Paul Mason has been incisive on current debt affairs:
Britain’s problem is its lack of manufacturing and high-skilled industry, combined with the low skill base of its workforce: when the one-time kick of £200bn quantitative easing and 20% currency depreciation wears off, we will begin to feel this.
And in the US the problem is writ even larger: even with $1.7tn of money pumped into the banking system by the state – and make no mistake, central banks, with one exception in the world, is part of the state – the jobs market has not recovered; growth is poor; house prices are still declining, although as the ever-optimistic rubbish that comes into my inbox from analysts constantly reminds me “at a slower rate”.
And that is before austerity. Much of Middle America already looks like a museum of the 20th Century. The stimulus has succeeded only in averting a slump; it has not pump-primed growth. When austerity comes, even if the pro-austerity economists are right, and the medicine eventually revives the patient, in the interim it should provoke a second dip, or a flat line.
2011 is turning into the year when the unabsorbed shocks of the credit crunch collided with the failure to find new sources of growth.