..and as I write a short piece on the UK bailout plan, it has emerged that the Bank of England has cut interest rates by 0.5%…hardly surprising.

It does show, however, that the government is trying to curb a recession and in doing so is effectively allowing inflation to rise well above it’s stated long term immovable target of 2%.  A 2% inflation target, you will recall, is a measurement Mr. Brown has stated repeatedly over the last 10 years would be the benchmark for the economy.

It is also interesting to note that this cut in interest rates is not a UK action but appears to be a co-ordinated global action.  Canada , Sweden and Switzerland today have also cut interest rates by 0.5%.  China has also announced a second cut this month in a separate move.

Ultimately, will this work or are we fighting a slow death here?  I believe this is the start of many more cuts in the hope of stimulating the economy.  What people must realise is that we live in a false economy, heavily debted and over valued.  The lack of regulation, personal and corporate greed has contributed hugely and we are paying a very heavy price for this.

I don’t believe interest rate cuts are really the answer, although they will undoubtedly help homeowners on variable rates.  The single biggest problem in my view is the level of individual debt, and until this is resolved, either by cancelling all existing debt, or by heavily subsidising it, economies will not be stimulated to the level we need.