Tuesday, 25 November 2008

Brownian Motion

Sorry for the delay in posting: I've been organising our local '2.5% off VAT' street party. Gran says it's like VE night all over again....

Will Hutton seems on board. Richard Murphy is prepared to give it a more than grudging time of day and the People's Polly is, of course, ecstatic. Yet both Mason and Crick were pretty nonchalant about it's supposed vast scale on Newsnight, and the Economist directly warns:

"......Britain is still heading for a painful recession, despite the government's fiscal stimulus. The reason why the Treasury was unable to do more was clear from the borrowing forecasts that Mr Darling unveiled. Although these include his new fiscal measures they were still breathtakingly high..."

Will it work? Who knows: whatever happens, the Tories will claim it made things worse and Labour will say things would have been worse without it. At that party-political/electoral level it is ultimately a game of spin and counter-spin, a hall of economic mirrors in which a mainly economically illiterate electorate stumble blindly.

But that may not be the question for very long anyway: almost unbelievably, the banks want more money. & Mervyn King and Robert Peston seem agreed we're going to have to give it to them. The scale of this reflation package is much, much smaller than that of the previous bank rescue funding measures, so why should any subsequent second tranche be very different? I suspect the Economist might find the public finances quite able to bear the costs of a second tranche of public money designed to support the banks.

It's not over yet. There are a lot more moves left in this macabre game of pass the parcel. I'm beginning to suspect there's even electoral mileage to be had for anyone who'll confront the banks head-on. Though whether that's Comrade's P's way is something I'm far less certain about.

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