Grow Faster, Go Further

Growth is anaemic, that much of the Balls critique is true, the cause is not the government’s spending cuts, they are a mere 1% of GDP. Osborne has made mistakes, hiking VAT hit the High Street by taking money out of the real economy whereas QE at the moment only puts money into high finance money markets. Back in June the IMF issued a report recommending

“…tax cuts are faster to implement and more credibly temporary than expenditure shifts and should be targeted to investment, low-income households, or job creation to increase their multipliers… Simultaneous adoption of deeper long-run entitlement reform would be desirable to safeguard fiscal sustainability and market confidence…”

It also pointed out that

“The level of public spending as a percentage of GDP in our forecast has reduced by about half a per cent of GDP as compared to the previous fiscal year. However, it remains very far above the pre-crisis levels of spending and represents a long-term high in spending. It’s important to maintain that perspective”

Plan B, the Balls plan for bankruptcy and bond market collapse, is for higher taxes and more spending, this can be dismissed. Osborne is right when he says the international bond markets would crucify Britain if he switched to Plan B, for as Jeff Randall points out this morning

“At the moment, the Chancellor is pulling off a brilliant confidence trick: persuading the markets that Britain remains a triple-A credit, able to borrow on the same terms as Germany, while managing an economy with an inflation rate 66% higher than the eurozone’s average, and a national debt that is forecast to hit £1.32 trillion in 2015, nearly 40% greater than today.”

Tricky. Gordon Brown inherited an economy in a sweet spot and left an economy drowning in debt, Osborne believes he must bear down on the deficit to keep the confidence of the bond markets. Yet a paper produced by Dr Tim Morgan of bond brokers Tullett Prebon argues that if the government is going to miss its deficit reduction target anyway, what option would placate the bond markets more?

  1. “Britain has missed its deficit target because growth hasn’t happened”
  2. “Britain has missed its deficit target because the government failed to cut spending sufficiently”
  3. “Britain has missed its deficit target because taxes have been cut in pursuit of growth”

We’re currently in the first situation, the second situation is unpalatable to the government, the LibDems don’t have the stomach for a shock doctrine style short term austerity programme. Balls advocates stimulus in the form of higher spending, no one in government is advocating the alternative, which is to stimulate the economy by cutting taxes instead. Of course if we also rolled back government spending there would be more room for tax cuts to boost consumer confidence and the economy, without matching spending cuts the deficit will rise. Osborne is going to miss his deficit target regardless of which option he takes, it wouldn’t scare the bond market so much if cut taxes in pursuit of growth…

Moral Markets and Other People's Money

Guido has just got round to reading The Big Short by Michael Lewis, author of the eighties-era defining Liar’s Poker. It is the most readable book on the American sub-prime crisis that was the catalyst for the global sovereign debt crisis we now face. Essentially Lewis has found and written the story of the few who not only foresaw the crisis but bet on it, big bets. Was it moral for traders to bet that sub-prime lending would end in disaster? Via synthetic Collateralised Debt Obligations risk was added to the financial system, purely for speculative purposes. In a free society with a free economy it is good that consenting capitalists are allowed to take risks, the problem was that the PhD-equipped quantitative-modelling geeks who inhabit investment bank trading rooms got the models for analysing risk completely wrong. The ratings agencies bought into the models because their customers demanded it. When it all went wrong governments and central banks stepped in to bailout banks out of fear that the financial system would fail. The banks had allegedly become too big to fail.

Guido was an investment banker, has a lot of friends who are investment bankers, hell Guido even married an investment banker. Since the days of the Long Term Capital debacle at dinner parties Guido has argued that the problem with investment banking was that the geeks had brilliant reasons for losing big money, in that they had complex models that impressed management better than traditional trader’s gut instinct. The second problem was that investment banks were no longer partnerships, they were publicly listed companies, with shareholders who were not involved in day-to-day management. This has proved to be a disastrous form of capitalism, with owners who don’t know what the managers of their money are doing.

Up until Salomon Brothers listed in 1981 the investment banks were partnerships. That meant the firm’s capital was provided and risked by the partners who ran the firm. The oldest and most experienced partners tended to have the most capital in the firm. This had a risk management effect greater than any Nobel Prize winning computer-calculated risk model, the old guy with the grey hair stood to lose everything when some testosterone charged 27 year-old trader bet the firm’s capital. This incentivised senior management to control risk, because they know there are old traders and there are bold traders but there are very few old, bold traders. The bosses’ desire to keep their retirement pots concentrated their minds.

Michael Lewis points out that public listings transferred all the risks from management partners to the firm’s shareholders who had no idea what risks were being taken. Now we have huge financial combines with managements incentivised to bet the shareholders capital big, win and get out with their annual bonus. If they lose, the shareholders lose, or if they lose really big the taxpayer eventually bails them out because they have retail banking High Street subsidiaries which democratic governments are terrified will be dragged under as well. Capitalism with the risk being taken with Other People’s Money has the same fundamental problem associated with socialist governments spending Other People’s Money. Why worry if it isn’t your money?

