(TALKZIMBABWE) British economic logic: Dig deep to get out of the well?

British economic logic: Dig deep to get out of the well?
Philip Murombedzi
Fri, 06 Mar 2009 03:58:00 +0000

THE LABOUR Government once criticised the Zimbabwean government for digging deep to “get out of its economic mess”. But today the same government seems to be taking cues from the much criticized “Gonomics”.

The difference is that Britain, unlike Zimbabwe, is using the same measures without biting economic sanctions; which suggests that they are in a deeper hole than Zimbabwe was, or is.

Telegraph blogger , Daniel Hannan wrote: “Every single measure it has so far taken - every single measure - has served to exacerbate the recession: the bail-out, the expropriation of Northern Rock, the next bail-out, the takeover of Bradford & Bingley, the fiscal fiddling, the next bail-out, the attack on our Icelandic allies, the Lloyds-HBOS merger, the higher spending, the unprecedented borrowing, and did I mention the bail-outs?”

Britain has started printing millions of 'dosh' to avert a slump, but the story does not make the headlines. Britain's malfunctioning banking system is starving consumers and businesses of credit and businesses are folding.

“Closing Down Sale” has become the popular high street mantra in Britain and many stores lie vacant.

The Chancellor of the Exchequer, Alistair Darling, taking cues from RBZ Governor, has ordered the printing of £75bn to be injected into that country’s economy over the next three months.

Threadneedle Street will be in over-drive for the next three months. Can you imagine what would happen to Britain if it had no printing paper?

We all know this is the last-gasp measure by Britain to get out of this mess. It was used by Japan to end a decade of recession and deflation, but circumstances were different then. There was no banking crisis.

In Britain, they call it “quantitative easing”. In Zimbabwe it has many nicknames. It was called “stoking up inflation”, yet Britain is spared the same economic logic.

Gordon Brown’s boom is now doom.

Liberal Democrat Treasury spokesman Vince Cable said increasing the amount of money flowing into the economy was the "only clear option". It was not the clear option for Zimbabwe, according to that same party and the British Government.

At least Zimbabwe did not reward those banks who played Russian Roulette with the economy.

Britain should realise that this problem is beyond liquidity issues now and it is now credit risk.

The price of money does not do anything to stimulate lending if the perceived risk of default is there.

Easing in Japan caused this mess. New tricks Mr Brown, Mr Darling?

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Philip Murombedzi is the editor of the Zimbabwe Guardian
philipmurombedzi@yahoo.com