[Closed] Double dip recession

TandemJeremy - Member
Solo / teamhurtmore - come on chaps -how are your beloved tories going to get us out of this mess?

Solo - nice diversionary attack on labour there - but lets hear how the torys are going to get us out of this mess.

Allow me..

They will get us out of the mess the same way they always do.

1)Drive down wage costs with mass unemployment especially in the public sector which is over paid and largely over staffed.

2)Let Inflation further devalue wages and reduce the debt.

3)Eventually enable the private sector to recover thanks to an increased pool of more hungry workers working for minimum wage.

4)Inflation will enable property values to recover in time, then the whole cycle will start again.

5) With property moving, Industry staggering to its feet and exports moving thanks to the low devalued and infation racked £, consumers will start spending on the next bubble.

Have I missed anything?

Why repeat the question? They will do much the same as they are doing now playing off the monetary/fiscal (sub optimally), FX/inflation (poss better) and IR vs inflation balances (well, but at a cost to those who I have just described). And Balls would probably do the same. And it will take a long time to work.

Wild card - social unrest and Europe.

Why social unrest? Because current spending plans and targets to balance budget will require average tax rates of 40% and real tax rates closer to 60% (including Vat etc) and people may find that hard to swallow on top of austerity.

[i]i have no idea what your on about.[/i]

Then may I perhaps suggest some water wings ?.

Saves you coming across as an aloof and superior intellect...
Oh, wait....
😉

CaptainFlashheart - Member

Insanity: doing the same thing over and over again and expecting different results

See what I did there?

I ain't gonna get any answers from solo or THM or any other of the tory apologists am i - just diversionary attacks 🙂

I ain't gonna get any answers

Then stop typing your inane drivel and repeated questions and shut down your computer.

Please.

[URL= http://gifsoup.com/view/834879/dog-chases-tail.html ][IMG] http://gifsoup.com/imager.php?id=834879&t=o [/IMG][/URL] [URL= http://gifsoup.com/ ]GIFSoup[/URL]

How many answers do you need? Perhaps you are looking for the sugar coated magic pill that will address the structural imbalances engrained in our economy in an instant. Well good luck with the search, but do not hold your breath.

[i]I ain't gonna get any answers from solo or THM or any other of the tory apologists am i - just diversionary attacks[/i] because I am getting too old to understand or to keep pace with ideas that do not sound like my own or fly against the way I want the world to be.

T,FTFY
😉

Why repeat the question THM - hoping for an answer

so your answer is more of the same. Hmmmmmmmm it has not worked yet so more of the same will work in future. Riiiiigght. GDPdown, tax receipts down, unemployment up, inflation up. Debt incresing
its really working 🙄

Insanity: doing the same thing over and over again and expecting different results

I've got a solution

Its radical

Make unemployed people work 30 hours a week doing community focused tasks, being led/supervised by the people who are currently being paid to do the jobs.

like litter picking!

why pay one man to pick letter, when instead you could pay him to supervise five unemployed people doing it.

Will it improve the economy? maybe, maybe not

But more importantly, it will stimulate a respect for hard work and improve the locale's of the people doing the work and their neighbours, and thats an important step to getting the country back on its feet.

Have I missed anything?

sell off profitable bits of nhs, education, police, royal mail .......

I understand unions wanting to fight for the gains they've made. I'm glad the public sector wages improved during labour's time but maybe they went too far. The public sector doesn't make money, it only spends it.

Anyway, don't worry, us designers & manufacturers will save the country by exporting stuff. Apparently.
Now that's it fashionable again 🙄

TJ and others. Dont know if you are familiar with the idea of profit and loss within business?
Basically any company has overheads that are sort of fixed and not linked to sales volume. they then have cost of sales (ie making stuff) that hopefully they can sell for a profit. If you sell enough to cover your fixed costs and your cost of sales then you break even. if you sell more then you make a profit, if you sell too little to cover fixed costs and variable costs then you make a loss.

Now extend this model to a country.
Fixed costs are the costs of society, teachers, bin men, NHS etc etc They dont on their own generate wealth for the country, but they are vital support functions to keep the country functioning.

The variable costs and profit for the country is mainly from private endeavor and the taxes etc paid by these companies and individuals.

