Alistair Darling Confirms Economic Crisis Fears

I’m almost tempted to feel sorry for Alistair Darling. For months he’s been mocked (by me among others) for failing to fully acknowledge the magnitude of the economic crisis. Yet now he has, everyone is appalled.

In an interview on Saturday, Darling told the Guardian that Britain is facing arguably the worst economic downturn for 60 years. The reaction to his comments has been one of stunned horror.

This just isn’t the sort of thing we’re used to from a politician. He even used a swear word — Britons, he believes, are "p****d off" with the situation. The chancellor’s comments have sparked off a lively discussion here in the Fleet Street offices.

So why has Darling’s frankness caused economy-watchers to wince?

"This man does not grasp how the economy works," explains colleague Theo Casey. "What Darling has done is confirm fears. Consumers, investors and businesses that were not previously worried, now are. They have been told from the highest office in the land that it’s time to cut back."

Theo says it makes him think of the film ‘Men in Black’. I’ve not seen it myself, but I’ve a fair idea what it’s about — two shadowy government blokes try to keep the existence of aliens secret from the general population.

Says Theo: "It reminds me of that scene:

Agent K: We do not discharge our weapons in view of the public!

Agent J: Man, we ain't got time for this cover-up bulls***! I don't know whether or not you've forgotten, but there's an Arquillian Battle Cruiser that's about to...

Agent K: There's always an Arquillian Battle Cruiser, or a Corillian Death Ray, or an intergalactic plague that is about to wipe out all life on this miserable little planet, and the only way these people can get on with their happy lives is that they Do... Not... Know about it."

I can see Theo’s point. The FTSE opened today by falling 36 points. Sterling also reacted badly to the chancellor’s comments.

This is why I’m feeling a bit sorry for Darling today. By dint of his job he’s basically obliged to try and mislead us — however futile and mockable such an attempt may be. Because no matter how bad things get, publically acknowledging the fact will only make things worse.

Here’s the thing, though. Darling must have known that his outburst would have repercussions. He has since given an interview to the BBC in which he tried to clarify his comments — by saying the same thing over and over again (the usual line about how the whole world, not just Britain, is facing a unique set of circumstances).

"I was watching the interview online," says colleague Glenn Fisher, "and whilst it was playing I was making a cup of tea. I assumed my laptop had crashed in some way and the video stream had got stuck on a loop. But no! He just kept repeating himself."

Darling’s repetitiveness is a sure sign that here was a politician who was ‘on message’. The government’s damage limitation machine had got to him. Like an errant child, Darling had been brought into line — under no circumstances was he to stray from the script.

As I say, the chancellor ought to have known he’d cause a brouhaha. So why did he do it?

Simple. He’s frustrated. Things have got so bad he can’t hide it any more.

Sadly, Darling’s candour is unlikely to do anything other than make matters worse. In his piece today, Theo explains the real motive behind Darling’s comments, and why even Alan Greenspan could have told him that he should have had more sense.

Why the credit crunch will make everything more local

There is another crunch happening aside from the credit one. A shipping crunch. Here’s how it works:

The tight-as-a-drum credit markets are making it difficult for businesses to finance big projects. One area that’s being hit is shipping. Despite the high demand for the goods their vessels carry, shipyards are seeing more orders being cancelled. Why? Because the firms that placed the orders can no longer get the finance to pay for them.

"I expect that the cost of transporting key commodities across the world by ship is going to soar over the next few years," says Garry White, our head of commodities.

This is excellent news for one of Garry’s commodity plays. Because the more expensive shipping becomes, the better it is for this one company.

Find out how you could benefit from one little-known investment as the global ‘shipping crunch’ continues.

Until tomorrow

Ben Traynor

Editor

Selected articles:

Garry White on the rise in global shipping prices.

Theo Casey on the investment that could benefit from Alistair Darling’s weekend outburst.

The Daily Reckoning — There are a lot of ways to ruin yourself

It is Labor Day in the United States of America. The country is taking the day off, in honor of the toiling masses. Since almost everyone toils in some way or another, and always has, a day off — celebrating labor — seems both oxymoronic and purely moronic. Why not take a day off to celebrate breathing? But nothing is so absurd, so pointless, or so appalling that it can’t be made the law of the land.

Our own contribution to the Labor Day festivities began at 6:15 AM when we boarded the train to Paris.

"Well, I guess this is the end of the summer," said Elizabeth, as she said goodbye. "But it has been a very nice summer for everyone... We can’t complain."

You can read the Daily Reckoning in full here.
P.S. If you enjoyed this article then we encourage you to sign up for the free Fleet Street Daily eletter. Learn what you can expect from today's markets -- and how to prosper in the face of uncertainty. You won't find more thought provoking writing anywhere on the Internet.

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Alistair Darling Confirms Economic Crisis Fears

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