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On Monday Channel Four’s Dispatches attempted a demolition job of Boris Johnson, the Mayor of London for just under a year now. Apart from being rather quick off the mark - they waited 8 years to investigate Red Ken - and made by an openly pro-Ken Antony Barnett, it was a waste of C4 budget, time and effort.

A central theme was “does he have a strategy to take London forward as the capital faces economic crisis?” despite the fact the economy isn’t part of his portfolio, though it then went on to criticise him for abolishing things such as the Low Emission Zone and Congestion Charge extensions in an effort to help remove burdens faced by small businesses. This was apparently contradictory to his manifesto pledge to improve air quality - though no mention of the fact the LEZ only cuts emissions to where they would be within a few years anyway as older vehicles get replaced, nor the fact halting both plans was in his manifesto. He was then accused of pandering to Sun readers because his Press Office spoke to them and they wrote an article!

In fact Mr Barnett was very obsessed by the environment, but not tree planting funded by abolishing the free newspaper, because apparently free propaganda is good. He is also very keen on bendy busses - with the new Routemaster being wrongly labelled dangerous, inaccessible and correctly “not expected until 2012″, which in this breath was considered a lifetime, but in the next (about the Olympics) almost imminent!

Traffic lights being reprogrammed to stay red for less time was similarly “bad” - no mention of how this reduces congestion, the time cars stay idle, or the amount of times cars stop and pull off, which…errr…reduces pollution and improves air quality.

Building a new international airport on a man-made “Boris Island” was deemed practically impossible and a flight of fantasy - no mention of Hong Kong International Airport - and almost identical to the rejected Cliffe Airport plan, which was totally different, that idea being on an ancient village and green fields rather than the sea. Also no mention of how Boris Island would replace Heathrow and its flight paths, a major cause of London’s poor air quality.

In short, it was rubbish.

“Two nations between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets. The rich and the poor.”
- Benjamin Disraeli, Sybil (1845)

“Two nations between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets. The public sector and the private.”
- Taxpayers (2009)

From ConservativeHome.

The News of the World has the scoop that Stuart Wheeler has defected to UKIP and gifted Nigel Farage’s party a £100,000 donation.

He told the News of the World:
“The EU is doing so much damage to our economy and our way of life that I can no longer vote Conservative at the European elections. The Conservatives, though perhaps more eurosceptic than Labour, just wish no one would talk about the EU so that they can win the general election in peace.”

This is a great disappointment. Ukip’s anti-EU message is poorly articulated and they are not a credible party, lacking both organisation as well as any real vision beyond hostility to the EU. Almost a parody of ‘little Englander-ism’, I have long felt they are damaging to the anti-EU message, with their rather insular, backward looking and at times alarmist or xenophobic messages (“We want our country back” etc) and image (right or wrong) as old, bowler hat wearing men.

Far better the sort of intelligent, high-minded and liberal “Jeffersonian” anti-EU message of people such as Dan Hannan. No one can name call with any credibility Euroscepticism based on democratic, free principles and spoke by those anti-EU but not anti-Europe.

The recent failure of the government to sell its gilts, thereby failing to borrow the amount it planned, has already started discussion on the possibility of a wider “guilt strike”. What if the government can’t fund its spending commitments?

As any failing business knows, no one wants to lend to a loss making firm with no realistic plans to stop losing money. This firm is UK Plc; Sterling has collapsed by 30%, there’s a 3.8% contraction predicted this year - the worst since comparable measures began in 1949 - and ourbudget deficit of 10% of GDP is higher than any other G20 country, indeed it’s 6th worst Worldwide (and they’ve mostly called the IMF). To add insult to injury the foolish bailouts and quasi-nationalisation of the banks means we are two large banks (near bankrupt ones) with a medium sized government attached, which isn’t an attractive punt.

The government has been buying up government bonds alongside investors with printed money for some time, so called “quantatitive easing”, but what if it needs more. Currently it plans to do £75bln of QEing, although the Governor has been saying he might not spend all the £75 billion, but the government deficit looks set to be over £150bln this year. What if they can’t raise the other ~£75bln? Will Brown throw caution to the wind and go nuclear, monetising the debt wholesale?

The only options besides this would be major tax hikes or major spending cuts, or a combination of both. To put £150bln into perspective, it’s roughly the combined cost of Health, Education and International Development. Total Government Expenditure is £557bln, so about 27%. Alternatively if you doubled Corporation Tax, Fuel Duties, Council Tax, Business Rates, Inheritance Tax, Stamp Duty and Tobacco Duty, without this tax hike affecting revenue (as it would) - you’d still be a £100m short! It’s just not possible.

So if the bond market doesn’t improve next month, what then?

The risk is the ever growing incentive for Brown allowing inflation to increase thus reducing the debt burden or the need to raise taxes or cut spending. With debt monetisation, government debt disappears and inflation takes its place. That £150bln seems a lot now, but not if a banana costs three million. While we complain at the high inflation and savers are ruined, the government escapes responsibility and the sort of cuts that caused the 1978 Winter of Discontent.

It’s not going to be nice.

Dan Hannan’s 3-minute assault on our “devalued Prime Minister of a devalued Government” has had 1,200,266 views as of 17:37.

Dan Hannan - in the words of Tim Montgomerie of ConservativeHome - “monsters” Gordon Brown in the European Parliament…

…then becomes global star via YouTube…

Then FOX News..,

…and is declared leader by Guido.

N.B. Hannan is the top video today in the UK on YouTube I’m told, and top politics video worldwide. As of 8:19 he has 818,271 views…it was about 600,000 this morning! The UK media have yet to take notice except The Daily Politics and R4’s Today, but the pressure is mounting as Hannan approaches 1,000,000 views.

