[jeffkrol]

Too lazy today (on labor day, funny) to resurrect the old thread..
good read:
These angry Tories can't see what 'no alternative' means | Polly Toynbee | Comment is free | The Guardian

The UK economy is healing", said George Osborne this week. Did Treasury officials show him all the graphs upside down? If he believes that, it's truly terrifying. If he doesn't, then applying more leeches to the economic arteries is the only remedy he knows. No turning back, there is no alternative – TINA – is that old Thatcher song he reprises at double volume. The cabinet is united round death Plan A, as even Vince Cable at the weekend signed his name in blood: even he said "Tina", too.

Osborne's faith healing has shrivelled growth, and next year looks worse. Though unemployment fell recently, both the CBI and Chambers of Commerce say it will rise in 2013 as the next giant wave of public sector cuts casts staff adrift. Tax receipts are falling, public spending and the deficit rising. Money is borrowed to waste on the running costs of unemployment, not on investment. The Engineering Employers Federation reports manufacturing at its worst for three years and order books negative, with domestic and export demand down, despite the pound's one-third devaluation. The Federation of Small Business said a third of businesses find their growth plans stunted by lack of bank lending. Osborne's Project Merlin failed; so did the national loan guarantee. Funding for lending is not off the ground before more plans are announced for government bank guarantees on loans to business and builders. Good if it works. But even to consider government-backed investment is to admit that his old "crowding out" theory is proven wrong: he pulled the state back but private investment didn't flood in. Instead large companies sit on billions, afraid to invest in an economy he has drained of demand.

The only booming sector is luxury London property:

US "poster child"
Britain's Paul Ryan - NYTimes.com

In a lot of ways George Osborne, the Chancellor of the Exchequer (finance minister) is Britain’s answer to Paul Ryan. True, he’s a toned-down version — no Ayn Rand, please, we’re British — but other aspects of package are there in full force: he’s articulate, has a vision that’s completely at odds with everything we actually know about macroeconomics, and he was for a while the darling not just of the right but of self-proclaimed centrists on both sides of the Atlantic.

Osborne’s big idea was that Britain should turn to fiscal austerity now now now, even though the economy remained deeply depressed; it would all work out, he insisted, because the confidence fairy would come to the rescue. Never mind those whining Keynesians who said that premature austerity would send Britain into a double-dip recession.

Strange to say, Britain’s recovery stalled soon after Cameron/Osborne began their new policies, and the country is now in a double-dip recession.

UK-centric but food for thought,,,,,,,,,,
http://www.guardian.co.uk/society/2012/sep/03/disabled-benefits-claimants-fines-work

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Last edited by jeffkrol; 09-03-2012 at 01:43 PM.

[ihasa]

Do politicians in America actually watch what goes on in other countries' economies, before they propose setting off down the exact same course? I also hear a lot of bitching about the policies which Obama's government has implemented to avoid a double-dip - even though when you look at the performance of the USA vs the UK, they have worked.

[jeffkrol]

Do politicians in America actually watch what goes on in other countries' economies, before they propose setting off down the exact same course?

Of course not.. we are "exceptional" to all rules.. man made of natural.. don'tya know..

Interesting post: plan B
http://www.guardian.co.uk/politics/2012/aug/17/top-economists-advice-george-osborne

Steven Keen vs Kenneth Rogoff is quite interesting.......

[Nesster]

OECD downgrades growth forecasts and calls for more stimulus | Business | The Guardian

The Paris-based Organisation for Economic Co-operation and Development (OECD) said the outlook for the UK had deteriorated and predicted the economy will shrink by 0.7% this year, compared with previous forecasts of 0.5% growth. The only G7 member worse off than Britain is Italy, which is expected to shrink by 2.4%. By contrast, Germany is expected to grow by 0.8%.

Rachel Reeves, Labour's shadow chief secretary to the treasury, said: "These very concerning forecasts show just how badly the government's economic policies have failed. Britain's growth forecasts have been slashed by more than any other major economy. And while ministers desperately try to blame all our problems on the eurozone crisis, the OECD says France and Germany are doing better than us. In fact Britain is one of just two G20 countries in a double-dip recession."

The US economy, meanwhile, is expected to grow, helped by improvements in the housing market and some progress on tackling its debt. Still, the OECD cut its growth forecast from 2.4% to 2.3%.

Only Japan is thought to be improving, with growth predicted to reach 2.2% (compared with previous expectations of 2%) as it rebuilds its economy following the earthquake and tsunami in 2011.

The thinktank blamed the weakening economic outlook squarely on the crisis in the eurozone, which has hit trade and business confidence around the world. The OECD also warned against too much austerity, which it said was "acting as a drag".

It expects the slowdown in the leading industrial countries to continue to the end of the year and warned that any intensification of the eurozone crisis, a rising oil price, or slowdown in the US "could derail an already weak recovery".

Chris Williamson, chief economist at Markit, said: "The downgrade to the outlook is not surprising, given the deterioration in the eurozone crisis and the extent to which we have seen business confidence hit as a result. Unless the eurozone crisis is resolved soon, even these downgraded forecasts could prove overly optimistic."

