It’s Athens, rather than Rome, that’s burning as the politicians fiddle. But this time we are likely to see other capitals going up in flames before the final dénouement of this Depression. And yet, it need not have happened; and nor are the horrors of the coming years inevitable.
The corruption of the Greek way of life is being exposed to the rest of the world as the politicians of that bankrupt country plead for money while the people demand a bail-out without conditions. But the state of denial is not confined to Greece.
In Britain, Business Secretary Vince Cable has written to Prime minister David Cameron claiming that the future cannot be foretold. “We can’t predict the economic cycles and market-driven competitive forces of the future,” he claims. Full marks to Cable for wanting a long-term plan for the recovery of industry. But he knows very well that we can forecast the peaks and troughs of the business cycle.
In his book on the 2008 credit crunch, he acknowledges consulting my Boom Bust (2005). Indeed, he personally told me that he drew heavily on my book’s historical materials. On the basis of the historical record, we can say with a very high degree of confidence that there will be a mini boom/bust in 2019 and the current 18-year cycle will end in another massive crisis that hits the trough in 2028, if corrective policies are not adopted.
Given this framework (and allowing for the changed competitive environment as a result of the rise of Asia), we can design a pro-growth programme that re-builds the western economy. But this will not happen if politicians like Cable continue to suppress the knowledge that is at their disposal. The hocus pocus policies may make good sound-bites, but they are driving nations deeper into the black hole of the Depression.