Ed Balls ties himself in knots

Scotty

The government must be rubbing their hands - every time balls talks it up he showns what a untrustworthy and unreliable figure he cuts.
In my experience the more a person accuses another of lacking in intellect the poorer the argument put forward in support of that stands under scrutiny.

JohnOfEnfield

"the fundamentals still elude them."

With socialism 'twas ever thus.

TrevorsDen

'... Yeah ... but ... no ... but ... yeah ... but ...' - the Vicky Pollard of British politics.

Liz Brown

He really does talk the most utter balls

Scary Biscuits

Is Balls, Brown's Minime? With those jowls he's starting to look more and more like him. He's already mastered all the double speak and barefaced lies.

Verity

So what?

Mark

Looks like Balls has some reading to do on Fiscal Multiplier and that there's good evidence it doesn't work for counties like the UK.

http://www.nber.org/digest/mar11/w16479.html

Which blows something of an enormous hole in his proposed economic framework.

TrevorsDen

'The plan, if there is one, appears to be this: to cast Balls as The Smartest Man in the Room, whose brain will deliver us from economic despair.'

Yes project Balls as the man with the brain the size of a planet who understands all those tricky economic issues that no one else in Labour does.

Now where have we heard all that before?

Are the electorate going to fall for that one again? Will even the gullible BBC fall for just nodding sagely as Balls spouts this rubbish?

Simon Stephenson.

Fatbloke, where are you?

Now that Mr Balls is accepting there was a structural deficit, what line are you taking? Do you continue to insist, as you have many times in this blog, that there was no structural deficit? Won't Uncle Ed get one of his henchmen to slap you on the wrist for this?

Or are you going to follow the Balls line and claim that there's no inconsistency between denying the structural deficit up to a few months ago, and admitting to it now?

Perhaps this will prove a bridge too far for you, even bearing in mind your vast experience of constructing arguments in Humpty Dumpty language.

TomTom

Balls is simply not credible. He has zero credibility as an Economist and is simply a bulls**tter. Noone can take him seriously. We used to have one or two people who did have an understanding - people like Wynne Godley....but Balls is physically a heavyweight and mentally, a confused lightweight

AF

It now seems that Balls and Brown are two damaged pieces of a crazy jigsaw that actually fitted together.
what are the chances of that?

Nick

There's been a lot of recent research showing that the fiscal multiplier doesn't work with a deficit of approx 10% of GDP.

Unfortunately the boost from fiscal spending is more than offset by the retrenchment of Ricardian Equivalence, as people spend less money knowing of the tax rises to come in the future.

So it looks as if Osborne has it right on the technical economics after all.

Alan Scott

Well said, Trevorsden. Somebody must put us out of Balls' misery.

Barry Bilge

Ed Balls saying "I'm increasingly of the view that George Osborne has no idea what the phrase 'fiscal multiplier' means, either, which is part of the problem." neatly illustrates that economists don't know economies.

There were (and probably are) too many economists in the Treasury who are great on theory but woeful in reality.

Life is not a textbook. Stop trying to fiddle with the minutiae, set the big picture in motion and then get the Government out of the way.

Graham

It's commonly agreed that balls is The Most Annoying Man in Britain, The Smartest Man in the Room...that's the best laugh I've had in years!!

Fatbloke on tour

PH

I fear your confidence has overtaken your ability, although I hand it to you that you want to enlarge the debate and introduce some new thinking.

When it comes to the debate about the structural deficit you need to be more specific about the years involved.

The argument has been about the situation in the public finances going into the global credit crunch, that is the situation pertaining in 2007/08. Comments by a media tart with an agenda in 2005 are all very interesting but they offer nothing towards the real debate.

2007/08 and the current spend was in a slight surplus, the figures are there consequently little room for argument. The deficit was 2.5%'ish and was more than covered by public sector investment.

Consequently there was no structural deficit in money terms so the question has to develop into a question of timing, where was the UK economy in terms of the economic cycle?

This point is important in that the position in the cycle can tell us if a slight surplus was good enough or it was better than we should have expected at the time.

Big question is where were we in the economic cycle, what position best fits the conditions in 2007/08.

There are any numbers of economic cycles that can be looked at:

1) Global economic cycle.
2) Raw material economic cycle.
3) Political economic cycle.
3) Natural economic cycle.

You can look at the time since the last recession which would be 1990/92 or the last relative economic slowdown which would be 2004/05. Any viewing of UK GDP will confirm this plus my local Tesco stopped looking for shelf stackers at this time. Unscientific I know but there was an economic chill in 2004.

This is my question to the OECD / EU / media tart position that in 2007/08 the UK economy was seemingly at the top or very near the top of the economic cycle and as such we should have been running some sort of significant surplus at this time.

Well from memory 2007/08 did not feel like some economic boom-time, globally raw material prices may have been high but the real economy in the UK did not feel very toppy at that time.

House prices had been slowing in the 2 years previously right across the UK so that area was treading water.

Add in the various economic episodes in the TB/GB government and it is difficult to see 2007/08 as on of wine and roses for the lotus eaters. The City, that may have been different but in the real world it was a case of plodding on in the quest to build the socialist New Jerusalem.

Tankus

yeah ..fatblokes response should be rather amusing !

Woody

The problem is no-one in the media has the 'Balls' to take him on, so he gets away with just spouting lies and more lies.
Does that remind you of anyone?

Gary Williams

Ed Balls: "The Smartest Man in the Room"?
Only if he is in the Ladies'.

"People reappraised what their view of what trend growth was"....
Yeah, I guess that if you imagined that you could personally guarantee that there would be "no more boom and bust", the trend line in your dreams would slope upward until the end of time.

Balls may be increasingly of the view that Osborne does not know what "fiscal multiplier" means. Those of us who, unlike Balls, have spent at least part of our adult lives in the real world are increasingly of the view that Balls does not know what "surplus" and "deficit" mean, or even that they are different.

Victor Southern

FatBloke
"The deficit was 2.5%'ish and was more than covered by public sector investment".

Priceless. It is public sector spending that creates the deficit.

Simon Stephenson.

