Vince Cable is right to lay into the Bankers and their lobbyists. To delay re-structuring is to play with fire. Even if there is some slowing of economic recovery as a consequence, it is far preferable to the economic collapse which would follow doing nothing. The banks are still in a precarious state. A lot of their assets are either worthless or worth less than they think. Neither America, nor the Euro-zone, has any form of political leadership, public consensus or coherent plan to cope with their huge and mounting sovereign debt issues, which are heading by several routes to converge at a general default at some point in the future.

Our Banking system has to be ready to cope with that, like a command bunker in an air raid. It is also essential that those parts of so called banking which are essentially gambling can go bust big time when they come face to face with their follies coming down the track. The government must not buckle or give way. The Tory part of it will be under tremendous pressure to do so. Suddenly the Lib Dems are holding a powerful hand.

The Tories are alleged to be buffeted by the pressures of their lobbyist friends and relatives to the point where they may seek to delay, so as to play electorally safe. They fear either  being blamed for slowing the recovery or for delaying the changes. They need to understand that this is not a matter of political calculation. It is a matter of numbers. The numbers are set to show a disaster in the making unless there is action very soon.

The Lib Dems now have an opportunity to restore their damaged credibility by showing, as Vince does, that they understand the numbers and the need. Clegg should make it clear that failure to act upon the recommendations of the Banking Commission will trigger the end of the Coalition. A general election fought on the need to reform the banks, with the Tories backing the bankers, would see the Cameron team routed at the polls and the Tories out of power for a generation.

The Tory high command, if it is indeed wavering, needs to think about that. Meanwhile three cheers for Vince. He needs to keep up the pressure.

The problem with recognising any rebel government in a civil war, however laudable its cause, is that there has to be some certainty that it has the capacity to govern. There is now anxiety about the general breakdown of affairs in Tripoli and the apparent inability of the TNC to offer, so far anyway, coherent leadership and direction. There are heartening reports of people coming together in neighbourhoods to help each other with shortages of water, fuel and food, but welcome though this is, it is not enough. Medical, police, public service and other personnel need to be back at work, power must be restored, water turned on. The list is long. 

The unusual feature of this Libyan revolution is the regional aspect of the forces who have combined to overthrow the Gaddafi regime. Whether from the western mountains or Benghazi in east, they have operated in separate groups, armies is too organised a concept, first to liberate themselves and then to go father afield. Having done that they move onto the next objective or return home. Thus in rebel areas there is coherent leadership, but in conquered Gaddafi strongholds, there appears to be a vacuum as in Tripoli. This needs to be resolved quickly, otherwise such populations will see little advantage in freedom and yearn for the return of the tyrant.

When the NATO campaign began, initially without formal control by the alliance then in internal disagreement, Britain, France and the U.S. demonstrated advanced and competent military planning in their initial decisive assault on the advancing columns of Gaddafi’s army, as it pressed forward to Benghazi. Now the need is humanitarian and practical. There appears to be no equivalent plan of civil support, logistical help or humanitarian aid. Military interventions to bring freedom are futile unless in their wake they bring order not chaos, relief not suffering.

In Libya this is especially important because of the regional, tribal and localised forces made up largely of civilians, who represent the armed forces of the revolution. There is no leader, nor is there a government, nor anything that looks like one. There is this National Transitional Council, thus far stuck in Benghazi, strangled of funds and without either the ability or the will to step into the vacuum left by the collapse of the Gadaffi system. This must be addressed as a matter of absolute priority or Libya’s worst days have yet to come.

Finally, the horrific scenes of masses of bodies, some from execution and some from neglect and abandonment of the sick and wounded, remind us, once again, that war is always an uncivilised and brutal way of organising human affairs. It is time to re-think the whole purpose of these military operations and judge them not in terms of military success but in terms of civilian outcome.

Before the advocates of the NATO intervention celebrate success, they must be reminded of its purpose. This was to protect civilians and, as a sub text to support the rebels in the drive to get rid of Gaddafi. But all of that stood not alone, but on a foundation which was fundamental to everything. To bring freedom to the Libyan people. Success cannot be measured until they are truly free. That cannot be measured unless freedom is itself defined.

