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The Eagle

Osborne's First Budget? It's Wrong, Wrong, Wrong!

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Does he make sense to you?

Professor Joseph Stiglitz, who has been described as the biggest brain in economics, is distinctly unimpressed by George Osborne's strategy. This, he predicts, will make Britain's recovery from recession longer, slower and harder than it needs to be. The rise in VAT could even tip us into a double-dip recession.

[...]

So what should we be doing? "The lesson is not that you cut back spending, but that you redirect it. You cut out the war in Afghanistan. You cut a couple of hundred billion dollars of wasteful military expenditure. You cut out oil subsidies. There's a long list of things we can cut. But you increase spending in other areas, such as research and development, infrastructure, education" – areas where government can get a good return on the investment of public money. "I haven't done the calculation for Britain, but, for the US, all you need is a return on government investment of 5 to 6 per cent and the long-term deficit debt is lowered."

Taxes also need to be restructured. Osborne has increased capital gains tax for high earners from 18 to 28 per cent. "There's absolutely no reason why you couldn't tax speculative gains [from rising house or land prices] by 40 per cent. There's no social return on it and land is going to be there whether people have speculated or not. But you lower the tax on investment in things like R&D."

Full article here:

http://www.independent.co.uk/news/uk/politics/osbornes-first-budget-its-wrong-wrong-wrong-2011501.html

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He's not a politician. He and his ilk can plan for the next decade or more.

In the UK, the govt have 5 years max (4 in the USA), and less than that practically if they want to be re-elected. Short-sighted? They have to be.

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i think its all talk...

it might be talk but the UK is alone on this one. Very few leading figures agree with osbourne but time will tell. If in a year we are still in a recession then we are in big trouble. In fact we will then be in the position as Greece is now. In fact we might be the only country still in negative numbers.

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i think its all talk...

OK; Question: WHERE does the "money" come from?? IF the UK is in massive debt - WHERE does the "money" come from??? I really want to know!! :rolleyes:

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it might be talk but the UK is alone on this one. Very few leading figures agree with osbourne but time will tell. If in a year we are still in a recession then we are in big trouble. In fact we will then be in the position as Greece is now. In fact we might be the only country still in negative numbers.

and if the whole world is back in recession, you might realise the stupidity of the idea that a depression is avoidable, all a recession depression is is a rebalancing of the economy, it is the natural cure to malinvestment, the quicker it is accepted the quicker things can be rebalanced and the cquicker it can be ended. Try to avoid it with more of the malinvestment that caused it (like trying to save banks, price fix property markets, increase the unproductivity of the state to support the former and you are just making it deeper and deeper, if your muppet chancellor Brown and Greenspan hadnt been such fckwits and tried to stop it after the tech boom, this whole thing could have been over by now with imeasurably less pain and poverty

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and if the whole world is back in recession, you might realise the stupidity of the idea that a depression is avoidable, all a recession depression is is a rebalancing of the economy, it is the natural cure to malinvestment, the quicker it is accepted the quicker things can be rebalanced and the cquicker it can be ended. Try to avoid it with more of the malinvestment that caused it (like trying to save banks, price fix property markets, increase the unproductivity of the state to support the former and you are just making it deeper and deeper, if your muppet chancellor Brown and Greenspan hadnt been such fckwits and tried to stop it after the tech boom, this whole thing could have been over by now with imeasurably less pain and poverty

but keynes says government intervention is essential to prevent depressions. Just borrow more and up the stimulus until we are into another raging boom.

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but keynes says government intervention is essential to prevent depressions. Just borrow more and up the stimulus until we are into another raging boom.

no i am sure he doesnt , im sure he talks about spending surpluses to take the rough edges off the recession, if you havent got one you cant be following Keynes

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OK; Question: WHERE does the "money" come from?? IF the UK is in massive debt - WHERE does the "money" come from??? I really want to know!! :rolleyes:

He said Afghanistan, $100s of billions of military expediture and oil subsidies (not sure if he's talking in the context of the USA here).

I guess that in the UK context, that might be cutting Afghanistan, Trident and some of our planned big ticket military hardware?

Scrap the Olympics? B)

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it might be talk but the UK is alone on this one. Very few leading figures agree with osbourne but time will tell. If in a year we are still in a recession then we are in big trouble. In fact we will then be in the position as Greece is now. In fact we might be the only country still in negative numbers.

I think you'll find the Europeans are playing a similar game.

As far as I can tell, the Americans want to print more money.. but they don't want to be the only ones to do it. Unfortunately they seem to be in the most desperate need as they are the ones closest to tipping back into deflation.

eating_popcorn.gif

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no i am sure he doesnt , im sure he talks about spending surpluses to take the rough edges off the recession, if you havent got one you cant be following Keynes

New Labour flunked their Keynseian driving test, they mistook the gas pedal for the brake :)

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but keynes says government intervention is essential to prevent depressions. Just borrow more and up the stimulus until we are into another raging boom.

Lord Maynard Keynes does not really say this. There is a law of diminishing return on Keynesian stimulus even recognised by Keynes himself. Now, people think it does not matter how much you borrow believing it will always stimulate growth. Wrong! It won't do so now and has little effect at these levels. Where USA 'programs' are ceasing they find there is nothing left standing and no self supporting economy.

