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Tuesday, September 30, 2008

Inflation

A little girl is advertising her dog for sale in the street. She is asking 1 million pounds for it. A passer-by warns that she won't get that much for her dog; but she is determined. When he returns later, the dog has gone and the girl is playing happily with two cats. She has sold the dog, she says. How much for? "1 million pounds of course," she replies. "I swapped it for these two cats and they are worth 500 thousand each".
The current turbulence in the world of finance is long overdue. Governments chose to be oblivious to high inflation and the consequences. Borrowers had little choice than to play the property game rather like the little girl in the street. People are not to blame as they simply behave like sheep: easy credit? rising house prices? play the free money game and win! The hangovers will continue after such a party. I don't believe bankers should be blamed - the responsibility lies with government regulators who chose to ignore the rise in easy credit with relaxed lending and the resulting "inflayshun". Somehow I'm sorry to see formerly sturdy mutuals like B&B in the wreckage.
posted by Guy Nicholson, 8:08 am 0 comments

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