Comments on Obsolete: The perils of independence and progressive intentions.

You're not wrong at all! Take a look at this ...

2010-06-18T10:42:25.593+01:00

You're not wrong at all! Take a look at this from Chris Dillow:

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2010/06/what-structural-deficit.html

-Julia

Thanks for putting me straight. I would make the ...

2010-06-16T11:33:15.383+01:00

Thanks for putting me straight. I would make the excuse that it was late, but it just goes to show that you shouldn't attempt to write with such authority and criticise in such a high-handed manner when you're capable of such an elementary mistake yourself.

"because it bailed out the banks" This ...

2010-06-16T10:12:54.926+01:00

"because it bailed out the banks"

This is a factor, but it's a tiny amount of the deficit, as John B mentions.

The structural deficit - the bit that we would have had even if there had been no recession at all - is the problem.

- Julia

All of this would be easier to take if there was a...

2010-06-16T07:57:22.762+01:00

All of this would be easier to take if there was at least some recognition of exactly why the deficit is so large - not because of the irresponsibility of the last government as it increasingly being painted, but because it bailed out the banks

No, this is flat wrong, which is a shame because the rest of the piece is good stuff.

The bail-out of the banks caused a one-off rise in the national *debt*.

The *deficit*, ie the annual increase in the national debt, exists because tax revenue has fallen below expectations due to the recession, and because welfare spending has risen above expectations due to the recession. None of this is in any way connected to the bail-out of the banks.

The absolute size of the national debt isn't a big problem at the moment - even including the banks' liabilities, it's still well below most Western economies. The reason markets are a bit nervous (although not as nervous as right-wing commenters like to paint them) about UK government debt is because we have one of the largest deficits of any country.