Mervyn King - finally someone in power talking sense!

Mervyn King, Governor of the Bank of England, is not one renowned for interfering in government policy and yet he has publicly criticised the Prime Ministers desire for further economic stimulus.

In short, Mr. King is saying that UK Plc simply cannot afford any more debt. With the total liability of the taxpayer now more than £2 trillion, when you include our liability for part nationalised banks and current economic stimulus packages, it is clear the Bank of England believe that any further government financial stimulus that requires us to borrow more as a nation will essentially mean we go bust.

And the reaction of government? Well that is difficult to tell. Gordon Brown says there is no disagreement between his Government and the Bank of England, Harriet Harman refused to answer any question put to her on the subject when she stood in for Mr. Brown at Prime Minister's Questions today and the media report that the Chancellor is in general agreement with Mr. King.

That the Prime Minister still believes further economic stimulus is affordable shows just how deeply entrenched within him the feeling of denial has become. If British families have to live within their means so must the British government. What's good for the goose is good for the gander. So it's time to face up to the consequences of our actions as a nation and to admit we are on the brink of bankruptcy as a nation and must stop trying to spend our way out of trouble and get real for the sake of future generations.

Interest Rates At 1% Won't Make A Blind Bit Of Difference!

The Bank of England cut their headline interest rate by 0.5% today to 1%. In times gone by, when our economy was managed by cuts in interest rates that were designed to manage the inflationary trend of our economy, this sort of intervention would undoubtedly have done the trick and an almost immediate benefit to our economy would have resulted.



The problem we have today is not that interest rates are in any way the problem. Quite the contrary, and today's cut will only serve to penalise the millions of prudent savers with money deposited in banks and building societies - many of whom rely on interest payments to make ends meet.


Across the UK the problem faced by our economy is not the cost of borrowing - it is the reluctance of banks to lend!


Despite the taxpayer owning many of our banks it appears our government are unable to get them to relax lending criteria so that businesses can borrow to invest in our future.


Why? Simply because it is government policy that tells banks to pay us back as quick as they can and to reduce their exposure to bad debt as they do so.


So what are banks actually doing instead of lending to viable businesses? They are foreclosing on businesses in trouble and in homeowners struggling to keep up payments in compliance with government instructions.


In conclusion, today's interest rates cut will damage those who have done the right thing by saving and do very little to help those who need to borrow, because none of our lending institutions will take any risk. So despite hundreds of millions of pounds spent on bailing out our banks cuts in interest rates are simply not doing anything to help our economy recover.