A week in politics

The objective was clear. To unite the party to the prospect of a full term coalition, to illustrate that the pain would be shared by all and to blunt any momentum by Labour’s ‘New Generat-on’. Where did it all go wrong? Well where didn’t it?
The prospect of middle class parents being deprived of their child benefit drew a storm from the predictable outlets of the Telegraph and Mail. The fact that the threshold was almost twice that of the current household income seems to have passed some by. A progressive tax system must seek to reward entrepreneurship, provide a safety netting for those less well off, but encourage those less well off to achieve greater things. I can’t see where a middle class tax benefit falls into this category.

The case for the defence is a poor one. Not a day goes by without the favoured outlets being briefed by Fox or Osborne’s men. Our defence procurement has been a shambles for decades. Last generation equipment being ready for next generation battles. The opportunity to reduce the time from conception to implementation should be grasped with both hands, as per the opportunity to actually increase the proportion of fighting men (and women) in the army. It seems that what is needed is not yet another outdated strategic review but a root and branch reform of the MoD.

Alan Johnson’s appointment is an interesting one. To mollify the Davidians, a stalking horse for the Balls-Cooper puppet show? Johnson is a heavyweight but is not in his element and will have little time to adjust and hurt the coalition when the spending review is unveiled. An opportunity missed by Labour.

George Osborne’s Conservative Conference Speech

As GO took to the stage, he left a dramatic 3 second pause to start. Was he lost for words? Would these words have any substance?

Our politicians are obsessed with the past as a slate to wipe our mistakes and Osborne’s speech started with the ‘failures’ of the current government as a checklist. But the use of statistics merely serves to illustrate that one can read, not that one has the cognitive skills to analyse the issues, design a strategy and implement a successful solution. This speech was directed to the party faithful and the biggest unscripted cheer was a reduction of quango specialists second guessing locally elected officials. I’ll believe that when I see it. The Conservatives invented this tactic in the eighties to counter free spending Labour councils.

But we wanted a message to the nation. The Shadow Chancellor reiterated policy statements made over the last year: a reduction in MPs numbers, a 5% cut in MPs pay, a pay ceiling equivalent to the PM’s salary, loss of child trusts to middle income families, retention of the 50% tax rate but nothing new and no tangible theme. There was no reference to the raising of VAT and this will come. Perhaps the fiscal task we face is too onerous to have an economic dream, but once the Augean stables have been cleansed, where is the ideology?

Osborne is often described as a lightweight (amongst many comments, some borne out of inverse class snobbery).  His detractors will have found little to add here in these 33 minutes but nor would his supporters.

Public Sector Pay Freeze

The Labour government’s spoiler declaration today was another pathetic attempt at gesture politics. If you truly wanted to make a gesture then 1) Freeze all public sector pay between £30,000 and £100,000; 2) All pay at or above.would be slashed by 10%. 3) All public sector bodies would be instructed to cut their contractor pay rates by 15%.
Schools, hospitals and social workers to name but a few pay large of their budget to contract workers. This must be addressed for both short and long term reasons.

Conservative Party Conference Week

As the conference kicks off, the Tories will seek to place an emphasis today on welfare. However the Fourth Estate are not interested. They want blood and gore over Europe. DC’s Faustian pact with the europhobes was always going to backfire but what a time to do so. Cameron needs to stick it to the Neanderthals and say “It is power on my terms, or no power”. The Conservatives will emerge from the May election the strongest party but a hung parliament is in the balance if the Continent is allowed to dictate the discussion.

Tory Banks Policy

Abolish the FSA, Transfer powers to the BofE is the synopsis.

DC introduces Tory Bank Policy White Paper

There is no doubt that the tripartite system failed. Too many macro decisions fell in the gaps in between and the idea of panic in the air over the three week period was palpable. The idea of a financial policy committee is a good macro decisioning tool and its position within the BofE seems a sensible one.

Overall, the Tory Bank Policy looks stable, however the devil will be in the detail. I would like to see an explanation of what the Treasury’s role in this will be in the future. Outsourcing financial overseeing should not lead to a dereliction of duty by the government of the day.

