Halloween may have been last week, but take Danny Alexander’s proposed £40bn €uro/IMF splurge and divide it by the UK’s population: £666 per head. A foreboding premonition for George if ever there was one. As Kelvin MacKenzie said on the Daily Politics: “If they want to become the most unpopular government in history…”

Back in July the government won a vote to send £9 billion to the IMF by just 28 votes, the tightest margin yet for the Coalition government. Despite the best efforts of the whips some thirty-two Tory MPs rebelled against the government. With Osborne’s pledge today to increase British contributions to the IMF before the cash is sent on its way to Greece, an even trickier vote lies ahead:

Labour voted against the government last time and Guido can see no reason why they would change their vote next time. If you add the 81 EU rebels on the Tory benches to Labour’s vote the government will be defeated. There is some obvious panic in the Treasury as the realisation has dawned that if Ed Balls marches Labour through the no-bailout door followed by the Tory rebels, the government will lose. Excluding minor parties it will be 339 votes to 282 against more bailout cash.

There are more Tory €uro-rebels than LibDem MPs, yet it’s Clegg and the swivel-eyed Europhiles with their hands on the tiller…

With the Greek government splitting on the referendum promise last night, today’s G20 summit is going to be even messier with the prospect of a snap Greek election now not out of the question. Papandreou says the referendum is about how the bailout, and the conditions that come with it, could be fed to the Greeks.

What is clear is the European political elite wants more bailout cash…

Two weeks ago Osborne told the Commons:

“Britain chose not to join the euro and the British Prime Minister has fought hard to get Britain out of the bail-out fund to which the previous Government signed us up. I want to make it clear that whatever the Commission President says, British taxpayers will not be contributing to the eurozone’s bail-out of Greece—full stop.”

Yet overnight we learn that Britain is gearing up to give more money to the IMF in a futile effort to try to keep Greece in the Euro. Surely this is a change of tune from just last week when Osborne said:

“Britain will not be putting money into the bail out fund either directly or through the IMF… the IMF exists to support countries, it does not exist to support currencies. The IMF contributing money to the eurozone bail out fund, no; Britain contributing money to the eurozone bail out fund, no. That is Britain’s clear position.”

We’ll be sure to believe you next time you make Britain’s position clear, George.

George Osborne to Parliament two weeks ago…

“Let me be clear, whatever the Commission President says, British taxpayers will not be contributing to the €urozone’s bailout of Greece. Full stop.”

On the day the German Finance minister Wolfgang Schäuble declared war on the City of London by announcing the EU will take “a global lead in introducing a financial transaction tax to curb speculative trading”, maybe the left will finally have something to get angry about in regard to the EU’s stranglehold over the UK’s sovereignty…

Emily Nomates, formerly of this parish, has got hold of Treasury documents over at CityAM that show “UK authorities are currently locked in fractious negotiations with Brussels” over the whether the plans set out in the Vickers Review are legal under new EU capital rules. The whole story is here but essentially the Treasury suggest their plans to reform the banking sector are being blocked from above.

Maybe the occupiers should target Brussels for letting the bankers off…

On the Today programme this morning George Osborne dismissed the inflation threat “Actually the problem at the moment is too little money… That’s why the independent monetary policy committee came to its judgement” Is that really true?

The MPC has failed for 60 months in a row to meet its inflation target of 2%, inflation will probably come in at 5% next month. That clearly isn’t a deflation problem, it is an inflation problem which gives savers and pensioners on fixed incomes negative real interest rates, deliberately halving the real value of their pensions in little over a decade. That isn’t an unfortunate consequence of government policy, it is a deliberate policy aim because it also halves the government’s debts in real terms as well.

Those dangerous radicals at SAGA, the retirees organisation, are describing QE as a “Titanic Disaster“,

“QE2 will damage pensions, impoverish pensioners and ultimately risk another crash. Inflation depletes spending power. It does not create growth. This inflation has undermined confidence and caused consumers to retrench, which has actually weakened the economy. The authorities must take heed of these dangers before it’s too late.”

The Monetary Policy Committee is simply no longer even trying to contain inflation, the Federal Reserve in Washington and the Bank of England in London are, in concert with their respective treasuries, deliberately letting inflation go to solve the government debt crisis on the backs of pensioners and prudent savers. The only reason they don’t say it explicitly is because if inflation expectations were to be higher it would feed, reflexively, into even still higher inflation. That is why Mervyn King has disingenuously claimed for 5 years that inflation is “a blip”. Some blip…

This from the party of sound money will hit a key voter demographic hardest, the demographic that is most loyal in voting for the Conservative Party, affluent retirees. David Cameron’s conference speech last week was nowhere near as good as his 2008 speech:

I believe that government’s main economic duty is to ensure sound money and low taxes. Sound money means controlling inflation, keeping spending under control and getting debt down. So we will rein in private borrowing by correcting that big mistake made by Gordon Brown, and restoring the Bank of England’s power to limit debt in the economy.

