Maybe I went out with my views too early. Tory figures not adding up as much as I thought. I was willing to give high-ish marks to Osborne for austerity honesty – but a closer look at the figures and the accompanying spin call for a re-mark . . . How exactly can increasing the pension age from 65 to 66 do this (from the gullible Telegraph):
The shadow Chancellor believes he can save £13 billion a year by bringing forward the rise, with an extra £130 billion in total being raised by the move.
Steve Webb MP on his blog does the best job of tearing this to bits. The maths is really simple. 10 years’ worth of people retiring (400,000 per year) will forsake £5000 per year of basic state pension. That is a total saving of £20bn. Whatever heroic assumptions are meant to turn that into £130bn, I really don’t want to know: it would make me want to sell my gilts and run to the hills.
Bizarrely, one of the best articles about the way QE might be withdrawn is in the Asian Times.
Knowing the Bernanke Fed, it will doubtless do precisely the reverse of what this column recommends, beginning to withdraw liquidity vigorously at an early date, while keeping interest rates at their present abominably low levels for far too long. In that case, the Fed will deserve the hyperinflationary depression it will almost certainly get
This is related to the FSA’s liquidity rules that rather conveniently for the Government demand that banks hold . . . lots of government IOU’s. The Adam Smith blog (Butler) doesn’t like it. Their view that the banks “have to spend £6bn to do this” is nonsense. They get lower interest payments, yes. But they have lower risk. Modigliani Miller theorem – it just makes them safer . . . more boring . . . but not necessarily ‘costing’ more.
I’m not sure what to make of Dillow’s article arguing that Government Spending has saved Capitalism. Is this not using accounting identities to prove causal relationships? Not my forte, but if G-T had been lower, could not the equation have balanced in all sorts of ways – different X-M, different O, and so on? It saved all sorts of things – but not necessarily all profits. In some set ups the profits might have held steady, the exports higher, for example (i’m not saying it would have – just the logic . . .)
Liberal Vision no doubt correctly complain about a President Blair. They forget a very important point: how incredibly annoying this would be for a. Gordon Brown and b. David Cameron. Imagine the Blair motorcade coming down Downing Street . . . come on, it would be brilliant