Friday, September 24, 2010

A touch of the Pollies*

The deeply tedious Labour leadership contest is not the only show in town; UKIP, too, are choosing a leader and the two candidates (as far as I can see) are Nigel Farage and economist Tim Congdon**.

I was reading through the latter's letter essay of intent, and something struck me, rather. This sentence...
If I am elected leader, UKIP will have the best economist in British politics.

... is followed, a little later, by this one...
The financial crisis in late 2008 came as a profound shock to me.

If Tim Congdon is the "best economist in British politics", one can only assume that the bar is set pretty low—there are plenty of people for whom the financial crisis did not come as "a profound shock".

Later on, this amazing economist explains that when the financial crisis hit, he...
... left UKIP in order to have more access to the top brass in the Conservative Party (and to some extent UK officialdom more generally) to argue for 'quantitative easing', among other things. QE was in fact adopted in early March 2009—and, I am happy to say, the economy recovered briskly.

Hmmm. I am not sure that having a leader who advocates inflating away your savings through a massive devaluation of the currency—which has, in any case, had almost no effect on the economy (except the previously mentioned increase in inflation)—is necessarily what sensible people want to see.

So maybe he'll win...

* After Polly Toynbee, who is well known for contradicting herself many times in the same article.

** I have recently done some paid work for Athena PR, which is representing Nigel Farage. But I can assure you that I am not particularly fussed who wins this contest—I was just struck by the inconsistency highlighted above.

8 comments:

Witterings From Witney said...

'Sok DK - methinks they are about to impload?

"http://witteringsfromwitney.blogspot.com/2010/09/ukip-go-to-war.html

Unfortunately, he says with heavy heart.

Clarissa said...

"If I am elected leader, UKIP will have the best economist in British politics."

Funny, I though that post belonged to Vince Cable...

/sarcam

MatGB said...

What Clarissa said. It's not like there was a shorag eof actual real economists predicting the collapse, or at least many large elements of it. And I doubt anyone knew the full extent of the bank futility.

I actually rate Farage quite a lot, bit of a nut (but, y'know, UKIP member), but definitely on the wing of the party that needs strengthening.

One point with QE though. I'm not a macroeconomist and, like many actually good microeconomists, make no pretense at understanding it that much, but wasn't the main effect to stop deflation rather than stoke inflation?

Inflation is up at the moment, but that's largely a result of increased import costs, the amount of money circulating collapsed due to the financial thingy, QE was a reaction to that trend.

Meh, like I said, not my game.

Congdon doesn't mention immigration in his essay, or anywhere else on his godawful site, so he's at least a step up from Pearson, but I suspect Farage has to be the man.

Devil's Kitchen said...

MatGB,

I agree (as is often the case) with almost everything that you say.

"One point with QE though. I'm not a macroeconomist and, like many actually good microeconomists, make no pretense at understanding it that much, but wasn't the main effect to stop deflation rather than stoke inflation?"

Yes, but there was no danger of deflation. With CPI inflation running at around 5% and RPI at near 9%, if would have taken a far bigger crash to bring about deflation.

And, as Burning Our Money has often pointed out, deflation is not necessarily a bad thing. Nominal prices drop? That's actually a good thing when you have a contraction of the money supply—it's what should happen.

But hey! I'm no economist either.

DK

Steven_L said...

I think QE was more about pinning interest rates down than anything else.

Most of the QE money seems to be stashed the banks BofE reserve accounts, it's just sitting there earning 0.5% per annum.

BofE action in the short term sterling markets is to provide liquidity and keep short term rates down.

The Credit Guarantee Scheme is to pin down the rates at which the banks could refinance their short term debt.

QE is more about long term rates. they are manipulating the yield curve because they think taht we need rock bottom interest rates.

If you ask me, there's no economic problem a good old hike in interest rates and a nice recession can't solve.

We'll be stuck like this for years and years now until some US president decides to bite the bullet and plunge the world into a proper recession.

Don't think they won't do it either - Reagan did.

Steven_L said...

The fact central banks all have amassed oodles of government bonds they can use to swipe money out of the system in the future should tell you something.

If they don't need it they could just forgive it no?

cuffleyburgers said...

Nah, QE was about Brown trying to buy an election with our grandchildren's cash - cynical and evil cunt

Anonymous said...

"I think QE was more about pinning interest rates down than anything else."

That’s exactly what it’s about

http://www.youtube.com/watch?v=sBUkEgHDnfc
Best explanation of QE yet (it’s also well worth following his daily economic news)