The row over what to do about Northern Rock rumbles on. It will be surprising if there are not other banks in a similar situation. If there are, can the government guarantee their depositors' savings too?
The other issue is this. Huge amounts of money have gone abroad to pay for consumer spending, with the result that previously British-owned assets have fallen into foreign hands.
READ ABOUT £65 BILLION BRITISH DEBT
And what has funded this consumer spending? Borrowing on the security of land values which have themselves been stoked up by injudicious lending.
This is in principle no different from what happened in the great crash of 1929. My own suspicion is that not only are we are moving towards the worst economic crisis since the end of World War 2, but that the problems that we are seeing at the moment are just the start. Things will get a lot worse over the next couple of years.
I have no confidence even in the security of such seemingly solid pension schemes such as those provided by local authorities and other public sector bodies.
None of this need have happened. Booms and slumps running on an 18 year cycle were a persistent feature of the nineteenth century. As long ago as 1880 it was demonstrated that they were a consequence of the interaction of the land market with the banking system. A solution was proposed, which nobody has ever convincingly refuted. Unfortunately and unforgivably, politicians and the professional economists who advise them have consistently ignored and even dismissed this analysis. Unless the proposals put forward in 1880 are implemented within the next five years, it would be a good idea to pencil in the next crash for around 2026.
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