Archive for October, 2012

Obama V Romney: How Close Will It Be?

Thursday, October 25th, 2012

If Obama loses the Presidency, history will record that he did so at the first debate, when he was outclassed by an opponent whom he had badly underestimated. It is not as simple as that.

The problem for the President is that he has been unable to achieve all that he inspired Americans to believe was possible, when, in the stark reality of financial crisis and a polarised country, it was not. It is therefore a fact that the many things he has achieved go unremarked but his failures loom large. People are having a tough time and the incumbent will be blamed, even if there is a good deal of evidence that the US is weathering the crisis much better than most other countries caught in the economic storm.

At the margin, and this is clearly an election where margins count, perceived winners and losers who hold fast or shift their vote will decide what happens, yet the truth is that for a Democrat to win a second term in modern America is a tough call. Only Clinton managed this in the last forty-four years. Indeed since 1968 the Democrats have occupied the White House for sixteen years, the Republicans for twenty-eight. The natural inclination of America now is to favour small government at the centre, with individual States providing a sufficient level of government in the average person’s life. Essentially that is the confederate model and if slavery is taken from the picture, that is the model the majority of Americans now instinctively prefer.

The dynamics of the election are the opposite of what is generally portrayed by commentators. It is not Obama’s to lose, it is Romney’s to lose, as history, sentiment and the American Dream indicate the challenger ought to win. If Obama hangs on it will be an historic triumph.

Sir Mervyn King: The Bank Governor Warns

Wednesday, October 24th, 2012

Sir Mervyn King, whose grasp of the fundamental problems facing the Western economies five years after the credit crunch is far sharper than many less astute economists give him credit for, warns that under-capitalisation of  banks which still harbour over valued assets in their balance sheets, which they are in denial about writing down, will inhibit the progress of whatever recovery other measures encourage.

He talks also of the dire risks of the UK Government writing off the one third of its own debt, which it in effect owns via the Bank of England’s purchases with quantitative easing, or the use of further QE to finance direct investment or budget deficits. He suggests that the time is fast approaching when the hard truth, that much borrowed money across the developed economies can never be repaid, will have to be faced and the losses written off to allow a complete economic fresh start. The alternative of  acute austerity and ever more borrowing to repay borrowing guarantees only stagnation and decline.

This blog is in agreement with all of this, save for the use of quantitative easing to buy government debt. £375 billion of new money has been pumped into the financial system of the UK. It has been used to buy government bonds. It is not clear whether it is aiding economic recovery, although it has probably driven up the price of shares and better quality property. It has made the rich richer, but the poor are getting poorer. That has the potential for social explosion.

This blog believes that QE should never be used to finance debt in any form. This is because money is a measure, not an intrinsic commodity, and to remain sound, must only be used to measure the creation of wealth. If new money, it must finance new wealth, not old debt. Imagine the effect on the economy if all the £375 billion had gone into infrastructure renewal, industrial expansion and new start ups, school rebuilding, new affordable homes, upgraded rail capacity and so on.

GDP would be growing steadily, tax revenues would be buoyant, every able bodied person wanting a job would be able to find one and the deficit would be shrinking. Demand driven inflation could be suppressed by interest rates and taxation, but would not harbour the fear of hyper-inflation through a debased currency printed to pay down old debt. Essentially that is how China got started and came from nowhere to a financial superpower in a couple of decades.

As stated in previous posts, this blog believes that the strategy to get out of the present crisis is to aim for full employment and industrial and agricultural self sufficiency. It is a big ask, but team GB can do it and every step forward eases the problem and the pain, motivating the nation in its common purpose. Too bad none of our political leaders can think this through.

Lord Patten’s Letter

Wednesday, October 24th, 2012

The Culture Secretary, Maria Miller, was right to send a letter to the Chairman of the BBC Trust, expressing anxiety at the chaos surrounding the Savile scandal, made all the more glaring by the unfortunate and embarrassing appearance of the Director General before MPs.

