The real history of gutting (from Calculated Risk)
Last night's C4 News was an absolute classic. According to Bishop Snow, the collapse of Lehman "guts the bedrock of global capitalism".
Guts the bedrock of global capitalism? Bedrocks have guts? Even in terms of the Bishop's own anti-capitalist fire and brimstone, that's more than usually spittle-flecked. And there was more:
"Nightmare... death... giant earthquake... tsunami... downward spiral..." - it was straight back to Private Eye's huge snakes roaming the streets of Britain's cities.
But one oft-repeated phrase really caught our attention - "The Day The Markets Went Into Meltdown".
And how about "there has never been a day like this"?
Never? As it happens, Tyler was at the screenface on Black Monday, 19 October 1987, and if he recalls correctly, Wall Street fell by 22.6% (DJI). Yesterday's fall? Just 4.4%.
And according to Afraid to Trade (via FT Alphaville), yesterday's 4.7% S&P decline was only the 14th worse since 1950.
Look, clearly this is a serious situation, especially if you work in one of the affected firms or own shares in them. But it isn't a market meltdown, and it isn't gutting the bedrock of global capitalism.
Much more scary is the risk of gutting the bedrock of fiscal discipline.
We've already watched as our bungling rulers failed to deal with the Crock, letting the Lloyds offer get away, leaving the incumbent management in place with a taxpayer guarantee, and eventually being forced to nationalise it in exchange for £100bn of dubious assets. How much worse will it be if they have to deal with, say, a failing HBOS? Its liabilities sum to over £600bn.
As we've said many times, taxpayers should stand firm against bail-outs for bankers. We must not let wild exaggeration by the Bishop and others make us lose track of that simple point.