They don't know what they're doing, do they? With every step taken by the Government as it tries frantically to prop up the British banking system, this central truth becomes ever more obvious. Yesterday marked a new low for all involved, even by the standards of this crisis. Britons woke to news of the enormity of the fresh horrors in store. Despite all the sophistry and outdated boom-era terminology from experts, I think a far greater number of people than is imagined grasp at root what is happening here. The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic. The political impact will be seismic; anger will rage. The haunted looks on the faces of those in supporting roles, such as the Chancellor, suggest they have worked out that a tragedy is unfolding here. Gordon Brown is engaged no longer in a standard battle for re-election; instead he is fighting to avoid going down in history disgraced completely. – Telegraph
Dominant Social Theme: It's Labour's fault.
Free-Market Analysis: If you read between the lines, you already know we've admitted to a sort of sneaking admiration for the "Tory" Telegraph. And the article, excerpted above, is startling in its vehemence, a clarion call – the first of its kind that we can recall in a major newspaper – warning the British of what may be barreling down the pike: national insolvency. The British, under the dour, half-blind Scot, Gordon Brown, can continue to bail out the banks but it is not turning out so well. The banks keep floating to the surface, dead again.
Just so we don't depress our readers too much, let us state for the record that there are things to be done, only Gordon Brown and his brain trust aren't doing them. As they could be done in America, by the way, only Obama probably won't do them, either (sorry, folks). Yes, despite the gloom, there are sound economic policy-actions that would reinvigorate the private sector, reduce mal-investment and start bringing Britain back from the brink. (You can jump to the end of this article to find out generally what they are.)
In the meantime, we wait. The reporting gets more hysterical; the bailouts bigger; the political solutions crazier and increasingly brutal. Nationalization of this and that industry will seem first implausible and then, perhaps, inevitable. Still it won't make a difference. You know, we've been predicting this stuff for a long time – and thus we will confess to schadenfreude when it comes to watching how frantic those running things in the West have become. A tad anyway.
Frantic they certainly are. The Brits are so far down the socialist path they have reached the inevitable dead end. Under London's Red Mayor, that great city taxed and spent its way into an ever-more decayed modernity and a big-time real-estate bubble. Meanwhile, the common man was stiffed by bad promises and sour solutions. The British nationalized health care system is a disaster that has all but stripped the average Briton of serious health care and day-to-day dental care. Meanwhile, the average bloke, rotten teeth and all, spends his waking hours under the hyper-vigilant gaze of an endless array of useless video cameras. The government school system barely functions, but bobbies keep handing out tickets for littering – when they are not alertly arresting citizens for defending their homes with impermissible firearms. In fact, having turned gun ownership into a crime, many in the nanny-class have begun agitating for knife laws. (We wonder what happens when boys start beating each other to death with bare fists.) Tax rates are punitive, the royals remain a pervasive blight, socialism reinforces class prejudice and the Tory opposition just came out formally against tax cuts – as irresponsible!
Want more? Corruption is rampant and increasingly bad laws are enforced with zeal. Labour, even more than the Tories, is simply not equipped philosophically or politically to deal with the current financial crisis. And Brown, more sanctimonious and smug than Tony Blair, is not a good choice. He was hailed as a genius when, like Alexander solving the puzzle of the Gordian knot by chopping it, he decided the best way to bail out banks was to directly provide funds. Tens of billions of pounds later, Brown has announced a second bailout, and indicated that he is peeved the greedy bastards aren't lending yet. (The genius thing is on the wane.) Here's the Telegraph again:
Does the Prime Minister realize the likely implications when the country joins the dots? He has never been wild on shouldering blame, so I doubt it. But Brown is a historian. He should know that when a nation has put all its chips on red and the ball lands on black, the person who made the call is responsible … The Government's bail-out of the banks in October with £37 billion of taxpayers' money was supposed to have "saved the world", according to the PM, but now it is clear that it has not even saved the banks. Our money kept the show on the road for only three months. As the Liberal Democrats' Treasury spokesman Vince Cable asks: where has the £37 billion gone? The answer, as Cable knows, is that it has disappeared down the plug hole. It is finally dawning on the Government that the liabilities of the British banks grew to be so vast in the boom years that they now eclipse the entire economy. Unfortunately, the Treasury is pledged to honour those liabilities because it has guaranteed not to let a British bank go down. RBS has liabilities of £1.8 trillion, three times annual UK government spending, against assets of £1.9 trillion. But after the events of the past year, I wager most taxpayers will believe the true picture is worse. Meanwhile, the assets are falling in value. This matters, because post-nationalization these liabilities are now yours and mine.
Strong language. But at the risk of sounding a tad superior, we wonder at this late date if the average Brit has the ability to "connect the dots" in any meaningful way. The culture, with its envious boozing and resentful abasement to authority, is seemingly far gone. Of course, Brown will do what he will do; the frazzled working class will throw him out; and the Tories, with all their self-serving posturing will arrive on the scene once more.
What would work in Britain, as it would in the US and throughout Europe as well, would be less regulation, lower taxes, less monetization and a determination to return to some sort of asset-backed money – gold, silver or both – so as to rein-in the worst destructive tendencies of the West's central banking cartel and its busybody bank-o-crats. We hope and pray this will happen, at least to some degree. Think it will?