Malcolm Blair-Robinson's Blog, page 159
July 17, 2015
Printing Money? Read This
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Tim Farron: A Liberal Revival?
The election of Tim Farron as leader of the Lib Dems barely made the news and is hardly a headline, given the massacre of the party at the general election. Yet perversely it has added thousands of new members since then and found itself a very different kind of leader. A barnstorming Lancashire christian leaning left is a new experience for the Liberals and may have a greater impact on future politics than most observers expect. Farron is far to the left of Clegg in both style and thought and his election signals a shift leftwards of his party.
Meanwhile the Labour party, looking somewhat rudderless and muddled since the election, is torn. Most of its leadership is on the right, whereas the centre has moved to the left, not just in the UK but all across Europe. Osborne has put his tanks on Labour’s lawn and flustered its leadership and many of its MPs. Yet its voters have moved left. Labour actually increased its vote in May for the first time since 1997. Milliband was not too far left but not left enough, since Labour’s defeat lay in too many of its potential supporters staying at home and too many others voting for UKIP. News that Jeremy Corbyn is ahead in private polls on the likely next Labour leader confirms this.
It will be something of an earthquake if Corbyn wins. People will hark back to Michael Foot, but they will be wrong. Foot was a brilliant scholar and idealist with little practical understanding of realpolitik. Corbyn is nearer to Harold Wilson, who was of the left, but well tuned to the public mood and political possibilities. Most likely the Labour establishment will throw its weight behind one of the other three candidates and Corbyn will lose.
This will leave Labour under Tory occupation and its core vote wide open to an appeal from the left. A Farron led Liberal party might well make deep inroads. The Liberals could bounce back much more dramatically than anyone expects.
July 16, 2015
Greece: EU Shame
The whole of the EU should hang its head in shame that one of its members, Greece, is being subject to the blackmail and coercion to which this impoverished country and its people are now subject. The Euro Group will be condemned by history for defying the principles of fair and just capitalism which it is founded to uphold, in order to disguise the huge losses its own defective governance, lax diligence and plain stupid rules has brought upon itself. To hoodwink its restive voters it has now embarked on a type of Soviet command economics with representatives (commissars in plain English) in all Greek ministries enforcing draconian and cruel financial repression upon a browbeaten population, whose primary sin was to believe a tawdry procession of lying and corrupt Greek politicians, with whom in happier times their repressors in the Euro Group were more than happy to deal.
Just look at some of the list. Top VAT rate 23%, VAT on fresh food, energy and water at 12% and 6% on medicines. These are tough for everybody but pulverizing in ferocity and cruelty for the less well off and potentially fatal for many of the poor. Now this craven bunch of finance ministers, for the most part blind to the enormity of what they do, led by Germany regressed back into a dark past and doing what it does best, subjugation of the weak, meets to cough up more loans so that it can pay itself back for the money it has already lost. It beggars belief.
Confronting Consultants
This Blog backs the Tory government one hundred per cent in its determination to make hospital consultants, who are employed by the State and paid with taxpayer’s money, work to a pattern that suits the ailing, the sick and the dying, even if it does not suit them. It implores Jeremy Hunt to stand firm in the face of the wrath of the conservative elements of the medical profession and not to back down. He must recall the determination of Thatcher against the miners; a cause less worthy and in some aspects shameful, but an object lesson in execution.
Hospitals are like the fire, police or ambulance services. They must be fully operational 24/7. This blog believes there should be a three eight hour shift pattern bringing about the end of waiting lists for anything. It also believes that the notion that many of these consultants can and do moonlight in private practice, giving the minimum permissible hours to the NHS and the maximum to private treatment in order to make themselves rich, is morally bankrupt and should be stopped. Barbara Castle, the redoubtable favourite of Harold Wilson, tried and failed to end this abuse in the early 1970s. Time to have another go.
