Viking Supporters Co-operative
Viking Chat => Off Topic => Topic started by: BillyStubbsTears on October 15, 2012, 12:56:25 pm
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Now worse than the Great Depression of the 1930s
(http://4.bp.blogspot.com/-OSxZ9EPPMJM/UEnOCZVxQAI/AAAAAAAAAIk/UT7kMRWENTw/s1600/GDP+to+August+2012.jpg)
For a bonus point, see if you can guess in which month the Coalition took office...
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Highest growth in 5 years, unemployment down (more people have a job than ever before), inflation down, deficit deducing........
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Typical tory`s though, when we had negative growth figures Gideon was quick to cite one off events as the reason, like "the bad weather" "the royal wedding" etc. Why has n`t he mentioned the one off event that occurred during these figures that helped the economy out, "the Olympics"
Is it because he`s trying to take the credit for it this time because the figures are good, surely not!
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Typical tory`s though, when we had negative growth figures Gideon was quick to cite one off events as the reason, like "the bad weather" "the royal wedding" etc. Why has n`t he mentioned the one off event that occurred during these figures that helped the economy out, "the Olympics"
Is it because he`s trying to take the credit for it this time because the figures are good, surely not!
It's exactly what I said previously, very hard to judge for that very reason and a huge criticsm of them all. I fully expect to see not much movement in 3 months time, probably around the 0% marker. Though the general business feeling seems to be cautious optimism.
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For a bonus point, see if you can guess in which month the Coalition took office...
Haha. How simplistic (as usual). So the policies of the previous government had nothing to do with what happened from the date the new government took over. You are saying that no matter how piss poor the previous government was, it can all be forgotten about because the new government accepts all responsibility for what went on before, from the date they take office. What a joke.
How do you explain the 1% growth if according to you things are worse than the Great depression of the 1930's? Don't say it was all down to the Olympics because it wasn't. The Olympics only account for 0.2% of the 1%. Surely according to you things should be getting worse not better. pmsl.
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Highest growth in 5 years, unemployment down (more people have a job than ever before), inflation down, deficit reducing........
Hear, hear.
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The ONS stated today that GDP fell by 6.4% during the 07-08 crash. Much the same as it did in most developed economies. Since then, it has recovered by 3.3%.
What they didn't say was that 4/5ths of that recovery occurred under Labour's policies. 2.7% growth in just over a year from the end of the Crash. Since the Tories' policies were put into action, we've had a grand total of 0.6% growth in more than 2 years. That's even including the big boost from the Olympics.
For them to claim that we are on the right track is farcical. We've deliberately decided to hobble growth for more than 2 years while most of the rest of the developed world has been pulling away. A mistake that will hammer us for years.
See the graph here to look at just how badly we have done compared to the USA and to economic expectations over the last 2 years.
http://krugman.blogs.nytimes.com/2012/10/24/the-economic-consequences-of-mr-osborne/
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Its a blip caused by the olympics prepare for a triple decker
:blink:
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The Olympics contributed 0.2% to the figure. What about the other 0.8%? I suspect there will be a deafening silence.
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See the graph here to look at just how badly we have done compared to the USA and to economic expectations over the last 2 years.
The USA is most definitely not the role model to follow. If Obama gets in again they will be headed for total economic disaster. The world should pray that Romney gets in because if he doesn't, the rest of the world will also suffer from the economic fallout in the USA.
There is nothing better that politicians like to hear than 'Spending more money will solve all your problems'. That Krugman crank has got a lot to answer for.
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Hey up Mick, well I think the olympics contributed 0.8% and other 0.2% I can't back it or provide any evidence though :P
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Hey up mjdgreg, well I think the Olympics contributed 0.8% and other 0.2% I can't back it or provide any evidence though
Unlike you I only deal in facts. It took me all of 0.4789 seconds to find proof of what I am saying:
http://www.bbc.co.uk/news/business-20078231
Read the seventh line down. Once you've done this please explain where you think the other 0.8% growth came from. Thanking you in anticipation of not providing a coherent answer.
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By the way. For a bit of perspective on tiday's growth news, go and have a look at the data on the graph at the top of the page.
Add an extra 3 months to the time axis. Add an extra 1% onto the dark blue curve. And see where it puts you relative to the other recessions.
In 2010, we were emerging on course, just as we had done in previous recessions. We have then flat lined for 2 years. So today's growth, welcome as it is, goes nowhere towards making up the ground that we have lost.
Even if we continued at 1% growth per quarter (and no-one believes that we will) we would still only be running parallel to previous recoveries. But two years behind them! That is the point. Two years lost, even if there is now a consistent recovery.
Or look at it this way. Even if growth grew to 2% per quarter (which would be truly miraculous, and would convert me to Tory policies) it would still take us until 2016 to make up the ground that we have lost since 2010.
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Hey up mjdgreg, well I think the Olympics contributed 0.8% and other 0.2% I can't back it or provide any evidence though
Unlike you I only deal in facts. It took me all of 0.4789 seconds to find proof of what I am saying:
http://www.bbc.co.uk/news/business-20078231
Read the seventh line down. Once you've done this please explain where you think the other 0.8% growth came from. Thanking you in anticipation of not providing a coherent answer.
That line just mentions ticket sales Mick, what about other factors like Merchandise, Food/refreshments, travel cost`s via public transport or fuel cost by private transport etc. add all those together and it will be around 0.5%
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"The positive 'surprise' in these figures is largely to be found in the service sector, which is estimated to have grown by 1.3% in the third quarter, after shrinking by 0.1% in the three months before."
Above is where most of the growth has come. I repeat, not from the Olympics!!!!
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Billy you make the mistake of assuming Labour's policies would have led to continued growth. It would not. We'd have ended up like Spain.
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Mick.
New resolution cocker. I do not respond to unsubstantiated trolling.
Come up with some hard evidence and we'll talk. Revert back to status quo ante of spouting opinionated b*llocks and ignoring evidence and I'll ignore.
Go on. Challenge for you. Show with evidence why we would have ended up like Spain.
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Ahh bless, don't you just love our Mick, btw I was posting on my phone but to be honest I just can't be bothered apart from its nice to read your unsubstantiated biased codswallop :blink:
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Billy, you're the one making unsubstantiated claims. The classic one being that if Labour had stayed in power and carried on spending, growth would have miraculously returned to normal levels. All you offer to back this up is your opinion which you want us all to take as fact. You completely ignore that Labour were intent on making spending cuts as well.
Anyway, as everyone knows I only deal in facts. Here is some evidence backing up my claim that growth would not have continued and we'd have been in even more trouble if your economic policies were followed. Here's what the head of the IMF said one year after Labour had been dumped out of office:
"Sometimes you feel like you could look back and wonder 'what if?'. And when I think back myself to May 2010, when the UK deficit was at 11% and I try to imagine what the situation would be like today if no such fiscal consolidation programme had been decided... I shiver."
In other words ''You are one lucky country that the financially illiterate Labour party didn't win the election or you'd be completely screwed just like Spain etc.''
Here's the link:
http://www.bbc.co.uk/news/business-18158226
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Read the seventh line down. Once you've done this please explain where you think the other 0.8% growth came from. Thanking you in anticipation of not providing a coherent answer.
As expected, totally incoherent.
Ahh bless, don't you just love our mjdgreg, btw I was posting on my phone but to be honest I just can't be bothered apart from its nice to read your unsubstantiated biased codswallop
You're the one talking codswallop. How many times do you need telling that the Olympics only contributed 20% of the 1% growth figure?
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Eeeh, Mick. I do hope that you've had a useful time in your sabbatical. Because whatever you've been doing, you clearly haven't been learning how to put a coherent argument together have you?
You still can't differentiate between facts and opinions. Quoting a friendly passage of a speech from Christine Lagarde and claiming that as evidence might just about pass muster for a coherent argument among 6th formers. Among grown-ups, you make a tit of yourself.
If you had been keeping up with events out there in the real world, you might have noticed the report by the IMF a couple of weeks ago, where they openly admitted that they had f***ed up on predicting the consequences of cuts to Govt spending. They looked the evidence (evidence Mick - there's a thing!) from 28 countries over the last two years. And they found that the countries who had cut their Govt spending a lot had performed very badly, and those who had not cut Govt spending had done really quite well.
The IMF put their hands up and said, in effect "Remember those predictions that we have been making for the last two years? The ones that said Austerity would work in the UK, Greece, Spain, Ireland, etc, etc, etc? Those predictions that have kept on being wrong, time and time again? Well know we know WHY they are wrong. Because we really didn't understand how seriously Govt spending affects the economy."
Quelle-f***ing-surprise as the French Finance Minister would say.
But you want to build an argument around a throwaway line from Christine Lagarde? Go right ahead Mick. It fits with your usual flimsy style.
PS: you're also wrong about the date of that comment by Lagarde. Attention to detail Mick. It's important.
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You're the one talking codswallop. How many times do you need telling that the Olympics only contributed 20% of the 1% growth figure?
And I guess you haven't been practicing read BBC reports carefully before prattling on either have you? Like Filo says, that report clearly says that spending on Olympic TICKETS added 0.2% to GDP growth. It says nothing about the effects of all the other Olympic-related spending that went on. The train tickets. The burgers. The hotel rooms. The beer. All bought by millions of visitors.
By the way, you DO realise what these GDP figures are measured against when the amount of growth is calculated don't you? The GDP in Jul-Sept is compared against the amount of GDP generated in Apr-Jun. So, 1% growth now is compared to the really, really piss-poor level in the Spring. And even with the (very good) growth figures today, the economy is STILL smaller that it was this time last year because we have been struggling so badly after being tipped back into a totally unnecessary recession.
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I was a Gamesmaker for 5 days, travelled to London and back each day, round trip of about 220 miles each time. Factor in the fuel and food, it cost me a fair bit and I didnt buy a ticket. In fact for the events I was involved in, road cycling, hardly anyone bought a ticket. The estimates I heard were 1.2 million out for the mens road race, 1 million for the women, 250 000 for the time trial. Out of that 2 1/2 million (to round it up), maybe 10 000 of those in total were in the ticketed stands in the Mall & Hampton Court. They were all out, all day, eating, drinking, buying souvenirs, loads of tourists staying in local hotels, others like me travelling for the day. The marathons were free, as were the triathlons, they all had 100's of thousands out. The sailing at Weymouth, that was free.
There was a heck of a lot more to the Olympics than ticket sales.
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BST you keep comparing now with many years ago, you can't do that it's completely different situations and they just don't compare.
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BFYP
Of course, every recession has its own characteristics and you cannot directly compare. But, there are some consistent features. It would be foolish to ignore these (although, by that measure, many right wing politicians have been deeply foolish over the last 4 years because they seem determined not to understand the lessons of history).
The 73-5, 79-83 and 90-91 recessions were all inflation-based. On each case, the economy had overheated in the earlier years, leading to a big rise in inflation. The recessions were, to a great extent, deliberately managed by Central Banks to take the heat out of the economy and bring inflation down. They did this by putting up interest rates, detering people and companies from borrowing. These recessions could be terminated by the Central Banks when they felt that the work had been done and inflation was tamed - the Banks could simply reduce interest rates and the suppressed economic activity would emerge again.
1929-33and 08-09 were very different. These were recessions produced by systemic banking crises, so that credit simply froze. The Central Banks' response to these crises was to drop interest rates to try to get credit flowing again. This helps, but it wasn't enough on its own to kick start economies in 1929 and it wasn't enough in 08-09 either. (By the way, a catastrophic mistake made in Europe in both 08 and 2011 was to fail to see the gravity of the situation and to be obsessed that Inflation was still the enemy. So they actually put UP interest rates in the face of the recession, which made the EZ crisis even worse than it need be. Even now, they haven't brought rates down to the level of the UK or USA and this is still a big drag on EZ economies.)
The point, BFYP is that we should compare this recession and the subsequent recovery (sic) with similarly caused recessions in the past. The most obvious ones are the Great Depression of 29-33 and the Japan debacle of 1992-onwards. In both cases, Governments stubbornly refused to stimulate the economy through spending. In both cases, recovery was long and slow.
Now go back and look at the graph at the top of the page. 20-24 months after the start of our current crisis, we'd hit a slump as bad as 29-34, but, because of Government stimulus, we were bouncing back more strongly. Then the stimulus was removed. And we have flat lined.
Other things to bear in mind.
America had as bad a crash and a worse debt problem than us. They kept a stimulus package going longer than we did. Their economy has rebounded far faster than ours did.
The IMF has admitted that it badly underestimated the effect of Govt cuts on GDP - not just here, but across the developed world.
Me, I look for simple explanations. With all that information, I can see only one, simple, logical conclusion. Stimulus was working. Austerity cut off the rebound. It seems to be arguing in the face of all the evidence to claim otherwise.
Yes, prolonged stimulus would have increased Govt debt. But there is not one shred of evidence that this in itself would have been catastrophic. America, Canada and Japan have all had Govt debt levels much higher than ours for years. None of them have had serious bond market problems as a result. In fact those three countries, AND the UK have all seen bond rates plummet even as debt was exploding over the last 4 years. That is why Mick's stupid comment about us ending up like Spain is a crock of dogshit. It ignores the most important issue. Those four countries control their currency and can set their own monetary policy. Spain cannot. That is why the bond markets think Spain is hopeless, whilst they think that USA, Japan, Canada and UK (all of which have higher Govt debt than Spain) are safe bets.
We have allowed ourselves to be obsessed by Govt debt as the main evil. This fits a right-wing agenda that wants to curtail the role of the State. But it is economic illiteracy. And our pitiful economic performance for the past 2 years is the price that we have paid.
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Our problems will not be sorted until the housing market deflates. Just like Spain. While ever household debt remains high and the banks have bad loans (against over priced houses) we will keep on struggling.
Well done Mr Brown for telling us you had abolished boom and bust. Not only did you overspend like a drunken sailor, you encouraged massive private debt as well. What a plonker.
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Thank you Billy. As ever, intelligent, informed and cogent. Your consistent ability to put forward a case based upon evidence suggests to me you'd make a totally shite politician. MJD,on the other hand, would be absolutely top notch.
Cheers
BobG
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You still can't differentiate between facts and opinions. Quoting a friendly passage of a speech from Christine Lagarde and claiming that as evidence might just about pass muster for a coherent argument among 6th formers. Among grown-ups, you make a tit of yourself.
If you had been keeping up with events out there in the real world, you might have noticed the report by the IMF a couple of weeks ago, where they openly admitted that they had f***ed up on predicting the consequences of cuts to Govt spending. They looked the evidence (evidence mjdgreg - there's a thing!) from 28 countries over the last two years. And they found that the countries who had cut their Govt spending a lot had performed very badly, and those who had not cut Govt spending had done really quite well.
The IMF put their hands up and said, in effect "Remember those predictions that we have been making for the last two years? The ones that said Austerity would work in the UK, Greece, Spain, Ireland, etc, etc, etc? Those predictions that have kept on being wrong, time and time again? Well know we know WHY they are wrong. Because we really didn't understand how seriously Govt spending affects the economy."
Quelle-f***ing-surprise as the French Finance Minister would say.
But you want to build an argument around a throwaway line from Christine Lagarde? Go right ahead mjdgreg. It fits with your usual flimsy style.
Christine Lagarde's comment was not a throwaway line. It was a revealing insight into what the IMF thought would have happened if Labour had kept hold of power. Also you can't have it both ways. You are on record as being very disparaging about the IMF, but when they come up with a report that you think supports your half-baked theories, you suddenly change course and trumpet their views from the roof-tops. Makes you look rather foolish.