I often feel that good economists make bad investors, and the reverse example of Keynes proves this. His economic policy caused disaster, but Keynes made a killing of 13% a year on average during the Depression investing for King’s College, Cambridge, whilst the stock market as a whole dropped lower each year. And thinking about it, if I was a great investor I’d probably not waste time writing economics books.

If only more shared my view, as I am really starting to get a headache - a Keynsian headache.

It’s all the fault of Polly Toynbee, who’s articles should never be read. Well actually it’s not just her fault, but her article triggered it.

She accuses David Cameron - and everyone who agrees with economic policies that work “with the grain of human instinct” and a “government liv[ing] within [its] means” - of being “economically illiterate”.

Far better to follow Keynesianism she says, a theory Keynes himself said is counter-intuitive. He wrote about the problem of the “thrift paradox” - if people try to increase their saving, there will be a decrease in spending, and supposedly a fall in employment and production.

Indeed if everyone saved everything and spent nothing this would indeed occur, as would starvation. But the problem is we need money available to borrow for new businesses and business expansion, overdrafts, mortgages etc; and for banks to lend out money, savers have to put it in.

The fundamentalist following of the “paradox of thrift” Keynesian dogma by daft governments lead saving to be discouraged (it’s taxed at 20%, pensions too are taxed), the savings rate dropping to near zero, and banks to become dependent on money borrowed short term from international investors (mainly the Chinese).

But that money was only ever a limited resource - there is only so much money - and only available whilst investors thought they were making a good investment. But the mortgage backed securities they bought were based on ever booming house prices, something bound to end sooner or later, as they knew many “sub-prime” borrowers were, well, sub-prime and libel to default.

When it appeared these mortgages were losing money, the investors stopped lending, called money back, and Northern Rock went bust. No one lends money to a business that’s losing money and has no realistic plan to stop losing money, which neatly explains why the government failed to borrow at yesterday’s bond auction.

So why can’t they realise we need savers?

But of course Mr Keynes isn’t just responsible for the crazy notion of saver hating. No, among other pearls of wisdom dished out by the supposedly “great” economist - why does he always get called “great” on TV? It’s a peer pressure thing if you ask me!- is the concept of borrowing your way out of debt. Got a huge credit card bill, struggling to repay your mortgage, in negative equity? What you need is more debt!

When challenged about the sanity of such a policy in the long run he famously answered: “In the long run we are all dead.” He should know all about that, he died in 1946, conveniently before the dire results of his crackpot theories fully reached their zenith in the 1970s.

It’s really time to return Mr Keynes to the crypt.

The news reported on ConservativeHome that Australian election strategist Lynton Crosby - dubbed “The Wizard of Oz” - has signed up to run the campaign of the newly formed Libertas is indeed strange. It strikes me there are three possible outcomes here: either (1) Crosby has made a big business mistake by annoying long term client in the Conservatives and will never work for them again; (2) Libertas has offered a huge sum of money so he doesn’t care if the Conservatives never call again; or (3) he has made a business masterstroke by breaking what seemed a Conservative monopoly over his services and will reap the rewards of a bidding war at every election from now on.

Meanwhile, what exactly is Libertas? It’s founder, Declan Ganley, ran the NO campaign against the Lisbon Treaty [EU Constitution] in Ireland, so it’s been branded Eurosceptic. The Independent even branded it “far right”. Have they even bothered to Google it? It’s the first real pan-European political party, uses the EU colour scheme, the EU’s symbols and flag, the EU’s “.eu” domain name suffix - but perhaps more tellingly states on its home page that “Libertas is a pan-European party dedicated to creating a new, democratic and open European Union…Libertas wants a strong and successful European Union. A Europe for and of the people…Libertas wants to change how Brussels works and give power back to the people in Europe.” It does not advocate returning power to free nation states.

The government has announced they are to spend £2 million of taxpayers money on creating budgets for twenty “Young Mayors”, who are apparently 11-18 year olds elected by schools. It has rightly attracted much criticism.

Now what a bunch of 11-18 year olds, elected by 11-18 year olds, and given the title “Young Mayor of…” will do with £100,000 each I do not know. I’m hoping there is some degree of adult supervision somewhere, or fact finding missions to Disneyworld might become common, but it is still a stupid idea.

Schemes such as this only include a few people, generally those already interested in politics to start with. But while school mock elections are a great, costless and fun activity, the idea of giving considerable budgets to Youth Mayors is crazy!

I’m not even against the idea of having an elected “Youth Mayor”, maybe letting him/her advice the real council and front youth campaigns such as safety for them, but budgets - without adult supervision from the real council and over and above the money already allocated to “Youth” projects in that area - is wrong!

Partly because “youth projects” are almost all a disaster (who wants to go to a “youth club”, surely a byword for uncool?), partly because we as taxpayers don’t have the responsibility to entertain young people, and partly because all ages should be integrated rather than pigeon holed. If someone had suggested I go to a youth club when I was that age, they would not have got a good response.

Besides engine failure, terrorism and other potentially deadly scenarios, what is your worst nightmare on a long haul flight - say Washington DC to London?

Bad food? A rubbish in flight movie starring Jim Carey? Being sat next to someone who smells, or talks endlessly about plane crashes, or is so wide they overhang your seat? Maybe a crying baby?

Well spare a thought for some transatlantic passengers sharing a flight with Gordon Brown.

Depressed from his visit to the White House - in through the tradesman entrance, a half hour chat with Obama over sandwiches and smoothies before being shuvved back out - “Would you look at the time!” - and Brown got air rage.

“You want me to go on television and apologise! Well I’m not going to do it. It’s not my fault. Get in the real World!” he is reported to have fumed.