Good news on GDP
They say you can see evidence of a stifled recovery everywhere. Everywhere, that is, except the official statistics. Today's 0.8% quarterly growth figure is the strongest third quarter figure in a decade.
The GDP numbers are going to jump around a lot over the next year or so - they always do. But if you look through the quarterly ups and downs, today's preliminary estimate suggests that the UK economy is now 2.8% bigger now than it was a year ago. They also suggest that the UK has been growing, on average, at an annualised rate of roughly 3.2% since the start of 2010.
Beneath that headline average, the strongest sectors have been construction, distribution, hotels and restaurants, and business and financial services. If the figures are right, output in the construction industry is now 11% higher than it was a year ago; the distribution sector is up 3.2%; and business and financial services have grown by 2.9%.
Interestingly, government and other public services have grown by just 1.1% over the past year, though remember that this does not cover all of the ways that government supports the economy. For example, as I've discussed in the past, public investment money often takes a year or more to feed through into output.
So, there's no doubt that the figures tell us good news about the recent past. What about the future?
The government would say it shows that fears of a stifled recovery are greatly overdone. The opposition - the so-called "deficit-deniers" - would say it shows that spending cuts have yet to bite. Who is right?
The honest answer is that we don't know. But, on the government's side, remember that the primary government deficit - the gap between spending and revenues, before debt interest, has fallen by more than 3% of GDP in the past 12 months (see my post of 13 October for the precise details). By that measure, fiscal policy has tightened more in the past 12 months than in any single year of the government's plan. But somehow, the economy has managed to grow by 2.8%, roughly its long-term trend rate.
You might hope to grow a bit faster than that after such a deep recession. But in past recoveries, it has usually taken some time for the recovery to build up solid momentum. This is unlikely to be an exception.
The lurking fear, in these numbers, can only be that the UK is behind the curve. After all, growth was strong in the early part of the US recovery, as well, only to slip back sharply in the summer. Given the importance of the US market for many UK exporters - and signs of weakening consumer confidence here at home - you still have to wonder whether this level of momentum can be sustained.
That will be one question that the Bank of England's MPC will focus on when it meets next month, with a new set of quarterly set of forecasts. The other question will be whether we are raising our expectations of inflation, as a result of the official CPI measure staying so long above its target rate.
Before today, there was perhaps a 50-60% chance that a majority on the committee would support more quantitative easing. I suspect that probability has now fallen. But with most economists still forecasting sub-par growth in 2011, I wouldn't rule it out - if not next month, then early next year.
There is still plenty to worry about in this recovery: much of it beyond our shores, and beyond the government or the Bank of England's control. But for today at least, I think we're allowed to join the cabinet in a sigh of relief.
Update, 1503: Simon Ward, from Henderson Global Investors, has just sent round a useful graph comparing this recovery with past upturns. Relative to the previous peak, it shows that our national output is now slightly higher than it was at the equivalent stage in the recovery in early 80s. The bottom line is similar: you can't call this a strong recovery, but it's not the weakest we've ever seen either.
Gilt yields have risen sharply on the news, bearing out what I said in Friday's post about last week's fall in yields. Right now, bond investors are more concerned with Britain's growth prospects than with the size of the government deficit.
On that subject, the Treasury is predictably cock-a-hoop that the ratings agency, Standard and Poor's, has revised its outlook for the UK to Stable from Negative, and affirmed the country's top credit rating.
The chancellor has repeatedly said that Britain was "close to bankruptcy" when the coalition came to office. Despite that, it's interesting to note that S & P was the only major ratings agency to ever formally put the UK's triple A rating on negative watch, last October. Now that medium-sized shadow has been lifted, Mr Osborne can talk, once again, of having brought Britain "back from the brink".
I hesitate to cast any droplets on the chancellor's parade, but note that he is saying the government's spending cuts have transformed the country's creditworthiness, yet will not make a noticeable dent on the recovery. If true, that would be a pretty impressive trick to pull off. Indeed, some economists might wonder whether it were actually possible.
When people raise fears about the impact of deficit cuts on the recovery, Mr Osborne likes to say that the government's plans are not that different from Labour's: a matter of a mere £6bn a year in extra spending cuts, on average, between 2010-11 and 2014-15, roughly 0.4% of GDP (or just over 1% of spending).
Yet, on the government's own telling, that modest amount of additional tightening has somehow been enough to take us from the "verge of bankruptcy" to having some of the safest sovereign debt in Europe.
If you claimed to have achieved that kind of turnaround in a company's fortunes, on the back of extra cost savings of just over 1% a year, people might wonder whether the talk of bankruptcy had been ever so slightly overdone.
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If the government had the confidence that the performance of the economy is good they would not have had to slash and burn as they did with the CSR. Good growth in the economy would sort out a not insignificant part of the deficit. Will OBR now revise its forecast of the size of the economy over the CSR period?
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The lag in growth is the result of policies implementted by the previous government - the coalitions policies will not have filtered through to output as yet; as Stephanie says in our real world of high streets and labour markets we see little signs of growth. House prices are still falling and lots of new construction orders are on hold or cancelled. Once the backlog has cleared and the impact of the emergency budget / CSR start to bite the real world we'll see the figures turn south. Just at the point the stimulus implemneted by Labour was starting to show in these very good growth figures the coalition has turned off the tap. Just as growth is returning is when support is needed most but instead Gideon and Camerclegg have trampled those fragile green shoots and for that we'll all feel the pain in 2011...
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"Given the dependence of UK exporters on the US market - and signs of weakening consumer confidence here at home, you still have to wonder whether this level of momentum can be sustained."
We keep getting told we can't leave the EU because this is our main export market. Now you're telling us the US is crucial. Which is it dear Stephanie?
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Smoke & mirrors. There can be no real recovery until asset prices fall to proper market levels. If your using 'Mark to Management' accounting rules then balance sheets will always show a favourable position. But don't be fooled, many institutions remain underwater. By artificially inflating asset prices and engaging in QE the 'powers that be' are actually ensuring no sustainable recovery takes place. The basis of growth after recessions is that a fall in values is eventually turned-around to provides the base for new growth under altered circumstances. By propping-up property prices in particular (whilst there is still actually falling demand) a proper relalignement is rendered impossible. Stagnation, viz Japan in the 90s, will be the inevitable result.
Despite comments otherwise, I still suspect that this constant reflation of falling asset prices is linked to the 'rescue' of securitized loans. The derivatives from these products have already been dragged from the future and spent, hence a fall in their values is deemed unacceptable. This was a factor not present in past recessions and where it will lead is difficult to assess, but it certainly makes this recession/depression different from previous.
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If there is supposed to be strong performance in the construction industry in these figures perhaps it should be shared with the skilled workers in that industry.I have two children who are skilled tower crane drivers and both are scratching around just to stay in work.They are like a great many construction workers where work has gradually dried up over the last year and a half.Wages have been driven down to near minimum wage rates and builders dont know where the next job is coming from.Recovery?Who is kidding who?
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The biggest problem is that growth must come from the private sector, and particulalry manufacturing.
I hate to harp on about bank lending but it is just not happening. I am a director of a recent start-up in Cambridge and we are experiencing incredible growth, 90% of which goes to export. Would our bank support us - NO. We found an alternate source of funding for the working capital needed to expand (this was only needed for 4 weeks!) and this is now in the past until the next change in rate of growth is experienced.
Unless funding becomes available for such growth, the ability of companies to expand will be limited.
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There is no lasting growth in this economy the last ten years have proved that. We need to aim for a sustainable stable economy with improved living standards by smarter spending. Improved energy supply, public transport and housing and less Chinese trainers and flat screen tv's. It can be done.
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Bryn the Cat says it. G Osborne can claim it is good news but the negative effects of slash and burn will take several months to work through and everybody seems to think that cutting public sector budgets is the same as cutting the deficit forgetting the inverse multiplier effect and that making large number of people redundant, especially those with long service is actually more costly than employing them in the short to medium term. To talk in terms of natural wastage is to live in fantasy world along with the prospects of an export lead recovery.
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"You can see evidence of a stifled recovery everywhere these days. Everywhere, that is, except the official statistics. Today's 0.8% quarterly growth figure is the strongest third quarter figure in a decade."
There never was a recovery Stephanie. GDP increased, and that is the only basis you have for there being a recovery when the beloved Labour party were in power. The employment rate has ticked down 9 times out of 10 so how can you say there was a recovery when there are even less jobs and even less people looking for jobs? But oh wait, now GDP has beaten expectations and the Tory's are in we better say dismiss GDP as an indicator and say it does not show a recovery!
GDP was never going to fix the problem. This is not a normal recession. The USA has some of the same problems we do. Consumers are de-leveraging due to being completely over burdened with debt due to an asset bubble. Real people cannot afford to pay for the things that 3 years ago they thought they owned, but in reality they don't. The average person is still struggling. Banks/Financials reporting record profits might send the GDP up, but it doesn't do any good for wealth distribution.
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As growth is now near its normal levels, we can get the base rate closer to its normal levels.
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Analysts and UK financial commentators once again have got it wrong. They have it wrong not because of any in depth analysis on their parts, but quite simply because they do not like publishing good news for the UK economy so do everything they can to make it bad ! Ireland, Spain, Greece are pretty well bankrupt. France in on constant strike and you never know what is going on Italy because the true picture is buried somewhere. Germany is OK but does not represent the whole of the Eurozone. So compared with the rest, the UK is really not doing too badly. Yet our commentators continue to talk "doom and gloom" Nett result, forex speculators make a killing and meanwhile us poor UK businessmen trying run a business with constant Sterling volatility continue to suffer. It is about time our so called expert fiancial commentators started standing up for this country !
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AGH46: both US and Europe are extremely important export markets. EU makes up a larger total contribution than the US though:
exports by country: United States 13.8%, Germany 11.5%, Netherlands 7.8%, France 7.6%, Ireland 7.5%, Belgium 5.3%, Spain 4.1% (2008 figures)
-- http://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom
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Stephanie
What was the fall in construction growth over the last 2 years?
What impact on the figures are the Olympics having - they will be building up to their peek in terms of activity over the next few months.
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AGH46: Surely UK exporters can be dependent on more than one market? The facts are that half of our exports in 2009 went to EU countries, 17% to the so-called Piigs (Portugal, Italy, Ireland, Greece and Spain). That is why I always say we have a big stake in the outcome of the eurozone crisis. But by far the largest national market for UK exporters is the US: 17% of our exports went to the US in 2009. We also enjoyed a £11.5bn current account surplus with America last year, as compared with a roughly £14bn deficit with the EU.
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1. At 11:28am on 26 Oct 2010, watriler wrote:
If the government had the confidence that the performance of the economy is good they would not have had to slash and burn as they did with the CSR. Good growth in the economy would sort out a not insignificant part of the deficit.
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I totally disagree. Throughout Brown's boom years when the economy was growing strongly we still had a significant deficit. It was and is structural. If we do not remove that we are on the road to oblivion. Natural short term growth per se will not get rid of it.
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"2. At 11:51am on 26 Oct 2010, Bryn The Cat wrote:
The lag in growth is the result of policies implementted by the previous government"
Well that might be true in some areas, but it isn't the case as far as construction and manufacturing are concerned. I work as a professional in the construction industry and most of our redundancies were felt in 2007-2009; this was due intially to cancellation or postponement of commercial projects and latterly by cancellation of publi funded projects such as BSF (schools). Since the election, a combination of slightly easier bank lending and ore realistic demands from local authorities for Section 106 contributions has helped to make some projects viable again. That combined with a reduction in construction costs has meant that things are slowly improving. Nothing in the CSR is likely to change that as the worst pain has already been allowed for. My brother works in manufacturing and tells me a of a broadly similar tale there, also helped by the current state of the pound.
I can see that the CSR could result in local problems, especially in areas which are over-reliant on public sector employment, however I do not believe the economy as a whole is likely to go back into recsession. I base this on the fact that by and large uncertainty (finacial and political) has been replaced by certainty (of the same). As a result business planning is easier now than it has been for 3 years.
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The latest GDP figures are good news for the British economy. Unfortunately, given the year to 18 month lag between action and outcome, we might have voted in the wrong party!
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So the sky has not fallen in after all. Despite all the attempts of the BBC, unions and the Labour party to talk down the British economy and destroy confidence, it has not happened. It just goes to show they can't even do a good job in opposition.
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As you quote in your article the main growth areas are Hotel, Restaurants, Business and Financial servies. These areas don't require a great deal of skill and are the main areas for employing part-time workers thats why the wages are low.The industrial areas this government should be investing in are the Engineer/Shipbuilding industries where the real growth will come in the future,for once thes industries loose the skilled worker which are the bedrock of all industries it takes years to recover if it ever does?.Therefore i still believe this government and the previous one can't relate to industry and a double dip recession could be on the cards.
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Just to follow up on Stephanie's post 14:
The main reason to belong to the EU if it's your principle export market is that you gain a modicum of influence over it's internal market policies. For example: safety requirements on electrical goods. We (the IEE) used to control this for the UK, but if your electrical goods are intended to be exported to the EU they will now be marked CE. This is a European-wide body that sets electrical safety standards; it includes representatives from the UK's IET (successor to IEE, the electrical engineering governing body).
This is all low-level EU politics. It's about coordinating standards for European-wide markets. Unfortunately, I'd be taken more seriously at these sorts of meetings if our government were to be a bit more positive about Europe. And that's the real tragedy: when Franco-German dominance comes to an end (Sarkozy and Merkel seem to be about to have a falling out), will the UK be in a position to exploit this for UK industries benefit? I doubt it.
The alternative is to go it alone, and drop out of Europe. And then hope that our industry is given sufficient advance warning of changing standards that they don't get caught flat-footed. Well, do you think French and German industry would let us know their decision making in advance? No, me neither.
Just for the avoidance of doubt: I think the pro/anti European decision is quite finely judged, but there does not appear to me to be an obvious, easy, course to take. And for thirty years, our politicians appear to have taken the same equivocal view.
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If the economic recovery is gaining slow but steady momentum and inflation is consistently over its target level then it is becoming increasingly obvious that the only real function of QE is to lower the value of the currency. The problem for the BoE, but the advantage for the rest of us, is that without these other spurious 'reasons' everyone can see what the game really is all about.
It wouldn't surprise me in the slightest if many in the MPC weren't secretly cursing these figures...Their 'fig leaf' has been removed.
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So, because these figures don't reflect the doom and gloom forecast by the BBC and the Labour Party you are casting doubt on them so that you continue your apolcalyptic reports. These are the sort of contortions we expect from politicians who can't accept that they were wrong.
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"You can see evidence of a stifled recovery everywhere these days. Everywhere, that is, except the official statistics."
Recessions aren't just about slowing down, they are also about corrections in the economy. We were engaged in the unsustainable so it didn't sustain. As part of the correction we need to switch from the fluff of consumerism at home to a higher level of exports and this means some parts of the economy will be for the chop.
Unfortunately many haven't grasped this and are assuming things will return to the way it was a few years ago. Only yesterday on the news some start-up was complaining that the bank wouldn't lend him the equity he needed and he had to approach friends and family. Well banks shouldn't be providing equity, that's what was wrong. This is part of what got us into this mess. Equity and equity risk is the role of the shareholder.
If we only look behind us then we risk crashing into the future.
If we spend out time looking backwards we are going to miss what's coming
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It looks like the industries which performed before the crunch are still performing. This is good news. However, how long construction will stay in that category is open to question.
It is quite apparent that a lot of the prevailing cuts are those efficiency savings made previously by Mr. Darling. The wicked ideological cuts by upper-class Tory vampires seeking to gorge on the blood of innocent public sector employees won't arrive on a High Street near you until well into next year. This is always assuming that the Coalition's spending review actually turns out worse than those planned by dear Darling.
What would be nice but which remains a long way off is confidence. It is going to take many quarters before we get there and so growth will remain bumpy. I don't think any confidence will return until the banking sector is fully reformed and focussed onto developing the real economy in the UK as opposed to inflating the price of apartments in Dubai.
Until we start getting some investment and government support in manufacturing and R&D we cannot expect our affairs to begin to prosper. Even then when we do turn that vital corner we will still have to address the issue of our burgeoning National Debt and those other, off-balance sheet obligations.
We are going to have to come to appreciate that the only way out of this shambles is to get as many people as possible creating value which will provide a solid economic platform for the future
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I just don't believe the figures.... or rather the story the figures indicate.
I would love to be proved wrong but my fear is that when we get to the end of the current liquidation of 'soft savings' by people and companies alike, who see zero returns as obviously no incentive to retain cash, we don't hit a sudden and dramatic set of statistics showing the underlying reality that I fear remains unaltered
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The slow growth in US and Europe is the reason UK businesses, Politicians and Union bosses need to get out and promote UK in the high growth areas of Asia and Brazil. By growing our market in these areas we can bring Jobs and wealth to the UK
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It is also worth noting that total Gov't spending this year (exc. debt interest) will be £15bn higher than last year.
The £81bn "cuts" is a totally spurious figure based on what would have been spent over the next five years had spending continued on Labour's profligate trajectory. (GDP like that we can do without).
The next 5 years' public spending plans (exc. interest) actually amount to approximately a 1% increase annual increase v. 2010 spending. That in itself ought not to be enough to cause a recession if the private sector continues to grow (from a low base, thanks to the deep private sector recession).
Hence the "surprise" today. Public and Private sector growth.
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SPIN! In what planet is movement from 1.2% to 0.85 mean progress or growth and calls for celebration? That BLUE plannet where so called journalists are in a blind romance with a gambling government. Keep the message positive. Tories for ever! No matter what.
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If we get two or three more quarters of reasonable growth numbers will those forecasting doom and gloom admit their errors?
I heard Angela Eagle on Daily Politics and I hope that her remarks will be repeated to her endlessly next year. Its going to be OK.
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Does this mean that interest rates can at last be put up?
As we are doing so well, I think not. So doesn't that tell you something we are not doing that well!
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Given the importance of consumer confidence on our recovery, I really think the BBC needs to start being more responsible in its reporting of these matters.
When I first checked the website this morning, there were gloomy forecasts of 0.4% being given as headline figures. Even though these figures were estimates, they were enough to get me worrying again. Then, lo and behold, the actual growth figure is twice the doom mongering forecast. And yet the analysis suggests that we may just be behind the curve so expect a crash in the future.
From the way the 0.8% figure is being reported, there almost seems to be a twinge of disappointment that reporters can't now revel in their apocalyptic forecasts and blame it all on the coalition's austerity cuts.
As for the Labour response, of course they are going to deny that steady growth figures mean, well, steady growth. Steady growth under the coalition is a bad thing for Labour, as they know it will keep them out of office for a long time to come.
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I would NOT trust Stephanie Flanders and the BBC which are basically a liberal democrat point of view and how can you trust someone who wishes the recovery to fail?
BBC are in step with the Labour part who are totally out of step with the drastic actions needed to repair this country and its economy.
I would start first by cutting the fat cats wages within the BBC and certainly cut their wages to fall in line with normal working class people.
After all it is the working tax payers of this country that pay the inflated wages of the BBC.
Its because of the BBC and its Liberal views that this country are in the mess that we now face and it will take a strong Coalition to get us out of this mess and on the road to financial recovery of which they are doing a grand job so far.
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Does anyone know how these GDP figures are arrived at? Obviously not a 100% sample. I suspect that they are extrapolated from a very small sample.
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Dear Stephanie, Surely a rather negative way to begin your blog? Where is the "evidence of a stifled recovery" that you can see "everywhere these days"? If, as you say later in the piece, the honest answer is that we don't know what's going to happen, what is the benefit of being pessimistic? Having just had some rather good news about economic growth, I feel it would be be better to be neutral or even mildly optimistic about the prospects. I really don't understand why journalists appear to be keen to talk us into a further recession.
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A word of caution, Blogger and posters all. There is a plus/minus error margin in most things in life and that for GDP would, in some circumstances, probably swallow 0.8% in one gulp.
Let's be patient, hang on in there, and do all we can to survive and help others do the same. There's a long way to go yet.
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Only you and your other left wing biased pundits in the BBC could find so much negativity in some good news for the country and the Coalition. The numbers are better than you expected so you cast doubt on the statistics. If the numbers had been as you expected or worse it would have all been the fault of the wicked Government and their cuts. There would have been no suggestion then that the stats where dodgy I bet.
If I was part of the coalition the first thing I would cut, long and hard, would be the institutionally left wing BBC. It would improve their chance of winning a second term, without having you lot pitching for left wing policies. I have to pay a licence fee to listen to this Labour propaganda!
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GDP figures are just one indicator of what's going on in the economy. So they are encouraging but we shouldn't get too carried away either. The key to a broader based recovery is consumer demand and expansion of the private sector. We'll have to wait for the first half of next year to judge how this is going. I think that there are some encouraging signs outside the UK too. The USA situation is worrying though.
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Stephanie, you may well be breathing a sigh of relief but I suspect that many of your colleagues within the newsroom are bitterly disappointed!
The whole tone of the feature that preceded the announcement of the actual figures was so negative that it could have come straight from Labour party headquarters. The economists quoted were obviously chosen for their negative views rather than their independent expertise.
Thank you for a more balanced view.
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I see the more disingenuous of the left are now claiming that these decent figures have nothing to do with the coalition and are all the result of Labour's past work. But does anybody really believe that had the figures been bad, the hypocrites would not have not jumped at the chance to blame them om the the coalition policies? And now they are telling us it could take 18 months for the cuts to take effect. If true, this would be just at the time that, had Labour stayed in office and continued spending and wasting more money this year with the national debt mounting to astronomical levels, Labour's cuts would then have needed to be much deeper and much nastier. Brilliant!
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Growth in 'financial service'...mmm
What you really mean is the banks are greedily sucking cash out of every other business in order to build up huge profits to pay massive bonuses.
This isn't real growth. In fact it really is a bigger brake on growth than any government policy.
Look at the lack of growth in manufacturing - the only place that MAKES money instead of recycling it.
Then of course there is the fact these are government numbers. We ALL know about them don't we - we've been living with 2, 3 sometimes 3.5% inflation while the prices of meat, veg, milk, butter, houses, council tax, taxation in general, government fees, council fees... have all been going up between 5 and 50% a year (in the case of milk its certainly more than that in the supermarkets - despite the fact they are actually paying less for the milk than a year ago - ooh, did someone say cartel?)
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38. At 2:05pm on 26 Oct 2010, Tradetalk wrote:
Stephanie, you may well be breathing a sigh of relief but I suspect that many of your colleagues within the newsroom are bitterly disappointed!
The whole tone of the feature that preceded the announcement of the actual figures was so negative that it could have come straight from Labour party headquarters. The economists quoted were obviously chosen for their negative views rather than their independent expertise.
Thank you for a more balanced view.
----------------------------------------------------
This is classic reporting. Precede an announcement by trailing a poor result. Release figures that are not so poor to mediocre.
Blow trumpet about better than expected figures.
Understand the process!
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Everybody needs to read, "The Grip of Death", by Michael Rowbotham, and then all will see why Ms Flanders, as well as every other 'economics editor' and 'business' "expert", especially those that make 'breaking news' announcements [Lloyds takeover] on the morning news to manipulate the markets, and launder their 'kickback' into untraceable accounts for doing so [eh, Bob ;-)], all need to go and get other jobs, 'cos they sure don't understand economics!
Reporting totally meaningless figures, and quoting phrases which have been imprinted into their psycho-susceptible brains, merely emphasises their ignorance, and how these frontmen/women are used by Government to keep the lid on the, presently close to bursting, pressure cooker.
Read Rowbotham's masterpiece...
Max
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Stephanie or someone else please correct me if I'm wrong but my understanding is that GDP growth is calculated by taking a random stratified sample of output across the various sectors of the economy compared to the sample from the previous quarter, then minus the CPI inflation calculation for the current quarter?
If this is the case the problem I see is the use of CPI as a valid indicator of real inflation for both individuals and businesses. My business and personal cost increases certainly have borne no relationship to CPI ever in the last 17 years. This is also the case for all others that I know in business and personally. CPI woefully underestimates real inflation in my opinion. Therefore GDP growth is over-estimated and might account for why I and others seem to have worse cash flow personally and in business when we are supposedly seeing GDP growth.
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So it's not all bad news, though according to the ex postie the government's doing it all wrong. Now he's full of advice on what they should be doing ; it's just a pity he didn't have this superior knowledge when he helped prop up the worst example of government economic incompetence this country has ever suffered . The temporary Labour party leader also seems to believe that the slight recovery is also due to Labour incompetence, but then he isn't quite sure what's going on around him anyway.
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Wow, that was a surprise after just about everyone saying only 0.4% growth, economist here even says recovery is better than in early 1980s . Surely that puts QE very much on the back burner...
http://www.mindfulmoney.co.uk/2087/economic-impact/strong-uk-growth-keeps-qe-at-bay.html
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Stephanie Flanders has the mind-numbing habit of starting paragraphs with the word 'interestingly' which appears to escape the attention of the sub-editors. I think we can assume that it is 'interesting' Stephanie, because you wouldn't be writing about it otherwise. She also answers a rhetorical question with this response 'The honest answer is that we don't know.' It's never a good idea to set yourself up by admitting ignorance on a subject. The reader might wonder what you are being paid for. And who is we anyway? The BBC? You can't be speaking for me because maybe I do know.
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Hmm a sobering analysis.
So this lag is basically due to the previous Govenrments policies.
Appears to be a very strong Construction led growth. Could this be to do with Public building iniatives that were funded by the previous administration.
I would say to the Coalition, take note!
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We have now had two quarters of what on the face of them are very good GDP numbers. Rather oddly this blog comments.
"The lurking fear, in these numbers, can only be that the UK is behind the curve."
How exactly are we behind the curve?As surely we are ahead of these countries and perhaps our attention needs to turn to the possible dangers ahead including the subject very rarely mentioned on here that of inflation..
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"44. At 2:46pm on 26 Oct 2010, kaybraes wrote:
So it's not all bad news, though according to the ex postie the government's doing it all wrong. Now he's full of advice on what they should be doing ; it's just a pity he didn't have this superior knowledge when he helped prop up the worst example of government economic incompetence this country has ever suffered . The temporary Labour party leader also seems to believe that the slight recovery is also due to Labour incompetence, but then he isn't quite sure what's going on around him anyway"
Can you not read? Or do they not teach that in Tory Madrasa's?
This recovery IS due to the previous administrations policies. THIS administration has done nothing so far to elicit the growth. In fact all fingers point to the Coalition policies pushing the Economy the otherway.
As for the "Postie", well at least he's had a real job, unlike Gideon and PR Man!
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"So, there's no doubt that the figures tell us good news about the recent past."
Reporting ilke this really annoys me and shows absolute naivity to the situation. Where is the in-depth critique? "Construction up 11% on last year"...a small or normal real world increase from a reduced base will always look big. I can increase my toast consumption each morning my 400% if I wanted - it would still only be 4 slices of bread though.
Just look at the GDP predictions...expected 0.4%, revised to 0.8%...so economists were collectively 100% out and they're the experts! My stat doesnt really give the right picture but it certainly could be used by some to make the argument that economists/analysts aren't very good at their job!
