Saturday, Mar 07, 2009
Mr Brown is now trying to create a bond bubble
Telegraph: It took exceptional brilliance not to see a crash coming
It has been decided that what we face is a crisis of capitalism, when actually it is a crisis of the regulation of capitalism. The consequence of this misdiagnosis will be that the Government will recover control over our wallets, our jobs, our industries and our lives in ways which you have to be almost 50 years old to remember. Being 52, I do remember, and I quail.
Posted by devo @ 01:49 AM (1147 views) Add Comment
17 Comments
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1. crunchy said...
The New Bubble to replace the Old Bubble.
No more boom and bust is a joke on US.
2. japanese uncle said...
As mentioned earlier, 'there is no cure for certain type of stupidity, but demise'
Corporate bonds will be waste paper, when the company goes bust. And for too many companies such likelihood is getting bigger by the day.
3. mdmick said...
The title contradicts the content.
Title: It took exceptional brilliance not to see a crash coming...
Content: An economic theory that it is normal for everyone in stable times to not question the system.
Mike
4. uncle tom said...
The price of gilts rocketed on the news the BOE was going to start buying them, but when they have finished buying, and probably before they have finished buying, they will start falling again.
If the BOE announces an end to the buying spree, the prices will implode, forcing them to resume buying, or raise interest rates.
Although there has been little reaction from the currency markets so far, this looks almost certain to drive down the value of sterling, prompting overseas owners of gilts (about a third are held overseas) to offload, and at the same time fuel inflation.
This policy does not seem to have any prospect of a happy ending, and when the markets realise that, confidence in Sterling and UK debt could collapse in very short order.
5. stillthinking said...
"The truth is the government is actually still a net seller of bonds. They are selling far more than they are going to buy."
This is a bit of a key point isn't it?
6. Stevie Dee said...
"It took exceptional brilliance not to see a crash coming", just would like to applaud the genuis for the headline... classic!
7. sneaker said...
Sometimes I get the feeling that our Prime Minister's plans are more like a dog cocking its leg to mark its patch than actually through a need to change something. He just seems to want so badly to "leave his mark", not realising that sometimes, even often, the best mark is no mark. The more you meddle, the more you disrupt, and the more disruptions, the more people lose their bearings and descend into confusion.
In particular, you have to admire the man's grandiose capacity not just to shut out reality, but to argue with it as if reality is the problem.
First, he claimed to have abolished boom and bust - akin to a mathematician claiming to have repealed arithmetic. Then he builds a tripartite regulatory framework that had the consequences we now all know. And once the bubble is in plain view (setting records on every metric), he denied the bubble's existence.
The first wave of the sub-prime problem in the summer of 2007 was brushed off with smug platitudes, when anyone with a real, practitioner's grip on markets knew that this was "the end". There would be no recession, our bold leader claimed. This failure to anticipate or even accept the problem meant policy could never be pre-emptive; it enshrined post facto management as the only possible outcome, the worst of all worlds.
So now that we have the worst economic crisis since the end of WW2, the Great Depression, 1919, 1873, 1837 or even the collapse of the Lombard System in 1348, the person who denied that the problem was existed, or was even possible, now believes he knows the solution.
On what grounds do we give this credence?
The uncomfortable truth is that the long period of economic calm since the mid-90's was built on the foundations the Tories left (I am no Tory), fed by the sudden appearance of "easy credit" in around 1997. If you recall, that's when interest-only mortgages suddenly appeared everywhere.
The causes of the "boom" were amazingly simple to diagnose if you actually read what came through your letterbox. But no, this was not the cause, it was our Glorious Leadership's Magnificence, like some surreal borrowing from North Korea, a claim which would of course be ridiculed even now.
To get to the point: we have a leader who did not understand the boom, did not admit a bust was possible, denied the bust even as it was happening, then proclaimed (through his puppet chancellor) that the UK was "best placed" to come out of the downturn, and has therefore now ruined the national finances. It's like being the passenger of a demented joyrider in a performance car.
But get this -- Brown now proposes that the world should adopt the UK's solution, from bank bailouts to bankers' bonuses. That claim about "we not only saved the world" was truly Freudian! And of course, the next part of the solution to the collapsed bubbles of shares, credit and house prices is to try and find another one, any one, to take their place: a bubble in bonds, and a bubble in government itself.