So to keep a country solvent you have to ensure that the fixed costs (state) can be afforded by the level of income generated.

Now ok thats simplistic, because if a state worker buys from a private company then it sort of offsets a lot of the effect, but its not sustainable to have a country with huge state because it has to be paid for somehow, and state cant fund state.
Higher taxes can fund MORE state, but the balance between state and private has to be struck and Gordon swung the pendulum to far in the JEESUS WE ARE GONNA BE SKINT direction.

GDP low, flat and below trend (yes, it will flatline for quite a while, so we know what gesticulations to expect for EB), UN up pretty much guaranteed esp in financial services, public sector, young people etc and inflation yes off course (financial repression) one to stimulate growth (weaker FX) and two to erode the debt levels. We are in for a bloody tough time ahead - face it and prepare accordingly.

[i]so your answer is more of the same. Hmmmmmmmm it has not worked yet so more of the same will work in future. Riiiiigght. GDPdown, tax receipts down, unemployment up, inflation up. Debt incresing
its really working[/i]

Yeah, fixing the crap labour cooked up.
Its not like there wasn't an issue before the Cons and Libs got the keys to No 10.
Things were pretty dire.
probably why the country voted the looneys out of No 10.
😉

[i]unemployment up[/i]
Love this.
Anything to do with.... supply and demand, buy any chance.

TJ.
You do understand supply and demand, dont you ?.
Stay with me here....
Lets just suppose, theres more people than there is, jobs.
What do you think will be the outcome ?.

THATS RIGHT !, unemployment.

Phew, I hope you're staying with me here.

So, what do we do with unemploymed TJ ?....

Do we give them a government job ?.... do we, huh ?.
How will that be paid for ?.

If we're all providing services....
Who gets the bill TJ ?.

Cuts are needed.
Just how cuts are being carried out in Scotland, I've no idea.
I thought you lot had it perfect in Scotlandshire, TJ.

Is Scotlandshire in recession TJ ?.

[img] [/img]

😉

I dont think annoyone is saying we dont need cuts its just the economic policy is being driven by ideology (on both sides) not sound economic sense. We need to maintain some spending to stop the economy going to shit and yet still think long term. Privatising education and the nhs whilst keeping VAT high and reducing tax for the rich are ideaological moves which are being sold as economic necessities.

[i]We need to maintain some spending to stop the economy going to shit and yet still think long term[/i]

Unreal.

It was Labour's spending which compounded and sent the economy to the brick out house in the first place.
The rainy day came, and end to boom and bust Brown was already deeply over drawn at the bank.
🙄

Labour spent too much.

What part of that ^^^^^ don't the left understand ?.

Higher taxes can fund MORE state, but the balance between state and private has to be struck and Gordon swung the pendulum to far in the JEESUS WE ARE GONNA BE SKINT direction.

apart from our taxation is significantly below Germany, France, Netherlands, etc etc ( remember that in these countries you pay for your healthcare as well as tax)

Our state spending is also significantly below theirs

So all we get as a possible solution from teh tories is more of the same its going to get worse - welcome to the 1980s again. it worked well thendidn't it?

ah well - I'm off to work shortly. toodlehooo

What part of that ^^^^^ don't the left understand ?.

The part where national debt (as a % of GDP) was significantly lower in early 2008 than in 1997?

Stopping tax cuts might help eh solo?

If cuts are the best method to get out of recession why is Greece in the shit?
Its about balance. Labour got it wrong and now the Tories are too, because both i led by ideology not economics. You cannot cut your way out of a recession, the cuts need to be targetted. Cutting corporation tax accross the board is ideological, cutting it for small business may help.

TJ dont disagree with higher taxes in principle, if they are spent wisely. Happy to pay more personally if it benefits society. Fact is though that gordon did the spending bit, but massivley screwed up on the "lets get value for money with this extra cash" and also messed up on the "lets raise taxes and revenue to fund this".

He ran the country like a working class alcoholic with a winning lottery ticket (except the ticket was lost).

welcome to the 1980s again. it worked well thendidn't it?

