I think the effect of 9/11 is understated. Alan Greenspan slashed interest rates, arguably fuelling the boom and over exuberance that followed. It was like that in 1987/88 too, when governments around the world reacted to the ’87 stock market crash by boosting demand. In the UK we then saw the Lawson Boom, and then we saw nasty recession.

Manipulating the economy in the wake of a disaster is notoriously difficult. It has been compared to having a shower in a hotel with a hot water system you are not used to. The shower is too cold, so you turn up the hot water, not realising that the shower was getting hotter anyway, and suddenly scolding water pours forth, engendering a string of expletives.

But there are other events which may have had an even bigger impact upon the economy.

These days we talk about the economic boom that preceded the credit crunch – a boom which lasted 16 years in the UK – as being based on an illusion. There is some truth in this, but only some. Another factor that stood behind the boom was a substantial increase in productivity which was driven by new technology. Another, incredibly important but often forgotten, factor was the end of the Cold War. The end of the rivalry between the US and Soviet Union, which had taken the world to the brink of nuclear war, had hugely significant economic implications which are often overlooked.

Another important development was the dotcom crash and the wider stock market crash which followed it.

It is arguable that the natural point for a global recession was the end of the 1990s. It was thanks to the policies of Alan Greenspan, and perhaps to an extent Gordon Brown, that helped enable us to avoid this fate. The US suffered a mild recession Germany flitted in and out of recession, but much of the world, with the UK in the vanguard, barely paused for breath.

Working out cause and effect is complicated.

Critics of Gordon Brown say he should have fixed the roof when the sun was shinning, but who is to say the sun would have been shining if he had pursued more prudent policies.

Then again, it is debatable whether deliberate manipulation of the economic cycle is a good thing. Gordon Brown vowed to end boom and bust. Clearly he failed. But even if he had been successful, it is debatable whether these aims were desirable. Bust can be a good thing.

I’d be interested in peoples’ views.

PS A Merry Christmas and peace, joy & prosperity to all during the coming year

PPS Great to see the newsletter back.

PPPS Any chance of having a print option again so that I can again read it in the bath?!

A fabulous set of articles today. Thank you, this is much better than anything I have read elsewhere.

I say, go skiing (in Bulgaria of course) and forget the crunch.

Happy Christmas

Lance