Simon Heffer, economics illiterate

Today, Simon Heffer tries his hand at economic analysis in his column in the Telegraph, and demonstrates to all and sundry that he knows nothing whatsoever about the subject. He sets the tone thus:

We need not blind ourselves with the technical details of the liquidity crisis enveloping so many financial institutions.

Then having made a virtue out of ignorance he sums up the global economy in one incisive sentence:

We are saving too little and borrowing far, far too much. Not just in Britain, but around the world, we have gone on a spending spree.

Right, well unbeknownst to Simon, when people spend money it does not evaporate, rather it passes to some other party and is further utilised, spent, invested or whatever. What he is actually saying is that the problem is that there has been too much economic activity, which is absurd unless you genuinely think it is better for people to be poorer. What is actually going on is that it has become apparent that some types of financial instruments cannot be accurately priced, which means that the risk of lending to institutions with the things on their books cannot be gauged. The dodgy assets are based on packaged up mortgages from the US which has seen an unsustainable property boom and a great deal of mis-sold mortgages as a result. It is one of the glories of the globalised economy that bad loans from Iowa can end up in Stuttgart but there you are. Having ignored the 'details' Simon gets on with pointing the finger, and in a complete departure from his usual form, he says that it is Gordon Brown's fault:

Much of this problem domestically is the fault of none other than our Prime Minister. When Chancellor, he set the inflation target for the Bank of England, and he set it too high. The supply of money in the economy has for years grown at an unsustainably high rate.

What this means is that Simon thinks that UK interest rates have been too low. He doesn't explain what on earth this has to do with a credit crunch caused by a US property crash, though. Anyway, his central point is that it is all going to end in tears because there is too much personal debt, and he harks back to the Victorians as an exemplar on how things should be organised. All I would say to that is why stop there? Maybe iron-age Britain had a few things to teach us too when it comes to managing international finance in the 21st century? It is also interesting to read a supposed admirer of Margaret Thatcher effectively trashing the concepts of free markets and personal freedom with gems like:

Those sensible Victorians used to lock people up for debt...

and

It might not be a bad idea to lock up a few reckless lenders as well...

That is economics by a committee of Fidel Castro, Robert Mugabe and Lenin. Does anyone still believe that Simon is a Conservative?

Later on Simon returns to more familiar ground in attacking David Cameron, this time for going up in the polls by espousing the sort of Right-wing policies that Simon pretends to endorse. So in Hefferworld no one is right, except for Simon of course.