This is from the FT on 13 August:
As the article said:
The man behind Jeremy Corbyn's most eye-catching economic policy says the Labour leadership hopeful's plan will only work if there is another economic crisis – but adds there is almost certainly going to be one.
Richard Murphy, a prominent advocate of people's QE, told the Financial Times the idea works only if the current government's plan fails badly. “People's QE is necessary only if George Osborne's plan comes off the rails pretty fast, which it almost certainly will,” he said. “There is a significant risk of another recession.”
Some predictions take less time than you expect to show signs of coming true.
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Oh there will be another recession, another banking crash in fact, probably within about 18 months. The so-called ‘recovery’ of the last two years has been fuelled by renewed personal debt, while wages have been somewhat stagnant. Most of the debts are due to be paid back over the next year or so, and loads of the debtors are bound to default in a short space of time.
Brace yourself around February 2017, I reckon.
“The so-called ‘recovery’ of the last two years has been fuelled by renewed personal debt, while wages have been somewhat stagnant. ”
True, but Osborne also played an astute, if utterly detrimental, trick by releasing into play all the money that has been locked up in pension pots. Unsurprisingly, that has lead to a bit of a “mini-boom” although what he thinks the erstwhile owners of said pots are going to do for funds for the rest of their lives, God alone knows.
Never has the rather crude but funny line “he hasn’t a pot to piss in nor a window to throw it out of” been more apt.
Beware of Osborne. He has the knack of talking tough but totally failing to deliver, for example on deficit reduction, and getting away with it politically. He may not be as stupid as he looks and will do what he needs to in order to achieve the other ideological goals such as getting as many public assets into private hands as he can whilst maintaining a certain level of stimulus for the economy.
. . . . and getting himself into No 10 – which is his top priority.
Samuelson famously quipped that the Wall Street indices had predicted nine of the last five recessions…
Agreed. Your plans are too important to allow them to be tarred by association with what may yet prove to be a premature economic crisis prediction.
I really doubt this. Corporates may spend their cash pile and Osbourne will likely not deliver on his “deficit targets.”
As Ann Pettifor has pointed out in ‘Just Money’, the financial system has integrated the idea of repeated crises into it’s neo-liberal perspective and will justify it along the TINA lines of dodgy reasoning. The financial system is largely about rent extraction/bail out(in)/further rent extraction-as long as this cycle continues unopposed (by a narcoleptic public) it will be seen as acceptable .
I don’t think this is ‘The Crash’ that everyone’s known would come since the 2008 mess was shoved under the carpet instead of being properly cleaned up. What’s going on now is just reaction to China falling apart. I don’t think it’s the same issue. I mean, it’s not Lehmann 2, is it? This isn’t dodgy deals bringing the system down, this is China all too predictably running out of road. Different issue. But you may differ 🙂
It’s not ‘the crash’
It’s ‘a crash’
And it will ripple far and wide
All too true.
I was talking to a family member at the weekend who had been a very successful director of an education and children’s service – she was widely respected in her field and I’d call her smart. But her disparagement of ‘Corbynomics’ was woeful – all based on the fact that she equated running the country with the running of her former department!
And when I asked about the alternative that could be put forward she basically had nothing to say. As I think Adam Curtis has noted – we know that something is wrong but too many people (especially those in politics and power) have NO answer.
When Thatcher said she was out to change the way people think, she meant it and she basically succeeded. Too many of us have swallowed the neo-lib pill whole and believe in TINA.
And I go back to the idea of disaster capitalism – the fact is that markets LOVE financial crises because it means that they pick assets up at low prices.
As Richard has said elsewhere we need to keep calm and carry on. Maybe the tipping point is closer than we think?
It’s happening again, Obviously it was business as usual after 2008 even the media admit that it looks as if its heading for another crash un yet no-one will take responsibility and the fall out will once again hit the little people. How dare they say that Corbynism wont work when clearly the current alternative is a car crash.
One concern I have is that the market that is suffering the worst – China – is the market which is subject to the most state intervention, whilst the “free market” economies are doing much better and their stock markets are up today. (Peston was suggesting China would do better to be more “free market” in his latest article.)
I was wondering whether you thought China’s efforts were the wrong kind of State building programmes and the wrong type of support for heavy industry?
All the markets seem to do is move money around from one market to the other on a whim using the interconnectivity of IT.
I don’t honestly believe you can say that China’s ‘interventionist markets’ are any worse or better than the lesser regulated Western ones. The 2008 cash (and the crashes before it) did not take place in communist China did they?
Those operating in the market provide the ‘hidden hand’ – look at this ‘hidden hand’ at work in the LIBOR scandal; the aggressive selling of mortgages that led to the 2008 crash; insider trading; the various international pyramid schemes we have seen.
All these are market manipulations by major players – something that the current head of Goldman Sachs just sees as legitimate ‘market making’. But does such manipulation mean that markets are ‘free’? I think not.
So the questions is this – if these people always set out to make their own rules irrespective of regulation or non-regulation, why do we continue to allow and rely on the making of money out of money that has already been made on such a scale? Is this wise? Increasingly it is not. We have crashes because our world is based increasingly on debt. This is what living with debt looks like.
What we need is more ‘real money’ driving investment and wealth in countries throughout the world – or at least a better balance between the two erring on the side of real cash (investment and good wages). This has to be a major objective of any reforming government.
Indeed, as I’ve said at length on another post (though it doesn’t seem to have made it into daylight yet) perhaps we need to expand the economy using the virtual equivalent of tally sticks instead of money. So while the current aim of introducing a quantity of debt-free money is laudable, I see no sign this vital aspect of financial reform is yet being addressed.
All have been approved…