Economy is worse under us, says Cable

I did ... Most of them, anyway. And I have enduring memories of scheduled power cuts and my dad buying a petrol generator. I may not have a first-hand adult understanding of how bad things can be, but I have lingering impressions and they're not nice.

I did live through the 70's, and also remember why what happened, happened.

And picketing firemen.

And picketing teachers.

And picketing cleaners.

And picketing council officers.

[Pierre]

You can't compare what is happening now to the 70's, or indeed 80's & 90's.

We're in the longest, deepest recession in living memory - so we keep being told.

Yet interest rates are the lowest in living memory and will be well into next year and possibly beyond.

Growth is just managing to stay above zero.

The high street recorded sales up last month.

Nearly every house hold has two cars, 3 tvs, sky or cable, broadband and several smart phones

Everybody is talking about cuts, but none of the cuts have actually been implemented yet - so any redundancies in the public sector are being implemeted in anticipation of the cuts.

I am not an economist and have no idea what the best course of action is, but then again I don't think that most so called "economists" do either.

I believe that if something makes sense then it's right.

If you owe billions, borrowing billions more wont help you - unless you are borrowing to invest in infrastructure, manufacturing etc

If you are borrowing to supply services and pay wages - forget it.

Borrow to invest is the road to success, borrow to spend is the road to the end.

When you're in a hole, stop digging - Nick Leeson.

The governments plan, may not be perfect for everyone, but it is a plan. The world markets like it - I don't see what Plan B there could be.

[Traduk]

Originally Posted by Hugh

I did live through the 70's, and also remember why what happened, happened.

I feel sure you do but I feel it would be wrong to focus on who did what and why because that would start endless discussions on who went on strike and why.

The area I tend to focus on is the fact that secular recessions are usually back to back recessions in which the second is opposite to and made worse by the mistakes made in the first.

The early 70's were deflationary as spending power was lost in higher costs to the oil price hike. Businesses closed, unemployment soared and spending power was reduced dramatically. The deflationary period damaged the supply side of the economy very badly with boarded up shops and businesses which left no supply side when workers forced through higher wages. As demand rose with no supply, inflation rocketed until equilibrium returned.

This time around and as usual the opposite occurs. We have inflation in a situation which is more true of stagflation. When part 1 is over and all the mistakes (100's of billions down the drain) come into play. In part 2 we get the opposite of 1 and deflation kicks in. Following the rule of alternation we get what was prevalent during the secular recession before the last which was 1930's.

I think this government has made very bad choices because even discounting global factors, recessions are as much about consumer mass psychology as other factors. Austerity forces savings both via government measures but more importantly destroys public confidence. The less people spend or have to spend the greater the snowball effect as fear breeds fear and the money in circulation goes down. The less money in circulation the more people lose businesses and jobs and if it goes on long enough the effects are exponential.

Deflation can become a depression and if this country sees one I for one will know for sure that it was this government who on the back of the previous government's mistakes made an even bigger one by removing liquidity from the economy.

[mertle]

Originally Posted by denphone

l think the fact remains whether it was the Labour government or the Coalition they are not doing a very good job with our economy and perhaps a new economic strategy needs to be thought out because the current stategy is quite clearly not working.

Agreed think ALL PARTIES should get together thrash out policies which will help the country not personal gratifacation/gains/budies.

If they work together then we might just turn things raise funds from which will make inroads bring in policies which will truly make difference. Chase those who defaulting on there tax. Stop the green taxes relieve burdens hit hard and fast at utilities giving ofgem some real power.

Lets start making difference instead retoric party trashing/bashing the helpless needy. Lets get MONEY circulating put it where it would be spent in people pockets. By hurting unemployed/disabled/elderly/low paid/public sector/freezing wages they stalling killing the country. Its governments fault this country now service industry heavy so they only way is to now make money move. The way to do it is ORDINARY PEOPLE to spend buying products. We aint got enough manufacturing to kickstart the uk heart.

Originally Posted by mertle

Agreed think ALL PARTIES should get together thrash out policies which will help the country not personal gratifacation/gains/budies.

