My guess is that Clegg-Laws-Huhne were always (privately) in favour of early cuts, but Vince was in charge of setting the LibDems’ stance on the economy and so had to go with the no-cuts-this-year thing. A coalition with the Tories allowed them to revert back to their original stance, but they desperately had to come up with excuses for this.

@1

Maybe, but while happily analysing what may have been going on behind the scenes you miss a very important point: This rejection of pre-election policies and promises on the grounds that the Coalition changes everything does nothing to counteract voter scepticism about politicians. Clegg is tying himself in knots trying to cover for the tory policies he’s having to justify.

As many said in the hiatus between the election and the formation of this government, this alliance with the tories will destroy the Lib Dems. About bloody time, too.

The line that leaps off the page is this:

“This is a confidence game then”

And that, put directly, is what it is. Confidence in the financial system is key. If all concerned are confident that they will be able to realise the value of their investments, all is well.

You fail to reproduce Gross’s next paragraph.

“Several months ago I rhetorically asked whether it was possible to get out of debt crisis by increasing debt. Yes – was the answer, but it was a qualified yes. Given that initial conditions were favorable – relative low debt as a % of GDP, with the ability to produce low/negative short-term policy rates and constructively direct fiscal deficit spending towards growth positive investments – a country could escape a debt deflation by creating more debt. But those countries are few – the U.S. among perhaps a handful that have that privilege, and investors, including PIMCO, have strong doubts about U.S. fiscal deficits leading to strong future growth rates.”

NB if there is one thing Gross is known for it is frequent changes of mind and (most obviously) always talking the PIMCO book.

I think the “confidence” he is referring to is confidence in the purchasing power of sterling, not confidence in “the system”. This relates to the “will the government inflate away debt” post a while back – he’s saying the UK govt can always “print money” to pay its debts. That might be easier that any option Greece has on the table, but it isn’t a panacea. Print too much and confidence in the future value of sterling falls (inflation expectations rise) and because bonds are mostly in nominal terms, bond investors would require higher interest rates. Which is an outcome the UK government might wish to avoid (especially if by that point the UK debt has swollen) but then again, it’s not the end of the world and I’d have thought not sufficiently bad to justify harsh austerity.

For all LC’s economics geek readers (which might be just me) here are some interesting ideas that quantity of money (printing money) isn’t as important in explaining inflation as some people think

The fiscal theory of the price level:
http://www.voxeu.org/index.php?q=node/4616
The quality of central bank assets:
http://andolfatto.blogspot.com/2010/07/money-and-inflation.html

@2
Yes, I think you’re right. If LibDems want to survive they need to make it obvious when they’re supporting something they disagree with for the sake of the coalition. Pretending to agree on everything is just making them look completely pointless. If it ever comes up, the marriage tax breaks will be a good one to try this out – but judging from the reaction to Clegg’s ‘illegal invasion’ comment, this might be quite difficult.

“the marriage tax breaks will be a good one to try this out – but judging from the reaction to Clegg’s ‘illegal invasion’ comment, this might be quite difficult.”

And who made it so difficult? The tory right who rabidly supported the war and Labour who should have supported him instead of cheap political point scoring and trying to pretend that their actions over Iraq were in any way justifiable.

I’m still not sure how you are standing up the allegation that Clegg lied or, as the headline has it, is ‘misleading us’.

Nothing Mervyn King says contradicts Clegg’s claim to have revised his opinion in the light of a conversation with the Governor.

King merely told the committee that he said nothing new to Clegg that he hadn’t said at his press conference three days earlier. Fine – since Clegg wasn’t at the press conference, his Saturday morning phone call was his first opportunity to hear the arguments from the horse’s mouth. And he found them compelling.

Nothing surprising or inconsistent there.

Certainly nothing to justify calling him a liar.

“Why does Nick Clegg keep misleading us about the economy?”

Because he is a CIA/MI5 plant.

They are now turning these robotic right wing machines out to infiltrate liberal parties and then move them to the right when they get elected.

Clinton, Blair, Obama, and Clegg are all right wing, corporate clones.

#9

Sally, are you claiming the CIA rigged the Liberal Democrat leadership election? If so, I’m sure Chris Huhne would be delighted to receive an evidence you have.

Today’s Guardian report shows conclusively that Nick C|egg lied – he admitted he changed his mind on the cuts before the election but continued to campaign against them. I hope everyone who said the Labour negotiating team lied when they said he made cuts a condition of a coalition deal with Labour now accepts they were wrong.

The chances that King has forgotten about the conversation is certainly not zero. Personally I think the old boy is getting a senile. His use of motoring metaphors as drivers of Bank policy at the Treasury Select Committee yesterday was just bizarre. He is in good company with Trichet at the ECB looking for confidence tooth fairies. At the Fed we have, Ben ( we could do more to prevent unemployment but we not going to. However, we might do something in the future) Bernanke currently not doing what he wrote a paper advising Japan to do.

Is there not a chance that clegg and most of his party’s leadership are actually just happy about the coalition deal?

I mean he keeps saying its a great deal. Both party leaders seem to share a small-state vision for Britain. Maybe, actually, the left-wing middle ground stuff before the election was just lies? It did seem sensible to pretend to be left-wing when Labour were on the ropes as that’s where the votes and seats would be. And stuff like the above seems like a pretty unconvincing sell compared to “sorry, we had to cede that one to the tories”.

Obviously this fits my long held bias that the libdems were never a left wing party but tended to pretend where there was an electoral advantage in it. However, maybe it turns out that its true.