John Maynard Keynes (John Maynard Keynes) wrote during the Great Depression, that only "fools and madmen" will tell you "salvation can be found only in the austerity."
Several countries currently have started "austerity, fiscal tightening or after the biggest financial crisis since the Second World War. The most obvious examples are Greece and Ireland. Portugal announced plans to reduce the deficit to 2.8% of GDP by 2013 from 8.3% this year, by reducing the cost of officials and state investment, raising taxes on high incomes and profits of the stock market.
Any reduction in costs should be based on evidence of growth of the private sector. Growth will increase tax revenues. It's reasonable to assume that fiscal and monetary incentives should last at least until it is restored half of the losses during the recession.
In Britain, there were many discussions among economists, especially on a series of letters to national newspapers to support a more drastic reduction in public spending, instead of a hard surface reductions already proposed by the Labor government. Local authorities in the framework of these plans offer a reduction from 10% to 30%, which may well mean a loss of 500,000 jobs.
Opinion Volcker
Most of these economists would leave stringent measures later. Former Fed Chairman Paul Volcker (Paul Volcker), speaking in Germany at the weekend, claimed that this is not the time to abandon fiscal or monetary efforts to stimulate demand.
Nevertheless, George "Slasher" Osborne (George "Slasher" Osborne), the shadow finance minister in the Conservative Party, said in a recent speech that "the choice is not between the rate of economic growth today and debt tomorrow."
Not correct. Britain has a predominantly long-term debt, which does not hit it soon, which puts it in a completely different situation compared with Greece. Osborne immediately protested the IMF, which rightly argued that "one of the key lessons learned from similar crises lies in the fact that premature failure of policy incentives can be costly, especially when the financial system is weak."
In a television interview this week, Alan Budd (Alan Budd), adviser to the Conservative Party said that "if you move too fast, there is a risk that the recovery would be eliminated, and we will return to recession. I mean what the Americans say? 'Remember 1937'. " It was the most famous case of re-recession in history.
Too early
Talk about saving too much and too early. Reducing government spending will increase unemployment, while monetary policy can be reduced to compensate for this, but it seems there are not many ways to do this. And do not think that the reduction in public spending or public sector pay freeze will be popular and simple.
Around 250,000 British civil servants went on strike this week because of the benefits of dismissal. According to opinion polls, the leadership of the Conservative Party fell before the general election to be held in the period up to June, due to news of the opposition on a plan for savings. Features minority government worried investors.
Austerity budget now on the agenda. States in the United States, which have been adjustments in balancing the budget, faced the same difficulties. All they can not devalue its currency or ease monetary policy to stimulate their economies.
The devaluation of the pound
Britain also benefited, as she managed to devalue the pound by almost 25%, which helped stimulate exports and import substitution within the country. As a member of the Monetary Policy Committee Bank of England, I tried to talk about reducing the pounds, especially in spring and summer of 2008, when my colleagues would not cut interest rates even if Britain entered a recession in April 2008.
Since then, Governor Mervyn King (Mervyn King), in my opinion, successfully persuaded of the need to lower the exchange rate against major currencies. But this is not suitable for countries in the straitjacket, the euro or U.S. states.
Finally, the European Commission declared its readiness to propose the creation of so-called European Monetary Fund in order to help cope with future debt crises in the region. This is only a matter of time.
Most countries in the Organization for Economic Cooperation and Development, is that apart from Australia, showed anemic economic growth, set in motion for more public spending and accumulation of stocks. In the U.S. there are some signs that unemployment may have peaked in some industries, other industries have already begun hiring workers, as opposed to those who have received temporary assistance, however, at present there is not much evidence turnover growth of investment.
Unemployment in the euro area
According to the most recent data, unemployment in Ireland has jumped to 13.8% in January 2010 with 13.3% a month earlier. The unemployment rate in Spain is now 18.8%, rising from an average of 8.3% in 2007, an incredible 40% unemployment, I am among those who are not 25 years old. I am inclined to believe that this will be the restoration of the unemployed in OECD. There is little evidence of the restoration of consumer activity in the near future. Latest Consumer Confidence Index from the U.S. Conference Board fell to 46 in February, although economists expect singed up to 55 with 55.9.
British Retail Consortium and KPMG, involved in the monitoring of retail sales recorded in January 2010 the worst results of research for 15 years. European broad index of consumer confidence fell again in February after a small increase in December and January. Several months of positive data did not trend.
Allegations that the need to reduce costs in the midst of a recession, put forward by politicians, not economists. Voters probably will not be impressed by the division of government economic policy and financial markets, bearing in mind that they got us into this mess.
