In These New Times

Cailean Bochanan

5th March, 2011

Understatement is well known to be one of the most characteristic features of the British character. At Waterloo the following exchange was heard between two calvary officers:

“By Gad, sir! You’ve lost a leg.”

“By Gad, sir! So I have.”

This is the famous stiff, upper lip and it’s worth keeping in mind when evaluating the most recent comments of the head of the Bank of England, Mervyn King replying to the question of whether there could be another financial crisis:

“Yes. The problem is still there. The search for yield goes on. Imbalances are beginning to grow again.”

I like that: “ The search for yield goes on”. It does indeed but it’s less successful than could have been hoped due to “growing imbalances”, as in imbalances between assets and liabilities. Translated into the language of a more emotionally volatile foreign leader this might come out as follows:

“Oh God! The banks are bust. They’re going to need another bailout. What are we going to do?

Kings intimations come at the end of a bad week for the ruling coalition. Prime Minister Cameron, freshly back from a gun running venture in revolutionary Egypt, failed to start a bombing campaign against Libya to mark the end of our honeymoon with dictator  and London School of Economics patron, Muammar Gaddafi. And Mervyn King was shooting his mouth off elsewhere about British prosperity being over for ever. Already we had the dramatic revelation that 4th quarter growth for 2010 had been revised down a whole 0.1 %. This was just a bit of statistical understatement, which we also excel in. What that 0.1 % means is the recession is far worse than we can possibly imagine… sorry, I mean the recovery is less robust than had been hoped.

But, ever intrepid, the search for yield goes on. So the banks want their pound of flesh. Where are they going to get it? Not from mortgage repayments from those whose jobs are disappearing or being axed at a frightening rate. Not from credit card payments from those who can no longer role over the debt. Not from bankrupt businesses built on the collapsing consumer, service, post-industrial economic model. Not somehow conjured up from the eerily quiet high streets, pubs, cinemas, restaurants.

It’s time for another bailout. Time to evoke the timeless principal of too big to fail. Time also for the British people to wake up and recognise that to accept too big to fail for the banks is too accept too small to count for themselves and their families. It would have taken more than one big demo to stop the Iraq War as it will take more than the occasional protest to stop our ongoing impoverishment and humiliation at the hands of the City of London. We need to learn from the magnificent example being set by the Arab peoples.

Otherwise our future looks very grave indeed.

By Gad, sir! So it does