Toby Young on the Tory Mayoral Hustings

“Don’t Panic” Chancellor

It is worth downloading this Sunday’s The World This Weekend to listen to how a finance minister should not behave during a financial panic. In the words of Fraser Nelson, the Chancellor is losing his grip, muddling his figures and rambling on irrelevantly about how a twenty five year-old David Cameron worked for Norman Lamont during the ERM crisis. Stuttering, he covered his ass by passing the buck to the Financial Services Authority – expect that to be a common refrain in the coming days.

Since Darling brought up the subject, Guido thinks this is Labour’s ERM equivalent moment, when this government loses whatever reputation it had for economic competence. It is going to be very hard for them to blame this instability on the Tories, perhaps they will blame it on Mervyn King at the Bank of England.

Darling has been on the phone to Benedict Brogan spinning furiously, complaining that everything is fine, that Cameron is playing politics. “He’s acting like a Tory backbencher, not the Leader of the Opposition. It’s completely opportunistic at a time when he ought to be reassuring people,” one “senior source” (with white hair) is quoted by Brogan. Playing politics, eh?

If anything the Tories have been slow to press home to the voters the reality of the “debt and mirrors” economics of Gordon Brown. Can you imagine this happening when Gordon was opposition shadow chancellor? Would he have gone around “reassuring people”? Would he hell. He would have said that it was the Chancellor’s fault and that it was the policies of the government that brought this on. He didn’t say on White Wednesday that exiting the ERM would lead to the longest period of unbroken economic growth in living memory. Gordon said it was a disaster. How should Osborne describe Britain’s biggest home lender of last year going bust?

Osborne might do well to point to moves like the loosening of bank reserve requirements which reduced the cushion of capital required of Northern Rock. Far worse still is Gordon’s dishonest manipulation of the MPC’s composite inflation target to justify the lower interest rates which have encouraged the property bubble. It is not as if there have not been enough warnings…

LibDem Fringe : Huhne 13 v Clegg 8

Guido’s man in the sandals reports that the future LibDem contenders for the leadership are, as to be expected, putting themselves about on the conference fringe. Huhne is speaking at 13 events and Clegg at 8.

We are told that Ming is in control, there is no leadership question and that he knows what day of the week it is. Excellent news…

Rich & Mark’s Monday Morning View

Boom to Bust : A Political Bail-Out

On 12 September 2007 in a paper submitted to the Treasury Committee by Mervyn King, Governor of the Bank of England, he warned the City: “…the moral hazard inherent in the provision of ex post insurance to institutions that have engaged in risky or reckless lending is no abstract concept”. On September 13, 2007, the Bank of England, pushed by HM Treasury and with the acquiescence of the Financial Services Authority, bailed out mortgage lender Northern Rock. What caused this about turn?

Nobody in the City was surprised by Northern Rock’s difficulties, but many were surprised by Mervyn King’s overnight U-turn. His stated policy of avoiding moral hazard was prudent and generally accepted in the Square Mile as wise and right. Foolish risk takers should suffer when they get it wrong.

In 1995 Barings collapsed. The Bank of England did not bail it out. Imagine the outrage if a Tory government bailed out the Queen’s bankers, “Tory toffs looking after their own pin-striped aristocrats” would have been the charge. Central Banks should only intervene when their is systemic risk to the financial system, not to bail out shareholders when things go wrong. Northern Rock put too many eggs in the mortgage securitisation basket and offered mortgages at slim margins. That strategy is now shown to be risky and unsustainable. So why bail it out?

Northern Rock is not merely the victim of illiquidity in the money markets as Alastair Darling spins, investors knew something was wrong months ago, the share price tumbled long before the sub-prime crisis made the headlines. Nor can you argue that the collapse of the Northern Rock would cause systemic crisis. The mortgages would be administered, the householders would barely notice a change in ownership and it is inconceivable that other banks would suffer contagion.

