I don't believe this one bit, so I had to pen him a reply. After my thoughts gelled, I was quite happy with their summation of my thoughts so I thought I'd post them here so I don't lose them. I hope you'll indulge me.
Many thanks for your email XXXXX.
However, my opinion is that the BBC is reporting on another “mass self-hypnosis” (with the last being, in all quarters, both public and financial sector, that the financial boom was sustainable).
Our last 10 years of growth were generated by financial magic, which turned out to be borrowing from the future in an exponential fashion.
Right now, people are buying cars, houses and plasma TVs by borrowing money which has been borrowed from the Treasury in the form of gilts. This has now caused those who have access to the media to start reporting that people, and now businesses, are feeling better about themselves. However, until we all wake up and realise that the money has to come from somewhere, and that organic financial growth cannot be in double digits (which is what the stock market and fickle day-traders have come to expect), we are heading for another cliff after what might feel like a small plateau, when governments and central banks finally realise they simply cannot hold up the edifice which we have all contributed to in the last decade.
I had to respond to your email – I do apologise if this is an odd reply to get!
I too saw the BBC report but it simply doesn’t ring true with me at all. I’m not paranoid enough to believe that central government is seeding stories like this – I don’t actually believe in sinister top-down management, frankly the management I see tells me that most people who rise to the top of the tree are struggling to control their own small empires – instead, I believe humanity builds complex systems which it cannot hope to control (or even understand – economists being a case in point, they really ought to be called Economic Historians), and which often blow up in our faces due to forces within them which align (usually on the basis of simple human instincts). In the case of the last decade, we’re looking at a financial system out of control on its’ own drunken binging on wholesale capital markets, with individual human greed in investment banking arms (bonuses et al) and a lack of oversight on the part of governments who just loved all the tax that came in. Collective hypnosis and an unwillingness to listen to those who tried to warn the system of its’ own lack of foundations led to where we are now. The people at the bottom just loved being able to buy all those new cars and plasma TVs.
I see no underlying changes either in the mindsets of the participants or the system itself which can make me believe that the recession is coming to an end.