Tuesday, 28 December 2010

There's no money left...

We’re moving rapidly towards the end of the Old Year – and my favourite year-end poem is ‘Sixty-Six”, written in Lancashire dialect by Sam Laycock at the end of 1866 (read it, or, indeed, listen to it, here). In any case this hiatus between Christmas and the New Year always finds me taking stock and thinking what the future may hold.

Seems to me that much – perhaps most – of what happens to us happens by chance. We are carried by currents that move beneath us, although we often don’t notice them. Only when we look back do we realise that we have been swept onwards.

The Guardian’ reported on May 17th that Liam Byrne, Labour’s former Chief Secretary to the Treasury, left a note for his successor that said “there’s no money left”. Ah – how far currents carried Labour from 1997 when it preached, and briefly practiced, ‘prudence’ to this moment in 2010! Bill Bonner wrote on 21st December:

“Expenses grew during the boom years. We all know why. Politicians prefer to spend than to save. They buy votes with other people’s money. That’s why they like programmes for poor people. They come cheap. But the votes they buy on credit are even cheaper. Give a job... a handout... free drugs... housing subsidies – and send the bill to the next generation. With declining interest rates and an expanding economy, governments could get away with it. Low interest rates made deficits easy to finance and reduced the cost of refinancing existing debt too.”

The title of Bonner’s article was ‘The Day of Reckoning’. Are his observations right? Will the currents take us toward declining living standards, and will our children look back on these times and lament the easy promises of politicians made with money that was not theirs, and with credit it would not fall to them to repay?

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