In the good times, an investment bank makes a profit and returns a nice dividend for its shareholders if it has the ability to do so. How much a bank makes is determined in large part by its ‘beta index’ – and it can be the case that the return can be very large if there is high risk. That’s how the market works. Investment banks typically have a high ‘beta index’.
The Coalition has now become like a bank that nobody particularly knows how to regulate. It has decided to take a risky course flying in the face of most economic experts. This policy has seen no return – in fact it has been downright dangerous, but thankfully the centre-right blame everyone for the economy; because they are idiots. Britain plc, under new management, starved the UK of investment in the construction industry, much needed at the time, through abolition of schemes such as ‘Building Schools for the Future’. Labour was much derided by the Conservatives and Liberal Democrats at the time, and the construction industry yesterday contributed to 0.4% of the -0.7% shockingly bad (deterioration) of the GDP.
The scale of this disaster cannot be underestimated. The Conservatives and Liberal Democrats inherited an economy which was weak in its recovery. Like an ill patient, the Doctor bled the patient to death. As a result of this haemorrhage in the last 27 months, the patient is in intensive care, but the hospital doesn’t wish to sack the doctor.
Mixing metaphors up, it’s because George Osborne has to be caste as the ‘rogue trader’ of Britain Plc. In public, Britain plc. is ‘doing well’ – all is good in the world, mounting ‘the biggest security operation in a lifetime’. There is no mention by Dave and Seb of the G4s cock-ups – national pride is the Microgynon of all criticism here. But Britain Plc is putting on a brave face for its future investors – like ENRON did.
Britain plc is not even returning a dividend any more. Real economists, many of whom are Keynesians, are fully aware that the recovery – if at all – will not begin until 2018 at the earliest. This is because there was lack of investment in the infrastructure of Britain leading to poor growth – the employment statistics reveal a more flexible workforce, but a country which is economically sick.
The best Britain plc can do, to be regulated, is to ringfence George Osborne. That is, put all the liabilities in George Osborne, with a view perhaps to flogging off George Osborne’s minimal assets and liabilities elsewhere. His assets as a master strategician makes the Great Stupendo look like a possible Royal Variety Act. He is at best a rather feeble tactician, evidenced by delivering possibly one of the most incompetently executed Budgets ever known to the UK in modern times.
George Osborne is accused of completely murdering the UK economy. Perhaps he can reduce this crime to manslaughter, if he can argue that he was provoked by Alistair Darling and Gordon Brown ‘maxing out the credit card’. This argument is difficult as the UK Plc, under a different board of management, had in fact had the lowest debt of all the G20 entering the global recession. Or maybe that George Osborne can claim ‘diminished responsibility’ – the abnormality of economic mind may be attributable to his 2.1 in modern history at Oxford, with little real-world experience of running a small business, let alone a sovereign economy. George Osborne may ‘get off altogether’ by claiming self-defence, but chronologically he started the verbal attacks of Ed Balls, culminating in a discredited smear campaign which even led the Tory press to ask for his political head.
Vince is no Saint either. It makes for a convenient story line for Michael Oakeshott to plonk him on a horse to lead a cavalry, but a real Keynesian would not have let this mess get this far. It was St Vince who famously said, in response to a Labour Budget, that “it doesn’t matter where the recession came from”. Oh really? St Vince of Cable has in fact, it is alleged, been a ‘silent bystander’ to the murder of the UK economy. The clue in his role comes from the unsubtle clue that he is in fact Secretary of State for Business, Innovation and Skills, during this fiasco.
So, it doesn’t particularly matter if Britain Plc. rearranges chairs on deck – mixing metaphors further to become HMS Britain. It has hit an iceberg, and the question now is whether this is enough to sink it on May 8th 2015. Incedulously, Cameron and Co. Limited (now Britain Plc.) wish to continue in their ideological campaign to cut the deficit, but given that the deficit and borrowing exploded this year, it might be safer for Britain Plc. if it frankly went into administration until it’s fit for purpose – after the Olympics of course.
