Rolling UK Economy Into The Shitbin Thread

was about to say 'who dat?' but then read 'confidence fairy'

and knew

Anyone else cynical enough to think Osborne is happy to have austerity now and a few green shoots before the election followed by a campaign that says Labour got us into the mire and can't be trusted to maintain the "recovery"? It's worked for the Tories before. It's not about what's best for the economy, it's about getting your timing right.

Osborne long term plan is surely to sell off the bank stakes or some of them and use some of that to pay off debt but also a large chunk to fund tax cuts right before the election. But he'll still be wanting better growth than this regardless - as it is we're teetering on the brink of another recession and that'll be disastrous for them. Assuming Labour can actually string together a narrative that sticks on this, which is a huge huge 'if'.

this'll sound student-y, but i think the crisis is so vast that the 'solution' (aka means of muddling through) has to be more than even the labour party of ed balls can offer. i don't think we're going to see really 'green shoots' at any time -- house price inflation, sure -- and much as i loved the last ~15 years, i don't think another round of what we had will see us through.

hollow laugh: george osborne is coming home from his hols early to... do whatever the fuck he does

so has ed milliband actually said anything about this yet?

ha, wrong thread, but i guess it works here too.

awaiting policy review iirc

there are a few 'i agree' kinda things on his twitter account. really feel like he could seem sorta persuasive if he said like, thoughtful things he probably thinks, but he seems a bit trapped in trying to sound like a guy who is able to say the right boilerplate politician things, for the most part, as a demonstration of his grown-up real-and-viable politician skills. like banal 'my heart is with the people of _____' platitudes.

https://si0.twimg.com/profile_images/135126819/404-fffuuu_bigger.png

https://www.youtube.com/watch?v=aC19fEqR5bA&feature=player_embedded

.

the good people of twitter are coming around to the opinion that it's a Yes Men stunt?

have been trying to find mention of 'alessio rastani' on the interwhat prior to april 2010 (that's quite a long game!) but it's rendered surprisingly hard by automated news tickers/rss type things - google brings up pages ostensibly from 2007 but with recent headlines etc on 'em.

that would be so awesome.

i can't decide whether it would or not! if it's a stunt, then wouldn't it be easier for people to ignore?

i am pretty bad at faces but it didn't seem to me that this was the same man as the Bhopal disaster interview, this one is so much younger.

Yeah, reading the Yes Men theories now as well. Soz about that.

Still, I wonder what percentage of people who saw it were disgusted v the percentage of people who went to look up "how to make money in a downmarket"

if it's a stunt, then wouldn't it be easier for people to ignore?

it's gotten through to enough people already to have made a difference i think.

His advice to protect your assets as best you can is very good advice right now.

The great majority of ilxors have few or no assets other than their skills and abilities. Sadly, in a cash famine and deflationary spiral (which is what this guy is obv predicting) there is no good way to protect those assets, since they must be converted to cash to become negotiable. Therefore, the best strategy would be to reduce debt, save as much as you can from your present earnings, and keep your powder dry. Also, evaluate your skill set and try to strengthen it by adding as many valuable skills as you can.

So the dude is kind of a fraud, but not a hoaxer.

"Not only are we going to be in debt to the bank, we're also in debt to our parents... we're probably never going to afford to get married, and god forbid we ever decide to have a child. I've worked my arѕe off, (so) how the hell has this happened?"

http://uk.reuters.com/article/2012/01/05/uk-housing-analysis-idUKTRE8040EK20120105

speaking of houses the benefit cap comes into effect this week i think?

