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Spin Bowler

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About Spin Bowler

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  1. In my opinion you are confusing two things. Surplus and Deficit (do we add or detract from debt this year) and debt. Keynes argument was that we should run surplusses in the good years and deficits in the bad, but that doesn't tell us where debt should be at any point in the cycle. You can follow Keynes counter-cyclical spending ideas with 20% of GDP debt in the bank, 0% debt in the bank or 20% of GDP saved up in a big warchest in the bank. The key is that it's neutral as a % of GDP over the whole cycle. So you don;t have to get to 0% debt for it to work. You can make it work from a 20% debt baseline just as well. This is important as there are other economic reasons why having a smallish but non-zero debt is desirable for governments. Having a small amount of debt is actually more efficient than having no debt because of some of the characteristics of government debt. (priuncipally it's very low price at very low debt levels). I agree with both of these comments. But the requirements to run budget surplus'/deficits counter-cyclically carries no proscriptions about the total amount of debt at any point in the cycle. Only when it goes up, when it goes down, and when it should be the same as the start. And Tamara. Sorry, you are right. GDP was nowhere near as high as I mistakenly said it was. Perhaps we should remove another 0.5% or so from the figures I gave to reflect the debt spending pre 2007. I plugged those lower growth rates (pre-2007 minus the benefit gained from deficit spending in a keynesian model) into my spreadsheet and the new figure for 20-25% debt is now paid back to there in my simple model in 2026 (25.7% govt. debt) or 2027 (18.3% govt. debt) instead.
  2. In my opinion these sums are both too optimistic in some senses and two pessimistic in others. I suspect the total debt will go above £1,000bn before the non-structural parts of the deficit right themselves, and probably also before we get the structural part under control. I'd say it's more likely to be something like £1,300bn by the time the non-structural parts right themselves and the Conlibs eliminate the structural part. (thats the bit where I think you were optimistic). That would be a govt. debt of approx. 80% of GDP. But I think you aren't calculating correctly where we have to get it down to from there. It doesn't have to be 0 debt. 20-25% of GDP in debt is perfectly fine. If we had a debt of only 20% of GDP now and a surplus, who'd be worrying about our govternment debt ? Nobody. If we are at that point the next time there is a bust we'll be sitting very pretty. So to spin a scenario.... Lets say the conlibs/non-structural part stabilises by 2015 at $1,300trn of debt (and we've averaged 2.5% growth up to there). Thats 5 years before unemployment returns to about 4-5% from it's current 7-8%, and would be the biggest recession apart from the great depression by a long way. Probably twice the size/depth of any post-war recession. How long to pay it back to that level ? Well, assuming growth continues at 3% after 2015 and the country saves 66% of the additional tax receipts as "surplus" (spending 1/3rd to lessen austerity) which would be very responsible of them my back of the envelope would have it paid to 23% of GDP by 2025 and we'd also be running a surpluss of £150bn that year. This is without factoring any inflation either. So the sums say. Assuming 5 years for the non-structural part to remove itself and for conlib to remove the structural £70bn, leaving us a £1.3trn deficit. It will be paid down to a reasable 23% of GDP providing they save 66% of tax growth in 10 years. Here's my back of the envelope excel calc. Year GDP Increase Govt. Income Repayments Debt Debt as % of GDP 2010 1451.50 2.5 580.60 -150 850 58.56 2011 1487.79 2.5 595.12 -100 1000 67.21 2012 1524.98 2.5 609.99 -70 1100 72.13 2013 1563.11 2.5 625.24 -70 1170 74.85 2014 1602.18 2.5 640.87 -60 1240 77.39 2015 1642.24 3 656.90 0 1300 79.16 2016 1691.51 3 676.60 13.01 1286.99 76.09 2017 1742.25 3 696.90 26.40 1260.59 72.35 2018 1794.52 3 717.81 40.20 1220.39 68.01 2019 1848.35 3 739.34 54.41 1165.97 63.08 2020 1903.81 3 761.52 69.05 1096.92 57.62 2021 1960.92 3 784.37 84.13 1012.79 51.65 2022 2019.75 3 807.90 99.66 913.13 45.21 2023 2080.34 3 832.14 115.66 797.47 38.33 2024 2142.75 3 857.10 132.13 665.33 31.05 2025 2207.03 3 882.81 149.11 516.23 23.39