There is a tendency in the West to see freedom of expression as freedom absolute. From the lofty perches of many political philosophers that is enough. But from the perspective of the family, the children and the vulnerable there is a much bigger meaning. It is the freedom from hunger, from cold, from poverty, from exclusion, from ignorance through poor eduction and illness through poor health-care. It is freedom from exploitation by politicians on the make and from tribal rivalry and reprisal. It is the freedom to stand tall and aim high and the opportunity to do so.

How all that is to be achieved in Libya is far from clear at this point, nor is it clear by whom it will be organised. Talk of the Libyan people as if they were one, is like talking of Europeans as if they too were one. Each are many but can, if they all agree, come together to act as one. To do that requires a common vision and a shared purpose. The common desire to get rid of something or someone is not, on its own, enough.

The Libya of the Gaddafis had the highest HDI (Human Development Index measuring various aspects of life quality, expectancy, welfare, education etc by the UN) in Africa. There was brutal repression of dissenters but a secure life of reasonable quality if you went with the flow. Disparate tribes and regions were held together in one country but with sufficient autonomy at local level to keep them from each other, providing civil stability.

All that has now been sweapt away. In its place  the world hopes a new enlightenment will emerge for all Libyans, giving true freedom from oppression and from want. Meanwhile services and governance have together broken down in Tripoli and elsewhere as the fighting continues, while die hard Gaddafi forces battle to the end. When that end comes, whether it is final, what follows it and what it delivers, will togehter determine whether the UN sanctioned, NATO led, Cameron and Sarkozy driven, intervention was a success or yet another interventionist folly.

It is as yet too early to tell, but it is never too early to hope. What is clear is that the really difficult part is now about to begin. We must especially hope that a plan has been prepared and properly thought through. At present we do not see one.

This blog has been opposed to the NATO intervention, but there can now be cautious optimism that the mission, essentially driven by France and Britain, has paid off. There is no longer stalemate. The Gaddafi family has clearly lost even if it is not entirely clear who has won. This is because nobody knows for sure who the rebels are. Nevertheless in the liberated areas, there does seem to be a sense of freedom unknown to most in their lifetimes.

Everything now depends on a united effort to support the fledgling authorities to restore services and get administration, education, health-care and the economy up and running. Life must be set back to normal while discussions take place about the implementation of democratic reform. The bitter lessons of Iraq, still a dangerous place with uncertain utilities, must be learned.

Financial aid must be given to the provisional authorities and given now. The situation cannot wait while politics are played out in the U.N., the African Union and the Arab League. Whilst the ramifications of unfreezing assets are argued over, new cash must be put in to bridge the gap. It cannot be stressed too strongly that medicines have to get to the hospitals, food to the shops, petrol for transport and electricity for daily needs. Unless this happens very soon indeed, the taste of freedom will turn sour on the pang of hunger, the stink of sewage and the indignity of poor hygene.

In Gaddafi’s Libya there was no such thing as dissent or political freedom, but everything worked and the essentials of life were well provided for. If freedom brings chaos and hunger, it will not take long for the people to hanker for old times. Britain and France, having started this thing must now, as a consequence of much better outcome than their critics feared, dig into their pockets, quite deep and right now. Failure to do that will guarantee ultimate failure of everything.

A good ending comes to absolutely nothing unless it is followed by a better beginning.

David Cameron and Tony Blair have been busy in the weekend papers giving their take on the state of our society and the causes of the riots. The Prime Minister had a prescriptive list of ills and potential actions. Blair was essentially defending New Labour’s social legacy.

The truth is that both Labour and Tory governments of the past have contributed to the conditions for a complete breakdown of law and order in certain districts by certain people, among whom all ages and races were represented, but where the predominant participants appeared to be young and in some cases very young.

