POLITICS CORNER

[Stanley]

I see that the senior civil servant treated Jeremy quite kindly but attacked Adam. That's fairly safe, shouldn't rock the boat.
Spanish government throws another €19billion they haven't got at Bankia and start worrying about the other banks who are exposed to losses from property investment.
Madame Lagarde tells Greek electors worried by the effect of the austerity cuts on their children's schooling that she cares more about education in Niger. She suggests the best thing they can do now it is pay-back time is hunker down and pay their taxes. Hard news but accurate.
Cameron comes out strongly in defence of Jeremy. Can't quite work out why he has done this. It's bad strategy, far better to keep quiet until J has appeared before Levenson. Could he be under pressure to make a stand from inside the party? This could be a mistake....
Grant Schapps and Mary Portass to save the High Street? Why am I not impressed....

[Tardis]

Nelson has 'won' through to be one of the Portas Pilot schemes, which means that it will get another £100k from central govt, and some civil service time.

More money poured down the drain?

[Tizer]

When asked if she was saying to the Greeks and other European nations that they had had a nice time and it was now payback time, IMF head Christine Lagarde is reported to have responded: "That's right." I wonder if she realises that not everyone jumped on the corruption and spending bandwagon and that such comments are offensive to those who were more moderate?

[Tardis]

Yes, she is the grauniad today:

http://www.guardian.co.uk/world/2012/ma ... e-imf-euro

I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education… I think they need even more help than the people in Athens.

[Stanley]

What Madame Lagarde said was rough but unfortunately true. I'd rather hear people like her telling the truth than obfuscating to avoid upsetting anyone. Reports this morning that her Face Book account is under attack.
The row over Baroness Warsi's expenses claim gets murkier. The man who blew the whistle by saying he was never paid for the accommodation is head of an organisation that expected support form the Baroness but didn't get it. More to do with personal rivalries than serious wrong-doing. Regardless of that she exposed herself to the attack, not very clever.
Leveson will be high profile this week. We can expect Blair wriggling his way round questions about why he flew half way round the world and what deal was made. I think we are also promised Lord Mandelson..... Deep Joy!
I suppose Leveson is essential and is shedding light on dark corners but wonder if it is distracting from the really important issues of the day?
More problems around moving tenants out of London. Worth remembering that a recent study estimated that less than 15% of the public service cuts have actually bitten yet. We can expect an escalation in stories like this as the real problems surface.

[Bradders Bluesinger]

"Pasty" Tax U-turn could mean one of two things....
Either Cameron wants another peaceful holiday near Daymer Bay again this year......
....or there's going to be something bad happening later today which needs A.D.V. (attention diversionary tactic )....
It could just be that the family he stays with have a chain of bakers shops and a caravan park ,or six....I dunno .....but there's a "rabbit off " somewhere !

[Stanley]

He may have connections in the static caravan home business as well because the proposal to go from zero rating to full VAT has been cut to 5%. Whatever, it's a pretty shoddy performance in budget setting. One wonders not only about the attention Wee Georgie paid to the detail but how competent his advisers and civil servants are, or were they just ignored?
Another rethink/U-turn is that the proposal to allow closed proceedings in the courts where sensitive information would come to light has been watered down. Inquests are no longer included and the test for closed civil proceedings has been stiffened from 'public interest' to national security. This concession is not going to satisfy the opponents of secret courts, especially Nick Clegg and the Lib Dems. Coalition friction is alive and well.
The markets have had a look at Spain and don't like what they see. The interest rate on ten year bonds has gone up to 6.5%, the danger zone. Stock market in Spain fell to a nine year low yesterday and more people are comparing Spain to Ireland where the problem was the same, massive debts in the failed construction industry. Problem is that Spain is a far bigger economy and the amount of bail-out will be much higher. Bankia isn't the only institution with bad debts and nobody is quite sure what the scale is yet. In Greece the EU is playing hard ball and assuring the electors that the only way they can stay in the Euro is vote in more austerity.
The problem is that while all these shenanigans are going on capital is being moved on a massive scale and the longer it takes to get a resolution in both Spain and Greece the more damage will be done to the Euro-zone as a whole. The train wreck continues.

[Stanley]

