Politics

[ChezGiven 0]

What makes me giggle from these posted articles are the bits like....

 

The Germans are doing it. The Greeks, the Spanish and the Portuguese.

 

George Osborne believes it is his patriotic duty to do it. Around the world, cutting budget deficits has become the priority for policymakers.

 

Mervyn King has applauded the return of fiscal conservatism. So has the Organisation for Economic Co-operation and Development.

 

China, Japan, the eurozone and Britain all set on reducing budget deficits.

 

 

So basically the majority of the worlds leaders and their highly paid economic advisors are wrong and a few blogging economists are right.

 

Go Figure.

 

Which highly paid economic advisors? Politicians have political advisors, not economic ones.

 

As for 'blogging economists', i tend not to be abusive in these sort of discussion but dont blow your mong-trumpet in my direction without expecting to be shouted down as an idiot.

 

http://en.wikipedia.org/wiki/Paul_Krugman

 

In 2008, Krugman won the Nobel Memorial Prize in Economics for his contributions to New Trade Theory and New Economic Geography. He was voted sixth in a 2005 global poll of the world's top 100 intellectuals by Prospect.[6]

 

Anyway, the point being that yes, they are wrong as is now demonstrated by the US experience in 1937 and the Japanese experience in 1996. we are in a liquidity trap and given interest rates close to zero, the DSGE modelled multiplier is 1.5 not 0.4 as the right-wing ideologues would tell us.

 

The question why they are being advised to do this is a pertinent one. The people doing the advising are the city economists who are funding the debt and are paid to manage the risk of their investments. They lend money to the government (i.e. invest in the government) and want them to improve their risk profile for portfolio diversification purposes. They are all, to a man, Friedman-inspired monetarists and believe people like Krugman are using out-dated ISLM models. They are not and they are wrong.

 

Every single economist worth their salt (i.e. is not a capitalist idelogist) predicts the response of the UK government will prolong the recession. People like Stiglitz have been arguing for years against 'fiscal austerity'.

 

http://en.wikipedia.org/wiki/Globalization...Its_Discontents

Edited June 14, 2010 by ChezGiven

[Christmas Tree 3997]

Did you also notice CT that the head of this new body said that Darling's March budget and Labours plans for the government term would have cut the deficit to its required level?

 

Of course they intended to cut as well but at least it was without the relish-filled abandonment of the Tories.

 

 

First sentence .... No I didnt ...Linky

 

2nd sentence ....

[Christmas Tree 3997]

What makes me giggle from these posted articles are the bits like....

 

The Germans are doing it. The Greeks, the Spanish and the Portuguese.

 

George Osborne believes it is his patriotic duty to do it. Around the world, cutting budget deficits has become the priority for policymakers.

 

Mervyn King has applauded the return of fiscal conservatism. So has the Organisation for Economic Co-operation and Development.

 

China, Japan, the eurozone and Britain all set on reducing budget deficits.

 

 

So basically the majority of the worlds leaders and their highly paid economic advisors are wrong and a few blogging economists are right.

 

Go Figure.

 

Did you have difficulty understanding that article CT?

 

 

Did you have difficulty understanding my post

[Christmas Tree 3997]

What makes me giggle from these posted articles are the bits like....

 

The Germans are doing it. The Greeks, the Spanish and the Portuguese.

 

George Osborne believes it is his patriotic duty to do it. Around the world, cutting budget deficits has become the priority for policymakers.

 

Mervyn King has applauded the return of fiscal conservatism. So has the Organisation for Economic Co-operation and Development.

 

China, Japan, the eurozone and Britain all set on reducing budget deficits.

 

 

So basically the majority of the worlds leaders and their highly paid economic advisors are wrong and a few blogging economists are right.

 

Go Figure.

 

Which highly paid economic advisors? Politicians have political advisors, not economic ones.

 

As for 'blogging economists', i tend not to be abusive in these sort of discussion but dont blow your mong-trumpet in my direction without expecting to be shouted down as an idiot.

 

http://en.wikipedia.org/wiki/Paul_Krugman

 

In 2008, Krugman won the Nobel Memorial Prize in Economics for his contributions to New Trade Theory and New Economic Geography. He was voted sixth in a 2005 global poll of the world's top 100 intellectuals by Prospect.[6]

 

Anyway, the point being that yes, they are wrong as is now demonstrated by the US experience in 1937 and the Japanese experience in 1996. we are in a liquidity trap and given interest rates close to zero, the DSGE modelled multiplier is 1.5 not 0.4 as the right-wing ideologues would tell us.

 

The question why they are being advised to do this is a pertinent one. The people doing the advising are the city economists who are funding the debt and are paid to manage the risk of their investments. They lend money to the government (i.e. invest in the government) and want them to improve their risk profile for portfolio diversification purposes. They are all, to a man, Friedman-inspired monetarists and believe people like Krugman are using out-dated ISLM models. They are not and they are wrong.

 

Every single economist worth their salt (i.e. is not a capitalist idelogist) predicts the response of the UK government will prolong the recession. People like Stiglitz have been arguing for years against 'fiscal austerity'.

