Friday, 20 February 2009

The Truth About Boom & Bust

Have you ever wanted to see something simple that shows the underlying strength and underlying truth about our economy?

Let me help you!

Our stock market, in particular the FTSE 100, provides a fascinating insight as to how strong our companies are in good time and in bad. From Margaret Thatcher's election as Prime Minister in 1979 through to the end of John Major's premiership in 1997 the FTSE rose consistently - though admittedly with the odd peak and trough as markets reacted to national and international economic circumstances.

Having inherited a golden legacy, New Labour presided over a few more years of growth. There followed a massive correction in the market, between 2000 and 2003, before the FTSE shot back up to levels close to its peak through to 2008. The truth is that the markets knew the underlying strength of our economy was massively overvalued because our economy was based on a mountain of national and personal debt. What has followed over the past year is the product of a decade of borrowing in times of plenty instead of saving up for a rainy day.

So if you ever want to be able to show someone the truth about "Boom & Bust" show them this graph. The difference between good economic management and economic management based on rhetoric and debt is simply the difference between Conservative Government and Labour Government.

Let's hope we get back to some sound economic management before it's too late!

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