The phrase "perfect storm" has often been used in connection with the chaos and turbulence in the global economy. To know how to cope with the effects of the perfect storm you have to look at how it impacts at individual level. Here is my summary of the perfect storm, obviously there is some overlap between elements.
But first, who is really responsible? The banks? Well remember Yossarian;
If any bank had behaved any other way than to follow the investment herd
in recent years, the management would have run a high risk of being ousted
by a mob of angry shareholders.
You and me? When was the last time you heard a bank or a politician saying we should all rein in our debt and balance our personal budgets?
What about politicians then? Well, politicians will only go so far as
their officials let them. If their advisers - in the UK that would be
Treasury civil servants - do not flash warning lights at any point they
can say - reasonably - that they were only following professional official
Which brings me to PIDPILU
Property (prices and lack of buyers)
PIDPILU is a multi-pronged threat to personal and social wellbeing the like of which we have never seen before.
And of course some people will be more exposed to elements of the perfect storm than others.
Who is most vulnerable to the storm? Someone like a heavily indebted building worker who bought his house summer 2007 with a 100% mortgage and who has a defined contribution pension scheme.
Who is most protected from the storm? Probably someone with a solid salary facing low risk of unemployment with a gold-plated inflation-protected pension and with no danger of being held to account for their anonymised backroom role in advising on and designing the systems and regulatory structures which led to the perfect storm the building worker is facing.
That's it, that's what we all need.
That's the solution.
Forget bailouts, forget IMF crisis meetings, forget interest rate policy, forget everything from shorting to credit default swaps. .
Just make us all senior civil servants.
We could kick the process of with a job swap between Wimpey workers and Treasury officials.
Given the state of the construction market, it could not do much damage
on that count, and given the quality of policy advice this could hardly
fail to make a better fist of things.