The Economics of Fantasyland
If I were a resident of Scotland who was a pragmatic supporter of the principle of independence, but willing to make a decision one the basis of an open-minded look at the practicalities of what is currently proposed, I think I would by now have reluctantly decided to vote "No" becauset for all their bluster and increasingly ludicrous claims to the contrary, the package that "Yes" is trying to sell to the Scots people is not properly thought through or prepared and would lead to all kinds of chaos.
But there are a lot of straws in the wind which suggest that the fantasyland economics put forward by the SNP is having much more impactg than it should. There is a very well argued piece on the "Think Scotland" site here, written by Bill Jamieson, which poitns out that even the British economic recovery, though their are genuine encouraging signs and is much better than the position of the rest of the EU, is not as secure as we would like, and has "fantastical elements."
He goes on to argue that that the claims of the SNP are "Fantasy Economics" but that this pales in comparison to the Fantasy Economics prevailing in some parts of the European Union.
As he points out,
"The Euro-zone's feeble recovery sputtered to a halt in the second quarter of this year. The continent’s economy is stagnating.
There were some bright spots – Spanish growth quickened from 0.4 per cent in the first three months of the year. And both Dutch and Portuguese GDP, which had contracted in the first quarter, are now above these lows.
But the euro area is being held back by poor performances in its three biggest economies. GDP fell in Germany, the biggest, and in Italy, the third largest, it contracted by 0.2 per cent in the second quarter, while the manufacturing purchasing managers’ index has collapsed to a 15-month low. France, the second largest economy, reports a GDP standstill.
Investment bank Citigroup has cut its German growth forecasts once again, to 1.3 per cent for 2014 and 1.6 per cent for 2015 – from 1.6 per cent and 2.0 per cent previously.
The lacklustre recovery has barely dented unemployment across the euro zone. Now there is growing frustration over the timid response so far by the European Central Bank. “Berlin fiddles while Rome burns” would be a fair summation. There is clamour for more effective action – specifically measures to counter low inflation by adopting a programme of quantitative easing.
As The Economist warned, “low inflation and negligible growth are a potentially lethal combination for countries weighed down by debt, as many are in the euro area. Moreover, the problem arises not just from high levels of public debt but also from excessive debt owed by households and firms. Even if inflation remains merely low it presents a problem for borrowers whose incomes are rising much more slowly, if at all, than they expected when they took out their loans. And if prices start generally to fall, this raises the real burden of debt.”
So evident has the deterioration become – despite that fantastical blue-sky depiction of the European Commission – that EU leaders have called an emergency summit on promoting growth and jobs on October 7, highlighting their concerns over the fragile economic recovery. The statement announcing the summit baldy stated that “the recovery, particularly in the euro area, is weak, inflation exceptionally low and unemployment unacceptably high.”
In this context, it is a remarkable achievement that the British economy is doing as well as it is. But we cannot afford an atom of complacency.
In particular, we really, really, really cannot afford a Miliband government in which Gordon Brown's main lieutenants when he previously trashed Britain's economy get to be PM and chancellor. The previous post by Sajid Javid illustrates this point perfectly.
There are many people - a dangerous number - who sincerely believe that there is little difference between David Cameron and Ed Miliband. For the sake of this country's solvency, I pray that they don't get to find out in ten months' time how very wrong they are.
But there are a lot of straws in the wind which suggest that the fantasyland economics put forward by the SNP is having much more impactg than it should. There is a very well argued piece on the "Think Scotland" site here, written by Bill Jamieson, which poitns out that even the British economic recovery, though their are genuine encouraging signs and is much better than the position of the rest of the EU, is not as secure as we would like, and has "fantastical elements."
He goes on to argue that that the claims of the SNP are "Fantasy Economics" but that this pales in comparison to the Fantasy Economics prevailing in some parts of the European Union.
As he points out,
"The Euro-zone's feeble recovery sputtered to a halt in the second quarter of this year. The continent’s economy is stagnating.
There were some bright spots – Spanish growth quickened from 0.4 per cent in the first three months of the year. And both Dutch and Portuguese GDP, which had contracted in the first quarter, are now above these lows.
But the euro area is being held back by poor performances in its three biggest economies. GDP fell in Germany, the biggest, and in Italy, the third largest, it contracted by 0.2 per cent in the second quarter, while the manufacturing purchasing managers’ index has collapsed to a 15-month low. France, the second largest economy, reports a GDP standstill.
Investment bank Citigroup has cut its German growth forecasts once again, to 1.3 per cent for 2014 and 1.6 per cent for 2015 – from 1.6 per cent and 2.0 per cent previously.
The lacklustre recovery has barely dented unemployment across the euro zone. Now there is growing frustration over the timid response so far by the European Central Bank. “Berlin fiddles while Rome burns” would be a fair summation. There is clamour for more effective action – specifically measures to counter low inflation by adopting a programme of quantitative easing.
As The Economist warned, “low inflation and negligible growth are a potentially lethal combination for countries weighed down by debt, as many are in the euro area. Moreover, the problem arises not just from high levels of public debt but also from excessive debt owed by households and firms. Even if inflation remains merely low it presents a problem for borrowers whose incomes are rising much more slowly, if at all, than they expected when they took out their loans. And if prices start generally to fall, this raises the real burden of debt.”
So evident has the deterioration become – despite that fantastical blue-sky depiction of the European Commission – that EU leaders have called an emergency summit on promoting growth and jobs on October 7, highlighting their concerns over the fragile economic recovery. The statement announcing the summit baldy stated that “the recovery, particularly in the euro area, is weak, inflation exceptionally low and unemployment unacceptably high.”
In this context, it is a remarkable achievement that the British economy is doing as well as it is. But we cannot afford an atom of complacency.
In particular, we really, really, really cannot afford a Miliband government in which Gordon Brown's main lieutenants when he previously trashed Britain's economy get to be PM and chancellor. The previous post by Sajid Javid illustrates this point perfectly.
There are many people - a dangerous number - who sincerely believe that there is little difference between David Cameron and Ed Miliband. For the sake of this country's solvency, I pray that they don't get to find out in ten months' time how very wrong they are.
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