Recession, what recession?
Politicians have survived for centuries on a heady mix of panache, panaceas and pain killers. However, as mass medication with cannabis or morphine is not generally condoned, politicians are instead forced to rely upon the tools of mass euphoria, mass distraction and mass denial. So what if there’s a war on, how could anyone have a care when the sun is shining and England have finally wrested the Ashes from the tenacious Aussies? Why worry if your wife’s left you and you’ve lost your job when your team has progressed to the FA Cup semi-final? Can you really be concerned that politicians have their greasy palms in the public purse when there are reports of Al Qaeda flirting social ridges, building bombs and blowing bridges? If I were George W. Bush and the CIA, I’d be personally bank rolling them for all of their unifying news and creation of common purpose. After all, what could be more useful than an all-pervading invisible enemy that has infiltrated every despotic regime and non-tax paying corner of the world? However, if all else fails, never forget your fallback option – complete denial. As a strategy denial only works for a while, as the truth will always out, but it can buy you much needed time to bury evidence, bribe dissident intellectuals, or to distract the fragile public attention span. Hopefully by the time the dust has settled and the enquiry has finally sat for two years, the individuals responsible will have long since left office and a new broom and fresh air will have reinvigorated the stale corridors of state.
There are, however some things that just won’t go away, social demons which even three successive FA cup wins could not ameliorate. One is foreign invasion by an enemy who imposes austere tax regimes, sleeps with your women, spends all your cash on sex, sun and sangria, and insults you on a daily basis in strange language (as opposed to our domestic politicians who at least have the courtesy to do so in our own mother tongue). A second is a global pandemic such as bird flu which laid low almost as many people in 2006 as are killed on a single Friday night in Britain’s inner cities (a scare that earned biotech companies billions in sales of vaccine stocks). The third is altogether more terrible than bird flu and a minister’s spending spree combined – yep, you guessed it, the dreaded ‘R’. Generally, people don’t particularly care if their politicians are caught forcing fellatio upon their interns, are not really too miffed if a long promised new hospital wing fails to materialize, and are mostly unconcerned if a toxic waste spill kills a few surplus seals in the estuary. After all, shit happens. Of all the horsemen of the apocalypse, none is so feared as the fifth rider – the dark horseman and grim reaper known only as ‘recession’. Politicians may speak freely and dramatically of war, famine, plague, and death, but when it comes to the fifth horseman they go white with fear and dare not speak his name. He is however (given his attributes he could only ever be male) known by many euphemisms, including ‘General Downturn’, ‘Slowing of the Economy’, and ‘Shoots of Recovery’. The mere appearance of his shadow causes alarm bells to ring across mahogany tables, triggers panic selling on stock markets, and drives politicians to transfer the contents of their bank accounts to sunnier climes shaded by palm trees. Stockbrokers may be throwing themselves off penthouse ledges, high streets may be boarded up, and women may be selling themselves on the street corner to pay the school fees, but the chancellor will never acknowledge the presence of the dreaded ‘R’.
After the grand tradition of 20th Century government, there are six golden rules for saving face, avoiding panic, and seeing you through an ‘R’ without ever having admitted to one. This all presupposes that the chancellor’s sleight of hand can turn some of the early quarters of ‘negative growth’ (aka economic decline) into ‘slow growth’, and that money can be pumped into the economy though borrowing & raiding the nation’s gold reserves. Indeed, by the time you’ve actually been statistically forced to admit that there ever was a recession, you will be sure to find an economist who can provide figures to suggest that an ‘economic upturn’ is on its way and that the worst is finally over. This is a skill which is unique to politicians and the British weather – the ability to announce the advent of winter and spring on the same day.
Now for those six little golden rules which may be used to ward off the dreaded spectre of the fifth horseman.
Rule #1. Deny that there is a recession for at least the first two years of any economic downturn. Manipulate the statistics and ignore classical indicators such as an increase in the cost of energy, raw materials, goods and labor, or rampant inflation. Slash interest rates in a desperate attempt to stave off a collapse in high street demand & consumer borrowing. Start practicing phrases such as ‘economic slowdown’ in front of a mirror until even you are able to use the phrase with a straight face.
Rule #2. Avoid panic attacks in public. House prices may be crumbling and the debt mountain created in the wake of a property bubble may be about to burst, but you must at all costs avoid panicking investors. Issue public statements of confidence in the solvency of the banks as they reel from sub-prime loans and a crisis of liquidity while you bail them out with billions from the tax payers’ purse which will probably never be repaid. Declare confidence in the pound, just as you did before it fell from the ERM sky. Echo the confidence of the major high street banks in declaring the strength of their position, just as Bear Stearns and Northern Rock did before the central banks had to prop them up to avoid collapsing the entire banking system.
