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Spending not the answer.


THE banks are being browbeaten into lending more and, in particular, into handing out more cheap mortgages to home buyers.

The Treasury is to borrow billions extra so that it can step up public spending.

And we are all being promised tax cuts - so that we can go out to the shops and spend more.

All of this, we are told, is to stimulate the economy and to get us out of this mess.

But hang on a minute.

Isn't this exactly what got us into the mire in the first place?

It was the reckless handing out of cheap mortgages that left the banks on the point of collapse.

It was lunatic personal spending that has left 300 individuals being declared bankrupt every day.

And it was the orgiastic public expenditure that even before the onset of the recession had the International Monetary Fund warning that we were heading for trouble.

What's more this "spend, spend, spend" solution comes from none other than the Scotsman in Number 10.

The very man who spent us into this black hole in the first place and whose pounds 400 billion "rescue" package for the banking system still shows no sign of taking effect.

It's not just that attempting to spend your way out of a spending problem defies common sense, logic and the opinions of many leading economic experts.

Even if this phenomenally high-risk strategy actually works all that cash - it may involve borrowing as much as pounds 100 billion this year alone - will have to be paid back. So if the nation escapes financial meltdown, it could be put in hock for generations to come.

And the alternatives which involve restraint, cut-backs and a reduction of the mammoth public sector that now employs one in five of us are not even being mentioned. You may be one of those who thinks that the Scotsman is a financial wizard whose mega-spending plan deserves blind trust.

I'm not buying it.
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Title Annotation:Features
Publication:Sunday Mercury (Birmingham, England)
Date:Nov 16, 2008
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