Economics Teacher ConferenceEd ConwayJuly 2011
2No normal recessionfive years on…1930-1934, 5.23%1979-1983, 3.41%1990-1993, 9.91%2008-, -2.42%-8%-6%-4%-2%0%2%4%6%8%10%12...
3So real incomes are fallingSource: Office for National Statistics. Median hourly earnings excludingovertime for all emplo...
4Fiscal conservatism (I)Source: OECD
5Fiscal Conservatism (II)Source: Bank of England
6Fiscal Conservatism (III)Source: Institute for Fiscal Studies
7Monetary activism01002003004005006002007 2008 2009 2010 2011 2012 2013 Apr-13UKUSJapanEuro AreaSource: Bank of England
8What does £375bn buy youthese days?
91. A third of the gilts market0100,000200,000300,000400,000500,000600,000700,000800,000900,0002011…2011…2011…2011…2012…20...
102. Every single automobile in Britain (cost: £185bn)
113. Scotland
124. Some pennies
135. A present£14,423for every single householdin the UK
14Net results: 1. distributive impactgains for UK households from QE by income decileX axis measures change in household i...
152: UK housing market-40-20020406080Price-to-rent ratioOver-valuationUnder-valuation
163. Higher prices for other exclusive assets/services
174. Divided UK
18No global rebalancingSource: OECD
19No euro rebalancing (I)Unit labour costsSource: OECD90.0095.00100.00105.00110.00115.00120.00125.00130.00135.00140.002000...
20No euro rebalancing (II)Beer pricesSource: Eurostat90.0100.0110.0120.0130.0140.0150.0160.02000-01-012000-06-012000-11-01...
21Current account balances
Bretton Woods compared (I)World GDP(annual average%)World inflationGold Standard(1870-1913)1.3 0.6Interwar period(1925-39)...
Bretton Woods compared (II)Nationaldownturns (shareof period)Banking crises(per year)Gold Standard(1870-1913)19 1.3Interwa...
Bretton Woods compared (III)External defaults(no per year)Current accountimbalances(surplus + deficit)Gold Standard(1870-1...
25But the future is brighterPotential growth rates2012-17 2018-30 2031-50United States 2.0 2.1 1.7Japan 0.8 1.1 1.1Germany...
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Ed Conway Presentation to Tutor2u ETNC 2013

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  • FIVE YEARS ON. Deeper and longer lasting than any other recession in UK history. Depression. Recovered at 48 weeks – four years. 1990s – recovered after 32 months – about 2.5 years.
  • Amount of consolidation to get net debt down to 60% of GDP by 2030
  • Just over a third of the Government’s planned consolidationhas taken place so far.plans, most of the tax increases have taken place, whereasmost of the spending cuts are yet to come.
  • Spending cuts are getting more difficult
  • QE: The Biggest Experiment in modern economic history
  • Cost: £185bn – less than half its total QE outlay. Of course, that would create a slight problem, in that, well, no-one would be able to get anywhere, so the Bank could use the remaining £190bn to buy every single household in Britain a brand spanking new Volkswagen Fox. Which, of course, would also bolster UK-German relations, so good news all round.
  • According to Savills, the entire housing stock in Scotland is currently worth just over £300bn – so easily affordable. And, while we’re at it, it could use that remaining £75bn to buy up every property in Northern Ireland.If, for understandable reasons, Sir Mervyn was rather nervous about the constitutional implications of the Bank of England owning Scotland, he could, instead, buy up every property in the North West (£372bn), the North East (£124bn) or the West Midlands (£309bn), including Wolverhampton, where he grew up. London would be a bit too expensive, at £783bn, but the Bank could easily afford a few of the smartest boroughs: Kensington & Chelsea and the City of Westminster, perhaps (£128bn all-in).
  • The Bank could, if it so chose, decide to get the money minted up into £375bn of pennies. I’m not entirely clear why they’d want to do this, but nonetheless it would be so many coins that, if piled on top of each other, they would tower 57m kilometres high, enough to reach to Mars, on one of its closer orbits to the earth.
