>The catch in Brown's finances on which I would like comment is the PFI -
>the Private Finance Initiative. This morning Brown's Treasury can boast a
>surplus of 12 billion pounds (newsclip of a tall somewhat rotund Brown
>striding confidently across a courtyard). It has been suggested to me
>though, that the use of private finance under PFI (invented by the
previous
>government) is mortgaging the stock of new hospitals, schools etc, and
that
>is one of the ways Brown has been able to reduce the national debt.
>Laundering it.
>How true is this criticism? I am looking for comments that are not purely
>polemical.
So far, -------------- next part --------------
?9.2bn of PFI deals signed (although this looks more like ?3bn if you take out the Channel Tunnel Rail Link). PFI-style deals are also catching on elsewhere in Europe (particularly Spain).
The PFI is indeed a wonderful accounting dodge for the government (the public
finance equivalent of playing fast and loose with operating and finance leases)
In my view, the government was very lucky to have got such a lenient accounting treatment from the ASB, and I wouldn't be surprised if pressure had been applied.
Enrique Diaz-Alvarez wrote:
>Brad De Long wrote:
>>
>>
>> And if I had been writing the article, I would have focused on the
>> weaknesses: a bunch of European central bankers who seem absolutely
> >clueless about what their job is
>As opposed to our Bubblemeister, who knows exactly what his job is: keep
>the printing presses running 36 hours a day, maintain a "steady flow of
>capital to households", making sure they don't have to sell their stocks
>to pay off their credit cards, and do whatever he has to do keep the
>Bubble going until he retires; even going on TV to say that internet
>stocks are undervalued.
The Euro central banking crowd are far worse; pathological hard-money nuts who managed for ten years to take away the cycle of boom-and-bust by replacing it with permanent bust. However, I think Brad's not right to say that they're "absolutely clueless about what their job is". They just have a different view; rather than being part of the interest-rate Keynesian consensus, they are for the large part old-fashioned inflation nutters (Duisenberg, Issing, Tietmeyer) or monetary nationalists with an affection for a certain rate against the dollar for its own sake (Trichet).
On a related issue, what do folk think about Greenspan's decision to abandon the NAIRU as a policy tool? Does this mean that he's also given up on the output gap? Or just that this amazingly nasty piece of labour economics has now died a nasty death at the hand of its own predictive failure?
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