A tale of two buses


Apparently that bus now looks like this:


Which might explain why Boris Johnson got a bit confused yesterday on Peston on Sunday.

Would you like to see him claiming that the Conservative manifesto promises £350m a week for the NHS? Of course you would.

And while we are with Robert Peston, here is another insight into Johnson’s behaviour:

Now would you like to hear what Norman Lamb made of it?

Boris Johnson misled the public once, he must not be allowed to get away with it again.

The NHS is in crisis, but the Conservatives are peddling blatant untruths instead of providing the urgent investment our health service needs.

It shows they are taking voters in this election for granted.

The Liberal Democrats are being honest with the British people that we will put a penny on income tax to raise an extra £6bn a year for the NHS and care.

* Mary Reid is a contributing editor on Lib Dem Voice. She was a councillor in Kingston upon Thames, where she is still very active with the local party, and is the Hon President of Kingston Lib Dems.

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  • James Hardy 22nd May '17 - 2:16pm
  • Michael Cole 22nd May '17 - 2:18pm

    The public say that they want politicians to be honest with them, but in fact they seem unwilling to listen to realistic analysis from the likes of Norman Lamb and Vince Cable.

    They prefer to hear massive untruths like ‘£350 a week for the NHS’ or facile slogans like ‘strong and stable leadership’ or easy solutions like Corbyn’s manifesto of empty promises.

    What can we do about this ?

  • Following the changes announced today about the “dementia tax”, every LibDem spokesman or spokeswoman should make sure they trot out the phrase “weak & wobbly leadership” every time they mention May for the rest of the election campaign. 🙂

  • Paul Murray 22nd May '17 - 3:22pm

    That bus appears to have lost some wheels. A significant re-engineering of something, that’s for sure…

  • Jenny Barnes 22nd May '17 - 3:54pm

    yes, 2 axles not 3, and the roofline is different. It’s wheely obvious these are 2 different buses.

  • Nick Collins 22nd May '17 - 4:14pm

    So May is on the Remain bus?

    Are UKIP aware of this?

  • OK, so I got confused about the buses, but not as confused as Boris Johnson about money for the NHS

  • Saw the Andrew Neil interview with Theresa May this evening.

    Fact……….., she is evasive or incapable or probably both because she failed to deal with any factual question put to her. One of the weakest and most ineffectual interviews I have seen by any Prime Minister in my lifetime. Surprised Neil put up with it so politely.

    Summing up : “They’re worse than us because I’m Strong and Stable”. End of.

  • David Raw

    You are absolutely right May was hopeless. However, she will still win easily because Corbyn is unelectable. Perhaps the worse political leaders of the Tories and Labour in living memory.

  • Little Jackie Paper 22nd May '17 - 9:06pm

    Michael Cole – ‘The public say that they want politicians to be honest with them, but in fact they seem unwilling to listen to realistic analysis from the likes of Norman Lamb and Vince Cable.’

    Hold on a minute. There is much that can be said about recent events and the manifestos at this election. However what May did on social care was honesty. You might not like it, you might offer alternatives and you might prefer to talk about the issue in big picture terms. All fair enough. However as far as I can see everyone else, including many LDP voters it would seem, appear just to have responded to honesty on house price wealth and care with a cheap slogan about dementia taxes.

    What’s the alternative you prefer – a state-backed ‘property inheritance insurance?’

    Mr Cole I agree with the point you make. But it takes two to tango. May had a perfectly reasonable, honest argument on social care (http://www.independent.co.uk/voices/theresa-may-tory-manifesto-pensioners-a7747196.html). That a lot of people don’t like it is clear but so what? If we are going to complain about an unwillingness to listen to analysis and think about unpalatable stuff then perhaps some might like to look at themselves when it comes to social care funding.

  • Dave Orbison 22nd May '17 - 9:59pm

    malc – I think again you are not facing up to some political home truths. If May and Corbyn are the worst leaders in living memory what does that say about the LibDems position in the polls?

