I had a series of depressing meetings yesterday, the overall conclusion of all of them being that double dip recession, or depression, is certain.
But the most interesting incite was about the reason for the Tory hurry to rebalance the economy in such haste when it is so obvious that massive damage will result. Apparently this reflects a widely held view in Tory and banking circles that the next major financial crisis is in 2014 and the government’s books have to be back in shape by then to ensure we can bail out the banks at that time.
There are two problems with this analysis. First the crisis will have happened well before then. 2012 seems likely after deflation emerges next year and asset values collapse. Second, if that’s really the concern then it’s the banks who need to suffer now, not the rest of us.
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Very interesting, Richard. My assumption was that the ConDems are cutting as quickly as possible because they think they can get the economic pain out of the way well before the next election in 2015 and they can fight the election with the economy on an upward track – which worked for the Tories in 1983 and 1987 (although there were several other factors then to be sure.) I think even this is optimistic; the cuts won’t really kick in until 2011 and then the resulting economic devestation will probably mean the economy is at best anaemic by 2015. If there is another financial crisis in 2012 or 2014 then of course things could be much worse than that even. If the Tories think there will be a financial crisis in 2014 that’s unfortunate timing for them as it could be very close to the general election… they should remember what happened to George W Bush in 2008. Of course this means that the next Labour government will most likely inherit a complete mess on the economy.
Truly frightening.
Unless General Galtieri stirs from his grave, they’re a one term government. This is no doubt explains their warming to PR, it certainly saved the Scottish Parliament Tories from extinction.
The hurry is to rebalance the economy in the favour of their class, avant le (prochain) deluge.
To get as much of the real economy held in the public sector into private hands.
“Apparently this reflects a widely held view in Tory and banking circles that the next major financial crisis is in 2014 and the government’s books have to be back in shape by then to ensure we can bail out the banks at that time.”
Any of the numerous right wing trolls who turn up on this blog care to refute this? And what does this say about the morality, ability and judgement of the tories and the bankers? They want to crucify the rest of the country so that they can keep pursuing their failed neoliberal economic model? These people are insane.
I think we need a source for the “widely held view”. Has anyone seen it discussed elsewhere?
@Colman Stephenson
Sorry, sometimes one can’t reveals one’s sources
This is one such occasion
Let’s just say I’ve been in Westminster a lot of late and met over 40 MPs and quite a lot of other people with interest in this issue as well who have led me to this line of thinking
It was also outlined by Will Hutton in The Observer two weeks ago.