OBR put the (deserved) boot into Cameron.
Discussion
cardigankid said:
You get your information second hand from the papers, which are full of crap. I can tell you that people are busy, and getting busier. I can tell you that I can get credit wher 12 months ago I couldn't. You keep reading your comics and believe what you are told. There's a 
born every minute, and you are the proof.
I'm guessing that wasn't aimed at me, because I agree with you that things are looking up! born every minute, and you are the proof. loafer123 said:
Andy Zarse said:
Digga said:
loafer123 said:
QE is simply about deleveraging the UK public debt, in just the same way as the US are doing the same.
It's working perfectly, even if most people have no idea, yet.
But my point was that it was never going to solve the bank's lending to SMEs, was it? It was never intended to, but there seemed to be some implicit hope, on the part of the government and possibly even Merv, that it would.It's working perfectly, even if most people have no idea, yet.
Sadly, the tactic has now become a full blown strategy in its own right. It was never intended to be so I suspect, but Merv and the MPC became hooked on it. And now it's become an inflationary doomsday machine. A bit like a bike that injects you with cholesterol as your pedal along, it a very unhealthy cycle
The additional money supply simply goes some way to compensating for the slower velocity of money as a result of the credit crunch, and the boomtime velocity of money is highly unlikely to be revived as the economy recovers due to tougher bank regulation.
That leaves us with a weaker currency which helps to rebalance the economy and make us competitive, a bit of inflation to erode the real value of our indebtedness, and a pile of self-owned gilts which are effectively already cancelled, it is just we haven't said so yet.
Hardly an inflationary doomsday machine.
Of course that phrase soon fell into disrepute as inflation continued on its not very merry way above its target! Those using it dropped it fairly quickly as it drew attention to their own often wildly inaccurate inflation forecasts although only Adam Posen had the decency to fall on his sword.
It has been a clear policy error to use monetary policy as a response to the credit crunch. The “quick fix” hasn't worked. Splashing money into the system and devaluing the currency are not working and yet we get more of it.
QE has failed woefully and the currency devaluation has failed to help rebalance the economy. Indeed it has gone the other way, opposite to what Merv hoped. The pound has slumped, and although commodities are below absolute peak, nothing is really priced in sterling and so the inflation wheel goes round again.
So if you think the current policy has been a success can you please give us your definition of failure?
Andy Zarse said:
loafer123 said:
Andy Zarse said:
Digga said:
loafer123 said:
QE is simply about deleveraging the UK public debt, in just the same way as the US are doing the same.
It's working perfectly, even if most people have no idea, yet.
But my point was that it was never going to solve the bank's lending to SMEs, was it? It was never intended to, but there seemed to be some implicit hope, on the part of the government and possibly even Merv, that it would.It's working perfectly, even if most people have no idea, yet.
Sadly, the tactic has now become a full blown strategy in its own right. It was never intended to be so I suspect, but Merv and the MPC became hooked on it. And now it's become an inflationary doomsday machine. A bit like a bike that injects you with cholesterol as your pedal along, it a very unhealthy cycle
The additional money supply simply goes some way to compensating for the slower velocity of money as a result of the credit crunch, and the boomtime velocity of money is highly unlikely to be revived as the economy recovers due to tougher bank regulation.
That leaves us with a weaker currency which helps to rebalance the economy and make us competitive, a bit of inflation to erode the real value of our indebtedness, and a pile of self-owned gilts which are effectively already cancelled, it is just we haven't said so yet.
Hardly an inflationary doomsday machine.
Of course that phrase soon fell into disrepute as inflation continued on its not very merry way above its target! Those using it dropped it fairly quickly as it drew attention to their own often wildly inaccurate inflation forecasts although only Adam Posen had the decency to fall on his sword.
It has been a clear policy error to use monetary policy as a response to the credit crunch. The “quick fix” hasn't worked. Splashing money into the system and devaluing the currency are not working and yet we get more of it.
QE has failed woefully and the currency devaluation has failed to help rebalance the economy. Indeed it has gone the other way, opposite to what Merv hoped. The pound has slumped, and although commodities are below absolute peak, nothing is really priced in sterling and so the inflation wheel goes round again.
So if you think the current policy has been a success can you please give us your definition of failure?
It is low gilt prices with high yields pushing up interest rates and causing massive widespread corporate and personal insolvencies.
