Double Dip Recession

There's no point blaming ttosca, they're only quoting Compass. The fact that Compass, an organisation that advises the Labour party and is presumably taken seriously by those on the red benches, can be as economically ignorant as they are certainly explains the shambles that was the British economy under Brown's stewardship.

Labour has, like it or not, a reputation for economic mismanagement - if they think that tripe like this passes as good advice, then it's a well-earned reputation.

if , IS, obviously. Very tired.

Ed Milliband this morning on R4 says that the workers need to share in the wealth they create, because workers create the wealth. Huruh at last Ed says something sensible.

The problem lies with ownership of the means of production, this means the wealth if funnelled away from those that create it.

I agree Daffo that countries now are more interdependent and as I keep saying we now are in a global economy. The UK government has policies which can influence our economy but outside forces can also have a big effect.

In general I do agree that we can't let the banks fail without resulting in mass chaos but at the same time the banks need to understand they cannot lend or take excessive risks with impunity either.

Ttosca, you views are clearly ridiculous and I think if you had any credibility before then you certainly dont have any now. Just how can you advocate the government to not pay PFI then at the same time argue we should continue borrowing to ensure people have money to spend. Just who would you borrow from? As soon as the markets realise that the UK government reneges on its debts when it suits them then our interest rates would go through the roof and the only lenders would be the corporate equivalent of Brighthouse.

You all sound far more acquainted with economic policies than myself but I sense the finance of any country is inter-dependent on the economies you trade with. So as we are more or less in Europe, I can't see how we could let banks fail unless Europe joins in too. Greece is crippled by not paying debt - v. high interest rates on loans I presume. The left and right views expressed here would I imagine create the same problems - chaos. We cannot go it alone on economic policy or we will get the cold shoulder from countries we want to trade and do banking business with. Am I way off? I'm happy to be enlightened.

I don't believe that tinkering around at the edges of an essentially flawed system is enough.

At the moment Governments are up to their necks in debt, borrowing more is not an option. Just as the banks used leverage when we had huge levels of mis-invested capital and huge levels of liquidity we are now giving huge sums to the IMF to bail out other countries in debt, not money we have, this is based on money we anticipate being paid back! just as the banks have done to create the problem. It's the creation of debt and capital investment not into manufacturing and work creation but the financialization of capital that has caused the problem. This has happened because business has chased over the globe for deregulated poorly paid labour markets. We all know that workers do not earn enough to pay for the goods of their labour. Disempowered labour means low wages and doesn't create demand. Thatcher/Regan and their onslaught against the unions helped to create the situation along with selling off nationalised industries. Thatcher's chief economic advisor has admitted a few years ago that "attacking inflation was just a cover for bashing the unions and creating unemployment, an industrial reserve army" that would bring wages down.

So in view of the fact that capitalism left unfettered creates the conditions that lead to welfarism, actually using welfare to stimulate demand in the economy does nothing to tackle the root cause of the problem.

We need wholesale reform of how banks and businesses operate. We need to reform and regulate shares, ownership, employment rights, world trade, banking and business and not simply tax and spend and it needs to be a global response. We need to create a flat earth policy to taxation, business rates and wages and we also need to make markets like derivatives illegal.

I have several ideas which I'll happily expand upon but I expect deaf ears or at least yawns

mini-

I don't agree with any of the ideas put forward by compass because not one addresses the underlying issues.

What are the underlying issues? It's not like the UK has such a tough business environment, you know. It has one of the most lax labour laws in the EU. It also has low nominal business rates, and many global businesses don't pay much tax anyway.

The underlying issues are that there is high unemployment, stagnating wages, personal debt which people are paying off, job insecurity, and lack of consumer demand because of all of these things.

The answer isn't even more supply-side reforms. We've had too many supply-side reforms already. More deregulation isn't the answer. The answer is to actually give people jobs and enough money to spend in the economy. Until this is done, there will be no demand. Without demand, there will be no growth.

I think that Compass's idea of simply not repaying the PFI debts is completely idiotic. Anyone with one iota of common sense would know that.
I am very surprised that anyone can take this idea, or the people who put these 'policies' forward in earnest, seriously.

I don't agree with any of the ideas put forward by compass because not one addresses the underlying issues.

breadandbutter-

I'm not talking about printing money. I'm talking about job creation and tax breaks for the poor and middle-classes.

ttosca - more QE is a stupid policy though.

"We can do whatever we like."

And watch any money saved eaten up in lawsuits and compensation? Don't be thick

So Ttosca, am I reading it correctly. Compass are proposing that we renege on our PFI debts because it's a lot of money? If so, do Compass also expect the NHS to give up the use of the hospitals which were built under PFI?

Don't get me wrong, I think PFI is/was terrible and we should never have done it in the first place. But now we have, we cannot simply turn around and continue to use the buildings whilst not paying our bills cos it doesn't suit us to anymore.

Sure we can. We can do whatever we like.

MrPants-

Haircutting the public spending budgets by x% each could never have created the conditions for recovery. Only a systematic cull of non-functional governmental departments, complete with a review of red tape, business regulations and laws, and coupled with a boost for industry in the form of a long term reduction in taxes on businesses could have turned things around.

No, deregulation is what caused the financial crisis, and corporate taxes are at the lowest point for decades; many international companies pay little or no tax at all.

Your suggestions are exactly what we've already been doing over the course of three decades, and it has given us wealth and income inequality not seen since the 1920s, corporations paying little or no taxes, collusion between corporations and government, and the financial crisis.

