Cock crows

In last month’s post [Lost Horizon] I declared that Nick Clegg was clueless, when he held a press conference in the Shangri-La hotel at the Shard sky-scraper in London, to claim credit for putting the economy “back on track” and he stated that “there was light at the end of the tunnel”.  This is not true and his figures do not add up,  He is in government and should know how bad a mess we are in.  He is either delusional or in denial.

But still he persists.  On 12th March the Daily Mail published an exclusive interview with him, when he outlined his flagship pledge of tax cuts for low and middle earners as a pre-election bonus after the lean years.  He said the LibDems would “balance the books fairly” and “crucially once you have balanced the budget there’s got to be light at the end of the tunnel”.  He is in denial for a second time.  He is also misleading voters when he talks about eliminating the budget deficit because he is only talking about current spending and not the whole budget deficit.  He still wants to spend and borrow, which will continue to increase the national debt.  He said, “I don’t understand why the Conservatives don’t understand that the country has to feel there’s a reward for all these lean years” and “One of those rewards is starting spending properly on public services, and spending properly on our infrastructure, roads, rails, housing and so on”.

He does not understand that the country must live within its means.  The voters know that.  Housewives know they must manage the family budget with prudence.  Debt counsellors tell clients they must cut-up the credit cards if they are ever going to get out of debt.  Speaking at the LibDem Conference in Liverpool on the 15th March he said, “While the job of fixing our economy is not over yet, the end is in sight”.  He claimed austerity could end in 3 year’s time, but also claimed the Tories wanted to continue cutting public spending far beyond what was necessary.  “After years of austerity” he insisted there was now “light at the end of the tunnel”.  Denial for the third time and the cock crowed.

There is no problem with public spending on worthwhile infrastructure projects, or even the social welfare net, if it is prudent and paid for out of taxation income.  The problems build up when government expenditure is funded by selling gilt-edged bonds, which are debts incurring the payment of interest.  So when Clueless Calamity Clegg [CCC] talks about getting “back on track” he wants a return to spend, tax and borrow policies.  He talks about “balancing the books fairly” when he should be talking about balancing the books early because there is a need for urgent action.

The debt burden isn’t just a mountain of debt, it is a mountain range of debt.  The National Debt has built-up over 300 years and it will require a long journey to eliminate it.  The journey to terminate the Private Finance Initiative is not as long.  Unfunded government commitments such as central-government employee pensions stretch to infinity, and they are compounded by political decisions.  In order to make the sale of Royal Mail attractive for investors the RM Pension Fund was transferred with responsibility falling on the government and tax-payer.  There are lingering earlier examples of this.  Government debt figures do not include the asset purchase facility.  All of this is only the public debt.  The tax-payer has also got to deal with personal debt.  Corporate private-sector debt is ultimately paid for by customers.

The debt burden is massive.  Progressive liberals like CCC think that it is manageable and under control, but they are holding a tiger by its tail.  They think that when the economy recovers everything will be alright.  They have embarked on a single track through a tunnel under the debt mountain, but the tunnel is much longer than they know.  CCC says that the journey will be over in three years time.  It will not.  He can only claim an economic recovery when the crutches that support a recovery are removed and it is proved that the UK economy can stand unaided.  Those crutches are artificially low base interest rates and Quantitative Easing [QE].  The circle of QE  has yet to be closed and no politician is talking about it.

The light that CCC sees at the end of the tunnel is the headlamp of a huge US locomotive rushing towards him and the locomotive engineer – that is the United States President – is asleep at the controls.  The US locomotive is hauling a toxic and explosive mix of debased currency, junk bonds and a ticking time-bomb of unresolved US QE.  It has the potential for a great disaster movie.  Where is Super Man when you need him?

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