Friday, April 27, 2012

Crafting the optimal budget

As we head to the reading of the budget, I am sure that there are some serious considerations to be made by the crafters. This has been exacerbated by what has been happening globally recently, not least of which are the revised downward projection of the Jamaican economy by the IMF and the fact that Europe seems to be falling apart, with the UK and Spain going into a double dip recession, and countries like Holland and France facing some serious challenges.

In addition the last US employment numbers show that they are not yet fully recovered and China's economy has been slowing.

These considerations are things to seriously consider as we craft our already late 2012/13 budget. It is quite possible that we may not have an IMF agreement finalized by the time the budget is read. The recent attempts to raise funds from the capital markets is also indicative of the realization that the only way we are going to craft a credible budget is accept the fact that we have to increase the debt stock, as my view is (an always been) that raising taxes is only a certain way to further sink the economy.

The fact that Europe seems to be going into another round of recession should come as no surprise, and I remember in 2010 when the UK announced its fiscal austerity measures that both Ralston Hyman and I were on radio saying that it was the wrong way to go and it would only serve to contract the economy further. At the time also we said that the new taxes that were imposed on the Jamaican economy and the cut back in capital expenditure, would also contract the Jamaican economy.

Both situations are really just a classic example of pro and anti Keynesian arguments. As far as I am concerned Keynes has won again and the US, being cognizant of the argument Keynes made after the 1930s depression, was careful to stimulate the economy rather than apply harsh fiscal austerity measures. The result is that it is going to take Europe a very long time to recover from this mistake, and in the process they may have retired the Euro.

As we go into the 2012/13 budget, the lessons from Europe, the US, and our own recent experience is clear, as Timothy Geitner said, we cannot grow the economy by contracting government expenditure. This argument that the private sector will jump in and take up the slack is one of the most flawed arguments I have heard coming from persons who are supposed to know better. If we go back to Economics 101 it tells you that private firms are motivated by profit.

Where there is no aggregate demand the possibility of profits are reduced, so you will find a very cautious approach from new entrants into the market. Where there are new entrants they will mostly be from small and micro businesses, which means that the time it will take for private firms to the void (without government stimulus - or fiscal contraction) will be longer than is needed. Even in the US where new businesses have a more immediate impact they still needed the stimulus funds to get their economy growing, and even so it is just grinding along.

The argument against stimulus for Jamaica is that we are heavily indebted and we were not generating surpluses prior to the recession. That argument sounds good if one is writing a text book. But when you are talking about the livelihood of people and the worst recession in our lifetime, then text book arguments just don't cut it alone. We need to be practical. I mean if I owe money, and at the same time I am dying of hunger, do I postpone eating because in order to do so I have to borrow. Or do I borrow to satisfy my hunger, and keep from dying, and then by eating I will have the ability to consider how to deal with the debt.

The fact is that because we have impractically convinced ourselves that we could not afford new debt we ended up causing the economy to contract. And this inability to face reality has not helped us because we have ended up having to go to the capital markets anyway for new debt. So what was the purpose of the argument against expending the debt. What we have to understand is that when we contract fiscal expenditure, causing a contraction in the economy, all we end up doing is increasing the debt/GDP ratio anyway, as GDP is not growing and the debt grows by virtue of interest costs.

So as we go into the new budget, even though it is going to be very tempting to continue our old ways of taxing to close the fiscal gap, we must change the way we approach fiscal policy by focusing on expanding the economy rather than the narrow focus of just closing the fiscal gap. As an accountant I know what it must be like to be faced with a cash flow crisis and want to do everything to solve that crisis immediately. However, the approach should not be just to focus on an immediate cash solution to the detriment of the future development.

I do not expect that it will be easy for the government, assisted by the technocrats, to craft this budget, but we will need to change the way we think about the solutions and employ a more strategic long term view. Within the context of our social and economic structure we have done well to keep the ship afloat but it is time to start sailing and not just stay afloat.

In my view the solution to the fiscal crisis lies in solving the balance of payments problem as well as ensuring that capital infrastructure work continues. Luckily for us these two avenues are open to us immediately, and the ministers in charge have been speaking about the right things to be done and seem to be moving ahead with the implementation. These are the energy and transport and works ministers.

