Some things come in pairs

The Great Recession and other horror stories

A perfect pairA perfect pair
This is the time of year traditionally known as the silly season and it's hard going for people who can't relax and have no sense of humour. I like this time of year, it's a test and passing with flying colours is Edmund Conway. He brings us, in the Telegraph, but with no online version, one of the funniest stories in a while. It has an inauspicious start in that its central character is Mervyn King. But stay with me for that man is more than just an authority on moral hazard. Conway says that King likes to tell of the moment he realised that what he calls the, Great Recession, will be harder to get out of than you might think. King was at a posh conference on the world circuit with the great and the good, the politicians who lead us, and was both amused and horrified to hear them all declare they would get out of the mess by exporting. Clearly for this to work buyers and sellers must come in pairs. But at the conference in question all the world leaders were sellers. King gives the impression that only he spotted the problem, at the conference maybe.

However, the man atop the Clapham omnibus has known this for years. Ordinary folk keen to clear out the garden shed and the cupboard under the stairs and make a profit by putting the stuff on eBay are, it would seem, better informed than the over promoted people who got us into the mess and now pretend they can get us out. It might be thought that the Governor of the Bank of England would be a capitalist, but here he is seeing the big hole in the plan; does this make him a socialist? No it does not. Neither is he going to contact Tony Blair and get him to send round to Threadneedle Street all that stuff about 'the third way' that Blair fooled himself and the voters with. But the capitalists, red in tooth and claw, and the socialists, also red, would both have been at the conference that gave King the horrors. They would have both dished up the same nonsense, simply fooling each other, and that's all. After all ordinary people buy their own tickets to travel, I bet not one of the conference attendees paid their own way. So beware of whom you get your economic remedies from.

In the Telegraph article Conway goes on at length to explain the global problems and the risk of a double dip recession. Pivotal to his thesis is the slump in home demand that's causing so much trouble in China. I would suggest that this is a problem beyond China. Within the lifetime of the Governor of the Bank of England communist countries the world over had an economic master plan that began at home. Democratic countries did something similar via a 'natural' approach to economics. When King was a boy it would have been unthinkable for a Frenchman to buy a Mercedes, Fiat or Austin. You could have said the same for an American too. Again within the lifetime of our Governor it has become fact that the 'restrictions' of the old communist countries have given way to the 'benefits' of political expansion, the EU is typical.

Running parallel to this political move is the dogma of exporting at the expense of all other considerations, ask yourself, has it worked? At the moment the Germans say rude things about the Greeks. The general drift is that they are lazy and don't work hard enough. However, the Germans should reflect on how the Greeks buy so much of their industrial output. They should also reflect on how the massive trade imbalance between Germany and Greece has caused so many problems for them both. Perhaps if the Germans were not so industrious? The basic flaw with the EU is its assumption that free trade will cure all the ills a country may have. The idea that two countries, A and B exist on the basis of A sells its widgets to B and B sells its widgets to A and all is well has its limitations.

Footnote - It is said the average woman owns 19 pairs of shoes, would it help it they all bought another pair?