Economy stuff

Saw a nice comment post on the BBC website that I thought I’d share.

 

94. At 08:59am on 7th Apr 2011, richard bunning wrote:

Those that argue for continuing on our course of deep and rapid spending cuts need to look seriously at where this took the Irish economy.

For every Euro the Irish reduced government spending by, several times that amount was sliced off their aggregate demand, which led to the economy rapidly contracting so that tax take fell sharply whilst unemployment rose, driving up government spending.

Result – THE IRISH DEFICIT WENT UP – NOT DOWN!

The UK deficit today is completely different from the very similar sized one that Ken Clarke left for the last government to deal with.

Firstly a large part of the debt was to bail out the banks, not ordinary government public spending per se at all.

Secondly the UK now has an asset approaching £100 Bn in publicly held shares/loans to the banks to set against the deficit.

So would you asssess the credit worthiness of an individual, a company or a nation by only looking at the liabilities without even considering its assets? You’d be an idiot if you did – but that’s precisely what those who only go on about the DEFICIT are doing when they ignore the bank holding ASSET.

The substance of the criticism of the level and speed of the spending cuts is that the deficit arose from the credit crisis and was not caused by domestic economic factors at all and just as you wouldn’t try and pay off a new mortgage in four years by starving your family to do it, we should recognise that over time the UK holding in the banks can be unravelled and the money used to pay off a large part of the debt – an option not available to Gordon Brown when he came into office faced with the same level of debt then as now.

For George Osborne’s policy to work the economy must perform a miracle that no other economy in the developed world has ever achieved EVEN IN PERIODS OF STRONG WORLD GROWTH.

+2m new private sector jobs
Exports must rise by a third
$400 Bn+ new investment in manufacturing capacity

If these figures are not acheived the UK will follow Eire into the spiral of cuts, rising public deficit and personal debt levels which we will not be able on our own to escape from.

What does that mean for you & me?

House prices collapse to less than half what they are now.

Interest rates hit 10%+

Petrol is over £5 a litre – so is a loaf of bread.

Unemployment passes the 5,000,000 level and goes on rising.

Sterling falls to parity with the Euro – and goes on falling.

So before you blindly support the current economic policy, pause and think about the RISK that is being taken and the LONG ODDS of it succeeding.

Even if you blame the last government for everything, are you seriously prepared to give the coalition a blank cheque to take this sort of gamble with your family’s future?

 

Not sure about his predictions but his clear view of the facts is nice to see. The bank ownership really is a huge asset to us that sets us apart from the PIIGS and should serve as a counter to the ‘blah blah deficit MUST CUT MUST CUT’ Thatcherite BULLSHIT spewing from Tory mouths.

Advertisement