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First we talked about whether there would be a recession.

Then we talked about who was to blame.

Then we talked about what to do about it.

There then followed a not so brief interlude during which ice creams and refreshments (including Hobnobs and dog food) were served whilst we discussed duck islands, the intricacies of moat maintenance, the impact of OCD upon breakfast habits and the finer points of astrology.

That over, we talked about how bad the recession would be…

…And now we’re talking about what letter of the alphabet its shape will be on the graph!

The British public discourse has had some strange moments of late, but this really takes the biscuit (but then if it’s Chris Huhne’s Hobnob biscuit we paid for it anyway)…

What is it with economists, have they all gone mad and decided to describe every possible outcome as the shape of a letter or did it just come to them one day at lunch over a bowl of Alphabetti Spaghetti? Perhaps we are now getting economic news from Sesame Street?

The deluded think it’ll be a V-shaped recession; sharp drop, sharp bounce back. V.

Some expect a U-shaped recession; a sharp drop with a sharp rebound like the V but after a period of flatness between the two. U.

My bet is on W; in effect a second U-shaped (or V-shaped if you go German and call W ‘double-V’) recession after a small rebound from the first. W.

Rather alarming is the L-shaped recession, a sudden fall then flat-lining; and the Y, a U or V shaped recession followed by a second possibly sharper drop. L and Y.

I suppose we could have N, M, J, Y, and I as well. Maybe a lowercase ‘r’ and ‘h’?

The Great Depression gave us the game of Monopoly, the recession of 08/09/10 looks set to give us Economic Scrabble.

Sir Alan Sugar is one person who really annoys me. The Apprentice is one of my favourite shows, I’m extremely pro-business and have no qualms with any other businessman in particular – but he drives me mad.

Maybe it’s because I’ve not agreed with a single one of his final choices on the series – James and Miriam in Series 1 then Lucinda and Raeph from S4 were the only ones deserving a six figure salary – or maybe it’s because he is just such an envious, arrogant and obnoxious misery (as Paul Merton discovered when Siralan went on Room 101).

But most of all I think it’s because he promotes himself as one of Britain’s top business gurus. Margaret Thatcher ones said that being powerful was like being a lady, if you had to tell people you were then you probably weren’t. I get that feeling with Siralan.

He sits on his raised chair in a TV studio’s mock-boardroom with its bizarre shortage of seating, presiding over grovelling Apprentice hopefuls who had never heard of him before the series started, telling us all how he’s an acclaimed business expert. But has anyone bought an AMSTRAD lately? No, me neither.

Alan Sugar was extremely successful at producing and selling cut-priced consumer electronics; mass market versions of more expensive products. There is no knocking him for that. But that does not qualify him to be the nation’s business guru, the government’s oddly titled ‘Business Tsar’. He failed to innovate, stifled creativity, built shoddy products, fall out with buyers from chains such as Currys (reportedly being rude, swearing at them etc)…and got left behind.

From its heights to its sale last year, Amstrad had lost 90% of its value.

If the government wanted a real advisor on business, I would recommend Sir James Dyson. Also a self-made man, he exemplifies innovation, quality, and sound business practice. Worth £1.1 billion according to The Times, Dyson is the market leader (by value) of vacuum cleaners in the USA – outselling Hoover in their home Hoover market!

He also knows – as he told the Money Programme recently – that Britain’s future lies in the creative industries, innovation, design, technology. Being the best rather than being the cheapest. The polar opposite of Siralan.

Some people are getting way too excited about house prices, with the FT leading the charge with the headline ‘House price jump highest in more than two years’ and the Telegraph writing that ‘Nationwide house price figures show a very clear trend and provide strong evidence that the market is now moving as rapidly towards stabilisation as it did when it started falling’.

I’m starting to think capitalists are optimists, and socialists pessimists, as there seems to be a divide between pro-market papers such as the FT and Telegraph latching onto every shred of good news and anti-market papers such as the Guardian latching onto every shred of bad news; the Guardian writes ‘House prices continue decline, says Land Registry…Volatility in prices blamed on low transaction levels’.

On that final note about low transaction levels they are for once right, and I am stunned that less has been made of this. The FT noted that during the housing downturn in the early 1990s, prices moved erratically, with increases in some months later wiped out by subsequent declines, but didn’t elaborate.

The problem with a mean average “house price” is that it takes no account of the price-distribution of them. Sell nine houses for £100,000 each and one mansion for £1m gives an average of £190,000; but if the upper end market continues to sell (even at a reduced price) but smaller homes don’t, say because of first time buyers needing 30% deposits, you might sell seven houses for £90,000 each and one mansion for £900,000 giving an average of £191,250!

