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Proof That A Monkey With A Keyboard Can Type Economic Sense!

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by Professor David Blanchflower

Q IS the world on the verge of economic meltdown?

A MAYBE. The eurozone is in big ­trouble as leaders didn’t fix the crisis when it first arose in Greece and then spread to Ireland, Portugal, Spain and now Italy. Some people even think France is next. We will see if the latest Greek bailout will work, but past attempts all failed miserably. There is a further worry that the US seems unable to agree to raise its borrowing limit known as the debt ­ceiling. For the first time it may not be able to pay its bills and could be in default.

Q WHY are we in such a bad situation?

A BANKS lent too much and people took out crazy loans they couldn’t afford because they thought house prices would rise forever. When the housing bubble burst in the US in 2006, a financial panic started and spread around the world. The UK and US were hit hard ­because they had large financial ­sectors.

Q COULD it be even worse than the last downturn?

A THE downturn in 2008 and 2009 was enormous. The worry is the economy is stuck in the doldrums and we will have a decade of very low growth. But it could be much worse than that if there is a major financial crisis perhaps emanating from the Eurozone.


Q WHAT exactly is the problem in Greece?

A PUT simply, Greece has been ­spending more than it can afford. Greece is characterised by tax evasion and poor tax collection. Greece was bailed out before but this lowered growth and the markets raised the cost of borrowing to Greece, making it inevitable that the country would default. The problem is that if Greece defaulted, this would bring the whole 17-country eurozone tumbling down with it. That is why the German chancellor Angela Merkel and French president Nicolas Sarkozy stitched ­together a deal this week. It is a start but may not fix the problem in the long run.

They keep saying with the law of probabilities if you give a monkey a keyboard eventually you'll get the complete works of Shakepears, it would appear you will at some point get some good basic economic analysis.

I'm wondering if he was having a bit of an off day when he wrote this?

A whole article with no calls for low interest rates, more govt spending etc.... he's clearly not himself.

Edited by interestrateripoff
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