Saturday, 23 February 2013
Snatching defeat from the jaws of victory
'sides its not as if George Osborne wasn't already as obviously useless as he is a shit. Rather, the downgrade is a real opportunity for some sanity as long as all parties get the basics right of looking at what the downgrade actually does to British borrowing costs (here's a clue - f' all), then work out how to spin the U-turn needed away from the following assumptions that have wrongly shaped economic policy:
- Cutting spending would have only limited impact on growth (see some IMF bod on how the impact of spending cuts was profoundly under-estimated in this chat on "multipliers")
- Spending needed cutting to save the credit rating because a downgrade would raise Britain's borrowing costs (more relevant than the US was the French example, now Britain is another of how this turns out not to be the case)
Then, they should start thinking in terms of (fiscal) expansionist policies that actually promote growth, a starter for ten being a government debt funded programme to build say £20 billion worth of social housing.
Moodys economic analysis should also be challenged in front of a parliamentary committee, but with the questions asked by people who know what they're talking about. The rationale for this second step is pretty straightforward - Moodys talk shit and need some hard, humiliating schooling. And it'd be fun.
The alternative is more of the same bollocks policies that are as self-defeating as they are cruel.