Monday, December 22, 2008

The Curse of Castle Circus Strikes again?

One of my very favourite politicians of modern times was Harold Macmillan, the ice-cool composure of his generation is an utter inspiration in these hysterical 24 hour media obsessed world we now operate in.

In 1958 Macmillan remained committed to maintaining full or nearly full employment, bringing him into dispute with many hard-liners in his own party. Super Mac rejected the advice of his more monetarist Chancellor Peter Thorneycroft, and two treasury Ministers (Nigel Birch and Enoch Powell) who wanted to support the value of Sterling by exchange controls which would save the pound but cost jobs. On January 7th as Macmillan was leaving for a Commonwealth tour all three of them promptly resigned in protest.

Mac refused to cancel a tour of the commonwealth and famously described this near-collapse of his Government to journalists as ‘a little local difficulty’.

In fact what he said to reporters at Heathrow airport was this: “It is always a matter of regret from the personal point of view when divergences arise between colleagues, but it is the team that matters and not the individual, and I am quite happy about the strength and the power of the team, and so I thought the best thing to do was to settle up these little local difficulties, and then turn to the wider vision of the Commonwealth”

Parties are a coalition of people sharing a broad philosophy; they are not a firm where everyone has no choice but to put up or shut up. I welcome independent thinking and recognise that councillors have the right, the duty even, to disagree with their party, or their colleagues when necessary.

I think Macmillans quote above sums up almost perfectly how a political party should be run.

In Torbay the Tories have been all over the newspaper for all the wrong reasons this week. Firstly there has been lively row between a councillor and an officer, which became the cause of a disciplinary hearing, followed by the councillor concerned being suspended. This was promptly followed up by the fairly acrimonious resignation of the political assistant to the group- and all under the steely gaze of a local newspaper desperate for copy at an otherwise quiet news week.

This kind of row is not helpful to my election, there is no doubt that the public tolerance for councillors is very low, especially when rows blow up over ‘trivial’ or non essential business matters like this seems to be.

Anything that builds on the idea that all they do is argue about pointless procedures (famously the Lib Dems spent a whole evening arguing about whether to scrap free tea and biscuits a few years ago and a week or two ago our lot spent two hours debating the merits of having free reserved car parking spaces for themselves) is a bad thing and only encourages people not to vote in local elections.

On the other hand I do get frustrated that any disagreement between councillors in the same party is leapt on by the media as ‘a damaging split’. It is simply not possible, or desirable, to have 20+ local councillors agreeing the whole time - democracy and indeed Torbay would not be served with such poor scrutiny.

Councillors are there to debate, discuss, challenge and sometimes even to disagree on your behalf, for the things he or she believes you want; and sometimes this will not be the same as is wanted by his or her party colleages or even the Conservative mayor.

The mayoral system means that the Mayor proposes and the council debates. Broadly councillors and Mayors of the same party share the same philosophy but - as Macmillan was aware - you cannot always see eye to eye.

What they don’t have the right to do is to behave disrespectfully to each other and even more importantly, towards their (our) civil servant employees.

Tuesday, December 16, 2008

Odds Against an early election.

In spite of a real surge in speculation of an early election the betting odds remain firmly against Gordon Brown going to the country in 2009. After days of 'will he go in the Spring?' speculation the money is staying firmly on 2010 as the date of the next General Election.

One reason I am interested in what the odds are is that I have recently changed my mind about this. All the way through the election that never was in 2007 I remained resolute that Gordon was not a man to make a decision before he had to, and that as a result he would always 'put off till tomorrow what you could do today' and not go to the country before the last possible date - June 2010.

Lately - and especially since Mandelson reappeared in 10 Downing Street - I had begun to rethink this - and the evidence is piling up:

1) Increasing guerilla tactics, the recent attempt to destabilise and discredit George Osbourne and the arrest of Damian Green are good examples of the black arts being deployed.
2) Money - Labour has come to an accommodation with the unions and now has the funds to fight if they want it, donations to them are also sharply up and ahead of us last quarter
3) Activity, Labour hyave been a blur of campaigning activity recently, locally as well as nationally, with targetted mailshots going out in all marginal constituencies.
4) Spin, the level of Labour spin has gone up (including spinning knife crime statistics and releasing them early) and manipulating the daily news agenda with repeated and constant news stories designed to blot out any opposition activity. This is a great short-term tactic Governments usually deploy in the run - up to a general election (after a GE is called, the media have to hand out airtime equally).
5) Tax give-away - well some has happened already but I do expect another raft of tax cuts in the spring (all on our borrowed money).
6) Interest rate cuts. Before Bank of England independence it was often the case that Chancellors discovered the 'need' for lower interest rates and base rates were cut. This time it is even easier, Brown has taken control of most of the high street bank network and cut rates that way.