    Michael Cole “Labour’s empty promises”? What does that mean exactly? Labour have produced detailed manifesto commitments in my view. Many which are clearly supported by the electorate. So are you relying on your crystal ball by claiming somehow, with certainty, that Labour will break their pledges and so are not to be trusted?

    Have you still not realised how LibDems harking on about other parties breaking their promise may appear a little hollow?

    May is weak – given that she is not prepared to go into a head-to-head debate. Her policy U-turn on social care charges support that observation. Corbyn has withstood enormous anti media coverage. Many on here complained how unfair it was fro the media to gang up on ‘poor Tim’ over the single issue of “gays as sinners”. Just imagine how you would feel with two years relentless and 75% misleading stories.

    He has produced a radical manifesto and the Tories are rattled. Not so weak. But anyway, please can we focus on policies….. The cult of personality is a dangerous thing…… Look to the US on that.

  • @ Dave Orbison Fair comment, Dave.

  • Little Jackie Paper 22nd May '17 - 10:05pm

    Dave Orbison – The interesting thing to me about the social care thing is that it has raised an interesting point about both Labour and Conservative manifesto. As far as I can see neither talk about inheritance tax.

    It’s not on the agenda at all.

  • We are I’m afraid living in the world of demagogues

    Demagogues have appeared in democracies since ancient Athens. They exploit a fundamental weakness in democracy: because ultimate power is held by the people, it is possible for the people to give that power to someone who appeals to the lowest common denominator of a large segment of the population. Demagogues have usually advocated immediate, forceful action to address a national crisis while accusing moderate and thoughtful opponents of weakness or disloyalty.

    Unfortunately I fear for many it needs the failure of the demagogues to inoculate the population from their ilk.

  • Voted leave, Never paid any attention to the battle bus. The whole thing is blown out of proportion by people who wanted a different result and hoped to pin it on one thing that could be undone.
    As for May and Corbyn. Well, I think they are both entirely preferable to Cameron and Osborne, who’s mixture of over confidence, incompetence and nastiness made hubris inevitable.

  • Glenn 22nd May ’17 – 11:42pm…..Voted leave, Never paid any attention to the battle bus. The whole thing is blown out of proportion by people who wanted a different result and hoped to pin it on one thing that could be undone…..

    Maybe you didn’t believe the bus/posters about £350M, etc. but very many did…Several of my neighbours, for instance… If I know a couple, how many others, on LDV, also know some?
    Added together they make ‘one hell of a lot’…

  • Denis Loretto 23rd May '17 - 9:45am

    In looking now at this bus business there is a danger that we are slipping into regarding the big lie as the promise that the “£350M per week” would be spent on the NHS. We must not forget that the real big lie was the figure – there never was £350M. As has been pointed out again and again the real UK contribution to EU funds (assuming post brexit that the UK still wants to have a farming industry, university research etc etc) is something like one third of that figure. It bothers me that questions now like “When is the NHS getting the £350M per week” let them away with too much by implying that this spurious figure ever existed. It didn’t.

  • The main problem is the sheer ignorance and naivety of most of the electorate and the petty obsessions of the political class who just pick the facts that support their silly obsessions instead of attempting any objective ananlysis. One of the most popular lines used here to criticise any policy is that it would take us back to the fifties, disregarding the fact that for many people it was a time of progress, full employment, a good education and improving living standards.
    Sorry to put a damper on your unrealistic expectations.

  • Why should people expect to pass on their wealth to their descendants if it is needed for their care in old age ? We do not have a system of insurance for this type of care and if people no longer need their houses when they are in a care home what is the point of keeping them ?
    How many people have £100,000 to leave to their children or other people ?

  • Michael Cole 23rd May '17 - 11:02am

    @David Orbison,

    I am proud to be a member of the Liberal Democrats because we believe in the power of evidence and reason. Despite the understandable suspension of political campaigning I feel I must reply briefly to your post.

    You ask ““Labour’s empty promises”? What does that mean exactly?” It means that the Labour manifesto is merely a wish-list. They claim that it is fully costed – well, they would wouldn’t they ? In fact, even they admit that much of it is not costed but consists merely of aspirations.

