Niall Ferguson, Telegraph, 9-10-2005

[RichM]

We're turning Japanese - so Labour could have 30 more years in power - Niall Ferguson

A weird article.

In short, things are nice and stable now so we probably won't need to change government again for some time.

Hmm. He completely ignores the 87 and 89 crashes in the UK, and buys the "large debt, low inflation era" argument completely.

Either - we have settled into a new paradigm of low inflation and large debt after 30 years of "birth pains", or are hideously naive about the dangers of debt. What do you think?

Edited October 9, 2005 by RichM

[mbga9pgf]

We're turning Japanese - so Labour could have 30 more years in power - Niall Ferguson

A weird article.

In short, things are nice and stable now so we probably won't need to change government again for some time.

Hmm. He completely ignores the 87 and 89 crashes in the UK, and buys the "large debt, low inflation era" argument completely.

Either - we have settled into a new paradigm of low inflation and large debt after 30 years of "birth pains", or are hideously naive about the dangers of debt. What do you think?

I personally go for the second option. Reason being, many external factors play with inflation/GDP growth and thus interest rates. The low inflation large debt argument only wins when low IRs can be guaranteed, which by no means they can. No-one can guess what is around the corner, they can only go off what has gone before. With having supposedly 10 years of feeling warm and snuggly about the economy, they are lulled in a false sense of security. Therefore, any individual falling for the "my debt interest repayments will stay the same" are playing a very very dangerous game. At the same time, if you sign any agreement, no matter what happens, in my view it is your moral as well as legal duty to honour it.

[malco]

Niall Ferguson writes:

"Recessions are happening less often and when they do they are not too steep and not too protracted."

And he writes:

"Second, the huge increase in international capital flows mean that it is far easier than it used to be for advanced economies to finance both budget and current account deficits. This year the United Kingdom will run a current account deficit that 30 years ago would have sent the pound over a cliff, closely followed by the party in power. Today no one cares."

Now he is an exceedingly intelligent guy, and far be it from me to criticise him, but I can't help feeling he is inadvertently showing us the problem. In a word, COMPLACENCY. "No liner has ever hit an iceberg and sunk, therefore we can't either". Actually, that is to be unfair to the officers of the Titanic. But his argument is surely a self-serving one. "The pound hasn't crashed yet, therefore the pound can't carsh"; "We haven't had a recession for 15 years therefore we aren't going to have a recession".

I once heard Prof Ferguson refer to the Vietnam War as "a piffling little war" or words to that effect. I know something of him personally. He's a golden boy, he's clever and industrious enough that Big Bad Life has never knifed him in the back and he has flourished more than almost anyone else of his generation. Such a record can make a man arrogant, especially if the called you "Professor".

I suspect his words will come back to haunt him. Remember "The End of History"?

[gone west]

Abstract: It's different this time.

[Mushroom]

I suspect his words will come back to haunt him. Remember "The End of History"?

So true.

MAD did seem to work. Was very expensive but I suspect we aren't spending much less now with the "war on terror".

[Guest Bart of Darkness]

I

n short, things are nice and stable now so we probably won't need to change government again for some time.

Past performance is not a guarantee of future returns.

[RichM]

Now he is an exceedingly intelligent guy, and far be it from me to criticise him, but I can't help feeling he is inadvertently showing us the problem. In a word, COMPLACENCY. "No liner has ever hit an iceberg and sunk, therefore we can't either". Actually, that is to be unfair to the officers of the Titanic. But his argument is surely a self-serving one. "The pound hasn't crashed yet, therefore the pound can't carsh"; "We haven't had a recession for 15 years therefore we aren't going to have a recession".

You've hit the nail on the head. Memories are very short indeed.

B*gger the ERM anyway, debt was at obscene levels in the late 80s.

Let's hope he's got an extensive BTL portfolio

Edited October 9, 2005 by RichM

[brainclamp]

He is incorrect on the economics side - very incorrect. Where we are heading is starting to get me very worried - and I am a mild mannered man.

There have been immense changes in the UK in population, deficit financed (therefore inflationary) government spending, immense changes in the job market and nature of UK output with real rates held negative, creating a total illusion.

Edited October 9, 2005 by brainclamp

[oracle]

no way are we heading into 30 years of labour thought-police.

we have NEVER stood for that in this country.

what's more likely is a change of government at the perceived end of the 14 year cycle....to be more precise,as the property market goes tits-up,joe public feels labour let them down and vote the tories back in,to do a damage limitation exercise and raise the competitive bar a bit.....it means joe public will have to settle for less pay and pension perks,but business will do well out of the tax and regulation cuts to come,which in turn helps UK plc out of a tight spot.

...that's if the tories get in next time.

if labour do then we can look forward to an eastern-bloc style stasi/securitate style government(if you thought it was bad now you aint seen nothing yet!)....zero investment,and probably queue's for bread at the shops as rampant inflation kicks in(due to IR cuts that were MEANT to help the consumer,but went a bit wrong)

[the end is a bit nigher]

can't be rsed to read the article as it sounds like the usual claptrap but hasn't japan been in economic turmoil for the past 10 years - didn't it have 0% interest rates which still didn't help it's economy and an increase in suicides as people couldn't cope with the shame of not having a job and being able to support their familiy? - oh yes, didn't house prices fall 70% in that time? - sounds like a cracking option

[the_duke_of_hazzard]

I once heard Prof Ferguson refer to the Vietnam War as "a piffling little war" or words to that effect. I know something of him personally. He's a golden boy, he's clever and industrious enough that Big Bad Life has never knifed him in the back and he has flourished more than almost anyone else of his generation. Such a record can make a man arrogant, especially if the called you "Professor".

I suspect his words will come back to haunt him. Remember "The End of History"?

I was lectured by Niall Ferguson. He likes to be controversial and has very personal political agendas, favouring the showy or outrageous line; a bit of a drama queen. I think he wants to be Prime Minister. I had the impression he lacked substance. The fact that all the girls at college fancied him is neither here nor there. I'm not bitter. Oh no.

[paradox]

Low inflation and high debt with low interest rates is not a good thing anyway if you have a mortgage because it takes longer to pay it off and means that the value of your mortgage is not magicked away by inflation.

I am a very recent STR. I am far more worried about inflation than I am about the Japanese scenario.

In fact a dose of Japanese deflation would be a Godsend for STR and FTB types who inhabit this forum.

[needle]

.....and I am a mild mannered man.

[van hoogstraten]

If Euroland puts its rates up & the dollar is rising, who is going to buy Weimar Gordon's government debt that he needs to issue to pay his mushrooming civil service payroll & index linked pensions every month.

Unless UK plc starts issuing debt at a competitive interest rate (with added risk premium for the fact the UK economy is a debt fuelled basket case) no one will buy it.