Now the Socialists are in power in France will the economy race forward?

[I1L2T3]

This is a handy graphic at the Guardian. It shows the extent of deficits (or surpluses) since 1979, but crucially EXCLUDING FINANCIAL INTERVENTIONS. You can see how high it was by 2009, and how it starts to fall under the coalition.

 

http://www.guardian.co.uk/news/datablog/2010/oct/18/deficit-debt-government-borrowing-data#zoomed-picture

 

http://www.guardian.co.uk/news/datablog/2010/oct/18/deficit-debt-government-borrowing-data#

 

Osborne relief as UK deficit beats target - but higher March borrowing points to tougher times ahead

 

Thanks for posting this. How do you explain the spike in 2008-9? On second thoughts don't bother - it was all spent on public services wasn't it

[Balpin]

Keynes did advocate government borrowing in hard times to stimulatre the economy as you describe. However, he also advocated paying back the borrowings in the good times. Unfortunately for UK plc Gordon, best man for the job, Brown decided not only to borrow during the good times but also to borrow to prop up his electoral support when things went bad. That's why there is no way to borrow more to invest in useful infrastructure. At the end of the good times the debts were already crippling. That's not what Keynes envisaged at all.

 

The incentive surely was to get people back to work, and creating wealth, from Keynes point of view.

The view of the modern capitalist is 180 degrees away from that.

Short term gain in order to fill their own stinking pockets.

The modern capitalist is a piece of filth that should be denied all human rights.

But apart from that, he is OK.

[I1L2T3]

The incentive surely was to get people back to work, and creating wealth, from Keynes point of view.

The view of the modern capitalist is 180 degrees away from that.

Short term gain in order to fill their own stinking pockets.

The modern capitalist is a piece of filth that should be denied all human rights.

But apart from that, he is OK.

 

The problem is that governments rarely follow the Keynesian lifecycle - they resort to stimulus spending in the bad times and they often spend on the wrong things. As pointed out above in the upswing phase when spending should be rationalised and service efficiencies/reform should be taking place no government is going to do it. Politically it would be suicide to remove hundreds of thousands or perhaps millions of jobs when the economy is in a solid phase of the cycle. Done in the wrong way it could throw an economy into recession.

 

Keynesian policies for me make perfect sense but the key problem of course is that it's politicians that get the job of implementing them. And that's where it all goes wrong.

[wellyman]

The problem is that governments rarely follow the Keynesian lifecycle - they resort to stimulus spending in the bad times and they often spend on the wrong things. As pointed out above in the upswing phase when spending should be rationalised and service efficiencies/reform should be taking place no government is going to do it. Politically it would be suicide to remove hundreds of thousands or perhaps millions of jobs when the economy is in a solid phase of the cycle. Done in the wrong way it could throw an economy into recession.

 

Keynesian policies for me make perfect sense but the key problem of course is that it's politicians that get the job of implementing them. And that's where it all goes wrong.

 

I suppose the problem with that theory is it doesn't take account of £1 trillion of debt, a £130 billion deficit and credit rating agencies only too happy to mark down a countries credit rating should their debts become unmanagable or not demonstrate a policy for getting the ship back on course.

The UK currently still has a AAA rating and is paying around 1.9% to fund those debts.

France recently lost its AAA rating and is now paying between 3/3.5%. Italy and Spain pay between 5.5% and 6.5%. Greece pays 28% when anyone is prepared to lend them anything on the open bond market.

Should the UK for example spend £30 billion trying to buy jobs we risk loosing the AAA rating which would probably cost a further £30 billion per year financing the debt. Pretty soon that spirals until you arrive at where Greece is today. Such is the price we are paying because the last government spent everything when times were good and left nothing for rough times like we face now.

[andygardener]

I suppose the problem with that theory is it doesn't take account of £1 trillion of debt, a £130 billion deficit and credit rating agencies only too happy to mark down a countries credit rating should their debts become unmanagable or not demonstrate a policy for getting the ship back on course.

