ttosca & Niceguy - you should both read this
Response to Hari's article on debt.
ttosca - I'd be particularly interested to see if you can constructively 'engage with the arguments presented' in the article or whether you have your mind set?
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RE: The Spectator's response to the Hari article:
A number of points:
a) You'll notice, disingenuously, that the graph show debt and debt/GDP ratio from 1975 onwards. Precisely the time when debt declined to the levels of recent decades. If you look at the previous charts:
4.bp.blogspot.com/_Z_3bgQQpLBE/TL_tYYSpP6I/AAAAAAAAAE4/6_NAPKhXUmg/s400/debt-gdp.jpg
That for most of the 20th Century, it has been much, much higher.
b) Yes, meant 'Pay of the deficit rapidly', not 'pay of the debt rapidly'. The Coalition plans to eliminate the deficit completely in four years:
www.bbc.co.uk/news/uk-politics-12874631
c) With regards to Peter Hoskin's assertion that the UK's credit rating is under jeopardy:
Here's what Nobel economist Paul Krugman wrote last week in the New York Times: "Like America, Britain is still perceived as solvent by financial markets, giving it room to pursue a strategy of jobs first, deficits later. But the government of Prime Minister David Cameron chose instead to move to immediate, unforced austerity, in the belief that private spending would more than make up for the government's pullback. As I like to put it, the Cameron plan was based on belief that the confidence fairy would make everything all right. But she hasn't: British growth has stalled, and the government has marked up its deficit projections as a result."
www.guardian.co.uk/commentisfree/2011/apr/01/george-osborne-economy-tanking-keynes
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I will reproduce the whole article shortly. The point is that the slash and burn deficit reduction plan is not only harmful to society - an argument in itself - but harmful to the economy, as they will deflate the economy. Recent economic indicators bear this out:
The great austerity is launched straight into the headwinds of this week's dismal economic news, as average incomes fall for the first time in 30 years. Dixons, a good bellwether, delivered a shock profit warning as sales tumbled 11% in 11 weeks: its CEO warned of the "chilling effect on consumers. We think this is the result of the way people are reacting to government cutbacks." Dixons is cutting capital expenditure by 25% ? not exactly growth. Oddbins goes into administration. Thomas Cook warns of "fragile consumer sentiment". H Samuel and Ernest Jones sales are down: no money for jewellery. Argos, Comet, Mothercare ? on and on the rollcall goes of sudden falls in sales and profits. The CBI reports "even best performing sectors ? grocers and clothing ? have seen volumes continue to fall".
Mortgage defaults jumped "unexpectedly", reports the Bank of England. House sales are down, as is manufacturing again. Small businesses are increasingly defaulting on their secured loans. Surveys tell the same story: GfK NOP's consumer confidence index reports the biggest drop for 20 years. They say: "This month's figures show how badly some form of stimulus is needed ? Next month's figures will reveal whether the budget really did put fuel in the tank of the economy ? or merely poured more cold water on people's personal finances."
www.guardian.co.uk/commentisfree/2011/apr/01/george-osborne-economy-tanking-keynes