That’s a lot clearer – thanks. Being powerless in the face of events doesn’t, as you say, imply someone’s ganging up on you; it’s just the Invisible Hand at work.

It’s also interesting that, no matter who gets in power, the financial, trade and political systems at work on a global basis allow them very little room for manoeuvre.

Cheers,

Tim

I think the Tory example shows that no colour of government is insulated from market events, but those events are not conspiracies. Ken Clarke concedes the lesson that there are limits to political power that politicians need to understand, Canute style, as did Harold Wilson wryly at the end of that broadcast. And Cockerell tilts at Brown’s overconfidence in claiming an end to boom and bust.

The interconnectedness of our economic and financial systems, and the underpinning technology, increases by the day. To see the subprime market as something foreign is a mistake, it was just one expression of a looser credit environment that had run its course; another was the scale of UK house price rises. For example, I wonder: there may be a counter-factual world in which a collapse in UK housing might itself have triggered some kind of credit crunch, considering Sornette’s analysis that UK housing was vulnerable to a crash well before the US. What held up the UK market for longer? Was it unexpected and unprecedented immigration that underpinned a weakening buy-to-let market two to three years ago? I don’t know. But government clung to the view it was lack of supply, while the Bank of England produced a well-publicised study to say that the link between housing and retail sales had been broken. Maybe. My guess is that subprime was just the first market in which confidence gave way, but there would be other candidates.

I thought this was an elegant broadcast that brought out some key themes using very straight-forward narratives and the first-hand accounts of politicians/elder statesmen. That itself is quite important when one considers that most of our politicians and their advisers now are very young, with little non-Westminster experience.

Tim

I’m a little confused. First you say that the orthodox media view (the challenging of which I assume you think is a good thing) is “that the economic problems now facing the UK are mostly a function of external events” but then cite the example of Norman Lamont being “powerless in the face of events”.

This suggests that the orthodox view and the “Banker’s Ramp” Labour mythology are right, doesn’t it?

Cheers,

Tim