August 2011 was a terrifying landmark for the British government. They borrowed more than in any previous August: a year after taking power with ringing declarations that control of spending and borrowing was their overwhelming priority.
Is it really the fault of Balls-Brown 'mismanagement' of the economy, especially of government spending, from 1997 to 2008? The answer surely is that Labour did nothing to assist the real development of the economy, but they are neither clever enough nor bad enough to get away with wantonly ruinous policies. Britain is [at least superficially] not alone: we are perceived to be in a hole that looks very similar to that in which the USA authorities have begun to panic.
President Obama is obviously unhappy as his rating with the voters plummets. The Federal Reserve is trying a new version of 'quantitative easing' called 'the twist': and commentators are highly sceptical that this will have the desired effect.
But the US economy is much better placed than the British, as will become clear in the coming months. The Chancellor says that he will stick to a failed policy: this is reckless obscurantism. The problems must be diagnosed properly before they can be addressed effectively. This blog tries to help.
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