July 15, 2015
IMF Earthquake
This is the moment when history will record the demise began of the Eurozone and the euro in their original form, set up on an unworkable financial model without any coherent system of governance. It will also record that this is the moment when Germany once again over reached itself and destroyed its leadership authority in Europe. It signals the end of the European Union in its current form. It is the biggest crisis since the end of the Cold War.
What has been revealed is a shocking coercion of a small Member State by a gang of frightened Finance Ministers who deliberately enforced a set of unworkable proposals which would ensure that State was left in penury forever, in order to conceal from their voters the truth; that through bad governance and lax diligence they had five years ago allowed Greece’s borrowing to get out of control. As a consequence many European banks were technically bust and needed rescue. But instead of accepting the fact that Greece had gone bust, they poured taxpayer money into Greece so that it could repay their own banks and financial institutions. They were not bailing out Greece. They were bailing out themselves.
This preposterous process is now into its third installment. Greece remains in the grip of extreme austerity with 30% unemployment, 60% among the young, an economy in seizure and its money run out. Yet of all the bailout money thus far, Greece itself has seen less than 10%. 90% of it goes back to the lenders to hide the reality that they hold worthless assets. This is not capitalism. It is old Soviet style command economics.
But today it is over, although the end game will be long and traumatic. The IMF has released the advice it gave to the Finance Ministers before they took the decision to go ahead. It is unequivocal. The deal is unreasonable and cannot work. The integrity of the Eurozone is completely shot. The future of the EU, and whether the UK remains a member of it, is now wide open.
July 13, 2015
Greek Deal: A Shocking Surrender.
Both the Euro and the eurozone have been terribly damaged by the all night row which has produced for Greece terms which are identical to the kind of sovereignty loss arising out of military defeat. It retains control of its streets but not of its economy. Moreover what is demanded is very bad for Greece and her sympathisers and very good for Germany and her allies. Above all it is a demonstration that there is no such thing a the euro as a single currency shared. It is Germany’s currency used by others on condition they stick to German rules. And the notion that the EU is a democratic union of free people is a tarnished aspiration unsupported by events. What has been done will not work; first because financially it makes no sense. Second it is politically it is unsustainable because it humiliates and grinds a desperate people into an austere darkness from which nobody has any clue how they can emerge.
This cannot work because none of the endless bailout money stays in Greece. 90% of all the bailouts thus far have gone to repay previous loans. The Eurogroup is lending money on humiliating terms in order to repay itself, so as to disguise the fact that Greece is and always has been from the very beginning, bust. To admit that would reveal to their voters that they had lost all their money. The rot started at the height of the global financial crisis. If Greece had defaulted many if not most European banks would have been in trouble. So Greece was bailed out to save those banks, including German ones. But this violated a basic principle without which capitalism cannot work.
It is the principle of failure triggering renewal. There is a mathematical certainty when an entity of any shape becomes over borrowed; it cannot continue and must go back to square one. This enforces a natural order because the lenders lose as much as the borrowers and that fear is supposed to prevent irresponsible lending. But with Greece the lenders were protected by public money which has now been lost, but which Germany refuses to acknowledge.
To reboot a busted economy money has to be printed and the ECB should have been allowed to do that to reboot the Greek economy right at the very start of this saga. Germany said no and that violates the very nature of what a currency is. Instead of becoming an enabling measure to oil the workings of economic activity, it becomes a meaningless impediment which grinds economic activity to a halt, because there is not enough of it. When the oil runs dry the engine seizes.
The next stage will not be financial but political. Europe is now headed for a political crisis from which it may not be able to survive in its present form. Many might say it does not deserve to. Because what is being done by frightened and exhausted politicians is profoundly shocking to fair minded people everywhere. Bit by bit they will start to raise their voices. It will get very noisy.
July 12, 2015
EU Spectacle
The word spectacle is carefully chosen, since this is what the current drama of which Greece is the symptom, not the cause, has become. It no longer bears any relationship to coherent democratic leadership or process of governance in a workable political and currency union. The cancellation at a moment’s notice of a summit of all EU leaders is extraordinary.
