The 08-?? Depression

[BillyStubbsTears]

Now worse than the Great Depression of the 1930s



For a bonus point, see if you can guess in which month the Coalition took office...

[big fat yorkshire pudding]

Highest growth in 5 years, unemployment down (more people have a job than ever before), inflation down, deficit deducing........

[Filo]

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!

[big fat yorkshire pudding]

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.

[mjdgreg]

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.

[mjdgreg]

Highest growth in 5 years, unemployment down (more people have a job than ever before), inflation down, deficit reducing........

Hear, hear.

[BillyStubbsTears]

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/

[Dagenham Rover]

Its a blip caused by the olympics prepare for a triple decker
 

[mjdgreg]

The Olympics contributed 0.2% to the figure. What about the other 0.8%? I suspect there will be a deafening silence.

[mjdgreg]

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.

[Dagenham Rover]

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   

[mjdgreg]

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.

[BillyStubbsTears]

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.

[Filo]

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%

[mjdgreg]

"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!!!!

[mjdgreg]

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.

[BillyStubbsTears]

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.

[Dagenham Rover]

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 

[mjdgreg]

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

[mjdgreg]

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?

[BillyStubbsTears]

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.

[BillyStubbsTears]

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.

[wilts rover]

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.

[big fat yorkshire pudding]

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.

[BillyStubbsTears]

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.

[mjdgreg]

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. 

[BobG]

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

[mjdgreg]

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.

[BillyStubbsTears]

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?

[mjdgreg]

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.