I1L2T3 Posted August 31, 2015 Share Posted August 31, 2015 Rubbish. You do not run a structural deficit. It's stupid. Keynes agreed. You run cyclical deficits during the bad times and cyclical surpluses during the good times. Unless the "borrow"ing you're referring is debt roll-over in which case you've reached a new level of deception in your argument. Seriously, governments borrow all the time. It is a completely rational thing to do. What you really mean, just to clarify for you, is that net borrowing should not rise above revenue. I don't agree. There are solid arguments for running a deficit at times, for example for new infrastructure and infrastructure renewal. If the government say had to borrow an extra £15bn a year for the next 10 years to renew utilities infrastructure so it was good for the next 50 years that would be totally rational. We would be less happy if we all had 1p banged on income tax to fund it. And maybe even less happy if they took it off the books and used PFI or PFI2 Deficits have to be monitored of course but they are not always bad. Link to comment Share on other sites More sharing options...
unbeliever Posted August 31, 2015 Share Posted August 31, 2015 Seriously, governments borrow all the time. It is a completely rational thing to do. What you really mean, just to clarify for you, is that net borrowing should not rise above revenue. I don't agree. There are solid arguments for running a deficit at times, for example for new infrastructure and infrastructure renewal. If the government say had to borrow an extra £15bn a year for the next 10 years to renew utilities infrastructure so it was good for the next 50 years that would be totally rational. We would be less happy if we all had 1p banged on income tax to fund it. And maybe even less happy if they took it off the books and used PFI or PFI2 Deficits have to be monitored of course but they are not always bad. My bold. No, that's not what I mean. You don't run a structural deficit. You can run a cyclical deficit to cushion the effect of bad economic times and if you're a Keynesian you can use it for stimulus. But you don't run a structural deficit. There's plenty of room for infrastructure spending in a ~£700bn budget. What economic school does this all come from? It's not Keynesian. Link to comment Share on other sites More sharing options...
I1L2T3 Posted August 31, 2015 Share Posted August 31, 2015 It was always fragile and it always will be. There will be bad times. Always have been and always will be. Your repeated statement of the UKs current debt/GDP ratio is very misleading, because it's the all but inevitable results of Labour's great recession and their massive structural deficit. The regulations on borrowing have improved. Mortgages are far better regulated now and the capital ratios at the Banks make a huge difference. They should probably be improved further. Don't forget though that the sudden switch from very low capital requirements to much higher several exacerbated the 2008 crisis and it's no sin to deal with outstanding banking matters at a gentle pace. Your characterisation of borrowing as "out of control" is very odd. The total debt is very high, but as long as we're headed toward sustainable public spending and the bond markets see that, the cost of borrowing will remain reasonably low and a reasonable rate of debt reduction can follow whatever international pressures arise and without shredding public services. Mortgages for households are heavily regulated now. Mortgages for buy to let are not Borrowing is out of control and it will only take one economic shock to prove it. Deficit reduction is predicated on a specific set of conditions, not quite as precise and naive as in 2010, but certain things have to happen exactly as Osborne expects to make his plan work. There is no wriggle room and as we found out after 2010 Osborne is no Mystic Meg. More is coming from China. We'll see how we go. Link to comment Share on other sites More sharing options...
unbeliever Posted August 31, 2015 Share Posted August 31, 2015 Mortgages for households are heavily regulated now. Mortgages for buy to let are not Borrowing is out of control and it will only take one economic shock to prove it. Deficit reduction is predicated on a specific set of conditions, not quite as precise and naive as in 2010, but certain things have to happen exactly as Osborne expects to make his plan work. There is no wriggle room and as we found out after 2010 Osborne is no Mystic Meg. More is coming from China. We'll see how we go. If things go badly, you may see the timetable for deficit reduction slip, but it's still all heading in the right direction. Don't buy to let mortgages require a 25% deposit now? It's hard to see how the banks could get into serious trouble with that. We shall indeed see what happens with China. My expectation is that it will continue to be choppy, but there's an awful lot of up left. Link to comment Share on other sites More sharing options...
