The G20 meeting of world leaders spouted ludicrous amounts of spin, such as Gordon Brown’s rapturously received $1.1trn stimulus package, which turned out to be mainly double-counting and wishful thinking.
But the most ridiculous spin-doctoring of all came when an unnamed cabinet minister told The Daily Telegraph’s Andrew Porter that new borrowing facilities agreed by the G20 meant that going to the International Monetary Fund (IMF) for a loan was now nothing to be ashamed of. In fact, we should look at it as being “like going to a spa to recuperate”. It could be a sketch straight out of Bremner, Bird and Fortune. As any country forced to endure the IMF’s prescriptions could tell you, it’s nothing like a spa. It’s more like an old-fashioned health farm, with a focus on fibre, purging and cold showers – with the odd random thrashing thrown in for good measure. But it seems that’s no longer the case. Lord Mandelson told Channel 4 that “we are de-stigmatising going to the IMF”.
But why? There’s no need. Countries only go to the IMF because they have to – shame isn’t an issue. The IMF is the lender of last resort. The whole point is that it steps in when you’ve messed up your economy so badly that no one else can help you.
And we were happy enough with the IMF taking a tough line when it was the little countries who needed bailing out. We would tut tut from the sidelines and tell them to take their medicine. Yet now we’re suddenly keen to see the IMF become more cuddly.
The new loans will make more money available with fewer conditions attached – not so much an old-fashioned bank manager, more like an easy-going subprime lender. Perhaps we shouldn’t be surprised. It’s the logical extension of how we ended up in this mess in the first place – the ultimate in moral hazard.
Individuals can already go bankrupt with no shame attached. Companies – as long as they’re banks – can do the same and continue operating, with the government’s blessing. And now entire countries will be able to tap the IMF’s supply of magic money without fear of having to make the painful changes needed to repair their economies for the long run.
So why the drastic change of tone now? Well, the Institute for Fiscal Studies reckons our government will have to raise an extra £39bn a year between now and 2016 to plug the gap in the public finances. The hard option is to raise taxes and cut public spending. But that’s not appealing at the best of times – even less so when there’s an election around the corner. Perhaps the IMF could help with a small loan – just until we’re over the worst. Don’t worry, our leaders will say – it’s just like a weekend at Champneys. And as usual with the bills our politicians run up, you’re the one who’ll end up paying for it.