Britain's Economy Is a Disaster and Nobody Is Entirely Sure Why

[Admiral Yi]

1930 and 2008 look too like on the graph

It's no accident this era of zero growth has coincided with an era of austerity. Despite entering office with borrowing costs at 50-year lows, the Cameron coalition decided the government deficit, and not the growth deficit, was the chief threat to future prosperity. It raised taxes and cut the growth of spending, but did so with little regard for what constituted smart cuts and what did not.

Just mayyybeeeeee a small part of the reason could be here ne?

A small part of the reason for falling productivity?  Feel free to make the case.  I don't see it.

[HVC]

Canada has only a few major banks and is one of the most regulated industries, yet the came it fine. It's not regulations or competition per se, it's greed. Banks wanted profit so the loop holed regulations and made dubious investments for greater return.

The bank bosses should have been removed and black listed as part of the bail outs. Without fear of consequence nothing will change.

[Valmy]

Canada has only a few major banks and is one of the most regulated industries, yet the came it fine.

Huh?  That was not the point.  The point is when you have just a few major banks so if something were to happen to one or two of those banks you would have to bail them out because there are so few of them.  Too big to fail.  Not that every single time you have lots of regulation and just a few major actors a failure will occur every other month.

It's not regulations or competition per se, it's greed

Wait are you saying that all economic disasters occur because of greed and incompetence or bad luck or whatever else cannot cause a bank failure?  Come on.  It may be greed but it is not like moral failure is the cause of 100% of every single bank failure of all time, please.  And besides this is a bank, if you do not make money for the bank you are working for you are going to lose your job to somebody who can.

This is silly as the right wingers insisting that low regulations and taxes will lead to uninterrupted economic prosperity and growth 100% of the time!  No other economic factors have any impact on the economy it seems.

[HVC]

Not 100% of all bank failures. Just the most recent ones

[Tamas]

just as this guy pointed out, trying to fight human nature instead of trying to harness it is stupid. Especially since "fighting greed" apparently involves giving insane power and money (at their disposal) to politicans. no personal greed there, no sir.

[derspiess]

just as this guy pointed out, trying to fight human nature instead of trying to harness it is stupid. Especially since "fighting greed" apparently involves giving insane power and money (at their disposal) to politicans. no personal greed there, no sir.

No shit.  I'd trust whatever is behind door #3 before I'd trust Barney Frank and Chris Dodd.

[Admiral Yi]

just as this guy pointed out, trying to fight human nature instead of trying to harness it is stupid. Especially since "fighting greed" apparently involves giving insane power and money (at their disposal) to politicans. no personal greed there, no sir.

Bank regulation is a necessity because of the central role deposit money banks play in the creation of money, and money supply's effect on the macro economy.  Regulation is also necessary to prevent a disconnect between the risk/reward of government-insured deposits and the risk/reward of retail lending.

[crazy canuck]

Canada has only a few major banks and is one of the most regulated industries, yet the came it fine. It's not regulations or competition per se, it's greed. Banks wanted profit so the loop holed regulations and made dubious investments for greater return.

The bank bosses should have been removed and black listed as part of the bail outs. Without fear of consequence nothing will change.

Actually I think Canada makes his case for him - at least in part.

Yes we have few Chartered banks but we have many many smaller lenders and credit unions.  You may recall that in the 90s the banks put on a large lobbying effort to change the regulations to allow them to amalgamate in order to grow bigger.  The argument they used at the time was that they needed to be bigger to compete against the US banks.  One of the smart things Martin did was shut that down completely.

Therefore our banks never actually got too big to fail.  Any one of them could have gone under (and iirc one of them did lose a lot of money in the US market) but that would not have had an adverse affect on our economy because of all of the other lenders we have that are not tied to the big banks.  Capital would still have been readily available.

Of course that is where Hannon does make a bit of a blunder.  Not all regulation is costly so that it drives out competition.  In the case of Canada regulation allows the smaller lenders to thrive.

[Barrister]

Canada has only a few major banks and is one of the most regulated industries, yet the came it fine. It's not regulations or competition per se, it's greed. Banks wanted profit so the loop holed regulations and made dubious investments for greater return.

The bank bosses should have been removed and black listed as part of the bail outs. Without fear of consequence nothing will change.

Canadian bankers are less greedy than their US or UK counterparts?

[Josquius]

1930 and 2008 look too like on the graph

It's no accident this era of zero growth has coincided with an era of austerity. Despite entering office with borrowing costs at 50-year lows, the Cameron coalition decided the government deficit, and not the growth deficit, was the chief threat to future prosperity. It raised taxes and cut the growth of spending, but did so with little regard for what constituted smart cuts and what did not.

Just mayyybeeeeee a small part of the reason could be here ne?

A small part of the reason for falling productivity?  Feel free to make the case.  I don't see it.

huh?
no. the crappy economy

[The Minsky Moment]

The thread title is a little confusing. 
It's not a big mystery why the UK economy is lousy - the mystery is the sharp dip in the productivity numbers.

[Admiral Yi]

huh?
no. the crappy economy

Well that part is not exactly the riddle of the sphinx Squeeze. 

[Josquius]

huh?
no. the crappy economy

Well that part is not exactly the riddle of the sphinx Squeeze. 

yet the obvious question was asked despite an obvious answer being right there

[Admiral Yi]

yet the obvious question was asked despite an obvious answer being right there

Did you read the article?

[Iormlund]

The whole 'too much regulation' mantra reeks of ideology-driven bullshit. The problem is not the quantity of regulation. Is whether it is good or bad and how it is enforced.