27 January 2009

Corus highlights a political problem

It was correct to bail out the banks.  No country can function without a  banking system.  However the the 2nd phase of the recession is now taking hold and thousands will loss their jobs.

There will now be great pressure from the unions and elsewhere for a bail out to underpin the manufacturing industry.  The problem is where is the money going to come from?  Brown, it could be assumed, would rather boost the economy with tax cuts for short term political reasons.  But he has a further problem to solve.  He will not want any unrest with the unions now or in the run up to the election.

This raises huge political and economic issues.  Should he subsidise companies to keep workers on?  Should employee’s reverting to part time working have their wages underpinned by the state?

I am not sure this has been thought through.  Brown assumed that the bank bail out (1st and 2nd phase) would work and we would have a short share recession.  Clearly this is not the case.

Brown needs an action plan fast as this recession could get very nasty indeed at a political level.  If the unions assume that Brown is sunk and the polls keep widening, they will not hesitate to cause Moses a huge problem.

Shades of the late 70’s here.

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1 comment:

  1. Utter drivel

    Banks = Rothschilds = Manipulation

    Do some research...