The Dirty Tricks have started

http://www.guardian.co.uk/media/2009/jul/08/murdoch-papers-phone-hacking

Clearly Mr Coulson, former NOW editor, now the Conservative Party communications director, is being smeared by association. This story has been around for some time but is being released now (by the left wing Guardian Newspaper), to disrupt the Conservative Party. Expect more stories ‘breaking’ about senior members of the Tories as we approach the election. Should there be enough instant damage then GB would call an October election. But I doubt this will happen, a drip feed through to a May 2010 election is more likely, as Labour cross their fingers and hope desperately for some for of evidence of ‘green shoots’.

UK Public Spending – a business viewpoint

I am at the excellent Global Leader Summit being hosted by London Business School.

Among the many interesting topics is a discussion on the down turn and its perceived length. It’s clear through overt discussions that the UK public finances are being seen as a key (if not the key) to future growth. Jeremy Darroch of Sky in particular pointed to the extent which the UK public sector permeates the UK economy (a point which is almost saturation in some geographical areas). This view was expanded by Paul Polman of Unilever who also pointed to the need for increased saving by the consumers.

Public Spending is a tightrope which must be tightened but if pulled too tight will kill off any greenshoots of recovery (illusory or otherwise). It is therefore with regret that our government have sought to use the uncertain economic climate as an excuse for ‘smoke and mirrors’ speeches and not firm figures.

David Cameron Monthly News Conference

Synopsis:

DC came out fighting effectively calling GB a coward with regard to the backing down over spending plans. Indeed he again explicitly said that the Tories will bring in spending cuts. This catches out the government who are hiding behind the “who knows what will happen to the economy?”

A pointed call for the release of the current years expenses to have less blank ink, revealing addresses.

A clever call to retain 2nd jobs for MPs using the argument that career politicians is not what the people want. I am of the opinion that it should be compulsory for MPs to have had two years experience in a job OUTSIDE politics. Get out of the Westminster bubble folks!

No date given on spending specifics. This is the correct approach to play. One cannot show ones hand when the government have said nothing. Channel 4 tried to corral DC into an autumn deadline and asked about the housing plan brought in by the govt. DC batted this away.

Speaker Froth

The media obsession with the appointment of the new Speaker is a diversion. Whilst the unseating of the previous Speaker was a microcosm of the public’s discontent, the interest in the appointment of a new Establishment figure is not. The general public do not differentiate between good MPs and bad MPs, they see the entire lower house as one cesspit of corruption and self interest. Only transparency can provide this, not a new face under wig and inside stockings, not another quango and certainly not the Prime Minister telling us that he’s the man to take us out of the ‘bust’, he presided over and claimed to have abolished.

Gordon Brown’s speech on Tues June 16th 2009

I shall avoid commenting on the rhetoric and go to the bare bones (trust me, it was mind numbing in a reality TV awkward manner – lots of letters from the public, Oprah Winfrey-esque rubbish).
GB basically said that under Labour, you get more money for the NHS, Tax Credit, Education whereas the Tories will cut these.
This is the propaganda that the public will be faced with for the next twelve months. The lasts gasps of a dying man. When will this man admit some culpability over this recession created under his Chancellorship instead of hiding behind “world recession” nonsense!
This ‘spending cuts’ argument against the Tories had its validity 24 months ago but the fact is that cuts must take place whichever party is in charge. The only point of discussion is where these will be applied. By ringfencing the NHS, George Osborne has forced Labour into the screeching of “10% cuts” knowing that cuts and tax increases must be applied. The public will be wary of this mantra by next June however and the msg of austerity will soak in. GB should only have begun this discussion if he intends to hold an autumn election. Or perhaps he does?
GB did omit that the last 12 years have been a historical time of calm hence the government’s ability to increase spending and increase taxes stealithy (think fiscal drag). Unless the govt comes out and is honest with its plans and not hide behind talk of “who knows what interest rates will be next year” and “we don’t know how much the economy will grow”, it will be swept out of power leaving a rump of a presence in Parliament. What is the point of the Treasury fiscal models, if not to plan for all scenarios?

