Well,  before you withdraw your money from your bank,  and pay it into one of those Irish or Greek banks that now have a government guarantee,  consider this:

“British consumers are finally starting to behave more responsibly when it comes to their finances.  And this is especially true of those who are considered sub-prime borrowers,” says Mintel.

“One in every five sub-prime borrowers will be concentrating on improving their credit rating over the coming months.  Meanwhile,  14 per cent have recently checked their credit record,  clearly trying to establish just how much trouble they are in,”  or so suggests the latest research from Mintel.

Toby Clark,  senior finance analyst at Mintel said  “This is the first real indication that borrowers are taking their finances seriously.  And it is clear that they really are starting to think and act more responsibly when it comes to their money.  If anything positive is to come from all this chaos,  it is that people are starting to take more of an interest and pay more attention to their personal finances.” 

Mintel research suggests that two years ago only 26 per cent of savers had even a vague idea of what the interest was on their account.  Meanwhile,  42 per cent had simply always held their savings account at the same bank.  Now,  says Mintel,  57 per cent of adults said that they will think more carefully about where to save and invest as a result of the bank’s problems.

But,  in a way,  though,  that is the problem.  All of a sudden,  people have started worrying their bank may collapse.  So Northern Rock,  the bank that diced with the money and was forced to its knees as savers rushed to withdraw their money,  is now finding that so much money is flooding into its government owned coffers,  that it has to close down some of its accounts. 

 Now that the Irish government has agreed to offer 100 per cent guarantees to money deposited in its banks,  British savers are sticking their hard earned spondoolies into the British branches of Irish banks.  Now the Greek government has followed the Irish lead,  and guaranteeing 100 per cent of the money deposited in its accounts.

Banks from other EU countries are crying foul.

But,  perhaps this is just a side show.  The real issue,  surely is that saving is back . At last, we have woken up to the reality of too much debt.

But there is another snag.  Keynes said that during a severe economic recession,  for the economy as a whole,  the last thing you want to see is savings increase.  It is known as the paradox of thrift.  While it may make sense for individuals to save more,  when we are all at it,  the result is falling aggregate demand,  and that is the stuff economic depressions are made of.

And that really is a conundrum.  For years savings levels were too low.  With a pension time bomb ticking ever louder we should all be putting money away.  Yet,  if we do that eminently sensible thing,  for the economy as a whole it could be bad news.

That is why,  it has been argued here before that the only solution lies in tax cuts aimed at lower income earners.  These are the people who tend to have a lower savings ratio.  The tax cuts will enable the repayment of debt,  without seeing a corresponding fall in consumer demand.  But with government finances in such a raw state,  that will not be easy.  It is just that on this occasion,  the government really has no choice,  but to borrow.