Quote:
Originally Posted by Damien
What are everyone's views on the possible effect of Greece's financial crisis on this election?
It's probably negative for the Liberal Democrats who are not regarded as strong on the economics and are pro Euro. The stronger the issues of the econmany and Europe are in the election then the weaker the Liberal Democrats will do in my view (despite the fact there were calling the global recession earlier than any of the others).
It's harder to work out who would benefit between the Conservatives and Labour. First of all the British economy never descending into the crisis Greece has and, although Labour are at fault for not saving money in order to deal with the level of debt incurred fighting the recession, they were successful in bringing the country out of recession. Their policies worked. Maybe the public will be scared by the current situation, Osborne is unproven as Chancellor, and choose Labour.
However maybe they will decide that drastic cuts need to made to the budget in order to cut our debt and make sure we don't go down the same path as Greece?
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It will harm the Lib Dems by showing weakness in increased European economic integration.
It will harm Labour as their method for mitigating the recession has been fairly ineffective (we were one of the last economies to return to growth) and its' only real impact has been to save the banks and highlight the massive structural deficit Labour have accumulated.
It will harm the Tories as attempts to avoid what has happened to Greece will just get painted as the 'nasty Tories' and people will point to Greeks protesting over their government having ignored debt for so long having to take drastic action and the Greeks standing up for their rights, etc.
If a closer look is taken the economy has been in fantasy land for most of the century. We've relied tremendously on generation of increased GDP through non-productive activities (bankers basically gambling, public sector enlargement, people speculating on property and debt-fuelled spending) meanwhile the government has spent increasing amounts of money on the pretty risky gamble that these revenue streams would remain constant.
We're in the situation now where the bankers bubble has burst and banking needs a rethink to avoid another bailout, people are jittery over private debt and are repaying it rather than taking it out and spending, property is wobbly and easy access to credit to invest isn't there and therefore the government can't afford to continue pumping money into the public sector to prop up the employment rate.
The stimulus wasn't anywhere near what it should have been as the money just wasn't there to implement large infrastructure projects and bring forward projects in order to maintain jobs and actually produce something with it due to Labour's structural deficit being so large after the extremely wobbly foundations they built their entire economic plan on came tumbling down.
The fact is although GDP is still rising we are in a frightfully weak position still. The recovery has been jobless and with large cuts in the public sector absolutely needed and a lack of action to stimulate the private sector into hiring and producing to take up the slack I'm not sure how it'll pan out as without private sector hiring in a big way the welfare bill will go up.
To be perfectly honest in this economic mess the major losers are us, there are no winners, it'll be extremely painful whatever, just a matter of when and how much.
The only potential winner so far is ignorance, ignorance of just what a mess Labour's economic policies caused as evidenced by anyone who would trust them with the economy for a further 5 years. Their only real positive action has been saving the banking system in the country from falling into disarray.