Ā Ā Ā The US budget deficit is coming down faster than the UK for two reasons. Yes, revenue is rising more quickly, thanks to economic recovery. But spending is also under much better control. The Federal government is now cutting defence spending, to assist the cuts made by the various states to a range of other programmes. In the latest figures Federal spending was only up by 0.5% in cash terms. The deficit is down to 6.6% of GDP and falling.
Ā Ā Ā Ā Ā The President was an angry man in a hurry when he addressed the House and Senate with his state of the Union message recently. He wants to tighten gun control,seeks Ā a strong anti global warming policy, and favours tax rises rather than spending cuts. He knows, however, that much of this agenda is not possible given Republican control of the House.
Ā Ā Ā Ā Ā More interestingly, does he know that far from following an anti global warming policy, the USA is following a cheap energy policy – one of the reasons for her relative economic success. Presumably the President knows that the USA did not sign the Kyoto Treaty nor its successor recently on his watch, leaving the EU almost on its own with these expensive dear energy commitments. Presumably the President knows that his country is engaged in an amazing dash for gas, with much shale gas now beeing extracted despite the protests of environmentalists. Presumably he sees all around him people and companies who heat their homes and offices to a Ā higher temperature in winter than they cool them to Ā in summer. Presumably he sees the gas guzzling cars and the reluctance to use public transport. How can he say he is a strong anti global warming crusader with all this going on?
The US economy is in better shape than the Uk or Euroland. They sorted out their banks more quickly. They took a much bigger hit on property prices than the UK or Euro core, and now have them recovering. They are cutting overall public spending in real terms, and cutting defence spending and some state spending in cash terms and bringing the deficit down. It shows it does work.
February 17, 2013
I have been thinking – what if we just walked out of the EU? – which, of course, is the reason for our own policies as we all know. (Climate Change, Fracking, the mad railway, the horsemeat scandal……) We are nowhere near getting our economy going and the debt is climbing fast.
Well we cannot leave because it is against our treaty obligations, (the procedure for leaving (Article 50) has small print), and nobody in power wants us to leave anyway.
The people to convince are not Mr Cameron and so on. It is Mr Rompuy, M. Barroso and Mr Martin Schultz who now decide our future.
February 17, 2013
“Treaty obligations” apparently, according to slippery Cameron, they are no longer “treaties” they are part of EU law – when he decides it suites him for ratting purposes that is.
February 17, 2013
We can leave any time we like; in principle it’s only necessary to remove at least half of the present MPs and instead elect a majority of MPs who will vote to leave, and with enough time available for those more patriotic replacement members of the House of Commonss to be able to over-rule the staunchly pro-EU, generally unpatriotic, and above all irremovable, majority of the members of the House of Lords, about thirteen months under the Parliament Acts.
We could leave in an orderly fashion through Article 50 TEU on voluntary withdrawal from the EU, which would be best for everybody, but if it became necessary the UK government could abrogate the EU treaties, including that article, and we would just leave.
February 17, 2013
Given that 50% of the UK’s exports go to the EU and leaving will result in tariffs being imposed on UK goods it won’t help the economy. Especially for companies that mainly trade with the EU.
February 18, 2013
Stop peddling tripe about tariffs. We already know that there is a circa Ā£50 BN PA trade deficit with the EU and other mechanisms for free trade EEA, EFTA as used by the non EU states – this argument has already been laid to rest
February 18, 2013
Being in the EEA or EFTA involves obeying EU law, so it’s effectively the same as being in the EU.
Given that the EU has even put tariffs on goods from the USA it’s nothing more than wishful thinking to believe that the UK will be able to leave the EU without having any tariffs put on it.
It is your argument that has been shown to be flawed, not mine.
February 18, 2013
Au contraire – Germany and France certanly aren’t going to enter a trade war with the UK, to the detriment of their economies, as they would be hurt more due to a tit-for-tat response. Any reduction in GDP (especially in the current crisis) caused by such an attitude would cripple them.
February 19, 2013
Peter Davis: “Stop peddling tripe ”
It’s what ‘uanime5’ does, you might as tell the sun not to rise in the morning.
uanime5: “Being in the EEA or EFTA involves obeying EU law .. ”
The fellow can’t put finger to keyboard with out talking rubbish.
February 18, 2013
And stop peddling tripe about 50% of our exports going to the EU.
February 18, 2013
Just because you don’t like it doesn’t make it false.
February 18, 2013
40% is the correct figure
February 18, 2013
And just because you keep parroting it doesn’t make it true.
February 19, 2013
uanime5: “Just because you donāt like it doesnāt make it false.”
It has now become almost axiomatic here, if you write a thing, it is almost certainty incorrect.
February 17, 2013
Indeed the US is recovering. Obama still make silly speeches , blaming any “weather events” on global warming but he is actually just making a dash for cheap gas. As we should be. This despite there being no warming for 16 years.
Cheap energy
No wind or PV subsidies
Halve the state sector
Get some functional banks
Get rid of silly regulations
Relax planning
Stop paying the feckless to be so.
Start Heathwick
Get rid of IHT stamp duty and halve CGT and get IT down to 40% max.
Stop HS2, the gender insurance nonsense and the global warming religion.
Be selective on immigration.
Fewer lawyers, litigation and tax advisers and more engineers and business people actually doing things.
Simples.
February 17, 2013
Excellent list Couldn’t agree more. What do you think John?
February 17, 2013
I see Janet Daley his it right in the telegraph:-
The passing down of small parcels of inherited capital is one of the most important and fruitful features of modern capitalism. If every generation has to start from scratch in building capital, the possibility of investment diminishes drastically. People who inherit their parentsā homes or savings donāt stash the money under the mattress. They spend it, or they invest it ā very often in their own businesses, which then expand. And those little parcels of wealth that arenāt sucked into the governmentās deadening grasp go back into the economy to help fuel growth. Does Mr Osborne ā or Mr Obama ā really not understand that?
Not only that it is a useful incentive to the older generation to bother to work.
