Google Analytics

Wednesday, February 26

26th Feb - UK's "Austerity Miracle"

Kalle Isokallio wrote a piece where he praised the deep budget cuts of United Kingdom and how the country has left the financial crisis far behind and is growing at a healthy rate.

He forgets the Bank of England's massive bond buying programme - buying government bonds, aka quantitative easing.

He forgets the massive fiscal spending the government did, running way beyond of what has seen in European crisis countries.

He forgets the Bank of England's massive "funding-for-lending"-programme, where the central bank offered commercial banks cheap loans as long as the money was further loaned to households.

Most importantly, he forgets the 30% depreciation of the British Pound against the euro - which could be called an intentional devaluation.

A knowledgeable and rational person might conclude that having your own currency and independent central bank fully capable and willing to go wild with alternative monetary policies, or a government not having to care about some stupid Maastricht debt/GDP or budget deficit / GDP limits had something to do with making the recovery happen.

But not Kalle. To him, it was the austerity that brought the recovery. Never mind that the economy recovered BEFORE the austerity measures had even begun.

Kalle, get your shit sorted. If you don't know, ask.You're a valuable source of information for many people.