    We do not need a ‘crystal ball’ to know that Labour’s pledges are worthless. My judgement is based on the evidence of the past. Corbyn is proposing tax, borrow and spend policies that were the main cause of the disastrous crisis brought about by the last Labour government. The proposals are superficially attractive but in fact they are highly irresponsible and cynical. Of course Labour can not be trusted – even most of Corbyn’s own MPs did not trust him.

    Incidentally, By “broken promises” I think you are referring to tuition fees. I must remind you that it was Labour that introduced them in the first place.

    I suggest that you take good note of what frankie says about demagogues.

  • Jenny Barnes 23rd May '17 - 3:17pm

    “Corbyn is proposing tax, borrow and spend policies that were the main cause of the disastrous crisis brought about by the last Labour government. ”
    Rubbish. Despite constantly repeated assertions, the 2008 financial crisis was a global one, created by overlending on sub-prime mortgages and triggered by a lack of liquidity in international capital intrabank markets. The LDs claim to “evidence based” is negated by the repetition of these lies. If anything, Labour, in the person of Gordon Brown, did most to minimise the damage. I’m not convinced the government should then have bailed out the banks and put the costs of it all on the poorest in the name of austerity – but I guess socialism is ok if it’s the rich getting the subsidies.

  • Phil Boothroyd 23rd May '17 - 3:53pm

    It is just my opinion, but I am pained to say that I think that Jenny is closer to the mark than what appears to be the official Lib Dem stance (the pain being disagreeing with the apparent message from the Lib Dems, not agreeing with Jenny – who seems entirely sensible and reasonable to me). The crash was not because debt was suddenly unmanageable – it was because (unsurprisingly) a highly deregulated banking market wasn’t actually all that stable. Labour did spend and borrow too much, and that made it harder to deal with when it happened (arguably we would have been in a much better position than most countries had Gordon Brown stuck to his own golden rules…
    but that’s another story). But, it was the failures in the market that caused the crash, and the worst of the subsequent difficulties.

    I remember chatting to a former Labour voting friend during the recession who said that he wasn’t going to vote Labour again – and used the analogy that if you let a friend borrow your car and they crashed it, you probably wouldn’t be that keen on lending them your keys for the next car. My response then, and I stick with it now, is that I wouldn’t – but I’d be even less keen on lending them to the idiot sat in the passenger seat who had been laughing and shouting ‘faster, faster’ in the immediate run up to the crash. In voting Tory people are giving the keys to the laughing idiot, and in supporting the idea that the crash was all about excessive Labour borrowing we are supporting that.

    I think it would be great if we got back to doing what we do best and approached this in a reasoned manner, and admitted that Labour didn’t cause the crash – just left us in a worse position to deal with the after effects. Our proposals for modest tax increases (1p to NHS, and reversing Tory tax cuts) to help get the books balanced while maintaining necessary levels of social spend, are entirely reasonable (and vastly better than Corbyn’s aparent head buried in sand approach to economics) – but the plans would perhaps be more credible if the party was more honest about how we got where we are.

  • Peter Watson 23rd May '17 - 4:44pm

    @Phil Boothroyd ” Labour did spend and borrow too much”
    I seem to remember the Tories and the Lib Dems promising to match Labour’s spending up until around 2008, and Nick Clegg criticising the Tories in 2008 when they dropped that.
    I don’t really recognise the Lib Dem party I’ve seen over the last 7 years.

  • Peter Watson 23rd May '17 - 4:53pm

    @Denis Loretto “We must not forget that the real big lie was the figure [£350M per week]”
    The problem with that line of attack was that it never went beyond “£350 million per week is a lie”. The next step was that the true nett figure was significantly less (£250 million?) but still a big number, and the Remain campaign seemed unwilling or unable to make a positive case for spending that. It was another missed opportunity in a dismally negative campaign, andunfortunately the Remain strategy has not changed so is likely to be just as unsuccessful.

  • I hesitated about posting today. Last night’s events make political argument seem trivial and empty. I post now because I regard the truth as above party politics. Jenny Barnes and Phil Boothroyd have told the truth.

