Friday, December 14, 2007

An honest and damning appraisal of the credit crunch

Credit crunch signals permanent shift in power

In response to the credit crunch, caused by a prolonged period of freely available, cut-price debt, British, American, European, Canadian and Swiss central banks knew precisely what needed to be done: offer the market even more; pump liquidity into the system; hose it down with readies. In short, welcome back Easy Money.

Mervyn King warned against this approach back in August. Now it seems he's fine with it. Worried? We should be.

Posted by paul @ 02:37 PM (779 views)
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3 thoughts on “An honest and damning appraisal of the credit crunch

  • This is the most harsh article I’ve seen from the Telegraph.

    It sums up my views on the economy and post modern society. There are no suggestions for a cure to the hangover. Mmmn…

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  • Harsh, but fair. It was a good read. Everything seems to be pointing to a major recession except shares – The stock market whilst volatile of late seem to brush off all bad news. I seem to recall that before the Dot com bust people were saying “it can’t go on” but it did for quite a while but it went eventually.

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  • Reading through the comments on Telegraph’s website I can’t help feel that people misuse words like “bankrupt” and “going bust”. If a company goes bust then the creditors don’t get paid, the customers don’t get their orders, and the staff lose their jobs: the entire business just stops. However if an individual goes bankrupt, they continue to live! They can go on to work again and be active contributors to the economy. Likewise if a country defaults on its debts then the creditors don’t get paid, but people continue to live!

    In fact there are examples of countries worldwide that have defaulted on their debts and sprung back with greater vigour than ever! Russia (1998) and Argentina (2002) are obvious examples. Some people lost their jobs, but a lot more didn’t. The people continued to live and love and eat and drink and do most of the things they did before. Both countries recovered relatively quickly and are now booming. Neither country was overthrown by totalitarian regimes hell-bent on destroying every last vestige of their liberty. Perhaps once we’ve stopped chasing pound signs we can focus on fixing our country!

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