Moody's are a joke anyway, since 2008 they have been seen as not knowing their arse from their elbow.
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UK PoliGAF thread of tell me about the rabbits again, Dave.
- Thread starter Chinner
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Moody's are a joke anyway, since 2008 they have been seen as not knowing their arse from their elbow.
killer_clank
Member
The outlook change. I know why they exist and do what they do but they play their part in inducing crippling austerity to people who don't deserve it. It's horrible.
zomgbbqftw
Banned
Indeed. People rag on S&P, but Moody's are on a whole other level of incompetence.
Either way, the message they have given to us is still true. Our public finances are in a terrible state and any further shocks from Europe will likely see us fall into a debt spiral that will be tough to break.
The Chancellor needs to ensure that we still have some room to manoeuvre should the Euro go up in flames. That means extra spending cuts this year and next, maybe £7bn this year and £10bn next year. That adds up to about £50-60bn over the life of the spending period which brings our overshoot from the original plan down below £100bn. That plus slightly better growth for this year and next year will be enough to keep the AAA rating. Finding £7bn of savings this year should be very easy, there are so many areas of government that are useless and could do with trimming down.
Yeah.
i love seeing the tories squirming to justify the state of the economy constantly, since they have to avoid saying it's their inept management that's doing the damage
so the royal wedding and japanese tsunami were both responsible for negative growth, and now after the continued failure of austerity to lower the debt and putting our credit rating on watch, osborne tells us that the solution is...more austerity
krugman absolutely nailed the comparison: osborne is like a medieval doctor who bleeds his patient, sees their health is not improving, then recommends further bleeding as a cure
it would be funny if it weren't the socioeconomic health of the nation on the line
so the royal wedding and japanese tsunami were both responsible for negative growth, and now after the continued failure of austerity to lower the debt and putting our credit rating on watch, osborne tells us that the solution is...more austerity
krugman absolutely nailed the comparison: osborne is like a medieval doctor who bleeds his patient, sees their health is not improving, then recommends further bleeding as a cure
it would be funny if it weren't the socioeconomic health of the nation on the line
zomgbbqftw
Banned
As opposed to more alcohol for the alcoholic?
The failure of our economic programme is basically because Europe has gone up in flames. There is basically nothing that we could have done about it.
Even so, the last few months have seen a turn around in our fortunes. We won't fall into a recession, we won't see more contraction and we will turn around.
The only way to bring down a £150bn deficit is to reduce spending. There are no two ways about it. We need to get that down to £50bn by 2015 to make sure we keep the confidence of the international investors who are looking at lending us money on the cheap. That means £80bn in spending cuts and £20bn in tax rises over 5 years. If there was an alternative then I'm open to suggestions.
where is that report to the effect of 'there's a 50% chance we'll go into recession again in 2012 irrespective of whether europe improves' when you need it?
i don't recall anyone saying that we don't need to reduce spending at some point. the alternative argument has always been that we need to increase short-term spending in order to cut the deficit in the longer term.
zomgbbqftw
Banned
The NIESR one?
I quite like Osbourne, he's clearly very driven and focused on reducing the debt.
People are saying that America went a different way, and they did, to some success, but I think the solution to the problems we face isn't a question of encouraging growth vs cutting debts, but more that either selection is followed through fully and without hesitation. This is why the Eurozone is fucked, they're indecisive whereas, say what you want about your position on the left/right spectrum, the important thing is to do something and Osbourne is clearly doing that, despite calls from other areas to waiver.
The growth option isn't as attractive for the UK because our fundamentals aren't as good as America's due to various factors (e.g proximity to emerging markets, lack of a minimum wage, red tape etc)
Or maybe I'm talking shite, I was totally useless with economics before the crunch.
People are saying that America went a different way, and they did, to some success, but I think the solution to the problems we face isn't a question of encouraging growth vs cutting debts, but more that either selection is followed through fully and without hesitation. This is why the Eurozone is fucked, they're indecisive whereas, say what you want about your position on the left/right spectrum, the important thing is to do something and Osbourne is clearly doing that, despite calls from other areas to waiver.