"UK economy is now 2.8% bigger now than it was a year ago."....anything to do with unsustainable QE do you think??? Not particularly comforting then, is it.
"There is still plenty to worry about in this recovery"...Mervyn King has come out saying "Of all the many ways of organising banking, the worst is the one we have today."...if we are running banking in the worst way possible, how on earth can a recovery begin to take shape without artificial 'growth' or serious cost to recify banking in any meaningful way?
You simply can't have anything in its worst state, do anymore than produce the worst product or assume that the cost fixing it won't discount the improved result for a long time.
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Interesting that over 10% of posters are here for the first time and of those 100% attack either Stephanie directly or any suggestion that today's figures are anything but good.
Muuum you can interprit what you like from that
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If these GDP figures are to be believed we must get interest rates up as inflation is a real and substantive problem that must be tackled urgently.
To argue that we must have more QE against this set of figures is bordering on insane. Or perhaps those arguing for prolonging the irrational economic management of the price of money do not believe the figures?
What is absolutely certain is that it is intellectually fraudulent to want it both ways. You can a recover, but if you have recovers inflation must be tacked. If you don't have recovery then keep rates low and have more QE.
If Mervyn King and the ship of fools (sorry the MPC) believe these figures then interest rates must start rising to tackle inflation and they must start rising now, before Christmas.
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re BBC bias
Agree totally, the BBC has a trmendous problem with lack of balance in all areas of its broadcast. It is very leftwing, it is also totally apple biased in any technology coverage (even naming its own replay mechanism after apple products), its unable to cover anything but the arts with any depth (listen to radio 4's 'today' news program - today covered some painting of ex-mps amongst other things which are clearly not news, yet skips over news worthy items at a depth that would makes the Daily Sport look well thought out and indepth).
The BBC is a total waste of money these days and would be better off shut down immediately, I'd certainly rather see us keep the Harriers and aircraft carrier.
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Stephanie,
Why don't you mention the encouraging performance of manufacturing?
You say that after construction, the "strongest sectors" were distribution/hotels/restaurants (+0.6%) and business/financial services (+0.5%).
Manufaturing posted stronger Q3 2010 growth (+1%) than any sector bar construction and has just had its best 12 months of growth since 1994 - up 5.3% since Q3 2009 compared to 2.8% in business/financal services and 3.2%. Admittedly this is partly reflects the severity of the downturn in the sector during the recession, but I think you underplay the contribution manufacturing to growth this year.
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There are a lot of BBC bashing, whistling in the dark supporters of 'balanced budgets' and other 1930s orthodoxies behind some of these remarks. The (sadly soon to die out) improvement in economic growth reflects the strong financial support of the ailing economy by the previous government when the then Tory opposition thought the recession should 'run its course' without state intervention.The cuts in public expenditure recently announced will reduce aggregate demand and so, investment,employment and economic growth very significantly.This isn't left wing propaganda but simple macro economic reality.
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Re Update, 1503:
It is very strange that the graph for the current recession is a smooth curve compared to the other three.
Is this a sign of recent statistical massaging?
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53. At 3:27pm on 26 Oct 2010, anotherfakename wrote:
re BBC bias
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Apply for a job with the BBC and change it from within. Let us know how it goes.
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Can someone explain the difference between a cut and a saving
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There is only one true measure of economic recovery, not gdp figures or I told you so politicians, ITS JOBS,JOBS JOBS.
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Excellent news!! Please put interest rates back up to 5% now then.
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Remember the stimulus? Bureaucratic lag, the cumbersome process whereby governmental agencies skim money off of the top of allocations and proceed with their painful process of distribution and identification of applicants with political connections. The election slowed everything down as a new list of the faithful needed to be established. This all takes time. I would guess that the funds of two years ago are finally showing up. The financial services increase is related to the continued extortion facilitated by the government. The political and their friends are doing fine....the rest are waiting to find when the bottom will finally be found. Through the Looking
Glass.
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49. At 3:15pm on 26 Oct 2010, ToriesBrokeBritain wrote: "This recovery IS due to the previous administrations policies."
OK, so if this recovery is due to the impeccable policies of the long lamented previous administration, did they also cause the bust as well? Bet you don't claim that as well?
"THIS administration has done nothing so far to elicit the growth. In fact all fingers point to the Coalition policies pushing the Economy the otherway."
Well so far the Labour mantra has been the recovery is being imperiled by Coalition policies because growth is not yet established. How much growth do we need before the economy is sound? The best 3rd quarter for 10 years seems a good starting point, does it not? And we seem to tracking in a similar way to previous recessions, perhaps the risk is not quite so serious?
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#53. Rubbish post from beginning to end.
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Hhm. Odd. I was on this website last night, and there was an economics item about the performance of Britains economy over the last quarter, or half I think.... and it didn't remotely accord with this news item. The basics of it were that the recent past's positive growth figures were an illusion.., a bump/jump after an extremely deep recession.
Now this morning, it seems to have disappeared, replaced by todays headline. Rewriting of the news?
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To believe the GDP figures - these or any others - you have to believe that the calculation is accurate, particularly where inflation adjustment is concerned. In the US, growth figures are massively flattered by understated inflation, something which is shown up by highly reliable independent sources - can we be sure that the same doesn't apply here, too?
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It's good that the some of the people on here are aware of the subtle (and sometimes not so subtle) biases of the so called 'impartial' BBC, although admittedly Stephanie is not as biased as some other commentators.
This shouldnt be a suprise for people though, the BBC is a public sector institution and has done very well for itself under labours stewardship. Now the coalition government is in power and the BBC is facing cuts in real terms. These factors no doubt lead to a culture which makes objective reporting difficult.
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The new economy figures can only relate to what the previous government put in place - the coalition had no time to influence the economy so shortly after coming to power, so the real question is WHY has growth held up?
The answer lies in Alistair Darling's stimulus package which brought forward capital projects in response to lobbying by the Construction Industry who said it was essential to keep the 300,000 building workers from becoming unemployed.
That package is now ending - as are the Olympic construction projects - and the combined effect of central government axing projects like the Defence Academy at St Athan, along with the capital spending collapse now happening in local government, plus the halving of social housing investment will see up to another 500,000 building workers joining the dole queues shortly.
Add in 500,000 civil servants plus another 500,000 private sector jobs directly dependent on Government procurement and we are headed for a perfect storm of rocketing unemployment, falling tax revenues and a rising welfare payments bill.
Given the state of our export markets and what looks very much like a collapse in consumer spending any moment as well as house prices now firmly on the slide, it seems to me to defy logic to go on having such a rosy view of the prospects for growth.
The OBR is completely at sea over the multiplier effect of taking £120 Bn out of the economy - they quote a range from -1.3 to +4 - or more - so on this range the effect on aggregate demand in the UK could range from +£160 Bn to -£480 Bn.
Tinkering with marginal rates of corporate taxation and twiddling with regulations is NOT going to lead to 2.7M new jobs, industrial investment of £400 Bn and an increase in exports up by a third over this parliament.
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This comment was removed because the moderators found it broke the House Rules.
Glad the GDP figure doesn't show a downward trend.....whoops!
Are there any journalists worth their salt?
"But if you look through the quarterly ups and downs, today's preliminary estimate suggests that the UK economy is now 2.8% bigger now than it was a year ago. "
What about the 7% of GDP that was added to the economy through the last round of QE Stephanie? - or have you forgotten GDP is a monetary based figure
The Economy hasn't grown - the money supply has and there is still some residual aggregate demand from the huge subsidies handed out to the car industry and the banking sector.
It's terribly sad to see how all this is quickly forgotten in the rush to be the first one to claim "I can see green shoots"
I mean haven't we all learnt our lesson by now?
http://news.bbc.co.uk/1/hi/uk_politics/7828549.stm
It's only ends with egg on face...
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Hi Sandy
Stick to the facts and not, maybe or could be. ie 'if the figures were bad then....etc'. Many say that Gordon Brown mitigated the effects of the WORLDWIDE financial crisis! Time will tell as to how the coalition governments cutbacks will present themselves?
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In Robert's end of year blog for 2009: http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/12/unstable_equilibrium_in_2010.html#comments
39. At 10:26am on 31 Dec 2009, onward-ho wrote:
2010 will be the year the economy grows at over 3%.
2010 will be the year the public finances start to look better than predicted.
2010 will be the year the bad debts the government guaranteed will turn out to be not so bad and the government will make a profit on it!
2010 will be the year the pound regains ground on the Euro.
And everyone thought I was a loony.
Mind you I thought we would have a joining the Euro referendum.
Maybe there will be a European taxation levy referendum instead.
I also thought we would get cashback from Iceland.
Hope springs eternal.
However, with every percentage in GDP growth improving government income by 5%, it looks like Darling and Brown were spot on ...... they managed to implement 90% of the cuts without us noticing, yet set the scene for growth ......but this new Dim and Dimmer lot blame Labour for taking the action that brought about the very same recovery that is saving the Coalition's bacon.
But the worrying thing is that with this new doom squad in power, the feelgood factor is conspicuously absent because they are such a depressing and mean-spirited shower.
AN ECONOMY GROWING AT 3% SHOULD NOT BE SLASHING PUBLIC EXPENDITURE AND CURBING THAT VERY GROWTH BY SHELVING INVESTMENT IN INFRASTRUCTURE AND PUBLIC SERVICE.
With a normal-service resumed lending culture ,construction cranes swinging and an open-minded and welcoming approach to immigration again,and a realistic approach allowing banks to do what they are good at, ie lending and supporting growing businesses and families....
there would be no stopping Britain thriving.
Can Dim and Dimmer see the light and ever so quietly and gently shelve their silly out-of-date slash and destroy Viking approach to managing a modern mixed economy?
We need decent, big, thriving banks .....now is not the time to shoo the successful ones away, nor is it the time to smash them up or sell them off too cheaply, too quickly.
Are we recovering in spite of government efforts,and if so will we continue to ignore the negativity, and confidence-bashing which they are inflicting on the country?
I live in hope.
Let's not let these twits get us down!
Wanna convert a barn, open a shop, send your kid to Uni, get married, raise a family, plan a future?
Never mind the horrors in power, just do it!
If we all do it, we will thrive.
But if we sack our neighbours, if we neglect our old, if we don't help young people to study , if we don't help young go-aheaders raise their children,if we reverse the recent reductions in crime by slashing police budgets, if we stop supporting people getting a fair trial,if we close our libraries, and stop learning-disabled children getting specialised help, if we stop inspecting restaurants and workplaces, if we let Murdoch take over the BBC, if we let this Tory retro-fest vandalise everything that is good about this country.........
Surely we won't will we?
What's to stop them?
Only us.
Have you ever written to your MP?
Have you ever gone on a demo or a strike?
Do we have to?
Do we have to wait until it is our job, our kids, our grans, our friends
......... who are thrown on the scrapheap?
Do we really want to see 200,000 skint Londoners evicted this year?
Great progress and cardbox city here we go again.
Thankyou Libdems, you are doing more harm to this country than any foreign terrorists ever could.
Though you did not tell us you would, did you?
As for the Tories, well whadya expect, they are Tories .
Who simply do not care tuppence for anyone who is down on their luck.
Tough totty is hilarious until you are the totty.
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I enjoy reading these blogs because it gives modestly educated readers like me an insight into the performance of the UK and Global economy.
What I do find disappointing though is the constant right wing propaganda and Mailesque BBC bashing.
Please give it a rest and let me and others enjoy the debate.
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66. At 4:24pm on 26 Oct 2010, The_Juice wrote:
It's good that the some of the people on here are aware of the subtle (and sometimes not so subtle) biases of the so called 'impartial' BBC, although admittedly Stephanie is not as biased as some other commentators.
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When assessing any news and opinion provider for bias you must remember that the first task is to be completely honest about about your own bias.
If you believe that The Guardian (or Telegraph) is not biased because it fits your view of the world then you need a little philosophical thought before continuing. To define bias there must be an agreement on where the middle ground is to be found. This is very difficult if you do not agree where this middle ground lies as that defines your bias as well as those you accuse of bias.
The only way around this is to accept (even insist on) a pluralist press and ensure you are well read.
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The Governement and their henchmen can say whatever they like on the state of the economic recovery.
However, it is interesting that they are using Labours figures in conjunction with what was agreed by the Treasury prior to the election when it comes to sorting out what is and is not cut.
I'll believe the figures if the economy continues to grow. I hope I don't have too long to wait.
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Where are the jobs going to come from?
In my view (acknowledging those above who have expressed similar views) the jobs will come in science, engineering and creative industries. A laissez faire economy, a love for individual liberty and an open view of the rest of the world has its down sides. But it is precisely those aspects of our society that will produce the jobs of the future.
It is individual ideas and personalities that will create jobs. We are world experts at that. It was precisely that attribute which produced the disastrous "innovation" in the City. We need to let loose precisely that individuality in the "real" industries.
The Government is trying to do its part. Many commentators will be watching the UK experiment - succeed or fail it will be debated constantly across the world. The otherwise rather stiff Economist even declared them "radical" (Cameron has to do the mohawk at his next fancy dress!)
Two further thoughts:
1. If I were Mr Cameron I would be appointing my wife to a prominent and wide ranging role. I reckon, at least in certain sectors, she knows far more than him about building British companies and British brands. It would also be good for his "new conservative" credentials.
2. If I were Mr Miliband I would be finalising my policy on cuts and taxes - being a bit more compassionate, a bit more green and a bit harsher on the bankers. I would then get onto the debate about how to build a sustainable economy. That is a space where he can create a new new labour and his own positive voice.
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Hopefully we will be able to get rid of the structural deficit and secure more trading partners inside the EU, Russia and China as well as South America and the Middle East while taking a step away from the toxic economy of the United States before their currency collapses, minimising the economic effects we will suffer from their eventual and inevitable collapse.
I just hope our Government are wise enough not invest anymore money into the American financial system, its a toxic waste factory that is about to blow up, contaminating economies worldwide, businesses in this country would be wise to get out while the goings good and get rid of anything associated with the US financial system while it is still worth anything.
Businesses here should invest in precious metals, oil and anything that is tangible and to stay well away from derivatives, credit default swaps and anything else to do with the Casino financial system Americans have created. For the sake of this country we need to start hording real assets now to safeguard the survival of our civilization from the greed and recklessness of Wall Street.
People personally should not bother saving money in fiat currency since its value continues to fall due to extremely low interest rates and quantitative easing programs and should buy Gold and even silver if you want to maintain the value and even increase the value of your savings, Gold and silver is going up in value all the time and there is no sign its going to stall anytime soon, so to anyone who has any savings in fiat currency, exchange it for gold, silver or both and invest in stocks such as oil, gas, and mining stocks and even agricultural stocks, anything that is real and not just worthless tinkering of Wall Street such as derivatives.
I hope this advice helps someone, seriously do some research on the Global Economy and find out how to weather through these tough times. Even though things are tough there are still so many opportunities out there to grab a hold of. There is more going on in the world than you realise, please believe that at least.
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@49 - ToriesBrokeBritain
You lack understanding of the current finicial crisis.
Although the current financial crisis was caused by the banking system collapsing it was labour's policies of tax, spend and borrow and borrow and borrow and borrow that took this country beyond its means.
Also had the previous labour government had not been so careless with the economy prior to the financial crisis happening then we would have been in far better shape to withstand the current situation this country finds itself in.
The amount of interest this country is having to pay on the money borrowed by the previous government means that for many years we will be having to pay off the debt incurred.
No government should make the mistake of making the state an economic driver to build the economy - in other words the state got too big. Because Labour allowed this to happen this is why you are seeing so many public sector workers being made redundant over the next few years - the government can't afford to pay them.
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Why does the BBC continue to talk the country down.Every news or political programme goes out of its way to degenerate any good news about our economy.Methinks it hates this government for threatening to cut the disgracefully overpaid workers.There is more money wasted as perks by the BBC than the MPs scandel but you wont be told about it.
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69. writingsonthewall:
"What about the 7% of GDP that was added to the economy through the last round of QE Stephanie? - or have you forgotten GDP is a monetary based figure"
Very true - and not mentioned anywhere in media reporting of this data, as far as I can make out.
During 2008-09 and 2009-10, government injected 14% of GDP through QE and 18% through deficits, so that's 32% of stimulus in two years, or 16% per year. That makes annual "growth" of 2.8% look pretty paltry, doesn't it?
One way to look at this, of course, is that even more stimulus is needed. But the more radical approach would be to conclude that stimulus doesn't seem to work as it used to, and to ask why.
One reason is deleveraging. Individuals, businesses and banks are reducing their debt exposure, so any government stimulus simply gets transferred to private balance sheets rather than boosting consumption.
Essentially, also, the private sector is burdened, not so much financially (though the tax burden is a problem) but rather through excesses of regulation. Have the planning, HSE and 'equality' regulatory structures now become so bureaucratic and zealous that business finds it difficult to expand?
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Do you think it possible for you to tell us where the deficit money is going? We hear every day about the billions we owe as a nation, but who are we paying it back to? I have an idea it's to a computer in South Shields, but I may be wrong.
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The lag in growth is the result of policies implementted by the previous government - the coalitions policies will not have filtered through to output as yet; as Stephanie says in our real world of high streets and labour markets we see little signs of growth. House prices are still falling and lots of new construction orders are on hold or cancelled.
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What are you talking about?
Osborne borrowed and spent more from May-October 2010, than Darling did in 2009 over the same period. Consierably more.
The debt, deficit, spending and borrowing has gone up. Not down.
The only reason growth remains is that Osborne hasn't implemented his own spending and cuts plans yet.
They won't come in until 2011.
Economists forecast 2011 growth to be less than 0.4% for nearly 3 years
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" I really don't understand why journalists appear to be keen to talk us into a further recession"
Because they're not the tory press office?
Basically everyone from economists, to city traders, and expecting growth to plummet not in 2011 when the cuts happen, but probably in the last quarter of 2010.
It's not if but when.
Osborne has increased borrowing and spending since being in office. He's had to to keep the country afloat.
That's your record growth. Not his own spending plans
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"If we get two or three more quarters of reasonable growth numbers will those forecasting doom and gloom admit their errors?"
Growth has dropped 30% in a single quarter, since the budget?
It will continue dropping.
What's to be happy about?
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"It's good that the some of the people on here are aware of the subtle (and sometimes not so subtle) biases of the so called 'impartial' BBC, although admittedly Stephanie is not as biased as some other commentators."
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Tories tend to work on the basis that any deviation from the party line is bias.
Have you ever considered the fact that it's the government version that is possibly partisan?
Think about it for a few minutes and get back to me
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#39
"I see the more disingenuous of the left are now claiming that these decent figures have nothing to do with the coalition and are all the result of Labour's past work. But does anybody really believe that had the figures been bad, the hypocrites would not have not jumped at the chance to blame them om the the coalition policies? "
I think I could rewrite this to say something like,
" I see the more disengenuous of the right are now claiming that these decent figures have nothing to do with the Labour party and are all the result of the good work of the coalition. But does anybody really believe that had the figures been bad, the hypocrites would not have jumped at the chance to blame them on Labour's past policies."
After one round of the new game show 'Claim and Counter Claim' my guess is that the reality is somewhere in between these two statements.
Round 2. Steph is a biased lefty?
Answer; No. The job of a reporter is report the facts. The job of the economic editor is to give some background to the news. In this particular case she has identified possible problems ahead. I am not so naive to think that everything is going to be perfect from now on. I want to know what the the pitfalls ahead are. This is not being anti coalition. In fact I hope that the coalition are doing the same. The unspoken failure of the Labour years was the failure for much of the time of the then opposition and much of the media to challenge Gordon's economic policy and the running of the banks.
If a position is challenged and its supporters consider the challenge they result is a stronger position even if it is unchanged. After all that is what a Devil's Advocate's role is.
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This isn't good news. It's less bad than we expected. But still bad.
Growth has dropped 30% in a single quarter. That's a heck of a lot. Not a disaster, but not great.
Since May Osborne has largely been continuing Labour spending plans. With both more borrowing and state spending.
This isn't his fault, as he has to ease the country into fiscal cuts, and can't do it all at once, but claiming this growth is anything to do with him is ludicrous.
He's continued spending, and he's got growth. Labour's basic position. If it was up to them, they'd continue this right up until the end of 2011 and start from maybe a 2-3% growth figure?
The numbers are a bit misleading. Building companies rushed through contracts before Osborne got into power. A lot of them state. Rushed through deals. This is sort result. A little spending bubble that's about to pop.
Most other sectors are going downwards. Not upwards. Construction will follow by the next quarter, as Osborne is slashing capital spending.
I was watching the city today, and they still expect a 0.4% figure in the final quarter, so we'll be having the opposite argument then I imagine!
In the longer term, they expect growth to fall under 0.4% consistently for the next 2-3 years.
Long sustained low growth. Which is where the danger comes in.
If you're running an economy with high unemployment, high inflation, and only say 0.3% growth, it won't take much to tip you into recession
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"Do you think it possible for you to tell us where the deficit money is going? We hear every day about the billions we owe as a nation, but who are we paying it back to? I have an idea it's to a computer in South Shields, but I may be wrong."
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Rich countries and hedge funds buy Gilt bonds in poorer countries.
This basically means that they hand over a HUGE amount of money to the UK, and in return the UK has to pay them back in say 20 years, with interest.
The UK isn't bringing in enough revenue to cover it's expenses, so has to sell bonds in itself (borrow) to cover the gap.
The deficit basically means they are paying back this money.
The UK has been doing this for 60 years, consistently, so debtors are contiuously calling in their money.
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I see the more disingenuous of the left are now claiming that these decent figures have nothing to do with the coalition and are all the result of Labour's past work. But does anybody really believe that had the figures been bad, the hypocrites would not have not jumped at the chance to blame them om the the coalition policies? "
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Osborne hasn't even finalized what his spending plans are yet?
Debt has gone up since May. As has borrowing. As has spending?
If the current spending levels are Labour's fault, so is the growth
You can't have both unfortunately
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14 S F
The UK exports more to Portugal than to China. I'm not sure that is an achievement or a failure.
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88 mike
You always see a rebound, nothing to do with politics, a drained supply chain restocking, deferred purchases implemented. Calling it growth is dubious.
So if its nothing to do with politics you can have it both ways if all anybody wants to do is try to relate politics to it.
There is relentless scaremongering from both sides.
Where it get real is if you have to borrow and the lender is concerned about your capability to repay.
If you have debt you are not independent.
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Good news on GDP; generally for the goondog billionaire import sucking monopolists and multi nationals.
The rest of the UK is either in 'recession' or in 'depression' as depending on sector and/or location.
Vince Cable is yet to create a single British job for a single British worker ... and he said yesterday that he has no money to do anything himself ... but at least he nearly 'shut up' about importing more immigrant workers.
Perhaps GDP can be split and broken down so as to show what is really going on with the British economy i.e. domestic economy - v- globalised section of the former British economy.
BTW - GDP does not exist in the UK ... we only have 'GIP' ... 'Gross Internationalised Product' (or 'Goondog Internationalised Product' for the 'more enlightened').
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4 reasons not to be cheerfull.
1. The cuts have yet to bite.
2. Growth is usually followed by a rise in interest rates.
3. A large component of the growth is in construction rebounding from a very low base.
4. The banking system is dysfunctional.
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Forgot to mention.
If the cost to the taxpayer of the 2008 bank bail outs are added to the current UK national debt along with the hidden UK debts on e.g.
public pension black-holes
UK public and private infrastructure
higher future energy, food, import costs
The UK is currently about £4 Trillion in debt, overall, according to recent estimates.
The differences between the UK's political parties in terms of policy are very small indeed and are infact dressed up and pumped up by the media into a huge non-existent difference of positions. Obviously, the Coaltition govt is facing up to the problem as best it is able to do so.
However, the underlying fact is that Britain's underlying debt and deficit problems and British govt spending generally are increasing (and notwithstanding the Coalition's govt's efforts and best intentions) ... are still set to increase further going forward.
The position where Britain's strategic, macro-economic direction is largely controlled by the triangle of despair ... goondog billionaires ... banks and spivs, gamblers and the ... 'vested self interests'... has to be addressed by funadmental constitutional, and strategic and other radical reforms.
Some may think there is growth ... and there is strong growth ... but it is within what is the super privileged 'triangle of despair' for the real UK economy.
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By current measures a fall in GDP. The economy is therefore slowing, albeit evidence, at present, of some growth. Let us pronounce judgement on this coalition's policies a year from now. For the sake of this great nation, I hope that I am wrong, but I forecast minimal growth in 2011, and significant social unrest to boot. Politics aside, if you are a 39-year-old wallpaper heir, with no idea about the severity of the impact of the downward multiplier, and the social upheaval you are encouraging in what was, once, a tolerant society, with your chosen policies, then the future is going to be held squarely at your door in 12 months' time. I, thankfully, did not vote for this. Be warned, England, the worst is yet to come. If you remove demand from the economy, the economy is dead.
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73. At 5:02pm on 26 Oct 2010, Kit Green wrote:
When assessing any news and opinion provider for bias you must remember that the first task is to be completely honest about about your own bias.
If you believe that The Guardian (or Telegraph) is not biased because it fits your view of the world then you need a little philosophical thought before continuing. To define bias there must be an agreement on where the middle ground is to be found. This is very difficult if you do not agree where this middle ground lies as that defines your bias as well as those you accuse of bias.
The only way around this is to accept (even insist on) a pluralist press and ensure you are well read.
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I completely agree, and i appreciate the difficulties in presenting material in an impartial way. It is for this reason that I try to attain material from both centre-left and centre-right wing sources (to get both sides of the story as it were). Whilst doing this I noticed that the way the BBC presents it's material in terms of content, structure and language bears more similarity to the left wing material which I read.
Turning to your last point, from my experience in dealing with the general British public i'm not confident that a majority of the population is well read and this makes any bias in the BBC (or other major broadcasters for that matter) all the more concerning. I just feel more could be done by the BBC to ensure objectivity is maintained.
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Given that policy takes 12 to 18 months to work its magic perhaps the plaudits belong to Brown / Darling for softening the worst of the recession with a stimulus.
All downhill from here. One piece of news that will please Nautonier ( :) ) is that the private sector is very good at creating jobs for foreign workers primarily because the under invested and under R&D'd private sector struggles to grow the high skill end of the economy.
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94. At 8:03pm on 26 Oct 2010, nautonier wrote:
The differences between the UK's political parties in terms of policy are very small indeed and are infact dressed up and pumped up by the media into a huge non-existent difference of positions.
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In some ways this is true. The main parties operate within a media permited narrow bandwidth.
On the other hand though. Some differences in policy however small will have a huge impact on hundreds and thousands of low income earners. The coalitions cuts which target the lowest earners and most vunerable in society disproportianately, shows how. Being say £30 a a month worse off for example may be the difference between survival and devistation for many. To oppose this is definately not a non-existant position. Especially if its you on the breadline.