Well, yes, it did actually - All that austerity in the early part of the Thatcher years, led to huge, huge gains later on, and lets consider the "purchasing power parity"

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A_A : very interesting points, but when you get down to it how much do you [b]really[/b] think is driven by ideology rather than economic sense? Ok, I am very sceptical about governments' (of any parties) ability to proactively manage economic activity. And yes they abuse their positions, favour their friends, screw up (literally and metaphorically 😉 oh no the image of jabbing John is too much) but when all is said and done, they don't deliberately set out to screw things up. Its a funny muddle of all these things.

Take tax - ok, loads and loads of ho-hah about it, but step back and take some perspective. Economists really struggle to measure elasticity and to work out where the optimum marginal rate of tax is (ie what level maximises the overall tax take). Most put it somewhere in the mid-40%s. Any wonder why the Labour party didn't whack the MRT up to 50% earlier. Probably for the same reason as the Tories. In the end, they want to max tax revenue and their advisors (people like Davies) would have told them the same things. Then you get the usual bit of fun-and-games from Darling pre-election. Lets put it up anyway just before we are booted out because it will be a political nightmare for the Tories when they restore it back to the mid 40%. Worked a treat and how he must be smiling about it (must still be bitter about being hung out to dry during the crisis?). So they all have a bit of short term fun at our expense and then economic realities take over and they start to behave themselves again.

So governments will carry on implementing policies designed to solve the recent past up until new events overtake them (will it be Europe next?). They will then REACT and change course and the cycle will start all over. In the meantime, most of us will battle on to earn an honest crust.

[i]Its about balance. Labour got it wrong and now the Tories are too, because both i led by ideology not economics. You cannot cut your way out of a recession, the cuts need to be targetted. Cutting corporation tax accross the board is ideological, cutting it for small business may help.[/i]

I'm not entirely down with all that.

But I welcome the change of course you have taken there.

All I'll add, if I may.
Is that while we have the advantage of hindsight wrt to NuLabour.
The Cons have still to play out their hand before we can judge their efforts so comprehensively.
They are still WIP, are they not.

A_A : very interesting points, but when you get down to it how much do you really think is driven by ideology rather than economic sense? Ok, I am very sceptical about governments' (of any parties) ability to proactively manage economic activity. And yes they abuse their positions, favour their friends, screw up (literally and metaphorically  oh no the image of jabbing John is too much) but when all is said and done, they don't deliberately set out to screw things up. Its a funny muddle of all these things.

the structural changes to the nhs and education are idealogy dressed up as economics. And yes i do know that knobber blair came up with academies. The rise of private health and education is idealogical.
cutting corporation tax and the top rate of income tax whilst keeping vat high is idealogical.
Refusing to consider an overall rise in income tax burden to try and spread the pain is idealogical.
None of this is to say the last lot got it right.

But I welcome the change of course you have taken there.

wrote the same thing about five pages back actually.

From page five: To be fair to the Tories their approach is always going to take longer to work and Labours would work bettershort term with potential for problems later. Problem is when a bit of a balanced approach is needed we get dogmatic ideal driven economic policy which is **** the whole thing up.

Cannot see how this is a new stance i've taken.

I think the major problem with today's recession was the performance of the construction sector.
Economically, the constuction sector tends to act as a "leading indicator" relative to the overall economy. Usually, the country's overall economic performance will follow a similar pattern to the construction sector, with roughly a six to nine month lag.
Its also interesting that most "debt based" indicators are usually considered to be lagging indicators (6-9 months behind the overall economy). Therefore , in an economic recovery, it would be normal to expect to see the Construction sector improve, then the Overall Economy, then debt levels.

One other key aspect of the construction sector is the way it responds to investment. It's usually accepted that construction investment can be used as a driver for overall economic growth or recovery. If you invest and improve infrastructure, civil engineering, transport and the built environment then you improve the conditions for many other sectors to do business in. It has worked in pretty much every country in the world. Its an easy option for boosting growth, but one weakness of the sector can be its dependance on public investment due to the scale of the potential projects involved.

Although the overall drop today was 0.3%, the construction sector drop was measured at 3% ~ ten times worse. This could be taken as an indicator of what is to come for the overall economy. Or, it could be taken as a mismanagement of the sector and a failure of government policy. However you read it, the news is almost certainly worse than the "double dip" headlines. That's why they're claiming that the figures must be wrong this time. They're not.

edit:

The ONS said output of the production industries decreased by 0.4%, construction decreased by 3%. Output of the services sector, which includes retail, increased by 0.1%, after falling a month earlier.
It added that a fall in government spending had contributed to the particularly large fall in the construction sector.

