The US economy

On Friday the House of Representatives eventually passed Bush's economic rescue package. Now a full two days later I finally get round tp commenting on it and many of the things I'm about to say have already been said and I apologise for that but you have to remember I live in the UK which feels a lot like having to go through life dragging the bloated corpse of a long dead Siamese twin.

The most important thing you have to understand about this rescue package is that it is not a magic bullet or a quick fix. Both John McCain and Barack Obama have described it as a tourniquet that will stop the bleeding but not heal the cut and all commentators have desperately tried to avoid the arrogance of plagiarising Winston Churchill's famous wartime speech in which he said;

"Now, this is not the end. It is not even the beginning to the end. But it is, perhaps, the end of the beginning."

But that comparison is apt if a little over dramatic because all this rescue package has done is solve the banking problem which has been the downward spiral driving America's economic problems. This solution will take 8 - 10 months to have an effect on Wall Street and it will then take another year or so for those effects to be felt on Main Street. In the mean time there still will be a recession, manufacturing and productivity will still decline, people will continue to lose their jobs and people will continue to lose their homes but things will get better.

The difference this rescue package will make is the difference between people hurting 10% and people hurting 90%. Sadly some people will still hurt 100% but the only real question I have about the package is why Congress didn't pass it this time last year.

In UK news I do need to go back to yesterday and point out that although £1.1trillion has flowed out of the British economy no individual in the UK has actually lost any money. All that's happened is that money that used to be deposited with the Bank of England is now deposited with other national banks. If you want to avoid the problem all you need to do is nip down to the Post Office and open one of their tax free savings accounts with a 100% deposit guarantee and 6.25% savings rate. Alternatively you could go with Northern Rock and it's 6% while you try and dream up new reasons to convince yourself that the British State still has an opinion worth listening too.