Interesting piece. I have a question which may appear miserly. It concerns The PM’splan ( details still to be worked out,typical Nu Labour, but gets headlines) for offering a two year interest holiday on mortgages.

I was brought up to live within my means and put money aside for a rainy day.

Why should those of us who have lived within our means end up paying for this. For, it is our taxes /government borrowings supported by our taxes, which will pay for this. It seems that in the fantasy world of Nu Labour everyone has rights but no responsibilities.

Am I being too scrooge-like?

Gordon Brown has proved to be the worst Chancellor in living memory. He denies any acceptance for the utter mess of the UK’s finances but struts the stage as the saviour of the economy.

Angela Merkel and her finance minister are spot on. David Cameron and the Tories are not alone in saying that showering the economy “a la Brown” is not the correct approach.

An election cannot come quickly enough to rid the country of this disastrous government!

Reply: I am still trying to get hold of the details of this mortgage scheme to find out whether it is good or bad and how much it will cost. I spent yesterday in the Commons chamber, so naturally that is the last place to find out what the government is planning!

Ending this double taxation would really encourage saving and give those of us saving for pensions a better range of options.

In the short term though any government will have to plan tax rise, spending cuts or more likely both.

That means in 5 yrs time we must borrow more, and five yrs after that we must borrow more. this is how we have given our children a £1Trillion debt.

When you Borrow, you ALWAYS have to pay back more than you borrowed because of the attached interest.

That is why, ultimately, fiat currencies always fail.

We should print our money free of charge, not Borrow it.

Bonds (as in fixed interest securities) are a mugs game now, unless they are very short dated and have an excellent yield. Perhaps the Government needs to issue 5 year Gilts at, what, 6% to get them away. OK for domestic investors perhaps, but would they be attractive to non-Sterling investors? No, I don’t think so either.

Personally I’d want 7% to 8% and a three year term as I trust this Government as far as I can spit a rat.

It appears that at least one European leader DOESN’T agree with Brown that the way to deal with the current economic crisis is thru a fiscal stimulus reliant upon excessive levels of public sector debt. Angela Merkel seems to be having reservations, speaking out against tax cuts and a spending splurge.

In the words of the Wall Street journal:

“The root of the global financial and economic crisis is known to every Swabian housewife, Ms. Merkel said: “You can’t keep on living beyond your means.” A lack of thrift in advanced economies caused the crisis and can’t be its cure, she said.”

The link is here if anyone wants to read further:

http://online.wsj.com/article/SB122816734631570097.html

Maybe I am thick but I don’t see how this squares with Mandy’s/the BBC’s portrayal of Brown as the political superhero/Moses figure who is leading the way for the rest of the world in how to deal with this crisis: Brown acts and the awe struck millions follow in his wake – much like lemmings as they follow each other over the edge of a cliff. Mandy’s euloly of Brown I understand – he’s a party hack and is economically illierate. But the BBC’s? Surely some measure of objectivity is called for here?

I appreciate my comment about Merkel is a mere debating point but surely this is worth throwing back in Mr Brown’s face the next time he ridicules David, George and the Conservative party for being the only voice in the world counselling caution in the wake of Brown’s stimulus package …? As with climate change Labour are seeking to claim that there is no disagreement on the policy strategy they are attempting to follow. And in both instances they being a tad economical with the truth.

Yes, but why not free of tax [full stop]?

But I agree with Nick too, Why save when government policy is to destroy the value of your savings with, in the first instance inflation, and in the second instance tax.

We need to encourage savers, because it is through savings that we might stand a hope of turning the economy around. Debt has its place, but it should not be the first call when a body wants to buy a thing.

We know where that road leads .. [ or are shortly to find out. ]

The monumental growth of the service sector with mindboggling choice has created the demand for more disposible income and the inevitable need for for credit. I’ve been guilty of that myself, many an evening I’ve returned home too tired and lazy to cook anything and have ended up picking up the phone to the local pizzeria and ordering a meal that I could easily have made myself. The fantastic choices on sale at the likes of ASDA and Tesco make us spend far more than we probably need to, we’ve all been guilty of throwing out food that we bought but didn’t get around to eating because we already had a fridge full to begin with. How many of us buy a Dvd that we never get around to watching, or buy clothes that we rarely wear ?

All these little habits have grown out of the service sector culture and our own need to buy for gratification. Easy-credit fuels these little addictions and therein lies the problem, consumer culture and credit.

Nick

Nick