Most people have given up watching the rise and fall of market shares. They now appear as meaningless an indicator as fairground test-your-strength machines. The way it runs is that governments inject taxpayer cash, investors get itchy palms again and the markets flutter until everyone remembers that the big spenders don’t want to spend anymore and the banks have no intention of following government advice to start lending again. This recession is not a special recession, its a ‘same old’ recession.
That’s why when it comes to great interventions and bailouts, the governments may as well be shovelling a lot of the money into a giant furnace because it will go up in smoke one way or another. The bald fact is that this recession will be about as deep and unpleasant as it would have been without the bailouts. The expensive Zimmer frames given to the banks have achieved only one major thing and that is the governmental guarantee of whatever savings people have in those banks. That is where government intervention has stopped. There is no indication or intention that governments will ‘order’ banks to start lending to business, because the banks just won’t, despite the fact that they are more than half-way to nationalization. The recession will remain as bad because every government wants to fix a market-made problem by applying the worst of the market as the cure.
It will be 2010, late 2009 at the earliest before recovery arrives and that is going to drag out as a five year process. In Britain the Queen’s speech rattled off more bank regulation measures, as if appointing a few more watchmen will stop unscrupulous economists, stockbrokers and bankers from devising new casino games.
Everyone who feels the pressure of this world recession, and frankly that’s about 90 percent of the world, needs to put out of their minds the idea that politicians and the meetings they have with bankers and financial ‘experts’ will bring recovery. Like treatments for a bout of the flu, their measures are merely palliative. What people need to ask themselves is whether they really support a system so prone to sickness in the first place?