Blog 2023 Malcolm Blair-Robinson

It makes little real difference that the Greek government has won its vote of confidence. It will also make little difference if the Greek parliament approves the latest austerity plan. This is because in the end and by whatever measure Greece now owes too much to repay, without the loss of social and political cohesion, necessary for a functioning economy and orderly democratic government.

It is no good for bankers, investors and politicians to bury their heads in the sand, in the hope that the problem will go away. It will not. The Eurozone is now in crisis and most of its banks are threatened. Those of France and Germany have leant the Greeks the most, but they have insured their losses with, yes, mostly British banks, through credit default swaps and all that other paper which nobody understands. The assets of many of these giant bank balance sheets, bigger than their host national GDP, are getting very close to vanishing in the night.

If the Greeks do play ball and opt for another dose of austerity, it will buy a little time. This will soon run out, so it must be used well to achieve two things. The first is to re-structure Greece’s debt obligations so that they become realistically repayable. This may or may not be possible without Greece leaving the Euro. The second is that the finance ministers of the Eurozone must elect one of their number to become Euro Finance Minister and cede to the resulting finance ministry a large slice of economic sovereignty.

The first will cause major, but just manageable, losses to the European banking system, with knock on effects across the world. The second will cause political upheaval with unwilling countries leaving the Euro. This in combination will be an unprecedented financial and political drama that will grip the global economy and affect almost every aspect of international business and trade. There will be  tough times, perhaps the toughest yet, but the house will stand and through this remodelling, will stand firm and true for the future.

The alternative is to continue in an orgy of indecision and wishful thinking, now seeping like an epidemic through the international financial class. The result of that will be a disorderly default from Greece, then Portugal, then brave Ireland, followed by Spain and Italy. That will bring the entire financial architecture down in an implosion so spectacular that the date will remain embedded in the psyche of history, like 9/11, for all time.

Yet another U turn, this time on law and order. That is traditional Tory turf. Whatever Cameron says about being a sign of strength, the record of this government for u turns is without precedent and approaching the point of farce. Most of it comes from the Tory side of the coalition but not all.

Downing Street must now take on board a sharp and unwelcome fact. Nobody any longer believes the government will stick to what it says it will do, if that course causes controversy. So if you make enough noise you can get it to change. That is near disastrous. The unions will go on the rampage and show signs of doing so. Much more of this and the markets will get spooked and then we are all in trouble.

The Prime Minister must demand of his ministers that they think through their plans and then he must back them. The idea that all these changes are improvements is flawed. The NHS reforms were fundamental and would have led the way to a more responsive health service, instead of a monolithic health process. The changes water the whole thing down to the point where it is likely to cost a lot and do a little.

Pension reform must be seen through and the unions faced down. The banks must be restructured without any retreat. The government has to regain its credibility, now very badly tarnished. With a new banking crisis in the offing and a Euro crisis in full swing, a government which does not know its mind is worse than useless.

Is not surprising that a missile mis-fired and killed an innocent family. It is surprising that it has not happened before. The fact that it has not is a testament to the skill of NATO aircrew and the quality of their weapons.

Nevertheless it reminds everyone, especially those who are uncomfortable within NATO that the alliance is stretching the UN mandate to side with the rebels in this civil war, that protecting civilians by bombing is a contradiction in terms which imposes such limitations on the campaign that it cannot reach resolution. Therefore it should not be happening.

There was a case of sorts for the prompt French intervention at the beginning to stop the Gaddafi forces advancing on Benghazi to create mayhem. Having done that, talks should have opened straight away to find some political compromise to stop the war. It may have meant two Libyas, but the free one would than have had an opportunity to create the kind of country to inspire Gaddafi’s supporters to seek a better deal, as well as Arabs everywhere still ruled by repressive regimes. By demanding Gaddafi’s exit as a condition of talks, NATO ensured that there will be none and that it has no exit either.

Somebody soon has to get real. The Germans are fed up, the Norwegians are going home and the Americans are in legal difficulties about being in the thing at all. Gaddafi, who may be everything people do not like, but is certainly not a fool, knows that. Like the Taliban, he knows he just has to hang on. The West has, once again, started something it cannot finish on the terms it proclaimed at the outset. Soon the priority for it will be to get out without humiliation. This is what will happen in Afghanistan. Gaddafi is close to making sure it happens in Libya.

