The fallacy of the mixed economy

"Nobody knows anything"

This was the punchline that William Goldman made famous when he wrote about Hollywood in his "Adventures in the Screen Trade". No-one can predict which film was going to be a hit or a flop.

In the same way, following the financial turmoil it seems no-one is actually steering, and Adam Smith's "invisible hand". has either got arthritis or has fallen asleep at the wheel.

In a sick kind of way I am actually grateful to the Republicans who pushed back on the Paulson plan, and stuck to their principles and challenged the nationalisation. It must be pretty hard for a free market politician (aren't they all?) to step back and agree to government intervention. But they have no choice and will get there.

b

The average Joe (plumber) can't figure out if the deal is really for for "Main Street or Wall Street". One thing is for sure the image and implications of the two words "The City" will never be the same again.

Double standards

I remember in late 2006 that Christmas saving scheme - Farepak - collapsed, costing thousands of families their annual savings.

Farepak's bank HBOS, was not willing to accept a new borrowing and business plan and called in the company's overdraft.

Incredible that the pin-stripes deserve our bail out, when needy families are tossed aside as a burden.

What to do

4 things. 1. Keep your money exactly where it is. 2. Put your head out of the window, and scream "I'm as mad as hell, and I'm not going to take it any more". 3. Read a good book. 4. Watch a good film.

b

I'd recommend three prophetic books that I have read in the past couple of years. They predicted this turmoil, not directly, but by addressing the fundamental instability of greed. Forever burying Gordon Gekko's words, "Greed is good". For a while there, people actually believed those words.

- The Shock Doctrine, by Naomi Klein. Canadian prophet takes on the free market and its architect Milton Friedman and wins.

- Afflueza, by Oliver James. Deep sickness of our times, the addiction to consumption.

- Status Anxiety, by Alain de Botton. How to treat the consequences of that part of human nature that must keep up with the Jones's.

Watch "A Matter of Life and Death" and "Amelie" and "21 Grams" and "Network" and "Amores Perros" and "Sicko" and "Educating Rita" and "Glengarry Glen Ross" and "Tokyo Story" and "Intolerable Cruelty" and "Stalag 17".

And bring a spring back to your step.