Downing Street is briefing that the PM will be promoting the idea of “moral markets”. It is of course human nature to act in your self-interest, what has gone wrong is that the incentives have been given to those who manage the capital to take risks which informed owners would never knowingly take. There is nothing moral in asymmetric markets where the risks are borne by others than those taking the risks. If taxpayers in Western democracies are to implicitly insure retail banks – in effect owning the risk – the cost of that insurance should be such that it is prohibitive for retail banks to take exotic trading risks. Proprietary trading is for proprietors. Moral markets require risk and reward to be fairly priced.

Climate Change: Global Flatlining

The now famous global warming graph (top), popularised by Al Gore, shows rising global temperatures. Now a well funded team called the Berkeley Earth Surface Temperatures project (BEST) led by Professor Richard Muller, of Berkeley University in California, has been accused of falsifying data by a respected member. A repeat of the Climate Research Unit debacle at the University of East Anglia.

Professor Judith Curry, who chairs the Department of Earth and Atmospheric Sciences at the prestigious Georgia Institute of Technology, said that Muller’s claims were a ‘huge mistake’, with no scientific basis – she has 30 years research experience and is the second named co-author of the BEST project’s four research papers. She has accused him of trying to mislead the public by hiding the fact that BEST’s research shows global warming has actually stopped – as seen in the more accurate chart (bottom).

One international controversy over research fakery at the Climate Research Unit of the UEA by politically motivated scientitsts is bad enough, now a second case of fakery has been uncovered suggests the global warming racket is unravelling. The age of the progressive consensus on climate change, which was bought into by Cameron’s Conservative Party, was based on deliberate falsifications.

“Ages are no more infallible than individuals; every age having held many opinions which subsequent ages have deemed not only false but absurd; and it is as certain that many opinions, now general, will be rejected by future ages, as it is that many, once general, are rejected by the present.”

John Stuart Mill, On Liberty

The claims by the likes of George Monbiot and others that the respectable scientific world was at one and those of us sceptical of the alarmist’s claims were in denial ring increasingly hollow. Public opinion is turning sceptical, suspecting rightly that this is just another racket to raise taxes. Temperatures have not been rising for a decade contrary to the global warming theories under-pinning the outlandish claims of the alarmists. Our supposed invisible carbon threat reminds Guido of the emperor’s new clothes – seen only by fools deceived by charlatans.

See also: CRU Boss Stands Aside, Queens University Blocking Data FOITime to Defund CRU’s Global Cooling DeniersClimate Change Alarmism is Snow Joke

Occupy the Bank of EnglandInflation Helps Central Bankers, Hurts Us All

The “Occupy the London Stock Exchange” and “Occupy Wall Street” crowd have got the wrong target. Living standards are being deliberately and systematically undermined by central bankers not stockbrokers. The London protestors should head over to the Bank of England and their friends in NYC should head for DC. Inflation at 5% is robbing rich and poor alike of our earning power.

In consistently predicting this inflationary mess Guido would happily claim sagacity, but it is pretty basic economics that if the supply of something rises, unless demand increases, the value of it goes down. If you print more money, you get inflation. Simples.

Ben Bernanke and Mervyn King say inflation isn’t a problem, in fact the Bank of England’s official position is that deflation is the danger. The Chancellor says he agrees with the governor. George Osborne also claims he is a “monetary activist”, though since monetary policy is in the hands of the nominally independent Bank of England it is hard to understand how his activism can take effect. He also claims to be a “fiscal conservative” who, when not putting up taxes, spends and borrows more than Gordon Brown. Mervyn King is alright, his pension is inflation protected.

In the think-tanks and on the financial pages the likes of Allister Heath, Dan Hannan, the MPs Douglas Carswell and Steve Baker, as well as yours truly, are all sympathetic to a radical school of economics that is attracting growing interest. The father of this school was an Austrian economics professor, Ludwig von Mises, as the credit crisis deepens his books are selling better, in particular Human Actionin which he warns

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

Capitalism is widely understood as a profit and loss system, through trial and error in free markets we find a more optimal allocation of resources. If central banks deliberately provide cheap and easy credit the creative destruction that is part and parcel of capitalism ceases. The losses and errors are not destroyed, instead they are bailed out until an incredible €2 trillion €uro bailout is the consequence.

Banks under-priced risk because interest rates were too low for too long. The US housing bubble owes its existence to central bankers, the recklessness of investment banks was encouraged by the Fed rescuing investors in Long Term Capital because it was “too big too fail”. The credit crisis of the West is now, finally, approaching “too big to bail” territory. The catastrophe will be greater the longer we try to head off economic reality with short-term bailouts which make things worse in the long-run.

Science is Never "Settled"

The likes of George Monbiot and Al Gore get pretty hysterical about global warming / cooling / dimming or whatever current theory is in vogue. The science is settled / the evidence is overwhelming they scream in an attempt to block any debate. In reality physicists, as a sub-section of the scientific community, are a lot less keen on the whole carbon and climate scare racket. Scientists are not usually unanimous on any subject which is complex.

