Bolitics The New Condem Government

[Dr_Pangloss]

Credit ratings do not mean shit. Moody's and S&P were exposed in the financial crisis as they rated toxic products at AAA. Also observe that Moody's gave Cambridge University, yes Cambridge University a AAA rating. Now let's contemplate for a second who is more likely to be unable to service their debts, Cambridge University or a one of the world's largest economies that also happens to be monetarily sovereign?

 

These large credit rating agencies should simply be ran out of town, they are utterly pointless at best and down right pernicious at worst. The fact that Giddeon held onto the absolute importance of a AAA rating further shows that he's an idiot and completely unqualified for his job.

Edited February 23, 2013 by Dr_Pangloss

[blandy]

They mess everything up.

[Rodders]

Not all students have immersed themselves in this debate. The Oxford Student newspaper reported that a member of the Bullingdon Club was fined for setting off a firework at a nightclub earlier this month. According to the paper, the student was accepted into the club after an initiation ceremony which included burning a £50 note in front of a tramp.

 

re the OUS having a debate on Israel - this snippet chucked in at the bottom, this the kind of shit messrs cameron and osbourne would have been initiated into? Utter rocket polishers.

[snowychap]

why oh why did Osborne ever set himself up as a victim of this stupid juvenile self imposed cock up?

He is so utterly wedded to the idea of economics just being about cycles that he gambled upon it being so.

[peterms]

Simon Wren-Lewis on Osborne.

 

 
The final verdict on George Osborne as Chancellor

This may well turn out to be the low point in the political fortunes of George Osborne. Of course the loss of Moody’s AAA means nothing whatsoever. Not for the first time, his opposite number Ed Balls gets it right:

“It would be a big mistake to get carried away with what Moody's or any other credit rating agency says. Tonight's verdict does not change the fact that the credit rating agencies have made major misjudgments over
recent years, not least in giving top ratings to US sub-prime mortgages before the global financial crash. But what matters is the economic reality that the credit rating agencies are responding to. Moody's
themselves say the main driver of their decision is the weak growth in Britain's economy.”

For more details on the ratings agencies, see Jonathan Portes here.

For the Chancellor, from now on things may start to get better, if only because they have become so bad. The UK may just avoid a triple dip recession, and may even grow at more than the snails pace predicted by
forecasters. Any growth will be talked up as if it is a new dawn, and people will want to forget the last few years as quickly as they can. This may even be enough to see a Conservative government elected in 2015. In that case, George
Osborne as politician will be vindicated. But this blog is about economics (mainly). As far as macroeconomics is concerned, nothing that will come can repair the damage that has been done over the last two and
a half years. Hence the finality of my title.

It would be foolish to argue that all of the UK’s economic woes are down to its Chancellor. The financial crisis has generated some particular problems for the UK, which most Chancellors of the Exchequer would have
struggled with. What George Osborne did with his austerity programme was the equivalent of putting a sick patient on a starvation diet accompanied by cold showers. The UK economy without accelerated
austerity would still have been in poor shape, but under George Osborne it has been a disaster.

It is perhaps telling that the best we can say for the record of the last two and a half years is that maybe the statisticians have got the numbers wrong. Maybe more of nominal GDP growth is real and less is
inflation. Without such a major rewrite of the data, the record is dismal. Effectively no growth, during a period in which we would normally expect a significant recovery, a recovery that had already
begun before he took over. Those who say that the employment numbers are not so bad completely miss the point (journalists please note): if the numbers are right it seems that productivity and the supply side of the
UK economy have also stalled in the last few years, implying that the loss of output could even be permanent. A temporary loss of output (and the increase in unemployment or lower real wages that goes with it) is
bad enough, but to permanently reduce output forever is some achievement. For once, the word disaster is not an exaggeration.
 
What about that terrible legacy the previous government had given him, which he never fails to mention? Absolute nonsense. The record of the previous government was far from perfect,
but they did not create a horrible mess that he had to put right. What about the debt crisis? The panic of 2010 might have justified promises of future austerity, perhaps with immediate action which demonstrated
intent in ways that did least harm to aggregate demand. When I was asked by one of his advisors what this might involve, I suggested temporarily raising estate taxes (death duties) - what better way to show you are
deadly serious about reducing the deficit than doing something that had big political costs for you, yet with a relatively small impact on demand. Yet for a Chancellor where politics is key, what we got instead
was front loaded austerity, which even Nick Clegg has recently acknowledged was in areas that did maximum damage to the economy.

After the panic of 2010 was over, when it became clear that the debt crisis was really a Eurozone crisis and UK long term interest rates declined with the fortunes of the economy, we should have had a major change of
policy. There were many possibilities besides conventional stimulus, such as balanced budget fiscal expansion, or changes to the monetary policy regime. But these would all have involved political costs, so
instead we had short term tinkering coupled with the prospect of more austerity beyond the next election.

Can he blame the advice of others? Sure there was bad advice from some influential quarters, but there were also plenty (a majority, indeed) of reputable economists who correctly warned of the dangers the policy
involved. So austerity was always a gamble - a gamble that the UK economy was strong enough to be able to offset the undoubted negative impact of accelerated austerity. It was not.

So what was the prize that led to this gamble? Again it had little to do with macroeconomic policy. As Paul Krugman has pointed out many times, the ‘debt problem’ is seen by many on the right as a useful cover to
reduce the size of the state. Seen through this lens, the details of the austerity programme make much more sense. A focus on demand ‘rich’ items like investment, local authority spending and welfare, and
avoiding temporary increases in taxes that have a much lighter demand impact? - because the aim is to permanently reduce the size of the state. George Osborne was prepared to take a gamble with the economy for
political ends.

