Monday, September 17, 2007

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

Sunday, September 16, 2007

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…

Friday, September 14, 2007

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.

Thursday, September 13, 2007

More Bonkers Policy Highlights

Guido knows no person who has read the entire report but more bonkers policies cited by Benedict Brogan include;

Bonkers idea #4 : removing white lines from the nation’s roads. The idea is that we would all drive more cautiously as a result, and so save fuel. It also says street lights should be turned off at night.

Bonkers idea # 5 : Cotton buds should be banned because they aren’t bio-degradable.

Guido doesn’t understand this, cotton is clearly bio-degradable, isn’t it?

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…

Doh! A Green Tax that Businesses Won’t Have to Pay

Guido intended to read the 547 page Quality of Life Report to extract and highlight some of the expected more bonkers policy suggestions. Fortunately others are doing it for him.
Bonkers idea #3 : Over at the Coffee House Fraser Nelson has spotted this corker, applying VAT to short-haul flights. “Has it occurred to either of them that VAT is reclaimed by anyone on business trips, so this would only hit the small people on their holidays?”

So business travellers won’t have to pay the tax…


Seen Elsewhere

Thornberry a Snob | Sun
Thornberry Has Turned Fire on Labour | Guardian
Thornberry’s Contempt for Working Class | Telegraph
Thornberry Shows Why Labour are Losing to UKIP | Alex Wickham
Thornberry Accused of Outrageous Snobbery | Mail
What Did Thornberry Mean By This Tweet? | Telegraph
Thornberry Finishes Labour in Rochester | City AM
Endless Hypocrisy of Russell Brand | Speccie
Few Tory to Labour Switches Since 2010 | Red Box
Did Venezuelan Spooks Break Into London Blogger’s Flat? | Infodio
Labour More Hostile to Any Coalition | Staggers


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Dominic Cummings blasts Sir Jeremy:

“Heywood is more important than anyone in the cabinet, apart from Cameron and Osborne, and arguably more important than Osborne. He sits right next to the prime minister. He has him completely by the balls and Cameron does not do anything without Heywood’s permission.”



Left on Left says:

The lefties are attacking because the panellist is a millionaire and lives in a London home worth upwards of two million. Someone had best tell them he’s called Ed Miliband.


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