 

http://en.wikipedia.org/wiki/Globalization...Its_Discontents

 

 

Ofcourse the worlds governments have economic advisors saying they dont shows you have your own mong-trumpet

 

You seem to be foccusing on a double dip recession, however I have said before that most of these governments, ourselves included, probably are less bothered about a double dip.

 

I would guess the decisions being taken in Downing street are in for a penny....

 

IE Its shit at the moment, we are hardly out of recession, might as well really trim the fat off and if we slip back into recession for a short while so be it. Blame it all on Labour and take the credit when it comes good again.

[Christmas Tree 3997]

Time for procrastination is passing

 

Jonathan Davis -- Financial Times

 

 

Paul Krugman, the Nobel Prize winning economist, was in top thundering form in his comments on the recent meeting of G20 finance ministers, which produced a noticeable change in political rhetoric by welcoming the plans by several countries to tackle their hefty budget deficits.

 

“It’s basically incredible that this is happening with unemployment in the euro area still rising, and only slight labour market progress in the US,” he fulminates. Bowing to demands from the financial markets for fiscal austerity is “utter folly posing as wisdom”.

 

“Don’t we need to worry about government debt?” he goes on, “Yes – but slashing spending while the economy is still deeply depressed is both an extremely costly and quite ineffective way to reduce future debt.” The right thing would be to wait until after the economy is strong enough to allow monetary policy to offset fiscal austerity. “But no: the deficit hawks want their cuts while unemployment rates are still at near-record highs and monetary policy is still hard up against the zero bound.”

 

The intellectual credentials of Prof Krugman are not in question. But is he right to warn that even starting to tackle the fiscal imbalances today dooms us to another recession, or even depression? The alternative view, more popular in the circles I frequent, is that tackling debt with yet more debt is a far surer way to long-term ruin. Postponing the evil day, after all, was at the heart of the Federal Reserve’s failings in the later years of Alan Greenspan’s tenure and helped to land us where we are today.

 

Not even to begin laying the ground for reductions in public spending today, let alone to confront the huge unfunded liabilities that lie beyond budget planning horizons, makes little sense. On past form it will take years for any cuts announced today to be fully implemented, if indeed they can be achieved at all. Just as 364 economists turned out to be wrong when they denounced Sir Geoffrey Howe’s infamous 1981 UK budget, it is not axiomatic to me that Prof Krugman and co are right this time.

 

In any event it is surely debatable to blame the imminence of spending cuts mainly on pressure from the financial markets. It is not, after all, as if the “bond market vigilantes” have been much in evidence recently. Long-term bond yields have been falling, not rising. Pointing out the inconvenient fact that Greece and other countries have unsustainable fiscal problems is hardly an insight confined to a few hedge fund managers.

 

What really seems to affront the liberal academic mind is the idea that financial markets – irrational, greedy and capricious as they indubitably can be at times – should be seen to be driving public policy in any way. Unfortunately, a good deal of the argument about fiscal consolidation is about the timing of economic recovery, the appetite for risk in the private sector and the second and third order effects of fiscal tightening. This kind of judgment in my experience has never been the forte of economists.

 

I take more comfort from Paul Volcker, who as a former chairman of the Federal Reserve has a gold-plated track record in dealing with the consequences of past financial excess (and was rightly lauded by Prof Krugman, among others, for that achievement). In a recent article in the New York Review of Books, after discussing his plans for banking reform, Mr Volcker observes: “The critical policy issues we face go way beyond the technicalities of law and regulation of financial markets.

 

“There is growing awareness of historically large and persistent fiscal deficits in a number of well-developed economies. The risks associated with the virtually unprecedented levels of public debts as we emerge from recessions are evident. In California, as in my own state of New York, it’s not a matter of intellectual awareness but of practical confrontation.”

 

He goes on, for the benefit of US readers, to make a comparison with the tribulations of the Eurozone in its “struggle to maintain the common European currency, to rebalance the European economy and to sustain the political cohesion of Europe. Amounts approaching a trillion dollars have been marshalled from national and international resources to deal with those challenges. Financing can buy time, but not indefinite time. The underlying hard fiscal and economic adjustments are necessary”. That sentiment is surely unquestionable. There is no doubt that the hand of history is sitting heavily on the shoulders of the current generation of political leaders. They have critical judgments to make, and insufficient evidence to be sure that their decisions will turn out right. Mistakes are inevitable. The markets certainly have no monopoly on wisdom either – just look at their apparent readiness to lump in Hungary, a paragon of virtue in fiscal terms, with Greece.

 

But the time for procrastination, as Mr Volcker is right to observe, is passing.

 

I think in a nutshell he's saying those who can, do.....Those who cant .....Teach

[ChezGiven 0]

So, i'll ask again, which economists are employed by the government?

 

Politicians dont sit around with economists whilst drawing up political strategies or statements to the media. The OECD told them to cut the deficit, they arent 'economic advisors', they are independent paris-based institution. They take advice (of course, we all do) but they dont employ them to sit with them making decisions. Those are political advisors.

 

The point being that objective advice is not what they want, they want advice which pushes their political agenda. If the markets demand austerity, then the politically expedient thing to do is to give it to them. Demanding austerity is not a form of 'advice', its a vested interest.

[Renton 17626]

An observation. From that article:

 

Just as 364 economists turned out to be wrong when they denounced Sir Geoffrey Howe’s infamous 1981 UK budget, it is not axiomatic to me that Prof Krugman and co are right this time.