There is evidence of increasing unease in the ranks of the Tories about the number of policy reversals we are seeing. Even the Daily Mail sees it as evidence of ineptitude at best and incompetence at worst. (LINK)
As if they weren't in enough trouble.... One of the major exports of the Mediterranean countries is olive oil and the market price has collapsed. This is blamed on two things, over-supply and the activities of the supermarkets who, as the biggest buyers, set the farm gate price. In Spain, Italy and Greece olive oil is used as a loss-leader. Don't hold your breath for prices to fall here. The oil in the UK system now is at the higher price. It remains to be seen whether the price will eventually fall in response to market prices. Anyone like to take any bets?
In the face of what is now virtually universal agreement that the Coalition cuts were too far and too fast and have crippled growth one would expect some response from Cameron et al but it looks as though they are using the excuse of waiting until the dénouement of the EU problems becomes clear. This is clearly not good enough, it is simply kicking the can down the road and 'steady as she goes' governance. It is high time that some clear and radical policies emerged. The excuse is given that the markets would punish the UK for using an element of deficit-financed spending to stimulate growth even though this is what the markets are calling for, they can see that increased growth is essential. What make it even worse as a policy is that financing the increased social costs of austerity is itself forcing government borrowing up. Remember that the cuts haven't bit home yet and this situation is going to get worse. There would appear to be more danger in pursuing the cuts to their logical conclusion than borrowing to invest in growth. Is anyone doing the sums?
Meanwhile the EU goes quiet as the internal struggle against increased federalisation goes on in the internal discussions. This is going to take years, time for us to bite the bullet and institute independent policies. The funny thing is that the Coalition has the best reason in the world for a change of policy. Conditions now are totally different than when the austerity package was introduced. Action this day!

[Bruff]

It's seems the U-turns are being presented as evidence of listening. Fair enough. But shouldn't you do this before you make an announcement? Why? Because it saves time and effort and therefore cost. In addition, serial U-turns could be taken as evidence of a seriously malfunctioning political antenna. Which is not a desirable trait in politicians.

Richard Broughton

[Stanley]

Exactly my point Richard. I know that assessing policies and drafting legislation has always been fraught with difficulty and susceptible to mistakes if not done carefully and slowly by competent lawyers and advisers but during the last twenty years it seems to me that for whatever reason, it has deteriorated. The flaws seem to be in direct relation to the speed at which it is produced but there is cause to wonder about competence and how cuts in government departments have affected it.
I listened to Andrew Lansley using the politics of envy as justification for the changes in pension arrangements in the NHS. I have news for him, I fond it quite reassuring that my medical resources are held in such high esteem that their market value is increased. The question is not ultimate pension levels, that's only statistics anyway, the point he should be addressing is why the doctors feel so strongly about this that they are doing the unthinkable, withdrawing their labour from non-essential treatment for a day. One also wonders about the definition of 'non-essential'. I think that if I was waiting for a hip replacement to relieve intolerable pain I would have a different view of what was 'essential'.
The plot thickens in the Coulson investigation, he has been charged with perjury for his part in the perjury trial of Tommy Sheridan. Probably the worst political appointment Cameron could have made and it has echoes of Richard's point about the political skills of our leaders, or even their native common sense. Tommy Sheridan will be watching with interest. Lots of mileage in this.
Meanwhile, in the EU the flight of capital to 'safe havens' has reached the stage where German Two Year bonds are 0% and flows into UK and US bonds have increased. Some 'experts' are even considering a point where investors pay Germany to allow them to buy bonds, in other words a negative rate! The focus now is on Greece and Ireland as well as Spain. Greece and Ireland are in effect locked into election.referendum which in essence give a choice between staying in the Euro and accepting indefinite austerity and going out and suffering the consequences over a shorter term. Great choice!
Attitudes in the markets seem to be hardening. Bond interest rates for the usual suspects are rising to the levels that triggered the Greek bail-out but in fact are worse than they seem if the differential between them and German Two Year bonds is taken into account. I think the market traders will be alive to that one!
I started taking an interest in politics many years ago and the thing that hits home to me is that what passes for normality these days would have been unthinkable at any other time in my life. It is economic warfare driven by all powerful markets and the inertia in the system militating against the radical changes that are so obviously needed are so great that I can't even imagine a way out beyond biting the bullet and accepting the fact that Capitalism needs a radical overhaul. How do you get a consensus for that? Tin hats on lads, the train wreck accelerates.

[Stanley]

Ossie makes another adjustment to the budget by removing the proposal to cap the tax relief on charitable donations. Some observers refer to hiding the bad news behind the Jubilee bunting, others, and I agree with them, think it's just a matter of getting the bad news for the government out of the way. I saw one comment that opined that the best thing to do was to tear up the budget and start again. Not too sure about that because one of the advantages to the government that has accrued from the recent spate of about turns has been that the rest of the budget has largely escaped scrutiny. This may be seen as a good thing by the Treasury.
You don't need any reminding of the latest dire news from Spain et al but what did strike me was the escalation in language from senior people in the EU like the head of the ECB and the economics commissioner. The words 'disintegration' and 'failure' are being used by normally reticent people. Hard to say whether this is just a recognition of the reality or part of the campaign to frighten people into agreeing to the fiscal reforms that will lead to central budgeting. The leaders of the EU are painfully aware of the shortcomings in the original treaties which have inexorably brought the Euro to the state it is in today and in their heart of hearts they know that the only long-term solution is central budgeting and eventually a full federal system. Their problem is that this is political dynamite and until now there seems to have been a voluntary code not to make this explicit. The big problem is that the short-term sticking plasters that are holding the EU together are too expensive to sustain. Greece was a possibility but larger economies like Spain and Italy are a different kettle of fish. It remains to be seen whether Ireland caves in and accepts indefinite austerity in exchange for another expected bail out.
Looking at the Jubilee frenzy and the hype of the Olympic games I wonder whether they are being used as a diversion and what the hangover will be like when they have subsided. I have this dreadful feeling that, like the Roman emperors, bread and circuses are being used as a political shield from reality. Or am I just an old cynic..... One thing is certain, later in the summer everyone is going to have to face reality and I suspect it will be worse than any of us feared. Sorry, I don't see any reason to be optimistic.

