A big day for bad ideas

On Monday evening Channel 4 showed a hastily-assembled documentary called "Don't bank on the bailout", presented by city fund manager Hugh Hendry. I didn't catch the whole thing, but the parts I did manage to see were, shall we say, unimpressive. Hendry appeared completely unaware of the difference between the annual budget deficit and the national debt. He intoned meaningless sentences like "four and a half is the new fifteen", referring to the level of Bank Rate. He invented scary numbers for the sake of effect, airily dismissing a carefully-researched study that suggested the budget deficit could reach £90 billion with the words "try £200 billion".

According to Hendry, it may be too late to avoid a recession in the UK, but if we are to do so, we need to return to old fashioned austerity. That's a great idea, Hugh. Let's prevent an accidental recession by causing one deliberately, because that's certainly what would happen if both individuals and governments stopped spending. Oddly, Hugh also wants a massive rate cut, which most of us would not see as the most obvious route to austerity. Looks like Channel 4 should stick to Big Brother. As for Hugh Hendry, he might want to spend more time with his funds, as he underperformed the market by almost 8 percentage points in the third quarter of 2008, according to Citywire.

Not that the UK has a monopoly on madcap ideas. Also on Monday, I came across Maria Bartiromo interviewing a panel of distinguished guests. First up was Arthur Laffer, he of the fatuous Laffer curve, who was bemoaning the financial market bailout because it would have to be paid for through higher taxes eventually. (Yes, it's all right for millions of people to lose their homes, as long as Art and his pals don't have to pay any more taxes). Then it was on to Lawrence Kudrow, who was foaming at the mouth at an old quote from Barack Obama, in which Obama said it was a shame that the black power movement had failed to redistribute income. Larry said the government should not worry about how much of the pie everyone got; it should just try to make sure the pie got bigger. He also asserted that Obama would use the courts to redistribute wealth if he could. Pretty clearly, Larry is one of the surprising number of people in the US who think the credit crisis was caused by the poor.

I had to stop watching at this point in order to avoid putting a boot through the TV. If I'd kept watching, Maria's next guest might well have been Jude Wanniski, reaching back from beyond the grave to call for restoration of the gold standard.