It is an insurmountable pile of national debt which has to be paid back over 50 years despite GDP and asset values falling through deflationary pressures, making repayments less and less affordable until eventual sovereign default.
cardigankid said:
No I meant Mr Snip.
Look up 'inductive fallacy' or 'arguing from the specific to the general'.Just because you see improvements in your personal economic situation doesn't mean the economy is improving.
Bigger, cleverer, people than you think the economy is in a mess and George Osborne is making it worse. What's more they aren't all 'lefties or pen pushers'.
loafer123 said:
My definition of failure is deflation causing complete stagnation.
It is low gilt prices with high yields pushing up interest rates and causing massive widespread corporate and personal insolvencies.
It is an insurmountable pile of national debt which has to be paid back over 50 years despite GDP and asset values falling through deflationary pressures, making repayments less and less affordable until eventual sovereign default.
I simply do not buy any of this. It's lazy thinking IMO. Nor does any evidence beat it out. It is low gilt prices with high yields pushing up interest rates and causing massive widespread corporate and personal insolvencies.
It is an insurmountable pile of national debt which has to be paid back over 50 years despite GDP and asset values falling through deflationary pressures, making repayments less and less affordable until eventual sovereign default.
Germany or Sweden, for example, haven't had QE, an FLS or a 25% currency devaluation. And they haven't had anything like the scenario you have outlined above. So why would we? There has been no deflation and I can see no reason why there would be.
Cancelling debt is not as easy as you suggest. If I'm proved right in due course ill be sure to point my son's generation in your direction.
Andy Zarse said:
loafer123 said:
My definition of failure is deflation causing complete stagnation.
It is low gilt prices with high yields pushing up interest rates and causing massive widespread corporate and personal insolvencies.
It is an insurmountable pile of national debt which has to be paid back over 50 years despite GDP and asset values falling through deflationary pressures, making repayments less and less affordable until eventual sovereign default.
I simply do not buy any of this. It's lazy thinking IMO. Nor does any evidence beat it out. It is low gilt prices with high yields pushing up interest rates and causing massive widespread corporate and personal insolvencies.
It is an insurmountable pile of national debt which has to be paid back over 50 years despite GDP and asset values falling through deflationary pressures, making repayments less and less affordable until eventual sovereign default.
Germany or Sweden, for example, haven't had QE, an FLS or a 25% currency devaluation. And they haven't had anything like the scenario you have outlined above. So why would we? There has been no deflation and I can see no reason why there would be.
Cancelling debt is not as easy as you suggest. If I'm proved right in due course ill be sure to point my son's generation in your direction.
The fact is that both the UK and US have de facto cancelled the QE debt already by recycling interest back to the payee and deferring repayment to beyond the horizon.
The other fact is that overleveraged individuals, corporates and countries have only survived the biggest financial crisis of recent times by artificially holding down interest rates to the advantage of debt holders and the disadvantage of savers.
In the process of this crisis huge amounts of money had been destroyed and that which is left has got stuck.
That is why QE is required, whether you want to recognise it or not.
loafer123 said:
In the process of this crisis huge amounts of money had been destroyed and that which is left has got stuck.
That is why QE is required, whether you want to recognise it or not.
So an expansionary monetary policy destroys money does it? Oh and where's all the Inflation coming from then?That is why QE is required, whether you want to recognise it or not.
I'm a bit surprised you don't acknowledge there's any down side to QE and the current monetary policy. I've put up plenty of negatives and all you do is fail to address them and repeat "what would have happened" without a single shred of evidence to back it up.
My view is that history will judge it a failure akin to Wilson's prices policy and the Social Contract in the 70's
Mr Snap said:
Look up 'inductive fallacy' or 'arguing from the specific to the general'.
Just because you see improvements in your personal economic situation doesn't mean the economy is improving.
Bigger, cleverer, people than you think the economy is in a mess and George Osborne is making it worse. What's more they aren't all 'lefties or pen pushers'.
Big words for an ex metalworking teacher!Just because you see improvements in your personal economic situation doesn't mean the economy is improving.
Bigger, cleverer, people than you think the economy is in a mess and George Osborne is making it worse. What's more they aren't all 'lefties or pen pushers'.
I'm kidding Snap, don't kill me!!
jules_s said:
johnfm said:
Well, reducing business taxes for SMEs could be included in 'taxes for the poor' as I really don't think a small business making less than £20k for its owner should be taxed much, if at all.