If Paulwell has his way and can implement a greater use of renewable energy at home and get competitiveness in energy distribution then we can significantly positively impact the balance of payments through lower oil imports.

If Dr Davies can get the transport system properly organized, which means less traffic congestion and a better alternative to private motor vehicles he can also positively impact the balance of payments. Additionally, if he can get the infrastructure project rolling then this will provide much needed stimulus to the economy.

So as we approach the budget reading we need to bear these things in mind to ensure our long term development.

65 comments:

Anonymous said...

naturally like your web-site however you need to check the spelling on quite a few of your posts.

Several of them are rife with spelling issues and I in finding it very troublesome to tell the truth however I will certainly come
back again.

Here is my weblog ... perfect waist to hip ratio

Anonymous said...

Simply wish to say your article is as astonishing. The clarity
on your publish is just great and i can think you're a professional on this subject. Fine with your permission let me to seize your feed to keep updated with forthcoming post. Thank you a million and please keep up the enjoyable work.

Feel free to surf to my weblog :: how to lose weight

Anonymous said...

This site was... how do I say it? Relevant!! Finally I've found something which helped me. Thank you!

My web blog :: how much should i weigh chart

Anonymous said...

Good day! Would you mind if I share your blog with my zynga group?
There's a lot of people that I think would really appreciate your content. Please let me know. Cheers

My blog post; registry cleaner

Anonymous said...

An outstanding share! I have just forwarded this onto a friend who was conducting a little homework on this.

And he in fact bought me lunch because I found it for him.
.. lol. So allow me to reword this.... Thanks for the meal!

! But yeah, thanks for spending time to talk about this matter here on your website.



Also visit my homepage waist height ratio

Anonymous said...

My spouse and I stumbled over here from a different web address and
thought I might as well check things out. I like what I see so now i am following you.

Look forward to finding out about your web page yet again.


My web site: Diet Plans For women

Anonymous said...

What's Going down i am new to this, I stumbled upon this I've discovered
It absolutely useful and it has helped me out loads. I hope
to give a contribution & assist other users like its helped me.
Great job.

Here is my blog post: best registry cleaners

Anonymous said...

Pretty element of content. I just stumbled upon your weblog and
in accession capital to claim that I acquire actually loved account your blog posts.
Any way I will be subscribing in your augment and even I success you get
admission to consistently quickly.

Here is my webpage; microsoft registry cleaner

Anonymous said...

After I initially commented I seem to have clicked on the -Notify me when new comments
are added- checkbox and from now on every time a comment is added I recieve four emails with the same comment.
Is there a means you are able to remove me from that service?

Cheers!

Feel free to visit my webpage bmi for women Chart

Anonymous said...

Woah! I'm really enjoying the template/theme of this website. It's simple, yet effective.
A lot of times it's very difficult to get that "perfect balance" between user friendliness and appearance. I must say you have done a superb job with this. Also, the blog loads extremely fast for me on Internet explorer. Exceptional Blog!

Feel free to surf to my web page: waist height ratio

Anonymous said...

Currently it appears like Drupal is the preferred blogging platform available right now.
(from what I've read) Is that what you are using on your blog?

Also visit my homepage does raspberry ketones work

Anonymous said...

Quality content is the main to interest the users to go to see the web
page, that's what this website is providing.

My blog ... bmr calculator

Anonymous said...

My family every time say that I am killing my time here at net, except I know I am getting know-how daily by
reading such good articles.

Also visit my webpage ... basal metabolic rate calculator

Anonymous said...

Heya just wanted to give you a brief heads up and let you know
a few of the images aren't loading correctly. I'm not sure why
but I think its a linking issue. I've tried it in two different internet browsers and both show the same results.

Feel free to visit my blog post ... raspberry ketone

Anonymous said...

magnificent put up, very informative. I wonder why the opposite experts of this sector do not realize this.
You should proceed your writing. I'm confident, you have a great readers' base already!


Here is my homepage; how much should i weigh for my height

Anonymous said...

Hello to every body, it's my first visit of this weblog; this weblog carries amazing and truly fine data for visitors.

Stop by my web page; how much should i weigh

Anonymous said...

After looking over a handful of the blog posts on
your web page, I honestly like your way of blogging. I book-marked it
to my bookmark website list and will be checking back soon.
Please check out my website too and tell me your opinion.


my site Diet Plan

Anonymous said...

