Martin Wolf has an article under the first part of the above title in the FT this morning, and as he notes:
What is to be done? To find an answer, listen to the markets. They are saying: borrow and spend, please. Yet those who profess faith in the magic of the markets are most determined to ignore the cry. The fiscal skies are falling, they insist.
I suspect twenty of those who insist the fiscal skies are falling are in the group demanding we cut the 50p tax rate this morning.
When the wind changes decisively, so should policy. And rarely has a financial and economic storm hit as rapidly as this summer.
Where there was a fine balance between a rather sickly supply side of the UK economy and tepid demand, the emerging evidence shows that Britain and other advanced economies are again in danger of spiralling into a vicious circle of waning confidence, contraction and banking stress.
If MPC members are willing to be bold enough to vote for QE2 now, the obvious way to signal their new intent would be to vote for the £50bn expansion of gilts purchases sought over the past 11 months by Adam Posen, an external MPC member.
Once QE2 is under way, the Bank should start to ask which other assets it should buy. The power of a central bank lies in its monopoly right to create and destroy money and nothing restricts it merely to purchasing gilts.
Kevin Daly of Goldman Sachs has suggested that QE2 could be more effective if the Bank aimed its asset purchases more directly at boosting demand. He suggested the purchase of commercial bank bonds, lowering the cost of their funding and giving them greater scope to ease the interest rates and credit constraints faced by households and small companies. The idea has merit, although subsidising financial intermediaries, which are still prone to use windfalls as an excuse to pay bonuses, would offend many.
Alternatively, the Bank could invest in government assets, providing a direct stimulus to investment. Having a motorway, Crossrail or some new school buildings on its balance sheet might fill Bank officials with horror. But if the outlook darkens further and deflation beckons, that would be far better than the alternatives.
It's good to see the argument for Green Quantitative Easing - that I made here some time ago - now being reflected by others.
Except it is now obvious that the time for this action has come. The lame excuses for inaction are now just that - lame excuses. We have an economy in crisis and we have needs that need to be met by making long term investment. When the price of bonds is so low then it's time to believe the markets and to use the funds they are offering to the government at what are really negative interest rates (yes, they're paying it to take the money) and use it for the common good.
Wouldn't any sane person do that?
Of course they would.
But George Osborne is refusing to do so.
Which does support the theory that he's actually trying to wreck the economy - and that the recession is all part of his plan to do so.