Chronically sick nation determined to learn nothing

Graham_Devon

Not going to be everyones cup of tea, however, if you have 5 minutes, it's (IMO) well worth reading.

One of my fav bits....

But there is a deeper issue here. Even assuming the Bank of England gets it right, all that happens is that we return to a fundamentally flawed model. The return of property inflation, asset bubbles, private equity deals and the whole big swinging !!!!!! culture that pervaded Britain back then does not signify real economic recovery: it is evidence of a deluded and chronically sick nation determined to learn nothing and forget everything from the crisis.

I don't know if this man has VI or whatever. I just thought it was a good "take stock" piece.

Cannon_Fodder

Is there a link to the full article, GD?

Graham_Devon

Cr*p!

http://www.guardian.co.uk/commentisfree/2009/aug/11/financial-crisis-recovery-bailout-labour

CLAPTON

bizarre article

I wonder if he knows what he is saying?

I would guess he was either drunk or did it for a bet that someone would take it seriously.

Although he is probably right about Labour not winning the next election.

Graham_Devon

CLAPTON wrote: »

bizarre article

I wonder if he knows what he is saying?

I would guess he was either drunk or did it for a bet that someone would take it seriously.

Although he is probably right about Labour not winning the next election.

Personally I think he does know what he's saying. It was all built on non real money.

Last year, for the second time, personal debt exceeded the entire nations GDP. That in itself says the money people are living on, is not real money. We can't actually afford the things we are buying.

Yet we seem intent on creating that euphoria again.

CLAPTON

just by way of example he says

'It was all there: an over-mighty financial sector that was too big to fail; a manufacturing sector in desperate need of some tender loving care; '

' Unlike Margaret Thatcher in the mid-1970s, Gordon Brown and Alistair Darling were not interested in fundamental reform, and, as a result, Labour's response to the crisis was managerial rather than ideological.'


Now many people view Thatchers fundamental reforms as directly creating that overmighty financial sector and destroying much of the manufacturing industry

Really2

Graham_Devon wrote: »

Personally I think he does know what he's saying. It was all built on non real money.

Last year, for the second time, personal debt exceeded the entire nations GDP. That in itself says the money people are living on, is not real money. We can't actually afford the things we are buying.

Yet we seem intent on creating that euphoria again.

If the debt is there it is real money all right. If it takes real money to pay it back it must be real.

Just because it exceeds GDP does not mean it is not real, it means credit as been over used.

kennyboy66_2

Graham_Devon wrote: »

Last year, for the second time, personal debt exceeded the entire nations GDP. That in itself says the money people are living on, is not real money. We can't actually afford the things we are buying.

.

I don't think thats actually true.

UK GDP in 2008 was about £1330 billion, I think personal debt (which would include mortgages) is a bit lower than that (£1240 bn ?)

However GDP is falling faster than personal debt so it certainly could be true for 2009. So maybe a minor quibble.

I don't think the BoE is trying to re-inflate the bubble, I think rather it is trying desparatly to let the air out slowly.

Share prices are significantly lower than 10 years ago, so difficult to argue that there is a bubble there.

If you read any of Larry Elliots pieces, I doubt you would want his cure (more regulation, higher taxation, restistribution of wealth, more government intervention).

Even for Guardian readers like myself, he is a bit of a lefty crank.

Always worth a read though.
Cheers.

tomstickland

CLAPTON wrote: »

just by way of example he says

'It was all there: an over-mighty financial sector that was too big to fail; a manufacturing sector in desperate need of some tender loving care; '

' Unlike Margaret Thatcher in the mid-1970s, Gordon Brown and Alistair Darling were not interested in fundamental reform, and, as a result, Labour's response to the crisis was managerial rather than ideological.'


Now many people view Thatchers fundamental reforms as directly creating that overmighty financial sector and destroying much of the manufacturing industry

Yes, and that agrees with what he said.

Graham_Devon

kennyboy66 wrote: »

I don't think thats actually true.

UK GDP in 2008 was about £1330 billion, I think personal debt (which would include mortgages) is a bit lower than that (£1240 bn ?)

http://www.independent.co.uk/news/business/news/personal-debt-in-uk-exceeds-gdp-for-second-year-905461.html
The total amount of UK personal debt has exceeded the country's entire GDP for the second year running.

According to the accountants Grant Thornton, the total amount of outstanding debt amassed through mortgages, loans and credit cards rose by 7.3 per cent to £1.44 trillion over the year to June 2008, up from £1.35 trillion the previous year. UK GDP is estimated to be £1.41 trillion, having increased by just 5.1 per cent in nominal terms over the past year.

ManAtHome

kennyboy66 wrote: »

UK GDP in 2008 was about £1330 billion, I think personal debt (which would include mortgages) is a bit lower than that (£1240 bn ?)

The debt figure there is just mortgages http://www.creditaction.org.uk/february-2009.html overall total was £1457 billion.

Total secured lending on dwellings at the end of December 2008 stood at £1,224bn. This has slowed further to 3.4% in the last 12 months.
Total consumer credit lending to individuals at the end of December 2008 was £233bn. This has continued to slow to 5.0% in the last 12 months.