Fatbloke on tour : 6.50pm

This is what Mr Balls said in the New Statesman interview:-

""We had a deficit every year under the Labour government because our policy was to balance the current budget but to borrow to invest - up to 3 per cent of GDP. In retrospect, three years on, it was clear once the financial crisis had hit that people reappraised what their view of trend growth was and, in retrospect, of course there was a structural deficit. But there wasn't a structural deficit as judged by policymakers at the time." [my emphasis]

and this is the transcript of his interview with Andrew Marr in late January:-

"ANDREW MARR:

Okay, well that’s very frank. Let’s turn to the structural deficit because that’s still at the heart of the argument between yourself and the Conservatives. It is true to say, is it not, that in the run-up to the financial crisis Britain was running the worst structural deficit – that’s the extra beyond the cycle – of any of the G7 countries?

ED BALLS:

I don’t think we had a structural deficit at all in that period. We had a deficit

ANDREW MARR:

(over) We had a £37 billion structural deficit, didn’t we?

ED BALLS:

… but we were covering that by investment. We were covering that by investment. The fact is we had fiscal rules, which were to borrow to invest, but to keep the current account in balance. There was a debate in that period in 2005 or 6 as to whether or not we needed to go two billion here or there. In fact taxes went up in a couple of those budgets. But the fact is that our debt was low, our economy was strong. We went into the financial crisis in a much better position than many other countries, but we got hit really hard by what happened with the banks.

ANDREW MARR:

But you can hardly say there wasn’t a structural deficit in the run-up to that crisis?

ED BALLS:

No. Look, the issue was …

ANDREW MARR:

Not only was there a structural deficit at that point. It was the largest of any of the G7 countries.

ED BALLS:

Look, we had a deficit. Yes, we had a deficit.

ANDREW MARR:

That’s what the OECD says.

ED BALLS:

There was definitely a deficit. Was there a structural deficit? I don’t think so. The current account balance was pretty much in balance over the period adjusted for the cycle. We were borrowing, but to invest, and that was always consistent with our fiscal rules. Our debt was low. We went in with lower debt than other countries. We did fix the roof while the sun was shining. In fact we made decisions which were opposed by the Conservatives – for example to use the proceeds from the mobile phone auction to get our national debt right down. So …"

So tell me Fatbloke, where in the Marr discussion did he qualify his denial of the structural deficit with "as judged by policymakers at the time"? Anywhere? Tell me where I can read in the Marr interview the same acknowledgement of the structural deficit as there is, quite clearly, in the interview with the New Statesman.

By the way, I won't accept the "Tory boom and bust"-style argument that when Balls said to Marr "I don't think we had a structural deficit at all in that period" Marr cut him off before he could conclude his sentence by pausing, then adding "I know we did"

davidk

You hate him because you fear him.

There, I've said it.

John Dubai

Simon Stephenson - you must understand that Fatbloke clearly is Ed balls. It all fits, the name, the incoherence...

daniel maris

Most annoying for being right?

Haven't you heard about Dixon's sales, harbinger of worse to come.

Fatbloke on tour

SimpleS @ 8.03

Oh goodness someone has been doing their homework.

Unfortunately you are wrong and you show your propensity to spout CCHQ pish with your choice of articles.

I stand by my assertion that the UK had no structural deficit going into the global credit crunch. Another viewpoint might suggest that it was at most 0.5% but the OECD view hat it was in the Top 3 of industrialised countries is just tripe.

2007/08: AD had a surplus on current spending.
Deficit = 2%+, investment = 2.5%'ish.
OECD says we have a big structural deficit.

Compare and contrast with Sha**er

1996/97: Smokey Joe was borrowing money to pay for teachers wages.
Deficit = 3.5%, investment spend = 2.0%'ish.
OECD says that we have a big structural deficit.

The OECD has the structural deficit in 2007 as 3% of GDP and in 1996 it was seemingly 4% of GDP.

******

The OECD is wrong specifically on the situation in 2007, its viewpoint is far too simplistic. It is only looking at the money position not what the money is being spent on. In addition it did not understand the position in the economic cycle that the UK found itself in regarding 2007.

It seemed to work on the basis that it had been a long time since the last recession so the economy in the UK must have at or very close to the top of the economic cycle.

As I have explained before that viewpoint was wrong, there had been an economic slowdown in 2004/05 but that information seems to have passed Paris by.

Consequently on the basic point they it wrong, a simplistic money based analysis is wrong. It is important what the money is spent on

Current spending = Difficult to cut.
Investment spending = Much easier.

Consequently the OECD got it wrong and so did the media tart who was just parroting their report.

******

For the record EB gave away too much to the Staggers, his answers to AM were much closer to the mark as I have explained above.

He was right with one thing in that the structural deficit is much worse coming out of the Credit Crunch than it was going in. Huge dislocation to the economy, lots of pieces up in the air and it will be sometime before we know if they have landed in a fashion that will generate their previous economic activity.

However as for the exact size of the structural deficit at the moment I fear that it will only be measured accurately in 20/20 hindsight.

The only figure that we truly know and understand is that the current spend deficit is 7.5%.

My viewpoint that the current OBR split of 2.3% cyclical and 5.2% structural is politically inspired hogwash from the "Three Brothers Grimm", Tory placemen sent to do a job by the dog boilers in the party.

Remember the Treasury and the OBR have history on this:

2009 Q4: Deficit estimated at 12.5%
Cyclical component = 3.4%'ish

2010 Q2: Deficit given as 11.1%
Cyclical component = 2.3%'ish.

Fishy very fishy.
A dog boiling agenda in the raw.

Maybe that should be:
Sushi very sushi.

Fatbloke on tour

FiLtD'y John @ 8.17

I am just a poor downtrodden salary man trying to bring economic enlightenment to the poor souls of SpeccyLand.

They are children in a storm
They are sheep without a shepherd.
They need economic support and guidance.

They are in for a shock.

As for SimpleS, he went to Fenland Poly don't you know so that explains the underlining, the bolding and the tripe.

Consequently blow it out yer arse ya rocket.

Simon Stephenson.

Fatbloke on tour : 8.57pm

Nice bit of copy and pasting. Now, to the question, which I'll repeat:-

Where in the Marr interview did Balls accept the existence of a pre credit-crunch structural deficit, as he does quite clearly in the New Statesman interview?

Or, in Humpty-land, is there a way of saying that:-

"in retrospect, of course there was a structural deficit" (New Statesman)

and

"I don't think we had a structural deficit at all in that period" (Marr)

can actually be considered to be asserting the same thing?

