Douglas Carswell's Blog

The Establishment is bankrupt

I see that the Bank of England's Financial Policy Committee says the UK's banks need more capital. Even after all those bail outs.

In other words, at the same time that the Establishment is demanding banks lend more, they are also saying to the banks that they should put more aside to be safe.

Another day, another example of muddled thinking at the very top.

Until I became an MP, a bit like Dorothy in the Wizard of Oz, I assumed that those at the top were wise and omnipotent beings. I took it as read that they would consider public policy matters from every angle.

Yet just like in the Wizard of Oz, draw back the curtain and you discover there's rarely any great wizard there. More often it turns out to be a slightly flustered, middle-aged man pulling at levers and hoping no one asks too many challenging questions.

Ever since the credit crunch hit, we've left it to these people to sort things out. But it turns out they don't really have a clue.

They still cannot see that the credit crunch was caused by the credit bubble that preceded it. They still cannot see that artificially lowering the price of credit will leave it in short supply.

Neither fiscal nor monetary stimulus will return us to prosperity. Yet those at the Treasury cannot envisage an economic strategy that does not involve more of both.

This crisis may well mean the end of the Western welfare model. It may mean the beginning of the end of the post-Bretton Woods monetary system. Yet our elite still see it as another cyclical downturn.

Just like the 1970s, Establishment thinking is bankrupt.

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