  • Ed Conway Presentation to Tutor2u ETNC 2013

    1. 1. Economics Teacher ConferenceEd ConwayJuly 2011
    2. 2. 2No normal recessionfive years on…1930-1934, 5.23%1979-1983, 3.41%1990-1993, 9.91%2008-, -2.42%-8%-6%-4%-2%0%2%4%6%8%10%12%0 6 12 18 24 30 36 42 48 54 60Source: NIESR
    3. 3. 3So real incomes are fallingSource: Office for National Statistics. Median hourly earnings excludingovertime for all employees10.0010.5011.0011.5012.0012.502002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012£ per hour
    4. 4. 4Fiscal conservatism (I)Source: OECD
    5. 5. 5Fiscal Conservatism (II)Source: Bank of England
    6. 6. 6Fiscal Conservatism (III)Source: Institute for Fiscal Studies
    7. 7. 7Monetary activism01002003004005006002007 2008 2009 2010 2011 2012 2013 Apr-13UKUSJapanEuro AreaSource: Bank of England
    8. 8. 8What does £375bn buy youthese days?
    9. 9. 91. A third of the gilts market0100,000200,000300,000400,000500,000600,000700,000800,000900,0002011…2011…2011…2011…2012…2012…2012…HouseholdsPrivate Non-FinancialcompaniesBank of EnglandOther FinancialInstitutionsInsuranceCompanies andPension fundsSource: Debt Management Office
    10. 10. 102. Every single automobile in Britain (cost: £185bn)
    11. 11. 113. Scotland
    12. 12. 124. Some pennies
    13. 13. 135. A present£14,423for every single householdin the UK
    14. 14. 14Net results: 1. distributive impactgains for UK households from QE by income decileX axis measures change in household income (£) Source: Bank ofEngland/Sky News
    15. 15. 152: UK housing market-40-20020406080Price-to-rent ratioOver-valuationUnder-valuation
    16. 16. 163. Higher prices for other exclusive assets/services
    17. 17. 174. Divided UK
    18. 18. 18No global rebalancingSource: OECD
    19. 19. 19No euro rebalancing (I)Unit labour costsSource: OECD90.0095.00100.00105.00110.00115.00120.00125.00130.00135.00140.002000-01-012000-05-012000-09-012001-01-012001-05-012001-09-012002-01-012002-05-012002-09-012003-01-012003-05-012003-09-012004-01-012004-05-012004-09-012005-01-012005-05-012005-09-012006-01-012006-05-012006-09-012007-01-012007-05-012007-09-012008-01-012008-05-012008-09-012009-01-012009-05-012009-09-012010-01-012010-05-012010-09-012011-01-01GermanyIrelandSpainFranceGreece
    20. 20. 20No euro rebalancing (II)Beer pricesSource: Eurostat90.0100.0110.0120.0130.0140.0150.0160.02000-01-012000-06-012000-11-012001-04-012001-09-012002-02-012002-07-012002-12-012003-05-012003-10-012004-03-012004-08-012005-01-012005-06-012005-11-012006-04-012006-09-012007-02-012007-07-012007-12-012008-05-012008-10-012009-03-012009-08-012010-01-012010-06-012010-11-012011-04-012011-09-012012-02-012012-07-012012-12-01GermanyIrelandSpainFranceGreece
    21. 21. 21Current account balances
    22. 22. Bretton Woods compared (I)World GDP(annual average%)World inflationGold Standard(1870-1913)1.3 0.6Interwar period(1925-39)1.2 0Bretton Woods(1948-72)2.8 3.3Current (1973-2008)1.8 4.8
    23. 23. Bretton Woods compared (II)Nationaldownturns (shareof period)Banking crises(per year)Gold Standard(1870-1913)19 1.3Interwar period(1925-39)27 2.1Bretton Woods(1948-72)4 0.1Current (1973-2008)13 2.6
    24. 24. Bretton Woods compared (III)External defaults(no per year)Current accountimbalances(surplus + deficit)Gold Standard(1870-1913)0.9 2.4Interwar period(1925-39)1.5 1.2Bretton Woods(1948-72)0.7 0.8Current (1973-2008)1.3 2.2
    25. 25. 25But the future is brighterPotential growth rates2012-17 2018-30 2031-50United States 2.0 2.1 1.7Japan 0.8 1.1 1.1Germany 1.2 0.9 0.7UnitedKingdom1.7 2.6 2.0France 1.5 2.3 1.4Italy 0.1 2.0 1.4Canada 2.0 2.2 1.9Source: OECD
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