tag:blogger.com,1999:blog-6247050185364541007.post3151192146321979170..comments2024-03-21T18:02:46.110+00:00Comments on PORTSMOUTH POINT: George Osborne Should Hang His Head In ShameJ. Burkinshawhttp://www.blogger.com/profile/07521961323780567072noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-6247050185364541007.post-70574413377559814062013-11-16T11:17:53.999+00:002013-11-16T11:17:53.999+00:00Austerity is not a purely political policy. In a p...Austerity is not a purely political policy. In a political sense it makes sense to increase government debt that is much more of an unknown quantity in an attempt to increase growth, which is a general indicator of how a particular government is performing. Very few people know how much government debt is rising or falling by compared to how much GDP is increasing or decreasing by. <br />Regards to your point about the economic cycle : the UK as you say will most probably end up in a recession again. This could happen because banks overstretch themselves, or more likely we are dragged in by the Eurozone or America. Growth will never be stable if the economy isn't allowed to contract following its excesses of the past. Both your policies just result in another debt filled bubble and then another recession as the bubble bursts. Growth would be much smoother and a recession will not realistically occur, if the economy contracts as it has done and banks don't loan out so much which can't be backed with a fair priced amount of collateral. ie that the banks can't rely on government backing as this causes excessively risky loans to be taken out which can't be paid back.<br />The IMF who strongly opposed Britain's austerity have backtracked and apologized along with Vince Cable who also conceded defeat to Osborne live on television. Considering how strong our ties are with the Eurozone our growth rate is impressive but what makes it more impressive is that is has been achieved not through "cheating growth" where unsustainable levels of debt are spent. <br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6247050185364541007.post-86992757203082912082013-11-12T17:48:36.471+00:002013-11-12T17:48:36.471+00:00Austerity is a purely political policy as to the a...Austerity is a purely political policy as to the average man in the street cutting the government's budget deficit appears to be the only solution to resolving economic problems as debt is a bad thing, or is it? If the government had invested more in job creation the long-run effects on the economy would be much more positive. As although increasing government spending and therefore further increasing the deficit is a negative in the short-run, allowing such a high level of youth unemployment is going to have a catastrophic effect on the productive potential of the economy in the future as those who should be moving up the pay scale will be lacking the required experience to do this as they will have spent 5 or so years being unemployed rather than gaining valuable experience in the work place.<br /> Using the economic cycle it is obvious that economic growth is never going to be totally stable and that eventually the economy will drop into another recession therefore the idea that by not using austerity measures would lead to another recession is ridiculous as an strategy employed will inevitably lead to another recession eventually.<br />I believe we need to learn from the mistakes made by the government during the boom period in the UK, if during those times the government had released that the prosperity experienced at that time was inevitably going to end at some point then they would have realized the need to attempt to run a decent sized budget surplus which would have acted as a safety net for the UK when recession hit.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6247050185364541007.post-45140061780812071722013-11-11T22:01:07.207+00:002013-11-11T22:01:07.207+00:00Our economy hit recession due to a housing bubble ...Our economy hit recession due to a housing bubble in America. It was caused by the government skewing the regulatory system, by removing restrictions on banks operations as an investment bank but preserving government insurance of deposits. This meant that bankers could take too many risks and would be kept better in check by the forces of a free market ( but that's for another day.) After this bubble burst a necessary contraction must take place, allowing a market to correct itself from a period of excesses. Eventually entrepreneurs lead an investment led recovery. A reduction in money supply can cause the interest rates to rise, banks are more likely to loan and the level of inflation is low due to high interest rates. Lower prices of raw materials can increase likelihood of investments and over time the economy is back on its feet. This is the next phase in Osbournes master plan. What you want is the B of E keeping interest rates low and more money being pumped into the economy. All of this disrupts the free market valuation of goods and money making them cheaper than the forces of supply and demand dictate. People borrow money and invest in another speculative bubble ballooning its value well above its real value causing another bubble to burst. Osbournes message is loud and clear saving has saved the economy and unfortunately as Keynes should have said "in the long run its his ideas which are dead" Without saving the economy can only fake growth living of printing presses. Your ideas would have caused unsustainable growth shortly followed another recession and leave humanity on the precipice. <br />Regards <br />Mr Schiff Anonymousnoreply@blogger.com