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tomandlu

Could Any Single Country Have Avoided It?

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For all of Brown's mismanagement, it seems to be the case that even genuinely prudent countries are in the sh1t.

Obviously, if all countries had realised earlier what was happening in the credit markets and responded appropriately, we would, presumably, not be in this mess.

However, as this wasn't the case, is there anything a single country could have done to protect themselves from the crisis?

China looks like the closest thing to a 'winner' in the long to medium term, but since a lot of the problems stem from China's actions*, it seems hard to point them out as 'protected' - more of a Typhoid Mary...

* i.e. lending us back the money we paid them for their stuff in order for us to buy more of their stuff.

Edited by tomandlu

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China have done very well out of this and one could argue they have been prudent, after all they have only seen a 2-3% decline in GDP yet are still in positive territory.

As noted above - however, they are partly responsible for the problem in the first place*.

* this is not a moral or ethical judgement, just a statement of fact

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China / India will not benefit they have huge structural problems which growth can only mask for so long.

Population is going to be a killer, both countries have around 2bn people a 1/3 of the world population just think what all those consumers will do to inflation.

China / India long term are totally screwed and don't have a sustainable economic plan.

That's not to say medium term the next 10 - 30 years they won't be profitable but beyond that they will hit the economic wall hard.

This century globally is going to be very tough.

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However, as this wasn't the case, is there anything a single country could have done to protect themselves from the crisis?

The housing bubble could have been dealt with through legislation a lot earlier, and that would have avoided a lot of our problems. Labour could have pissed a lot less money up the wall and kept a bit back - remember, they actually ran a surplus for two years before going spend-crazy. Yes, it wouldn't have made us immune, but given the choice between a recession without a massive existing debt burden and one with, I know which looks "better".

To say "it's global and no-one's immune" is to simplify the whole thing to the point of banality. Think of it in terms of car crashes - would you rather be shunted off the road and into a brick wall at 30mph by some looney doing 70mph, or would smashing into a concrete pillar at 70mph while mowing down innocent drivers be preferable?

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However, as this wasn't the case, is there anything a single country could have done to protect themselves from the crisis?

Easy, just limit mortgage multiples and LTVs to limit the opportunity to leverage and increase debt.

Try Eric if he has any ideas :)

VMR.

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