Ignoring an important cautionary tale

Shares

We all know the saying ‘if all your friends jumped off a bridge, would you too?’ But when it comes to the US and austerity, the question that needs to be asked is “If your closest friends jumped off a bridge and were visibly crippled, would you jump off the same bridge?

The question needs to be asked, because the UK recently lost its AAA credit rating from Moody’s. This is not a huge surprise – the US also has lost its perfect status. But what’s interesting is the justification Moody’s gave:

“”The main driver underpinning Moody’s decision to downgrade the UK’s government bond rating to AA1 is the increasing clarity that, despite considerable structural economic strengths, the UK’s economic growth will remain sluggish over the next few years due to the anticipated slow growth of the global economy and the drag on the UK economy,”

And the response of the government:

“”a stark reminder of the debt problems facing our country”.”

In other words, in the face of a double dip recession and a credit downgrade, the UK continues down a failed austerity path. Specifically, a path that actually CUT corporate taxes while raising the sales tax and slashing government spending. And yet the same mantra that sold them that failed bill of goods – ‘restore confidence of markets, lower taxes to create jobs’ – is still being repeated here. As we come up against another self-imposed ‘fiscal crisis’, we would be wise to learn from the example of the UK.

If you appreciate our efforts to hold Montana Republicans accountable and the independent journalism here at The Montana Post, please consider supporting our work with a small pledge.

About the author

The Polish Wolf

36
Leave a Reply

avatar
4 Comment threads
32 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
7 Comment authors
EricIngemar JohanssonSteve WThe Polish WolfJC Recent comment authors
  Subscribe  
Notify of
lizard19
Guest
lizard19

the washington consensus is for austerity. the people will pay for the global corruption of the ruling class. President Obama and congressional Democrats will go along with it, because their political lives depend on it.

Craig Moore
Guest
Craig Moore

The bubble of ideology pops when encountering the thorns of reality. The UK economy is sluggish with no light at the end of the tunnel. One of the drivers that is affecting people in general and business recovery is the cost of power. The UK has been moving away from coal and nuclear and has not replaced that power with similar cost alternatives. http://www.bbc.co.uk/news/business-21501878 The “failure” didn’t start with austerity measures. The problem was growing for decades with spending outstripping revenues. There has never been a payback that has arrested that trend. When people and business have less available income… Read more »

The Polish Wolf
Guest
The Polish Wolf

The US gets more power from renewable energy than Britain does. Germany gets over twice as much power from renewable sources. The bubble of ideologically convenient excuses pops when encountering the thorns of reality.

Craig Moore
Guest
Craig Moore

I could have sworn that your post is about the economic doldrums the UK finds itself experiencing. Since you brought up Germany, they have been pushing to close their nuke power plants. They went on a solar wind building binge and have discovered that the power is just too unreliable and expensive and doesn’t begin to make up for the volume loss by closing the nuke plants. Just last August the Germans brought on-line a new coal power plant near Cologne. And as I write this, they are building 23 other coal plant because they see a bleak future without… Read more »

JC
Guest

“a healthy economy relies on a plentiful, reliable supply of electricity at an affordable price” We’ll put this statement on the back burner and see how well it stacks up after our republican-led PSC terrorizes the populace deregulates electric markets in Montana. Craig, you got any evidence that the price of electricity is more a more important factor than austerity for the world’s economic doldrums? Or is it just talking point time again? And really, what difference does any talk about austerity or world economy make when the economy is going to be at the mercy of the climate for… Read more »

Craig Moore
Guest
Craig Moore

Define denier.

As to your claim of talking points, are you serious????? Visit North Korea some time. Energy is a commodity business with very little product differentiation. If the economical commodity doesn’t come to the user, then the user moves to access the commodity, provide the user is mobile. Businesses are mobile, not so much for people wedded to their homes and country. Do you understand why the Google server farms congregate out west near hydo? Without that affordable, dependable supply no internet for example.

JC
Guest

Talkin about having to get your panties in a twist to justify your talking points. As to Google being out west because of hydro, then why has Ma href-“http://www.apple.com/environment/renewable-energy/”>Apple built a state of art data center in NOrth Carolina, utilizing 124kWh of renewable energy (enough for 10,000 homes)? Anyways, amazing how fast you can shift the topic away from austerity. What’s going to happen to electricity prices when austerity dries up the U.S. economy, and sequestration puts a hamper on the ability of the gov to fund the BPA? Privatize the dams? Say sayonara to cheap power. Face it Craig,… Read more »

JC
Guest

lets try that link again:

Apple’s datacenter

Craig Moore
Guest
Craig Moore

You obviously don’t understand or just flatly refuse to understand my point. The UK is not going to get out of the economic doldrums without addressing power so that their businesses and citizens have affordable, stable, and plentiful supplies. Their present energy policy is only exacerbating the problem when their economy is in the dumpster. BTW, ever hear of ASEAN? Those nations see the value of energy being the lynchpin to their economic future. http://talkenergy.wordpress.com/2011/09/16/asean-economic-community-2015-integration-of-energy-infrastructure/ Energy is crucial to the transformation of ASEAN into a stable, secure, prosperous, rules-based, competitive, resilient and integrated economic community by 2015…