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Osborne seems to want to tell us we were bankrupt one day and he saved us all with his (totally politically driven) £6bn of initial cuts back in June. Then he says oh dont be silly we're not bankrupt and these cuts of ours wont be so bad, look they're pretty much like what labour would have done (even though he then complains the opposition Labour won't tell him what they would have done - welcome to Govt). All total poppy cock. As pointed out in other posts pretty much all the economy short term stats are a reaction to Labour's attempts to push the economy back into growth, including the continued high level of borrowing requirement (£16bn in September). Next year sometime we will see impact of Torylition policies - who knows, but personally not very confident. Making lots of people unemployed and reducing benefits while hoping for some magical private sector safety net miracle doesn't seem very likely to me over the next couple of years. Emminent economists seems a bit of a misnomer these days, but if we give the nobel prizewinner a short honeymoon he seems to think Govt policy is very much not the way to go.
QE has contributed a lot to the expansion in GDP over last year and we will need to pay for that sometime. Inflation already looking a wee bit scary and interest rates must start to go up sometime soon. Successive 4 or 5 year governments have pushed up debt levels as a nation since 1992 (apart from Blair mark 1, and in %age terms the worst offender was Clarke/Major - check the Treasury stats, easy to get) - its time to somehow try and stabilise this but regardless of politics I dont envy anyone the job, Tory or Labour.
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The blog we are commenting on is (volens nolens)being an educational tool, as well as a piece of social engineering. Given the experience of last years it might be the best policy for now to underestimate the growth. It will keep some credit cards deep in the pocket and it might help to keep some people under a decent roof over their head as well. The left of centre and right of centre perspective is “one interest, different sensitivity”. In a country with real wealth distribution far enough from the statistical one (the latter being as it is) knowing these two opinions hardly seems enough to imagine where the real vector of social tensions might be pointing.
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So it turns out that the previous Government's sensible efforts to stimulate the economy actually worked. It didn't stall and it is growing. Still, the economic illiterates who opposed such stimulation and comprise the current Government can be relied upon to stifle this recovery and plunge us back into recession.
We weren't of course on the verge of bankruptcy, although with the voodoo economics of Mr Osborne ("we'll take 80 billion out of the economy but the private sector will miraculously take up the slack") who knows that we might yet be.
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"By that measure, fiscal policy has tightened more in the past 12 months than in any single year of the government's plan. But somehow, the economy has managed to grow by 2.8%, roughly its long-term trend rate."
Somehow... it is most perplexing isn't it?
It's almost as if the economy benefits by having fewer people employed by the government (their salaries paid through taxes) and more people employed in the private sector (thus generating wealth and paying taxes).
But I'm sure our Stephanie will figure it out one day!
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98. At 8:30pm on 26 Oct 2010, lefty10 wrote:
94. At 8:03pm on 26 Oct 2010, nautonier wrote:
The differences between the UK's political parties in terms of policy are very small indeed and are infact dressed up and pumped up by the media into a huge non-existent difference of positions.
--------------------------
'Some differences in policy however small will have a huge impact on hundreds and thousands of low income earners.'
........................
That's also the difference between 'macro-economics' and 'micro-economics', 'domestic' and 'globalised' and 'rights and privileges' for the 'rich and poor'.
This is more than a party political or economic problem ... it is an ongoing constitutional crisis.
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97 R Dingle
We are all immigrants. 12,000 BC onwards.
All EU citizens have the right to live here as we do in the EU.
The US is actively encouraging any immigrants who fit their idea of where the economy is going or needs to go. The UK needs smart people.
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104. At 9:40pm on 26 Oct 2010, Not Buzz Windrip wrote:
97 R Dingle
We are all immigrants. 12,000 BC onwards.
Indeed. I am.
It is a continually beneficial and enriching process.
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We may all be immigrants but I really cant see why we need so many new immigrants to man the tills,etc when so many others are lounging on the unemployment register.Either we address the problem of too many scrounging or we limit the number of newer,unskilled immigrants to achieve a balance politically as well as economically.
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Surely this is "Labours Legacy"?
After all, the LIECONS have said everything else was when it has suited them...and they have also said that its too soon to tell their policies effects - they have not even decided what some of them are, or at least, not told us yet!
so this must be no different...
Cant have it all ways, LIECONS... its one way or the other...
Which is it?
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To suggest thst the BBC is biased is untrue.
However, imagine the conclusions of Stephanie's blog and listeners comments if we had a Lab-Lib coalition instead of Con-Lib?
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S&P give the nod to the nations credit rating.... AAA again.
So - why does anyone care what these rating agencies say when they were rating all the UK protagonists in the great (recent) crash as AAA - and seemingly are more keen to attend 'smoozing' functions and sell their services to the very companies they rate than use the downgrade button...
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102. At 9.13 on 26 Oct 2010 Daniel Earwicker wrote
"By that measure, fiscal policy has tightened more in the past 12 months than in any single year of the government's plan. But somehow, the economy has managed to grow by 2.8%, roughly its long-term trend rate."
Somehow... it is most perplexing isn't it?
It's almost as if the economy benefits by having fewer people employed by the government (their salaries paid through taxes) and more people employed in the private sector (thus generating wealth and paying taxes).
But I'm sure our Stephanie will figure it out one day!
Eh have you not read anything commented on here the only thing perplexing is your statement the economic growth is entirely down to the previous Labour governments QE (quantitive easing) measures.
Also don't know if you're aware but the public sector cuts haven't actually started yet that's next year up to 500000 up until 2014. Probably the same again for private sector workers who depend on the business created through said public sector contracts finally public sector workers do also pay tax like the rest of us.
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We will contract when the Conservative cuts take full effect.This growth is the result of Brown bravely spending left right and centre in order to kick start the economy.Everyone forgets the huge debt is there for the good reason it helped shorten the recession and kept people in work.Brown's policies on spending meant that Britain has had less unemployment in the recession than France/Germany and the USA.Yet we voted him out,so now the pain will come
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You mentioned in your report tonight on the 10 o'clock News that VAT is to rise to 17.5% - should that not be 20% ?
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111. David
I agree - I don't think Gordon Brown was perfect (neither am I), but we would have been lost without the fiscal stimulus and protections for people losing their homes etc. Job Guarantee was another good thing, though it was a shame that it could not be implemented earlier.
I think that Brown did the best he could under the political circumstances prevailing. These circumstances will change with the cuts and give Labour space to be more radical - I fear though Labour will not take that opportunity, and continue to be mere 'deficit doves'.
Kind Regards
Charlie
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" You can see evidence of a stifled recovery everywhere these days. Everywhere, that is, except the official statistics.”
That may be true for the left wing media; desperate to look for bad news and to talk any signs of recovery down but these are statistics. Measurements. Analyisis; from independent sources, not from the treasury.
I guess bad news makes for better copy.
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The BBC headline at about 9am this morning when I looked was:
"UK GDP economy figures expected to show growth slowdown"
And the BBC news pages were littered with labour spin-masters talking down the economy and telling us that we were heading for a massive double-dip etc etc.
BBC headline an hour or so later when the truth was published was:
"UK recovery faster than expected"
I was very confused by this change of headline today, because I read the first one in the morning, then came back again a few hours later and saw the completely different "news". I thought perhaps I was going a bit bonkers, and that I had never read the first headline and it was just my imagination.
But then I read Guido's blog and he confirmed the change of headline by the BBC and helped me set my mind at rest that it wasn't just my imagination.
Was that first headline written by Mandy himself?
Sorry, but I don't take the BBC seriously when it comes to reporting "economic news", because most of the time it seems to be pretty much a verbatim script from the labour spin machine. I can't tell the difference between labour and the BBC anymore; they're one and the same as far as I'm concerned.
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People will only start to feel better and really start to believe when they know that there are Millions of New Jobs out there in the REAL Market Place, other it matters NOT whether the Economy is "said" to be growing at the current 0.08 per-cent, or 1000 pre-cent.
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#14 Stephanie - response to AGH46 Exports point.
We should compare like with like with these export and balance of trade statistics. The EU is a much more important export market to the UK than the US.
Either the reference is to the whole EU for UK exports, when as illustrated above the UK's exports to the EU are much superior to those to the US, or when you compare balance of payments numbers you should do so for those to the individual export markets cited.
UK exports to France and Germany combined are larger than to the US alone. From recollection, the balance of payments numbers between the UK and those two countries is very small deficit to France and a larger one to Germany. We are not alone in having a balance of payments deficit with Germany. France and Germany's economies are faring rather better than those of the PIIGS. Proportionately, the UK's exports to Germany are probably far higher than those to the US; we have a bigger stake in a smaller market to them.
The balance of payments issue is separate really to specific export totals to individual countries or global trading blocs like the EU. As it has been recorded on these blog pages that the UK's export performance has been relatively weak and that to improve the chances of continued growth in the economy exports need to be substantially improved.
The Standard and Poors rating and bullish stock market, caused by better than expected growth numbers this last quarter will make UK exports more expensive and increase the chance of the UK's budget deficit worsening; be this to the US or the EU or any of the EU's individual member states.
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GDP is just another number which can be used to prove/disprove any partisan viewpoint you like . The figure that is most revealing is that of the Prime Minister virtually begging the CBI to create jobs ... knowing that Boy George is going to sink us all with his simplistic schemes. At the same time the retail sales were reported to have dropped once again!
The public have bought the single from Dave C , Sneaky Nick and Rich and found that it doesn't have a 'B' side.
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The fact is that we have to radically change the makeup of our economy whilst maintaining reasonable growth. Talk by Labour of 'recovery' back to their feckless spend-on-credit ways is just rubbish. The only way back is to take some pain, dig deep and work our way out of it - it worked for 18 million Chinese and it will work for us. While we've got growth, lets be happy, stop moaning and get on with the job.
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Could anyone tell me if the GDP value reflects any fall in the pound against other major currencies, ie would a GDP of x billion this year represent the same as x billion two years ago?
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Is the effect of inflation taken out of that 3.2% growth? If not then our economy hasn't grown at all.
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And yet inflation, which never works evenly, might contribute nicely to re-profiling....You have to "anchor" some prices though. Arguably "oil shock" was quite a desirable inflationary event to get rid of debt overhang from post WWII growth.
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#102
"It's almost as if the economy benefits by having fewer people employed by the government (their salaries paid through taxes) and more people employed in the private sector (thus generating wealth and paying taxes)."
I think you are a bit confused. The private sector does indeed generate MONEY that pays taxes. However roads, health, education and other things provided by the state also contribute to the wealth of this country. Without them the private sector would not be able to raise the spare cash.
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97. At 8:29pm on 26 Oct 2010, Richard Dingle wrote:
Given that policy takes 12 to 18 months to work its magic perhaps the plaudits belong to Brown / Darling for softening the worst of the recession with a stimulus.
All downhill from here. One piece of news that will please Nautonier ( :) ) is that the private sector is very good at creating jobs for foreign workers primarily because the under invested and under R&D'd private sector struggles to grow the high skill end of the economy.
.......................
You sounding more and more like that Super Goon ... Vince Cable ... 'Vince Incapable' ... incapable of creating a single British job for a single British worker.
The current 'triangle of despair' created by and as sucking in immigrants and 'bad imports' creates globalised jobs mainly for the 'triangle of despair' (and not our woeful domestic productive economy) ... other than taking £300 - £400 billion a year off British workers and students and their families (by massive stealing of our jobs, wages, housing, pensions, health care, schooling, university places etc) perhaps you can provide examples of immigrants creating jobs for British workers ... because Vince Incapable said yesterday that he has no money to do this and he thinks import and export tariffs as used by most of our global competitors, are a bad idea.
There are 500 million reasons why you are, once more, 'wrong' Herr Dingle ... and they all live in the EU.
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growth, growth, growth, is output growth the holy grail of life?
If so then we can only fail, it's a question of when not if. We have a finite world with finite resources, perpetual growth is not possible, or as logic argues, even desirable.
We have enslaved ourselves to output growth instead of concentrating on prosperity growth. Prosperity growth has much more emphasis on reduction of stress, more leisure time, more time to invest in nurturing and integrating our children to take their place in adult society.
Instead we have consistently used efficiency and know-how advances to fuel consumption of stuff and inflate asset price bubbles. This is a vicious circle creating envy and anxiety in those that are left out and excluded by unaffordable prices as the successful and lucky run ever faster to stay on the merry go round spinning out of control towards breakdown.
There is a simpler way, namely place sustainability at the core of all our planning and thinking, personally, locally, and nationally. Imagine surplus invested in prosperity not growth. Technological advances used to give workers more time off for the same pay.
The first governments and nations to embrace, adapt and manage the inevitable end of the output growth era of human society will benefit from such a rush of applicants to immigrate to such a society where life is about improving your prosperity not chasing some never-ending and never satiated greed for worthless bank account enlargement.
Our surplus should be invested in improved prosperity and quality of life not growing the output pie which achieves nothing but anxiety, stress, and ultimately failure.
This depression caused by the inevitable end of plentiful cheap energy and the offshoots of it needs to be acted upon to make a real change in our outlook of what is desirable for a life well lived.
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121. At 07:08am on 27 Oct 2010, errrrrrrrrrm wrote:
'Is the effect of inflation taken out of that 3.2% growth? If not then our economy hasn't grown at all.'
What an excellent question.
According to the ONS, the national accounts seem to work on current market prices, see link:
http://www.statistics.gov.uk/pdfdir/oie0810.pdf
I can only assume that inflation is not taken into account.
And
RPI excluding houses is currently around 5.0%.
RPI including houses is currently around 4.7%
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Here is a housing benefit question? (from an economic point of view)
Who gets the housing benefit? Answer - The Landlords. (Not the tenants as the more rabid press announces every day.)
So cutting the rents will impact (at least to some extent) on the landlords. This flows directly through to buy-to-let mortgages. Which in turn flows through to house prices.
The national effect may be that rents/house prices in very expensive places may fall whilst in outlying places that currently have lower rents/house prices rents may rise to the maximum housing benefit level. This on balance will push up rents for the poor and so increase the overall cost of housing benefit to the state!!!!
[What will push down rents and house prices in buy-to-let is the 10% year on year reduction of benefit payable to landlords (NB not tenants)].
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124 nautonier
Perhaps the locals do not want the jobs that the EU immigrants take. If so you can hardly blame the EU immigrants. Perhaps there is a problem with the willingness to undertake the available work by some locals. The alternative is the locals could become self employed or move or improve their skills and knowhow. If they do not want to do any of this then they will remain unemployed. There is no automatic right to work.
Work has fled the UK - wherever possible - because the locals - by and large - do not want to buy stuff made here. The work has gone to where people are prepared to do it at a price that allows a sale to be made. Whose fault do you think that is.
The situation has been made worse by a significant number of UK locals believing that above all money should be shoved into a housing bubble to their own benefit - maybe. The housing bubble has in turn fed through and raised rents so that one of the principle costs of funding the unemployed, housing benefit, has run x4 in a decade. BTL Buy to Let, which feeds on the housing bubble outcomes has in turn been promoted by banks. BTL was specifically developed to replace the fall off in FTBs, First Time Buyers. Therefore by definition BTL was judged de facto to be big enough to influence the housing market. The result is the housing benefit bulge has to be reigned in which by definition will affect the housing market.
Dumb is forever.
Everywhere I look there are sullen and angry people.
Dumb is forever.
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One of the more cringeworthy moments of the Tory conference was when Cameron spoke about the little girl who had sent her £1 from the Tooth Fairy to the Treasury to help the country pay it's debt and make more jobs.
It must have been evidence to them that their Economic Policy was reaching it's target audience.
It is also a fitting allegory to the situation, the Tooth Fairy as Business Confidence, (the Fairy of Confidence ref. Paul Kaufmann) and the Little Girl as the Private Sector appearing as saviour and giving to the Treasury out of the goodness of it's heart.
I would like to think that they sent it back to her but I doubt it somehow.
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126 dempster
Inflation is higher than target because there has been an effective currency devaluation, imports are up and the food basics have risen due to demand elsewhere and crop problems elsewhere. Not much to do with what is produced here.
Inflation tends to work its way through. Your housing figure is also likely to head downwards.
Regards Not Buzz
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121. At 07:08am on 27 Oct 2010, errrrrrrrrrm wrote:
‘Is the effect of inflation taken out of that 3.2% growth?’
In my view that should be given the ‘question of the week award’.
Having been to the ONS website the latest figures for RPI all items are
September 2009 index figure 215.3
September 2010 index figure 225.3
Difference is + 4.64% (inflation)
If GDP is measured @ current market prices in £’s (which it appears to be), that would give a net contraction of 1.4%. Presumably we made 1.4% less cars, drunk 1.4% less beers etc.
If on the other hand GDP is measured in units of ‘things’, then we made 3.2% more cars and drunk 3.2% more beer etc.
Does anyone know the answer?
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re #121
Good question. I tried to get a discussion going on that a long time ago. Unfortunately wild economic theories tend to be more popular than down to earth, real-life economics.
My two brain cells suggest that 3.2% growth is not cancelled or negated by 3.5 or something% inflation but that a proportion of the growth is lost. What proportion?
Money supply and value would probably come into the equation as would raw materials, commodities, etc. I reckon that that is one for an economics PhD who is good at maths and has a nifty computer and programmes to match. Not me.
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131. At 09:44am on 27 Oct 2010, Dempster wrote:
Does anyone know the answer?
---------------------------------------
I think we have been told in the past that these GDP figures are inflation adjusted.
However they are not referred to as such as that would sow the seeds of inflation awareness in the population.
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#131 and others
I think that GDP figures are real not nominal.
See http://www.statistics.gov.uk/cci/nugget.asp?id=192
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121 etc. see my post 43 earlier.
I believe GDP uses CPI inflation but I have asked anyone if they know. If it is as I suspect then the problem is the use of CPI. This is a totally unrealistic and unrepresnetative measure of inflation for either individuals or businesses. It is the lowest measure possible though and this serves the purpose of the "illusion" of growth (not to be confused with prosperity).
An earlier point on QE having artificially added 7% to growth figures is a very good one too. Again smoke and mirrors.
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This comment was removed because the moderators found it broke the House Rules.
87. At 6:30pm on 26 Oct 2010, Mike
Or it might be looked at this way;
http://www.newdeal20.org/2010/10/26/what-does-it-mean-to-live-beyond-our-means-24435/
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#136
Apologies if my post did indeed break the house rules.
What I was saying was that I felt that Stephanie could have also mentioned the Labour Market statistics for October 2010 on the ONS website. These statistics clearly show the increase in private sector jobs this year.
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135 sage of cromerarrh
If your measuring fudge there will always be fudge in the answer. Its just a comparison tool.
Surely net effect QE > 3rd party > HMG > Public Spending hole plug
The growth is just supply chain pick up from what I can see. We seem to be a in pseudo steady state.
Prices are continuing to rise due to lower volumes in the supply chain and the realisation you cannot buy volume via discounting. Again from what I can see. We are busy and our suppliers are busy. If you want it you have got to buy it. Note - want is not always need.
There is still money about. That will not help businesses that have got the wrong model or sector.
Anything that relied on direct or indirect public money for their profit will be in trouble I suspect. There are other implications for that category as the public sector is keen on paperwork and if your set up with that overhead then moving to a lower overhead is difficult. The paperwork demanded by the public sector is quite ridiculous on occasion and I suggest not bearable as a cost in some parts of the private sector.
You cannot switch off legions of workers and expect them to force fit into other jobs or to expect employers to create jobs that suit spare workers, the jobs are created to suit the business not the potential employee. Incidentally - There are an number of towns that have adopted business expansion plans and grown rapidly. What is notable is that some at least still believe they have the same group of unemployed people that they started with. The new jobs created have been taken by people moving into the area who have the turn key skills.
It is this embedded unemployment which is the really difficult problem. growth in jobs - whatever that means - is not likely to easily help many long term unemployed into employment.
I guess what I am saying is growth only has an impact depending where you stand in the economy, which as an individual is all that matters. Therefore the issue is to make sure you move your position asap if at all possible if you are affected. Sadly many just do not get this and keep hoping for a return to a pre-existing state and in most cases it is just not going to happen. Not that I am saying mobility is easy. Despite what Mr Clegg appears to think.
So I see growth as a measurement as a bit irrelevant even when it is fudgey. It is simply whether you are affected or not. If some areas are in demand and therefore growing and the situation overall is static then other areas are in decline, and that is before the big public sector contraction occurs. The biggest shouts are coming from those in decline or contraction.
Regards
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139 7oaks
What is the quality of the jobs. Unemployment should be 4 million by some models but is under 3 million. It is probably due to individuals in the private sector downtrading jobs and new part time working and some moving to tax credit based survival where they did not need it before. At best I could only describe that situation as a limited success, a pretty big HMG strategy failure, poor economic management, resultant poor opportunity to create good quality employment. Simple as. I could probably dig out the data to support the concept that in real terms incomes have dropped over time simply because the jobs available have moved to lower skill and income levels. It is dismal simply because moving to a low wage economy leaves you vulnerable to competition from other low wage competitors. That is the whole story of the UK for decades.
Business creates the jobs but government influences the environment and relentless focus on speculation activities such as UK housing market manipulation has just made things much much worse. Please dont anybody say this lot are any better, that is not proven yet. I have not forgotten Cameron was Lamonts aide on Black Wednesday. Or that it needed a cabbie to tell Lamont he had lost before Lamont realised it. According to Lamont.
Now sorry but I have got to go. Regards
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80. At 6:06pm on 26 Oct 2010, arden_forester wrote:
Do you think it possible for you to tell us where the deficit money is going? We hear every day about the billions we owe as a nation, but who are we paying it back to? I have an idea it's to a computer in South Shields, but I may be wrong.
================================
The deficit is the surplus of government spending over income from taxes etc. so it goes to the people who work for or supply the government. Of course whether a particular payment comes from income or borrowing cannot be determined!
The government issues 'gilt-edged' securities, whose ownership is shown on the chart here http://www.debtbombshell.com/bond-market.htm so the biggest owners are out pension funds and insurance policies.
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What I don't understand is this: The governement wants to make spending cuts but there is more talk about 'quantitative easing', which as I understand it means the government printing money and 'injecting' it into the economy. Why not use the printed money to pay for public services (ie no cuts)? Simple, eh? Am I the new Keynes?
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Journalists are ignoring cause and effect.
There is a time lag between economic policies turning into tangible results.
This growth was the result of the previous governments policies.
If we ignore this fact, we risk self delusion - not a good thing when staring at a depression
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#140
Not Buzz, I daresay that there is much in what you say. Many of these jobs may be only part time, and many may be filled with non UK born people (as the ONS describes them) which is depressing.
My point really was that the economy is expanding as both the statistics for real GDP and labour market demonstrate. Perhaps the reason that we are not all enthused is that the number of UK Born people in employment is falling. Is this because the UK born are over qualified to take these jobs or because we simply choose not to take such jobs as are available?
Govt does need to encourage an economy where jobs are created across the spectrum both in terms of quality and across all regions. Only time will tell whether the coalition have it right.
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135. At 10:14am on 27 Oct 2010, Sage_of_Cromerarrh
The GDP deflator uses a more complex and inclusive measure of inflation than either RPI or CPI. There is some useful background here.
http://www.hm-treasury.gov.uk/data_gdp_backgd.htm
(the published GDP figure is adjusted for prices in relation to this measure - that is, the published figure is inflation adjusted)
Whether it has any real relevence is a differnt matter.
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#142
Benedict49, I think that the term "printing money" is misleading. What the Bank of England is doing is injecting money into the economy by buying bonds from institutions and banks. It also is a weapon to control the risks of inflation falling below the target rate.
The increased buying of corporate bonds by the BoE creates a shortage which in turn enables corporates to borrow at lower rates.
Once the economy has no need of further boosting the BoE would be able to raise interest rates or withdraw the quantitative easing to try to avoid rising inflation or a combination of both.
I suppose QE is a temporary measure to boost an economy when interest rates are very low.
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@ Hughoctopus
"I can increase my toast consumption each morning my 400% if I wanted - it would still only be 4 slices of bread though"
This comment highlights exactly why some people who (frequently) comment on this blog should have their view taken with a pinch of salt.
The maths are wrong. Your sentence tacitly implies that going from 1 to 4 is an INCREASE of 400% - it's not.
You could say that if you used to eat 1 slice by moving to eating 4 you now eat 400% of the amount you used to eat but if you used to eat 1 and INCREASED this by 400% you would in fact be eating 5.
This may seem pedantic but when given statistics accuracy in interpretation is the difference between correctly formed opinions and gibberish.
Not everyone (or should that be anyone) who comments on this blog is a subject matter expert so don't to surprised if their opinions seem a little skewed.
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141. At 12:35pm on 27 Oct 2010, AnotherEngineer
That web site appears to totaly fail to live up to its name. Try this one
http://bilbo.economicoutlook.net/blog/?p=12022#more-12022
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147 marky_makry:
'Not everyone (or should that be anyone) who comments on this blog is a subject matter expert so don't to surprised if their opinions seem a little skewed.'
I quite agree. Only comment from suitably qualified and vetted such as those who led to this economic situation should be considered. Anybody else should just get on and pay their dues and not question anything. Expert is an interesting word. Phonetically it is 'ex', as in no long doing something, and spurt as in a prolonged drip. So we have a prolonged drip not doing anything now. Also known sometimes known as a consultant.
Remarkable how Mervin King has got so talkative and opinionated lately. particularly when absolutely nothing was said during the bubble.
Yup, roll on those expert comments.
Regards
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148. At 1:41pm on 27 Oct 2010, Squarepeg wrote:
'That web site appears to totaly fail to live up to its name. Try this one'
http://bilbo.economicoutlook.net/blog/?p=12022#more-12022
Interesting explanation, interesting diagrams, but where's debt and interest?
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"people might wonder whether the talk of bankruptcy had been ever so slightly overdone"
no doubt those living on the 15th floor of Ivory Tower in the Republicj of Westminster.
By those who suffered it, unlikely.
GC
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As a measure of "how quick is the recovery" the relevant starting point could be the trough, not the peak. By that measure we are ahead of the 1973 recession (thanks to its double-dip) but a in a similar position to other declines.
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Is it not amusing that the previous government gets the blame for the deficit, while the current government takes credit for the 2nd and 3rd quarter economic growth, which happened before Osborne took 80 billion out of the economy?
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148. At 1:41pm on 27 Oct 2010, Squarepeg wrote:
141. At 12:35pm on 27 Oct 2010, AnotherEngineer
That web site appears to totaly fail to live up to its name. Try this one
http://bilbo.economicoutlook.net/blog/?p=12022#more-12022
==========================
I posted that link to answer the question of who the National debt was owed to.
I have seen Billy's blog. In my opinion it is a load of nonsense e.g. money paid in tax does not finance government spending, designed to justify greater government spending, but I am sure there are others here who will disagree.
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54. At 4:12pm on 27 Oct 2010, AnotherEngineer wrote: "I have seen Billy's blog. In my opinion it is a load of nonsense"
Agreed - what a load of gobbledygook! A further quote from this BillyGoatblog: 'All of this is basic macroeconomic reasoning. Output and income growth is driven by aggregate demand. You can get as complicated as you like but that basic result remains. There are no other sources of national income' .................. oh, I thought we also had overseas investment income,savings income,investments etc.to name but 3 for starters?
