Monday, December 22, 2008
Will he or won't he?
Gordon Brown must be starting to move into his depressive phase again, after a couple of manic months. At least he ought to be, with a decision required on the Jaguar bailout.
Obviously, AngloAustria's position is to let them go bust, along with everyone else queueing up in the corporate welfare lounge. Those business people who indulged in long-term investments because they were fooled by artificial interest rates, so entered structures of production much longer than the market truly required, must be cleared out from the system to allow other more competent managers to get hold of their resources. This is the only route to the solution to this crisis, along with massive government spending cuts and tax reductions.
The pain for many will be immense (and don't worry, sports fans, as a self-employed person I'm expecting to bear my share), but the pain will be over relatively soon, within one or two years. In the longer term, we also need to move to a disciplined form of money, one which we can trust, and this means a move to a 100% reserve commodity currency, probably of either silver or gold. But I'll settle for tax and spending cuts, and no bailouts, if that's all I can get.
However, looking at this 'politically', we have a very interesting situation. After years of government interventions, we have a well-connected car company with several factories in Labour marginals employing thousands of Labour Party voters. We also have a petty Stalin in charge of the government, Gordon Brown, who wishes to stay in charge of the train set for the rest of his natural life.
Brown must know that if he fails to bailout Jaguar, then Tata will let it go bankrupt, and the Brown bounce will start deflating. Expect every Labour MP in the affected areas to immediately begin sharpening their knives for his back again.
However, Brown also knows that if he bails out Jaguar, then the Brown bounce may continue for a short time, but then every other monkey in the forest will be down from the trees with their begging bowls out.
First, it will be all those who engaged in long-term roundabout production processes, so expect airlines, property developers, and other car companies to come calling. Then it will be anyone else who has enough marginal voters on their payroll to command the government's attention. (So all small and medium-sized companies who will be forced to pay for all of this largesse will be wasting their time.)
The only way to avoid upsetting all of these corporate welfare monkeys will be to pay them all off, and the only way of doing that will be to crank up the printing press and push M4 up from 16.3% to something more like 163%!
As Brown keeps buying time by printing more money, his dilemmas are going to come sooner and swifter each time, until eventually his bubble of hubris will pop. The longer he survives, the louder will be the explosion when he is finally overcome.
You never know. He might hold the line. He can 'plausibly' protect his bank bailouts by simply toeing the orthodox line of banks being too big to fail. But if he starts bailing out 'ordinary' companies, then it really is all over. Even he may be able to see this, and then when the unions are screaming for his blood, he can adopt the 'Margaret Thatcher' stance of standing up to them.
Well, he can do that if he likes. That way he'll make a bigger target for all the Midlands and Merseyside Labour MPs coming at him from behind.
We really do live in interesting times.
So what does Maturin Towers think he will do? Well, your regular correspodent merely looks at the photograph above of Gordon Brown's own 4.2 litre armoured Jaguar to work out his opinion. For once, I'll let you guess what it is.