Clearing up the codswallop about the economy

Bill Emmott is a former editor of the Economist. As well as generally knowing his economic onions, he is an expert on the economies of India, China and Japan.

His article today in the Guardian is most welcome: Crisis, what crisis? Enough kerfuffle it's just a slowdown.

He sums up my feelings with this passage:

The only statistics that point strongly in a downward direction are those for bank shares, house prices and mortgage lending. So far this has really been a crisis just for the Daily Mail and the Financial Times. Oh, and the IMF. Most ordinary people have been affected more by inflation, in the form of rising petrol and food prices, than by anything connected to the supposed crisis of capitalism. Anyone who can remember the unemployment of the early 1980s or the early 90s, or the inflation of the 70s and 80s, ought to be shaking their heads in disbelief at all the kerfuffle over what is just a mild slowdown.

Well said. I can remember the Three Day Week when all TV and radio closed down at 10.30pm and we had scheduled and random power cuts. Now there was a real crisis!

What galls me is the constant harping on about the slowdown in the housing market. I sympathise greatly with anyone who is trying to sell their house at the moment. However, an economy is not based on buying and selling houses, and the housing market has been ridiculously over-heated for years. It needs a correction.

One of the features of the panic created by the Daily Mail etc is that it seems there is a significant body of journalists who are so young that they don't actually know what a recession is actually like. This leads them to exagerrate the current situation.

Just to be clear, here's another salient passage from Mr Emmott:

For the past year has actually not been very bad at all - unless you are a banker, a bank shareholder or Gordon Brown; and few will shed tears for any of those. Unemployment, that traditional begetter of rebellions against capitalism, hasn't risen at all. In fact it has dropped from 5.4% to 5.2% of the workforce. The economy grew in the year to the second quarter by, oh my gosh, just 1.6%. Earnings have been rising by - yikes! - 3.8% a year. Let's all head for the hills.