JC
Guest

“The UK is not going to get out of the economic doldrums without addressing power so that their businesses and citizens have affordable, stable, and plentiful supplies” You’re just painting a bogeyman to point to when the UK’s economy doesn’t improve. Here, I can do it, too: “The UK is not going to get out of the economic doldrums without redistribution policies that return wealth to the workers that created it.” And you refuse to acknowledge my point that your demands will result in reliance on carbon-based fuels, and the inevitable catastrophic changes to global climate. Where’s the water going… Read more »

Eric
Guest
Eric

JC – you do realize that energy in Montana has already been de-regulated since May 25, 1999, don’t you?

The Polish Wolf
Guest
The Polish Wolf

If you are going to blame Britain’s double-dip recession on renewable power, then we should find that the UK relies more on renewable power than countries that have not experienced such a recession. The opposite is true. However, the UK does compare quite well to other countries that have undergone austerity (Ireland, Greece, Latvia), and therefore it seems scientifically quite valid to assign responsibility to austerity, not renewable energy.

Craig Moore
Guest
Craig Moore

No, I am not blaming it solely on that. It is complex without a single factor. But continuing the downward deficit path is a driving factor. My point is that without addressing their power crisis they stand very little chance of making real gains to come out of the doldrums. Comparing the UK to other failing countries like Greece doesn’t lend much to the discussion other than there are competitors racing to the bottom.

Craig Moore
Guest
Craig Moore
JC
Guest

” My point is that without addressing their power crisis they stand very little chance of making real gains to come out of the doldrums. ”

Nothing a little central planning wouldn’t cure.

Steve W
Guest
Steve W

Craig, The piece is about the failure of austerity everywhere it’s been tried, and why the US shouldn’t follow the British proven failure of going over the austerity cliff. England petroleum production is falling rapidly, not because of green measures but because once it’s all been pumped, that’s what happens. Production falls. If they switched to green years ago they would be better off now. http://www.resilience.org/stories/2012-03-26/uk-oil-plummeting-production-vs-media-inattention. If the Brits hadn’t spent so much money on failed war and bailing out failed banks they would be doing fine. Just as we would. But the conservative ideologues screwed the pooch for everyone… Read more »

The Polish Wolf
Guest
The Polish Wolf

We’ll see, lizard. I’m less certain. I’m sure there will be cuts, but they will not match the depth of those in Britain, not even close. That’s my prediction, anyway. If for no other reason than that the wealthy in this country don’t want a double dip recession any more than the rest of us. Ultimately I would say that so long as we balance any social spending cuts with defense and security cuts, it’ll be almost worth it (though still not economically viable).

Steve W
Guest
Steve W

PW, I wonder how you have such a clear view into the minds of the rich people of this country. Do you know a lot of them personally? Or do you just assume that rich people also lose money during a recession? I imagine some do. And I imagine some people make far more money in a recession than during more normal times. Cheap property is great, if you have the capital to be able to buy it. For instance. From somebody who has to sell it cheap, quick. I didn’t see a whole lot of rich people decrying and… Read more »

lizard19
Guest
lizard19

corporate profits are doing splendid and the stock market is booming. does it matter that it’s all an illusion, and our economy continues to get hollowed out through corruption, predation, and reckless infusion of liquidity? most Americans are too strapped, tired, and dejected to really grapple with the systemic deceit that keeps this charade going. the wealthy don’t need to worry about shooting the US economy in the foot by keeping the true engine–consumer spending–from recovering. there are still emerging markets to exploit, and recessions/depressions definitely come with major economic opportunities if you’re properly connected. the shit going on behind… Read more »

The Polish Wolf
Guest
The Polish Wolf

Ha no, I do not have any contact with very wealthy people. But the fact is that corporate profits in the US, the stock market is healthy, and all of this is as a result of rising GDP. Austerity will most assuredly cause a fall in GDP, and not even the wealthy want that. Especially because a fall in US demand hurts all markets, so even highly diversified investors will lose money.

Ingemar Johansson
Guest
Ingemar Johansson

From Bloomberg, Jan 7th. Quote: “The starkest contrasts are Latvia and Greece, two small countries hit the worst by the crisis. They have pursued different policies, Latvia strict austerity, and Greece late and limited austerity. Latvia saw a sharp gross domestic product decline of 24 percent for two years, which was caused by an almost complete liquidity freeze in 2008. This necessitated the austerity that followed. Yet Latvia’s economy grew by 5.5 percent in 2011, and in 2012 it probably expanded by 5.3 percent, the highest growth in Europe, with a budget deficit of only 1.5 percent of GDP. Meanwhile,… Read more »

JC
Guest

Sure, let’s model the U.S. or U.K.’s economies after Latvia. NIce analogies.

Support Our Work!

Poll

What would be the most appropriate nickname for Matt Rosendale?

Follow Us on Twitter

Subscribe Via E-mail

0 /* ]]> */