    When former Leaders of the party I always supported departed from the truth it diminished them. When a poster parrots them with “tax, borrow and spend policies that were the main cause of the disastrous crisis brought about by the last Labour government” that is not true or acceptable.

    Fannie Mae and Freddie Mac in the US were not members of the Labour Cabinet. Nor were Fred Goodwin of RBS and Adam Applegarth Chief Exec of Northern Rock. They were the guilty ones.

    The National Audit Office state :

    Since 2007 the UK has committed to spending £1.162 trillion at various points on bailing out the banks. This figure has however fluctuated wildly during the period and by March 2011 it was £456.33bn. That total outstanding support was equivalent to 31% of GDP.

    • The £456.33bn figure breaks down into £123.93bn in loan or share purchases, which required a cash injection from the government to the banks, and £332.4bn in guarantees and indemnities which haven’t actually been paid, but were offered to shore up the failing bank system.

    • Of the £123.93bn, the Royal Bank of Scotland received £45.80bn, Lloyds £20.54bn, Northern Rock a total of £22.99bn, Bradford and Bingley £8.55bn and a further £26.05bn went on “loans to support deposit”.

    That’s where the deficit came from. The Conservative Party cheered on the lack of tight bank regulation before fabricating the truth post 2010 with support from some of our own (though not Vince pre 2010).

    Goodwin is in court in two weeks time. A further assessment can be made then.

  • Michael Cole 23rd May '17 - 8:14pm

    Jenny Barnes: Still in denial. “There’s no money left” – remember that ?

    There is much more data but let’s leave that for another time.

  • @ Michael Cole “There’s no money left”. See National Audit Office above.

    1964 : Tory chancellor Reginald Maudling, to Jim Callaghan: “Sorry to leave it in such a mess, old cock.”

    Jenny Barnes is into grown up politics. On today, of all days, I wish everybody else was.

  • Peter Martin 24th May '17 - 7:02am

    It still seems too early to get back into political discussion. I’m still feeling rather numb after Monday night’s events. But maybe we can discuss the issue of whether Governments generally , and not just Labour ones, tend to, as Phil Boothroyd just put it, “borrow and spend too much”. It’s an important question for all shades of political opinion. Some points:

    1) Someone in the UK has to do the borrowing and spending to cover the cost of running a trade deficit. Money lost to the domestic economy to pay for net imports has to be replenished from somewhere to prevent it falling into recession.

    2) The political right prefer that the borrowing and spending is done by the private sector. The left prefer government borrowing and spending.

    3) Too much borrowing and spending of both kinds can cause inflation to become too high. Too little can cause a slump with increasing levels of unemployment.

    4) For any given level of trade deficit if we have more government borrowing we need less private sector borrowing and vice versa.

    5) Too much private sector borrowing can lead to excessive asset price inflation. Stocks and house prices. If bubbles form and then burst we can have a crash. The economist Hyman Minsky is known for the term ‘Minsky Moment’ to describe when this happens.

    So there we are. Everyone can decide for themselves just how their own political viewpoint fits in with the reality of how the economy really works.

  • Michael Cole 24th May '17 - 10:02am

    Nick Clegg accused Labour of crashing the economy. I broadly agree with him.

    A while ago I had the temerity to disagree with David Raw. Since then he has lost no opportunity to have a go at me.

    Please, let’s use this site for rational discussion, not to pursue personal vendettas.

  • Phil Boothroyd 24th May '17 - 10:58am

    Peter Watson – thanks, point noted and a fair criticism. When saying ‘spending and borrowing’ I was really getting at the deficit and that they weren’t generating income to cover the spending not that the amount they were spending was in and of itself unmanageable. For myself I full supported the Lib Dem manifesto of 2005 with it’s proposed 50% over £100k tax rise to cover areas of additional spend – but I would have been happy with a small decrease in spending to make it sustainable as well. Either way, I have recollections of Kennedy basically saying that he wanted to maintain Labour levels of spending, but that the party had tried to be open about how the money would be raised – rather than relying on stealth taxes or borrowing to plug the gap (of which Labour did a bit of both) and that the Lib Dems would have some different spending priorities.

