I was honoured to be invited to the annual party at the FT, where Martin Wolf regaled us with an interesting and wide ranging speech, and floating amongst the canapes and red wine were just about every impressive economist and journalist I had half heard of in the last 12 months. Plus a certain Chancellor of a particular Exchequer, giving nothing away. It was very interesting, and I will treat it as Chatham house, for my convenience, because 6 glasses of wine later, I am not entirely sure what was said. Except:
- I can find no-one who is against QE. Everyone imagines the no-QE counterfactual would have been worse
- I myself am beginning to row back a bit from my Slash and Grow? views, and said as much to Rupert who advises G Osborne. Fact is, it may be unlikely, but it is still the right aspiration. Politicans express aspirations, rather than Plan A to Z in descending order of likelihood. Don’t get me wrong: I still think they are nuts to try cutting immediately. But you can’t prove it just by saying “this has never happened before”. People know that- we’ve been on a 30 year binge after all. What I am still uncertain of is: if the economy weakens, will they go all ‘Lady’s not for turning’ on us?
- I did not find many people willing to agree with me that Ed Balls is a good bet at 30-1 to be the next Labour leader. But I know good odds. He s joining the mad war on fiscal arithmetic (see his Seeking £2.6bn on Spending). Iain Dale (who is apparently some sort of blogger), wonders what he is up to, tracing his weaving and bobbing on this issue. What I think he is up to is aligning himself with that part of Labour that may decide the future leadership: the part that thinks fiscal arithmetic for all future years is optional. Alistair Darling is having a go at him, according to the FT
- I feel strangely confident in the country’s future, because I saw a lot of bright people from across the spectrum chatting amicably.
Other FT stories. Obviously the fiscal responsibility act is a pointless noisy political gesture. Read “Fiscal Rules OK“. There is no way that fiscal policy can be bound by (a) rules written a while ago or (b) unelected bureaucrats (if you want the Tory alternative) I like the quote from the FT leader:
The fiscal bill is the most egregious example of the government’s use of aspirational legislation, seen also in the child poverty bill and the draft bill on international development spending. These efforts to impose policy goals on a future government by statute bring the law into disrepute.
Not everything about recession is bad news. There is a flood of elder teachers into the profession.
I love Brad DeLong’s graphical explanations for why fiscal policy may still be better than monetary policy. But Economist Blog Free Exchange is probably right that the monetary levers still have more political capital. AS BDL himself pointed out (see my blog before): getting more out of Congress, even if it makes perfect economic sense, may not be easy.
As for the UK … if Dillow is right, the government has already bucked at the fence of promised higher spending . But the trouble is that monetary policy IF it can work is not committing to the right measures: permanent money increase. There are real divisions in the MPC as to the right next steps. Is that good?
The OECD’s growth projections are going up, but are still nowhere near the Bank’s. I have a pet theory: is this the Bank’s belated attempt to prove that it will do anything – including lie about what it thinks of the future – in order to boost demand?
Having enjoyed Paul’s attack on Left economic illiteracy, I was glad to read a sceptical take on Cruddas’s communitarianism. I once tried to count the ISMs in a Cruddas article, and gave up after 20. What would you do? rather than which isms are you in favour of? should be yelled from the floor at all these characters.
UPDATE: The Isms of Cruddas: worth a second post.
Bill, I can’t read law. Explain why this document changes the political reality of regulators taking on booming financial firms.