Keynes warned that the classic political mistake is too early tightening. Beware of fools and madmen, who say the opposite.
Several countries currently have started "austerity, fiscal tightening or after the biggest financial crisis since the Second World War. The most obvious examples are Greece and Ireland. Portugal announced plans to reduce the deficit to 2.8% of GDP by 2013 from 8.3% this year, by reducing the cost of officials and state investment, raising taxes on high incomes and profits of the stock market.
Any reduction in costs should be based on evidence of growth of the private sector. Growth will increase tax revenues. It's reasonable to assume that fiscal and monetary incentives should last at least until it is restored half of the losses during the recession.
In Britain, there were many discussions among economists, especially on a series of letters to national newspapers to support a more drastic reduction in public spending, instead of a hard surface reductions already proposed by the Labor government. Local authorities in the framework of these plans offer a reduction from 10% to 30%, which may well mean a loss of 500,000 jobs.
Opinion Volcker
Most of these economists would leave stringent measures later. Former Fed Chairman Paul Volcker (Paul Volcker), speaking in Germany at the weekend, claimed that this is not the time to abandon fiscal or monetary efforts to stimulate demand.
Nevertheless, George "Slasher" Osborne (George "Slasher" Osborne), the shadow finance minister in the Conservative Party, said in a recent speech that "the choice is not between the rate of economic growth today and debt tomorrow."
Not correct. Britain has a predominantly long-term debt, which does not hit it soon, which puts it in a completely different situation compared with Greece. Osborne immediately protested the IMF, which rightly argued that "one of the key lessons learned from similar crises lies in the fact that premature failure of policy incentives can be costly, especially when the financial system is weak."
In a television interview this week, Alan Budd (Alan Budd), adviser to the Conservative Party said that "if you move too fast, there is a risk that the recovery would be eliminated, and we will return to recession. I mean what the Americans say? 'Remember 1937'. " It was the most famous case of re-recession in history.
Too early
Talk about saving too much and too early. Reducing government spending will increase unemployment, while monetary policy can be reduced to compensate for this, but it seems there are not many ways to do this. And do not think that the reduction in public spending or public sector pay freeze will be popular and simple.
Around 250,000 British civil servants went on strike this week because of the benefits of dismissal. According to opinion polls, the leadership of the Conservative Party fell before the general election to be held in the period up to June, due to news of the opposition on a plan for savings. Features minority government worried investors.
Austerity budget now on the agenda. States in the United States, which have been adjustments in balancing the budget, faced the same difficulties. All they can not devalue its currency or ease monetary policy to stimulate their economies.
The devaluation of the pound
Britain also benefited, as she managed to devalue the pound by almost 25%, which helped stimulate exports and import substitution within the country. As a member of the Monetary Policy Committee Bank of England, I tried to talk about reducing the pounds, especially in spring and summer of 2008, when my colleagues would not cut interest rates even if Britain entered a recession in April 2008.
Since then, Governor Mervyn King (Mervyn King), in my opinion, successfully persuaded of the need to lower the exchange rate against major currencies. But this is not suitable for countries in the straitjacket, the euro or U.S. states.
Finally, the European Commission declared its readiness to propose the creation of so-called European Monetary Fund in order to help cope with future debt crises in the region. This is only a matter of time.
Most countries in the Organization for Economic Cooperation and Development, is that apart from Australia, showed anemic economic growth, set in motion for more public spending and accumulation of stocks. In the U.S. there are some signs that unemployment may have peaked in some industries, other industries have already begun hiring workers, as opposed to those who have received temporary assistance, however, at present there is not much evidence turnover growth of investment.
Unemployment in the euro area
According to the most recent data, unemployment in Ireland has jumped to 13.8% in January 2010 with 13.3% a month earlier. The unemployment rate in Spain is now 18.8%, rising from an average of 8.3% in 2007, an incredible 40% unemployment, I am among those who are not 25 years old. I am inclined to believe that this will be the restoration of the unemployed in OECD. There is little evidence of the restoration of consumer activity in the near future. Latest Consumer Confidence Index from the U.S. Conference Board fell to 46 in February, although economists expect singed up to 55 with 55.9.
British Retail Consortium and KPMG, involved in the monitoring of retail sales recorded in January 2010 the worst results of research for 15 years. European broad index of consumer confidence fell again in February after a small increase in December and January. Several months of positive data did not trend.
Allegations that the need to reduce costs in the midst of a recession, put forward by politicians, not economists. Voters probably will not be impressed by the division of government economic policy and financial markets, bearing in mind that they got us into this mess.
Keynes warned that the classic political mistake is too early tightening. Beware of fools and madmen, who say the opposite.
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