Thursday 8 January 2009

From Recession to Deflation and on to Depresssion

The Government has been consistently behind the curve in its recognition of the threatened depths of this recession and in its response.

Because Gordon Brown threw away control of the Bank of England in 1997 the recent cuts in interest rates have repeatedly been too little too late.

The fiscal stimulus in the form of the cut in VAT and increased public spending has been pathetic in scale and ineffectual in action.

The Government has prevaricated over quantitative easing and continues to dither over taking control of the banks on borrowing and lending.

In the meantime the failure to provide workers with effective rights to job protection, consultation and industrial democracy has meant that companies can get away with treating their employees like chattels as they lay people off in large numbers.

Deflation hangs over the economy and a recession is turning into a depression as the Government looks on in bewilderment.

Increasingly this lack of decisive action will undermine the initial boost in confidence the electorate gave the Prime Minister.

Just one small act of bringing the operation of the banks under public control would stabilise this slide in confidence and buy the Government time to bring forward the radical and comprehensive programme of economic change needed.

There is no evidence however that the Prime Minister either has any idea of how to devise and implement the radical change programme needed or has the inclination to even consider this approach. The result is that each day thousands of working people are paying for this crisis with their jobs.