The Budget

At the birth of the US the biggest argument between the founders of the new state was about the economy. One camp believed the market should be left unfettered whilst another argument was that the state should act as the regulator of markets to protect sellers and buyers. Laissez Faire versus Regulation a central argument within economics that students grapple with.

In the early days of pre industrial agricultural markets economists studied how prices varied with supplies and demand from buyers, Adam Smith was amazed as the "invisible hand" he saw smoothed out gluts and shortages by adjusting price up and down. The magic of markets had been known since ancient times the Romans used financial enterprise as a unifying factor for empire indeed it became the most desirable factor that attracted tribes to the Roman franchise.

In Norman times the local lord would, given a royal charter, provide markets so his serfs could trade their personal surpluses.

Everywhere markets had been the key through which economic development occurred. But were they un fettered....well no. There has always been a need for special courts, local laws and local law enforcers to ensure buyers and Sellers were not cheated. For this they levied local taxes. And reaction could be extremely punitive indeed.

Mmodern economics was based on observations of how these simple markets operated....and Osborne, Clegg and Cameron perhaps should have got back to basics before they launched into their emergency budget.

For those who are confused the condemns came to power based on a commitment to small government, reducing the deficit and reducing government spending to stimulate the market!!

But it was greedy monopoly forces in banking searching for ever more marginal investments and consequential higher returns that led to massive losses in wall street, toxic losses in the sub prime market tracked across the globe resulting in the biggest run on banks in banking history. Banks fell and had be bailed out by national governments. This was the origin of the Global Collapse in trade!!

Deregulation of financial services was soon identified as the fly in the soup.......Thatcher & Reagan being the villains of this piece. All markets will move to monopolisation and concentration of economic power...that is why we need cycles in the trade cycle where regulation is increased to ensure positive corporate practices.

Perhaps Labour should have done more and perhaps they should have seen this disaster occurring but as a government they were not responsible for it!!!!

In Cameron & Clegg World, the last of the summer amateur economists, it is government that is the baddy and not the greedy bankers!!!! Government spending was the issue they say and then impose more inflationary forces on the economy than there were in the first place by increasing VAT, reducing working families negative income tax, reducing government spending. The Young, Poor and Middle in come groups will pay all the costs whilst we could see stagflation and unemployment rapidly increasing in the economy.

Does any of this make sense well not really...except we must rebuild the Labour party and again offer a real alternative to Tory Economics from Noddy and Big Ears!!!