Thursday, December 11, 2008

Value of pound falls to 28-year low

The bloody fruits of the failure of Gordon Brown's bailout policies are beginning to become too noticeable to ignore. With the pound collapsing against the Euro, Alistair Darling, our woebegone Chancellor of the Exchequer, has gone from "puppet on a string" to "a rabbit frozen in the headlights".

He refuses to say where he thinks the pound will end up, because, let's face it, he doesn't even know what colour underpants he's wearing, so how would he know something as complicated as the terminal value of a fiat currency? Well, Alistair, I'll let you in on a secret; and it's not that complicated. The Pound will eventually possess the full value of a single Zimbabwean Dollar. It really is only a matter of time.

Poor Chancellor.

In 'normal' situations like this, a fall in the value of the Pound would lead the Bank of England to stoke up interest rates to shore up the Pound's strength. But these are not normal situations. If interest rates were increased, the full force of the recession would finally hit home and blast away the remaining crumbling debt-built edifice of the British economy. So we can't do that, because to embrace a recession just before an election, no matter how sensible from an Austrian point of view, would be electoral suicide for the short-term future of the Labour Party (though very good for the long-term future of the country).

On the other hand, if interest rates stay just where they are, or head even lower towards zero per cent, then the pound will crumble away to dust, just like Christopher Lee in one of those sixties Dracula films when he's hit by early morning sunlight.

Hence, a Chancellor struck dumb and blinking in the headlights.

Oh dear, oh dear, oh dear. What is he going to do next? Unlike the Americans, this Downing Street lemming cannot hide behind the libation of a world reserve currency status (though as Peter Schiff has forecast, this will eventually fail for the Dollar too, when it implodes). And unlike the Europeans, Darling presides over a much more debt-ridden society, similar to the US, with a destroyed manufacturing base resting upon government spending and corporate welfare, fueled by debt and the Bank of England's printing press.

Because our economy is so analogous to the American one, we are basically experiencing a dress rehearsal for what the Americans will go through in a couple of years when the Dollar loses its world reserve currency status, and it too goes into free fall.

So what will Darling and Brown do? They will do what all socialists do when forced to face up to their own failures. They will blame everyone else and then clutch at straws.

Expect an emergency capitulation and switch to the Euro, 'which we have been forced to do due to global conditions originating in America'. No referendum. No debate. Just a force majeure overnight switch to the Euro.

When will they do it? Well they don't know themselves, though they'll be toying with it in committee rooms, so it's hard to call it. I would suspect that when the miserable peasants are beating on the iron gates of Downing Street with their torches and their pitchforks, which at our current rate of decline could be in a few weeks!

I wonder if Mandelson is working on the slogans now? A New Labour Currency for a New Labour Year.

The question remains, however, will the strong Eurozone countries want to let us in? With Greece imploding, will they want another economic basket case on their hands? That may be the final irony. Brown will have wrecked the economy enough to finally get the British people to grudgingly accept the Euro as our only lifeline, and then the French and the Germans don't let us in!

Now that really would be something, even for this appalling Stalinist megalomaniac and immodest saviour of the world.

Oh, and none of it will be his fault. Oh no.


not an economist said...

I was oncentrating on my driving at the time but I am sure I heard Simpson say on the Today programme that in some places the pound is exchanging for less than one Euro.

Also, the German Finance Minister has slagged off Brown's economic policy. Not from an Austrian perspective I guess but at least it puts paid to Brown's/Mandy's claims that they are leading the world and everyone is copying them.

Jack Maturin said...

I grew up listening to the Today program and Brian Redhead. I suspect this may be the main reason why I became such a hard-core communist. Alas, I can no longer listen to 'Today', but I'm sure that it still does occasionally tell the truth and doesn't ask ministers to 'do something' every time there's a problem. Simpson, I'm sure, will be the best of the presenters. But to listen to James Naughtie for even 10 seconds brings me out in a murderous rash.

He would be there, in Room 101, if ever they come for me.

Though I suppose it's good that they're allowing criticism of Brown to be broadcast on a government radio station. One suspects that even they feel that he might be finished, despite the bombast, and that their soon-to-be-new paymasters in the Tory party need to be kept onside with the occasional bone.

There is going to be an enormous amount of tax cutting at some point in the next few years. Not instigated by the state, but demanded by the increasingly poverty-stricken tax sheep.

Let us hope that the BBC license fee becomes the easiest arm of the state to cut off, as the parasites seek desperately to retain some kind of authority by giving us some of our money back.