First, from Chris Dillow: our gilt rates do not makes us a more risky proposition than Italy:
Granted, UK five-year yields are slightly higher than Italy’s: 2.81% vs. 2.72% for benchmark bonds. But this is not a pure measure of creditworthiness. Bond yields also depend upon inflation and currency risk. One reason why gilts yield more than their Italian counterparts is that the latter is perceived as greater for the UK than for Italy; the market thinks there’s more chance of sterling falling against the euro than of Italy leaving the euro. Indeed, CDS prices tell us – if they tell us anything – that the UK government is more creditworthy than the Italian. I don’t mention this merely to point to the village idiot
The finger is permanently pointed at the Spectator, when it comes to economics. In another area of expertise, they have fingered my colleague as Clegg’s Consiglieri. I hope this whets your appetite for when he starts his Blog. And if you want more village idiots, just read the homophobic cr*p beneath that blogpost.
Next for the sensible party is David Smith who points out that the fuss about economic inactivity is no good reason to decry the unemployment figures.
Yes, too, there was a rise in economic inactivity, to 21.5% of people of working age, but this was higher in 2004 and higher still in the mid-1990s. The important number to hang on to is that the recession saw a 6.2% decline in gross domestic product but only 2.4% in employment, much better than could have been expected.
One reason it just doesn’t feel as bad as the early 1980s, something Labour would be well advised to play up in the weeks ahead.
The Guardian: focus stimulus measures on Investment, not Spending:
The measures unveiled since the collapse of Lehman Brothers were aimed primarily at keeping consumption going: a big cut in VAT, in stamp duty on homebuying, a whopping £2,000 subsidy for new cars. As emergency interventions, these helped reflate the economy – but they did not restructure it. Yet that is what the UK needs to get away from the overreliance on financial services and the housing market, and to create more private-sector jobs north of Watford. Mr Darling should go for stimulus – but aimed at investment in the economy of the future rather than shopping. The state investment bank which Treasury officials have been talking about could help achieve this goal.
As Charles Bean’s speech made clear:
the evidence from past sharp downturns after banking crises is that they can have a significant impact on the economy’s supply potential (Chart 8). Downturns typically lead to less investment, more capital scrapping, fewer business start-ups and more business closures and a restriction in the availability of credit is likely to aggravate these effects.
That might actually put pressure UPWARDS on inflation. We need investment to prevent supply constraints muddying the picture and making the cost of this recession even worse.
More League of Gentleman commentary on Phillip Blond. No sign of coherence yet:
Most confusing of all was his position on markets. He condemned neo-liberalism, but his reasons for doing so oscillated during the talk. On the one hand he seemed to suggest that the problem with neo-liberals is that they were not thorough enough, undermining the true principle of laissez faire with various state subsidies for various large businesses. On the other hand, he floated the idea that the whole idea of free markets relies on a misconstrual of human sociality, a criticism entirely at odds with his first. while I recognize the difficulty of articulating a contemporary conservative vision that isn’t in thrall to neo-liberalism, I can’t see that his views add up to a coherent political philosophy independent of the exigencies of policy.
And John Rentoul has noticed how Cameron is Son of Clegg: nicking his lines about the banks being a special interest.
ThoughCowardsFlinch use a phrase that resonates for me: “ the inner circle of blogincest,”
Paul Krugman has spotted that the Anglo Saxon world is not the entire climate. Check out his graph. This year is HOT. On that subject, I’m going out to play in the sunny garden with my 1.6 year old boy.