The idiocy, the idiocy

This is ridiculous. The world is queueing up to give the government money at the lowest possible interest rates. Every government bond issue is over-subscribed. There is then no shortage of funds to build this hospital with much cheaper funds than those the government is seeking. It is purely dogma in that case that is preventing this hospital being built. But whilst the FT recognises the possibility that the government could fund this project directly, it does not point out that this would, very obviously, be the cheapest option available.

Nor does it point out that if things are so dire but this hospital is really needed then People’s QE could be used to fund it. People’s QE was always intended as a backstop for the time that the market failed. The market has failed here. In that case it is just time to get on and use the viable alternatives to get this hospital built. That is the message that needs to be sent to politicians. The time for fighting around with incredibly expensive market alternatives has come to an end. It is public and not private finance that has to build our infrastructure now.

The problem isn’t in gaining debt finance to finish the hospital. It’s in having an equity investor who will carry the risk of over runs.

You know, the over runs on this particular project which so wondrously contributed to Carillion’s demise? The risks of which are why People’s QE isn’t a solution. Because QE doesn’t produce that equity investor carrying the risk, does it?

Jeebus, how can a damn accountant wibble on about this without getting equity and risk?

15 comments on “The idiocy, the idiocy

  1. Jeebus, how can a damn accountant wibble on about this without getting equity and risk?

    Because Murphy’s a £2 share capital company sort of accountant with aspirations of becoming a £100 share capital sort of accountant?

  2. I’m guessing but I think he wants a government owned construction company to be set up to do it.

    So the state bears all the equity risk.

    But we’re a way off setting up something like that.

  3. Though the thought occurs that he’s never seen a Brazilian either.

    Probably just needs BiS’ phone number.

  4. Why not put Capt Potato in charge of selling gilts? He would soon find out just how easy it was. So many debt funds are either only going very short term or index-linked that he might find it difficult to meet requirements

  5. With inflation running over target, thanks Carney, why would anyone buy anything other than linkers?

  6. But Murphy believes that the State is all-wise, all-benevolent and all-competent (*), so of course it is far more capable than any mere capitalist construction company of building a hospital.

    (* other than when he is complaining about anything that any government has ever done, of course)

  7. If The Egregious Tuber™ put his CV in for a position as a bond trader, how long do you think it would be before the people who vet these things stopped laughing?

  8. Candidly, if cost goes over estimate then just print even more money to pay for it. There’s no possible downside.

  9. The world is queueing up to give the government money at the lowest possible interest rates.

    Why bother, when governments can print all the money they will ever need?

    This is ridiculous

    Good of him to give us fair notice for once.

  10. The irony is that if you got rid of all the shit spending (abolished overseas aid, arts subsidy, etc) it is extremely likely you could build lots of new hospitals with government money.

  11. @Rob +1
    And HS2. £100 billion here, £100 billion there, and pretty soon you’re talking serious money …

  12. @Rob

    In the strict sense, public art is a public good – it’s non-excludable (there’s no way to prevent non-payers from viewing the fountain and statue in the town square) and non-rivalrous (the fact that one person enjoys the view of the statue does not prevent another person from doing so).

    If it were to be funded privately, the marginal private benefits and costs and the marginal public benefits and costs are misaligned, so the socially optimal levels of public art will not be produced – in fact we would expect underinvestment. There is therefore a “neoliberal” argument for the state funding of public artworks.

    Having said that, when you see what local governments tend to splurge their art money out on, I do rather go off the idea very quickly…

  13. Is it the art itself that is the public good, or the provision of space for public art. I suspect that it’s the provision of the space. Once you’ve plonked the council’s approved bit of art on it, then the school’s, the Lions Club and everybody else’s idea of art they’d like to plonk there is excluded.

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