Tullett Prebon has been recently making headlines due to its extremely stark, objective and realistic Project Armageddon, in which it "Thinks the Unthinkable" where it reached the conclusion "that Britain’s debts are unsupportable without sustained economic growth, and that the economy, as currently configured, is aligned against growth. Radical solutions are required if a debt disaster is to be averted. All macroeconomic options have been tried, and have failed. The only remaining options lie in the field of supply-side reform. Unfortunately, public opinion may be inimical to the scale of reform that is required." Needless to say, Keynesians around the world are not happy: after all it takes away from their voodoo punch that just doing more of the same insane things over and over should eventually help. Because if not, then all the BS that is taught in Ivy League is just that... BS. Today, none other than the CEO of Tullett Prebon takes such floundering voodoo economists as Ed Balls, Samuel Brittan, Paul Krugman, George Magnus and Barack Obama, and Keynesianism in general, to task by finally saying what we have been claiming for years: Keynesianism, as applied in modern soceity, is ultimately doomed to failure, but not before we transform from an FX war to a trade war to its final state - shooting war. Because there is nothing like spilling human blood in the name of a false economic religion in its last hurrah before it is finally wiped out from the face of the world.
From the blog of Terry Smith, CEO of Tullett Prebon
Today’s Financial Times published my letter to the Editor concerning the financial crisis. Here is the letter in full.
From Mr Terry Smith.
Sir, I refer to the debate being conducted in the pages of the Financial Times between those who propose further Keynesian measures, such as Martin Wolf ("Struggling with a great contraction", August 31), and those who do not accept that they will work, such as Wolfgang Schäuble ("Austerity is the only cure for the eurozone", September 6).
Such so-called Keynesian measures as advocated by, among others, Ed Balls, Samuel Brittan, Paul Krugman, George Magnus and Barack Obama as well as Mr Wolf have not worked to date, and they will not work. Their advocates seem to assume that their repeated failure to solve our economic problems just means that the medicine must be repeated, which reminds me of Richard Nixon's motto that "if two wrongs don't make a right, try three".
I say "so-called" Keynesians because these advocates seem not to realise that Keynes' theories did not rescue us from the Great Depression. They are also asymmetric in their application of his theories - calling for ever larger deficit spending, having overlooked the bit about running a surplus in a boom. But above all, they do not seem to realise that they cannot work in a period of debt deflation in which a recession is preceded by the collapse of the banking system, as their current failure is demonstrating.
To the ordinary person in the street, the idea that we can rescue ourselves from a crisis caused by excessive borrowing by borrowing even more must seem mad. In this respect they are possessed of far more common sense than those who are currently advocating just such a course of action and purport to be our leaders.
The first step in rectifying this situation should be to make a clear and unambiguous statement about the actual debt the UK is carrying.
To give a lead to this, today we have circulated to every member of parliament a tin can emblazoned with the UK debt figure - £3,589bn including commitments for public sector pension commitments, private finance initiative and banking sector guarantees, so that they can see what it is they are metaphorically "kicking down the road" with their present policies. This, ahead of the party conference season, I hope might spur some considered and honest debate on this issue.
It is time for those who wish to lead us out of this crisis to tell people how bad the current situation really is and the painful remedies which will be needed to remedy it.