The 2015 Election starts here

You know things are desperate when the Financial Times runs a piece headed “Will the Royal baby buoy the economy?” Look Pink ‘un, it was a boy, not a buoy. The poor little beggar’s only 48 hours old and already he’s more influential than the Chancellor. Mind you, put that way well, yes, perhaps it does make sense.

Overnight, UK Business Minister Vince Cable has broken ranks again, this time with the Bank of England”s stricter monetarists. Vinny Livewire thinks the Old Lady has held back SME lendingby demanding that the banks hold ‘onerous levels of capital as a cushion against further shocks’.  Draper Osborne allegedly shares this view. Usually, I find myself nodding in agreement when Cable goes off-message, but this outburst seems oddly naive: has he not been following the thousands of SME fraud cases against RBS and other banks? Doesn’t he realise that no matter how lax you allowed these reptiles to be in terms of ‘cushion’, they’d still use the money selfishly for the own ends? Hasn’t he heard that Crash 2 is almost here?

Except it’s not quite as simple as that. There is an agenda here, and it isn’t that well hidden. This is about winning in 2015, and creating the right environment for QE-man Mark Carney to get down to the important business of chucking our money at the economy in order to make it look other than it is: a sort of narrow strip of quicksand, into which things are thrown, and then disappear.

Friction between the BoE and the Government became near-tectonic during June,  when the Chancellor’s hopes of a revival in the housing market were threatened by prospective capital demands on Nationwide, Britain’s biggest building society. It fell short of new requirements compelling lenders to hold top tier capital equal to 3% of all loans, and was told by the BoE to buy some more sandbags. But this could have torpedoed George Osborne’s Help to Buy inflationary housing-bubble vote-winning lunacy. Nationwide’s CEO Graham Beale, the group’s chief executive, immediately warned that the BoE assessment was “crude”, and would constrain its ability to lend. Funny how people find doing the correct thing crude, and doing the wrong thing bold.

Anyway, the clincher for this analysis is that the new BoE Governor Carney the Canuck arrived, and pretty much on Day 1 granted the Nationwide until 2015 to meet the requirements. It’s clear what’s coming, and it fits exactly with what reliable sources told me in March about The Carney Plan: it is to loosen up credit and bash in disguised QE bigtime, on the assumption that this will lower the Pound’s value, make exports boom, stimulate more entrepreneurial confidence, and see Blighty arising tumescent from the Ashes.

There are five flaws in the scheme. One, more QE and a plunging Pound will put our borrowing costs up. Two, our main export market is flatlining, China is slowing down, and India is is a muddle. Three, we don’t have a manufacturing sector to speak of. Four, all Britain’s banks are in a parlous state caused by madness in the past. And five, Japan has done the same thing, and appears to be getting nowhere.

So thinking again, it really is down to the new Windsor arrival to sort it all out. It’s a big Ask, but we Royalists know that the Firm has the necessary grit to see us through.

Connected at The Slog: How neoliberalist fanatics screwed the Coop Bank