My view of the IMF has not changed. They don't have a clue. They are just like you and change their views at the drop of a hat. I only quoted Christine Lagarde's views as I thought you now took what they said seriously. Please let us know, do you hold them in high regard or don't you? We're all very confused as to what you really think about them. Like I said, you can't have it both ways.
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Mick.
Very, very simple. I have little time for ANY organisation or person that bases major, world-changing decisions on questionable theory or ideology. That is what the IMF did when it was telling the world to engage in Austerity in 2009-11. And remember that Christine Lagarde is a politician, not an economist. And a right-wing politician at that. What do you expect her to do when dealing with another right-wing politician like Osborne or Cameron? Tell them in public that they are wrong?
What I DO respect, are people or organisations that are prepared to consider FACTS and revise opinions in the light of them. That is what the IMF's recent report did. It looked back at indisputable evidence and accepted that the IMF's previous theory was wrong.
That's how the grown up world works Mick. When you find that the facts prove you wrong, you have two choices. Act like a grown up and accept that your ideas were wrong. Or act like a kid and claim that the rest of the world must be wrong.
Now. Here's a question for you.
Why is it bad for Governments to run up large debts?
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That is why the bond markets think Spain is hopeless, whilst they think that USA, Japan, Canada and UK (all of which have higher Govt debt than Spain) are safe bets.
The bond markets don't think these countries are a safe bet. They think they are the best of a very bad bunch and are actually losing money by buying their bonds once inflation is taken into account. Why are they doing this? Because they know that things are so bad that it would be madness to invest in equities given the parlous state of the world economy.
I do wish you'd stop just banging on about Government debt as being the only thing that needs consideration. UK consumers are up to their eyeballs in debt. This debt was fuelled by a housing bubble that politicians are doing their best to stop deflating. If house prices fell as much as they should do, banks would be in a terrible state due to bad debts.
Consumers will not spend until they get their finances back in order and banks will not lend as they are petrified of the bad losses they are going to make when house prices do eventually fall to their correct level. Unfortunately due to political mismanagement this is going to take years and we will stagnate for this period. Far better to raise interest rates now and get it over and done with quickly so we can start to grow again.
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By the way Mick. Your bullshit-quotient hasn't changed.
You say that you only quoted Lagarde because you thought that I now took the IMF seriously. But I hadn't mentioned the IMF before you quoted Lagarde.
Pathetic Mick. Really, really pathetic. I thought you might have been practicing while you've been away, but it it the same old shite from you all over again. Obfuscation, dissembling. And when that doesn't work, barefaced lies.
Why do you do it? Why do you insist on making a public idiot of yourself?
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Why is it bad for Governments to run up large debts?
I don't agree with your statement and I thought you were of the opinion that it is good for Governments to run up large debts. You have surprised me again by completely changing your mind and weakened all your previous arguments fatally.
'Large' is a very vague term. I do think it can be good for Governments to borrow money if it is spent wisely, for example in infrastructure that helps the economy to grow and generate more money in taxes than what was borrowed. However borrowing for consumption like Labour did is criminal.
Borrowing money to pay for a bloated public sector that ended up bigger than the private sector and to increase welfare dependency is economics of the madhouse. We all know why he did it though don't we. He thought he would eventually have so many people dependent on the state for their income that he would keep on winning election after election. Another one of his many mistakes.
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By the way . Your bullshit-quotient hasn't changed.
You say that you only quoted Lagarde because you thought that I now took the IMF seriously. But I hadn't mentioned the IMF before you quoted Lagarde.
Pathetic mjdgreg. Really, really pathetic. I thought you might have been practicing while you've been away, but it it the same old shite from you all over again. Obfuscation, dissembling. And when that doesn't work, barefaced lies.
Why do you do it? Why do you insist on making a public idiot of yourself?
I really can't get my breath. You categorically did mention the IMF before I quoted Lagarde. I won't indulge in abuse and come down to your level. Instead, I'll just refer the readers of this forum to the following link to show why I said what I did about your views on the IMF:
http://www.drfc-vsc.co.uk/index.php?topic=235207.0
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Mick.
Stop obfuscating. Why is it bad for Governments to run up large debts? It's a very simple question. Answer it.
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mjdgreg.
Stop obfuscating. Why is it bad for Governments to run up large debts? It's a very simple question. Answer it.
I thought I did answer it. I'll try again. I do not think it is bad for Governments to run up 'large' debts in certain circumstances.
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I'll make it easier for you. Why is it bad for Governments to run up large debts in the current situation?
Simple question. Simple answer will do.
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By the way . Your bullshit-quotient hasn't changed.
You say that you only quoted Lagarde because you thought that I now took the IMF seriously. But I hadn't mentioned the IMF before you quoted Lagarde.
Pathetic mjdgreg. Really, really pathetic. I thought you might have been practicing while you've been away, but it it the same old shite from you all over again. Obfuscation, dissembling. And when that doesn't work, barefaced lies.
Why do you do it? Why do you insist on making a public idiot of yourself?
I really can't get my breath. You categorically did mention the IMF before I quoted Lagarde. I won't indulge in abuse and come down to your level. Instead, I'll just refer the readers of this forum to the following link to show why I said what I did about your views on the IMF:
http://www.drfc-vsc.co.uk/index.php?topic=235207.0
Ahh. So you WERE paying attention while you were on sabbatical.
Well done.
But unfortunately, you weren't paying attention quite well enough. Again.
You say that you think the IMF are idiots who are always wrong and you only quoted Lagarde to smoke me out.
You say that I quoted Lagarde before you did.
You must have forgotten posting THIS 5 months back.
http://www.drfc-vsc.co.uk/index.php?topic=233138.msg244408#msg244408
You know they say that liars will always be found out eventually?
Mick. YOU were the very first one on this forum to bring the IMF into discussions. You were delighted because they approved your ideas.
You then decided that you didn't like the IMF because in the small print of their report in May, they were critical.
Then, in this thread, you forgot that, remembered the positive quote by Lagarde and re-posted that.
Then, when it was pointed out to you that the IMF has recently come out strongly against Austerity, you obfuscate, dissemble and finally lie.
Pack it in now Mick. You are dealing with grown-ups here.
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I'll make it easier for you. Why is it bad for Governments to run up large debts in the current situation?
Simple question. Simple answer will do.
Look, we're already up to our eyeballs in debt. The money hasn't been invested wisely and we've ended up having to borrow even more. When the Government runs up huge debts and produces nothing to show for it, we're the ones and future generations that shoulder the burden.
In 2012 the interest on the national debt will cost £44.8 billion a year. That's more than we spend on defence, and not much less than the entire education budget. This debt interest payment is a real drag on the economy so it is bad to add to it and make matters even worse. We've gone past the tipping point. It's doubtful that our current debt will ever be repaid.
If the bond markets lose faith in Britain there could be profound consequences for our currency, our country and our lives.
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If the bond markets lose faith in Britain there could be profound consequences for our currency, our country and our lives.
Right. Mick. We got there at last. THAT is your concern isn't it Mick. IF, IF the bond markets lose faith.
Now. Let's get back to evidence. Over the last 5 years, our Govt debt has tripled. What has happened to our bond rates Mick?
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You say that you think the IMF are idiots who are always wrong and you only quoted Lagarde to smoke me out.
I have categorically not said that. All I've said is that I don't think they have got a clue. This doesn't mean that I can't agree with the odd thing that I think they get right.
You say that I quoted Lagarde before you did.
I have categorically not said that. I have never said that you have quoted Lagarde. Context is the key. In the context of this debate it is obvious my comments were made about what you had said about the IMF only a few weeks ago in a thread you started! Going back 5 months to try and justify your outburst has left me pissing my pants laughing at your vain attempt to clutch at straws.
You know they say that liars will always be found out eventually?
I agree. I'll let the readers of the forum decide who is the liar.
mjdgreg. YOU were the very first one on this forum to bring the IMF into discussions. You were delighted because they approved your ideas.
Wrong. They don't approve my ideas and never have done. I was delighted that Lagarde agreed that a Labour Government would have been a disaster for the country and that Dave and George were a much better alternative.
You then decided that you didn't like the IMF because in the small print of their report in May, they were critical.
Wrong. I've never liked them. This doesn't mean I disagree with everything they say, just most of it.
Then, in this thread, you forgot that, remembered the positive quote by Lagarde and re-posted that.
Then, when it was pointed out to you that the IMF has recently come out strongly against Austerity, you obfuscate, dissemble and finally lie.
I posted that quote because it is one that I agree with and because you now appeared to be an IMF convert. It is your opinion that I obfuscate and dissemble. I suspect you resort to abuse when you feel you are losing the argument. I can handle these terms but would respectfully ask you to stop calling me a liar. Everything I post is in good faith and I do not lie intentionally. We are all human and do make mistakes from time to time but I am not a liar.
Pack it in now mjdgreg. You are dealing with grown-ups here.
I'm beginning to wonder.
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Right. mjdgreg. We got there at last. THAT is your concern isn't it Mick. IF, IF the bond markets lose faith.
Now. Let's get back to evidence. Over the last 5 years, our Govt debt has tripled. What has happened to our bond rates mjdgreg?
This is the crux of the matter. It doesn't matter what bond rates have been in the past. What matters is what they will be in the future. No-one can predict that. Not even you. So for you to assume they will always stay low is one hell of a gamble with the future of the UK.
Has it not occurred to you that our current low rates might have something to do with the current Government's policies? There are many factors that determine bond rates and these factors can quickly change. If we followed your policies we could quite easily get caught with our pants down. Better to live within our means and not take the risk.
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Mick.
We really ARE at the core of the debate now. It all boils down to whether you think that Govt spending is inherently inefficient or whether you think it can help boost the economy.
Now, the argument on the Right has been that Govt spending MUST be reduced. This is because, if it isn't the bond markets will hammer us. The theory on the right is that bond rates are closely linked to Govt borrowing. Because bond rates are effectively a measure of how risky the lenders think it is to lend to Government. So if Govt borrowing is too high, then of course bond rates will go up. But if that argument is incorrect, then the strongest argument about why Govt spending should be reduced goes out of the window.
So. Here goes.
Graph 1 - Govt borrowing over the last 22 years for 4 major developed economies with sovereign currency.
(http://i48.tinypic.com/167m5i1.png)
Graph 2 10 year bond rates for those same countries.
(http://i45.tinypic.com/1jxovl.png)
See any sign whatsoever over the last generation that bond rates go up as debt goes up?
See any sign that Austerity made a big effect on the bond rates?
And remember that we are talking about TEN YEAR bond rates here. Long term lending rates. So the Markets believe that countries like the UK are a safe bet to lend to for ten years or more.
So Mick. the biggest plank of the Right's economic argument founders when faced with the empirical evidence. There is no correlation whatsoever between Govt debt and bond rates. So the whole argument about why we must cut back Govt spending collapses.
Now, you maight say, "Ah yes, but what if the rates DO increase?" Ok. Fair point. But is that threat (which has not happened in japan by the way, despite their debt being 3 times ours) a sufficient reason to throw out the whole idea of using Govt spending to kick start the economy?
Then you might say, "Yes, but Govt spending can't kick start the economy, because it's not productive." But the IMF themselves (who have been preaching that Govt spending must be cut back) have reviewed the evidence of the last 2-3 years. they have found that every £1 of Govt spending leads to an increas in GDP of £1-1.70. So in fact the EVIDENCE (not theory, not prediction, the facts) are that Govt spending actually IS a very efficient way to get growth going. Or equally, as we have found out over the last 2 years, cutting Govt spending is a very efficient way to knacker an economy.
Every single step of the way over the last 4 years, the Right-wing economic argument has been shown to be incorrect. The predictions it has made have ALL turned out to be wrong. There is only one reason to stick to that now. It's called Faith, rather than Reason.
It's what led the man that you admire so much, Peter Schiff, to say in 2009 that because interest rates were so low, Govt spending was going up and Quantitative Easing was taking place, "You know, look, I know inflation is going to get worse in 2010. Whether it’s going to run out of control or it’s going to take until 2011 or 2012, but I know we’re going to have a major currency crisis coming soon. It’s going to dwarf the financial crisis and it’s going to send consumer prices absolutely ballistic, as well as interest rates."
What happened to Inflation and interest rates since 2009? Both down. Both staying low. What happened to the dollar? Nothing. It's worth today exactly what it was worth in 2009 What does Schiff do know? He says
1) inflation is actually higher than the Govt says and it's all a big conspiracy (Presumably he believes in the Roswell aliens as well and he thinks the Twin Towers were blown up by the CIA).
2) Yeah, well, the huge rise in interest rates and inflation and the collapse of the dollar is coming soon. Just wait. it's coming. I know you've been waiting half a decade already because I've been saying this since the crisis started in 2007, but it's coming. Just wait. Ignore the evidence that says it isn't coming. I know best.
He and the people who think like him are like those nutters who stand at the top of a mountain waiting for the second coming of Christ. When Christ doesn't come, they decide it must be because they didn't believe enough. So they get even more certain that their faith will be proved right next time. Doesn't matter how often the evidence proves them wrong, they just believe even more strongly that they are right.
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Mick.
To be frank, I am truly sick of discussing anything with you. It is like arguing with a child. I have posted on here simply to try to help disabuse anyone else of the idea that you have a clue what you are talking about. I have no interest whatsoever in trying to convince you, because you have no comprehension of how discussion and idea forming works.
Consider last night. In the space of a couple of hours you wrote:
"My view of the IMF has not changed. They don't have a clue."
Then
"I was delighted that Lagarde agreed that a Labour Government would have been a disaster for the country and that Dave and George were a much better alternative."
So, the IMF don't have a clue, but when their Head criticises Labour, I'll pounce on that as something to support my arguments. Do they have a clue or don't they? And if they don't have a clue, why should we trust the judgement of their Head. Surely she must have got that wrong. Or is it that they don't have a clue when they say things you disagree with, but are correct when they say things that you DO agree with? That is how kids argue Mick. Have some pride in yourself and stop being so childish in your inconsistency.
Let's have a look at those quotes from a different angle:
"My view of the IMF has not changed. They don't have a clue. I only quoted Christine Lagarde's views as I thought you now took what they said seriously."
Then you wrote.
"I was delighted that Lagarde agreed that a Labour Government would have been a disaster for the country and that Dave and George were a much better alternative."
So which was it Mick. Did you quote Lagarde because you agreed with her and were delighted with what she said? Or do you not believe that she has a clue, and simply quoted her to try to trip me up. I haven't got any idea which of these mutually incompatible views is really yours Mick, because you claimed to hold both of them within 2 hours last night. Perhaps it might just be that you are a bullshitter who changes his tack every post and is not clever enough to be consistent when he does it.
Now. You are going to accuse me of inconsistency. You said last night "Also you can't have it both ways. You are on record as being very disparaging about the IMF, but when they come up with a report that you think supports your half-baked theories, you suddenly change course and trumpet their views from the roof-tops. Makes you look rather foolish."
I really shouldn't need to explain this to an adult, but clearly I am going to have to do.
I fundamentally disagreed with the IMF's THEORETICAL PREDICTIONS of economic performance from 08/09 onwards. They said that growth would come despite Govt cuts. They said that Govt cuts wouldn't harm economies too much. I disagreed with that PREDICTION.