The world’s leading physicists at CERN reckon they have discovered neutrinos travelling faster than the speed of light. If proven correct this will undermine a key part of Einstein’s accepted theory which constitutes the standard model of science. Of course it was once standard settled science that the atom could not be divided and it was the “settled science” until Copernicus that the earth was at the centre of the universe. The next time Monbiot tries to shut down debate by claiming scientific authority for his theories, ask him if the atom can be split or can anything travel faster than light? Climate changes undoubtedly, the significance of humanity’s carbon outputs is debatable. CERN has today shown that science is never entirely settled…

The Guardian's Self-Delusion

The police have tight rules on releasing information to the press for fear it could prejudice a trial and because over the course of an investigation police arrest suspects to eliminate them from inquiries once they determine their innocence. Occasionally a suspect’s name gets into the press. Remember Chris Jefferies, the landlord of  murdered student Joanna Yeates? Jefferies has received “substantial” libel damages from eight newspapers – Sun, Daily Mirror, Sunday Mirror, Daily Mail, Daily Record, Daily Express, Daily Star and Scotsman – in relation to “seriously defamatory” allegations made against him after he was identified as a police suspect. There are often extremely good reasons for police investigations remaining confidential.

The Guardian has been gleefully naming suspects in the News International investigation, sometimes telling us who is going to be arrested before they actually have been. The Metropolitan Police have turned in frustration to section 5 of the 1989 Official Secrets Act, which covers “damaging” information leaked by government officials, including police officers, when it is “likely to impede … the prosecution of suspected offenders”. Now bear in mind that the Guardian case against News International is that they had inappropriate relations with Metropolitan Police officers which were corrupt and the sensitivity of this becomes manifest. Nobody is suggesting that the Guardian bribed police officers, but there is such a thing as “client journalism”, where sources trade information and in return the journalist slants stories to make the client source look good. The reward for the source is an enhanced reputation which among other things boosts their prospects of promotion. When the source has a bad news moment, the journalist will cover-up or spin the story and protect their client-source’s interests. This is why client journalism is implicitly dishonest if not corrupt.

Police rules are clear:

“The release of information concerning current investigations may compromise any subsequent court proceedings. Police investigations are conducted with due regard to the confidentiality and privacy of victims, witnesses and suspects.” 

The Guardian has been making hay with the many violations of these rules by News of the World journalists. Once again the Guardian expects to be treated differently from the tabloids. The News of the World’s relationship to the Metropolitan Police was evidence of a corrupt media-police nexus, when the Guardian has an unlawful relationship with a Metropolitan Police officer it is, they froth, “a public interest investigation”. Just as when the Guardian avoids taxes offshore it is not, for some inexplicable reason, like when other firms do it. When Guardian journalists hack phones it is somehow different, journalists have to have the editor’s approval before hacking phones according to internal guidelines. The editor of the Guardian seems to think that his paper is above the law, and that he can be judge and jury when it comes to his paper hacking phones and compromising police investigations.

UPDATE: Metropolitan Police have issued a statement saying “This is an investigation into the alleged gratuitous release of information that is not in the public interest.” Quite.

Why Can't Progressives "Be the Change They Want to See"?

Guido had a bit of a dig at the three-houses-owning, multi-millionairess, anti-poverty campaigner Polly Toynbee last week. She responded that Guido was laying the charge of “Champagne socialist” against her, something which Guido has yet to do. More on the money was this part of her rebuttal:-

“…you say we should be Gandhi-like saints and give everything away before we can advocate being taxed more. The point about tax is that’s it’s collective – it’s an “I will if you will” deal. I see no hypocrisy in any of this – but no doubt you will go on spreading ad hominem empty spite – instead of engaging fairly with the substance of the argument.”

Engaging with the substance of her argument, Guido asks, why is progress towards her social democratic utopia an “I will if you will” deal? If it is conditional on reciprocation from the likes of Guido it will never happen. Millions of us already feel over-taxed, like her employers we’re going to hold on to every tax break and tax haven we can come hell or Edward Balls. If she thinks she is under-taxed she can do something about it tomorrow, pay the Treasury more, they really do accept donations to bring down the deficit. Polly could give her own self-defined “unjust rewards” – for that is how she describes her own income – to charity and live more like the common people. Instead she chooses to keep the rewards that put her in the top 1% of income earners.

The home in London worth a million-and-a-half, the house in the country, the villa in Italy, the sheer inequality of it all must play on the conscience of a progressive social democrat. Her get out for keeping all is that she won’t make the sacrifice unless the likes of the greedy and privileged bankers in the neighbouring villas do so as well. Do you see the flaw in this aspiration?

Polly’s excuse for educating her children in private schools is that the state schools were crap at the time. The exact same reason the Fawkes girls go to schools whose existence Polly Toynbee now campaigns against. Another case of “do as I say, not as I do”.  

Meanwhile the next generation of progressives is lining up to be no less hypocritical than the last. Will Straw commends Tory MPs Matthew Hancock and Nadhim Zahawi who in their new book Masters of Nothing argue that the banking crisis was partly due to a lack of women in trading rooms. Too much testosterone contributed to the debt crisis apparently, well that and a lack of pay transparency among other things.

ipprWill is a wonk at the IPPR, the key policy and propaganda think-tank of the progressive soft left. So how does IPPR do on the gender equality and pay transparency front? Guido asked Will, IPPR’s associate director, how much he earns he refused to say or even give an average for associate directors at the IPPR. Pay transparency is only for bankers, not policy makers it seems. 

