It is Obvious

Chris Rick has got altogether too much to say

Somebody else’s money

Posted by chrisrick13 on April 17, 2013

It is obvious: most the people are wrong some of the time

In the 1980’s there was a very funny program called “No the Nine o’ Clock News”.  Funny and novel.  I remember the sports section one night.  It showed a penalty being scored in a football match and then in the slow motion replay the goalkeeper saving it.  It reminds me of the £100,000 a week footballer taking a penalty last week and hitting it over the bar.  He is sure to be offered a job by a bank, the government or the IMF when he has done playing…did he even start?

It was in 1981 that Margaret Thatcher was trying to run this country and get its economy into a stable state.  There was high inflation.  There was a recession.  The public finances were in a mess.

It sounds a lot like today except that the unions are not running the country and inflation is relatively low.  At the time 364 economists wrote an open letter to her criticising her policies.  She ignored them, got inflation down, got growth back, put the budget into surplus and started paying down the debt.

It is ironic that one of those economists was Mervyn King.  He has a recession.  He has public finances in a mess.  He is working on getting inflation up.  Perhaps he is waiting for that final condition so that Thatcher’s policies can then be enacted as a sure way to solving the problem.  Does he care really?  He has a pension and it is index linked.

I do not think that the government is doing the right thing.  There are those better at describing  scenarios that might work such as Shaun Richards.  I’ll leave it to them.  What is interesting is that yesterday the IMF said that the UK was doing austerity too hard.  Much less austerity was needed.

I need a quick review of the performance of the IMF.  3 months into the year the IMF has cut the prediction for growth in 2013 for the UK from 1% to 0.7%.  Not much has changed since December when they last forecast in the trajectory of all the statistics.  Surely their model could have done better?  I will forecast that they will cut again in June to 0.4% or lower.  I cannot call these numbers forecasts as their is so little future in them and they never keep a forecast the same from one period to the next.  Indeed that is the evidence of good forecasting: revised figures, in the light of more and more recent evidence, that change little.  Certainly reducing amounts of change moving to obvious end point.

So we have 4 countries under the control of the IMF: Portugal, Ireland, Spain, and Italy.  I could add Cyprus but I don’t think that qualifies as a country any more.  These 4 are undergoing severe austerity at the behest of the IMF.  Austerity much, greater than ours.  This is the IMF method and they only have one.  Cut back expenditure and get the budget into surplus at whatever cost.  It is one of reduced employment, reduced public services and poverty for a lot of people.  It is required medicine, best taken in big doses to get the illness over quickly.

Suppose that tomorrow we threw ourselves on the mercy of the IMF?  What would they do?

It is obvious: all the people are wrong some of the time; all of those in charge are wrong most of the time


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