Rumours abound of adverts and airtime booked by Labour in March as well.

So with so much evidence why do the betting markets still not rate the chances?

Probably it is because we have seen all this before. In the lead up to Autumn 2007 the airwaves were thick with speculation of a snap autumn poll and as we all now know, Brown bottled it. Punters think that exactly the same will happen again. Advisers and the party will go to great lengths to prepare for an election that when the final moment comes Brown will baulk from calling.

I am not so sure....

Thursday, December 11, 2008

Will it be a U, V L or W?

The news on the economy continues to be pretty gloomy with another slew of reports out showing the speed of decline in economic activity in Britain accelerating.

The pound has sunk as of today to around €1.13 and a currency trader friend of mine is saying that he expects to see parity with the Pound/Euro at some point in 2009.

The Government have made their rescue plans on projections that this recession is going to be very short and the economy will quickly return to fast growth in the back end of 2009. This is called a V shape recession (reflecting the shape the chart will be) and is a scenario widely dismissed by virtually all economic think tanks, research groups, and most other Governments. Their consensus view about the UK is for a U shaped recession, a period of fall, followed by a series of quarters of zero growth followed by an evential climb back to the long term average of about 2% growth year on year.

The most pessimistic observers feel that we are in for an L shaped recession, a sharp downturn followed by a very long period of flat economic activity; possibly for as long as a decade or more; this is what happened in Japan in the late 1980's when their totally overheated economy bust and it took twelve years of low or no growth to slowly unravel the towering mountains of debt that private individuals, banks and businesses had run up to buy inflated assets that were now nearly worthless. This slump included a period when base rates fell to a minus figure, in other words you got paid to borrow money and banks effectively charged you for depositing money with them (it still didn't work, today asset prices in Japan are still below the levels in 1989; the stock market is still at a quarter of it's pre bust levels).

My own view is that this recession will be 'W' shaped; a 'double dip'. The last period of W shaped recessions was the 1970's when it was almost a permanent time of either boom or bust. W shaped recesssions happen when the 'cure' for the downturn unleashes other unfortunate consequences that mean a quick lapse back into recession.

During the 1960's and 1970's the problem was a chronic capacity shortage in the supply side economy. Governments would stoke up a 'dash for growth' of economic stimuli - tax cuts, spending pledges and government borrowing to 'kickstart' the economy - usually ahead of an election (sounds familiar, doesn't it?). This would lead very quickly to shortages, of goods to buy, property and other assets, leading to almost instant inflation and ballooning wage demands, which in turn would provoke an rapid unwinding of the stimuli, followed by a sudden lapse back into recession, often accompanied by a sterling crisis.

This combination of stagnation and inflation (stagflation) creates long periods when interest rates were lower than the inflation rate, meaning that borrowing money was almost free. This was a disaster for many people who had accumilated savings for their old age, their money became worth less and the income from it was not enough to live on.

It took twenty years of painful restructuring of the economy to cure this disease. Although credited (or blamed, depending on your view) on Mrs Thatcher the beginning of the turnaround was some fiscal discipline on public spending put into place by Jim Callaghan and Dennis Healy after having had their hands tied by the terms of our rescue loan from the IMF.

Gordon Brown seems determined to turn the clock back to the 1970's. His 'fiscal simulus' will create a short-term boost to consumer spending and may well create the impression that the recession is over during the second half of next year. But in creating trillions of new pounds and dumping them into the economy there will be a rapid, indeed I think a drastic, rise in inflation; (the pound in all our pockets is going to become worth a lot less and therefore people will demand a lot more of them for the same goods) and we will soon be facing rising interest rates, rising taxes and more expensive imports which will tip the economy back into bust almost as soon as it gets going again.

The cure for the patient is going to be more damaging than the disease.

Monday, December 08, 2008

What is the big deal over the Green arrest?