Three weeks ago, they published a report reflecting back on the EVIDENCE of the last three years. That EVIDENCE says, categorically that their predictions were wrong. The evidence is that Govt spending cuts do harm economic growth very severely. There is nothing to agree or disagree with in this report. It is not a report that gives opinions or theoretical predictions. it is a statement of FACT (I know you have difficulty with that concept Mick but try to cling on) of what has actually been seen to occur.
There is no inconsistency whatsoever in my approach. I disagreed with their predictions. I welcome their factual, reflective report admitting to their mistakes.
Clear?
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Consider last night. In the space of a couple of hours you wrote:
"My view of the IMF has not changed. They don't have a clue."
Then
"I was delighted that Lagarde agreed that a Labour Government would have been a disaster for the country and that Dave and George were a much better alternative."
So, the IMF don't have a clue, but when their Head criticises Labour, I'll pounce on that as something to support my arguments. Do they have a clue or don't they? And if they don't have a clue, why should we trust the judgement of their Head. Surely she must have got that wrong. Or is it that they don't have a clue when they say things you disagree with, but are correct when they say things that you DO agree with? That is how kids argue Mick. Have some pride in yourself and stop being so childish in your inconsistency.
Let's have a look at those quotes from a different angle:
"My view of the IMF has not changed. They don't have a clue. I only quoted Christine Lagarde's views as I thought you now took what they said seriously."
Then you wrote.
"I was delighted that Lagarde agreed that a Labour Government would have been a disaster for the country and that Dave and George were a much better alternative."
So which was it Mick. Did you quote Lagarde because you agreed with her and were delighted with what she said? Or do you not believe that she has a clue, and simply quoted her to try to trip me up. I haven't got any idea which of these mutually incompatible views is really yours Mick, because you claimed to hold both of them within 2 hours last night. Perhaps it might just be that you are a bullshitter who changes his tack every post and is not clever enough to be consistent when he does it.
Talk about trying to twist my words. It's very simple. Saying that an organisation doesn't have a clue is not the same as saying that everything they come up with is wrong. I disagree with most of what they come up with but I am not clueless enough to think everything they say is wrong. I did explain this in my post but you conveniently ignore this. Even you occasionally get some things right but just because I think you are clueless does not mean I think everything you say is wrong. Got it?
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There is no inconsistency whatsoever in my approach. I disagreed with their predictions. I welcome their factual, reflective report admitting to their mistakes.
pmsl. You have left yourself wide open with that statement. If I can be bothered, I'll go back over some of your previous posts that prove this statement is inaccurate. I won't call you a liar, I'll just put it down to you having a poor memory and a willingness to change your mind.
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Give up Mick. every time you post you make yourself look an even bigger pillock.
You have not quoted, or reasoned, a single fact based argument yet, not one, in support of your theories. Unless and until you come up with some, Billy's viewpoint has won by a knockout.
BobG
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It's what led the man that you admire so much, Peter Schiff, to say in 2009 that because interest rates were so low, Govt spending was going up and Quantitative Easing was taking place, "You know, look, I know inflation is going to get worse in 2010. Whether it’s going to run out of control or it’s going to take until 2011 or 2012, but I know we’re going to have a major currency crisis coming soon. It’s going to dwarf the financial crisis and it’s going to send consumer prices absolutely ballistic, as well as interest rates."
What happened to Inflation and interest rates since 2009? Both down. Both staying low. What happened to the dollar? Nothing. It's worth today exactly what it was worth in 2009 What does Schiff do know? He says
1) inflation is actually higher than the Govt says and it's all a big conspiracy (Presumably he believes in the Roswell aliens as well and he thinks the Twin Towers were blown up by the CIA).
2) Yeah, well, the huge rise in interest rates and inflation and the collapse of the dollar is coming soon. Just wait. it's coming. I know you've been waiting half a decade already because I've been saying this since the crisis started in 2007, but it's coming. Just wait. Ignore the evidence that says it isn't coming. I know best.
Just because I have quoted Mr Schiff previously, doesn't mean he gets everything right. He is human and will get some things wrong. I don't happen to believe he is right about inflation.
The problem is going to be deflation. Trust me I know what I'm talking about. Do you know why deflation will be the problem? I'll wait for your answer but if you don't give a very good one I'll step in and enlighten everyone.
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Consider last night. In the space of a couple of hours you wrote:
"My view of the IMF has not changed. They don't have a clue."
Then
"I was delighted that Lagarde agreed that a Labour Government would have been a disaster for the country and that Dave and George were a much better alternative."
So, the IMF don't have a clue, but when their Head criticises Labour, I'll pounce on that as something to support my arguments. Do they have a clue or don't they? And if they don't have a clue, why should we trust the judgement of their Head. Surely she must have got that wrong. Or is it that they don't have a clue when they say things you disagree with, but are correct when they say things that you DO agree with? That is how kids argue Mick. Have some pride in yourself and stop being so childish in your inconsistency.
Let's have a look at those quotes from a different angle:
"My view of the IMF has not changed. They don't have a clue. I only quoted Christine Lagarde's views as I thought you now took what they said seriously."
Then you wrote.
"I was delighted that Lagarde agreed that a Labour Government would have been a disaster for the country and that Dave and George were a much better alternative."
So which was it Mick. Did you quote Lagarde because you agreed with her and were delighted with what she said? Or do you not believe that she has a clue, and simply quoted her to try to trip me up. I haven't got any idea which of these mutually incompatible views is really yours Mick, because you claimed to hold both of them within 2 hours last night. Perhaps it might just be that you are a bullshitter who changes his tack every post and is not clever enough to be consistent when he does it.
Talk about trying to twist my words. It's very simple. Saying that an organisation doesn't have a clue is not the same as saying that everything they come up with is wrong. I disagree with most of what they come up with but I am not clueless enough to think everything they say is wrong. I did explain this in my post but you conveniently ignore this. Even you occasionally get some things right but just because I think you are clueless does not mean I think everything you say is wrong. Got iII
Mick
Perfectly clear. Thank you for clearing that up.
You could have been much more concise by saying that you answered "yes" to my question:
"Or is it that they don't have a clue when they say things you disagree with, but are correct when they say things that you DO agree with?"
Thing is Mick, grown up debate doesn't work like that. You are perfectly at liberty to agree with some things that a person or organisation says and disagree with other things. But you would need to explain your reasoning. Simply choosing to agree with things that you favour and disagree with things that you don't like is not a rational reason. That is the approach that someone takes when they make their mind up first and are then impervious to rational argument.
Now. If you could explain rationally how you determine when the IMF are complete fools who spout horseshit, and when they are wisely calling the decisions correctly, I would have some respect for your opinion.
But you don't. Ever. When someone disagrees with you, you call them cranks, fools or lefties. That is the limit of your preparedness to discuss. That is why discussion with you is pointless.
But hey. At least while you've been concentrating on this thread, we've been spared a rant about today's possession stats.
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Mick
I truly do not give a shit about your opinion on inflation not being a problem and deflation being the threat.
Want to know why? Because less than 3 months ago, you were saying that inflation was "the biggest risk to all our futures" and saying that interest rates had to be raised to get it under control.
You were wrong 3 months ago Mick. Why should anyone give a shit about what you think now? Especially when what you think now is 180 degrees away from what you thought then?
Enough, enough, enough. You keep on posting. I'm replying to nothing further because it is pointless.
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I take it you don't know why we are all going to have a deflation problem. When I've got a bit more time I'll explain all.
What is so wrong about me changing my mind on inflation? I've come across some astounding evidence about deflation which I have weighed up and this has led to me changing my view. It's not a crime to change your mind you know. As things change and as I become even more knowledgeable about a subject I alter my opinion if the evidence requires it. Trust me, I know what I'm talking about.
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Now. If you could explain rationally how you determine when the IMF are complete fools who spout horseshit, and when they are wisely calling the decisions correctly, I would have some respect for your opinion.
I did this. I thought Lagarde's words about Labour not being elected were very wise. Most of the rest of the time they are clueless.
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You have not quoted, or reasoned, a single fact based argument yet, not one, in support of your theories.
I've already done all this in other threads so don't want to bore everyone with going over it all again. If you read the 'Bob Diamond resigns' thread you will see that I have totally dismantled all of Billy's arguments.
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It's not a crime to change your mind you know. As things change and as I become even more knowledgeable about a subject I alter my opinion if the evidence requires it. Trust me, I know what I'm talking about.
Did you know what you were talking about before you changed your mind, when you admit in black and white that you were less knowledgeable about what you were talking about?
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Did you know what you were talking about before you changed your mind, when you admit in black and white that you were less knowledgeable about what you were talking about?
Only a fool doesn't ever change their mind. When new evidence presents itself I always assess it and change my mind if the evidence is strong enough. I have come across new evidence that is so powerful that I have been convinced by it that deflation is now the very likely scenario. I am not pedantic enough to not change my mind just because a few of you will try and use the opportunity to use it as an excuse to have a go. I don't just take a position and defend it regardless of the mounting evidence to the contrary like Billy does.
I am now even more knowledgeable about things than I was before, not less. Every day I increase my knowledge.
When the IMF change their mind Billy sings their praises. When I do, he castigates me. Doesn't take much working out does it. Pathetic really.
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Did you know what you were talking about before you changed your mind, when you admit in black and white that you were less knowledgeable about what you were talking about?
Only a fool doesn't ever change their mind. When new evidence presents itself I always assess it and change my mind if the evidence is strong enough. I have come across new evidence that is so powerful that I have been convinced by it that deflation is now the very likely scenario. I am not pedantic enough to not change my mind just because a few of you will try and use the opportunity to use it as an excuse to have a go. I don't just take a position and defend it regardless of the mounting evidence to the contrary like Billy does.
I am now even more knowledgeable about things than I was before, not less. Every day I increase my knowledge.
When the IMF change their mind Billy sings their praises. When I do, he castigates me. Doesn't take much working out does it. Pathetic really.
So, you agree that when you were writing essays and cutting and pasting other websites, and telling everybody about how much you knew about what you were saying, you were wrong.
Yet you continue to say you know more the subject than everybody else when you post. Smart people learn from their mistakes. You haven't.
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So, you agree that when you were writing essays and cutting and pasting other websites, and telling everybody about how much you knew about what you were saying, you were wrong.
Yet you continue to say you know more the subject than everybody else when you post. Smart people learn from their mistakes. You haven't.
I agree that I know what I'm talking about. Are you trying to say that because I've changed my mind about one small part of what I was saying then everything I was saying is wrong. How silly. Also, you seem to forget about my photographic memory.
I don't claim to know more about the subject than anyone else but I certainly know far more than Billy. Avid readers of this forum will know that I've given him several batterings over the last 6 months or so.
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I agree that I know what I'm talking about.
You can't agree with something no-one's said. Wrong again...you're getting a reputation.
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It's obvious. You just don't like to see your leftie idol Billy made to look daft, so lets just leave it at that that. You obviously have nothing to contribute to the debate.
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You obviously have nothing to contribute to the debate.
Neither have you, you just use other peoples material and try to pass it off as your own, BST has given you a right battering over and over again, I`m just surprised that he keeps persevering with an obvious basket case!
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BST has given you a right battering over and over again,
If you say so. lol.
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See any sign whatsoever over the last generation that bond rates go up as debt goes up?
See any sign that Austerity made a big effect on the bond rates?
Sorry if already covered, but as far as I understand it governments have been buying up their own bonds (QE) meaning that bond rates have been artificially inflated. Take the BOE/ central bank manipulation out of the bond market and I suspect rates will go sky high.
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Bond yields have been depressed by QE, no doubt about that. But the consensus is that the effect is probably no more than 1-2%. Look at those graphs again - bond yields have been coming down for a generation (well before the widespread use of QE which begain in Japan in ~2002 and in the UK/USA in 2008/09). There is something else afoot in the global markets that has meant that the bond markets have been prepared to lend to Governments at ever lower rates, pretty much independently of the Governments' debt levels.
The point is that this entirely skewers Osborne's argument. He regularly claims that we in the UK have low bond rates BECAUSE of the Austerity package being sufficient to convince the markets. Those graphs on the previous page show that this is utter nonsense. There is no cause-and-effect between Austerity and low bond rates. Austerity is happening because the Tories want it for ideological reasons, to reduce the role of the State. That is a perfectly acceptable thing to argue for. But they never have argued for it. They are introducing it by the back door, and in the meantime, our economy has stalled for 2 years as a direct consequence.
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And you assume reducing the role of the state is a bad thing - it isn't for many reasons. Our economy was the thing artificially inflated by the last government that's for sure.
As for Mick's arguments on deflation, it just isn't going to happen, in fact we'll probably see a small increase in inflation now the economy's picked up a bit and organisations bump up prices knowing disposable income is increasing again.
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BFYP
There is a perfectly rational argument to be had on the role and size of the state. I have no problem with that. I have my own opinions. You have yours. They are just that - opinions.
The point is that an entirely spurious economic argument is being made to justify the reduction in the size of the State.
I am simply pointing out the fact that we have entirely thrown out the possibility of using Keynesian Govt spending to jump start the economy on a myth. The myth that we MUST bring the Govt debt down or the Bond Markets will punish us. The argument is demonstrably wrong - the graphs on the previous page demonstrate that. I really can't see how anyone can argue with that if they are prepared to look at those graphs dispassionately.
If you agree that the State should be reduced in size, argue that case on its merits by all means (although you'd better have a strong argument for how a country can grow it's way out of a demand-slump depression without Keynesian pump-priming.)
If you think that the Bond Markets MAY turn on us in future, argue that case too by all means (although you'd better have a really good explanation for why the Bond markets haven't turned on Japan in 20 years of spiralling debt, and why the bond rates collapsed at precisely the time that our debt was doubling.)
Argue away.
As for Mick's argument on deflation, I couldn't give two tosses. He'll change his mind later anyway, so why bother listening? Three months ago, he was adamant that inflation was the biggest threat to the global economy. Now he has read something that has changed his mind exactly 180 degrees. Give him enough time and he'll spin round sufficiently often to drill himself into the ground and do us all a favour.
My take is that you, BFYP are being grossly optimistic. There is no evidence at all that disposable income is rising quickly enough to make a difference, if at all. The jobs market is also still very weak and as a result, there is little chance of wages increasing rapidly. And to cap it all, as the BRICS countries weaken, there is likely to be little inflation due to global demand for commodities.
Personally, I would be astonished if inflation reached 4% this side of the Election, and outright deflation is not out of the question - whether it comes depends on whether the Central Banks manage to convince the markets that they will do (as Ben Bernanke said) whatever it takes to get economies moving again. In the USA's case, Bernanke has said this means making a pledge to continue QE for as long as it takes.
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What we all need is a good war!
It's worked before when economically illiterate politicians wedded to dogma refuse to see what's in front of their eyes.
BobG
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Bob.
Interesting that it took WWII to get politicians to properly embrace a Keynesian approach to getting out of the Great Depression.
In the mid to late 30s, it was just accepted by policy makers that nothing could be done to bring back full employment. But of course they were wrong. Once the chips were down and the American & British Govts had to pour money into making guns, battleships and bombers, both countries had full employment within months.
Hitler already knew that. His rise to power was primarily due to his promise to bring back Govt-funded economic prosperity after the chaos of Heinrich Bruning's massive austerity drive crippled the German economy and brought democratic politics into disrepute.
It is a supreme irony that Germany is insisting that Greece (and, God forbid, maybe Spain and Italy to come) follow policies very similar to Bruning's. And with the same likely outcome, that democratic politics will be shattered there.