It begins with the upheaval of Thatcherism, although it must be said that neither Thatcher nor her minions sought the outcome seen in the riots. Nevertheless the massacre of the British industrial base, destroying the neighbourhood jobs, which reduced what had been decent working class areas to benefit ghettos is a major cause. This happened because union militancy had priced the British factory off the world map entirely and foreign imports were a good deal cheaper than anything made at home. It is impossible to de-industrialise a great industrial power without creating an underclass with nowhere to go.

Add to that the  half baked nostrums about education, resulting in functional illiteracy for very large numbers of those affected, enormous centralisation of policy making, the interpretation of human rights in a literal fashion to favour the criminal, the feckless and the wicked above the law abiding and the honest; pour on all of that political correctness favouring all manner of conflicting interests at the expense of the majority; secularise society to the point where it breaches some fatheaded nostrum to point out the difference between right and wrong and it is small wonder society or parts of it are, in Cameron’s words, broken.

But it does not end there. Enter selfishness, greed, people earning obscene sums for doing ordinary or quite useless things, many directly or indirectly from the public purse; construct an economy based upon endless borrowing of ever expanding electronic money, secured not on wealth creation, but on inflating assets to which no real worth is added and then reward those who guzzle at this debauched trough, with incomes on such a scale that greed becomes not a vice to shun but a quality to value; allow the borrowings of business, the state and people to reach levels without precedent in peacetime history and you have a good deal that is broken and a lot more that should be broken up.

Cameron is right to note that there is work to be done. Typically Blair is trying to spin his way out responsibility for trouble that he and his chancellor had a big hand in making.

The continuing inability of the politicians in the Euro zone to come forward with timely proposals for fiscal integration is not just something that spooks markets. A currency without proper control will eventually cripple both the banking system and the markets in which the currency is used. Thus Euro zone banks are thought to be in the danger zone whilst growth in euro land stutters to a halt. Meanwhile Ireland, Greece and Portugal, already bailed out, edge towards some kind of default of the kind, but on a more significant scale, than that already in hand for Greece. 

The rest of the world cannot pass by this disaster without suffering from the collateral effects. The situation is made worse by the political turmoil in the US which presently has a split of public opinion and splits within parties which make firm and coherent government impossible. The combination of these profound weaknesses is capable of triggering or may already have triggered, a new recession. Over-riding everything is a fact that not even the best politics can now reverse. Too many countries, corporations and people are over borrowed. Servicing these borrowings cripples growth; trying to repay them will prove impossible without carrying an economic millstone for half a century.

Many lessons have been learned, above all, two. You cannot  create sound growth on borrowed money and you cannot borrow your way out of trouble when ends do not meet. The British Coalition Government knows this and is steadfast in pursuit of policies which it hopes will ease the crippling burden. The deficient unwritten British constitution, with its mysteries and inventions, has one enormous advantage, which is why it remains in effect. It can deliver strong government in time of need. This is why British Government debt retains AAA status and is now in such demand. There are tough times ahead. With all our export markets in trouble, the headwinds will be very strong. But, once again in history, Britain is showing that its government knows that declarations of intent unmatched by timely action, are as futile as doing nothing.

This has been underscored by the riots which startled the world. Even more astonishing to many was the establishment of 24/7 courts, the arrest of many hundreds if not thousands and the meeting out of sentences which are unsurpassed for harshness in any democracy. It  required a brave soul to mention fairness, proportionality and human rights. Those who came forward were quickly drowned out by the cry of fury from the streets. Brits are very slow to anger, but when they do get angry, they throw away the bounds.

The Sunday media has reports of various senior police chiefs expressing their views on government policy. Irrespective of whether we think government policy on policing, riots or whatever, is right or wrong, we know it is wrong for police to become involved in political debate. This must stop.

Having made that point, it is indeed true that politicians and the socially liberal elements of society have consistently undermined police authority with a combination of laws, regulations, quangos and inspectorates which, whilst demanding that the police uphold the law, remove the responsibility for deciding how to do it from them and even put them into the dock as well, if anything goes wrong. This is a mess to be sorted out.

If these terrible riots have a silver lining, it is to show four things

The police and justice system can be very tough on crime and retribution can be swift and decisive.

