I was slightly surprised by headline in the Institute of Chartered Accountants in England and Wales daily newsletter this morning. It read:
The ICAEW had engaged Oxford Economics, in whom I have never had much faith, to form this view.
But there was a caveat:
Recovery could still falter if lockdown is extended, a second wave of coronavirus triggers another lockdown, the long-term economic damage is worse than expected or government support is withdrawn too early. A collapse of UK-EU trade talks could also hamper recovery.
As caveats go that's as good as the audit report that says this company will be a going concern until it isn't.
The chance of any one of these events happening right now is, in my opinion, high. The chance of a rapid recovery from this crisis is, then, very low.
Why are people trying to delude themselves?
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Many of our public or quasi public institutions have been captured by the wrong sort of thinking, that making money must come before anything else.
The delusion is just a lie to stop panic in the markets isn’t it? We need the markets to pump their money in – no doubt because the Government we now realise is not willing to do enough (even though it could) because false alarms are going off about the so-called debt it will create.
It is a perfect storm of stupidity. Franks Zappa said that stupidity was the most plentiful substance in the universe (as opposed to hydrogen I think) and he was right. It’s pity he’s not still around, he would have made great albums about this and no doubt Trump too.
‘Trouble every day’ from the first Mothers of Invention album (1966), could have been written for 2020.
Well I’m about to get sick
From watchin’ my TV
Been checkin’ out the news
Until my eyeballs fail to see
I mean to say that every day
Is just another rotten mess
And when it’s gonna change, my friend
Is anybody’s guess
Here’s a 2019 update of it by She Drew The Gun
https://www.youtube.com/watch?v=VUklMnEO_yg
Economic recovery in the UK could indeed be very rapid….were it not for Coved 19 and if the chaos and uncertainty of impending Brexit was not looming….
But it would require us to have a government intent on doing things differently for the 21st century rather than pretending we can get back to business as usual eating the planet to maximise monetary profit.
I’d say the chances of rapid recovery are nearer to zero than just low. After all, this shambolic government hasn’t got us out of the aftermath of the banking crisis yet. (Unless you happen to be in the monied elite in which case Jim Callaghan’s ‘Crisis? What crisis’ seems to be the predominant sentiment.)
You’d have to have a heart of stone not to laugh at Oxford Economics caveat. Except it’s no laughing matter. With unemployment in the US heading towards 20% do we really think that as we leave the EU, probably without a deal, that we are going to escape?
The financialisation of the economy and the way it has infected government thinking will exact a heavy price.
Here’s a “global investment guru” who has a better grasp of reality, and is very worried about a new round of austerity –
https://www.heraldscotland.com/business_hq/18489353.boris-johnson-lovely-adviser-will-not-risk-public-spending-clampdown-global-investment-guru-declares/
So much so that he’s desperate for the UK Government to adopt the “MMT idea” –
Baillie Gifford partner James Anderson added: “When there is a crisis, people pick up the ideas that happen to be around. I do think that modern monetary theory and the like is an idea that happens to be around at the moment. It will be a very convenient one for many governments to adopt.”
Apart from some dodgy framing, he makes some sensible points – such a pity that he didn’t see the light and tell John McDonnell on his round of discussions with UK Business before the election.
Indeed…
“The chance of any one of these events happening right now is, in my opinion, high. ”
Five events. If they were 50/50 the chances of all 5 not happening is â€0.0000152587890625‬. I can see why you have a dim view of “economists” who describe such a probability as “likely.”
Thanks!
Earlier today on BBC News Gordon Brown was asked the usual question of how do we pay for this! His response was that, given the low level of interest rates at the moment, dealing with the deficit was not the issue. What was important was to get a recovery plan in place to get the economy going again. He was looking at this not just from a UK perspective but a coordinated global recovery plan involving the G20 – similar to what happened in the financial crisis back in 2008/09. Unfortunately I don’t think that in 2020 we have the leaders who are competent to make this work.
Not yet we haven’t
This is also what I think. There is a complete lack of good will and collaboration between nations, leaders are hunkered down with domestic issues particularly in the G7.
It’s money, and you can do anything with it if you have enough political will.