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Labour Party Political Broadcast watch

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    I got a few more years of study to go ... I can be patient.
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    (Original post by Tednol)
    Tories, or the UKIP
    Don't set out too broad a stall!

    I thought the Conservative PPB was hilarious.
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    (Original post by Howard)
    Thatcher didn't really ban unions. They really became self defeating and collapsed on their own.

    As I remember, interest rates did hit 15% for a very brief period at about the time that Britain was forced out of the ERM.

    But most repos had more to do with negative equity than foreclosure induced by interest rates as such.

    There was a lot of voluntary reposessions. People had been remortgaging up the hilt for several years on the back of absurd house price appreciation and spending the money on goodies. Then suddenly, many people, with a 90% LTV ratio suddenly found themselves in negative equity when house prices slumped by 20%! A lot of folks simply sent their house keys back to the lenders.

    And of course, people won't learn will they. The same thing is happening in Britain (and the US) today.

    People are living the goodlife on the VISA and then remortgaging, some taking out a second mortage, or HELOC to pay it all back. They think house price inflation will soar at 20% forever. But it won't. And when it collapses all those folks owing 90% of the value of their property will be posting their keys back again!!
    So you're saying it wasn't the fault of the conservatives releasing huge amounts of money into the economy, causing huge price rises, which they had to stop by raising interest rates to rediculous rates? Just because they were like that temporarily, it's still an insane height, and the effect of a conservative policy.
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    (Original post by mik1a)
    So you're saying it wasn't the fault of the conservatives releasing huge amounts of money into the economy, causing huge price rises, which they had to stop by raising interest rates to rediculous rates? Just because they were like that temporarily, it's still an insane height, and the effect of a conservative policy.
    How did the conservatives release huge amounts of money into the economy?
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    The Lawson Budget, or so my economics techer tells us.
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    (Original post by mik1a)
    The Lawson Budget, or so my economics techer tells us.
    Well, I'm afraid your economics teacher is going to have to be a bit more forthecoming.

    How did Lawson's budget (indeed which budget? all of them?) saturate the economy with so much money? (I always thought the Tories spent less than Labour......that's a counter-inflationary policy isn't it?)
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    (Original post by Howard)
    Well, I'm afraid your economics teacher is going to have to be a bit more forthecoming.

    How did Lawson's budget (indeed which budget? all of them?) saturate the economy with so much money? (I always thought the Tories spent less than Labour......that's a counter-inflationary policy isn't it?)
    What happened during the Lawson boom was that the governmen predicted that economic growth was going to be higher, than it actually was (say 5% when potential was in reality only 2.5%). Lawson though he would be able to boost AD through government spending to a much higher amount than he actually could, hence his spending caused Demand to exceed Supply and hence caused a temporary boom period followed by high inflation and a crash.
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    (Original post by corey)
    What happened during the Lawson boom was that the governmen predicted that economic growth was going to be higher, than it actually was (say 5% when potential was in reality only 2.5%). Lawson though he would be able to boost AD through government spending to a much higher amount than he actually could, hence his spending caused Demand to exceed Supply and hence caused a temporary boom period followed by high inflation and a crash.
    What's "AD"?
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    Aggregate demand, ie the demand of the entire economy added, government spending, company, consumer spending, etc.
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    (Original post by mik1a)
    Aggregate demand, ie the demand of the entire economy added, government spending, company, consumer spending, etc.
    Thanks for that. Long time since I've studied economics so I'm a bit rusty I'm afraid.
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    (Original post by corey)
    What happened during the Lawson boom was that the governmen predicted that economic growth was going to be higher, than it actually was (say 5% when potential was in reality only 2.5%). Lawson though he would be able to boost AD through government spending to a much higher amount than he actually could, hence his spending caused Demand to exceed Supply and hence caused a temporary boom period followed by high inflation and a crash.
    So, let me get this striaght. Lawson sought to make up the shortfall in predicted AD by increasing spending in the public sector. Is that what we're saying?

    This caused the economy to overheat and so Lawson slammed on the brakes by increasing interest rates which led to the recession of the early 90's.

    Have I got that right? Is this your explanation for the recession and the housing market crash which accompanied it?

    I want to understand what you are telling me before I answer it.
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    (Original post by Howard)
    So, let me get this striaght. Lawson sought to make up the shortfall in predicted AD by increasing spending in the public sector. Is that what we're saying?

    This caused the economy to overheat and so Lawson slammed on the brakes by increasing interest rates which led to the recession of the early 90's.

    Have I got that right? Is this your explanation for the recession and the housing market crash which accompanied it?

    I want to understand what you are telling me before I answer it.
    The Treasury over predicted our economic growth (this is our increase in supply potential year upon year), which lead to Lawson thinking he could boost our actual economic growth (the actual amount of growth we have through demand) more than the economy could handle. This led to him putting money into the economy which made demand > supply, which led to a boom in the economy, and following this the crash (due to high inflation rates (10%+), unstrainablity of that growth etc etc.)
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    (Original post by Howard)
    So, let me get this striaght. Lawson sought to make up the shortfall in predicted AD by increasing spending in the public sector. Is that what we're saying?

    This caused the economy to overheat and so Lawson slammed on the brakes by increasing interest rates which led to the recession of the early 90's.

    Have I got that right? Is this your explanation for the recession and the housing market crash which accompanied it?

    I want to understand what you are telling me before I answer it.
    Yes, that's correct. And the high interest rates hit homeowners with variable mortgages very hard, banks repossessed houses and sold them, increasing supply even more. So Prices fell very low and there came the negative equity.
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    (Original post by mik1a)
    Yes, that's correct. And the high interest rates hit homeowners with variable mortgages very hard, banks repossessed houses and sold them, increasing supply even more. So Prices fell very low and there came the negative equity.
    This must be the first time I've ever heard anybody on this forum critisizing the Conservatives for spending too much money on public services!

    However, I'll come back on the rest when I've looked into it.
 
 
 
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