    I think that post crash we do find ourselves in a position that cuts need to be made and additional revenue brought in to balance the books, but it would be much easier to stomach if we really were ‘all in it together’ and there was some clarity in what is a permanent change and what is a temporary measure. Just my view, but a) it may be easier to sell modest tax increases or spending cuts to the public and b) it may be more in line with the long term ambitions of the party for the nation – if changes are proposed as temporary measures, and even better that the proposal would be to legislate such that they are reversed incrementally as debt is reduced to a more sustainable level.

  • There is a curious dichotomy between those who believe that the crash was Labour’s fault, and those who believe it was solely a global phenomenon.

    Of course it was a combination of both. The number of times Gordon Brown, amended his Golden Rule so that he had to reign things in, but not just yet, coupled with the astonishingly weak regulatory system, which the Conservatives wanted weakening even further led to the domestic problems.

    The international problems of big financial institutions lending recklessly aided by merchant banks creating financial instruments to enable other institutions, including those in the UK like the Bank I worked for, to share in the disaster, just made things much, much worse.

  • Richard Underhill 24th May '17 - 11:10am

    Nick Clegg was accusing Gordon Brown MP. Jeremy Corbyn’s habit of being absent or asleep at key moments during the 2016 referendum does have a precedent. As PM Benjamin Disraeli slept through a Cabinet meeting on his own bill for electoral reform. He never said or believed in “one nation”. He described Two Nations in Sybil but always wanted to be in the elite. (biographer Douglas Hurd, now a peer, former political Secretary to the PM).

  • @ Michael Cole It would be helpful if you addressed the issues I posted at 5.11 pm by way of ‘rational discussion’ instead of ‘having a go’ at Jenny Barnes, who had also contributed to a rational discussion.

  • Michael Cole 24th May '17 - 12:25pm

    I agree with David Evans when he says “it was a combination of both.”

    It should be stressed however that the government was responsible for regulation of the banks and had powers to do so. It is common knowledge that Brown/Blair became too cosy with the banks and City institutions; to that extent they were partially to blame for the irresponsible lending which led to the banking crisis.

    I felt a bit sorry for Alistair Darling who had to deal with the aftermath.

  • Michael Cole,
    Please ‘spell out how ‘Labour crashed the economy’?..

    Remembering, as has been said, that George Osborne (just months before the financial crash) wrote a ‘Telegraph’ article promising to match Labour’s spending, our leadership were in favour of that same spend AND the Tory opposition demanded even less financial regulation….

  • Peter Martin, It’s an interesting explanation and you could be right.
    However you aren’t going to get much traction on this site. It is bridge too far for most.

  • Michael Cole 24th May '17 - 1:14pm

    Hi expats. “Please ‘spell out how ‘Labour crashed the economy’?..”

    It is a matter of record. Even some Labour politicians accept responsibility. This is not the place to recite the whole history but it is readily available if you wish to look it up.

    I do not have much liking for George Osborne and I haven’t read the Article to which you refer. The fact of the matter is that the coalition made necessary cuts in expenditure. It’s called ‘fiscal responsibility’. Of course the LDs have attracted much criticism and have paid a heavy political price for this.

  • Michael Cole….It is a matter of record…

    Ah, so that is your answer?…BTW, Whose record…

    I don’t expect ‘chapter and verse’ but, as it’s a matter of record, you could do a ‘leetle’ better than that?

  • Nom de Plume 24th May '17 - 3:32pm

    @ Peter Martin

    Interesting. It is all about the trade defecit. How long can this go on for – borrowing to fund a trade defecit? Does it inevitably lead to bubbles and crashes? I have never read a detailed discussion about the long term effects of running a persistent trade defecit. Perhaps I should.

  • Peter Martin 24th May '17 - 3:49pm

    @ Nom de Plume,

    Running a trade deficit just means that our trading partners don’t want to spend everything they earn selling us stuff. So they buy gilts and other govt securities with their surplus. They are choosing to save their money.

