We all know that the economy is badly screwed. And this isn’t just some country-specific problem, it’s economic buggery on a global scale, thanks to the wonders of a joined-up international banking system run by people who thought they were a lot smarter than they actually were. “Gold rushes” always collapse eventually, it’s just that in this case the gold rush knew no national boundaries and when it ended, everyone is left with a hangover, even (or perhaps even especially) the people that didn’t benefit stratospherically from the good times.
Another week, another plan to stimulate the economy from the UK government. I actually think what they’re doing this week is pretty sensible, which basically means an insurance / underwriting scheme dependent on mandated lending to individuals and small businesses. But I think today is actually less about this individual step, and more about the fact that most commentators are in agreement that if this doesn’t work, ie doesn’t restart the flow of credit to sound lenders, then it’s going to lead to pretty much a wholesale nationalisation of the banking sector in the UK.
I generally don’t have a lot of time for politicians. I’m of the opinion that a large number of those who actively pursue political power are also the ones least suitable to wield it, and that even the few that enter the halls of power with the best of ideals will have most of them eroded away within a few years, or be largely marginalised. I live in a jurisdiction which has leaned towards a conservative approach to government for decades (our island has it’s own government, separate from the UK).
I blogged a few months ago about my concern regarding the precedents being set by the Northern Rock and Bear Stearns debacles - that investment bankers and city executives can take outrageous risks, bag huge bonuses and get into a situation that for the sake of the economy, the government has to step in and sort it out. If only that had been the end of it; I don’t think anyone really thought it was, but since then things have really gone south.