February 17, 2013
That article is based on the assumption that everyone who inherits money is either an entrepreneur or spends their money in the real economy, rather than paying their debts. It also fails to explain why the IHT limit of Ā£325,000 is going to cause problems for the average person.
February 18, 2013
The point is not whether people have Ā£325k now, it’s whether they hope to have it in the future, or hope their children do. For the same reason high marginal rates of tax are a huge disincentive to economic activity even if they only apply to small numbers of people. People to whom they don’t apply can see the damage they do, can see that they could be hit by it and can see their children might be. Flatter simpler taxes with far fewer loopholes is a much better way to go.
February 17, 2013
Thats a good one from Georgie considering a continuous stream of money from Daddy has enabled him to never need a proper job bar the brief stint at SKY TV
February 17, 2013
lifelogic–Plus abolish Employers’ NI and to be logical start paying Employers for the work they do for the Government which has nothing whatsoever to do with them. Pensions, Maternity Leave, Tax Collection etc.
February 17, 2013
Sounds like the UKIP manifesto, a party that Mr R would be far more at home with, and whilst they have no seats yet, as people wake up to the current realities and the way the political class treat the populous with utter contempt, that will no doubt change.
One other for your shopping list… maximum terms for MPs (along with suitable corresponding constraints on the Civil Service)
February 17, 2013
Lifelogic. You forgot the bonfire of the Quangos. Careless, or just forgetful???
February 17, 2013
Indeed that too.
February 17, 2013
Your assumption that we could easily get out of wind or PV subsidies may be wide of the mark. We may not even be able to get out of the carbon tax.
Spain has very recently (last Thursday) indicated that it will cancel all further subsidy and is being sued by renewable energy investors who have already put 13 billion euros into evidently useless assets.
Many of these will be the same assets where people were generating solar subsidies right through the night by shining arc lights onto the solar cells. Innovation knows no bounds where subsidy is concerned. Lovely gravy train if you could have got onto it in time.
Well done Lord Deben and Tim Yeo amongst others (Chris Huhne?) for being so quick on the uptake. Chris Huhne’s speed of course is legendary.
February 17, 2013
How giving the wealthy a tax cut going to benefit the majority of the UK? Odd that you never recommend anything that would help the average person but only demand things that help the rich.
February 18, 2013
Which tax cut is this? The base rate of tax is higher than at any time (bar three weeks) that Labour was in power. Child benefits have been removed, the 45% higher threshold has been reduced, personal allowances are reduced, national insurance contributions have increased, the maximum amount that can be sheltered in a pension has been reduced (from Ā£250,000 which was Labour’s amount) to Ā£40,000 per annum.
The percentage of tax from the rich has INCREASED during this coalition, the percentage of tax from the poor has DECREASED.
(And I say this as one who earns far less than the 45% cut-off)
February 18, 2013
Halve the state sector, get rid of silly regulation, stop paying the feckless to be so? Is this list meant to mean anything. Or is just a religious wish list. Another pointless and inane comment that when looked at with any sense is ‘absurd’. You just cannot help yourself coming out with ‘right wing think’ can you? Expand a one of the points. Like. Stop paying the feckless. Who? the bone idle rich? Get rid of silly regulations Food safety inspection by any chance? and so on. You cannot can you?
You have the cheek to talk about propaganda and ‘think’? I’ll try and pull you every time on your fantasies and so should everyone else with any intelligence. This is what many on the right want. A run down state and this is what this list is about. Ram it.
February 18, 2013
Its not called “warming” anymore, its called “change”. I thought we always had “change” as evidenced by sampling of the icecaps and the vastly differing temperatures and sea levels.
The Sahara was a jungle only 6000 years ago apparently.
February 18, 2013
Yes – the proponents couldn’t justify the word ‘warming’ and keep their grants.
Technically we are still in an ‘ice age’ as defined by geologists since there is ice at the poles. There have been substantially warmer periods (and cooler periods).
The rise in global temperature lasted about 120 years to 1996 – including periods in the late 19th and early 20th century when man’s ‘contribution’ was much less than today and is pretty constant. Had there been significant man-made global warming then the curve would not have been a straight line.
February 17, 2013
All I can say Mr Redwood is you must be reading some very different figures to the ones I’ve seen if you think what is happening in America is a recovery. Unemployment is catastrophically bad, percentage of working age adults employed is the worst in history, the debt ceiling is going to be raised again, house prices extremely depressed, state governments on the verge of bankruptcy across the country, the only cuts in spending are in projected increases rather than current expenditure, police and military budgets are exploding with almost no real control and almost all off books, the police are becoming (tougher-ed) over zealous cops, 30000 drones due to spy on the population and more state control on peoples movements and money than ever before. That all sounds like a country whose government is expecting an explosion and is preparing to clamp down on a rebellious population. Is that what counts as a recovery these days? Is it what we are going to get here? I’m sorry, Mr Redwood, I agree with a good amount of what you say in other posts but you’re living in an alternate reality if you think there is any chance of economic or social improvement in the US now.
Reply: my comments relate to GDP, output and retail sales, and now house prices. There is a recovery, and it is beter than countries in the EU.
February 17, 2013
Eh here is another one, McDonald’s sales figs for 2012 also dropped. Where is the demand going to come from to further the recovery, if US consumers are so stretched financially that they cannot even afford to patronise a restaurant whose main business is providing $1 meals?
February 18, 2013
There clearly is some gentle recovery in the US now in GDP, output and retail sales, and now house prices.
February 17, 2013
Of course Obama is well aware of the situation.
He fully understands that politics is the art of the possible and that many things he says he wants are not politically possible-but he will get credit for trying. That credit will be used to achieve those things he really does want.
Unfortunately the same is not the case here. For example, why has the Prime Minister or Health Secretary not been asked whether Her Majestys Government have confidence in the Head of the NHS?
It worked for Boris getting rid of the useless Blair from the Met and gained him much support-but apparently no MP has the guts to do so.
February 17, 2013
Then Head of the NHS has to go, and go now, if not yesterday. It’s a no brainer. How he has the gall to hang on beggars my belief.
But then, many other things about this government also beggar belief.
