Yea, Verily I Say Unto You...

THURSDAY, DECEMBER 18, 2008

Yea, Verily I Say Unto You...

We are being robbed and left for dead

Great to see the Good Samaritan is still in business. The Chief Druid somehow overlooked him this morning as he likened Gordo's fiscal stimulus package to an"addict returning to the drug". But later the Dear Leader reminded us that he himself is the GS - the GS incarnate. And no matter what stones the druids may cast, he will not "walk by on the other side when people are facing problems".

Of course, as Maggie was wont to observe, "no one would remember the Good Samaritan if he'd only had good intentions; he had money as well." So it's just as well the DL has plenty of that.

Or rather, it's just as well he has unfettered access to our wallets and credit card.

Today we got the latest card statement.

Uggh.

Public sector borrowing was £16bn in November - the worst since records began. And our cumulative borrowing since the start of the year is already £56bn - twice what it was at the same stage last year. There's simply no way we're going to stick within Darling's £78bn PBR forecast for the whole year, even though it was made just three weeks ago. Borrowing, my friends, is out of control.

But hey, that's OK because we're in a serious recession, there are lots of people facing problems who need our help, and anyway we can always finance everything by running the printing press.

That last point has been the subject of much comment in recent days. Right now, it is said, governments don't need to worry too much about how to finance their huge budget deficits. Apart from the fact that panicked investors are desperate to stuff their cash into "safe" government bonds, the deflationary forces at play in the global economy are so strong that governments can safely print all the cash needed to pay the bills - there won't be an inflationary consequence.

Well... there won't be an inflationary consequence so long as governments remember to drain all the cash back out again just as soon as the global economy starts to recover. However, if they somehow forget to do that, we'll be in for the mofo of all stagflationary nightmares.

Feel lucky?

It reminds us of the Greater Fool Theory that always takes hold during financial bubbles - buy, buy, buy... and don't worry about buying wildly over-priced assets because there will always be time to sell them to The Greater Fool just before the ordure hits the proverbial.

In this case, it's print, print, print... and don't worry about printing too much because there will always be time to drain it off through bond sales to The Greater Fool just before the ordure etc.

The only problem being that The Greater Fool never seems to be around when you actually need him.

A bit like the self-funding Good Samaritan.


PS Martin Woolf had another good article yesterday on precisely this subject. He says: "Once inflation returns, the central bank will need to sell assets into the market, to mop up the excess money it has created in fighting deflation. Similarly, the government must reduce its deficit to a size it can finance in the market. Otherwise, deflationary expectations may swiftly turn into expectations of above-target inflation. This may also happen if the debt sold in efforts to sterilise the monetary overhang is deemed beyond the government’s ability to service." Note that last sentence very carefully. It means that we cannot rely on the Greater Fool to meekly buy hundreds of billions of HMG debt in 2 or 3 years time just to help HMG mop up today's prospective excesses with the printing press. If we don't maintain some semblance of fiscal and monetary discipline now, we shred our credit capacity and we're straight back to the plunging pound, sky-high interest rates, and inflation of the 70s and 80s. A real frying pan/fire job.

Trust The People. Not.

Do you want him running Cheltenham?

Well, we never thought Labour would go ahead with its supposed plan to allow direct elections to police authorities. And sure enough they've now canned the whole thing.

They reckon they can't go ahead because allowing such elections might"politicise" the police. Jacqui says:

"There is a real risk that something that is very important in British policing -about non-politicisation – is at risk of being undermined."

As we all know, Westminster politicos hate the idea of real local democracy - who knows what rabble might take control? So once again they've decided the people can just get stuffed - if we don't like what's on offer from our Westminster oligopolists, too bad.

On BOM we remain fully committed to our elected local sheriffs (see many previous blogs). We think local policing should be directly accountable to local communities, and direct elections are by far the most powerful way of achieving that.

We also have much more confidence in the good sense of British voters than Labour have. Unlike them, we don't believe Westminster control is all that stands between us and Reinhard Heydrich running Cheltenham.

This is a classic example of our Commissariat insider elite ensuring that the people remain firmly on the outside. And that our police are bound ever more tightly into serving the state.