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July 31, 2010



So lets get this straight - 'cuts' means less spending that has been planned for the future, but not not less than what is being spent now?

Incidentally I did plan to spend 10% more on wine, women and song next year, but now I'm going to only increase my spending by 5%. I hope this savage round of cuts will get the approval of the pedantic right wingers.

Luis Enrique

"This in turn requires that the banking system be fixed, so people can borrow more easily."

Who do you think has been finding it too difficult to borrow? Small businesses perhaps? What data would tell us whether barriers to credit have been too high?

Cliff Tolputt

Most large public companies have resourced ample funds through rights issues during the past two years or so. By so doing their borrowing needs are either eliminated or hugely moderated.

It's a different matter for small businesses but surely banks need to evaluate the risks of default even more strictly in the current climate. A failing business will mostly look for monetary sustenance until lack of profitability overwhelms. In present circumstances lenders need sensibly to be wary by ensuring their wanted returns take reasonable account of potential risks.

As to banks generally, I'd like to see their business models embedded in "prudence" (now there is a much abused word - more brownish than black or white). Good banking is the bedrock of our society, or should be.

I do like the clarity of your explanation of the economic "politics" in 1) above. I've been struggling with that for some time.


We need to get away from the perception that it's just Labour who b*gg*r*d it up. What they did was to transfer some of the appalling 1980s/90s growth in personal debt, to the public sector. Both major parties have made our economy debt-dependent and house-price-oriented (see my post today) and like a cat, I can't see a way back down out of the tree without falling out of it. I'd love to be able to prove that the bankers and politicians knew exactly what they were doing over the past 30 years, but even if they did the evidence will have been shredded, I expect.

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