Friday, Oct 02, 2009

Even Daniel doesn't 'get it'

Zero Hedge: Guest Post: Daniel Hannan MEP on When Nothing is Something

Is there anything - anything at all - that might convince world leaders that they shouldn't respond to the credit crunch by spending more? It may seem common sense that you can't borrow your way out of debt: we all apply that principle to our household budgets. But, since the financial crisis began, states increased their spending despite the plain evidence that stimulus packages have done nothing to ward off the recession.

Posted by devo @ 09:03 PM (1215 views)
Add Comment
Report Article

36 Comments

1. devo said...

House prices rising.

Unemployment rising.

Friday, October 2, 2009 09:08PM Report Comment
 

2. devo said...

Gordon Brown saved the world.

Tony Blair to become EU President.

Friday, October 2, 2009 09:16PM Report Comment
 

3. robh said...

Oil supply constraining growth. The exponential expansion required for a debt based system maxed out. Where next?

Friday, October 2, 2009 09:32PM Report Comment
 

4. str 2007 said...

Devo

Can you expand on Even Daniel Doesn't get it and your 1st 2 posts ?

Friday, October 2, 2009 09:38PM Report Comment
 

5. devo said...

3. robh said... Where next?

More QE.

The global economy is living from hand to mouth

Friday, October 2, 2009 09:38PM Report Comment
 

6. devo said...

Devo: Can you expand on Even Daniel Doesn't get it and your 1st 2 posts

As a simpleton, I tend to leave expansion to others.

Having said that....

Doing nothing was not, is not and will not be an option.

Friday, October 2, 2009 09:44PM Report Comment
 

7. devo said...

I can't do this on my own. I need help in articulating my thoughts.

Shipbuilder?

Friday, October 2, 2009 09:57PM Report Comment
 

8. tinker said...

Maybe the Op is being sarcastic. It seems that instead of the normal knee jerk reaction of government to intervene to try to fix things, then up on seeing it making things worse, being unable to stop, Hannan advocates 'doing nothing' (a 'do nothing Tory'). He's right of course. But they have to meddle if only to be seen to do something or in Brown's case attempt to avoid blame.

Short-term pain and quicker real fix v. sweeping things under the carpet.

Friday, October 2, 2009 09:57PM Report Comment
 

9. devo said...

8. tinker said... Hannan advocates 'doing nothing' ..He's right of course.

No tinker, you don't get it either.

The global financial system is on life support.

I'm not being melodramatic, it truly is. As far as the G20, and by extension most of the 'known world' is concerned, Gordon Brown really did save the world.

Friday, October 2, 2009 10:07PM Report Comment
 

10. tinker said...

9 @ devo.

We may agree to disagree but to quote our great leader "I,I I, don't accept that."

The problem of debt and toxicity hasn't been dealt with. Those responsible are not paying the price. Gordon Brown is no hero.

Friday, October 2, 2009 10:26PM Report Comment
 

11. dude said...

Ah, Hannan the Idiot.

"It may seem common sense that you can't borrow your way out of debt: we all apply that principle to our household budgets. But, since the financial crisis began, states increased their spending despite the plain evidence that stimulus packages have done nothing to ward off the recession."

Two immediate points to note out of the above opening paragraph. First, since whenIt may seem common sense that you can't borrow your way out of debt: we all apply that principle to our household budgets. But, since the financial crisis began, states increased their spending despite the plain evidence that stimulus packages have done nothing to ward off the recession. does it make any sense at all to apply national financial planning and spending process as if it was a household budget? That is plain stupid. The economy is not like a household. There is so much infrastructure that this country could get involved in:

* the road network needs upgrading (for instance, I was in Norwich recently -- a god awful place to get to);
* the rail network leaves much to be desired;
* there is much talk of the failing electrical generation system, and predictions of interruptions to our power supplies because of lack of investment in core infrastructure;
* our old, dilapidated houses would benefit from home insulation.

In other words there is much the government could spend the money on, that wouldn't be frittering it away as it would bolster many aspects of our aging infrastructure.