"The huge cuts to public spending - 25% in public sector housing and 24% in public non-housing and with a further 10% cuts to both anticipated for 2013 - have left a hole too big for other sectors to fill," said Judy Lowe, deputy chairman of industry body CITB-ConstructionSkills, said.
Some have questioned the validity of the ONS's figures, particularly on the construction industry, which has been particularly volatile in recent quarters.
But Joe Grice, chief economic adviser to the ONS, said the construction data was based on a survey of 8,000 companies and had been carefully checked and double checked.

http://www.bbc.co.uk/news/business-17836624

I can't believe this is still going. No wait, yes I can.

The part where national debt (as a % of GDP) was significantly lower in early 2008 than in 1997?

A-A: again interesting to hear you perspective esp on education. But a question, if I may. OK, so the introduction of comprehensive education by Castle was a major idealogical and radical move. Perhaps the abolition of public schools would be the same, albeit unlikely to ever happen. But the rest, isn't it more tinkering around a general trend? There is no wholesale privatisation of education (or healthcare) as nice as the headlines are. Nor is there a re-introduction of grammar/secondary modern (is that right?). Gov's have to manage an education budget and rather like certain PR men and gov advisors may like to overplay their real impact. But in the end, aren't the big decisions more often based on economic realities?

Personally I couldn't give a shit about some basic values that are based on outdated terms of reference.

In my view a lot og Goves changes are dressed up as money saving which is not what its about. His changes are designed to improve the standing of private schools and selective grammar schools and thus are idealogical.

The difference between Coalition and Labour spending plans over the next 5 years amounts to about £40 billion. Government spending is running at about £720billion per year. So that £40 billion amounts to a 1.1% difference in spending plans between Labour and the Coalition. So whoever thinks that things would be any better if Labour were in charge is, to quote a well known poster on here, a "fantasist". The world economy has to de-leverage and its going to take time. If you increase taxes to pay for increased public spending you'll just kill off demand. If you increase borrowing to increase public spending bond yields will rise and mortgages along with them again killing off demand. There's no easy way out of this. Like THM says we're going to be bumping along the bottom for a while so get used to it.

As far as I can tell outside of Crossrail and the Thames Tunnel there's very little major construction projects happening in the UK, and as an architect and therefore amongst the very first to feel both the downturn and (fingers crossed) upturn for those outside London/ south east the news isn't good. There is some movement in residential development appearing but not much else. Margins are down and suicidal fee bidding is causing severe pain and will result in more job losses I think during the next few months. I have been told recently that across the UK as a whole architectural fee income is projected to fall a further 15% over the next 12 months, which coming on top of the 40% drop since the peak is pretty catastrophic. The current thinking of working in the Oil states isn't necessarily panning out too well either due to interesting contractual arrangements with local clients.
As for the answer? God knows.

aP
That's bad news all round.
I'd guess architects see what the rest of construction will see about 6 months later.

building some new council houses- kil 2 birds with one redbrick?

Borrow our way out of recession had pretty much been the labour plan all along. Ass hats.

This is just a 26 v 29 debate using different references isn't it? Round and round with no progress.

Borrow our way out of [s]recession[/s] credit crisis had pretty much been the labour plan all along. Ass hats.

+1

we're truly doomed as a nation of ass hats

I think one aspect that has become clear is that the short term-ism that pervades politics is not conducive to successful economic policy. Is there another way that economic planning can be undertaken outside of government without becoming a body that could literally hold the country to ransom?

I think one aspect that has become clear is that the short term-ism that pervades politics is not conducive to successful economic policy. Is there another way that economic planning can be undertaken outside of government without becoming a body that could literally hold the country to ransom?

Dictatorship.

😉

Is there another way that economic planning can be undertaken outside of government...

I think you'll find that economics is politics in its purest form, so divorcing the two would be problematic.

CaptainFlashheart - Member
Dictatorship.

F*** it, let's do it. At least we wouldn't be lying to ourselves anymore.