Thursday, March 21, 2013

The worst deficit in the West

Take a look at the graph "The Worst Deficit in the West in 2015" (graph 4). Currently the deficit is a lot worse even than the 6% predicted then. I am reminded of the famous Eurocrat lament: "We all know what has to be done, it's just that we don't know how to be re-elected afterwards."

Matthew Parris wrote in The Times that the Chancellor's Budget presentation was like a man adjusting his suit and tie to make the very best impression. As we zoom out, we see that he's in a lift (elevator) and that the cable has snapped - he's plunging to his doom. Parris asks: why aren't we showing the necessary signs of panic and desperation?

Because the turkeys are still not voting for Christmas. Contempt for the Tory state of denial is pointless - they still have residual hopes of getting re-elected in 2015.
Homework question. At the moment the cable snaps, does the Chancellor still feel weight or is he instantly floating in free-fall?

Answer: At time equals zero, the cable is intact and the Chancellor feels weight. At any time t greater than zero, the cable is unattached and the Chancellor is in free-fall. So the onset of weightlessness is instantaneous.

In the real economy the process has been more gradual, but the eventual outcome will be not less painful.