The economic arguments against a bail out such as this have been impressively made by Mervyn King himself, the special circumstances argument is patently political spin. So isn’t it more likely that this is a political decision forced on the Bank of England by Gordon Brown and Alastair Darling to spare their blushes?
Northern Rock is a regional bank from Labour’s North-Eastern electoral heartlands. Labour supporting figures are on the board. Sir Derek Wanless, Gordon’s favourite banker, chairs the Risk and Audit committee. Sir Iain Gibson sits on both those committees and was appointed by Gordon to the Court of the Bank of England. As far back as the miners strike it has been seen as a “Labour” bank. In the eighties Conservative ministers were furious when striking miners were told not to worry about their mortgages by Northern Rock – removing a pressure on them to return to work. The Labour movement lauded them for it and for their giving of 5% of profits to North Eastern charitable projects.

Guido suspects that the Treasury pressurised Mervyn King, against his better judgement, to bail out Northern Rock for political reasons. Brown’s Britain is a bigger version of Northern Rock. Gordon’s macro-economic policies are Northern Rock’s borrowing policies writ large. Gordon has mortgaged spending through PFI, government debt has ballooned and the consumer economy is floating on debt secured against over-stretched property prices. It can’t go on for ever…

Ming: Referendum? Yes, No, Maybe, Definitely

Two days ago he told the FT that “My judgment is a referendum is not necessary on this document.” Today he says “Let’s have an honest debate on the European Union followed by a real choice for the British people. That means a referendum on Britain’s membership of the EU. We would ask the British people the big question – whether to remain in the European Union or not.”


Hokey cokey politics…

Friday Caption Contest (Love Action Edition)

Labour Base Not Happy With Gordon’s Transvestism

One of the key reasons given by Brownites for their long putsch against Blair was that Tony was resented by the activist base and traditional supporters. Some of the Labour base see Brown’s co-opting of the three Tory “useful idiots” as clever politicking, but many others are uneasy. The symbolism of Thatcher back in No. 10 has proved too much for many. With his tough stance on public-sector pay plus his PFI’ing of the NHS and schools many socialists are wondering if they haven’t got another right-winger in Downing Street.

Even Brownite media stalwarts like Kevin Maguire are choking on the latest Thatcherite symbolism – “The sight of her in Downing Street still turns my stomach after all these years…. It was a calculated political gamble by Mr Brown. But for a Labour PM to flaunt a Rusty Lady despised, yes despised, with good reason by Labour voters is provocative political transvestism… gut reactions still count in politics, with many Labour folk wanting to throw up.”

The GMB’s Paul Kenny reckons “This is a huge mistake which will cost Labour credibility with their voters and communities up and down the land that still bear scars of the damage she caused.” John McDonnell MP says “It is hard to imagine a greater insult to the Labour and Trade Union movement.” “Don’t forget misery Thatcher caused” rants the Mirror’s political editor Oonagh Blackman at Gordon.

Activists on LabourHome are reflective but not impressed. “Personally I’d much prefer the Government to actually start making some fundamental policy decisions instead of being in permanent campaign mode. It’s all very well having a so-called ‘big tent’ but what’s the end game?” Others complain “there does have to come a point when he stops trying to woo the right-wing and comes up with some solid policies.”

“It’s all very well inviting Thatcher around and recruiting Tory MP’s/Lib Dem MPs to head task forces. Not actually sure how it’s a vote winner down my local pub?” One disaffected activist sums up the feeling of many about Brown treating with Thatcher: “Disgusting. Insulting. He just lost us thousands of votes from Labour supporters.”

Political transvestism may seem like clever politics in Westminster, but it doesn’t go down so well with the people who got rid of Tony Blair and want Labour to return to its roots.

UPDATE : Tribune has an editorial attacking Brown.

Truth in Advertising : Gordon’s New Advert

What Did Gordon Learn Today from Thatcher?

The sheer audacity of Team Brown is breathtaking. Are they really trying to portray him as the heir to Thatcher? It is all very well claiming to be a conviction politician, but what if they are the wrong convictions?