On gender equality the IPPR has 9 male serving directors out of 12 at the top. At the bottom 7 out of 8 operations staff are female. Another progressive case of “do as I say, not as I do”.  

Harriet Harman is Gangsta Mutha #1

It was Erin Pizzey, the founder of the first refuge for battered women, who in the late eighties identified Labour’s then radicals Harriet Harman and Patricia Hewitt as dangerous feminist  ideological enemies of the family. Harman and Hewitt were in those days leading lights of the loony left’s radical feminist wing, arguing in pamphlet after pamphlet that “It cannot be assumed that men are bound to be an asset to family life, or that the presence of fathers in families is necessarily a means to social harmony and cohesion.” After decades of agitation, which influenced social policy as well as social workers, their attack on men and their role in modern life has reached its nadir in Tottenham. Local MP David Lammy put it bluntly last week: “We are seeing huge consequences of the lack of male role models in young men’s lives..” Harriet Harman is the ideological single-mother of those gangsta rioters.

Peter Oborne correctly identifies that behind the scenes New Labour’s party policy was captured by the likes of Harman and Hewitt who viewed the traditional two-parent family as an instrument of male, patriarchal oppression. The riots are the toxic legacy of such poisonous “progressive” attitudes.

In government Iain Duncan Smith has perhaps only until the next election to reverse decades of progressive social policies, he has to make work pay for people who have known only inter-generational worklessness and rebuild the traditional family as the prevailing societal norm. That task first starts in the think-tanks, moves onto the broadsheet editorial pages, before becoming a stated policy objective eventually leading to changes in the infrastructure of social policy. There is also a necessity for a reversal of the secular kulturkampf which progressives have waged to make non-judgemental, moral relativism the only acceptable official view. We are currently only at the think-tank and broadsheet editorial stage.

Harman’s 1990 IPPR  pamphlet “The Family Way” was described by Feminist Review as “An attempt to combat stultifying, traditionalist concepts of ‘the family'”. We have reached the end of that decades long struggle by Fabians and feminists to undermine the family; with 40%  of children born outside marriage and a minority of childhoods completed in the household of both biological parents. It is now apparent to all that few if any of Harriet Harman’s gangsta progeny come from those supposedly stultifying traditional families.

Fatherless Feral Youths

Yesterday Guido tweeted that he “Would bet that the majority of the homes of those looting youths are fatherless”. Andrew Neil chimed in pointing out that “Surveys suggest that in areas like Tottenham as many as 80% families have absent/no fathers. Similar to worst ghettoes in US… Pointing out most underclass families are fatherless [is] different from blaming single mothers”. The progressive twittersphere went spare, as if this observation was somehow controversial.  

It is self-evident that the welfare state has fundamentally undermined the family, enabling and actually encouraging fatherless families to become commonplace. This is a social disaster. Welfare incentives are powerful nudges in a negative direction. Downing Street wonks should understand that “nudge theory” works two ways, not always in a positive direction.

The scale of the problem is immense, in a generation since the sixties the percentage of births outside marriage has risen from 5% to 40%. Some of those are in co-habiting couples – which unfortunately are more fragile than traditional marriages – however the majority are brought up in fatherless households. A Civitas study found that children living without their biological fathers are more likely to get into trouble at school, to have adjustment problems and eventually go to jail. Iain Duncan Smith can’t solve deep social problems with welfare reform alone. Society needs to reverse decades of failed “progressive” thinking about the family and social norms. A culture which makes no value judgements about how we raise our children is creating tomorrow’s looters and rioters.

To Grow Faster, Go Further

Growth is anaemic, that much of the Balls critique is true, the cause is not the government’s spending cuts, they have barely started, the £6 billion down payment on deficit reduction is not even 1% of GDP. Some of the reasons are external; US economic doldrums, Japanese earthquake related supply-chain disruption, cost push inflation and some are internal; lack of business and consumer confidence, difficult credit markets and rising interest rate expectations. So what is to be done?

The IMF report recommends

“…tax cuts are faster to implement and more credibly temporary than expenditure shifts and should be targeted to investment, low-income households, or job creation to increase their multipliers… Simultaneous adoption of deeper long-run entitlement reform would be desirable to safeguard fiscal sustainability and market confidence…”

It also points out that

“The level of public spending as a percentage of GDP in our forecast has reduced by about half a per cent of GDP as compared to the previous fiscal year. However, it remains very far above the pre-crisis levels of spending and represents a long-term high in spending. It’s important to maintain that perspective”

Plan B, the Balls plan, is for higher taxes and more spending, the same plan Brown had which took us to the brink of bankruptcy with the biggest government deficit in the G20. That can be dismissed as a failed ideology, now tried for 13 years and tested to destruction. If faster growth is required the IMF actually recommends an accelerated Plan A, “Plan A+”, cutting taxes for those on low-incomes, cutting welfare payments to those who are healthy yet on long-term unemployment benefits and cutting overall government spending back to where it was before Gordon. The UK is cutting public spending slower than Obama and at a rate slower than even the EU average.

