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Given that Germany is a fairer society than the UK any pain from 'fiscal tightening' will fall less on the poorer segments of society. The obsession to cut, cut and cut in the UK is best explained by using the deficit as an excuse for ideological reduction in the state and the LibDems role in all of this, with particular reference to VAT, is beneath contempt.

There is an argument for a more measured approach to UK deficit reduction over say 2 Parliaments given the long term of UK debt. Let the rating agencies go hang.

Finally to the main point.

4-1
4-1
4-1

Eckanomics is a funny old game. It has "negative growth" instead of contraction, and "fiscal tightening" when countries are still spending more than their income.

The missing demand is missing because it was brought forward from the future and used up. This is how the trade imbalances were allowed to grow, until they were eventually stopped by an economic crisis.

Now we are in the ditch, it's extremely hard to get the vehicle back on the road, let alone getting it to move forward in the right direction at a reasonable pace.

1. At 5:10pm on 27 Jun 2010, Richard Dingle wrote:
"Finally to the main point.
4-1 4-1 4-1"
An hilarious reflection on how two different countries can differently define what the line is to cross - so Germany has a different line to England, as Ms Flanders notes it, crossing a structural or a total deficit line? But the "fairness" point that Richard Dingle makes is odd, Germany have an artifially weak currency by remaining in the Euro and thus not only export goods, but export economic pain to other parts of the Eurozone - so cheating economically and in footie - surely not?
BTW, the US government has blamed finance, large corps, other countries etc not their own policies, regulations, behaviours etc - why would any country wish to even listen to TG and BO?

There is a perverse logic to the markets (particularly the currency markets): the basis is that when banks will make money (or the rest of the World's banks think that the banks in a country will make money) then the currency rises. This is what happened last week to sterling. Yet the fact that sterling has gone up works against the non-banking sector improving. In other words: bankrupt the banks - the currency falls - the non-banking sector can (appear to) grow - and vice versa.

This little problem of a rapidly appreciating currency did for UK manufacturing in the 1980s under Thatcher - I recall trying to run an international manufacturing business when the dollar rapidly rose to $2.40 to the pound - all I could do was to close the UK manufacturing factories and move abroad to preserve the company - it was either that or go bust. This is the ever present danger of an appreciating and overpriced currency.

We must separate our banks from the country if we are ever to return to making and trading things again and the employment that this provides. Just having international banks will prevent the country's recovery! We need to kick them out!

The G8/G20 meeting is also simply not tackling the main substantive issue - excessive 'private' debt. This crucified Japan's economy for the last decade and we seem intent that we shall all join Japan now. There is one necessary step that must happen and that is that private debt has to be substantially de-leveraged/deflated. This step was crucial for all recoveries from all Depressions (1930 & 1870) in the past and its logic is not changed. Only AFTER this has happened can a Keynesian deficit financed recovery work.

The crucial error we are seeing at present is that we are re-inflating the bubbles that caused the crash. The extra liquidity is simply propping up the bubbles of the past decade that caused the crash. New liquidity should be spent on job creation and creating new infrastructure - not propping up the hugely overpriced housing market. The economic children in Toronto simply don't understand!!!

Steps: (bluntly!)

1 - Crash the housing market.
2 - Deal with the social consequences of repossessions.
and only then
3 - Use Keynesian deficit financing to kick-start the economy.

Until this happens we are all doomed to an agonising elongated depression (just like the 1870s!). Indeed, if Japan did this they too could provide and engine for growth. However I am optimistic that the inescapable economic logic will win in the end - I just want to see the process over - quickly!

" #3
But the "fairness" point..."

Fairness in the sense of a more balanced society and a smaller gap between rich and poor. This country is socially and institutionally little different from pre war (WW2) Britain with a 7% percent educated privately and still pulling all the levers of power. The economic re-adjustment deemed necessary will fall mainly on the poorer elements of UK society.

There is a maxim. If it ain't broke don't fix it; unfortunately the UK economy and our social institutions need fixing big time.

But then life is not fair otherwise Lampard's cracking goal would have been given, and would have given England some momentum.