Do you mind if I quote a few of your articles as long as I provide credit and sources back to your website?
My website is in the very same area of interest as yours and my users would
truly benefit from some of the information you present here.
Please let me know if this ok with you. Thanks!


Here is my web site; rmr calculator

Anonymous said...

Greetings from Idaho! I'm bored to death at work so I decided to check out your site on my iphone during lunch break. I really like the information you provide here and can't wait to take
a look when I get home. I'm surprised at how fast your blog loaded on my phone .. I'm not even using WIFI, just 3G .

. Anyways, awesome blog!

Feel free to surf to my page - flight simulator games

Anonymous said...

Everyone loves what you guys are up too. This type
of clever work and reporting! Keep up the amazing works guys I've added you guys to our blogroll.

Review my web site: bankruptcy attorney florida

Anonymous said...

Good day! I know this is kinda off topic but I'd figured I'd ask.

Would you be interested in exchanging links or maybe guest authoring a blog article or vice-versa?
My website discusses a lot of the same subjects as yours and I believe we
could greatly benefit from each other. If you're interested feel free to shoot me an e-mail. I look forward to hearing from you! Wonderful blog by the way!

my blog :: healthy diet plans

Anonymous said...

Hey very interesting blog!

Also visit my web page: Raspberry ketone Plus Reviews

Anonymous said...

Hello, i think that i saw you visited my web site so i got here to go
back the desire?.I'm attempting to to find things to improve my site!I assume its ok to use a few of your ideas!!

Feel free to surf to my web blog best diet

Anonymous said...

This blog was... how do I say it? Relevant!! Finally I've found something which helped me. Appreciate it!

Feel free to surf to my web page; Best Diet

Anonymous said...

Hi there, this weekend is good for me, because this time i am reading
this wonderful informative piece of writing here at my home.


My page: calculate bmr

Anonymous said...

tag heuer outlet sydney has been around for an very extended time and you will
find countless designs to choose from. The suggestions below
could be used to begin selecting out tag heuer outlet online that's ideal for you.

Also visit my blog post ... buy tag watch

Anonymous said...

Howdy would you mind letting me know which webhost
you're utilizing? I've loaded your blog in 3 different internet browsers and I
must say this blog loads a lot quicker then most.
Can you suggest a good internet hosting provider at
a honest price? Cheers, I appreciate it!

my weblog: lose weight fast

Anonymous said...

Undeniably believe that that you said. Your
favorite justification seemed to be on the internet the easiest
factor to bear in mind of. I say to you,
I certainly get irked whilst folks think about concerns that they plainly don't realize about. You managed to hit the nail upon the top as smartly as defined out the whole thing without having side effect , folks could take a signal. Will likely be back to get more. Thank you

Review my weblog: diet that works

Anonymous said...

Hello, i think that i saw you visited my blog thus i came to “return the favor”.
I am trying to find things to improve my website!I suppose its ok to use a few
of your ideas!!

Also visit my blog post Buy 1285 muscle

Anonymous said...

It could be effectively worth your while to completely analysis any tag heuer outlet sawgrass to be able
to buy or promote. This makes it difficult to know where you should start.



Take a look at my site - tag heuer outlet orlando

Anonymous said...

Whether or not you have inherited tag heuer aquaracer automatic, obtained a piece as a present or bought a item
for oneself, you might be just a little puzzled about the specifics of
tag heuer aquaracer grande date.Where ought to you look when
it comes to discovering information on this standard
art kind? This article has some beneficial suggestions to assist you a more informed customer.


Take a look at my webpage ... tag heuer aquaracer 300m

Anonymous said...

It really is necessary to have a deep comprehending
of tag heuer link calibre 36 you're planning to purchase or promote it. This could make you wonder exactly where to begin.

Anonymous said...

Hi to every body, it's my first go to see of this website; this blog carries awesome and really excellent information in support of visitors.

Also visit my blog post: diets that work fast

Anonymous said...

I love what you guys are up too. This kind of clever work and exposure!
Keep up the terrific works guys I've you guys to blogroll.

my web page; click here

Anonymous said...

ӏ am in fact delighted to glance at thiѕ blog pοsts whiсh
consists of tonѕ of valuable facts, thаnks for proviԁing
thеsе data.

my blοg Low cost Lodge Bargains - Uncover wonderful resort prices whilst organizing the Correct reservations at the most effective resorts

Anonymous said...

continuously i used to read smaller posts which as well clear their motive, and that is also happening with this paragraph which I am reading at this time.



Here is my webpage ... What Should I Weigh

Anonymous said...

Hi, i think thаt і noticed you visited my ωebѕite
thus i got hегe to go bacκ the choοsе?
.Ӏ'm trying to to find things to enhance my website!I guess its adequate to use some of your ideas!!

my web page; Geneva Lodges - Low-priced Resorts For A Limited Spending plan

Anonymous said...

Very rapidly this web page will be famous amid all
blog people, due to it's nice articles

Here is my blog: Grow XL Review

Anonymous said...

Nice weblog right here! Additionally your site loads up very fast!
What web host are you using? Can I get your associate link to your host?

I want my web site loaded up as quickly as yours
lol

My web blog; Lift serum pro review

Anonymous said...

Hey There. I discovered your blog using msn.
That is a very smartly written article. I will
make sure to bookmark it and return to read extra of your helpful information.
Thanks for the post. I'll definitely return.

Also visit my web-site ... VItal Pro Collagen

Anonymous said...

Pretty! This has been an extremely wonderful post. Thank you for providing this information.


Feel free to visit my webpage ... how much should i weigh for my height and age

Anonymous said...

Hello, its good article on the topic of media print, we all be familiar with media is a
fantastic source of data.

Have a look at my web blog - weight by height and age

Anonymous said...

I'm very pleased to find this website. I wanted to thank you for ones time for this particularly wonderful read!! I definitely savored every part of it and I have you saved as a favorite to see new things on your website.

Feel free to surf to my page; how to determine your body mass index

Anonymous said...

That is really fascinating, You are an overly skilled blogger.
I've joined your rss feed and sit up for in quest of more of your wonderful post. Also, I have shared your site in my social networks

Also visit my blog post: Home Staging

Anonymous said...

Aρρreciate the гecommendation. Will tгy it out.



Нere is my homepage ... Common: Journey

Anonymous said...

You actually mаke it seеm so еasy wіth your presentаtion howevеr I
to find thiѕ topic to be actually something
whiсh I beliеve I'd by no means understand. It seems too complex and extremely large for me. I am having a look forward in your next submit, I will try to get the hold of it!

Here is my weblog: Lodge Discount (Hotels_Discount) on Twitting

Anonymous said...

ӏt's perfect time to make some plans for the future and it's time
to be happy. Ӏ've read this post and if I could I desire to suggest you few interesting things or tips. Perhaps you can write next articles referring to this article. I desire to read even more things about it!

Here is my web-site - Author's external home Page.
..

Anonymous said...

I геad this pieсe of writing fully regardіng the differenсe оf most recеnt and preсeding technologies,
it's amazing article.

Here is my page: Resorts at TravelSupermarket | Assess and guide cheap accommodations on-line - TravelSupermarket.com

Anonymous said...

Aѕkіng questionѕ are genuinely pleаsant
thing if you arе nοt unԁeгstandіng ѕomethіng entirely, but thіs post ρгovides good
understandіng even.

Alѕo vіsіt my blоg ... Thailand Phuket Motels

Anonymous said...

I almοѕt nеver соmment, but i did
some searching anԁ ωounԁ up
here "Crafting the optimal budget". Anԁ I actually ԁo have
2 quеstіоns for уou if it's allright. Is it simply me or does it look like some of the responses come across as if they are left by brain dead people? :-P And, if you are writing at additional online sites, I would like to keep up with anything fresh you have to post. Would you make a list of the complete urls of your social sites like your linkedin profile, Facebook page or twitter feed?

my web site: Resort Examine Prices - With Movie Bookmark You Are Ready To Help You Save And Embed Your Favored Films And Internet Websites Of The Net Effortlessly

Anonymous said...

I was recommended this blog by meanѕ of my cοusin.
I am not cеrtain whethеr thіs submit is
written via him as nobody else realize suсh pгecіse approхіmatеly my dіfficulty.
You arе wоnderful! Thank уou!

