I have never believed that there would be a quick end to this recession because not only were people funding their consumption through borrowing, but some truly awful lending (i.e. capital destruction) was being undertaken on a huge scale at the same time - a very interesting article re the background to the latter can be found here under the heading The Subprime Debacle: Act 2, Part 2.

There are numerous commentators who say that increased consumption is the way out of recession and that any Government policy which curtails consumption is detrimental to our wellbeing - in my opinion such commentators are wrong. I believe that the only way out of this particular recession is a combination of:

• Saving both personally and by governments - at last the UK has a government which understands this! These savings will reduce indebtedness and ensure that we collectively return to a position where we consume what we can afford out of our own assets rather than enjoying accelerated consumption through borrowing other peoples' cash. In my opinion, just as this imbalance has built up over some forty years, it will take many years for the rebalancing to take effect.

• Creating wealth. At the same time as increased saving is being undertaken, we can also improve our individual positions by investing in businesses which successfully create wealth - in my opinion and against the above background, these will predominantly be businesses which improve productivity and do so with products which are tradable internationally - such companies enable the cost of goods and services purchased by individuals to be reduced, thereby increasing the ability of such individuals to increase savings. In addition, investors in successful productivity enhancing companies will enjoy rising share prices, which represents an enjoyable alternative means of saving!

You might well respond that that's all very well in principle, but where are these productivity enhancing companies? For many investors this presents a problem because many of our major listed companies have been assisting our propensity to consume, but relatively few enhance productivity. I believe that the UK has a natural talent for developing productivity enhancing solutions but many of these are based on combinations of newish technologies eg powerful and inexpensive computing, biotechnology, electronics etc as well as deep knowledge of the operational issues within specific activities. This means that many…

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