Right Hand,Left Hand… Err

On Tuesday I had the pleasure of meeting the redoubtable Frances Coppola at an event organised by Positive Money there was a great panel there, including Paul Mason and Zoe Williams (Grauniad), but something Frances said stuck in my head. Hers was a simple suggestion that the right hand starts talking to the Left hand. The Bank of England is practicing loose monetary policy via whilst the Treasury is, to date, attempting fiscal tightening via austerity. Shome mishtake shurely?

So what is QE? It seems to defy explanation, like neoliberalism, but both are things. Some describe QE as an asset swap, some as a bank bail out and others are plainly bewildered, for example myself. let’s instead look at what QE is supposed to achieve. It is to boost lending to businesses, increase economic velocity and generate inflation with a veritable tsunami of cash unleashed on banks. What it actually did was boost the assets of the already rich but it didn’t boost lending or create inflation in Japan. So the US and UK tried it with identical outcomes. Now the EU are doing it to and doubtless expecting a different outcome. So much for supply creating it’s own demand.

At least Japan tried to marry fiscal and monetary policy, so too did America  with some direct fiscal injections. The UK did Cash for Clunkers and austerity. So the UK position became to stimulate the economy with QE but to shrink it again by  spending less than it taxed. The fact that this didn’t happen was widely predicted and Osborne’s dreamed of surplus was always several years into the future. Then the events of brexit took centre stage, there is talk of abandoning deficit reduction and Mark Carney unleashed some more QE because it’s worked so well for everyone so far. {Irony Mode Off}. Is there any chance these guys could talk to each other, maybe even coordinate policy? Just a thought.

I wouldn’t mind if this were a one off but this Right Hand, left Hand business seems to have taken hold. In 2015 David Cameron, our former Prime Minister in case you’d forgotten, was extremely cross with his local council. The Tory council was enacting cuts, demanded by a Tory government because the deficit was a big scary number, which if unaddressed, would mean we’d all be living in caves in two years. What exactly is the Right Hand saying to the Left Hand here? A constituency MP (himself) objects to cuts in services demanded by government (himself) and wants the local council to do something. Presumably the council wrote to the constituency MP (himself) to bring this to the  Prime Minister’s (himself) attention so he (himself) can intervene.  OK, I needed an asperin after reading that sentence myself but it’s what happened.

So safe to say it couldn’t happen again but it just did. George Osborne is terribly cross because he’s just found out QE appears to have made the already rich richer. Again, just to remind you, George used to be Chancellor of the Exchequer and you’d have thought he may have been able to address this. Who knew? This revelation only made it’s Damascene appearance shortly after leaving office. Those spiteful people at Renegade Inc decided to pop this news to me whilst I was on a busy train, several dozen fellow passengers are now convinced they were travelling with a raving lunatic. Hey ho they’re probably right.

The government has changed, in personnel at least, has the Right Hand started talking to the Left Hand? Not it seems when it comes to brexit. The Right Hand says brexit means brexit. The Left Hand replies that this is a circular tautology. The fact that a tautology is by definition circular isn’t the point. This particular tautology is so concentrically spherical it has become circular unto itself. I will declare how I voted. I went for in under instruction from by infinitely wiser 16 year God daughter but my head said out. I have my red lines and one red line is called Greece. I am terminally disgusted, not just at the treatment of this proud country, but at the lack of protest from the UK and beyond. That is exactly what the EU would do to us in the UK given half the chance. Apart from the good bits I’ll say goodbye to membership with few regrets. I wish Yanis Varoufakis the very best of luck in trying to reform the EU from within but it won’t happen DiEM25 or nay.

As luck would have it, or not as the case may be, our new PM Theresa May has a master plan, that’s to put Liam Fox, Boris Johnson and David Davis in charge, oh joy. It is already clear they haven’t a clue what they’re doing and here I run out of metaphors. I believe Zaphod Beeblebrox had an extra hand but I’m not sure if there is a name for such a differently abled person. So now, not only does the Right hand not know what it’s doing, there’s an extra hand not talking to the other two. It’ll be alright on the night.