The growth option isn't as attractive for the UK because our fundamentals aren't as good as America's due to various factors (e.g proximity to emerging markets, lack of a minimum wage, red tape etc)
Or maybe I'm talking shite, I was totally useless with economics before the crunch.
radioheadrule83
Banned
I've never had issue with the principle of cuts being necessary, where I am skeptical of and critical of this government is in their efforts to minimise them or move them on to the people who can take it... I can't imagine how bad it would have been without some Lib Dem moderation.
While I don't want us to drive businesses away, I do want to see us claw back some money that we're currently letting ginormous businesses get away with in avoidance.
Actually you've got the Investment allowance wrong, it's currently £100k and Osbourne has lowered it to £25k from April and reduced overall corporation tax rates. This will make it less likely that they will spend cash because they will get less investment allowances and will pay a lower rate anyway so more likely to hold on to it.
Bingo, strong and wrong is better than nothing, if sentiment is that you are at least decisive then market conditions can improve and confidence can return.
It's not liking having a smaller deficit will hurt us either.
the problem with the eurozone was that it was poorly designed to begin with and it's been mismanaged every step of the way.
louis89
Member
So a giant financial crisis in the UK's biggest trading partner and the world economy in general being in a dire state has nothing to do with it?
killer_clank
Member
Agreed. It's all very easy to say 'cut cut cut' but totally innocent people are suffering hugely under George Osborne, who's so rich he doesn't give a fuck and just can't see how miserable his economic policies make the country. The deficit reduction measures need to be way more even, they've affected the poor so much and the rich not at all.
zomgbbqftw
Banned
Osborne is doing a decent job under the circumstances, but he has let the growth agenda get away from him a bit, but we'll see what he comes up with in the next budget. I'm hoping for some kind of capital allowance relief for all companies.
On the economic stuff, you are right about US fundamentals, but you haven't taken into account the fact that the Dollar is the world's reserve currency and that they can basically borrow at whatever rate the Fed sets (via QE) so a longer term deficit reduction plan is viable in the US where it wouldn't be here. Investors are much more likely to lose patience with is the UK than the US and risk trillions in dollar assets they hold.
Close those loopholes and business will drain away to more hospitable jurisdictions and take thousands of jobs with them. Sad but true.
of course it does, but back in july they were blaming the japanese tsunami, royal wedding, and olympic ticket sales
[edit]and for the 'well it's raising confidence' stuff; business confidence briefly rose before the tories were in power but then steadily declined and are now below the pre-recession average
Unfortunately I don't think it's something that can be legislated for. Shutting down Jersey/Isle of Man would only go so far, they'd probably just move it to Switzerland or the Caymans.
What needs to happen is a social/consumer change. Moving money to offshores needs to be more stigmatised than it is now (similarly to how benefit fraud is tackled socially) and consumers need to be better at consuming, factoring in whether a company is evading into their purchases *COUGHCOUGHarcadiagroupCOUGHCOUGH*
Simply put, it's impossible to legislate against without them running off.
A stronger press that isn't in the pockets of corporate interest is a good start
zomgbbqftw
Banned
It already went down to £100k? Oh dear. I don't really deal with small business so my info is pretty out of date with this stuff. I have yet to meet a single person who thinks the UK's investment position is worth a damn, it's so much easier to invest money in the US.
I would like to see the government take a look at US style investment taxes, raise capital gains taxes to match income tax and allow almost unlimited capital investment tax free with the ability to write off almost any kind of expense against corporation taxes.
