Mr. Strauss-Khan changes his mind

At least twice over the past four years the IMF has warned the UK of the grave danger it was in as the result of the debt mountain it had created. (G.Brown ignored the IMF, as he knew better.)

Now the IMF in the person of Mr. Strauss-Khan wants the UK to build its debt mountain even higher, - it's no longer dangerous. This time G. Brown, who has not changed his mind, agrees.

What has changed?
The IMF feared that the mountain of debt might precipitate recession, which we all know is not caused by us but could be mysteriously imported, according to G. Brown. Now the recession is here, not caused by us but imported, it seems that we should borrow in a big way. The nostrum for over-indulgence is more over-indulgence.

The only problem is that this (crass) Keynesianism, which was worked out and never tested as the re-armaments for WWII did the trick, was for reversing mild downturns, and is more shaky on controlling inflation. There is no certainty that the Keynesian presciption will work in our present situation. It could even make the situtation worse and prolong the recovery period, as in the case of Japan.

It is indeed possible that some countries will recover by Keynesian means, as they do not have our level of indebtedness, and we shall pulled along by their coat-tails. It is possible that the public sector debt will crowd out private borrowing, that sterling will have depreciated to such an extent that our import prices rise so quickly that we return to our old enemy of the 1970s, - stagflation, but with major industries lost, - London finance, manufacturing and service industries.

It promises to be a long and painful business, whatever happens, even if we are the best placed to weather the storm!