Feel free tо visіt my blog рost;
Find Leading Checklist of Vacation Directories

Anonymous said...

Heya! ӏ realіze thіs is kind of οff-topіc
but I haԁ to aѕk. Doеs operating
a ωеll-establіshеd wеbsite such as
yours take а lοt of woгk? І'm brand new to operating a blog but I do write in my diary on a daily basis. I'ԁ likе
to start a blog so Ι сan easily share
mу experіence and thοughts оnline.
Please lеt me know if you havе аny suggeѕtіonѕ oг tipѕ for new aspiring
blog ownerѕ. Τhankyou!

Mу ωеb pаgе: Common: travel

Anonymous said...

Hellо to every , bесause I am actually eageг οf reаding this webpagе's post to be updated daily. It consists of nice data.

my blog ... General: Journey

Anonymous said...

Ι know this ωeb page gives quаlіty bаsed
articles or reviews and othеr information, іs there any other web ρage which ρreѕеnts these kinds of
things in quality?

Feеl free to surf tο my webρage: Common: Vacation

Anonymous said...

I think everything posted made a lot of sense.
However, consider this, what if you wrote a catchier post title?
I am not suggesting your content isn't good, however suppose you added something that makes people want more? I mean "Crafting the optimal budget" is kinda boring. You might glance at Yahoo's front page and see how they
write news headlines to get people to click. You might try adding a video or
a related picture or two to get readers excited about everything've got to say. Just my opinion, it might make your posts a little bit more interesting.

Here is my webpage; raspberry ketone ultra slim

Anonymous said...

Excellent beat ! I would like to apprentice even as you amend your website, how can i subscribe for a blog
site? The account helped me a applicable deal. I were a little bit acquainted of this your
broadcast provided brilliant transparent concept

Look into my page: Pay day loans

Anonymous said...

If your relationship is escalating towards physical abuse.
If you are just faking your confidence and help repair your damaged emotions.
However, you can't how do i get a girlfriend by being yourself if" yourself" isn't great!
One of the twins was given pheromones to How Do I Get A Girlfriend, so you know exactly what
it reminded me of. Even after that, it's time to ditch your friends.

my webpage ... how to get girlfriend

Anonymous said...

Fastidious response in return of this query with firm arguments and describing the whole thing about that.


Review my site ... the Porn Reviews

Anonymous said...

If you want to get out and feel the pressure consolidation loans that can bring.
A person beseeching bankruptcy person loans will be offered
credit at consolidation loans very high interest rates ranging from 14% to
25%. Some lenders will accept stocks or bonds, or even expensive belongings
such as jewelry or electronics.

Check out my page; web site

Anonymous said...

I constantly emailed this blog post page to all my contacts, as if like to read it afterward my
contacts will too.

my web-site - Power Pump XL

Anonymous said...

Diminished or low sex desire and no sensation in female's genital region happens due to poor blood flow, medicines, lifestyle and diet. Open the windows, take a deep breath and let Spring enter your life! Social gathering are great because women there already are looking for a new relationship. Attention Women: Stop Settling for a Man who Can't Take Care of Himself
I have come to see things from a different room.

Also visit my blog post :: how to attract women tips

Anonymous said...

Women with how to attract women tips low self-esteem Women with a lot
of gourgeous women. Most men are not really taught any specifics on how to win back your ex.
After all, why do the same exact triggers of attraction.
You really can't go wrong with this as a birthday gift? And if he is not listening! It is a very useful as well as enjoyment.

my blog - how to attract beautiful women

Anonymous said...

Low Interest Rates This is important not only for student
credit cards with reward programs often have credit card debt consolidation loans higher rates than credit cards that are
offered by credit unions.

Here is my blog; bad credit consolidation loans

Anonymous said...

All you have to buy another policy. The current insurance
policy rating system also supports appealing savings and surcharges in particular
use of the feminine since the principal cars, with the cost of insurance each month.
You also need the convenience of being able to save some money on your auto insurance kalamazoo mi from an
affiliated car insurance provider with regards to the type of cover you require.

Anonymous said...

It is best to stay clear of deliberately looking to get really good looking women.

Ask her what her favorite chocolates are then stick to a
box of chocolates, or something. How else can a girl get to know her.
Men won't get tips to attract women bored of you.