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Chris
12-20-2012, 08:16 PM
This topic, based on God Save the British Economy (http://www.nytimes.com/2012/12/23/magazine/god-save-the-british-economy.html?pagewanted=all&_r=0), is less about the British economy than it is about what I see as an insight into what economics is about.

First some facts:


The British economy, however, is profoundly stuck. Between fall 2007 and summer 2009, its unemployment rate jumped to 7.9 percent, from 5.2 percent. Yet in the three and a half years since — even despite the stimulus provided by this summer’s Olympic Games — the number has hovered around 7.9. The overall level of economic activity, real G.D.P., is still below where it was five years ago, too. Historically, it’s almost unimaginable for a major economy to be poorer than it was half a decade ago. (By comparison, the United States has a real G.D.P. that is around a half-trillion dollars more than it was in 2007.) Yet austerity’s advocates continue to argue, as Cameron has, that Britain’s economic stagnation shows that the government is still crowding out private-sector investment. This, they say, is proof that austerity is even more essential than was first realized. Once the debts have been paid off and the euro zone solves its political problems, the thinking goes, the British economy will bounce back quickly.

When I visited Posen this summer, he refused to publicly criticize a sitting administration’s policies, but every time the topic of austerity came up, he was unable to hide his frustration. Posen’s term ended in August, and his subsequent nondisclosure agreement expired last month. Now he wants to persuade everyone he can that Britain should abandon its austerity program. He says that he has a solution that would quickly return healthy economic growth. His critics say that his prescription would bring about another financial panic. But whether you think he’s right or wrong depends on what you make of the data.

Now how do we approach these facts economically?


Economics often appears to be an exercise in number-crunching, but it actually resembles storytelling more than mathematics. Before the members of the Monetary Policy Committee gather for their monthly meeting, they sit through a presentation from the Bank of England’s economic staff. The staff members take the most recent economic data — G.D.P. growth, the unemployment rate and more subtle details gathered from interviews with businesspeople throughout the country — and try to fashion it into a narrative. Does a sudden spike in new factory orders represent a fundamental shift, or is it just a preholiday blip? Do anecdotal reports of rising food prices herald a period of inflation, or is it the result of a cold snap? Which story feels truer?

Carygrant
12-21-2012, 06:42 AM
As I feared , your insights are as about as useful as the previous resident commentator , Mister Ron Spock , whose knowledge of the EU political and economic scene matched my knowledge of American Football ---zero .
The first thing to notice is how the world's power makers view Team GB .
Unlike the US , which has been successively down rated financially , we hold on to our triple A rating , even if at long last it has an 18 month negative light flashing against it .
Our economic performance has been nothing short of miraculous . The average EU unemployment figure is over 11% whereas Team GB boasts a figure at roughly parity with the US --- despite official original forecasts that it would be around 20% higher at this point in our five year planning .
It seems that we have made colossal inroads into creating private sector jobs growth whilst shedding the fat from the public sector . Of course achievements in this area might have been even greater and faster and I have been a strong champion of this line of thinking over the last two years .
But for a country that is not a mass markets exporter , and cannot be whilst having almost no natural resources , plus high labour production costs versus the east , life has been startlingly positive .
I am not sure what motivated this flimsy Topic . Compared to the US which has been barely propped up -- despite huge and continuing printing of imaginary money --- Team GB has been one of the great EU success stories which France and Germany have come to grudgingly realise in the last six months .And of course we all know the state of the US housing market ( Triple A shit ) and the fact that by any realistic definition US unemployment is around 20% ( perhaps a new rating of quintuple shit ).
I see the US in disarray and disintegration this coming year as the EU further unravels itself . And even in the EU , Germany will come under huge bank pressure as the details of the Italian chaos become fully realised .
I expect American banks to start tumbling and an increase in the speed of $US devaluation . Once huge inflation kicks in , I shall be pleased to organise food parcels to you people who find themselves in extreme circumstances . Which you will .