UKIP fills the gap

With all this talk of Labour’s demise in the European elections and the rise of the BNP, too little attention has been paid to the rise of UKIP. In Nigel Farage, the party has an eloquent individual who gave the best (and most non partisan) assessment of the election results over the last 48 hours. His press conference did not gloat and correctly identified the weaknesses in the Conservative’s position of Europe. The promise of a referendum on the Lisbon treaty has had too many caveats. Whether or not and to what degree the UK stays in the EU, a greater degree of honesty MUST be employed by all parties with the public.
– What proportion of legislation employed per annum originates from the EU?
– What proportion of those EU laws emanate directly from the elected (by the public) officials?
– What do the UK parties intend to do about the wasteful Common Agricultural Policy which:
: pays the farmers of the ‘old’ EU more than that of the new EU?
: is a direct obstacle in each and every free trading round with the rest of the world?
: increases the poverty of the lesser developed world?
Is there any button which the CAP does not press when one is looking for an insiduous use of public money? The CAP is the figurehead of a wasteful system whose few good policies are outweighed by its many unnecessary and poorly thought out ideas. There is not enough space in this blog to express my disgust at the largesse of the many officials.
By perverting the traditional axis of UK politics, UKIP will increase its share of the vote in the general election, votes which could prove crucial in the North West for David Cameron. Mr Cameron need not change into some snarling anti EU-phobe. But what he must do is transplant the ideas he has put forward for the UK to the EU. That of, transparency, the idea that politicians are public servants; and subsidiarity, the idea that decisions will be made at the lowest feasible levels.

Titanic Labour

Not the force of Greek myth but the early 21st century sinking ship. As the rats leave (Jaqui Smith and Hazel Blears at time of writing), it leaves only the inevitably poor showing in the European elections to draw out the plotters. But no one is brave enough to play the part of Brutus or indeed Michael Heseltine.

The truth is that the Labour party are suffering from government ennui, a desire for change regardless of performance. Labour’s performance in recent years has been lamentable: the impoverished response to the banking crisis, the waste (non jobs in the public sector) of money in the good times, the Iraq retreat debacle, failure to assert itself in Europe. But none of these are election winners or losers. The great British public invariably vote in general elections based on the economy, incompetence, or boredom but rarely ideology. The government have handled things better than in the dying days of the Major administration but one cannot help thinking that only a collapse by the Tories will lead to anything but a 1979-esque rout.

The smell of power has quietened the rabid right wing dogs and their howls of immigration, EU, and low taxes. The hope is that David Cameron will use the 12 months as thinking time to develop a true ideology leading to economic sustainable growth, a viable ‘free’ healthcare system, a resuscitation of our morbid education system, and a foreign policy that puts the UK and its sphere of influence first.

Cameron @ the Open University

“No Revolution” but some tinkering necessary and a return of power to the people through personal responsibility, as well as greater independence to individual MPs and accountability of the Executive was the summary of this speech. It feels strange to hear of a right wing leader using the phrase ‘power to the people’ but it is an indication fo where this country has come in the separation of public servants and the public they are meant to serve.
Cameron encapsulated themes he had gone over prior to the expenses row but wrapped them in relevant themes: expenses, over zealous bodies such as the police and councils, ticking of boxes rather than common sense. The theme of subsidiarity is not a new one, I recall John Major using it in an attempt to dilute some typically all encompassing European initiative. However the desire does appear to be there even allowing for the media froth.
I was pleased to see Mr Cameron return to one of my favourite themes of the number of MPs! A reduction of 10% and an equalisation of population sizes is a very good start. It is ridiculous for the UK, especially given the powers of devolution, to have more MPs than India! Also it is farcical that Na h-Eileanan an Iar has 22,000 voters whilst the Isle of Wight has 110,000 voters. This country’s surface area is not so large nor its transport and communications so backward that there is a need for a 5x disparity in (voting) population sizes.
The messy beast that is proportional representation was explicitly torpedoed. I feel that the resulting LibLab concensus would lead us to the constant political mess that is Israel or Italy.
Unfortunately he did not address the West Lothian question, but that is the elephant in the room. It must be addressed in the first post election Parliament.
Europe was addressed by a promise of a referendum on the Lisbon treaty and a desire to have powers returned. I would have thought DC would play this one down since it’s an easy whip to use against his party by the left.
This was a far reaching speech (and my synopsis does not cover all themes) but it was a SMART response to the country’s questions and frustrations.

