David Cameron says a second financial crash is imminent. If he’s right, it’s because politicians bailed out the wrong industry, argues Renegade Economist Ross Ashcroft.
Bankers and politicians saved the wrong industry, says Economist Ross Ashcroft.
First Massive Fail
Instead of channeling money into the real economy where we all work, politicians pumped money into financial institutions and practiced quantitative easing (money printing).
Second Massive Fail
Politicians financed more speculation.
Third Massive Fail
The only industry to grow has been the financial industry.
The Result
Prices of houses (unproductive assets) are built on mountains of private debt — in fact the greatest in history.
Professor Steve Keen of London’s Kingston University believes the level of private debt and the speed at which it is growing are the key indicators of the health of the economy. He believes the economy is in trouble when household and business debt is above 150% of GDP, and when it grows at a rate of 20% or more. In the United Kingdom the household and business debt is at 350%.
Ashcroft believes escaping from the private debt trap will require a lost generation or a drastic change of policies that run counter to conventional economic thought.
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