Under Starter’s Orders

Another day, another backtrack from the Fuhrerin. Yesterday, she budged, last night, she unbudged. She pushed her deputy finance minister, Steffen Kampeter, out of the door to rule out “eurobond-lite” plans to pool part of eurozone countries’ debt before the Land of Milk & Honey (Fiskalpakt) is established. Kampeter didn’t even bother to can the idea of bonds issued by the United European Bankrupts’ Association, so we’re left wondering what van Rompuy and Barroso will be working on today.

It’s a familiar pattern this Merkel bum-shuffle. Every morning, the hacks go on a sort of Grand Tour of Brussels, Paris, Frankfurt and then Berlin. Brussels says she ought to, Paris says we don’t know, ECB Frankfurt says she must, Bankfurt says she mustn’t, and then Merkel waits until late afternoon before saying I’m not. Easy money if you’re a journalist in search of lunch somewhere nice, insane monetarism for the eurozone. Everyone’s waiting for the moment when at least one Germany says “Genug” and prints the Nordeuro or something. Could be the 28th of June when France tables its plan to loot the EFSF, could be the moment when Spain needs a full bailout. My money’s on the latter – and yesterday we came perilously close, as bond prices there spiked to levels normally associated with towel-throwing. There’s a gag in there somewhere about Germans, but I can’t be bothered.

Bored with Spain, Moody’s downgraded four Dutch banks at the end of play last night….but thankfully not the European Central Bank, because that one now Stands Ready. All of the Central Banks are now standing to attention, because they are poised To Act. Hurrah. Is it Macbeth, Death of a Salesman, or Le Bourgeois Gentilhomme? None of these, in fact: Combating the Greek Storm is a new play in 729 parts by the obscure patagonian Irish author Brendan O’llocks, and Reuters previewed it late last night GMT.

The plot is good, the content thin, the script risible. What happens is a senior U.S. official proclaims that, if severe market strains emerge after an unusual confluence of three elections this weekend – there are important elections in Egypt, France and Greece – central bankers are on standby to ensure enough cash is flowing through the financial system. “The central banks are preparing for coordinated action to provide liquidity,” confirms a senior G20 aide familiar with discussions among international financial diplomats. His statement is then confirmed by several other G20 officials. And G20 organisers confirm that it’s going to provide a dramatic backdrop to the G20 summit of world leaders, who will gather in Los Cabos, Mexico, on Monday and Tuesday. Penultimately, the head chef at Los Troughos confirms that he has a firm booking for a working dinner on Monday, and the Maitre d’ of Rosita y Gonzales says he has the same for Tuesday lunch. The denouement is that nothing happens.

I haven’t taken in the show yet, but I hear the rehearsals aren’t going well. However, last night’s previews went down well off Wall Street, and as a result shares rose overnight in Asia. One suspects that this was part of the plot. You have to see it as a kind of audience participation shtick.

President Obama told his supporters at a rally last night that the economy now depends on the result of the US Presidential Election. He misspoke of course, in that what he really means is the result of the election depends on the economy – as it nearly always does. This is a smart move by the Black Dude: he switches attention away from the fact that the US recovery is a leveson of lies (see – it’s catching on already) in favour of pointing out something correct – that Mitt Romney has a speech impediment: he is incapable of saying anything of any interest beyond stuff that fires a barrage of lead into his feet. At the same time, the Prezz appeals to calm, patriotic heads: Vote for the President, now is not the time for experiments, they send bad signals. That last White House occupant to pull this stunt was Dick Nixon. He got re-elected by a landslide, even though his hobby was burgling folks. The Obama tactic may be derivative (like everything else he does and says) but it can’t miss.

George Osborne, meanwhile, is about to throw away another £140bn, or over ten times what he has ‘saved’ so far with Austerity 1. I suspect this is really a disguised QE3, and I do so because the scheme will involve giving yet more dosh to banks. The headlines here in the UK this morning say that it’s to stimulate the economy and help us fend off the euro-collapse. I understand some wags in the Treasury are referring to it as Project Alamo, and given that the sum about to hit us is at least €50 trillion, it’s an apt parallel.

Number 11’s spin-line on the ‘boost’ is that it will be used to help people get onto the property ladder and start new businesses. The property ladder is irrelevant at the moment, and the money for new small businesses (a) should’ve been handed out in June 2010 and (b) should’ve been done by the banks anyway. But the Draper-turned-Lady-Bountiful extracts every last drop of Anti-Nasty pleading into his announcement:

“We are not powerless in the face of the euro-zone debt storm,” Mr Osborne lied. “We can deploy new firepower to defend our economy from the crisis on our doorstep. Funding for lending to the family aspiring to own their home and the business that wants to expand…the Government – with the help of the Bank of England – will not stand on the sidelines and do nothing as the storm gathers.”

