Credit Crunch Canards No. 1

The credit crisis is spreading to the 'real economy'

If a dial in the dashboard of your car indicates that your engine is overheating and then later steam starts coming out of the bonnet, you don't say that the problem started in the dashboard. Similarly, if the accounting and banking centres of the country starts to show extreme stress, you would be unwise to look there for the root of the problem.

IMHO the primary cause of the current crisis is the collapse of Western competitiveness. Our indebtedness is a symptom of this problem as we have used both sovereign and personal debt to mask the fact that our lifestyles were no longer within our means.

Only once we have thrown off the health and safety, 30 hour week, consumerist culture will we truly have turned the corner. Until that day the true position will just keep getting worse, whatever the stock market says.

Bankers should be admired (if not thanked) for doing such an amazing job covering up this unsustainable position for so long. Sure, they were well paid, but it wasn't easy inventing all that money from nowhere or getting the eventual certainty of default to be seen as a small risk. The real villains, as ever, are governments who conspired with the bankers against the people, whilst (of course) benefitting greatly themselves. The current round of nationalisations is just politicians' latest wheeze to delay the day of reckoning just a bit longer.