Saturday, February 21, 2009

The lies about the recession we need to have


Did you enjoy your New Zealand Herald today?
It was almost a recession special with story after story looking at the recession and how John Key is reacting or should be reacting.
Underlying it all is a theme that governments can or should do something, even if the reality is more like Key or anyone acting as King Canute trying to turn back an incoming tide.
I have often praised the Key government's caution as to how best to remedy the financial crisis upon us.
I have certainly seen no improvement from big spend-ups like what we see from Barack Obama, Kevin Rudd and Gordon Brown.
Today, Iain Dale reveals that this, to paraphase Australia's Paul Keating, is indeed the recession we all need to have; that the financial crisis is just a natural reaction to what governments have done over the years, spent excessively and fuelled a consumer boom. And now the pollies are lying about the crisis.
Best of all, such lasissez faire view comes not from the right, but the left, the Liberal Conspiracy Blog of England.
Here's some of what contributor 'Aaron' says.
What bothers me though, is that people - politicians and the media mainly - view this recession as something that needs treating. When in fact, rather than being the disease, the financial crisis is the cure.
The recession is a market correction of a hugely over-inflated housing market (it will correct, and home values will/may return to a more realistic level of appreciation). The recession is a reaction to borrowing on a massive and wholly unsustainable scale. The recession is the global economy snapping back, as rampant growth surpassed the finite resources we have available.
We should stop thinking of the recession as something we can spend our way out of, and just swallow our medicine. Governments, rather than trying to perpetuate a bankrupt economic status quo (see the reduction in V.A.T.), should be using funds to provide basic safety nets for those who fall through the cracks.
We should stop lying to ourselves. We need to be honest. We can’t afford to continue spending money we don’t have. Continuous growth is an illusion. Markets will fluctuate. That’s the way it is.
We spent more than we had. We borrowed beyond our means. And now we have to suck it up.
It certainly seems worth reading in full. Perhaps we should email the link to John Key and the media prior to the Jobs Summit.

2 comments:

Lou Taylor said...

Excellent post FFM.
The truth usually hurts but it is still the truth.

Lou Taylor said...

Excellent post FFM.
The truth usually hurts but it is still the truth.