If they work together then we might just turn things raise funds from which will make inroads bring in policies which will truly make difference. Chase those who defaulting on there tax. Stop the green taxes relieve burdens hit hard and fast at utilities giving ofgem some real power.

Lets start making difference instead retoric party trashing/bashing the helpless needy. Lets get MONEY circulating put it where it would be spent in people pockets. By hurting unemployed/disabled/elderly/low paid/public sector/freezing wages they stalling killing the country. Its governments fault this country now service industry heavy so they only way is to now make money move. The way to do it is ORDINARY PEOPLE to spend buying products. We aint got enough manufacturing to kickstart the uk heart.

If they work together than who is there is oppose bad policy?

[Ignitionnet]

Originally Posted by Pierre

Everybody is talking about cuts, but none of the cuts have actually been implemented yet - so any redundancies in the public sector are being implemeted in anticipation of the cuts.

If you owe billions, borrowing billions more wont help you - unless you are borrowing to invest in infrastructure, manufacturing etc

Hey Pierre, the cuts started at the start of this financial year, and have been deepened by inflation as the budgets were given in nominal terms.

Your second paragraph is spot on. They stubbornly refuse to invest in anything beyond trying to get the banks to feed us all more of the poison that caused the trouble to being with - debt.

qft

[Ignitionnet]

This national debt stuff is getting really, really boring. Every so often yadda yadda record levels of debt.

Osborne is missing his deficit reduction targets due to the tax take being down, and I should mention that a large proportion of the national debt can be removed overnight.

The Bank of England owns £186bn of gilts purchased in QE 1, they'll probably own ~£70bn more after QE 2. This is debt purchased with invented money. They tear those gilts up, there's £250bn wiped off the national debt overnight.

They are full of it, I agree with the need to reduce the size of the state for sure, what I am disgusted by is the indifference to inflation. This is a stealth tax for those with savings and those who work, it is genuinely affecting our living standards but they still allow it in order to keep asset bubbles inflated and insolvent banks operating.

I hate this coalition's economic policies. They are reducing my income through tax rises and withdrawal of family allowance, they are reducing the value of what I do get by ignoring inflation, they are harming my attempts to save for a deposit for a home through low interest rates and they are harming my attempts to buy that home by propping up house prices with low interest rates.

If they had an ounce of conscience in their banker-whore bodies they'd tear the gilts up, capitalise RBS if need be and force it to deliver credit responsibly - we own 83% of it for heaven's sake - and get some investment rolling in infrastructure delivering jobs and housing, two things which are massive drags on the economy.

Huge amounts of capital are sitting in housing doing nothing and high housing costs and inflation are reducing people's spending power. Get building, get people into work designing and constructing those homes, build some high speed broadband plant.

They can also ditch their vanity project HS-2. Interesting they can find billions for the pet project whose business case has been ripped to shreds pretty much universally but there's apparently nothing in the kitty.

This coalition is like some sick parody of everything you didn't want.

[mertle]

Originally Posted by Ignitionnet

Hey Pierre, the cuts started at the start of this financial year, and have been deepened by inflation as the budgets were given in nominal terms.

Your second paragraph is spot on. They stubbornly refuse to invest in anything beyond trying to get the banks to feed us all more of the poison that caused the trouble to being with - debt.

Thats biggest question the only answer is they doing it to favour low interests in debt by sucking up to the banks who created the mess.

I fear we will again left lagging while the country crumbles hell the politians will laugh they all can up there bags live in caymen isles.

Damien all we can hope is by doing it together taking political mindsets they MAKE decisions which right for the Country.

They both shown they cant do it alone so we need them to stop there political persuations there retric atitudes think what will work. They tried the preverbal bashing/trashing agendas not hurt it why it was not there fault but they was soft targets.

I fear tories waiting and hoping 2012 olmpics/green windfarm projects will be the saviour in shining armour. Sadly think neither will olympics crippled greece I fear that foreign firms will get more out off the windfarm projects.

Countryfile sunday mentioned how many foreign firms do the wind farms that little money despite huge cost to uk will see return.

---------- Post added at 13:40 ---------- Previous post was at 13:30 ----------

Originally Posted by Ignitionnet

This national debt stuff is getting really, really boring. Every so often yadda yadda record levels of debt.

