An analysis of farmyard manure

It is not uncommon to hear people disparaging the views of others to describe them as “bull”.  The word has been in common usage for about 400 years and derives from the French word “boul” meaning fraud.  The first trace of its being extended to “bullshit” was in the title of a poem by TS Eliot at the start of the last century.  There is a common misconception that “bull” is an abbreviation of “bullshit”, whereas in fact “bullshit” is an extension of the word “bull” and not the other way around.

The Mumbler has reported previously on the repeated misuse of numbers by politicians in favour of our leaving the European Union.  This week there have been two instances of monumental bull from both sides of the European debate.

David Cameron and Philip Hammond came well and truly unstuck earlier in the week when their bull was roundly exposed, by both journalists and their opponents.  They both stated that leaving the European Union would risk the United Kingdom’s security.  Mr Cameron went so far as to suggest that Brexit may make war in Europe more likely.  The Brexiters laughed this off as hyperbole and rightly so.  It was as clear an attempt at ramping up Project Fear as you are likely to see.  Nigel Farage described it as preposterous, and that is probably the first thing that he has said with which The Mumbler agrees.  Mr Farage was not so swift though to condemn Iain Duncan Smith, when earlier in the campaign he had stated that a Paris style attack in the United Kingdom unless we withdrew from Europe.

With hindsight, Mr Cameron probably regrets his scaremongering, though he would doubtless not make such an admission.  The journalists soon picked up on it though.  Only four months ago, Mr Cameron was stating that he was not decided on voting for the UK to remain within the European Union.  The risk of war if the United Kingdom left the European Union was the same then as now.  But Mr Cameron made no mention of it then, instead he announced that the defining factor would be the outcome of his negotiations with the other EU states.  The logic of his statements is that the paltry concessions squeezed out of the other member states were of greater significance than the risk of a European War.

Furthermore, if his threat of potential war is to believed, then one has to ask, what Prime Minister in their right mind would give the British public a vote on a matter, the outcome of which could lead to another World War.  Given the disrespect the electorate regularly shows to the democratic process, with the electors of Middlesbrough electing their football club’s mascot to be their Mayor, or with the public voting to name a boat Boaty McBoatface, or voting to keep John Sergeant on Strictly Come Dancing, or even Labour Party members voting Jeremy Corbyn as their Leader.  Either he believes in the risk of war, in which case the reasons he gave for holding a referendum were bull, or it is the risk of war that is bull.  It has to be one or the other.

Then on Thursday on his battle bus in Cornwall, Boris Johnson, the Clown Prince of Bull, produced a prime example of his own.  In response to a Bank of England report suggesting that Brexit would lead to a weaker pound, under questioning from a BBC journalist he stated that he thought it more likely that the pound would rise, rather than fall, following Brexit.  His logic, which in itself was not very strong, was that prior to Sterling leaving the European Exchange Rate Mechanism in 1992, economists had predicted that the pound would fall, when in fact it actually rose.  An argument based upon the fact that economists made a mistake 25 years ago, so they’re probably making the same mistake now, does not seem particularly analytical.

Consider the graph below this paragraph, which shows the fluctuations in the value of the British Pound to the US Dollar since it ceased to be a fixed currency in 1971. What it shows is that the Pound strengthened against the Dollar throughout 1990, reaching a high point of $2 at the end of the year.  It then fell back through 1991, before rising again through 1992, passing the $2 level again in September 1992.  On 16th September 1992, the then Chancellor of the Exchequer, Norman Lamont, made desperate attempts to keep the Pound in the ERM by raising interest rates, from 10% firstly to 12%, then to 15%, before finally withdrawing from the ERM and reducing the interest rates back to 10%.

dollar-recent

This proved to be a seminal moment in British politics.  It was the point at which public confidence in the Conservative Party’s greater ability than the Labour Party to handle the economy dissipated.  The confidence, which the Conservative Party had held since the Winter of Discontent in 1979,  passed to Gordon Brown who held it until the Financial Crash of 2008.

As can be seen from the graph above, the pound depreciated rapidly against the dollar.  It lost 25% of its value in a matter of weeks and 30% by the end of the year.  The pound did not regain its value against the dollar for over a decade. This is not the increase that Boris Johnson described.

So the question is whether Boris Johnson knew when he said that pound increased in value after its exit from the ERM, that it did not.  If he knew that it fell rather than increased, then Mr Johnson has clearly lied.  If, as seems more likely, he did not know what effect the UK’s exit from the ERM had, then he clearly simply made up his statement to support his own view.  This isn’t just bull, but it is reckless bull.

If Mr Johnson believed that what he described had actually happened, then it suggests that not only is his judgement or memory seriously flawed, but that he also has a very tenuous grasp upon economic reality.  The reason that the pound was unable to remain in the ERM was because it was overvalued.  Speculators could see it was overvalued and so sold it in abundance, making it further overvalued.  The Government tried to support its value through the use of interest rate rises, but once they realised that this could not be done in anything but the short term, they opted to allow the pound to float against the other European currencies.  Because it was overvalued, when it was floated, it sank as expected.  How on earth anyone with any economic sense could believe it did otherwise is a complete mystery.

So the question remains: is Mr Johnson a liar, incompetent or a bullshitter?

Advertisements

2 Comments Add yours

  1. Nicki UK says:

    The ‘Bull’ has been going on for the last 20 to 30 years. It just got more obvious during the Labour’s time. Just think about Iraq and Blair. It is called the Westminster Bubble that only the posh boys can access.

    Like

  2. Jed Bland says:

    The Tories make good use of the fact expressed by Terry Pratchett “A lie can travel round the world while truth is doing up its bootlaces” Just think about it – by the time someone has checked thefacts and published them the moment has gone and the news is about other things.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s