Lord Patten, whilst acknowledging that all was far from well, reminded the minister that the BBC is independent of government. This is indeed the case for editorial content, but is very much not the case in a scandal of a BBC sponsored icon turning out to be the biggest serial sex offender ever unmasked, with much of the criminal activity of this man, who now repels, taking place on BBC premises, at its headquarters no less.

The BBC’s income is derived from a levy or tax, called a licence fee, which everybody in the country with a television has to pay, whether they tune into a BBC channel or not. It is compulsory and to watch or listen without one is a criminal offence. In a democracy such taxes or licences cannot be collected without the responsibility and control of the elected government. On the taxpayers’ behalf  the minister rightly raises concern, and this blog hopes she will continue to demand of Lord Patten that he gets the nation’s broadcasting organisation in order. If he does not like that he should consider his position. His recent appointment of Director General is already in the departure lounge.

Culling Badgers: Another Muddle

Wednesday, October 24th, 2012

There appears to be another muddle at the heart of the cancellation of the proposed badger cull. Notwithstanding that, animal rights campaigners are delighted. This blog hopes for a more reasoned approach, as the present rationale for the cull appears as muddled as the delay which has stopped it.

If there were powerful evidence to demonstrate that badgers spread TB to cattle and that reducing their numbers by seventy per cent would greatly reduce or even eliminate the disease which causes much loss and heartache to farmers, this blog would support it. Unfortunately this is not really the case. Cattle will still catch TB from each other and the cull would only reduce, at best and with the most optimistic interpretation of the data, by fifteen per cent. This is too small an uncertain margin to set against the slaughter of tens of thousands of badgers.

TB in cattle should be controlled by vaccinating the cattle. It may well be necessary to control badger numbers in some areas of over population, for their own good and for ecological reasons, in the same way as deer and foxes, but this does not mean wholesale slaughter, nor is it linked to the spread of TB. The problem with the cattle vaccination is that it is not yet possible to differentiate, when testing cattle for TB, whether an animal showing positive either has the disease, or is vaccinated. Because no untested cattle without an all clear can be exported to the EU, a market worth about £1.5 billion to farmers, there is a reluctance to spend money on a vaccination which would effectively halt beef exports to a very big market.

This blog does not consider a cruel and unnecessary slaughter of a rather wonderful and iconic animal, many of whom live happily close to my cottage, is the right way to deal with this. Better surely to find a way of separating the identity of the vaccinated from the diseased. This cannot be that difficult a problem to overcome surely?

Syria And Lebanon

Monday, October 22nd, 2012

The car bomb attack which killed the Lebanese security chief and the subsequent violent demonstration in Beirut underscores what has been said by experienced correspondents in the area for some time; the civil war in Syria is spilling over the borders into its close neighbour. Such is the ethnic and religious mix in Lebanon, interwoven with armed factions and fighters, little is required to destabilise the country to a descent into violence.

The potential for all this was plain at the start of the Syria crisis, which is why it required a subtle and nuanced approach to gain a more open system of government for the Syrian people without consigning them to months or even years of bloodshed and suffering, on a scale likely to spread. Unfortunately the West, with its highest concentration of inexperienced politicians for a generation, failed dismally to measure up, and now faces yet another complete failure of policy in international affairs. In a futile confrontation with Russia and China, who in a far from perfect situation, appear to have been more right than wrong, the West now finds itself backing an extraordinary conglomeration of jihadists and terrorists, whom they oppose elsewhere. Of course there are some good people in the mix, but they are nowhere near in control nor can any agree among themselves where they are headed or how to get there.

Coming on top of Iraq and Afghanistan, this further failure should force some serious re-thinking of a flawed process of analysis post cold war. Even Libya, which at first appeared a success, now looks less certain. It is very bad news indeed that its newly elected representatives are still unable to agree a government.

It really is time for a re-think.

