Is that a fiscal cliff ahead in the distance?

[Admiral Yi]

Yes Shelf, but *why* did you think halving the deficit over one Parliament was the right pace?

[Neil]

Right now the lack of spending, and not lack of investment, is what's holding the economy back.

No, what's holding the economy back is that there has been a temporary plateau in terms of the large-scale improvement of productivity through technology, and they've already looted the sorts of things that they can easily get their hands on (real estate, pensions, etc).

[Sheilbh]

Yes Shelf, but *why* did you think halving the deficit over one Parliament was the right pace?

Because those were the options.  My opinion wasn't formed in a vacuum.  There were two parties fighting for my marginal constituency and those were their proposals.  There were multiple other reasons I didn't back the Tories - the local candidate, recapitalisation vote, etc.  But my choice was halving v complete elimination.  So my 'optimal deficit reduction theory' is shaped by the political debate and options in this country. 

More widely the deficit was too large, but national debt was roughly where we were in 1997 so it's manageable.  We weren't Greece and as long as we had the BofE weren't likely to turn into Greece.  There was a fragile recovery in 2009-2010 (since turned into double-dip recession) that needed to be supported, I was a big fan of Mandy as BIS Secretary.  We were recovering from a financial crisis which tends to have longer overhangs as individuals, banks and the private sector deleverages - so all of that meant I also supported Labour backloading fiscal consolidation into second half of Parliament.  I also thought Brown was a tank and the best man to be PM and Darling by some distance the most credible Chancellor. 

I think the Tories' way of making their argument and trying to politically insulate themselves from it was irresponsible - they repeatedly pointed to Greece and regularly said 'our entire way of life' would have to change.  That was nonsense and it put me off them even more.

[mongers]

Shelf, you've swung back again. 

[MadImmortalMan]

I think the Tories' way of making their argument and trying to politically insulate themselves from it was irresponsible - they repeatedly pointed to Greece and regularly said 'our entire way of life' would have to change.  That was nonsense and it put me off them even more.

Actually that sounds, as Sir Humphrey would put it, very courageous. 

[Sheilbh]

Shelf, you've swung back again. 

Really?  My fondness for Mandy's been unswerving

Actually that sounds, as Sir Humphrey would put it, very courageous. 

There were two phases, the first was just to make points and the second was to later be able to say 'see that wasn't so bad' or, if it was so bad, 'we warned you'.  During the election we were like Greece, after they were in office they started talking about how 'everyone's' lifestyle would change due to austerity etc.  Both were nonsense.  Both were political.  Both were harmless.

[mongers]

Shelf, you've swung back again. 

Really?  My fondness for Mandy's been unswerving

No, but you have been flirty with the Tories in recent months. 

What do you think of the unexpected UKIP charge in two of the three by-elections?

Myself I haven't seen any news reports of these.

[11B4V]

So what do you all think about the oncoming fiscal cliff?

What do you think of the Democrat position? The Republican one?

What sort of drama can we expect, and what's the ultimate outcome?

? #1; Nothing, we'll survive

? #2; Both retards

? #3; High Drama

[Sheilbh]

I don't think I've ever flirted with the Tories

I kind of like Clegg 

What do you think of the unexpected UKIP charge in two of the three by-elections?

Well tonight they were second in two of them.  In Rotherham the Lib Dems were in 8th place and the Tories were behind Labour, UKIP, the BNP and Respect

[mongers]

I don't think I've ever flirted with the Tories

I kind of like Clegg 

What do you think of the unexpected UKIP charge in two of the three by-elections?

Well tonight they were second in two of them.  In Rotherham the Lib Dems were in 8th place and the Tories were behind Labour, UKIP, the BNP and Respect

Hmm, maybe this should be split off into a separate UK politics thread ?

Surprising just how hard the kicking the electorate is giving the LibDems.

I'm slightly worried at how avowedly populist UKIP is becoming; policy just seems like a collection of prejudices.

[Sheilbh]

Maybe, if only to prove to Marti that we're still here.

I worry about the effect UKIP are having on the Tories, Blair mentioned it in the Q&A after his speech on Europe - 'sometimes decisions are taken at a moment in time, expressly and obviously. But political decisions can also be taken by effluxion, by a process that begins with an attitude, turns into a series of tactical steps driven by the attitude and then results in a decision that is strategic in effect but almost imperceptible in any one moment of time.  That is the risk now.'

I find it really, really mindboggling that the Tories have their most Eurosceptic PM ever, their most Eurosceptic Foreign Minister ever and want to renegotiate our membership, but it seems like the major problem the Tory grassroots have with their leadership is that they're too pro-European

[mongers]

Maybe, if only to prove to Marti that we're still here.

I worry about the effect UKIP are having on the Tories, Blair mentioned it in the Q&A after his speech on Europe - 'sometimes decisions are taken at a moment in time, expressly and obviously. But political decisions can also be taken by effluxion, by a process that begins with an attitude, turns into a series of tactical steps driven by the attitude and then results in a decision that is strategic in effect but almost imperceptible in any one moment of time.  That is the risk now.'

I find it really, really mindboggling that the Tories have their most Eurosceptic PM ever, their most Eurosceptic Foreign Minister ever and want to renegotiate our membership, but it seems like the major problem the Tory grassroots have with their leadership is that they're too pro-European

Indeed, Cameron tendency to policy making on the hoof, with an eye to what will look good in tomorrows papers is worrying, but then again that's was a major part of his previous 'profession'.

[Razgovory]

I guess I just don't get where you are coming from.

A person who just doesn't get where someone else is coming from doesn't conclude that they have contempt for themselves based on their statements.

Of course they can.  You can listen to an insane rant and hear a lot of invectives against certain people and conclude the speaker has something against that group without understand what exactly what speaker is on about.

[Richard Hakluyt]

My fear is that the next general election will see Labour get a huge Commons majority but with a pitiful percentage of the vote.

I voted Tory in the last election btw. They promised to scrap the proposed identity cards, which was good enough for me.

The speed of austerity is a tricky one, nobody really knows what would be the best pace. I would say though that a too dogmatic approach should be avoided. The world economy is unpredictable, if it does well we can maybe make our cuts quicker, if it does badly then we should probably slow down.

[The Minsky Moment]

I could take your and Joan's positions a little more seriously if you were deriving your position from some model of optimal deficit levels.

Don't want to repeat what Sheilbh said so I guess I'll just amke the same point in a different way. 
I'm not sure what kind of model you are looking for.
What I do know is the economy is still very weak and that a reduction of government dissaving is probably not going to be offset by dissaving by consumers (spending) or business (investment).  So big cuts in spending and big rises in tax now are likely to hit growth, and thus will not succeed in actually reducing the deficit by the degree hoped for.

Another way of saying the same thing from the POV of a widely accepted economic modelling construct is that under present conditions, the negative multiplier from austerity is likely to be relatively high (as the IMF recently posited) and thus going off the cliff at this time is likely to be 2 parts pain for every part deficit related gain.