The British Are Coming!

This, so I am reliably informed, is the case... too bad really.

More interestingly, I considered it may be worth clarifying my position on an issue for which I have received some criticism in the past couple of days.

I, perhaps foolishly, subscribe to the view that government intervention in the market is an occasionally advisable thing; not necessarily a view to which many people who study the same subject as me subscribe. 

I have also, in the past, supported the end of the investigation into the potentially clandestine activities of BAE, on the grounds that such an investigation could have had dire consequences to the economy, and caused quite a large swell in unemployment.

And yet I have spent the last few days criticising both the Fed's decision to dramatically cut interest rates, and the US Government's financial stimulus package. Why, I've been asked, do I on the one hand defend government action to protect the economy, and yet on the other stand ardently against the very same thing?

Firstly, let me say this; the reasoning for canceling the BAE investigation was not purely economic; there were also security concerns as highlighted by MI5's report this year to that effect.

Secondly, and more importantly, the US' plan is not about saving jobs, it is about saving their entire economy; in this instance it is difficult to argue that they are doing anything other than stave off the inevitable, and not particularly efficiently or wisely. 

One of the major problems currently facing the World is the huge dependence upon credit which has emerged in the past couple of decades; lowering interest rates will do little to solve this problem.

A more significant issue for me is the fiscal stimulus package; described, by Michael Bloomberg, the Mayor of New York, as 'like giving a drink to an alcoholic'. Each job created by this scheme will cost the US Government $336,000 (figures courtesy of Professor N. Gregory Mankiw); quite expensive, relative to, for instance, just increasing the number of jobs in the Civil Service and paying each of them $40,000 a year; not a brilliant plan itself, but no more stupid than what they're actually doing.

So that's my opinion; you're all completely at liberty to argue with me. I hope you do, in fact; it'd certainly be interesting.