What dangers lie in wait?

John Redwood writes a punchy blog post on Alistair Darling’s inconsistent message to the banks on lending.  Well worth reading the whole thing, but here’s the key paragraph:

“As someone who does want the banks to help small businesses as much as possible, I understand they can only do so on a big enough scale if the government is more successful in offering the prospect of recovery from recession. The government faces a dilemma. If it does not start to lift us out of recession, lending too much to people and companies who cannot repay just weakens the banks more rather than saving the businesses we want to save. Weak banks and weak small businesses both need the same thing – more success from the economic policy.”

As James highlighted earlier, the problem with many of the Government’s debt-heavy measures during this downturn is that, if they don’t have the tonic effect that Brown hopes they will, then they could leave us in a much worse position than we would have been in otherwise.