The gist of it is that those vast swathes on lower incomes generate more economic activity than the 1% of top earners who are paying the lion's share of direct taxes.
If I can be bothered one day, I will do an analysis, but I expect the lower earners drive the economy and generate demand. While business owners lay claim to 'creating growth', I think that while they undoubtedly respond to demand by creating jobs to provide goods and services (and generate employers NI, corp tax and rates revenues), they never ever do this in an economic vacuum. The powerfully built, goatee wearing directors need the demand of the masses - and this will come if you cut their taxes (both direct and indirect).
I'm not sure reducing business taxes on SME would work in the short medium term as they would invariably just bank the money for a 'rainy day' or future capital investment. I certainly don't know of many business people who would instantly start spending increased (less taxed) revenue, as they want to protect themselves against cash flow issues etc.The gist of it is that those vast swathes on lower incomes generate more economic activity than the 1% of top earners who are paying the lion's share of direct taxes.
If I can be bothered one day, I will do an analysis, but I expect the lower earners drive the economy and generate demand. While business owners lay claim to 'creating growth', I think that while they undoubtedly respond to demand by creating jobs to provide goods and services (and generate employers NI, corp tax and rates revenues), they never ever do this in an economic vacuum. The powerfully built, goatee wearing directors need the demand of the masses - and this will come if you cut their taxes (both direct and indirect).
As for low earners generating demand? The low earners I know are really living hand to mouth, so they might stop buying Tescos value a little less often with more cash in pocket, but hey...I wouldn't call that 'demand' as such
We're taking around the subject in hand again
There is a very very large number of low income earners that, given an extra £20/week in their hand will spend it. That spend trickles 'up' and is what creates demand for business owners. Not convinced demand trickles down from businesses to consumers tbh.
TankRizzo said:
Mr Snap said:
Look up 'inductive fallacy' or 'arguing from the specific to the general'.
Just because you see improvements in your personal economic situation doesn't mean the economy is improving.
Bigger, cleverer, people than you think the economy is in a mess and George Osborne is making it worse. What's more they aren't all 'lefties or pen pushers'.
Big words for an ex metalworking teacher!Just because you see improvements in your personal economic situation doesn't mean the economy is improving.
Bigger, cleverer, people than you think the economy is in a mess and George Osborne is making it worse. What's more they aren't all 'lefties or pen pushers'.
I'm kidding Snap, don't kill me!!
(Don't blame me, Kenneth Baker came up with that one..).
johnfm said:
People without Much income tend to spend it all. I think he same is probably the same for very small business.
There is a very very large number of low income earners that, given an extra £20/week in their hand will spend it. That spend trickles 'up' and is what creates demand for business owners. Not convinced demand trickles down from businesses to consumers tbh.
I disagree (not sure how to split one quote on here so i'll just bold and reply for clarity)There is a very very large number of low income earners that, given an extra £20/week in their hand will spend it. That spend trickles 'up' and is what creates demand for business owners. Not convinced demand trickles down from businesses to consumers tbh.
People without much income tend to spend it all
Of course they do, i doubt they have enough money to live on in the first place!
I think the same is probably the same for very small business
They won't if they want to survive for long. Which was my point in the first place. No flexibilty in your business account means you have to run your own overdraft/float/buffer (call it what you want)
There is a very very large number of low income earners that, given an extra £20/week in their hand will spend it. That spend trickles 'up' and is what creates demand for business owners. Not convinced demand trickles down from businesses to consumers tbh.
They may spend 'it' (£20 - that's optimistic) but on what? nothing much that would trickle up into UK SME that I can think of, happy to hear your idea of what that extra spend would go into though (Tescos?)
Andy Zarse said:
loafer123 said:
In the process of this crisis huge amounts of money had been destroyed and that which is left has got stuck.
That is why QE is required, whether you want to recognise it or not.
So an expansionary monetary policy destroys money does it? Oh and where's all the Inflation coming from then?That is why QE is required, whether you want to recognise it or not.
I'm a bit surprised you don't acknowledge there's any down side to QE and the current monetary policy. I've put up plenty of negatives and all you do is fail to address them and repeat "what would have happened" without a single shred of evidence to back it up.