 

From the previous article:

 

Let's start with a bit of history. The budget hawks like to cite Geoffrey Howe's draconian 1981 budget as evidence that fiscal tightening is perfectly consistent with economic growth. So it is, providing there is scope for an over-valued pound to depreciate and for excessively high interest rates to be cut. So it is, provided that tumbling oil prices raise the real incomes of consumers and cut costs for businesses. All these things happened in the early 1980s; none of them are likely to occur now. The pound has already fallen by 25%, interest rates are at 0.5% and oil prices show no sign of falling much below $70 (£48) a barrel.

[Christmas Tree 3997]

So, i'll ask again, which economists are employed by the government?

 

Politicians dont sit around with economists whilst drawing up political strategies or statements to the media. The OECD told them to cut the deficit, they arent 'economic advisors', they are independent paris-based institution. They take advice (of course, we all do) but they dont employ them to sit with them making decisions. Those are political advisors.

 

The point being that objective advice is not what they want, they want advice which pushes their political agenda. If the markets demand austerity, then the politically expedient thing to do is to give it to them. Demanding austerity is not a form of 'advice', its a vested interest.

 

 

Well without getting to side tracked down this route..Sir Alan Budd, all over the news today, economist appointed by George Osbourne to give economic forecasts.

 

I appreciate economists dont make decisions in government and I dont recall saying they did.

 

Your last point with regard to objective advice is entirely wrong, for The Tories The whole reason the office for budgetary control was set up was to prevent chancellors (such as Brown and Darling) fiddling the growth figures.

[ChezGiven 0]

Time for procrastination is passing

 

Jonathan Davis -- Financial Times

 

 

Paul Krugman, the Nobel Prize winning economist, was in top thundering form in his comments on the recent meeting of G20 finance ministers, which produced a noticeable change in political rhetoric by welcoming the plans by several countries to tackle their hefty budget deficits.

 

“It’s basically incredible that this is happening with unemployment in the euro area still rising, and only slight labour market progress in the US,” he fulminates. Bowing to demands from the financial markets for fiscal austerity is “utter folly posing as wisdom”.

 

“Don’t we need to worry about government debt?” he goes on, “Yes – but slashing spending while the economy is still deeply depressed is both an extremely costly and quite ineffective way to reduce future debt.” The right thing would be to wait until after the economy is strong enough to allow monetary policy to offset fiscal austerity. “But no: the deficit hawks want their cuts while unemployment rates are still at near-record highs and monetary policy is still hard up against the zero bound.”

 

The intellectual credentials of Prof Krugman are not in question. But is he right to warn that even starting to tackle the fiscal imbalances today dooms us to another recession, or even depression? The alternative view, more popular in the circles I frequent, is that tackling debt with yet more debt is a far surer way to long-term ruin. Postponing the evil day, after all, was at the heart of the Federal Reserve’s failings in the later years of Alan Greenspan’s tenure and helped to land us where we are today.

 

Not even to begin laying the ground for reductions in public spending today, let alone to confront the huge unfunded liabilities that lie beyond budget planning horizons, makes little sense. On past form it will take years for any cuts announced today to be fully implemented, if indeed they can be achieved at all. Just as 364 economists turned out to be wrong when they denounced Sir Geoffrey Howe’s infamous 1981 UK budget, it is not axiomatic to me that Prof Krugman and co are right this time.

 

In any event it is surely debatable to blame the imminence of spending cuts mainly on pressure from the financial markets. It is not, after all, as if the “bond market vigilantes” have been much in evidence recently. Long-term bond yields have been falling, not rising. Pointing out the inconvenient fact that Greece and other countries have unsustainable fiscal problems is hardly an insight confined to a few hedge fund managers.

 

What really seems to affront the liberal academic mind is the idea that financial markets – irrational, greedy and capricious as they indubitably can be at times – should be seen to be driving public policy in any way. Unfortunately, a good deal of the argument about fiscal consolidation is about the timing of economic recovery, the appetite for risk in the private sector and the second and third order effects of fiscal tightening. This kind of judgment in my experience has never been the forte of economists.

 

I take more comfort from Paul Volcker, who as a former chairman of the Federal Reserve has a gold-plated track record in dealing with the consequences of past financial excess (and was rightly lauded by Prof Krugman, among others, for that achievement). In a recent article in the New York Review of Books, after discussing his plans for banking reform, Mr Volcker observes: “The critical policy issues we face go way beyond the technicalities of law and regulation of financial markets.

 

“There is growing awareness of historically large and persistent fiscal deficits in a number of well-developed economies. The risks associated with the virtually unprecedented levels of public debts as we emerge from recessions are evident. In California, as in my own state of New York, it’s not a matter of intellectual awareness but of practical confrontation.”

 

He goes on, for the benefit of US readers, to make a comparison with the tribulations of the Eurozone in its “struggle to maintain the common European currency, to rebalance the European economy and to sustain the political cohesion of Europe. Amounts approaching a trillion dollars have been marshalled from national and international resources to deal with those challenges. Financing can buy time, but not indefinite time. The underlying hard fiscal and economic adjustments are necessary”. That sentiment is surely unquestionable. There is no doubt that the hand of history is sitting heavily on the shoulders of the current generation of political leaders. They have critical judgments to make, and insufficient evidence to be sure that their decisions will turn out right. Mistakes are inevitable. The markets certainly have no monopoly on wisdom either – just look at their apparent readiness to lump in Hungary, a paragon of virtue in fiscal terms, with Greece.

