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Sunday, 25 October 2009

Blood on the tracks

A driving tip. Apparently, if your car stalls on a level crossing and won't restart, you should be able to get it off the tracks by putting it in gear and trying to start the motor. I have no idea whether this works in practice, but I am reminded of it by the way the governmrnt is handling the downturn/ recession /depression.

Gordon Brown says the battle to prevent a depression was being won and has promised the economy will return to growth by the turn of the year, in his first reaction to news that the UK is still in recession.

His podcast was released on the Number 10 website a day after official figures showed the economy was still shrinking. The prime minister accepted times were tough but said the battle to stop "a second Great Depression" was being won.

Sorry, but I thought we had already been saved from recession, not. The truth is that if the government really wants to they could lift the economy out of recession by playing the game that Brown played before the recession. It was easy to claim zillions of back to back quarters of unbroken GDP growth when he simply put his foot on the spending gas pedal. The problem was that it was largely wasteful spending.

Sure enough he has promised to cut a some point in the future (not that he will be around), but it would be easy to create a upward blip in government spending to push the next quarter into growth, with a later collapse, perhaps by borrowing and spending, perhaps doing nothing more than a few accounting tricks getting PFI schemes to count as government spending or booking the payment of a defence contract in this quarter just to cook the books.

After all finding an extra 0.4% of GDP (£5 billion) can't be hard when the government is already overspending by 15% of GDP. Whatever it is done, it will likely be just enough to get out of the recession for a quarter, before falling into another recession.

Oh, and if you are caught on level crossing, forget the tip above. Just get out of the car and off the tracks as soon as you can.

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