Monday, February 18, 2008

It's worse than that, Darling

For sheer mind-numbing stupidity, I think it's going to take quite some future effort for three British politicians to once again prove so imbecilic as prime minister Gordon "McAvity" McBroon and his two hapless stooges, the butter-fingered chancellor, Alistair "Badger" Darling, and McBroon's myopic head counterfeiter at the Bank of England, Sir Mervyn "Lender of Last Incompetence" King (who was at least brave and honest enough before the weekend to tell us we're all going to get a lot poorer under Brown's socialists.)

In the biggest British state nationalisation of all time, dwarfing British Steel, British Leyland, and British Airways all put together, they have now made the British people liable for £100 billion pounds of Northern Rock's jerry-built mortgage book - this enormous figure reads easily enough on the page, but it is a fifth of the national tax take each year, an enormous sum even in these fiat-money days of telephone-number money. Being the government means of course that they will blanche at sacking Northern Rock's 6,000 employees in the Labour stronghold of Newcastle (as Jack Maturin would do immediately) or repossessing properties from feckless mortgage customers, both of which the government ought to start doing immediately if the blighted taxpayer is to come out of this with any change at all in their pocket.

What really sickens me, however, is that the whole £100 billion pounds is simply a gigantic exercise in preserving McBroon's personal reputation as a financial wizard, when in fact all we Austrians know him to be an economically illiterate and incontinent buffoon - it's an expensive price to pay with someone else's money to prop up a collapsing emotion.

What McBroon should have done, of course, is absolutely nothing. He should have stood by and watched Northern Rock go to the wall, taking the employees and shareholders with it. The beauty of real free market capitalism and its creative destruction of badly-managed or unwanted business, is that it rewards success and punishes failure (both defined by people's wants). The employees will quickly get other jobs and the shareholders should have been watching their board more closely. Having a "share" means you have a share in the losses as well as in the profits - these blinkered shareholders should have been made to take their medicine and to take the role of being an assiduous shareholder more seriously.

To keep these 6,000 voters in a job and to give these lazy shareholders anything for their shares in a failed organization, with my money, taken from me by force, is a crime. Yes, appeal to my charity, and beg me to prop up a failed organization through pity, but Gordon "McThief" McBroon, if you want to be Father Christmas, use your own money, not mine.

Even in a statist's terms, McBroon's nationalisation of Northern Rock is an utter catastrophe. And as the credit crunch deepens and the western world hits a prolonged bubble-collapsing depression created by all of that easy fiat credit pumped out over the last 50 years, then my hard medicine above will seem like a blessing rather than hard-hearted curse. Because if house prices do collapse (as I predict), and Northern Rock's mortgage book collapses in value to only £75 billion pounds, then each and every person in Britain including tax payers, pensioners, welfare bums, political parasites, and Uncle Tom Cobley and all, will be bled white to pay for the damage when all Gordon had to do was walk away and say it really was a situation with nothing to do with him.

This would have also encouraged les autres in the Square Mile to behave a lot less rashly in the future. But now having seen this political action, the brakes will once again be off on risky financial behaviour. Even now, financial companies are queueing up for special government privileges with the line, "if it's good enough for Northern Rock, then it's good enough for us." This truly is an epic disaster of collosal proportions and nothing I can say here can highlight strongly enough what a calamity the last 24 hours has been for this country.

Will the last non-sponging person to leave Britain, please turn out the lights.


atlanticwriter said...

Thankfully house prices are heading back up again according to the latest figures published today.



cuthhyra said...

Good article once again, although as Al says, I wouldn't be too quick to predict a house price crash. A slowdown, sure, but I certainly don't see much sign of a crash in London house prices. I think that demand still outstrips supply in houses by a long way, although this is no doubt heavily biased towards London and the South East.

As to the Northern Rock affair I would say the lack of 'moral hazard' now expected by financial institutions will probably be the biggest disaster to come out of this whole mess. As a shareholder myself I whole heartedly agree that people have to understand that no investment is risk free. Even 'money in the bank' should not be taken for granted, although now, of course, it will.

Jack Maturin said...

Hey Al, if you print enough fiat cash (at a current rate of 15% per annum in the case of the UK), everything should be going up 15% a year in price, just to stand still in value. Measure house prices in gold last year, and gold this year, and you'll see the real differences in value, and we've a long way to go yet before we're out of this current financial mess caused by the printing presses of the G7 central banks. Whoops, mea culpa! I'm assuming that you're being serious and that inflation isn't actually 2.1% as the government claims! ;-)

Jack Maturin said...

Here's a comment I subsequently placed on one of atlanticwriter's blogs:


Hi atlanticwriter,

A few weeks ago you (or someone using your logname) left a comment on one of my blog diary posts:

"Thankfully house prices are heading back up again according to the latest figures published today.


I was surprised at the time that somebody could be so optimistic about property investment, considering the unfolding credit crunch situation, unless you were just playing it for comedy? :-)

If not, I was wondering after HBOS's prediction of a 5% fall in UK house prices, and the IMF's prediction of a 10% fall in UK house prices, whether you might have a second response to the post as I would be particularly interested in where you think UK house prices are going to go in the next 12 months (as I know virtually nothing about property investment, except that it has a high risk/reward profile and high transaction costs)?

Here's the address of the article:


His blog article address: