Breakingviews

All this talk by the author of raising interest rates as good economic policy for the underdeveloped countries in times of crisis is simply innaccurate and and well behind current economic thinking.

In 1997, at the onset of the Asian Crisis, Mahadir Mohamed — then Prime Minister of Malaysia — completely ignored the IMF’s stern insistence on Malaysia raising its interest rates. Instead, he introduced currency controls to stop the inevitable rapid inflow of harmful hot dollars into his own country. Worked like a treat — Malaysia was the first Asian country country to zoom out of the Asian Crisis on turbo. But the big American funds and banks were furious at their lost opportunity to economically plunder that country.

Since that time, it has to be said, the IMF has indeed commended using currency controls as a brake on rampant hot dollars rushing in to buy and usurp the eminent domain and resources of these underdeveloped countries. This is also standard practice now — more and more developing nations have sensibly started using government currency controls for their own necessary economic protection.

By raising interest rates, the American Fed and the big US banks have the unfair market advantage, but by using currency controls the local government has full control over its own currency’s protection and destiny, which thereby becomes successfully insulated against any dangerous and uncontrollable hot money inflows such as US dollars.

There have been few mergers over the years which can truly be considered a success other than in superficial terms. Takeovers can work when commercial or financial discipline needs to be brought to bear on a failing target or when an industry needs to thin down and the best bits can be kept in a business with sufficient scale.

Academic studies and stock market results show mergers generally destroy capital and skills. Failures can be all the more sever when dealing with businesses in highly complex industries where established patterns of working might take years to change or integrate.

So why do these two sets of management want it – the easy life! They are each under financial stress and want to hide from reality.

Why do governments want it? Probably a good helping of naivety and gullibility but in the case of the Germans and French and much of the UK political class, the prospect of creating an uber-business for pan-European defense production makes them salivate. It will help them destroy the ability of the UK to have independent forces and advance their cause of an EU superstate.

This is very worrying indeed for those who favour an independent, democratic Britain.