Santa helpdesk: All I really want for Christmas is an economic miracle

Published on Saturday 20 December 2008 14:28

DEAR Santa, I wrote to you this time last year, when I was in a bit of a fix over a bank called Northern Rock. You advised me to nationalise it and to do it soon.

Stupidly, I only took half your advice. I was a bit out of my depth. Just a novice. Not now though. I've had plenty of practice at nationalising banks since then, bravely rushing in where angels fear to tread… isn't that how the saying goes?

This year I need a small miracle if I'm to avoid going down in history as the Chancellor who presided over the biggest slump in the UK for 60 years, and single-handedly wrecked the economies of Scotland, Wales, England and Northern Ireland.

Please Santa, tell me what to do.

Alistair Darling,

11 Downing Street, London

DEAR Chancellor,

Fools are the ones who rush in where angels fear to tread. Ho, ho, ho. Chancellor of the 21st-century Great Depression, eh? They might even write a carol about you: "Bad King Darling once looked out." Ho, ho, ho…

Now be fair. You told them yourself it would be the severest downturn in 60 years.

I remember the Christmases of the 1930s. Skinny children, big sad eyes. Your problems are a million miles away.

How your ears must ring: "Sort out the housing market", "Tax breaks for savers", "Pensions and the stock market", "Let Tiny Tim walk"… What's that Rudolph? Wrong century? I said this celestial satnav was playing up. Let me give it a whack.

Red herrings all. Take it from Father Christmas, you have to sort out what they need from what they want. Their biggest heartache come the new year will be unemployment.

There's only one thing for it: you must sort out the banks. If you think they are strapped for cash now, wait while bad debts go nuclear next year.

I've had letters from bank bosses asking if I'll come down their chimney with the 100bn they need just to keep existing borrowers in their homes next year. Surely their parents told them Santa never comes to greedy, stupid children.

On top of this, mortgage arrears are exploding faster than party poppers, and more mega-frauds like the Madoff scandal will crawl out from the slime. Shout at the banks as much as you like, it won't stop them squirrelling their cash away for the winter.

One fellow down south, Mervyn, writes almost daily. Looks familiar. I'm sure I've met him as a gnome in another life.

You'll have to get money moving around the system and you'll find something in your stocking to help. Rudolph, you did remember the printing set?

Ignore those who say you must ride it out, like governments have done in recessions gone by. What's heading your way is in a different league.

Stick in your throat though it might, be kind to the banks. The gnome reckons you'll have to give them more money anyway, so relax and enjoy it. Make it cheap and easy. It's Christmas, after all.

I know you're not famous for your jokes, but telling them to pay 12% is a prize cracker when US banks can borrow for 5%. Get the goblins at the City watchdogs to revisit the capital rules. Fine any banks needlessly hoarding cash.

Don't allow yourself to be forced down the nationalisation route. But be prepared if none of the above works to start lending direct. You're already planning to by matching bank funds to small businesses? Good. Why not take some pressure off mortgage funding by going into the home loan business.

Of course, you already have: Northern Rock. You're part of the problem, forcing the Rock to slash mortgage lending, thereby crucifying the whole market. Reverse that policy. Get them lending again. You might even think about getting Adam Applegarth back. Ho, ho, ho… just my little joke.

After that, your only option will be to print cash and hand it to the banks. Force them to lend by putting a gun at their heads if you have to. Make them offer attractive deals to borrowers with small deposits. This will ease pressure on those with the biggest loans, and may help new buyers into the market.

There must be other strings. Everyone has a right to a bank account. Put bankers in the debtors' prison (which is where most of them should be) if they even catch breath to suggest they can't risk offering services to families in poorer communities, given the white-collar criminals they have bankrolled.

What's that Rudolph? Wrong century? They don't have debtors' prisons anymore? I said this celestial satnav was playing up.

And get building… anything: houses, roads, hospitals, flood defences, dams.

As for the ghost of Christmas future, here you are returning from the IMF to tell millions of unemployed the country is bankrupt, and there will be no more money for anyone without a job.

Will it happen? Not likely, but not impossible.

And here's another vision. It shows you narrowly averting disaster next year, only to head straight into a new calamity: Zimbabwean-style inflation.

Once the economy turns, slam on the brakes hard. And don't leave it to the gnomes. I suggest you get in the dwarves. Great traders. Very diligent. Trouble is… you can't seem to find good dwarves anywhere these days.

Merry Christmas,

Santa Claus

North Wind