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If it wasn't good news on GDP was it fair news?
The meaning of fair was discussed on a previous blog and considered to be relative.
What about wealth creation? What is the meaning of that?
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155. At 5:17pm on 27 Oct 2010, dontmakeawave
I'm afraid you're showing your ignorance of macroeconomics
Aggregate demand is made up of private consumption, Govt spending, private investment and (exports - imports) when measured by sources of income
The same measurement can be calculated by looking at household use of their income. i.e Private Consumption + Savings + Taxation.
Anything else prompt your gobbledygook conclusion ?
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128. At 09:33am on 27 Oct 2010, Not Buzz Windrip wrote:
124 nautonier
Perhaps the locals do not want the jobs that the EU immigrants take.
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A) Perhaps they do want the jobs that immigrants 'steal'?
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If so you can hardly blame the EU immigrants.
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A) Yes you can! 'They' know that they are stealing
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Perhaps there is a problem with the willingness to undertake the available work by some locals.
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A) Perhaps foreigners and UK employers prefer to employ foreigners because it undermines our English/British culture and communities and makes it easier to change Britain for themselves
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The alternative is the locals could become self employed or move or improve their skills and knowhow.
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A) One alternative is to give British jobs to British workers and treat them fairly and respect their own soverign and constitutional rights in their own country
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If they do not want to do any of this then they will remain unemployed.
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A) Many have no choice
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There is no automatic right to work.
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A) Legally you're right but morally ... there is a very strong case for the right to work in one's own country ... especially if the UK constitution is changed and the sovereign and constitutional rights of British people is properly recognised in their own country
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Work has fled the UK - wherever possible - because the locals - by and large - do not want to buy stuff made here.
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A) Wrong again... we're all conditioned with consumerism and media and brain washed into thinking we're second best ... by our own backtstabbing establishment and political class
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The work has gone to where people are prepared to do it at a price that allows a sale to be made. Whose fault do you think that is.
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A) Er ... yours probably ... just joking, of course - the work has gone to where there are dictatorships where people are lined up against walls and shot for e.g. wanting lunch breaks, TU membership etc with zero employee rights, child labour and bullying zero helath and other employment benefits ... I suppose you're happy with all of that?
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The situation has been made worse by a significant number of UK locals believing that above all money should be shoved into a housing bubble to their own benefit - maybe. The housing bubble has in turn fed through and raised rents so that one of the principle costs of funding the unemployed, housing benefit, has run x4 in a decade. BTL Buy to Let, which feeds on the housing bubble outcomes has in turn been promoted by banks. BTL was specifically developed to replace the fall off in FTBs, First Time Buyers. Therefore by definition BTL was judged de facto to be big enough to influence the housing market. The result is the housing benefit bulge has to be reigned in which by definition will affect the housing market.
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A) Some good points there ... but just who are the locals?
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Dumb is forever.
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A) ? Just keep trying
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Everywhere I look there are sullen and angry people.
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A) I wonder why?
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Dumb is forever.
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?
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124. At 08:11am on 27 Oct 2010, nautonier wrote:
97. At 8:29pm on 26 Oct 2010, Richard Dingle wrote:
There are 500 million reasons why you are, once more, 'wrong' Herr Dingle ... and they all live in the EU.
Almost as many reasons for joining the Euro and scrapping border controls.
Immigration is healthy and finds its own level.
Jobs taken by migrants are jobs not wanted by UK citizens who have a huge start given that they speak English and some have English qualifications.
The economic facts speak for themselves; a significant part of the increase in GDP is due to our migrant friends. The tax take exceeds benefits cost.
Keep up.
(Euro now 1.1388 to the £. Some demise, eh.)
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I really am getting a bit fed up with all this talk about the Banks refusing to lend. It was the ease with which they threw money at us in the past which made a significant contribution to the mess we are in now. Do we really want more of the same. I am sure that there are many out there with good ideas for a new business or to expand an existing one but need capital. In my days as a Bank Manager it was expected that the borrower would provide a chunk of the capital with the Bank providing the balance i.e. share the risk. It seems that nowadays people expect the Banks to provide it all and therefore take all the risk as was to an extent the case over the last decade. Sorry folks but those times are over. I for one hope they are never repeated .
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• 157. At 6:40pm on 27 Oct 2010, MetalGasket wrote:
Anything else prompt your gobbledygook conclusion ?
I actually said nonsense but it’s the same difference.
Here are a few more gems from Billy:
Terrorism is the use of coercive means aimed at civilian populations in an effort to achieve political, religious, or other aims. That is what the British government is engaged in at present.
Any coincident issuing of government debt (bonds) has nothing to do with “financing” the government spending – again this will be explained in a further blog.
Taxation works exactly in reverse. Private bank accounts are debited (and private reserves fall) and the government accounts are credited and their reserves rise. All this is accomplished by accounting entries only. The taxation does not go anywhere! It is not stored anywhere and certainly does not “finance” the spending.
The non-government sector cannot pay its taxes until the government has spent!
It is a good practice to think of taxes as just draining liquidity from the non-government sector reflecting the Government’s desire for that sector to have less spending capacity.
The important conclusion is that the Federal government is not financially constrained and can spend as much as it chooses up to the limit of what is offered for sale. There is not inevitability that this spending will be inflationary and it does not necessarily require any increase in government debt.
In other words, government spends simply by crediting a private sector bank account at the central bank. Operationally, this process is independent of any prior revenue, including taxing and borrowing. Nor does the account crediting in any way reduce or otherwise diminish any government asset or government’s ability to further spend.
This is just a small sample from less than two pages.
This makes those sites saying that the banks should keep all the deposits look sensible by comparison.
In fact I wonder whether Billy is an economist at all. Perhaps he is a psychologist having a contest with his colleagues to see who can get the most ridiculous ideas accepted and disseminated.
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159. At 7:47pm on 27 Oct 2010, Richard Dingle wrote:
124. At 08:11am on 27 Oct 2010, nautonier wrote:
97. At 8:29pm on 26 Oct 2010, Richard Dingle wrote:
There are 500 million reasons why you are, once more, 'wrong' Herr Dingle ... and they all live in the EU.
Almost as many reasons for joining the Euro and scrapping border controls.
Immigration is healthy and finds its own level.
Jobs taken by migrants are jobs not wanted by UK citizens who have a huge start given that they speak English and some have English qualifications.
The economic facts speak for themselves; a significant part of the increase in GDP is due to our migrant friends. The tax take exceeds benefits cost.
Keep up.
(Euro now 1.1388 to the £. Some demise, eh.)
.........................
Most UK citizens have accepted the idea of EU migrants ... it is all the bleating by e.g. Vince Incapable about bringing in more and more non-EU migrants that is causing most of the anxiety for many British people.
Apart from certain ethnic groups ... most continentals do not wish to migrate to the UK ... they're quite happy with their sun, saurkraut and/or sangria. Overall, it's the non EU migrants that are the main 'problem'.
Mass UK immigration is not healthy for British people because our politicians and education systems have failed most British people in terms of e.g. their/our language skills ... I suppose you think that is the fault of the British under-privileged, unemployed, poor, vulnerable in Britain for not being fluent in e.g. German and Polish otherwise would millions of Brits with impressive language skills be welcomed in e.g. Germany and Poland ... I suppose it just serves them unemployed Brits right for being fat, idle, welfare dependent mono-linguistic shirkers, I guess, from a German and Polish point of view?
I am very much in favour of the UK integrating with the EU but only if the UK is paid full compensation for its citizens being at an acute disadvantage in terms of their general language skills and the rest of Europe being made as open to British workers as Britain is to other EU citizens ... this means Britian getting EU subsidies on the English language issue ... just like French farmers get EU budget handouts for agriculture.
I've said repeatedly, the problems with the EU and Europe will not emerge over-night but the cracks and fissures are there and two and three tier Europe has already emerged with differential growth and debts and deficits and a power mad European bureacratic/dictatorship forming in Brussels at the nub of the EU.
There is no evidence that the tax take exceeds 'immigrant costs' from anywhere ... there are no reliable figures anywhere to support this speculative statement ... no more than anyone can prove me wrong when I say that mass UK immigration over the last 13 years is costing the UK taxpayer/worker ... hundreds of billions of pounds a year including the cost of the UK population going to 70 million in the coming years. No other country is under such a level of population forecast increase and demographic change.
Just watch the Euro/Euro land unravel when the interest rates start to increase at some point in the near future ... how long do you think the lowest interest rates levels in modern history can last ... what do do you think will happen to those countries with high debts and deficits when the interest rates, at some point, start to rise.
The real problem with Europe is that the Coalition govt has no real policy on it ... the Tories went round and round in circles on the subject for 15 years and nearly destroyed themselves in the process ... because they did not start from the right place ... an initial discussion on changes/legislation on the British constitution and sovereign British rights and privileges for all UK citizens ... if and when that is done ... the way forward on Europe for the UK/England /Wales, Scotland, NI will becoame clear.
Britain is still in its 'EU straight jacket' but is quite capable of asserting itself against the tsunami of bureacracy eminating from Bruseels. The EU bureacrats are now 'holding the straw ready for the British camels back'.
The UK back-lash is coming, just a little too slowly ... once the UK Coalition govt figure out the political power is sorting this out ... things might change substantially.
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Hallo there,AnotherEngineer @161.
The idea is called "Chartalism" and came into being around the Great Depression. Here is a link: http://www.ucm.es/info/ec/ecocri/cas/Febrero.pdf
(although it might be disproved by the mod-s as it is pdf.) where they deal with the concept. The leading thought behind it is probably to rein in the "FIRE" sector... which is the only meaningful competitor of the state on the field of money creation and income redistribution.
PS I remember somebody saying that he holds his brain cells in two brains, or at least that's what I've managed to understand from what was stated. Well, I'm loosing mine for Brittain.
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159. At 7:47pm on 27 Oct 2010, Richard Dingle wrote:
Immigration is healthy and finds its own level.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Yeah,the maximum physically possible regardless of the cost(not just financial!) to the "host" nation:
http://www.guardian.co.uk/world/2010/oct/25/armed-eu-guards-greece-turkey
Ever heard of this UN genocide thingy Dingle?
"Article 2
In the present Convention, genocide means any of the following acts committed with intent to destroy, in whole or in part, a national, ethnical, racial or religious group, as such:
* (a) Killing members of the group;
* (b) Causing serious bodily or mental harm to members of the group;
* (c) Deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part;
* (d) Imposing measures intended to prevent births within the group;
* (e) Forcibly transferring children of the group to another group."
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160. At 8:14pm on 27 Oct 2010, pdavvers wrote:
I really am getting a bit fed up with all this talk about the Banks refusing to lend.
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Damned if they do, damned if they don't. People (posters here) get huffy if they take risks and lose money; when they play it safe and refuse to lend to higher risk operations, people demand Government controls to make them lend.
Ho hum.
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133. At 10:04am on 27 Oct 2010, Kit Green wrote:
131. At 09:44am on 27 Oct 2010, Dempster wrote:
Does anyone know the answer?
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I think we have been told in the past that these GDP figures are inflation adjusted.
However they are not referred to as such as that would sow the seeds of inflation awareness in the population.
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Er, inflation figures are announced monthly usually with quite a bit of publicity and have been for some time.
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Richard Dingle,
"Jobs taken by migrants are jobs not wanted by UK citizens who have a huge start given that they speak English and some have English qualifications."
I'm not sure that you are right here. I will give 2 instances were you certainly are not:
2 accquaintances of mine own fairly large strawberry operations here in the South West. Both rely upon supposedly Eastern European students from organisations attached to agricultural 'colleges'. These 'students' are lodged in what can only be described as very basic accommodation and are paid an allowence (well below minimum wage). Both 'farmers' admitt that should they have to employ locals on even minimum wage, they could not make a profit upon the prices that they achieve from the supermarkets.
I can take you to new buy-to-let developments were the majority of 2 bedroom flats are let to Lithuanians and Poles. In most there are 8 residents as 'hot-bedding' is a normal practice. Now is that a standard of living that you believe that locals should aspire to? Now these imigrants are following a well defined path - the same things happened with West Indians, and Asians before them.
I really believe that both you and Not Buzz Windrip are taking a very short sighted view on this issue.
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162. At 8:43pm on 27 Oct 2010, nautonier wrote:
A lot
But he's got a point.
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re #154
Thanks to someone for the earlier link to it. I haven't had a chance to carefully (try to) read the Blaggers Blog but seem to recall from the recent past that it has a certain amount of notoriety. Now I know why the acronym dictionary I looked at chose to ignore Modern Monetary Theory! My quick glance was enough to lead me in the direction of your rather firm opinion. Anything that cannot be expressed simply must have serious questions asked of it. Have we so quickly forgotten the lessons of New Labour spin?
There are plenty of theories out there. It is easy to let them scramble one's brain and it could be that is what is divorcing Charles and a few others from reality. The first economic textbook that I had to use kept the student anchored in reality. Can't remember the title for sure - may have been a Spicer & Pegler publication - probably simply entitled 'Economics'.
We are where we are. The Government here is not about to sweep away, wholesale, our way of doing things. And right now around the world, I can't think of any other country wanting to do so.
We have to mend, patch up, tweak and fine tune the way things operate now in practise - not theory. The patient is in a fragile state. It's not a good time to ask him to turn somersaults and handstands.
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167. At 9:47pm on 27 Oct 2010, foredeckdave wrote:
Richard Dingle,
"Jobs taken by migrants are jobs not wanted by UK citizens who have a huge start given that they speak English and some have English qualifications."
I'm not sure that you are right here. I will give 2 instances were you certainly are not:
.....................
Hiya FDD - it was my quote I think and not Herr Dingle's but the problem with super cheap strawberries is due to UK import policies and supermarket power on sucking in foreign imports when a fairly small % import tariff on foreign strawberries ... would solve our UK strawberry farm problems.
British people do not pick on strawberry farms because they don't have a reserve currency in which to exchange their paltry wages and send money overseas as benefitting from massive exchange rate differentials ... that is why the exploited immigrants are here ... no British worker in their 'host country' can compete with that kind of racket/exploitation on near zero accommodation costs and tax dodging.
These kind of problems are complex ... that is why our politicians are useless at solving them as requiring ability and competency.
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I see nobody is bothered by the way that the housing benefit 'crisis' is being manipulated - then see (#127)
Given the critical significance of house prices/secured loans and CDO's I would have hoped for at least some interest!!!
Further nobody seems to be bothered by the collapse of 300 years of financial certainties either. That is that savers get less than base rate and borrowers pay more - this would imply a base rate today of 3.5% to 4%.
Yet the uncontrolled housing bubble caused the banking collapse and without doubt will be with us as even Mervyn King notes for (at least!) a decade (i.e. long after he is drawing his very hansom and generous pension).
A few decimal points on GDP is irrelevant against the cataclysm of the collapse of 300 years of banking certainty, but we are all diverted, excessively so!
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168. At 9:49pm on 27 Oct 2010, Dempster wrote:
162. At 8:43pm on 27 Oct 2010, nautonier wrote:
A lot
But he's got a point.
LOL. Very dry. He is passionate about it too. Got to admire that. I just really believe he is wrong.
167. At 9:47pm on 27 Oct 2010, foredeckdave wrote:
Richard Dingle
I'm not sure that you are right here. I will give 2 instances were you certainly are not:
I feel that you are making the mistake of arguing from a small set of narrow instances and coming up with a general conclusion. Need more examples, carefully chosen. Arguing from the particular to the general is always dangerous. Try looking at it in the round.
Both examples can be found all over the world and go hand in hand with migrations.
Migrations are usually driven by desire for a better life and migrants are willing to put up with a lot to achieve it.
I still maintain that without migrants bolstering the work force the UK economy would be in a far worse state.
"Poles, Czech and others who moved here after the EU expanded in 2004 have paid far more in taxes than they received in benefits, academics at University College London found. Professor Christian Dustmann said the immigrants made a "substantial net contribution to the UK fiscal system". In 2008-09, arrivals from new EU members the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia paid 37 per cent more in taxes than they took in welfare payments and from public services, he said." (The Independent)
No doubt Nautonier will entertain us with an interesting conspiracy theory to debunk the above.
Mis-government, deliberate, by a class system based on privilege, is a far bigger problem for the UK. The UK's problems are self-inflicted. An example is housing. No coherent policy for new builds, no adequate legislative framework for letting, a tacit acceptance that property inflation is a good thing.
And now the ConDems are going to try their hand at 'social cleansing'.
Sad that some people will pick on migrants.
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170. At 10:10pm on 27 Oct 2010, nautonier wrote:
... no British worker in their 'host country' can compete with that kind of racket/exploitation on near zero accommodation costs and tax dodging.
These workers are EU citizens and have a right / choice to work here. Incidentally I have no problems with illegal workers being rounded up and sent home so don't use that group to muddy the argument.
If you have your wish and the UK leaves the EU the following will happen, amongst other even worse scenarios.
1. English workers on the bottom rung will be / may be employed picking 'strawberrys' at the NMW.
2. Highly skilled British engineers / designers will lose their very highly paid jobs in the EU.
Does'nt seem like a smart move that one.
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#170 nautonier,
Thanks for the quote correction and apologies to Richard.
I can understand Richard's thoughts and in theory they have validity. The real problem here is, I believe, one of management ot the lack thereof.
I am also getting tired of the continual accusations that British workers are both lazy and under-educated in relation to their European counterparts. The major part of UK industry and commerce have a lot to answer for about the supposed state of the British worforce. We continually hear the captains of industry giving the "our people are our greatest assets" chin-music when their actions give a lie to their statements.
Comparatively, UK businesses lag behind their Westrn European counterparts in their commitment to training and development and use far higher levels of contract and part-time labour. They have made full use of the most liberal employment laws in the EU. Yet, again comparatively, the perform less well in terms of productivity and profitability.
Some of this is a reflection of the poor training of management itself.
Too often we hear that the young are feckless and don't wish to work. If you look at the majority of low wage/skill jobs that they are offered, why should they commit themselves to firms who will be only too willing to dispose of them.
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174. At 11:27pm on 27 Oct 2010, foredeckdave wrote:
#170 nautonier,
Comparatively, UK businesses lag behind their Westrn European counterparts in their commitment to training and development and use far higher levels of contract and part-time labour. They have made full use of the most liberal employment laws in the EU. Yet, again comparatively, the perform less well in terms of productivity and profitability.
Yes, I agree. It is management in this country that has a calibre deficit rather than British workers who in my experience are definitely not lazy. After all, German and Japanese managers, and their are many, in the UK have no problem with British workers, quite the opposite.
Another example in the long line of Lions being led by donkeys. Goes back to the 'class' system which we really struggle to get rid of. THe 'class system' argument is real and will continue until we do something about it and close down the 'incubators'.
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Which ever party is in power, the nonsense they come out with would be the same. Granted, the chancellor (whomever he or she may be) must never talk down the economy - look what happened when AD said, right at the beginning of the recession, that this crisis was on a par with the Great Depression.
Nevertheless, is the wager that the coalition have made any different to that of the banks that got us into this mess. The solution to our financial deficit relies on a short term gamble that aggregate demand will not be unduly diminished by the reduction in public sector spending. Assuming we survive and get through this, the private sector must be ready, willing, and able to effect the required long term realignmnet of the economy towards private sector exports.
If the short term gamble fails, and we have a second dip recession, one can kiss goodbye to any prospect of a realignment of the economy for the foreseeable future. Personally, I think the odds are stacked against the coalition - but who knows, they may get lucky and throw a double-six - the alternative is much too scary to contemplate.
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161. At 8:30pm on 27 Oct 2010, AnotherEngineer wrote:
Here are a few more gems from Billy:
I'm glad you're reading some sensible stuff at last.
Keep it up and you might learn something if you can get over your xenephobic tendencies
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172. At 10:57pm on 27 Oct 2010, Richard Dingle wrote:
168. At 9:49pm on 27 Oct 2010, Dempster wrote:
162. At 8:43pm on 27 Oct 2010, nautonier wrote:
I still maintain that without migrants bolstering the work force the UK economy would be in a far worse state.
"Poles, Czech and others who moved here after the EU expanded in 2004 have paid far more in taxes than they received in benefits, academics at University College London found. Professor Christian Dustmann said the immigrants made a "substantial net contribution to the UK fiscal system". In 2008-09, arrivals from new EU members the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia paid 37 per cent more in taxes than they took in welfare payments and from public services, he said." (The Independent)
...................
Ha ha ha .., very funny ... but funny it ceratinly is isn't too many low paid Britains displaced by these foreign job and infrastructure cheats.
If you believe the Independent on any of their mysterious and imaginitive immigration estimate figures ... you perhaps you could try laying off the 'sauerkraut' for a while because the Independent's report is nonsense.
How is it that this Professor has access to the bank accounts and foreign tax records and NI records of these 'visitors' when the HMRC doesn't know who these people are or is unable to find them.
Professor Christian Dustmann ... prove it ... or shut up and apologise to the British people for peddling lies and misinformation.
Same with you Herr Dingle ... prove it!
BTW. What is the UK tax bill for the immigrants' economic, social and other crimes; interpreters, housing, health care, rent inflation, stolen jobs and wages etc, housing repossession of British taxpayers homes, crowded schools, disappointed students and graduates without a college place or job?
I like your story ... perhaps you could try and complete it sometime soon and get your facts right. The numbers matter a lot and those delberately peddling bent immigration cost/benefit figures have a lot to answer for and those in official positions of responsibility should be sacked for doing this.
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re #178
It is not just tax paid or UK benefits claimed. What is easily overlooked is the level of remittances home by inward migrant workers. When the immigration debate was getting a bit heated about ten years ago, a panellist on R4's Any Questions happened to mention off hand that £6 billion was remitted back to the Indian sub-continent. I have a notion that he worked for the bank that handled a lot of the money. No-one paid much attention to what he said.
Money earned by Poles in the UK has certainly helped Poland. It is said that Ghana has been completely turned around, not just by remittances from Ghanaians but by their nationals who came to work here or were born here to migrant workers, going back and using their wealth, knowledge and skills to create businesses there.
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re #171
Lots of us are bothered by the housing situation. Period. Not just the spin on benefit changes. Oh, all right. I am. It's just you and me then.
Dave & GO have got a lot to fix. I hope they have asked all the right 'what if' questions, tried to work out what unforeseen consequences might arise.
I guess the CSR wasn't the place but I think if I was in GO's shoes I would have announced a mini-Budget for this week. Then I would have said I am taking back control of interest rates for a short-term period from the Bank of England and interest rates would be raised slowly through 2010 and 2011.
We really can't go on as we are without making some of our problems a lot worse. For example, there is no point in making employers offer pensions when a) the pensions industry is a bit of a rip-off, b) the returns are pitiful, and c) no-one has spare money to invest in pensions anyway because of the cost of housing and the taxation thereon.
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Britain's top bosses saw their total earnings rise by more than 50% over the year to June, according to the latest Directors' Pay Report. Skip related content
While pay for company board members went up 45% as a whole, that for chief executives climbed to 55%.
The report from the Incomes Data Services (IDS) indicates a dramatic reversal in fortunes over the year.
Although basic salary rises across the board appeared to be subdued, growing at just 3.6% for the FTSE 100 chief executives, pay packages were actually boosted by the reappearance of bonus payments, the value of share option gains and separate long-term incentive plans.
The average bonus was up 34% at £701,512, share option values rose by more than 90% and LTIPs climbed more than 70%
Its really good to see that we are all in this together, eh, just like communism all are equal except some are more equal than others, we are all in this together, except some are more in it than others, same thing just slightly different words. Karl Marx at least meant well in his belief, it is mans greed that fails marxism. where the Tories and Lib Dems are just happy to feed their greedy friends and who cares if more get poor, or poorer.
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I have to say nautonier does have a point.
Assuming that the number of jobs available in the country does not rise to accommodate the number of economic migrants, it is reasonable to conclude, that those already resident in the country will suffer.
Similarly if the government’s revenue does not increase in proportion to the number of new people arriving, then those already existing here will experience a contraction in the services provided to them by the government.
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Up2Snuff @179 For the country with globally accepted currency the remittances abroad are a way of "export" either way: Either it becomes a claim on your goods (self financed export, as, though in a different way, Chinese export in many cases is), or it becomes a claim on other exporting countries goods and is "mopped up" by financial instruments holding the "global imbalances" (CDO, CLO, and, among others, our gilts). Lastly it becomes a foreign exchange reserve of a foreign country - "dead money". In this way it is used as base money for developing their internal economy, this might be useful after a crash or deep deflation (like in Lithuania (Russian crash fallout) or Poland (deflation) in late 90'), so, figuratively, this money is just facilitating other Pole/Lithuanian to provide a seasonal/temporal migrant who came back with the goods for the money earned not in Poland/Lithuania - not necessarily a bad thing either. It's a good point to say "not necessarily". Economy should be thought "at a margin" which, when translated into a language that I, out of custom find more appealing - in a created field of derivative matrix - which way the vector actually points. (Is the Pole who made the windows of our migrant going to export them here eventually, and to such an extent, that he will give us a hard time etc. etc.). So, coming to vernacular again (which I hate, because it's harder to bent your imagination to use it). Even if the change of balances doesn't work in our favour at the moment, look at the rate of change and even further at the "dynamic of the rate of change" and if this (third derivative) is in your favour and you know probabilities fairly well, just wait for it to play out nicely!
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"If you claimed to have achieved that kind of turnaround in a company's fortunes, on the back of extra cost savings of just over 1% a year, people might wonder whether the talk of bankruptcy had been ever so slightly overdone."
Stephanie, I lurve the way you have to be so careful when suggesting the tories are talking xxxxxxxx. You'd feel much better if you just screamed it out and you are absolutely spot on. I have no time for any politicans but the previous government saved the country from a lot of pain by its deficit spending. We can no longer avoid that.
Please consider doing a blog on Modern Monetary Theory. Its not going away and puts the responsibility for full employment right back where it should be, at the top of any civilised Govt's agenda.
The views of Bill Mitchell, Randall Wray and Warren Mosler are starting to be taken seriously by alot of people. I think an economics blog such as yours is the right place for a discussion about their ideas.
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184. At 10:08am on 28 Oct 2010, MetalGasket wrote: "I have no time for any politicans but the previous government saved the country from a lot of pain by its deficit spending."
I don't understand this sentence. MG what does it mean? It's OK to go into debt? At some stage you have to pay it back or perhaps not?
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185. At 10:30am on 28 Oct 2010, dontmakeawave
public debt good
private debt bad
good deficit employs people
bad deficit rewards bankers
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What seriously concerns me is the fargility of the whole of the world financial situation and its effects upon the ability of all nations to 'normalise' their situation. Domestically we are fiddling whlst Rome burns. The ConDem polcies will in no way 'normalise' our economic situation whilst they have the possibility of destroying the very fabric of our society. Internationally we are aware that there is a strong possibility that a more and possibly larger financial shock is waiting to evidence itself.
