Economic Recession - pouring oil into roaring fire.

The whole world is faced with the economic recession stemming from the US financial crisis starting from the sub-prime loans. Big names in the financial sector like AIG, Citicorp, Lehman Brothers etc, industrial sectors like GM, DaimerChrysler etc are all affected and all around the world from London to Tokyo to Malaysia governments are frantically trying to protect their economies from going into severe recession. Although actual measures differ the modus operandi all appears to be the same - pour more money into the economy and urging the public to spend, spend, spend, spend,spend ........... The rationale - the public must keep spending to spur demand and therefore growth and recovery. Very Keynesian, very conventional, very stupid.

I will be laughing my head off if the situation was not serious and the effects so dire. Did not any of the economists look at what caused the financial crisis and the ensuring recession in the first place? Consumption expenditure, or to be precise, overconsumption expenditure. People were spending like there was no tomorrow, whether or not they could afford it. They were eating into the accummulation of wealth of the past without the commensurate generation of wealth, thus leaving a big bubble or shell which has collapsed with such dramatic effect. And now governments are asking their citizens to carry on the crazy SPEND, SPEND, SPEND activities that caused the financial crisis in the first place and will dig a deeper grave from which perhaps the world may not recover, not in the next 10 years. Yes, we must spend and spur economic activities but only in generating more wealth in the form of investment expenditure, building up again the egg nest for us to spend in the future without threatening the erosion of the disposable wealth. To spend, spend, spend when you have nothing is just plain crazy.

Have we all gone crazy?