UK Economy

[superfrank]

Britons are 'lazy' and 'addicted to benefits', China claims
http://www.telegraph.co.uk/news/uknews/ ... laims.html
Britain's "sloth-inducing" work ethic and dependence on benefits are to blame for the current economic downturn, a senior Chinese official has claimed.

"If the world operates as one big market, every employee will compete with every person anywhere in the world who is capable of doing the same job. There are lots of them and many of them are hungry."
Andy Grove, Intel.

"Asians make things and sell them to Americans, who borrow money from their suppliers (on the inflated value of their houses) in order to continue living beyond their means. Asians take their profits and either relend them to Americans...or use them to buy more productive capacity, in America and elsewhere.
For those who wonder where this trend will lead, we offer a guess: The average American will be left with a shoeshine kit and instructions on how to say 'please' and 'thank you' in Chinese...."
Bill Bonner.

[CaerMyrddin]

Imho, he's right. The richest countries didn't take into account this effect of globalization. We are globaly competing for resources, work, etc.

It was really good for some time as it made inflaction very low for some years, but simply we can't compete right now. Wether we introduce protectionism back or we won't be able to compete against hungry people who can exploited at will.

[superfrank]

Exactly right.

Central bankers must have known that the credit bubble and the the imported deflation couldn't last and that the situation was unsustainable - loads of us did!

But they chose to keep the party going with low interest rates for far too long (under pressure from bankers no doubt who were all chasing big bonuses, and governments who wanted to keep spending).

The buck stops with the central banks ultimately - they are the ones charged with keeping control with an eye on the long-term. But they hid behind their flawed inflation targets and did nothing.

[Iron]

Why austerity is a good policy - http://twitpic.com/7cd2yb

Jeff

[superfrank]

UK clocks up record trade deficit in September
http://www.bbc.co.uk/news/business-15653282

Export lead recovery my @rse!

Things get worse even with a massively devalued £.

The economy needs structural reform which will not happen while tptb pursue a reflation policy of a busted economic model.

[Iron]

UK clocks up record trade deficit in September

So in other words, more wealth is leaving the economy than is coming in.

I was a big fan of Mr Osborne's when he started as chancellor, but he needs to be willing to say 'The economy didn't grow nearly as fast as our independent predictions forecasted it would. So we're going to have go cut further and deeper than we'd anticipated'.

Worryingly, Labour are ahead of the Tories in the polls, suggesting that a large proportion of the voting public think that the Mediterranian/Obama approach to tackling sovereign debt is the answer...

Jeff

[superfrank]

The austerity stuff is a myth... we are still running a huge budget deficit (much bigger than Italy's).

[Iron]

I think that all that's saving the UK from 7% interest rates is the fact the markets have confidence in the austerity programme (rightly or wrongly).

But if the austerity measures aren't adjusted to reflect the worsening economic reality, I question whether that confidence will be maintained...

Jeff

The austerity stuff is a myth... we are still running a huge budget deficit (much bigger than Italy's).

[superfrank]

No it's the fact that we can (and are) printing money keeping our currency on the floor. Italy can't do that (on their own) because the Germans (via the ECB) control the Euro.

But it's just a short-sighted temporary fix that doesn't work either (hence our high inflation).

[Iron]

No it's the fact that we can (and are) printing money keeping our currency on the floor.

It could be, but I don't think that we've printed nearly enough money to do that. If the markets were to lose confidence in the UK economy, interest rates would rise IMHO.

Also, don't forget that QE can increase interest rates, if investors think 'Last time I bought a UK government bond, I lost money because the QE meant that the interest I received was dwarfed by inflation. So in future, I want a higher interest rate on my UK bonds'.

Jeff

[superfrank]

Yeah I don't get that either - the markets are not looking too far ahead and somehow still believe that this mess is gonna get sorted soon and that governments will be running huge budget surpluses for the next 20 years to pay off the debt. I can't see it. Bonds are in a massive bubble and when it bursts the system may well collapse.

[Iron]

Tweet from Faisal Islam:

Mervyn, letter to penpal George: "inflation will fall back sharply in next six months or so, and to around target by the end of next year".

Phew! That's a relief...

Jeff

[Iron]

Debt to GDP - Various countries compared: http://www.zerohedge.com/sites/default/ ... %20gdp.jpg

Jeff

[superfrank]

Debt to GDP - Various countries compared: http://www.zerohedge.com/sites/default/ ... %20gdp.jpg

Jeff

But we're a "safe haven" aren't we?!

The UK is so fooked on so many levels.

[Iron]

Interesting tweet today from Faisal Islam:

'Since 2005, Germany has reduced unemployment by 2.3 million, whereas in Britain has increased 1.2 million'

I don't know how that has come about, but it would suggest that Britain is doing something wrong somewhere...

The fact that the state is sponsoring millions of people to do non-technical degrees can't really help Britain compete in the global economy. I think we have enough media studies graduates - we could do with a bit of balance. A few more engineers and chemists, perhaps...

Jeff

But we're a "safe haven" aren't we?!

The UK is so fooked on so many levels.