'timebomb' Uk Economy Will Explode After Election, Says Albert Edwards

[canbuywontbuy]

I do care about the blame game, actually. I'd like to call out the Tories for pretending we've had 5 years of austerity, and miserably failing to reach their own deficit reduction targets. Why was and is the deficit high? A big government getting bigger and bigger, including more and more people into being dependent upon it.

Edited April 15, 2015 by canbuywontbuy

[MarkWeston]

I do care about the blame game, actually. I'd like to call out the Tories for pretending we've had 5 years of austerity, and miserably failing to reach their own deficit reduction targets. Why was and is the deficit high? A big government getting bigger and bigger, including more and more people into being dependent upon it.

But the tories have cut the deficit. I'm unsure what you're actually angry with, that they did cut the deficit but didn't do it enough (ie. you want more austerity), or that you'd have preferred no cuts, more spending and a higher deficit? This isn't an attack btw, I'm genuinely curious to see how people view these things.

[Bill D'arblay]

Of course it does but the alternative is living in non-reality for a longer period and risking the entire market turning against you. Exhibit A : Greece

The problem with pointing out flaws in the policy of austerity is that a workable (real life workable) alternative is seldom if ever proposed.

Wrong. Economically literate governments (ie: not Btitain) make capital investments in ways that will increase productivity.

E.G. Help to buy a robot production line or a laser milling machine. Not help to buy overpriced houses.

[MarkWeston]

Wrong. Economically literate governments (ie: not Btitain) make capital investments in ways that will increase productivity.

E.G. Help to buy a robot production line or a laser milling machine. Not help to buy overpriced houses.

Sounds easy.

[Assume The Opposite]

Huge increases in the pile of debt was obviously going to happen when the deficit was so high. You see that surely, right?

I am not sticking up for the tories explicitly, but does anyone talk about the reasons why the *DEBT* (not deficit) has doubled? Tories have certainly cut the deficit they inherited, but why was it so high and why has it remained relatively high?

The deficit is the difference between government spending and what it takes in taxes. Regardless of who is running the government, when a recession like 2008 hits (caused by private sector banks), people lose jobs and income tax receipts go down. As more people rely on the state to survive the deficit will go up. That's common sense.

The deficit would of been high with a monkey in charge at number 10.

To answer to your question about why the *DEBT* has gone up, it's worth noting what Max Keiser has been saying for years. Austerity is a hoax in the UK. All of the 'cuts' have conveniently been the same amounts which have go onto to fund rich tax cuts, Help to Buy and other ponzi schemes.

Austerity hasn't happened. The cuts have merely diverted public money into private pockets.

[MarkWeston]

The deficit is the difference between government spending and what it takes in taxes. Regardless of who is running the government, when a recession like 2008 hits (caused by private sector banks), people lose jobs and income tax receipts go down. As more people rely on the state to survive the deficit will go up. That's common sense.

The deficit would of been high with a monkey in charge at number 10.

To answer to your question about why the *DEBT* has gone up, it's worth noting what Max Keiser has been saying for years. Austerity is a hoax in the UK. All of the 'cuts' have conveniently been the same amounts which have go onto to fund rich tax cuts, Help to Buy and other ponzi schemes.

Austerity hasn't happened. The cuts have merely diverted public money into private pockets.

Debt has gone up so much more than previously because the deficit is ridiculously high compared to previously. But people are equating the debt going up so much with more spending and that isn't the case.

[Assume The Opposite]

or that you'd have preferred no cuts, more spending and a higher deficit?

In case you've not realised we've had: More cuts, more spending and more national debt.

The deficit isn't the problem. The elephant in the room is the private debt at over 200% of GDP. The private debt which caused the banking crisis in the first place?

[R K]

Of course it does but the alternative is living in non-reality for a longer period and risking the entire market turning against you. Exhibit A : Greece

The problem with pointing out flaws in the policy of austerity is that a workable (real life workable) alternative is seldom if ever proposed.

Not at all. The alternative is maintaining higher public investment during the private sector deleveraging, which would have resulted in higher output. There was a choice and unfortunately we ended up with Gidiots so called "expansionary fiscal contraction" which was always doomed to failure.

Greece isn't a comparator in any way shape of form. They have no fiscal autonomy, no currency, no central bank and were forced to shrink their economy by 25% by the IMF/ECB/EU. Even the IMF now accept they made an error.

