Wednesday, Feb 25, 2009
Let's use CPI on the way up, RPI on the way down
Telegraph: UK needs 'shovel-ready' jobs, says Blanchflower
The UK should spend £90bn on 750,000 new "shovel-ready" jobs to stop the unemployment rate rising to 10%, according to Bank of England policy maker David Blanchflower.
Professor Blanchflower also questioned whether the benchmark CPI index was the right tool for the MPC to measure inflation, because it does not take house prices into account. He suggested that including house prices could have helped the MPC to justify rate cuts sooner, amid growing evidence that the economy is facing the worst downturn for many decades.
Posted by little professor @ 08:41 PM (1053 views) Add Comment
21 Comments
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1. shipbuilder said...
"Professor Blanchflower also questioned whether the benchmark CPI index was the right tool for the MPC to measure inflation, because it does not take house prices into account. He suggested that including house prices could have helped the MPC to justify rate cuts sooner, amid growing evidence that the economy is facing the worst downturn for many decades."
These people are just taking the p*ss out of us.
2. little professor said...
Yeah, it's just blatant. None of these tossers wanted to use RPI while house prices were soaring - that would have meant the BoE would have had to raise rates to restrain the bubble. Now that house prices are falling they want to move the goalposts
3. mark wadsworth said...
LP, it's worse than that
Circa 2003 they switched from RPI to CPI so that they could ignore house price rises
A year or two ago when inflation was a threat but house prices had started dropping, they mumbled about going back to RPI
Now that apparently deflation is a threat, their preferred measure is CPI again
i.e. they will choose whichever one is in that reassuring band between 1% and 4%.
4. paul said...
Dear oh dear. Shovel him back off to the US. Quickly.
5. plato said...
Want to include house prices!
Well of course they do when they're reducing. This would keep all index linked payments down and saves them a packet at the expense of peoples' already descending standard of living. They just won't stop their hypocrisy, will they?
'shovel-ready jobs'..........Would that be to clear up the bulls*** they keep coming out with.
6. flintster1994 said...
Plato,
"'shovel-ready jobs'..........Would that be to clear up the bulls*** they keep coming out with."
That was good!
7. plato said...
Pleasure......... their terminology inspires such comment.
8. alan said...
How can these people inspire trust when they resort to comments like the one above?
It's no different with Nu Labour. Darling & the Treasury seem to be firing off initiatives each day, Mandy is doing likewise. It may give (via the BBC) the impression lots is happening, but as most voters know, it's just spin. Jobs are folding on a daily basis!
Good comment, plato.
9. flintster1994 said...
L&G has just announced 450 jobs to go. Might seem small but this company has been through it all and has always survived unscathed. Their share price has been taking a battering also. One to watch.
10. inflation is eating my savings said...
At risk of hoots of derision, I will defend DBs corner- although as a VI in HPC, my gut instincts are with the rest of you.
I think most of had a fairly strong feeling that something was amiss when the bubble got its 2nd wind in late 2005. Professor B also noted this I am sure. It is often said (I have no idea if this is a meaningful rumour or not) that interest rates need a year or so to fully kick in. So all he was really pushing for was prophylactic intervention, knowing full well that everything was about to go t1ts up. So although we hated him for advocating a policy that worked against us, he was probably just doing what he thought was best to try and make the coming recession as gentle as possible. Regarding the ethics of tinkering with measures of inflation, I hope it comes down to Bentham. It probably does much of the time, but this isn't always going to suit us.
Anyway, I'm sick of my operating name- seems a bit out of place now that deflation is ripping at the target of my savings. Is there a way to change it?
11. hpwatcher said...
This ''Blanchflower'' idiot is one of the guilty men......
12. flintster1994 said...
inflation is eating my savings said...
Don't be too premature with regards to changing your name,
13. Shindigger said...
So if as most people say they pick the most suitable measure depending on the circumstances (which i do not doubt) whats their ultimate game? Whats the objective? Are they truly this unhinged and blinded? Whats pushing them higher up the tree? Why are they still grasping the guy rope on the balloon as it sails higher and higher? It wont work politically thats for sure.
The tabloids have already clocked (it takes a while) that the tax payers money we are bailing with, is the money that they will try to lend back to us, so gradually the edifice is crumbling.
They wont be able to carry this much longer. Do they want a riot? Maybe they do. FSA anyone?
Or do they know something about mankind that we dont??
I just cant see how ANY human being (even a politician) can believe what we are being fed.
Their apparent ignorance is as baffling as it is terrifying.
14. plato said...
flintster............
Change it to : 'gordon is eating my savings'.............You can't go wrong!
15. plato said...
Whoops didn't mean flintster.......Forgive me!
16. inflation is eating my savings said...
flinster
I don't think (I don't actually know but,,,) that inflation is going to rip a hole in our house buying potential in the near term.
Like most here, I am watching for a change in the weather. But is there really the mood at the moment to blow another bubble?
I don't understand such things, but bailouts are filling a very big hole rather than blowing up another bubble.
These things do not historically turn on sixpences- they turn on wars.
17. who stole my pension? said...
I think it is corruption. All FSA, bankers, MP's etc should be made to declare what property they own. They are just ramping to save there own necks. They don't care about the poor tax payer who is left to clean up the mess.
18. dohousescrashinthewoods said...
I was really touched by the humanity in Gordon Brown's condolences to David Cameron.
If politics was done with humanity, we would be so much better off in the long run.
I intentionally do not distinguish Danny "Drivel" Blanchflower's utterance from the inhumane brand of politics.
19. Crunchy said...
1. shipbuilder 16. who stole my pension?
Spot on. The creaters and selfish protecters of bubbles. No more boom and bust my arsenal.
Taking the pee? For sure, and in so many other area's also.
20. Lucas said...
True, if house prices were not droped from the inflation target, then the bubble and along with massive debt that drove it would have been better controlled. But lets not blame the BOE, it was Brown who changed the inflation target and so the fault lies with him and his government.
21. layers said...
What do we actually know about the 'good' professor? Through his deeds his agenda appears to be clear - another f###g talking head for the govt. And please tell me Prof.how would lowering IRs earlier have helped when the spigot of 'money' was turned off and the banks were already insolvent? As the MPC you should have been raisinf rates around 2002-2003 to stop the bubble. But then again you treat us like morons.
Idiot.
Anyone know what other quangos this joker sits on or if has political connections here or the us?