And the problem with politicians is they don’t care to listen to the experts, unless the expert is a major campaign contributor.

High unemployment exacerbates the weak consumer-demand problem (and puts the formerly employed on public assistance). Which leads to lower GDP and lower tax revenues to the government. And the ever-weakening consumer demand perpetuates the downward cycle. Government cuts right now reduces GDP, which makes our GDP to debt ratio even worse– and the finanicial markets aren’t going to reward us for that.

The problem is that all manufacturing is performed in the ex. soviet states in eastern Europe, in China, and in special economic zones in Malaysia, etc. where the workers can be forced to do things cheaply and in conditions that we wouldn’t accept in the rich west. Our standard of living is too high, we’ve gutted our country of most genuinely productive activity, and replaced it with busywork (the NHS document digitisation scheme), and financial services that add almost no value.

George Osbourne may be driven by ideology, but the alternative of business as usual is not tenable – foreigners will stop lending, either before we devalue the pound, or after, or they will recall the debt and own everything of value in the UK.

Basically, until Chinese workers demand roughly equivalent conditions, or we figure out how to manufacture on UK soil cheaply, and with working conditions that are acceptable to people who can’t be shot if they disagree, or we adopt regressive policies that lower our standard of living until we’re competitive with the far east, the problem will not rectify itself.

national debt of the UK was growing to exceed the GDP of Britain, which is clearly an untenable position

Is it? Many of us have mortgages, which would typically be a debt significantly in excess of our personal GDP. It doesn’t seem to cause catastrophe in most cases. I don’t think it’s the amount of debt that is the problem in and of itself, so much as the (perceived) ability to support that dept. If you do something that reduces that (perceived) ability I suspect you might get into all sorts of trouble.

Of course, a sovereign body can always do something a bit more drastic than the average homeowner – say invade some other country, declare an empire, colonial rule, strip-mine the victim, er, colony, and $$$profit$$$!

ding ding ding ding! everyone thinks they deserve a new car and a nice house and all the other bullshit that goes along with it. Well, most people don’t. beyond that, the only way government can spend more is either by taking more from the people (which forces them to borrow in order to maintain their lifestyle) or print it (which devalues the currency, reduces purchasing power… and forces the people to borrow in order to maintain their lifestyle)

even those who DO live within their means, then, get dragged down by those who don’t in the form of higher interest (to compensate for the walk-outs) and just plain higher prices for goods (to compensate for inflation which, by the way, hits the consumer market instantly while salaries lag behind by years, compounded by the fact that corporate profits fall during downturns, which doesn’t give the people upstairs much incentive to give raises)

I’ve done the math – I make less now (in terms of buying power) at my job than i did when i started 5 years ago despite having fairly regular raises… but I now have a significantly heavier work load on account of some layoffs which reduced our already understaffed office from 7 people to 4. Oh and my current project? Duplicating the equipment we have here so they can move our whole operation overseas. You can imagine how inspired and motivated I must be.

All of it from panic. It’s absurd – the popular reaction to economic downturn is to fire people. Ok, you might be helping to save your own ass, but god damn is it short sighted.

OMG the economy is in the shitter (I heard it on the news so it must be true!) so all these people are going to be out of work and unable to buy our product! Quick, put more people out of work! So they won’t have much room to bargain and will have to take whatever job they can at whatever salary they’re offered! So that they have less money and are less able to buy our stuff! Unless we give them loans and government subsidies! Yeah, that’s the ticket!

Yep. Quid quo pro. The people in charge think that money == wealth, and that they can print wealth. You can’t. You can print money.

That’s the -problem-.

We are where we are right now as a result of ten years of taking on more and more consumer debt to (1) buy and sell houses from each other at insanely upward-ratcheting prices, and (2) buy more and more bling bling. (“Let your house work for you! Buy a boat, buy a Harley, take a cruise!”)

Neither political party can claim any credit for trying to slow this process. They were both very happy to play Santa Claus, not in the least because they were and are both in the hip pocket of the banks who adeptly socialized their losses.

We need a strategy to reduce the sector of our economy which is comprised of consumer spending, rather than keeping it artificially inflated.

in terms of $$$profit$$$, technology has made war too efficient – unlike the days when most of the map was pink, now places can defend themselves effectively.

+ we have this posturing morality that prevents us from simply sticking to the script of invading a foreign country and taking the assets – we can’t conscience being cast as the ‘bad guys’

The Iraq war may have been a war about resources, but if so, we weren’t nearly ruthless enough.

People arent spending as much money as they used to. This is because they are in massive debt. They are going to pay that personal debt down, and the government can either lower taxes, in which case people will pay down their debt sooner, or keep taxes high, where people will take longer to pay down their debt.

Encouraging spending right now is pushing on a string.

People are buying less! Shouldnt you all rejoice in this forced austerity? Arent we extending the planets life by keeping those Xboxs on the shelves?

Stuck on stupid this is. The government isn’t the totality of investment. In many ways the government drives out normal investment because government investment doesn’t have the same strings (i.e. demanding results) that private investment has. This is just the usual socialist cant that never makes any sense.