Absolute bollocks and a complete waste of money. Who in their right minds would start a new business now, unless it involved storing bankrupt office equipment? The economy is flatlining, and demand is at a lower point than it’s been for decades. What we are witnessing here is a switch from Austerity 1 to QE3, disguised as Osborne Bazooka 1 and, in effect, Plan B. It’s that simple and well thought-through.

Heigh-ho. Let’s face the day. And hey…let’s be careful out there.


44 thoughts on “Under Starter’s Orders

  1. We are told repeatedly….
    ”Companies are sitting on mountains of cash and need to invest in the economy…” ”Consumers have no need for more debt…”

    and now ‘the solution’…..
    5billion a month for the banks to lend.



  2. ” Who in their right minds would start a new business now, unless it involved storing bankrupt office equipment? :” Bwahahahahahahahahahahaahahahahahahahahahahaahahahahaaha!!!!!!!!!!

    This is classic and pretty much sums it up…


  3. a great post john am wondering how long 140 billion would last for england look at what 100 billion managed for spain maybe he needs a biger Bazooka or plan c all run away and hide


  4. Tell them to keep their STINKING MONEY whatever the price. They’ll end up OWNING US.
    With a weekend of quakes ahead, it’s SELL, SELL SELL.
    next friday, BUY, BUY, BUY


  5. Have they really grasped the scale of the looming disaster or, did it seem like a good idea at the time? Not that it matters a jot because, none of the money will find it’s way into the hands of ordinary people, it’s just more shoring up for the banks.


  6. “Could be the 28th of June when France tables its plan to loot the EFSF, could be …..

    The DMN take on that (extracts) –

    “Is the next crash threatening here?

    Panic mode: France calls for bank bailout by the ECB and ESM

    The new French president, Francois Hollande, increases the pressure on Germany: Together with Italy and Spain he wants to push through that the ECB takes the leading role in the bank bailout and that the ESM, before its start, is installed as the banking rescuer. Apparently, he fears that French banks could be the next domino stone in the crisis.

    The new French president, Francois Hollande, is trying feverishly to establish the European institutions ECB and ESM as the saviour for the troubled banks. According to a report in the FT, Hollande is hyperactive behind the scenes trying, together with the already crippled Spanish and the ever increasing number of Italians coming under pressure, to establish the ECB as the supreme body of the European bank bailout. They should perform stress tests. If there are problems, the ECB as coordinator should tap into the ESM plunder, so as to jump to the aid of the ailing banks. EU Council President Herman Van Rompuy is already sitting on relevant concepts. Hollande and Van Rompuy want to implement their plans at the next EU summit in late June.


    (…) Hollande’s fear is that, without an ESM-rescue automatism, in the question of bank rescues France would have to step up as a supplicant to the Germans. Hollande wants to avoid that at all costs, and is therefore concentrating all his attention onto a cold financial coup: if it succeeds, to remodel the ESM as the majority-driven banking saviour of Europe before it is even set up (that is already a chutzpa in itself!), then the European debtor countries could, without further democratic detours, gain access to the German savings deposits as collateral for their banks. The current panic amongst Europeans could favour the project. However, the dramatically rapid changes in the bond markets could put the decisive spanner in the works for Hollande. Because, should the federal government recognise that also the financing of government spending in Germany is at risk, they will pull the plug (if they know where to find it).”


    Where the hell is Paul Oliver Duggan when you need him?


  7. Who in their right mind, small businessman or aspitational home owner, would consider burdening themselves with secured debt at this time, even if the banks wanted to lend (which they don’t)? There is a storm coming our way and soon. Unemployment will rocket (as will crime), demand will contract, businesses will close, those businesses that dont close will try to compensate for falling demand by increasing prices thus ensuring that demand contracts further, people lucky enough to keep earning will hold on to their cash, even as it depreciates in front of their eyes.


  8. And the BoE wil print print print………… they have taken the wrong course of action and it is their only option………get ready for fun times ahead !

    Oh and the August tax hike on fuel duty….thats not going to fuel inflation either is it ? We are on the carosel now and its starting to move too fast to jump off…………..come on Ollie print print print….. you know you wanna do it :)


  9. If Osborne really means to kick start the economy, the £140bn would have a more immediate impact if it was issued to households in the form of bonds redeemable against whatever British-made goods Osborne wants to promote. As it is, does he really suppose the banks are going to start lending and we are going to start borrowing?
    JW another brilliant post. Don’t know how you do it.


  10. Good Morning everybody. ECB is out of pledges.

    The only solution is massive write offs world wide to 80%. If not, i see big trouble ahead.


