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hutch0
Date: 2008-11-24 23:15
Subject: just a small point...
Security: Public
Location:home
Mood:baffledbaffled
Music:news 24
Apparently one of the financial dangers we now face in this country is deflation, where consumers stop spending. Part of the Chancellor's raft of measures announced in his pre-Budget statement today was meant to combat deflation by getting us spending again.
Now, when Gordon was Chancellor he revelled in his reputation for prudence - ask him for money for stuff and he'd say no, because it was the prudent thing to do.
But when ordinary people are being prudent, because we're frankly terrified and we want to hang onto our money and buy cheap stuff, that's the wrong thing to do.
So it's vital for us to spend, even though the various governments and financial institutions have royally karked things up and everything's uncertain. But it's okay for him to refuse to spend. Which of these?

I may have overestimated Gordon's grip on things a few weeks ago. You'll all have realised long ago that I'm no expert, but to me the pre-Budget statement smacks of desperation, the nuclear option. Which gives me the scary impression that after this, there are no other plans.
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calcinations
User: calcinations
Date: 2008-11-25 18:02 (UTC)
Subject: (no subject)
Oh good, you're coming round to my viewpoint.
Deflation is technically falling prices, due to people not buying stuff because they are paying off debts. Its at this point that the wonderful banks creating money system ensures that we get screwed, and the banks and others get by just fine.
The interesting thing I notice is that actually, gvt debt and borrowing have been rising all the way through the phony boom we have experienced. Or in other words, despite the economy apparently steaming full ahead, the reality for gvt expenditure is that they were getting themselves more and more into debt, thus reducing the room for manouvre when the crash came.
Which is obviously not the action of a gvt which knows what it is doing. But yet if they cancelled Id cards and various PFI and other wastes of money, they could saved probably 40 or 50 billion over the next few years, a not inconsiderable sum of money.
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hutch0
User: hutch0
Date: 2008-11-26 00:16 (UTC)
Subject: (no subject)
Well, yes. And the banks still haven't said thank you to us for saving their miserable hides.
I guess in a way the government was just like us, writ large. We were encouraged to use credit to get the things we `needed,' because it kept the economy churning over, and the government was doing just the same only on a larger scale. All of us living in some kind of faery-land that was going to go on forever.
I think, notwithstanding the recent introduction of ID card for foreign students - many of whom won't care because they've already had ID cards in their countries of origin for years and years - the ID card scheme is going to be a much harder sell from now on, on cost grounds alone.
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