Fatbloke on tour

SimpleS @ 9.13

The answers are all in my previous posts, if you are too lazy to look for them or you don't understand the subject matter then too bad.

I agree with what he said to AM, there was no structural deficit in 2007/08, no matter what the OECD said in its report.

I have given the figures and I have explained why the OECD analysis was flawed.

I think EB gave too much away in the Staggers interview vis a vis a backward looking analysis of the situation in 2007/08.

My reading of it is that he suggests things looked more toppy in hindsight than they did at the time.

If this is what he meant I don't agree with it. Financial services might in hindsight have been toppy but the rest of the economy was struggling under the weight of high raw material costs.

Or he might have been trying to explain in a rough and ready manner my main point:

There was no structural deficit going in.
There was a structural deficit coming out.

All explained above.

Including my critique of the Treasury / OBR position on the breakdown of the deficit and why it is not worth the fag packet it was written on.

Consequently stop coming the madam and start asking questions of Sniffy and his abilities.

He is a dog boiling muppet out of his depth and you are a parrot without a brain.

Away and play tig wi' the buses ya numpty.

TrevorsDen

Fatbloke is an ignorant arse - now reduced to saying even Ed Balls knows less than he does.
'depends how you define structural'
'depends how you define deficit'
'depends how you define cyclical'
'depends how you define 2008'

But then fatarse is a gobshite.

TrevorsDen

Mr maris - we have had a huge recession, one of the biggest ever. Labour flooded the economy with money before the election.
In case you have forgotten there is no such thing as a free lunch. In and after a recession people have got other things on their mind than plasma screen TVs - I mean whats to watch on the useless thing anyway.

Walt Whitman

Some brains are sharp
Others are blunt
But that Ed Balls
Is a useless...

Simon Stephenson.

Fatbloke on tour : 9.08pm

"As for SimpleS, he went to Fenland Poly don't you know so that explains the underlining, the bolding and the tripe."

Put yourself in the shoes of the reader is what I was taught. Don't be afraid to help him to understand what you have written. Use emphasis to highlight sresses where otherwise they may not be apparent. Remember at all times that it is not you who is reading what you have written, it is someone else. Show consideration to him in your structuring, for he has condescended to read your opinions.

I'm afraid that at school and at FP this was the expectation. Presumably your alma maters expected precisely the opposite, or, with a political career in mind, did you just ignore them?

TrevorsDen

Mr Stephenson - of course you make good points.
In another life Balls believed in post classical (a bit of leg pulling there) endogenous growth theory - a land beyond the wardrobe where growth was eternal.

Now he has a new buzzword which has bypassed countless generations of chancellors - 'fiscal multiplier'.

Mr Bilge you are right. Balls' 2nd greatest weakness (weak weak weaknes?)-that he thinks he is an economist - is topped by is main weakness - he is an economist.

Fatbloke on tour

Very Stupid @ 7.20

Here we go again, the ride of the one club golfer, the data driven decision maker.

Compare and contrast:

1996/97 - Sha**er at his best.
Smokey Joe at the wheel.
Deficit = 3.5% of GDP.
Current spend in deficit.
Low level of public sector investment.
Money being borrowed to pay wages.

2007/08 - GB's first year in charge.
AD working the numbers.
Deficit = 2.5% of GDP.
Current spend in surplus.
High level of public sector investment.
Money borrowed to improve the public realm.

Both of these years involve borrowing money.
They are however not the same.

One is borrowing money to pay for todays expenditure, buying the messages with a credit card.

The othyer is building a better future for our children an no government has ever had any qualms about landing the blighters with the interest bill.

Consequently away and throw shite at yersel ya walloper.

Andy H

I sometimes feel a bit sorry for Fatbloke and his obvious low self esteem issues.

Fatbloke - I'm sure you can get counselling for your condition..

Fatbloke on tour

Failed Blogger @ 10.02

How are you getting on with your homework?

Can you now tell the difference between aT22 frigate and T42 destroyer? I fear it would be a lot easier if they were in Commando comic.

Blow it yer arse ya rocket.

Simon Stephenson.

Fatbloke on tour : 9.54pm

So, just to be clear, of Balls' two assertions:-

"in retrospect, of course there was a structural deficit" (New Statesman)

and

"I don't think we had a structural deficit at all in that period" (Marr)

one of them was wrong. Is this what you are saying? And, according to you, the Marr statement was right, and so by a process of elimination, the New Statesman statement must have been wrong. Is this a correct summary of your position?

Now, what I'd like to hear from you next is an explanation of what happened to the cyclical surpluses that Keynes recommended being collected during periods when the economy was not in recession? I'm right about this, aren't I? Over a business cycle, the cyclical surpluses and cyclical deficits nett out to zero, so that the overall deficit over the cycle is structural? And that this is the very essence of countercyclical fiscal policy - that, like seasonal adjustment, it takes from the peaks and gives to the troughs, in such amounts as to leave the whole-period totals unchanged.

So what happened during 2003 - 2007? Were we in recession? No, not according to the government at the time. So where do the surpluses show? They must have been there, mustn't they, since we weren't in recession. So maybe there were structural deficits during these years in addition to the "investments" that you claim explain the actual overall deficits? Because the cyclical surpluses ended up being used for current spending, and not held back to finance the additional cyclical spending in the next downturn.

Or, having "abolished" boom and bust, was the thinking that there were no surpluses needing collection during the good times, since there would be no further downturns requiring cyclical deficit spending?

TrevorsDen

Once again I am afraid you are right Mr S.
Gutman chooses not to enlighten but to obscure.

No thats not right is it.
Gutmans mission is to show how oh so clever he thinks he is. But he isn't. And balls' understanding is not perfect either.

'a one percent increase in government purchases (as a share of GDP) increases GDP by a maximum of 0.7 percent and then fades out rapidly. This means that government spending crowds out other components of GDP (investment, consumption, net exports) immediately and by a large amount.'

****

http://www.stanford.edu/~johntayl/carnegie1march.pdf

'such measures should also be embedded in a conservative medium-term fiscal framework that ensures that deficits and debt do not drift upwards permanently when the economy recovers. In the absence of such a framework the long-run costs could exceed the short-run benefits.'

daniel maris

I'd like to restate an important point I've made before - our economic performance is far worse than it seems. We are net importers of people to the tune of about 250,000 per annum.

