It has been announced that the U.K. economy is going into the second dip of the 'double-dip recession that we are in. George Osbourne has always rejected this idea. I remember seeing Michael Moore (MM) on the Piers Morgan show. MM said that when he was young rich people could have their fancy houses and foreign holidays because they would invest some of their wealth in jobs. Now they are hanging on to it because they are worried that the recession would be longer and more severe than everyone had predicted (I am para-phrasing). George Osbourne has long said that a double dip recession is unlikely to happen. To explain the recent figures he has pointed the finger at the slow-down in the E.U. Zone as being responsible, as we cannot sell them our good and exporting has diminished. That may be a factor, but it is only one.
Looking at the figures put out recently shows that manufacturing has indeed slowed, but then so has construction. The second dip has been because George Osbourne has cut too far and too deep. Many public sector workers have lost their jobs and will not have the money to put an extension onto their houses or buy the goods that manufacturers produces. Many have consistently said that investment in the economy is the way out of this recession. Gordon Brown missed a trick when he was in charge. He put money into the banks to re-capitalise and said that this was the sort of thing that John Maynard Keanes would have advised. That does not correspond to the things that I have been told. J.M. Keanes would have said that the investment should have gone into infra-structure projects. That way there would be more people working, paying tax, buying new televisions, and having extensions built on the side of their houses.
The sad thing is that there is no guarantee that either scheme would have worked over the other, except that the Keansian view would at least have people working.
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