    PS. when the germans start to feel the problem they will “kill” Merkel, but it will be too late. They live like the sultan of Brunei, on thin air an other peoples interest payments.


  11. There is a lively comment thread in today’s Telegraph which should have Georgie’s ears burning :


    The best comment is an absolute pearler (your humble correspondent adds his best wishes too), summing up, as it does, the intellectual depth of our beloved Chancellor.

    I used to think he was – perhaps – clever but badly advised; now I realise that he really is as thick as the proverbial and should be shut far away from the economy where he can do no harm.


  12. The grubbyment should use this money (where did it come from?) to set up a new bank, then underwrite business and personal accounts of the tbtf banks,transfer the accounts to the new bank and then let the tbtf banks fail.


  13. In my limited experience bankrupt office equipment costs money to be taken away. It has no value. Due to data protection laws you have to trash computers also. However maybe setting up a business to “skip” this stuff in compliance with all relevant H&S legislation etc might be a runner? Though who pays??? ;-)


  14. Allen Stanford sentenced to 110 years in prison for $7bn Ponzi scheme. George Osborne gets a good bollocking from more than 1000 Daily Telegraph readers for launching a £140 billion ponzi scheme. Will the City of London Police make an arrest when the post count reaches 2000?


  15. If Hollande really is playing this tack then the game is over. It means that nobody but Germany, Finland and Holland can afford to fund the bail-outs. The ESM/EFSF can’t borrow on the markets and there is no money left in most of the contributors kitties. And these three countries do not have the resources to bail out the rest – though they can buy time at a ruinous cost to themselves.
    The Fed may help but at bottom the ECB has to print. And didn’t Draghi say last night he was at the limit of his mandate?
    John quoted some astronomical sum some time ago (9T??) which was needed to keep the EZ afloat this year. I thought at the time he may have slipped up on his sums but I’m not so sure now.


  16. SITC – over one million people told Blair not to invade Iraq, yet there he goes, trousering huge piles of spondulicks (“I shouldn’t come any closer if I were you” – very courageous when backed up by goons with hearing aids permanently attached), whilst Milosevic coughed his last in a cell at the Hague. Jail – like taxes – is only for the little people.

    I am not a vindictive man, neither am I religious, but I rather wish there was something to the concept of ‘Karma’.


  17. Pump those houses!! Form an orderly queue debt serfs – we can fit just a few more members into the ponzi scheme.


  18. The Bankers’ Plan

    “The Power of financial capitalism has a far reaching plan, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.

    This system was to be controlled in a feudalistic fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences.

    The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks, which were themselves private corporations.

    Each central bank sought to dominate its government by its ability to control treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence co-operative politicians by subsequent rewards in the business world.”

    Carrol Quigley, Tragedy and Hope, 1966 – [Bill Clinton’s mentor and Georgetown University professor]


  19. @Wfd

    Have I misunderstood what has been done here?

    The BofE has just agreed to continue QE (let’s call it what it is, Printing Money) at 5B per month and give it to the same banks that have received all the previous QE but with alleged conditions attached to this lot. As distinct from the implied aims of the previous QE. In other words the same book with a different cover.

    What I surely don’t understand is why they expect to get a different result from what has gone before.

    Or have I missed some hidden genius to it?


  20. @Caratacus. You wrote ‘.. but I rather wish there was something to the concept of ‘Karma’. There is. It is called your life. This revelation came as a huge shock to me at a buddhist meeting. Karma is not something that happens in your next life. It is happening now. The choices you made in the past have formed the world you inhabit today.

    The bugger for those who would like the baddies to suffer is that we can’t control how they perceive their life. We may think having to live surrounded by bodyguards in fear of assassination is living in hell; for Bliar those heavies may just be fuel to under the oiliness and smarm he is walking on eggshells – perhaps waiting for his lies and deceptions to be called to account. As a Catholic, he expects that reck0ning on his death bed. Now THAT is living hell.


  21. No hidden genius Jwoo.

    “Insanity is doing the same thing, over and over again, but expecting different results.”
    ― Albert Einstein

    “Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.”
    ― Albert Einstein


  22. @Caratacus

    “Let no man pull you so low as to hate him.”
    — Martin Luther King Jr.

    Wise words indeed.


  23. Quite right MaxC – when I said I was not religious I didn’t mean I was unaware of the true meaning of Karma .. I spoke carelessly for which I apologise ;-) I used to try to follow the Noble Eightfold Path myself so I really ought to know better.

    In order to clear things up, perhaps I should say that I hope the smarmy self-righteous sod suffers a million torments either in the this world or the next. I ain’t fussy. (See – already I’ve failed on No. 3).


