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Howard's Way.... a weekly column from the Rt. Hon. Michael Howard QC. MP. 

23 October 2008

It is some weeks before I wrote about the credit crunch. Since then things have got worse.

The banks have got into deeper trouble. Credit has become scarcer. And stock markets have tumbled. Experts argue with each other over whether we are already in recession.

And this is really the most worrying point.

It is perfectly reasonable to have sympathy with shareholders in banks and other companies and pension funds have undoubtedly been hit. But we are always warned that shares can go down as well as up.

The most acute concern is the extent to which the difficulties in the financial section affect the “real” economy. Clearly credit is the lifeblood of business. If firms can’t borrow they will go out of business. Jobs will be lost. Homes will be repossessed and there will be misery all round.

I’m afraid that all of these things are going to happen. The only questions are how many people will be affected and how long these difficulties will last. And in truth no-one knows the answers to these questions. Anyone who thinks they do is probably deceiving themselves as well as their audience.

In this dire situation there is a limit to what governments can do but it is essential that they do what they can within those limits. This what most governments have now done, some later rather than sooner.

For Opposition politicians it is important they support their governments when they do the right thing. But this need not prevent them pointing out who is responsible for these difficulties, what lessons can be learned and putting forward their own ideas for hastening the end of the crisis.