PROPHETS AND PROFITS

The financial journalist Richard Wachman recently wrote an article in The Observer entitled "We're two years older and sadder, but perhap not a great deal wiser".He reviewed the financial collapse that had occured from August '07 to August '09. "What happened two years ago was to lead to a chain of event that involved the nationalisation of about half the major bank in Britain and the United States. It was also to lead to the collapse of emerging markets from Latvia to Pakistan and the biggest ever globally co-ordinated government rescue package, involving trillions of pounds. The world is now an uglier place with mass unemployment, widespread business failure and dramatic falls in world trade." (Observer, 2 August)
Mr Wachman's analyisis of the problem is not particularly revealing but what is of interest in his article is how the crisis has left so-called experts with egg on their faces. Mervyn King (August, 2007) "I don't think there's any real evidence here of a fundemental challenge to the macroeconomic outlook." and then (February, 2009) "The UK is in deep recession ...Restoring both lending and confidence will not be easy and will take time." George W Bush (August, 2007) "The fundementals of our economy are strong ... and we are headed for a soft landing." and then "If money isn't loosened up, this sucker could go down." (September, 2008) Alistair Darling (August 2007) "People should have confidence that many of the investment they make will be good investments." and then "Times are are arguably the worst they've been in 60 years... it's going to be more long-lasting than people thought." (September 2008)
Capitalism is a social system based on economic slumps and booms and it makes fools of all the "experts". RD