Government's cuttings and Recession in my view

Most of Govt.'s including UK and USA have adopted the policy of cuttings in expenses by restructuring of public funded bodies and cutting in the staff. This strategy will be helpful in reducing the Govt. borrowings and maintenance of their credit ratings which will lead to the cheap interest rate borrowings to cover the budget deficit.


But the dangers of this strategy are very horrible including;

With cuttings more people will be redundant and unemployed which will lead to lower buying power of consumers and definitely it will directly affect the business of consumer goods companies, their lower profits and higher losses which will lead to redundancy programmes in these companies so more people out of jobs. It is a vicious cycle  which will involve more and more people and ultimately multi-dip recession and finally death of economy.

This recession is more like a fear in the mind of investors who got the money but because of fear they are not investing. Govt.'s need to adopt a strategy of reducing this fear and promote economic activity by creating more jobs and opportunities. They need to learn from history as Keynes (A great economist) adopted the strategy of creating jobs and economic activity and brought world out of Great Recession of 1930.

So, we need to get rid of such thinking and be positive in our approach and policies and promote economic activity either at the cost of expensive loans as it will be difficult in the short run but very fruitful in the long run for economic prosperity and progress of global economies.