Governments don't work on the timescales of households, and can afford, because in large part they have much more freedom to move goal posts etc, to think differently. So to compare government spending to household spending (as Thatcher often did in the 80s), shows a lack of imagination, and definitely demonstrates a lack of experience in governing and managing a large economy.

And the second point I took out of the above was about the downturn. I personally have not seen any evidence yet of the recession. Now I work in the tech industry, so it may be that that, or at least the part I work in, has escaped. But I have felt no financial pain to date, and have not seen any indication that my job is threatened or that I am going to be adversely affected by it.

He's a Tory, so you need to read his comments bearing in mind he will aways viscerally oppose the Labour Party because that's what he is expected to do. But if this attitude is carried into government next year, as many expect, and if the economy is really on the edge of the precipice as some suggest, then a change of government will be very frightening indeed. It may even affect my job, and that would be bad...

Friday, October 2, 2009 10:39PM Report Comment
 

12. devo said...

"Gordon Brown is no hero" On that we agree, tinker.

"The problem of debt and toxicity hasn't been dealt with" This is my point. It CAN'T be dealt with; it's too big to deal with.

"Those responsible are not paying the price" Well they wouldn't, would they?

Friday, October 2, 2009 10:41PM Report Comment
 

13. devo said...

11. dude said...* the road network needs upgrading (for instance, I was in Norwich recently -- a god awful place to get to);
* the rail network leaves much to be desired;
* there is much talk of the failing electrical generation system, and predictions of interruptions to our power supplies because of lack of investment in core infrastructure;
* our old, dilapidated houses would benefit from home insulation.

How will the government pay for these improvements, dude?

Friday, October 2, 2009 10:46PM Report Comment
 

14. str 2007 said...

Well done Krusty

That's what I like about this place, there's always someone about , normally Little Prof. who can remember what someone said in a previous life.

MP's you can't trust any of them can you ?

Friday, October 2, 2009 11:17PM Report Comment
 

15. str 2007 said...

Go on Krusty, tell me you're impressed with my Psychic powers.

Friday, October 2, 2009 11:19PM Report Comment
 

16. krustyatemyhamster said...

Hannan, 2004:

"In the ten years that I have been travelling to Iceland, I have watched an economic miracle unfold there. Today, Icelanders are absolutely rolling in it. A people two generations away from subsistence farming have become international tycoons.

Look at the City of London, for heaven's sake, which Brussels is doing its best to asphyxiate with its financial regulations.

Icelanders understand that there is a connection between living in an independent state and living independently from the state. They have no more desire to submit to international than to national regulation. That attitude has made them the happiest, freest and wealthiest people on earth."

Yes, if only we'd been as clever as those people in Iceland Daniel.

Friday, October 2, 2009 11:19PM Report Comment
 

17. str 2007 said...

Sorry Devo, asked you a question, then got called away.

I quite like Daniel Hannan, if only for his speech we all saw tearing the PM to shreds in Europe.

Anyway, I agree that something needs to be done, Gordon Brown does seem to have rallied round and done something. However, due to gross mismanagement this situation has been allowed to arise.
Due to further gross mismanagement there is no real money to pay for it.

On the subject of pouring money into infra structure a far simpler solution to balance the equilibrium would be as I've said before to initiate a program of making sure all towns and villages have plots available on which to build. The numbers of which to be replenished as they are taken up.

This simple step would pump real 'new' money directly into all local economies whilst allowing a gentle deflation of the main asset that has caused all the problems.

Simply desperately trying to maintain an over inflated asset bubble maybe doing something but not the right thing. As is being and no doubt will be proved with enhanced pain due to the wrong interference.

To dude

Whilst infrstructure can be a worthwhile cause actioning projects takes far too long and doesn't pump money in directly where it's needed.

Further infrastructure IMO should be tackled with at least a sensible deposit of real money. Can you remember the last project completed within budget ?

Friday, October 2, 2009 11:24PM Report Comment
 

18. krustyatemyhamster said...

Yes, you're psychic powers are strong str2007 @11.19

Friday, October 2, 2009 11:58PM Report Comment
 

19. dude said...

