We must rein in our feral financial system
By Andrew Simms, nef fellow, and Tony Greenham, head of Finance and Business
Yesterday marked unprecedented consecutive daily falls in the history of modern markets.
It’s clear that our Ponzi economy, built on debt has reached its limits. Many of the debts have become unpayable. They can only be dealt with through default, rescheduling or being ‘inflated away.’
The financial elite resist this because they will lose out. But not to act is to be in denial and delay the inevitable.
Also, the idea that tax cuts for the rich, such as abolishing the 50% rate, will do any broader good is insupportable in fact or theory. It is, frankly, nonsense. The economy will stagnate until we put money back in their pockets of middle and low income people.
That means rebuilding around productive, employment intensive sectors that also are vital to the UK’s transition to a modern, low carbon, low through-put economy. A new phase of targeted, rather than unfocused quantitative easing to support these sectors would do that.
The model of financial liberalization and self-regulation that has proved so self-destructive must be re-regulated in the public interest. George Osborne speaks of using the crisis to push the old, failed, unmanaged economic agenda. These are dead ideas walking.
The government must act in the whole national interest and bring our feral financial system under control.