Less than 2 years ago, Buffett rejoiced that, in the battle between finance, government and labour, finance had all but won! We can see that in the concentration of wealth (at least in money terms). We can see that in the transfer of wealth from the poor to the rich and the acceleration of that transfer into the wealth of what we in the UK refer to as the Middle Classes. Absolutely no action is being taken to correct this transfer.
Before died in the wool Tories chant their "politics of envy" guff, re-read what I have written. It is the very fabric of what you hold dear that is under attack.
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Cheer-up FDD
A great correction awaits.
If only we could convert greed into electricity it would solve global warming.
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On the subject of terrorism check out this report on "suicide bankers".
Give us the QE or we'll blow ourselves up and take everyone with us
Keiser Report Epidsode 90
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187. At 12:36pm on 28 Oct 2010, foredeckdave wrote:
"What seriously concerns me is the fragility of the whole of the world financial situation"
FDD, if you really want to be plunged into the depths of despair use this link to see 50 economic factors about the USA. If it's half true, I wouldn't like to be an American.
http://www.globalresearch.ca/index.php?context=va&aid=19539
If the BBC doesn't like this link Google "current world financial situation" and click on the site www.globalresearch.ca 50 facts about the USA! Frightening really and for me shows the effects of not facing up to the economic bubbles, such as the Dot Com bust, and Wall Street's excesses in the USA over the last 15 years.
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Referring to your scepticism regarding the construction industry and some commentators stating this growth will come to an end due to cuts in public spending; I would refer you to some £12.3Billion (approximately) of project tenders going forward currently advertised on one major construction tender website, generally over 4 years. Although a very difficult market there are signs of movement going forward. With regard to housing if the banks would stop being so over cautious (complete opposite to where they where) and borrow some money and the planning system would wake up then the House builders could get on and the shortfall in housing could be built and sold and would also support the economy going forward. The economy needs people confidence and we will move forward.
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#188 Richard Dingle,
We are in agreement.
As we are not yet sure of the nature of that correction, we cannot define either the actual process or its consequences. Hence, I believe, we have the situation in which posters appear to agree on either the causes of the problems or the consequences of them only to widely disagree on possible solutions or their consequences. There is not one speck of stable eco/political ground on which to build.
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#191 bradcheck,
No you won't, you'll merely go round in circles.
What a stupid expression 'going forward' is!
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177. At 05:55am on 28 Oct 2010, MetalGasket
Cognitive dissonance; difficult stuff.
AnotherEngineer, if you find Mitchell's style difficult try starting with Marshall Auerback;
http://www.newdeal20.org/2010/10/26/dean-baker-takes-the-wind-out-of-deficit-hawks-sails-24653/
http://www.newdeal20.org/2010/10/26/what-does-it-mean-to-live-beyond-our-means-24435/
The Dean Baker paper linked to in the first of those is worth a read.
However, I can recommend an evening or a weekend reviewing Bill Mitchell's site. Even if you don't agree with him at all I can guarantee you will learn enough to make it worth while.
All of our mainstream parties operate from within the same rehashed neo-classical paradigm. To suggest that there are not viable alternatives or to assume that we have a solid understanding of economics in our mainstream politics is trusting to hope.
If you really are an engineer (as I am) you will understand just how wrong you can be when you are sure that you are right.
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#190 dontmakeawave,
Please see my answer to Richard Dingle in #192.
It is strange for us to be in agreement but that is the case. BTW I don't doubt that we are both searching for a brighter more secure future for those to come.
The problem for us all is the fallout of the US debacle, linked with both our pan-European and domestic problems. Now I am not trying to be sensationalist but as the problems build and the inertia in seeking answers remains the likelyhood of war or revolution (not likely in the UK) increases. I think I'm in the "jaw, jaw" camp.
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#194 Squarepeg,
"If you really are an engineer (as I am) you will understand just how wrong you can be when you are sure that you are right."
Just to add that I think that applies to us all and not merely engineers. That is not to downgrade engineers - oh shit the PC has kicked-in again!!!! :)
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THE POOR
Let them eat DERIVATIVES
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195. At 3:12pm on 28 Oct 2010, foredeckdave wrote:
#190 dontmakeawave,
The problem for us all is the fallout of the US debacle, linked with both our pan-European and domestic problems. Now I am not trying to be sensationalist but as the problems build and the inertia in seeking answers remains the likelyhood of war or revolution (not likely in the UK) increases. I think I'm in the "jaw, jaw" camp.
No not sensationalistic at all.
Consider this question would the 1930's depression have ended anyway. Or did it end as a result of re-armament and war.
Japanese economy is same saize as it was in 1991 - $5.7 Trillion (GDP)
China is getting more pwerful by the day.
A faultline if ever there was one.
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196. At 3:37pm on 28 Oct 2010, foredeckdave
True, but as an engineer (woroking closely with custyomers) you have to suck up your failure on a (hopefully not too) regular basis, fix things and try to be more open minded next time around.
Trying to apply this to everything in life is difficult. I wish I was much better at it.
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198. At 3:48pm on 28 Oct 2010, Richard Dingle
'Consider this question would the 1930's depression have ended anyway. Or did it end as a result of re-armament and war.'
One question there might be what was it about re-armement and war that ended the depresion. Was it goverment spending lifting the productive capacity of the nation(s) to full or was it some more sinister aspect of the consequences of war that could only be achived in that way?
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This comment was removed because the moderators found it broke the House Rules.
179. At 08:41am on 28 Oct 2010, Up2snuff wrote:
re #178
It is not just tax paid or UK benefits claimed. What is easily overlooked is the level of remittances home by inward migrant workers.
......................
A very good point ... again, that's why 'the Professor' needs to be careful with his figures as not telling the true story. This/his comment isn't just 'a commment on a blog' ... the details have been published by a ND newspaper for miillions of people to read ... and many will take in the nonsense rhetoric and negative propaganda as being fact ... when it is just nonsense and insulting to British people struggling to make ends meet on their low or non-exsitennt wages when losing their jobs, homes, marriages, children and health as a result of the increasing financial and other pressure heaped on them by the difficult economic circumstances.
When the costs of immigration are all added up PROPERLY ... the current and future cost(s) and effects of mass immigration to the British worker/taxpayer is massive ... it is a staggering amount of money/change and no one has any idea (especially the BBC), of what the financial and other cost amount(s) really is.
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For all the "Neo-Chartalists" out here: http://solari.com/blog/?p=7950
(Roman Silver coin debasement) I myself imagine it as a function of costs of running a system...
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Squarepeg, I was actually agreeing with you quite strongly in my post 201 when you hinted that the recovery from the depression might have been something to do with Govt spending.
Unfortunately I used the words 'hole' and 'round' so naturally it got moderated.
No fun of any kind!
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This weblinks to the Fiscal Sustainability teach in last April in Washington DC and you can see some of the Modern Money guys...
http://www.netrootsmass.net/fiscal-sustainability-teach-in-and-counter-conference/
One of the gems is the following thought game...
Everyone who's unemployed or on welfare is in the public sector...
...similarly everyone in prison.
Are we happy that these people are doing nothing in the public sector?
Wouldn't it be better if they all did some useful work in the community?
Then they'd pay taxes, rather than consume taxes!
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193#
It beats going backwards!
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re #193
Are you sure? An awful lot of posters seem to want to go backwards or round in circles ...
And a lot don't want to be here and want to be there but don't know or won't tell how to get from here to there.
Have a look at RP's Blog.
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re #183
Scintillating. While reedymost of your fully paragraph of the punctymold I was struck, like a smackereu bleudy, of the thoucus that if, in a strangey parallel way we could shift all monies mostly in one way and all the peoploace off in the directy of abroad, our debtie and the deficie that hang in onit would be repaid.
Oh joy! Deep joy of the most multiples of Christams all in one year.
I could kissee and hug for this kindly thought. Oh deepest gratitchued of the heart bottom of the nations for you yourself. Your knightyhood will be in the postage if the union can put off the strikit for another day.
George! The deep difici debt problode is solvy!
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187. At 12:36pm on 28 Oct 2010, foredeckdave
When you are accused of the politics of envy, remember that others openly proclaim the politics of greed. Greed is good some proclaim. CEOs, people in the city and others at the top have to be paid more and more ridiculous figures while benefits are cut and companies complain about having to pay the minimum wage.
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202. At 4:40pm on 28 Oct 2010, nautonier wrote:
179. At 08:41am on 28 Oct 2010, Up2snuff wrote:
re #178
It is not just tax paid or UK benefits claimed. What is easily overlooked is the level of remittances home by inward migrant workers.
......................
A very good point ... again, that's why 'the Professor' needs to be careful with his figures as not telling the true story.
Fraulein Nautonier (well if you must keep referring to me as Herr) allow me to put in the bits the learned Professor left out.
All these monies being transferred back home, be it Poland, Ghana or some other land, plus the knowledge transfer, acts as a stimulus to these countries economic development and increases their appetite for exports from the developed countries (British exports, no serious, don't laugh and German exports, etc). It also brings greater stability to otherwise unstable parts of the world.
Do the sums please.
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Thank You Mr Dingle! (#210) I answered that one at #183 making a bit of a joke of it (as there were stated solid economic background and two brains), but if one doesn't want to be just joking an analogy to opportunistic species in an over - gazed environment might hold too, so I, for one, can't say whose profit is the most. General cry would be "Lower the cost of the system!" - globally, don't try to push from strong shoulder to the weaker, either across the social ladder or national boundaries. But we might not reach this kind of consideration...
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The quarter's GDP grew by X. It is very difficult to turn this into news, except by pitching at an ever more innocent audience - ones who need to be taught that GDP stands for Gross Domestic Product.
Then they are told that the number is 0.8% for the quarter and 2.8% for the year so far.
Earth-shaking. How can economics be so fun, and so useless?
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Oh, and to all the Modern Monetary Theory worshippers: It might work, but if it doesn't than do you know what all the rulers who debased currency too much did so far? They were introducing taxes in kind! (Last examples known to me originate in Soviet Union).
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213. At 8:30pm on 28 Oct 2010, Suav wrote:
"It might work"
As far as I can see it's the best offer on the table
How about it Suav ?
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Did you read my post to the end? All the princess and feudal lords that debased currency were ending up in taking cows, horses, grain etc. because they knew, that they can buy nothing for their money. The power of the money introduced by them was supported by their sword only! Can't you see any analogy with what happens now? In Soviet Union they refused to exchange goods for money so if e.g. a headteacher wanted to have his school refurbished before the start of the new school year he phoned a PartCom secretary asking him to instruct, say, a local PrefabHouse GM(i just trunslate the name roughly to make it soft to the ear - DomStroy would be in original) and said GM was sending the materials to the school. Money were changing hands, but they weren't equivalent to the goods! Can't you see parallel system of exchange emerging as soon as debasement is counted as exchange cost?
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163. At 9:02pm on 27 Oct 2010, Suav wrote:
The idea is called "Chartalism" and came into being around the Great Depression. Here is a link: http://www.ucm.es/info/ec/ecocri/cas/Febrero.pdf
===========
Thanks Suav, I'll give it a read. I wonder if it explains how the Industrial Revolution happened without government help?
[Unsuitable/Broken URL removed by Moderator]
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AnotherEngineer #216 I, myself, appreciate Henry VII over his son for exactly this reason - initiating "green shoots" of English manufacture. (Breaking monopoly of the Low Countries). But it was not a high social cost of production that was a barrier then. It was low population density, backward agriculture and, hence, low capital accumulation. Once a critical mass of capital and population concentration was reached we were beyond the singularity in demand/supply curves. (We both know that they are not as they draw them in "good old books"). Now it is extremely high capital interconectedness (for every move you got a thousand of "swaps" to be paid for the loosers) and costs of a change in highly interconnected and "clinched" social system - the opposite!
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#216 AnotherEngineer,
"I wonder if it explains how the Industrial Revolution happened without government help?"
It can be argued that the Industrial Revolution was stimulated by government aid - particularly in the form of naval procurement. It can also be argued that the government expansionist policies also stimulated business growth. It was certainly not an accidental explosion of engineering talent.
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#218 foredeckdave, and then Germans (Bismarck) invented (or, rather, accepted an invention) of social security which lowered their costs below ours...
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The trouble with Economics reporting in the media is there is scant attention paid to a scientific and unbiased approach. Some people have pointed out that these figures reflect the success or failure of the policies of 18 months ago. This is a widely held theory in economics and they are right to point this out. However, this should be taken as true all of the time, not just now. The first 18 months of the Labour government under Tony Blair enjoyed strong economic results, as a result of the Major government's actions.
When it comes to GDP figures being "higher than expected" that is a highly subjective analysis. Firstly, the expectations come from the city which has a certain amount of interest in underestimating growth in order to keep interest rates low and govt aid to business intact (e.g. tax cuts/subsidies etc). Secondly, the current figures are an estimation based on preliminary figures from a number of key sectors - and will be revised upward or downward depending on future figures for GDP. In other words, we are comparing todays estimate of yesterdays performance with the day before yesterdays predictions from estimators with a vested interest in certain predictions and a track record of underestimating growth.
Yes it is good news because it suggests growth in the last quarter will be reasonable. It also shows a slowing of growth from Q2, which was even more positive. And it reflects spending decisions of around one and a half years ago. Drawing conclusions is hard enough for the majority of the population, without the media failing to explain these basic points of reference. You wonder why both larger parties are so keen to argue that the other party's economic policies are damaging? - It's because the public really has no idea whose policies are best and so as far as the politicians are concerned the mantle of "safe pair of hands" is continually up for grabs, regardless of the actual results.
In my humble opinion Gordon Brown was an excellent economist and a lousy politician, and his leadership in the financial crisis has supported this strong recovery, but because he has singly failed to explain how and why he took the decisions he did, and to point out his mistakes as well as his successes, we will learn nothing from it as a country. Moreover, his party has lost its economic competence and the Liberal Democrats have abandoned theirs for a shot at the big time so the madness of brainless cuts versus brainless spending has returned. Brown may well view his time as a huge success - but in the long term if we don't recognise the achievement of 13 years uninterrupted growth or why he was able to achieve this - then it counts for very little.
Economics is a tricky and subtle science, but everyone claims they know the answer, and makes crass generalisations. We will continue to bluster blindly against some odd scapegoat, lurch from crisis to triumph and back again, and deliver distinctly average economic performance as Britain has always done since the industrial revolution. And alas we will sink ever lower down the league table of world economies. This coalition's policies has no grounding in academically recognised economics. Nor does the opposition's policies. The media fails to make this clear. And economists have long since learnt it is easier to bury one's head in the sand than risk being drawn into the political cauldron.
It's called the dismal science because it's depressing how little we know, and from what we know, how little we use our knowledge.
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#219 Suav,
You present a very unique view of the reasons why Britain gained and then lost their competitive advantage.
If you look more closely, you will find that the Industrial Revolution was preceded by the Agarian Revolution. Starting with the enclosures moving on to 4 fiels rotation a la Tutnip Townsend and Jethro Tull's seed drill. Obviously that is a very pocket view but the important thing is that food production increased significantly whilst more labour became available. Hence both the Poor Laws and the availability of labour to feed the Industrial Revolution.
An alternative view of the rise of German (and US) manufacturing is that they gained the benefit of the UK experience and therefore their cost of entry was less. I strongly doubt that social security lowered their costs to any appreciable degree. Another major factor is the social environment here in the UK. To become acceptable socially, many of the leading UK industrialists bought titles, built country estates and removed themselves from the very industries that has made their fortunes. Contrast that with Krupp who built his mansion at the centre of his industrial complex.
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#221 foredeckdave, How do you expect a fellow to whom marxist economics was being lectured for 20 years not to know about enclosures etc. ? The moment England (and esp. Scotland) started their Agrarian Revolution was a tipping point for Ukrainian grain trade to Britain, so again, well known. The entry cost point holds, but the "exhaust cost"? American day worker made redundant in a mill was taking a wagon and a pair of horses and ran West. The cost of running to the colonies was much higher for a redundant artisan in the UK. Germany had arguably lowered costs of social disruptions by introducing this form of mutual responsibility. It is the last that we need now, so I skip all the rest in favour of what I guess might work again.
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221. At 10:35pm on 28 Oct 2010, foredeckdave wrote:
Another major factor is the social environment here in the UK
The present tense is correct.
Ironic that New Labour when it won the 1997 election actually honoured its election pledges (to the middle classes) when it should have used its massive majority and done the opposite, and fundamentaaly changed this country by eliminating private education.
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220. At 10:33pm on 28 Oct 2010, TheWalrusandtheNasriator wrote:
-----------------------
Many thanks for an excellent piece, but there are a few points I would make.
Economics is not like physics and from the reading I have been doing, I suspect that mainstream economics as espouced by many currently in power is actually based on ideas that are demonstrably wrong. Economists and economic commentators have yet to face up to this. Until they do wrong political decisions will continue to be made and lead us down false and expensive paths. The neoliberals who push these ideas are just out for themselves and are simply exploiting most of us. More than ever before, the middle class are under attack. The poorest in society are also being made poorer yet again, its time for a change in direction and ideas.
For economics to start to earn the title 'science' it must immediately reject and remove ideas, precepts and theories which contain falsehoods. It must accept that its models must be thrown away when the loose they power of accurate prediction. The 2007 debacle should have been predicted and accepted by the world's economists and it should therefore never have happened. Some may have forseen it, but most did not and anyway had too much vested interest to listen. So we now suffer, not the banks and their employees. They and the politicians in whom we place our trust to ensure a healthy economy have failed. All of them - no excuses. So where now?
I like many of the ideas espouced by those developing MMT but some seems wobbly to me still [but less so than mainstream ideas]. At least the ideas are based on the reality of the way the financial system actually seems to work. Seems a good starting point to me. I am however not sure yet that their ideas will lead to a controllable stable economy.
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Richard,
what is it that you have against private education, I would like to see public(free) education so good that private education seems and is a waste of money, but if people want to buy it then why should anybody stand in their way, much as I don't like private education I would defend the right, because it's right, right.
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Having been involved in reporting economic & political debates for over 30 years, I think there is some merit in looking back over the various claims about the nature of our economic problems and their causes down the generations.
The 1920/30s - after WWI, the world's economy cooled off - the victors slashed spending on armaments - the dole queues lengthened and Chancellor Winston Churchill was persuaded that the UK needed "sound money" - the answer - return to the Gold Standard! Only issue as much paper money as we happenend to have bars of gold sitting in the Bank of England - and live within the income the government receives in tax.
Result - the Great Depression - round after round of wage cuts, vast layoffs and public spending cuts that formed a positive feedback loop - cut because things are bad - things get worse - so cut some more! The conventional wisdom of the time nearly drove the West over the cliff into revolution - only Maynard Keynes' insight that Government could run deficits, come off the gold standard and stimulate demand saved us from complete collapse.
"wage increases cause inflation" was the claim in the 1970s - trade unions "holding us to ransom" - there was a strong lead positive correlation between wage incrases and inflation, so it MUST be the cause of all our economic woes! Curb the unions - problem solved!
Working for C4, we uncovered another even stronger indicator with a +0.7 relationship with a 6 month lead: RIGHT - fix this one, problem solved!
It was the incidence of dysentry in the Western Isles of Scotland....
Then we were told this was all irrelevant - the money supply is ALL that needed to be controlled - ALL inflation is caused by execessive growth in the money supply - forget wages, taxes, spending - just watch M0.
So politicians did just that - various loonies took this latest True Faith to obscure parts of the planet and tried it out - and produced massive failures all round. The seeds of the HUGE US deficit were sown by Ronald Reagan - and the stage was set for jobs and industry to be quietly dismantled in the western economies and shipped lock, stock & barrel to the "developing world".
This was "a god thing" because it would eliminate poverty abroad and reduce the cost of goods in the West - a virtuous circle! Meanwhile in China milllions of peasants who lived pefectly happily in self-sufficient agriculture were summarily marched off their land which was bulldozed to make way for factories, and then marched back in to work 6 day weeks of 16 hours per day, in dangerous, polluting factories for a few cents an hour.
Richard Nixon's visit to the Chinese Communist Party had opened their eyes to the possibility of a Communist state forming a "marriage of convenience" with multinational companies to develop the "means of Production" in China, whilst retaining political control over the masses - Marx would approve - but so did Wall Street.
Multinationals got rich - we got cheap goods - the City got fat on financing this new boom - whilst cities all over the Western World simply lost their core manufacturing jobs and the service industries and the public sector soaked up the unemployed.
The next Great White Hope was deregulation - get rid of the "dead hand of the State" - set private enterprise free and the economy will grow, the magic of the market will start to work and growth, wealth and jobs will follow.
We did just that - trade globalisation took off, but jobs simply went to the lowest cost global production areas -i.e. NOT HERE! The deregulated financial services industry went from a boring retail banking industry to a global casino in a few short years, taking our savings, pensions and investments into a series of speculative burst bubbles until the ultimate meltdown of the Credit Crutch. Manufactured goods, food and energy were imported to the UK - and to pay for them, we started to run massive trade deficits and now live way beyond our means - oh, and every man, woman & child in UK PLC has taken on £40,000 of debt EACH to bail out the banks.
In Iceland, where the "freedom" of onlyt a reputed dozen greedly men resulted in the Icelandic banking collapse: an entire country has seen its welath and even it currency destroyed by laissez faire dogma and has had to go cap in hand to the EU, effectively losing its sovereignty over economic and monetary policy and consigning the entire nation to generations of debt.
Today we are told that cutting the deficit, shrinking the state and deregulating the economy is the answer which will produce growth and make government spending sustainable.
This claim seems to me to be even more spurious than almost any of the so-called "economic consensuses" of the past.
It is BOUND to be massively deflationary - it ignores the root cause of the problem: the trade deficit - and it continues the failed mantra of deregulation and shrinking the state.
In the end this WILL resolve itself, but not in the way it's claimed: cutting public spending to shrink public debt is likely to produce other negative effects, just as Churchill found out with returning to the Gold Standard - firstly this is deflationary and secondly it ignores PRIVATE debt, which is likely to GROW as people spending savings and borrow more to fund their lifestyle.
And as our ability to take on more personal debt is constrained, in the end we won't be able to afford to keep consuming at this rate - we will be forced to cut our personal spending: this reduces demand - which in turn leads to recession, which then becomes a positive feedback loop just as it did in the 1930s.
If the UK economy slides into a recession, Government tax receipts will fall sharply and spending on welfare will rise sharply. If this happens our public debt will RISE, not fall - and we risk getting trapped in a downward spiral, forced to cut even harder, but by doing so, we further depress the economy and make the debt problem even bigger.
The Irish Republic is our pathfinder for this policy - they've had a second round of massive bank bailouts and the economy has shrunk by 13% - house prices are down 40% and unemployment is rocketing, whilst Government borrowing which was supposed to fall sharply has exploded to over a third of GDP this year.
But the UK is not in EuroLand so unlike Eire, we could depreciate the £ and rebalance our terms of trade, so potentially choking off imports and helping exports and this has happened, to some extent already.
The problem is that devaluation is inflationary - it drives up fuel, food and other import prices, so futher depressing demand, and with our shrunken manfuacturing sector, it's not very likely that we will see much export growth anyway.
Just as the "Empire Free Trade" movement of the late 1920s became the battleground for trade policy, so in the end we will see the elephant in the room move from the shadows to centre stage - TRADE.
Globalisation doesn't work - we cannot compete with virtual slave labour economies, we can't afford our import bill and we can't afford the welfare bill for the unemployed either. In the end we will have to protect our jobs and move to a sustainable economy where we produce what we consume and manage trade rather than leaving it to the market.
Paul Mason showed us recently on NewsNight where the alternative leads with his film on Gary in the USA - a city that has literally died and turned into a nightmare place out of a science fiction movie of dereliction and crime.
The choice is ours.....
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#225 and 224
I think you are both missing a point. The OUTCOMES of private education are undoubtedly superior to that of the public sector. But does that mean that the quality of of the education is so superior?
There are many factors which affect the outcome - not the least being the quality of the intake. This then affects the statistics and the public perception of the quality. A few years ago I had two exceptionally gifted pupils. One went to the local poorly regarded Council Estate comp (the figures proved it). The other went to a very popular school which had a selection process (success proved by good results). The one from the comp ended up at Cambridge (the first one ever), the other ended up at Southampton - they both were doing the same subject. Obviously this anecdote has no statistical significance, but I hope you see the point I'm making.
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RICHARD 226: an excellent post giving a very accurate historical analysis and using logic to draw conclusions for the future.
There are some underlying fundamentals that we overlook in our tendency to over complicate and look for complexity:
1) The industrial revolution and the availability of cheap fossil fuels to power it gave us a huge surplus return for our labour which has been initially gradually and recently rapidly over-exploited. This has been expedited by our desire for output growth in everything from population to tonnage of steel to short term agricultural yields. In short we have consistently opted for output growth as opposed to sustainable prosperity growth. We have confused and continue to confuse growth with prosperity.
2) In previous depressions we have always had an area for output growth and the still abundant cheap energy reserves to achieve this. We are no longer in this situation unless we can discover or invent another game changing energy source such as a cold fusion type product. This seems very unlikely.
3) Your analysis correctly shows that deflation of the per capita economy is the only outcome when population plus efficiency is growing faster than output is able to. Unfortunately this inevitably will lead to at the very least social unrest.
The industrial revolution and fossil fuels gave us the opportunity to engineer a paradise for a world population of a couple of billion. But we went mad and didn't apply our intellect to consider what happens if we just keep growing output and population ad infinitum?
It will all work out. Population will decrease and output will not exceed the capacity of the Earth to sustain it. The question is can we apply our intellect to engineer this amicably or will natural limits force it upon us? My conclusion unfortunately is that history shows that collectively mankind allows impulse to overrule intellect when the chips are down.
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227. At 07:55am on 29 Oct 2010, Boilerbill wrote:
#225 and 224
I think you are both missing a point. The OUTCOMES of private education are undoubtedly superior to that of the public sector. But does that mean that the quality of of the education is so superior?
I made a brief comment which I will expand on.
When I say 'eliminate' I was arguing for the German approach where private schools are protected by the constitution. Of course people have a 'right' to send their child where they see fit. However, and this is the point, in Germany it is not possible to pay a teacher in a private school more than a teacher in a state school; this renders them innefective. They also, probably for this reason, fail to cream off the best pupils.
I agree with the points in your post but suggest it is you who are missing the point.
Private (fee based, this includes all independent schools) education in this creates a situation where 7% of children travel first class educationally, and the rest (93%) second class. This is wrong for social cohesion and promoting scial mobility.
I accept completely that standards, in private schools, are higher, and I also accept that not all parents who educate their children privately are wealthy, they have a different, and commendable, set of priorities.
Countries that do well in a very competitive world have excellent state education systems (Germany, France stand out).
I would wager that 'the other ended up at Southampton' will punch way above his weight in the jobs market. His schooling will open doors.
Parents, who send their children private, cite 'cache', 'door opening' and 'privilege' as reasons for doing so.
Your point about quality of intake is spot on and neatly underlines my argument.
State education needs the brightest and best pupils.