Instead of doing the same thing but worse, we should be doing something different. Namely, demand-side reforms which will put money in to the hands of struggling households who will spend the money out of necessity, rather than throw more money at corporations and banks, who are still holding cash and neither lending nor investing.

minimathsmouse Which departments? I thought the bonfire of the quangos was a brilliant idea, simultaneously saving money and increasing democratic accountability within the system. No one is more critical than I am that the coalition have appeared to bottle it and stopped the cull. Similarly, the great repeal bill, championed by the likes of Douglas Carswell, was another opportunity missed. That in turn could have cleared the way to culling the number of famous 'non-jobs' that us right-wingers froth about on every occasion - the 5-a-day coordinators, Riverbank Accessibility Officers etc... Similarly, this crisis provided a once in a lifetime chance to re-evaluate the state to subject relationship. What is the state for in the 21st Century? This is looking more blown by the day as the coalition seems more intent on restoring the pre-2007 settlement rather than fashion something new.

As for your second point, "Should we cut taxes and deregulate labour", I think we should. We want as many businesses operating in the UK as possible and right now it's a buyer?s market. We need to put as few obstacles in the way of investment as possible. We cannot compete with Eastern Europe on wages (never mind China), so we need to find other ways to compete. Low tax is the simplest, and quickest, way of achieving this.

Only a systematic cull of non-functional governmental departments which depts?

complete with a review of red tape, business regulations and laws, and coupled with a boost for industry in the form of a long term reduction in taxes on businesses Which regulations?

Should we cut taxes and deregulate labour?

There has been a problem with how to absorb greater levels of capital surplus since the recovery from the crisis of 73-82 but there has been little invested into production. This is a world wide problem, despite chinese manufacturing. Money instead has been used to make money through things such as the derivatives markets, something too complex and difficult for governments to regulate. I would argue that without regulation we do not wisely use capital to invest in real jobs and growth.

If you want to cut business taxes in the hope that more jobs can be created, you are very much deceived. Look at GE, they had so much capital, they used it not to grow their core business but to get involved in banking and finance, is that a way of generated jobs and long term security.

I suppose a wall north of Watford would provide employment. (And nothing this lot does surprises me anymore, sadly).

I'd better get e-baying to raise some more pennies then.

Reneging on PFI would be a partial default on our national debt and would be seen as such by the markets. In essence it what Greece just did. It would result in the UK borrowing costs rising overnight by several %.

Such a stupid idea.

Mr Pants, I like Chinese people, as you know I am very concerned about the conditions of the Chinese workers.

Y. Peril is a book by Wang Lixiong, about a civil war in China, that becomes a nuclear exchange and engulfs the world, causing World War III. It's notable for his politics, as a Chinese dissident and outspoken activist; its publication following the Tiananmen Square protests of 1989

So Ttosca, am I reading it correctly. Compass are proposing that we renege on our PFI debts because it's a lot of money? If so, do Compass also expect the NHS to give up the use of the hospitals which were built under PFI?

Don't get me wrong, I think PFI is/was terrible and we should never have done it in the first place. But now we have, we cannot simply turn around and continue to use the buildings whilst not paying our bills cos it doesn't suit us to anymore.

Your weeping MrPants would be matched by that of the Labour leadership... who know full well that their grand plan (despite idle talk of taxing bankers) would be no different in essence to the current one.

Haircutting the public spending budgets by x% each could never have created the conditions for recovery. Only a systematic cull of non-functional governmental departments, complete with a review of red tape, business regulations and laws, and coupled with a boost for industry in the form of a long term reduction in taxes on businesses could have turned things around.

This austerity plan is severe enough to affect the poorest in our society, yet not severe enough to make a difference to our economy in the long term. Cameron is going to lose the next election at this rate and I weep when I think of the alternative government that this country is likely to get.

From the Guardian Business blog:

12.51pm: Here's a graph showing that the UK economy has performed even more weakly since the current financial crisis began than in the Great Depression:

www.guardian.co.uk/business/2012/apr/25/eurozone-crisis-live-uk-double-dip-recession#block-40

12.36pm: Compass, the left-wing pressure group, argues that neither Labour nor the Conservatives have the right policies to end the economic crisis.

Neal Lawson, chair of Compass, said Ed Miliband and Ed Balls should be bolder:

Labour's '5 point plan' doesn't go far enough. Ed Miliband and Ed Balls need to go on the offensive by presenting a clear alternative to the failed politics of austerity, rather than offering up a lightweight version of the "Osbornomics" which has let the country down so badly these last two years.

? Reversing the cuts until the economy is growing strongly.
? A new round of Quantitative Easing to be directed to a Green New Deal, to insulate and prepare large numbers of buildings to use renewable energy.
? Cancelling PFI debts, saving the nation £200bn in debt repayments.
? Increasing some benefits for the poorest, who are most likely to spend any extra income, thus boosting demand.
? Introducing a Financial Transaction tax on the City to be used for public investment purposes.
? Closing the £70 billion lost tax gap with a range of anti-avoidance measures including a general anti-avoidance principle.

minimathsmouse, I would have assumed your description of China was an obsolete phrase laden with racist prejudice. I stand to be corrected of course - hence not reporting your post.

Did you honestly think that the austerity measures would mean a straight recovery?

No, we thought austerity measures would harm recovery - which they have.

The road to recovery will be bumpy and things were obviously going to get worse before they get better.

No, they're just going to get worse if we keep on the same course.