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Bread and circuses: why the fiscal deficit is in danger of becoming a joke

Ruth Prickett's picture

The eye-watering amounts being spent by governments to bring the world's economies out of recession are becoming the subject of the same kind of ironic comments and jokes as natural disasters.

The figures are so vast, so frequently changed and so incomprehensible that it seems easier to laugh than to start trying to understand how they can be repaid - and what we will have to give up in order to do it. There are even countdown (up?) clocks on the web that turn the whole Micawber-esque crisis into an economists’ circus sideshow (see debt clocks for the US  and for the UK).

Politicians, of course, are reluctant to stick their necks out too far if, as in the UK, they are facing an imminent 2010 election. Yet their decisions - and the opinions of national and international experts - will have a huge impact on how our businesses function in the next few years and the wider economic markets in which they operate.

Should we raise taxes, cut public spending or sell government assets? And should we continue to pour yet more cash into quantitative easing like a drunk at a Las Vegas slot machine? There are good reasons for both sides of every argument – as Vince Cable, UK Lib Dem shadow chancellor recently said at a conference held by think-tank Reform: “Our economy has had a massive coronary and has been kept alive with steroids. We must be cautious about recommending a work-out at the gym.”

This month we will be sending you an e-mail containing a link to our first ever online edition of Financial Management. In it, we look at what these people are saying, but the debate shouldn't end there.

What do you think about the government spending that got us into this debt - and how do you think we should, or can, repay it? Or maybe you think laughter really is the only response to this kind of disaster? We want to know.

Repayment

Personally, I get the impression that there is a problem with the way the political system works. When a person is in power, they want to bring "positive change" to the economy, society and country at large. However, they know that they can pay for it using credit. These politicians don't mind doing so, as by the time the debt is called for repayment, the chances are that they will be retired, remembered for how much they "contributed" to the advancement of the country. Due to the fact that the government is permanently filled of employees with this mindset, debt will only get larger and larger and will always be "someone else's problem."

However, a second emerging problem is that the debts are reaching epic proportions, proportions which the government will struggle to deal with. The real question is: do they ever intend to repay? One may get the impression that the UK intends to rack up a few trillion in debt, then attempt to declare bankrupcy in order to ask for debt cancellations. The easy way out? The hard away out? Either way, the government is getting the immediate gratification it seeks, whilst delaying a much larger, and rapidly growing, problem.

Christopher Hutchison