 

But the time for procrastination, as Mr Volcker is right to observe, is passing.

 

I think in a nutshell he's saying those who can, do.....Those who cant .....Teach

 

Bold out the key arguments in that for me will you. You use the phrase nutshell, so nutshell the article in one or two sentences for me.

 

I am struggling to see where he has dealt with the arguments that a stimulus will pay for itself through growth.

 

He says "Unfortunately, a good deal of the argument about fiscal consolidation is about the timing of economic recovery, the appetite for risk in the private sector and the second and third order effects of fiscal tightening. This kind of judgment in my experience has never been the forte of economists."

 

Which does not constitute an argument. Apart from that, it has no substance.

[ChezGiven 0]

So, i'll ask again, which economists are employed by the government?

 

Politicians dont sit around with economists whilst drawing up political strategies or statements to the media. The OECD told them to cut the deficit, they arent 'economic advisors', they are independent paris-based institution. They take advice (of course, we all do) but they dont employ them to sit with them making decisions. Those are political advisors.

 

The point being that objective advice is not what they want, they want advice which pushes their political agenda. If the markets demand austerity, then the politically expedient thing to do is to give it to them. Demanding austerity is not a form of 'advice', its a vested interest.

 

 

Well without getting to side tracked down this route..Sir Alan Budd, all over the news today, economist appointed by George Osbourne to give economic forecasts.

 

I appreciate economists dont make decisions in government and I dont recall saying they did.

 

Your last point with regard to objective advice is entirely wrong, for The Tories The whole reason the office for budgetary control was set up was to prevent chancellors (such as Brown and Darling) fiddling the growth figures.

Or fiddling the deficit figures which are a lot lower than Cameron said they were. Shame for him really, already made to look like a liar.

[Christmas Tree 3997]

An observation. From that article:

 

Just as 364 economists turned out to be wrong when they denounced Sir Geoffrey Howe’s infamous 1981 UK budget, it is not axiomatic to me that Prof Krugman and co are right this time.

 

From the previous article:

 

Let's start with a bit of history. The budget hawks like to cite Geoffrey Howe's draconian 1981 budget as evidence that fiscal tightening is perfectly consistent with economic growth. So it is, providing there is scope for an over-valued pound to depreciate and for excessively high interest rates to be cut. So it is, provided that tumbling oil prices raise the real incomes of consumers and cut costs for businesses. All these things happened in the early 1980s; none of them are likely to occur now. The pound has already fallen by 25%, interest rates are at 0.5% and oil prices show no sign of falling much below $70 (£48) a barrel.

 

 

I think its pretty much agreed by most city economists that no-one quite knows what will happen next. As with all these points in time you will have economists on either side of the fence, just as you will with party followers each thinking their side knows best.

 

As I have said many time I see a bleak outlook ahead as I see no signs of new booms.

 

That being my view I would much rather the government of the day, like any wise family, batten down the hatches and get rid of as much debt as possible.

 

Remember all parties agree to this course of action even if Krugman doesnt. The difference is Labour and its supporters will tell you that they will slash in a nicer way than the tories.

 

I wont convince you differently nor you I.

[Christmas Tree 3997]

Time for procrastination is passing

 

Jonathan Davis -- Financial Times

 

 

Paul Krugman, the Nobel Prize winning economist, was in top thundering form in his comments on the recent meeting of G20 finance ministers, which produced a noticeable change in political rhetoric by welcoming the plans by several countries to tackle their hefty budget deficits.

 

“It’s basically incredible that this is happening with unemployment in the euro area still rising, and only slight labour market progress in the US,” he fulminates. Bowing to demands from the financial markets for fiscal austerity is “utter folly posing as wisdom”.

 

“Don’t we need to worry about government debt?” he goes on, “Yes – but slashing spending while the economy is still deeply depressed is both an extremely costly and quite ineffective way to reduce future debt.” The right thing would be to wait until after the economy is strong enough to allow monetary policy to offset fiscal austerity. “But no: the deficit hawks want their cuts while unemployment rates are still at near-record highs and monetary policy is still hard up against the zero bound.”

 

The intellectual credentials of Prof Krugman are not in question. But is he right to warn that even starting to tackle the fiscal imbalances today dooms us to another recession, or even depression? The alternative view, more popular in the circles I frequent, is that tackling debt with yet more debt is a far surer way to long-term ruin. Postponing the evil day, after all, was at the heart of the Federal Reserve’s failings in the later years of Alan Greenspan’s tenure and helped to land us where we are today.

 

Not even to begin laying the ground for reductions in public spending today, let alone to confront the huge unfunded liabilities that lie beyond budget planning horizons, makes little sense. On past form it will take years for any cuts announced today to be fully implemented, if indeed they can be achieved at all. Just as 364 economists turned out to be wrong when they denounced Sir Geoffrey Howe’s infamous 1981 UK budget, it is not axiomatic to me that Prof Krugman and co are right this time.

