Wednesday, April 09, 2008

Something Will Turn Up

It didn't cost taxpayers a cent... if only real life was like that

So this morning Evan Davis got to interview Darling about the IMF's new downgraded growth forecasts, which have lopped 1% off UK GDP next year compared to Darling's Budget numbers. How is he going to shore up the collapsing roof?

"Well, our economy is immensely strong - IMMENSELY STRONG..."

"Chancellor, I just don't know what you mean by that. Just like the US, we have an economy that has been supported by high levels of debt and an overvalued property market. Why should we escape the consequences?

"Well, compared to those hopeless boom and bust Tories in 1868, things look immensely bright - IMMENSELY BRIGHT. And we have very little debt..."

"Very little debt? We have the highest levels of personal debt since the dawn of creation."

"Ah yes, I meant public sector debt. Yes, public sector debt... we're so much better than those hopeless boom and bust Tories in 1792."

Actually, Davis let him off the obvious riposte that Labour's official debt figures are grotesquely fiddled (see here). But we'd all got the point. I fancy Darling will ask for Mr Naughty next time.

"So what about the mortgage crisis. How are you going to help both existing home owners and first-time buyers, as Brown promised yesterday? Surely what will help first-time buyers is a house price crash, but that won't help existing owners."

"Well... er... you put it in very stark terms... we prefer to wibble and mumble about enquiries and hope something will turn up. It might you know. Umm... housebuilding!"

Again, Davis slightly let him off the hook by not pointing out that the housing crisis owes a great deal to Labour's wildly irresponsible open-door immigration "policy", which has not made us any richer but has ramped up housing demand. But Darling was already shipping plenty of water.

You know, Tyler may be joining the TT fan club.

PS The IMF now reckons the global credit crisis will cost $1 trillion. That's three times the initial market estimate of $300bn and may still not be the final word. So how worried should we be? $1 trillion is A Big Number, but to give it some perspective, we should remember the world economy is north of $60 trillion pa. The key thing for taxpayers is to avoid getting panicked into picking up the tab. Globally, bank shareholders can absorb these losses - I can't immediately lay my hands on their combined equity base, but HSBC alone had $128bn of shareholders' equity at end-2007. As we've said before, they've had the upside, and they must take the downside.

No comments:

Post a Comment