The police require a cultural overhaul to restore their authority and re-define their  responsibility.

There is at the heart of our economic and social structure an almost medieval bias towards the rich and educated against the poor and the underclass.

The Human Rights Act, the Health and Safety Regulations and the Data Protection Act have done a great deal of good. They have also done a great deal of harm to the maintenance of law and order.

The riots have not shown the nation a way forward. What they have done is show the nation that is has a lot of thinking to do.

Cameron has earned himself some points. Neither May nor Clegg appeared to have a clue, until the Prime Minister arrived back from holiday. Then the tide began to turn. His leadership, which has been tainted by u-turns and poor judgement over Coulson and Libya, is now shown in a much bolder and decisive light. We must see if he can build on his new advantage.

The Tory party feels comfortable demanding tough action on crime and looting and will be little troubled by the deeper meaning of what is going on among young people in the cities. It may demand of Osborne that he stumps up more cash for the police and he may well have to. Broadly however the Tory party is in a comfortable place in troubled times.

For Milliband and Labour things are less straightforward. Milliband did very well out of Murdoch. Those sort of dramas are full of emotional outrage and he used the gushing flow to advantage. But Murdoch is now history. Nobody cares much anymore. The riots, on the other hand, are difficult for Labour as mostly they occur in its constituencies. Their MPs have been assiduous in their condemnations and comfort and have done much to rally the non rioting majority to stand up and be counted and be seen to be counted. I suspect that this has done at least as much as the enhanced police presence to restore order.

Nevertheless the gap between Labour and its heartland is exposed. For far too long Labour under Blair and Brown has been too preoccupied with middle England, fawning the rich and pursuing, when in power, policies which favoured the City rather than the neighbourhood. Labour once spoke for the working class and rallied against exploitation and deprivation. The bright new housing estates of the fifties and sixties are now violent ghettos of the dispossessed where crime is the only economy, drugs the only product, violence the only order and lack of useful educational attainment the only birthright of those caught in this web of hopelessness.

Labour must get back to its vocation. It must once again speak for the underclass and develop socially fair polices to restore prosperity to neighbourhoods, not by doling out handfuls of benefits, but by finding means of restoring industrial and commercial activity to put life back into these under-lands. It must develop coherent polices for affordable energy, affordable housing and affordable finance. It must develop fair taxes and a sound economic policy. It must turn its back on the crackpot combination of high spend and low tax. It must turn away from its penchant for supposing that all can be dealt with by a new quango or task force.

Above all it must tackle head on the simple fact that the post Thatcher economic model is utterly shot through and spending your way out of trouble on borrowed money is to drive into ever deeper trouble. It must return to its old doctrine which said that you must take from the rich and give to the poor. The time is passed for the professions to milk the rest. There has to be not just an economic re-balancing. There has to be a social re-balancing as well.

To get a mandate for all that will be tough and well beyond the power of spin. It will demand the radicalism of Attlee or Thatcher. But if Labour will re-engage with the needy and once again become the champion of the honest, the good and the hard working majority in the country, it will find itself, once again, in a position of power to effect real change for the good, rather than suffer the utter futility of the outcome of its last spell of thirteen years in power.

The violence, destruction and looting, in London mainly, but other cities too, is terrifying to the law abiding and the innocent. The government, having turned its back on the whole thing with a few unctuous comments about ‘keeping in touch by phone’ is now returned hot foot from holiday and working. It will need to take whatever steps are needed to protect life and property and restore order. That is its first duty to the country. Parliament is recalled and rightly so.

Beneath the immediate imperative of clearing the streets of anarchy, violence, looting and arson, a sorry list for any  country, lies a deep and predictable set of problems for too long ignored. We now know that the financial model we employed for so long is unsustainable. Steps are in hand to put this right, but the scale of debt and the cost of servicing it are likely to prove crippling to even the UK and the US, previously thought safe. The UK remains in this safe category for the moment, with borrowing costs at nearly the lowest in its history, but as the £50 billion per annum needed to pay the interest on this growing debt mountain begins to impact, that confidence will begin to falter.

