Two years ago I suggested to Alistair Carmichael at an Althing debate that his Con Dem coalition was likely to turn out like the Liberal-Tory coalition of 1918. That bright bunch introduced huge public spending cuts, which led to a massive increase in the deficit and in unemployment. Carmichael said: “We’ll see.” We’ve seen.
Brian Smith
53 Kalliness,
Weisdale.
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Robert Wishart
What did the Labour Treasury chief secretary Liam Byrne say to his successor?
‘I’m afraid to tell you there’s no money left.’
Brian Smith
That’s what the Lib-Tories said in 1918 too, Robert. Fortunately Keynes came along later with a more sophisticated way of looking at things.
Robert Wishart
Keynes? Hatched and fledged when public spending was around 15 per cent of GDP. Even after the second world war public spending was “only” around 35 per cent of GDP. Now it is about 48 per cent and in cash terms will continue to grow through the rest of this parliament. We see why national governments live in fear of the financial markets and how quickly government borrowing costs can rise and defeat a country’s ability to pay the interest far less repay its debts – all of which are burdens on future generations of taxpayers. Did Keynes not also think one should save in the good times to spend in the bad. What did Gordon Brown/Balls do? What has SIC done for that matter? As the outgoing Labour man said ” I’m afraid to tell you there’s no money left”. Ho, ho, ho.
Brian Smith
Here is a much better account than you will get in the Daily Mail, Robert:
http://www.redpepper.org.uk/countering-the-cuts-myths/
John Tulloch
Brian,
Just because other countries owe more than us isn’t a reason to compete with them for that title. We are currently piling up debt at an alarming rate and one of the reasons our interest rates aren’t higher is that the Bank of England is spending hundreds of billions of “printed money” to buy up UK bonds with their so-called “quantitative easing” programme.
That can’t continue indefinitely as it will lead to rising inflation, higher interest rates, etc.
Yes we can reasonably spend to invest sensibly, in something that will bring a positive return, however, as you will know from previous comments of mine, a heck of a lot of money is being wasted on something I think I’m not allowed to mention any more as several comments of mine have not been posted recently, so I won’t mention it here.
Sprikkel as we will, there’s no escape from Micawber’s celebrated scenario in which annual income must exceed annual expenditure, at least, in the long run.
M Inkster
I think it’s incontrovertible that the country will struggle for years to come to turn around the debt crisis as servicing the interest alone is proving difficult enough. If, and possibly even when, we lose our triple a credit rating, the interest rate on our borrowing is likely to increase three fold. In simple economic terms, we are living well beyond our means and if we continue to do so, and maybe even if we don’t, the consequences will be such that we will look back with incredulity at recent events, not to mention the horrendous financial burden that our successors will inherit. That is my prediction, I hope I’m wrong, but we’ll see.