Having last week got a very good description of what the problem is from Tom Burroughes, this afternoon I got some good answers from Antoine Clarke and Michael Jennings to the what-should-be-done? question.  Doing nothing would be better than what they are doing now.  Better still would be to cut public spending in all countries (notably the USA) where the budget deficit is big.  Yes that will all be horrible, but the horror will be sorted relatively soon.  What they are actually doing will prolong the misery, which is what they have done in Japan, as Michael J explained.  Trying to ensure a soft landing, as they are now, will merely leave the wreckage on the runway indefinitely.  The runway wreckage metaphor did not occur in the conversation but lots of other regular get-the-grief-over-with-quickly metaphors did, notably surgery.  If you have to have an operation, you want it all done at once.

Michael made the point that a lot of what has passed for “prudence” during recent years was: not.  He spoke with feeling about how he had been mocked for not buying a house.  But he looked at the cost of houses, and compared it with the rents you could charge for them, i.e. the income that houses yielded, and said: no deal, I will rent.  We did not also mention, but might have, that choosing a bank to put your money in entirely on the basis of the interest it is offering, with no thought of its chances of failing, is likewise imprudent.  These are not things that our politicians will be stepping forward to say in the next few weeks, but they are surely true, are they not?

But, recent incoming from Michael:

By the way, I think I was far too sanguine about employees sympathetic to management being able to help a company adapt its way through a liquidity crisis. In truth I think any company is pretty much dead the moment it misses payroll.

In other words, Michael reckons he tried to make the short term misery sound not quite as miserable as it will really be.  A temptation that all our politicians will understand only too well.

What a mess.

By the way, this conversation was recorded straight into a laptop computer, not with the lapel mikes usually use, and quality has suffered a little.  But we can all be heard, I think.  Saying quality things is what matters with this kind of exercise.