You cold also point out hat his response to the crisis was probably better that the current cretins.
Not everyone agrees with you...
Cross-post - yep, IGM would have sympathies with your first few points but MUCH less with the last one. The main difference in my mind was that Brown/Balls were dealt a good hand that they played very badly (cashed our winners/trumps far too early), whereas Osborne/Cameron were dealt a very bad hand (null points) which they are also playing badly. Its a subtle but important difference. The frightening thing is that Balls is a self-confessed Keynesian and while lambasting his party for failing to communicate K economics correctly (his Fabien Society speech), then screwed it up himself in practice! I would merely place O/C in the same class as most of the economic/political elite determining the global policy mix at the moment. They are holding a normal screw driver when a Phillips one is required! Apologies for the mixed metaphors!
THM - as I recall, and I've been wrong before, we we just starting to come out of recession and grow again around the time of the general election (agreed we'll never know if it would have been sustained). Osborne pursued a stated policy of cut to the bone and let European growth create a market we can sell into cheap, missing the facts that a) Europe wasn't growing, and b) by cutting to the bone you can end up pushing up your welfare bill significantly.
Now we have an economic record worse than the depression of the 1930s on our hands.
The google public data miner gives some lovely graphs from the European office of statistics (Eurostat I think) of both deficit and debit, in absolute terms and percentage GDP. You could read them to suggest that the real issue is we allowed ourselves to become too dependent as a nation on the financial sector.
Having spoken to the odd FD who knows Osbourne the suggestion is that he's not fit to run the school tuck shop.
As for the Icelanders, I have sympathy with them but they were complicit in getting themselves into the situation in the first place. And even then he says not introducing austerity measures helped Iceland back into growth.
It's like medieval doctors seeing the bruised and battered patient and saying "I know, let's let some blood". Don't run up further debts, agreed, but do invest where you can. Which belatedly appears to be part of Osbourne's plan B which he keeps claiming he doesn't have - of course the IMF would like him to go further.
Well there is no doubt that Osbourne has made mistakes, but whether these are unique to him is another point since there was little discernable difference between the Labour and Tory plans or between what was happening here and the policies proposed at the time by the IMF.
But what has gone wrong? His Plan A had two main assumptions and a few extras. First that the deficit needed to be cut faster than previously thought due to market pressures and the threat to yields/UK funding costs. Second, that fiscal consolidation would only have a small impact in growth (and some advisors were saying it could be positive ). In addition, they did not expect the European recession to be as deep or as prolonged and they expected private sector job creation to compensate for public sector job losses. On the first assumption, we can never know. On the second, with hindsight the models/he have proven to be wrong. Advisors like the IMF believed that the fiscal multiplier was somewhere in the region of 0.5 whereas it has turned out to be at least double that in the UK and elsewhere. So basically, he probably scored 1.5/4 with the 1 being for the labour market being better-than-expected. If you let him off about the size of the fiscal multiplier then maybe at a push that could be 2/4, but not more!!
There is no doubt that the economic record is bad, but the whole triple dip stuff is frankly a statistical red-herring. Balls is right to bang on about flat-lining - this is a much better analogy, ie bugger all growth albeit not much better for any of us. Good for headline writers though. But we a suffering from a chronic lack of aggregate demand and a debt overhang. Consumers are still de-leveraging (really only starting), and investment is hit by a total lack of confidence and a banking system barely out of intensive care. One of the few bright sparks is the fact that corporate restruturing has taken place and many companies are sitting on reasonable amounts of cash. But, and its a big but, they need a catalyst and confidence for them to put the money to work especially with storm clouds still sitting over our biggest export market. And sadly, Osbourne is not giving them that for sure!
I think we are in something approaching agreement. And yes there is a lot of cash out there uncertain places - I work for a certain Mr Buffet and I've heard he got a postal order at Christmas that he could buy a European country with (problem is which one is worth having - ok Germany but its pricey).
You really work for Berkshire Hathaway? In the UK? That must be interesting. For a deep value investor Europe was a gold mine last year. Banks at 0.2/3x BV now at 0.7/9x!!!
What does "consumers are still de-leveraging" mean?
The man in the street is repaying his debts rather than spending on crap.
I've got something Quantitative that needs easing.
People are still living with high levels of personal debt and are trying to reduce their borrowings (reducing leverage). This is reducing spending on consumer items. UK household debt is still 136% of GDP v 98% in Europe.
Cross post - Mefty put it better!
So I'm not a loser with no savings. I'm just de-leveraging!
THM, my boss's boss's boss's boss is Warren Buffet - which makes me sound far more senior than I actually am. And yes we're doing OK - and we pay tax on our UK earnings in the UK.
You must log in to post.