Sunday, 30 November 2008

German words of wisdom

(By Richard Holway) I've just returned from my first ever visit to Berlin. In the spirit of my other visits whilst writing UKHotViews, I'd like to quote some recent German words of wisdom from their Chancellor Angela Merkel.

"Excessively cheap money in the US was a driver of today's crisis. I am deeply concerned about whether we are now reinforcing this trend through measures being adopted in the US and elsewhere and whether we could find ourselves in five years facing the exact same crisis."

In other words, cheap money and excessive borrowing got us into this awful state. So what are our own 'wise leaders' advocating as its solution? Cheap money and excessive borrowing!

Merkel speaks much sense. Read more in the FT Merkel sees danger in 'cheap money'.

Footnote - I notice that several others agree with Merkel (and I). Today's (Monday) FT Letters page has a number of letters of support. Read Merkel is right about the dangers of 'cheap money' from Philiip Collins. I agree with every word! Particularly the penultimate paragraph which reads

When this happens with your children there are two remedies: either you bail them out and say “don’t do it again”, which leaves you much poorer and only ensures that the same thing will happen again, but much worse; or you tell them to sort it out themselves, which makes them a lot poorer, but is generally more effective in changing bad habits and has long-term benefits.

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