The IMF’s Plan A+ to boost growth should be considered along with supply-side reforms to boost business confidence, if we rolled back government spending there would be more room for income tax cuts to boost consumer confidence. If we want more private sector jobs and to grow the economy fast and sustainably, Plan A+ makes sense. Preferably sooner rather than later.

The Bank of England's Great Inflation Swindle

Before finishing his term on the Monetary Policy Committee Andrew Sentance warned that the Bank of England is in danger of losing its credibility on inflation. Guido has been warning since 2008 that inflation is not a blip and that it was baked in to the economy. Letter after letter from Mervyn King to the Chancellor has excused missing the inflation target as temporary and promised it would decline in the months ahead. Promises now shown to be demonstrably false.

Ladies and gentlemen, Guido presents the Great Inflation Swindle, we have just seen the second-biggest one-month increase on record and a record high in core CPI yet the Governor of the Bank of England has told us for 3 years inflation was a blip and that the real danger was deflation. It was a deliberate lie to excuse the most reckless monetary loosening since… well, actually monetary policy has been too loose globally since back to 1998 when Greenspan “saved the world” after Long Term Capital’s financial theory geeks had a close encounter of the reality kind. The loosening up of monetary policy to smooth the aftermath of that hedge fund collapse told financial risk takers to rack up the risk because central banks would step in if you got in to trouble. Everyone was “too big to fail”. Central bankers turned capitalism from a system of profit and loss into a system of private profits and socialised losses. Taxpayers had their chips put on the gambling table without even being asked. 

From 1998 to 2008 central bankers failed in their primary task of taking the punch-bowl away when the financial party gets too swinging, drunk on cheap credit and easy profits. In 2008 the solution when the excrement hit the air-conditioning, with interest rates already at rock bottom, was Quantitative Easing (QE). The excuses given for printing money on such a massive-scale were two-fold, to ward off  an imaginary “deflation” bogeyman and to provide an economic stimulus. Those of us who said this would inevitably result in inflation were shouted down. We now have inflation at almost double target and rising, the huge cost of the monetary stimulus has provided very little growth and undermined Cameron’s stated aim of “sound money“.

“Sound money” is not something that the Bank of England seems to be aiming for or even expecting. Guido has remarked on the Bank of England Pension trustees prescience before, their success is a little short of scandalous. If there was evidence of insider trading at a normal fund the investors would be in jail. Whilst Mervyn King’s Bank of England scaremongers about a deflation bogeyman his pension bets on the exact opposite – buying inflation protected securities on an amazing scale. Guido has discovered that Mervyn King’s pension is 94.7%* invested in index-linked, inflation protected securities, up from an already remarkably high 88.2% the year before.

This is the exact opposite of what you would do if you really feared deflation, in a deflationary environment fixed income securities rocket, out-performing index-linked securities. Mervyn King’s Bank of England pension pot profits from doing the exact opposite of what it should if the trustees believed the Governor’s pronouncements were credible.  This is no accident, Guido believes it is the deliberate policy of the Fed and the Bank of England, with the complicity of their political masters in the US Treasury and HM Treasury, to inflate their government debts away. Inflation is a pernicious form of taxation, it punishes the old and those who save and leads to a worse reckoning in the end. We are being deliberately swindled by the political elite.

*Just 22% of UK gilts are inflation-protected, the Bank of England pension fund’s skew towards expecting inflation is that pronounced.

Schillings Backlash: Injunction Industry Under FireParliament Should Define Privacy Limitations

The Schillings backlash has commenced in full, the tabloids are splashing on front page stories about Schillings’ losing clients with gusto. Schillings lost a case about Gordon Ramsey’s father-in-law yesterday to The Sun, over a case originally taken out by Schillings against Guido’s virtual mother, Popbitch, rubbing more salt into Schillings’ wounds.

The make-up of the recent Lord Neuberger Committee on super-injunctions – set up to investigate the supposed “need for a privacy law” – included lawyers involved in making their millions from the injunction industry; Rod Christie-Miller, CEO of Schillings, and Alasdair Pepper, a Carter-Ruck partner, argued their case successfully.

Privacy law is based on the European Convention on Human Rights which was formulated in the 1950s,  Article 8 enshrined an individual’s right to a private and family life at a time when totalitarianism stalked Europe. Millions were oppressed, the rights of shagging celebrities were not foremost in the drafter’s minds. It was envisaged to protect individuals from the state.

Lord Wakeham, a former chairman of the Press Complaints Commission, argues this morning that the the Human Rights Act could be amended, rather than just repealed:-

“..possibly by limiting the role of the Courts to dealing with issues that impact only on public authorities and the State (as the drafters of the Convention envisaged). That would leave the media outside the direct supervision of the Courts on privacy issues and enable the PCC – which can react much more swiftly to changes in newspaper technology than the law will ever be able to do so – to reassert its primacy in this area, as Parliament always intended.”

