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Tuesday, December 18, 2007


2 new stories in the news today.

1)The LibDems have chosen the wrong (well ok wrongest) candidate for their leader. Nick Clegg is clearly a stuffed shirt, which is why he was the preferred candidate among the "great & good". Huhne, despite much idiocy & some dishonesty over environmentalism, clearly was a competent economist with some actual ideas. He lost by 500 votes & may well get a 3rd chance if Clegg doesn't start inspiring & their vote keeps deservedly falling.

Clegg's pompous acceptance said he hoped to help Britain to become a better "liberal country" which will be difficult leading a deliberately illiberal party. Ming has commented on how well the party will do with a young leader!

2) The government has increased its guarantee to Northern Rock to cover effectively ALL of its £100 billion liabilities. No answer as to why this has been done, nor why the Branson takeover hasn't been hurried through or indeed anything. The old adage is if you owe the bank £10,000 you have a problem, if you owe them £1,000,000 they have a problem. Well the bank owe us £100,000,000,000 & we have a hell of a problem. Moreover we have established a far worse precedent. If house prices are going to fall & sometime they will because their prices bear no relationship to the cost of building them but are merely held up by government preventing building, then NA will be merely the first to fold. The government will find it infinitely difficult to refuse to subsidise them all & totally impossible to do so.

Japan's economic growth, the fastest in the world, was brought down to zero for a couple of decades by a government which devoted its entire economic resources to ensuring banks which were were broke because of a property bubble, were propped up. We should, under no circumstances, do the same. Bankruptcy is a, perhaps the, vital part of the free enterprise system. If the shareholders of NR refuse to sell to Branson until they get a price which actually depends only on our underwriting them then we should have called in the receivers & let him sell to Branson (or the other guys).
2 guesses as to whether the story about us being down £100 billion or a sheep tick taking over the Illiberals led the news. No guesses which should have.

Surely you mean, the bank potentially owes us 100bn and we have a hell of a problem.
Yep. Thanks. Will correct.
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