The Truth About The Credit Crunch
Is the credit crunch actually going to make the world a better place? Harvey Jones rips to shreds the lies politicians tell us.
There's a school of thought that suggests the credit crunch will actually do us a world of good. Moral good, that is.
After years of undignified splurging on needless fripperies, a little bit of hardship will stiffen the soul, the argument goes.
Our plummeting spending power will transform us from debt and consumption junkies into well-balanced human beings who better appreciate the simple pleasures of spending time with family and friends, or taking a walk in the park on a frosty January morning.
It is an alluring idea, and a nice try at drawing some positives amid all the current negativity. But is it true?
The fashion for frugality suggests we may be reconnecting to older, traditional values.
Sales of sewing machines are up, as people patch up their old clothes rather than bin them and scoot down to Primark, while retailers report a surge in sales of traditional family games such as Scrabble and Monopoly.
Instead of raising us another generation of plastic addicts, parents are teaching their kids how to manage their own money, according to recent research from NatWest.
And rather than making a beeline for billion-pound bonuses in the City, the latest crop of graduates are eyeing up the teaching profession.
Encouragingly, kind-hearted Britons are giving as much to charity as before the crunch, according to from Charities Aid Foundation.
So that's something.
Hooray for the recession!
Plenty of people are lining up to tell us the recession may be a disaster for your pocket, but will work wonders for your soul.
The Archbishop of Canterbury Dr Rowen Williams has called the credit crunch a welcome "reality check" for a society that had become driven by unsustainable greed.
Tory health spokesman Andrew Lansley also claimed recession can be good for us, because we will "smoke less, drink less, eat less... and spend more time with our families".
Alan Milburn, who is leading the Government drive to improve social mobility, has even claimed it is a chance to end unfair privilege.
These cheerleaders for austerity all have one thing in common. They're unlikely to lose their jobs in the next 12 months.
They are also middle-aged, with established careers and secure index-linked pensions to ease their final years. It's always easier to pontificate over somebody else's hardship, rather than your own.
I don't see too many younger people cheering on the recession. It may be driving down property prices, but that's no consolation if you're shouldering a massive student loan and can't find a job because companies have put a freeze on recruitment.
Most have played little or no part in the consumer-fest of the last 11 years, but they will have to pick up the tab.
Nor are the elderly likely to celebrate the crunch, having seen their personal savings and private pensions savaged.
I would be delighted if the downturn did persuade us to become better human beings, but I'm not convinced it will.
First, I'm old enough to remember the recessions of the early 80s and 90s, and they certainly didn't leave us happier and healthier, quite the reverse. Losing your job or your house is the wrong kind of reality check. Some communities, particularly in the north of England, never recovered.
I also remember what came after each slump - another bout of easy credit and unrestrained consumption, as people cast off the shackles of austerity and hit the plastic as fast as their credit limits would allow them.
What makes people think it will be any different this time around?
Here we go again.
This new, sober attitude towards money is likely to prove a fad, unless it is backed up with regulatory teeth, to stop lenders from chucking credit at all and sundry, and curb excesses such as 125% mortgages.
Because without serious structural change, we'll be hitting the flaming sambucas and signing up to Ponzi schemes just as soon as credit conditions ease.
Which is pretty much what the Government is encouraging us to do right now. Its stimulus package aimed to solve a crisis caused by excessive debt, by raising that debt to dizzying heights. What the Archbishop of Canterbury calls the addict returning to the drug.
What kind of moral can you draw from that?
And I'm not sure what lesson savers can draw, as they see their diligence rewarded with 0% interest rates, while the Government pesters the banks to cut lending costs to those in debt.
That materialism and consumerism may be crass, vulgar and costly, but at least you get something in return?
So beware anyone who claims the credit crunch is good for you. They probably means it is good for them.