Thursday, 12 August 2010

Double dip gamble‏

There has been all kinds attacks on the coalition cuts all over the web and warnings of a double dip recession after yesterdays Bank of England forecast of a 'choppy economic recovery'. While less than 3% growth is not great its still not a double dip recession so lets not panic just yet. The way some have reacted you would think that we are back in a recession.

If we keep on talking about a double dip recession it will happen because even those that can spend or even need to spend well hold of on those planned purchases and ties goes for business too.

For what it's worth I think government spending should be cut as it cannot be sustained and I would like to see admin inefficiencies removed. By the same token I would like to see more capital projects like in the states for example the High-speed rail plans is a great example. The good thing about capital spending is that we all get a permanent asset which the country can use.

One of the real keys as Mervyn King said is small business bank lending. I believe the sooner we split up the banks the better so they can get on with lending funds to business.

I'm willing to admit as a Lib Dem that I don't fully agree myself with having cuts too quickly but I do agree that we must have the cuts. I'm somewhere between the coalition and the Labour party on this (I guess that's what makes me a Lib Dem right).

I do think however that this is a gamble and a fine line between pleasing the markets (the reason why we are cutting to keep the interest payments down and rate) and not going into a double dip recession. If the banks can get the money flowing then there won't be a recession but personally I'm not enjoying the ride.

Hold on tight people it's going to get bumpy but try not to panic.

Todays Links related to this Norfolk Blogger postDouble Dip Recession ? We were warned !


  1. You cannot have a 'double-dip' if you never got past the first one. Which we haven't.
    The ONLY thing propping up the rotten system was State spending, but unhappily the ONLY thing propping up State spending was un-repayable debt.

    The current dysfunctional economy cannot be re-inflated. It's past saving. That is why Cameron made the point of saying that the 3 main support legs of the current economy are structurally deficient and must be replaced by a sustainable new way forward.

    Single dip - double dip - endless dip; it's all the same thing. You can't conjure real growth out of a noxious combination of State spending, malevolent, ill-conceived, and arguably criminal, Financial Services, and ridiculous Real Estate prices. Until we re-start our 'making things' Industry, we are going to continue to head downwards. Sometimes faster, sometimes slower, but always DOWN.

    So no, it is not a mistake to turn off the 'stimulus' tap. It was creating not one 'good' thing but it was burying us all in a mountain of debt. We can't grow' out of this(primarily because we are not going to be 'growing' very much) --- we have to either adjust to a lower standard of living or find a way to return to a variant of the Industrial past. Spending money we don't have, just to preserve a structure we can't afford, just isn't going to work any longer.

  2. If only more people thought like you. I agree we need to make things and change the economy it's just all over the shop and unbalanced. Good comment

  3. "If only more people thought like you."

    Oh my. Be VERY careful what you wish for. As the old maps used to say ----- There Be Monsters. :-)

    Thanks for the kind words. I actually hope that I am completely out-to-lunch in my analysis of the economy of much of the West. Because it's not good news at all if I am correct. It means that the surface problems can't be 'fixed' because the structure itself is in decay mode, and the 'pain' will go on for a very long time, before any gain can be achieved.

    I hope No, but I fear that it is Yes. But the 'good' side effect of all this is that the LibDems are FINALLY growing up. For a while it might become a smaller Party, but it will be a REAL Party, not merely an amorphous anti-those-other-guys collection of people who lack any cohesion.
    The Coalition is the best thing that has happened to the LibDems(I wish it was just Liberals) since the early years of the 20th century. I am impressed with the 'growth', the Party is forcing itself to accept.