Carol Wilcox, a regular commentator on this blog, has the following letter in the Financial Times this morning:
From Ms Carol Wilcox.
Sir, Two years ago in this newspaper Gillian Tett (“Recovery not as easy as U, V, W”, May 29 2009) conjectured that the recovery would look like the shorthand sign for “bank” (right). And look what has happened: a sharp downturn caused by the global financial crisis, followed by a gentle upturn when the Labour government introduced some useful stimulus and now a period of flatlining, which presumably will last until the coalition's Plan A is abandoned.
Carol Wilcox,
Highcliffe, Dorset, UK
Looks like Gillian Tett was right.
And Carol is right to point it out - there, and to draw it to my attention.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Yes, excellent stuff from Carol, Richard. What a strange coincidence that the symbol that captures the UK’s current economic mess (sorry, state) is ‘bank’.
It was actually printed on 19th May.
Genius!
Well done Carol.
In what way did the “stimulus” help recovery? In what way was it “useful”? The countries which did not try neo-Keynsian nonsense are recovering best. The US which stimulated itself the most is stuck with rising real unemployment.
As for plan A, it would work if they had the courage to actually follow it. They have not actually reduced government spending at all, and the small cuts they have made to the increases have been more than swallowed by stupid, illegal attempts to shore up the Euro and an equally stupid though legal bilateral loan to Ireland.
I;’m talking Keynes
Not neo-Keynes
Note the neo- that’s neoliberalism
Get things right please
And Keynes worked – look what Labour managed after the crash and what Osborne is failing to deliver
Less dogma and more analysis would help you
Ireland after the crash of 2008 followed IMF austerity measures to the letter. Result? That country was left almost bankrupt and given a large bailout with conditions attached to said bailout so draconian, they haven’t a hope of actually paying it off. Neo-liberalism worked brilliantly for them, didn’t it?
Meanwhile, China has done the polar opposite of austerity, and has become the biggest economic power on earth. In 2002, Argentina defaulted in IMF measures that were killing their country and, within six months, their country started to recover.
Neo-liberalism doesn’t work…..never has done!
Ireland also had the same problem as the UK and USA, spending too much in the good times, however it was in the Euro and is a tiny country which had a huge banking bubble (largely due to the Euro).
Ireland is not comparable to the UK or US. It is closer to Iceland in the nature of crisis. Its imminent bankruptcy only shows the folly of bailouts, by comparison. The banking crisis was far greater as a proportion of GDP than the UK or USA. Ireland has been bankrupted by the EU forcing on them a bailout, forcing them to rescue their banks to save (largely German) bond holders and to save the Euro which had helped cause this disaster, with the liability going to Irish taxpayers at terrible interest rates. This was a despicable act by corrupt EU officials probably carried out to scare Spain into an austerity programme.
China is an unknown. No-one knows what is happening, as the dishonest government is the only source of information. State control also means that production need not be economically viable to be carried out (many stories told of factories stockpiling unwanted goods during 2009, though they are hard to verify). You can say is that its economic structure is fundamentally different from the US or UK, with low-cost, low-skill labour, that totalitarianism has an effect on economic performance and on the currency, and that Chinese expansion that has happened has occurred in response to liberalisation.
Argentina makes a case for Portugal, Greece and others. We should not try to rescue something that is unrecoverable, but default will always cause long-term harm. Argentina would have been better not to have been put in a position to default, but when it was in that position default was the lesser of two evils. It is a shame Southern Europe cannot learn those lessons.
“Ireland also had the same problem as the UK and USA, spending too much in the good times”
No – it was caused by a speculative bubble in housing (a common denominator as a cause of economic crashes all around the world) and the government, to its shame, largely appeared to turn a blind eye to it. They followed an austerity programme after the 2008 crash and it ended up nearly making the country bankrupt.
“China is an unknown. No-one knows what is happening, as the dishonest government is the only source of information. State control also means that production need not be economically viable to be carried out “
But their production IS economically viable! They have previously reached production levels of 8 per cent annually – a phenomenal acheivement. You can’t maintain growth at that pace for very long if what you are doing is not “economically viable”!
“and that Chinese expansion that has happened has occurred in response to liberalisation.”
And they achieved that expansion by doing the polar opposite of what we are doing! The USA continues to decline, Europe is in severe crisis and the UK’s growth is non-existant! China spends – and their economy booms; The USA, the UK and Europe follow austerity measures and continue to decline. In fact, countries in South America and India, who have invested, are all doing better in growth terms than we are.
I think there’s a clear message there!