This isn't just even a hypothetical debate about the past either, a similar choice faces the country now - More doomed to failure austerity or more investment.

[MarkWeston]

In case you've not realised we've had: More cuts, more spending and more national debt.

The deficit isn't the problem. The elephant in the room is the private debt at over 200% of GDP. The private debt which caused the banking crisis in the first place?

I agree.

[canbuywontbuy]

that they did cut the deficit but didn't do it enough (ie. you want more austerity)

YES. You can also swap out the word "Austerity" for the phrase "sensible spending" and we can have a debate on what that is. £46Bn will be spent in the next 12 months on interest repayments for the UK debt.

[Assume The Opposite]

Debt has gone up so much more than previously because the deficit is ridiculously high compared to previously. But people are equating the debt going up so much with more spending and that isn't the case.

So Osbourne adding debt more than Labour in 100 years is because..??? You can't piss away £600 billion then blame the deficit. What about the Current Account deficit? The Trade Deficit? Losing the UK's AAA rating? I guess that's Labour's fault as well?

[crashmonitor]

Debt has gone up so much more than previously because the deficit is ridiculously high compared to previously. But people are equating the debt going up so much with more spending and that isn't the case.

Totally agree that you can't turn the trajectory of debt around when you have inherited a massive deficit. You can't just cut old age pensions and public sector wages, you have inherited promises that you can't unmake.

However, we have been less than serious about cutting the deficit in the last three years or so. We have gone for growth, topping the European growth league table in the process, where as the rest of Europe has gone for austerity; even Greece runs a primary surplus now.

Some would say that is the right way to go, but actually all we have done is steal growth from the future bought on debt. This is destabilising and dangerous.

[Bill D'arblay]

Sounds easy.

It is. The Germans have been doing this since 1950.

But then the war experience did give them a mindset that lends towards progressive and evidence based policies and away from the bigoted and ignorant class-based policies that we have had.

It's no coincidence that the Gidiot went to Eton and studied 'History' at University. Why ever would we want a Chancelor who is fit for purpose when we can have a poshboy wallpaper heir with scary staring eyes instead?

[MarkWeston]

So Osbourne adding debt more than Labour in 100 years is because..??? You can't piss away £600 billion then blame the deficit. What about the Current Account deficit? The Trade Deficit? Losing the UK's AAA rating? I guess that's Labour's fault as well?

Ok, but explain to me where the money goes and why it has gone up so much. As I said, I don't enjoy the blame game so much, without understanding. Sure maybe it's fun, but ultimately useless.

My understanding, and I'm very open to learn an be corrected:

Depression = lower tax receipts

Huge increase in public spending leading up to 2010 (spend in the 'good time')

Large public sector

Pension liabilities growing

All of this contributes to a very high deficit, which is what makes the debt pile grow so quickly. So when people here complain about debt growing, isn't it good to understand why? Feel free to correct my understanding.

[interestrateripoff]

Wrong. Economically literate governments (ie: not Btitain) make capital investments in ways that will increase productivity.

E.G. Help to buy a robot production line or a laser milling machine. Not help to buy overpriced houses.

Luckily we have complete cronyism in the UK which stops proper investment from happening.

[crashmonitor]

Ok, but explain to me where the money goes and why it has gone up so much. As I said, I don't enjoy the blame game so much, without understanding. Sure maybe it's fun, but ultimately useless.

My understanding, and I'm very open to learn an be corrected:

Depression = lower tax receipts

Huge increase in public spending leading up to 2010 (spend in the 'good time')

Large public sector

Pension liabilities growing

All of this contributes to a very high deficit, which is what makes the debt pile grow so quickly. So when people here complain about debt growing, isn't it good to understand why? Feel free to correct my understanding.

All true, but instead of trying to do something about it the Tories have compounded the problem with triple locks etc, enriching a cohort that alreadycontrols over half of UK wealth but holds the key to number ten. Our politics are the problem and an ignorant electorate that believe in the magic money tree.

[MarkWeston]

It is. The Germans have been doing this since 1950.

But then the war experience did give them a mindset that lends towards progressive and evidence based policies and away from the bigoted and ignorant class-based policies that we have had.

It's no coincidence that the Gidiot went to Eton and studied 'History' at University. Why ever would we want a Chancelor who is fit for purpose when we can have a poshboy wallpaper heir with scary staring eyes instead?

Ha.