nb: SMART: http://www.projectsmart.co.uk/smart-goals.html

Michael Martin keeps it short

Short and purely factual. Michael Martin eschewed the opportunity to leave with a jibe at his tormenters and to spare us the fake worship by those who were stabbing him in the back and chest just 24 hours previously. One sentence with the key words.
“…I will relinquish the office of Speaker on Sunday 21st June..”
Let’s hope that we can move on from this episode with equal brevity allowing MPs to focus on the key issues and leaving the matter to be sorted out by an independent body in the autumn.

Cameron on R4 and R5

An accomplished performance from Cameron obviously mostly about the expenses farce. It’s always uncomfortable dealing with the rants, sometimes rambling, of John Humphreys and of the great British public. He was very quick to respond in a reasonable fashion. Clearly welll coached but I was impressed.
The interview/phone-in moved on to the general election. Cameron pressed again for a July election, an event not seen since 1945 (clearly an extraordinary time) and before that 1902. He also refused to criticise the Speaker. It’s not clear if this is a case of disinterested, uninterested or Machiavellian.

Cameron launches Europe Manifesto

Somewhat dwarfed by the Speaker’s speech, David Cameron launched his manifesto for Europe today. He impressed with the first half of his brief oratory. The euro sceptics of the country have long called out for a representative who is not a europhobe. There is a clear distinction to be made between reform within Europe and leaving the cosy club (but that should always be retained as a possible outcome should change not take place). The direct connection of the rebate to CAP reform is vital if a CAP solution is to be found. It is a collective disgrace that farmers of wealthier nations receive more than farmers of poorer nations in what is supposed to be a club of equality. A commitment to attack the gravy train of the Eurocrats was also welcoming.
The second half of the speech was less inspiring. The call for a general election seems ill timed. The reaction of voters in a general election at this time is very much an unknown. Whilst DC has responded well to the expenses debacle, the Conservative vote is still down in polls and may lead to less seats than expected. In twelve months, DC’s reaction will be seen to be a sign of a man in touch with the nation but general disdain for politicians will have subsided resulting in a withering of the votes for the minor parties ensuring a smoother election result. Mr Cameron’s desire for government is understandable but in this case, patience is a virtue.

The Norway Debate

To watch the Speaker’s, Michael Martin, performance this afternoon was surreal bordering on the farcical. A perfunct apology was followed by a game of hide and seek behind the legal processes of debate. When finally cornered, the Speaker refused to countenance resignation, immediate or otherwise. It was clear that of those present in the house, the majority were in favour of an unequivocal statement in the opposite direction.
The Speaker may appear to be a victim of misdirected anger, a scapegoat. However it was Mr Martin who actively blocked attempts to use the FOI act to reveal the spending habits of MP’s. His response has been muted in public and obstinate in private. He is totally out of touch with the public mood. His example (his wife’s taxi fares) before this blew up, his failure to step forward as an impartial representative of the house of commons and his subsequent (in)actions clearly warrant his demise.
His supporters have long suggested that his opponents are waging war on a nationalistic (Mr Martin is Scottish) class front. Mr Martin is brusque at best and rude at worst but these are traits present in many of our business and political leaders. He has however been accused (below the parapet) of a lack of impartiality in his running of the house. Mr Martin will have thought long and hard about his response today. Clearly not long and hard enough.

MPs’ Expenses: Crime and Punishment

One must congratulate the Daily Telegraph on its ability to spin so much out of its outlay. This has been helped by its fellow media outlets who are still content to feast on the tawdry but irresistable nuggets. The initial reports were of breaking the spirit of the rules and I am not inclined to have MPs pay the money back. Like the public apology, I see no true purpose in it. What is needed is patience and a full redrafting of the manner in which MPs are remunerated and compensated for extraneous expenses.  Don’t blame the players, blame the game.

