Gordon Brown and the New Feudalism.

Here in the UK we have been quite busy politically with the US presidential election and the US economic crisis. On top of that we've had the UK economic crisis, the national conventions of the three main political parties, the introduction of ID cards and are looking forward to the state opening of Parliament in November which should feature the most controversial Queens speech since Guy Fawkes.

Some of you have been able to cut through this chaos and realise that I have a special interest in seeing the US economic recovery package carried out successfully. Those people are correct if unable to identify my my motivation. In order to explain this I need to give everyone a sub GCSE economics lesson.

Macro-economic Controls.

In the UK any private bank like Lloyds, HSBC, Barclay's, Natwest etc must first hold an account with the central, national bank called the Bank of England (BOE). As with any private bank account the account with the BOE allows a private bank to deposit the money it gains from it's operations and borrow money for any of it's future operations. This loan facility gives the BOE and it's governmental backers something called a macro-economic control mechanism in the form of interest rates. These interest rates get in the news on pretty much a monthly basis as the heads of the BOE meet to discuss what level they should be set at.
If the government wants to have less money available in the UK economy they simply raise these interest rates forcing your bank to in turn raise your mortgage rate increasing your monthly repayments and leaving you with less money in your pocket. Conversely if the government wants more money in the economy they simply cut those interest rates with the opposite effect.

A Little Bit of History.

In the olden days when the landed gentry rode black horses through their fields, the poor died young in dirty factories and everybody knew their place this system worked very well, for the landed gentry at least.

Then in the early 1980's an uppity Prime Minister came along and de-regulated the financial services industry leading to an explosion of wealth and productivity. This event was known as The Big Bang! and the comparison with the creation of a new universe was not overstated because over the next ten to fifteen years the changes were dramatic and wide reaching. Britons were allowed electricity in their homes 24 hours a day 7 days a week. Millions were allowed to own their own homes for the first time ever. Money suddenly became available to develop new sciences and technologies. A generation grew up able to stay in education up to university and beyond. Women were finally allowed to fully enter the workplace and if the government were that way inclined there would have been billions available to spend on our health service. Most importantly some of the private banks became so rich that they were able to absorb any changes in the BOE's interest rates without passing them on to their customers.

You would think this new world of opportunity and prosperity would make everybody happy and it did. Everybody that is except for the UK civil service who hated it and hated it with a passion.. Partly they hated it because it went against their departmental policy of managed decline - running down the UK at a such a slow and gentle rate it's citizens don't really notice. Partly they hated it because this new universe was too big and complicated for the diseased little minds to cope with but mainly they hated it because it meant they were no longer able to dictate who in the UK would be rich and who in the UK would be poor.

For nearly twenty years they sat and seethed quietly plotting a day when they would be able to once again convince themselves they're the cleverest people in the country. In the election of Gordon Brown, an old school socialist Prime Minister with a seemingly psychotic desire to control every aspect of his citizens lives, as leader of the Labour party which spent ten years losing to Thatcher's Conservative party the civil service found an unwitting ally for their plotting.

The Big Bang Project.

As the credit crunch started to bite Britain's government started nationalising banks. This started in January 2008 when Northern Rock and its 10% of the UK mortgage market came directly under state control. This weekend Bradford & Bingley with it's 6% of the mortgage market met the same fate and came under the control of the government.


The most interesting of the UK bank takeovers came just as Sarah Palin announced that Bristol would be keeping her baby, Croydons trams crashed while a delegation form the French government were inspecting the system, my grandmother was in hospital, the channel tunnel caught fire and the Large Hadron Collider fired up hoping to re-create the big bang. Here Halifax Bank of Scotland (HBOS) with it's massive 20% of the UK mortgage market was brought out by Lloyds-TSB in a deal so large it actually needed the government to waive competition laws to allow it to happen.

Apart from it's sheer size the deal also raised eyebrows because nobody could quite figure out just why HBOS was in so much trouble. After all it was safe bank with a very large book of good mortgages backed up by a large base of deposits. In fact the only risk that HBOS appeared to be exposed to was that it had recently been caught trying to pay my grandmothers gas bill for her so everybody thought that it would be next on the chopping block to sate the state seemingly never ending blood lust.

Suddenly their cash flow dried up and within a week they were swallowed up by Lloyds-TSB a much smaller bank with an 8% share of the UK mortgage market. Like Barclay's bank Lloyds has long been a loyal part of the UK establishment and is the bank my father has used all his working life.

The Result.

With around 60% of mortgages in the UK either directly or indirectly under central government control the governments economic control mechanism is backin full force and it has become clear that the UK's response to the credit crunch was to panic and nationalise everything in effect withdrawing from the global economic system. This is very bad news for the UK because the financial service industry is very much the goose that lays the economies golden egg beign one of the largest and most porfitable industry.

The one thing the UK Treasury were hoping would mitigate the negative effects of their tactic admission of failure was that amid all the chaos and confusion the deadlocked US senate, which the UK helped to produce, would either fail to pass a solution or would only pass a solution that involved massive amounts of government intervention and reams of needless market regulation frog marching America down the road of socialist intervention and dragging it down to the UK's very low level.

What they didn't count on though was that the US Treasury with it's greater finesse and understanding of micro-economics would come up with a relatively cheap and simple solution that would end the economic decline with the barest minimum of government intervention. If that solution is implemented it will be incredibly bad news for Britain, very good news for the United States. It will also be amazing news for me because it will just reinforce the fact that all those UK agents who've caused me so much trouble are really doing is racing each other to climb to the top of the shit pile.

So there you have it. I have a vested interest in seeing this recovery package passing and I have a vested interest in seeing successfully improve the US economy but then why should you believe me after all the Brits have been leading a year long operation to convince you that I am your worst enemy.