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Paul Krugman Attacks Britain's Austerity Drive As 'deeply Destructive'


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http://www.guardian.co.uk/politics/2012/may/30/paul-krugman-austerity-deeply-destructive

Nobel prize-winning economist Paul Krugman has attacked the government's austerity policy as "deeply destructive".

Speaking on Radio 4's Today programme, he said the coalition's plan was "failing dismally". Instead of cutting spending the government should be increasing it by 2% of GDP, he added.

"It is deeply destructive to pursue austerity in a depression," said Krugman. "Give me a stronger economy and I'll turn into a fiscal hawk. But not now."

The American economist gave a lecture at the London School of Economics on Tuesday titled Austerity thy Name is Vanity.

He argued that David Cameron's government had made a terrible mistake by going for austerity, and could not change course now because to do so would be to admit its mistake.

On his New York Times blog, he cites Martin Wolf of the Financial Times: "It may be humiliating for the government to offer such a speech now. But there is no reason why the people of the UK should suffer for its mistake, indefinitely."

Chicken and the egg it's even more dangerous to fuel a boom with deficit spending.

http://www.guardian.co.uk/news/datablog/2010/oct/18/deficit-debt-government-borrowing-data

UK-deficit-graphic-007.jpg

So the way out of a bust created by deficit spending is er more deficit spending.

Perhaps the UK govt should move to spending 70% or 80% of gdp then we could really get out of this depression.

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This socialist idiot is on Newsnight right now making a complete tit of himself.

He's on newsnight now making mincemeat of two lightweights. Not because he's right, but because they haven't got the knowledge to effectively argue against his views. Typical beeb!

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http://www.guardian.co.uk/politics/2012/may/30/paul-krugman-austerity-deeply-destructive

Chicken and the egg it's even more dangerous to fuel a boom with deficit spending.

http://www.guardian.co.uk/news/datablog/2010/oct/18/deficit-debt-government-borrowing-data

UK-deficit-graphic-007.jpg

So the way out of a bust created by deficit spending is er more deficit spending.

Perhaps the UK govt should move to spending 70% or 80% of gdp then we could really get out of this depression.

...I gave seen mass hysteria from the likes of Krugman and the lefties ...but what I have not seen is mass austerity as implied....still waiting for this ....cheaper pasties and lowering of tax for the rich are hardly that .... :rolleyes:

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Copied from the Greek thread, Krugman again.......

An article from 1998, first one I read.

Calling for low rates - well hey schmuck you got exactly what you wanted and look at the shit it caused.

http://web.mit.edu/k...w/euronote.html

So what do the europessimists - the people who believe that the whole experiment will come to grief - say now? Well, they have a new argument. Pretty clearly, Europe is not about to tear itself apart because it cannot agree about monetary policy. In fact, everyone but the central bankers now *does* agree about monetary policy. The clear and present danger is, instead, that Europe will turn Japanese: that it will slip inexorably into deflation, that by the time the central bankers finally decide to loosen up it will be too late.

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Debt and money are a smokescreen. It's all about wealth.

The Uk has the same resources and potential in 2012 as it had in 2004 or 2006 or 2008.

The drag on our economy is caused not by debt (in itself) although it manifests itself that way, but by the incorrect apportionment of wealth to owners of land.

They extract rent which detracts from the economy.

A progressive LVT would cut down the deficit without punishing the innocent or the productive. If we transferred wealth via PLVT to producers of wealth we could grow.

We could even grow whilst making austerity cuts and replacing non jobs with roles in national infrastructure projects.

The trouble is that Tories have rejected entrepreneurs in favour of rent seekers and labour have rejected unions who attempt to maximise wages ( and wealth) in favour of unions who sacrifice their membership to eank at the alter of Brussels and its lucrative recognition for good little boys.

We need to transfer wealth via Lvt not via inflation.

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Copied from the Greek thread, Krugman again.......

An article from 1998, first one I read.

Calling for low rates - well hey schmuck you got exactly what you wanted and look at the shit it caused.

http://web.mit.edu/k...w/euronote.html

So what do the europessimists - the people who believe that the whole experiment will come to grief - say now? Well, they have a new argument. Pretty clearly, Europe is not about to tear itself apart because it cannot agree about monetary policy. In fact, everyone but the central bankers now *does* agree about monetary policy. The clear and present danger is, instead, that Europe will turn Japanese: that it will slip inexorably into deflation, that by the time the central bankers finally decide to loosen up it will be too late.

