April 2, 2009
It will be the debt of us
You cannot spend your way to prosperity. That's a basic economics lesson that most people learned at a young age. Today, however, we have a generation of bankers and politicians who appear to believe that they can borrow their way to boom times and spend their way to success. It simply ain't so. Once the debt-fuelled binge is over the bill will have to be paid. It would be better to pay as we go now than face the prospect of harsh cutbacks later. Ongoing current account deficits have now been joined by a return to government borrowings for operating expenses. In other words we are borrowing to pay the groceries - something New Zealand finally stopped doing in the 1990s. Are we now poised to return to bad habits?