the truth, unvarnished
There are times when shouting at the TV just doesn't cut it, when the response of normal people is just sit there stupefied by the sheer duplicity on display. I wouldn't mind but they're avoiding the real conversation. What is that conversation? It's about the state of the economy, what ails it, and what needs to be done in the short to medium term to help, as opposed to hinder, the situation.

There is no recovery, there is stock market rally with government money, where banks are gambling, there is no other word for it, in the hopes of winning back, some of their losses. They are doing this in the full and certain knowledge that the government will not let them fail. It's a one sided bet.

If you want proof of this, look at this bit of research by Barry Eichengreen & Kevin H. O’Rourke. Eichengreen is no fool, he knows his stuff, look at figures 2 & 3, the V shape is the stock market, the other is world trade. The blue line is 1929 in the run up to the depression. Trade is the basis of the global economy, it's still going south, and the blip at the end is restocking, after excess inventory has been sold off.

Were it not for the fact that the government is propping them up, the banks would all be dead with very little exception. For the most part they are still insolvent, this is why they're gambling.

The real deal however is what economists call "aggregate demand" consumer spending. which is evaporating. On the high street/main street, like for like takings are down anywhere between 5 & 20% Jobless people are having trouble paying mortgages and credit card debts. Companies cannot get loans. If people have no money or cannot get credit, then they cannot spend. If they don't spend, there is less demand, less demand means less trade, less trade means fewer jobs. That is what figure 3 is telling you.

The only way to encourage demand is to give people a job, if you just give them money, or tax cuts they'll just save it or pay down debt. At the very least this means sustaining spending. If you cut spending you cut jobs, and thus cut demand & economic activity even further. no demand, no recovery.

The argument of who is going to cut, or cut more is a misnomer in the UK, and politicians of both stripes are desperate to acquire or maintain power, the crap about cuts is just that, crap. Who cares if the ratings agencies cut the UK's rating, they cut Japan's too, it didn't hurt them, and they've a deficit equal to 130% of GDP. If the worst comes to the worst, we can get bailed out by the IMF, better to take the money while it's available IMO.

But you're not hearing this argument, all you're hearing about is cuts, it's stupid, but it's politics, the best we can hope for is that the elections come soon, then people can get real.

Madness.