What a sad state of affair(e)s
February 17, 2013
You’d better believe that he has the gall!
zorro
February 17, 2013
@Nicol Sinclair
“Then Head of the NHS has to go, and go now”
I agree, and so do the 3,500 people who signed this e-petition:
http://epetitions.direct.gov.uk/petitions/45576
February 17, 2013
JR: “The US recovers thanks to the spending cuts” (1)
JR: “one of the reasons for her relative economic success. ” (2)
1. There are no spending cuts in the US. Just like the UK.
2. In a hospital the patient with blood poisoning is ‘healthier’ than the one with terminal cancer.
February 17, 2013
Predictions being made this morning that the OBR will have to increase the 2013 borrowing requirement by another Ā£10 billion. This means that after the one-off items are excluded (which in any honest system of accounting they would be, but hey, this is the public sector fantasyland where money can simply be magicked from thin air and taking over vast future pension liabilities is counted as money in the bank today), the total REAL borrowing requirement for 2013 is now predicted to be around Ā£140 billion. That’s not much progress after what will be three and a half years of “grinding austerity” by the end of the year. No wonder that the pound is sinking faster than the Titanic and gilt yields are rising. Things are going to get very bad for the British this year, mark my words. We can only hope that the coming massive kick in the seat of the pants for Messrs Cameron, Clegg and Osborne will wake them up into actually reining in the deficit. because they have failed abjectly so far in what was supposed to be the top priority of the coalition.
February 17, 2013
“No wonder that the pound is sinking faster than the Titanic and gilt yields are rising.”
Gilt yields are indeed rising, to a large degree because the Bank of England is no longer creating vast sums of new money and using it to rig the gilts market.
But where is your evidence that “the pound is sinking faster than the Titanic”?
Here’s my evidence to the contrary, that in reality the pound is still bumping along at about the same level it reached nearly four years ago – the table for the sterling trade weighted index published by the Bank:
http://www.bankofengland.co.uk/boeapps/iadb/fromshowcolumns.asp?Travel=NIxIRxSUx&FromSeries=1&ToSeries=50&DAT=RNG&FD=1&FM=Jan&FY=1963&TD=17&TM=Feb&TY=2013&VFD=Y&CSVF=TT&C=IIN&Filter=N&html.x=37&html.y=19
13 Feb 09 78.4583
15 Feb 10 80.763
14 Feb 11 81.6076
14 Feb 12 80.7909
14 Feb 13 80.0035
On which factual basis, so far the passengers and crew on the Titanic would have noticed nothing untoward let alone any cause for hysterical alarm.
February 18, 2013
I’m referring to what has happened so far this year. It’s only recently that the focus has switched from the Eurozone and people are waking up to the fact that the government has pretty much given up on deficit reduction. Perhaps you’ve missed it, but there’s an open currency war going on at the moment and unfortunately Britain seems to be winning it.
Compare the recent currency trends and you should see what I am referring to:
1/1/13 GBP-USD = 1.618; GBP-EUR = 1.226; GBP-AUD = 1.559
15/2/13 GBP-USD = 1.551; GBP-EUR = 1.158; GBP-AUD = 1.498
If that trend doesn’t alarm you given recent statements by various government figures, both here and abroad, that they are actively seeking a lower currency, then you are welcome to keep on fiddling on the deck, but personally I’m heading for the lifeboats.
February 18, 2013
Well, no, those short term movements don’t alarm me, yet, because there have been similar scale fluctuations up and down over the past four years or so but in the overall medium term picture the sterling index has been remarkably stable.
It’s only necessary to go to the bottom of the table linked above and scroll upwards to see that.
I’m looking at what has actually happened; not at what some people wrongly assume has happened, or at what we might have expected to happen with the creation of Ā£375 billion of new money, or at what the Bank and some politicians might have wanted to happen or now want to happen, but at what has actually happened over the past four years.
Every time somebody says that sterling is collapsing or sinking or becoming worthless, I check to see whether that is true and so far I’ve only found a continuation of the period of stability that has been running for about four years now since the major drops during 2007 and 2008.
February 18, 2013
@Denis Cooper
Sterling has continued to weaken against the dollar and the euro on continued worries about the health of the UK economy.
http://www.bbc.co.uk/news/business-21496997
February 18, 2013
It’s a pity that JR has published your comment referring me to a BBC article about what is probably just another short term fluctuation in the value of sterling, but has not yet published my reply to Steve Cox pointing out that this is probably just another short term fluctuation in the value of sterling.
February 18, 2013
You have to remember that this is a BBC report and hence has a lefty slant to it.
February 17, 2013
There have been numerous suggestions in recent years about removing various Government Departments completely e.g. Culture, Overseas “Aid”, Business. I read yesterday that the cost of the so called Business Department is Ā£14B a year, if true why is this not more politically discussed?
February 17, 2013
In reply to MNr Sedgwick’s quyestion “why is this not more politically discussed”
the answer is depressingly simple. The public sector is run for the benefit of its employees and any such proposal would ellicit a howling shreik from the unions, Guardian, BBC et al, and this government simply doesn’t have the guts to face them down.
This is the root cause of the governments inadequacy at the moment.
February 18, 2013
Full name
Business (the destruction and inconveniencing of) Department. Hence Vince Cable with his quack expensive energy religion.
February 17, 2013
“The US economy is in better shape than the Uk or Euroland’ may be as long as you use the analogy of it being the best looking horse down at the glue factory. (refers to poor retail sales from a retail source-ed) . While in November of last year, also for example, the number of Americans getting by on Food Stamps hit a record high of 32 million.
The economic numbers may say “recovery” but for ordinary Americans things are not getting better at all from the evidence above.
February 17, 2013
Sorry that fig for Food Stamps is incorrect its actually 48 million nearly around 16% of the population!
February 17, 2013
Cheap energy is a driver of economic recovery, but the government of which you are a part Mr Redwood insists on pursuing policies which will ensure our energy is as expensive as possible. Thanks to Miliband of course, the former ‘energy’ minister, and other technological ignoramuses.
