From Nice to Nasty
Non Affluent Stagnant Terrible Years (NASTY) are on the way, especially for those economies who followed the property price bank dependent model of economic growth.
The British economy is bleeding like a dying dog. The money markets can take it all out and the pound is sliding.
The markets know that Britain is going to be suffering more than most because we are more dependent on the rapidly bankrupting bank sector.
We bought in the Ponzi scheme more than most. Iceland mortgage fish production for the free market nostrums of Friedman and Van Hayek. Their island was an economic experiment for the advocates of voodoo economics. Perhaps Voodoo is unfair, because some people prosper from its religious practice, whereas as marketisation is the road to speculative fuelled catastrope.
Britain is Dr Friedman's other island and will sink with the application of his theories, adminstered by nurse Thatcher and her successors including Blair and Brown.
Government borrowing could become unsustainable, who will lend to Brown or Cameron?
An unattractive option.
This will be the start of a decade of decline...we in the UK have too little manufacturing or agriculture to exploit the falling £.
However the falling £ will make pay off the external debt owed by British businesses, British consumers and the British government more difficult to pay.
So goodbye NICE (Non Inflationary Continuous Expansion) and hello Nasty.
Could we be in for the IMF treatment...with interests rising to 18% like Iceland...the Government will find it increasingly difficult to sell bonds, interest rates will be force up to tempt lenders to buy our toxic national debt.
So my prediction is a year of very low interest rates but steeply rising if we begin to climb out of recession....those from the frying pan back into the frying pan.
We need some big economic alternatives...equally the bulimic economy (capitalism) where we consume more, vomit it up to make more room is ecologically impossible.
Keynes is just as dead as Friedman but the new prophet lives I believe in New York.