Monday, Jan 12, 2009
Superb
Telegraph: This recession demands that we employ logic and spend our way out of it
Solution going mainstream. Also pretty much echoes my own views, and therefore brilliant. There is a rash of this stuff about at the moment.
Posted by stillthinking @ 01:14 PM (1382 views) Add Comment
20 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. techieman said...
Dont agree Rodge. The keynesian solution is a solution when things are at their worst. At the moment (see other post) you cant encourage more and more people into debt because the trust has gone. Infalte the PSBR? Will that work and produce a multiplier effect? Not this time mate, all thats gonna do in bankrupt the country.
Lassez Faire and then do some fiscal management in bite size chunks (if you must do anything) else its money down the plug hole because the multiplier effect wont. http://en.wikipedia.org/wiki/Multiplier_(economics)
2. hubbers said...
Spend what? There are no jobs and no more silly loans ...
3. it_is_going_with_a_bang said...
Spend our way out of it?
It is like building sand castles when the tide goes out and then trying to find a way to stop the incoming tide from washing it away.
I would think we all learnt as small children that it cannot be prevented.
Just as a recession cannot be prevented. It is the inevitable consequence of a boom sustained with fictious wealth. People are not spending because they are starting to realize that money does infact NOT grow on trees.
4. mark wadsworth said...
If others want to try and spend their way out of the recession with their own money, then feel free to give it a try. I fully intend to remain my usual parsimonious self, if that's OK with you.
5. icarus said...
Increase exports? Of financial services?
6. last_days_of_disco said...
@mark wadsworth
"I fully intend to remain my usual parsimonious self,"
Right down to your skinny little fags...
:-D
7. bellwether said...
Isn't this about how bad the multiplier in reverse will be, if there is an attempt to discourage saving then there will be an ameloration nothing more.
These are not of course long term solutions to the overall problem which is with limited resources the world cannot get ever richer and certainly nor richer together.
Whatever the outcome an extended period of relartive poverty is a done deal. of itself, no bad thing as long as (to echo Wadsworth) it doesn't affect me as much as others. As you can see I'm a christian at heart!
8. Stillthinking said...
techieman, isn't the article suggesting that spending should come from savers and not by increasing debt? i.e. run down unsupported savings. Also, I don't disagree with the fact that the government cannot kick-start a spending spiral as suggested by your link. I do think that the government should borrow though, but for an increase in disposable income through lower taxes.
apart from allowing the defaults what is your solution?
9. stillthinking said...
sheesh. I just posted a post and forgot to put my password in. now its gone.
techieman, I agree with you on the ideas in the link not working. I think government borrowing should be used to cut taxes and increase disposable income, I in no way think that they can kick off a spending spiral. also the idea in the article is for the savers to spend, not get additional borrowers. whether savings/debts go up, or savings/debts go down, who cares? as long as there is some movement.
10. mark wadsworth said...
LDOD, thin ones burn better. When I wnt to Germany (where rolling tobacco is dirt cheap) I was much derided for the thinness thereof, so over the years I became accustomed to rolling them fatter. Then, when I came back to England, I was derided for making them too fat, so now I roll them thinner again.
11. greytornado said...
The solution to the current problem, which will soon make any previous depressions/recessions look like a girl guide Sunday outing is that there is no solution....................................... I'll repeat that, just in case you thought you misheard..................There is no solution. Rather like the bit in the Matrix where Neo is told that the trick is to realize that there is in fact no spoon.....................
12. Safe As A Crash said...
10. greytornado said... Rather like the bit in the Matrix where Neo is told that the trick is to realize that there is in fact no spoon.....................
....or just to see how deep the rabit hole goes....
13. stillthinking said...
The only trick is that there are no savings(that can be spent without inflation). There is an excess of savings/debt, or debt/savings, but in a collapsing economy what will you get? It only looks good(!) now because of a spending strike.
Avante !
14. shipbuilder said...
I'll spend my money on a house when they reach a reasonable level, not before, as I suspect will most on here.
The government can do whatever it wants - houses in NI dropped 30% last year, so 0% interest on savings is trifling. So get to the bottom of the housing market and you'll get my money, not before. Simple.
15. shipbuilder said...
On the article as a whole - don't buy it - spending now just needs to be backed by more later on. The problem is too much capacity to produce, which was built up in the boom years. We do not need the capacity. Reducing it gradually later on, as Bootle suggests, is fantasy - an enforced recession? Rubbish, it'll never happen - spending more is delaying the pain.
Notice how we, the public, are always the ones who must carry the can, though - either through government or as individuals.
Shareholders could take the hit on profits and keep more jobs - will it happen? It's not even suggested.
The suggestion is that we must be the whipping boys, yet they tell us that the country is run for us. Figure that one out.
16. shipbuilder said...
Pardon my third post in a row, but always look at what's NOT said, what's NOT suggested as a solution - anything that requires business to take a hit for the greater good, for example. Never on the agenda. You have to wonder why that is, who this country is run for.
17. stillthinking said...
shipbuilder,
If it were possible for the housing prices to bottom quickly I think that there would be many possibilities for recovery. However, this cannot happen because of the incumbent government needing to admit the ruinous decade, and also the requirement to let the last 6 years of house buyers (mainly young people with kids) know that they got shafted.
I think the main problem with a spending led recovery, which is IMO the only recovery option, is that the UK population as a whole want to buy goods that are not actually made in the UK. So even if we do begin spending so what.
Our problem is that when we spend we collapse domestic demand because we want stuff made somewhere else, from foreigners who also don't want anything we make.
Never worry about a third post !! I sometimes make four or five. I also comment on my own posted news articles because there isn't enough space. The more you can say the better shipbuilder ! Don't hold back. I read it.
18. goweresque said...
Its true that in the depths of a recession the last thing the economy needs is less spending. It is also true that govts must spend more in recessions to counterbalance the falls in private consumption. BUT (and I'd like very big capitals for that BUT) it presupposes that the govt hasn't been spending like a drunken sailor for the entire upswing of the economic cycle. Imagine if you will that GB had continued post 2000 with the same type of spending plans he had from 1997 to 2000 (ie the Tory ones). Govt spending would probably be 10-20% lower than now, National Debt would have been paid down to possibly below 30% of GDP. There would be huge scope for extra borrowing allowing massive tax cuts/public works expenditure that could mitigate the worst of the recession. That is how Keynesianism is supposed to work. Then as the economy recovers you reverse the tax cuts to a normal level and reduce expenditure again. Rinse and repeat.
Unfortunately we have politicians in charge. Taxes seem to go one way only (with occasional election bribes), expenditure ALWAYS goes one way, and there is massive temptation to spend the fruits of the good years before the bad years come back. So any extra expenditure now by the govt to pump prime the economy will NEVER be taken away when the economy recovers. The only way to solve this issue is for politicians to be bound by fixed percentages in terms of their spending plans at various stages of the cycle. And tax rates (as a % of GDP) should have a mean level, with maxima and minima, fixed by statute. Politicians cannot be trusted with the mangement of the economy, which requires a longer term view than the next election, or even two elections.
19. growler said...
The problem with spending via printing money (as we are going to have to do) is that we risk filling the market with so much UK debt, that noone wants to buy it. That will mean there is only tax cuts. When the Government start talking serious tax cuts, then you know they think selling debt is at saturation point.
20. Worried1 said...
Only one way out of this mess. The governement should stop interfering and let things take own course. Too much interference is only prolonging the suffering. Its like trying to save a sinking ship but eventually it will still sink so you may as well let go.
SOLUTION : Except for bailing out the banks....do nothing else. The bust will take its course faster and lead to a faster recovery. SIMPLE.