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AS markets continue to tumble, there is a tendency in some quarters to assume the bail-out plan has not worked. Such a view is naive and wrong.
Gordon Brown's rescue was aimed at restoring liquidity to the UK banks, to get them lending to each other again. It was not a panacea for a wider domestic or global economy.
The world is hurtling towards recession, if it is not there already. One piece of semantic sloppiness is that we've allowed the words "credit crunch" to become synonymous with downturn. This implies that if the credit starts flowing again, the economy will lift. That is not so.
The latest patient to give cause for concern is China whose slowdown has impacted on commodity stocks. This will be a worldwide dip and no nation will be immune.
There are other issues that must now confront Brown, such as the worsening public finances caused by lower receipts from fewer people in work and raised benefits as unemployment bites.
Reader views (1)
I think the bail-out doesn't work simply for the fact that the monetary system in place is inherently doomed to serve the central bankers in the first place. It's putting a plaster on the titanic! Watch the documentary 'The Money Makers' despite it being American - it is relevant to UK and Europe and other countries. the Simple principle is - Money is created out of the promise of an IOU and not of actual deposit, so what happens when there is added interest and inflation? it's called debt creation and devaluation. Loans to patch up more loans, however you see it, it's even more naive to think that this will work.
- Jeremy, London, UK., 23/10/2008 20:01
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