@str

Yes, you're right. But the 'don't build on my view' brigade will always spoil that plan. IMHO this green belt nonsense should be watered down. It's misrepresented in any case. You only have to go up in a light aircraft (or for cheapskates like me use Google Earth) to see that it wouldn't need very much land -- not enough to cause any serious problems, to resolve the housing issue.

And if you do that you will need better infrastructure -- back to my original point! :-)

I agree that projects don't always (= never!) go to budget, but that matters less. The reason they don't (at least in IT) is generally because as a project unfolds people start to see the benefits of adding this, or doing more of that -- scope creep. But the act of doing the project generates economic activity that helps to generate it elsewhere.

What I'm trying to say is 'free market economics' is boll0x when what you are getting are ringtone websites and other useless tat, but when it is used to help restore/install infrastructure it has a positive and lasting effect.

Saturday, October 3, 2009 04:30AM Report Comment
 

20. str 2007 said...

I know there is a nimbie problem, but it's alot easier to get over than for arguement sake getting a new road built (Winchester or Newbury bypasses spring to mind. It literally take 15-20 years to get something like that started.
I guess I was thinking more Civil Engineering when you said infrastructure.
Yes of course there are other types of infrastructure aswell.

Rather than huge housing estates I feel infilling (to a small degree) existing and by that I mean with family homes - we have more than enough flats now.

I thinks it's surprising how many extra new homes could be added with really very little impact.

Also building projects ona small scale allow the suppliers to those site slightly better margins that if they were nailed down on price by one of the big developers.

My concern is that Labour have banged on about building x number of houses, and instead of even moving slowly towards that target , quite literally nothing is now happening.

Saturday, October 3, 2009 09:11AM Report Comment
 

21. the number cruncher said...

Free market economic in the western context is really the freedom for one group to create a monopoly to exploit another. the free-market is B0ll0x,

A true free market needs regulation - very strong regulation - to stop it becoming a monopoly

I wish more people actually professed to be freemarketers actually understood what a free market is.

So a free market in housing is actually a huge monopoly for landowners and landlords to extract money from those that cannot afford to buy, or choose to employ there financial resources in ways not associated with property.

Saturday, October 3, 2009 10:16AM Report Comment
 

22. str 2007 said...

I think I may have steered this post away from Devos original point about everyone missing the point. I guess Devo you were after more posts around a doomsday scenario.
That's not being negative by the way so I am interested to read if you wanted to expand on your earlier posts as to what you think may be brewing.

Saturday, October 3, 2009 10:25AM Report Comment
 

23. str 2007 said...

Totally agree number cruncher

Providing my plan came with proviso for 'owner occupiers only' that would create a free market. There would need to be some attached time constraint to stop people constantly moving onto the next plot (I think 5 years is reasonable as a minimum stay).

And not forgetting the less is paid for the land the more budget there would be to be pumped directly into the real economy, and the better the house that would be built for future generations to enjoy.

If the land is too expensive all you get is an economical box no-one will be proud of, now or in the future.

Saturday, October 3, 2009 10:33AM Report Comment
 

24. str 2007 said...

Also the S2R1 post has passed a day or 2 ago. But on their S2R1 saw the price of Gold falling to $700/oz from the current £1000/oz level.

I'm not sure if that was falling due to following a falling market down or the strebngthening of the $. Either way its £/oz I'm more interested in.

Anyway S2R1 this might be a good place to come back if you are still reading.

Saturday, October 3, 2009 10:38AM Report Comment
 

25. devo said...

@str2007 I guess Devo you were after more posts around a doomsday scenario.

I just call it the way I see it; but I am interested to see if I provoke a response.

Saturday, October 3, 2009 10:55AM Report Comment
 

26. str 2007 said...

Devo

You say the debt crisis etc is too big to be dealt with.

To that end are you looking or advocating any solutions that would go someway to helping the situation ?

What do you think would be the correct policy now we are in this mess ?

Saturday, October 3, 2009 11:24AM Report Comment
 

27. devo said...

What do you think would be the correct policy now we are in this mess ?

1. The G20 should explain the issues clearly and simply to the world.
2. All stimulus, QE, Tarp etc. to stop.
3. Observe what happens and act acccordingly.

Saturday, October 3, 2009 11:34AM Report Comment
 

28. krustyatemyhamster said...