 

In any event it is surely debatable to blame the imminence of spending cuts mainly on pressure from the financial markets. It is not, after all, as if the “bond market vigilantes” have been much in evidence recently. Long-term bond yields have been falling, not rising. Pointing out the inconvenient fact that Greece and other countries have unsustainable fiscal problems is hardly an insight confined to a few hedge fund managers.

 

What really seems to affront the liberal academic mind is the idea that financial markets – irrational, greedy and capricious as they indubitably can be at times – should be seen to be driving public policy in any way. Unfortunately, a good deal of the argument about fiscal consolidation is about the timing of economic recovery, the appetite for risk in the private sector and the second and third order effects of fiscal tightening. This kind of judgment in my experience has never been the forte of economists.

 

I take more comfort from Paul Volcker, who as a former chairman of the Federal Reserve has a gold-plated track record in dealing with the consequences of past financial excess (and was rightly lauded by Prof Krugman, among others, for that achievement). In a recent article in the New York Review of Books, after discussing his plans for banking reform, Mr Volcker observes: “The critical policy issues we face go way beyond the technicalities of law and regulation of financial markets.

 

“There is growing awareness of historically large and persistent fiscal deficits in a number of well-developed economies. The risks associated with the virtually unprecedented levels of public debts as we emerge from recessions are evident. In California, as in my own state of New York, it’s not a matter of intellectual awareness but of practical confrontation.”

 

He goes on, for the benefit of US readers, to make a comparison with the tribulations of the Eurozone in its “struggle to maintain the common European currency, to rebalance the European economy and to sustain the political cohesion of Europe. Amounts approaching a trillion dollars have been marshalled from national and international resources to deal with those challenges. Financing can buy time, but not indefinite time. The underlying hard fiscal and economic adjustments are necessary”. That sentiment is surely unquestionable. There is no doubt that the hand of history is sitting heavily on the shoulders of the current generation of political leaders. They have critical judgments to make, and insufficient evidence to be sure that their decisions will turn out right. Mistakes are inevitable. The markets certainly have no monopoly on wisdom either – just look at their apparent readiness to lump in Hungary, a paragon of virtue in fiscal terms, with Greece.

 

But the time for procrastination, as Mr Volcker is right to observe, is passing.

 

I think in a nutshell he's saying those who can, do.....Those who cant .....Teach

 

Bold out the key arguments in that for me will you. You use the phrase nutshell, so nutshell the article in one or two sentences for me.

 

I am struggling to see where he has dealt with the arguments that a stimulus will pay for itself through growth.

 

He says "Unfortunately, a good deal of the argument about fiscal consolidation is about the timing of economic recovery, the appetite for risk in the private sector and the second and third order effects of fiscal tightening. This kind of judgment in my experience has never been the forte of economists."

 

Which does not constitute an argument. Apart from that, it has no substance.

 

 

My point is that there are plenty out there on both sides of the argument ...Take this article...

 

Nobel prize winner Paul Krugman may say it's econ 101 to have the federal government spend more in recessions, and I agree, but it's also wrong...........

 

The insiders will say, you're just a player-hater and don't understand let alone appreciate the math. It's true critics will not understand the tools as well as the true believers, because if you think it's a waste of time, you aren't going to get really good at these tools. So the bottom line is, do they generate useful predictions? Do large banks hire top-level macroeconomists? No and no. Hard core macroeconomic theory has been pretty irrelevant to the latest recession, as it always has been

 

http://www.businessinsider.com/stimulus-is...d-advice-2010-6

[NJS 3960]

I fully admit to not being an economist but I don't see how putting a million people out of work through cuts and the subsequent affect on benefits, tax revenue and demand can in anyway lead to a recovery.

[Christmas Tree 3997]

I fully admit to not being an economist but I don't see how putting a million people out of work through cuts and the subsequent affect on benefits, tax revenue and demand can in anyway lead to a recovery.

 

 

Ditto, but the public sector comparison is like you taking out a bank loan to employ your wife to manage your finances.

[ChezGiven 0]

Time for procrastination is passing

 

Jonathan Davis -- Financial Times

 

 

Paul Krugman, the Nobel Prize winning economist, was in top thundering form in his comments on the recent meeting of G20 finance ministers, which produced a noticeable change in political rhetoric by welcoming the plans by several countries to tackle their hefty budget deficits.

 

“It’s basically incredible that this is happening with unemployment in the euro area still rising, and only slight labour market progress in the US,” he fulminates. Bowing to demands from the financial markets for fiscal austerity is “utter folly posing as wisdom”.

 

“Don’t we need to worry about government debt?” he goes on, “Yes – but slashing spending while the economy is still deeply depressed is both an extremely costly and quite ineffective way to reduce future debt.” The right thing would be to wait until after the economy is strong enough to allow monetary policy to offset fiscal austerity. “But no: the deficit hawks want their cuts while unemployment rates are still at near-record highs and monetary policy is still hard up against the zero bound.”

 

The intellectual credentials of Prof Krugman are not in question. But is he right to warn that even starting to tackle the fiscal imbalances today dooms us to another recession, or even depression? The alternative view, more popular in the circles I frequent, is that tackling debt with yet more debt is a far surer way to long-term ruin. Postponing the evil day, after all, was at the heart of the Federal Reserve’s failings in the later years of Alan Greenspan’s tenure and helped to land us where we are today.