But yes, I agree with sensible investment spending. I do think you're simplifying a little or ignoring the issue that is our actual public liability spending (pensions and benefits etc) is very high. Ultimately, we have to either replace our population with people who are happy to wait for investment spending to be reflected in GDP and tax receipts (obviously satire), or we cut our public liability spending (sort of doing), or we increase our tax receipts through higher taxes.

I firmly think we're going to be forced into higher taxes.

[shindigger]

Yet another who gets the big picture but has been calling the crash for 5 years. Eventually they will be right (and claim they were right all along) while for years their investments have stopped people building for their retirements.

Just wait when the next crash does come for the Keisers, ZHs, Schiffs etc shout how right they were.

Unfortunately HPCers will lap it up.

? Didn't you used to be on the radio saying exactly the same?

I am con-fused.

[long time lurking]

But the tories have cut the deficit. I'm unsure what you're actually angry with, that they did cut the deficit but didn't do it enough (ie. you want more austerity), or that you'd have preferred no cuts, more spending and a higher deficit? This isn't an attack btw, I'm genuinely curious to see how people view these things.

Eliminate was the call in 2010 by 2015 not reduce

Edited April 15, 2015 by long time lurking

[MarkWeston]

All true, but instead of trying to do something about it the Tories have compounded the problem with triple locks etc, enriching a cohort that alreadycontrols over half of UK wealth but holds the key to number ten. Our politics are the problem and an ignorant electorate that believe in the magic money tree.

+1

[R K]

? Didn't you used to be on the radio saying exactly the same?

I am con-fused.

Me too!

[shindigger]

The deficit is the difference between government spending and what it takes in taxes. Regardless of who is running the government, when a recession like 2008 hits (caused by private sector banks), people lose jobs and income tax receipts go down. As more people rely on the state to survive the deficit will go up. That's common sense.

The deficit would of been high with a monkey in charge at number 10.

To answer to your question about why the *DEBT* has gone up, it's worth noting what Max Keiser has been saying for years. Austerity is a hoax in the UK. All of the 'cuts' have conveniently been the same amounts which have go onto to fund rich tax cuts, Help to Buy and other ponzi schemes.

Austerity hasn't happened. The cuts have merely diverted public money into private pockets.

Whats happening to tax receipts now that they have jobs?

[Bill D'arblay]

Luckily we have complete cronyism in the UK which stops proper investment from happening.

Yes you are right, of course.

Example: I have a raspberry pi running freepbx and put a 3g dongle on there so I can make cheap mobile calls with my landline phone and also route mobile calls/sms.

I figured there may be a small market for such a device - until I learned that selling it as a complete unit is illegal in the UK.

Yep - cronyism all the way in sh1thole Britain

[crashmonitor]

Whats happening to tax receipts now that they have jobs?

Workers don't earn enough.........part time, self employed etc. etc. and indeed the rise in the personal allowance to £10,600 is drawing more and more people out of it.

I think that is right. There are areas where you could easily raises tax. IMO the broadest shoulders are the dead and you could raise loads on IHT, but that is out of bounds for the Tories, family is too precious, even though the deceased have run up public debts of £250,000 each on average and there should be pay back.

The scandal is the bill is will eventually be passed onto poor workers without rich mummies.

Edited April 15, 2015 by crashmonitor

[R K]

I don't understand how they can have cut the deficit yet borrowed more, so increasing the debt? They have cut the deficit but increased the debt. But even if they cut the deficit to 0, it makes no difference if the debt has increased by £500 billion. Isn't it the equivalent of buying a property for £500 more than it was last sold but reducing the interest rate slightly? You are paying less interest but nothing towards the capital?

When people talk about the "debt" they usually do so in nominal terms.

What's important over the long run is the debt as a proportion of the size of the economy. So if the debt increases £500b but the economy increases £600bn then the debt is falling as a % of GDP. If the economy increases only £400bn then the debt is increasing as a % of GDP.

In the short run and with unemployed resources in the economy, the objective ought to be to get people back to work and to increase the size of the economy, increasing tax revenues, investing for increased productivity and reducing social welfare payments automatically as a result.

In the long run you can then gradually reduce the debt / GDP ratio (if you think that's a good idea).

What Osborne sought to do was just slash spending because he has an ideological obsession with a "smaller state". The end result is both nominal debt and debt / GDP are much higher than planned because it DOESNT WORK.