Cameron/Osborne Would like a Do-over

24 Oct

Austerity will work…….. we’re sure it will.  Because it sounds very, very serious.

From Dr. Krugman today.

October 24, 2012, 9:06 am3 Comments

The Economic Consequences of Mr. Osborne

Schularick and Taylor have an update to their article on post-crisis economic performance. They previously showed that the United States is doing a bit better than one might have expected from the historical record. Now they show that the UK is doing significantly worse:

Their exegesis:

The pink range indicates the expected recovery path. As we noted in our original column, the US exceeds expectations here. The US growth path manages to emerge from and stay above the predicted range by years 3-4-5 (i.e. 2010–12). In contrast, the UK path is disappointing, and can’t really be called a recovery yet.

Even using the maximal measure of excess credit based on bank and shadow bank data to bias the forecast path down as far possible, it is still not possible to account for the UK’s dismal performance. The UK was on a similar path to the US in years 1-2 (2008–09), but falls well behind the US in years 3-4 (2010–2011), only to drop below the forecast range in year 5 (2012).

Future economic historians will debate whether US policy in recent years can take some credit for supporting the economy at a level above a range of plausible alternative paths. But the UK’s policy choices will not find refuge so easily, since there the output path has now diverged below what a wide range of plausible historical projections might excuse.

Gee, remember the enthusiasm with which the Cameron/Osborne turn to austerity was greeted by VSPs on both sides of the pond, with David Broder urging Obama to “do a Cameron”?


Posted by on October 24, 2012 in Economy, foreign affairs, Politics


2 responses to “Cameron/Osborne Would like a Do-over

  1. Mashed Potato Bulletin

    October 24, 2012 at 6:20 pm

    Great find! It’s analysis like these that really made me scream more than a couple of times during the debates when Obama would not defend his record.

    When Romney would say, “We’re on the road to Greece” I so wanted Obama throw back at him, “Okay, well let me ask you this, ‘If my policies are such a failure then why is it the US is one of only a very few western world countries NOT in, or on the verge of, a double-dip recession?'”

    I would love to hear Romney answer that one. We are one of the only ones not foundering on the edge and the GOP keep claiming Obama is a failure… give me a break.

  2. h2dog

    October 24, 2012 at 9:13 pm

    I wish Obama would be tougher. It’s needed, the monumental stupidity and mean self- interested people he has to deal with kind of demands it.
    That said, he’s had to put up with more blatant obstruction and attacks than you would think possible. So I cut him slack.
    But, if gets beaten up for being a “Chicago style” politician, he may as well at least act the part every once in a while.
    These republicans are junkyard dogs. You need to use a club,– not so much a pen.
    If you go to Krugman’s blog on a regular basis, you’ll find good information. You can tell he’s good by how much the wingnuts hate him.
    Romney is spineless. Rove and Grover Norquist will shape him like so much playdough if we’re unfortunate enough to see him win.


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