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Time to explain my position on deflation. The first reason we are headed for deflation is that every major debt bubble in history has always been followed by deflation. In 2008 the latest debt bubble peaked and history tells us that deflation will inevitably follow.
The second reason is demographics. Consumer spending makes up nearly 70% of GDP and due to an ageing population, consumers will be spending less than before and this will slow the economy down. Think about it. Old people spend less than middle aged people and because there are more and more of them there will be less consumer spending. They prefer to save not spend.
The government thinks it can inflate the economy by creating debt via quantitative easing but it will fail. Public sector debt is only a third of the size of private sector debt so what happens in the private sector has far more impact on the economy. Unfortunately for the government the private sector is deleveraging as fast as it possibly can and it always wins the inflation/deflation battle.
Don't believe me? Just look at what has happened to Japan. I rest my case.
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And how, oh wise one, would you avoid it?
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Don't believe me? Just look at what has happened to Japan. I rest my case.
Billy - why have you never mentioned Japan?
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And how, oh wise one, would you avoid it?
I'm afraid we can't. It's not just us that are going to be affected, it's most of the developed world. Demographics is the most powerful economic force there is and it is often overlooked by economists and lefties like Billy. Check this out. Which countries suffer the most from inflation? It's the emerging economies that have got youth on their side. Say no more.
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Billy - why have you never mentioned Japan?
Where have you been? He's mentioned them loads of times. Unfortunately he's missed the biggie. Japan's demographics are horrendous. You'd have thought Billy would have mentioned that wouldn't you? Demographics are the main reason Japan has deflated over the last 2 decades.
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Check this out. Which countries suffer the most from inflation? It's the emerging economies that have got youth on their side. Say no more.
Yes, but which of the three causes of inflation would you say fuels it?
And why do you say 'suffers' from inflation? Inflation is good when managed properly.
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LJ
Some fell on stony ground eh?
Ni mind. Let's sit back and marvel at Mick's public education. Having insisted 3 months back that inflation was the biggest threat to our kids, apparently that is now no longer the case because we don't have enough kids.
He's on catch up. A fair way to go yet, but give him time.
PS: with his current obsession about demographics, Mick has caught up with Thomas Malthus from 200 years back. Malthus was wrong because he underestimated the power of human ingenuity to find solutions to the big issues. Doubtless Mick will tell us that lessons from Malthus's day are irrelevant. Just like he was saying 3 months back that lessons from Japan in the 90s were irrelevant.
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Yes, but which of the three causes of inflation would you say fuels it?
And why do you say 'suffers' from inflation? Inflation is good when managed properly.
Not sure what you are on about but I do know what causes inflation. It's young people. They impose a very high cost on society and produce nothing.
Why do you think we had high inflation in the 1970s? It was because the Baby Boomer generation were in education, spending their parent's money. It is no surprise that the 1970s were the lowest productivity decade in the 1900s.
In the 1970s we had worsening recessions as the older generation began to save more while the Baby Boomers entered the economy in huge numbers. This cost a great deal of money as it is very expensive to raise them and then bring them into the workforce.
Inflation only started to fall when these young people became productive members of the workforce which enabled the economy to grow.
It's very simple. When there is a huge influx of young people into the economy this causes inflation. Once people get past their mid forties and stop spending as much this is deflationary. Our population is ageing so work it out.
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Not sure what you are on about but I do know what causes inflation.
Anyone with the slightest knowledge of economics knows what I'm talking about, it's O-level stuff.
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Why do you think we had high inflation in the 1970s? It was because the Baby Boomer generation were in education, spending their parent's money. It is no surprise that the 1970s were the lowest productivity decade in the 1900s.
And that is the biggest load of b*llocks you've come out with yet. It was OPEC policy that caused the high inflation of the 70s, it caused it all across the industrialised western world.
And how exactly do kids in education spend their parent's money? And even more incredibly, how does it drive up inflation when the RPI isn't based on the stuff kids buy?
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And that is the biggest load of b*llocks you've come out with yet. It was OPEC policy that caused the high inflation of the 70s, it caused it all across the industrialised western world.
And how exactly do kids in education spend their parent's money? And even more incredibly, how does it drive up inflation when the RPI isn't based on the stuff kids buy?
I'm afraid you demonstrate a complete lack of knowledge of the situation. You fall for the politician's argument that the symptoms are the problem and totally miss the point of what is really going on. OPEC only got away with what they did because there was a large influx of young people into the economy. If this didn't happen then they couldn't have done what they did. OPEC was only one of the symptoms of the problem.
Have you ever had children? They cost their parents a fortune. The average cost of bringing up a child until they are 21 is £218,000 according to an article in the Guardian. This ignores any increased housing costs because you need a bigger house when you've got kids than when you haven't. Once the kids are off your hands a lot of older people downsize which is deflationary. Saying that the RPI isn't based on the stuff kids buy is laughable. Of course some of it is and you completely ignore what they have cost their parents. This is why the Baby Boomer generation caused inflation in the 1970s.
I'd go back to debating with GCSE students if I were you. You are way out of your depth in this debate.
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OPEC only got away with what they did because there was a large influx of young people into the economy. If this didn't happen then they couldn't have done what they did.
Once the kids are off your hands a lot of older people downsize which is deflationary.
I'll let those two gems stand. I don't need to comment on them, they do it for themselves.
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Eeh you have to admit, he's good comedy value when he gets all mono-maniac on the latest thing he's read and lapses into his Sanjeev "Indian" Bhaskar mode.
Inflation in the 70s. "Baby Boomers"
England losing to Poland at Wembley in 1973. "Baby Boomers"
Assassination of Archduke Franz Ferdinand. "Baby Boomers"
So in the 1970s, we ignore OPEC quadrupling oil prices. We ignore the inflationary effects of the massive US spending on the Vietnam War. We ignore the collapse of the Bretton Woods currency system and the floating of currencies. We ignore the massively inflationary mistake of the Barber Boom in the UK.
Nope. It's all down to baby boomers.
Forget the fact that there was a huge baby boom in the early to mid 1920s. So those kids reached economic maturity in the late 40s/early 50s. When inflation was falling for a decade. Forget the fact that there was a huge drop in births in the Great Depression. But when that generation came to maturity in the late 50s, early 60s, inflation was pic whining a 2 decade-long rise.
No. Some has told Mick that the Great Inflation of the 70s coincided with the baby boomers starting work. So that must be the cause and effect and any other explanation is rejected.
Tell you what. When Rovers beat Reading 7-5, it was cloudy. Apparently it's going to be cloudy on Saturday. I bet we win 7-5.
Old Mick's arguments are so 1-dimensional, they'd make a line from a 2H pencil feel fat.
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I think he might have been reading this:
http://www.forbes.com/sites/greatspeculations/2012/09/19/demographics-to-blame-for-inescapable-deflation/
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Of course he has. All the sites coming up with this crackpot theory are American, which is why the factors don't match the UK economic, political and demographic history and situation. And none of them have any solution to the problem, which is why Mick hasn't got one either.
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LJ.
You're forgetting his photographic memory.
Mind, when he then introduces that text with the comment "Time to explain my position on deflation," he clearly forgets that plagiarism is plagiarism, even if it is photographically recalled.
By the way, in that Forbes article, Harry Dent conveniently starts his graph showing the coincidence between Labour force growth and inflation at 1953. I wonder why that might be?
http://blogs-images.forbes.com/greatspeculations/files/2012/09/Inflation-Indicator.jpg
And of course, this is the same Harry Dent who, in 1999 and for many years afterwards, loudly proclaimed an analysis that predicted that the Dow Jones would hit 40,000 by 2010.
Yeah, well. Thank goodness I don't put money into his investment company eh?
(http://factsnews.files.wordpress.com/2009/08/dow90-2009.jpg?w=300)
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I'm gobsmacked tbh. That anyone, anyone! could put forwards that drivel about baby boomers, while ignoring the factors you pointed out Billy, is just beyond belief. The bloke's a crack pot. I detect quite a number of neuroses actively at work actually.
BobG
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This thread is hilarious. It's like watching a dribbling delinquent on Jeremy Kyle get battered around by him and his audience. I remember learning about the Great Depression/Weimar Germany when I was at school and often wonder what my history teacher would write on poor old Mick's essays.
I do like these threads for more wholesome reasons though, I've learned a lot from them about an area I'm far from an expert on.
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I do like these threads for more wholesome reasons though, I've learned a lot from them about an area I'm far from an expert on.
Stick with it and you'll learn a lot more from me as I am an expert.
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Those of you that think Billy is an economic God are very sadly deluded. He throws a few graphs in now and then and makes statements that bear no resemblance to fact and you all bow at his altar. In fact I find it very funny that his views are taken so seriously.
It's obvious that his supporters are all lefties and don't want to face the unpalatable truth that lies ahead. How anyone that espouses spend spend spend by our useless politicians can be taken seriously is totally laughable.
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Aw bless, he's like a puppy that just wants to be loved.
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Aw bless, he's like a puppy that just wants to be loved.
lol. You couldn't be more wrong (as usual). Now if you'd been talking about Billy.....
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Oh look, he's chewing my slippers.
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So in the 1970s, we ignore OPEC quadrupling oil prices. We ignore the inflationary effects of the massive US spending on the Vietnam War.
I haven't got the time to pull apart all of your ludicrous arguments, but I'll still do the odd one so you don't have a free run at brain-washing all your leftie friends. OK, so if we accept that the Vietnam war caused high inflation (obviously I don't) then why didn't the same thing happen when the US waged war on Iraq and Afghanistan? What about when oil went to over $90 a barrel? According to you inflation should have took off. It didn't. Why?
I'm not holding my breath for a sensible answer, just more leftie spend spend spend proposals for which you are happy for future generations to pick up the bill.
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This thread is hilarious. It's like watching a dribbling delinquent on Jeremy Kyle get battered around by him and his audience. I remember learning about the Great Depression/Weimar Germany when I was at school and often wonder what my history teacher would write on mjdgreg's essays.
I do think you've been a bit harsh in your description of Billy. I may not see eye to eye with him but even I would not characterise him the way you have. Your teacher would have given me 10 out of 10 (unless of course he was a deluded leftie).
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I think he might have been reading this:
http://www.forbes.com/sites/greatspeculations/2012/09/19/demographics-to-blame-for-inescapable-deflation/
Is that the best you can do? pmsl. I bet it took you ages to come up with that. How anyone can say I got my post from there is laughable. That's not to say I didn't find the article interesting. You'd do far better pulling the article apart if you disagree with it. But you won't, because you don't have the nouse to be able to and seem to spend all your time being the plagiarism policeman.
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I'm gobsmacked tbh. That anyone, anyone! could put forwards that drivel about baby boomers
If you'd said dribble instead of drivel your view may have had more merit.
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Do you think your thread title The 08-?? Depression is a bit of an exaggeration to say the least? It's amazing the views you form when you've been looking at a graph.
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Damn, the puppy's leaving little messages all over the carpet now...
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So in the 1970s, we ignore OPEC quadrupling oil prices. We ignore the inflationary effects of the massive US spending on the Vietnam War.
I haven't got the time to pull apart all of your ludicrous arguments, but I'll still do the odd one so you don't have a free run at brain-washing all your leftie friends. OK, so if we accept that the Vietnam war caused high inflation (obviously I don't) then why didn't the same thing happen when the US waged war on Iraq and Afghanistan? What about when oil went to over $90 a barrel? According to you inflation should have took off. It didn't. Why?
I'm not holding my breath for a sensible answer, just more leftie spend spend spend proposals for which you are happy for future generations to pick up the bill.
Go on Mad "Baby Boom" Mick. I'll humour you again.
1) The cost of defence spending in the USA during the Vietnam War was proportionally much higher than the cost of defence spending during the Iraq/Afghanistan wars. The American Congressional Research Services agency estimates the figures at 9.6% and 4.3% of GDP respectively.
2) This racheted-up defence spending led directly to the pressures on the dollar that caused the collapse of the Bretton Woods currency system. This was massively exacerbated by Nixon's unilaterally decision to abandon the convertibility of the dollar into gold in 1972. This effectively removed the anchor that world currencies had had, and led them to float freely on the markets. For a period of time, there was something approaching chaos as markets searched for the "true" value of currencies and Central Banks searched for the monetary policies to control currency volatility. And of course, one of the key drivers of inflation is an undervalued currency - I'm sure you understand the mechanics Mick.
3) In 1973, the price of oil was quadrupled OVERNIGHT. There has never in the whole of modern history been an increase in the cost of a major commodity anything like as dramatic as that. And it stayed high. It didn't come down. In fact, it then went on to triple in price in 1979 after the Iranian Revolution. By contrast, in the 2000s, it took something like 6-8 years for the price of oil to quadruple. And then it fell in price by 70% in less than a year as the Financial Crash took effect.
Now, I'm sure you don't need me to remind you about this next bit Mick, you being a genius and all that, but you do have a habit of pretending to be thicker than you are, so I'll say it anyway. Inflation is not related to the level of prices. It is related to how quickly those price level are changing.
So, When oil quadrupled in price between 2000-2008, our UK inflation rate DID increase. But slowly; it went up from around 1% in 2000 to around 4% just before the crash. When oil quadrupled in price in October 1973, inflation exploded. from 1970-Oct 1973 it had been bobbing between 6-10%. By mid 74 it was 17% and by mid 75 it was 27%. And then after the Ayatollah came to power and the price of oil rapidly trebled, inflation more than doubled in less than a year.
If the price of oil quadrupled tonight, I will guarantee you that you'd see inflation go through the roof over the next few years. Baby boomers or no baby boomers.
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So in the 1970s, we ignore OPEC quadrupling oil prices. We ignore the inflationary effects of the massive US spending on the Vietnam War.
I haven't got the time to pull apart all of your ludicrous arguments, but I'll still do the odd one so you don't have a free run at brain-washing all your leftie friends. OK, so if we accept that the Vietnam war caused high inflation (obviously I don't) then why didn't the same thing happen when the US waged war on Iraq and Afghanistan? What about when oil went to over $90 a barrel? According to you inflation should have took off. It didn't. Why?
I'm not holding my breath for a sensible answer, just more leftie spend spend spend proposals for which you are happy for future generations to pick up the bill.
Because America didn't commit the same amount of resources to Iraq & Afghanistan that they did in Vietnam. The consequences of that war were such that they couldn't afford to and risk a huge public backlash when the casualties came home. That's why we and several other counties are there, its a coalition.
Anyway inflation didnt rise just because of the Vietnam War, it owes more to the Yom Kippur War, which led directly to OPEC's action in raising oil prices (and may very well have contributed to the end of the Vietnam War).
The graph showing it is here: http://en.wikipedia.org/wiki/1973_oil_crisis
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I'm confused this morning. All along Labour tell us we shouldn't cut as it will help to boost growth etc, yet last night they voted to cut a budget designed to boost growth (which I don't agree with by the way). But my point is one minute they say one thing, the next they're changing their mind. Is it me or is their only policy to play games with the opposition?
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BFYP
I don't follow your logic. The issue from Labour's side on the EU budget argument is nothing to do with home much our own Govt should be spending. It's about whether that spending should be given to the EU or spent at home.
But of course there's politicking going on as well. That's politics. Labour are quite within their rights to put on the spot a PM who less than 12 months ago was trumpeting how hard he was on Europe. Here's a chance for him to prove it on something substantial.
