I don't understand the government. I don't understand the economy either. However, I do know a contradiction when it's staring me in the face.

The government blames the banks for their role in bringing about the global recession. The banks are criticised for encouraging 'bad debt', and told that they must return to 'responsible lending'. I'm old enough to remember the days of responsible lending. All the jokes were that you had to prove you didn't need a loan in order to get one. I'm not talking centuries ago, more a quarter of a century ago. And yes, I was judged worthy of a loan, several times.

So next thing the government is telling banks 'you've got to give loans to stop fragile businesses collapsing' and 'you've got to give loans to get the housing market moving'. Yet responsible lending would dictate that these loans would most likely not be approved.

The average UK salary is apparently around £23,000. If we returned to the 'three times income' rule for mortgage borrowing, that would mean lending only £69,000. Way below the average house price. Adding 'twice the second income' (though IIRC it used to be only one and a half times) would make buying a house more possible, but everyone would have to get used to having a smaller house than they'd aspired to before, when 'five times plus' and £100% or more loans were practically the norm. Banks encouraged greed, and now the government wants is struggling with the expectations they've created. Instead of saying to people, 'sorry, this is the way it is now, get used to it,' they're encouraging the banks to go down the same sorry road all over again.

Businesses don't always struggle purely for cash-flow reasons. sometimes they are no longer viable. Banks are understandably cautious just now, and erring on the side of caution when deciding between the two. It used to always be like this (an ex's business went down the toilet in 1990 because the bank decided it wasn't a cashflow problem, although I did the books and knew that it was). Recession usually means banks become cautious. Yet now the government wants them to throw caution to the wind.

We've tried running an economy on credit. It doesn't work. VAT cuts aren't going to work - because goods are cheap now due to seller desperation. I don't even think interest rate cuts will work - not all are passed on to mortgagees, and even when they are, people usually have savings as well as mortgages, so the saved money is likely to end up there, in times when people think their jobs are at risk.

So what to do? I never thought I'd say this, but I think the Tories are right. Do nothing. See what happens. At least then the government would look as though it had a modicom of dignity. A gaggle of headless chickens is the last thing to inspire confidence.