Why do our politicians continue to mislead us about the recession?

19 Feb

I said I probably wouldn’t write anything this week. But then I saw this headline on The Guardian’s site:

Bank bail-out ‘could send national debt soaring by £1.5 trillion’

(link)

Okay, upon reading the article it’s clear that the “soaring” has much to do with the ONS (the Office for National Statistics) reclassifying banks, that have been “recapitalised” with public funds, as public institutions (i.e. taking on the bank’s liabilities*). Therefore, we learn, that debt may exceed 150% of national income.

This is frightening.

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 (based on artificially inflated assets). And now we have to suck it up.

Sorry. But we need to grow up. And our politicians need to stop bullshitting, and tell us what we don’t want to hear.

The recession is the cure. Now let’s stop making matters worse, and deal with it.

*Assets, other than short-term bonds and cash-at-hand, are not included. This will give an inaccurate interpretation of the *real* balance sheet. In fairness, it’s hard to calculate assets when the value of property, and the ability of lenders to service borrowing, are so uncertain. Accountants should always side with caution.
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6 Responses to “Why do our politicians continue to mislead us about the recession?”

  1. ageminiuk@hotmail.com February 19, 2009 at 11:05 pm #

    the financial crisis is the cure.for sure. but a cure for what?It’s purpose is not to help us escape from a financial bubble..though it does that .The purpose of this crisis is to teach us a lesson.and that being More money does not necessarily mean that we feel more secure, grounded or fulfilled. We have tried THAT approach and it has been found to be wanting.

  2. ageminiuk@hotmail.com February 19, 2009 at 11:05 pm #

    the financial crisis is the cure.for sure. but a cure for what?It’s purpose is not to help us escape from a financial bubble..though it does that .The purpose of this crisis is to teach us a lesson.and that being More money does not necessarily mean that we feel more secure, grounded or fulfilled. We have tried THAT approach and it has been found to be wanting.

  3. aaronsheath@gmail.com February 20, 2009 at 10:17 am #

    for sure. but a cure for what?Unsustainable turbo-charged, credit-fuelled growth. It’s purpose is not to help us escape from a financial bubble..though it does that .There is no firm proof that recapitalisation will have a considerable positive impact on the overall economic well-being of the UK. We’re reaching out in the dark – hoping we’ll find the bannister.The purpose of this crisis is to teach us a lesson.Well that’s not its “purpose”, but okay.and that being More money does not necessarily mean that we feel more secure, grounded or fulfilled.Agreed.

  4. aaronsheath@gmail.com February 20, 2009 at 10:17 am #

    for sure. but a cure for what?Unsustainable turbo-charged, credit-fuelled growth. It’s purpose is not to help us escape from a financial bubble..though it does that .There is no firm proof that recapitalisation will have a considerable positive impact on the overall economic well-being of the UK. We’re reaching out in the dark – hoping we’ll find the bannister.The purpose of this crisis is to teach us a lesson.Well that’s not its “purpose”, but okay.and that being More money does not necessarily mean that we feel more secure, grounded or fulfilled.Agreed.

  5. pepeperez67@yahoo.com February 20, 2009 at 10:39 am #

    I suggest all these recession/depression comments would be stopped for ever if the governments of the affected countries warned that instead of bailing banks out they were going to bail “people” out directly.That is giving the aid to those directly affected by the downturn.Cutting out intermediaries altogether.

  6. pepeperez67@yahoo.com February 20, 2009 at 10:39 am #

    I suggest all these recession/depression comments would be stopped for ever if the governments of the affected countries warned that instead of bailing banks out they were going to bail “people” out directly.That is giving the aid to those directly affected by the downturn.Cutting out intermediaries altogether.

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