These billions and those trillions, who's keeping track any more? How? Does the money matter, now that we're printing it? If overspending got us into this mess, how does overspending get us out? Who knows? Most of us are so ignorant we don't know that we don't know.
So there was very little to get hold of when the Chancellor told the Commons about his new bank bail-out. George Osborne pointed out that no one had dared name the extra liability as £39bn. That was new bad money on top of God knows what. I remember when furious political battles were fought over budgetary "black holes" of £6bn. Those are "found down the back of the sofa" sums now. This new happy splashy event was "the biggest single bail-out in the world". We lead the world!
You'd think these new sums might have something to do with Britain's continuing recession. But Alistair Darling maintains a low-pulse-to-no-pulse nonchalance. The US and France have higher unemployment, he says – that's one good thing. And Germany had a nastier slump than we did – that's another positive for us. It'll all be over by Christmas. Hooray!
George Osborne said several other things we could understand. The money supply is contracting faster than at any time since records began. Cause for concern there. And for Britain to catch up with the Budget prediction we will have to grow at an annualised rate of 24 per cent, he said. He's good George Osborne, he's improving every day. He's now the chartered accountant's Ben Elton. If only the chancellor was Eddie Izzard, George would slaughter him.
"Due diligence" has been done on the Royal Bank of Scotland. I remember asking whether due diligence had been done on Northern Rock. "Oh, absolutely!" the Treasury said. Or in old English: "Absolutely not!"
They're saying they've penetrated RBS's "structured assets" as deeply as it's possible to go. so that means about mid-shin, then.
As Tory Brooks Newmark pointed out, in the Lehman Brothers collapse, the Government had no capacity to understand the counter-party risk. It's harder to calculate the counter-party risk than the structured product risk. These things have been built to resist comprehension.
Vince Cable ran with the Bank of England's line on moral hazard. Yes, economics is probably about morals more than money. It's people's morals that inform their behaviour which in turn creates expectations which is what credit is. So banks ought to pay for the underwriting of risk that these fantastic bail-outs represent. That must be true. It's another way of saying that if the banks are too big to fail, they're too big.
We don't need to know anything about money to know that.Reuse content