In Ireland the ECHR was incorporated into the constitution only in 2006, Irish judges so far have taken the Wakeham view, correctly in Guido’s opinion, that Article 8 is to protect individuals from unlawful privacy violations by the state and agencies of the state. It protects individuals only from journalists who use illegal means; hacking, stealing photos, sneaking onto private property and similar. It has not so far been used to hide the embarrassment of adulterous politicians and footballers. That is how Article 8 should be properly interpreted and parliament should make the law explicitly clear.

A few years ago an Irish High Court judge gave Carter-Ruck’s representatives short shrift and a bollocking over an application they made for a gagging-injunction against a certain charming, cheeky Irish blogger on behalf of a rich British politician and his socialite freedom of speech campaigner sister. For legal reasons Guido can’t say any more…

The Richest Man in Britain, Lakshmi Mittal,Has Super-Injunction Muzzling the Press

Lord Neuberger, the Master of the Rolls, whose report on super-injunctions is out today, will help determine if Britain is to have a free press or not in the future.

Lakshmi Mittal is the richest man in Britain, he has given the Labour Party over £2 million in donations. Since 2008 it has been an offence punishable by imprisonment to even say he has a super-injunction. Why? What is it about? You shall not know. Editors fear his wealth and the wrath of judges. Do we really want a country where journalists fear imprisonment for writing the truth?

In 1948 Britain helped draft the United Nations’ Universal Declaration of Human Rights, Article 19 declares:

Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.

No judge should presume to dare to take away our rights in order to protect the privacy of the rich and powerful. If France had less stringent privacy laws and a less craven press, Dominique Strauss-Kahn might not have got away with doing what he has done for years. The freedom of the press is a check on the powerful and a restraint on them. This is not about Ryan Giggs’ sex-life, it is about knowing the truth about the powerful. Remember Lakshmi Mittal when privacy advocates attack “tittle-tattle”.

The "Progressive Majority" Delusion

The noisy progressives in our public life are forever claiming there is a “progressive majority” in Britain. If it was not for Murdoch, the City and the editor of the Daily Mail they would lead us into the social democratic utopia that the people so desire. That is basically the underlying worldview of many at the BBC, Guardian editorial meetings and the young wonks in the think-tanks around Ed Miliband. Tony Blair understood that this was a delusion which electorally crippled the Labour Party and the somewhat flakier LibDems. He fashioned a left-of-centre platform which addressed the real concerns of voters.

The British people are sceptical about “progressives”, their language and their disconnection from the reality of  their lives. The “progressive” idea that switching to the Alternative Vote was important to ordinary people, who are not on the whole interested in politics, was delusional. There is no untapped progressive majority outside the media and political elites.

It is one thing to be youthful and idealistically progressive, believing if only we cared and shared everything would be alright. When you become a taxpayer, parent or home owner you are mugged by reality. Caring and sharing with your family becomes your priority, that is human nature. The amount of your salary that goes to HMRC, the fear of crime, a desire for better schools for your children and the cost of petrol become more important priorities. Guido speaks to Labour Party supporters who think that Ed Miliband is overly influenced by “progressive” voices, his support for switching to the Alternative Vote shows that in truth Ed Miliband is himself a “progressive”. Voters are not.

Rendevous with Destiny: Cameron Turns Hawkish

The debate on the pages of ConservativeHome and the Tory broadsheets as to whether or not Cameron inclined towards the Neo-Conservative world view (in the way that Gove, Fox and Osborne are said to) appears to have been settled with the commencement of the challenge to Gadaffi. The Neo-Cons over at the Speccie are thrilled and have produced this:

Guido is a pragmatic libertarian, wary of wars which always seem to increase the power of the state and diminish the treasury. On the other hand instinctively whenever Guido sees a dark-glasses-wearing socialist military dictator he wants him over-thrown. Neo-Cons argue that if you believe the free world’s liberal democracy is a morally superior form of civilisation than it is our manifest destiny to assist those who yearn for those same freedoms.

Blair called it “liberal interventionism”, his heir Cameron prefers to call it “muscular liberalism”. In any event his speech in Perth yesterday takes a Neo-Con line claiming that Britain is acting because of:

… the moral duty to step in when a dictator starts killing his own people. Not just the belief that a movement towards more open and democratic government in the Arab world will be good for the entire world.

But the clear and hard-headed understanding that a stable Libya, free from Colonel Gaddafi’s brutality, is in Britain’s long-term interests too.

This is where our ideals and our interests come together… in the cause of justice and freedom for the safety of our nation and the security of our world.

It is an attractive argument. In an interdependent world with weapons of mass destruction the libertarian ideal of “splendid isolation” may be more dangerous in the long run…

The Guardian: Uncut and Full of Cant

On Saturday morning The Guardian decided to give UK Uncut a front page boost.  The protestors managed to shut down three dozen of the 1,720 branches of Barclays bank. Surprised they found any branches to occupy given Saturday opening hours.

The gist of the shabby story was Barclays bankers are evil tax dodgers. The evidence was a hatchet job with the paper making the spurious claim that Barclay’s only paid 1% tax on their £11.6 billion profits. In arriving at a profit before tax figure of £11.6 billion, The Guardian has added the profit from the ongoing business (£4.5 billion) to profits from a disposed business (£726 million) and the gain made on disposal of that business (£6.3 billion) to reach a total of £11.6 billion.