Of course all Chancellors are politicians. Most would take small liberties with the macoeconomics to gain political advantage: for example before 1997 by delaying raising interest rates until after the party
conference, or after 1997 by being a little too optimistic about tax receipts to minimise unpopular tax increases. However in most cases these are the equivalent of minor indiscretions, which do not
fundamentally alter the fortunes of the economy. The centrepiece of Osborne’s strategy was accelerated austerity for political ends, and it stopped the recovery dead.

So my final verdict on George Osborne? He is a political tactician, who time and again has put party political gain ahead of the economic interests of the economy. We see this in many ‘small’ things, like the
contents of his last budget and Autumn statement, to more important things, like his support for policy on immigration or Europe. It is defined by both what he has not done (total inaction on monetary policy, when - unlike the US and
Europe - he has considerable power), as well as what he has done (accelerated austerity). The politics may still come good for him, but the damage to the UK economy his action and inaction has caused is final.

 

 

[blandy]

That "final verdict last para is spot on, IMO, though I doubt the politics will come good for him, because by acting ideologically, to please the right, any gains he gets from that will be more than offset by the rest of the country voting based on the economic mess it's created.

[peterms]

Ministers have minders who are supposed to help them avoid unfortunate photos.  Luckily, they don't always manage.

 

And they might have advised him against that tie, as well.

 

 

 

[Awol]

That "final verdict last para is spot on, IMO, though I doubt the politics will come good for him, because by acting ideologically, to please the right, any gains he gets from that will be more than offset by the rest of the country voting based on the economic mess it's created.

Has he pleased the 'right' though? I consider myself centre right (which by VT standards equates to Genghis Khan's more ruthless cousin) and think he's an utterly useless chod.

[peterms]

I think I've discovered the inspiration for the bedroom tax.

 

If we're going to compete on the international stage, then allowing people who aren't home-owners more space than this will clearly damage our productivity.

[CarewsEyebrowDesigner]

He hasn't pleased the right, he's pleased his mates.

[TrentVilla]

That "final verdict last para is spot on, IMO, though I doubt the politics will come good for him, because by acting ideologically, to please the right, any gains he gets from that will be more than offset by the rest of the country voting based on the economic mess it's created.

Has he pleased the 'right' though? I consider myself centre right (which by VT standards equates to Genghis Khan's more ruthless cousin) and think he's an utterly useless chod.

 

Perhaps you are still not 'right' enough my friend.

[TrentVilla]

So Nick Clegg knew about unspecific concerns about Lord Rennard but nothing more than that until last week, now I for one believe him, Nick Clegg is a man of his word after all.

[peterms]

Editor of C4 News:

 

bendepear
‏@bendepear

Some senior Liberal Democrats briefed over 2 weeks before broadcast

bendepear
‏@bendepear

3/3 For the record we gave Lib Dems womens' allegations 53 hrs before broadcast they replied @18.59 on day of broadcast; we r on air @1900

bendepear
‏@bendepear

2/3 Then, Clegg;"when indirect
& non-specific concerns about Chris Rennard’s conduct reached my
office in 2008, we acted to deal with them."

1. bendepear
   ‏@bendepear
    

   1/3 Clegg saying 2 things;"I did
   not know about these allegations until C4 informed the party of them
   shortly before they were broadcast."

   
   
   Iain Martin
    
2. ‏@iainmartin1
    

   Classic hurt Clegg: "I will not stand by and allow my party to be subject to a show trial of innuendo, half-truths and slurs"

 

 

[peterms]

An astonishing story about the vast amounts of compensation this country paid to slavers for stopping them practising slavery.  Instead of imprisoning them (or by the standards of the times, killing them), we gave them massive amounts of money.  The parallels with throwing money at criminal bankers are acute.

 

 

 

Britain's colonial shame: Slave-owners given huge payouts after abolition

David Cameron's ancestors were among the wealthy families whoreceived generous reparation payments that would be worth millions ofpounds in today's money
 

 

Of course Cameron's family used that money to speculate on the stock exchange, and then hide the proceeds in tax havens.

 

What an edifying tale.

[peterms]

Jeremy Thorpe.

Cyril Smith.

Paddy Pantsdown.

Charles Kennedy.

David Laws.

Mike Hancock.

Chris Huhne.

 

Perhaps they have a different interpretation of "Liberal" than I understood.

[drat01]

From Twitter but smile

 

Clegg now has 15 personal advisors! That's 13 more than @johnprescott had, 8 more than Snow White ever needed, and 3 more than Jesu

[snowychap]

What's Charlie K done?

[TrentVilla]

What's Charlie K done?

 

No idea, what makes you think he has done something?

[snowychap]

He seems to have incurred Peter's disapproval a few posts above.

[peterms]

What's Charlie K done?

 

Done?  I'm not sure I catch your drift.

 

I understand that Charles was assiduous in showing his personal support for one of Scotland's oldest industries, that of distilling the water of life.

 

Some said he took this too far, by appearing on television and in Parliament while sporting the ruddy glow which he had attained through a bracing walk, but which his detractors put down to less healthy pursuits.

 

It is sad that some political pygmies chose to use these base allegations to remove him from his position of leadership.  He was after all the wittiest Liberal leader we have ever had, or ever will have.  How different to the faceless and pathetic Clegg.  (NB "clegg" in Scotland, means a nasty and aggressive horsefly, which does no lasting damage but which painfully steals your blood in a surprise attack.  Well named, then.)