If Noonan wants us to spend, he must lead the way
The public has €134bn in savings accounts, but consumers lack confidence, writes James Fitzsimons
The Minister for Finance Michael Noonan wants us all to start spending again to boost the economy. That's a tall order, given that the new Government has not delivered on its own election promises. The problem is the continued lack of consumer confidence. The Government needs to step up to the plate and show us what it can do before it earns our support.
The banks are compounding the problem. Normally, they play a major role by increasing the money supply. Savers put their money in the bank. The bank lends this to borrowers, who pay for services. This increases earnings. This leads to more savings, more lending and so on.
But the banks are not lending. They are keeping the money to fill the holes in their own leaky boats. Until the banks' own impaired debts are faced up to and rescheduled the system cannot function properly.