The 08-?? Depression

[Glyn_Wigley]

at least we all now know where we stand with you.

Yep - to one side, pointing and laughing.

[Filo]

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!

[mjdgreg]

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.

[mjdgreg]

Yep - to one side, pointing and laughing.

I think you'll find we're all laughing at you after your quantitative easing blunder. pmsl.

[mjdgreg]

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.

[mjdgreg]

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.

[BillyStubbsTears]

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.

[Filo]

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

[BillyStubbsTears]

Filo.

No can do mate. What with the bairns and work, I'm having to ration my matches these days.

[big fat yorkshire pudding]

It's alright the living wage will save us all.... One of the most flawed ideas I've seen.

[mjdgreg]

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.

[BillyStubbsTears]

That "Astounding evidence" Mick?

Still waiting to be told what it was.

[Hounslowrover]

"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.

[BillyStubbsTears]

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.

[mjdgreg]

"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.

[The L J Monk]

Mick - all this talk of demographics, the need to cut spending further etc....what's your solution to this little tester:

[Glyn_Wigley]

Mick didn't have a clue until he saw an astounding economics lesson disguised as a movie called Logan's Run...

[Filo]

It must be hard work on google, the astonishing evidence still has n`t been forthcoming

[big fat yorkshire pudding]

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....

[wilts rover]

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

[big fat yorkshire pudding]

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...

[The Red Baron]

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.

[BillyStubbsTears]

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.


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.

[BillyStubbsTears]

That "Astounding evidence" Mick?

Still waiting to be told what it was.

Tick

Tock

Tick

Tock

[mjdgreg]

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. 

[BillyStubbsTears]

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?

[BillyStubbsTears]

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?

[wilts rover]

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.

[BillyStubbsTears]

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?

[Hounslowrover]

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.