The OECD welcomedThursday's moves by the European Central Bank to intervene in the debt markets and help bring down the borrowing costs of crisis-hit eurozone countries. But it urged central banks across the globe to do more to boost growth – cutting interest rates to zero and doing more electronic money creation.

However, this advice was ignored by the Bank of England, which on Thursday kept rates on hold and made no change to its £375bn quantitative easing programme.

The ECB also ignored OECD calls for it to cut its marginal lending facility – effectively the rate at which commercial banks borrow overnight – and kept all interest rates on hold.

In relation to the US, the OECD said the so-called "fiscal cliff" – when Bush-era tax breaks will be dropped and a series of draconian spending cuts imposed at the end of this year – would probably push the US economy into recession.

It said: "It is urgent that the political parties agree on detailed medium-term consolidation plans that will avoid this outcome and reduce uncertainty regarding the fiscal outlook."

• This article was amended on 7 September 2012 to correct the OECD's previous forecast for the UK from 0.5% decline to 0.5% growth

But this pain is good for us, and will eventually result in a far stronger economy...

[jeffkrol]

OECD downgrades growth forecasts and calls for more stimulus | Business | The Guardian



But this pain is good for us, and will eventually result in a far stronger economy...

well some seem to believe that...

UK politicians have begun feeling austerity pains, though they say citizens understand the sacrifice. U.S. lawmakers need similar audacity. Otherwise, the time could come when the market prefers the shrinking deficits in Europe to America’s bloated borrowing.

Analysis & Opinion | Reuters


good thing it is only an 'opinion'..and all I can picture is the "black knight".. "I's just a flesh wound.. come back here"...

However, these OECD figures are interpreted or manipulated, it’s hard for the Coalition government to escape the bad news, - The UK economy is in the doldrums. Barring a package to stimulate the economy or a change in economic policy, it’s difficult to see where the growth will come from.
PressTV - OECD downgrades growth forecasts

[ihasa]

Yeah, but they just relaxed the planning regulations on home extensions. Surely that will be enough to reverse the trend???

[jeffkrol]

and the "beat down" continues.. never realizing THEIR OWN policies are a prime cause......

"The economy is healing. But it's a longer and harder road that we have to travel down. There will have to be further cuts," Osborne said.

PressTV - Britons to bear burden of more austerity

They were warned..........

http://online.wsj.com/article/SB10000872396390443866404577565222558594062.html

The London-based think tank, whose modelling work is used by several central banks and finance ministries around the world, said if austerity had been delayed, the U.K. would have avoided falling into recession in the first quarter of 2012. Official figures last week showed the U.K. economy shrunk 0.7% in the second quarter of 2012, which means it has contracted for three consecutive quarters. Recession is defined by some economists as at least two quarters of economic contraction.

NIESR estimates that if the government had delayed the spending cuts, the country's gross domestic product would have grown 0.7% during 2012. In contrast, the think tank, which also Friday released its latest economic forecasts, expects the economy to contract 0.5% in 2012.

NIESR said the U.K.'s economic output, on a cumulative basis, would be £239 billion lower over the period from 2011 to 2021 than if it would have been had austerity been delayed until 2014.

The government's early implementation of austerity also has serious effects for the labor market. Dawn Holland, a senior research fellow at NIESR and one of the authors of the report, said delaying austerity until 2014 would have meant around 200,000 fewer people would have lost their jobs and the unemployment rate would not have risen above 7.0%. The unemployment rate stood at 8.1% in the three months to the end of May, the latest official figures show.

Ms. Holland said NIESR's model does not take into account the reaction of international bond investors to a decision to slow the austerity measures.

Mr. Osborne has long argued that the government's ambitious spending cuts have won the country credibility with investors, which has led to record low borrowing costs for the country.

A "reminder".. having sovereign currency means never having to "borrow"....but on to an interesting (sort of ) article.... note the "change of heart"

That this is important is usefully emphasised by looking over a recent turn of events. In February 2010 twenty economists signed a letter to London’s Sunday Times supporting a plan to lower steadily the UK structural budget deficit, starting as early as the 2010/11 fiscal year. (For transparency, I should say here I was one of those 20.) The letter suggested that failure to do so could, among other things, raise interest rates and undermine UK recovery, given how the economy had entered the recession with a large structural budget deficit. Not unexpectedly, this proposal was not uniformly accepted, and many distinguished economists suggested instead that such a policy was potentially risky and that the first priority had to be to restore robust growth. But to bring about growth was never a point of dispute. So, it might be useful now to look back and assess the balance of risks then extant.

On the one hand, for some observers, there has never been any doubt: “the UK had a depressed economy then, and it still does now.” (Indeed, that particular writer upon reading that in August 2012 some of the original group of twenty had changed their minds expressed disappointment “to see so many of the prodigal economists asserting that they were responding to changed circumstances rather than admitting that they simply got it wrong. For circumstances really haven’t changed [...].” (Again, for transparency, I was one of those reported to have changed my mind, and indeed I was reported to have emphasized changed circumstances.)

http://www.economonitor.com/blog/2012/09/uk-austerity-and-growth-winter-is-coming/
funny.. but not for the British

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Last edited by jeffkrol; 10-07-2012 at 02:18 PM.