This is a fascinating read. This guy, a former chief economist at the IMF, argues that politicians were only too glad to encourage the growth of credit. They positively encouraged it. Why? Because it masked growing inequality, and inequality is something the political classes in both the US and the UK are unwilling (or unable?) to deal with.
He is one of the few people I have read who focuses on inequality as being the hidden driver of financial instability. Unless we address inequality in this country, we are going to divide our nation even further and condemn millions to a life of poverty. This is an unacceptable prospect.
Far from addressing the inequality issue, the coalition is in the process of exacerbating it. George Osborne has poked his stick into the hornet’s nest. He and his cohorts should not be surprised if they get stung.
As an aside, I came across a great quote the other day, it’s by Edith Wharton:
“Affluence, unless stimulated by a keen imagination, forms but the vaguest notion of the practical strain of poverty” Amen to that!