That means you should subtract about -0.5% on our GDP to get an accurate picture of how we are doing. So the -0.5% of the last quarter becomes -1%.

It's an important point that never gets mentioned.

It's one among many reasons I don't trust "experts".

daniel maris

Politics is not an exact science, a fair trial or a form of philosophical inquiry.

The important fact here I think is that Osborne has been shown to be wrong - already. He thought cutting the deficit quickly was the superhighway to growth. It's proved nothing of the kind. It's mired us in a second recession with rocketing welfare payouts.

The fact that his inheritance was more plutonium than gold is neither here nor there. The fact that there might be factors causing the recession that are beyond his control is neither here nor there.

I fully expect the first quarter of this year to show negative growth as in the previous quarter - and it's clear, as far as I am concerned, that this is because the Osborne policies AND style have spread fear and despondency across the land.

Time for him to be put out to pasture or on to the board of one of our rapacious banks.

Simon Stephenson.

TrevorsDen : 11.04pm

Mmmm. What flabbergasts me about lefties like Fatbloke and the present Labour leadership is that they choose to approach the political contest by using the weaponry of the flawed, discredited, ramshackle and hugely improbable explanations with which, helped by a bit of "Yah-Yah-Yah, Can't Hear You", they constructed the expedient certainties that supported the rebellious posturings of their early adulthoods. I've no idea of Fatbloke's age, but Balls and Miliband and Cooper are all in their 40s for heaven's sake - and yet they behave as though they're 40 going on 18.

And the hair-pulling-out feeling becomes greater when one realises that the left has got some pretty telling arguments against the coalition policy, and against free-marketeering generally - arguments that need badly to be made. And yet it chooses to use none of them, relying instead on the sort of emotional, irrational claptrap that titillates Daily Mirror readers, but has no relevance whatsoever to the requirements of running the country.

I despair.

Fatbloke on tour

SimpleS @ 10.59

You make it just too easy for me.

Regarding what EB said we have 2 different situations:

1) AM interview on tape.
2) Staggers interview written up by a journalist.

from what we know about EB said he seems to have changed tack slightly. However without full notes on the second interview it is hard to fully understand what he said.

MH's piece suggests it was quite a tense affair, why I do not know as he himself has been quite vocal in criticising Sniify economic illiteracy.

The other point to ponder is the different dates associated with various comments.

From the article above:

Q2 2005 - The media tart is using OECD analysis to push the structural deficit line.
2006 - OECD puts a figure on it.
I take it this is the calendar year and not the fiscal year.
2007/08 - Final year before the onset of the global credit crunch in the UK.

Consequently not apples with apples.

You talk about time periods, as always not wanting to fully give an account of the TB / GB years.

Consequently here is one for you:

May 97 - Mar 99 = Smokey Joes numbers.
Small current spend deficit in the first year.

Apr 99 - Mar 02 = Surplus generated in cash terms.

Apr 02 - Mar 06 = Above trend growth in public spending leading to a cash deficit on current spending.
Reducing towards the end of the time period.
Cash deficit reducing slightly but public sector investment rising.

GB is effectively spending the surplus he produced in the previous period.

Apr 06 - Mar 08 = Surplus on the current spend.
Rate of spending growth reduced to below trend GDP growth.
Little or no structural deficit, I say no but others may disagree, the finances are in a much better shape than 1997.

Apr 08 - May 10 = Global Credit Crunch hits the UK and its weak banking sector.

Conseq

Fatbloke on tour

SimpleS @ the edge of reason.

Consequently if you want to talk about the situation going into the global Credit Crunch make sure you are using the right information.

Now on to your final piece of politically motivated tripe.

GB said he was going to end -

"Tory boom and bust".

You know the situation, economic headwinds and the UK under the Tories was the first country into a recession and the last country out.

The world gets the sniffles
The UK gets flu / the lurgay / Legionaires disease ...

Consequently get real.
Understand the big picture.
Compare and contrast TB / GB with the shambles left by Maggie and Sha**er.

Graph 4 in the previous article told the whole story.

Arsewipe's Tory propaganda piece mentioned in a subsequent post also laid low classic Tory economic policy.

Bribe before and election - Cut and cut quick after the election.

Uncle Rab wrote the book.
NL read the book and put ideas into action.

Simon Stephenson.

TrevorsDen : 10.16pm

"Balls' 2nd greatest weakness (weak weak weaknes?)-that he thinks he is an economist - is topped by is main weakness - he is an economist."

Well, he's an economist of sorts. But all he's done is sift the various economic theories until he found the ones he can use in support of his prejudices, and then learn these cover-to-cover.

It's like Brown the great historian. All he had was a fascination with people who had supported his peculiar political outlook, and he obsessively learned everything about them because they interested him. He'd have known everything about Jimmy Maxton, down to his hat size, even if Maxton hadn't been the subject of his PhD thesis, but I bet he couldn't put together two sentences of objective information about any of the Tory politicians of the 18th or 19th centuries.

So don't make the mistake of thinking that because Balls is word perfect in his specialist subject he's competently knowlegeable about the entire discipline. Zealots tend to be flattered by their apparent competence.

Tom Pride

Fatbloke shows a depth of intellect well beyond the typical offerings on this site. His comments are always expressed succinctly and with such clarity, brilliance and rapier wit, that one is left breathless in admiration.

I for one say - more - much more, please.

John Dubai

Fatbloke I went to Fenland Poly too. For me sins I went to the alma mater of Johann Hari, David Laws and Meynard Keynes. So I'm prejudiced to agree with Mr. Stephenson.

But what strikes me in all your arguments, is that you like to pull figures out of thin air, or at least, redesignate and massage real figures. Hence you state at some point (a la Balls), [I paraphrase] there was no structural deficit, current account spending was balanced, or if there was a deficit it was at best 0.5% But this is simply your assertion. Like the sainted Labour economists before you, you simply classify one set of spending as "investment" and another "current spending" and hey presto it's the magic disappearing deficit! So I've learned not to pay too much attention to the figures you put forward.

