My official excuse for not posting for almost the whole month is that nothing really happened this month - at least in UK politics. (US politics was of course quite different - but hopefully I'll get a bit more time to blog on that after the Republican convention next week).
At the start of the month, Dave-2 (Miliband) appeared to be testing the waters for a move against the PM; those waters are probably still being tested as I write this. A putsch in the autumn seems a distinct possibility. Brown seems to be doing his best Leonid Brezhnev impression; I figure Gordon is a particular fan of the later Brezhnev, where the Soviet leader had been certified brain dead but was being wheeled out at public holidays and international summits anyway. A bit like the mid-seventies Elvis Presley, or Bono today. The problem is, Brezhnev didn't have the difficulties of the electorate to contend with; whereas Gordon, in about 18 months, does. Someone will surely slip him the (metaphorical) sleeping pills well before that date.
At the end of the month, Alistair Darling has been spotted drinking deep in the waters of economic gloom; some great comments by him in a Guardian interview reported in the news yesterday. Voters are "pissed off" - OK, so it's hardly post-watershed stuff (even though yesterday's Daily Mail bleeped out the word 'pissed' - how anal do they think their readers are?) but it's not the kind of language we've associated with Darling in the past. And the economic crisis is 'the worst for 60 years'.
This kind of statement gets batted about a hell of a lot at the moment and I wonder if the people making it - politicians, economists in the media, anybody fronting a property market programme like Location, Location Location or Property Ladder or any of the other crap - have really thought about what they're saying. In the early 80s unemployment went up to 3 million and we had negative growth for at least 2 years - probably 3. Is it really going to be that bad? Worse than the early Thatcher years? Do any of the people making the statement really remember those years? Or have they just watched Ashes To Ashes on the TV recently?
I would have to say the jury is still very much out on how bad this economic slowdown is going to be. A house price crash would actually help a hell of a lot of people in the UK - all the poor f***ers who have been renting or living with their parents for seven or eight years because they couldn't afford a house. Most of the recent opinion poll research on this shows that a large proportion of people actually want prices to fall. I think it's called 'bursting the bubble' or a 'market correction', depending on who you talk to. There was no way the economy could have continued with house prices rising at the rate they were in the early 2000s. The question, of course, is how big the knock-on from this correction will be to the rest of the economy. And no-one really has any good estimates of that.
I need to start running some more in-depth economic analysis, either on this blog or a parallel site, to debunk a lot of crap that is flying around at the moment. But the one thing I would say most of all is, DO NOT believe anyone who says that interest rates have to rise to head off a huge inflationary threat. Believe Bank of England Monetary Policy Committee economist David Blanchflower. Like Ben Bernanke in the States, he says interest rates have to fall to stave off recessionary pressure, and the inflationary 'spike' will be short-lived. He's right, and the rest of the MPC are misguided. The other guys aren't necessarily 'wrong' in formal terms, as they are acting on a crazy remit of controlling inflation no matter what (that's the target they were given by New Labour in 1997) but, like the early 80s, there is a danger that an obsession with inflation will inflict huge and unnecessary damage to the economy through high interest rates. Bernanke understands this and has cut rates really aggressively; the latest US output figures show a rebound to positive growth, although it's unlikely this strong growth will last once the temporary bosst from the latest round of unsustainable Bush tax cuts works its way through the system. Still, the US is in better shape than if it had whacked up interest rates, for sure.
In short, we're headed for a recession but it's not clear to me - yet - that it's gonna be a really bad recession. I think the current hysteria runs the risk of turning a slowdown into a slump. Whilst I wouldn't accuse Alastair Darling of hysteria per se (on the face of it a less hysterical-looking person would be hard to find), I think he should highlight on what basis he's saying things are the worst they've been for 60 years. A volte-face of such magnitude, coming out with a statement like that after a year of denying the problems, seems irresponsible in the current climate of fear and apprehension.
No-one really knows what the hell's going on, so what's your best move? Hal's advice: avoid the bullshitters (I'll tell you more about who they are over the course of the next few weeks) and read people like Blanchflower and New York Times columnist Paul Krugman. (I've just spent 30 minutes or so reading Krugman's columns and blog and they really are excellent - some of the best analysis of the US economy you'll read from a centre-left perspective. Very accessible to non-specialists, too.) These guys are still a little mainstream for my liking but they are still streets ahead of most 'orthodox' economists plying their trade these days - including, it seems, most of the UK Monetary Policy Committee.