Tuesday, March 02, 2010

KENNETH CLARKE: How dare they say this crisis isn't their fault | Mail Online



It is time to take a clear, unblinking look at the UK economy.

With a General Election only weeks away, the indicators are uniformly bleak.

The UK is the last economy in the G20 to leave recession and is now witnessing one of the weakest recoveries in the industrialised world.

Our budget deficit is the highest of any developed country. One in five of our young people cannot find work. Perhaps most striking of all, one pound in every four our government spends has to be borrowed from the markets.

We are faced with the most extraordinary background to economic policymaking I have ever seen. Not since the war has there been such a need for concerted leadership and a programme of action.


KENNETH CLARKE: How dare they say this crisis isn't their fault | Mail Online


Why the Tories are in trouble is clear here.  Ordinary people don't care much about rankings of G20 or even budget deficits and young people don't vote.  Compare this to the issue in the United States.  Unemployment is much much higher in the US.  When you lose your job in the US you almost certainly lose your health care coverage and 50,000,000 Americans don't have health insurance.  100,000s of people have lost their homes in foreclosure and almost every Americans home is worth less now than it was 5 or maybe even 10 years ago.

I little lesson on human behavior: blaming things on deficits or G20 ranking are not real issue to people.  People either feel secure in their own economic life or not.  In highly Capitalistic societies like the US or UK failure to make money is felt as a self loathing.  Few people face hunger or death.  A small number of people in the United States now face the prospect of early death because of the economy, but mostly the impact is on people's self esteem.  Making less money they feel "less of a man" and look for scapegoats.  An easy scapegoat is "bloated government spending" or deficits and you might find people saying they are worried about these, but you will almost always find that people's concerns on debt depend more on who is in power or not.

Certainly the UK government has taken on a great deal of debt, as has ever industrial nation in the world.  From China, through Brazil, India, France, Germany, the USA, Canada, the UK, Ireland, Spain, well hell the entire EU and any other nation the Public sector has had to come in to fill a gap left by the Private sector.  The private sector was living on debt so the Public sector, to prevent inflation or the need to expand taxes, has had to live on debt as well.  For years the economy was being propped up by consumer and business debt. 

This will be problem in the future and will need to be dealt with, but to the well earned credit of the UK government Clarke had to go fishing to find something wrong.  He could not say: hundreds of thousands have lost their homes or fear losing their homes because that is not true.  They can't say "over 3 million Britons are now out of work" because that is not true. He can't say that the Pound is at the lowest point in 10 years, that UK unemployment is at the highest level since the Great Depression or that actually the Christmas shopping season was that bad. 

Actually to be frank the British are a race of bloated pig who have grown too rich too fast and have become generally clueless as to how bad things have become for Americans and other Europeans over the past 3 years.

But with no real daily fear nagging at the normal English the Tory pitch probably should change.  Deficits are a sure fire loser, they should see that clearly already.  People who face massive debt bills are not going to cry about currency traders concern about their long bets on the pound. 

Lets be frank about this, the Tories are trying to act as though the crisis never happened, by taking a purely City investor view of the entire thing.  Given how serious the economic crisis that CAME FROM AMERICA was and HOW MUCH MORE OTHER NATIONS PEOPLE HAVE SUFFERED the Tories seem oddly out of place going nuts about a AAA credit nation which still can borrow all the money it needs until the economy picks up. 

But this is beyond just negative vs. positive slogans, there is a very good chance that since we don't really know Tory plans they could, if they won, cause a second recession. Their priority of the debt as the ONLY economic issue could very well cause much worse problems if they pulled the stimulus too soon to have an economy where everyone is now saving.  As Japan should teach England, their is a paradox of thrift.
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