Rule #3. Flood the market with cash. Slash interest rates to stimulate more borrowing, lend the central banks (who created the mess in the first instance by offering high interest loans to poor people) vast sums of money from the taxpayer’s purse (i.e. the Bank of England & the Federal Reserve), increase government spending still further (further driving up the budget deficit and government borrowing to new record levels), cut taxes to increase the amount of money debtors have to pay off their creditors (i.e. the banks), increase military spending in sensitive regions to further drive up the cost of oil, and then triumphantly declare that the green shoots of recovery have reappeared within the economy. Relax; the twin demons of debt & inflation are bound to be banished during the upstroke of the next economic cycle...
Rule #4. Keep the people happy. No not the masses, the people who hold the highest offices & send officials home to spend more time with their families. Freeze public sector pay, cut public spending, and prop up share prices as best you can. Above all, ensure that the customary inflated city bonuses are maintained, that as many debts as possible are recovered, and that properties and assets can be repossessed at knock down prices by those who have the cash. Blackstone and other private equity firms have been rubbing their hands with glee on TV at the prospect of a fire sale of business assets as, after all, recessions are a wonderful financial tool for dispossessing the poor and to allowing the rich to acquire still more equity at bargain basement prices.
Rule #5. Find suitable scapegoats. After the financial crisis has broken, talk endlessly of market reform and of new regulation. Confer sweeping new powers upon new supremos. Claim that such an orgy of greed and economic incompetence could & would never happen again. Send the witch smellers out into the city with an entourage of highly paid forensic accountants. Seek out blame in lowly offices and cast the unworthy out onto the streets to face the fire of flash bulbs. Just as Nick Leeson once carried the can for the Barings Bank directors in the nineties, now the Swiss and French banks have also uncovered their own super villains who gambled vast sums on shifts in the stock market. Although they had previously been making billions for their employers, they had been caught out by the sudden downturn in the markets, and now these former rising stars are vile, reprehensible, immoral rogue traders who acted without the awareness or full consent of their supervisors. Surely the banks must have known what they were doing when they earned all of those billions for their banks in 2007, but apparently the banks hadn’t a clue when the bull metamorphosed into a bear. However, the prize for the most hilarious victims of the blame game surely goes to the financial sales teams which had sold sub-prime loans with a AAA rating – apparently a hallmark of the most secure of investments. Anyone who knowingly bought into sub-prime loans with AAA ratings needs to cut down on their cocaine habit and to urgently seek emergency rewiring.
Rule #6. Sell the family silver. Empty the taxpayer’s coffers to maintain the money supply within a faltering market, sell any state-owned assets, and launch IPOs for privately held companies to keep the stock markets turning over. Perhaps the one sale that sums up the intractable flaws inherent within the financial markets was this March's Initial Public Offering (IPO) of shares in Visa. This share sale raised a record $18bn and a loud cheer from the bourses as it became the largest new offering ever to hit the US market. Hang on a minute… don’t Visa sell credit cards?
‘Our hopes & expectations – black holes & revelations’ - Muse
There are, however some things that just won’t go away, social demons which even three successive FA cup wins could not ameliorate. One is foreign invasion by an enemy who imposes austere tax regimes, sleeps with your women, spends all your cash on sex, sun and sangria, and insults you on a daily basis in strange language (as opposed to our domestic politicians who at least have the courtesy to do so in our own mother tongue). A second is a global pandemic such as bird flu which laid low almost as many people in 2006 as are killed on a single Friday night in Britain’s inner cities (a scare that earned biotech companies billions in sales of vaccine stocks). The third is altogether more terrible than bird flu and a minister’s spending spree combined – yep, you guessed it, the dreaded ‘R’. Generally, people don’t particularly care if their politicians are caught forcing fellatio upon their interns, are not really too miffed if a long promised new hospital wing fails to materialize, and are mostly unconcerned if a toxic waste spill kills a few surplus seals in the estuary. After all, shit happens. Of all the horsemen of the apocalypse, none is so feared as the fifth rider – the dark horseman and grim reaper known only as ‘recession’. Politicians may speak freely and dramatically of war, famine, plague, and death, but when it comes to the fifth horseman they go white with fear and dare not speak his name. He is however (given his attributes he could only ever be male) known by many euphemisms, including ‘General Downturn’, ‘Slowing of the Economy’, and ‘Shoots of Recovery’. The mere appearance of his shadow causes alarm bells to ring across mahogany tables, triggers panic selling on stock markets, and drives politicians to transfer the contents of their bank accounts to sunnier climes shaded by palm trees. Stockbrokers may be throwing themselves off penthouse ledges, high streets may be boarded up, and women may be selling themselves on the street corner to pay the school fees, but the chancellor will never acknowledge the presence of the dreaded ‘R’.