My view is that history will judge it a failure akin to Wilson's prices policy and the Social Contract in the 70's
I also do acknowledge there are downsides to QE. Currency weakness has its benefits, but also problems, especially inflationary pressures, but the main problem, as in my earlier post, is the pain borne by savers.
There are no perfect outcomes, but my view is that QE is one of the least worst.
Andy Zarse said:
..QE has failed woefully and the currency devaluation has failed to help rebalance the economy. Indeed it has gone the other way, opposite to what Merv hoped. The pound has slumped, and although commodities are below absolute peak, nothing is really priced in sterling and so the inflation wheel goes round again...
This isn't rocket science, however you may try to make it appear so. QE has failed because it involves money being pumped into financial institutions at the top of the system who use it to repair their own balance sheets. Politicians however have huge faith in bankers. Something has changed over the last couple of months. Stagnation is the result of excessive levels of tax and regulation - do you seriously expect a 'white' economy to flourish with VAT at 20%, not to mention all the other stuff? Tax levels are a function of excessive overheads. We are trying to drive a bus with a Mini engine. Some of the passengers are going to have to get off.
cardigankid said:
Mr Snap said:
cardigankid said:
No I meant Mr Snip.
Bigger, cleverer, people than you think the economy is in a mess and George Osborne is making it worse. You were the one who made the laughable observation that Gorgeous George was doing a good job. It doesn't require expertise to know that. Lots of people think he's way out of his depth and making things worse, including plenty of people on the right.
This chap isn't exactly a socialist and knows a thing or two about economics. He has a pretty low opinion of your favourite whey faced loon.
http://moneymorning.com/2013/02/20/is-george-soros...
In order to determine whether he is doing a good job, surely you need to consider the alternative options.
The economy may be stalled, the deficit increasing again and taxes too high, but unless you can explain what you would do that would end up with a better (or less worse) result than currently, you haven't really got a leg to stand on.
If Soros wants to short the pound, let him. If he did, he could push the pound down, saving the Govt. the job of doing it, the stock market would rise, productivity and exports would rise, imports would fall, tourism would flourish and suddenly he would have shot himself in the foot, or the head, depending how much he had gambled.
But he is far to clever a bird to do that. He needs someone to pick up the other side of the bet. Back in the Lamont days, we had entered the ERM and the Treasury was prepared to throw money at the market to keep the pound within the necessary parameters, in the belief that they could always outgun a private investor. That created the situation which Soros took advantage of. Lamont's arrogance and folly was astounding to watch. It was obvious what was going to happen, and Lamont burnt billions trying to stop the tide coming in. Today they would just let him push against an open door. A totally different situation, and Soros knows it.
All I am saying is that at SME level efficient businesses are creeping up to their capacity, and lending has started to flow. Osborne is trying to put a lid on public expenditure and tax levels, and not to obstruct business. He doesn't have to be a genius to do this, so it is pointless to criticise him for not being a genius, being a silver-spooned toff, being out of touch with reality, all of which may be true, but doesn't alter the fact that he is presiding over an economy which I can see turning round in front of my eyes. The alternative is to return to the type of waste which characterised the Labour Government, create non-jobs etc., which leads to debt, bureaucracy and gross inefficiency. I don't want that, ergo I support G.Osborne. What don't you understand?
But he is far to clever a bird to do that. He needs someone to pick up the other side of the bet. Back in the Lamont days, we had entered the ERM and the Treasury was prepared to throw money at the market to keep the pound within the necessary parameters, in the belief that they could always outgun a private investor. That created the situation which Soros took advantage of. Lamont's arrogance and folly was astounding to watch. It was obvious what was going to happen, and Lamont burnt billions trying to stop the tide coming in. Today they would just let him push against an open door. A totally different situation, and Soros knows it.
All I am saying is that at SME level efficient businesses are creeping up to their capacity, and lending has started to flow. Osborne is trying to put a lid on public expenditure and tax levels, and not to obstruct business. He doesn't have to be a genius to do this, so it is pointless to criticise him for not being a genius, being a silver-spooned toff, being out of touch with reality, all of which may be true, but doesn't alter the fact that he is presiding over an economy which I can see turning round in front of my eyes. The alternative is to return to the type of waste which characterised the Labour Government, create non-jobs etc., which leads to debt, bureaucracy and gross inefficiency. I don't want that, ergo I support G.Osborne. What don't you understand?
Edited by cardigankid on Thursday 14th March 19:44
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