Privatize profit, socialize losses.

This is, unfortunately, where we are today. In this environment, speculators are indeed the scum of the earth, and should be hung from the nearest lamp post, along with the politicians who allow it. Then maybe we can reclaim the terms “speculator” along with “capitalism” as positive terms. Until then, your time is better spent boiling rope than arguing semantics.

the asian workers may benefit from this in the long run tho, but US workers will loose out over time. The real winners are the merchants and IP “landlords”.

Heck, thinking about it that way reminds me of this: https://secure.wikimedia.org/wikipedia/en/wiki/Tenant_farmer

Why?

First of all, it matters where the debt comes from. Most of Japan’s public debt is domestically held-this means that the national economy as a whole including the government has a decent balance sheet.

Secondly, and more importantly, the geopolitical and economic position of a country matters. Greece was small enough in the EU to bully into austerity measures: if the US ever developed a ‘really’ dire debt problem, it’s unclear who is powerful enough to demand that it be paid.

Finally, many organizations-the IMF, the World Bank, the Tories, et. al, do in fact think that government debt (and government regulation) is inherently bad. It’s their policies, not the debt itself, with the capacity to create destruction.

What’s curious is that these same people do not believe that the government has an active and irreducible role in the economy.

What is this magical waste? Every cent of “waste” eventually ends up as someone’s salary down the line. The money is not thrown into a fire. Every spending cut results in someone, somewhere, either not making as much money, or outright losing their job. This person then has less to spend on the things they buy. That hurts another seller/producer of a good or service. They too must then cut back, which hurts someone else, so on and so forth in a very nasty negative feedback loop.

As another comment pointed out, other non-government groups could arguably do more “productive” things with that same money. There is validity to this point, IF, AND ONLY IF, private companies WANT to borrow to expand and cannot because they are being “crowded out” of the market for borrowing. Presently, there is no evidence that the private industry wants this money as expansion during a recession isn’t a winning proposition. In fact, by the government spending more, the same negative feedback described above could happen in reverse, increasing aggregate demand and the result of government spending during a recession may actually create a “crowding in” effect.

As a side note, imagine this parable:

There is a young bachelor who spends all his time frolicking and never once does his groceries or stocks his pantry. A neighbor, knowing this, comes over every night offering food. The bachelor says, “I’ll pay you back, I promise.” This continues for quite a time and eventually the bachelor finds himself quite indebted to his neighbor.

Then, a terrible hurricane hits and every store and restaurant are shutdown or destroyed. The poor bachelor has no food in his house, and sits there starving as the city lays in waste from the storm. He thinks to himself, “what a fool I was to not stock the pantry when I had the chance! Now I may starve to death!” Just then, the neighbor shows up and offers to lend him some of his extra canned goods. The starving bachelor, emaciated and dying of hunger, looks at the neighbor and says, “Borrow more food? That is the dumbest thing I’ve ever heard! The fact that I always borrowed from you is the reason I have no food now! I will not borrow one more thing from you.” The neighbor shrugs and leaves. Later that night the bachelor starves to death.

Was the bachelor wrong to never save up food in his pantry and always rely on being able to borrow from his neighbor? Yes. Does that mean he shouldn’t have borrowed some food while he was starving? No.

True.

But, although things are considerably better than two centuries ago, life is difficult. That’s the default state of nature, which we struggle against.
Also, government does not improve on this state of affairs.

Regarding the sick: healthcare would be cheaper if it was left to the competitive pressure of the market. Instead, we have heavy regulation (insurance tied to employment due to tax benefits, licensing of doctors and nurses, etc.) and over half of medical spending coming from government.

Regarding the elderly: becoming old is not a surprise to anyone, you have to plan ahead. There is no magic dust to avoid it.
Right now, we have the worst situation, where people planned and count on social security benefits which are insufficient (inflation) and endangered (unsustainable Ponzi scheme, longer lifespan and higher costs of healthcare).

Regarding misfortune: again the solution is not government safety net, but the private safety net. Before the public safety nets grew (during the Great Depression), there was a strong network of charities and communities, which voluntarily helped. This is a more healthy situation than having taxation and bureaucrats to (badly) administer support programs.

Joe and Jane Sixpack are under the illusion that they are entitled to the same ever-increasing standard of living as they were when American manufacturing (1) bestrode the world and (2) was based on 1940-60 labor intensive methods.

The GOP has tried to convince Joe and Jane that we can borrow and tax cut our way into keeping that gravy train rolling. The Democrats have tried to convince them that we can tax and regulate (and now borrow) to achieve the same thing.

Both are wrong. I suppose it’s futile to hope for any political candidate to tell America that we’ve been living off the seed corn for quite a while now, and it’s time for the pain.

The bachelor isn’t a bachelor, but a family man. And he borrows food, because after paying medical bill he still wants that nice, shiny television set. And he’s perfectly fine with borrowing, since he figures that his kids will pay up.

Yes, the money isn’t burned – it flows very nicely into the hands of people who already have all the money they need.