Earlier we wrote about the fact that UK austerity, and the negative effects that it’s having on the economy, is starting to seep into to the mainstream of thought. Lots of people are starting to see that the cuts are hurting consumer spending and GDP.Some people seem upset that we’re even acknowledging this point.
Here’s a comment on our earlier post:
“Austerity is painful and negative to the economy.”
Austerity means just paying what you eat. Joe as a parasitic leech he is, thinks everything should be for free, a permanent nanny state.
We can understand why this discussion bothers people so much. If you’re of the free market mindset, and think developed world debt poses a huge crisis, then pointing out that cutting spending and shrinking government has negative ramifications might seem to undermine your stance.
Here’s the thing… we’re pretty agnostic on what the UK (or the US) should do. Our opinion isn’t going to change anything too much, and frankly, nobody needs another opinion on the spending question. The only thing we’re interested in is cause and effect, because if you’re an investor that’s what you want to know.
Is the UK doing the “right” thing? Who cares. Leave that up to academics. What matters is what they are doing, and the effect that has. And right now, we’re starting to see clear effects of what they’re doing (Or maybe not! It’s possible the correlation-causation in what we wrote is totally wrong, in which case, that’s a legitimate grounds for attack.)
The bottom line: Don’t let your economic or political worldview cloud your analysis. If you think austerity is smart long term, that’s dandy, but don’t let that cloud the realisation that things may also be bad int he short term.