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The Credit Cruncher was conceived to help you to keep up to date with credit crunch and recession developments, it provides some helpful credit crunch advice and it addresses personal debt. The Credit Cruncher also seeks to explain how the credit crunch started and shed some light on the worldwide recession. Recently, we have begun to look at how BREXIT will affect the UK economy. Please feel free to leave comments where relevant.

22 Aug 2009

Recovery or false dawn?

I admit that my outlook on the current crisis is fairly dark and negative, but I think it's worth countering the spin that is being raised to paint a rosy outlook for supposed economic recovery.
These are the elements that are being cited as signs of recovery:
  • Rising house prices (remember THIS is what got us into the mess to start with!)
  • Recovering bank profits (sound familiar - see above...)
  • Steady growth in GDP (hopefully this will be evidenced soon, but this is not the ONLY thing the economy needs - see below)
The real indication of a healthy economy would be:
  • Stable and progressive public spending (UK borrowing will approach and unbelievable 80% of GDP this year)
  • Steady rising of employment figures (We are approaching critical levels of unemployment)
It is only when the economy has stabilised (don't forget the Government has yet to reveal how it is going to pay for all the craziness thorough possibly crippling taxation), and employment levels are manageable that we can be satisfied that our economy will not go into free-fall. The danger is that this short-memory economy will rely on rising house prices to prop up spending again, it does not even bear thinking about the consequences of a similar crash before the effects of this one have been ironed out.
Can we be so stupid as to allow this to happen again? My answer is that yes, we are possibly on the verge of doing exactly that.
What have the banks learned from dragging the economy close to oblivion?
They have learned that they can personally profit from such a crash and will do so again...
This is the sad state of human nature, now the profiteers have seen and tasted the good times, they will want to go there again and again to personally satisfy themselves regardless of the growing unemployment queues. Our only hope is that the Government have legislation lined up to prevent the financial community from profiting from their greedy nature - Sorry, still dark and foreboding for me - I really hope my skepticism is unfounded, but I think we have seen what can happen and I think we may be powerless to stop it happening again - Welcome to the combination of the powerful Free Market and the equally powerful sense of Human Greed.

Related posts:
G20 prepares for recovery
IMF recognises recovery
Is the credit crunch over?

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