There is a problem with Greece, but it is not that difficult to solve. Indeed this blog working alone would be able to negotiate a workable solution. What is proving impossible is to find an acceptable solution, because the institutions normally established to process decision making at national and international levels are not there, or there in such abundance nobody can detect who is in charge. And to make matters worse the structure of the currency itself is unsustainable as it lacks a treasury and a finance minister answering to an elected government. A committee of finance ministers at loggerheads, elected by only one member state in each case, on conflicting mandates and to differing electoral timetables will work only in the good times and becomes dysfunctional under pressure.
So all we know at this moment is that Greece may or may not go bust tomorrow, the euro looks more like an impediment to growth than an engine of it, and the reputation of the EU as a coherent political union is severely damaged. Beneath that a big gap is developing between the north and the south of Europe, between the politicians and their electors everywhere and between those in the eurozone who want to stand firm to high principle even if it brings the whole thing down, led by the Germans, and by those who feel pragmatic reality demands compromise, led by France and Italy.
At the heart of of this crisis now engulfing the whole EU are three violated principles. You cannot have a democratic political union without an elected forum from which all authority flows. You cannot have a currency which cannot be printed. You cannot have capitalism which does not permit debtors to go bust. The first is violated because the whole EU is wrongly configured. The last two are rescinded because Germany says No.
July 10, 2015
Wars Are Not Won By Evacuations
Churchill’s words at once spring to mind after the Foreign Office advice to British tourists to flee Tunisia ASAP. There is no doubt that IS, now building up its presence in the collapsed state of Libya, with whom Tunisia shares a porous border, has won a stunning victory. One gunman has all but crippled the Tunisian economy by destroying its vital tourist industry. This blog has never had any confidence in the UK Foreign Office and doubts now the wisdom of this call. Would it not have been better to loan Tunisia a thousand British security forces to make the beaches relatively safe? Clearly the decision to go to such a place would have been taken by tourists who knew and accepted the risks and for families it was a no go area. But for those without ties? And running away?
Tunisia is the only Arab Spring country to appear to make a go of it and deserves better support. Next door Libya, the subject of a very ill advised intervention to topple Gaddafi, has now collapsed altogether. Whatever that dictator’s faults and there were many, his country was an orderly state with good services, with whom other nations could do business. Now we have total chaos, armed gangs at war with each other and people traffickers on an industrial scale dispatching a diaspora of the desperate across the Mediterranean to a discordant EU which is unable to agree what to do with them. Meanwhile IS is establishing a base for its next conquest with little to stand in its way.
This is worse than policy failure. It is a collapse of policy to match the collapse of the outcome of its interventions.
Labour’s Opportunity
Yesterday this Blog referred to Osborne’s successful seizure of the centre ground which Labour had thought it occupied, but by using policies of the left (ie higher taxes on the better off and lower taxes on the less well off, the ending of the practice of business owners paying themselves in dividends rather than higher salaries to reduce tax, plus a higher statutory minimum wage, together with a bank levy and denial of higher rate mortgage relief to private landlords). This was a bold move which has wrong footed the whole right wing of the Labour party with its Oxbridge New Labour roots. I also pointed out that Labour remained in possession of a political strongpoint; the reduction of tax credits before the benefit of the new minimum wage is in effect.
Analysis by the IFS reveals that this strongpoint is far stronger and bigger than anyone supposed. 13 million families, no less. Moreover they will always be worse off, even after the minimum wage rise goes live. In other words the poorest and most disadvantaged families are paying the highest price for the Tory cuts. That is where Labour can retrench, re-orientate and build a winning position. There are millions of voters there (reliable working people in ordinary jobs upon whom the functioning of the nation depends, not the sharp elbowed who want to get on now called aspirational) who have deserted Labour in despair, many no longer voting at all. Winning them back will give Labour the keys to Number Ten. But to do that Labour has to reconnect to its roots. It has to move left. If it does not it will lose again and again. If you have a vote in the Labour leadership election, think about that when you use it.
