Tuesday, November 25, 2008

Darling's Pre-Budget Fiasco

The pre-budget report is the most ill-thought through, botched and misguided piece of economic mumbo jumbo, I have ever seen. It will fail on every count. It also ignores completely the natural corrective forces of free markets.

When demand crashes, cash-flow becomes king and profit is for another day. To survive stocks must be moved almost at any cost to keep the cash flowing. This leads to a natural reduction on prices to a level that re-ignites consumer interest and increases demand. That is the beginning of a revival.

The government should have concentrated on measures designed to reduce costs to business like a reduction in fuel costs that impact throughout the economy, making goods cheaper and therefore improving profit margins.

The only other thing it had to do was stabalise the banks and make them lend.

Tax cuts funded by higher debt make no sense at all. There is not an ounce of savoir faire or common sense in anything Mr. Darling announced today. All he has achieved is more pain tomorrow. Pathetic

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