As for your re-writing of Tory spending History, what you never, ever, point out, is that the deficits run by Tory governments trended downwards (in particular I think of Ken Clarke's chancellorship), whereas under Labour they trend upwards. Factor in that Tories start governing when the economy is in crisis and this becomes decidedly explicable. A couple of blow-ups due to external factors such as the ejection from the ERM and the crash in the mid 80s, but essentially, the trend is downwards. So let's look at what GB inherited. Here's an actual graph, rather than some made-up figures: http://www.debtbombshell.com/britains-budget-deficit.htm

Notice anything about the gradient of the line between 79 and 89 and 93 and 2001? Ok I'll give away the answer. It's trending downwards. As I said, the spike in 92 - 93 is caused by the ERM related recession. Now let's forget ancient History and focus on Brown's legacy. He stuck to Ken Clarke's spending plans until 2001. Guess what, we ran a surplus under Clarke's plan right up until 2001! Yes, there was a deficit up to 97 BUT IT WAS BEING DECREASED. Same is true of the 79 - 89. That's responsible government spending. Now go and get yourself a nice doughnut for all the hard work reading a graph.

Sir Everard Digby

FatBloke of the multiple,long winded posts.
You miss the point entirely. I am sure you enjoy selective number crunching to make up a question which fits your answer. However,that is a pointless activity in this context.

I contend that the idea of a structural deficit serves a political rather than analytical function. It's a pseudo-scientific concept which serves to legitimise what is in fact a pure judgment call - that borrowing needs cutting. Any government can make this call. Talk of a structural deficit does not therefore enlighten us.

So why exactly is Ed Balls u-turning on this? The fact is Labour chose not to cut borrowing. The Coalition wish to.

The rest of the smoke and mirrors matter not one jot. Time to move on.

Fatbloke on tour

FiltD'y @ 6.52

Interesting point but like most comments in SpeccyLand it is full of errors, you do have to wonder about the teaching standards at the FenLand Poly when happen so often.

GB followed KC's spending plans until Mar 99 not 2001 as you contend. Love your point about deficit under Maggie and Sha**er trending downwards unless of course it was trending upwards.

No shit Sherlock.

Again no analysis or comment on the impact of North Sea oil, privatisation receipts or the state of the public realm and public services after Maggie and Sha**er had worked their magic.

Finally I think you have lost all credibility with your inability to accept the difference in current and investment spending. maybe that is the case from 4000 miles away but up close and personal you certainly can.

GDT

Simon,
as always very interesting posts and very informative. I suspect if FBoT could construct his arguements in a similiar fashion we'd have a very interesting debate on our hands.

Mike Stallard

If you are a drug addict and someone asks you to support them, saying that you are not an addict and that you should continue with your current lifestyle, and then offers you a lot more drugs even though you already are heavily in debt and have no idea how to repay, surely you will take the drugs with joy and be grateful?
That, subsituting 'welfare' for 'drugs'seems to be the Labour policy. And it that which, I reckon, will win them the next election. Meanwhile, my little country will go to pieces and I personally will go to th wall.

John Dubai

Fat bloke - the North sea oil and privatisation are irrelevant; the spending plans are made on the basis of the projected earnings. Thatcher made hers on the basis of the receipts she could get and the deficit started to reduce accordingly. Brown on the other hand started running a deficit. Where the income comes from is not the issues.

JohnOfEnfield

I am staggered, after scanning these comments that anyone believes that rampant socialism as practised by Brown and Balls in their 13 years in power was anything other than a complete disaster. They left the country, as all Labour Governments have, in absolute ruins.

Dance away on the head of a pin if you want, but that's the problem in a nutshell.

TrevorsDen

Sorry Gutman - you are shafted by your hero. Somehow we are meant to pretend that Balls' answers to a lefty magazine have been made up by the reporter? Give us a break.

And pretending not to recognise a trend does not get you out of jail either. The ERM was a policy insisted on and supported by Brown when in opposition.
Nit picking over 1999 or 2001 is pretty facile as well. As soon as Brown saw the economy moving into surplus (aided by 3G sales in 2000) he started spending even though the economy could not support it. Thats AKA a structural deficit.

I have to say I do wonder. If there is/was no structural deficit and we have the magic of the fiscal multiplier - then why has the national debt doubled over the last 13 years?

Gutman reminds me of those guys in green bandannas wheeled out to cheer on Gadaffi.

TrevorsDen

Even Nick Robinson can see Brown did not borrow to invest but to get himself out of his own mess.

'This year the government has borrowed to cut taxes - on the £2.7 billion bail-out of the 10p debacle and the freezing of petrol duty.'
http://www.bbc.co.uk/blogs/nickrobinson/2008/10/the_final_cost.html

The 10p shambles was surely the nadir of Browns political career - and thats saying something.

Simon Stephenson.

Fatbloke on tour : 12.41am

" However without full notes on the second interview it is hard to fully understand what he said."

I wondered if you were losing your grip by failing to throw in the "he must have been misquoted" card. Next, I suppose, after it's been shown that he wasn't misquoted, will be the "you're taking his words out of context" claim?

You lefties are so predictable. And one way to recognise whether or not you are making a genuine case is to examine the stance you take when you present it. Like here, if Balls had genuinely been misquoted, or if there was really a valid argument that there had been no structural deficit, you would approach the discussion with the view that the opposition's "wrongness" could be corrected by facts, and by reality. There would be no wavering from the point at issue, no quoting of peripheral and, at a push, marginally relevant facts and statistics, no attempts at points-scoring by pretending a direct comparability with events affecting the opposition - events which are barely similar, and took place in different circumstances. No, because the weakness of the opposition's case is sufficient for a skirmish to be won, all the rest is embellishment that will be lost in the triumph of the main victory.

So when your input fails to address the point at issue, and when it is full of long ramblings which you appear desperate to introduce as relevant, that's when all the world should be aware that you are bullshitting, and that, true to your pig-headed ways, you are refusing to admit to a wrong that you know to be a wrong.

Keith

FBoT's style is classically Lefty in the way he spews out meaningless and/or uncheckable figures in an attempt to bludgeon his opponents into submission. The point is not to promote discussion and understanding but to put an end to it by pretending that the whole thing is much more complicated than his opponents can possibly comprehend. It's the same mystifying style that leads them to pretend (by endorsing post-cassical neo endogenous growth theory or some other bullshit) that governments can somehow conjure wealth by dubious accounting practices, by making groundless assumptions, or by magic.