AGW is a scam which nobody outside vested interests believes in any more. That’s why eco-fanatics now call it Climate Change so that they can blame it on the human race whether it’s hotter or colder. Nobody has yet explained why the current climate is the optimal condition anyway – perhaps climate change is just what we need ?
Why don’t you and your coalition come into the real world, face up to the uselessness and exorbitant cost of wind farms, get on with fracking to release the huge natural gas resource under our feet and bring in thorium reactors to ensure reliable power generation for decades to come?
February 17, 2013
AGW is a scam which nobody outside vested interests believes in any more.
What exactly are these vested interests? Do you know what you’re talking about?
Thatās why eco-fanatics now call it Climate Change so that they can blame it on the human race whether itās hotter or colder.
Global warming also blamed the human race for producing CO2 that was warming the planet.
Nobody has yet explained why the current climate is the optimal condition anyway ā perhaps climate change is just what we need ?
Scientists have shown that if people continue to produce large amounts of CO2, which is raising the average global temperature, then eventually we will reach a point where the climate becomes intolerable; starting with areas closest to the equator when the Earth is hottest.
February 18, 2013
uanime5: “Global warming also blamed the human race for producing CO2 that was warming the planet.”
Change of tack detected.
February 18, 2013
Indeed.
Certainly catastrophic AGW is a scam which nobody outside vested interests believes in any more. Certainly no one who has applied any logical thinking to the matter or looked at the actual reading rather than the computer projections cooked up.
February 17, 2013
No doubt Mr Obama knows exactly what he is doing in making statements to appeal to his favoured constituency that are the opposite of what is actually happening. The USA has a much better chance of rebuilding its economic prosperity than Europe which, as you point out, has hobbled itself with energy policies that will not work as advertised and, if pursued to their bitter end, will beggar the nation. Interestingly the German government has finally woken up to the potential of shale gas and is working out how best to make the most of its own shale gas resources. That would be a useful complement to the several coal fired power stations whose construction it has authorised. Germany, it seems, has no desire nor intention to screw its industrial base – unlike one government I can think of.
February 17, 2013
“Mr Obama knows exactly what he is doing in making statements to appeal to his favoured constituency that are the opposite of what is actually happening”
Meanwhile Cameron is doing many totally wrong things this while kicking is constituency in the teeth at every opportunity.
February 17, 2013
Indeed, Obama talks to the gallery with his aspirations, but as John mentions, it’s worthwhile looking at what is really happening in the US….Yes, they are still engaging in heavy QE but they are actually cutting spending and particularly military spending (note the difference with defence spending)….
The banks took an early hit with some reforms, and their property market was revalued. Neither of these things has really happened in the UK. Hence, the still high prices compared to overall depressed wages, and little activity in the property market. As I have said before, we will not recover until this takes place…..
Look at Iceland now, people were saying that they would not get back access to finance on the markets for decades. They ditched the banks, reformed themselves, and within 3-4 years, they have steady growth, renewed access to the markets, and no continuing debt overhang or endless pain like Spain or Ireland….
zorro
February 18, 2013
If you ditch you can ditch your debts you clearly are better off by definition.
February 17, 2013
also they have had a house price correction, makes a big difference
February 17, 2013
Makes a big difference to the amount which has to be paid out in benefits too .
People think that with the devaluation of the pound the UK has had it’s house price correction .
I’m starting to think that with the engineered shortage they may be right .
Time to build some more houses with covenants that they can only be occupied by people born here and only owned by occupiers .
February 17, 2013
Indeed land is short in many areas, houses are expensive to build (especially with all the planning and building regulation drivel), population rising – they will not go down much from here in popular areas just drift up slowly and faster should we ever get a sensible government.
February 17, 2013
thats just “group think”
the average house is worth no more than 3.5 times the average salary, any higher and its just a rigged market and crazy government policies
there will be a correction its just a case of when, quite possible as interest rates are forced upwards this may do it
February 19, 2013
Iain ,
In 1985 the majority of people were saving towards their old age .
In 2013 the majority of people are saving nothing towards their old age because they are giving all the money to the banks in interest payments on their houses or in rent .
I think your assertion that houses are worth no more than the old rule of thumb of 3.5 times average salary should be modified to be 3.5 times average salary after making provision for old age .
If 28% of salary is saved for old age which is probably the optimum , that brings the multiple down to 2.52 times gross earnings .
February 17, 2013
In popular areas they will drift up , the law of supply and demand will dictate that only those who are able and prepared to pay will live in the prime locations . There is next to nothing which can be done about that .
However , the average person/family can only afford a house costing around Ā£80,000 including land – if they save towards their old age .
There need to be new towns created to provide houses at 2.25 – 2.75 average wages if the next generation are to meet the pay-as-you-go obligations we have saddled them with .
Have you seen how low wages are in the real world ?
February 17, 2013
I must admit JR, the following US numbers are somewhat better than the equivalent UK versions. I paraphrase Dan Kervick at NEP:-
The unemployment rate is now 7.9% and has never been lower than 7.8% at any time during the past four years. The unemployment rate for young people aged 20 to 24 is 14.2%. The unemployment rate for African-Americans is 13.8%. The percentage of the population that is employed is 58.6 %, down from 62.5% in January 2007; the percentage of the labor force that is employed is 63.6%, down from 66.4% in January 2007. These are the lowest rates in 30 years. Altogether there are now over 26 million Americans who are willing and able to work but are unable to find full-time employment to support themselves and their families.
Corporate profits are up 36% since January 2008, and up 200% since January 2001. The share of national income going to working people has fallen 6.2% since January 2008, and 11.2 % since January 2001. For the bottom fifth of wage earners, the number of annual hours worked increased by 22% between 1979 and 2007, but real hourly wages increased by only 7.7%. For the period between 2000 and 2007, real wages in this group actually fell by 3.2%.
