Thursday, 12 February 2009

Credit where credit's due

Can any of my wonderful 6 readers ask their undoubtedly highly intelligent friends if they know why it is that we are all getting so fixated on trying to get the banks to do their job, rather than feather their beds in a recession. Why doesn't the government cut them out of the equation and extend credit directly to citizens and businesses. If banks can't, or won't lend, then I think the time for gentle or not so gentle pursuasion is over. Bankers have brought us to this point, and their obstinance is seemingly perpetuating the woes of ordinary people and small businesses, who through no fault of their own, face ruin. The time for action has surely arrived. Either we must nationalise the banks, or the Government must, through some ingenious ruse (which I cannot describe as I know nothing, along with most economists, about these things), extend credit to those who need it. Money is all notional, after all. If you doubt me, just look at how a boom was generated which apparently made us all so much better off. It was a chimera. A house of cards. The money didn't really exist.

Which leads me to another thought. If the recession gets as bad as even Cabinet Ministers are now predicting, then we are looking at damage being done to the economy on an almost biblical scale. Let's imagine for a minute that a terrorist group, or a mafia organisation were able to have "taken out" several City banks, and caused even a tiny fraction, say one per cent, of the damage already done to the "real" economy in this recession. The Government would have passed emergency legislation, police and army units would have flooded the streets of central London. The nation would be up in arms at the audacity of such an attack and would be reeling due to the jobs (let alone lives) lost.

So now consider what has happened in the last two years. Yes, we're all culpable to some extent, through our collective myopia and greedy wishful thinking that such a boom and credit-based consumerist economic growth could continue ad infinitum. But the "Masters of the Universe" in high finance who wrought this economic destruction on us through their greed and recklessness were more to blame. It seems that the recession will wipe out four per cent of UK economic growth in just one year. How much will the recession take in total? Ten per cent? Fifteen. Twenty? Can you imagine if a terrorist organisation had managed to cause such a calamity? There would be mass outrage.

And I suspect that unless the political masters of the market systems of the West show, very rapidly, that they are able to bend this system back towards the interests of ordinary people, these very same people might start to express similar levels of outrage.

Ed Balls and any student of history knows that there are always political and social repercussions from economic calamities. Given that every prediction since summer 2007 has turned out to be far, far too optimistic, the time to get a grip on this crisis is suerly upon us now.

1 comment:

  1. Sadly since we live in a socialist country we are hampering the creative destruction of capitalism and as a result only the taxpayer and society will lose. At least Gordon Brown's true economic record is becoming apparent!


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