 

Not even to begin laying the ground for reductions in public spending today, let alone to confront the huge unfunded liabilities that lie beyond budget planning horizons, makes little sense. On past form it will take years for any cuts announced today to be fully implemented, if indeed they can be achieved at all. Just as 364 economists turned out to be wrong when they denounced Sir Geoffrey Howe’s infamous 1981 UK budget, it is not axiomatic to me that Prof Krugman and co are right this time.

 

In any event it is surely debatable to blame the imminence of spending cuts mainly on pressure from the financial markets. It is not, after all, as if the “bond market vigilantes” have been much in evidence recently. Long-term bond yields have been falling, not rising. Pointing out the inconvenient fact that Greece and other countries have unsustainable fiscal problems is hardly an insight confined to a few hedge fund managers.

 

What really seems to affront the liberal academic mind is the idea that financial markets – irrational, greedy and capricious as they indubitably can be at times – should be seen to be driving public policy in any way. Unfortunately, a good deal of the argument about fiscal consolidation is about the timing of economic recovery, the appetite for risk in the private sector and the second and third order effects of fiscal tightening. This kind of judgment in my experience has never been the forte of economists.

 

I take more comfort from Paul Volcker, who as a former chairman of the Federal Reserve has a gold-plated track record in dealing with the consequences of past financial excess (and was rightly lauded by Prof Krugman, among others, for that achievement). In a recent article in the New York Review of Books, after discussing his plans for banking reform, Mr Volcker observes: “The critical policy issues we face go way beyond the technicalities of law and regulation of financial markets.

 

“There is growing awareness of historically large and persistent fiscal deficits in a number of well-developed economies. The risks associated with the virtually unprecedented levels of public debts as we emerge from recessions are evident. In California, as in my own state of New York, it’s not a matter of intellectual awareness but of practical confrontation.”

 

He goes on, for the benefit of US readers, to make a comparison with the tribulations of the Eurozone in its “struggle to maintain the common European currency, to rebalance the European economy and to sustain the political cohesion of Europe. Amounts approaching a trillion dollars have been marshalled from national and international resources to deal with those challenges. Financing can buy time, but not indefinite time. The underlying hard fiscal and economic adjustments are necessary”. That sentiment is surely unquestionable. There is no doubt that the hand of history is sitting heavily on the shoulders of the current generation of political leaders. They have critical judgments to make, and insufficient evidence to be sure that their decisions will turn out right. Mistakes are inevitable. The markets certainly have no monopoly on wisdom either – just look at their apparent readiness to lump in Hungary, a paragon of virtue in fiscal terms, with Greece.

 

But the time for procrastination, as Mr Volcker is right to observe, is passing.

 

I think in a nutshell he's saying those who can, do.....Those who cant .....Teach

 

Bold out the key arguments in that for me will you. You use the phrase nutshell, so nutshell the article in one or two sentences for me.

 

I am struggling to see where he has dealt with the arguments that a stimulus will pay for itself through growth.

 

He says "Unfortunately, a good deal of the argument about fiscal consolidation is about the timing of economic recovery, the appetite for risk in the private sector and the second and third order effects of fiscal tightening. This kind of judgment in my experience has never been the forte of economists."

 

Which does not constitute an argument. Apart from that, it has no substance.

 

 

My point is that there are plenty out there on both sides of the argument ...Take this article...

 

Nobel prize winner Paul Krugman may say it's econ 101 to have the federal government spend more in recessions, and I agree, but it's also wrong...........

 

The insiders will say, you're just a player-hater and don't understand let alone appreciate the math. It's true critics will not understand the tools as well as the true believers, because if you think it's a waste of time, you aren't going to get really good at these tools. So the bottom line is, do they generate useful predictions? Do large banks hire top-level macroeconomists? No and no. Hard core macroeconomic theory has been pretty irrelevant to the latest recession, as it always has been

 

http://www.businessinsider.com/stimulus-is...d-advice-2010-6

 

By that token, your posts on here are evidence of the other side of the argument since all you need to do is quote a website where someone appears to disagree without either displaying an understanding of the issues, or a well-argued counter position.

 

Thats why i stick to nobel prize winning economists without political allegiances, rather than 'businessinsider.com'.

 

I mean, what does that first sentence even mean? Governements spend more in recessions, its a fact. Does he mean they 'ought to' spend more? Or what? When the writer cant articulate the sentence / argument coherently, i am a little sceptical of everthing else.

 

I'll nutshell his argument this time - banks dont employ hardcore macro-economists, there must be a reason for that. Fuck me, where to start.

[NJS 3960]

I fully admit to not being an economist but I don't see how putting a million people out of work through cuts and the subsequent affect on benefits, tax revenue and demand can in anyway lead to a recovery.

 

 

Ditto, but the public sector comparison is like you taking out a bank loan to employ your wife to manage your finances.

 

Only if she wasn't allowed to spend any money - public sector workers can generate demand outside of the public sector "world".

 

As I've also argued if they say for the sake of argument closed Longbenton the knock on effect in private sector on Tyneside would be massive.

