No More Inflationary Tory Boom and Bust

The Prime Minister was on the today programme this morning being interview by Evan Davies. At one point Evan asked him about the now legendary phrase of 'no return to boom and bust', and the PM couldn't - just couldn't - bring himself to say that it had been a mistake to utter those words.

When he said the words some voters may have been convinced, and went out on a spending borrowing splurge leading now to a greater boom and greater bust. So apart from being a factual mistake now that we're in 'bust' - he may have actually influenced behaviour to make it more likely.

It's funny that when we all realised we were heading for a recession Gordon Brown then started inserting the word Tory into the phrase - 'no more Tory boom and bust'. As if that means anything to the people who are now having their pay cut and are losing their jobs. Incidentally, it would be impossible for Gordon Brown to bring about a tory boom and bust as he was a Labour Chancellor. So that was some weird kind of thinking.

This morning he's changed the phrase again to 'no more inflationary boom and bust'. Oh well, that's ok then. It's so much better to be in a credit crunch, possibly deflationary boom and bust than an inflationary boom and bust. I don't think so. At least with an inflationary boom and bust we know which levers to pull. Gordon Brown is like the signal man in the 'The Great St Trinians Train Robbery', randomly pulling the levers without knowing which way the next train is going, when it's coming back and which way it's facing. He's mistaking activity with effectiveness.

One last point, yesterday Adair Turner - the new chair of the FSA - stated that new rules for banks would ensure that they increased capital in the good years to cope with less income in the bad years. Maybe he should apply that to Governments too and tell the PM, then maybe we wouldn't be looking at £1 trillion debt over the next few years.

Over and out.

Squiffy.