  3. I can't possibly reply to all your comments, but... I would say I am assuming that this recession is bigger than all post-war recessions, and all pre-war recessions apart from the great depression itself. I'd say we are somehwere between "the biggest post-war recession" and "the great depression". Thats not the same as saying this is a "normal recession". I am not assuming any shape to the recession, V, W, L, U. All I am pointing out is that the deficit can be divided into two parts. That part that would be in deficit recession or not. That part of it caused by the recession. The first part has to be fixed for national solvency reasons. The second part will fix itself over time, the shape of the recession will determine how long a period of time that is. It could be 3 years, or 5 years, or 10 years or 20 years. Nevertheless, that part will fix itself and the "structural" deficit will not. [p.s. if someone could tell me how to quote several different posters with thier names on the quote that would be helpful] I am not saying the pre-2007 economy was normal. I am saying that the pre-2007 economy included a large deficit on the order of 10% of govt. spending that was unsustainable (the structural deficit). That means it was not normal. I am not even expecting a return to pre-2007 levels of growth (see below). Just a return to some kind of growth perhaps more typical of the modern UK economy (2-3%) than the 2007 period (5%). There will be a return to growth. The things that drive it, productivity gains, technological improvements, increased knowledge are still operative. Eventually sustainable growth at whetever level will return and sort out the non-structural parts of the deficit problem (unemployment, lack of profits and so on). I am not anticipating another debt financed boom. Just a return to "economic normalcy" of the kind that always eventually happens after a bust. Your basic boring 2-3% growth a year that most modern economies have sustained off fundamentals since the industrial revolution and that from current levels, not from pre-2007 levels of GDP.
  4. But a large proportion of that deficit is just temporary. It's no good just looking at the whole of that deficit as a lump. It's all very well to try and scare people with the base figures, but something like 60% of the current deficit is caused by the recession, not any issues of overspending. Basically, the fall in taxes due to layoffs/lower profits and the rise in expenses due to additional social welfare payments in the slump is most of it. The issue with this part of the defecit will sort itself naturally over time as the economy returns to normal, leaving a much smaller persistent problem, the structural deficit, to deal with. There is an issue to be addressed with the structural deficit. But this is far smaller than the "scary" top level figures suggest. I.e. the top level deficit (including non-structural) is currently at about £150-175bn. Of that only £70bn is structural. It's that £70bn that has to be cut, not the whole wodge of £150-175bn. To do this requires cuts on the order of 10% of expenditure, not the 20-25% HPC'ers usually bat around in our chicken little way. Providing that could be cut, we would have a notional £0 deficit after this crisis had passed, that could be gradually grown into a surplus with GDP growth sufficient to pay off some of the debt in time for the next plunge (counter-cyclical keynesianism). Saying we have to cut all £150-175bn to be solvent is just deficit-hawk scare mongering and is likely to be counter-productive to the UK economy as compared to "only" cutting the £70bn or so we really need to cut. Especially as this would be removing a lot of high multiplier market support at exactly the wrong time in the business cycle (i.e. in a pro-cyclical rather than counter-cyclical way). The Conservatives (and Lib Dems) recognise this and are only planning to cut that $70bn by the next election, even if HPC'ers don't and prefer instead to scaremonger with the higher "including slump caused deficits" figure. Hell, even the bond hawks recognise this.