  24. I can’t see much of Osborne’s new £140 billion bazooka being used to fund lending to the private sector and SMEs as he & Merk claim. Partly because demand for borrowing has fallen off and the banks are following their orders to beef up capital reserves. Ossy & Merv know this. A better explanation is that it’s another round of cheap bank liquidity as the EZ storm approaches…


  25. WFD

    I don’t hate him – hate is born of fear and I certainly don’t fear him.

    All I want is a reckoning … a balancing, a symmetry in the Uinverse if you will.

    While I tend to agree with Kant that the truly moral man will never act violently, that doesn’t mean that I wouldn’t give him a slap if he was in range… that is my failure as a human being.


  26. @Carat: Congrats. You’re at No.2 at the moment :-)
    1500+ comments! That’s getting to be a near record methinks.


  27. And here we have the REAL reason for the Osborne/King £140 billion bank bazooka, buried in the Telegraph article @Caratacus quoted above:

    The scheme should also help British banks shield themselves from the impact of the eurozone crisis – as they will not have to rely on international finance markets to raise money, which is currently difficult.


  28. @BT

    Indeed, but why do they continue to present everything as something it is not?

    The Markets, traders, politicos and insiders know the truth, the proles who don’t see it, don’t matter, the proles who do see it, don’t matter.

    I just do not see the point of it.


  29. @Wfd

    Which implies to me that there is some advantage to them in continuing to maintain the facade knowing that only a proportion of the proles, who don’t matter, are fooled.

    So, what it is that ‘time’ is buying them? Because even these who haven’t yet realised will at some stage.

    It is a rhetorical question really, not looking for an answer, just trying to work out whether robbing them of this ‘time’ would be possible and advantagous to the common good. I suspect it would whilst having no idea how to speed up the conversion rate of the ‘don’t knows’. Those I meet who don’t see it this way I’m convinced don’t want to see it.


  30. @Caratacus.

    Fair do’s, we are all human and given the chance who knows what we each might do.
    I’ve just started to read the “Bhagavad Gita” that Hieronimusb recommended, it may help me in understanding the human condition a bit better, I do hope so because I’m just scratching my head at the moment!


  31. @Jwoo:
    “…why do they continue to present everything as something it is not?”

    Lying is the standard MO of those in power and the stated reason for the bazooka is likely to be much more acceptable to the electorate. Indeed Sky News are spewing it out non-stop this morning. Doubtless the BBC is too. After all, who’d be unhappy with the govt providing cheap funding to banks for the purpose of freeing up lending to customers?
    If they admitted publicly that it is to shore up the banks AGAIN, people would be shouting and screaming… we’ve all had enough of the banks! Some people would argue that a better use of the money is to reduce taxes and kick-start activity that way.


  32. I think that they don’t know what to do and are scared as a result, but not so scared that their greed kicks in and they try to milk things for what they can.
    Being honest about the situation is not in their vocabulary.


  33. Nope – it will be done quietly in a disguised way (or they will try) so that the German taxpayers are not aware………….except that the word will get out through the blogosphere……….Merkel is part of the project (she will remain until such time as she has to be sacrificed on the alter of the project – as per all politicians).


  34. Because the proles can’t handle the truth and the PTB fear the consequences of the proles not being able to handle it.


  35. @caratacus. Moderation in all things – including moderation. Feed the inner animal from time to time, mate.


  36. I am surprised at Merv. He def. knows better than to do this wasteful gesture. The banks will not lend out the money, they will do as they always do, find a reason to fail the loan request, and add usurious fees for the privilege.
    He knows exactly how bad the situation is in UK, and it has very little do do with the Euro crisis. If he thinks it does, he should just go ahead and nationalise RBS and Lloyds right now.

    Central Govt. and their lackeys cannot interfere with pump-priming money, it is always stolen (we are no less corrupt than anywhere else in the third world)
    If Dumbass George wants to kick-start the economy, he should be giving tax refunds to taxpayers; if he wants to stop them spending the money on imported goods, it should be used only to pay down personal debt (credit cards, overdafts, mortgages. Credit card terms should be locked down tight, so people have to pay back a minimum 1/12th the debt every month. They can have as high a credit limit as their card company is crazy enough to give them, you can even not bother enforcing the 1/12, but you make it that if they relax payment terms, then the debt is unsecured.
    He should take VAT of home improvements and stimulate the SME construction industry, that employs so many more than a crazy infrastructure project like HS2 or M25 10-lane roundabout could ever do.
    Secondly, change corporation tax and dividend tax to 10% for the first £50k, that will free up spending and investment from the people who will circulate it best in the economy.

    Whatever he do, keep the money out of the city!


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