Tough Times

The BBC has conducted a poll of local councils to ask about potential job losses, and come up with a number of 25,000.  One analyst from the LSE on Radio 4 this morning expressed surprise at how small the number was - a number that is already 10% of all employees for local councils.

Naturally, the unions have started talking up strikes, and trot out the usual line that it's unfair that honest council workers must face the axe for the excesses of investment bankers the world over.

Last week we talked about the important of the financial sector for the functioning of the economy, and we noted that these institutions, called intermediaries since their function is to match monies people want to save to monies people want to borrow, are vital.  That, of course, doesn't excuse the kinds of excesses that have happened in recent years.

This week we'll talk more about the link between the financial markets and the goods markets, and why we got from a problem in the financial markets to the deepest recession in 60 years.

Final point: Unions always seek somebody to blame, and it's human nature to always try and blame someone else.  However, consumer indebtedness mushroomed in the last decade, as well as banking excesses.  We all, as a population, loved the idea of being able to spend more, and lapped it all up.  So as a population we all have some stake in the mess things have got into.  It's never quite as black and white as some people would like it to be to suit their arguments...