I was half hoping for a late England goal to make it 4-2, then the symmetry with 66 would have been perfect; remember the Geof Hurst goal that did'nt cross the line but was given :).

#4
"Steps: (bluntly!)

1 - Crash the housing market.
2 - Deal with the social consequences of repossessions.
and only then
3 - Use Keynesian deficit financing to kick-start the economy."

I agree totally (and I am a home owner btw)

Had the banks been allowed to fail as I advocated on numerous occassions we would now be well into 'a new beginning'.

Until this happens we are all doomed to an agonising elongated depression

Not ALL of us; therein lies the injustice. The rich will get richer and the banks will continue to make money as easilly as 'shooting fish in a barrel' (Warren Buffet)

The best way for to cut the debits is to grow trade with Asia, this is the only part of the world likely to grow. America, Japan and Europe are stacked high with debits and have to cut spending to an affordable level. However there still seems to be a perception in UK particularly with the Unions that we don't have to adjust our spending to what we can afford. Unfortunately they have been living in dreamland, even before the banking crisis and during the biggest boom, Gordon Brown was overspending and building up national debit, just when his own "golden rule" was telling him to pay off national debit.

lixxie @ 7: How precisely will "growing(ing) trade with Asia" cut the debits? (BTW I assume you mean debts, but clarification might be worthwhile.) There is plenty of trade with Asia as it is, but the problem is that we buy lots of stuff from them rather than the other way round, and until that position is reversed the debt / deficit will continue to grow rather than shrink. Until such time as we can make things more cheaply than they can this is likely to continue, and reduced UK manufacturing costs are unlikely to come about until such time as the Minimum Wage is scrapped and people are forced to work more as less as slaves. For the avoidance of doubt I am not advocating this course of action.

There is, of course, a difference between what we can afford as individuals and what we can afford as a country. But every *P** sold because it is the latest "must have" adds to the problem. The sooner consumers (who en masse I regard as gullible beyond redemption) cut up their bits of plastic up and "do without" the better. As individuals and as a corporate mass we have to learn to have less.

"Some is plenty; enough is too much."

The recovery has stalled in my opinion. The problem with the stimulus, including all the social protections Gordon Brown put in place (mortgage prtection etc) was that it was only good for a 90's scale depression, not the monster we are dealing with.

We should have put more money in initially and expected all protective meaures to be as much as two years, not 6 months or a year. The sadest fact though is that the most potentially useful measure (the Job Guarantee) was too small a scale and not brave enough - it should have included all unemployed people who wanted work at a reasonable minimum wage.

In short the money did not go sufficiently to the right places. On top of this the coallition are cutting this service entirely now.

I believe that, it's not about 'when' you spend, it's about 'how' you spend.

The truth is global recessions kill poor people around the world, and that's not an exaggeration.

A job Guarantee Scheme could have (and still could) be good for developing countries, as well as our own relative poor. The extra demand in our economy would fuel imports from poorer countries, and therefor jobs and futures.

鈥淲hat I'm waiting to see is the IMF paper 鈥� showing how all these governments' economic plans add up to a balanced global recovery鈥�.
So should we all, Stephanie. It appears from the IMF statement that NEITHER the BRIC economies, NOR Japan, NOR the Eurozone and ourselves are expected to each be net importers. Each and every one of us will make our debt reductions by selling more stuff to the others than each and all of us will buy.
This may not add up. Unless we can persuade the USA to be, once again, a massive and indebted consumer of the world鈥檚 output. That鈥檒l generate a surplus of dollar savings that could be invested 鈥� via US Banks 鈥� into loans to sub-prime borrowers.
I鈥檝e got it! What we want US Banks to do is package those sub-prime mortgages up and sell them on to G20 Banks all around the world. Gosh! What a wonderful idea! Why didn鈥檛 we do that before?

4

Same old drivel whatever the topic

No surprise a business you were running closed down....

1

England lost the football...so what....

