Telling it the Way it Is: Reasons to Be Cheerful

Am I being pessimistic about the way things will go economically? Well, maybe. But it seems to me the very structure of our financial system (see Synthetic Money below) has put us in what engineers call a negative feedback loop. I may be wrong, but if I am I’m in very good company, and company which is going to be spending your money soon.

Feb 10, Timothy Geithner, US Treasury Secretary. “The financial system is working against recovery, and that’s the dangerous dynamic we need to change,.. “Without credit, economies cannot grow, and right now, critical parts of our financial system are damaged.”

Feb 10, Tom McKillop, ex-RBS Chairman. "Securitisation was perceived as a stabilising influence in financial systems, distributing risk and making the whole system more stable. It didn't turn out that way, it turned out to be the absolute opposite of what was expected."

Feb 10, Ed Balls, UK, formerly a chief economic adviser to the Treasury. "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years as it will turn out." "I think this is a financial crisis more extreme and more serious than that of the 1930s."

And last week Gordon Brown, the UK Prime Minister said that the world was in a full-blown economic "depression", but his office quickly declared that comment a slip of the tongue.

There's no technically agreed definition of a depression, but two rules of thumb widely mooted are a 10% decline in real GDP or three years of recession. Its not like the "R" word where there is a definition and one can be declared. So don't worry, there won't be a Depression, not politically.

But a drop of 10% GDP from our already very high standards is hardly a reason to get depressed. Nor is three years of belt tightening the end of the world. Its probably the only way we were ever going to get CO2 emissions down and address ecologically damaging consumption growth, get house prices to a level that support life rather than drain our resources, and address the ideology that growth for growths sake is inherently good (the philosophy of a cancer cell). And maybe we'll even address the issue that GDP has become as a much a measure of consumption as production - heck, if we borrow and spend it all then UK GDP temporarily rises and its trebles all round, despite the mounting debt mountain. Shurely shome mishtake.

And so lets take all the "bad" news as a sign that our collective common sense and conscience is finally asserting itself. And the world will genuinely be a better place.