However what we are now faced with are two clear cases of fraudulent activity. It is astonishing that Ray Mallon, the mayor of Middlesbrough has had to ask for a police investigation to be instigated. Former minister Elliot Morley has been suspended from the Parliamentary Labour Party after claiming £16,000 expenses for a mortgage he had already paid off. But when did he pay this back? If recently, then clearly there is a case for arresting and charging him for fraud. Equally husband and wife MPs Andrew MacKay and/or Julie Kirkbride have police questions to answer,

Bank of England Forecast

It’s clear that there are so many indicators that the BoE forecast is really just trying to stick the pin on the donkey.
A restriction of growth of 4.5% this year does seem on the dovish side but we shall see. Any upturn will surely be temporary as there needs to be an unwinding of our leveraged position by banks, businesses and households.

Now Blears joins in!

It is one thing for disaffected Blairites with delusions of grandeur stabbing you in the back but when a member of your cabinet goes for the hammer and chisel approach, you must question if GB has any control of his charges? Now Ms Blears’ column is 90% sensible: ‘win on policy, not rhetoric or soundbite’, but she is not so naive to realise that this would be twisted by the media to suggest post Brown positioning? Either way GB needs to ditch her at the next opportunity.

Hazel Blears suffers foot in mouth disease

Hazel tells it as she would like to be seen by a future Labour leader:

http://www.guardian.co.uk/commentisfree/2009/may/02/hazel-blears-labour-gordon-brown

The ‘too late’ support for GB

http://www.youtube.com/watch?v=erR2S7rvGdM

Blunkett & Clarke put the boot in

Charles Clarke has popped up again twisting the knife into GB.

http://news.bbc.co.uk/1/hi/uk_politics/8028170.stm

Is he preparing for a spring stalking horse campaign?

The MPs’ Expenses Farce continues

An incompetent government seemingly led by events rather than leading, an emboldened opposition, the trickle of public backing being lost being turned into a flood. They say that history repeats itself but thirteen years seems like an awfully short time.

One wonders why, when an independent enquiry is due to report before the year end on the comprehensive issue of allowances, the government would seek to pick a fight now. One can only think that Gordon Brown has lost touch with all reality! The damage to his reputation and that hint of sleaze is done but deferring to an independent body would surely lead to this story slipping away. His insistence on meddling has kept this story in the news far longer than would otherwise have happened.

Gordon Brown’s government is a dead man walking. June 2010 cannot come too soon.

Political Diversion

The Fred Goodwin pension debacle says a lot about our government and where their minds are concentrated. Instead of a structured plan (not a spending spree), to combat our recession, they chase headlines in an attempt to deflect from their own inadequacies.

This was a glorious opportunity for tax cuts for the working classes, tax hikes for the highly paid, amalgamating the NIC into the tax system a removel of even more tax dodges and a simplication of the tax system overall, they spend their time briefing reporters.

Ever time Harriet H opens her mouth, she puts back the cause of the left and women in politics decades. Engage brain before lips please Harriet.

Ken Clarke on R4

Listening to Ken Clarke’s interview by John Humphrys on Radio 4, I was reminded how the centre left intend to undermine the one weak spot of the opposition – Europe. Humphrys launched into a ‘when did you stop beating your wife’ type question re the wildcat strikes and the UK’s position in and on Europe.  KC saw that coming a mile away and deflected with aplomb.

Of course the bigger picture is that Gordon Brown’s pathetic soundbite has come back to bite him on the proverbial. ‘British jobs for British workers’ was always the most sanctimonious piece of rubbish issued by the PM recently (amongst many). Entirely futile in an open European market, efforts and words would have been best spent targeting our European ‘allies’ who seem intent on preventing a truly open market.

Bank of England Cuts Rate to 1.5%

The answer has to be why?

Will the 0.5% encourage business or mortgage lending any further? Will mortgage holders find their payments signicantly lower? Will credit card holders find their painful repayments eased. The link between monetary activity and bank lending is no more. A political gesture made by those without the tools, brains or balls to remedy the situation.

Balancing our budgets

I’ve edited a piece from John Maudlin which is US centric but with a few omissions, oh so relevant for the embattled UK taxpayer.

