Today's article from Anatole Kaletsky was perhaps the worst article he has ever written. That is quite an achievement since he seems to specialize in producing rubblish.
Here are a few choice quotes from today's sorry offering:
Gordon Brown has saved the world yet again.
Has the world been saved? If so, I must have missed it.
(P)ublic money invested in supporting credit growth costs taxpayers nothing.
Presumably, it is also true that public money invested in supporting the car industry also costs the taxpayers nothing. Perhaps, handing out money to the unemployed is also free as far as the taxpayer is concerned.
Much of this investment could — and should — be financed by printing money at no cost to taxpayers at all.
Thus it would seem that inflation and the erosion of the value of nominal assets such as cash has no effect on taxpayers.
(B)anks can increase their lending to non-financial companies and households even if their capital continues to decline.
That sounds like a great idea, especially when banks are building up huge credit losses from households and companies which is likely to erode capital further.
(T)the pricing of this public support (to the banking system) is unimportant, because the true returns to taxpayers will come not from capital gains in bank shares but from the vast additional revenues that will flow into Treasury coffers if economic activity can be revived.
Where do you start with such foolishness?
The pricing of this support is important because the recapitalizations have been financed by government debt which will have to be redeemed by future tax payments.
The idea that increased additional revenues will accrue if economic is revived obscures a more serious problem. UK public finances were in deep trouble even before this crisis; now that we are in recession, they are simply unsustainable. Next year, the UK will run a deficit of 8 percent of GDP. The idea that recapitalizing the banks would suddenly lead to a surge in economic activity that would resolve all our fiscal difficulties is pure fantasy.