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Professor Joseph Stiglitz, who has been described as the biggest brain in economics, is distinctly unimpressed by George Osborne's strategy. This, he predicts, will make Britain's recovery from recession longer, slower and harder than it needs to be. The rise in VAT could even tip us into a double-dip recession.

[...]

So what should we be doing? "The lesson is not that you cut back spending, but that you redirect it. You cut out the war in Afghanistan. You cut a couple of hundred billion dollars of wasteful military expenditure. You cut out oil subsidies. There's a long list of things we can cut. But you increase spending in other areas, such as research and development, infrastructure, education" – areas where government can get a good return on the investment of public money. "I haven't done the calculation for Britain, but, for the US, all you need is a return on government investment of 5 to 6 per cent and the long-term deficit debt is lowered."

Taxes also need to be restructured. Osborne has increased capital gains tax for high earners from 18 to 28 per cent. "There's absolutely no reason why you couldn't tax speculative gains [from rising house or land prices] by 40 per cent. There's no social return on it and land is going to be there whether people have speculated or not. But you lower the tax on investment in things like R&D."

[ /quote]

Yes, profesor Stigltz is a smart guy but 'biggest brain in economics' is probably just spin. I do think increase in VAT is a bad idea but what else can British Government really cut? Cut benefit too much and you get a revolution, cut NHS is not acceptable because Cameron says he will protect NHS at all cost.

I also think taxing income derive from writing/making economic soundbite at 50% is a pretty good idea as those predictions are often wrong and are not socially useful either.

Investment in education yes, but the result will not be obtained for 20 years. The CGT of 28% is without taper relief so inflation related increased is taxed at 28% as well.

Without cut, UK will be running deficit of 12% of GDP and Warren Buffet said that if a country can run deficit of 12% of the GDP indefinitely without consequences, people would have fgtured this out long ago - then we will have unlimited public services at no cos to anybody (yah right!)

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no i am sure he doesnt , im sure he talks about spending surpluses to take the rough edges off the recession, if you havent got one you cant be following Keynes

he's dead dude. He, like, doesn't say sh1t.

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The underlying problem in our economics is that we expect to reap more than we have sown. HPI is an example if how we have relied on a non-productive activity to provide a lifestyle that ordinarily would require a great deal of effort.

At the beginning of the night, we expect far too much and have got away with it so far through fractional reserve banking and convincing the rest of the world we are "good for it" if the debt was ever called upon.

As far as Osborne's 1st budget goes--it's a wait and see . His biggest failure, IMO, was not tackling the parasitic house market by discouraging speculation in property. He should have applied CGT at the full rate of IT against any profits in property and maintained the lower rate for those who invest in productive enterprises.

Our addiction to HPI will destroy us in the end.

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Does he make sense to you?

Not at all.

He talks of investment. Politician directed 'investment' within a system riven with the gaming of it by the civil service and public sector to get preferred results has caused atrocious results in the UK. We have already had lots of 'investment' in public services thank you very much.

At the simplest level the State needs to ensure the services the State looks after are working. It is not. We are staring an energy gap in the face because the Government postponed making decisions about power stations and now seems hellbent on making them uneconomical. Schools are juggling parenting responsibilities, climate brainwashing *and* trying to teach children the basics. The wellfare system has pissed away billions on feckless people and instead should be returned to it's roots as a safety net. It is a trap. More money is not the answer. The State needs shrinking. Return schools to teaching normal subjects and put parenting responsibilities back onto parents. Stop propping up speculative investments in property with housing benefit. Stop subsidising corporate wages with tax credits. The country has gone welfare and subsidy mad through the last Government's innate desire to meddle.(I'm not expecting this one to be much different tbh. Unless the have genuinely radical ideas up their sleeves for the comprehensive spending review)

As for the threat of a double dip recession Stilgitz seems wedded to the idea that growth is automatically a sign of success (it is not as the UK has shown.) and a recession is bad. Tightening belts is neccessary after such gluttony of the last 15 years. Many parts of the British economy has grown fat on debt spending. Inefficiencies have been maintained that allowing tighter economic circumstances 5 or 6 years ago (rather than spending even more debt) would have been forced out of the economy but the political brains could not allow it. The banking sector would have sorted itself out sooner and for a smaller cost. It is often said that the problem with Labour is that they always run out of other people's money. I'm not sure that's really the case - it is more that when a recession hits Labour try to spend their way out of it whereas more rational heads are prepared to say 'enough'.

There is nothing wrong with expecting better value for money when money is tight. The problem with economics is that it is either opinion or historical record, there is no 'present' to it.

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Exactly Labour 'implemented' parts of Keynes they liked and ignored the things they did not like - such as saving in times of surplus.

That's one way of looking at it - another would be to tax at a higher level to match spending.

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That's one way of looking at it - another would be to tax at a higher level to match spending.

not really as the poster didnt define whether it should be increased taxes or reduced spending it simply highlighted they didnt run a surplus, there is no other way of looking at that reality

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  • 142 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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