The brexit plan has never been anything other than plucky little England (Plus Wales minus London) pulling the collective todger out of the fire against great odds. They probably never even got that far in their thinking but it doesn’t matter. Several years down the line, after Chillcot has thought things through, if we ever brexit it will look so much like being in we’ll never know the difference, so calm down.

That’s how we do things.

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5 thoughts on “Right Hand,Left Hand… Err

  1. Well, Bill, you covered some ground in that post, didn’t you?

    I would like to comment about this nutty idea about austerity: because it is the reverse of the “trickle down” idea. Both are supposed to be great ideas, both only show that the people who dreamed them up don’t have a clue.

    Oh, you mentioned that, didn’t you?

    I mean, the feisty Greeks all lined up to buy Porsche Cinnamons or whatever they were, and did so because their super-slack banking system was flooded with money from the EU. Remember it’s only countries that have tough banking regulation that have breathing economies in our day and age: Sweden, Iceland, Denmark and of course, Germany.

    Had the money poured into Greece been used for anything more useful than a bridge spanning two uninhabited hillsides – you remember the joke, don’t you? – things would have been a little better for Greece. The problem for Greece was that they have to pay for the money they borrowed to build those bridges. It’s how Goldman Sachs works. They don’t care just as long as they get their slice.

    If it happens to be dripping with blood, Greek or otherwise, no matter: they can launder the meat money.

    As to Britain outside the EU? All the more for Goldman Sachs when the TTIP is shoved swiftly up the backside of the British government. It’s what the EU was there to do… and when America’s around, do not expect to escape their tentacles.

    And in the meantime, out of the spotlight of the mainstream media that today, is blaming Deutsche Bank for all the woes of the American banking industry… oh, that’s Goldman Sachs, isn’t it? Ummmmm… Okay, so what were the Krauts getting up to? The unification of Central and Western Germany* that was allowed by the US overseers, left the Bundesrepublik with a problem: DDR infrastructure that looked like British or Greek infrastructure. Houses as run down as those in Sheffield or Attiki.

    Trickle down economics wouldn’t work here: the problem was just too pervasive. If ever you’ve been to the DDR – or Sheffield for that matter – you’ll know how run down a place can be. Decades of non-investment costs large sums of money to put right. The Wessies (West Germans) couldn’t afford to do it all, so they did something else instead… and caused a small economic revolution. It was called the Stadtsanierung. You’ve probably read the post, but here it is again:

    https://gemmasponderings.wordpress.com/2015/02/18/the-german-stadtsanierung/

    This was real economic stimulation in an area that had seen austerity for five decades.

    (*40% of Germany is now ‘New Poland’ – the Soviets kicked out the Poles from Ukraine and had to dump them somewhere dry. There was nowhere else they could go. So the US had a genocide in the West of Germany and the Germans from the East – also brutally purged – filled up the gaps they’d left in the bits left to the Germans).

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      1. The truth is, it’s not so hard to do, Bill.

        If something is difficult, it’s because someone is trying to hide something. Like the Toxic Assets the American banks sold – and should be fined $11,2 trillion for. Those assets appeared to be worth their weight in gold, because the fraudsters had concocted a labyrinthine program to deface the stuff they were peddling.

        In the end, it cost the banks a lot of money; Deutsche being one of the few that escaped relatively unscathed. The rest needed propping up with taxpayer’s money. An excuse, this time, not someone trying to hide the truth from others… that is fraud, by the way.

        They say crime pays, it only pays when you’ve got the power and wealth to pull it off.

        What was it Berthold Brecht said? Criminals who don’t know what they’re doing steal from banks; the real criminals establish one.

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  2. Hello Bill I think bewilderment was the point of the explanations. Everyone assumes they have an understanding when all they have is a soundbite.
    Me, I’d go for a peoples QE take the national debt plus all unfunded liabilities, divide by the number of people who’ve been citizens for 18+ years, divide again by 25[?] and create a credit facillity in a new peoples national bank equal to that amount on an annual basis on which people could draw. Say 1% interest and clawed back in a transaction tax, for the impecunious a weekly drawdown of the fund, for those with an income and debt let them take the full annual ‘credit’ and pay down any other debt they may have; and so on blah blah.

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