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Also Labour is being consistent as it voted for a real-terms cut in the budget in July. It now puts Cameron on the spot to see how tough he really is on Europe.
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I could have written every word myself. Exposes Billy's ideas for what they are. Economics of the madhouse. Notice how scathing he is of socialist France. If Billy had his way we'd end up just like France. I've taken the article below from the following more extensive link:
http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2012/11/02/the-role-of-risk-in-asset-allocation.aspx
A Simple World
By Charles Gave
Many of our readers seem to believe that the world is getting ever more complex. I disagree. In fact, I have never seen a world whose key drivers were so simple to grasp. Almost everybody, save a few politicians in France and BillyStubbsTears, realize that government is the problem. Even the 50% or more of US citizens who receive "bribes" with money borrowed from their grandchildren concede the spending has to slow. As the anti-Obama adverts on TV put it: “Where did the trillions go?”
Servicing debt is not a problem when there is growth. However, increased government spending does not lead to higher growth but to lower growth. We won’t hear this message from complex souls like Paul Krugman and Joseph Stiglitz, both Nobel Prize winners in economics. But as Hayek said while accepting the prize, there should never have been a Nobel Prize in Economics. Even a cursory look at economic history shows that increased government spending drags down the growth rate, largely because it drives out productive investment (see How The World Works).
Wealth is not created by artificially cheapening money. When prices are manipulated to the point where they have nothing to do with reality, then the only rational decision is to shift to cash and to wait for prices to send signals again (see A Measure Of Keynesianism). As a result, the velocity of money goes to zero and the economy moves ex-growth. This is exactly what we are seeing today as the world’s idiotic central banks apply a strategy that Japan has spent 20 years proving does not work.
None of this is rocket science. Let’s look at the banks – a web of financial complexity we’re told. But one does not need the ability to slice a lousy mortgage loan into 37 different risk-rated tranches to know that when a bank has to go bankrupt, the shareholders and the bondholders of the bank should go to zero. The executives should go to jail if needed (always very popular) and the depositors can remain protected though a nationalization of the said banks. Three or four years later, once their balance sheets have been cleaned up and their capital reconstituted through an infusion of public money, the banks can then be reintroduced in the stock market and privatized at five times the amounts spent by the government. This is what happened in Sweden after 1992 but did not happen in Japan over the last twenty years and is certainly not unfolding today in Europe.. We all know the results.
Equally, there remains no justification for comingling the casino-like operations of an investment bank and the post-office function of a commercial bank. This is because these institutions are in different businesses; the first one plays with the partners’ money and the second one with the depositors’ money.
Tampering with prices, or with interest rates, allowing a quasi-monopoly to develop in the banking system, using debt to pay for current expenditures, manipulating exchange rates, killing the saver, etc… all of this does not work, and never did.
So the solution to our current malaise is very simple: we have to stop now. Reduce government spending, stop manipulating money, let market pricing return – or the result will be a vicious cycle of low growth and rising debt, or certain depression.
The choice is just as simple for investors:
Stick with countries that have avoided the worst of the bad policies, like Canada, Sweden, Denmark, Poland, Switzerland, Australia, New Zealand, Singapore, Hong Kong or even Korea. All of these countries either kept fiscal balances and taxes low (or started reducing them), and/or regulated their financial systems to prevent casino madness.
Consider certain countries that are improving on the margin. This includes the UK. It also includes China, which is opening its capital account and liberalizing its financial system. Spain and Italy are distant possibilities.
Respond quickly and exuberantly if the US elections bring a change of leadership.
Forget about countries like France – they have never understood and never will.
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Yeah, but what about the baby boomers?
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Yeah, but what about the baby boomers?
I'm glad you're coming around to my point of view. Charles Grave isn't perfect. He talks a lot of sense, but is obviously unaware of the huge effect demographics have on an economy (just like you and your leftie friends). When you add the effects of demographics into the mix it makes you aware of just how bad things are.
Increasing our debt when we have less 'productive' people in the economy to pay for it, makes your point of view even more ludicrous.
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Aye. Ta for clearing that up.
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Aye. Ta for clearing that up.
You're welcome. At last you've seen the light. About bleeding time.
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A pleasure Mick.
I've seen the light that there's no converting you, that's for sure.
We were discussing the clear and unequivocal evidence a few weeks back that the multiplier on Govt spending is much greater than 1. Which means that £1 increase (or decrease) in Govt spending results in an increase in GDP greater than £1. That's unequivocal evidence from 28 countries over the last 3 years.
But you, Mick, ignore this evidence, and instead quote your Messiahs who tell you that that can't be true. "However, increased government spending does not lead to higher growth but to lower growth" in the latest diatribe. I've no idea where they get that information from. There is not the slightest bit of factual evidence to back that up.
He quotes Sweden. Sweden has had higher Govt spending and higher Govt debt that the UK for pretty much the whole of tiem since WWII. It's also had higher growth. Ditto New Zealand, who had stellar growth in the early 90s when they had very high Govt spending and debt, but whose growth has bobbed around much lower levels since they embarked on a programme of cutting Govt spending sharply from the mid-90s.
The facts, when you actually look at them, simply do not fit the message that your Hayekian writer wants to peddle.
(Not that I expect you to look at facts Mick. You never do. You simply ignore them and paste yet another posting that argues what you want to hear. Month after month after month.)
And then there's the REALLY pressing issue for the current predicament. Your man blithely says "increased government spending drags down the growth rate, largely because it drives out productive investment ."
Right. Now, IF the private sector were booming, he might have a point, to the extent that Govt and private business would both be competing for the same credit, and hence would drive up the cost of credit.
But in the current environment, the private sector is NOT investing. It's hoarding money. THAT is precisely the reason that the climb out of the depths of the Depression has been so slow. So, Govt borrowing and spending does not, in any way whatsoever "drive out productive investment." The "productive investment" is not happening anyway. THAT is the core of the crisis in growth.
Consider. Why do you think that interest rates are so low across the Developed World? The interest rate is the "cost" of borrowed money. If your man's analysis was correct, if Govt was competing with private business for credit, the interest rates would be going up. But the rates aren't going up. Because no one wants the credit in the first place. Because private business doesn't want to invest. So Govt cannot, by definition, be crowding out private investment. Which is kind of where we started. (And before you start the conspiracy theory drivel about Govts holding down Central Bank interest rates unnaturally, ask why the open Bond Market rates are also at historic lows.)
But never mind. The Hayek supporters have got a myth to peddle. Govt spending is inherently inefficient and should be driven out. End of story. Any alternative analysis, any empirical evidence that refutes that argument will be utterly ignored and instead we'll keep repeating the same mantra. They are like religious zealots, or the Socialist Workers Party demonstrators - no matter how often the world proves them wrong, they keep barking the same line.
Mick. I was taught by Catholic nuns for a fair bit of my childhood. They had exactly the same approach to any argument that God didn't exist, or that little baby Jesus wasn't the saviour of mankind. They were truth-denying, f***ing barking mad zealots as well.
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What you don't seem to realise is that growth in an economy is dependent on demographic expansion, rising labour productivity or increases in capital. Government spending when it goes on social issues does not increase growth. All it does is create more debt and is subsequently a further drag on the economy.
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There you go again Mick. You comprehensively lose an argument (again) so you twist like a fish on a dockside and change the argument. It's impossible to discuss with you Mick. Utterly impossible. Because you have the attention span of a gnat.
Let's consider this thread as a case in point.
You Mick, raised the issue of demographics as affecting inflation. That is a perfectly sensible issue to raise. But you can't just simply raise it as a factor can you Mick? Oh no. You have to claim that it is THE dominating factor and will determine everything.
When several of us point out that this is rather silly, you ignore this and instead cut and paste a rant from a Hayekian ideologue on an entirely different subject - the efficacy of Govt spending. (Aside: he makes himself look rather silly by putting the UK forward as a prime example of how reduced state spending is the way out of recession. Yeah, right. I suspect the rest of the world will be falling over itself to follow our lead.)
When I point out the fallacies at the core of that argument, you flip again and produce a rant about Govt spending on non-productive items.
Mick
Each one of those topics is worthy of discussion. But you're not interested in discussion are you Mick? When the fallacies of one argument are made clear to you, you simply choose another argument and carry on as though nothing had happened, usually quoting yet another neo-Hayekian zealot as though that clinches the argument because he says something you agree with (even though you've said times many that economists are cranks).
What precisely do you come on here to argue for Mick, when you are so utterly incapable of sticking to the point at hand?
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What precisely do you come on here to argue for Mick, when you are so utterly incapable of sticking to the point at hand?
Err, can I have a go at 'to try and wind you up' - or trolling as i believe it is called in that there interyweb world.
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I don't think I have ever, ever come across a more self important, opinionated fool than good old MJD. even debates with my 11 year old son stick to the point longer and are conducted, on both sides, with a deal more rationality than poor old MJD has shown here.
I think you would benefit from 3 years at a Uni Mick. Don't really matter which one. Any of 'em would do. Try Salford. You might learn the art of debate. As it is, you are simply puerile.
BobG
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I don't think I have ever, ever come across a more self important, opinionated fool than good old MJD. even debates with my 11 year old son stick to the point longer and are conducted, on both sides, with a deal more rationality than poor old MJD has shown here.
I think you would benefit from 3 years at a Uni Mick. Don't really matter which one. Any of 'em would do. Try Salford. You might learn the art of debate. As it is, you are simply puerile.
BobG
High Melton does n`t count ;)
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What you don't seem to realise is that growth in an economy is dependent on demographic expansion, rising labour productivity or increases in capital.
b*llocks. Go and learn microeconomics. And I mean from a textbook, not a blog.
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What you don't seem to realise is that growth in an economy is dependent on demographic expansion, rising labour productivity or increases in capital.
b*llocks. Go and learn microeconomics. And I mean from a textbook, not a blog.
Given that this explanation of growth excludes technological advancement, it is older even that Thomas Malthus's 200 year old Doomsday analysis that I accused Mick of peddling a few days back. Malthus at least realised that technological breakthroughs would lead to increases in output, but he thought that the ensuing output would be devoured by the feral poor, who would therefore procreate extensively and eventually have more mouths to feed than agriculture could support, leading to mass starvation and a collapse in the population levels.
He was shown to be wrong a century back. Mick hasn't even caught up with him yet.
Mick. As part of your ongoing education, I'll give you six simple additional mechanisms by which GDP growth can occur.
1) Technological improvement, leading to more efficient ways of doing things.
2) More women entering the labour force, leading to an increasing in the productive capacity with no increase in the overall population.
3) Workers working longer hours per year, leading to an increase in the prod....etc, etc.
4) Workers working longer years in their lifetimes, leading to an increas....etc, etc.
5) More efficient managerial systems, deciding how to allocate labour and capital to particular tasks so that more tasks can be accomplished with the same capital and labour.
6) Better trained/educated/rewarded labour, such that the same total labour force can and will tackle more productive problems.
Enough for now?
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Look, it's very simple. Labour created a housing boom and consumers borrowed to the hilt in the expectation of ever rising house prices. They have now realised that this was an illusion and are not about to go on a spending spree any time soon, as a lot of people are now in debt and will be for many years to come.
Banks are sat on a lot of potential debt from lending against increasing house prices. Now house prices are falling the consumer and the banks are not about to get into even more debt so the economy is stuffed. The last thing we need is Government borrowing even more money to get the country into even more debt.
There will be no sustained recovery until the housing market reaches the bottom and this is going to take years because interest rates are too low to sort it out quickly. Add in the demographics time-bomb and we are going to be in a bad way for many years. Simply saying that everything will be all right if the Government spends a load more money we haven't got is the biggest load of cobblers I've ever read. You show no real understanding of what is going on because you are so left wing you can't see reason.
If only I was the benevolent dictator of the country things would soon be sorted out.
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b*llocks. Go and learn microeconomics. And I mean from a textbook, not a blog.
I would ask you to refrain from using bad language on the Sabbath. Any other day of the week is fine. You need to consider your fellow forum users, some of which may be quite holy.
As for microeconomics, I am a big picture sort of person and prefer to deal in macroeconomics. I get my views from real life not from textbooks. Anyone who has got the time to write such boring books obviously hasn't had time to live in the real world so by definition don't know what they're on about. My experience as a serial entrepreneur counts for much more than the drivel these cranks write.
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Those of you that want me to refute every point Billy makes are wasting your time. I've already done this on other threads and I'm not about to do it again. Billy seems to think that if he keeps on saying the same thing over and over again then what he says must be right.
No doubt all you lefties will agree with him because it all seems very plausible, especially when a few graphs are thrown in. Unfortunately for Billy I have conclusively proved him to be totally wrong and have shown you all the path to enlightenment. If you all want to follow Billy to the dark side then that is your choice. Just don't say you haven't been warned.
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If only I was the benevolent dictator of the country things would soon be sorted out.
Aye, because you'd be hanging upsidedown from a lamppost within five minutes and everybody would have an increase in their happiness quotient.
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Aye, because you'd be hanging upsidedown from a lamppost within five minutes and everybody would have an increase in their happiness quotient.
I think you would find that the numbers of right wingers would increase dramatically and lefties would soon turn out to be a dying breed. Being a tolerant sort of person (unlike you and your leftie friends), I would do my best to stop the lefties being persecuted because there would be so much anger that they had got away with ruining the country for so long.
Anyway it's time you stopped looking at text books for the microeconomics of the situation. This marks you out as a 'small picture' sort of person who can't see the wood for the trees. Hopefully you have now learned that the big picture is far more important.
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When the fallacies of one argument are made clear to you, you simply choose another argument and carry on as though nothing had happened
Followed by
Look, it's very simple. Labour created a housing boom and consumers borrowed to the hilt in the expectation of ever rising house prices. They have now realised that this was an illusion and are not about to go on a spending spree any time soon, as a lot of people are now in debt and will be for many years to come.
Banks are sat on a lot of potential debt from lending against increasing house prices. Now house prices are falling the consumer and the banks are not about to get into even more debt so the economy is stuffed. The last thing we need is Government borrowing even more money to get the country into even more debt.
There will be no sustained recovery until the housing market reaches the bottom and this is going to take years because interest rates are too low to sort it out quickly. Add in the demographics time-bomb and we are going to be in a bad way for many years. Simply saying that everything will be all right if the Government spends a load more money we haven't got is the biggest load of cobblers I've ever read. You show no real understanding of what is going on because you are so left wing you can't see reason.
If only I was the benevolent dictator of the country things would soon be sorted out.
I believe the most appropriate term is Q.E.D.
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Look, it's very simple. Labour created a housing boom and consumers borrowed to the hilt in the expectation of ever rising house prices.
Multiple property owners that buy cheap and sell on for profit or rent out must take a big portion of the blame then eh? ;)
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Multiple property owners that buy cheap and sell on for profit or rent out must take a big portion of the blame then eh?
All I'm doing is buying up Doncaster to put a roof over some poor unfortunate souls heads because they've fallen for the leftie claptrap that it is your duty to borrow and spend as much as you can to keep the economy afloat. I prefer to live within my means and save some of my money which I then invest to the benefit of me and my family and others (usually lefties). I am also doing my bit to sort out the demographics time-bomb by putting a roof over the heads of foreign workers as well.
It may interest you to know that the last house I bought, I fully expect to go down in value not up. Because I am a big picture sort of person, I am prepared to take this loss as eventually I will make a profit when the market has bottomed out due to continuing to receive rent. At the moment the rent is only just covering the losses on the depreciation of my asset. So I would argue that I am being very philanthropic and executing my social responsibilities in a very caring way.
