Jump to content
House Price Crash Forum
interestrateripoff

David Blanchflower: Spending Cuts Could Lead To Recession

Recommended Posts

http://www.guardian.co.uk/business/2010/oct/18/david-blanchflower-warns-against-spending-cuts

Former Bank of England policymaker David Blanchflower today warned that the UK economy is in "desperate danger" of slipping back into recession and the government's planned spending cuts will make matters worse.

His comments, which come two days before the government sets out £80bn of spending cuts, are at odds with the views of 35 business leaders, including Marks & Spencer chairman Sir Stuart Rose and BT boss Ian Livingston, who have written an open letter in today's Daily Telegraph to express support for George Osborne's cuts. They say there is "no reason to believe" the chancellor's plan to eliminate the structural deficit within four years will undermine the economic recovery.

The 35 also warn that Labour's plan to spread deficit reduction over more than one parliament would leave the UK almost £100bn deeper in debt by 2014/15 and increase the risk of interest rate hikes.

Blanchflower rejected this analysis, saying the business leaders "are not economists. It's a terrible, terrible mistake. The sensible thing to do is to spread [the cuts] over a long time".

He has repeatedly described the public spending cuts as the "greatest macro-economic mistake in a century".

"Clearly you have to deal with the deficit, but there is no economics that says you have to deal with it in a week or a month," Blanchflower said on Bloomberg Television. "You have to be mindful of the data and if the data turns down, which it has, you have to adapt."

He added: "The last thing you do in a recession is make things worse."

Apparently allowing a dangerous over expansion of debt during boom isn't an issue.

So spread the cuts over a long long period of time and keep on building up the debt eh Danny? As far as I'm aware the coalition is proposing to deal with the deficit in a week are they, have I missed that memo?

Share this post


Link to post
Share on other sites

http://www.telegraph.co.uk/finance/economics/8069686/Nobel-economics-winner-Christopher-Pissarides-warns-deep-welfare-cuts-risk-spiralling-poverty.html

The Government has already said it is scrapping universal child benefit and is expected to outline further welfare cuts in Wednesday's comprehensive spending review (CSR).

Britain's social housing sector is set for "radical" reforms which could include the end to the right to a council house for life, while £1bn will be saved by cutting the number of people receiving disability living allowance, The Sunday Telegraph reported.

Professor Pissarides warned that he would be "very concerned" if social benefits are targeted in the CSR.

"The risk is essentially that people will sink into poverty," he said. "When people get into poverty, they get disillusioned with their engagement in the labour force, they face longer periods of unemployment and it becomes much harder to get them back into the workforce."

Professor Pissarides, who specialises in the theories of labour markets and policies at the London School of Economics, advised the Government against cutting broader social benefits such as jobseeker's allowance and housing benefit.

"Because the bill is very big, it looks very tempting to go and cut them, but I would be very concerned to see that happen in a recession," he said.

Another eminent Professor who clearly gets the basics of economics.

So having the taxpayer overpaying housing benefit is beneficial for the wider economy?

So areas with high levels of poverty don't have structural weaknesses then? If we simply give them more benefits these areas will recover economically then?

Share this post


Link to post
Share on other sites

I have an inkling Blanchflower may be proposing a viable solution.

We have a window of opportunity to devalue our currencies and economies while capital still has no better home to flee to.

When growth can be found somewhere in the world the devil will take the hindmost for those economies not playing "ball". Currently, we are all neck and neck but with different trajectories.

Leveling the playing field while we can still dictate events - might be the best option.

Share this post


Link to post
Share on other sites

I have an inkling Blanchflower may be proposing a viable solution.

We have a window of opportunity to devalue our currencies and economies while capital still has no better home to flee to.

When growth can be found somewhere in the world the devil will take the hindmost for those economies not playing "ball". Currently, we are all neck and neck but with different trajectories.

Leveling the playing field while we can still dictate events - might be the best option.

One problem with that is that if the UK devalues now money will flow to less worse currencies, never mind about growing economies. In the world of the blind the one eyed currency is king. As a Yen bug I'm quite happy with this of course...

Seems to me that they're going to throw the kitchen sink (massive cuts + QE) but it won't help if this is....what's the term....a secular change?

Share this post


Link to post
Share on other sites

He has repeatedly described the public spending cuts as the "greatest macro-economic mistake in a century".

Trying to camouflage the greatest macro elephant-in-the-room of all time being the out of control housing boom currently robo stamping its way all over the US.

Share this post


Link to post
Share on other sites

He added: "The last thing you do in a recession is make things worse."

Of course Gordos scorched earth pre-election spend spend spend policy when the UK had entered recession made things far far better for everyone especially youngsters trying to buy a house :rolleyes:

Share this post


Link to post
Share on other sites

Blanchflower seems a bit behind the times to me.

I thought even Bernanke realises that excessive defecit spending is over and printy printy is the solution. Buy up the bonds keep yields low but not have the Govt creating even more debt to exacerbate the situation..

Midterm elections in the US looming means possible tea party stalemate in congress and Obummer as an even bigger lame duck than he has been.

Blanchflower is a bubble blowing socialist and a turkey determined not to vote for christmas.

Share this post


Link to post
Share on other sites

Of course Gordos scorched earth pre-election spend spend spend policy when the UK had entered recession made things far far better for everyone especially youngsters trying to buy a house :rolleyes:

...Blanchflower was appointed by Brown.....and of course trying to 'put it right' as far as Gordo was concerned made everything worse .....time to let the new team have a go....and clear Blanchflower out of the media way ....he is another big yawwwwn...... :rolleyes:

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 149 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.