After the boom, bust
Gordon Brown’s oft-repeated claim to have abolished “boom and bust” – Tory or otherwise – is among his most widely ridiculed moments. Even his badly-timed gold sales (1999 to 2002, the bottom of the market, lest we forget) don’t get as much airing as this soundbite. And rightly so. The idea that you can abolish the business cycle is hubristic to the point of being delusional.
The trouble is, it’s not just Brown who fell for this nonsense. The people in charge of the financial system – not to mention plenty of the investors who follow them – still seem to believe it. Somewhere, if they only search hard enough, there’s a magic wand that central bankers or governments can wave that will make everything go away and take us back to the golden age before the Northern Rock run and the collapse of Lehman Brothers.
Just look at how markets reacted when the Federal Reserve was getting ready to release its latest statement on Tuesday night. I was keeping an eye on Twitter (it’s very good for breaking news, although it’s worth taking most things with a pinch of salt until you’ve confirmed them elsewhere – you can follow me at www.twitter.com/johnstepekMW). Everyone was clearly hoping that Ben Bernanke and his colleagues could somehow come up with a plan that would prevent a US recession, delay an implosion in the eurozone – or perhaps simply prop up stock prices with a load more printed money.
• Read the full editor’s letter here:
After the boom, bust.