What is this thing with growth? Shouldn’t we have stopped growing by now? More growth is just fatness surely?

And I hope you havea good weekend as well.

So, what do you think should be happening?

One thing ought to be borne in mind: the UK economy cannot be fixed by the UK government alone. What is the future for the Eurozone? Clearly it cannot remain as is, but the options are problematic, to put it mildly. Turmoil will remain until the Euro issue is resolved.

And you still want a financial transactions tax?

I’m afraid that toughing it out might just be the least worst solution unless we can get all the worlds major economies to abandon fiscal control simultaneously and persuade the Chinese to allow their currency to increase in value. Otherwise any country that looks like it’s going soft on deficit reduction will be at the mercy of the markets.

2.3% is better than 4% for goodness sake.

If you can get the Eurozone, the US and the UK to issue cross guarantees for government debt things might calm down. I really don’t think it si growth that is issue for the markets – it is getting their money back with interest.

Should I be buying a shopping cart?

An alternative take: http://bilbo.economicoutlook.net/blog/

Fully agree with you here, Duncan. I have been saying on here for two years that the UK gilts market in a low interest rate environment with the UK having an independent monetary policy would act inverse to the stock market. It always does to some extent, however, in the current risk averse environment, gilt yields are a clear proxy for future growth prospects. There never was much chance of UK gilt yields spiking and the 2010 shorts got their head handed to them and the analysts who predicted imminent rising interest rates have been made to look foolish. It is beyond parody when Coalition ministers point to the low cost of government borrowing as a positive. When the economy is doing better, yields will start to rise and as long as they are this low it is an extremely bearish sign for our economy and the government.

I actually think some of the risk aversion is overdone and even crap fundamentals do not justify this low level of yields. My reading of the turmoil is although companies are making money just now, the market is predicting almost no growth in the U.S. and EZ etc. during 2012. The government bond market is predicting something worse than the low anaemic growth that I expect. It is not very often that the bond market is wrong. Although, I suspect that there is a genuine fear that a major European bank will blow up and freeze the interbank market. Hence, the extraordinary low yields.

The EZ money trends suggest that the whole of the EZ is heading back into recession. As Simon Ward says, the fingerprints of the ECB are all over the murder weapon. Morons is the kindest description of those clowns.
http://www.moneymovesmarkets.com/journal/2011/8/15/global-monetary-divergence-widens-further.html

You have a point, albeit expressed in foul language, about the economy.

But the Conservative Party aren’t too worried about economic credibility right now, thanks to the criminals of the last 10 days. It’s more important to be tough.

IMHO the riots have brought the end of the welfare state perceptibly closer – something which even the BBCs Paul Mason was writing about this week.

“What everybody is toying with is the idea of a big, government-led structural change within capitalism: whereby the priorities are re-oriented so that private sector growth does not return at the price of impoverishing developed world consumers and workers.

At times like this I always come back to Hyman Minsky, the unorthodox neo-Keynesian economist who predicted the crash and whose work contains the kernel of what a 21st Century structural change might look like.

Minsky, who has followers on both the left and right, argued: socialise the banking system, rip up regulation for the private sector non-financial economy so it can grow, and abolish welfare, making the state the employer of last resort but forcing the unemployed to work. “

Vast chunks of the 1948 settlement have gone over the years – though I think the NHS will survive in one form or other – the native Brits being historically keen on fairness, and no one wanting to get ill.

But the people who are calling for a response to the riots like the post-80s response (only spending even more) are in some kind of dream world. The years of an economy fuelled by borrowing are ended.

“And the worst hit shares are financial companies (where rumors of problems in the European banking system are once again circulating) – those most exposed to global growth.”

Surely the reason financial stocks are being hit is their exposure to dodgy sovereign debt?

Is this really terrifying? Really terrifying is being shot at with heavy calibre artillery. No, this is more like mildly uncomfortable. Or maybe it’s great fun. Take a 300 year perspective. Roll with it and be cool. Growth is overrated anyway. It has a way of wrecking things. People should focus on learning instruments instead. Like zithers. A nation of zither players. That’s terrifying.

I don’t usually get scaired when politicians tell me I’m looking down the barrel of a gun; as in the case of global warming, the millenium bug or avian flue it usually amounts to a storm in a tea cup. On the other hand, I begin to get nervous when they reassure me there’s nothing to be worried about – a la blood products being uncontaminated with HIV or nuclear power plants disasters.

Sure unemployment is raising and the cost of living is increasing, but no one will starve to death and, besides, a little calorie control might be good for us. What’s more, the world of work had become so much of a drudge of late, I get the feeling that less materialistic folk, if they’re perfectly honest with themselves, are actually enjoying their enforced sabaticals.

Remember, some of the best things in life are still free – like playing football with the kids or catching up on some books you’ve been meaning to read.

The real misery, of course, will be felt in the developing world, where there are no food subsidies and unemployment benefits. So, needless to say, the real political choas will be felt there.