Analysing our leader seems to be more of a study in psychpathology than politics, but there it is, that is the way we are currently led and it gives me an aching sensation in my brain when I contemplate it. There's no way out and no remedy while Brown is in charge, just more thrashing around and more "come with me" lecturing of the world.
Somebody call for the men in white coats, before he does any more harm. Perhaps that's why Blair held on as long as he did.
But the real question is: how can we revamp our political system to make sure we get real, expert leaders in high office, and ensure that we can get rid of them as soon as their purpose is expended?
8. enuii said...
Well said Sneaker
9. tinker said...
Excellent summary sneaker.
Months ago as events unfolded, I sensed that we would see the PM 'thrashing around', making things worse. The real problem is that we have a man in charge that is not doing what's best for the country; he is in denial.
It is a tragedy that the political system we have and the spineless, traitors that inhabit Westminster, cannot and will not rid us of this awful, misguided man, who is bringing this country to its knees, whilst selling out its children and their children.
10. Confusedsaver said...
Sneaker: brilliant analysis, spot on.
As you point out, though, how do we get rid of harmful politicians/leaders? And more to the point how can we get rid of the Unelected?
Do we have to wait (and hope) till the next elections? Might it not be too late by then?
11. This comment has been removed as it was found to be in breach of our Blog Policies.
12. House said...
How correct you are sneaker. It would appear that no amount of comments made anywhere is going to change our leader's attitude. We are going to get more of this for the next 18 months (Hopefully less). I have written and sent articles by fax to the Prime Minister and the reply I get is that he has taken note of the comments made by me.
However, it would appear that the world is looking for inspiration from the UK leader as no one knows exactly how this problem is going to pan out. Everyone is running around like headless chickens trying to calm their population by saying that we are taking steps to solve the recession crisis rather than allowing it to take it's natural course.
13. troy said...
from Gordon is a Moron
"In a fascist country it is the sick, the weak and the needy who suffer most, and we are now seeing, at first hand, the institutionalised economic oppression of the masses by the state. Remember: fascism means that the state comes first and the people come a long way second. The state's employees exist to defend the state (rather than to care for the people) and that is why their loyalties are to the state. Civil servants whose working lives are dominated by the need to satisfy the state machinery by hitting performance targets are working not for the people but for the party machinery - the state.
The only honest purpose of a Government is to protect its citizens; to work for them.
But Brown has acted like a ruler not a servant, and our individual rights have been eroded and replaced with state rights.
In a real democracy the state should have no rights; it should only have responsibilities. In a real democracy the Government should only be entitled to use force to protect the rights of the individual.
But our Government controls us with fear and force."
14. letthemfall said...
Best way to change the kind of mistake-prone politicians that get elected is to change the electorate.
15. Dead Money said...
"Evil thrives where good men do nothing".
16. crunchy said...
13. troy said...from Gordon is a Moron
"In a fascist country it is the sick, the weak and the needy who suffer most, and we are now seeing, at first hand, the institutionalised economic oppression of the masses by the state. Remember: fascism means that the state comes first and the people come a long way second. The state's employees exist to defend the state (rather than to care for the people) and that is why their loyalties are to the state. Civil servants whose working lives are dominated by the need to satisfy the state machinery by hitting performance targets are working not for the people but for the party machinery - the state.
The only honest purpose of a Government is to protect its citizens; to work for them.
But Brown has acted like a ruler not a servant, and our individual rights have been eroded and replaced with state rights.
In a real democracy the state should have no rights; it should only have responsibilities. In a real democracy the Government should only be entitled to use force to protect the rights of the individual.
But our Government controls us with fear and force."
Crunchy-Rule Britannia, Britannia rule the waves, Britons never, never, never shall be slaves. : (
17. shipbuilder said...
With Gordon being such a Moron, your would expect that at least one of the world leaders, at some point, or even an opposition political party, at some point, to have had an opposing view to his, to have criticised his economic policy during the fact rather than after. You might have expected there to be a difference between right- and left-wing policy on the matter.
Mmm.