We're told that the austerity of the U.S. 'fiscal cliff' of tax
increases and spending cuts might be disastrous to their economy.
We're also told (as are those in the PIGS group) that similar
austerity is essential for ourselves.
No one seems to want to comment on the inconsistency.
Not so much disastrous for the economy - just hardship for a lot of
people. The cuts have in any case been 'ignored', and will be discussed
again in March:
The 'cliff' IIUC is the precipice of revenue not matching public
spending. I haven't a problem with that overall. However, borrowing at
high rates to cover revenue costs is a recipe for disaster, PIGS-wise. I
suspect they'll endure a fire sale, and become slave nations, unless
they step outside of the system sharpish.
As for us (UK), we're told wrong:
I think they're the same thing. The US Keynsian approach has for many
run its course and failed to produce results, and this 'cliff' nonsense
is market-advocates' spin.
IMO it's a question of pain now versus pain later. Austerity is pain now
and possibly a brighter future, but doesn't get governments re-elected.
Quantitative easing and similar measures to flood the economy with money
is pain later, a temporary feelgood factor followed by decades of
stagnation (like Japan).
Although our government is hitting the soft targets (unemployed,
disabled and pensioners) rather than eg tax avoiders, overall they're
steering the economy pretty well.
I think that for a winning argument you have to be a bit more constructive.
There are lots of people who think the government are going "wrong" fixing
the economy because the chosen solution doesn't help them personally.
This doesn't make their opinion right
Not really. Since I disagree with most of the ways the government is
handling the economy I don't see how being "a bit more constructive"
would be applicable.
If you are asking what would I do instead. Well I wouldn't be using
quantative easing as a way of recapitalising banks. Such money should
be used to benefit the whole economy. Therefore the money could be
directly invested in businesses and infrastructure projects. We could
do worse than using it to build some Nuclear power stations, for
I wouldn't be targeting the poor, the disadvantaged and the disabled
to bear the brunt of the cuts while reducing taxes for the richest and
ignoring loopholes which allow multinationals to avoid tax.
I would be repeating the lies such as "We're all in this together" .
Current polices are analogous to a tourniquet around the economy. It
may stop the bleeding but it kills the limb.
That's another matter entirely.
>This doesn't make their opinion right
The austerity could be worse - compare with Greece, or what the US would
be like if they'd fallen over the fiscal cliff.
I agree that quantitative easing has been something of a disaster - the
money has gone into the wrong pockets and the net effect has been
deleterious to savers and pensioners - but at least they haven't
expended a horrendous amount. Some 'hawks' argued for much larger
The Bank of England probably envisaged that the money would go to the
banks in one door and straight out of another in the form of cheap
finance for business. No doubt it looked attractive on paper because
banks are in the business of lending therefore they have the
infrastructure, checks and logistics to manage the process.
It's a matter of pragmatism. Hitting the needy is easy because the poor,
disabled and unemployed have little political power - they can hardly go
on strike. Curbing the multinationals is a whole different kettle of
fish - I'm not aware of any country on the planet which manages it
I disagree. We might even have a third dip, but overall the economic
indicators are positive. On current course the country should eventually
come out of it in fairly reasonable shape.
It's just that you seemed to be saying that the current policy was too
austere and spending too much, both at the same time. ISTM that (even if it
is both) both can't be wrong.
Lead time is too long to make any difference.
Even fast tracking some already planned road/rail improvements wouldn't get
started for (minimum) two years after you have decided to spend the money on
them. It's nice in theory, but it's difficult to target the money
I do agree that we shouldn't be starting from here. We should already be
two year's in and reaping the rewards. The problem is that the numpties in
power (and ALL of those that aspired to being in power) really do seem to
have thought that this was a "normal" recession that would have recovered in
12/18/24 months, when ISTM that it was flipping dammed obvious that this
wasn't likely (and yes I did say so at the time).
If you are going to cut benefits (be that actual money handed over or
services) this is bound to affect the worst off in society as they are the
uses of these items. Those in the upper deciles are never going to be
affected by a cut in such items as they don't use them.
But IMHO we do have to cut these items, they make up far too much of
government spending (welfare/health/education account for 75% of total
government spend) for us to get back into fiscal balance without doing so.
(see below for tax rises)
I agree that lowering the 50% rate was a big mistake - totally unjustified.
But, in general, the fact is that the "rich"(/bankers) make up far too small
a proportion of the economy for increased taxes on them alone to fill the
gap. If we decide that we want to get back into balance by increased taxes
the only way that it can be achieved is to increase (substantially) a tax or
two that "normal" people pay.
The loophole that I think you are referring to is almost certainly
un-closable. Get used to it
I don't see that we have any choice unless we are going to put the basic
rate of tax up to 30% (or VAT to 50%, or NI to 20%). A stupid half blind
Scottish idiot got us into this position by running a current account
deficit during boom-time (WTF did he think was going to happen in a
down-turn, with that policy!) and everybody got used to a level of services
that was unaffordable, but in the short term we're committed to it unless
you want to take an even bigger/quicker cut to services than we are.
The really bad thing is the numpties that couldn't manage the finances of a
social club outing are going to be let back in charge of the cookie jar if
things don't quickly improve from here.
Don't forget, the current government are (apparently successfully) running a
policy that is keeping interest rates low. Try and do anything else and
they will sky rocket. So not only will you have to find more money to spend
on this new (different), whatever ideological thing it is that you want to
do, you'll have to find another few 10s of billions to pay the interest on
the deficit that the Scottish wanker ran up.
In his role as current, temporary president of G8, Cameron is looking at
options to close the loophole.
Some American states impose unitary taxation - a corporation is taxed on
global profits based on the proportion of business they do in that
state. That would render pointless Starbucks UK hiving off royalties to
a Dutch subsidiary and buying their beans from a Swiss subsidiary.
More reason to invest now for long term.
So start now rather than further procrastination and excuses for not
You have to ask yourself, are you in favour of increasing taxation
revenues, or making an ideological statement?
Agreed, avoidance has always been legal. What we could do is encourage
corporation tax, in much the same way Ireland does
We ought to pass a law where MPs party to a deficit budget become liable
to a surcharge and disqualified from office just as local councillors are.
perhaps, but making this decision will have no effect on the current
I don't believe that reducing the rate will increase revenue. And there is
no proof that it will as the data used to justify it was skewed by the
limited amount available (and the current state of the economy). (I'll
explain further if you insist)
however reasonable this may be, we can't start from here (or anywhere within
the next 10 years)
They can since the money is being spent in the wrong places so we have
austerity for the majority and the greedy bankers paying themselves
Not so. If a programme had been started at the beginning of the
crisis we would be seeing benefits already for the economy.
The richest can and should pay a larger proportion of taxation though.
We can't expect the lower & middle classes to pay the lot.
Difficult but not impossible.
One of the problems with the previous government is that they threw
money at things and expecting this to be enough. They forgot entirely
about value for money.
>Don't forget, the current government are (apparently successfully) running a
>policy that is keeping interest rates low. Try and do anything else and
>they will sky rocket. So not only will you have to find more money to spend
>on this new (different), whatever ideological thing it is that you want to
>do, you'll have to find another few 10s of billions to pay the interest on
>the deficit that the Scottish wanker ran up.