Has he ever not called for lower rates?

He often adds some caveat like 'im all for higher rates, but now is not the time'

I cant remember him ever advocating higher rates in the current.

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I think their chart shows once and for all where most of the UKs debt problems came from:

UK-deficit-graphic-008.jpg

Either there was a sudden increase in JSA / Incapacity Benefit in 2008, or something else happened <_<

It also puts to bed the theory about Labour being more spendthrift than the Tories. Looks like Tories "spent their way" out of the 90s recession. And were spending more then than Labour did pre-financial crisis.

Labour themselves fell off the wagon in 2002, but even if we'd been running a surplus in 2008, we'd have a circa £100 billion deficit now.

I am still astonished that some of the posters here can't see where the problem is. Public spending is a drop in the ocean compared to the money we had to spend propping up the financial sector. Which is still continuing largely as it was :o:blink:

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Jesus Christ... how/why is China running a budget deficit with a $160 billion positive balance of trade?

There is something not right with China... Germany running a bigger trade surplus over the last 12 months.

China is now importing perhaps $200 Billion worth of oil alone every year... That's a LOT of basic electronic assembly. Plus Coal, iron ore.. whatever it can get it hands on, really. The low wages in China have the knock on effect of shrinking the value added relative to raw materials costs..

That may seem insane, but if you imagine a world of limitless free labour, near-free capital and manufacturing being based on price competition, the difference between raw material prices and finished product prices will shrink to near-zero.

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China is now importing perhaps $200 Billion worth of oil alone every year... That's a LOT of basic electronic assembly. Plus Coal, iron ore.. whatever it can get it hands on, really. The low wages in China have the knock on effect of shrinking the value added relative to raw materials costs..

High raw material / input costs is reflected in the balance of trade.

What I find odd is a positive balance of trade, a positive current account balance, but a deficit.

Are they...

i) Servicing enormous debts?

ii) Spending huge amounts of money on investment - so much they are running up debts?

iii) Producing economic figures that don't stack up as there has been some massaging?

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This socialist idiot is on Newsnight right now making a complete tit of himself.

That'll be Nobel Prizewinning tit, to you.

......"But he's a Nobel Prize winner".....so said Paxo.

"Yes, which goes to show exactly how deep seated the problem is......" should have been the reply.

What DID Keynes actually and honestly say regarding spending?

I'll bet he would have urged massive cuts when the 'boom' was in full swing....... anyone know?

The left are only taking parts of Keynes philosophy....parts convenient to them...

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What DID Keynes actually and honestly say regarding spending?

There are no Keynesian economists on the planet. It would certainly be interesting to see what Keynes would make of the current situation. I suspect he would be livid that we are in a similar position to that of the great depression. I wonder if he'd rip Krugman apart for his stupidity.

A debate between Hayek, Keynes and Krugman would be fun, everyone would see how inept Krugman really is.

The guardian chart is also interesting as it perhaps indicates Labour was already trying to fight a economic "bust" before the financial collapse.

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http://www.guardian.co.uk/politics/2012/may/30/paul-krugman-austerity-deeply-destructive

Chicken and the egg it's even more dangerous to fuel a boom with deficit spending.

http://www.guardian.co.uk/news/datablog/2010/oct/18/deficit-debt-government-borrowing-data

UK-deficit-graphic-007.jpg

So the way out of a bust created by deficit spending is er more deficit spending.

Perhaps the UK govt should move to spending 70% or 80% of gdp then we could really get out of this depression.

Surely there is a lag on this though of 5-10 years?

Brown didn't just walk in and whip up billions in surplus. The decisions made to create those surpluses down the line were probably made over 5 years ago

under KC. Wait 5 years for Brown's management of the economy to work itself in and it all goes pear shaped.

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Surely there is a lag on this though of 5-10 years?

Brown didn't just walk in and whip up billions in surplus. The decisions made to create those surpluses down the line were probably made over 5 years ago

under KC. Wait 5 years for Brown's management of the economy to work itself in and it all goes pear shaped.

There will be a lag in some cases. Probably not 5 years in most - look at the 2008 as an example of how they can be forced to spend quickly. They can turn things around in a couple years (see VAT for a recent example) when they want to.

There is however, nothing except the stark reality that the Tories are just as bad at fiscal management as Labour to explain the substantial 1990-1996 deficit.

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