Cameron Whips a Surprise

Saturday, October 20th, 2012

Quicker than Downing Street was spinning, the Prime Minister has appointed a new chief whip. Sir George Young, an honourable veteran in his seventies of governments as far back as Thatcher, twice defeated in his quest to become Speaker by odd ball candidates and recently retired from the cabinet in the reshuffle, is back.

Several people were mentioned by commentators as suitable and likely appointments to sort out an ill disciplined Tory party in the Commons, growing restive at continuing government confusion. Sir George’s name did not feature. Perhaps that is because in style, manner and ambition he is the opposite of everything alleged to make the choice of the disastrous Mitchell ideal. Perhaps that is why the increasingly beleaguered Cameron chose him.

No sooner had the poor man done so and settled in his Chequers country retreat  to watch the Ten O’clock News, than he learns that his Chancellor, yes the Chancellor of the Exchequer in charge of the nation’s money, is embroiled in a controversy about travelling on a Virgin train, yes Virgin of the franchise crisis, in first class on a second class ticket.

Oh dear! Time for bed perhaps. In the morning things will look better.

One hopes.

Mitchell Out: But It May Not Be Over

Friday, October 19th, 2012

The departure of Andrew Mitchell would have been something little more than a political storm in a teacup if he had gone immediately after losing his rag because he was not allowed through the big posh gate and had to use the plebby one at the side. After a month of festering and ridicule his resignation is a double disaster. A disaster for Mitchell, because no way can he creep back into government this side of an election at which he will likely lose his seat.

For Cameron, alas, it is an even bigger disaster. Once again he has hesitated when he should have acted and like Coulson and Fox, when the resignation comes it is a drama, which questions the judgement of the Prime Minister and finds it wanting. Coming at the end of a week in which the PM made a fool of himself over energy policy and was more or less ignored at the Brussels EU summit, like an unfamiliar agency butler hired for a party. Such is his disarray, that there is no candidate in waiting to take over as Chief Whip to shut the whole thing down. Thatcher moved like lightening when ministers left her cabinet.

All three party leaders finished the conference season with their reputations enhanced. Cameron’s has fallen off a cliff in a matter of days. Anything can happen now.

Europe: Time For GB To Face The Future

Friday, October 19th, 2012

The news that the eurozone countries have arrived at some midnight compromise over the centralised supervision of  all banks in the euro area must be welcome to all those who hope for a road map of  how the crisis of this currency will play out. There is, as always with these euro agreements, doubts about the when and how, and even perhaps the if, of implementation. Still steaming on the track is the  locomotive of the German demand for a pan-euro budget tsar, with the power of veto over national spending. Merkel, backed by the Bundestag and German public opinion, will not sign any bail out cheques until that omni-powerful official is in place. The dynamics of the euro crisis remain as before. Those staying in the euro will have to do things Germany’s way, give or take a little, just a very little, here and there.

It is now clear that to survive the eurozone will have to go down the road which it shunned at the outset, of a significant degree of fiscal and political union, in which sovereign states will be a good deal less sovereign than before. Whether all or just some will do this is not yet clear. Talk of the Greeks exiting the euro remains talk. Remaining in the euro, even to most Greeks, now takes precedence over the structural and social collapse of their country. In all probability these adjustments and upheavals will go on for years and while they do the EU will bump along the economic bottom between recession and minimal growth.

Great Britain, itself facing the prospect of perhaps losing one of its nation states, will have to weigh its options carefully. It is not a simple matter of in or out. It is still a fact that London trades more euros every day than the whole of the eurozone. The EU is the destination of nearly half our exports. Nevertheless the plain fact is that either GB will have to follow the road of greater integration into a federalising Europe, or it will have to drift away. There is no chance any longer that the majority of the British people will vote for further integration and it is therefore stating the stark, if unwelcome, obvious that the time is fast approaching when we must have a plan to drift away.

Such a plan must recognise that our marriage to Europe has been ambivalent and often discordant for the simple fact that GB is already, and always has been, married to the United States. Almost everything we do, whether it is defence, literature, entertainment or business has an echo across the Atlantic. We will need to enhance that relationship for our own and America’s benefit. If we do, almost everything in Europe will have to come past our door.

