Saturday, 11 October 2008

The bank holiday option

Whether the G-7 declaration will be enough to halt the developing global international financial meltdown remains to be seen. There is a five point plan, which certainly identifies problem areas, but it seems a bit short on specifics and the devil is in the detail. The G-7 has a bit of a track record of delivering well-meaning platitudes and, although it has done more than that, whether it is enough is another question.

One possible option is to declare a bank holiday on Monday which would close the stock exchange. However, such a circuit breaker would only be worthwhile if the G-7 plan, or anything agreed at the IMF, did have some bite. Otherwise, one could just have a worse crash on Tuesday.

As I recall, there was an emergency bank holiday at the time of the 1967 devaluation and Harold Wilson wanted to use the option again in 1968 when sterling was under pressure, but was not able to do so.

There's a certain amount of trumphalism, to say the least, on the hard left about the crisis of capitalism. However, two notes of caution are necessary. First, the model that seems to be emerging is what might be called state venture capitalism rather than anything that looks vaguely like old-style socialism. Second, whilst the recession in the 1930s boosted the parties of the far left, many people flocked to parties of the far right.

This is even more likely when those parties have been 'sanitised' and don't march around in absurd uniforms doing silly walks. I think it was Harold Macmillan who said that the fascists in the 1930s might have been more successful if they had worn sports jackets rather than blackshirts. The message is: be careful what you wish for.

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