Can anything douse the economic flames?…(Calling for a “New World Order?”)
A global solution must be found to put out the fires that threaten our economies.
By Jeremy Warner
Lawlessness on city streets, mayhem in financial markets, warnings of civil war in Europe, Parliament recalled, a double-dip recession looming and the mighty US dollar stripped of its AAA credit rating – there’s an unmistakable end-of-the-world air about this extraordinary confluence of anarchy, panic, anger and bewilderment. Rarely has our post-war prosperity and stability seemed so much under threat.
Only an apologist would link the criminality of the riots with the extreme challenges faced by the global economy, but the coincidence of these problems is impossible to ignore. Social breakdown seems to mirror apparent economic paralysis. Criminals can be locked up, but is there anything that can still be done to douse the economic flames?
The prevailing narrative is that there is not. We’ve chucked everything up to and including the kitchen sink at the problem, and it’s just not working.
Interest rates have been cut close to zero, the money-printing presses have been put on overdrive, the bankers have been bailed out, and governments have let rip with unfunded deficit spending. Yet still output remains below pre-crisis levels across many Western economies, with growth now unambiguously stalling. Nothing seems capable of lifting us out of our post-bubble funk. Policymakers are all out of ammo.
Those of the same persuasion as Ed Balls, the shadow chancellor, and the former prime minister Gordon Brown, tend to claim it is not the policy response that has been discredited; rather it is that there wasn’t enough of it, or that the stimulus has been applied in the wrong way.