We won the wars

2-0
2-0
2-0

So there

The Germans are indeed screwing the rest of the Eurozone, and this is par for the course for them

Wait until the Presidential election on 30th JUne, and see how long Merkel lasts after then

12. At 8:27pm on 27 Jun 2010, Kevinb wrote:
"1

England lost the football...so what....

We won the wars

2-0
2-0
2-0

So there"

No one "wins" a war Kev.

That blog tells me more about you than anything you've posted before.

My work here is nearly done!

#10. At 8:22pm on 27 Jun 2010, leftie wrote:
"鈥淲hat I'm waiting to see is the IMF paper 鈥� showing how all these governments' economic plans add up to a balanced global recovery鈥�.
So should we all, Stephanie. It appears from the IMF statement that NEITHER the BRIC economies, NOR Japan, NOR the Eurozone and ourselves are expected to each be net importers. Each and every one of us will make our debt reductions by selling more stuff to the others than each and all of us will buy.
This may not add up. Unless we can persuade the USA to be, once again, a massive and indebted consumer of the world鈥檚 output. That鈥檒l generate a surplus of dollar savings that could be invested 鈥� via US Banks 鈥� into loans to sub-prime borrowers.
I鈥檝e got it! What we want US Banks to do is package those sub-prime mortgages up and sell them on to G20 Banks all around the world. Gosh! What a wonderful idea! Why didn鈥檛 we do that before?"

And just in case anyone thinks it might be a bit risky we'll allow anyone to sell paper guarantees covering the risk without the money to back it up. Just to make it more fun we'll let the sellers sell these worthless guarantees to anyone not just collateral parties. Now wouldn't that be a wheeze?

My work here is nearly done.

4. At 8:43pm on 27 Jun 2010, NorthSeaHalibut wrote:
12. At 8:27pm on 27 Jun 2010, Kevinb wrote:
"1

England lost the football...so what....

We won the wars

2-0
2-0
2-0

So there"

No one "wins" a war Kev.

That blog tells me more about you than anything you've posted before.

My work here is nearly done!

It is a direct response to that idiot Dingle

By the way, we won the war...check your history

NSH

My work here is nearly done.....

Too many beers watching the football?

#4. John_from_Hendon

John a couple a few questions on how your soluion would work, and seriously I'm not picking a fight I'm curious how the steps would pan out.

"Steps: (bluntly!)

1 - Crash the housing market. Yep with your here, raise interest rates my guess.
2 - Deal with the social consequences of repossessions. This is the big one, how would you acheive this without a huge financial burden on the state?
and only then
3 - Use Keynesian deficit financing to kick-start the economy. How will you prevent new asset bubbles/inflation/sovereign debt? Phased?

My biggest question is how would you get the banks to subscribe to all this because I think "Step 1" is what they're currently trying to avoid at all costs.

NSH

I have German car, and I am not antiGerman

More like, anti-Dingle

The man who said we would join the Euro by 2015

The man who said we would have sterling Euro parity by Easter 2010

The man who abused and mocked me for telling him neither of these would happen

Well, when I saw that 4-1 post, I felt it was appropriate to respond by being just as childish

16. At 8:54pm on 27 Jun 2010, Kevinb wrote:
4. At 8:43pm on 27 Jun 2010, NorthSeaHalibut wrote:
12. At 8:27pm on 27 Jun 2010, Kevinb wrote:

....."By the way, we won the war...check your history"

Oh dear!!

My work here is nearly done.

#17. At 8:56pm on 27 Jun 2010, Kevinb wrote:
"NSH

My work here is nearly done.....

Too many beers watching the football?"

Ha ha ha ha ha - If I wasn't teetotal that would be funny.

And, I watched the cricket not the football old boy. I'm a York City season ticket holder, when have I ever watched football.

My work here is nearly done

#16
Something bothering you Mr b.

Hmmm. Wonder what that could be.

11. At 8:27pm on 27 Jun 2010, Kevinb wrote:
4

Same old drivel whatever the topic

Why is it drivel - explain.

How about posting a comment of your own that does not insult others.

'Drivel' - now that is what I call projection (identifying your own faults in others).

