government pickpockets

I'm a big fan of Fagan Inspection, a proven and effective method software defect prevention. Note the spelling: Michael Fagan has never been unkind to Oliver Twist, unlike old Fagin. (He is also a real person, even if he does look like Max Headroom). One of the techniques an inspection leader may employ is to have a "novice" on the team: someone unfamiliar with the product domain who will ask obvious questions and may thus uncover unwarranted assumptions.

Let me now take on the role of the novice in the domain of economics. In recent months we have learned that the "sub-prime" mortgage crisis arose because banks had been lending too much money to high-risk borrowers; many borrowers defaulted on repayments, causing enormous losses in the finance industry and a tightening of credit. Stock markets around the world have reacted with steep falls.

To stop this cascade of trouble, the Federal Reserve has decreed a sharp cut in the interest rate. In other words, they've loosened the constraints on credit. The root cause of the problem was easy money... so the US government's remedy is easy money. This seems like a mediaeval quack deciding to bleed a patient who is suffering from the symptoms of anaemia.

We Brits, meanwhile, will soon be forced to lend billions of pounds to a bank.

Fagin would have been impressed.