    So if we add that to those savings that might be made in the domestic economy (negative at the moment BTW showing a net level of overall borrowing) then everyone else other than the UK government is running a surplus. Therefore, penny for penny, the UK Govt has to be in deficit.

    Another way of looking at it is to consider what happens if I buy £100 of premium bonds. I’m creating £100 of government debt. That’s my decision not the government’s. So it is somewhat unfair to then blame the government for what I have chosen to do.

    And the government, if it is being responsible, has to deficit spend that £100 back into the economy to keep it ticking over.

  • Nom de Plume 24th May '17 - 4:30pm

    @ Peter Martin

    You haven’t quite answered my question. Government debt can become unsustainable as well. I was not trying to apportion blame, just work out what is happening. Does this sort of economics have a name?

  • Jenny Barnes 24th May '17 - 5:39pm

    “Jenny Barnes: Still in denial. “There’s no money left” – remember that ?”

    Yes. That was a joke on several levels, but for the purposes of this discussion I point out that the UK has a fiat currency, and can effectively print as much money as it likes. They’ve been calling it Quantitative Easing recently – and mostly giving it to the banks.
    So, no, I’m not in denial, just paying attention rather than regurgitating nonsense.

  • Peter Martin 24th May '17 - 5:48pm

    @ Nom de Plume,

    It’s a mixture of Post-Keynesianism as espoused by Steve Keen. And Modern Monetary Theory as espoused by Stephanie Kelton, Bill Mitchell and Randall Wray. I mainly agree with them all but disagree with them all on some things.

    It’s a good question as to how much debt Governments can sustain. In Japan it’s up to 200% of GDP. Seemingly without problems.

    If Germany wants to keep running a trading surplus with us, then every year Germany is acquiring extra UK debt. If I were a German politician I’d be arguing that it really makes no sense to do this. Germany is sending us twice the value of goods and services they are getting back in return and acquiring more IOUs from us in the process.

    Most Germans seem to have a blind spot about this. In their minds a surplus is a profit. If we ever were required to export more to them than they export to us they’d consider it a failure of their part. They’d see it as running at a loss but really it would be just us repaying what we owe.

    It is this German peculiarity which is at the root of the euro’s problems and which in turn has led to Brexit. This could be have been avoided if all countries had agreed to more closely balance their trade. Steve Keen would agree on the desirability of this but the others I’ve mentioned would argue that it is unnecessary.

    They would be right if we didn’t worry so much about debts and deficits. But that’s not likely any time soon.

  • Nom de Plume 24th May '17 - 6:03pm

    @ Peter Martin

    Many thanks. Most informative.

  • Michael Cole 24th May '17 - 8:42pm

    Jenny Barnes: “So, no, I’m not in denial, just paying attention rather than regurgitating nonsense.”

    Calling it nonsense does not make it so.

  • Michael Cole 24th May '17 - 8:51pm

    expats: “I don’t expect ‘chapter and verse’ but, as it’s a matter of record, you could do a ‘leetle’ better than that?”

    I have found ‘Coalition’, the excellent book by David Laws, very informative, especially his
    account of the events of 2010.

  • Nick Collins 24th May '17 - 9:36pm

    As David Raw said, “Jenny Barnes is into grown up politics. … I wish everybody else was.”

  • Ah, the coalition according to Laws? Clegg the hero, Laws observing, only what he wanted to see, from the sidelines..

    I have a lot more respect for Shirley Williams who said, about Clegg joining in the ‘Tory spin’ about Labour crashing the economy,, ” “I think the constant attack on Gordon Brown as being responsible for the banking crisis was terribly unfair and untrue,”… “We should not have taken part in it, but in fact we took part in it enthusiastically.”

  • @ expats The less said about the 17 day tenure of the author of that book, and his personal contribution to the inherited deficit, the better.

  • Peter Martin 25th May '17 - 7:31am


    Shirley Williams was mainly correct. The Tory narrative that Gordon Brown was responsible for causing the crash by overspending is economically nonsensical. Overspending, relative to the level of taxation, by Government can cause too much inflation. That’s about it. It can’t produce an economic crash of the kind we saw in 2008. Underspending, again relative to the level of taxation, produces recession.

