We've considered the mysteries of the headless chicken before, but the question of the hour is whether they can spot green shoots? I mean, think about it - you've got no head, which is clearly less than ideal, but on the other hand you're still running around. Maybe your shortfall in the head department means you can sense the shoots in some way. In fact, maybe you can sense special shoots which are always hidden from the fully headed.
ESP - makes you think.
Meanwhile, back on planet earth, the cacophony of policy announcements coming from the chicken coop is now so intense that Tyler has lost the will to decipher them.
As far as he can tell, taxpayers are now going to guarantee £20bn of short-term bank loans to small businesses. Well, no, although the coop headline says £20bn, it actually seems taxpayers are going to guarantee only half of that, the rest of the risk remaining with the banks. And then there's another £1.3bn of longer-term loans, and £75m of equity investment. Ballpark, it seems taxpayers are being put at risk for some £11bn.
God knows if this will actually moderate the slump. Tyler now routinely asks small businessmen if they've lost their existing bank facilities, and he's yet to find one who answers yes. But we must assume our extra-sensory chickens have sensed a different answer, including somehow concluding the guarantees won't simply be used by the banks to de-risk their existing exposures.
Anyway, what we really need to know is what we're going to lose from all the defaults we're going to suffer?
My Lord Mandy reckons that defaults on the £10bn chunk will cost us no more than £225m. But that's only 2.25%, which looks ludicrously low.
Defaults on Labour's existing Small Firms Loan Guarantee scheme reached a cumulative 13% in just the first two years of its existence. And that was only up to March 2008, well before the economy fell off the cliff. Here's BERR's own chart showing soaring defaults right across the programme:
In terms of money, losses in 2007-08 were £69m on a programme that had only lent about £440m cumulative. So that was getting on for a 20% default loss (recoveries amounted to a notional £1m). And God knows what the loss has reached by now - 40%? 50%? 70%?
So overall, if we're guaranteeing £11bn in the teeth of the worst slump for a century, Tyler's fag packet says the default losses are going to be BIG. £225m ain't in it. We're talking billions.