Economics is at bottom extremely simple. The only rule that you need to know for these purposes is that everything has to be paid for. Judged by this simple, intelligible standard our public finances are in a total mess and pretending that the debt is "covered by investment" will only lead to deeper insolvency.

Incidentally, FBoT can't be Ed Balls because Balls is English but FBoT is from Glasgow. This may of course explain a lot.

Cheers all,

Keith.

Greenslime

These people work on the basis that if you complicate and obfuscate, the average person will be totally confused. Then they can sneak through all sorts of rubbish. A classic example was last night; you have that nutter Sowhatcuts, or whatever his name is, telling the Question Time audience that "if you keep all the public sector workers employed and paying taxes, the deficit would fall" - watch it again if you don't believe me. He got a round of applause for that - so people obviously believe that if you employ people on the public payroll, and therefore paid from taxes, this will decrease the deficit. FFS!

marc oliver

Ed Balls is unlikely to be the smartest man in any room containing more than one person. Intelligence is more than just swallowing J M Keynes whole and then spouting selectively to order. That infernal squint of his comes from staring with doltish rigidity at one side of every question. He wouldn't know a moral principle if it came up and stabbed him in the eye. I know that if we prick him, does he not bleed, etc; but as I think James Thurber once said (of someone else) - "I am not sure that we should not judge him too harshly."

Every bit as dark and dangerous as his surly mentor from the far North. Use a very long pole.

Victor Southern

FatBloke

The first time Gordon Brown mentioned "Tory boom and bust" was late in 2007 when the new bust had arrived. Prior to that date he had always said "an end to boom and bust". There are innumerable records in Hansard of those words.

Your own grasp of economics is perilously flimsy. At 7.02 pm I pointed out the silly statement that you made earlier which was that the 2.5%-ish deficit was more than covered by public sector investment.

Apart from that being one if the most blinkered statements that you have ever made it implies, as you have done elsewhere on this thread, that all of Labour's deficit was caused by investment in capital works. That is totally incorrect as hardly any capital projects whatsoever were financed directly by the Treasury. New schools, hospitals, departmental buildings and the like were more than 97% financed by PFI - creating more debt and more interest to pay.

Posting much more than any other and writing ever longer coded replies does not make anything you say the truth.

Balls and Miliband are deficit deniers and so are you.

Frederick James

I don't think this hyping-up of someone as an economic colossus will cut it with the public this time: we heard about Brown's gigantic brain ad nauseam and it turned out to be about as substantial as a puffball. Once bitten.

2trueblue

Fatbloke on tour. By April 2007 the writing was on the wall. Commercial property had begun to slide and you could not get invested funds out easily in June 2007. After that everything was history.

There is always a time lag with unemployment so Balls is talking balls all the way through. Did he study conemy? Sorry meant comedy.

Simon Stephenson.

Fatbloke on tour : 12.49am

"Now on to your final piece of politically motivated tripe.

GB said he was going to end -

"Tory boom and bust"."

Oh, it was just "Tory" boom and bust he was going to end, was it? So there was no thinking that he'd ended boom and bust completely? So, there must surely have been an expectation that at some time the debt-induced exuberance of the early-to-mid noughties would come to an end, right? So it wouldn't have been possible to treat the cyclical surpluses of these times as superfluous, and therefore available for current spending or "investment"?

So I come back to the question you've failed to address - where are these cyclical surpluses accounted for between 2003 - 2007? Why weren't they there to offset the cost of the automatic stabilisers that kicked in as we went into recession? Is it in any way possible that an error of Brown and his Treasury team was to fictionalise the economic forecasts to fit the spending plans, rather than to build the spending round the professionally-produced forecasts?

And isn't the nub of all this that Brown didn't really care if the forecasts were cloud-cuckoo-land optimistic, he didn't care that revenues would fall short of spending - because his plan all along was to spend as much as he could possibly get away with, by fair means or foul, in order to force a situation from which it would be possible to assert that the only practicable remedy to the fiscal imbalance was a massive hike in the tax take as a percentage of GDP. Thereby establishing an virtually irreversible high-tax, high-spend society, over a period of a decade, against the desires of 90% of the population, without very many of them sussing out what he was doing.

Such is the power that can be built through structuring your entire public projection on a pack of lies.

Fatbloke on tour

Very Stupid @ 10.46

You just don't get it do you?
You bundle up the 13 years as one.

You have neither the wit or the wisdom to spot the not so subtle changes
in policy over that time period. You are so blinkered in your naked one dimensional world that every member of the Labour party is the same to you.

Look beyond the SpeccyLand CCHQ propaganda and you might learn something.

Sha**er was very different politically from Maggie.
Dave the rave is closer to Clegg than he is to half the Tory members of his cabinet, the world is complex get used to it.

EB is not a pantomime villain.
He actually knows something about economics.

Sniffy hasn't a clue, it is all dog boiling.
He doesn't do economics he does politics by numbers.

Simon Stephenson.

marc oliver : 10.44am

"Intelligence is more than just swallowing J M Keynes whole and then spouting selectively to order"

Balls hasn't "swallowed J M Keynes whole", he's extracted those elements of Keynes' theories that can be topped and tailed to support a growth in the size of the State sector of the economy, and ignored everything else. It's as I wrote earlier - he starts with his prejudices, and then searches for a theory, or part of a theory, that he can dress up to support them. All the people who surround him do the same thing - they all belong to Bertrand Russell's cocksure stupid, not his intelligent doubters.

Chris lancashire

davidk; We don't fear him because he is one of the Conservatives best vote-winning assets. We hate him because he is an unscrupulous liar who wrecked our economy.

TrevorsDen

'He actually knows something about economics'

Hilarious. Yes we know he has a degree. Shock horror.
But here is the man who was in the Treasury for 10 years.
The man behind the sale of gold
The man behind the removal of ACT
The man behind the tripartite system
The man who thought implementing 10p tax was a good idea ..
the man who thought repealing it was a good idea.

The man who talks a good game so well he totally fooled thicko part time historian Gordon Brown.

As for the rest - yes just insults because there is no argument - that was shot down in flames days ago.

But not only do we have a structural deficit these two bozos set in train the banking led casino games which created it. They relied on a boom in banking profits to fund long term spending (poorly targeted and wasteful) instead of treating it like a windfall and paying down debt. Even on top of taxing bank profits and bonuses they could not keep spending within limits even then.