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229 RICHARD. I have just listened to a phone in on radio 5 live about state education and can quite honestly say that we are missing the fundamental problem with state education in this country. It all comes down to intrinsic motivation of the students to learn and achieve.
In the UK state system there are too many students now who come in with apathy or at the least a lack of motivation to learn. This is not a problem in other societies we are competing against in the global marketplace.
In some countries kids will walk for hours every day for the opportunity of an education in a bare classroom with no computers. Society here is not instilling a desire to achieve through learning and education widely enough across the population.
Hence the reason why middle class parents such as myself take our kids out of the system and put them into independent schools where they are surrounded largely with like minded and motivated kids.
It is the ethos of the societies within and feeding the schools which are the problem with our state educational outcomes. The schools and teachers themselves are largely outstanding but have to make up from a deficit of input to the kids from parents and broader society.
It's not difficult and requires no money. Teach our kids to be motivated to learn, simple.
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229. At 09:58am on 29 Oct 2010, Richard Dingle wrote:
Private (fee based, this includes all independent schools) education in this creates a situation where 7% of children travel first class educationally, and the rest (93%) second class. This is wrong for social cohesion and promoting social mobility.
The train is a good analogy. If you take out the first class carriages everyone travels second class but they now have nothing to compare it with.
The abolition of grammar schools was a big mistake in my view. They gave a good education to those who could take advantage of it. They still exist in Warwickshire and a few other counties.
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226. At 07:30am on 29 Oct 2010, richard bunning wrote:
"Today we are told that cutting the deficit, shrinking the state and deregulating the economy is the answer which will produce growth and make government spending sustainable. This claim seems to me to be even more spurious ......It is BOUND to be massively deflationary - it ignores the root cause of the problem: the trade deficit - and it continues the failed mantra of deregulation and shrinking the state."
Richard, you covered a huge amount of ground in your blog from deficits to trade wars to globalisation etc. However I don't agree with your conclusion on the Government deficit and the trade gap.
If we are to get this country back to a more financially stable situation we have to get Government spending back to more realistic levels. Like a bankrupt we have to pay our debts, liquidate assets and lower our standard of living.
Inevitably it will be deflationary and cause pain with withdrawn benefits, a reduced overall standard of living, unemployment, reduced private spending. If we don't do it now our country's debt interest payments will be huge. As it is by 2015 we will be paying £60 billion in debt interest per year. Surely you are not advocating ignoring it?
As to deregulation, yes we need that in some aspects of our economy to get our international competitiveness back but we need more regulation in areas that expose us all to risk namely Personal Debt and Casino bank practices.
As to the Trade Gap, I don't believe this is the root cause of our problems. We have lived with this for many decades and it has caused crises in the past but not of the scale we have just passed through. We should attempt to reduce it but the way we manage our open economy mitigates against it. Better to get back to a more competitive economy that encourages inward investment particularly of manufactures!
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230. At 11:09am on 29 Oct 2010, Sage_of_Cromerarrh wrote:
It's not difficult and requires no money. Teach our kids to be motivated to learn, simple.
I agree. But can you not see that by taking away the best pupils from state education you are weakening the state system; it becomes mediocre, and the process is a downwards spiral.
Motivation comes from seeing brighter pupils around you doing well.
Though money is important too.
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233. At 11:40am on 29 Oct 2010, Richard Dingle wrote:
230. At 11:09am on 29 Oct 2010, Sage_of_Cromerarrh wrote:
I think you both have a point!
Motivation can come from seeing brighter pupils around you doing well but it can also be a disincentive to others.
I really believe that if education is not a valued ideal within the home the child is unlikely to be persistently motivated to receive the education.
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Richard, We tried that. Our son was bullied for wanting to achieve, being enthusiastic in class, and doing his homework on time.
The school completely missed his intellectual talents and put him in set 2 for all setted subjects. He went to independent school, got straight A* in all gcse's (10 of them) and A* in all Alevels (maths, chem and biology).
There has been too much social engineering in the education system using too much academic wishful thinking, and not enough consideration of reality and using output feedback to modify the system to produced desired outcomes.
Kids are being failed by parents and society not teachers by and large. They are all too often stuffed in front of the TV, and given no fire in their belly to learn and use this to achieve in life.
That's why parents who have the means usually opt for independent schools. No nonsense does what it says on the tin approach to attainment. Any student persistently being disruptive is "asked to leave".
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234. At 12:04pm on 29 Oct 2010, mr_scotty wrote:
233. At 11:40am on 29 Oct 2010, Richard Dingle wrote:
230. At 11:09am on 29 Oct 2010, Sage_of_Cromerarrh wrote:
I think you both have a point!
Motivation can come from seeing brighter pupils around you doing well but it can also be a disincentive to others.
I really believe that if education is not a valued ideal within the home the child is unlikely to be persistently motivated to receive the education.
Whether it is a 'valued ideal within the home' is determined by the educational experience of adults in the home. A downward spiral.
"We tried that. Our son was bullied for wanting to achieve, being enthusiastic in class, and doing his homework on time."
Need critical mass. More than one or two ambitious pupils.
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#236 continued...
going private is negative from a country perspective and weakens the state alternative
similar logic applies to law enforcement. If the state alternative is not up to scratch would you advocate vigilanty gangs; some would.
The only way you can reverse thisdownward spiral in state education is to have just one system. It works very well in France and Germany and underpins their rather superior economic performance since WW2.
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Richard again I think you are missing the home environment issues.
In my working class family upbringing my parents had a very basic secondary modern education. They were both capable of much more but lacked the input to achieve selection at 11+ for grammar school.
However, what they didn't lack was the motivation to insure their kids appreciated the value of a good education. I got into grammar school as a result but my brothers didn't get the opportunity because they were abolished.
They went to the local comprehensive and achieved. The majority of the kids around them were generally motivated to learn and endowed with a belief that good educational qualifications would be essential for them in life.
Since then things have changed for the worst and it's not the schools and teachers that have changed. Teachers now are much better trained and generally more highly skilled. It's the deterioration in motivation and behavior of students and parents that is the problem.
We have lost the realisation that we are not owed a living and that life and education has to be worked at and struggled with. Some things in life are our own fault and we have to work hard to succeed.
This is a societal failure and is now prevalent in a large enough minority to cause a major drag on the rest of society, in particular teaching and learning in state schools.
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#230 Sage,
"Teach our kids to be motivated to learn, simple."
The statement itself is simple: achieving that is a totally different matter.
It will not happen unless there are major changes to our whole society. Why should kids be motivated to learn when they see their parents treated as expendable items on the way to profit? When the media promote the concept of personality and fortune without effort? When, as far as they are concerned, society treats them with indifference and mistrust? When education itself has been treated as a political football and educstionalists have been allowed to run wild?
Now I can easily point to some of the problem factors (there are many many more) but I do not have a clue how you can apply any kind of meaningful fix.
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Foredeck, Kids don't draw the deep complex intellectual socialist conclusions that you are alluding to. What they see is lot's of telly, sweets to shut them up on the supermarket trip and parents to whom they appear to be a burden. That is the reality for too many kids and is why they are not motivated and have poor attitudes to working hard.
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By the way I believe the single biggest contributor to all of this attitude shift is the welfare and benefits system we have evolved. It has been done with the best of intentions but if we monitor the feedback of the output we are getting from it we can easily see that it does not achieve desired or sustainable outcomes.
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239. At 12:48pm on 29 Oct 2010, foredeckdave wrote:
#230 Sage,
"Teach our kids to be motivated to learn, simple."
It will not happen unless there are major changes to our whole society. Why should kids be motivated to learn when they see their parents treated as expendable items on the way to profit? When the media promote the concept of personality and fortune without effort? When, as far as they are concerned, society treats them with indifference and mistrust? When education itself has been treated as a political football and educstionalists have been allowed to run wild?
Now I can easily point to some of the problem factors (there are many many more) but I do not have a clue how you can apply any kind of meaningful fix.
Agreed. Though having a single state education system would provide at least one of the missing components.
Decline in this country, and it has declined, economically and socially, since WW2 is so gradual that it will not provide the necessary 'kick up the %*&'.
Back to economics.
The beginning of the Second Great Depression that we are now seing may provide an awakening. Surely no one is mistaking this 'dead cat bounce' as the beginning of an up-cycle.
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#232 dontmakeawave,
Normal service is once more resumed! Sorry mate but have have to disagree with some of your statements:
"If we are to get this country back to a more financially stable situation we have to get Government spending back to more realistic levels."
Now I do take note that you talk about Government spending. However the process being used by the coalition is far more concentrated upon rolling back the State than actually reducing spending. However, this is only 1 element of what is required for our economy to be financially stable.
Very little direct attention has been paid to the levels of corporate, household and personal debt. Holding interest rates at historically low rates has not produced the expected levels of the paying-down of this debt. If you really want to grow the economy then this area needs urgent attention. It is arguable that this area requires more urgent attention than government debt.
"As to the Trade Gap, I don't believe this is the root cause of our problems."
Strategically, this is the root cause of our problems.
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The fix needs to start with the basic cause which I think is focus on relentless output growth. Why has pushing up house prices and other basics to such a level that two wages are needed to afford these a desirable outcome? This is what focus on ever more consumptive growth together with population growth and globalisation has achieved in the last generation or so.
We are out of cheap energy to continue on the output growth train any longer. So we have to accept reduced employment for everyone and more time to spend with friends and family doing things that don't involve shopping mall trips (real or virtual). Essential items will relatively increase in price.
If goods and services can be sourced locally they should be. International trade should be for items that can not be sourced locally. Unfortunately food and energy fall into this category in the short term but we can engineer local (European) solutions within a generation if we set out to achieve it.
Why over complicate our economy? Credit default swaps and derivatives etc.. , wealth being accumulated by individuals and corporations who produce no goods or services to the real economy, get rid.
Time to me is our most precious commodity. We should spend less of it at (superfluous) work and more of it with friends and family. Isn't that what progress is all about to give us more leisure time?
I don't see the point of hoarding until you are 70 to have free time on your hands in abundance at the end of life. The family have all gone, you don't fancy the wife anymore, and neither does she fancy you, and you give most of your wealth to the nursing home.
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Richard, no absolutely not an upturn. I believe we will at best bump along with inflation and devaluation lowering our living standards for years to come. Unless we think more radically and move away from all policy being aimed at output growth.
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213 suav,
"Oh, and to all the Modern Monetary Theory worshippers: It might work, but if it doesn't than do you know what all the rulers who debased currency too much did so far? They were introducing taxes in kind! (Last examples known to me originate in Soviet Union)."
You seem to assume that increasing the money supply debases it. Debasing is different to devaluing it, but I get what you mean. I don't agree though, your assumption is based on the largely discredited 'Quantity Theory of Money':
MV=PQ
where M is the money supply
V is the Velocity of money
P=Prices
Q=Output
Mainstream economists (unlike MMT) believes that both V and Q are constants, and therefore increasing the money supply by say, 5% increases prices by 5%.
MMT (as I understand it) says that V varies depending on how you spend the money - if, for example, the government gives it to people on low incomes they will spend more of it than someone on higher incomes, who will likely save more of it - so V is largely unknowable and is not constant.
More importantly, MMT says that Q (output) is not constant unless the economy is at full capacity, which it is not (see high unemployment) and has not been since the the early 70's. MMT says that if the government spends the money in a way that increases output and employment (Q) then prices (P) would not increase.
Kind Regards
Charlie
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232.
The reason we have 8 million unemployed, why we have a massive level of public and private debt and why we are struggling to grow compared to Germany that has a bigger public sector as a % of GDP than the UK is due to our low level of manufacturing and our high level of imports.
We do not pay our way in the world - we run a huge balance of payments deficit and we borrow vast sums both as individuals and as a nation - if we stopped importing so many goods, they would have to be made here - people would be employed, the welfare bill would shrink and the tax take would rise.
The temptation to create public sector jobs to soak up unemployment would go away as there would be many more jobs in the "real economy", the depressed regions and overheated SE would come into balance and dependence on the bloated financial services sector for tax take and jobs would reduce.
We have Socialism for Bankers: Robin Hood in reverse where everyone has been expected to bail them out - why do we have to have Communism as well in our trade?
The unholy deal we have with the Chinese Communist Party where they build their economy at the expense of British jobs and communities by rigging exchange rates and exploiting their own people is complete madness as far as our interests goes.
"Free" trade is in really cripplingly expensive to this country's communities - and a slash & burn approach to public spending is irrelevant and indeed potentially very dangerous - the Irish are now trapped in a deflationary spiral - I don't want to join them.
You claim that we've lived with this problem for years - yes we have, and over those years we've simply dug ourselves deeper into debt. We need BIG industry here in the UK to make our economy sustainable - not some pipedream of small businesses solving the problem.
Just how many aroma therapists or personal fitness trainers can the local self-employment market support?
We should be making our own cars, aeroplanes, ships, fridges, TVs and PCs. I'd happily pay a bit more for things made in the UK because I'd know that the money went to emply people here, whoi then pay taxes and don't need to claim benefits.
This won't happen without calling time on the world trade fiddles and insisting that those that want access to the British consumer market must employ British workers to produce the goods and services for our market, or fork out for the real cost to our economy though import tarriffs.
Sure we can have bilateral trade deals to enable netting off of minor imbalances and we can even use trade to discriminate in favour of the really poor nations that need our help - the rest can pay up, shut up or do the right thing.
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243. At 1:14pm on 29 Oct 2010, foredeckdave wrote:
#232 dontmakeawave,
Strategically, this is the root cause of our problems.
So this takes us back to (state) education, investment, R&D and culture.
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245. At 1:32pm on 29 Oct 2010, Sage_of_Cromerarrh wrote:
Richard, no absolutely not an upturn. I believe we will at best bump along with inflation and devaluation lowering our living standards for years to come. Unless we think more radically and move away from all policy being aimed at output growth
'output growth' - you mean like Japan. :)
Some sobering statistics (GDP $trillion)
1991 2010 (est)
USA 7.3 14.2
Japan 5.7 5.7
Deflation destroys societies and often is only eliminated through re-armament.
Growth is healthy. Like sharks we need to keep swimming or we drown.
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.)247. At 1:44pm on 29 Oct 2010, richard bunning wrote:
the rest can pay up, shut up or do the right thing.
Fighting talk. Trouble is protectionism entrenches our bad practices and deprives countries like China of trade.
It also leads to war.
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247 RICHARD B, what you say is largely true now and was completely true in the days of plentiful cheap energy. Exporting jobs to a regime that runs it's protesters over with tanks is morally inexcusible as well as absolute short term economic folly. We should be raising import tariff's on all goods from countries that run a constant trade imbalance with us.
However, energy costs are going to force some drastic cut backs and reductions on what we actually produce and make. So there is no alternative to a generation of consumption reduction and we need to remodel our economy and lifestyles.
The aroma therapists, spiritualists, life-coaches, and personal fitness trainers will all become superfluous as we are forced to spend more of our income on essentials of life.
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#247 richard bunning,
I have to agree with all that you have written today.
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249. RICHARD D,
Japan is massively over populated and was and still is producing far more output than it can sustain. Hence it has stagnated in terms of output. The US is a much larger country (over 30 times larger) with much more natural resources than Japan. Japan was always going to suffer when it's much more vast neighbour (China) got it's act together economically.
The US can correct it's economic model and prosper. It's not over populated as a whole and it has a lot of resources to exploit. Japan is going to see more and more downturn as it has been punching economically well above its weight. They need to reduce their population and in the long term this will increase their per capita prosperity.
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#250 Richard Dingle,
"It also leads to war."
You keep trotting this out but you have never produced one shred of evidence to support the claim. It is NOT self-evident.
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253. At 3:18pm on 29 Oct 2010, Sage_of_Cromerarrh wrote:
249. RICHARD D,
Japan is massively over populated and was and still is producing far more output than it can sustain. Hence it has stagnated in terms of output. The US is a much larger country (over 30 times larger) with much more natural resources than Japan. Japan was always going to suffer when it's much more vast neighbour (China) got it's act together economically.
Just about as wrong as an analysis can be.
Japan is unwinding from a burst property bubble. The problem is debt and the deflationary aftermass.
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#240 Sage,
You are wrong - they do! They may not articulate it in the terms that I used but they do make their own conclusions.
BTW, comprehensive (in the true meaning of the word) was not a socialist idea.
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#251 Sage,
Just why are the days of cheap energy over? Whilst we may still be at the same stge as the hybrid cars, there are many examples of how sustainable enrgy production can be achieved.
Your claim that material supply will force up costs only holds true if you look at present processes.
BTW, Japan does not need to reduce its population. It will need to adapt its economic and social strategies.
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254. At 3:31pm on 29 Oct 2010, foredeckdave wrote:
#250 Richard Dingle,
"It also leads to war."
You keep trotting this out but you have never produced one shred of evidence to support the claim. It is NOT self-evident.
Wrong FDD.
The alternative to war-war is not jaw-jaw - it is trade.
A major component 9not the only one) of the causes leading to WW2 was protectionism. The evidence is there you just don't wish to see it.
Output represents a country's energy. If it cannot be channelled through trade it will find other outlets.
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Dear Sage,
sorry not to respond!
Energy is as you quite rightly say CRUCIAL to our future.
Even if we manage to reduce our imports of it, we will still be fighting for it for all the non fuel uses of oil - plastics in particular - in a world running out of fossil materials.
That's why we need to invest in many forms of energy efficiency.
1. Cut our use of energy - home insulation is a no brainer - saves imports, cuts the cost of living for the occupant and creates jobs for insulators - I've got a VW Polo that does 80 mpg - we need to move on to the hydrogen economy where portable fuel comes from electrolysis of sea water from renewable electricity.
2. Invest in R&D - photovoltaic is still VERY expensive and VERY inefficient - throw serious money at improving it and cutting the cost.
3. Expand generation from renewables - wave, wind & solar are all out there for the taking - hydro is lagging - ALL our rivers and tidal zones should be in line for exploitation with suitable fish ramps, etc.
4. Short term - carbon capture would buy us some time to expand clean coal fired generation - we are standing on 200 year's worth of coal in the UK - but ONLY when the clean up and capture technology is proven - then inject liquid CO2 into our vast resource of depleted oil wells in N. Sea.
5. Stop the nuclear delusion - it takes 20 years for a nuclear station to "save" the CO2 it took to build all that steel & concrete and the predicted life of the station is only 25 years anyway - plus fuel is running out - the construction costs + the decommissioning costs are also huge - let alone the security risks. Coal may not be very nice, but coal + CO2 capture is less damaging than nuclear.
6. Build an intelligent energy grid - combined heat & power for district heating & generation - turn every roof into a solar electricity generator - incentivise people to use energy more intelligently - hook it all up to the Internet and micromanage local demand.
Also stop telling lies about public transport - e.g. which creates more CO2 - going by train from Exeter to Glasgow, or flying in a turbo prop aeroplane? The green thought police will say the plane is worse - actually that's not true - a turbo prop Dash aircraft creates less CO2 than the train per passenger mile fully allowing for occucpancy rates, etc - so there's no need to build hugely expensive, environmentally damaging high speed rail lines - get the aircraft to run on a proportion of renewable fuels and they would be significantly less environmentally damaging than the trains!
BTW - a BIG moan about regional Rail fares - Devon to London - £175 day return! - a standard Devon to Scotland return now costs FOUR TIMES the air fare, takes FIVE times as long and is HALF AS BAD AGAIN in terms of CO2 than the plane.... but I completely agree about long distance air travel being an environmental problem...
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258. At 4:02pm on 29 Oct 2010, you wrote:
254. At 3:31pm on 29 Oct 2010, foredeckdave wrote:
#250 Richard Dingle,
"It also leads to war."
It is not a case of if you put up tariffs we will open fire.
The logic is as follows. Protectionism does not work, it depresses output futher and entenches depression. This in turn produces ideal conditions for extremists. This is precisely what happenned in Germany in the late 1920s and 1930s. German exports were severely hampered by protectionist measures. Not because they were paying low wages but because other countries could not compete.
As an example if we ban Chineese imports it would probably lead to regime change - they have'nt tried fascism yet.
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247. At 1:44pm on 29 Oct 2010, richard bunning and
243. At 1:14pm on 29 Oct 2010, foredeckdave disagreed with my conclusions on the Trade gap (and a few other things as well).
As a result I did a bit of homework and I have to eat some humble pie - I didn't realise how much our Current Account had deteriorated over the last 10-12 years. Coincidentally in 1997 the Current Account was in balance and although we have maintained a manufacturing sector this has not grown, where other European nations have seen strong growth. Thank our previous Governments fixation on the Financial sector and letting our trade position deteriorate so much.
So what is the outlook. In reading a report projecting our position (before the Coalition Government came to power) by 2020 we could be in the unenviable position of a Current Account deficit of 5% and high unemployment.
To quote one source...."Most economists agree that countries cannot run large current account deficits forever, because of the resulting growth of foreign debt; sooner or later some form of adjustment will be required. The question is how large is large and how painful will the eventual adjustment be?"
Now we know what might be coming we ought to put in train policies to get us back on track (haven't heard much except rhetoric yet).
However I am still of the opinion
- we must reduce Government spending as %age GDP and get back to balance,
- we must put in train policies that improve our competitive position
- we must try to get away from this over weaning Welfare culture that saps peoples drive to improve themselves
- we need an industrial policy to encourage the development of strategic future industries and industries that reduce our dependence on key imports
AND we need a proper system of Regulation and Oversight on our Financial Sector reduce the risk behaviour of this key sector.
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http://www.bbc.co.uk/news/business-11651549
Without any heating on my flat does`nt get any colder than 16 degrees centigrade during the winter anyway....
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#258 Richard Dingle,
Still no evidence just more rhetoric. Your WW2 reference does not hold water.
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Foredeck and Richard D, We'll have to agree to disagree on the sustainability of Japan's 128 million population in a country 25 times smaller than the USA (sorry 30 was a very slight mental maths error). It's population density is about ten times that of the US and 4 times that of China. I'll bet that Japan keeps throwing the kitchen sink at output growth without success. Time will see who is right.
As for cheap energy I'll just throw in a few observations to justify the problem. Oil is tremendously versatile both as an energy source and a basic ingredient of most plastics, pesticides, fertilisers, pharmaceuticals, etcc.. It is very light and easy to use for transport. (50kg of diesel can run a family saloon for 1000 kilometres). No other source of energy gives us this energy utility as well as a multitude of modern day products.
Hydrogen could be the future for vehicles but we need a humungous investment in the infra structure and vehicle development to provide this. (I mean really huge). This will take decades to achieve if we can achieve it. Hydrogen also is a store of energy and has to be made from water by a huge input of electricity. Look at the numbers in terms of generation capacity we would have to build and install to produce the hydrogen necessary to replace some of our reliance on petrol and diesel for vehicles. It is really huge. Again taking decades to realistically achieve.
Even if and when all this capacity is in place the cost of this energy source will be very high compared to the previous drill a whole in Saudi Arabia and out gushes energy dense sweet light crude.
Cheap energy is well and truly over. Expect oil prices over $200 before 2014, in my opinion. Growth is then history and we will see how it has been achieved on the back of cheap energy giving us such a surplus largely squandered.
RICHARD BUNNING: agree with everything except I'm not sure about carbon capture for coal and the length of reserves you say we have.
Liquid CO2 has to be at very high pressure and/or very low temperature to remain liquid, so how to you keep it that way when it is injected into the earths crust in old oil wells? Also the volume of the stuff would soon eat up the available volume of the empty wells I believe. The pressure of the CO2 would mean that leakage could be an environmental nightmare too.
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210. At 8:05pm on 28 Oct 2010, Richard Dingle wrote:
202. At 4:40pm on 28 Oct 2010, nautonier wrote:
179. At 08:41am on 28 Oct 2010, Up2snuff wrote:
re #178
It is not just tax paid or UK benefits claimed. What is easily overlooked is the level of remittances home by inward migrant workers.
......................
A very good point ... again, that's why 'the Professor' needs to be careful with his figures as not telling the true story.
Fraulein Nautonier (well if you must keep referring to me as Herr) allow me to put in the bits the learned Professor left out.
All these monies being transferred back home, be it Poland, Ghana or some other land, plus the knowledge transfer, acts as a stimulus to these countries economic development and increases their appetite for exports from the developed countries (British exports, no serious, don't laugh and German exports, etc). It also brings greater stability to otherwise unstable parts of the world.
Do the sums please.
.......................
Fraulein Dingle
You've again speculated with more misinformation and biased and unproven and completely unsupported statements and you have the cheek to ask me 'to do the sums'.
You've introduced another speculative dimension to the argument ... 'all these monies being transferred back home' ... It's your statement so you should show us the evidence that some of the monies stolen from British people are being translated by foreigners/immigrants into a higher level of, or indeed any British export related activity to those countries.
I think most will see through your 'mad professor' speculative nonsense. But the sums involved are in any case 'peanuts' to the overall financial damage do British workers and their families as British taxpayers by the foreign stealing workers.
There are no reliable figures for anyone to add up ... as they're all deliberately hidden from British people in case their review causes the kind of street scenes not scene since in England since 'Watt Tyler'.
I think you're 'clutching at straws' ... please try putting a few more on the camel's back. Most British people do not understand the scale of this one sided immigration 'rip-off' on their bank balance, house re-possession, failure for their children to secure a collge place etc.
I met someone recently who has just returned from Paris ... he has been told that the French govt is now re-patriotating some of their recent immigrants purely because it is becoming more difficult for them to carry on their emigration to Britain, in terms of their becoming illegal or additional new immigrants to the UK.
Perhaps Germany can start taking its fair share of immigrants soon?
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http://www.dw-world.de/dw/article/0,,6118859,00.html
Multiculturism has failed ... in Germany!
Immigrants to Germany will need to speak German.
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265. At 6:41pm on 29 Oct 2010, nautonier
A respected academic and thorough research on the one hand
and
'I met someone recently who has just returned from Paris '
on the other.
LOL. You really don't give up.
Posters like you are what make this blog so much fun.
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263. At 5:15pm on 29 Oct 2010, foredeckdave wrote:
#258 Richard Dingle,
Still no evidence just more rhetoric. Your WW2 reference does not hold water.
Why ?. The evidence lies there throughout history.
Can you give an example of any place, any period where protectionism has worked.
I won't hold my breath.
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264. At 5:45pm on 29 Oct 2010, Sage_of_Cromerarrh wrote:
Foredeck and Richard D, We'll have to agree to disagree on the sustainability of Japan's 128 million population in a country 25 times smaller than the USA (sorry 30 was a very slight mental maths error). It's population density is about ten times that of the US and 4 times that of China. I'll bet that Japan keeps throwing the kitchen sink at output growth without success. Time will see who is right.
Japan has been grappling with the so far un-solvable nightmare of deflation. Japanese consumers have stopped consumers; if prices keep falling the pschyology of consumers is to stop buying.
It has absolutely nothing to do with population / land area ration.
Japan is still a wealthy country especially in terms of the skill and expertise of its people. It leads the world in robotics for example.