Just be grateful that there are people like me about.You being a leftie that relies on the state to look after you, may one day need a roof over your head (when the state can no longer borrow money to keep you in the style to which you have become accustomed). I will be there waiting with a set of keys to a house for you (providing you haven't spent all your money and got loads of debt).
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Given that this explanation of growth excludes technological advancement,
Wrong. This is included in 'rising labour productivity'.
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When the fallacies of one argument are made clear to you, you simply choose another argument and carry on as though nothing had happened
Followed by
Quote from: mjdgreg on November 04, 2012, 11:58:59 pm
Look, it's very simple. Labour created a housing boom and consumers borrowed to the hilt in the expectation of ever rising house prices. They have now realised that this was an illusion and are not about to go on a spending spree any time soon, as a lot of people are now in debt and will be for many years to come.
Banks are sat on a lot of potential debt from lending against increasing house prices. Now house prices are falling the consumer and the banks are not about to get into even more debt so the economy is stuffed. The last thing we need is Government borrowing even more money to get the country into even more debt.
There will be no sustained recovery until the housing market reaches the bottom and this is going to take years because interest rates are too low to sort it out quickly. Add in the demographics time-bomb and we are going to be in a bad way for many years. Simply saying that everything will be all right if the Government spends a load more money we haven't got is the biggest load of cobblers I've ever read. You show no real understanding of what is going on because you are so left wing you can't see reason.
If only I was the benevolent dictator of the country things would soon be sorted out.
I believe the most appropriate term is Q.E.D.
Look, I've already explained that I've totally demolished all your arguments in previous threads. I've got a life and will not repeat it all again just to keep you happy.
I don't constantly berate you for not picking up on the demographics argument. It's obvious to anyone that you hadn't given this area of economics a seconds thought even though it is the most powerful economic force there is. I don't need to berate you because I just let the readers make their own minds up.
You're complete lack of regard for demographics, exposes you as not having a clue what you are on about. You'd do better to take on-board what I'm saying before it's too late.
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You're complete lack of regard for demographics, exposes you as not having a clue what you are on about.
I remember when you had a complete lack of regard for demographics. Presumably you had no clue what you were on about then too.
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I remember when you had a complete lack of regard for demographics. Presumably you had no clue what you were on about then too.
I've always been aware of demographics. I had been waiting many months to see if Billy would ever bring it up unprompted. Unfortunately I have decided it was never going to happen so I have now enlightened him.
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I remember when you had a complete lack of regard for demographics. Presumably you had no clue what you were on about then too.
I've always been aware of demographics. I had been waiting many months to see if Billy would ever bring it up unprompted. Unfortunately I have decided it was never going to happen so I have now enlightened him.
(http://woookie.co.cc/wp-content/gallery/tri-moons-gifs/Cole-Lol.gif)
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He can't even remember what he's written in this thread!
So much for the infallible photographic memory!!!
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I remember when you had a complete lack of regard for demographics. Presumably you had no clue what you were on about then too.
He can't even remember what he's written in this thread!
So much for the infallible photographic memory!!!
pmsl. You're the one with the bad memory. I defy you to find one statement (you can even use other threads) where I have stated that I have a complete lack of regard for demographics. You won't find one.
It would be enlightening for us all if you could clarify your statement 'He can't even remember what he's written in this thread!' I'm sure I'm not the only one baffled by this comment.
As far as my photographic memory goes I've never stated it was infallible. It is particularly susceptible to error after several ales have been consumed. However, I have yet to come across anyone who has got even 5% of my amazing powers of recall.
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I've always been aware of demographics. I had been waiting many months to see if Billy would ever bring it up unprompted. Unfortunately I have decided it was never going to happen so I have now enlightened him.
OK Mick, so when you said this a couple of weeks back...
I've come across some astounding evidence about deflation which I have weighed up and this has led to me changing my view.
...and the evidence that caused you to change your mind was the fact (sic) that demographics means that we are going to have deflation, was that:
a) You being a little tinker and being economical with the truth because you knew all along the effect that demographics has on de/inflation?
b) Genuinely new information to you because before reading that you didn't appreciate the effect that demographics has on de/inflation?
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Thanks BST, that's what I remembered and Mick obviously hasn't, despite his phenomenal memory.
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Done like a Kipper, again, I`d say!
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...and the evidence that caused you to change your mind was the fact (sic) that demographics means that we are going to have deflation, was that:
a) You being a little tinker and being economical with the truth because you knew all along the effect that demographics has on de/inflation?
b) Genuinely new information to you because before reading that you didn't appreciate the effect that demographics has on de/inflation?
You're the one being economical with the truth, trying to make out that the only reason I've changed my mind is all down to demographics. Simply not true. Your memory is as bad as Glyn-Wriggly's.
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Only quoting you, Mick. Your words not ours.
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Go on then Mick. What was the dramatic new information you read that made you switch your mind from rampant inflation to rampant deflation being the big threat?
I'm sat comfortably waiting for the explanation.
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Go on then mjdgreg. What was the dramatic new information you read that made you switch your mind from rampant inflation to rampant deflation being the big threat?
Twisting my words again. I don't ever remember using the words 'dramatic' and 'rampant'.
Anyway, I seem to remember that the main reason I thought we were headed for deflation is that every major debt bubble in history has always been followed by deflation. In 2008 the latest debt bubble peaked and history tells us that deflation will inevitably follow.
Also the government thinks it can inflate the economy by creating debt via quantitative easing but it will fail. Public sector debt is only a third of the size of private sector debt so what happens in the private sector has far more impact on the economy. Unfortunately for the government the private sector is deleveraging as fast as it possibly can and it always wins the inflation/deflation battle.
Don't believe me? Just look at what has happened to Japan.
I think you'll agree that your assertion that I said deflation is going to happen solely because of demographics is way off the mark. I will accept your apology instantly and forget this incident ever happened as it is obvious that my memory is much better than yours.
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Only quoting you, mjdgreg. Your words not ours.
I'm confused. Where did you quote me? What words did I use?
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I think you'll agree that your assertion that deflation only being down to demographics is way off the mark. I will accept your apology instantly and forget this incident ever happened as it is obvious that my memory is much better than yours.
The only person who's asserted that deflation is down to demographics is YOU. In fact you say it's unavoidable.
So you can take any 'apology' you fantasise you've been offered and stick it where your memory (and the rest of your head) seems to be languishing.
You also have a hilarious opinion as to what quantative easing does. I'd love to know how you think increasing M1 creates debt.
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Only quoting you, mjdgreg. Your words not ours.
I'm confused. Where did you quote me? What words did I use?
Of course you're confused. It's the natural order of things.
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I'm still waiting for you to show where you quoted me and what words I used.
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I'm still waiting for you to show where you quoted me and what words I used.
I didn't, BST did it before I could in his post at 04:46:27 PM. I confirmed in the very next post that the words of yours he quoted were those I meant. But they're still your words that were quoted, whomsoever quoted them (and I never said that I'd quoted them myself either).
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You also have a hilarious opinion as to what quantative easing does. I'd love to know how you think increasing M1 creates debt.
You really should know this stuff. This is how it's supposed to work. The BOE reduces interest rates to near zero and then floods the markets with more money supply to promote private lending. They basically print money, which these days is done electronically, and purchase bank assets, thereby increasing money supply. This brings down the interest rates further. The idea is that now the banks have more money available to lend to consumers and businesses who in turn can spend the money back into the economy. The consumers and businesses that then borrow this money then incur debt.
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I didn't, BST did it before I could in his post at 04:46:27 PM. I confirmed in the very next post that the words of yours he quoted were those I meant. But they're still your words that were quoted, whomsoever quoted them (and I never said that I'd quoted them myself either).
I'm still waiting because BST did not use any of my words about demographics. He only quoted some of my words about deflation. Deflation and demographics are two different things.
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Mick
I always used to think you were Peter Schiff. I've changed my mind. The way that you insist on telling a lie over and over again in the hope that it becomes a truth makes you more like Mitt Romney.
Let's get this right. Are you NOW saying that demographics do NOT have a dramatic effect on in/deflation? And that the real reason for your Damascene conversion was that you found out that debt bubbles are always followed by deflation?
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Twisting my words again. I don't ever remember using the words 'dramatic' and 'rampant'.
Mick
No you didn't use those precise words. Out here in the real world, words are used as signifiers and, as long as the meaning is not changed beyond recognition, other words may be substituted.
So, you said that you had "come across some astonishing evidence" about deflation. Out here in the real world, we could substitute "dramatic" for "astonishing" without changing the meaning of that phrase.
Or maybe I'm wrong. Maybe you are Humpty Dumpty and words mean precisely what you intend them to mean. In which case, can you give us a Micktionary so that we can interpret what a word means when you use it?
Meantime, back to the case in point. What was this "astonishing" evidence that you were ignorant about before? It can't have been demographics can it Mick? Because you knew about the effect of demographics all along.
So. What was it?
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In 2008 the latest debt bubble peaked and history tells us that deflation will inevitably follow.
Don't believe me? Just look at what has happened to Japan.
Mick, I`m sure you`ll remember how every time BST made any historical reference to support what he was saying, especially Japan, you just either ignored those references or dismissed them as not relevent! You`re backed into a corner Mick, and making yourself look dafter by the minute, those Diploma`s they dish out at High Melton must be ten a penny!
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No you didn't use those precise words.
Thank you. Please tell that to your acolyte Mr Wriggly.
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Meantime, back to the case in point. What was this "astonishing" evidence that you were ignorant about before? It can't have been demographics can it Mick? Because you knew about the effect of demographics all along.
So. What was it?
Again you try to twist my words. I've never said that I had come across some 'astonishing' evidence that I was ignorant about before. I know pretty much all there is to know about economics but I am always coming across new information that expands my knowledge. Unlike you I am prepared to keep myself up to date with the latest information and adjust my views accordingly.
What is it that you don't understand about what I posted at 12:11:05? This clearly states 2 very good reasons why there would be deflation with no mention of demographics.
Of course demographics also has an effect but you are trying to paint me as not ever having heard of demographics before and saying that my change of view is totally down to demographics.
I think you're just a bit annoyed that in all the drivel you've posted you've never mentioned demographics before. Not even when you were banging on about Japan.
I don't go around saying that therefore you have never heard of demographics. I suspect even Mr Wriggly had heard of demographics before I mentioned it. You are just making yourself look dafter by the day.
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OK Mick
We're getting close to the endgame now.
Here are the facts.
1) In July, you were saying that inflation was "the biggest threat to us all."
2) In October, you said that deflation was the big threat.
3) You explained this change of opinion as being due to your having found "astonishing evidence" that led you to re-appraise your views.
4) The evidence you presented was that
a) Debt bubbles have previously led to deflation.
b) Demographic changes lead to deflationary pressures
5) You're now saying that you were ALWAYS aware of the effects of demographics.
So. Tell us. What was the "astonishing evidence" that you found that you weren't factoring into your consistent and stridently held opinion back in July?
Simple question.
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I can't get my breath. I've explained my position very clearly. I've presented three valid reasons why I believe deflation is now inevitable, yet you try and twist my words again and only present two! At least it's two now and not just one.
You really are a first class pedant, but seeing as I'm in a good mood I will humour you further. Looking at the overall picture I am now in the deflation camp. Demographics is just one part of the reason (not the whole reason as you like to make out). Just for you, I will go into a bit more detail about demographics.
I have stated that I have always been aware of the effects of demographics. This is true, I have. What has happened is that I have become aware that the deflationary effects of an ageing population is greater than I initially believed. I've always believed that an ageing population is deflationary but thought that the inflationary pressures being stoked up by the BOE would offset this and we would still have inflation (though not as great as it would have been due to the deflationary effects of an ageing population). I've also explained about the 'baby boomers' in previous posts so I'm not going to do it again.
So hopefully now you are clearer about where I'm coming from. If not, then I really don't think I can help you further. Just take it on the chin and admit you don't like what I'm saying because you have been blissfully unaware of the factors I mention.
I've done you a big favour by expanding your knowledge of the economy. I just hope you'll take it on-board and change your spend spend spend philosophy. It really makes my piss boil that you think it is OK for future generations to pick up the bill. Harden up man and start to live within your means.
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Right. Thanks for clearing that up.
So, in summary, you were ALWAYS aware of the deflationary effect of demographics and ALWAYS aware that deflation has always been a major problem after credit bubble crashes.
I'm still not sure though what the astonishing new evidence was that you found. Sure, you posted a statement of what you think (or had read), but that was opinion, not evidence. You gave no indication of what the quantitative effect of the deflationary pressures from demographic change and post-debt bubble crash effects are. Neither did you suggest quantitative values for what the inflationary pressure of QE might be. You simply stated as a matter of fact that QE will not work.
None of that is evidence Mick. It's unsubstantiated opinion. So, we've finally arrived at the end point. What you meant all along Mick was that in July you held Opinion A and in October, you had a complete volte-face and now hold the diametrically opposed Opinion B. With no evidence presented to explain why that change occurred.
Glad we finally got there.
PS: It's not the first time in this thread that you have confused "opinion" and "evidence". When I asked you for the reasons why you generally think that the IMF are clowns, but sometimes don't, I'd expected an evidence-based explanation of why you disagreed or agreed with them over particular issues. Perhaps a critique of the veracity of the analytical tools or models that they were using. Perhaps a comparison of what they had predicted against what actually happened. What you actually said was that they are clowns except when they say things that chime with your opinion. Then they are right.
At least you're being consistent. Doesn't really help us move on in a debate if the correctness of an issue is determined solely by what you say is correct, but at least we all now know where we stand with you.
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at least we all now know where we stand with you.
Yep - to one side, pointing and laughing.
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Right. Thanks for clearing that up.
So, in summary, you were ALWAYS aware of the deflationary effect of demographics and ALWAYS aware that deflation has always been a major problem after credit bubble crashes.
I'm still not sure though what the astonishing new evidence was that you found. Sure, you posted a statement of what you think (or had read), but that was opinion, not evidence. You gave no indication of what the quantitative effect of the deflationary pressures from demographic change and post-debt bubble crash effects are. Neither did you suggest quantitative values for what the inflationary pressure of QE might be. You simply stated as a matter of fact that QE will not work.
None of that is evidence Mick. It's unsubstantiated opinion. So, we've finally arrived at the end point. What you meant all along Mick was that in July you held Opinion A and in October, you had a complete volte-face and now hold the diametrically opposed Opinion B. With no evidence presented to explain why that change occurred.
Glad we finally got there.
PS: It's not the first time in this thread that you have confused "opinion" and "evidence". When I asked you for the reasons why you generally think that the IMF are clowns, but sometimes don't, I'd expected an evidence-based explanation of why you disagreed or agreed with them over particular issues. Perhaps a critique of the veracity of the analytical tools or models that they were using. Perhaps a comparison of what they had predicted against what actually happened. What you actually said was that they are clowns except when they say things that chime with your opinion. Then they are right.
At least you're being consistent. Doesn't really help us move on in a debate if the correctness of an issue is determined solely by what you say is correct, but at least we all now know where we stand with you.
You`ve been vey patient with him BST, I think you`ve proved beyond doubt that Mick is a WUM, and a bullshitter of the highest order, High Melton must be very proud of it`s graduate!