@NC
"A true free market needs regulation - very strong regulation - to stop it becoming a monopoly "

Very true

Saturday, October 3, 2009 01:42PM Report Comment
 

29. str 2007 said...

Devo @ 11.34

Yes that would be an interesting scenario.

I wonder if they could tell the world the situation without fudging and patching truths.

I've said on here myself before that the right time for stimulus is at the bottom of the market, not to use it all the way down trying to pervert the course of the market.

It wouldn't have been pleasant for alot of people but IMO finding the bottom of the housing market sooner rather than later would have proved more benficial in the long term.

It would also have taught people a little more caution and prudence.

Saturday, October 3, 2009 02:00PM Report Comment
 

30. the number cruncher said...

My solution to our crisis is:

1. Land Value Tax (lots of good reasons including those below)
2. stimulate free enterprise by abolishing all income and purchase tax (apart from fags booze and other drugs and socially harmful activity)
3. redistribution of wealth from rich to poor (they spend it thus release tied up capital into the real economy)
4. redistribution of wealth from gain on monopolistic use of capital to real economic activities - tax worthless financial activity - make no safe haven for money not put to work in the real economy
5. free mankind from the tyranny of anti competitive intellectual property rights - this is a huge drag on innovation and enterprise
6. strong regulation to ensure functioning, open, free markets
7. legalise drugs to free up police time to tackle real crime and stop giving an incentive organised crime

Saturday, October 3, 2009 04:35PM Report Comment
 

31. devo said...

@30, the number cruncher

We won't have your 1-7 until my 1-3 has happened.

Saturday, October 3, 2009 05:44PM Report Comment
 

32. the number cruncher said...

31. devo

Intelligence, objectivity and a little love for mankind is what we need

At the moment our economy is like a carol Vorderman commercial: {cue cheesy music}

"Has your nation got insolvent banks, crippling personal debts, overvalued assets and massive commercial loans. Why not consolidates all your countries debt into one simple national debt." (WARNING: if you cannot keep up the re-payments your children may inherit a second world economy and live in poverty for the rest of their lives)

Saturday, October 3, 2009 07:45PM Report Comment
 

33. mdmick said...

@32

Yes, it is quite a conundrum

Saturday, October 3, 2009 08:58PM Report Comment
 

34. devo said...

"Intelligence, objectivity and a little love for mankind is what we need"

And besides shipbuilder and myself (ahem), where might those qualities be found?

Saturday, October 3, 2009 10:29PM Report Comment
 

35. Urbanbear said...

NC.
1. I disagree, this is Socialism in disguise, it will not be fair, will hurt productive people, will become unworkable, and will not cause the decline of other taxes!
2. Agreed, but socially harmful can be rather subjective and could easily contradictory 7.
3. Blatant Socialism, if the money was earned, better to encourage charity; tax without representation, and consent, is theft, period!
4. Again Socialism, given monopolies tend to be most successful, when supported by government legislation; which they currently are!
5. Agreed, since this is one of the major ways that monopolies are supported by the state.
6. I partially agree, but only for a simple, unambiguous basic commercial legal framework, based on fluid contextual local knowledge, but not for generalist interference.
7. Definitely, because banning something just boosts prices, and creates a black market, and boosts a whole range of genuine crimes.

Sunday, October 4, 2009 02:51PM Report Comment
 

36. Urbanbear said...

@NC
Cheesy indeed. I am smart enough to understand the inspired evil of compound interest, but she easily beat my best Mensa test, so the evil b* must have known!

Consolidating debt can be a serious mistake, better the basket cases are made bankrupt, and the highest remaining interest debts are paid off first, to minimise growth of the total debt e.g. just like a consumer should give priority to paying off credit card debt, and HP, because they often have extortionate (compound) interest rates.

A lot of people were conned into making this mistake for consumer debts, so now have higher debt to pay off, over time.

Sunday, October 4, 2009 03:18PM Report Comment
 

Add comment

  • If you do not have an admin password leave the password field blank.
  • If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines
Username  
Admin Password
Email Address
Comments

Main Blog | Archive | Add Article | Blog Policies