Paul Ostafiehyk well drew on the economic risks facing Malta (Is Malta's Economy On The Edge, January 1) which probably will come to pass during 2009. However, in his otherwise objective analysis, I venture that his writing "the rampant and destructive march of the euro" was off-target finger pointing. The other side of the coin (forgive the pun), and the reality, is that the debilitated pound is consequent on the unsustainability that was of a British economy puffed up by inflated property values and excessive personal debt, all fuelled by over-leveraged banks. Does that sound familiar? Though I hope the latter is not the case with Malta's banks.

Mr Ostafiehyk sensibly advised that "Interest rates should be cut to between one and two per cent". No doubt he is aware that a year ago, when Malta entered the eurozone, the CBM's responsibility for setting bank rate lapsed to the ECB. And of all the central banks, the ECB is being the slowest to reduce its rate, which today is at 2.5 per cent. Last month the Bundesbank president said that he would prefer avoiding lowering the policy interest rate below two per cent. Whatever rate may be right for Malta, it has - like all the euro zone countries - to live with the ECB's "one size fits all" suiting.

On the other hand, the BOE having (belatedly) recognised the "problem", has been swift to reduce rates and voice its MEPC's Damascene conversion to continue cutting. That has weighed the pound down, which painful as it is for British expatriates and tourists, advantages UK exports and tourist inflows.

Malta's government is going through much the same stages (albeit lagged) seen in other countries up to mid-2008. First, there is denial of any "problem", then a rabbit-like freezing in the headlights of the oncoming vehicle, then a thoughtless knee-jerk reaction, e.g. the jump in Malta's energy tariffs at the wrong time, then...?

Malta's governments have presided over a property bubble which provided many years of (apparent) economic performance for the governments' (assumed) economic achievements. As house prices inflated owners were made "better off" by as much as those who were buying from them were made worse off. All that was happening was a zero-sum transfer of a more-or-less static pool of national income via banks to borrowers, which did no more than redistribute income among residents, mostly from the young to the old.

Fact is that high property prices divert a massive proportion of the ordinary citizens' income into a dead non-productive asset. Almost any other use of this money would benefit the individual and the economy more. Of course the winners have been the builders and those developers that have shrewdly sold off their stock by now.

In straitened times when cash is king, stone blocks and mortar unfortunately do not quickly liquidate.

And the worst part of it?

All those unaesthetic shabby buildings and stark shells have irremediably tarnished Malta's landscape, which was already doing its tourist product visuals no good even before the onset of this global downturn.

The Maltese, and especially my parents' generation, have historically suffered deprivation in peace and war which made for a stoic and thrifty people. No question that the present younger generations have never had it so good. One hopes that their "genetic" qualities will surface if needs be to get through the next year or two.

By the way, in Malta's own enigmatic way there is always the possibility that it will serenely sail unbuffeted through this great global recession - unlikely though.