UK economy will be back in growth by late 2009

[Fred Bloggs]

End result: inflation, another boom in credit and a temporary feel good factor that does nothing to solve the real crisis in the British economy -which is that it doesn't make enough.

I'm emigrating.

I agree and I share your thoughts.

However, I don't see anywhere to emigrate to at the moment that is so much better than the UK? The whole world is *****d at the moment.

[Bagpuss]

You might think like that : but there are millions of chavs who will disagree. First chance they get they will be spending like it is 2007 again.

Admitedly they wont get a chance this year.....

I don't think like that, I am pointing out how herd mentality and expectations drives recessions or booms, just as much as the restriction/increase of cheap credit.

For every person (myself included) pointling out the inevibility of the housing bubble bursting, there were 3 times as many thinking it was sustainable and fuelling the boom even further.

With recessions this operates in reverse, with a popular view that things will can only get worse and hence a lack of commitment to making large purchases becoming ever more widespread.

[Pickle2]

One difference between Japan and the UK is that Japan are a nation of savers. Wheras we are a nation of spenders.

But you are in danger of letting the tail wag the dog. The Japanese are a nation of savers because of the bursting of the debt bubble and the resulting deflation.

You will see a rush in the UK and US for people to pay down debts and save money. Ineed, the US savings rate just hit a 14 year high as reported here. Doesnt sound too inflationary does it?

http://www.marketwatch.com/news/stor...64}&dist=msr_4

[Gonzo]

The man who bought that country to its knees. It took Maggie years to repair the damage.

There are some who argue that it was the imposition of the controls that were a condition of the 1976 IMF loan that allowed the economy to start to readjust. He didn't like it at the time, but perhaps Denis Healey should be credited with saving the UK economy last time that Labour fliped it up.

As Radice rightly argues, there are various explanations for the causes of the IMF crisis. But however it began, the result was a dramatic reduction in international confidence and the fear that sterling would collapse. It was generally believed that the situation could be redeemed only by an international loan that required the government to make certain economic "adjustments", to convince the IMF that the loan would not be squandered. Denis Healey, by then Chancellor of the Exchequer, thought the price had to be paid. Tony Crosland, the foreign secretary, did not. Neither did I.

Radice rightly reports that, in the cabinet, I alone "backed Crosland to the end, but later conceded that after all, Healey had been correct". In fact, I was eventually convinced of Healey's view, graphically expressed at the time by Gavyn Davies, then economic adviser to the prime minister. The "markets wanted blood", and had to be propitiated by an unreasonable sacrifice. As we now know, the markets based their demands on Treasury statistics that turned out to be categorically wrong. The sacrifice for which they called was a reduction in the public sector borrowing - a result achieved partly by cuts in social services. In fact, it turned out that the Treasury had grossly overestimated the size of the public sector borrowing requirement. The cuts were unnecessary.

Yet Healey was right. At that moment, in 1976, survival required the government to pay the market's price, which amounted to providing proof that it would abandon socialism in favour of stability.

OK, these are comments by Roy Hattersley on a book by Giles Radice but that's no reason to discount them. They were there at the time and now have the benefit of a load of hindsight with which to adjust their viewpoints.