« New Labour & capabilities | Main | Was Osborne wrong? »

June 30, 2009



So if I have this right, brown and balls (notably not Darling, who's books they are) are so clever they are possesed of the wisdom to see past mere predictions and into the future.

They wish to believe in an alternate utopia, which just so happens to match their political aims.

it is a very elegant try Chris, but it does not wash at all.

The biggest hole is that they are not taking seriously at all the issue that they may in fact be completely wrong. In which case the markets will serve unto us a currency event in pretty short order.


Hm, so Brown and Balls may have something right? Extremely unlikely as they have managed to get every single forecast wrong since 2000.And they only got the ones before that right because the Tories had done it for them...


"Why is Brown lying?"

I've always assumed he has some sort of congenital defect.


"the public sector’s deficit will come down - possibly more quickly than the Red Book forecasts, and sufficiently quickly to avoid the need for big spending cuts."

Things could indeed be better than the Red Book forecasts. Thay could also be a damn sight worse.

Call me cynical if you will, but I find it difficult to believe that the Governments projections will tend to error on the side of pessimism.

Tim Worstall

"In other words, the public sector is in deficit because the credit crunch has forced the private sector to run a surplus."

Well, yea and nay.

"** It’s not minus one because of movements in the current account deficit - foreigners’ financial surplus. However, as these are small, I can ignore them for the sake of simplicity. "

For of course that could change.

kardinal birkutzki

I think you might find that the reason they are lying is because they are liars.

David Logan

I have real reservations about the validity and relevance of these figures. Firstly over the last year the private sector (principally banks) has written off more bad debt than any time in history. There has been a modest increase in the savings rate among the general population partly as a result of credit restrictions but the chart seems incomprehensible. One possible explanation is that a major new "asset" of the private sector is all the new gilts the Government is churning out but even that does not explain these figures. Secondly, I don't agree the international trade situation is too small to affect the picture. We have been running a deficit for a long time now and it is cumulative in its effect. Thirdly, what about quantative easing? Over £100bn of new money has been issued which clearly should affect balances.
Obviously CSRs are fairly speculative in later years and may be based upon pessimistic assumptions but a Government should be prudent (remember her?). We are so far off the fan charts produced in 2007 by the Bank that they have been discredited. Brown and Balls have no basis for assuming things might turn out better and these are the figures. They are therefore lying.


hmm I can't see the difficulties in sustaining higher levels of public sector borrowing over the medium to long term. In the great depression, it was the inability of governments act sooner and spend which made it drag on so long.

so what if debt is at 100% of GDP? its not unprecedented, and many more OECD countries are in that situation. If it means we survive with more of our jobs, infrastructure and businesses intact then it might be worth it. If we reduce public spending now and see entire industries and localities hollow out, we'll be paying for that in the future anyway...


Can't argue with the logic but maybe an economic historian can help you out. It's true that the surplus in the private sector is a function of an inability to lend and this is how all credit crunches start. The problem is that as the recession continues, can't lend is replaced by don't want to lend. This is exactly what happened in Japan in the 1990s. The lost decade there is all about households and companies continuing to run large surpluses well after the banking system has been fixed. State spending keeps ratching up to try to support growth but it becomes harder and harder to generate a return on this investment. Generating inflation becomes the only way to get the private sector to stop saving but as the Japanese have shown, that's a very hard thing to do when you trying to work off a massive borrwoing binge. Conclusion: Brown and Balls are incompetent liars.

cartier watches

This is just one idea, and perhaps displays no more than my limited imagination. If there are better ideas out there, that amount to more than "implement something called "market socialism" and then - alacazam! - full employment!" then I'd love to hear them. http://www.watchgy.com/ mostly bank deposits, fell by £143.2bn in Q1. And of course there’s no guarantee such buying will continue.

The comments to this entry are closed.

blogs I like

Blog powered by Typepad