Shouldn’t the consumer, after decades of over-consumption, be allowed to digest the over-indebtedness and save, rather than be encouraged to take risk?

Shouldn’t companies, no matter what state they reside in from a political point of view, if run poorly, be allowed to fail or forced to restructure?

Should taxpayer money be used to make up for the mishaps at financial institutions or should we allow them to wallow in their own mistakes?

Shouldn’t free markets be free?

When did post war concensus near communism return our shores?

How do we choose who is rescued and who loses?

Shouldn’t we place blame on the politicians, bureaucrats and other “decision makers” and put skilled people in place that know how to run the businesses?

Is anyone else thinking that the blind attempt by the government to maintain mortgage lending at 2007 levels is sheer blind panic driven by political grandstanding or sheer ignorance of finance and economics.

I noted that house prices are back at their long term levels. Good. However they are liable to fall further before returning to the norm if past experience is anything to go by. Even better. Mortgage holders and lenders need to learn that cheap money is not cheap forever and a primary property is a home not an asset!

UK inflation rate falls to 4.1%

Today’s news that UK inflation fell from 4.5% to 4.1  with an RPI of 3% leaves us staring at a clear and present danger of stagflation. The fall in prices is really on the back of oil prices (do not be deceived by those sale prices). The table below of oil prices required to balance the relevant country’s budget, provided by Dennis Gartman (vie the excellent John Maudlin Weekly e-letter), suggests that OPEC will try to maintain a higher price than currently, leaving battling inflation and a downturn.

The old pistols held only 6 bullets and the developed world is fast running out of their monetary policy bullets. Did we shoot our bolt too soon?  What was the point of the VAT decrease except to increase Government borrowing? No effect on business, no effect on consumers. A shoddy deceitful piece of transparent Government publicity which leaves you the taxpayer and your children paying tomorrow.

I envisage a scenario where a Conservative government is forced to act like that of the ’79-’83 government in reducing the defecit and ‘cutting’ spending. It’s not pleasant but the only successful policy for the next government (of whatever hue) is a certain route to electoral defeat. the alternative is to pretend (like the 70s) that all is well whilst we slowly bankrupt ourselves.

Who do we blame? Partially the government but it’s a 50:50 split with us, the general public who’ve turned a blind eye to the fact that extra jam today must be paid for tomorrow. We did it for the last ten years and we’ll compound the error by voting out any party who attempts a degree of financial discipline.

At this time of year, it is traditional to infuse an element of optimism. My one hope is that we all wake up and smell the roses (or at least the swing voters)  as my fears are too many to mention.

Is this a democracy?

The arrest of Damian Green has raised a number of questions about our government and abuse of its position.

• The use of ‘Anti terrorism’ laws is clearly being abused. The lesson learned here is that if a power can be abused, it will be by government and/or the police service. Government claims of laws being put through Parliament on a ‘just in case’ basis are clearly lies.
• Why do the police arrest individuals who are clearly not about to run away. I’d be grateful if a legal expert could help. As in the case of Harry Redknapp, the individual could have merely asked the person to attend a particular police station at a set time?
• Why did the Speaker allow the police to ransack an MP’s office?
• Why were the police reading twenty year old love letters. This seems like a case of individual tittilation.
• Since when has Opposition leaks become an arrestable offence. Gordon Brown was a regular at this in his time.

It seems that this was a warning shot to civil servants. But it was also a warning shot to democracy.

Media Stretch

The non story about Messrs Brand and Ross and is the entertainment equivalent to the politics story of Messrs Mandelson and Osborne.

Both were non stories which have been stretched out by the media until something happens. It is a pain of our times that multi cahnnel 24/7 has not evolved into greater discourse or depth or opinion or detail, but repetition and the elevation of the ‘dumb waiters’ of society to some exalted position.

Now I could go on about the tawdry details of each story but ask yourself this. It is one think for Sky (the red top of the broadcasting world) to peddle this nonsense but should you and I pay for it involuntarily. Yes, I am referring to the tax that is the BBC. To inform and entertain. The BBC seems to struggle on both counts. It is high time that the exact nature of this increasingly commercial beast is addressed. No other Government owned operation: Post Office, NHS is run with such little oversight. Allowing a bunch of middle class, left wing, retards is tantamount to dereliction of duty. As for their diversity! Yes, if you’re reflecting the diversity of a table of frappucino tasting people in an Islington brasserie tucking into a bowl of £10 olives perhaps. Do not let this sore fester any longer!