In government and at the Chancellor’s behest we are seeing the printing of money on a scale never seen before, inflation is uncontrolled, spending is rising, debt is being encouraged to rise. The Chancellor plans to facilitate more private borrowing from the Treasury by poor corporate credit risks and the Bank of England now holds on its books a third of all the government debt outstanding with no credible plan to unwind the hundreds of billions in QE driven government gilt purchases. Sound money? What a joke.

Investors Chronicle on Osborne’s corporate bond purchase programme…

“If banks know they can pass on credit risk to the state, they’ll not bother to assess it properly. Like US mortgage lenders, they’ll lend to every fool and con-man who walks through the door. Yes, lending will flow freely, but to the worst malinvestments – all of them underwritten by you and I.

This isn’t the only likely source of malpractice. What if the government were to buy (say) the bonds of Tesco but not Sainsbury’s? This would give the former a state-sanctioned competitive advantage. Even if we disregard free-marketers’ quibbles about distorting price signals – and we shouldn’t – this is a recipe for lobbying, rent-seeking and outright corruption.”

There is often more truth in satire than news reporting and yesterday gave us an amusing example. The Chancellor’s vague plan for the Treasury to buy small firm’s corporate bonds was reported on by the Daily Mash thus:

Osborne’s offer of credit to thousands of small businesses will make Britain the first conservative-led communist state when the loans are inevitably defaulted and the government ends up owning and running everything.

The Chancellor seems to think the solution to the credit crisis is more debt, even though many businesses are doing the opposite and de-leveraging. Banks make money from lending and they lose money lending to bad credit risks. The government thinks the banks are being too cautious even though the markets think there is serious trouble ahead. Guido thinks the markets have it right.

When challenged to introduce growth-stimulating tax cuts the Chancellor refrains saying that he won’t because he is a “fiscal conservative”. George Osborne presumably would concede that Nigel Lawson was also a fiscal conservative, yet he managed to cut the top marginal tax rate from 60% to 40%. There is nothing fiscally conservative about maintaining a tax rate so perversely high it generates lower revenues by driving high earners out. This isn’t fiscal conservativism, it is political defeatism.

It is even less likely that fiscally conservative Nigel Lawson would countenance Osborne’s proposed socialisation of the corporate credit markets. When the government starts lending money to companies that no one else wants to lend to, you can be sure of one thing, they are going to lose a lot of taxpayers’ money. Billions.

A conference speech is always a team effort, Osborne’s speech had input from Rupert Harrison, Poppy Mitchell-Rose and Ramesh Chhabra. Read it in full here and judge for yourself.  The end result was so polished it read like a Times leader. Perhaps with good reason…

A close textual analysis of Osborne’s speech gives Guido the distinct impression that the hand of The Times’ Danny Finkelstein can be detected. A usually reliable source says Fink was unofficially on the team helping finalise the speech back in Osborne’s hotel room. Ironically a couple of years ago it was Fink who spotted that Gordon Brown was recycling lines crafted by Stan Greenberg for American political audiences to Labour conference.  Guido is still trying to figure out what the Treasury-backed small business bond plan is all about.

If you hear @edballsmp talk about #eurozone crisis remember he led Labour through lobbies to vote against UK's #IMF contribution this summer—
Matthew Hancock (@matthancockmp) September 25, 2011

Back in July the government won a vote to send £9 billion to the IMF by just 28 votes, the tightest margin yet for the Coalition government. Despite the best efforts of the whips some thirty-two Tory MPs rebelled against the government.

Osborne’s former bag carrier Matthew Hancock thinks this was a bad thing, others (including Ed Balls, Guido and John Redwood) think they voted in the national interest. We were told at the time that this was not like £9 billion transfer which we would never see again, it was a “contingent liability” and the IMF has never failed to repay such borrowings. The IMF has never faced a financial crisis on this scale before, the US is in no position to be the leading lender of last resort if the Euro shatters the IMF.

Christine Lagarde of the IMF is now briefing that the IMF needs more funds to deal with the worst case scenario.

Osborne and the Treasury spin that if Britain wants to sit at the top table the taxpayers have to cough up to the IMF. Isn’t it time to let other people sit at the top table. Brazil, China and India should get a better seat. The menu doesn’t look that appealing and is overpriced.