It is not the cuts in themselves which are stalling growth. It is the cost of previous and continued borrowing, added to absurdly inflating energy costs (gas at 18%?!) through dysfunctional markets, and general inflation way ahead of ordinary people’s earnings. You cannot get growth out of falling incomes.

Unfortunately there are many at the top of the pile who have never had it so good. They have never had it so good because we have been running a me first system which lauds greed and selfishness and allows money to be hoovered up from the lowest elements of society and sprayed out over the top end, already overflowing. The notion that people have to be paid hundreds of thousands to carry out straightforward responsibilities in the public sector and the professions or have to be paid in millions to gamble with other people’s money, is not only immoral and unjust, but it is socially destructive.

This blog has previously raised  anxiety of the danger that the post WWII consensus, which provided social cohesion (even though there was ideological tension) will break down, through the unrestrained application of financial policies which are exploitative and unfair. This is now happening because the continuing financial crisis is exposing more clearly than ever, just how rotten the state of affairs has become. A recent example is the fact that whilst workers pensions are squeezed and shrinking, those of the directors of the very same companies are protected and growing. It is not possible to run any sort of society like that, whether you call it Big, Fair, Just or whatever. Thatcher said there was no such thing. Well, there is when it rises up and turns upon  itself.

Add to that one million young people without jobs, a good proportion of whom have insufficient education to even have a prospect of getting one, and you have trouble. This is where flawed policies, half baked theories and weak politicians, coupled with a collapse of conscience and a failure of parenting have brought us to. Sorting it out will take an uncharacteristic and heavy hand. That will form further resentments and leave lasting scars. In tandem and importantly, we have to re-think; we have to learn why it is that decent young people become mindless criminals overnight and why their frightened parents have no power to control them. The answers are obvious to those who bother. Bothering is now a universal responsibility.

So, it has happened. Americans, especially the government, will not see it this way, but this may turn out to be a good thing. For too long the United States has followed a financial policy that is potentially ruinous. Spending up to twice your income and borrowing the rest. Always the mantra is that you pay back debt out of growth, but always the reality is that the borrowing grows at least as fast as the growth. The instigator of this mis-guided and dysfuntional economic theory was Ronald Reagan. History will not hold him in the same affection as the American people hold him now.

His brand of Reaganomics was followed by the two Bushes over three terms. Clinton bequeathed a balanced budget. It is therefore very ironic that the Tea Party is a movement within the Republican Party, as it is Republican Presidents who have done the most damage. It is true that Obama tried to spend his way out of trouble, but that cannot work in an economy hopelessly over spent already.

However it is not the details of the figures which are the cause of the current crisis or the downgrade. It is the realisation that the Western economies, which owe more than 70% of all the money owed in the world, have borrowed too much to repay in full. The cuts needed to make repayment possible will, coupled with the huge and rising interest bills, make such a drag on the economic activity of the countries involved, that something will have to give.  Add to that, the complete dysfunctionality of the U.S. model of government in a crisis of this magnitude and nobody can see with clarity what can be done nor what will be done.

Here there is a sharp paralell with Europe. The political deadlock and inaction at the heart of European governance of the Euro is the primary cause of the mounting anxiety that, not only are the debt levels unsustainable, but nobody is able to agree what to do.

Enter an angry China. This is not good enough, they tell the humiliated Americans. The UK should be saying something similar, because of the rarely reported fact that we are the third largest holder of US debt, $.35 trillion in fact. There is also some synergy between the British and Chinese. Britain’s muddle of a Constitution is only a limited democracy. The advantage is the ability to enjoy stable government which is empowered to take decisive action. China’s Communist capitalism can deliver the same, decisive government. So for that matter can Putin’s Russia. Between them Russia and China now hold, on the latest July 2011 figures,  $3.7 trillion of reserves between them, of which China’s share is now an eye popping $3.2 trillion. The UK needs to start looking East.

Meanwhile both the US and the Eurozone have to sort out their governance issues. Failure to do so will cost the Euozone the Euro and America control of the dollar.