You can’t buck the market someone once said, perhaps that is why every time Gordon and Alistair tell us that “Britain is best placed to weather the global crisis” the pound falls another notch. As you can see from these charts the pound is down 25% against the dollar and the yen in the last three months and over 10% against the euro this year.
This has one benefit, it helps exporters. However Britain runs a current account deficit and imports more than it exports. Key commodities are priced in dollars, so although oil has fallen 50% in price, the fall in the pound against the dollar means that that benefit is reduced by 25%.
The reason the pound is falling is because foreign investors don’t want to hold sterling assets. Money supply (M4) is off the chart, the government is flooding the debt markets with cash, gilt issuance is going to be a massive £100 billion, the government is still a AAA risk for now, but so were many investment banks until recently. Nobody believes Gordon’s “we have reduced government debt” routine, it is laughable, where did the money for all the schools, hospitals, quangoes and bureaucrats come from Gordon? Include all the taxpayers liabilities and UK government debt is up there with Italy at over 100% of GDP.
There is a lot of scepticism about Gordon’s borrow more, spend more solution. It will be years before any capital infrastructure spending will come through to the real economy, it will worsen the government’s indebtedness and crowd out the private sector. The Tories seem incoherent and without a macro-solution, a little help here and there for small business isn’t going to turn around the economy. “Sound money and economic responsibility” is all very well, if that had been government policy rather than just an opposition slogan we might not be in this mess. It has come to something when the LibDems offer voters more in tax cuts than the Tories. Today Britain desperately needs a real growth package for the real economy. The Tories are too timid and scared of the old Labour attack lines. Voters understand that government spending has to be tightened, Clegg senses that too, why not the Cameroons?
What has happened to Spooks? Have they got a new script writing team? The heroes in tonight’s episode were MI5 agents, saving the lives of innocent women and children – service families. Adam the hero dies in the process despite having already saved the life of a British soldier from would be Al Qaeda terrorists set on a beheading. The soldier was presented sympathetically, as a father and husband who refused to read out the speech dictated to him, preferring death to dishonour.
The ultimate baddie was a Russian spymaster. What no evil Christians? No duplicitous Americans, no Israeli Mossad manipulators, no big business plutocrat exploiters? This is the BBC, we expect to be force fed left-wing platitudes and propaganda, not given a patriotic tear jerker.
The 10 O’Clock News returns things to normality: “Tonight America is accused of terrorism…” Don’t start paying the TV licence fee just yet.
Mandelson remains unrepentant and says he would be happy to meet Oleg the Oligarch again. At least George Osborne won’t be cavorting around on billionaire’s yachts:
“I think I did make a mistake. In politics it is not just what you say and what you do, but how things look. This did not look very good and I regret that…”
He sounds like he is willing to take his punishment.