Simple Economics ?

[JemimaMuddleFuck]

I have cut back on everything.
I am going to cut back futher.

I will not be buying anything because I do not know what the future holds.

It's the Thatcher recession all over again. Tories. Cuts will hurt eveyone that works for a living; but not them.

Normally I would buy from John Lewis; Boden; Vertbuadet; La Redoute, Next.

I have spent not a penny; because the household budget is too tight.

It's a typical Tory recession. Look after your own is the Mantra. Those that have money will make more money.

Interest rates will rise. Production and unemployment will increase; but be carefully hidden in statistics.

Because I am not spending; like thousands of others; jobs will be lost..

Verbaudet, Boden, John Lewis. No sales.

No sales mean more unemployed. It fits the Tory profile because we will all be working for a pittance

It was the drive for unrelenting, but unsustainable, demand for growth that was part of the cause of the economic problems. It is part of the problem, not part of the cure.

But doesn't money make money?

So if I have a job I buy things other than the absolute basics...which funds the shops and businesses....which means they pay their staff...who go out and buy things....which funds the businesses....

On a very simple level if I lose my job now, at least one nursery nurse will probably lose theirs. That is two people at least made redundant.

simplistic and misplaced solution,you are wrong

What is the answer then, Purits?

Labour over-spending didn't cause the recession, bailing out the banks did. Even Mervyn King agrees with that. And don't try and tell us that the Tories would have regulated the banks more - they clearly wouldn't. They also agreed with labour's spending plans so I'm struggling to see what would have been different.

So give the old It's All Labour's Fault thing a rest. It isn't, and it's getting boring.

Ok...isn't the solution somewhere in the middle though?

Made sense to me scottishmummy. Why is it wrong?

Most people know the recession is much worse because of Labour. There is a structural deficit - years of our spending beyond our means and we are still even after the Labour/Coalition cuts still spending far too much. There is much to do and it has hardly started. We cannot keep spending what we do not have.

Also perhaps some people had become just a bit too consumerist. Would it not do good for people to cook at home, not eat out, to buy clothes less often, recycle clothes? Aren't those things really morally better anyway? Spend spend spend was never a route to personal happiness.

The recession is much worse than what, Xenia? Worse than it would have been had the Tories been in power? What evidence is there that they would have done anything differently?

I think we should probably just bomb Iceland (country not the store, natch).

They owe us billions right?

Or is that ridiculous?

Like... for instance, not being able to shop at Boden?

If you shop at Boden and Vertbaudet, you have money. Ergo, according to the OP, you are a Tory. Therefore you don't care and won't be affected by the recession because you don't work.

Um, what tosh.

What is the answer to unsustainable growth, Lecce?
Um, that would be sustainable growth.

Gordon Brown made the mistake of thinking that things could only get better bigger for ever and ever and ... He forgot his own Golden Rule of balancing the books within an economic cycle. He might even have believed 'no more boom and bust'.
This is the reality check.

There is a worldwide recession. How it has affected the UK is much worse than some other countries because of the spending of Labour whilst it was in power - the coffers were bare.

You do realise that there has been a deficit since the post war years. This is not something that has appeared magically since May 1997. Ok, so Labour didn't do a stirling job, but if they hadn't had to bail out the banks then the national debt was unlikely to have risen to the height it is now. I don't want to hear every spending cut justified by the childish cry of "It's not my fault - he did it!".

Especially when those being hardest hit are those who can least afford it, and some of those individuals who helped the banking house of cards nearly topple have had ridiculously huge bonus.

Jemima, much of what you say is true, but for the fact that you've overlooked opportunity costs. That is, what might the government do with the money it saves by not spending it on healthcare, education, etc. Presumably they will spend it on paying down debt. Presumably, in their judgement, paying down debt has a better return than investing in public services.

Opportunity cost is a key concept in economics, and is one of the principles that sets us economists apart from our friends the accountants. The best analogy to describe opportunity cost is one given by Adam Smith himself. He asked whether it was economically sensible for people to go around Paris smashing windows in order to keep widowpane-makers in business? Of course, the answer is no. Because it ignores what else the money could have been put towards if the windows hadn't been smashed. It could have been put towards, for example, investing in boulangeries. Or something similarly french.

(PS, posting from New Zealand so I know squat about English political trade-offs)

The deficit got much worse under labour. Anyway all parties wanted 20% cuts so there is really very little between them all except this Government had the misfortune to be in power when the axe had to fall.

Yes, none more "champagne socialist" than "I can no longer afford Boden". That's really made me chuckle!

MrTumble, you say those being hardest hit are those who can least afford it?

Who do you mean exactly, I genuinely would like an example.

The poorest people aren't losing their child benefit or paying tax at 40% or 50% are they? Their children don't even have to pay (as much, if any) tuition fees for university.

YABU OP. Spending your way out of a recession is Keynesian economics - its not the only economic theory out there. It (probably) works in the short term, but is inflationary in the long term. Keynes' famous quote was "In the long run we are all dead". But I think most of us do worry about the long run and what sort of world our children will live in. Some sensible restraint now may well help in the future, don't you think?

The hardest hit are those in the middle.

The richest and poorest are protected from the worst of it

violethill what is your definition of the middle?

Middle class? Middle earners?

Middle earners.

(Have no idea what the concept of middle class means. I was the child of a working father and non working mother, I went to a fairly crap school, got into University - in the days of grants- have worked all my life apart from mimimum maternity leaves. Have no idea what that makes me, and I don't like labels anyway, as they mean different things to different people)

Agree - there are so many different definitions in the media of the "middle" these days and I wondered which you meant, that's all.

In the interests of balance, here's a Torygraph article complaining about how left-wing Cameron is:

Link

IMO if Cameron is succeeding in getting the lefties to complain about how right-wing he is, and the righties to harrumph about how he's a wooly leftie, he's probably taking a fairly sensible centrist line.

It is the working class that will be most affected. Not the underclass and not those on £100,000 plus. The average grafter will be the most affected.