December 2022
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Um, sorry to come with bad news, but Britain hasn’t had its economic crisis yet – that comes in 2015

Apologies for 2 days’ silence, but I was travelling then jetlagged. Anyway, maybe it’s me that is mad, but as far as I can see, Britain hasn’t yet had its real economic crisis. I know virtually every journalist (especially the supposed “economic experts”) are all singing from the same hymn sheet – the 2007/8 banking crash was the worst since 1929: the recession that followed was due to the banking crash: it’s taking much longer for Britain (and other countries) to recover from the recession, eventually growth will return. But I don’t buy this story.

As far as I can see, there are two separate disasters that just happened to coincide. One was the realisation that the whole banking industry was virtually bankrupt because banks had been selling financial garbage to each other and to pension funds after having the rating agencies’ help to dress up the garbage to make it look like gold. Many bankers became multimillionaires and even billionaires. When all this blew up, credit was frozen, banks couldn’t get access to funding and some were rescued at taxpayers’ expense while a couple were allowed to fail.

But there was a separate disaster – for decades most Western governments have been spending around $120bn for every $100bn they took in taxes. Dickens’ Mr Micawber warned us where this policy would lead. Even without the corrupt bank crisis, the crisis due to government overspending would have crashed most economies at some point. The banking crash just accelerated the government overspending crisis. Greece is already paying the price – 25% unemployment (50% amongst the young), waves of bankruptcies, homelessness, family breakdowns, rising suicide rate, riots, drastic cuts in public-sector salaries, cuts in pensions and so on.

But with the British government desperately inventing money to buy its own debt, we haven’t yet had to face the result of our ever-increasing debt – rising interest rates, an ever larger proportion of taxes going to pay off interest on our debt, a loss in confidence, the collapse in sterling and the choice of either defaulting or else of horrendous spending cuts and tax increases. That will probably happen in 2015 when our debt hits 1.5 trillion pounds.

The only comfort we can take from the situation is that it will be the new chancellor’s, Ed Balls’, job to clean up the mess for which he along with economic incompetents Brown and Miliband are responsible.

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