Remind yourself of just two examples of when Gordon was on the wrong side of a big battle born of conviction.

Facing down Soviet Communism – Brown was opposed to installing the Cruise and Pershing missiles that the Soviets feared most and could not afford to match. This brought them to the negotiating table.

Miners Strike – the crucial and decisive battle for the economic well being of the country – at the time he opposed Thatcher’s determination to end once and for all Scargill’s blackmail. He never supported the rights of working miners who faced harassment and violence. When David Wilkie was killed by striking NUM miners there was no condemnation from Gordon Brown.

The list is long. Team Brown is doing this not out of conviction, but for pure spin…

Saatchi & Saatchi Win Labour Advertising Deal

Further evidence to support the view that the political parties are becoming indistinguishable marketing brands comes with the news that the firm whose reputation was made by campaigning for the Tories, will now handle the advertising for the Labour party.

The Times reports Populus research which shows that Brown is perceived by voters to have moved to the right and Cameron’s Conservatives are perceived to have moved to the left.

So with increasingly little difference between the brands, it may all come down to marketing…

Brown’s Vanity Publishing

Pandora confirms what we already knew, Brown’s Courage book was vanity publishing. Brown backing billionaire Lord Paul has bought six thousand copies to distribute to schools. That is twice as many as have sold nationally.

What did the kids do to deserve this treatment?

Inheritance Tax : Clear Water Between Tories and LibDems

Have just read an article on LibDemVoice by Dick Newby, the Chairman of the LibDems Tax Policy Working Group. The Tories are promising “lower and greener taxes” and the LibDems are promising “fairer, simpler and greener” taxes. So far, so Tweedledum and Tweedledee. However one policy struck Guido as sharply different, the Tories are proposing to abolish death taxes on the reasonable grounds that they are unfair taxes on funds which have already been taxed. The LibDems are proposing to tinker with the threshold and toughen the rules on gifts.

If Guido understands the LibDem proposals correctly, the following example is correct:

His daughters finish university, by which time Guido is in his sixties, and he gives them each an (electric) car as a graduation present. He dies 14 years later (as expected by the actuaries), leaving his estate* to the girls. Under LibDem proposals they would be taxed on the cars and every birthday present given to them for the previous 15 years.

Does that strike you as fairer or mean-spirited?

*Assuming his estate is worth more than £500,000.

Rich & Mark’s Monday Morning View

Observer “Ban the standby button”, say Tories.

Green Groups Accuse OLR of PR Stitch-Up

According to the front page of the Guardian Greenpeace, Friends of the Earth, WWF and the Green Alliance are claiming that the government is using Deborah Mattinson’s Opinion Leader Research to distort the evidence and get the required result on nuclear power from bogus public consultations.

Duh! Of course – that is why Gordon hires and re-hires his personal pollster’s firm to the tune of £3 million. She tells him what he wants to hear.

Greenpeace says that they along “with other NGOs, trade unions, renewable energy companies and representatives of the nuclear industry met with OLR and the government in July to discuss this stakeholder briefing pack. This document was full of pro-nuclear opinion masquerading as fact … This document is fundamentally flawed and cannot form the basis for a full public consultation.” So it is not just Guido who thinks OLR’s work is another form of push-polling.

Charity Commission Will Publish Sith Investigation Findings

Guido contacted the investigators at the Charity Commission recently to inquire as to how the eight-month long investigation into the wrong doings of the Sith was progressing. They won’t say as yet, but did promise they would publish their report online.
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Quote of the Day

Heather Wheeler talks to Burton Mail about her tweet…

“It was a tongue in cheek pop after the European Parliament tweet – it was purely that. I also wanted to congratulate Team GB on a brilliant result and thirdly congratulate the Commonwealth countries who also did very well. Fourth, I am also looking forwarded to establishing new trade agreements. That was it – nothing more. Let’s just enjoy the summer!”

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