 

I honestly think that they don't take knock on job losses into effect when working out cuts from the public sector.

[Matt 0]

Banks do hire economists. Loads of em.

[spongebob toonpants 3587]

So, i'll ask again, which economists are employed by the government?

 

Politicians dont sit around with economists whilst drawing up political strategies or statements to the media. The OECD told them to cut the deficit, they arent 'economic advisors', they are independent paris-based institution. They take advice (of course, we all do) but they dont employ them to sit with them making decisions. Those are political advisors.

 

The point being that objective advice is not what they want, they want advice which pushes their political agenda. If the markets demand austerity, then the politically expedient thing to do is to give it to them. Demanding austerity is not a form of 'advice', its a vested interest.

 

 

Well without getting to side tracked down this route..Sir Alan Budd, all over the news today, economist appointed by George Osbourne to give economic forecasts.

 

I appreciate economists dont make decisions in government and I dont recall saying they did.

 

Your last point with regard to objective advice is entirely wrong, for The Tories The whole reason the office for budgetary control was set up was to prevent chancellors (such as Brown and Darling) fiddling the growth figures.

 

Labour fiddling the figures eh??

 

However, as my colleague, Paul Mason, was able to get Sir Alan to confirm, that 2015 figure means that the OBR does think that Labour's policies would have eliminated a large part of the structural deficit by the end of the next Parliament. The OBR expects it to go from 8.8% of GDP in 2009-10 to 2.8% in 2014-15.

 

I know who I think is lying at the moment

http://www.bbc.co.uk/blogs/thereporters/st...st_downgra.html

[Christmas Tree 3997]

So, i'll ask again, which economists are employed by the government?

 

Politicians dont sit around with economists whilst drawing up political strategies or statements to the media. The OECD told them to cut the deficit, they arent 'economic advisors', they are independent paris-based institution. They take advice (of course, we all do) but they dont employ them to sit with them making decisions. Those are political advisors.

 

The point being that objective advice is not what they want, they want advice which pushes their political agenda. If the markets demand austerity, then the politically expedient thing to do is to give it to them. Demanding austerity is not a form of 'advice', its a vested interest.

 

 

Well without getting to side tracked down this route..Sir Alan Budd, all over the news today, economist appointed by George Osbourne to give economic forecasts.

 

I appreciate economists dont make decisions in government and I dont recall saying they did.

 

Your last point with regard to objective advice is entirely wrong, for The Tories The whole reason the office for budgetary control was set up was to prevent chancellors (such as Brown and Darling) fiddling the growth figures.

 

Labour fiddling the figures eh??

 

However, as my colleague, Paul Mason, was able to get Sir Alan to confirm, that 2015 figure means that the OBR does think that Labour's policies would have eliminated a large part of the structural deficit by the end of the next Parliament. The OBR expects it to go from 8.8% of GDP in 2009-10 to 2.8% in 2014-15.

 

I know who I think is lying at the moment

http://www.bbc.co.uk/blogs/thereporters/st...st_downgra.html

 

 

Im not sure what your point is? I have said and it is a fact aswell that all parties had plans to reduce the debt by Big Cuts in public spending and tax rises.

 

Sorry if Im missing the point of your post .

[spongebob toonpants 3587]

So, i'll ask again, which economists are employed by the government?

 

Politicians dont sit around with economists whilst drawing up political strategies or statements to the media. The OECD told them to cut the deficit, they arent 'economic advisors', they are independent paris-based institution. They take advice (of course, we all do) but they dont employ them to sit with them making decisions. Those are political advisors.

 

The point being that objective advice is not what they want, they want advice which pushes their political agenda. If the markets demand austerity, then the politically expedient thing to do is to give it to them. Demanding austerity is not a form of 'advice', its a vested interest.

 

 

Well without getting to side tracked down this route..Sir Alan Budd, all over the news today, economist appointed by George Osbourne to give economic forecasts.

 

I appreciate economists dont make decisions in government and I dont recall saying they did.

 

Your last point with regard to objective advice is entirely wrong, for The Tories The whole reason the office for budgetary control was set up was to prevent chancellors (such as Brown and Darling) fiddling the growth figures.

 

Labour fiddling the figures eh??

 

However, as my colleague, Paul Mason, was able to get Sir Alan to confirm, that 2015 figure means that the OBR does think that Labour's policies would have eliminated a large part of the structural deficit by the end of the next Parliament. The OBR expects it to go from 8.8% of GDP in 2009-10 to 2.8% in 2014-15.

 

I know who I think is lying at the moment

http://www.bbc.co.uk/blogs/thereporters/st...st_downgra.html

 

 

Im not sure what your point is? I have said and it is a fact aswell that all parties had plans to reduce the debt by Big Cuts in public spending and tax rises.

 

Sorry if Im missing the point of your post .

 

Ill make it simple for you. You accused Labour of fiddling the figures. I then quoted the very economist you mentioned who confirmed that they werent.

[Christmas Tree 3997]

So, i'll ask again, which economists are employed by the government?

 

Politicians dont sit around with economists whilst drawing up political strategies or statements to the media. The OECD told them to cut the deficit, they arent 'economic advisors', they are independent paris-based institution. They take advice (of course, we all do) but they dont employ them to sit with them making decisions. Those are political advisors.

