A position of utter ignorance.

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markets.pngThe cliches and metaphors burgeon around us as the markets collapse, and hacks breathlessly trade roller-coasters for dominoes, or offer injections in the heart of the whirlwind. 

Much of this verbiage is produced because no-one really knows what is going to happen, but they certainly know it's dramatic.

For example, the Newsnight panel last night was 100% journalists and politicians, all without the faintest idea of what the bailout might deliver, let alone where the markets might take us next. Newsnight Scotland went one better, relying on vox pops before running a journalist-only panel (including Douglas Fraser's new incarnation as Economic Disaster Correspondent for the BBC). They didn't know how it would turn out either, it turns out.

No offence to either panel, but the producers might have been better off pulling in some serious economists, historians, and even economic historians. The comparisons might have been more rigorous, and the options set out more clearly. 

Economists are famous for their widely diverging opinions: this would be an asset. It would have been more enlightening to have had debate with a Friedmanite, a Keynesian, a Marxist, a Green, plus someone from the soggy New Labour/New Conservative managerial centre. Constructive disagreement would be better, given the gravity of the situation, than the usual synchronised hand-wringing. 

In these circumstances, with fear and uncertainty dominant, George Osborne has done the tactically correct thing - supporting the package in principle, but with some caveats. He has no idea whether it'll work, but opposing it now would expose him on the upside if the £500bn bailout does deliver for the markets and for Labour. If it doesn't work the Tories benefit anyway, politically, and the caveats will cover him. Nick Clegg did much the same, although he chose to support the proposals while comparing Brown to the captain of the Titanic.

Here's a counter-prediction. It won't work. None of the strands of the Brown/Darling bailout affect the core problems - those worthless debts and opaque derivatives, the housing bubbles here and abroad, and the wider systemic failures of regulation and oversight. Sure, they can cut interest rates and try to reflate the bubble, but wouldn't it be better to rebuild our economy on a somewhat more substantial basis, one that could be literally sustainable?


Wasn't Ollie Shamm, hedge fund manager and Times leader writer, on Newsnight? The freezing out of any alternative analysis that might just critique the whole tottering edifice has been total - where's Anne Pettifor for one? http://debtonation.org/

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This page was published on October 8, 2008 2:03 PM.

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