What they chose to ignore however was the total tax take Barclay’s had to pay; payroll taxes, bank levy, non-recoverable VAT, employers NI, SDRT and so on. Over the weekend Tim Worstall and the FCA Blog tore chunks out of the piece:

The article compares the cash paid to HMRC in respect of UK corporation tax in 2009 (£113 million) to the profits generated by the consolidated Barclays group worldwide in 2009. In the UK, tax is paid in arrears, so 2009 taxes would relate to widespread 2008 losses, not 2009 profits.

Multinational companies such as Barclays pay tax in a number of jurisdictions. Generally speaking Barclays only pays UK corporation tax on profits it generated in the UK.  Anything earned outside the UK doesn’t get taxed here. So it’s a howler to compare the UK corporation tax payment to the global consolidated profit. Most of those profits were taxed where they were made.

In 2002 (under Gordon Brown, Chuka), the UK government introduced the substantial shareholdings exemption, a corporation tax exemption for UK businesses disposing of a substantial shareholding in a part of their business. The idea was that businesses should be able to restructure their businesses without having to worry about chargeable gains implications. Barclays are heavily criticised by The Guardian for using it.  The last time that Guido saw this being used was by the, err, Guardian Media Group to save themselves some £60 million of taxes in 2008:

“In 2008 GMG sold half of Auto Trader publisher Trader Media Group and made an exceptional (one-off) profit of more than £300 million. No tax was payable on the return from that sale because under UK law GMG qualified for SSE”

In 2008 The Guardian made £302 million in profits and paid no corporation taxes. The CEO, Carolyn McCall, was paid an £827,000 package. Yet we don’t see the UK Uncut crowd kicking up a stink about The Guardian’s tax structures or their fat cat pay and bonuses.

Over the weekend the Guardian editor Alan Rusbridger (half-a-million a year since you asked) tweeted about Barclay’s offshore holding corporations. Guardian Media Group holds hundreds of millions in assets in a Caymans Island domiciled offshore corporation.

Guido put it to the GMG press office that GMG has £223.8 million invested in an overseas/offshore hedge fund managed by Cambridge Associates which trades currency derivatives. They don’t deny it and have declined to confirm the fund’s structure for tax purposes.

Guardian readers seem to be under the illusion that it is owned by a not-for-profit charity. The Scott Trust was wound up in October 2008 and the Guardian is a for-profit-privately-owned media business, the well paid directors of which confirm in their annual accounts that they operate tax strategies in line with their fiduciary duty to the shareholders – just like any other business.

The old Scott Trust was set up in 1936 to avoid inheritance taxes and wound up in 2008 so that GMG could cynically exploit the SSE capital gains tax shelter to pay 0% in corporation taxes on their £302 million in profits that year. GMG claim that it was about modernising the holding structure, in fact it was a disingenuous cover for corporate venality.

For three quarters of a century the The Guardian has been shirking taxes, Guido has no problem with them acting in their shareholders’ best interests. The hypocritical cant from them however about others doing the same is beyond contemptible…

Big Society v Big Government

In the Indy this morning the left-wing columnist Steve Richards identifies the key truth about the ideological under-pinning of the heavily under attack Big Society programme which seems to have escaped most of his allies on the left. When Cameron said “There is such a thing as society, but it is not the same as the state” it wasn’t a rejection of Margaret Thatcher’s famous dictum, it was a restatement of what she said:

“I think we’ve been through a period where too many people have been given to understand that if they have a problem, it’s the government’s job to cope with it. ‘I have a problem, I’ll get a grant.’ ‘I’m homeless, the government must house me.’ They’re casting their problem on society. And, you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It’s our duty to look after ourselves and then, also to look after our neighbour.”

That he set the chattering classes into paroxysms of delight over a Tory leader’s supposed rejection of Thatcherism shows that on the whole, with a few exceptions like Jon Cruddas, most of the left don’t understand right-of-centre thinking because they hold a mental caricature of centre-right and right-wing ideology in their minds, attributing malice to their opponents. The Big Society is about displacing Big Government as the key actor in society, so when the left-wing quangocracy, unions and their media allies complain that charities are losing their taxpayer subsidy and this undercuts the Big Society agenda, they misunderstand completely. A charity that relies in the main part on taxes is no more a charity than a prostitute is your girlfriend. Since Edmund Burke conservatives have wanted Little Platoons to take the lead in civil society. If David Miliband’s Movement for Change had actually set about being the change rather than just (as his brother Ed wants) campaigning for Bigger Government, it too would have been one of Burke’s “Little Platoons”. Radical whigs and liberals have always wanted to disperse power away from first the monarch and in modern times from the state. The Big Society agenda is not about the state delivering through para-statal bodies, it is about society delivering for itself. Ask not what your government can do for you, but what you can do for society…

Expect the Prime Minister to very soon deliver a speech reaffirming his Big Society agenda, when you are right, you cannot be too radical. The speech will have a touch of a mea culpa, though it will not be a retreat, it will be a call-to-arms at the start of the Big Society revolution unlike Blair’s late recognition in 2005 that “Every time I’ve ever introduced a reform in government, I wish in retrospect I had gone further.” Expect more squeals from those still advocating Big Government solutions…

The Logic in Balls Denying Reality

The appointment of Ed Balls as shadow chancellor means that deficit denial becomes the central economic policy of the Labour Party. In essence both the Eds intend to argue that it was the banking crisis and only the banking crisis that caused the deficit. In taking this policy direction they repudiate the more sensible realistic policy followed by the last Labour Chancellor, Alistair Darling.