Although household debt has declined since the peak of the recession, it remains very high by historic standards. Total household credit market liabilities as a share of GDP are now over 81%. This compares to 43% in 1970, 49% in 1980, 60% in 1990, and 67% in 2000. The financial sector remains dangerously large, and growing, with an 8.4% share of GDP ā bigger than it was just before the recession. The US financial industry now accounts for 30% of all domestic corporate profits. The total outstanding debt of the domestic financial sector is over 87%, down from 107% at the beginning of 2007, but still much higher than in January 2000 (80%), January 1990 (44%) and January 1980 (19%).
The after tax income of the top 1% of households, adjusted for inflation, has risen by about 130% since 1967. The income of the next 20% has risen by 28%. The incomes of all other income groups have fallen. The richest 1% of Americans control 34.6% of Americansā net worth. The bottom 90% control 26.9% of net worth.
According to the Congressional Budget Officeās (CBOās) projections, if all of that fiscal tightening occurs, real (inflation-adjusted) gross domestic product (GDP) will drop by 0.5 percent in 2013 (as measured by the change from the fourth quarter of 2012 to the fourth quarter of 2013) Output would be greater and unemployment lower in the next few years if some or all of the fiscal tightening scheduled under current lawāsometimes called the fiscal cliffāwas removed. However, CBO expects that even if all of the fiscal tightening was eliminated, the economy would remain below its potential and the unemployment rate would remain higher than usual for some time. (The CBO is saying the deficit is not big enough to reduce unemployment, exactly the same problem in the UK).
February 17, 2013
Do not just look at the headline rate things are not getting better. Check out the BLS figs for “discouraged workers” (ie those who have dropped out of the count), number of hours worked, average hourly rate etc before you drink Obama’s Kool Aid.
February 17, 2013
Fresh from my successful prediction that Farrage would chicken out of standing in Eastleigh. I reckon that Obama and his Committee to save the World are actually losing it and things are beginning to unravel. For example why is the price of gold continually being pounded, though other commods go unscathed? Why is the S&P 500 behaving so funnily recently ie a glacial crawl upwards and such a long time since it had a correction?
February 17, 2013
If there really is economic recovery in the US then precedents suggest that it should follow here quite soon, and then slightly later spread to the continent.
However whether it would arrive in time to save the UK governing parties at the 2015 general election is another matter.
February 17, 2013
2015 is surely lost already, he could not even beat Gordon Brown with all the cards on his side and before everyone even knew he was a pro EU, tax, borrow and waste, fake green socialist.
February 17, 2013
Given that Germany has already recovered beyond its 2008 levels yet their recovery hasn’t come here it’s unlikely that any US recovery will come here any time soon.
February 17, 2013
The US is the only country to have reduced its CO2 emissions due to use of fracking gas see The economist at http://www.economist.com/blogs/schumpeter/2012/05/americas-falling-carbon-dioxide-emissions.
Others point out that fracking gas has meant the US has increased coal exports which on a world scale negates much of the US alone improvement.
Guess who imports much of this US coal – why the greener than green EU. See http://www.economist.com/news/briefing/21569039-europes-energy-policy-delivers-worst-all-possible-worlds-unwelcome-renaissance.
Power utilities in Germany lose ā¬11.70 per MW when they burn gas but make ā¬14.22 per MW when they burn coal. The renewable energy based Energiewende policy has undermined the utilities finances according to Moody’s and the whole sector’s creditworthiness is under threat.
Forgive politicians for they know not what they do.
I bet the EU will not include the effect of increased world CO2 production when it’s heavy energy use industries move outside the EU to escape green high energy prices policies. They will move to parts of the world where the major way of producing energy is purely based coal – the cheapest but dirtiest fuel for generating CO2 and far dirtier than energy produced by the mix of gas, coal and nuclear in the EU.
February 17, 2013
Is that ā¬14.22 per MW with or without carbon capture?
February 18, 2013
You might find this interesting. The cost of renewables is dropping as is the cost of financing them compared to fossil fired plants; even gas. The reason being that fossil plants are considered to have high political interference – risk -keep changing the rules. Also investing in a dirty coal plant is not good for a Banks corporate image on facebook / twitter etc.
February 17, 2013
Money spent by private individuals is usually spent far more efficiently than that spent by governments, but the government here is doing its very best to ensure that domestic spending decreases by stealth taxes. Now the LibDems are proposing to tax all assets such as Jewellery, if today’s papers are to be believed. Such taxation gives no incentive for individuals to work harder; what is the point of getting any assets if all they do is attract taxation?
But the main reason why the Americans are getting out of the mess more quickly is that once they decide to do something, they get on with it. Having decided we need to do something, we set up committees and talk about it, and if we do start we set up a small pilot scheme to test the idea for a few years before taking action. Americans act now, and if there are problems, they correct them whilst we are still talking. Look at both the NHS and our schools, both are failing the people of this country, yet the government is doing nothing real, and when they do try, they only make half-hearted attempts with minimal change.
We need action, not words, but seem unlikely to get it under any of our present political parties.
February 17, 2013
As usual, Mr. Redwood has no clue about the US.
Defence spending will only be cut if no deal is made in the next couple of weeks. But yes, it look now that no deal is likely to be made because the Republican Party wants to hurt the economy, and these cuts will hurt the economy, possibly dragging the country into recession, or at best to low growth. Of course the US military budget is far too large, but better to divert that money to (for example) research and education rather than just letting the federal government spending drop suddenly. And most people in the Republican Party happen to think that the military budget is too small. But they are willing to just this once stick two fingers to the military because they can also at the same time stick two fingers to poor people, and that is what gives them great joy in life.
“The President was an angry man in a hurry.” Wow, that is a (unfair-ed) comment by Mr. Redwood. If Mr. Redwood thinks that the President is “angry”, what does he have to say about the tirade of abuse spouted by nearly every leading Republican in the US about nearly every public issue, especially with regard to the President. Now that is angry. And Republicans are angry because they are the party of old white people and old white people are losing their power and they don’t like it. They especially don’t like the fact that a black person (one of “those people”) is President. Has Mr. Redwood ever called any Republican angry, even though they are angry almost all the time? No, I didn’t think so.
Reply: I don’t think it’s anythign to do with race, and yes some Republicans are very angry.
