4 November 2011

I’ve been putting it off for as long as I can – but I can put it off no longer. I know it is my duty to write something about Greece, and the euro, and the global economic crisis which some normally sober commentators have now started describing as an impending catastrophe.

But first a word of warning: I am not an economist, and I have an inbuilt tendency to distrust economists who claim to be able to analyse with any degree of accuracy the mysterious workings of international financial markets.

I mean, seriously, how can we trust people who talk about “negative growth”, “taking a hair-cut”, and “quantitative easing”? As far as I’m concerned, the best definition of an economist is “someone who will explain to you tomorrow why what they predicted yesterday didn't happen today.”

So, to Greece. Let’s make it simple: they borrowed too much money, they can’t pay it back, and unless they can get their hands on more, they’ll be bankrupt.

If that’s what happens, a lot of banks who lent them billions of euros will have to kiss those loans goodbye. And that remains the case whether or not the high-stakes gambler George Papandreou is still prime minister.

You probably remember what happened the last time the banks found they’d lent rather a lot of cash to people who couldn’t pay it back. We ended up bailing them out, on the grounds that it’s not a good idea for banks to be allowed to crash.

That’s one reason (not the only one, I know) why the UK government has decided it has to cut back pretty sharply on its spending – because as for everyone else, in the current climate, spending money you don’t have is not regarded as the thing to do.

It’s worth remembering, though, that not everyone is sliding toward the abyss. According to figures from the International Monetary Fund, 20 countries last year registered economic growth rates above 8 per cent. (One of them is Ethiopia, from where Charlotte Ashton reported for us on Wednesday’s programme.)

Of the 20 highest achievers, 10 are in Asia (China and India obviously, but also Sri Lanka, Uzbekistan, and yes, even Afghanistan); four are in South America (Paraguay, Argentina, Peru and Uruguay); five are in Africa (Democratic Republic of Congo, Zimbabwe, Botswana, Nigeria and Ethiopia). Just one – Turkey – is in Europe (sort of).

Yes, I know, these are, mainly, relatively small economies. With the exception of China and India, most of the main global economies – the US, Japan and Europe – are in the doldrums. And that’s why we’re all in so much trouble.

But according to a report presented to the G20 summiteers this week by Tidjane Thiam, chief executive of Britain’s largest insurer, Prudential, Western investors are sitting on trillions of dollars which could go into financing major infrastructure projects in some of the world’s poorest, but rapidly growing, economies.

The theory goes like this: invest in, say, road-building. More roads mean more trade, which means more business, which means more wealth. More wealth means more people with money to spend, which means bigger markets for clothes, and televisions, and fridges, and cars.

Result: growth. But of course, even if theory turns into practice, it all takes time. And with Greece on the brink, and Italy, Spain and Lord knows who else waiting nearby, time is in short supply.

As you know, I try to stay cheerful – but I fear it’s going to be a tough time ahead.