Why are those growth forecasts always wrong?

[David Johnson]

Greetings comrades. Here in the Johnson Madrassa for political correctness training and all things left wing, we have been discussing why the capitalist lackeys always seem to get their growth forecasts wrong.

No doubt you will have noticed that whenever the International Monetary Fund or the independent Office of Budget Responsibility in the UK issue a growth forecast for the UK, you can guarantee that it is going to be higher than what turns out in reality. And this has been the same for all those countries run by the right wing capitalist lackeys intent on forcing austerity on to their populations.

Now as we know in the UK, Diamond Dave and Ozzy have explained why the growth forecast has not materialised in reality. In a word it is Jonny Foreigner's fault. Or instead it was that bloke Gordon Brown who brought down Lehman's Bank, the US economy, the economies of the eurozone and Iceland etc etc. Instead of knuckling down to getting their economies going Jonny Foreigner has been concentrating on eating sauerkraut, drinking champagne, necking ouzo and fucking up our economy. Bastards!

But lo, the IMF has done a study of 20+ countries following austerity plans to try and work out why the resulting growth forecasts are almost invariably wrong.

And the simple answer is they buggered up the fiscal multipliers that the likes of the UK goverment are using. Fiscal multipliers are the formulas which say, if we reduce spending by a quid, what will that take out of growth. In the UK, Ozzy used a multiplier of ?1: 50p, so he reckoned if there was a reduction of ?1 in spending then 50p would be taken out of growth.

THe IMF has discovered that this formula is completely wrong and it is much likelier to be something like ?1: ?1 or ?1: ?1.50 which explains why the growth forecasts throughout euroland and the UK have been uniformly shite.

SO not only is Ozzy not reducing the deficit,

http://bgafd.co.uk/forum/read.php?f=3&i=261853&t=261853

nor has his economic management been brilliant

http://bgafd.co.uk/forum/read.php?f=3&i=261958&t=261958

but he is using completely incorrect formulas to predict the effect of his spending cuts on growth.

I can feel the economy "healing" already

[Porn Baron]

I stopped believing anything politicians and Mervyn King say a long time ago.

Why can't we have a common sense approach to our troubles like Iceland?

[David Johnson]

Well Iceland is a very different situation to the UK. In Iceland they had no alternative to letting the banks go kaput. There was no way the Icelandic government could have bailed out the banks even if they had wanted to.

Secondly, there have been loads of losers not only in Iceland but also those individuals from outside Iceland who had money in Icelandic banks. For example there are a significant numbers of people in EUropean countries that are going to lose their houses as a result of taking out equity release schemes with Landsbanki. The British government is currently taking Iceland to court for the money it had to spend to bail out people who had savings in Icelandic banks which Iceland refused to honour.

THirdly, many Icelanders took out loans in foreign currencies for their purchases e.g. Japanese yen. After the crash, the Icelandic kroner devalued about 40% which made their loans huge.

The Icelandic economy lost about 30% of its size which is even more than Greece has done so far and the government is bringing in huge spending cuts to deal with the collapse in the size of the economy.

[max_tranmere]

"Here in the Johnson Madrassa for political correctness training and all things left wing..."

You said it. lol.

[David Johnson]

There's always a place set aside for your good self, Max!

[Arginald Valleywater]

Lies, damned lies, statistics. Simples.

[David Johnson]

"Lies, damned lies, statistics. Simples."

In what sense..........precisely?

[jimslip]

David Johnson posed the question:

"Re: Why are those growth forecasts always wrong?"

Could it be because they are no longer massaged and doctored in the same way as they were under New Labour to make them always look favourable? Were they not massaged in the same way as were the figures highlighting the fall in standards of school leavers?

In a classic exercise in spin, that could have been lifted from the pages of Stalin's, "How to make everything look great when it is in fact SHITE!" handbook, New Labour simply made the exams easier! lol So they could then proclaim, "Look everyone, thanks to our policies, our schools are churning out thousands of kids with so many A ******** that we will have to create a new standard of "A DOUBLY EXCELLENT TRIPLE STAR PLUS" exam grade, to accommodate the sudden flood of geniuses! The fact that most of them can't read, spell or do simple maths will be brushed under the carpet and anyone who complains will be branded a, "Daily Mail reading elitist Tory Toff cunt!"

So now the result is this, thanks to New Labour and the dumbing down of the school results in the state sector, whilst the public schools continued to expect excellence in all their subjects, the outcome is now top management and executive positions in all areas are now packed with more toffs from the private schools than ever before.

As far as " growth forecasts" are concerned, all that is happening now is that we are seeing the world as it really is, ie SHITE and not through the eyes of some New Labour lying spin doctor sheister, who has presented us all with a turds disguised in gold wrapping!

[David Johnson]

"As far as " growth forecasts" are concerned, all that is happening now is that we are seeing the world as it really is, ie SHITE and not through the eyes of some New Labour lying spin doctor sheister, who has presented us all with a turds disguised in gold wrapping!"

You have completely missed the point, yet again.

What you are describing is why you think the actual growth is low NOT why it is so different from the forecast over the last few years. Even there you are talking nonsense. Independent groups like the IMF and a whole host of other finance groups have always brought out growth forecasts for the UK.

What you are not doing is explaining why these independent forecasts made by the IMF over the last few years have proved to be wrong in practice and have to be downgraded regularly.

That is the subject of the thread and I give my view as to why this has happened.