Tuesday, January 1, 2013
MPs and central bankers have the means but not the courage to solve the current economic malaise
In a rare press conference in 2007, I remember there was a suggestion from a journalist that rather than QE and credit loosening being the wisest option, fiscal tightening was the logical and prudent path. "You're not suggesting we raise interest rates are you?" was Mervyn King's precise answer. Fast forward to now and we should not pretend that the options presented for solving our economic malaise are pre-ordained - they are the result of carefully considered political strategies over economic ones. In exactly the same way as Mervyn King chose to get the teetotallers to pay for the party-hards' hangover medicines, so the zombie companies (and don't forget the zombie property assets, FT!) are political rather than economic outcomes.