After the crash there was endless worry of a double dip recession. Nobody worried about a sovereign debt crisis. This is now approaching fast. It has three components. One is political. Another is financial. The third is the survival of the Euro.

It is the political element which is now the driver. Greece is heading towards default and the government will be too weak and the population too angry to allow sufficient financial austerity to prevent this. There is fear of financial contagion but it is political contagion which is far the most dangerous. If populations say no, that is that. Already in the UK there is talk, by the most inflamed union bosses, of the biggest strikes for nearly a hundred years. The majority of the British public are realistic about what has to be done (unlike certain union leaders) and that majority will most likely be sustained. Maybe not so in Ireland and Portugal and certainly not so in Greece.

Serious defaults will make the European Central Bank insolvent, as well as hammer the balance sheets of universal banks. The exposure to Greek debt of UK banks is manageable, but their much larger exposure to Ireland may not be and in some cases definitely will not be. At the end of it all so much borrowing will be needed to shore up older debt and pay accumulating interest that, just like the developing economies of years back, the problem becomes so crippling that consensus collapses and with it the economies of the affected countries.

Added to the problem is the Euro, which is at the root of the current crisis. So often has this blog remarked that it is impossible to have a currency without a government, that we hesitate to say it again. Nevertheless the Euro is now a major problem because the currency came before full political union. Its founders supposed that union would follow naturally, until slowly the various populations wanted their independence either back or diluted no further. Thus political union has stalled. For the euro to survive those who want to keep it will have to agree a loss of economic sovereignty to a federal financial government. Those unwilling will have to drop out. That is pretty certain. What is not so certain is whether this crisis can now be contained long enough for all that to happen.

Europe is now in uncharted waters, or sailing with charts which are wrong. Nobody knows for sure where the ship is headed or how the voyage will end. The UK can do no more than batten down the hatches and try and balance its books. The unions need to think on these things before they try to make matters worse.

President Fernandez of Argentina has called for negotiations about the sovereinty of the Falkland Islands, which she and her country call the Malvinas and believe are theirs. Nowadays most of the world probably agrees. Certainly the U.S. does and has called upon the UK and Argentina to start talking. Cameron has refused point blank. President Fernandez calls him arrogant. This blog calls him foolish.

Times have changed since their heroic recapture in 1983, when the U.S. tacitly backed the Brits, when the chips were down. Then we retained the kind of military which could launch and sustain from the sea, a land war on the far side of the globe. The Argentine Junta was seen as foolhardy and although their air force proved a lot more potent than expected, Britain won a lightening campaign and restored its standing in the world as a significant military power. The shame of Suez was washed to the bottom of the South Atlantic.

In the modern world a British colonial possession of land, close to the shores of a sovereign claimant and so far away as to be beyond the reach or even the comprehension of most in the UK, no longer sits well. If we end up in another clash, few in the UN will support the British position, the US under a Democratic President certainly will not and the British people will be far less willing to back yet another overseas war. Moreover we no longer have the military capacity to recapture the Falklands, without US participation.

This is not about the inhabitants. They may want to remain British, but the plain fact is they cannot live without Argentina. Sooner or later a compromise has to be found on the question of their nationality and passports. But now it is more than that, as there may be oil beneath the ocean off-shore. This gives the row traction.

A wise and clever British Government would negotiate a deal which left us with some tenure whilst giving Argentina enough to meet its national aspirations. The value to the UK of joint exploration of oilfields and mutual trade, with a friendly Argentina in partnership, far outstrips the breast beating and obduracy of current Foreign Office policy, which is blind to reality as it looks backwards to Thatcher era glory.

It is not yet clear exactly what the proposals will actually be to secure the retail side of banking from the investment or casino, side. Many, including it is said the Bank of England Governor Sir Mervyn King, would like completely separate companies with no linear connection. The Chancellor’s plan may fall short of this, hence reference to fences and walls. The trouble with those is that fences and walls can be broken down or climbed over.