The UK currently still has a AAA rating and is paying around 1.9% to fund those debts.

France recently lost its AAA rating and is now paying between 3/3.5%. Italy and Spain pay between 5.5% and 6.5%. Greece pays 28% when anyone is prepared to lend them anything on the open bond market.

Should the UK for example spend £30 billion trying to buy jobs we risk loosing the AAA rating which would probably cost a further £30 billion per year financing the debt. Pretty soon that spirals until you arrive at where Greece is today. Such is the price we are paying because the last government spent everything when times were good and left nothing for rough times like we face now.

 

We need a like button. Spot on, though they won't like to hear it.

[I1L2T3]

I suppose the problem with that theory is it doesn't take account of £1 trillion of debt, a £130 billion deficit and credit rating agencies only too happy to mark down a countries credit rating should their debts become unmanagable or not demonstrate a policy for getting the ship back on course.

The UK currently still has a AAA rating and is paying around 1.9% to fund those debts.

France recently lost its AAA rating and is now paying between 3/3.5%. Italy and Spain pay between 5.5% and 6.5%. Greece pays 28% when anyone is prepared to lend them anything on the open bond market.

Should the UK for example spend £30 billion trying to buy jobs we risk loosing the AAA rating which would probably cost a further £30 billion per year financing the debt. Pretty soon that spirals until you arrive at where Greece is today. Such is the price we are paying because the last government spent everything when times were good and left nothing for rough times like we face now.

 

Japan has an AA3 rating (several notches below AAA) but pays under 1% on borrowing. Like us it also has a huge deficit and debts. Like us it has a stagnating economy.

 

Get out the mindset that the low interest rate on gilts is a good thing. It's more likely a warning sign on a number of levels. Likewise BoE base rates being so low is not good.

[I1L2T3]

We need a like button. Spot on, though they won't like to hear it.

 

I didn't like it because it's based on poor logic, scare stories and regurgitated nonsense from Osborne.

 

Can we have a dislike button too please.

[andygardener]

Japan has an AA3 rating (several notches below AAA) but pays under 1% on borrowing. Like us it also has a huge deficit and debts. Like us it has a stagnating economy.

 

Get out the mindset that the low interest rate on gilts is a good thing. It's more likely a warning sign on a number of levels. Likewise BoE base rates being so low is not good.

 

Jap bond yeilds are low because they are ruthless, out of work? Go find a bin to live in you shamefull scumbag. Maybe we could follow their example but even a taxpayer like me would see that as a step too far for some of our doleys. Not all to be fair, some would benefit from a reality check.

[MrSmith]

I suppose the problem with that theory is it doesn't take account of £1 trillion of debt, a £130 billion deficit and credit rating agencies only too happy to mark down a countries credit rating should their debts become unmanagable or not demonstrate a policy for getting the ship back on course.

The UK currently still has a AAA rating and is paying around 1.9% to fund those debts.

France recently lost its AAA rating and is now paying between 3/3.5%. Italy and Spain pay between 5.5% and 6.5%. Greece pays 28% when anyone is prepared to lend them anything on the open bond market.

Should the UK for example spend £30 billion trying to buy jobs we risk loosing the AAA rating which would probably cost a further £30 billion per year financing the debt. Pretty soon that spirals until you arrive at where Greece is today. Such is the price we are paying because the last government spent everything when times were good and left nothing for rough times like we face now.

 

I agree with it all apart from the bold bit, times weren’t good under the last government, the economy was run on spiralling debts and a housing bubble, can’t exactly be called the good times.

[I1L2T3]

Jap bond yeilds are low because they are ruthless, out of work? Go find a bin to live in you shamefull scumbag. Maybe we could follow their example but even a taxpayer like me would see that as a step too far for some of our doleys. Not all to be fair, some would benefit from a reality check.

 

That doesn't make any sense at all.

 

You go and live in a bin