Monday, December 08, 2008
Economy Still in ICU: Will it Respond?
The bail-out did prevent the immediate implosion of the entire financial sector which was a gravely serious threat at the time when Mr Brown unveiled the grand plan. Without that emergency action, it is highly likely that we would have seen the simultaneous collapse of several of Britain's biggest banks.
But, he adds:
What it has yet to do is get the patient out of intensive care. One senior minister who is currently spending most hours of his days with bank executives compares them to men who have 'suffered a massive heart attack'.
The analogy is apt because when someone has a heart attack, if they survive until they make it to hospital, a spell in the ICU is the only treatment. The image breaks down soon enough in that, while doctors have a range if not a multitude of drugs to feed into the heart patient, governments seem to have only one drug for a heart attack economy: huge injections of money.
One reassurance is that Obama seems to be planning to emulate FDR's New Deal to the letter:
The economy is going to get worse before it gets better," he told NBC television. He announced the biggest public works expenditure in half a century in his weekly radio on video address on Saturday, saying there would be projects to improve roads and bridges, make public schools more energy efficient, and computerise medical records.
He even manages to use the same medical metaphor:
He said he was focused on projects that would create the most jobs in short order, saying the economy was like a critically ill patient who needed a blood transfusion for survival.
Meanwhile, those of us who depend on the patient getting better-I exclude the Tories whose best calculation is that it won't- sit anxiously around the bed waiting for those indicators of good economic health- recovering share prices, stable exchange rates, resumed bank lending- to start beeping away cheerfully. Fingers crossed.
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