The reason is this. The combined economies of the US and UK are the biggest  in the world, bigger than any other and bigger than the whole of the EU without GB. The US and UK  are the greatest military power by a huge margin. They also rank number one and two among the counties who owe the most money. That should certainly guarantee a common focus.

It is an interesting philosophical point that it was President Roosevelt’s determination to clip the power of the British Empire, which he detested. Although Britain was on the winning side at the end of WWII, it actually lost in the long term more than any other belligerent, as its Empire faded into the Commonwealth. This loose and amiable coalition is of little or no interest to the Americans, but the power vacuum left by Britain’s demise was. It stepped in to fill the void. Yet Britain never quite left. It is just that America is now the leader. In weighing its options, the GB family may well feel that to be led by kith and kin over whom one has great influence, is better than being led by an assorted but well meaning multitude dominated by the most powerful Germany in history, over which one has little to none.

Energy: Will The Lights Go Out?

Thursday, October 18th, 2012

The Prime Minister’s invention of a new energy policy on the spur of the moment, which even his own office cannot explain, simply serves to underline the abject and final failure of the Thatcher doctrine of mindless privatisation of utilities and blind faith in the equilibrium of free unfettered markets.

Sir Geoffrey Howe, as he then was, wowed a Tory conference at the height of the Iron Lady’s ascendancy over British politics, by describing socialism and communism as not isms but wasms. By the same measure, Thatcherism is itself becoming a wasm. The problem with all these doctrines is they have an element of validity, but their disciples push them too far. Thatcher faced a rampant and irrational trade union movement destroying the competitiveness of British manufacturing, and a burgeoning State, weighed down by the losses of all its many enterprises from coal to railways to British Leyland. Socialism had lost its way and was losing money big time.  Thatcher transformed the country with a new economic model based on the dominance of markets, privatisation, regulators and quangos, which seemed, on the face of it, to work better.

Unfortunately, just like socialism before it, Thatcherism was allowed to go to extremes, so that eventually the economic model imploded, following mismanagement by New Labour and because of selfishness, greed and excess. It is now clear that the energy industry is dysfunctional, monstrously expensive to both private consumers and business, exploited by speculators and not up to the job. There is a dire warning of power cuts, yes back to the three day week of the Heath government, in little more than  two years, unless something drastic is done. This comes on top of mayhem in banking, chaos in the franchising of railways and the worst housing shortage since the aftermath of the blitz. Add to that a country more in debt per head of population than almost any other and you should need little persuading that all is not well.

Yet there are some signs that the people, independently of the politicians who lead them with such incompetence, have taken responsibility to get to a better place. Employment is at a record high, unemployment is falling and retail sales are up. Not for the first time in history may the British nation far outshine its leaders.

Nobel Prize For Europe

Sunday, October 14th, 2012

It is odd that some people find this award inappropriate. It is both inspired, and deserved, not because of efforts by the EU to promote peace in trouble spots, but because it is the major contributory combination which has brought the longest period of peace among the nations of Europe since the time of the Roman Empire. That is an achievement unsurpassed in history and comes not from the domination by the strong of the weak, but by all the nation states working in partnership together.

None of its institutions is perfect, the threads of its collective democracy are quite frayed, its currency is in trouble and at present it borders on economic recession. Some of its members are technically bust and its competitiveness is undermined by extraordinary and sometimes idiotic regulations. Yes there is a lot wrong. But all of it pales to insignificance when the achievement of peace among its formerly warring peoples is set in contrast. Only those who lived through those terrible wars understand this, because all of the living remember the millions of dead, not as an act of remembrance on a special day, but because they still miss family and friends bombed, shot, gassed or butchered in hideous depravity.

That is what the Nobel Prize is for. This recognition should encourage Europe on its onward journey. One day Russia must be allowed into the fold. She has given more lives in the defence of Europe’s integrity than all the members of the EU put together.