    We see 1929 and 2008 type crashes when the “market” suddenly realises that a bubble has been created in asset prices. Everyone stops wanting to borrow. Banks stop wanting to lend. Spending slows down rapidly and the economy slumps.

    Having said that, Gordon Brown wasn’t entirely innocent. For a long time, he went along with the idea that the economy can be regulated solely by adjusting interest rates. The boom of the 00s was fuelled by too much private lending which created too much private spending. When that all stopped the responsible thing was for Government to spend more to take up the slack and prevent a recession from becoming a depression. Gordon Brown hadn’t forgotten all he once knew about Keynesian economics of the real kind, as opposed to so-called New Keynsianism or interest-rate-ism, and did the right thing in the two years up to the 2010 election by reducing VAT and other stimulatory measures.

    But then the Lib Dem/Tory coalition did exactly the wrong thing by putting those policies into reverse and so intensifying the recession. That mistake helped create the social conditions that have recently led to Brexit.

  • Michael Cole 25th May '17 - 1:05pm

    @David Raw: Your insulting remarks about David Laws – an honest, intelligent and perceptive man, who gained a doube first in economics from Kings College, Cambridge – tells us all we need to know about you.

  • Michael Cole 25th May '17 - 1:17pm

    expats: I respect Shirley Williams but aren’t you being a tiny bit selective in your selection of quotes ? I prefer to make my judgement on the basis of my own experience plus the narratives of Vince Cable, Nick Clegg, Danny Alexander, David Laws and many others.

    Peter Martin: Keynsian economics is not really relevant here. The problem was much starker: the creation of a huge budget deficit.

  • Peter Martin 25th May '17 - 1:59pm

    @ Michael Cole,

    That an odd comment. If you consider a budget deficit to be too large then don’t you need some kind economic rationale to explain why?

    Or maybe not? Maybe you’re happy to not know what you’re talking about?

  • @ Michael Cole. Last comment about this. Sadly, it’s not just about academic intelligence – it’s about judgement – and the electorate gave their judgement.

  • Michael Cole 25th May ’17 – 1:17pm………….expats: I respect Shirley Williams but aren’t you being a tiny bit selective in your selection of quotes ? I prefer to make my judgement on the basis of my own experience plus the narratives of Vince Cable, Nick Clegg, Danny Alexander, David Laws and many others………..

    I regard Vince Cable as a principled politician. However, his ‘changes of tack’ on everything from QE to government intervention shows a lack of consistency..His efforts in trying to impress a couple of females with his ‘nuclear option’ and his handling of the RM selloff also shows poor judgement…As for the others on your list, after the decimation of this party in 2015, I wouldn’t buy a used car from any of them…

    This will be my last post on this thread as we will never agree…

  • Bill le Breton 25th May '17 - 5:49pm

    You are both wrong and Jenny may be onto something – Monetary Policy really is boss.

    Read this on the US recovery – the UK’s performance is not much different. Our 2010 recovery stalled when Mervyn King and the MPC failed to honour his promise to Cameron and Clegg to ‘do what ever it takes’ to offset their accelerated deficit reduction plans.

    Recovery from the 2010 stall came when the markets heard Carney was taking over from King as Governor of the Bank of England.

    Sadly it stalled again in 3rd Q of 2014 – as a result the LD’s were butchered on 2015, Cameron was free to hold a referendum and Brexit won a year later.

  • Bill le Breton 25th May '17 - 5:49pm

    Would help if I posted the link, I suppose:

  • Bill le Breton 25th May '17 - 6:04pm

    The trouble with the years between the dot.com bust (2002) and the Great Financial Crisis (2008) was not that central banks throughout the world tried to manage the economy through interest rates (using the Taylor Rule), it was that the system for setting interest rates worked on reacting to the inflation level. It was rule based.

    Fear of deflation following the dot.com boom and then actual deflation caused by growing efficiencies from globalisation meant that the Taylor Rule set rates too low – boom conditions.