The country needs to rethink its whole attitude towards personal and business investment, the latter is far more important for the wider economy and job creation.
killer_clank
Member
Stop blatent tax dodgers operating in the UK? Almost certainly illegal, but fuck tax dodgers.
zomgbbqftw
Banned
And pray tell, what can the Chancellor of the UK do about that? We aren't in the Euro, and we don't want to be in the Euro and have very little to do with the rescue, unless you fancy the UK handing over 200bn to EU to bail out Greece, Portugal, Italy and Spain.
the chancellor of the UK doesn't have anything to do with it, i'm not sure where you think i suggested he did?
zomgbbqftw
Banned
Well I was pointing out that the UK's biggest problem has been the Euro and likely will be for the next few years. You seem to blame the government for all ills, but really that isn't true as Osborne has very little influence over what goes on in the Eurozone but we are still tied to it given our over reliance on the single market for trade, another thing that can be laid on the door of Labour. Over reliance on the EU for trade and neglecting emerging economies.
phisheep
NeoGAF's Chief Barrister
I don't think Osbourne's background is all that important (though it is trumped up to be so by the opposition). What is important is that he is hard-headed about the economics.
Way back in the '70s I knew a good mathematical economist from a very poor background (his room in college was three times the size of the place his entire family lived in at home) who took the same approach.
This 'Osbourne is rich so he doesn't care' argument doesn't have any validity at all apart from party bickering.
No. The uk's biggest problem was to rely on casino money from markets of the city and the bloated service sector.
There's a reason why the german economy is going good. Because they manufacture stuff and export their way into growth. There is no substitute for that.
The German economy looks fantastic but a systematic trade surplus is just as unsustainable as a systematic trade deficit. We (the British) can learn how to create a successful export industry from the Germans but they also need to learn how to import and consume more as a nation. Clearly they are just two sides of the same coin. The Brits need to become more German and the Germans need to become more British.
the germans need to keep doing what they are doing. They are in the eurozone propping up neighbouring countries and yet their growth engine is still going good.
Imagine if the germans actually spent all that money on themselves instead of greece.
then they'd have nobody to export to and their economy would collapse
Guerrillas in the Mist
Member
He essentially kept his job, but no longer had anything to do with the whole BSkyB ordeal.
Thanks, I knew that much anyway. Lost all responsibility for "media affairs" as well.
except that there are 'hard-headed' economists who oppose osborne's policies
osborne, presumably, began pursuing these economic policies because he believed that they would work; i grant him that
but this is politics, and i do not believe that the fact that they are broadly in line with the tories' perennial 'small state' standpoint and the fact that osborne is too rich to feel the real negative effect did not influence him at all
I don't think that Osbourne is this kind of monster that wants poor people to starve that much of the left thinks he is.
If the choice is between Balls or Osbourne then Osbourne wins every day of the week over that smug cunt.
i didn't say he was a monster who wants poor people to starve
i believe that he is a very rich person who doesn't fully understand the damage that his policies are doing to society because he has no suitable personal frame of reference
whitehall/westminster swallows everyone into the 'bubble' where only statistics, thinktanks and committees exist, I'd say Osbourne is no different in that regard.
killer_clank
Member
There's something especially galling about him though, I mean most politicians are pretty privileged in life but he's just obscenely rich and has been all of his life.
If Alan Johnson was currently the Chancellor instead of Osbourne I guarantee that the economic policies put in place by a Labour government would be almost identical to those currently being implemented by Osbourne. Clearly Johnson would have a more traditional "frame of reference" than Osbourne but that doesn't really manifest itself in the policies made by any government. We can talk about the political class being out of touch as a whole but singling out individuals doesn't help.
i don't buy this: even new labour were much more concerned with maintaining a happy society than the tories are now, and i think that new labour was largely terribad
zomgbbqftw
Banned
Lets take a look at the Labour front bench. Miliband is a millionaire, Balls and Cooper are millionaires, Harriet Harman is a millionaire Umunna is a millionaire, and that is just off the top of my head.
If you are going to accuse Osborne of being a rich bastard, then you are accusing basically all politicians of all parties of being rich bastards.
Osborne is doing what he thinks is necessary to stave off bankruptcy, he has the confidence of the markets, and the one ratings agency that has problems do so because they think he is beginning to waver from his resolve to cut the deficit. That is the crux of it, reducing and eventually eliminating the deficit is a necessity, there is no denying it, there is no real way we can boost spending and stimulate the economy (I would support tax cuts, but only funded via extra spending cuts) without extra cuts or tax rises elsewhere, so what do you expect the government to do?