Osborne is missing his deficit reduction targets due to the tax take being down, and I should mention that a large proportion of the national debt can be removed overnight.

The Bank of England owns £186bn of gilts purchased in QE 1, they'll probably own ~£70bn more after QE 2. This is debt purchased with invented money. They tear those gilts up, there's £250bn wiped off the national debt overnight.

They are full of it, I agree with the need to reduce the size of the state for sure, what I am disgusted by is the indifference to inflation. This is a stealth tax for those with savings and those who work, it is genuinely affecting our living standards but they still allow it in order to keep asset bubbles inflated and insolvent banks operating.

I hate this coalition's economic policies. They are reducing my income through tax rises and withdrawal of family allowance, they are reducing the value of what I do get by ignoring inflation, they are harming my attempts to save for a deposit for a home through low interest rates and they are harming my attempts to buy that home by propping up house prices with low interest rates.

If they had an ounce of conscience in their banker-whore bodies they'd tear the gilts up, capitalise RBS if need be and force it to deliver credit responsibly - we own 83% of it for heaven's sake - and get some investment rolling in infrastructure delivering jobs and housing, two things which are massive drags on the economy.

Huge amounts of capital are sitting in housing doing nothing and high housing costs and inflation are reducing people's spending power. Get building, get people into work designing and constructing those homes, build some high speed broadband plant.

They can also ditch their vanity project HS-2. Interesting they can find billions for the pet project whose business case has been ripped to shreds pretty much universally but there's apparently nothing in the kitty.

This coalition is like some sick parody of everything you didn't want.

yep sad thing they want another housing boom to try fudge a recovery which will then cause another false economy.

Governments dont learn sadly sustainable jobs, money in people hands who will spend it.

I would like to see interest rates at least 2% ofset it wages should be stabilised. I think house prices should be reduced tighter control on prices. Yes people will moan but they should realise its home not comodity.

It wont be popular but housing/land costs one single reason we in mess. Firmly think banks behind inflating them to get bigger mortages.

[Ignitionnet]

Originally Posted by Hugh

But a change in policy could lead to the UK's credit rating being downgraded, which would mean the interest rates on all the money we, as a country are still borrowing to pay for current spending plans, would rise, leading to higher debts and probably more cutbacks.

We can't carry on, as a country, spending money we don't have.

Per above, tearing up the BoE's gilts it bought with magical money would reduce the national debt substantially and George isn't making much inroads into the deficit anyway.

The cynical wotsit is, along with the BoE, eroding the debt and deficit with inflation. At 5.6% per year on official figures although of course we all know that's not the case for those of us who don't eat iPods and flat screen TVs.

Perhaps a good question for Merv the Swerve would be to ask why his pension is now 93% index linked, inflation proofed if you like, if he's so confident. This up from as I remember it 85% 12 months ago. What an arse.

Vince cable wasn't that the chappie everyone a few years ago was saying was the perfect man to head the economy and since having some power has been a total joke. Lib dem to the core doesn't like having to be in a coalition to have power but won't do the honourable thing and give it up much better to stroll around making completely unhelpful comments all the time.

He's got no political instincts whatsoever. He really doesn't know how to choose his words carefully and when to simply shut up and say nothing at all - c.f. bragging that he was going to 'declare war' on Rupert Murdoch whilst having ministerial responsibility for ruling on Murdoch's attempt to buy BSkyB.

It makes for interesting news stories from time to time, but for the good of the country I'm glad he stands no chance of ever actually becoming Chancellor.

Originally Posted by Hugh

But they can be blamed for putting the country into so much debt that when the recession hit, we were so badly affected.

"End to boom and bust" was the phrase used, I believe.....

just to play devils advocate for a mo ,If labour had not spent so much money we wouldn't have the new schools ,jails and hospitals .The best thing they did in my opinion was the huge investment in social housing improvement ,unfortunately instead of these types of investment being done steadily over a number of decades they tried to do them all at once which meant borrowing huge amounts ,i believe that most of the investment was done in 05/06 and 08/09 when they doubled investment when they should have started back in '98 .
Labour did some good work with investing our money and we realy did need it the problem is they went about it the wrong way