Politics

11 April 2009

Fraser Nelson reviews the week in politics

Just three months ago, this looked impossible. Mr Brown had no more chips to put on the roulette table — but now he has a device with which to manufacture a fresh supply. This so-called ‘quantitative easing’ (or ‘printing money’ as it is more commonly known) has transformed the parameters of the forthcoming Budget as the PM now has the theoretical ability to hurl even more borrowed billions at the problem. This is what is unnerving Mervyn King, the Governor of the Bank of England. He knows Mr Brown is more than capable of such a gamble, and wants to stop it — which is why he has said, in public, that the spending limit has been reached.

Mr King’s words are incredibly potent because confidence is everything when it comes to printing money. If the market thinks the so-called ‘quantitative easing’ is a genuine attempt to combat deflation, then the freshly minted bank notes cause little damage. But if it is seen as merely a ploy to fund the uncontrolled extravagance of a spendthrift government — as it was in the Weimar Republic and is in Zimbabwe — then inflation will take off. So lurking behind the Budget are two nightmare scenarios: an IMF bailout and hyperinflation.

There are ominous signs of the markets bracing themselves for the latter. An increasing number of mortgage advisers are telling clients to take low five-year fixed deals while they still last. If the Budget contains anything that looks like an unfunded stimulus — the type which Mr King warned against — then the markets will be spooked and the Treasury could find itself running out of buyers for the debt. This is the horrible paradox: what is politically most attractive for Mr Brown contains the greatest economic risk.

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john miller

April 8th, 2009 3:11pm Report this comment

Of course the government is deeply concerned about deflation. That's why it increased what we pay for politicians food in the House and why MPs got a 2.3% pay rise. When the price of goods plummets they'll need all the help they can get. Oh, wait, have I got that wrong?

Nobody can seriously believe that the UK can fund its budget deficits. Bond buyers who didn't take up all of the latest issue realise that Brownie is trying to inflict hyper inflation on the UK. Its the only way we can manage the interest on the debt, never mind the debt itself.

Brownies major problem is that he doesn't have enough time to stoke up inflation, so perhaps this reinforces my belief.

Brownie retires over Christmas 2009 because he has gone blind and the Tories have to be satisfied with a hung Parliament or a small majority.

Hyper inflation throughout their first term proves they are incapable of managing the economy, Labour force a vote of confidence and get back into power after only four years out of the frame.

Sorry to spoil Easter, Dave.

James

April 8th, 2009 5:05pm Report this comment

It is terrible that even with so little time left of his tenure, Brown will likely still wreak so much more havoc.

I am infuriated by the mainstream media's refusal to give more room to the idea that some of these banks should have gone to the wall. In America, many people knew this was necessary and although they were ignored, they have been proved right.

The absence of this debate means people do not realise enough just how much money was was on propping up these dreadful banks. For capitalism to work, losers and spivs must pay the price.

http://www.telegraph.co.uk/comment/5120618/Give-taxpayers-a-break-from-the-cuckoo-banks.html

M Rees

April 8th, 2009 8:09pm Report this comment

Spin about the Home Secretary's expenses is one thing, blatant lies about the parlous state of the nations's finance is bordering on the wicked. Brown is playing games, swapping the country's future for the sake of continued power. And yet there are still thinking Labour supporters that will not speak out. Put politics aside and think of poor old Britain. Brown has sown a whirlwind and we shall all reap the bitter harvest

Cuse

April 9th, 2009 1:07pm Report this comment

Yeah, thanks Fraser. Coulson's got you in election mode now hasn't he?

I thought this article was a review of "the week in politics". Silly me! Because it read like "why the Labour party is really beastly".

Grow up Fraser.

TrevorsDen

April 9th, 2009 3:44pm Report this comment

"his almost eerie ability to sit through a doom-laden briefing without flinching" -- this just shows up darlings lack of imagination. It shows his blissful ignorance.

But why should he flinch? He is not the real chancellor - it could be many people or a combination of all of them, Brown Balls Mandelson ... but it is not Darling. Why should he not just carry on taking his salary and expenses and say stuff to the rest of us

Browns G20 announcement is meaningless - he could have invented any figure; nothing will have any meaningful effect on the public.

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