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You should know by now that I only deal in facts. If I stated that the world was round would you want me to provide 'evidence' that it wasn't flat? Get a grip man.
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Yep - to one side, pointing and laughing.
I think you'll find we're all laughing at you after your quantitative easing blunder. pmsl.
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When I asked you for the reasons why you generally think that the IMF are clowns, but sometimes don't, I'd expected an evidence-based explanation of why you disagreed or agreed with them over particular issues. Perhaps a critique of the veracity of the analytical tools or models that they were using. Perhaps a comparison of what they had predicted against what actually happened. What you actually said was that they are clowns except when they say things that chime with your opinion. Then they are right.
pmsl. You're the one that has denigrated them and then as soon as a report comes out you're all over it like a rash if it backs up your point of view. All I've done is agreed with a comment Christine Lagarde made.
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You`ve been vey patient with him BST, I think you`ve proved beyond doubt that mjdgreg is a WUM, and a bullshitter of the highest order,
Do you seriously think Billy would spend so many hours debating with me if he thought I was a WUM and a bullshitter of the highest order? He may be totally misguided but he is not stupid.
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When I asked you for the reasons why you generally think that the IMF are clowns, but sometimes don't, I'd expected an evidence-based explanation of why you disagreed or agreed with them over particular issues. Perhaps a critique of the veracity of the analytical tools or models that they were using. Perhaps a comparison of what they had predicted against what actually happened. What you actually said was that they are clowns except when they say things that chime with your opinion. Then they are right.
pmsl. You're the one that has denigrated them and then as soon as a report comes out you're all over it like a rash if it backs up your point of view. All I've done is agreed with a comment Christine Lagarde made.
Mick, Mick, Mick.
How difficult is it to understand?
I criticised the IMF because I fundamentally disagreed with the models they were using in 09/10 and beyond to predict what the effect of Govt Austerity would be. They said that the effect on growth would be small because the Fiscal Multiplier was small. I disagreed with their PREDICTIONS.
Last month, the IMF published a report into what actually happened over the last 3 years. Not forward-looking projections. Assessment of establishable FACTS that had actually happened. That report showed that the evidence was clear - the Fiscal Multiplier is large. Very large. And it is now unequivocally established that Govt Austerity DID result in significant reductions in growth. That's not the IMF's opinion. It is not what their prediction models indicate. It is a sober assessment of the FACTS.
THIS is what I mean when I talk about using evidence to support your argument.
I don't say that I now agree with the IMF because they are saying what I believe to be true, which is YOUR approach to deciding what to agree with and what to disagree with. I'm saying that I welcome their publication of a retrospective report into the facts. FACTS Mick, not opinions. Simple enough? Or is there some part of that train of logic that you cannot compute?
Forward looking predictions vs retrospective establishment of facts. Is it so difficult to understand that difference Mick? Clearly so, because you keep on this like a dog with a f**king rabbit.
Now. Remind us what YOUR approach is to deciding which sources to agree with and which to dismiss.
After you've reminded us what that "astonishing evidence" was that you found.
Do all of that, and you might be worth taking seriously. Otherwise, I'll have a more productive evening arguing with my five year old about why he has to get out of bed before having a shit. His arguments have a more consistent thread of logic to them than those you keep dumping on us.
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BST, never mind argueing with your 5 year old over shitting the bed, let your lass do that, there`s a game down the KM that needs your attention
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Filo.
No can do mate. What with the bairns and work, I'm having to ration my matches these days.
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It's alright the living wage will save us all.... One of the most flawed ideas I've seen.
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It's alright the living wage will save us all.... One of the most flawed ideas I've seen.
It wouldn't surprise me to see the public sector adopting this flawed idea. Any excuse to increase the burden on the productive part of the economy.
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That "Astounding evidence" Mick?
Still waiting to be told what it was.
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"Boris Johnson announces rise in London living wage
London mayor says living wage will be £8.55 in capital, while rate elsewhere rises to £7.45.
Johnson said: "By building motivated, dedicated workforces, the living wage helps businesses to boost the bottom line and ensures that hard-working people who contribute to London's success can enjoy a decent standard of living."
So it's not all bad then, the most popular Tory politician agrees again to raise the rate.
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It's alright the living wage will save us all.... One of the most flawed ideas I've seen.
BFYP. So you don't follow the background then? Your young, so allow me to give you a little walk through history.
Once upon a time, there was this idea in the Western democracies of a social contract. The concept was very simple. It was based on the idea that we were all in it together, and that if the economy grew, we all deserved a share in the proceeds.
It didn't come about from the generosity of the bosses. It came because working people fought like bloody hell over decades for the right to have a fair share of the cake. The Golden Age lasted from 1945 to the end of the 70s. Typically, in those days, if GDP grew by 1%, so did median wages.
Then along came a revolutionary woman and her friend from over the ocean. They said that it wasn't right that bosses weren't free to make whatever decisions they wanted. they said that if bosses were freed, companies would grow even faster and we'd all be better off as the wealth trickled down to us all. It sounded wonderful. So the Western world changed to the ideas that these two people,(let's call them Maggie and Ron) proposed.
And what happened? Well the bosses were freed to do whatever they wanted. And the economies carried on growing on average at pretty much the same rate that they had done previously. But guess what happened to median wages? By 2008, for every 1% increase in GDP, median wages went up by only 0.5%.
But the economies were still growing. So where was the extra money going? Nobody knows for certain, but here's a clue. In 2010, in the middle of the biggest economic slowdown for 80 years, the average salary of FTSE100 directors went up by 55%. Last year it was 22%.
So the bosses were freed to do what they wanted. And what they wanted was to suppress the wages of staff and reward themselves stupendously. Even when the economy was tanking. By 2010, the average FTSE100 director's salary was 200 times the national average wage. (And here's an indication of just how much times have changed. The arch-capitalist JP Morgan said around 1900 that in his opinion, it was morally unacceptable for a boss to earn more that 20 times what his lowest paid employee earned.)
Me, I find that state of affairs to be morally outrageous. You may have a different opinion. (And yes, I do hold New Labour to be seriously to blame here, too - at least they tried to deal with the issue, but by introducing tax credits to ensure that people had enough to live on, rather than holding the companies who were paying below living wages to account.)
So, the Living Wage.
It's not a law, mores the pity. But it is an attempt to hold companies to account. To publicly shame them if they are giving below-subsistence wages to their staff.
Maybe, just maybe, it's a step in the direction of changing this f**king disgraceful situation that we have allowed to develop over the last 30 years. We will hear from the usual suspects that it is a disaster that will cripple companies and drive them abroad. What they actually mean is that it might cramp their ability to reward their bosses with obscene amounts.
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"Boris Johnson announces rise in London living wage
London mayor says living wage will be £8.55 in capital, while rate elsewhere rises to £7.45.
Johnson said: "By building motivated, dedicated workforces, the living wage helps businesses to boost the bottom line and ensures that hard-working people who contribute to London's success can enjoy a decent standard of living."
So it's not all bad then, the most popular Tory politician agrees again to raise the rate.
Whether you live in London or anywhere else in the country, no-one can have a decent standard of living on such a low wage.
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Mick - all this talk of demographics, the need to cut spending further etc....what's your solution to this little tester:
(http://2.bp.blogspot.com/-HGXIAiKlvDI/UFLzwBt_dSI/AAAAAAAAAKI/96FJSR8KkhY/s1600/Camden+Graph+of+Doom.jpg)
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Mick didn't have a clue until he saw an astounding economics lesson disguised as a movie called Logan's Run...
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It must be hard work on google, the astonishing evidence still has n`t been forthcoming
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It's alright the living wage will save us all.... One of the most flawed ideas I've seen.
BFYP. So you don't follow the background then? Your young, so allow me to give you a little walk through history.
Once upon a time, there was this idea in the Western democracies of a social contract. The concept was very simple. It was based on the idea that we were all in it together, and that if the economy grew, we all deserved a share in the proceeds.
It didn't come about from the generosity of the bosses. It came because working people fought like bloody hell over decades for the right to have a fair share of the cake. The Golden Age lasted from 1945 to the end of the 70s. Typically, in those days, if GDP grew by 1%, so did median wages.
Then along came a revolutionary woman and her friend from over the ocean. They said that it wasn't right that bosses weren't free to make whatever decisions they wanted. they said that if bosses were freed, companies would grow even faster and we'd all be better off as the wealth trickled down to us all. It sounded wonderful. So the Western world changed to the ideas that these two people,(let's call them Maggie and Ron) proposed.
And what happened? Well the bosses were freed to do whatever they wanted. And the economies carried on growing on average at pretty much the same rate that they had done previously. But guess what happened to median wages? By 2008, for every 1% increase in GDP, median wages went up by only 0.5%.
But the economies were still growing. So where was the extra money going? Nobody knows for certain, but here's a clue. In 2010, in the middle of the biggest economic slowdown for 80 years, the average salary of FTSE100 directors went up by 55%. Last year it was 22%.
So the bosses were freed to do what they wanted. And what they wanted was to suppress the wages of staff and reward themselves stupendously. Even when the economy was tanking. By 2010, the average FTSE100 director's salary was 200 times the national average wage. (And here's an indication of just how much times have changed. The arch-capitalist JP Morgan said around 1900 that in his opinion, it was morally unacceptable for a boss to earn more that 20 times what his lowest paid employee earned.)
Me, I find that state of affairs to be morally outrageous. You may have a different opinion. (And yes, I do hold New Labour to be seriously to blame here, too - at least they tried to deal with the issue, but by introducing tax credits to ensure that people had enough to live on, rather than holding the companies who were paying below living wages to account.)
So, the Living Wage.
It's not a law, mores the pity. But it is an attempt to hold companies to account. To publicly shame them if they are giving below-subsistence wages to their staff.
Maybe, just maybe, it's a step in the direction of changing this f***ing disgraceful situation that we have allowed to develop over the last 30 years. We will hear from the usual suspects that it is a disaster that will cripple companies and drive them abroad. What they actually mean is that it might cramp their ability to reward their bosses with obscene amounts.
My advantage over you is being an accountant at a company directly affected by this proposal. I've seen the numbers and also heard the discussions about how to deal with it and if you think that there's endless pots of money in Plcs and these contracts then to be frank you're deluded. The cost to the councils and taxpayer will be rather high unless they plan to cut services. I just wish I could give you the evidence that I see everyday in my job and in the studies I've done outside of that. I don't know your background so you may well see different, but in my line of work it's certainly no myth (no matter how much the unions try and tell us differently), though I see the numbers they don't. It's such a shame that we can't produce in depth numbers for all to see....
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BYP
Are you also taking into account the extra finance that these workers will be putting back into the economy by having more money to spend, thus becoming consumers & customers for companies (like yours?) - or just the direct effect on the profits of your company alone?
Big picture............small picture
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BYP
Are you also taking into account the extra finance that these workers will be putting back into the economy by having more money to spend, thus becoming consumers & customers for companies (like yours?) - or just the direct effect on the profits of your company alone?
Big picture............small picture
But where you take the money into the company from them, the money's coming out of the company somewhere else isn't it? All well and good giving that bigger spending power out, but pointless when companies simply put the price up giving them in the end less spending power...
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All well and good giving that bigger spending power out, but pointless when companies simply put the price up giving them in the end less spending power...
Or when they employ fewer people...
What got me about this was that I saw Rachel Reeves, a Shadow Treasury minister, being questioned by Charlie Stayt (hardly Jeremy Paxman!) on Breakfast this week and being unable to explain the "policy" properly. She couldn't even answer his perfectly reasonable question of why a Labour Government wouldn't simply make the "living wage" rate the national minimum wage.
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BFYP
I really don't follow your logic. No-one is making it a legal requirement that any organisation implements the living wage. If companies and councils don't want to do so, they don't have to do. But they might find themselves facing a certain amount of public pressure. And by the way, my position is as MD of a highly successful technical services company employing a dozen people. Every one of them receives in excess of the Living Wage. My salary, as the founder of the company, the largest shareholder, the most experienced and by some way the highest qualified person in the organisation is less than 5 times that of the lowest paid person, who left school at 16 and who is now 22. I'm more than happy with what I earn. I do not see the need to screw his wages down in order to inflate mine. I see absolutely no argument whatsoever for bosses of other companies doing any different.
TRB.
...or when they more equitably share out the rewards in the company. Old fashioned I know, but look where the approach of the last 30 years brought us to.
A couple of numbers for you. ONS figures released this week show that the average salary of the top 1% of wage earners in the country increased by 117% above inflation over the last 25 years. The salaries of the bottom 10% increased by 47%. THAT is the issue here. That is the inequity that needs re-balancing. The Living Wage is a step in that direction. Personally, I really wish Labour would have the balls to make it a binding policy. But I can see why they don't, because they are petrified of being portrayed as an anti-business party. Even though, when you look at the numbers that I've just stated, it's clear that it's not BUSINESS that would take the hit to do the re-balancing. It's the people who benefited most from the good times before the crash. A bit of pay restraint on their part, while those at the bottom catch up. Am I missing something obvious about that as an approach, because I really don't see the catch.
And if the moral argument that massive wage inequalities are undesirable doesn't float your boat, how about a hard-headed pragmatic one.
Have a look at this graph. It's American data, but I suspect ours would tell a similar, if perhaps less extreme tale.
(http://www.oftwominds.com/photos09/income1917-2008a.gif)
Look when the peaks in the data are. The share of income going to the top 10% of earners peaked in 1928 and 2007. There is a very strong argument that this level of income inequity is a signal of a system gone haywire. The richest people let off the leash to take the risks and reward themselves as they see fit. When there are untold riches to be made for the bravest in the business world, there are also big incentives to take madcap risks. With the resulting crash waiting round the corner. (There's a similar graph which I can't find at the moment showing the ratio of average wages in the financial sector to average wages across the whole private sector - it tells an identical tale and strongly backs up the thesis that the financial crashes are a function of the financial sector being allowed to consider itself the Master of the Universe).
Me. I'm a 1950s/1960s sort of guy. I like the idea of there being a smaller gap between the richest and the poorest. And, quite relevantly, that was an era of quiet, consistent growth in national and individual living standards. Time for a return to that sort of society.
You want to know where the money should come from to pay the Living Wage? Have a look at that graph. It's blindingly obvious.
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That "Astounding evidence" Mick?
Still waiting to be told what it was.
Tick
Tock
Tick
Tock
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More information on demographics as Billy just hasn't got a clue about its effects:
Rates of GDP growth are heavily influenced by how many people of any particular age live in a country. In our country we think growth of 2-4% is normal. However this is changing due to our demographic profile.
Births rose by 15% between 1946 and 1970 compared with the previous five years. This meant there were an extra three million babies. Those babies reached their top spending age (46) between 1982 and 2007.
Between the ages of 25 to 40 people work their hardest and are at their most productive and invest in housing. After the age of 40 they become slightly less productive and start to invest in the stock market and bonds. When they retire they cut consumption and downsize both their housing and investments. So it is no surprise that when we have large groups of young people we see rises in house prices and GDP.
Unfortunately we no longer have large groups of young people. Births between 1971 and 2000 were 17% lower. This means that the only growth area of the population now is those over the age of 55. This is bad news for GDP growth.
These 'baby boomers' are even less inclined to spend due to the fact that their savings have not provided the income they were expecting so they are inclined to spend even less than they normally would have done.
