Is just a carbon copy of Blair-Brown's isn't it?
Since I started taking a closer interest in these things, i.e. a year or two before I started 'blogging, it must have been clear that the entire 'growth' in the economy since the late 1990s was fuelled by two things:
1. A house price/credit bubble incl mortgage equity withdrawal.
2. Government deficit spending.
This is not a sustainable model, of course, so the relative shares of these two in contributing to nominal growth shifted from the fomer to the latter. Blair-Brown managed to keep it going for ten years until the wheels came off in 2007 (Northern Rock) although many consider the official end to be in 2008 (Lehmann Brothers).
Whatever we slagged the Blair-Brown government off for applies in spades to the current lot.
They realise that household borrowing to fund land speculation had reached an upper limit of about £1,200 billion (this total has hardly changed for the last five years) so they are resorting to ever more desperate measures (Help To Sell, interest rate subsidies, inflation, general mood music etc) to squeeeze out the last few drops.
Their cunning plan is only working in London and the South East, in the rest of the country, house prices have been pretty much flat for a decade, if you adjust for inflation.
So they then turn to Blair-Brown's secret weapon #2, government deficit spending. It's a good excuse to nick loads of money for themselves and their kleptocrat chums, but they are running a deficit of at least 7% of GDP and have been doing for four years (or about six years if gloss over the personnel reshuffle at the top of the UK government four years ago).
And all this is only producing nominal growth of 2% a year or something, which is probably not real growth at all. Whatever happened to the lefties' favourite weapon, the multiplier effect? If there were such a thing (there isn't) then surely that 7% deficit would be producing at least 8% growth?
Some recovery, huh?
Get involved with AI says Starmer
1 hour ago
8 comments:
If ever the multiplier effect were true, the theory behind it did not account for the massive effort from government in herding money into the rentier sector.
Re deficits not being “sustainable”, a 2% inflation target actually makes a more or less permanent deficit inevitable for the following reasons. Given that inflation, the national debt and monetary base will shrink at 2%pa in real terms. Thus if they are to remain constant in the very long term relative to GDP (which they do, more or less) then they need to be topped up, and that can only be done via a deficit.
In addition, there is economic growth. If that’s running at 2%pa for the sake of argument, that makes even more deficit inevitable.
And if you want proof of that, the fact is that every country has been running a deficit (with the occasional surplus year) for the last century.
Kj, exactly, that's why these things always go pop. The Tories have an especially bad record on this.
RM, that's off topic.
I wasn't talking about govt annual deficits, we know that annual deficits of 2% or so are perfectly sustainable - what matters most is debt-to-GDP ratio, so if debt is half of GDP and GDP grows 5%, then a 2% deficit still means that debt is constant or falling as % of GDP.
Not that I'm saying govt deficits are a good thing, but they are tolerable, especially if the govt is spending it on stuff which will come in useful in the future.
Absolutely spot on.
This is why your YPP party should look at constituencies like Corby or Worcester. They're the places that have a lot of people in the productive private sector and the public sector is little more than schools and hospitals.
Whenever I hear the Tories claiming credit for the growth in the economy, I think "They'll be claiming credit for the end of winter next". Of course, because they all wear the emperor's new clothes, none of the Liblabcons are going to point out that it probably would have happened if we had had no government at all, like Belgium.
Being a child of my father, I have never ever trusted anything any government has ever told me about anything its doing or has done or achieved. This abject cynicism got me to the Blair Brown failure from about 20 seconds after the start of Broons first budget.
MW, you're a smarter bloke than me. What took you so long?
TS, we had a candidate in Corby in 2012, we got 39 votes :-)
B, good point.
L, I never really trusted them either but I always assumed that
a) the only choice we had was slightly left of centre or slightly right of centre.
b) recessions and so on were inevitable,
I didn't realise until then that you could choose a tax-economic system which is neither left nor right and which is more or less recession proof.
MW - Ahh, I see.
I was already aware that booms and busts were government driven (that is not 'market failure'), and that socialism was a philosophy of moral and economic bankruptcy, and I was not a 'Tory', as that was just rent seeking by landowners.
What I was not up to speed on was LVT...although I had sort of worked out the 'all surpluses from production get to rent' bit.
But you live and learn.
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