Today's Peter Oborne article shows exactly why I said in an earlier post that the answer to our present financial problems was saving not spending. It's what Mrs.T and Lawson did in 1981. We were pretty much in the same position then as we are now - although now may be worse. Brian Boru took me to task and said that saving would drive us into a slump.
I didn't know this, but one of the 364 economists who signed the famously wrong letter was Mervyn King. Terrifying - but it explains why he is so far behind the curve all the time.
Saving will not drive us into a slump - it's a rising savings ratio that creates the conditions for expansion and posperity. Remember Germany, Japan, China, India and so on. Remember too that they all make things.
In the same way that the beginning of the bank's problems getting better will be when they finally reveal the true extent of their losses, so the pain a sharp contraction will inflict will be the lancing of the boil. It hurts, it hurts like hell - but it's the only way to get better.
2 comments:
GB has nothing to lose in bankrupting the country
ww- that's the problem....
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