  5. Please point to any part of that post discussing speed camera's saving lives. It's all about fines saving taxes. Personally, I'd also be in favour of that. Here I was just arguing against the seemingly commonly held view that fining people for breaking the law, and raising revenue that way, is "worse" or "more disgusting" than taxing people on earned wages in a compulsory manner. If we are to exclude everything else and just talk such compulsory taxes I agree that taxing the rich more is certainly more morally justifiable than taxing less well off people more.
  6. So then neither Reagan nor Thatcher were real conservatives as they both expanded the state ? The way you define liberalism/conservatism the US hasn't had a conservative president since Hoover, if ever. Reagan, like other republican presidents grew the size of the state in both relative and absolute terms. Year GDP-US $ billion Total Spending -total pct GDP 1981 3126.8 33.64 i 1982 3253.2 36.25 i 1983 3534.6 36.31 i 1984 3930.9 34.44 i 1985 4217.5 35.48 i 1986 4460.1 35.71 i 1987 4736.4 35.09 i 1988 5100.4 34.73 i
  7. ? Why is my view quaint ? I suspect thats shorthand for "I don't want to discuss this as I expected you to say something else". I have been arrested, and charged, for crimes I committed, that I do not personally consider immoral. I have seen family members go to jail, and friends and relatives receive criminal records, for crimes that I consider crimes and others I do not consider real crimes. I am aware the criminal justice system isn't all Rosseain (?) Social Contracts. I am aware it is often unfair and it is often administered unjustly. That doesn't change the fact that if they define rules that everyone is aware of, and then raise neccesary revenue by fining people who break those rules when they did not have to this is (in my opinion) better than if they just forced the same amount out of everyone compulsarily. At least with speeding fines you have the choice. You are in control. Keep to the limit and you will never lose a penny. This has got to be better than a situation where you are not, and you have money taken from you simply for minding your own business and earning it. If they have to raise £100, I'd prefer they did it from fines than from taxes.
  8. No. States can pass illegitimate laws for a whole host of reasons. Even if they are legitimate, I don't think citizens have to obey it without exception. Only that they should obey it or be prepared to accept the consequences if caught. There are lots. Is the law democratic. Is it symmetrical as to inherent characteristics. Is it immoral, in my opinion, to obey the law. Is it moral, in my opinion, to break the law. Do I have a chance to leave the country and reject the government/law Am I prepared to accept the consequences for not obeying it. There are lots of reasons laws may, in my opinion, be illegitimate. What is your point ? All I am saying is that given we have such a law and given the state has to raise revenue then there is nothing inherently wrong in raising it in fines on people who break the law. Indeed, so long as people breaking the law do so completely voluntarily and could easily not break the law and still pursue their lives, doing so is by most measures better than raising it from people using a compulsory levy on things like their income or entrepreneurship. I'd rather the money came from people who chose to engage in an activity knowing there may be a fee than it come from people who have no choice and must be forced to pay irrespective of their choice.
  9. Stay classy there single malt. What I'm saying shouldn't be hard for even the dimmest petrolhead to understand. Regardless of how unsafe/safe speed is with driving, people accept that there is an increase in danger with speed. It may only be marginal, but it's there. The second point where this all started was, these states have to raise revenue/cut costs to pay down debt. Given both those starting points it's hardly uniquely disgusting if they raise that cash from fines for speeding. If they have to raise £100 surely it's better if they say "You can all drive from London to Edinborough for free, but if you go over 70mph and we catch you then there is a £100 fine because that impacts safety" rather than "There is a new tax of £10 on anyone who drives anywhere at any speed". At least you can avoid the first, and if you do not do so there is a sense in which you weighed the costs and the benefits to you of speeding and chose to acccept the cost of a fine if caught for the benefit of the extra speed you desired and felt personally safe driving at. If the alternative is the second, then the first is hardly "utterly disgusting".