#19
"The man who said we would join the Euro by 2015"

In case you have a problem with chronology as well as simple logic 2015 is in the future (two world cups away - hmmm I wonder who won't win those).

Five years to go. A lot can happen in politics in a week. An awful lot can happen in five years.

I dont have a problem with you just your posts - they are consistently wrong and so voluminous and repetitive; I am sure if we re-arranged the words we would have the complete works of Bill Shakespear, but would we want to.

We will be in the Euro in time for the next world cup.

I have explained on numerous occasions why it is drivel, as I did to you when you said the Euro rhubarb

You reverted to cheap psychobabble then as well

Nothing changes

You can't educate a brick, so no point in explaining it all to you again

Just think through that JFH has a masterplan which included making half the country homeless...and at the same time devaluing the assets of the other half by 50%

Not very bright, is he

No wonder the company he was running closed down

NOW WE KNOW WHY HE IS SO BITTER

By the way Dingle, YOU said parity by Easter (WRONG)

Euro entry by 2015 (WRONG)

Looks like you have the drivel market sown up

#24

Yawn

23. At 9:20pm on 27 Jun 2010, Richard Dingle wrote:
#19
"The man who said we would join the Euro by 2015"

In case you have a problem with chronology as well as simple logic 2015 is in the future (two world cups away - hmmm I wonder who won't win those).

Five years to go. A lot can happen in politics in a week. An awful lot can happen in five years.

I dont have a problem with you just your posts - they are consistently wrong and so voluminous and repetitive; I am sure if we re-arranged the words we would have the complete works of Bill Shakespear, but would we want to.

We will be in the Euro in time for the next world cup.

We as in Germany?

You ARE in the EURO

The Euro preparation unit at the Treasury has been scrapped and Osborne has confirmed that we will not join during this parliament

Like most people who live in a fantasy world, you can never admit being wrong

It would also be interesting if you could back your claim up, when you say

That my posts are consistently wrong?

Probably seem that way to you, as you don't even know that Germany are in the Euro

2 World Cups away?

You can't count either

Argentina will knock Germany out, so make the most of your crowing

1. At 5:10pm on 27 Jun 2010, Richard Dingle wrote:
Given that Germany is a fairer society than the UK any pain from 'fiscal tightening' will fall less on the poorer segments of society. The obsession to cut, cut and cut in the UK is best explained by using the deficit as an excuse for ideological reduction in the state and the LibDems role in all of this, with particular reference to VAT, is beneath contempt.

There is an argument for a more measured approach to UK deficit reduction over say 2 Parliaments given the long term of UK debt. Let the rating agencies go hang.

Finally to the main point.

4-1
4-1
4-1

You don't live here, you don't pay tax here, and you don't belong here

Make the most of Merkel, she won't be around for long after the Presidential Elections on 30th June

As I said months ago, the German Coalition will fall apart by the end of July

I also said that Cameron could well form a coalition with the Lib Dems, to which I received the normal abuse from you saying he wouldn't and the Lib Dems wouldn't

I admire your consistency, wrong on everything

That takes some doing!

In the first post you belittle England for losing to Germany, later on you pretend to be English, even though you mock England in your first post

You wonder why I think you are not quite the full shilling

1. At 5:10pm on 27 Jun 2010, Richard Dingle wrote:
Given that Germany is a fairer society

If Germany was a fairer society it would honour it's commitments under the Eurozone Treaty and not be bleeding the South Med countries dry

Unfortunately, Germany doesn't care less about any other European country

I still maintain that the first country to leave the Euro will start with a G

#27

Confused kevinB. I have a British passport and we (uk) are not in the Euro.

The Coalition will not last. There will be an election. Labour will be led by David Miliband who favours 'entry'. A lot can happen in 5 years.

2015 is in the future - 2 world cups away (2010 and 2014).

btw I favour Argentina to win the World Cup. Maradona is one of my sporting heros (scored two great goals against the Eng-er-lund in Mexico :) )

29. At 9:52pm on 27 Jun 2010, Kevinb wrote:
1. At 5:10pm on 27 Jun 2010, Richard Dingle wrote:
Given that Germany is a fairer society

If Germany was a fairer society it would honour it's commitments under the Eurozone Treaty and not be bleeding the South Med countries dry


Complete drivel and underlines my point about your posts.