February 17, 2013
This is a very silly post. With 48%of the vote, the Republicans cannot only be old white people. It is true they lost the black and Hispanic votes due to the immigration issue. Had they handled that issue better Romney would most likely have won, because he had the better of the economic argument (listen to the first presidential debate). Obama got lucky. The US is recovering in spite of Obama and his leftist rhetoric, because this leftist rhetoric (eg on global warming) doesn’t get carried through into policy.
February 18, 2013
wab ,
Your points about the Republican Party ring true with me . It is worrying that idiots like Rick Santorum can rise to become leadership candidates .
As in the UK , there are individual Republicans who are honourable people and do care about the poor .
Ron Paul was the only senior politician in the US spouting anything new or different over the past two years .
Mitt Romney , although hardly revolutionary , was not the right wing monster he was successfully portrayed as . Obama went about Obamacare the wrong way but Mitt Romney got cross party support for healthcare reforms and increased access to healthcare in Maryland i.e. garnered support and delivered .
Whereas I was initially pleased Obama got back in I’m now realising that Romney would probably have been better for the US .
The tragedy for me is that Obama promised change and has been a massive disappointment . He’s an advertising man , not Martin Luther King .
Perhaps we shouldn’t be surprised as Obama was clearly anointed some time ago . Obama is a fake and a vote to reelect him was a vote for the status quo and against change .
Obama is about as authentic as the astroturf roots Tea Party movement .
He’s just another new world order plant like Blair , Mandelson , Cathy Ashton , Barosso .
February 18, 2013
Mitt Romney’s healthcare plans were the same as Obama’s, that’s why he couldn’t criticise Obamacare while campaigning.
Given that Romney’s economic plan involved tax cuts for the wealthy and increased defence spending, while somehow reducing the deficit it’s unlikely that Romney would have been better for the USA.
February 17, 2013
Quote “More interestingly, does he know that far from following an anti global warming policy, the USA is following a cheap energy policy”
I don’t discount the possibility of significant human influence over the climate only the assertion that mankind’s relatively small CO2 emissions (2.5% of those released by natural leakage from underground) would cause it – it’s implausible .
However , for those people who are obsessed by CO2 the US has cut it’s CO2 emissions more than any of those countries which signed the Kyoto agreement .
This is due to the displacement of coal , a principally carbon fuel by natural gas , a hydrocarbon fuel .
Incidentally , the UK has become a big customer for surplus coal from the US .
I’ll say it again , the US has cut it’s CO2 emissions more than any of those Kyoto signatories thanks to the substitution of natural gas for coal .
February 17, 2013
It’s going to be interesting in the second half of this year when DECC go through the applications for acreage to be released under the 14th onshore oil and gas licensing round and award licenses to the winners .
Will DECC take this opportunity to get their own back on Cuadrilla for single handedly torpedoing the establishments entire renewable energy program by awarding them only scrappy acreage ?
Will DECC instead award the cream to those big companies who sided with DECC in trying to close UK shale gas down ?
February 18, 2013
I gather from a US nuclear engineer that they are starting up nuclear much more cheaply and quickly than Europe, as the stations mothballed after 3 mile island are available for a re vamp.
February 17, 2013
Hurrah for IDS and his robust defence of the Workfare Scheme. Can it really be true that the Court’s time was wasted over a mere two weeks–and as IDS said the woman did get paid? This country went mad not too long ago, before which the woman would have been told to grin and bear it and get on with it. I suppose some wretched lawyer made a packet for spouting as much bile as he could make up. Besides, the fact that people like unanime have spoken against it is enough to prove to me that the scheme is sound.
February 17, 2013
IDS wasn’t able to defend the workfare scheme, he just said he didn’t like the ruling and was going to appeal it. Also for some reason the DWP is going to change the rules of this scheme to comply with the judgement. You’d think that if he was confident of overturning this judgement he wouldn’t need to change the scheme to comply with this judgement.
IDS said the woman did get paid
Cait Reilly only got her benefits from the Government and wasn’t paid a penny by Poundland. I suspect IDS is trying to muddy the water by claiming that benefits are a salary, so that he can avoid claims of unpaid labour and slavery.
before which the woman would have been told to grin and bear it and get on with it
You can tell her what you want but she would still have been able to sue the Government for forcing her to work for free.
Besides, the fact that people like unanime have spoken against it is enough to prove to me that the scheme is sound.
Given the public opposition and this scheme being ruled illegal by the courts it’s clear that it’s not sound.
February 18, 2013
unanime–The Courts have, as so often, gone with a technicality about minor regulatory form rather than substance. I think it absolutely essential that the Government, paying this lady as they do, be allowed, nay encouraged, to place (very reasonable) conditions on her continuing to be paid.
Besides, cannot imagine why you would want to proclaim the judgement as some kind of continuing victory when it was made clear that the lady’s main and completely farcical claim that her human rights had been infringed was…….I believe “rubbish” was the term used (though perhaps not by the Court). We were talking a mere two weeks for Heaven’s sake and I doubt she was in sackcloth and ashes and all the rest as you would have us believe.
February 17, 2013
Leslie ,
The irony is that IDS is actually trying to establish a safetly net for people and reinforce the insurance principle of getting more if you have actually contributed .
It’s shameful that the post war Govt went to such lengths to ensure that the social security system was just that and subsequent politicians chose to turn it into a hand out system which guaranteed it’s failure .
February 18, 2013
The only good thing IDS is doing is changing how benefits are withdrawn, so they’re withdrawn based on how much your earn rather than mostly withdrawn because you’ve gotten a job. However even this withdrawal system isn’t as generous as the rate the personal allowance is withdrawn for those earning over Ā£100,000.
February 18, 2013
unanime–“Gotten” a job? Are you American?? Wouldn’t have thought so because over there it’s “User pays” which I wouldn’t have thought you’d think much of.