Sir Everard Digby

Oh dear, FatBloke,only you could write several posts yet fail to appreciate the delicious irony within them which exposes you for what you are:

'....stop spouting CCHQ pish'

'You are so blinkered in your naked one dimensional world that every member of the Labour party is the same to you'

So you accuse others of exactly the same attitude which you exhibit?

I note you failure to take any of my many pieces of sound advice and frankly, I tire of you.

The only purpose you serve is to interrupt any form of discussion. A kind of virtual semi-colon in the wrong place.And a hypocritical one at that.

May I remind you that Ed Mandelaband said on Saturday he was on my side (did he mean we are all in this together?).......haven't you read the memo from HQ yet, or have you formed a breakaway group - Rotund Labour?

Simon Stephenson.

TrevorsDen : 12.02pm

"But not only do we have a structural deficit these two bozos set in train the banking led casino games which created it. They relied on a boom in banking profits to fund long term spending (poorly targeted and wasteful) instead of treating it like a windfall and paying down debt. Even on top of taxing bank profits and bonuses they could not keep spending within limits even then."

It's worse than this. They actually believed that the pre-crunch banking super-profits were real - that they were actual, never-to-be-taken-away wealth that had been created through the genius of flooding the economy with underpriced money. There appears not to have been the remotest thought that this was just an illusion worthy of Jasper Maskelyne. No one in the Brown/Balls/RedEd entourage seems to have given consideration to the possibility that part of these "profits" was created not by current genius and endeavour, but by under-accruing future costs, through adopting a ridiculously optimistic attitude to down-the-line risk.

So the story of the noughties is not of a brilliantly successful period followed by a debilitating slump, it is of a grossly overpraised period of activity, followed by a period somewhat less successful, but made to look much worse by the decision to treat the write-offs as current-year charges, rather than as prior-year adjustments.

Paul Marshall

balls can tell you the square root of the beans in the tin but sadly cannot work out how to open it

not the right man for any office of state

GDT

Paul Marshall,
beautifully put.

GDT

Fatbloke on tour

SimplesS @ 12.47

Crack shot my man.
One bullet both feet.

Any thoughts on today's banking margin?
Interesting to see how their profitability going forward will compare with the noughties.

Love the bit about cheap money, pity you didn't target the right people - how about the "Ken and Eddie Show" of 95-97?

Surely that was a level of politically motivated monetary policy that GB / EB / AD could only dream about?

Away and bile yer heid ya walloper.

Simon Stephenson.

Fatbloke on tour : 2.06pm

Before you fly off on any more tangents, how about some answers to the questions you appear not yet to have addressed:-

Which of Mr Balls' statements is incorrect? The Marr one, or the New Statesman one?

Where have all the cyclical surpluses of the early to mid-noughties gone? If any further evidence was needed, doesn't their non-appearance in the official statistics demonstrate once again that we were running a structural deficit pre-crunch? Just as Balls admitted last week, having previously spent at least 12 months denying it.

John Dubai

Fatbloke re your earlier comment, I do understand the proposed difference between current spending and investment spending, I just dispute your "calculations" as to what percent of the deficit was made up by each.

I hasten to add that one of the largest increases in spending which fuelled Brown's deficit was on public employment. You would doubtless account that as investment (human capital and all that). Problems is, when it comes to paying off debt, that doesn't count a monkey's, indeed, when you're inventing jobs with no real benefit (diversity officers, back office bureaucrats in the NHS Police etc.) there isn't even a human capital benefit. Public employees at best are cost neutral (i.e. they put back into the system what they cost) - however it is highly unlikely that all the money they are paid would go back into the system. So what kind of an investment strategy is to lose money? This is to say nothing of the fact that the initial cost for the public wage comes through taxation or borrowing. Don't forget that if it comes from borrowing, it adds to the interest we pay on the debt, so that's negative return. Balls' fiscal multiplier starting to look a bit weird, isn't it?

Fatbloke on tour

Bluey @ 11.12

Interesting point about commercial property.
From memory it was seen as a bit of a bubble that was going to be sore on those directly affected but was not mainstream enough to hurt the rest of the economy.

It was the shape of things to come.

However it was a much smaller issue in scale compared to the mortgage / sub prime hurricane from the US.

Fatbloke on tour

FiLtD'y John @ 2.23

When it comes to the split between current and investment spending the rules are all set out by the ONS. The figures I have been using are all in their documents.

Consequently not much room for arguments.

On the subject of the "Daily Mail specials", I fear that your laundry list covers very few actual people instead of the millions who actually do real jobs. Not an excuse not to squeeze the public sector on a regular basis to ensure service improvements just to caution that Sniffy's slash and burn will hurt and hurt hard.

Simon Stephenson.

No answers yet, Fatbloke?

And there was me thinking you may be a man, and not what I believe in your neck of the woods is known as a wee, sleekit, cow'rin', tim'rous beastie.

TrevorsDen

Diubai - All Browns 'investment' spending did was suck in overseas migrants and park hundreds of thousands of Brits on benefits.

John Dubai

Plenty of room given you don't deign to show how you apply the rules. Plenty of room given that the rules would have been drawn up by the treasury under Brown in any case. Plenty of room given that the OECD, the IFS, the World Bank and all the rest seem to come to a different conclusion. But I'm sure your calculations are more accurate.

Isolde

It's simple. The 'Smartest Man in the Room'
ballsed it all up.

HJ

Fatslob:

"Not an excuse not to squeeze the public sector on a regular basis to ensure service improvements just to caution that Sniffy's slash and burn will hurt and hurt hard."

Perhaps you could help us by providing the figures for the spending cuts which illustrate that they constitute "slash and burn"? Hard numbers please.

Victor Southern

I wish that I got paid by the word as FatBloke obviously does. Can the Unions afford such a prodigious output of bunkum? Can they do that just because they receive £10-million a year Modernisation Fund? FatBloke @10P a word must be absorbing a good chunk of that.

Then there is his alter ego Cameo Parkway Kid, another hireling dedicated to foul and abusive language.