    Then, just when the economies were turning down, (falling aggregate demand) rising raw material prices were raising the inflation rate above target, triggering expectations that rates would remain high (thanks to the Taylor Rule).

    And when the Fed confirmed this, everyone tried to leave the Party at the same time.


  • Peter Martin 25th May '17 - 7:52pm

    @ Bill le Breton,

    It’s easy to be wise after the event and come up with a semi-plausible theory of why one’s favoured economic theory failed. If the mainstream were so smart about all this, why didn’t they devise a better formula in advance?

    There’s always going to be problems when relying on one single variable to try to control a complex systems which is a modern economy. To make matters even worse Governments then pretend they can declare their own central bank to be “independent” and hand over the responsibility to them.

    Ted Heath painted a good picture when he likened Nigel Lawson to “a one-club golfer stuck in a bunker.” All economies hit the rough occasionally. There are other clubs available to help keep them out of that bunker.

  • Michael Cole 26th May '17 - 1:18pm

    @David Raw: It was your complete lack of respect. You are entitled to form your own view of David Laws, but there is no need for gratuitous insults.

  • Michael Cole 26th May '17 - 1:26pm

    Peter Martin at 1.59pm: I was simply pointing out the obvious – that a huge budget deficit is not sustainable. If you have a method by which it can be substained I shall be interested to hear it.

  • Peter Martin 26th May '17 - 6:00pm

    @ Michael Cole,

    Why do you think that? If I buy £100 of premium bonds then I am creating £100 of government debt. Is it fair to blame Government for something that I have chosen to do?

    Similarly, countries like Germany like to sell us lots of stuff and save most of the money they earn. The Bundesbank buys Gilts rather than premium bonds but the effect is just the same. They are creating Government debt in exactly the same way and it is entirely their decision. They can, if they choose to, spend their money on jet engines or Scotch whisky or whatever else we sell these days.

    The Government then has to deficit spend the proceeds into the economy to keep it from falling into recession.

    As long as anyone wants to buy Premium bonds or Gilts the Government deficit is totally sustainable. How long can that go on? I don’t know. Until the Earth is hit by the next big Asteroid maybe?

    We could try asking Angela Merkel. When do the Germans want to spend the money that they have saved with us? To do that, though, they would need to import more from us than they sell to us. Is that likely any time soon?

  • Bill le Breton 29th May '17 - 10:44am

    Peter, there were economists warning along these lines at the time. And the value of explaining the causes of the mid Noughties boom and the later Great Financial Crisis is so that we don’t make the same mistakes twice, especially as we are still using similar tools.

    One of Freedman’s great insights was to point out that interest rates are not a good indication of the tightness or looseness of monetary policy. If anything they indicate the tightness or looseness of interest rates in the period leading up to a present situation.

    Low bond yields are not a result of easy monetary policy, but rather a result of excessively TIGHT monetary policy.

    Rule based monetary policy is a good thing as markets know better what is going on, what will happen next and are not foxed by uncertainty. But there is a need to a rule based formula that is not based on interest rates. Here is a recent paper trying to elaborate a monetary policy rule assessing the stance of monetary policy without any reference to any interest rate.

    As the author writes, “This rule should thus be able to measure the stance of monetary policy in conventional and unconventional environments without any distinction. To that end, this study develops a new monetary indicator based on the forward-looking generalization of the Taylor rule …”


  • Peter Martin 29th May '17 - 11:49am

    @Bill le Breton,

    I’m not sure how we can be using similar tools for much longer now that interest rates have fallen to just about zero. It’s not just in the UK it’s the same in the EU and USA. Australia has 2% which seems high. But who could have imagined this just ten years ago?

    I’m sure that if economists had been wiser than they were, they could have devised better formula and better monetary policy which wouldn’t have led to the crises, or at least one which were quite so bad, as we have seen. But sooner or later we’d end up exactly where we are now. With interest rates at close to 0% and no more room for manoeuvre.

    Didn’t they see this coming? If not, why not?

    So what next?

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