Financial Collapse and Neutrinos - 25th September 2011

The Leader of the Opposition wouldn’t have agreed with my column last week, because he is demanding a tax cut and increased expenditure when our principal problem, and that of the western world, is that we are already borrowing mind boggling billions. Of course, there is a perfectly sensible argument for getting government expenditure to kick start economic activity when it is so sluggish, but we haven’t the money to do it with. If however, we had paid off our debts during the boom years we might now be in a position to give the economy such just a stimulus.

Unfortunately, our addiction to borrowing did not abate even in the good times: during the ‘years of plenty’ 2003-2007 when the tax revenues were rolling in, the government borrowed a further £160 billion and it is for this reason we cannot entertain greater government spending now. A serious party of opposition needs to come to terms with what it did previously in government if it is to be trusted again. It cannot go on just blaming the world economy and the banks. It was a British government that borrowed too much and spent too much even when times were good –just like Greece, actually.

It is disastrous level of sovereign debt that is sinking Euro zone. We are very fortunate we didn’t join, and they are fortunate too, otherwise our own levels of sovereign debt would be adding to their problem which is already of quite a sufficient scale to be getting on with. As negotiations begin on a new rescue package for Greece and the Euro as a whole, I have had quite a few emails from constituents demanding to know what it will cost Britain, and expressing the certainty that it will be wasted effort because Greece is bound to default in a disorderly manner and the Euro is doomed. I am not aware of the knowledge and expertise on which they base their certainties. In my replies I tell them, first not to underestimate the political will behind the endeavour to save the Euro, and second, to be careful what they wish for, because it is clear from the tone of the correspondence that they intend to enjoy the fulfilment of their predictions.

Any Greek default and consequent damage to the Euro could have frightful consequences for our principal export market. The damage to European economies will have profoundly unpleasant implications for us. Being able to say “we told you so” will be of very little comfort. Hopefully, the answer to the question about what the latest package will cost Britain, will be very little if anything, but it is too early to be sure. If there is a cost to us, we need to consider it against the very substantial costs of standing by and watching the whole thing blow up.

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During a few days in the southern Alps, away from the curse of email, I thought about the experiments that were going on under my feet in that mountain range, and as a consequence of which the world of physics is now also in turmoil. A stream of neutrinos fired from the Hadron collider in Switzerland arrived under the mountains in Italy billionths of a second sooner than expected, breaking the Universe’s absolute speed limit. According to Einstein’s theory of general relativity –on which our whole understanding of the Universe remains based- nothing can exceed the speed of light. The reaction of the Physics establishment has been to question the validity of the findings (one professor at Surrey University said he would eat his shorts) rather than change the whole way we think about galaxies, space and time. If correct, this result would even call into question our estimate of the age of the Universe (currently 13.7 billion years – a mere trifle as a number when considered against levels of sovereign debt). Of course, the experiment must be repeated and the data confirmed. Though, if proved correct, it does raise extraordinary possibilities, perhaps the neutrinos took  a short cut through another universe. This is certainly the antidote to worrying about the Euro and imminent financial collapse.