Thursday, June 04, 2009

John Lanchester on the banks

I am given to quoting "Cityphilia", an article by John Lanchester from the London Review of Books, on this blog.

The last issue of the LRB had another article from him on the economy. It did not make happy reading, but I fear he is right:

I get the strong impression, talking to people, that the penny hasn’t fully dropped. As the ultra-bleak condition of our finances becomes more and more apparent people are going to ask increasingly angry questions about how we got into this predicament.

The drop in sterling, for instance, means that prices for all sorts of goods will go up just as oil and gas prices have spiked downwards. Combined with job losses – a million people are forecast to lose their jobs this year, taking unemployment back to Thatcherite levels – and tax rises, and inflation, and the increasing realisation that the cost of the financial crisis is going to be paid not over a few years but over a generation, we have a perfect formula for a deep and growing anger.

Expectations have risen a lot, over the last three decades; that’s going to have a big impact on how furious people feel about the hard years ahead. The level of future public spending cuts implied in Darling’s recent budget – which included the laughably optimistic idea that the economy will grow by 1.25 per cent next year – is greater than the level of cuts implemented by Thatcher.

Remember, that’s the optimistic version. If we’re lucky, it won’t be any worse than Thatcherism.

Lanchester's profile on the LRB site says his "book about the financial crisis, Whoops, will be published by the Penguin Press, once he’s finished writing it".

No comments: