The world's economy changed yesterday with Trump announcing a trade war with almost every nation on earth, as he has long said he would.
Long ago, Lord Keynes supposedly said:
When the facts change, I change my mind. What do you do, sir?"
It has been suggested that the quote should be attributed to economist Paul Samuelson instead. It makes little difference: the point is that this is required of a mature economist.
Reeves' reaction to the announcement of trade war is that her fiscal rules remain in place, unchanged.
It takes some considerable stupidity to stick with such a destructive policy when the facts demand that you change your position. Reeves would appear to be possessed of such stupidity.
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Apologies for repeating what I said the other day. The correct response from EU & UK is to shrug observe that “this will make US serfs poorer – but that’s their affair” and indicate that the UK & EU will, to the max, design, build and buy their own weapon systems, from UK and EU companies. US weapons companies, not welcome.
I promise you, one will see toys being ejected from the pram labelled USA – at high speed. Can the USA do anything? Not much (stop intelligence sharing? hmm – UK & EU build own intelligence gathering system, need satellites? EU has own orgs able to do that etc etc.
Much to agree with
I have argued this for some years but we need to note the reality, which is that many ‘European’ weapons systems have US components, and we use American weapons for which we need spare parts-which can be cut off.
To replace them with European ones is costly, and will take some years to put into production, install and deploy. Longer than Trump will be in office.
The Americans have the advantage of longer production runs, lowering the unit cost. To get this sort of economy, Europe will need integrate its defence industry. It does already to an extent but to do more needs closer political alignment able to over ride nationalist objections.
I feel I should point out it is not a quick fix and will be costly.
Mr Stevenson – you make fair comments. In reply – this – which goes into some depth. US-independent systems exist now. The principle in the future has to be: European-systems with zero or very minimal US dependency.
https://www.youtube.com/watch?v=I0AOusajGsU
in summary independence from US weapon systems is doable and – given current events – desirable.
I would love to see serious investment in this.
I am in basic agreement. I just wanted to make the point it can’t happen in a few months or even a year or so. Richard and I agree that it will cost ‘serious investment’ ( I would rather it was spent on other things but there it is ) but it is being forced on us.
Is that the same intelligence system who lied to us about Iraq and got us into yet another US war zone that cost us is lives and war expenses? Well good riddance. I have had two younger members killed or wounded by “friendly fire”. Maybe, if we told Trump to sling his hook, the world would be a quieter safer place.
Reeves, no matter what she says, is content on delivering austerity.
Hence sticking to an arbitrary set of rules, despite the multiple crises we already face.
Politically speaking, this is a gift for Labour. It is a chance to ditch all its foolish promises and actually do the right thing.
If they can’t see this they are lost.
Agreed
How many gifts has Labour squandered of late?
The 2017 election?
BREXIT?
Gaining power last year?
The are lost already I think.
Too true Clive. Unfortunately in Starmer and Reeves we have a PM who is a coward and a chancellor who is a fool.
Very humorous – but then very serious – report from Rachel Maddow (as usual). If you didn’t know the exports to the US from islands populated by penguins then you will after Rachel’s report: https://www.msnbc.com/rachel-maddow-show
This one is absurd…..
But is it worth watching for knowledge and/or entertainment?
Both
25% tariffs on the Falklands.
Last time a fascist messed with the Falklands the PM sent a Task Force and threw them out.
This time Sir Ten per Cent offered the fascist a tax concession for the digital giants that are destroying our democracy and faciltating online criminal-level harm.
I think its time for the Falkland Islands penguins to join the resistance movement via the cartoons again. Sir Ten per Cent would look great as a penguin, and so would Ms Cast Iron Fiscal Rules.
Even economists who support fiscal rules are pointing out that by continuing to tinker with spend and tax every few months so as to meet the ever changing OBR forecast for five years ahead – she is doing the very opposite of what she claims to be doing – building a ‘solid foundation’ – and iron clad stability which encourages external investors.
The British establishment, of which Starmer is a tailors dummy, don’t see the relationship with the US as being in the realm of ‘facts’. Its more a religion – a cult – we have the special relationship and that can never change., whatever the US does. It was predictable Trump would offer a sop to Starmer , to keep us separate from EU – knowing he would greedily grab it
Lewis Goodall on Newsnight was pretty good mocking the 10% ‘Brexit dividend’ – against the billions of lost trade with EU already.
The Mike Parr ‘turn our backs’ strategy has much appeal – but maybe too sophisticated for dumb politicians – who might prefer visible knee – jerk retaliation.
How long will these tariffs last? A cynic might wonder whether it will be just long enough for his mates to take appropriate positions in anticipation of the tariffs being cancelled, an event that will no doubt be telegraphed to the chosen few in advance, allowing them to make maximum profits from the chaos.
But of course no responsible politician would ever manipulate the markets in this way. /s
“When the facts change, I change my mind. What do you do, madam?” Churchill is reported to have said that.
Keynes wrote about investors change their mind when cold hard facts damper their enthusiasm and find themselves loosing money. Paul Samuelsson probably got caught in 2 minds and credited Keynes when he probably should have credited Churchill.
And then there is the post war mythos of Keynes as someone who changed their mind regular and would have hated Keynesian economics and declare himself as anti-Keynes. That one popularised by Hayek. Though post-Keynesians would agree and argue that Keynesian economics was never really anything to do with Keynes to begin with.
I think I follow that
I agree that the Keynesian economics developed by Hicks and then Samuelson was not Keynsian at all.
Read https://www.amazon.co.uk/Keyness-General-Interest-Keynesian-Economics/dp/1403996288/ref=sr_1_1?crid=2S0B5LJ6Z9G4I&dib=eyJ2IjoiMSJ9.XAqE9Lrtn9Y_T7lRlUEmWQ.uciBoMaTBWprlKPQzQnL4FGo5HFTkEbxHoPZHA5rqL4&dib_tag=se&keywords=keynes+betrayed+tily&qid=1743676397&s=digital-text&sprefix=keynes+betrayed+tily%2Cdigital-text%2C87&sr=1-1 – althouhgh I note that it is horrendously expensive.