Blogging from the Highlands of Scotland until I return to the Murcia region of Spain in the Autumn for a month or so
'From fanaticism to barbarism is only one step' - Diderot

Thursday, 30 October 2008

What's really going on in the economy

I haven't written here for several days now and here's why. I'm just so depressed and worried. My view for a long time (since May 1997 at least) is that our Labour government would lead us, again, into economic disaster. Well, the obvious signs that this had happened first began to show up three or four years ago when the implications of the off-balance sheet items in the government's financing mechanisms started to show up big-time. Now we are told that the way out of this recession/depression we are just entering into is to SPEND, SPEND, SPEND our way out of trouble. We're also told that inflation is not the problem as deflation is and that inflation is going to trend down provided we just keep ploughing more money into failed companies. All this additional 'investment' is coming from two sources - borrowing and running the printing presses even faster. And yet we're told that inflation won't eventually take off big time? I just don't buy it.

Politicians don't want their electorates (not just in the UK, but over the whole of the western world) to realise just how badly their governments have messed up - and how much the electorates themselves have messed up by continuing to borrow increasingly large sums without the underlying income to ever pay it back. There may be a few individuals like me who have no debt, but we are in a vanishingly-small minority, unfortunately. So now the cry is to reduce interest rates to encourage more borrowing. I ask you, just how crazy is this?

I came across these two videos in the AngloAustria blog, they are interviews with a guy called Peter Schiff on the Bloomberg channel just a few days ago. Frankly I can't fault the man's logic at all; the man is not an 'alarmist', even if what he says is exceedingly alarming. Unfortunately my view is that he is simply telling it like it is. Pain cannot be put off forever; I think people need to realise that the sooner the debt-mountain cancer is lanced, the quicker economies can be rebuilt on a sounder basis - and trying to borrow our way out of trouble to put off the evil day is only going to prolong the agony for far longer, even if in the short term it seems to provide some relief. It's a lot like drug addiction; the really hard part is weaning people off the drug. The harsh truth is that real living standards in the western world have got to fall dramatically for most people for a while and that some won't make it through to the other side; naturally the politician who said such a thing would have no chance of being elected, because most voters are hopelessly addicted to the debt and borrowing drug. OK, now that I've cheered everybody up, please watch these videos:

Part 1



Part 2



Who amongst our politicians has the courage to get back to economic reality? Obviously not Brown, and unfortunately not Cameron, either. And, frankly, who can blame them with the myopia that afflicts most voters - although I believe strongly that if one of them stood up and told the truth for once they would be surprised how many people would be receptive to it.

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