Who’s in charge of the economy?
We need to know the answer and to know that someone is taking responsibility.
As is becoming clearer by the day we are entering a very dangerous phase.
If we are to avoid an increasingly likely calamity someone will have to bring in the measures that are needed to steady the ship.
We need to know who that someone is.
Our economy – which we tell ourselves is doing quite well – is in fact overloaded with debt.
The sense that things are going well is engendered by no more than our propensity to borrow and to demand a standard of living that we cannot afford.
It is a fool’s paradise.
The huge and alarming rise in house prices is the product of record lending by the banks on mortgage.
That in turn helps to fuel a consumer boom as home-owners are encouraged to borrow against the reported rises in the value of their equity and to spend large sums on imported consumer goods.
The banks will continue to lend without limit to house-buyers and consumers alike for as long as they are allowed to do so.
The result is a dangerously inflated bubble of house prices – consumer spending and imports – none of which reflects any actual increase in wealth or is sustained by anything other than borrowing.
History tells us that bubbles of this kind do not go on inflating ad infinitum and only rarely deflate gently.
If we insist on continuing our rake’s progress – the day of reckoning is sure to come and it will be painful.