The Clock is Ticking

There is a mass delusion brewing that we have just been through a recession and that 'things can only get better'.

I do wish it were true - but it's not. We haven't seen anything yet.

Gordon Brown is borrowing and spending every penny he can to shore things up for as long as he can to create the circumstances in which this delusion is made possible.

But with authoritative talk of 'Keynesian' economics and pronouncements that 'you must not cut spending in a recession' this crazy behaviour is legitimised.

Will shoring things up win him an election?

Almost no chance of that happening. But it does have one major benefit of Labour.

If Labour lose the next election but the electorate believe that we have come out of recession then inevitably a Conservative government will have to cut spending massively (there will be no choice). Labour can then sit on the sidelines and lament the terrible Tories having destroyed the fragile economic regeneration that the Labour government created..

It's a time bomb.

If the Conservatives go into the next election with the electorate believing that the economy is sound then the Conservatives will get blamed (for the inevitable impact of solving the Labour problem). The Conservative government will be hugely disabled and the Labour party will put every energy into discrediting the Conservative party for it's 'failures' - so they can re-emerge quickly.

The clock is ticking. This bomb needs to be defused. It will only be defused by bold action to deliver the message to the electorate of the really appalling state of the public finances.

If it is not defused the bomb will go off - in the process quite probably destroying most of the ambitions of the next Conservative government.

Recommended Reading here at: Burning Our Money