Tuesday, July 13, 2010

And Speaking of The Stupidity of Austerity

From Bloomberg:

The planned squeeze in U.K. government spending increases the chance of the economy slipping back into recession, said Geoffrey Dicks, who heads economic forecasting at Britain’s new fiscal watchdog.

Responding to questions during a parliamentary hearing in London today, Dicks said measures proposed by Chancellor of the Exchequer George Osborne in the June 22 budget led his office to shave 0.5 percentage points from its growth forecast in the “near term,” increasing the chances the economy will shrink.

“There are some budget measures which will have reduced demand,” Dicks told the Treasury Committee, which scrutinizes economic policy. “The near-term outlook for GDP is not as good as it was before the budget. I still don’t think that will mean a double dip, but logically the chances of that happening have increased.

And therein lies the rub. He's using logic. That's what throws people off.