Night Said Fred

As Sir Fred departs the scene http://news.bbc.co.uk/1/hi/business/7666570.stm one can only view his career with RBS as a microcosm of our financial times. Like Icarus he flew too close to the sun, replacing a well run, austere Scottish retail bank with a laissez fair institution with global ambitions.

I am loath to praise our government for their actions because it could and should have been done at least two weeks earlier, and like congratulating the drowning man for accepting the offer of assistance, what alternative was there? Independent economists had been calling for this action for some time, and sprinkled with some political actions: no dividends, the heads of those responsible, it remains the best action that could be taken. Since this crisis began, the UK banks have consistenly lied to anyone who would listen. Minimal exposure to the US housing crisis we were told, mark to market values were still good. Yet each quarter from 2007 brought us further downgrades. It is for this reason why heads must roll and bonuses for MDs and above must be curtailed for every institution who brings its Dickensian begging bowl out.

I am somewhat annoyed with the response by the Conservatives. They were consistently slow in their response, merely adopting a ‘united front’ approach, arguing that they would work with the Government. I realise that nationalisation (and that’s what it is) is a bitter pill to swallow, but these are not ordinary times. It is vital to ensure that this does not happen at the same scale again which means, punishing the executives, through resignations, and bonus cuts, and punishing the shareholders through dilution and no dividend. The shareholder via the institutions clearly need to take a closer look at their holdings. Did Enron and WorldCom not teach us that a story too good to be true is just that?

If the Scandinavian and Japanese crises of the last century tell us anything, it’s that we’re in for a painful recesssion. The best we can hope for is that 2010 will bring us new hope, and that this, if not the end, is at least the beginning of the end.

David Cameron on Radio 4

Evan Davis was trying to land a blow on DC but DC held firm.
It started with an attempt to make DC admit that we would have to raise taxes and/or cut spending. DC quite rightly concentrated on the big picture.
There followed an attempt to undermine the right’s raison d’etre whereby capitalism has been undermined and socialism is the best way, you know the drill. But DC kept to the script being somewhat smart after the fact, claiming parliamentary unity at this time of crisis whilst landing the odd party political blow.
Again ED tried to corral DC on tax but he evaded and stayed calm. Since taxes will probably have to be raised before he gets to power, it was the approach that I would recommend. Who needs newspaper headlines of ‘Tories to raise taxes’ when Gordon will have to do it for you (by stealth or otherwise)?
Moving on to spending, DC was well versed on where he could cut spending on advertising, consultancy fees, I’d cards etc. ED again tried to admit that this was impossible to to guarantee from the outside.
DC was overall very competent, rightly pointing out that the Great Depression was caused by the actions after the banking crisis and that is something that globally we must concentrate one. One can’t help but feel that John Humphreys would have been a much better opponent, in his smug comfortable leftie kind of way,  but you can only beat the opponent opposite you.
In summary DC had a good appraisal of his brief, kept his cool, and stayed focused. However there will be far harder tests to come.

This has all blown the Conservatives’ economic planning out of the water. I have to agree with their policy of keeping their head down whilst emitting the odd sniping remark. On can’t publish a revamped policy today which will be turn apart by tomorrow’s crisis. it is the advantage of the opposition to have thinking time, the advantage of the government to show they have experience and can cope, the been there done it attitude.

One hopes that the calls for tax cuts can now be put to bed, and that a sustainable tax and spend model for the medium term can be forged out of this crisis. This is an opportunity for the Tories to shape economic policy for years to come regardless of who is in power. It is however an extremely onerous task

Yes Darling

So Mr Darling has promised to do something to the economy!

http://news.bbc.co.uk/1/hi/uk_politics/7628545.stm

Well considering that the credit crunch began some twelve months ago, one can only marvel at his inability to have a structured response by now.

