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Sorry seems to be the hardest word
If the answer to the recession was to print more money, it would have been done a long time ago, and we would have avoided all this trouble.
Quantitative easing isn't exactly printing more money, but it's being designed to have the same effect. But won't it simply have a negative effect on inflation?
For this extraordinary step to take place the Government are basically admitting that everything they have tried so far has failed, and that there's practically little else they can do now to ease the pain of this recession. After all interest rates can't go below zero per cent.
Of course what the Chancellor, Mr Darling wants the Prime Minister to do is offer an apology. To actually say sorry for causing the recession.
Mr Brown has refused to do this, because he doesn't accept it's his entire fault, and it would be unfair to say it is. But it's equally unfair to say that none of it is.
Gordon Brown's stock excuse has been to say this all started in America, and that we're all catching the cold after America sneezes. Strangely however, he didn't mention this last week when he was in the States!
It seems sorry is the hardest word for politicians to say. Rather like we've seen here in Eastbourne over the Airbourne debacle, where no local politician is prepared to say a meaningful 'sorry', that's the case with the Prime Minister as well over the recession.
An additional 150 Billion has been authorised to be added into the system as part of this quantitative easing, with the first half already underway. The idea is that by buying more government assets it will encourage banks and building societies to start lending more, and thereby increase the money in circulation.
A similar move had only limited success in Japan a few years ago.
And surely, won't it just hike up inflation? If I have a product that I am trying to sell for 100 in the market place, that value is, at least in part, based upon the relative amount of money available to buy it. So if more money is put into circulation, then the 'value' of my product is lower – therefore I will have to put my product up in price to achieve an equivalent relative value, hence inflation.
So with inflation on the rise and interest rates at an all time low, both savers and spenders are disadvantaged. And if that's not worthy of a little humility form the man who was Chancellor for ten years when the seeds of this recession were being sown then I don't know what is.
Mr Brown's problem seems to be he doesn't know what to say sorry for. So how about this for starters:
• For building an economy based on huge personal debt (eg banks lending mortgages on properties at higher than the property value),
• spending unlimited and unrestrained amounts in the public sector,
• and not having a regulatory system that is fit for purpose.
Of course it could be that Brown and Darling have this all under control and we'll see it all come right in the end. Let's hope so, because from what I can see things are going to get a lot worse before they get better.
By the way, I think it's great news that there is to be an independent candidate in Langney, at the forthcoming elections for the county council. I shall be writing more about this next week - in the meantime have a good week friends!
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Weather for Eastbourne
Saturday 11 February 2012
Today
Sunny
Temperature: -6 C to 2 C
Wind Speed: 10 mph
Wind direction: North east
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