Wednesday 3 November 2010

More Humble Pie, Mr President?

Can the coalition learn anything from the USA mid-terms? Probably not. The situations are different and the proposed solutions are different. President Obama is following the Gordon Brown method of fighting a recession by cutting rates and forcing growth into the economy, 1934 style. The Fed is going to buy its way out of the recession no matter what it costs. Just today..

The Fed says it will buy $600 billion of long-term government bonds by the middle of 2011 to further drive down rates on mortgages and other debt. This will be in addition to an expected $250 billion to $300 billion in purchases over the same period from reinvesting proceeds from its mortgage portfolio.

$900 billion more on top of the $1.7 trillion already spent. What are Republicans, who campaigned mostly successfully against an increase in spending, going to make of that? The USA has some different economic problems to the UK. Unemployment is high {9.2%} while inflation is low {1.14 av}. Interest rates are 0.25%. It does seem though, that like the UK, the USA is going to let their currency get weaker. There, as here, they will get a shock when the price rises finally come through. Retailers in the UK have been keeping prices down, taking margin cuts to do so. But the VAT rise and the cotton price {up 90% since 2009} and grain price {up 47%} is going to make that unlikely to continue. UK consumers, after Christmas, are going to be faced with some real price hikes.

No..All the coalition can really learn is something we said back in July about
Barack Obama
Its the economy. Its about the economy, and its also about the economy.
Everything else will just have to wait.
President Obama decided to do a lot of other things too. In just about every newspaper its reported the president was punished for not sorting the economy. There were also major concerns from voters about the horrific level of debt that the country was undertaking. That should be something that is more of a concern for Labour, who are not so worried about borrowing to buy jobs.

So Coalition..
Don't fight battles you don't need to or ideological wars that will distract you from fixing the mess. Watch the debt and talk up any economic successes at all times. And don't over promise.
No one will thank you for semi-fixing university funding, voting rights for prisoners or scrapping stupid police pledges to 'protect us from fear,' if there aren't new jobs and better prospects by 2013.
As we have said before, the Big Society is for a second, more prosperous term.
Coalition can, quite rightly, blame Labour for the mess they inherited. But they also have to do something about it.


Old BE said...

Disagree. Parliament doesn't need to spend its whole time talking about public spending and taxes. It can be reforming and liberalising in all sorts of other areas too. Mrs T's big mistake was to only start thinking about other reforms such as education when it was too late which meant a huge missed opportunity.

Blair also faffed for far too long before he started to think about what he might do in office. And he admitted that he regretted that long before he lost power.

Lots of people who helped the coalition parties into power were hacked off about things other than the economy. If they only do the unpopular bit of sorting the economy out some of those people, let's call them small "l" liberals who voted them in because they hated all the interfering nonsense that Labour did, might not bother next time.

Richard Manns said...

Also disagree, for similar reasons.

The momentum is now. It won't be in 2020, and all of the former Tory shadow ministers, at least, were purposefully given years to shadow and plan and learn.

They know they'd have little time. Even Blair had little time, and he piddled it against a wall. So let's do it now.

Obama's problem is not so much that he didn't focus upon the economy, it's that his solutions were failures. His only way out of admitting failure is to claim he didn't do enough, and you seem to implicitly accept that premise!

Let's do it all, and now, because soon, as Obama now knows, now becomes then.