Two weeks on from the arrest of front bench opposition spokesman Damian Green by terrorist squad Police and the subject is still dominant in most of the media. Today Parliament held a debate about the issue, specifically the role of Speaker Michael Martin in allowing the police to enter the Palace of Westminster and search a serving MP's office and confiscate and search through confidential correspondance from constituents without a warrant.

As some have pointed out, is it really that important to be arguing about apparently obscure Westminster protocol at a time when the economy is falling off a cliff?

Well in my view virtually nothing is more important than our freedom, and this shameful episode threatans the very heart of the hard-won democracy, Parliamentary power.

Be quite clear, MP's might not be above the law individually but the institution of the House of Commons is; and so it should be. Aside from the fact the it's now become clear to everyone that there is no suggestion that Green had broken the law in any way even if he had had that been in the interests of the public good then he is and should be allowed to, and should only be judged by his fellow MP's.

Think about this, if the House of Commons is ever answerable to anyone other than us -the electorate- it's power is lost; and the power rests in whoever the Commons ends up answering to.

One of the greatest arguments about the EU is the level to which MP's have derogated power to the EU commission, itself a body appointed by political leaders, in a move that has hampered and hobbled their authority.

Thursday, December 04, 2008

Mortgage help for 0.17% of the population

Well it isn't much but I suppose it is better than nothing. About 9,000 families may have their homes saved by Gordon Browns much trumpeted initiative to underwrite the rolled up interest on mortgages where homeowners defer payments and then still eventually default.

This is all well and good but what about all the people who do keep their mortgages up to date? Like so many Gordon Brwon initiatives this one has the potential to backfire horribly as a) people work out that so few will be helped (in the face of 75,000 repossessions, helping the richest 9,000 seems perverse in the extreme) and b) that the net effect of this move is to reward people who have over extended themselves with taxes taken from people who haven't.

As someone called Jon C observed on Politicalbetting this morning:

"In debt? Lied about your income to get a stupidly unaffordable mortgage? Withdrawn some equity to spend spend spend? Never mind! Let the government/taxpayer pick up the bill for you!

I have always lived within my means. I have payment protection insurance (which I will be cancelling). I have not over-borrowed. I have not extended my mortgage to spend it all on holidays, cars and plasma screen TVs. Well I should have done - that is the message from this appalling, amoral, disgusting, reckless, useless government.

I am indescribably livid that taxpayers money is to be used as the latest in a long line of doomed schemes to prop up the housing market and further delay the time when the market’s true value of housing will be revealed. A kick in the teeth for honest people who don’t live on credit.

What about people sensibly renting, not having lied about their income or over-extending themselves on credit, waiting patiently for an affordable house, will they get their rent paid if they lose their job, or as they have to wait YET LONGER for house prices to return to normailty?"

Could this could turn out to be another 10p tax rate fiasco?

Monday, December 01, 2008

Are we really living in a Police State?

As regular readers of this Blog will know, I am not a fan of the Police Service as it is increasingly being run these days.

I have said before that current police are ever closer to a paramilitary hit squad that the approachable law enforcement service we used to know and love, and also pointed out that they have growing powers to act as judge and jury - to assume your guilty and act accordingly, without the need to prove to a judge or jury their case.

The latest news last week from Westminster that a trusted colleague Damian Green was arrested and held for nine hours on suspicion that he leaked (non-security) information to the media is another sign that the police are out of control.

Some of my political colleagues are pointing fingers in the direction of Labour high command and certainly there are questions concerning who knew what about this raid, and when. But in the end the Police alone decided to go for Mr Green - and not just to arrest him but to go in metaphorically 'guns blazing' with a total of nine anti-terror squad officers involved in raids at Mr Greens home, constituency office, and most controversially of all, his Parliamentary office taking his computers and mobile phone, suspending his email account and cutting him off from contact with the constituents he was elected to represent.

The role of an MP is very closely connected to the basis of our democracy, the rights we enjoy as free citizens were won by early parliamentarians - the sanctity of Westminster is based on it's status as a Royal Palace and a Court where the people are represented.

If our police force have come to believe that they act on a higher command than Parliament as it seems they felt in this case, than we have a major problem brewing with our democracy.

There are many potential causes of this malaise, but the most serious of which is the total politicising of senior officers (now chosen not on their effectiveness at cutting crime, but on their willingness to adopt NuLabour political correctness).