I1L2T3 Posted August 31, 2015 Share Posted August 31, 2015 My bold. No, that's not what I mean. You don't run a structural deficit. You can run a cyclical deficit to cushion the effect of bad economic times and if you're a Keynesian you can use it for stimulus. But you don't run a structural deficit. There's plenty of room for infrastructure spending in a ~£700bn budget. What economic school does this all come from? It's not Keynesian. It's from no economic school. Stop obsessing about Keynes. Borrowing to invest is totally rational and totally different from borrowing to spend Osborne-style. Borrowing to invest can happen at any time within reason. It does not create a structural deficit. It is well-recived by institutions, rating agencies etc...If you want a Keynesian flavour to it then maybe you would argue that it is best to do the borrowing in bad times. But as I said it can happen at any time, within reason. You can borrow to invest to help growth ticking along even during good times. Link to comment Share on other sites More sharing options...
unbeliever Posted August 31, 2015 Share Posted August 31, 2015 It's from no economic school. Stop obsessing about Keynes. Borrowing to invest is totally rational and totally different from borrowing to spend Osborne-style. Borrowing to invest can happen at any time within reason. It does not create a structural deficit. It is well-recived by institutions, rating agencies etc...If you want a Keynesian flavour to it then maybe you would argue that it is best to do the borrowing in bad times. But as I said it can happen at any time, within reason. You can borrow to invest to help growth ticking along even during good times. As long as you don't create a structural deficit you're fine with me. Labour did. So I'm ****** off. Link to comment Share on other sites More sharing options...
drummonds Posted August 31, 2015 Share Posted August 31, 2015 Labour's spending commitments in 2008 were £40bn above revenue. If the deficit is now £80bn above revenue Osborne is borrowing twice as much as Labour ever committed to in order to meet his spending plans. These are not Labour's spending commitments. They're Osbornes. Money that he should not be borrowing if he'd stuck to the plan he made in 2010. labour took on 1 million extra public sector workers during their term. that spensing commitment can't be turned off like a tap and you well know it. labour handed over an empty bank account and even joked about it. they left the new government with spending that could not be avoided and could not be afforded. the country knows this which is why labour are not trusted with the economy. Link to comment Share on other sites More sharing options...
I1L2T3 Posted August 31, 2015 Share Posted August 31, 2015 labour took on 1 million extra public sector workers during their term. that spensing commitment can't be turned off like a tap and you well know it. labour handed over an empty bank account and even joked about it. they left the new government with spending that could not be avoided and could not be afforded. the country knows this which is why labour are not trusted with the economy. Here are the facts about public sector employment: http://blogs.channel4.com/factcheck/how-many-public-sector-jobs-did-labour-create/2860 Link to comment Share on other sites More sharing options...
TJC1 Posted August 31, 2015 Share Posted August 31, 2015 Labour messed up...but nobody knew the extent of the GFC. they should have fessed up after though and got on the right track, instead they got milliband, and made themselves unelectable. Link to comment Share on other sites More sharing options...
I1L2T3 Posted August 31, 2015 Share Posted August 31, 2015 labour took on 1 million extra public sector workers during their term. that spensing commitment can't be turned off like a tap and you well know it. labour handed over an empty bank account and even joked about it. they left the new government with spending that could not be avoided and could not be afforded. the country knows this which is why labour are not trusted with the economy. Structural deficits in UK 1980-2012 http://www.imf.org/external/pubs/ft/weo/2010/02/weodata/weorept.aspx?sy=1980&ey=2012&scsm=1&ssd=1&sort=country&ds=.&br=1&pr1.x=92&pr1.y=13&c=156%2C158%2C132%2C112%2C134%2C111%2C136&s=GGSB_NPGDP&grp=0&a The Tories ran a structural deficit for every single year 1980-97 The emporor has no clothes!!! Link to comment Share on other sites More sharing options...
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