William Keegan, Larry Elliot, Ed.Balls, Seamus Milne, Will Hutton, Roy Greenslade, Jonathan Steele, Malcolm Dean, Jonathan Freedland, Max Hastings

I address those who can claim some competence in the art (or science) of political economy, particularly William Keegan.

We received a letter from our MP, Rob Marris of SW Wolverhampton, suggesting about 300 reasons for voting Labour in the recent elections. I wrote back saying that I had not intention of voting for Blair, a war criminal, or anyone misguided enough to support him. Also that large claims to have influenced the capitalist economy were false.

As events have shown Socialists, no one controls the capitalist economy. It pursues its mysterious way and if it appears to have produced some form of prosperity in recent weeks we should all be thankful, for it was not long ago that we feared it was heading for a slump, and indeed, this may still be the case.

Of course, some political parties handle slump or boom better than others and Gordon Brown as he becomes the longest serving chancellor since Nicholas Vansitaart 1812-25 (Nicholas who?) may well take some credit. Being an oil producing economy has enabled him to tax by stealth, although recent events suggest that even with this advantage conditions to continue to produce prosperity will not remain indefinitely.

It is under these circumstances that the remarks of the governor of the Bank of England, Mervyn King, created a minor sensation when he pointed out that he did not know where house prices are going. But house prices affect interest rates which affect inflation and further rises in interest rates and so on, or vice versa. So continuing prosperity is now deemed to depend on rising house prices.

William Keegan unearths yet another authority in his 4 July 04 column in the Observer. This is no less than The Bank for International Settlements. This venerable 74 year old institution was originally set up in Switzerland to deal with reparations from Germany after the first world war. When that failed it then became the `the central bankers' bank. So when the central bankers meet in conference virtually every month they have unrivalled information. BIS current policy centres on `imbalances which must warrant attention from prudent policy makers.' In Britain the most important is the continuous rise in house prices. But the main imbalance is in the US where 25% of the balance of payments deficit in 2003 of 550 billion dollars was financed from money borrowed from foreigners. So yet another indicator suggests doom and gloom for the future.

However, some people can remember that the last time US deficits were considered unsustainable they hived off to create Euro-dollars. Also much of Britain's second world war expenditure was met by forcing the colonies to meet it by delaying payment of their balances held by us in sterling.

So even if most of the omens are bad, capitalism may well have surprises in store for us.
It is a sobering thought that Mervyn King is a local boy made good from Wolverhampton and is just celebrating a year in his new job as governor of the Bank of England. So perhaps the most important person deciding our future is a local figure. We wish him well.

Where does Blair stand in all this? As Keegan puts it `Blair's promises are not worth the paper they are not written on .' And that well sums up the progress of this particular rogue.

Dr.George Barnsby, 141 Henwood Rd. Wolverhampton W.Mids WV6 8PJ
phone & fax: 01902 751888 eMail: barnsby@blueyonder.co.uk: web: www.gbpeopleslibrary.co.uk