the time has come to shoot you down

OK, the last post wasn’t totally serious.

But is it too much to say that John Redwood is back? He’s been given a committee to chair, which sounds like a kick to touch, but we live in committee times. The Government is handling the economic crisis through a combination of outside committee-ists and a civil service-run mixed cabinet committee that super-sets the outsiders, some cabinet members, and some officials.

And the Conservative line is becoming increasingly clear. They believe the rate of interest is too low; this means they want to put it up. So much for independent central banking, the guarantor of sound money. The justification is that they want to encourage saving. They also want to cut or hold public spending. And they vaguely suggest that they want to fix the exchange rate, or at least intervene upwards in it.

These are all deflationary and demand-reducing steps. If you’re a monetarist, they want to increase the price of money by reducing its supply; if you’re a pragmatist, they want to push up sterling and keep imports cheap, which implies pressing down the level of prices generally; if you’re a Keynesian, they want to pull money out of the circular flow into a storage tank, whether private or public. If you’re a 1980s New Classicist, they want to make cash scarce compared to goods, so that the price of labour eventually falls far enough so that the price of goods and services clears the market.

Bing! That’s it. They are still obsessed by the idea of hammering down wages, as they were in 1985, and 1995, until we get to…what? Where can it go, in a world that includes Bangladesh, and overheads? For them, that is the solution. Strangely, no-one ever suggests that the price of enterpreneurship ought to fall; haven’t we had enough bad ideas for a while? The only answer is what it was back then; we’ve got to make good stuff, or good services, and the best way to do this is not by bidding up the price of houses in the suburbs of Middlesbrough.

Yes, there’s the idea of guaranteeing loans to small businesses. But here’s a question for you. Not so long ago, it appeared that the Government guarantee of wholesale interbank lending would result in a monster liability on the public balance sheet – but only if the Government charged a fee for this service. Weirdly, if the Government did it for free, the liability vanished out of the moneysphere. Either way, certain pol… Fuck him. George Osborne used the liability to back his own version of the numbers.

Now, George wants to guarantee £50bn worth of loans to small businesses, and charge a fee; but for him, the wholesale guarantee is “Labour bankrupting the country again”. I know I’m a sad, twisted bastard, but I still remember when lying in the House of Commons was a resigning matter. Perhaps I should have learned something when Jack Straw and Hoon back in 2003-2004….no. The struggle of man against power is the struggle of memory against forgetting, said Havel.

Maintain your rage, said Gough Whitlam. I happen to know that some really serious donors to the Tories think Osborne ought to be sacked, moved to Communities and Local Government, /dev/null, Siberia or wherever. Most of all, they want him nixed. Step away from the controls.


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