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…
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…
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…
Hokey cokey politics…
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.
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…
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…
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.
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.