Reality Has Now Become “The Producers”

Submitted by Michael Every of Rabobank

One of my all-time favourite films is The Producers. Not the quirky 2005 musical starring Nathan Lane, but the darker (and much funnier) 1967 original with the incomparable Zero Mostel as the lascivious, oleaginous failed Broadway producer Max Bialystok alongside his naïve sidekick, the blanket-hugging Leo Bloom, played by Gene Wilder. That is a comic combination rarely matched before or since. Why mention this now? Because, strangely, today is a day when the plot of that film seems redolent of what is happening in real life.

For those who haven’t seen either version, The Producers is the tale of how Messers Bialystok & Bloom stumble upon a brilliant plot to make money: if they can put on the worst Broadway show of all time, they are guaranteed to make a fortune after selling thousands of 100% of the shares in the failed production to gullible investors. The show’s closure on opening night will leave them rich and everyone else poorer. Yet if the show succeeds they face jail-time. Their quest begins to create a guaranteed flop, a certain failure, a guaranteed money-loser.

Perhaps you see the parallels with today’s news already? No? Really? I don’t mean Jussi Smollets’ inept little recent production. No, I am talking about market nonsense like central banks cutting rates to encourage more borrowing, which ensures they can’t raise rates if they succeed in generating inflation; like Bitcoin; the rush to tech IPOs in firms that only lose money; around USD10 trillion in negative-yielding bonds, all of which lose you money on; and the genius of Germany actively running a fiscal surplus in order to pay down its stock of government debt which is negative-yielding, currently the most so since 2016?! The black comedy almost writes itself:

“Max, we are being paid to borrow when we have crumbling infrastructure, rising Chinese geopolitical influence in Europe, and a Donald Trump/Russian military threat that make me nervous!”

“When you’ve got it, don’t flaunt it, baby! Don’t flaunt it! Let’s reduce this onerous income burden immediately!”

Meanwhile, in the UK the whole Brexit process is right up there with “Springtime for Hitler” –the script The Producers opt for as their ultimate flop– as the worst show of all time, with a line-up of leading actors straight out of central casting. Boris-stock & Mogg have until now been laughing all the way to the bank as Hard Brexit has loomed closer and closer as a result of all their deliberate chaos. Yet as we enter another day of drama in the UK Parliament it would appear that the plot of the film might be playing out – snatching defeat from the jaws of victory.

Amazing as it may sound, there are some suggestions that PM May might be in a position to get her widely-detested Withdrawal Agreement through at the third attempt if Brexiteers are made to see that the alternative is not No Deal but instead No Brexit. In short, this whole “Springtime for Brexit” play has stunk so badly that it may have ironically ended up being a potential success for Bremainers – certainly over 1-million people turned up to applaud over the weekend, which is quite the public draw. You can perhaps sense the shift in sentiment in the Brexit camp when Boris Johnson writes two Telegraph op-eds in succession: the first channelled Moses to say “Let My People Go” (as someone pointed out, that act of liberation was followed by wandering in the desert for 40 years; and I would add, in a significant decline in the quality of the bread); the second today claims “The people’s day of jubilation has been hijacked by spineless pirates.” Now that sounds like a pitch for a show people would pay to see!

Apparently, the price for such a May-deal would be her firm resignation date: will that prove a stumbling block or not? We shall soon see. And we will also see what Parliament puts forward as an acceptable alternative today in indicative votes – and what the Boris camp thinks of their merits over the deal on the table. Yet while it’s tempting for some to argue that we are now in the final act of this farce, that’s still far from the case. We are actually only close to the intermission in the first act – EU withdrawal. Then we start off on the negotiations over what the future UK-EU relationship looks like, and this all starts all over again.

Meanwhile, straight out of central casting, Stephen Moore, Trump’s new candidate for a FOMC seat, has just stated that the Fed should immediately cut rates by 50bp. As Zero Mostel shouted out in excitement back in 1967: “That’s our Hitler!” (You perhaps need to have seen the film to get this particular reference: it is not a Nazi comparison, but rather a way to say ‘he’s so bad he’s perfect for our flop’.) And elsewhere, Trump himself has just underlined that he will only be signing an excellent” trade deal with China, or nothing at all. Just to throw that into the mix too in case anyone thought that issue had gone away. Trust me, it’s still lurking stage left to enter again.

And what do Messers Bialystocks & bonds make of all this? Well, the latter show their usual level of blanket-clutching nervousness. And now the former are starting to feel the same way, it seems.

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