The Sun Says...

The highly sophisticated political operators who write The Sun's editorials have managed to sum up the issues* thusly:

GORDON Brown and Alistair Darling must think carefully before deciding to borrow and spend their way out of recession. Pump-priming is fine when you have the money. New power stations, roads and rail links create jobs — though not overnight.

Tax cuts for low and middle earners, coupled with lower interest rates, would be much more effective. The trouble is Labour has already spent and borrowed too much.

There is nothing in the kitty. More borrowing today means even HIGHER taxes later. That’s why the world downgraded its valuation of our economy, sending the Pound into freefall.

Now the Bank of England is terrified of turning devaluation into a vicious circle by cutting rates ...

Having covered the Keynes vs Hayek debate as well as Ricardo's Theory Of Equivalence and the impact of sentiment/interest rate differentials on foreign exchange rates, they go and spoil it with the last phrase:

... to the level we desperately need.

Oh dear. Maybe they ought to swot up on the 'pushing a piece of string' theory of the impact of central bank interest rate cuts on actual rates paid by borrowers. Further, given that savings and borrowings net off to nil, there are just as many people who'd benefit from higher interest rates. Or possibly fewer people who'd benefit disproportionately more, who knows?

*Via Christina Speight.