Germany pays more into the EU budget than any other country.
No one forced the Med countries to join the Euro
The list of countries wanting to join is longer than the list of countries wanting to leave (none).

How do you feel about Jurgen Klinsmann as the next England Manager :)

This comment was removed because the moderators found it broke the house rules. Explain.

#18. NorthSeaHalibut wrote:

(responses somewhat out of order)

"My biggest question is how would you get the banks to subscribe to all this because I think "Step 1" is what they're currently trying to avoid at all costs."

The unthinkable idea that we have to break up the mega-banks is already a policy objective in almost every major banking country. The banks have shown that they are unable to provide banking services to any economy without destroying that economy. As I wrote a year or so bank the banks will be broken up from 4 in the UK to 40 - it won't be pretty and they will try to bribe politicians and civil servants to maintain their monopoly. But the consequences of not doing so will be ever deeper depression and economic collapse so in the end they will agree.

"social consequences of repossessions. This is the big one, how would you achieve this without a huge financial burden on the state?"

I actually don't think we can avoid the economic consequences either way. If we don't actively seek to achieve a downwards price shift in housing the whole society will implode as it will be impossible fro new entrants to the market to earn a sufficient income to justify a mortgage to buy a minimal pod (along with their 100K student loan).

We have already let the price of housing rise to such a level that this is inevitable this was obvious by 2000 the real economic crime is the way that no clamp of lending was applied in the noughties and the last two years to prevent the continued rise in prices.

So I think we are stuffed either way and this cost is inevitable. The advantage of my steps is that at then end (which should be quick) the economy can grow again and society can re-establish some from of social stability.

"...kick-start the economy. How will you prevent new asset bubbles/inflation/sovereign debt? Phased?"

I suggested a scheme designed to divert availability liquidity away from inflating house prices over a decade ago and it may work (or some such similar scheme) I have described it before. In essence you limit the security of a secured loan to a specific multiple of the borrower's income and put the onus on the lender to continuously verify that income. This does not cost any actual money - it is just a change in the law. This should prevent secured debt asset bubbles and inflation in asset prices that is out of pace with incomes. It will also protect borrowers from being forced to borrow more than they can afford.

Inflation - the too much money available to buy too few goods - I think you have to burn this out of the system with interest rates, as now - but all price inflation needs to be considered and well as the effects of imported deflation perverting the figures.

Sovereign Debt - this is the only one that is currently being tackled. That the schemes will not provide the out-turn predicted is the only certainty! I actually quite like the theoretical idea of the EU - if only there was some mechanism to enforce them! Sovereign debt does then to be overreacted to by the currency markets and they force interest rates up. The problem we has as a planet is that there is far too much money in circulation and this is currently forcing down global interest rates and creating asset bubbles that are, and have, destroyed many national economies. The Japanese solution of negative interest rates simply does not work (they have proved it.) My guess is that there needs to a stricter enforcement of BaselII ideas to limit the cash in circulation and the ability of banks to create money

This is a mealy mouthed settlement. It leaves each country able to claim success and the repercussions on others is largely ignored. This beggar my neighbour policy is not the least of it - bankers and others are calling for end to welfare state in Europe. This was not as I recall the basis for the problem but now it bears the brunt of the solution. Success of the CIA's european policy I fear.

This comment was removed because the moderators found it broke the house rules. Explain.

This comment was removed because the moderators found it broke the house rules. Explain.

33

What a load of baloney

This comment was removed because the moderators found it broke the house rules. Explain.

This comment was removed because the moderators found it broke the house rules. Explain.