February 17, 2013
Off-topic, JR, I wonder what you think of this plan which is being mooted for disposal of about half of the government’s RBS shareholding?
http://www.independent.co.uk/news/uk/politics/george-osbornes-rbs-exit-plan-400-share-gift-for-every-taxpayer-to-woo-voters-8497525.html
“George Osborneās RBS exit plan: Ā£400 share gift for every taxpayer to woo voters”
February 17, 2013
Will that be an attempted vote buyer? Like G Browns absurd Ā£500 baby bonds – to pay for your children’s 18th birthday party if it has not been pinched by the financial “services” industry?
February 17, 2013
Two hundred and fifty quid actually and I cannot find anyone who will offer access to the stock market for this trivial amount without imposing an additional fee. An absolute waste of the taxpayers money!
February 17, 2013
lifelogic–The fact that it might be a vote buyer is hardly proof (some would say rather to the contrary) that it is not a good idea–personally I think it unarguable that it is best to get the Government, especially this half-rear-ended Coalition, the Hell out of it.
February 18, 2013
If you mean get the government the Hell out of RBS, the scheme as mooted would still leave the government with a very substantial investment, about half of the shares it now holds, but as it would no longer be the majority shareholder with 82% of the shares it would no longer have decisive power over developments at the bank which would affect the value of its investment.
February 18, 2013
Dennis–Maybe, but they don’t seem to have anything resembling “decisive power” anyway.
February 18, 2013
Denis Cooper ,
Disposing of half the Govts shareholding would just be a way of maintaining the status quo wouldn’t it ?
It’s not sufficient just to get it off the taxpayers books , RBS needs to be broken up .
February 17, 2013
I would say Obama is doing what is good for america.
Only the eu and the UK would be stupid enough to self harm by ideologically following policies others ignore or undercut.
We only once had a smart operator as PM in this country and look what happened to her.
The UK is rapidly becoming a lost cause. The ‘greenest government ever’ may come to pass, but with a different meaning than Dave’s.
February 17, 2013
Starting in April 2014, the Government will start imposing its new ācarbon taxā on every ton of CO2 emitted by producing electricity from fossil fuels, rapidly rising from Ā£16 a ton to Ā£70 by 2030.
Is this going to improve our economy?
Stimulate growth perhaps?
Result in cheaper energy?
Reduce inflation?
Create jobs?
Improve chances of re-election?
Unfortunately the Government is living in cloud cuckoo land.
February 17, 2013
I think history will say that the major cause of the US coming out of recession is gas prices dropping to a quarter.
Obama, of course, has had only a negative role in this. However if he really believed in the catastrophic warming story as anything more than a way of keeping voters scared and obedient he would have been promoting nuclear power as the only CO2 free practical policy. Obviously the same applies to the Labcondems here.
February 17, 2013
Well Mr R, we all agree cutting spending works, as we see by the USA, but why is Mr Cameron pursuing foreign aid spending to such levels. The nation does not want it, and we can’t afford it, so why do it? We owe these countries nothing, they have their own governments who pursue arms and navy advancement while their own poor rely on this aid. That is not right, and we have people here who need help. We have heard the debate on elderly care, its nothing more than a farce what’s been proposed, nothings changed, people will still have to sell their homes to pay the bills, yet 12 billion of our money goes abroad. How any government can justify this I just cannot understand. But we will remember when it’s time to make a vote, we will see those who think they are doing good come to a fall including Mr C. Miliband is not better, and Clegg and his team are a real danger to this country, they’d sell us down the EU river in one go.
No, I’m afraid we can all praise the USA for the way its tackled its problems, and yes perhaps we should do the same, but while spending on foreign aid is so high, your government arguements are flawed. H2 is another hype of silliness, which should be abandoned, and an expensive rail line for the few who will be able to afford the tickets. The thinking behind all these schemes makes one think perhaps some have marbles missing, its certainly not in the ‘national interest’ but self interest for the few.
February 17, 2013
It is worth pointing out that the USA uses genetically modified food . We all got scared by the media with Frankenstein stories and ended up with some horsey business.
Incidentally shale gas is greener for the USA as it replaces either imports which have to be shipped from wherever or dirtier coal. If the UK did likewise it would be greener producing it locally rather than shipping from wherever.
February 17, 2013
How about “the USA economy is recovering because of fracking (estjmated as no less than 1 percent of GDP) and the benefit this brings to the economy as a whole as a result of cheaper energy?
February 17, 2013
I wonder if we are holding onto a big RBS to try and get our money back from it and a potential share give away to please voters.
February 17, 2013
I’m glad the bar for political comment is much lower than that for published academic work.
Where is the causal chain here, has it been established? I mean, between the cuts which then led to all this growth?
How do you know it’s not that the economy is recovering and hence the budget deficit is recovering?
And more to the point, how many times do I have to make this same simple point on here? How many times do you not respond to it in any substantive way other than diverting? How many of your fawning followers just simply ignore anything that perhaps throws the odd fact into this bizarre story you spin?
February 17, 2013
You sound pretty angry too! It is the case that the US has reduced total public spending whereas the UK has not. It is the case that the US has a much lower state/GDP and tax/GDP ratio than the UK. It is the case that the US is allowing proper price corrections through liquidation of bad debts from property lending whereas the UK has not. And it is the case that US industry and consumers are benefiting hugely from the shale gas revolution, ignoring the global warming hysteria which opposes it. Cut the insults and produce some facts and arguments of your own.
February 18, 2013
My apologies if you don’t like being referred to as fawning – you’re right, sometimes I put things a little strongly which isn’t helpful.
However, all the examples of things you believe are aiding economic growth do not relate to the relationship between fiscal policy and economic growth, the point I’m making.
There’s a coincidence of events – budget deficits improve and economic growth happens in the US, and neither happen in the UK. John asserts that the causality goes from government action to growth without any evidence to support this.
I suggest that there’s plenty of evidence to suggest that usually budget deficits are cyclical and hence follow what growth is doing. Not least the progressive tax system and the payment of benefits.
John never responds to this substantive point.
So my apologies, sometimes I’ll get a bit peeved when someone repeatedly ignores the things I’m saying and makes big headline points that are plain wrong.
February 17, 2013
James are you therefore saying that a bigger deficit than the one we currently are running with more Govt spending via higher taxes and increased borrowing is the way to growth?
