Interesting Links for 10-08-2012
- How does the Corby by-election change the UK's electoral mathematics?
(tags: elections coalition uk ) - 1300 extreme porn convictions in the last year. Rather more than the original estimate of _30_
(tags: viaCipherGoth porn uk law freespeech ) - Spotify, Pandora, Streaming Music Make Up 25 Percent of Warner Digital's revenue
(tags: music spotify ( Read more... )
(Memories of the Major Government and an assumption that as the Conservatives had nearly won the most recent election most of their MP’s in marginal seats would be young).
The numbers still seems too tight for a Labour - Lib Dem coalition to emerge but another one or two lost Conservative seats might be enough to make such a coalition stable and able to do things.
What it certainly does is strengthen the Lib Dem hand. “Hey Tories, how’d you like to not be a minority Government but in Opposition? Not liking that. Then here’s the deal. I’ve taken the liberty of forging your signature at the bottom of the page to save time.” Stylee.
We live in interesting times.
(Saying this - my comments on the likely inability of Osbourne and Cameron to change their course on the economy in time for the next election also hold true if Ed Balls were to become Chancellor as a result of a Mensch precipitated Putsch. It’s less of a problem electorally for Miliband and Balls because they can go to the country in 2015 without having completely fixed the economy with New Keynsian and say it’s work in progress in a way Cameron and Osbourne can’t. But for those hoping that a Balls Treasury would quickly improve the economy I’d say it’s still two years after Balls enters Number 11 before you can expect any significant improvement.)
Also, the irony of a Conservative government being brought down by a woman selfishly deciding to put her own family ahead of her career is giving me these strange tingling sensations.
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A vote of no confidence would be fun.
I wonder what the SNP make of it all. I wonder if they’d prefer to be fighting the referendum with a Tory government in Westminster or a really weak Lib-Lab-Rainbow pact.
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The idea that we should take advantage of cheap labour to build some productive capital or invest in some education and training that will improve our long-term economic performance doesn’t strike me as fundamentally flawed. But I’m unsure if it would actually work in our current circumstances.
The first bit of uncertainty comes from being unsure how much more borrowing the UK can take on before lenders begin to worry about financial distress and the cost of our borrowing goes up to the point that the economic gains from the additional capital are consumed by the higher overall cost of borrowing leaving us actually worse off.
The second uncertainty is that I’m not convinced this is the type of economic downturn that a Keynsian stimulus would help.
I’d expect a Keynsian stimulus to help with a downturn caused by some form of exogenous shock which dislocates trades in the short-term, makes people uncertain about their future and results in a bunch of people being laid off. A downturn that affects mainly the profit and loss statements. Profits are down but fundamentally it’s still worth owning the factory / having the skill set because at some point soon people will want to buy stuff again. A Kenysian stimulus bridges that demand / output gap and gets everyone feeling more positive about the future. This is helpful when the future is fundamentally like the recent past, once you’ve gotten over the shock.
I’d expect a Keynsian stimulus to be less use in downturn caused by a realisation that large parts of the economy and many economic actors were fundamentally wrong about the future. No one will ever want what the factory you owns ever again, or not in the same numbers. This might be because tastes and technology have moved on, that the factories were badly built or because your customers can now no longer afford, over the long term, what you wanted to sell them. The hit is mainly to the balance sheet. We turn out to always have been poorer than we thought we were.
I’m unclear if our collective balance sheet still has lots of over-valued assets to be written down and we don’t yet recognise our own poverty.
In this case I don’t see that borrowing a lot of money to spend on infrastructure is going to return us to normal as the old normal was fundamentally wrong.
There’s a middle ground I think where the size of the exogenous shock is so large and enduring that it dwarves our ability to mitigate it with a Keynsian stimulus. I’m not sure this is usefully different than a balance sheet recession but it might also be where we are.
To expand on your analogy, have we hit a log in our ocean liner or have we hit The Iceberg in our canoe?
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