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266. At 7:20pm on 29 Oct 2010, nautonier wrote:
http://www.dw-world.de/dw/article/0,,6118859,00.html
Multiculturism has failed ... in Germany!
Immigrants to Germany will need to speak German.
And so they should.
What exactly is your point.
EU workers picking fruit, for wages UK workers reject, are not immigrants. They are citizens of the EU and under EU law have the right to come here. Just like english car designers have the right to work in Germany for german car makers.
Verstehen.
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267. At 7:26pm on 29 Oct 2010, Richard Dingle wrote:
265. At 6:41pm on 29 Oct 2010, nautonier
A respected academic and thorough research on the one hand
and
'I met someone recently who has just returned from Paris '
on the other.
LOL. You really don't give up.
Posters like you are what make this blog so much fun.
...................
Glad you like it Herr Dingle as the laughs on you ... and your non-story as backed up with nothing in terms of mysterious non existent details on how much we benefit from immigrants stealing off us to go out and buy all those wonderful British Exports with the money they send home for conversion into their own cheap home country currency.
You really must be watching too much Star Trek or something.
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270. At 7:45pm on 29 Oct 2010, Richard Dingle wrote:
266. At 7:20pm on 29 Oct 2010, nautonier wrote:
......................................
http://euobserver.com/843/31062
I see Mrs Merkel has been busy as quoted by Leigh Phillips:
'She openly courted disgruntled workers that have lost their jobs by saying that the education of native German unemployed people should take precedence over the hiring of foreigners.'
I suppose you think that Mrs Merkel is wrong too ... and that/this is my point;
Is mass UK immigration (or indeed any kind of immigartion in the current economic client) a good idea or can we (as British taxpayers, workers, students, pensioners) not afford it and not even be allowed to be told the true economic and social costs to the British taxpayer'?
I'm not getting into the figures again as I've already/previously given estimates on the 'omissions' made by the media and vested interests in their one sided biased rhetorical and nonsensical £'s estimates of the so called financial 'benefits' from UK immigration. That's all anyone outside govt can do ... provide 'estimates' ... and our govt can't even do that.
If Mrs Merkel recognises the same problem in Germany ... why are you in denial?
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272. At 8:18pm on 29 Oct 2010, nautonier wrote:
I suppose you think that Mrs Merkel is wrong too ... and that/this is my point..
Your points are rather muddled.
Merkel was referring to Turkish workers not EU citizens.
Last time I looked I did'nt see any Turkish workers picking strawberrys in Engerlund fields.
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273. At 9:24pm on 29 Oct 2010, Richard Dingle wrote:
272. At 8:18pm on 29 Oct 2010, nautonier wrote:
I suppose you think that Mrs Merkel is wrong too ... and that/this is my point..
'the education of native German unemployed people should take precedence over the hiring of foreigners.'
.........................
That's the point here assuming you're not following the recent new concern about this in Germany (as probably cost related there also) ... and many Germans are questioning and concerned about those immigrants who do not speak German ... that is a new development and irrespective of whether or not from within the EU ... Britain is at a disadvantage here on language with about 1.8 bn (?) people worldwide speaking English.
The massive net cost of UK immigration also shows in our UK GDP ... but the ONS does not provide a suitable breakdown of that either. Presumably, mass immigration is good for GDP as 'net cost' transactions ... so we have some 'growth' at last - 'good news' according to the BBC.
Anyway you should be allright stealing a German job as I think you're fluent in German?
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274. At 10:08pm on 29 Oct 2010, nautonier wrote:
... Britain is at a disadvantage here on language with about 1.8 bn (?) people worldwide speaking English.
Blimey Nautonier you have actually made a good point.
Britain is likely to be a magnet for foreigners for the reason you gave.
But if you all learnt Welsh...
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#268 Richard Dingle,
Now you are just wriggling.
Exactly where in history.
If you must answer a question with another question then I will give you 2 examples:
The British Empire
The Peoples Republic of China
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#264, Sage,
If you remove the usage of oil for power generation, heating and transport the demand level falls significantly and even on present estimates we face no shortage in the medium to long term.
Now I have recently identified that the environment for a major technological development exists. It is also likely that this change will occur in the production of power. Until that change is identified we are already well in train to establish a strategically sustainable mix of power sources:
Nuclear
Wind
Coal
Wave
Hydro
By-Product production
Until such times as the 'new' technology is availble the above sources are strategically viable. However, when you get statements like the recent one from Chris Huhne describing the Bristol Channel barrage as being strategically irrelevant ( does this man even understand the meaning of strategy?) because it would only provide 5% of demand!. We would have to consider them as the equivalent of the hybrid car.
However, they can meet our estimated needs and do not suffer from the vaguaries of the oil and gas markets. They are within our own borders and therefore the price can be controled internally
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Hey Stephanie,is the following bit of REAL NEWS a "nothing-burger" as well(as well as foreclosuregate-a non-economic insight topic according to the BBC!):
http://www.thisismoney.co.uk/mortgages-and-homes/article.html?in_article_id=517365&in_page_id=8&position=moretopstories#ixzz13kgVhpCj
Quote:
"Mortgage lending fell by 90% from August to September amid worrying signs house prices are set to dive, Bank of England figures showed today."
90% drop in a month-it must be a nothingburger,silly me!
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Btw,I know you read these blogs,you even brought yourself down from your rarefied atmosphere to actually comment at post 14!
In my almost 3 years of reading you and Peston,that is the 2nd time I`ve seen you comment on your blog,but I know that you`re busy working on your insights and your televitz appearances.
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275. At 10:36pm on 29 Oct 2010, Richard Dingle wrote:
274. At 10:08pm on 29 Oct 2010, nautonier wrote:
... Britain is at a disadvantage here on language with about 1.8 bn (?) people worldwide speaking English.
Blimey Nautonier you have actually made a good point.
Britain is likely to be a magnet for foreigners for the reason you gave.
But if you all learnt Welsh...
..................................
The final points on building a better and different 'magnet':
1) British GDP ignores measurement of costs and liabilities being added to the overall £4 + trillion amount of UK debts, deficits and liabilities. In other words how can our GDP be said to be increasing when our full big debt and liability picture is not presented in the same statistical measure?
2) Some of these costs and liabilities include UK net immigration costs.
3) GDP is measuring part of the globalised financial mess and is therefore useless as a measure of our UK financial performance.
4) Denying that mass immigration is displacing British people from jobs, employment, govt services and benefits, education and opportunities ... is 'net immigration cost denial' ... and is now recognised in e.g. Germany as a serious national and constitutional problem.
5) 'Net immigration cost denial' should be a crime for those in a position of responsbility.
6) The ONS need to give a full and proper breakdown of GDP figures as they are confusing to all and sundry ... particularly to the BBC, it would seem.
7) What some perceive as GDP growth is not, in my view, 'good news' ... it is simply the fact that the bad news for the British taxpayer and British worker is being deliberately hidden from us all in the way that these ridiculous GDP figures are pushed on us all of the time and without any proper accounting of the overall debts and liabilities for the UK. In other words if our overall debts and liabilities are increasing faster than 'GDP' ... then there is no 'UK growth' i.e. what I believe to be the real UK financial position.
8) 'Net immigration cost denial' is doing tremendous economic and social damage to the UK. No one can prove me wrong as no one in govt will carry out a proper measurement on this (also because 'they' all know I'm right on this0.
9) This is no laughing matter - we're not all inclined or able to steal a German or Welsh job when the time is right.
10) So who is truly British ... my definition is of anyone who had a grandparent or great grandparent (or close relative thereof) who would have fought for Britain or otherwise served the British war effort in the first and/or the second world wars... and their direct descendants.
This would of course, include many who are or would have been born and lived overseas. Obviously, all those who born in Britain are also British.
Before rabid lefties start writing in with their xnephobic insults ... A definition is very necessary because:
i) without this, the true cost of immigration can never be calculated and is just a massive and burgeoning, unquantified UK financial liability, as part of the £4 + tn.
ii) this is a UK sovereign and constitutional rights and privileges issue
11) BTW, I am not anti-immigrant, I am anti 'bad government and GDP nonsense' when our population, national debts and liabilities are running out of control on our very small and congested, unsustainable group of British islands.
12) Unless we get a proper measure of these £4 + trillion UK debts and liabilities and get these under proper control - the UK is heading for a larger and more serious financial/credit crash. This is far more serious that just the 'structural deficit' and which obviously does need tackling first.
The second serious consequence is a future massive decline in UK living standards ... as a 'shock wave' and not as a gradual effect (on the non globalised element of the economy and population). I'm afraid that its already on the way ... unless we do things differently and address these issues.
Net immigration cost denial = GDP 'good news' rubbish.
UK GDP is not increasing ... it is just not being measured properly.
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280. At 07:27am on 30 Oct 2010, nautonier wrote:
11) BTW, I am not anti-immigrant,
Oh but I think you are big time.
Immigrants built this country and contemporary migrants are net contributors to the economy.
BTW Did you know that Doc Martin footware is the creation of a German immigrant.
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#276. foredeckdave and #268 Richard Dingle,
Précis :arguing about the pros and cons of protectionism
Consider if a single currency is a form of protectionism? as the examples "The British Empire The Peoples Republic of China" - given by foredeckdave - both have that feature too.
Is a single currency the best from of protectionism? If so what implication does that inevitably draw one towards for the UK!!!!!
Further, what does that say about the detriment to economic efficiency in money changing (and bankers!)?
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#281. Richard Dingle wrote:
#280. nautonier wrote:
"I am not anti-immigrant" Oh yeah!!!
I am an immigrant - Huguenot, Celt, Roman, West Saxon, Norman and those three proto French women from the Dordogne from 10,000 years ago!
I enjoy proving that if we go back about 32 generations all Europeans are related - that is we all have some of Charlemagne's [800 AD] genes (if not his jeans!) (2 to the 32 ish GT then the probable number of people in Europe at the time.)
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281. At 09:40am on 30 Oct 2010, Richard Dingle wrote:
280. At 07:27am on 30 Oct 2010, nautonier wrote:
283. At 10:00am on 30 Oct 2010, John_from_Hendon wrote:
#281. Richard Dingle wrote:
#280. nautonier wrote:
"I am not anti-immigrant" Oh yeah!!!
.........................
You both sound to me as if you are 'net immigration cost deniers' ... in my book that is a very serious offence if you are in a position of responsibility as seemingly being very comfortable pushing out British workers and students and graduates from what is rightfully theirs ... that is a big issue ... the sovereign and constitutional rights of British people in their own country ... and Britain where most of them were born, live and are now stuck and most do not have the option to leave Britain, even if they wanted to and their standards of living are standing on a cliff edge. Millions of people are being written off here and your response is to criticize those who would defend them. Grrrrrr!
You're both sounding very anti-British to me and the long sought after and non-existent adult and sensible discussion is about the overall effect of immigration and how much this is costing us as UK taxpayers and it is not a discussion of immigration at an individual level.
Therefore, I think you need to be very careful with your pigeon holing criticism and accusations as there are different perspectives on this and there are vitally important issues involved, e.g. the question of GDP nonsense as is not just immigration related.
For example, another GDP issue should be the 'Cadbury's issue' when much of the related transaction monies on GDP will show in UK GDP when in effect the transaction created a good many liabilities and opportunity cost issues for the macro economic management of the UK.
If the GDP figures are being rolled out every quarter ... then so should the national liabilities register be rolled out every quarter and be cross referenced to corresponding transactions on GDP ... in the case of GDP this might mean setting up a govt accounting provision for increased unemployment, graduate HQ training, attracting a replacement for Cadbury's chocolate business.
Unless their is a corresponding national register of short, medium and long term liabilities that is cross referenced with GDP ... then our GDP figures are just nonsense as also includes the work of the OBR and all govt and BOE forecasts ... including inflation and other key measures.
BTW - I think its called 'accounting'.
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284. At 10:54am on 30 Oct 2010, nautonier wrote:
BTW - I think its called 'accounting'.
Yes, and best left to people who understand it.
(An accountant)
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276. At 11:14pm on 29 Oct 2010, foredeckdave wrote:
#268 Richard Dingle,
If you must answer a question with another question then I will give you 2 examples:
The British Empire
The Peoples Republic of China
The British Empire ? Any particular aspect. A rather large subject. Not known for level 'playing fields'. Hardly a good example going forward.
The Peoples Republic of China ? Don't confuse red-tape with protectionism or incubation of 'nursery industries'.
German export penetration of China is running at 16% + annually.
Germany, China and toys, now that is interesting.
Germany used to be world leader in toys (now the far East), not any more. A good thing ? Yes, they have replaced toys with 'machine tools'. Moving up the added-value ladder. Re-read previous posts.
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#285, Richard Dingle,
Oh please preserve us from the monsterous army of accountants. Running dogs of the casino bankers - as Moa Zedong may have said.
Cost of everything and value of nothing comes to mind!!
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285. At 11:47am on 30 Oct 2010, Richard Dingle wrote:
284. At 10:54am on 30 Oct 2010, nautonier wrote:
BTW - I think its called 'accounting'.
Yes, and best left to people who understand it.
(An accountant)
.....................
Agreed - Obviously not me or you ... but it needs to happen as we have no reliable UK plc accounts for those who pay/have paid the taxes and have fought and died and lost people who have done this on behalf of their country.
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Nautonier - interesting name choice, misspelt old french word for navigator also used by the fake 'priory of sion'. Hmmmm, pretty fitting that you misspelt it, makes me think you're just a WUM.
Just incase you're serious (and I'll have to modify my language to avoid this comment being removed on grounds of foul and abusive language), you're arguments are those of a person who already has a conclusion and is only willing to listen to evidence that conforms to that conclusion - dismissing anything else because of your predjudice. You make wild sweeping claims with no evidence then claim any evidence presented by anyone else is made up/not valid, because it comes from a source that doesn't support your views.
As it is you making wild claims then the burden of proof lies with you, not those trying to contradict your erronous claims.
There is one thing that is undeniable, the 'indigenous' population (btw, everyone in the country is an immigrant of one sort or another, and if you trace back your family tree you'll find you are too, whether your ancestors arrived 1 generation ago or with the first wave of homosapiens) are having less and less children and are living longer and longer, so without immigration there won't be enough people in the country of tax paying age to support you and your family in their old age.
You're arguements and points on this page remind me of my grandfather, an old man who has grown bitter and spends too much of his day reading the daily mail (or as I like to call it the daily heil), you can't reason with him because his thought process is influenced by his prejudice and the daily infusion of vitriol he gets from the daily mail, he already has his conclusion and isn't willing to listen to anything that contradicts it.
Luckily because we have an adequate education system and a reasonably independent media people like you will always be in the minority.
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#288. nautonier wrote:
"
BTW - I think its called 'accounting'. Yes, and best left to people who understand it. (An accountant)
"
I disagree. Accounting is (should be!) doing the sums in a way that non-accountants can understand, and to make sense of the numbers to non-accountants. It (accounting) must not be seen as a black art. Even more so, auditing must be accessible and comprehensible to everyone or it is nothing.
There are of-course problems with convincing non-accountants (particularly in the UK) that the sums are right and proper, and give a true and fair (jargon!!!) view of the state of affairs (jargon!!!) and the activities of a business at a time and for the period since the last set of accounts were produced and audited. The main problem is the almost complete innumeracy of the British people. The promotion of innumeracy and indeed illiteracy may not be the stated aim of British education but it is without much question the result!!! (RANT Warning!!! - but there is I believe some truth in the statement)
But professionally qualified accountants and auditors MUST strive to overcome the increase in the educational deficit - indeed it is their duty to do so.
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#290 JFH,
John,
An amusing (though serious) response.
Part of the problem, as I see it, is the concentration upon the money engendered by financiers, governments and corporations. Now I am in no way suggesting that accounting is not an essential element of organisational management. I am suggesting that the rise of accounting from a facilitating and adminstrative process to a driving process has totally skewed the startegic decision making process for governments and businesses alike.
As for the level of numerical literacy (let alone accounting litteracy) within the general poulation I wonder if that reflects the genaeral antipathy towards financial sophistry. After all if the financiers cannot understand the formulas of the rocket scientists and their implications then what chance the man on the Clapham omnibus?
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290. At 12:51pm on 30 Oct 2010, John_from_Hendon wrote:
#288. nautonier wrote:
"
BTW - I think its called 'accounting'. Yes, and best left to people who understand it. (An accountant)
"
.....................
Hi John_from_Hendon
My reference to 'accounting' viz-a-viz GDP and national liabilities register is more in relation to ... the principles of accounting 'balance' and completeness ... the 'big picture' - as capable of being useful for those who do not understand accounts ... as is suitable for use, along with GDP, for the 'politicians'.
Unfortunately, the 'UK big picture' may be too much of a horror show at the moment and while parts of it may be better kept 'confidential'... the GDP figure fiasco must surely be just inaccurate nonsense and misleading and ... as may be the case in many other countries as including China, India, i.e. some of the other countries which everyone refers to as the 'big growth success stories' but for whom the realisation of future national liabilities ... worker rights, public service provision etc does not yet feature ... in their national 'accounts'?
The UK Coalition govt. must be undecided whether to tell the full story of Britain's finances or perhaps wait until closer to the next general election? They may win the 'sympathy vote' by getting more of the bad news out now?
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Richard Dingle, When prices are falling you only stop buying stuff you don't really need. Everything you do need you still have to buy. So I don't see any issue with deflation as my point is we need to change our behaviour and buy less non essential goods and services.
Foredeck, all the energy sources you list are no good for transportation and don't address the role of oil in key industries such as agriculture. In addition, there is not sufficient capacity at a price we can afford (financially or environmentally) in the solutions you list for electrical power generation. The problem is energy return for energy input required to get that return (net energy yield). Our energy will be a lot more expensive because of the much lower net energy yield of the generation sources you list, and we will have to make huge infra-structure investments that we will have to make great sacrifices to be able to afford. I see no sign of this sacrifice being even contemplated by politicians.
Transportation and mechanised agriculture are the two areas we can address least well with current alternatives to oil.
The increase in cost for energy together with the increase in cost for food and the restrictions on transportation of people and goods resulting from this will have huge impacts on our economy and requires new more localised thinking.
Overriding all else is a lack of time to make the adjustments and infrastructure investment required to wean our economy off of oil.
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293. At 3:27pm on 30 Oct 2010, Sage_of_Cromerarrh wrote:
Richard Dingle, When prices are falling you only stop buying stuff you don't really need. Everything you do need you still have to buy. So I don't see any issue with deflation as my point is we need to change our behaviour and buy less non essential goods and services.
Stuff we need ? Presumably you mean food for example. Your logic falls down rather badly. Deflation may not stop end-consumers, you and I, from buying essentials. But what about the producers; they need to invest in future production, the time factor, the up-front costs, etc.
As for the anti-growth brigade, unfortunately growth is essential if you have a growing population. It is that basic. The more people the bigger the cake has to be. Moving on to non-essentials. You keep the same model iPod (as an example) for ever, you deprive future designers and engineers of employment.
In an earlier post you suggested that 'Japan needed to reduce its population'; how, by war or mass suicide.
You need an economics primer, and quick. Your un-Sage like comments amaze me.
Hyper-inflation is bad, but prolonged deflation is far worse.
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#293 Sage,
The capacity problem would be solved by using a managed mix of the alternatives that I suggested. As for the investment requirements then they will have to be faced sooner or later so you are limiting yourself.
The 'goal' of cheap power production will force us to move to the type of production methods that I described. You appear to completely overlook that, as this depression deepens further (which it will), both oil and gas will become increasingly more precarious in supply. We, along with our European partners will be forced to make domestic power arrangements. The imperative will be there.
A similar situation exists with agricultural production. However, as we are members of the EU there is the possibility of diversified supply. That does not mean that we will see more marginal land being re-employed or technological developments as the necessity increases.
So, we have to ask ouseleves when is a cost a cost? It certainly isn't when the very continuance of your society is compromised - it isd a vital investment!
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289. At 12:48pm on 30 Oct 2010, errrrrrrrrrm wrote:
..............................
Great stuff errrrrrrrm someone who disagrees/objects/insulting at last.
Your 'username' well, says it all ... Ha Ha Ha! Further comments would be moderated here ... that's a major 'geeky' user name ... some might think it a bit too 'geeky'.
BTW Are you also a 'net immigration cost denier'? A 'Yes' or a 'No' will do just fine?
BTW No need to write a load of xxxx there are other websites/blogs which are more suitable for your standard of economically absent comments. In your case, just 'pass' if you do not understand the question.
Cheers!
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#296, nautonier,
calm Down, Calm Down, Calm Down!!! (and as a born and bred scoucer I can say that)
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297. At 6:18pm on 30 Oct 2010, foredeckdave wrote:
#296, nautonier,
'Allri-iiii-ght', Kid!
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I have to agree with many posters that it will take some time for the current spending cuts to feed through BUT - I wonder what the net effect of consumers deleveraging will be? If consumers arent buying the goods that are usually imported then the trade deficit will be less. Now there will be a negative effect from retail job losses but given the UK balance of payments deficit is a whopping £100bn ish - what is the net effect going to be? Could it actually be beneficial in that we import less consumer stuff?
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Richard D, You hit on the solution to output growth being required, population growth. Stop population growth and the pressure reduces. Japan could reduce it's population by having less babies than there are people dying from now on. Population would gradually come down. 0.5% per annum would do the job, humanely. The same goes for elsewhere such as the UK, USA, India etc. When I look at all the mounting evidence from the environment and key finite resource price inflation this will be forced upon us anyway. I feel it would be infinitely more wise and sage like to manage this in an orderly fashion for ourselves.
Population control is a great taboo subject, everyone seems to feel it's off limits to discuss, and in reality it will seriously negatively impact the quality of all of our lives and needs to be considered. On output growth I am simply arguing it is no longer sustainable with the approach of peak oil, peak coal, peak gas, peak phosphorous, global warming etcc.. Therefore when something may be no longer possible it is wise to consider an alternative approach (just in case I and many others are right).
Foredeck we are in broad agreement with what needs to be done. I merely point out that we have a serious timing issue and a net energy issue both of which we will be unlikely to fully meet. This issue is exacerbated by political thought currently overlooking the problem and continuing to focus on getting back to output growth at all costs. I believe this can not be sustained because of the energy supply issue we face and that vital time is being lost in the blind faith pursuit of output growth.
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Accountants are not the problem but the half-educated bean-counters that seem to comprise corporate Britain in both government and commerce present a serious difficulty.
I have been told that the British invented cost accounting primarily to deal with ammunition shortages in the First World War. I have no idea as to the truth of that statement but cost accounting has its function: but it is a management tool and not a prophetic statement. If the numbers don't add up then you have to seek to rework the equation into other formats to see if the processes under review are viable if constructed in some other way. I have participated in some interesting exercises in such management methods. We have to accept that perceptions and opinions are not necessarily realities. There is too much politics in business and not enough productivity.
We have a situation in this country where it is deemed too costly to make anything. This is a generalisation but I think it is an acceptable proposition. This is an absurdity as it is a clear statement that everything is too expensive. If this persists it can only mean progressive economic collapse in which we all pay tax on our benefits to ensure that there are benefits tomorrow. As an economic model it is a complete no-hoper.
We have to go back to the fields, factories and workshops whatever the cost as, to coin a phrase, there is no alternative.
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#301 stanilic,
"We have to go back to the fields, factories and workshops whatever the cost as, to coin a phrase, there is no alternative."
I agree with you. Globalisation has been predicated solely upon the basis of cost. Low cost has been used as a smoke screen for price. As every marketibg text book will teach you price is about value and NOT about cost. In our present position the real value will only be achieved by doing exactly what you say.
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US FORECLOSURE CRISIS
Ladies and Gentlemen
I would like to draw your attention to the links below, you'll have to judge its veracity
The link concerns the foreclosure crisis in the USA:
http://www.marketoracle.co.uk/Article23629.html
Even if you don't read the whole article, do please scroll down to the video at the bottom of the piece and watch it. A direct link is:
http://www.marketoracle.co.uk/financial_markets_analysis_videos_10.htm#vid1
The implications of this are immense, and not just for the US people - if it is true. It is bound to affect us all and not for the better.
We are in for exciting times.
Does the UK have similar foreclosure problems? Please, please let us know, yes or no ..........
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300. At 11:20pm on 30 Oct 2010, Sage_of_Cromerarrh wrote:
Richard D, You hit on the solution to output growth being required, population growth. Stop population growth and the pressure reduces.
No. Presure increases. It takes a different form - an ageing population. The second major problem hitting Japan, after deflation is an ageing population.
Just about the only significant problem facing Germany to-day is an ageing population caused by a poor birth-rate.
Both Germany and Japan need to turbo-charge their birth rates. PDQ.
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Why are we still in thrall to the completely discredited ratings agencies?
Weren't these the same people who rated those wothless American mortgage instruments as AAA? The truth we all know is that was completely the oposite to the truth about LIAR loans, NINJA loans and all the other acronyms used to describe rubbish. With reference to the strength of our 'recovery' in the British economy, a contribution has undoubtedly been made by people actually spending their savings now rather than see their capital being eroded by low interest rates and remorseless inflation.
The people with huge debts/mortgages have benefited hugely, whilst the person who has saved has been heavily penalised. This will come back to bite us when pensioners with depleted savings are forced to apply for state benefits. Unless something is done to encourage savers, this will be the cause of more public benefits/debt increases in the future.
Hold on to your hats, we will not be out of this for a long long time....
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#291. foredeckdave wrote:
"As for the level of numerical literacy [I prefer the terms numeracy and innumeracy-jfh]... I wonder if that reflects the genaeral antipathy towards financial sophistry."
I'd go with the simple answer: crap and declining educational standards combined with political jingoism of proclaiming the we are better educated than [insert county with good education - say India]!
I come from a long line of scientifically and mathematically educated people and have also seen in my lifetime the collapse of numeracy - even in the teaching profession! How many school maths classes are now taught by graduate mathematicians? Far fewer today than they were when I was at school. (also holds true for all sciences). I also blame the move away from two and three hour exams to course work and of-course the use of computers and calculators.
As an exercise: watch the confusion in the supermarket when people try to compare the relative price of different sized packs, and 2fors etc. I have also seen school maths teacher unable to re-scale a cookery recipe for a different number of people or a different sized cake tin!
#292. nautonier
Don't blame Accountants and Auditors for the GDP information deficit. blame NSO! Lies damn lies and statistics! It is also possible to blame statisticians for the too low interest rates for the last decade that 'forced' the spineless Bank of England into keeping interest rates too low and so causing the bubble that led to the crash! Make today National Head Butt a Statistician Day if their numbers worry you! Our National Statistics have decline a very long way since my late aunt was head statistician at the Board of Trade! I recall she stood out against including invisibles in the trade figures and it was only included after she retired. (She also beat all the boys in Maths in her year at Cambridge - she would have been senior wrangler in an earlier age - but that was before girls were even given degrees - in fact she would have received her degree but died a couple of months earlier.)
However... Isn't it about the misuse of statistics by people who not only should know better, but who we have expensively educated to know better?
