"Crise Financiere", "Toxic debt", "Credit crunch" - all phrases that weren't in my vocabulary a year ago.
Now it sems that every news report leads off with a story about the recession and who is to blame. Surely it's now time to learn our lesson and act upon it.
I don't see how QE (printing more money) will help change our "spend, spend, spend" culture in any way except for the worse.
Similarly bailing out all the over stretched buy-to-let brigade by reducing interest rates to zero only punishes savers who have been prudent with their money.
Politicians and journalists talk about changing our credit card culture and then try to spend their way out of the crisis burdening the next generation with unsustainable debt levels.
The only reason that there isn't a huge furore about it is greed. With mortgage payments coming down and high street prices so low those who remain in employment can turn a blind eye and make hay while the sun is shining.
Let's stop talking about the need to discourage spending more than we earn and cursing the recession. Let's actually encourage people to tighten their belts, say no to that new car/plasma/i pod and live within their means. Sure the short term effect will be shocking but in the medium and long term our children will be grateful.
1 comment:
The lesson is about balance. Spending and borrowing is great but there has to be balance and if you borrow money you can't pay back or lend people money without a sensible review of their ability to do this, you are heading for disaster.
The point you miss is that the economy demands we continue spending. If we stop, we are all doomed.
Those of us lucky enough to still have jobs are currently not spending but are paying back all our debts and reducing our mortgages because there is no confidence, no guarantees where the next £500 will come from and no borrowing network to bail us out in times of hardship because people are now scare to lend to people who can afford to pay it back!
I believe that those of us prudent enough to have kept their money now need to be encouraged to spend, spend, spend (though perhaps we mean invest, invest, invest) - picking up bargains galore, cheap houses, second homes, cars, services etc. This is what the economy needs (and therefore QE, interest rate cuts etc. are absolutely right) and it is those prudent folk who have the opportunity to kickstart the economy over the next few years whilst helping the retailers, butchers, plumbers, builders, even estate agents back into work.
So stop depriving your kid of the latest ipod because they are fantastic, fun and remember that by buying them you are keeping people in work in factories and shops and creating wealth for the entire global community.
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