32

No wonder your company went bust

Personal insults aimed at me won't change that

41

Strangely, John from Hendon is allowed to insult me, yet my responses are moderated out for reasons best known to the moderator

How a cut and paste of the ORIGINAL insult is against house rules, when the original isn't is beyond me

John from Hendon says he hopes I am made homeless first

That is the level of personal abuse and the degree of bitterness this man has, because his business failed

I KEEP TELLING YOU, I HAVE THE CASH TO PAY MY MORTGAGE OFF

So, unlucky, I won't be made homeless.....

What an unpleasant and unnecessary comment

Are you Gordon Brown?

I have said I don't like him, he hasn't been seen for a while, and his Company failed

You claim to be saving the world, and talk economic hogwash.....

You ARE Gordon Brown..aren't you.....

31. At 10:06pm on 27 Jun 2010, Richard Dingle wrote:
29. At 9:52pm on 27 Jun 2010, Kevinb wrote:
1. At 5:10pm on 27 Jun 2010, Richard Dingle wrote:
Given that Germany is a fairer society

If Germany was a fairer society it would honour it's commitments under the Eurozone Treaty and not be bleeding the South Med countries dry


Complete drivel and underlines my point about your posts.

Germany pays more into the EU budget than any other country.
No one forced the Med countries to join the Euro
The list of countries wanting to join is longer than the list of countries wanting to leave (none).

How do you feel about Jurgen Klinsmann as the next England Manager :)



Germany is benefiting from the low rate of the weak and dying Euro.

This is creating further pressures on the South Med countries

SELFISH GERMANY

Klinsmann as manager..couldn't give a t***

Your continual anti-English comments are simply the views of a bigot

30. At 10:00pm on 27 Jun 2010, Richard Dingle wrote:

#27

Confused kevinB. I have a British passport and we (uk) are not in the Euro.

The Coalition will not last. There will be an election. Labour will be led by David Miliband who favours 'entry'. A lot can happen in 5 years.

2015 is in the future - 2 world cups away (2010 and 2014).

btw I favour Argentina to win the World Cup. Maradona is one of my sporting heros (scored two great goals against the Eng-er-lund in Mexico :) )

More anti-English bigotry....

More political hogwash

Not a clue...

32. At 10:32pm on 27 Jun 2010, John_from_Hendon wrote:

Excellent post (why was it removed)

So this talking shop spent $1 billion to do......nothing. It is obscene at a time when ordinary working class people are already paying (and will continue to pay for years to come) for the incompetence and greed of the banking sector. Now the world's leaders demonstrate their impotence and self-serving greed.

Governments talk about efficiency and cost effectiveness - this bunch of idiots probably contributed more to global warming with all their hot air than a years worth of car emissions world wide.

No real decisions, no leadership, political gobbledegook that achieves nothing more skirting around the real issues....wow, G20 is a gaggle of Labour Governments!...sorry, that's being facetious....

Re #33 - you make some good points.

I still find it difficult to understand how the banking sector is allowed to have its cake and eat it as well. And with many financial institutions making obscene profits in the face of all the misery that they were instrumental in causing just beggars belief.

The housing market is another example of a flawed economic model that benefits only the banks. We have an economy based on debt, and what's more, an economy that actively encourages people to take on levels of debt way above their means to realistically pay. No doubt the banks will cry out indignantly that this is not the case. But as you rightly point out, it is already almost impossible for a first time buyer to be able to afford a home....unless they get themselves into a world of debt.

Too many peoples' finances are on a knife edge - god knows what will happen when interests hit 7% and higher.

Governments and politicians are not interested in tackling the root cause of the financial problems and making that cause pay the debt. Instead the Government turns on the public sector - which does need reform - but the process and depth of cuts are way out of proportion. Did the public sector cause the current financial crisis? No it did not. Does it need reform? Yes it does. Is it being treated fairly? No it is not. Are the banks getting away with absolute blue murder? Yes they bl**&y well are!

So the banks would throw their teddy bears in the corner and threaten to leave this country if they were penalised - let them! If the government had any balls though it would put legislation in place that absolutely hammered financial institutions that decided to run away rather than face up to the horror show that they have created...

But instead the Government will just stand by and let them do what they want - the proposed financial penalties are merely a small inconvenience to banks and they are probably laughing at having got away almost scott-free.....