FT.com / Companies - Stock markets hit by BofA’s bleak forecast.
Why on earth does anyone think the immediate prospects are anything but bleak?
Unemployment is rising hard.
House prices are bound to fall further as a result.
Governemnt spending is, wholly illogically, under attack.
It can't get better until this changes, especially the last. We need more fiscal stimulus. And the Conservatives want to give us recession by the bucket load. It's madness on their part.
States do not work the same way as corner shops. Learn and inwardly digest soon George Osborne.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Although I am not against the government spending more money than it is receiving in tax revenue, I am very unhappy about the notion of “fiscal stimulus”. It will end in tears.
The spending has to be directly on real, wealth-creating projects. This will primarily consist of the repair and development of the nation’s infrastructure. Given its dire state, it is not difficult to make a long list of things that need to be done.
Some economists have said that the lead time is too long. Nonsense. It does not take much of a lead time to initiate a programme to catch up on the backlog of highway repairs. Network Rail has a huge “wish list” of projects most of which call for no planning inquiries or even land acquisition. They could start within a matter of months. There are many big infrastructure projects which have been brought to an advanced stage and then put on the back burner.
In this way, the spare physical capacity in labour and manufacturing can be brought back into use. Recession is the time to get such projects done – labour and raw materials are at their cheapest within the economic cycle.
Agreed, Henry. This is a sensible way to increase aggregate demand via employment. And, as we well know, publicly funded infrastructure always feeds into land values. So if annual land value tax were implemented, such expenditure would be self-financing. I don’t understand why our grand economists can’t see this.
Another way to stimulate demand is by increasing the minimum wage (the opposite of what my wonderful Tory MP is proposing).
Carol, yes, adn as regards the minimum wage, things are even easier. Tax should not be chargeable on a 40 hour week minimum wage – that is an absurd situation.
The minimum wage should stay the same and thresholds should be raised gradually so that nobody working for 40 hours a week on the minimum wage was paying tax (only we know that really it is the employer is paying so one effect of this change would be to reduce the gross cost of employment, thereby reducing unemployment.)
Henry
We agree on much here
Richard