Billy, who thinks demographics is completely irrelevant might want to look at Japan. Their 'baby boomer' generation came along a little earlier than ours and hit the peak of wealth creating age between 1977 and 1994. Their stock market peaked in 1989 with government bond yields at 8% and growth at 4%. Since then growth has been around 1% despite the Government’s best stimulus efforts.
The governor of the Bank of Japan recently said that the implications of demographics are “profound”. There will be “differences in timing and magnitude” but eventually all developed countries should expect “a decline in growth potential, a deterioration of the fiscal balance and a fall in housing prices”. He could have been talking about the current situation in the UK now.
Research Affiliates puts the cost of an ageing population at about 1.4% of GDP a year. Our current debt, costs another 0.8% of GDP every year. Take all this into account and a growth rate of 1% would look very good indeed, although poor by previous standards.
No wonder when you consider other factors as well, I have been convinced we are heading for deflation.
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Mick
Of course that demographics argument would suggest that the growth in GDP between 1982-2007 should have been much higher than in the previous 30 years, when the baby boomers were still shitting their nappies and were a drain on the productive economy. Agreed?
But anyway, you knew all this demographics stuff back in July when you told us that inflation was the biggest threat to us all.
I still don't get it. What was this astonishing new evidence that you found that led to your 180 degree change of mind?
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PS Mick
That photographic memory of yours is letting you down. It's now getting a bit confused and is re-arranging words in some sentences.
http://boomerdomain.com/the-cost-of-britains-ageing-population/
I gather that some cynics say that plagiarisers try to do that so that they won't be found out. Can you imagine the cheek of someone like that Mick?
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Interesting graph there BST, I suspect a British one would be significantly different, pre WWII definately. The divide between rich and poor in Britain was far greater in 1914 than it was in the US, something like the top 6% with 90% of the wealth.
The Liberal reforms of 1909, the Labour Gov of 1945 explain our changes, but I didnt realise that WWII also had such an effect in the States, interesting.
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Wilts
The WWII effect is fascinating isn't it. That REALLY was a time when we were all in it together. And the 30-odd years post war kept that deal. No longer was it acceptable for the rich to milk the system and the poor get what was left.
And then came Maggie, and Ronnie. And then Blair & Mandelson, the latter saying that he was "intensely relaxed" about a few getting obscenely rich.
Look where it took us eh?
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BST wrote:
And then Blair & Mandelson, the latter saying that he was "intensely relaxed" about a few getting obscenely rich.
In defence, as this is often a quote used by the right to condemn him, he did continue the sentence with 'as long as they pay their taxes.
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Saying that we should just take the money off the rich and give it to the poor is such a simplistic argument. It may have escaped everybody's notice but we live in a global economy. Start to pay the brightest and best in this country peanuts and they will up sticks and go elsewhere then we would really see the shit hit the fan.
Pay peanuts and you get monkeys. If you're not happy with your wages do something about it yourself ffs. There is no bar on anyone starting their own businesses. With a lot of people it just means stopping believing that the Government has a duty to look after them from cradle to grave.
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mjdgreg - all this talk of demographics, the need to cut spending further etc....what's your solution to this little tester:
We need to spend less on the very old. We now have the ludicrous situation where old people are kept alive for far too long with a shocking quality of life and they cost an absolute bleeding fortune.
This situation is going to get worse the more the population ages. Its not fair on the young. Old people should be put out of their misery once their quality of life is very poor. Religious nutters have got a lot to answer for.
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Dum-de-Dum
That "astonishing evidence" Mick?
You're doing plenty of posting so surely you've got time to enlighten us all?
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mjdgreg - all this talk of demographics, the need to cut spending further etc....what's your solution to this little tester:
We need to spend less on the very old. We now have the ludicrous situation where old people are kept alive for far too long with a shocking quality of life and they cost an absolute bleeding fortune.
This situation is going to get worse the more the population ages. Its not fair on the young. Old people should be put out of their misery once their quality of life is very poor. Religious nutters have got a lot to answer for.
Ok Adolf you propose to murder the ageing population, some of whom fought for your right to free speech?
You really are a fruitcake, people like you should never be allowed anywhere near a ballot box!
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Ok Adolf you propose to murder the ageing population, some of whom fought for your right to free speech?
You really are a fruitcake, people like you should never be allowed anywhere near a ballot box!
You are obviously quite old or heading that way. It may surprise you to know that a lot of these people want to be put out of their misery. You need to take a trip around a hospital ward full of old dying people. The last time I did I heard one old lady screaming at the top of her voice 'just let me die'.
I'd much rather money was spent on children to give them a good quality of life than on a decrepit old fogey who is only being kept alive at enormous cost just because of outdated religious beliefs. Unfortunately the young don't have a vote so end up picking up the bill.
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Filo
Fascinating insight into his mentality int it?
I put it down to his shock at losing his bet on Romney. He's let his guard slip as a result (he's also apparently lost his memory about that "astonishing evidence an all...)
Give him a few days and he'll revert back to his usual stance of copying and pasting economically illiterate Hayekian blogs.
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Billy, you're just annoyed that in all the acres of verbiage you spouted about Japan you never once mentioned demographics. pmsl.
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Wilts
The WWII effect is fascinating isn't it. That REALLY was a time when we were all in it together. And the 30-odd years post war kept that deal. No longer was it acceptable for the rich to milk the system and the poor get what was left.
And then came Maggie, and Ronnie. And then Blair & Mandelson, the latter saying that he was "intensely relaxed" about a few getting obscenely rich.
Look where it took us eh?
The ultimate irony being that Mandleson was the grandson of Herbert Morrison - one of the main architects of the labour policy in 1945 which lead to this period of social awareness/equalisation within society.
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Billy, you're just annoyed that in all the acres of verbiage you spouted about Japan you never once mentioned demographics. pmsl.
In that case, quote the evidence he's asking for and show him up.
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In that case, quote the evidence he's asking for and show him up.
Look, I'm fed up of showing him up. I do have a heart you know and feel he has had enough punishment for now.
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Amazing how this rarely seen magnanimous side of you emerges every time you are shown to be full of bullshit, and are cornered by your own lying Mick.
Every
Single
Time.
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I`m sure BST can take more humiliation from you!
Go on reveal the evidence, make him squirm with embarassment!
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I`m sure BST can take more humiliation from you!
Go on reveal the evidence, make him squirm with embarrassment!
With friends like you, who needs enemies. Poor old Billy must feel like a punch bag after all the batterings I've given him. I refuse to rise to the bait and am sticking to my guns. He needs a rest to calm down so I'm going to give him one.
It's about time one of you other lefties stepped forward and entered the battle. It's so unfair of you all to just leave it to Billy.
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I`m sure BST can take more humiliation from you!
Go on reveal the evidence, make him squirm with embarrassment!
With friends like you, who needs enemies. Poor old Billy must feel like a punch bag after all the batterings I've given him. I refuse to rise to the bait and am sticking to my guns. He needs a rest to calm down so I'm going to give him one.
It's about time one of you other lefties stepped forward and entered the battle. It's so unfair of you all to just leave it to Billy.
Finish him off I say, stick the knife in while you can, he`s probably approaching the cut off age for your pensioner murdering programme any way!
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In that case, quote the evidence he's asking for and show him up.
Look, I'm fed up of showing him up. I do have a heart you know and feel he has had enough punishment for now.
http://www.youtube.com/watch?v=KAp9sFVdERQ
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I`m sure BST can take more humiliation from you!
Go on reveal the evidence, make him squirm with embarrassment!
With friends like you, who needs enemies. Poor old Billy must feel like a punch bag after all the batterings I've given him. I refuse to rise to the bait and am sticking to my guns. He needs a rest to calm down so I'm going to give him one.
It's about time one of you other lefties stepped forward and entered the battle. It's so unfair of you all to just leave it to Billy.
http://www.youtube.com/watch?v=FopyRHHlt3M
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I was talking, this afternoon, to a guy who works at a rather secret, yet very large, Government place not too far away from where I live. He was telling me what an unpleasant place it is these days: people being pushed out for reasons that would have caused a riot 30 years ago; people not being replaced so those that remain having to do more and more and more - and who, when they make a mistake consequent having too much to do, are then also pushed out as 'not up to the job'; pay rises, even inflation linked ones, being a dim and distant memory; pension rules being re-written, and not to the advantage of the employees. Now, this all sort of reminds me of where I work. A very large telecoms company you might have heard of. And that, in turn, makes me wonder that if these behaviours are so necessary to ensure economic survival, then something, somewhere, has gone badly wrong.
I'll offer a few simple suggestions: why do we need 2 monstrous great aircraft carriers? Why do we need a replacement for Trident? Why do we insist we are the world bobby following Mr USA's Sgt in charge of everything? There's a lot of data out there pointing to Britain sliding, ever more rapidly, to being a third world nation. Look it up. It's scary as anything. Look up UK's academic standards and world ranking. Look up the UK's health service standards and world ranking. You are better off having your eyes, and your teeth, attended to in Thailand than you are here ffs! Cuba has a better health service and a better education record than we do! Everywhere in western Europe, (Belgium excepted) has better quality roads and a better quality road system than we do. Just about the entire planet has a more useful rail system than we do. Yet all that 1980's revolutionary fervour was supposed to create more wealth to invest in 'the nation'. What happened? oh I know. Tax cuts for the rich wasn't it? And the buffoons in Downing Street continue to posture as if Britain matters. They continue to bleed the people who could do something about this slide so they can justify their own dogma and their own bank accounts. You only need one example to prove that: Sheffield Forgemasters. The shadows of that cow, and that cowboy, are still ruining this nation today.
Jesus Mick. Grow up ffs.
BobG
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I was talking, this afternoon, to a guy who works at a rather secret, yet very large, Government place not too far away from where I live. He was telling me what an unpleasant place it is these days: people being pushed out for reasons that would have caused a riot 30 years ago; people not being replaced so those that remain having to do more and more and more - and who, when they make a mistake consequent having too much to do, are then also pushed out as 'not up to the job'; pay rises, even inflation linked ones, being a dim and distant memory; pension rules being re-written, and not to the advantage of the employees. Now, this all sort of reminds me of where I work. A very large telecoms company you might have heard of. And that, in turn, makes me wonder that if these behaviours are so necessary to ensure economic survival, then something, somewhere, has gone badly wrong.
I'll offer a few simple suggestions: why do we need 2 monstrous great aircraft carriers? Why do we need a replacement for Trident? Why do we insist we are the world bobby following Mr USA's Sgt in charge of everything? There's a lot of data out there pointing to Britain sliding, ever more rapidly, to being a third world nation. Look it up. It's scary as anything. Look up UK's academic standards and world ranking. Look up the UK's health service standards and world ranking. You are better off having your eyes, and your teeth, attended to in Thailand than you are here ffs! Cuba has a better health service and a better education record than we do! Everywhere in western Europe, (Belgium excepted) has better quality roads and a better quality road system than we do. Just about the entire planet has a more useful rail system than we do. Yet all that 1980's revolutionary fervour was supposed to create more wealth to invest in 'the nation'. What happened? oh I know. Tax cuts for the rich wasn't it? And the buffoons in Downing Street continue to posture as if Britain matters. They continue to bleed the people who could do something about this slide so they can justify their own dogma and their own bank accounts. You only need one example to prove that: Sheffield Forgemasters. The shadows of that cow, and that cowboy, are still ruining this nation today.
Jesus Mick. Grow up ffs.
BobG
BobG, as far as I and many others are concerned, you are a true legend. I totally respect your views and no matter how much you may disagree with my views or denigrate me, I will always have ultimate respect for you.
What you have done for DRFC in the past, marks you out as a very special person indeed, and no amount of abuse you may throw at me will ever change my view of what an extraordinary person you are.
You are obviously (like me) a very intelligent person whose heart is in the right place. I too used to be a leftie, until I saw the light. Lefties think with their hearts and not with their brains. I now think with my brain not with my heart no matter how unpopular it makes me.
The thing is, working in the public sector is an absolute piece of piss compared to working in the private sector. There are exceptions like nurses and police. But for the most part, working in the public sector is a right cushy number. If this is now changing, then all I would say to theses people is welcome to the real world. The country can no longer afford for you to take the piss, so it is time for you to harden up and get real.
Now it may surprise you to know that I agree with nearly everything in your second paragraph. You have obviously read me the wrong way. We don't need 2 monstrous aircraft carriers (Gordon authorised these to keep Labour voters in jobs). Trident should be ditched. We should tell the USA to f... off.
Why are we sliding towards becoming a third world nation? I blame thirteen years (yes thirteen) of Labour running the country in a totally incompetent way. When Tony Blair came to power he said the priority was 'Education, education and education. What a pathetic job Labour made of this priority despite spending vast sums of money.
I know how shit our health service is. I also know that Labour spent an absolute fortune on it. Another example of total incompetence. Our roads and rail are also shit. Whose fault is it? Of course it's Labour's. The current Government is just trying to clear up the monumental mess Labour left behind. Don't get me wrong. They are nearly as incompetent as Labour. At least they don't think spending money you haven't got is the solution.
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Finish him off I say, stick the knife in while you can, he`s probably approaching the cut off age for your pensioner murdering programme any way!
The more Billy reads your posts, the more he must be thinking that you don't like him. Just because (like me ) you think he is an easy target, it doesn't mean this should be taken advantage of.
I have realised that I have made him look stupid and have no further wish to inflict further damage to his reputation. Until I sorted him out, all you lefties obviously thought the bloke knew what he was on about. You have to realise that it is not easy for someone with an ego nearly as big as mine to be made to look so daft. Give the bloke a break and let him lick his wounds.
He's a fighter and will be back for more. He just needs time to recover. I respect his never say die attitude in the face of overwhelming odds and am happy to give him some time to lick his wounds and once more come at me again when he feels he is ready. Take your time Billy. I can wait.
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Finish him off I say, stick the knife in while you can, he`s probably approaching the cut off age for your pensioner murdering programme any way!
The more Billy reads your posts, the more he must be thinking that you don't like him. Just because (like me ) you think he is an easy target, it doesn't mean this should be taken advantage of.
I have realised that I have made him look stupid and have no further wish to inflict further damage to his reputation. Until I sorted him out, all you lefties obviously thought the bloke knew what he was on about. You have to realise that it is not easy for someone with an ego nearly as big as mine to be made to look so daft. Give the bloke a break and let him lick his wounds.
He's a fighter and will be back for more. He just needs time to recover. I respect his never say die attitude in the face of overwhelming odds and am happy to give him some time to lick his wounds and once more come at me again when he feels he is ready. Take your time Billy. I can wait.
I wonder if the wait will be as long as the wait for this astonishing evidence?
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Still here Micky boy. I'm just a bit busy between foreign trips. You know how it goes. Globe trotting, drumming up business to help the country out of its hole.
How are the gee-gees going?
Anyway, when I read this
I have realised that I have made him look stupid
I got to wondering whether you had found some astonishing evidence to bring you to this realisation?
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Still here Micky boy. I'm just a bit busy between foreign trips. You know how it goes. Globe trotting, drumming up business to help the country out of its hole.
How are the gee-gees going?
Anyway, when I read this
I have realised that I have made him look stupid
I got to wondering whether you had found some astonishing evidence to bring you to this realisation?
Come on Mick, he`s asking for it, show him once and for all who the Daddy is!
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Updated
http://4.bp.blogspot.com/-YXzdF2gWePQ/UMISdCWNVRI/AAAAAAAAAK4/PtsbX5PQqUQ/s1600/GDP+to+november+2012.jpg
PS. I know where the original data is...