There is none; the answer does not exist. Households, private sector and governments have to de-leverage a colossus amount of debt. Stimulus and inflating the bubble (again) will make the depression even worse-which we are currently in-and would destroy living standards even more.
During the Great Depression, British growth was sluggish and uninspiring. But the economy grew, similar to current standards. All packages to accelerate growth and employment proved to be insignificant – the economy had to rebalance from the excess credit addiction. You cannot maintaining spending and credit without a massive contraction or, worse case, economic collapse. Japan is entering a second loss decade after a similar housing bubble in the 90s and China phantom construction boom is about to explode.
Europe is becoming the new Japan.
The entitlement culture, corporate and welfare, is too costly for the economy. Corporate socialism should cease to exist under the coalition; a failing business should fail. Government should not bail out the losers and hand the losses to the taxpayer. And those, who think a life on benefits is good choice, need to be dealt with. Taxpayers should not finance the lifestyle of those who refuse to work; this
minority are just as bad as bankers, who demand we write cheques for huge losses.
As I’ve said countless times on Twitter, cuts will continue post 2015 – we have not begun to deal with Britain’s spending addiction. Western economics, with huge deficits and debt levels, have no choice but to advance towards fiscal sanity, whilst hoping the emerging economics can continue to reform and expanded. But there is nothing we-this government-can do.
danielfurr
Good points. There are no magic bullets but we can make adjustments & improvements. Life has always been hard. Business & government should focus and make lots of little changes not posturing or worrying about staying on message. Too many politicians have no real world experience of work, business nor financial hardship. All westminster parties are full of career politicos. They live in a never never land of soundbites, political rangling & bullshit. Lacking experience, they stick to theoretical dogma. Lacking the courage to change direction or upset their career prospects. Their priorities are personal profit, party political and finally the people.
Simple changes:
Infrastrucure investment by UK Gov awarded to UK companies employing UK labour. Rig tender process like Germans.
Cherry picking only very best for immigration. Eradicate 3rd world benefit tourism.
Cancel all wars. Shore up borders. Have military working in UK not building Schools in Afghanistan. Stop all aid to China, India, Pakistan & Russia etc. Not our problem.
Steer UK consumption to UK manufacturing, engineering, renewables, gaming, banking, construction materials, etc
Cancel Nuke weapons programmer
Reform public sector pensions, employment, salaries. Nobody should gave certainty paid by those without it
To keep it short I will just list the first 10 that come to mind.
Apologies for poor formatting & spelling. On phone and long posts difficult to edit.
I disagree with the above commentator. I think it’s pretty obvious why.
Now, on the question of the financial crisis, as far as I understand it, we are facing two simulanious crisies: the first is a liquidity trap, where banks are keeing their capital:loans ratio high in order to secure themselves if any deals fold. The second is that a decade of profligacy has called into queston the ability of governments, including those of Triple A France and the United States.
The solution to a liquidity trap is stimulus. The solution to a crisis of confidence is to cut spending. This is a huge contridiction which is almost impossible to resolve, but there is a risky solution.
Cut government debts, and use the money to restructure and liberalise government services like health and education. Turn what are stodgy tax-and-spend industries into growth sectors founded on partonage and other private fianance schemes and create a whole load of new jobs. Pass enviromental legislation demanding lots of cheap modifications to buildings and cars which will result in lots of sales at British enviromental technology industries. Although Government has lost its best tool to create aggrigate demand, it has not lost all control.