 

The point being that objective advice is not what they want, they want advice which pushes their political agenda. If the markets demand austerity, then the politically expedient thing to do is to give it to them. Demanding austerity is not a form of 'advice', its a vested interest.

 

 

Well without getting to side tracked down this route..Sir Alan Budd, all over the news today, economist appointed by George Osbourne to give economic forecasts.

 

I appreciate economists dont make decisions in government and I dont recall saying they did.

 

Your last point with regard to objective advice is entirely wrong, for The Tories The whole reason the office for budgetary control was set up was to prevent chancellors (such as Brown and Darling) fiddling the growth figures.

 

Labour fiddling the figures eh??

 

However, as my colleague, Paul Mason, was able to get Sir Alan to confirm, that 2015 figure means that the OBR does think that Labour's policies would have eliminated a large part of the structural deficit by the end of the next Parliament. The OBR expects it to go from 8.8% of GDP in 2009-10 to 2.8% in 2014-15.

 

I know who I think is lying at the moment

http://www.bbc.co.uk/blogs/thereporters/st...st_downgra.html

 

 

Im not sure what your point is? I have said and it is a fact aswell that all parties had plans to reduce the debt by Big Cuts in public spending and tax rises.

 

Sorry if Im missing the point of your post .

 

Ill make it simple for you. You accused Labour of fiddling the figures. I then quoted the very economist you mentioned who confirmed that they werent.

 

Two different things imo.

 

Yes he agreed that their cuts and tax policy would make inroads into the structural debt. (we already knew that)

 

The main points he made were that Darling and Browns growth figures were considerably wrong by about 1% give or take. As Labours figures are only a few months old and pre election, the electorate can make their own minds up whether Darling and Brown were just so bad that they got them so wrong or whether they manipulated them to make things look rosier, pre election.

 

To quote someone famous...."I think I know who is lying at the moment".

[Monkeys Fist 38565]

So, i'll ask again, which economists are employed by the government?

 

Politicians dont sit around with economists whilst drawing up political strategies or statements to the media. The OECD told them to cut the deficit, they arent 'economic advisors', they are independent paris-based institution. They take advice (of course, we all do) but they dont employ them to sit with them making decisions. Those are political advisors.

 

The point being that objective advice is not what they want, they want advice which pushes their political agenda. If the markets demand austerity, then the politically expedient thing to do is to give it to them. Demanding austerity is not a form of 'advice', its a vested interest.

 

 

Well without getting to side tracked down this route..Sir Alan Budd, all over the news today, economist appointed by George Osbourne to give economic forecasts.

 

I appreciate economists dont make decisions in government and I dont recall saying they did.

 

Your last point with regard to objective advice is entirely wrong, for The Tories The whole reason the office for budgetary control was set up was to prevent chancellors (such as Brown and Darling) fiddling the growth figures.

 

Labour fiddling the figures eh??

 

However, as my colleague, Paul Mason, was able to get Sir Alan to confirm, that 2015 figure means that the OBR does think that Labour's policies would have eliminated a large part of the structural deficit by the end of the next Parliament. The OBR expects it to go from 8.8% of GDP in 2009-10 to 2.8% in 2014-15.

 

I know who I think is lying at the moment

http://www.bbc.co.uk/blogs/thereporters/st...st_downgra.html

 

 

Im not sure what your point is? I have said and it is a fact aswell that all parties had plans to reduce the debt by Big Cuts in public spending and tax rises.

 

Sorry if Im missing the point of your post .

 

Ill make it simple for you. You accused Labour of fiddling the figures. I then quoted the very economist you mentioned who confirmed that they werent.

CT;

[Christmas Tree 3997]

Now we know why the liberals are so keen on electoral reform....

 

What with this and the gay liberal these liberals are a right bunch of sleazemeisters

 

 

 

In a statement given to the newspaper the MP said: "I am in a serious relationship with Carina Trimingham and I am separating from my wife."

 

Mr Huhne was married to his wife for 26 years and has three children and two stepchildren.

 

Ms Trimingham is believed to work for the Electoral Reform Society.

 

More follows...

[Norbert Colon 0]

For what its worth I left school during the pomp of the last tory regime when there were no apprenticeships and no jobs other than yts and other pointless schemes, however, I managed to gain work eventually and buy a house, in true tory tradition, the missus got pregnant and stopped work whilst the tories introduced the poll tax (which quadrupled the cost of rates) and the 15% mortgage base rate.

It was all good fun having to work three shit jobs, miss my kid growing up and eventually become estranged from the missus thanks maggie , thanks john, fuck off you tory scum and your elitist , chinless, old school tie shitbag bumchums.

[Monkeys Fist 38565]

For what its worth I left school during the pomp of the last tory regime when there were no apprenticeships and no jobs other than yts and other pointless schemes, however, I managed to gain work eventually and buy a house, in true tory tradition, the missus got pregnant and stopped work whilst the tories introduced the poll tax (which quadrupled the cost of rates) and the 15% mortgage base rate.

It was all good fun having to work three shit jobs, miss my kid growing up and eventually become estranged from the missus thanks maggie , thanks john, fuck off you tory scum and your elitist , chinless, old school tie shitbag bumchums.

Stand by for the sequel.

Coming soon to the North East.