And it’s this scenario that has happened exactly. Sales of normal and smaller homes have all but vanished, but larger homes are fairing much better. Country Life writes that although a lack of bonuses is hitting the very upper end ‘much of the movement in the market is concentrated in the £500,000 to £1m market’. Furthermore ‘the best in class houses have retained more value over the past eighteen months than the more average houses’.

The trouble with jumping on these statistics as evidence of recovery is that when volumes of cheaper homes do increase, people will see headlines of a price crash!

4/6 Update: The Halifax releases more data skewwed by low volume.

Britain is facing – depending who you ask – a crisis of variously dire proportions. The worst recession since WW2, a potential depression, a return to the 1970s, a rerun of 1990s Japan; all of these are predictions made by journalists over the last year who have been darting through history like aspiring Doctor Whos in the search for an easy comparison ideal for a simplistic background graphic laden with nostalgic archive footage.

And with them has gone the Government in the search for an easy answer and suitably simplistic sound bite to parrot on Newsnight. And as ever there isn’t an easy answer, but someone will offer one – it just won’t work. Of course that answer is from John Maynard Keynes, a man who once dismissed fears about the future debt levels on the basis that “in the long run we are all dead.” How reassuring, no wonder he chose economics rather than medicine.

So debt is back on the menu, and back big time. It’s like the Spam sketch – you can have anything as long as it comes with spam debt. “VAT cuts with spam debt, capital projects with debt, postponed taxes with debt, debt with debt, debt on debt, fried debt, scrambled debt, hidden debt, debt surprise…” But wasn’t excess debt part of how we got into this mess?

The Government is borrowing to boost demand, but the public sector crowds out the private; there is only so much credit out there and the more the government Hoovers up, the less there is for everyone else to borrow and the higher the real interest rate goes. And is boosting demand in this artificial way the right thing to do? We have got to face facts. The old levels of spending were built on unsustainable levels of debt and “easy credit” that aren’t coming back, we have got to once more adapt to survive.

Now I am not an expert, but I do know that most businesses facing difficulty are in trouble because of a lack of previously available credit, that the housing market is dire because of a lack of credit in the form of mortgages, and that consumer spending is falling because of a lack of credit. It is a largely credit related issue, hence the term “Credit Crunch”. Therefore the government gobbling up what limited credit is out there is a terrible idea – we need less credit crowding, not more, and this means reducing the current operational deficit as well as the ‘extra deficit’ being created for the stimulus. We need to make huge savings, and fast.

As even if the fiscal stimulus does boost demand it’s temporary. Therefore priority – other than reducing the government defect to ease credit demand – should be for tax cuts and measures that help businesses stay afloat on the new sadly lower levels of demand.

I imagine it as a treadmill, let’s call it the cost treadmill. The burden of debt and other costs has been speeding it up more and more; the runner has been running at an unsustainable rate, is now out of breath and can’t go on much more. Brown’s answer is a fiscal stimulus to artificially boost demand – an injection of some dodgy performance enhancing drug or adrenalin. It may restore the old turbo speed for a while but sooner or later will wear off, leaving us with the nasty side effect of a faster treadmill in the form of higher taxes. And what if natural demand doesn’t return, another dose? Surely the better answer is to slow the treadmill and get our breath back at a sustainable speed?

Cutting or abolishing Business Rates and Employer NIC would reduce the costs of running a business so far more could survive on the new lower “post-easy credit” levels of demand. It would slow the cost treadmills faced by businesses. So too would cutting regulation, red tape and other costs created by government.

Over time individuals, firms and the government would then sort out their finances by repaying debts, with credit become freer and spending begin to rise again – natural spending, rather than artificial; sustainable growth, rather than debt growth.

And to speed these individual recoveries the government can help individuals sort out their finances by giving them lump sum rebates (if affordable, and they sadly aren’t). Rather than VAT cuts purely to boost demand, this would let families utilise the money in the way that best suits them. Some would save it, but what is the problem with this? Banks need greater reserves to lend, and having savings with boost the individuals own confidence, in turn leading to spending. Some would repay debts, aiding banks again and reducing their monthly outgoings, leading to their recovery and return to spending; and others may spend immediately, boosting demand (although as I said, I believe supply-side measures of debt reduction and individual financial recovery the key).

In short what we need is to look again at this crisis and – instead of believing we can stop the recession, keep spending unsustainably and beat the markets – work to minimise the damage, minimise the time span and position ourselves for the strongest recovery possible. And come to think of it, didn’t a previous Prime Minister have doubts about “all sorts of curious notions, like the more you spend, the richer you get”.

NatWest is offering a money advice service called ‘Money Sense’.

Rather ironic from a bank that all but went bankrupt and got itself over half-nationalised.