"Not only are we going to be in debt to the bank, we're also in debt to our parents... we're probably never going to afford to get married, and god forbid we ever decide to have a child. I've worked my arѕe off, (so) how the hell has this happened?"

i've had a few and it's late here so i'm not pumped to get into it but it seems to me that this kind of argument, which you hear a lot re: the recession/economic climate/decline of the West/whatevs is loaded with entitlement and ahistoricity and point-missing and it doesn't pull at the heart or brain-strings as to why we're at the evil end of an evil age

they're using the word ARSE in a reuters article next thing it will be big bottom this and blood sausage that all over the newsy wewsies

nv otm, difference being i'm sober

i feel bad for the dude if he can't afford to get married tho, it's only 60 quid

yah god forbid those feebs ever have kids

housing is a universal right oh and also a maketable good oh and also yr pension kthxbye

UK/Irish govts, 1993-2007

yeah the demise of the benevolent blair govt really saw told to that

Britons' love affair with housing on rocks

big improvement on previous gov's love affair with housing on sand

i can't even look at that 2nd rate brian connelly who played blair tbh, let alone think about the baldingrinning prickdemon himself

I was thinking about this in relation to the divide-and-rule talk that's being going on this week. The anger felt by people who are in that situation is entirely justified but seems to be increasingly turned against those propped up by child support and housing benefit, rather than those responsible for the root causes of why couples earning 60k between them don't feel like they can afford homes and families. There's a well of legitimate outrage building up - i'm not sure how it can be harnessed to point in the right direction at the moment.

tbf it can be both

FT blazing all guns

Cameron is consigning the UK to stagnation

By Martin Wolf
Can it make sense for policy makers to stick with their policies, regardless of adverse changes in circumstances and outcomes? David Cameron thinks not. In a speech earlier this week, Britain’s prime minister advises the eurozone to change its monetary policies and fiscal institutions. But what does he think about the policies his government is following at home? On that he is not for turning. The policies decided when the coalition came into office two years ago are, he insists, also correct now.

The world, eurozone and UK economies are in a far worse state than expected. Yet Mr Cameron insists that “we are moving in the right direction”. Who is this “we”? UK gross domestic product is stuck at 4 per cent below its pre-crisis peak in what is the longest such slump since the 19th century, with no end in sight. Even if one believes that part of the pre-crisis output was an illusion, why should one accept that the UK economy has lost the capacity to grow altogether? How can Mr Cameron believe the economy is moving in the right direction when it is not moving?

The reason Mr Cameron believes this is because he is fixated not with the dire economic performance, but with the public sector’s balance sheet – and not even the whole balance sheet, but with its liabilities. “We cannot blow the budget on more spending and more debt,” he says.

Yet if not now, when? As Jonathan Portes, director of the National Institute of Economic and Social Research, argues in a recent blog post: “With long-term government borrowing as cheap as in living memory, with unemployed workers and plenty of spare capacity, and with the UK suffering from both creaking infrastructure and a chronic lack of housing supply, now is the time for government to borrow and invest. This is not just basic macro-economics, it is common sense.”

With real interest rates close to zero – yes, zero – it is impossible to believe that the government cannot find investments to make itself, or investments it can make with the private sector, or private investments whose tail risks it can insure that do not earn more than the real cost of funds. If that were not true, the UK would be finished. Not only the economy, but the government itself is virtually certain to be better off if it undertook such investments and if it were to do its accounting in a rational way. No sane institution analyses its decisions on the basis of cash flows, annual borrowings and its debt stock. Yet government is the longest-lived agent in the economy. This does not even deserve the label primitive. It is simply ridiculous.

The results, however, are not at all ridiculous. They are extremely costly to both the economy and society. Yet, instead of taking advantage of the opportunity of a lifetime to repair and upgrade the capital stock, as Mr Portes notes: “Public sector net investment – spending on building roads, schools and hospitals – has been cut by about half over the past three years, and will be cut even further over the next two.”

He recommends a £30bn investment programme (about 2 per cent of GDP). I would go for far more. Note that the impact on the government’s debt stock would be trivial even if it brought no longer-term gains. Indeed, it would be modest at many times this level.

It is a scandal that in an exceptionally severe downturn, the Treasury, in its majestic unwisdom, slashed its investment so deeply. Penny wise, pound-foolish does not come close to it. As Brad de Long of Berkeley and Larry Summers of Harvard argue in a paper that I have commented on in the Wolf Exchange blog, with a positive impact on output and modest “hysteresis” effects (permanent costs from high unemployment and low activity), extra spending can pay for itself.

