August 15, 2008

The party is over…

Filed under: Politics/News — Tags: , — 4fooey @ 10:01 am

Over the past year we’ve heard little else other than the ‘credit crunch’. The crisis in the financial system here and abroad is a particular manifestation of a broader problem in our economy, one of over consumption, or binge living — our economies rely too much on people buying more, spending more, on consumer goods, holidays, entertainment, etc.

Our economies have grown over the past few years, but this is based on consumers’ ability to buy more and more, to consume more and more. To fund this consumer binge people have borrowed more. Much of the money has been lent on the back of rising house prices. But now the whole thing has finally unravelled — the bubble has burst, and people are no longer feeling so well off. The price of energy and food has also risen, causing inflation, something in the future which will probably continue to rise.

Vince Cable of the Lib Dems has been warning of this situation for many years — in various statements and speeches he has outlined the problem of rising personal debt secured against the soaring value of homes. Borrowing has far outrun people’s earnings and their ability to pay back loans.

And after the binge time, comes the hangover, the guilt and upset. And rather than taking responsibilty for their own actions, people are looking for a scapegoat. Unfortunately, the main scapegoat is PM Gordon Brown and the Labour Party, which is a shame because they have achieved many good things over the past 11 years.

This is a very depressing time when more-or-less everything the government does is criticised — the extent to which the Prime Minister is criticised and even lampooned is damaging to our national life. And I can’t understand why the tories are so high in the opinion polls, since they don’t seem to offer many alternative policies. Hopefully something or someone will come along to take the country forward in a more positive light.

Over time people will get more used to having to watch their spending, but in the meantime hopefully not too many people will suffer. Longer term we need a more sustainable economic strategy, to avoid the boom and bust cycle, which would correspond to a more sustainable way of life.


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