ScaryTimes

Today there will be two blog articles, this one about domestic matters, and the other to say goodbye to President George W. Bush.

We are all very concerned about the government and its latest bail out of the banks in the UK. Today’s figures are just so astronomical they could choke our economy for a couple of generations to come if this doesn’t work. We are now entering the realm of fantasy fiscal policy, which has been trodden before, in Weimar Germany and more recently in Zimbabwe.

The solution being sought involves in our government in theory creating a bank for toxic debt. This central clearing house will deal with all the bad or suspect debts floating in the banking system, and now to be guaranteed by us, the taxpayers. This is a black hole that could bury us; it is extremely treacherous territory from which there might be no escape. Our government doesn’t actually know how big this risk is, no one seems able to do so.

Add to this the tactic of simply printing more money to meet potentially unending obligations and we could yet face the day when wheelbarrow manufacture might be the boom business of the new decade, simply because we would need some means of wheeled transport to carry our worthless money in if the pound continues to implode.

You can already feel the affect of this decrease in comparative value when you travel to the USA or Europe and realize that your pound has dropped about 25% in value in a relatively short period of time. We need to see the economy stabilize and the government’s latest measure take effect or we are in huge trouble. Even if they do become instantly effective, and I doubt that, there is still no light at the end of this particular tunnel.

I’m sorry if I am confirming the pundits naming of this date as the most pessimistic and downbeat date on the annual calendar but we have to face the future with pragmatism and that tells us that our Prime Minister did what he had to a few weeks ago as he probably had no alternative other than to watch our banks topple like a row of dominoes and – it simply wasn’t effective and it hasn’t worked in broader terms. Our banks are still not liquid enough and are still not lending to the small and medium sized businesses or solid citizens, as they must if we are to financially survive.

Although today's bail out is larger in both size and ambition I don’t trust the banks to take a view bigger than their own boardrooms and next shareholder event. They are going to have to be dragged screaming to do what’s right by the government or they will simply not comply.

The scariest thing I have recently witnessed was President George W. Bush as he calmly made arrangements with the American legislature for the next $350 billion of public money to be downloaded to the boys from Wall St. When he was asked how we were going with the previous £350 billion, provided less than a month ago, he smiled and said, “That’s already been spent.”

This money isn’t endless and we need to see some positive signs from our banking system or we are falling into the biggest financial hole in history. We need to start handing out the shovels and digging!