Reply to: There is no plan b

[lukemg]

I am clinging to the hope that the krauts will eventually dig deep and cough up. They know they cant do this straight away as the feckless pigs will be back again and again.
Have to get them feeling pain and making the changes needed first.
Germans know it will cost them even more if it goes norks up.
UK - another lost decade beckons...

[sasguru]

[QUOTE=centurian;1437070]The problem is we have used Keynesian economics in the UK to starve off recession since 2001. [QUOTE]

No we haven't. I don't think Keynes advocated bribing your voter base with public funds, having no oversight over financial institutions, starting pointless wars you can't afford etc etc.
Back in 2001 the fiscal and monetary position was still OK, Labour hadn't completely wrecked the good work of the previous Tory Administration yet.

[centurian]

Hey thicko! Look up what happened to the US when they cut everything in the last depression.

And look at what happened to governments that quote Keynes and don't cut (Argentina, Ukraine, Russia etc.) - they go bankrupt under the weight of debt.

A Keynesian approach buys you some time. The problem is we have used Keynesian economics in the UK to starve off recession since 2001. And while it works in the short term, you can't keep doing it forever.

[hyperD]

I'll drink to that.

Big stones to do it quickly or tiny little ones to drag it out a bit?

A carrier bag full of bricks and a couple of empty cans of 80/ should suffice.

[TimberWolf]

Who needs a plan B when you own a printing press.

[CheeseSlice]

Little ones, sharpened.

That'll be a good quality packet of gravel then sir.

[Mich the Tester]

He is correct in a way. Keynesian theiry was badly violated when Brown was in power. The gist of the theory is that when there is a full blown recession going on with corporates and public not willing to spend, the government will step in and borrow money and spend on value adding projects like bridges, motorways etc. This way, the government has spent money in the economy and enabled jobs to be created and has proper assets against the debt.

That's half the gist. The other half of the gist is that when the economy's doing well you should run a surplus to save up money for the times when you want to stimulate demand; that's the less popular bit among politicians, but it's quite important if you want to make Keynesian economics work.

[malvolio]

Greater borrowing, agreed. Much cheaper repayment terms though, and for rather shorter terms. So end-to-end cost actually lower. Heigh ho...

[Mich the Tester]

Limoncello. Lovely.

They have the best coffee as well.

Barolo, Barbaresco, Brunello, let's make a list of what the Italians will be drinking when they go bust. I guess they'll be digging up some truffles to go with it all too.

I think they'll be alright.

[sasguru]

He is correct in a way. Keynesian theiry was badly violated when Brown was in power. The gist of the theory is that when there is a full blown recession going on with corporates and public not willing to spend, the government will step in and borrow money and spend on value adding projects like bridges, motorways etc. This way, the government has spent money in the economy and enabled jobs to be created and has proper assets against the debt.

But Brown borrowed heavily to just increase jobs in public sector and gave above inflation pay rises to public sector employees. Net result is that the borrowing sky rocketed but there is no tangible assets to show for that.

He was comparing Brown and Osborne.
As you point out Brown frittered the money on bribing his voter base.
Osborne is proposing spending money on the infrastructure of the country which will eventually indirectly and directly simulate the economy.
2 very different things.

[fullyautomatix]

Hey thicko! Look up what happened to the US when they cut everything in the last depression.
In the end we have the benefit of printing money, the PIIGS cannot buy back their bonds.
Like I said you're a moron.

He is correct in a way. Keynesian theiry was badly violated when Brown was in power. The gist of the theory is that when there is a full blown recession going on with corporates and public not willing to spend, the government will step in and borrow money and spend on value adding projects like bridges, motorways etc. This way, the government has spent money in the economy and enabled jobs to be created and has proper assets against the debt.

But Brown borrowed heavily to just increase jobs in public sector and gave above inflation pay rises to public sector employees. Net result is that the borrowing sky rocketed but there is no tangible assets to show for that.

[doodab]

The Italians have lots of liquid assets.

I predict that if the worst comes to the worst, they will drink them.

Limoncello. Lovely.

They have the best coffee as well.

[Mich the Tester]

The Italians have lots of liquid assets.

I predict that if the worst comes to the worst, they will drink them.

[doodab]

By an amazing coincidence - the value of the Gold just happens to be the value of their debt !

Is it? I think you'll find it's worth quite a bit less than that.

[Mich the Tester]

I'll drink to that.

Big stones to do it quickly or tiny little ones to drag it out a bit?

Little ones, sharpened.