Like I said earlier, if you have an alternative, I'm all ears. If it is decent I can even put it forwards to government and treasury contacts we have at the bank...
well, given that our only window into this counterfactual world is what johnson said he would have done, i can only refrain from making grand statements about it
killer_clank
Member
In other news,
NHS papers expose risks of health reforms
I enjoy it when the guardian goes all out in trying to kill something it dislikes.
NHS papers expose risks of health reforms
I enjoy it when the guardian goes all out in trying to kill something it dislikes.
zomgbbqftw
Banned
That's hardly an economic policy. Lets increase capital spending funded by a tax on bankers.
The bank levy, nay, unilateral bank levy introduced by Osborne will bring in £2.4bn this year. Labour's one off bonus tax brought in about £3.5bn but Darling conceded that a second year would leave the banks better prepared and that figure would be about £1bn if they repeated it. Labour refused to introduce the bank levy, it was in the Tory manifesto to introduce one unilaterally and deal with any consequences later, it turns out there weren't any.
What would Labour have done with an extra £1bn in capital expenditure, that is a truly paltry figure when looking at public sector finances. £1bn build about 20miles of motorway, 15 miles of high speed rail or a tenth of a runway at Heathrow.
well maybe the labour front bench would be as disconnected from damaging policies if they were given power and implemented them too, eh?
moody's in fact said that in their view pure austerity measures are not enough and osborne needs to turn to growth measures, so that's hardly supporting the idea that 'they think he is beginning to waver from his resolve'
as for confidence of the markets; as i linked earlier, business confidence in the uk has been dropping since the tories took power and the fact that we're still a 'safe haven' is a red herring in terms of suggesting our policies are good; in fact as krugman points out it just looks like investors are buying the bonds of advanced economies with their own currencies
but you also have to bear in mind that we're now too far gone down this road for the government to double back without appearing a laughing stock; politics is the opposite of science in that it's considered to be negative if at a later date you revise your opinions in light of fresh evidence. you must stick to your guns now matter how bad the situation gets or how many economists tell you it wont work
I'd disagree.
In this scenario the UK is standing on a platform with an axe swinging from a rope attached to the ceiling. If it hesitates (Eurozone), it dies. It's not as relevant as to which way it jump, left (bail-outs, stimulus (USA)) or right (cutting spending, keeping taxes high (UK)) as what lies on the platform that the UK jumps onto is unforeseeable anyway, what matters in the immediate moment is that we jump and get out of the way of the axe.
It's no time for hesitation, and I'd applaud the LD-CON coalition for not doing so, and come 2015 I hope they're rewarded with another parliament in which they can actually spend some money and stop being the bad guys.
zomgbbqftw
Banned
We are not the US. We don't have the luxury of being the world's reserve currency nation. We need to maintain investor confidence to get our bonds away at high prices.
That letter was pretty sad btw. The government has the backing of the City, the people who buy the bonds, and until such time as that changes I think the government will be fine.
I have the Moody's detail in front of me and the chief reason is that the Eurozone crisis has lowered growth but the government haven't cut spending, instead choosing to run a looser fiscal position and take on more debt. Basically that we are no longer going fast are far enough to satisfy the criteria for a AAA rating.
the world's second reserve currency is currently imploding, which would cause flight to other bonds. what is the defining difference between the eurozone countries and the uk? we have our own currency.
and as i say, moody's rationale is that they don't think we can meet our debt targets, not that they think we aren't cutting fast enough. these are different, since they specifically say that if a combination of factors including the macroeconomic situation were to improve they would also take us off the warning list; and one of the ways the macroeconomic situation could improve is by not imposing such hard austerity measures that are killing off the economy.
in any case, it's largely academic at this point. the tories wont reverse course, and it'll be up to labour to repair the social damage, just like in 1997.
well then i stand corrected. apparently no-one undid the social damage that the tories inflicted on the nation between 1979 and 1997. my opinion of new labour drops ever lower.
zomgbbqftw
Banned
Fucking owned.