Another policy maker has decided realism is the best policy when talking about the current credit crunch. China’s Liu He started the trend earlier this month, by talking about the need for ‘economic restructuring’. Now the UK’s Finance Minister, Alistair Darling, has become the first western official to abandon reassurance and instead to focus on the reality of current problems.
His analysis is stark in tone, and acknowledges that the depth of the crisis is far worse that he had previously understood. He says:
• Today’s economic times ‘are the worst they’ve been in 60 years’
• The downturn ‘will be more profound and long-lasting’ that most people had expected
Some research in yesterday’s Financial Times yesterday also highlights the depth of today’s problems. Its shows that Merrill Lynch has already lost 25% of all the profits it has ever made, since it became a listed company back in 1971. And, of course, there are probably still more losses to come, as global housing markets remain weak.