Monday, 19 January 2009

There may be trouble ahead ...

Right then, we've had an American economist telling us that Ireland's economy will be leading Europe within a decade because Ireland is small enough to be flexible. We've also seen Hannes H Gissurarson laying the blame for Icelandic troubles at the feet of Gordon Brown, something I can't help but agree with him on. Now we've got the Icelandic President, Olafur Ragnar Grimsson, telling us that Iceland will recover more quickly than the UK and that Iceland will be thriving while the UK is still struggling. On top of that, there's the Brown/Darling admission that their bank bailout didn't work - and the plunge in bank share prices in response to the new bailout.

Should we be surprised? Not really, in November one of Gordon Brown's first appointments to the Monetary Policy Committee warned that the UK was basically insolvent, public debt likely to be exceeding GDP, the fiscal stimulus mince, and the recent relaxation of accounting rules likely to make it worse. He said
The government argues that its net debt position is strong, with a net debt to annual GDP ratio still just below forty percent. That statistic is a prime example of lies, damned lies and government statistics.

We've had an IMF economist saying the VAT cut wouldn't restart spending, and way back in September 2005 the IMF and the EU warned that Brown had lost control of the economy. This depression has been coming for a long time and it's going to be a long and painful one. Far sighted politicians will be the ones who are making long-term plans for our best positioning for recovery.