Osborne and the Emperor's New Clothes

I continue to notice the contrast between the international press, and the British media on the success or otherwise of the weekend's G20 summit. The international press, by and large, regard the summit as a typical summit - long on talk and short on actions. If they do mention Brown by name, it is to comment on how hard he tried to "fill the vacuum left by Obama" or to "take on a leadership role". Few think he got what he came for, and in general he comes over as a somewhat desperate figure.

The British press have deftly avoided the G20 - and taken Mandelson's bait that somehow Osborne is wrong in addressing the level of money being printed by Brown and the continuing and dangerous impact this could have on sterling. We'll have to wait and see on this, but my money is on Osborne - like Hans Christian Andersen's child in the crowd he is only shouting out what honest people can already see - that Gordon Brown's pride and stupidity have left Britain standing stark bollock naked. I don't remember the Emperor' tailors emerging as heroes.

In any case Brown's big talk before the summit and subsequent disappointment will have a much more direct bearing on sterling's next move than Osborne's observations. Regrettably there is no "convention" preventing power hungry liars who are keen to be re-elected (or just elected) attending international summits.

So the agenda now will turn to Brown's unfunded tax giveaway. Having failed to get more than 21 words out of 3500 at the G20 on this plan, he is now turning to the IMF for support - No doubt the papers this coming week will be full of the Brown giveaway "as endorsed by the IMF", so it might be useful to examine precisely what it was the IMF said on this subject.

In principal, they favour fiscal stimulus of 2% of GDP (30 billion in UK's case). Well, so do I - or more if possible - but I am concerned about how it is paid for. So let's see exactly what was said:-

QUESTIONER: What countries do you think should have it?

MR. STRAUSS-KAHN: As I've just told you, I'm not going to make an announcement in place of the countries, but I want to answer your question candidly. Everywhere where it's possible. Everywhere were you have some room concerning debt sustainability. Everywhere where inflation is low enough not to risk having some kind of return of inflation, this effort has to be made.

Thanks to Gordon Brown and his his deceits, we are almost certainly disqualified on the debt sustainability point alone. And, if sterling continues to fall, we might as well be disqualified on the inflation point as well - since as a country that barely makes anything worth consuming (and exports even less), we can expect the shattered pound to open the door to inflation whatever the Bank of England might hope for.