It also flies in the face of statements made by Tony Blair in his memoirs and as recently as last Friday at Davos. Since Balls isn’t an idiot we have to ask ourselves: why is he trying to deny reality? Does he think the voters can be convinced that overspending wasn’t a problem until the banking crisis? Here he is telling Andy Marr there was no structural deficit under Labour:

Clearly both the Eds think they can blame it on the bankers, popular understanding of the deficit is hazy. The huge one-off costs of bailing out the banks and the constant government-debt-bloating-deficit are confused in the popular consciousness. Even the debt and the deficit are confused in many people’s minds. Whenever Ed Miliband is cornered on spending or taxes he reaches for the banker bogeyman – tax them more and it will sort everything out. None of this adds up to anyone with any financial literacy, which unfortunately is a minority of voters, the majority of voters do blame and detest the bankers.

For this argument to make sense of course requires Ed Balls to deny that there is, or ever was, a structural deficit that had to be tackled. Which is exactly what he did on the Marr show today.

Denying the deficit and blaming the government’s debt crisis on the bankers is an attempt to absolve Brown, Balls and the Labour Party of the blame. It thus allows Balls to claim that, since there is no structural deficit, the cuts are unnecessary and ideological. Which is exactly what he does.

The problem for Balls is that the public senses innately that the government under Brown’s chancellorship and premiership was overspending. If Osborne can keep that national memory alive over the next three years the public will forgive him doing what is necessary. If they forget, or prefer to believe Ed Balls’ claim that cuts are not really necessary, they will blame the government for the coming hardships. The deficit blame game will have to be played until the next election.

Downing Street Vacancy : Television Image Maker Wanted

Guido has always been a news junkie, taking it in from all directions; online rolling news, radio, television news channels and the papers, hell even Twitter nowadays. When Guido was a paperboy he read every paper from the Sun to the FT, which must have annoyed the customers wanting their paper before the morning commute. As media pundits go Guido is as qualified as anyone can be after 30 years of news consumption and analysis. What that experience has taught Guido is that one thing is for sure: television is the medium that matters.

It may not matter to the chattering class, but it does influence the voters more than they do. Most voters don’t read the Guardian, they don’t read the Indy, Times or Telegraph either. They watch television, which is why more people voted for the winner of X-factor than the government.


One of the central ideas that inspired the creation of this blog was the “Guidoisation of politics” by which is meant more than just the trivialisation of politics, it alludes to the conveying of ideological messages in simple images and terms. It is also about the personalisation of politics via the character of politicians. Character matters to most voters more than ideology. Gordon Brown’s character weighed against him with voters more than his economic policies. His character was revealed on television to more people, more effectively than Andrew Rawnsley or Tom Bower could ever dream of doing. Tony Blair and Peter Mandelson were masterful televisual image makers – remember them deliberately delaying the acceptance speech that May morning in 1997 until a shaft of sunlight broke through into the Royal Festival Hall – “A new dawn has broken, has it not?” Brilliant imagery.

Roger Ailes is famous as the boss of Fox News, the news channel with the most viewers in America, making it the most profitable news channel in the world, more profitable than all the other US news channels combined. It has so much political influence that Obama’s strategists reckon it costs them 3% at the polls. Roger Ailes cut his teeth as a young TV producer who Richard Nixon hired after he told him to his face “The camera doesn’t like you”, Nixon replied “It’s a shame a man has to use gimmicks like this to get elected”, the young Ailes retorted “Television is not a gimmick, and if you think it is, you’ll lose again.” In a televised democracy, television decides elections, it really is that simple.

It is a given that the coalition is about to enter a period of unpopularity, to win the next election the economy firstly has to come good or be coming good by 2014, that is a pre-condition. Secondly they have to get the credit for the economy coming good as well. Television will help most voters decide who gets the credit, not broadsheet editorial writers. Cameron and Clegg are better television performers than Miliband, if they want to exploit that they should hire a director of communications who understands televisual imagery. The media grid planning can be done by Downing Street drones a plenty and Osborne has a good grip on political strategy. Television requires a certain genius. If they want to win over the voters they need a political maestro equivalent to Simon Cowell or Roger Ailes. If they think that television is just a gimmick…

Feck Off Euro-Socialists

Euro-Socialist and Green MEPs have tabled a motion calling on Ireland to double corporate tax rates as part of a quid pro quo for a bail-out. Not a single Irish MEP has supported the motion. Ireland should just tell them to “feck off”…

Douglas Carswell is right, Ireland should decouple and default.[…] Read the rest

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Quote of the Day

Shadow Education Secretary Angela Rayner:

“We have no plans to write off existing student debt.”

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