Why is the government determined to stick to its plans even though the weak economy has led to far higher borrowing than originally expected? The answer is that it is terrified of what Warren Buffett calls “Mr Market”. It believes that if it raised investment and supported demand, the market for its bonds would not just fall – as one must hope it would, once recovery came – but collapse. Yet a country with huge private sector financial surpluses, a floating exchange rate and an independent central bank is most unlikely to experience the runs it fears, as I have recently argued in the Wolf Exchange. The eurozone is simply a different case. It is more likely that the bond markets would collapse if the economy did not recover and so huge deficits continued indefinitely.

In its fear of the spectre of a bond price collapse, the government is consigning the UK to stagnation. It is refusing to take advantage of the borrowing opportunities of a lifetime. It is unwilling to contemplate even a clearly time-limited fiscal boost out of fear that the gilt markets would promptly panic. It is determined to persist with its course, regardless of the unexpectedly adverse changes in the external environment. The result is likely to be a permanent reduction in the output of the UK, not to mention permanent damage to a whole generation of the unemployed. I have words for such behaviour. Not on this list is the word “sensible”.
- http://www.ft.com/cms/s/0/5853d1c0-9ea9-11e1-9cc8-00144feabdc0.html

GDP fell by 0.7% in the last quarter, much worse than expected.

so psyched for the next Tory government

uk gilts now at an all-time low of 0.04%, so this massive deficit that we absolutely must cut down as soon as possible could in fact be largely refinanced into an interest-free loan.

But, yes, let's stop everything until we've paid back all the 0% money. This is like somebody not buying food until they've paid off their entire student loan as fast as possible. It's just financially illiterate.

(i mean, okay that's the 2yr, but even the 10yr is sitting at 1.4%, compared to 5% at the time of the bailout)

Cameron refusing to budge. Won't the Lib Dems just revolt?

Of course they won't. Revolt = electoral oblivion.

surely that'll happen either way?

We're all going to die either way, doesn't mean don't want to put it off for as long as possible.

Now taking us longer to get out of this than it did the great depression:
http://www.zerohedge.com/news/forget-double-dip-uk-now-depression

here we go http://www.bbc.co.uk/news/business-19174649

this cyprus thing is bananas

http://www.economist.com/blogs/schumpeter/2013/03/cyprus-bail-out

Whatever the rationale, it is a mistake for three reasons. The first error is to reawaken contagion risk elsewhere in the euro zone. Depositors have come through the financial crisis largely unscathed. Now they have been bailed in, some of them in breach of an explicit promise that they can be sure of getting their money back even if a bank goes belly-up.

Euro-zone leaders will spin the deal as reflecting the unique circumstances surrounding Cyprus, just as they did the Greek debt restructuring last year. But if you were a depositor in a peripheral country that looked like it needed more money from the euro zone, what would your calculation be? That you would never be treated like the people in Cyprus, or that a precedent had been set which reflected the consistent demands of creditor countries for burden-sharing? The chances of big, destabilising movements of money (into cash, if not into other banks) have just shot up.

The second error is one of equity. There is an argument to be made over the principles of bailing in uninsured depositors. And there is a case for hitting everyone in Cypriot banks before any taxpayer in another country. But there is no moral imperative for whacking Cypriot widows and leaving senior bank bondholders untouched, as appears to be the case here; or not imposing any losses on sovereign-debt investors in Cyprus; or protecting depositors in the Greek operations of Cypriot banks, as has also happened. The euro zone may cloak this bail-out in the language of fairness but it is a highly selective treatment. Indeed, the euro zone’s insistence that this is a one-off makes that perfectly plain: with enough foreigners at risk and a small enough country to push around, you get an outcome like Cyprus. (That is one reason why people are now wondering about the implications of this deal for little Latvia, also home to lots of Russian money and itself due to join the euro zone in 2014.)

The final error is strategic. The Cypriot deal has no coherence in the larger context. The euro crisis has been in abeyance for a few months, thanks largely to the readiness of the European Central Bank to intervene to help struggling countries. The ECB’s price for helping countries is to insist they go into a bail-out programme. The political price of going into a programme has just gone up, so the ECB’s safety net looks a little thinner.

is there a better thread for this?

I started this one but nobody posted to it: The Eurozone Crisis Thread

thanking you i will post there

You've never had it so bad