(no subject)

I post a quote from 'Unman, Wittering, and Zigo'.

"Authority is a necessary evil, and every bit as evil as it is necessary."

This is because folk, en masse, are pretty damn stupid: however clever they appear to be as individuals.



Anyway, back to the real world and the budget.

Richard Koo, chief economist at the Nomura Research Institute, said on last night's 'Newsnight' that the Coalition budget was "poorly timed, given our own experience in Japan....You never want to cut the budget deficit when the private sector is de-leveraging."

www.bbc.co.uk/iplayer/newsnight 
28:10 mins into Wednesday's programme. There's more if you want to view it.

George Osborne, possibly one of the great geniuses of our time....but probably not really. First we bail out the financial sector, because the whole edifice of capitalism looks to be crumbling. Then we bend over to let them fuck us in the ass by paying for their bailout with our social services, because the markets won't stand our levels of debt: debt that we got into by bailing them out. It may just be time to line these wankers bankers up against  a wall and shoot them.

If we 'double-dip' it will be the Coalition's fault.
And we will blame them.
For a long time.

(no subject)

And further to my last post:

en.wikipedia.org/wiki/Lost_Decade_(Japan)

I quote from the end of the Wiki article.

Economist Richard C. Koo wrote that Japan's "Great Recession" that began in 1990 was a "balance sheet recession." It was triggered by a collapse in land and stock prices, which caused Japanese firms to become insolvent, meaning their assets were worth less than their liabilities. Despite zero interest rates and expansion of the money supply to encourage borrowing, Japanese corporations in aggregate opted to pay down their debts from their own business earnings rather than borrow to invest as firms typically do. Corporate investment, a key demand component of GDP, fell enormously (22% of GDP) between 1990 and its peak decline in 2003. Japanese firms overall became net savers after 1998, as opposed to borrowers. Koo argues that it was massive fiscal stimulus (borrowing and spending by the government) that offset this decline and enabled Japan to maintain its level of GDP. In his view, this avoided a U.S. type Great Depression, in which U.S. GDP fell by 46%. He argued that monetary policy was ineffective because there was limited demand for funds while firms paid down their liabilities. In a balance sheet recession, GDP declines by the amount of debt repayment and un-borrowed individual savings, leaving government stimulus spending as the primary remedy.

Now, Paul Krugman describes Japan's lost decade as a liquidity trap rather than a balance sheet recession.

Whichever it is will be telling in the coming years. I'd bet on Koo rather than Krugman, but I'd be happy to be wrong, as I'm not proud. And it's not as if it makes any material difference: we're still in it up to our middles.