Friday 4th November

Well really, what did we expect, we have been blindly walking into a cave with no light at the end, and the way back out obscured too, for years and years.  Did we really think it could go on forever; ever and ever higher house prices, more and more consumer goods filling up the empty spaces in our homes and lives, and an ever increasing standard of living, when for most of us we already had far more than any generation before us could ever have dreamed of.  And it was driven by a sort of collective greed that overrode any social conscience or common sense we might once have possessed; everything is allowed as long as we just keep getting richer and richer.  Well, the roundabout has juddered to a halt, and those that haven’t been thrown to the ground must simply cling on and hope that somehow the wretched thing can be got moving again, though the signs are not so good.  Oh, the rich will prevail, no danger there, they are already investing heavily in the economies of the East, China, India and the rest, and the poor – well, who really cares about the poor, it is the middle classes we must try to protect.  But just how, nobody is sure.

The world has only limited resources, even with advanced technology there is only so much food that can be grown, only so many tons of iron and coal and oil extracted from our tiny planet, and the third world nations we used to ignore in our madcap grab for wealth are now demanding not only a fair price for the goods we used to practically steal from them, but also their share of our affluent and comfortable lives; consumer goods, computers, mobile phones, meat on their plates, fashionable clothes and nice houses.  And who can blame them.  It was as inevitable as that other staple of Economic Historians, the dissipation of Wealth, where despite the rich getting ever richer, first the middle and then the working classes demanded and got a slice of the cake.  The trouble is that the cake is only capable of being sliced up into so many pieces, and we in the West are going to have to get used to thinner and thinner slices, or just go hungry.

I think that it is only just dawning on our leaders too.  I always thought that one was supposed to learn from History, but not this time it would appear.  The last World Depression in the thirties went on for quite some time before FDR decided to create the New Deal, which was basically printing money but channelling it towards consumers to give them confidence again.  All the remedies which our leaders are advocating are not only crumbling confidence but are positively scaring the patient to death.

We have to somehow inspire the middle classes to believe in the future again, without encouraging them to get into massive debt again.  Maybe we have to re-invent money, or as every country has done before to devalue our currency so that everything becomes affordable again.  J. K. Galbraith told us on television in the nineteen seventies that economic policy was like pulling a brick on a piece of elastic along a table top, and bending down level with the table trying to watch it move.  What is so surprising is that nobody realised that it was bound to wallop us right between the eyes sooner or later.