After the grand tradition of 20th Century government, there are six golden rules for saving face, avoiding panic, and seeing you through an ‘R’ without ever having admitted to one. This all presupposes that the chancellor’s sleight of hand can turn some of the early quarters of ‘negative growth’ (aka economic decline) into ‘slow growth’, and that money can be pumped into the economy though borrowing & raiding the nation’s gold reserves. Indeed, by the time you’ve actually been statistically forced to admit that there ever was a recession, you will be sure to find an economist who can provide figures to suggest that an ‘economic upturn’ is on its way and that the worst is finally over. This is a skill which is unique to politicians and the British weather – the ability to announce the advent of winter and spring on the same day.
Now for those six little golden rules which may be used to ward off the dreaded spectre of the fifth horseman.
Rule #1. Deny that there is a recession for at least the first two years of any economic downturn. Manipulate the statistics and ignore classical indicators such as an increase in the cost of energy, raw materials, goods and labor, or rampant inflation. Slash interest rates in a desperate attempt to stave off a collapse in high street demand & consumer borrowing. Start practicing phrases such as ‘economic slowdown’ in front of a mirror until even you are able to use the phrase with a straight face.
Rule #2. Avoid panic attacks in public. House prices may be crumbling and the debt mountain created in the wake of a property bubble may be about to burst, but you must at all costs avoid panicking investors. Issue public statements of confidence in the solvency of the banks as they reel from sub-prime loans and a crisis of liquidity while you bail them out with billions from the tax payers’ purse which will probably never be repaid. Declare confidence in the pound, just as you did before it fell from the ERM sky. Echo the confidence of the major high street banks in declaring the strength of their position, just as Bear Stearns and Northern Rock did before the central banks had to prop them up to avoid collapsing the entire banking system.
Rule #3. Flood the market with cash. Slash interest rates to stimulate more borrowing, lend the central banks (who created the mess in the first instance by offering high interest loans to poor people) vast sums of money from the taxpayer’s purse (i.e. the Bank of England & the Federal Reserve), increase government spending still further (further driving up the budget deficit and government borrowing to new record levels), cut taxes to increase the amount of money debtors have to pay off their creditors (i.e. the banks), increase military spending in sensitive regions to further drive up the cost of oil, and then triumphantly declare that the green shoots of recovery have reappeared within the economy. Relax; the twin demons of debt & inflation are bound to be banished during the upstroke of the next economic cycle...
Rule #4. Keep the people happy. No not the masses, the people who hold the highest offices & send officials home to spend more time with their families. Freeze public sector pay, cut public spending, and prop up share prices as best you can. Above all, ensure that the customary inflated city bonuses are maintained, that as many debts as possible are recovered, and that properties and assets can be repossessed at knock down prices by those who have the cash. Blackstone and other private equity firms have been rubbing their hands with glee on TV at the prospect of a fire sale of business assets as, after all, recessions are a wonderful financial tool for dispossessing the poor and to allowing the rich to acquire still more equity at bargain basement prices.
Rule #5. Find suitable scapegoats. After the financial crisis has broken, talk endlessly of market reform and of new regulation. Confer sweeping new powers upon new supremos. Claim that such an orgy of greed and economic incompetence could & would never happen again. Send the witch smellers out into the city with an entourage of highly paid forensic accountants. Seek out blame in lowly offices and cast the unworthy out onto the streets to face the fire of flash bulbs. Just as Nick Leeson once carried the can for the Barings Bank directors in the nineties, now the Swiss and French banks have also uncovered their own super villains who gambled vast sums on shifts in the stock market. Although they had previously been making billions for their employers, they had been caught out by the sudden downturn in the markets, and now these former rising stars are vile, reprehensible, immoral rogue traders who acted without the awareness or full consent of their supervisors. Surely the banks must have known what they were doing when they earned all of those billions for their banks in 2007, but apparently the banks hadn’t a clue when the bull metamorphosed into a bear. However, the prize for the most hilarious victims of the blame game surely goes to the financial sales teams which had sold sub-prime loans with a AAA rating – apparently a hallmark of the most secure of investments. Anyone who knowingly bought into sub-prime loans with AAA ratings needs to cut down on their cocaine habit and to urgently seek emergency rewiring.
Rule #6. Sell the family silver. Empty the taxpayer’s coffers to maintain the money supply within a faltering market, sell any state-owned assets, and launch IPOs for privately held companies to keep the stock markets turning over. Perhaps the one sale that sums up the intractable flaws inherent within the financial markets was this March's Initial Public Offering (IPO) of shares in Visa. This share sale raised a record $18bn and a loud cheer from the bourses as it became the largest new offering ever to hit the US market. Hang on a minute… don’t Visa sell credit cards?
‘Our hopes & expectations – black holes & revelations’ - Muse
posted by The Angry Man at 8:23 AM
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