No FB - I do not bundle all of Labour's 13 years into one - I lived every bloody sour and horrible moment of them. I remember every cabinet minister that had to resign, their apologies in the House, their subsequent antics, every Labour MP who was charged with criminal fraud, every Labour Lord hawking influence for cash. I remember the sale of our gold, the dissipation of the huge windfall from the sale of the 3G phone licences, the weapons of mass deception, Lord Mandelson holding as many posts as any politician ever has - simultaneously, the lies over immigration. Not a 13 years to gloss over.

TrevorsDen

Fair poijnt Mr HJ
In 2010 spending on welfare was 109 billion.
In 2012 its proposed as 116 billion.

Of course we have to remember that interest payments were 31 billion and will be 47 billion in 2012.
Thats Browns legacy to us.

2trueblue

Victor Southern. On the Fatbloke issue, absolutely right, too many words.

Simon Stephenson.

Fatbeastie

Still no answers??

Fatbloke on tour

SimpleS @ 12.00

Cut the crap, stop being lazy.
The answers are all there in my previous coments.

Just to recap, EB may have strayed from the correct answer adding a backward looking viewpoint in his latest comments but he a paragon of clarity compared to the alternative SpeccyLand viewpoint.

That is all over the place.

PH talks about IFS commenst in 2004/05. This is based on previous OECD comments.
When a figure is provided it relates to 2006.

These have nothing to do with the real question in all of this -

What was the situation with the UK deficit as the economy became affected by the Global Credit Crunch?

That to me is the situation in 2007/08.
Then we were running a surplus on the current spend and investing quite a lot.

The OECD / IMF / EU / Dog Boiler analysis falls down on a number of issues:

1) The look at it in only money terms.
To them borrowing to pay wages is the same as borrowing to invest.
That to me is wrong.

2) They offer no analysis on what part of the economic cycle 2007/08 relates to?

To me they seen to be worling on the false premise that beacause it has been a long time since the UK was in a recession we must be at the top or very near to the top of the economic cycle.

That to me is wrong, it is simplistic tripe that does not fully describe the situation in 2008.

GB's work meant that the UK missed the 2001 global recession but it did affect us.
There was also a slowdown in 2004/05 due to the previous increase in interest rates.

All of these things suggest that 2007/08 was part of the steady climb away from that trough.

The article was a CCHQ puff piece.
Poor quality as it generates more questions than answers.

Consequently use your Fenland poly education to learn or your secret will be out, you were in the Aristo finishing school half of that august institution and you did Land Economy because you could not cope with the rigours of Geography.

As for Sniffy and the Dog Boilers, love some of the stuff of debt coming out of the OBR.

He might be a media tart but he definately is becoming more subtle.

Sir Everard Digby

Ok FBoT. This can be simply settled by answering to questions:

What is Labour for when money is tight? The two Eds don't have an answer -do you?

Do you think public spending before the credit crunch was sustainable? Again the two Eds don't have an answer-what's yours?

GB/AD obviouly didn't either,given the levels of cut they were planning to implement had they been returned to power.

Fatbloke on tour

SED @ 12.47

I cannot answer for the 2 Eds but I do know that the AD / GB plan was much closer to reality than Sniffy's politically inspired slashathon.

I would start with manufacturing, criminally ignored by the Civil Service for 30 years.

Maggie took the hatchet to the privately owned manufacturing sector in 79-81 with her high pound / high interest rate policy.

She found financial services and financial engineering and the rate as you say is history.

There were stirrings in this area in 93-97 but it wass low pound inpired screwdriver plants specifically to lower unemployment.

PM showed what a bit of imagination could do but that was 18 months of effort after 11 years of laziness where the Civil Service attitude was accepted all too readily.

On the deficit, AD / GB had a plan and that plan was working. Even here though the effects of civil service orthodoxy and forecast bending was apparent.

The Dec 2009 deficit forecast will go down in history as Treasury wrecking of the highest order.

However the plan should be the starting point:

1) Deficit = Maxxed out at 11.1% of GDP.
2) 3.5% investment spend / 7.6% current spend.
Target was reduce it by half over 4 years.
Big point - Once the recovery had taken hold.
Booked in for Apr 2011.
Looking at cuts and tax rises of £82bill.
The going in position was £50bill of investment so lots of room to be flexible.
Q+D figures so very approximate.

Sniffy turns up and it is "Cuts, Cuts, Cuts" as he envisages an economic "Pearl Harbour". Economic vandalism of the higest order, dog boiler does political slashathon.

He highlights the spending deficit as a combination of the cyclical and the structural.

The OBR works the numbers to magic up a 4% output gap and a cyclical defict of 2.3%, both numbers 33% lower than the Treasury had worked up 3 months prevously.

Consequently he is looking at an 8.8% cut in the deficit to eliminate the structural deficit by Mar 2015, looking at £130bill of cuts and taxes by then.

Works out at £40bill more in cuts to public services and he delights in scaring the plebs fartless with talk of sackcloth and ashes for ever more.

The cuts are too far and too fast.
He has ruined the AD / GB recoivery.
His plans are economic fantasy, pure and simple.
He is a right wing mentalist on a mission.

Finally one example.
The police budget.
AD / GB worked up cuts of 12%.
Very tough but in-line with their deficit reduction plans and what was achievable after some squealing and shouting from the department.

Sniffy turns up and demands 20%.
Slash and burn done at the gallop to meet his political plan of suddenly finding tax cuts before the 2015 election.

AD / GB = 88% of current budget.
Sniffy = 80% of current budget.
AD/ GB would have provided a 10% increase in resources over what Sniffy is offering.

AD / GB thought about their plans.
Sniffy is just jumping over a cliff and hoping something will turn up.

He is a muppet.

Finally your second question:

Yes I think that the 2007/08 spending plns were sustainable. The plan was to increase spending by a real terms 1.8% over the medium term in an environment where the long term growth rate was 2.5-2.75%.

2006/07 - Current spending in surplus.
Investment covered by that surplus and the borrowing requirement.

2007/08 - Similar figures, slightly better.

Deficit = £30bill approx in cash terms
Looking at 2%'ish of GDP.

The global Credit Crunch was the biggest financial shock in 135 years, its scale and severity came straight out of left field.

No structural deficit going in but we do have one coming out in the medium term as the economy is up in the air and no-one is quite sure where all the pieces will land and in what state.

The Global Credit Crunch changed everything. The economy had a number of weaknesses in 2007/08 but the political debate was more about the future of inheritance tax than detailed plans to fix them.