We therefore need to be clear about what is required. This is the freedom of vast universal banks to collapse with total shareholder loss, without affecting the domestic financial structure of the retail or High Street banking system. The prospect of that happening will do much to curb the wilder aspect of what has become almost a casino sport, as shareholders grasp that ruin will be the product of over confidence and greed. In addition the retail banks must be returned to the level of stability and probity they enjoyed prior to Big Bang, with the additional statutory requirement that any rescue by taxpayers requires the transfer of all the shares to public ownership for £1.

The simple truth is that the public are no longer willing to allow shareholders to own and profit from banks which taxpayers have to rescue when the folly of bad practice leads to disaster. In such a moment it must be clear that taxpayer to the rescue means taxpayer takes all.

From the very beginning the chances of Greece getting through without a default of some kind were very slim. They are now very slim indeed. The reason is not so much financial; the figures were a calamity at the start. It is political. The simple truth is that populations will put up with just so much, but when the sacrifices, cuts and social deprivations reach a certain point, consensus crashes, strikes and protests abound, political cohesion is replaced by opportunism, government authority weakens and nobody knows what is coming next.

Greece is in this situation because it is the Euro. The Euro is in this situation because it has no central government, only a Central Bank. The Bank’s policy is now at odds with its largest economy, Germany. All around Europe and within Greece itself, there are competing priorities and arguments about what do do. If some loan is cobbled together to stop a quick default, nobody, literally nobody, thinks that will stop a default later. The worry is contageon. Will the chaos spread? The advent of the universal, multinational bank greatly increases the risk.

How this will end is not yet clear. A storm is brewing and it is time to prepare. Osborne has done well thus far, though by shuffling around with a commission which has come up with banking reforms much on the lines all but the bankers themselves have been proposing since the crash ( including this blog and 2010 A Blueprint For Change), he may have wasted valuable time to secure our vulnerable U.K. banks. Let us hope his decision now to do so, will not be too late.

Reforming public services is a difficult concept. The nature of public services tends to make them large, complex and difficult to steer. Over time they can be fashioned. Certainly the modern NHS is different to the way it was in the 1950s, but this is more to do with changing nature of medical science and the structure of society, than it is to do with the endless so called reforms. None of these has achieved to the level of its promise. The combined effect of all of the reforms is probably negative and it can be argued that if the original organisation had been allowed to develop organically under the simple umbrella of providing 24/7 universal health-care, whether routine or emergency, it would have worked a model to do this a good deal better than the current outcome.

As things stand now the NHS has become, in many ways, dysfunctional. In a recent post I related to my long delay in seeing a cardic consultant. Today I met a friend who took her husband to the local hospital to see a consultant about a hip replacement. The appointment was for 11.10 am. Note the precise time. Due to delay and confusion, including the consultant busy in the operating theatre, this couple finally got home again, a twenty minute drive from the hospital, at 5.15 pm. Their prize for the day was the husband’s name on the ‘short list’. This means he will wait at least four months.

This is not a service. It is a process. Moreover it is not free. Everybody, even the poorest, are paying through the nose for it. The £100 billion plus a year bill, is a prime reason why we have vat at 20%, income tax which kicks in at too low a level of earnings, and a budget deficit of dangerous proportions. Without the NHS the deficit would be well under control, because the NHS represents two thirds of it.

This is not an argument for closing it down. But it is a clear signal to be considerably more demanding of the outcome it delivers. It is a moment to be on the front foot asking big questions. It is also important to understand why some love the NHS and some are less sure. Had my friend’s husband, let us call him Bill, fallen down his front steps and broken his gammy hip, he would have been rushed to hospital, operated on and given a new one, all within hours and be home within days. Bill would then claim the NHS was marvellous.

This reason for this chaos is that the same outfit does both emergencies and routines, operations and clinics. Had the meddlers kept away for the last fifty years, the organic growth would have led to a community health system based on the GPs covering all health maintenance, servicing and minor repairs, with hospitals reserved for surgery, acute treatments and full time nursing care. Separate emergency departments (or hospitals) would, with dedicated staff and facilities, handle all the admissions to A&E. It is the simple logic of needing two trains, one express and one stopping. It is not possible to achieve both with one train.