#303. SleepyDormouse wrote:
"US FORECLOSURE CRISIS..Does the UK have similar foreclosure problems"
Of course we do! [As your question suggest!] Not a day passes than there is not a further news story about downwards pressure on house prices.
Take today as an example: apparently the new housing benefit cap of £290/wk for a two bedroom flat will mean that the vast majority of all people in all of London will no longer be able to afford their rent. Think about that fro a moment and what it means to landlords. Property will either be vacant or they will have to reduce the rent. If they reduce the rent it is possible that they will see the investment in property as not providing the return they seek and at its worst the rent will be less than the mortgage!
House prices have to fall in relation to incomes. Incomes are not going up so prices will fall and that will at the margin increase repossessions. I have previously written about the lender aggregate effect where lenders are initially unwilling to repossess as this suggest that other properties on their books are also overvalued - but eventuially an avalanche hits the market... with the possible (probable?) need for the state(taxpayers) to rescue the lenders once again!
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303. At 00:24am on 31 Oct 2010, SleepyDormouse wrote:
US FORECLOSURE CRISIS
Ladies and Gentlemen
I would like to draw your attention to the links below, you'll have to judge its veracity
The USA (and the UK) has the mother of all 'ball and chains' attached to it.
By the time Britain and the USA get on top of the debt issue the BRIC economies will have disappeared over the horizon.
Only 4 possible solutions..
1. Hyper inflation
2. War
3. Growth in the USA and UK to outstrip the emerging economies (pigs and flying come to mind here)
4. Massive debt write-offs and an orderly unwinding of the banking system.
I'd go for 4.
The USA is still a young country (and a great country in my opinion) and the Americans take government with a pinch of salt (and have no respect for fools in Washington), which is why the Tea Party movement is gaining traction and Obama is regarded as un-American. Handing out huge sums of taxpayers money to corporations that basically 'fouled-up' has not gone down well.
To understand the how the great majority of Americans think just watch The Little House on The Praire a few times.
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307. At 11:10am on 31 Oct 2010, Richard Dingle wrote:
"Only 4 possible solutions..
1. Hyper inflation
2. War
3. Growth in the USA and UK to outstrip the emerging economies (pigs and flying come to mind here)
4. Massive debt write-offs and an orderly unwinding of the banking system.
I'd go for 4."
------------
Thanks for posting your views. A very interesting list.
If I choose from your options I would expect some of 4 but also inflation will occur, hyper, hmm not so sure, but I wouldn't be surprised to see it up around 20-50% with interest rates to match.
Trouble is I can also see conflict as an option, maybe just a lot more of what we have now rather than WWII style. So I'd bet on a mixture of these three.
I agree about option 3, unless we get a really charismatic leader and the country all pulls together in a selfless way ............ Oh forget it, you're right, it will never happen, even though its the best answer and I wish it would!
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306. At 11:00am on 31 Oct 2010, John_from_Hendon wrote:
#292. nautonier
Don't blame Accountants and Auditors for the GDP information deficit. blame NSO! Lies damn lies and statistics! It is also possible to blame statisticians for the too low interest rates for the last decade that 'forced' the spineless Bank of England into keeping interest rates too low and so causing the bubble that led to the crash! Make today National Head Butt a Statistician Day if their numbers worry you! Our National Statistics have decline a very long way since my late aunt was head statistician at the Board of Trade! I recall she stood out against including invisibles in the trade figures and it was only included after she retired. (She also beat all the boys in Maths in her year at Cambridge - she would have been senior wrangler in an earlier age - but that was before girls were even given degrees - in fact she would have received her degree but died a couple of months earlier.)
......................
Hiya John_from_Hendon
I don't for sure who is to blame but some persons are ...
Interesting point about 'invisibles' being incuded in trade figures ... I had speculated on this previously not knowing why this happens and when the change occurred ... but bringing me back to my main point about GDP figures ... this is possibly our political class's greatest ever 'con trick' on Joe Public ...
... concentrate on piddling little % changes in GDP and do not ever let the 'peasants' know the full big picture story ... about overall govt debts deficits and liabilities that are both known and ignored (let us also hope that the BBC are not still taken in by all of this?).
So the various estimates about the UK's other 'liabilities' ... £4 trillion ... probably underestimate how much money Britain is really is in the 'red' and over what time period(s) ... short, medium and long term (?) because the UK has had 'zero' strategic planning for 50 plus years.
All GDP growth figures are nonsense in my view ... even for the BRIC countries ... they have their own massive in-built current and future liabilites as their population levels explode upwards and the gaps there, between 'rich and poor' get ever, ever wider.
Cheers
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306. At 11:00am on 31 Oct 2010, John_from_Hendon wrote: "Take today as an example: apparently the new housing benefit cap of £290/wk for a two bedroom flat will mean that the vast majority of all people in all of London will no longer be able to afford their rent."
JFH I did a short search on 3 Estate Agents in the London area and looked for rental properties up to £15000 per year i.e. 290 per week. There were literally dozens available and not just flats! Perhaps this limit on benefits is a bit of hyperbole? The flats may not be in the most desirable areas but most of us, who are working or worked for a living, would love to live in a town house in St John's Wood but can't afford it!
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Richard Dingle, just think through the logic of your suggestion on raising birth rates for Germany and Japan. As these births move into old age yet more births are required which then require yet more births etc.. You like many economists seem to think that increasing numbers is the only way to achieve a quality of life.
Our finite planet will limit numbers. I say to you that the signs are that the limit is probably already passed in terms of humans on the planet.
Therefore fresh non output growth thinking is required.
For a start old is a relative term. A hundred years ago 50 was old. Now a 70 year old is likely to have more years ahead of him/her than a 50 year old did a century ago and is still able to work particularly as modern jobs are on average less physical. So the argument of demographics is fallacious. You simply move the retirement age up and down according to the reality of what individuals and the state can afford.
In addition at the young end of the age scale more/ less people can part time work and part time study as required to meet the labour market demands.
Being simplistic and saying the current model means we will have more retirees being supported by less work age people takes no account of the simple alteration that can be made to the age of retirement and the work/study pattern of younger people.
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#311 Sage,
I'm not sure that you, me or anybodyelse can really do anything about population. Neither am I sure that you, me or anybodyelse should even try.
At the present time we have enough food production for the world's population. It is a crime to not donate food for mergencies merely because of the cost of transporatation. Additionally you have also to take into account the great volume of food that is presently wasted and the casino activities of the coomodity markets.
For over 50 years we have heared your type of population warnings and the dire consequences that have accompanied them have failed to materialise.
Now we do have to totally re-think our economic startegies and practices but we cannot stop the right of people to bread.
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# 311 & 312 Sage_of_Cromerarrh & foredeckdave
There are limits to everything here on a finite earth. Saying we have never had a problem in the past is in my view the action of a person who needs to think ahead a bit more. To increase the population of the earth now seems to me to be short-sighted. By ensuring that all on the earth can expect their children to live [to then support them in their old age] is a first critical step to limiting the earth's population. This has happened in many countries. The earth will reject humans as a species it does not want if we become too numerous. We will then have proven that we perhaps had little purpose and the meaning of life might just as well have been 42.
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313. At 7:15pm on 31 Oct 2010, SleepyDormouse wrote:
# 311 & 312 Sage_of_Cromerarrh & foredeckdave
There are limits to everything here on a finite earth.
Are knowledge and technology finite too ?
Answer: No
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#311 & 313 Sage and Doormouse,
We do not even know what the limits are when it comes to sustaining population. We are certainly nowhere near them when it comes to food production. I therefore feel that you are both being somewhat short-sighted yourselves.
Now there are constraints upon poulation density. Whilst I have not read an accurate description of them, human history appears to show that wars, pandemics and natural disasters appear to be major control factors. Of these war is the only factor that is within the control of man. It can be argued that war is a psychlogical response to economic factors. If so, then man appears to have an unacknowledge self-control mechanism for population.
I am somewhat wary of following the global warming argument as a control factor as the models that we presently have at our disposal are far from being comprehensive. That man's behaviour will have had and continue to have an effect upon climate change I will accept. However we have no way of knowing where we are in Earths natural change processes and therefore cannot truly quantify the level of effects of those activities.
You both believe that resources are finite. This also is probably true. However, the resources most in demand today will not necessarilly be those demanded in the future - coal within Western Europe is an example of that.
As for Doormouses's question of our purpose and meaning then you will have to research further in the fields of philosophy and religion for that
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314. At 8:28pm on 31 Oct 2010, Richard Dingle wrote:
Are knowledge and technology finite too ?
Answer: No
--------------------------------
I appreciate your reply to me - many thanks.
I suspect we could have a long discussion about the limits to technology. It has to be capable of being built and used by humans who make mistakes. I suspect that technology is limited even if we are far from the limits at present. If you have the freedom of infinite time, effort and no cost restriction, you may approach your ideal. However, you are limited by physics and its laws. This shows at present there are limits to what we can do. However, the subject has a habit of producing new theories that overturn the old [unlike in economics] and the subject marches on in a new direction allowing new technology to be produced. We would be god-like if we knew everything, and I doubt this will ever happen. So I believe technology is limited.
As to knowledge, although I admit to having a very poor understanding of his work, Godel showed that there are limits to what we can know. There are limits.
So sorry Richard, I regret I must disagree with both your examples.
But then, maybe you have other ideas and thoughts .........
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314. At 8:28pm on 31 Oct 2010, Richard Dingle wrote:
313. At 7:15pm on 31 Oct 2010, SleepyDormouse wrote:
# 311 & 312 Sage_of_Cromerarrh & foredeckdave
There are limits to everything here on a finite earth.
Are knowledge and technology finite too ?
Answer: No
.....................
Wrong ... in the UK the answer is 'YES' ... because our government and our 'large business' and political classes prefer to import knowledge, labour and technology rather than create it in our schools, universities, factories and workshops.
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Richard we're not talking about knowledge and technology, we're talking about finite resources. Fossil fuels took millions of years to form and we have devoured them in a hundred years.
Foredeck, modern agriculture is a means of turning oil into food. Every calorie of food requires at least ten calories of diesel fuel to produce, and more naptha to make the fertiliser and pesticides to achieve the industrial yields.
Current world food supplies are very precarious and certainly can't stand the pressure of yet more humans on the Earth. Climate change, soil erosion, deforestation, and water depletion is depleting the ability of large parts of the current food producing land areas of the Earth to meet even current outputs.
You can't eat technology Richard and the laws of thermodynamics aren't altered by it.
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318. At 9:01pm on 31 Oct 2010, Sage_of_Cromerarrh wrote:
You can't eat technology Richard and the laws of thermodynamics aren't altered by it.
Nuclear power, GM foods, synthetic foods, distilling drinking water from seawater, etc.
The list is ever growing. Science has the capacity to provide solutions to all of mans problems.
So you are being too negative. In any event wars, there will always be wars, provide a curb on population growth.
Curbing population growth artificially rather than letting it find its own level will create more problems than it solves.
Malthus's theories have never really gained traction because they fail to factor in the advances provided by science.
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317. At 9:00pm on 31 Oct 2010, nautonier wrote:
Wrong ... in the UK the answer is 'YES' ... because our government and our 'large business' and political classes prefer to import knowledge, labour and technology rather than create it in our schools, universities, factories and workshops.
Wrong way round. We tend to export the above and import fruit pickers.
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320. At 9:29pm on 31 Oct 2010, Richard Dingle wrote:
317. At 9:00pm on 31 Oct 2010, nautonier wrote:
Wrong ... in the UK the answer is 'YES' ... because our government and our 'large business' and political classes prefer to import knowledge, labour and technology rather than create it in our schools, universities, factories and workshops.
Wrong way round. We tend to export the above and import fruit pickers.
.........................
You've got it wrong again, I'm afraid
'5 live Investigates'
A third of 'highly skilled' migrants work in unskilled jobs - is the UK benefitting?
The debate is now live on Radio5 and well worth a listen on I-Player - See if you can spot the well known 'net immigration cost denier' who has a position of responsibility.
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319. At 9:27pm on 31 Oct 2010, Richard Dingle wrote:
"....Science has the capacity to provide solutions to all of mans problems. ........."
-------------------------
Man has the capacity to use science to screw up mankind.
We've done it in the past and will no doubt continue to do it. I see no reason why we should ever get to being 10% right all the time.
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#318 Sage,
"Foredeck, modern agriculture is a means of turning oil into food. Every calorie of food requires at least ten calories of diesel fuel to produce, and more naptha to make the fertiliser and pesticides to achieve the industrial yields."
That maybe true at the present time. However, you are denying the ability of humanbeings to find answers to problems.
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#322 Sorry typo alert!!!! Poor proof reading -
I meant to write 100% not 10%
However, if we ever do hit 10% correctness perhaps we should all be pleased
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323. At 10:48pm on 31 Oct 2010, foredeckdave wrote:
"#318 Sage,
"Foredeck, modern agriculture is a means of turning oil into food. Every calorie of food requires at least ten calories of diesel fuel to produce, and more naptha to make the fertiliser and pesticides to achieve the industrial yields."
That maybe true at the present time. However, you are denying the ability of humanbeings to find answers to problems."
-----------------------
Being human is all about problem solving from beginning to end. Evolution has selected those that can problem solve to inhabit the world today and will continue to do so.
[as far as it is allowed to by man - I fear we maybe upsetting the balance a bit - as an example think of the politicians we currently have in power and in particular, GOs problem solving ability].
Just because we solve problems does mean we can solve all problems. Nor does it mean all problems have a solution that is satisfactory to man and the rest of mankind. I like the gaia theory of Havelock Ellis. The world and nature will tell mankind if the solutions we find and implement are acceptable. There will be no appeal. We will survive or die at the court of nature
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#323 FDD
perhaps someone crashed the economy as an academic exercise to see how the problems it throws up are solved. It has certainly got people thinking.
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#326 BobRocket,
:)
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Richard D you suggested: "Nuclear power, GM foods, synthetic foods, distilling drinking water from seawater, etc. The list is ever growing. Science has the capacity to provide solutions to all of mans problems.
So you are being too negative. In any event wars, there will always be wars, provide a curb on population growth."
All the above sources of technological advances have a crucial role to play in helping to mitigate the energy supply problem. However, when you look behind the numbers they all fall way short of replacing oil satisfactorily.
Do the numbers on the world's quantity of nuclear fuel available and you will find that it is completely insufficient to last even the life time of a power station if we ramp up the numbers of stations to take up the slack on electricity generation. Secondly, nuclear stations are very expensive to build financially and above all in terms of energy input required to do so. Therefore there is a net energy return problem again (Energy Return On Investment) EROI.
Distilling drinking water from sea water again requires colossal inputs of energy to produce it and transport it for delivery.
All of your solutions require massive ramp up's and alterations in infra structure capacity and above all huge amounts of energy.
The main point I am making to you is that energy is the problem.
It can not be created magically by technology. Technology can only help us harness it better. We need a game changing breakthrough in an energy source such as cold fusion to improve the energy that is available to us in a quantity that will offset the drop off in cheap oil and the other products provided by it. Simply believing technology will provide this is not enough, we have to look at the facts, do the numbers, and plan accordingly.
Economic growth has required a cheap and plentiful abundance of key raw materials, fundamentally oil in the past century. If this becomes supply constrained because of an inability for production of it to match demand then growth is necessarily constrained.
I argue that this is the situation we find ourselves in and that new economic and strategic planning and organisation will be required to solve the problems it creates.
GM foods I agree will be essential to help feed the over populated world and help us through acceptance of the problem and education and family planning to reduce to sustainable levels this century without war. However, food prices alone will scupper output growth because of the cost of running tractors, combines, etc.
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The thing I noticed,this week,in particular is,the extra number of shoppers on the high street,this week.Now maybe half term had something to do with it but I have been to several market towns in Somerset and Dorset since the figures were released.False dawn perhaps but from what I witnessed shoppers were spending.I maybe wrong but this could turn out to be a high street driven recovery.
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#329 derderdum,
Go back and have a look tday. Just got in from visiting a High Street in Somerset (no, not Street) and it was like a ghost town. Closed shops and very few people.
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The Condem policies have yet to really be in operation. We are still operating our economy under the measures set out by Labour. I don't believe you can read anything into these economic statistics yet from the coalition viewpoint. You need to wait until March/April to see the real effects of increased VAT and cuts to the public sector. However, anecdotally, I am aware of redundancy notices etc aready being issued, particularly in industry.
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Sleepy,
I think if things do go wrong next year, the job losses may show up in the private sector first for the reasons you give. Though I think the questions of 'when/if' will mostly be determined by what happens in the US and Europe, I am still expecting much higher unemployment next year, even if there is no actual double-dip as such. The fact that growth has suprised so many people is a testament to our healthy automatic stabilisers - so far at least. Cuts to Housing Benefit though will undermine these.
Some things will offset the effect of cuts and taxes:
1) Redundancy payments will mean that aggregate demand might not suffer immediately - i'm guessing that most of the employees who were easy to sack (public or private) are already unemployed;
2) the increase in the tax-free allowance;
3) meaures being taken (or continued) by govt to protect business.
Eitherway, unemployment will be a problem for a long time I think. We need a bigger budget deficit to be sure of a job-rich recovery or any kind of recovery.
Kind Regards
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330. At 2:22pm on 01 Nov 2010, foredeckdave wrote:
#329 derderdum,
Go back and have a look tday. Just got in from visiting a High Street in Somerset (no, not Street) and it was like a ghost town. Closed shops and very few people.
------------------------------------------------------
There are six shops in my local high street (in SW London) that have the usual landlord's repossession notice in the window. These have all appeared in the last few weeks, presumably as a result of not paying the quarters rent normally due on 24th September.
Before this there were already shops that have been vacant for many months.
If this trend continues I expect many more shops to be taken back by landlords after the next quarter payment is due at Christmas. If it is not a bumper Christmas shopping spree then I think many more shops will give up on the rent.
I see no signs of high street driven recovery here.
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332. At 3:34pm on 01 Nov 2010, Charles Jurcich wrote:
-------------------
Charles
Thanks for your comments; mostly I agree. However, as reality bites, I believe the downturn is likely to be severe. The cuts are over a 4 year period. Take this in budgetting years. Year one redundancies in the public sector will happen over the next 6 months or so and set the tone. Many will then see the writing on the wall for themselves. So whilst in a job, I believe they will be likely to save rather than spend, preparing for hard times in the next 3 years or so. So next year I see a really significant downturn over and above that which might be expected from the redundancioes alone. Industry are already choking off employment. Anecdotal evidence on this and other blogs [keep it coming guys and gals]. Industry's unemployment may well therefore lead that in the public sector [PS} for a while. PS redundancy will then catch up as they work out where to shed labour.
We are also assuming that we have seen the totality of GOs measures to hold back the deficit. If the automatic stablisers kick in and actually push up the deficit [or stop the deficit decreasing at te required rate] how will GO react? If he decides that the dose of medicine isn't working -so increase the dose- then heaven help us all.
Next we need to factor in the US situation re foreclosure gate and their budget deficit + a likely republican house. Any downturn there will have an effect here for the worse.
So I cannot see recovery for 5 years at the moment [being optimistic] UNLESS there is a change of policy and direction. I think we both know where the best new direction might come from [although I am still in doubt over some things Bill writes]!
This isn't over by any means.
I wish I really could hibernate; Bill Gates has given my computer that ability; shame I cannot also
Cheers for now
Sleepy
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It seems obvious to me that some (not all) in the bond markets, with their allies in the Criminal Ratings Agencies are 'bluffing' the politicians. - Here's how it works:
The bond markets rely on government debt as a risk free source of interest payments for various financial products, notably pension funds. In fact they cannot get enough. Their nightmare would be for the government to stop issuing debt in sufficient amounts.
By bluffing the political classes into taking austerity, this austerity will ensure that the government/BoE will be kept in position where it has to issue a large amount of debt, for a much longer period of time, than if the government stimulated their economy into a full recovery.
They bluff governments by pretending that they do not understand that government spending is not dependent on debt issuance, and that they are afraid the government may default. Actually, they fully understand that the government is the monopoly issuer of the currency, and so cannot default unless it wants to, and they are bluffing.
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Never mind about meaningless "GDP" numbers Stephanie,let us have some discussion of Mervin King`s thoughts on possible abolition of Fractional Reserve banking!
http://www.bbc.co.uk/blogs/newsnight/paulmason/2010/10/post_1.html
Mervyn King, the governor of the Bank of England, has tonight made a big intervention into the debate on banking reform. In a speech at Buttonwood, New York, he [listed] much more radical proposals.
1. Forcing the riskiest banks to hold capital "several times the magnitude" of requirements at present.
2. The Volcker rule-style enforced breakup of banks into speculative and non-speculative arms.
3. The "Kotlikoff proposal", which forces banks to match each pool of risks with a requisite amount of capital, preventing losses in one spilling over into another.
4. Stunningly, Mervyn King imagines the "abolition of fractional reserve banking":
"Eliminating fractional reserve banking explicitly recognises that the pretence that risk-free deposits can be supported by risky assets is alchemy. If there is a need for genuinely safe deposits the only way they can be provided, while ensuring costs and benefits are fully aligned, is to insist such deposits do not co-exist with risky assets."
Why on earth has this been left to Paul Mason`s little blog?
Surely it`s an "economic insights" issue for you Stephanie?
Surely it`s not ANOTHER "nothingburger" for us peasants not to worry our little heads about?
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My apologies Stephanie,I see that our common purpose friend Pesto has done the needful,so need for redundancy here at the BBC business section :)
That still leaves Foreclosuregate and the precipitous(90% in a single month!) drop in British mortgage lending though!!!
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Whoops again,that should be:"...so no need for redundancy..."
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So Darling did do something right then?
The bad news is that model Messrs Cameron, Osbourne and Cable are preaching is not working. Two years on from enforced austerity measures in Ireland, they are still going backwards. A depressed housing and commerical property market, public sector disputes, high unemployment rate and little growth. It is possible that IMF will be knocking on the door very soon.
http://www.automatedtrader.net/real-time-news/60184/irish-press-the-imf-may-well-be-running-ireland-by-february--if--the-irish-budget-quotfails-to-convince-the-financial-markets-quot-warns--economist-colm-mccarthy-in-an-irish-independent-story-on-sunday
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Britain is in long term underlying recession in terms of its national sustainability index ... NSI ... (we dont have one of these yet but we do urgently need one) ...
i.e. the NSI is the relationship between actual -v- relative changes in UK GDP in comparison with overall UK national liabilities. The NSI can be constructed to take into account of e.g UK balance of payment figures etc.
So, at the moment, while some may be 'sighing with relief' because GDP appears to be increasing but it is and is probably the case, that our UK GDP is actually reducing in relative terms to our UK national liabilities ... then in reality, the UK is in strategic/ non sustainable recession/ depression ... as our govt/institutions have lost strategic control of our UK economy to the interests of the banks, goondog billionaire import suckers, spivs, financiers, tax dodgers and 'international middle-men'.
GDP makes no sense on its own ... it has to be measured against all aspects of the economy ... including overall short, medium and long term liabilities and which are not even measured at the moment.
GDP is currently a govt/ HM Treasury mandarin inspired political con trick on Joe Public ... that is all it is. A nasty 'Sir Humphrey' joke.
GDP is nonsense unless weighed properly in a 'national sustainability index' ... so that elements like e.g. 'invisibles', Cadbury's issues, net immigration costs are properly evaluated regarding their counter-balancing effect on the health of 'UK plc'. Some elements of GDP which politicians regard as growth ... are very damaging to the UK national interest.
'Growth' does not exist ... it is meaningless ... where we need the growth is in the minds of our politicians. We need growth in the economic knowledge, honesty and integrity of our politicians and not just in some elements of our GDP.
Until this is done quickly and done properly ... the UK is 'going nowhere'.
Without an NSI the UK govt cannot strategically plan, legislate, act , fairly etc ... it is needed to get things right including tax and other critical policies.
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339. At 10:59pm on 01 Nov 2010, modest_mark wrote:
So Darling did do something right then?
He cetainly did. It's a shame he didn't understand why.
Now he's just another deficit terrorist.
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When, oh when are we going to focus our attention upon the catastrophe that that is the US economy? We really need to have some clear information so that we can make some guesses as to what the implications for our own economy may be. Stephanie, can you please address this issue?
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Is Steffie on holiday? One GDP growth figure, and are economists supposed to sigh and relieve themselves of efficiency, productivity, and utility?
#340 nautonier says much that needs to be said about economics in the last 70 years. One thing though - it would be nice to have a National Sustainability index, but if its value is to be derived from GDP, then it will suffer all the same inherent flaws of GDP definition and data collection.
So assuming that we can't be perfect, but we have to start with what we've got, shouldn't somebody review how GDP is defined and relied on by all the nations in the Global Economic System in any case? This to me would be essential anyway, now that Currency "wars" have entered the minds of even the most financially illiterate of our politicians - these people need to understand that all the Global Currencies have been left to market valuations which depend hugely on reported GDP (and a few other realities, especially actual trade foreign exchange) for each nation.
#341 Metalgasket, I like the line about Alistair Darling "Now he's just another deficit terrorist." Nails on heads! We have been living in an era of deficit terrorism since June this year! It has been far more troubling than the recent bomb terrorism news. When will people of all forms of desperation learn that terrorism is not as effective anyway as moaning and complaining, and that's not as effective as catching some Vitamin D by exposing your skin to some needed sunshine?
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343. At 12:04pm on 02 Nov 2010, verano wrote:
Is Steffie on holiday? One GDP growth figure, and are economists supposed to sigh and relieve themselves of efficiency, productivity, and utility?
#340 nautonier says much that needs to be said about economics in the last 70 years. One thing though - it would be nice to have a National Sustainability index, but if its value is to be derived from GDP, then it will suffer all the same inherent flaws of GDP definition and data collection.
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An NSI would do more than measure/relate to GDP ... it should/would clarify GDP and make us aware of the big picture in our national finances ... and most important of all ... would require our politicians to be both fully accountable for their management of the UK economy and require the govt to use strategic management/policies in assessing the NSI ... and set e.g. tax policy accordingly.
Currently GDP allows our politicians to be short termist and set policies accordingly and without any strategic planning/accounting for the 'big national economic picture' ... i.e. in reporting terms that are meaningful to those who put the politicians in office.
The NSI should most certainly not be flawed by GDP issues if worked out properly ... even a very crude and rudimentary NSI model (so that our UK politicians can understand it) would/should be a substantial improvement on the current UK GDP reporting fiasco.
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will you lot stop talking about about cuts,we have a weak Governmet with no B--ls. we want leaders that have idea's and that can get us back to work. Housing benfits? weres the new homes, no Mortgages no homes being built.220 millon home tax on banks will build 150.000 new homes for rent and make work for 1/4 builders
Benefits are suppler's keep working and shops keep selling
BANKS HAVE BEEN ROBBING EVERY MAN,WOMEN AND CHILD JUST TO GET THIER BIG FAT WAGES AND B--LS TO US ALL
THEY WILL MAKE A PACKET WHILE THEY DO NOT HAVE TO LOAN SO COME ON CAMERON AND PUT US BACK TO WORK BEFORE IT'S TO LATE
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