Wednesday, November 30, 2011

 

Didn't he do Badly?

I can't pretend I envied the Coalition government's task back in May 2010. I was kind of relieved that Labour were no longer there under Brown to disappoint, mess up and make me feel bad about being a supporter of his party. It was always going to be a big ask to fulfill his stated aims- and through a mixture of obstinacy, ambition and ignorance, he hasn't disappointed those who said he'd fail. It was so obvious that with an economy as fragile as ours George's cold bath treatment was going to cause the patient to weaken further. And, successive lowering of predicted growth forecasts has proved beyond doubt that his famous Plan A has flushed down the toilet.

We now see economic indicators going south at a tragic rate of knots. Inflation is running at 5.2% so all the tiny increases ordinary folk have managed to gather- as opposed to the 49% the FTSE directors have tucked into their offshore accounts over the last year- have been instantly eroded away. And the resultant lack of growth has produced an additional £158bn borrowing requirement on top of the mountain he faced 18 months ago.

He refused to contemplate a Plan B to stimulate growth and ridiculed the ideas brought forward like investment in infrastructure projects, help for small businesses and so forth. But now, with the economy gurgling down the plug hole, he suddenly discovers these ideas are exactly what wee need. And who will pay for these economic stimulations? The money required will be cut from other parts of the public sector, causing a total of 700,000 job losses by 2015. Cutting of such big slice from the public sector was supposed to stimulate the private sector to grow and produce a slew of new jobs. What happened? Nothing whatsoever- proof of the poverty of Osborne's approach. If he had palns to take over from Dave as PM, he should seriously consider another line of work.

Moreover, instead of removing the deficit by 2015 in time to win the next election, he's had, humiliatingly, to delay his schedule until 2016-7. An age of austerity truly awaits us and George has proved no magician, just a journeyman politico basing his ideas on long forgotten economic thinker- in this case Friedrich Hayek. Had he reduced the size of his cuts, as Darling proposed, the economy would not be in such a parlous state and might even be showing signs of life instead of needing intensive care.

Certainly his focus on reducing the deficit has kept lending rates down to 2.5% instead of Italy and Spain's 7-8% but experts doubt our own rates, based on long term borrowing rather than the short-term Italian variety, would have gone up unacceptably, had Osborne moderated his surgery of the public sector.

All this is bad enough- total humiliating failure- but it is predicated on the assumption that the Euro crisis will clear up and carry on as before. This is by no means likely to be the case. My reading of the euro currency crisis is that Italy might well be left to default and then the brown substance will really hit the fan dragging down UK's economy into a deep recession and an age of austerity stretching into the foreseeable future. What will the voters think in 2015? Not, I suspect what Dave and George and their well heeled mates confidently expected. Cameron will rue the day he put all his trust- and his party's not to mention the nation's future- in Osborne's economic judgement.

Comments:
What you say is true but I wouldn't bet against Cameron & Co being in charge in, say, 2018. He still has a trump card left to play: "I would've gotten away with it if it hadn't been for those pesky Lib Dems".

It could all've been different. Had Gordon Brown had the good manners to step down in 2008/9 we might now have D Miliband and the reassuringly calm and rational Mr Darling steering us through the choppy economic waters and away from the rocks towards which the Tories seem determined to sail (end of cliched metaphor).

Even better would've been for Mr Brown and his henchmen bully-boys to have realised long ago that, for all his political skills, the man had no leadership potential. Instead, alas, the aforementioned henchmen are now firmly in command of the Labour Party and likely to be so at least until after it loses in 2015. It's being so cheerful that makes me so popular at party meetings...
 
Not really the right way of looking at it of course. How the economy has fared in the last eighteen months(clearly badly), as a question in isolation, is largely irrelevant in assessing the impact of the Coalition. It is more about how our economy has fared in relative terms (extremely well if bond yields are used as a yardstick) or even how our economy had fared and would have fared under a Labour Government. Most educated people know the answer to that, their economic record and plans were embarrassingly poor.

This was always going to be hard. I don't think people have truly appreciated that until perhaps this week. Anyone striking for old style public sector pensions completely misunderstands the nature of the problems facing us. But then most of them are failures anyway, which is why they ended up in the public sector. Tough cheese, no money left. No Government is going to change that, and anyone suggesting otherwise is either dishonest or stupid (or perhaps both). The 'plan for growth' is economically illiterate and an insult to what little political intelligence those on the left possess.
 
It's interesting, Skipper, to contrast your view with that of Dan Hodges, who is also a Labour man (albeit one now linked to the Torygraph). I don't know whether you've read it or have views on it - because his conclusions are oddly opposed to yours yet for more or less precisely the reasons you give for your own.

My personal view is that the numbers for Labour's current leadership, and Ed Balls in particular, are so absolutely dreadful that a Labour victory in 2015 is now a very long shot. If they are still so far behind while provided with such a beautiful clear run to the winning post, what chance will they have if by some miracle our economy does start to improve? And even if it does implode, at what point are they going to have a better hand to play than now. After all, their policy is predicated on restoring growth by borrowing money to stave off a contraction, which will certainly not be possible if there is a massive international sovereign debt crisis even if they try to print it.

All in all, a mess for the Tories, a mire for Labour, and misery for those of us caught in the middle.
 
As usual, playing fast,loose, & selective with your quoted stats.

You neglect - how strange - to note that the pay of the BBC DG & the Editor of the Grauniad has risen in excess of 80% for the period 2000/1 to 2008/10.

Trebles all round

Kind regards
 
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