There is only so much that can be borrowed in the current climate therefore taxes have to be raised yet, Darling ever the politician, just didn’t have the guts to say the obvious. This unnecessary economy with the truth is incredibly frustrating. I was happy to praise Mr Darling when he acknowledged the severity of the financial earthquakes some weeks ago, but clearly he’s been told to keep his mouth shut by Team Brown.

What we actually need is a structured attack before the contagion gripping the city hits town & country!

On a separate point, I note the call for a windfall tax is rising in the labour ranks. Now I have a big problem with windfall taxes. There is a system already in place to capture a share of excess profit. It’s called ‘taxation’.  Also, I note that it’s ‘to pay for rishing fuel bills’. Where does this taxing A, to bay for B principle stop? Will all taxation need to be earmarked for a particular related expenditure? In which case, who will we tax to pay for defence or our MPs and civil servants? Now that’s interesting…

The Gordon Brown Interview

Having just watched Andrew Marr’s interview with Gordon Brown, one can only surmise that it was a valiant stand by an outgoing prime minister. Whether his successor will be Labour (after an ousting) or Conservative (after the general election) has yet to be decided.

The Markets

Try as GB could to wriggle out of it, the fact remains that he was Chancellor of one of the world’s largest economies at a time of severe largesse.

• Does anyone recall GB’s bemoaning the erosion of T1 capital at the financial institutions?
• Does anyone remember the ‘prudent’ chancellor criticising a bonus system which was not in sync with the actual profit line?
• GB tried to stoke the housing market when all sane people were suggesting that a neutral approach was the minimum that should be taken.

In fact he was too happy to accept their contributions to the Treasury, wasting much of the funds, particularly over the last four years.

The Personality

GB gave the diplomatic two fingers to those in his party seeking to unseat him. After all, his successor would only have a maximum of 18 months to cement a personality and policy upon the British public. He also stole Tony Blair’s line about being just an ordinary guy. GB’s never had a real job! Politics is not a real job.

The Result

Andrew Marr tried to corner GB but GB always had the upper hand in language if not in substance.

Score Draw.

Stamp Duty Axed for a few

Now I have nothing wrong with the idea of stamp duty. Indeed it is the only thing that Gordon Brown did to try to rein a rampantly overheating housing market but this current action is just pathetic. Where is this money coming from? Nick Robinson provides us with an idea: http://www.bbc.co.uk/blogs/nickrobinson/2008/09/who_pays.html

Did anyone see Hazel Blears on the BBC this morning? This woman is a prefect example of the sycophantic drivel which we need to vote out. When will politicians look for long term solutions and not headline grabbing shortemist exercises?

• Do not try to stimulate a market which all unbiased bodies suggest is at least 20% overvalued as at September 2008.
• A labour government should be concentrating on ensuring that mortgage holders are not hounded out of their homes by banks eager to recover funds.
• They should be working with international bodies to create a Basle III or II.5 ensuring an increase in Tier 1 capital so that we don’t have our banks gambling this madly again.
• They should also ensure that we never get to the stage where the nation’s people get themselves into a tulipesque market decoupling the idea of a first house being a home and not an investment.

Northern Shock

As the government prepares to nationalise Northern Rock, we must ask ourselves how would a Conservative government have dealt with the situation. Of course what should have happened is that the company should have been allowed to fall as a warning to us all. But of course the public relations disaster meant that this is not a viable option for a government of any colour.

With this in mind, I still believe that the correct course would have been to exercise the Government’s arm as the biggest stakeholder to effectively nationalise the company. Now I know that nationalisation is not on a right wing government’s agenda but, this would effectively give senior management time to restructure the company and then sell it in two years time once the market has calmed.

What is actually happening is that the tail is wagging the dog as shareholders are demanding a higher price. The government should screw its courage to the sticking post and pay the shareholders nothing.

To the shareholders: ‘Caveat emptor’!

Stating the obvious #1

 

Apparently limiting your alcohol, red meat, sugary drinks and waistline will reduce your odd of croaking early!

 If you don’t believe me, see here

http://news.bbc.co.uk/1/hi/health/7069914.stm

I’m surprised they didn’t remind us to stop smoking.