Additionally, because the GPs are self employed and the hospital staff are NHS employees, the emphasis over the years has been to shift all but the most basic prescription bashing healthcare, which is dispensed in the allotted ten minutes at GP surgeries, to the hospital clinics, which cannot cope or deliver. This gives us waiting lists of months and years and casualties kept on trolleys for hours.

Andrew Lansley spent years studying the problem and came up with a plan which might, just might, have got to grips with the challenge. His mistake was in the weak communications employed to sell it to NHS staff. There was then inevitable opposition from entrenched self interest, bad medical practice and phony moralising. A political bandwagon began to roll. A panicked Cameron and a rejected Clegg united to call for re-think and change. The outcome looks much less like a bold reform to set things on a better path and much more like a meddle, as in the past, which will deliver, after wasted £billions, no better and maybe worse than we have now. If that happens, the coalition will pay a heavy electoral price.

The government’s record on u-turns is now something of a record. Daily the tally rises. Most of them are on flagship Tory policies. Many of these were ill thought through or their implications mis-read. The Government is fast losing its authority as it falls prey to the strident cries of lobbies and focus groups. Many of these u-turns will have little practical effect. Not so the NHS. This may yet prove to be a disaster.

How the activists of the Tory party must hanker for those far off days, when the Lady Who Was Not For Turning, nailed her colours to the mast of her chosen reforms and then set sail, no matter what, confident that she was right and she would win. She was not always right, of course, and not all her reforms turned out in the end as well as they looked in the beginning. But she always, always, had the courage of her convictions.

It is not clear whether the current leadership of the Tory party lacks courage, or convictions. Some are beginning to fear it is deficient in both.

We know what the recommendations are of the Review. We do not know for sure what the Government’s official response is until later. Until then this Blog will not give a considered response. We  do, however lay out the standards of judgement we shall employ.

The prime element of the NHS, the key person and the core of the whole thing is the patient. Next comes the patient’s doctor. We call this doctor the GP. Upon the relationship between these two and their assessment of need, whether treatment, surgery, diagnosis, or support, everything else as well as everybody else, must derive. Always all these other events, people and combinations, must work from and back to the patient and the personal doctor. Only then can you have a user friendly service which delivers an effective outcome.

At present this is not the case. GPs are self employed and under contract to the government. At a very early stage of diagnosis they pass the patient into a process which begins with a hospital clinic with whom there is sparse communication. The clinic decides on  the treatment, when and by whom. Its doctors are full time employees of the NHS but the most senior ones are allowed to moonlight up the road at private hospitals making lots of money while their NHS waiting lists grow.  Hospitals are getting bigger, more specialist and more expensive and, crucially further apart. This means that they are further away from patients and their families. The outcome is over burdened clinics, long waiting times for everything, fragmented after care, a shortage of critical health professionals such as midwives and home carers and a generally poor outcome form the biggest employer in the world after the Chinese army, with over £100billion of your money gobbled up each year.

Anyone who cannot see the need for change is just not facing reality.

It is good to see that China’s authorities are acting to put the squeeze on bank lending following the surge in property prices. It seems that China is no exception to the rule that ensures that excess money from lending, flows straight to the soft target of property rather than the hard, or at least harder, target of business and industry.

Of course, this is the seat of all our financial troubles and why the property bubble of the UK and the US collapsed, crushing the banks and all but busting the western economy. The difference is that China has been lending its own money, but we had to borrow it first to lend it on. If the Brown Treasury had not been seduced by the bankers and if the Bank of England had retained its traditional function of watchman of the banking sector, instead of the naive FSA, action may have been taken in the UK to stop things getting out of hand.

The price the country has paid for this abrogation of fiscal control will not only go on being paid for decades, but is paid by everyone, even the poor and the vulnerable. No wonder the Chinese authorities are on the job. It was on New Labour’s watch that the calamity happened, but it was the Tory frenzy for de-regulation which made it possible. Neither of the main parties has a clean slate on this, but at least the Tories, now in Coalition, have a plan. So far Labour does not fully understand what happened and therefore has no idea what to do. Ed Milliband needs to work on that.