  10. Isn't this more of the HPC patented paranoia ? The US hasn't changed it's speed limits since the 70's and only did so then to reduce oil imports (and kept them as they were for the lower death rate it brought). There is no indication the US is going to do any such thing and lowering it below 55 would surely be met with so much outrage as to make it impolitic. As to the crime detection/resolution figures. Aren't they itemised by crime ? So who cares if the "car speeding" detection and resolution figures change, that won't affect the rates anyone looks at. Murder, Assault, Theft and so on. Whatever you feel about arbitary speed limits. If states are going to have them, and they currently do, then what is wrong with raising revenues from people who are willingly breaking the law they are perfectly well informed is in force ? Why is it worse to extract needed revenues from law breakers than it is to extract it from law abiding citizens doing nothing more objectionable than earning their daily crust ? Frankly, if 100% of the states revenues came from punitive fines for lawbreakers and 0% from people who are just trying to earn enough to keep a roof over their head then this country would be a lot better off ! Some people just seem to think they have a god given right to drive dangerously fast and then moan when they are fined for breaking a law they knew perfectly well was in force. I have no sympathy at all. I wish the fines were higher, and my taxes correspondingly lower.
  11. Why is it disgusting ? The state needs the money. No-one is forcing anyone to break the law. I'd rather they raised the money by fining people willingly breaking the law than by taxing law abiding people for the work they do. If anything raising funds in such a way is less disgusting than demanding it out of the pay packets earnt with peoples sweat. I have no sympathy. If you don't want to pay the "Driving so fast it's a danger to other road users tax" then stay under the speed limit. If you still decide to speed, you knew the rules, you pay the penalty if caught and lower my taxes for me.
  12. I think this is a great idea. It provides all the benefits of some stringent cuts, without many of the drawbacks. Why not turn round to various departments and say "Look, we were planning to sack one in four of you but decided all 4 would go on 30 hour weeks instead". You get the same cuts. And if and when one of them says "Sod this for a game of soldiers, I'm quitting for a private sector job" then you get your reduction without redundancy pay and the other 3 can go back to their 40 hours. If PS workers do so then it will also have the advantage that they are gradually siphoned off into the private sector with little pain. We get the 25% cut immediately and they can move over to private sector over a year or so as jobs become available. So rather than dumping 1m people on the dole now what happens is those 1m people gradually move themselves from public to private over the course of a year or two with no shock to the system, and as they do so we have the remaining staff to pick up the slack by just re-increasing their hours. Just what is wrong with this idea ? Could this be done ? Or is there some kind of union/contractual block to this that there isn't to mass redundancies ?
  13. Wow, Thanks for that info Pent Up. Thats real quality info, hopefully that trend will continue. I already have property bee, I'd picked it up from reading the site before. I'm beginning to come round to your view, that the "worst" that can happen (from my perspective) is a flat market and there may well be a fall. It seems like "wait and see" is the prudent option, now I've just got to convince the wife ! Thanks again for sharing that info. I might start keeping such stats for my searches too (currently Chelmsford +5 and Harlow +10). If Damien pokes his head in here...... what are your views, if you are keeping an eye on similar areas ?
  14. I'd be interested in what anyone thought about prices in the South East/Essex/Chelmsford area. I started a thread onthis in the "Regional House Prices" area of the site but got no reply. Everywhere else seems to be going down, but not the South East. Does anyone have any views on whether the falls are likely to move to the South East soon ? Or do you think it will remain (with london) "a region apart" ? Is there anygood reason why it is like this ? Especially, I am thinking, with upcoming Public Secor cuts (lots of those people must live in Essex). Can I ask the more experienced on the site....... do you think the SE will remain different OR start moving with the rest of the country ? I'll be looking to buy over the next few years and have a reasonable 20%-25% deposit if I hold on for a while (especially if there are falls)
  15. Hello, I thought this might happen too. It looks like the government Stamp Duty levels printed above are the old labour levels. Has anyone heard if the Conservatives are going to continue this or not ? Or is this something else that we will only find out about on the 23rd ? It would be very handy for me if they did extend it.
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