Above is the sort of slogan which is now being popularised by right-wing "celebrities, personalities and authorities".

It is true that expansionary economic policies, which were called for by some global leaders last month, can lengthen the financial debacle which started in 2007 and which is not yet at an end.

It is also true that the G-20 participants who called for fiscal restraint are at lesat partially correct: governments cannot indefinitely and endlessles spend, nor can they infinitely expand money supply.

However, it was not government deficits and debts that caused the current crisis. It was the nature and current structure of the financial system. Specifically, it was "the Shadow Financial System" that caused the crisis.

So the problem is not what one commentator calls "the national howling we have seen against pension-fund reform in France or spending cuts in Greece and Spain". (Apparently, according to such commentators, governments can and should bail out rich stockholders when their stocks run into trouble, but governments should not do anything to help the poor).

The actual problem is rather that nothing substantial has been done so far about the shadow financial system, and nothing subtantial now looks as if it is going to be done any time soon.

Regretfully, the G-20, meeting in Toronto last month, copped out of any attempt to reform the system.

That is the real reason that we are seeing the economy teetering between mini-rallies and aversion to speculation, leverage and risk-taking.

Given time, governments are apparently hoping that the risk-takers will come back into the market.

If they do, there will be another real boom.

Follwed by another bust - which naturally therefore will be worse than the current one. Sphere: Related Content

Prabhu Guptara