Wednesday, June 03, 2009

Juglers And Tightrope Walkers

Hello, this is No 10

"You have sat too long for any good you have been doing lately ... Depart, I say; and let us have done with you. In the name of God, go!"

Then, according to Thomas Salmon in his Chronological Historian (1723):
"[Cromwell] commanded the Speaker to leave the Chair, and told them they had sat long enough, unless they had done more good, crying out You are no longer a Parliament, I say you are no Parliament. He told Sir Henry Vane he was a Jugler [sic]; Henry Martin and Sir Peter Wentworth, that they were Whoremasters; Thomas Chaloner, he was a Drunkard; and Allen the Goldsmith that he cheated the Publick: Then he bid one of his Soldiers take away that Fool's Bauble the mace and Thomas Harrison pulled the Speaker of the Chair; and in short Cromwell having turned them all out of the House, lock'd up the Doors and returned to Whitehall."

Juglers, whoremasters, swindlers... it could be straight from today's Telegraph.

The first time Tyler heard Cromwell's famous quote bandied about was in early March 1974. It was the weekend following the Who Rules Britain? election, and Heath was desperately trying to cling on, despite having narrowly lost. He reckoned that, since neither he nor Wislon had an overall majority, if he could fill a room with enough smoke he could maybe do a grubby deal with the Libs and stay (cf the perils of PR).

What he'd failed to understand was that he'd lost his moral authority. He'd asked the country to back him against the miners, and the country had declined. He couldn't possibly stay.

But this time through it's a hundred times worse.

At least Heath had once had some moral authority. At least he'd once been elected.

And at least he had a broadly stable cabinet - even if his Chancellor was Anthony Barber.

And at least his MPs weren't mired in sleaze.

In fact, as far as we can tell, there are only two similarities between Heath and Gordo:

  1. Weirdness - neither could laugh/smile without scaring people
  2. Economic meltdown - both stoked up unsustainable booms that turned to devastating bust.
Ah yes, the economy. Out here, those pressing economic issues have not gone away.

Sure, as we blogged yesterday, the Juglers of Big Government are congratulating themselves on averting the Second Great Depression (Martin Wolf adds his congratulations in this morning's FT). But even setting aside the distinct possibility that a Second Great Depression was never on the cards in the first place, the question we are all asking now is what happens next?

What are we going to do about our looming fiscal crisis? As we've blogged many times, the government's fiscal sums simply do not add up, and on current plans we are heading for the IMF and years of no growth misery - just like we got post-Heath, only ten times worse.

And what are we going to do about our looming inflation crisis? Everybody knows how high fiscal deficits and near-20% pa monetary growth play out - inflation goes through the roof. Even those, like Martin Wolf, who support the fiscal splurge can see that:

"People need to believe that the extraordinarily aggressive monetary and fiscal policies of today will be reversed. If they do not believe this, there could well be a big upsurge in inflationary expectations long before the world economy has recovered. If that were to happen, policymakers would be caught in a painful squeeze and the world might indeed end up in 1970s-style stagflation.

...policymakers are walking a tightrope: on one side are premature withdrawal and a return to deep recession; on the other side are soaring inflationary expectations and stagflation"

A very tricky balance... especially when you understand that the fiscal and monetary tightrope is even narrower than it was back in the 70s.

Our government borrowing is much higher than when Heath got kicked out. In 1974-75, borrowing was 6.5% of GDP, only about half the projected 12.4% for this year. And monetary growth is at least as high - in 1974 it was running at 14% pa, compared to 17.4% currently (M4).

So just to recap, we are on an economic tightrope. It is approximately 2mm wide, and we cannot see the other side. Our tightrope walker is actually a clown - the very one who got us up here in the first place. He has zero authority, moral or otherwise, and even his custard pies don't work properly. He's "supported" by a disintegrating, discredited troupe of performing seals (incredibly, another cabinet member has resigned just in the time it's taken to write this post).

Enjoying the show?

PS At what point does the cabinet become non-quorate? Can Brown even make it to tomorrow's election? Do postmen know anything about tightrope walking? And please can I have my money back?

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