February 18, 2013
It may be, but that isn’t the thrust of my argument.
My point is John never recognises my point and continually ignores it – the point being that the direction of causality in all likelihood is not the way John always asserts it is.
It is much more likely that economic growth movements cause much of the swing in any budget surplus/deficit, rather than vice versa (as he asserts).
The main reason is we have a progressive tax system and we pay out unemployment benefits.
Reply: Nonsense. I usually show cyclically adjusted UK figures. Why don’t you try dealing with the udnerlying evidence and issues, instead of slanging me off for no good reason. The US is enjoying a good recovery despite or because it is cutting states’ spending much more than the UK is cutting the growth of public spending, with tight controls now on Fed spending as well.
February 18, 2013
James,
I can understand that to decide what causes what, is difficult but the figures are cyclically adjusted are they not?
Also its odd how modern economists now feel higher taxes to enable even higher state spending will give us the growth we need.
To me the opposite is required ie lower taxes to enable a rise in disposable income, leading to increased consumer spending added to cheaper and more easlily available credit for consumers and SME’s
It was the solution for many chancellors in the past.
February 22, 2013
Edward – John generally doesn’t cite cyclically adjusted figures, and I have no reason to believe, unless he corrects me, that he is doing here.
You make a sweeping generalisation which I would say, as an economist, is probably wrong – we don’t as a profession prefer high taxes and high spending and believe that will deliver high growth.
We do nonetheless advocate analysing each market on the basis of the conditions under which a free market, absent of any government intervention, will provide the optimal outcome.
But generally, economic analysis happens post hoc, to support whatever decision some politician has already decided to make – like the Chancellors of the past you refer to.
We economists then get sullied with the blame for the follies of Chancellors past…
Reply I have cited the cyclically adjusted figures for the Uk when making the case that the large Keynsian boost administered has not led to growth. The US has been cutting state expenditures n ear the low of the cycle, but this has not prevented growth resuming.
February 17, 2013
The US, unlike the UK, are not saddled with a tax and spend Chancellor so have been able to cut spending to get their deficit down. We have a PM driving up spending with his ridiculous fixation on boosting Overseas Aid, an indolent Chancellor (welfare is now 13% of GDP) happier to increase tax than to cut spending; and a junior Coalition partner intent on spending money like it was going out of fashion – their commitment to ROC’s for renewable energy keeping energy costs high, the EU budget which they opposed cutting & the huge sums they were prepared to waste on HoL reform. Mr Osborne was prepared to support the LD plans fr higher Council Tax bands last year if press reports are true. It’s therefore no surprise that with broken banks still very weak and starving our SME’s of credit (according to the BoE report on Funding for Lending) and no other debt capital markets of substance because the Gov has done nothing to promote a private placement market that we have the lowest growth in the G20 bar Japan & Italy, are in imminent danger of a triple dip recession and losing our AAA rating, have plummeting productivity, and Gov spending increasing but for the inclusion of 4G sale proceeds & profits from QE. This Gov’s management of the economy has been woeful !
February 17, 2013
Roger Helmer MEP writes today that a report by PWC is claiming that by scrapping Airport Passenger Duty we would create 60,000 jobs, increase economic growth and benefit the economy by Ā£16 billion by 2015. That might go some small way towards winning the election.
No doubt George Osborne is considering raising the tax.
February 18, 2013
Matthu ,
Who can afford to fly anywhere these days ?
Foreign holidays have become a thing of the past for Britons and if you can afford to go anywhere your devalued pound won’t buy you as much as it used to .
The majority of kids born today will never need a passport .
Won’t be able to afford to go anywhere and won’t be able to afford to live here .
February 17, 2013
The US had some easy hits to cut with their defence and NASA. Still funded well but they didn’t get into that welfare trap as we did.
February 17, 2013
Test, does this newer comment get through, Am I still welcome or should I just close the door on my way out?!
48 hour plus and counting on older comments from Friday morning, and yesterday now, didn’t think I said anything objectionable nor anything no more off topic than others have, oh well…. š
February 17, 2013
These are still waiting from Friday;
…./2013/02/15/living-standards-need-to-rise-inflation-is-their-enemy/#comment-165346
…./2013/02/15/living-standards-need-to-rise-inflation-is-their-enemy/#comment-165677
Reply : Long contributions, contributions referring to unknown outside sites, and contentious statements slow down editing.
February 18, 2013
John neither of the above comments had links, the first was no longer than many and was mad on the morning the blog was published, nothing looked contentious (unless criticism of the government, Tory party or green politics is now being regarded as contentious). My guess is that you have just been (very) very busy, or taking time off which is fine, but a little heads up would have been nice! š
Reply: Yes, I am very busy and one of yours was very long so I parked it.
February 17, 2013
More interestingly, does he know that far from following an anti global warming policy, the USA is following a cheap energy policy ā one of the reasons for her relative economic success.
Since when have these things been mutually exclusive? It is possible to have cheap energy and reduce CO2 emissions (though energy is cheapest when you don’t care about pollution).
Presumably he sees all around him people and companies who heat their homes and offices to a higher temperature in winter than they cool them to in summer.
Depends on which part of the USA you’re in. In Florida you don’t need to heat your house in winter and in Alaska you don’t need to cool it in summer.
Presumably he sees the gas guzzling cars and the reluctance to use public transport.
Well petrol prices are much cheaper in the USA than the UK. Also the public transport isn’t as good.
February 18, 2013
The US has another couple of things going for it viz a viz the UK:
(1) There is less stagma attached to going bankrupt in the US.
(2) The average ratio of household debt to household income is 100% in the US, as against 140% in the UK (down from the 160% when Gordon Brown left office). The 140% includes a lot of ‘under water’ (negative equity) mortgages, inhibiting labour mobility.
The UK Government should look at the detailed distribution of household debt underlying that 140% average and ask themselves “Which households have a low level of debt and what is needed to get them spending?”
February 18, 2013
I am glad that the US government is at last reducing its deficit as a % of GDP. Hypocracy is preferable to stupidity.