[Tardis]

Chris Huhne & wife up before the bench.

She pleads not guilty on the grounds of marital coercion. He does not enter a plea

We could be seeing the end of his career as an MP, meanwhile the public are still paying for him (if he is found guilty will he be asked to repay?).

[Stanley]

And about time too...
Still can't understand why Cameron keeps telling us Hunt has 'his complete confidence'. More to do with internal Tory rumblings than common sense.
Could be a crucial weekend for the EU and the markets. I get the feeling we are near to a tipping point. Jaw jaw isn't working, the capital holders want positive action. Rise in US unemployment isn't helping and China is looking less stable, they have their problems as well. Not long since the EU was asking them to bail Europe out..... The bottom line is that there isn't enough real money in the world to pay all the debts.

[Tardis]

Would appear that part of the discussion around down sizing regulation has now come to look at the necessity of CRB checks that were draconially applied under the last government.

Whilst I agree with the revision, I do hope that the government doesn't fully embrace the stance of the Daily Mail

The example of the children in Rochdale should serve as an example that the pieces of paper did little to actually protect the vulnerable

[Tardis]

Apparently the EU released a report on the level of taxation.

UK gets 44% of Treasury from direct taxation of earnings and wealth, whilst France gets 22% and Germany 27%

Could be selective reporting, but since industry can reclaim much of the indirect taxation it would suggest that the UK is massively uncompetitive within the Eurozone, never mind the rest of the world

Interesting too that it is the FT that picked it up, not the Tax Payers Alliance, although I do note that some of the right wing tories have now starting tweeting about it.

Also interesting that MP Douglas Carswell is "crowd sourcing" his private members bill on Guido's site. 5 options, but you get a virtual vote www.order-order.com

On the subject of tweets, it would appear that the Labour Party don't like people asking questions as I am now blocked from receiving their news tweets. Still get all the other parties, and I ask them questions too

[Tardis]

Pendle appears to be trying to serve Tree Preservation Orders on the woodland that surrounds the Silentnight site

Documents here:

http://www.pendle.gov.uk/meetings/meeti ... _committee

Private land, and a TPO would mean that it could not be used as a resource for those in the town who might like wood for their wood burning stoves since the trees are all species that will do the job very well

[Stanley]

Another, and this time welcome, U turn was quietly slipped out under cover of the Jubilee. Plans to sell-off parts of the Air Traffic Control system have been dropped.
The Tokyo exchange opened this morning with a fall. Bank Holiday today so any bad news will not come till Tuesday. We have just had a report that UK manufacturing is shrinking faster than anyone suspected. Watch out for another revision of projected growth figures for 2012. All the signs are pointing the wrong way..... Full blown global recession is not off the cards despite all the hopes pinned on China and the US.

[Tizer]

Yes, and US employment figures are lower than expected, China's manufacturing has dropped to lowest so far this year, India's lowest for a decade, and Japanese exports are expected to crash due to a strengthening yen (itself due to people buying the yen as a safe haven!)...not to mention the eurozone.

[Stanley]

News this morning of some bad figures coming out of Australia. Quantas forecast profits down 90% and shares fall 18%. Exports of iron ore and coal are down as China manufacturing contracts.
Markets in UK closed again today so we can keep our heads buried in the sand....

[Tizer]

Michael Goldfarb makes comparisons between the eurozone crisis and earlier times such as the Great Depression and the Marshall Plan...
http://m.bbc.co.uk/news/magazine-18281576

[Stanley]

Interesting article and essentially correct, thanks for that Tiz. He makes a telling comparison between the immense wealth and autonomy that allowed the US to implement the Marshall Plan and the present situation where states like California are putting strain on the Federal budget. Nowhere near as easy of course and a good parallel with the relationship of the rich members of the EU and the poorest. The factor that is missing in Europe is the federal structure that allows Washington to impose solutions if necessary by law. The big problem for the EU from the beginning is that they kicked the ball off without having a proper federal structure and what we are seeing now is a consequence of this omission. Worth remembering that it took a bloody civil war in the States to achieve eventual full integration.
I was listening to the commentators recounting the difficulties Spain is facing as the market jacks up interest rates on bonds to the point where the loans are useless, they just make things worse. The only way out looks like a bail-out from the IMF and the ECB with attendant austerity measures. The thing that strikes me is that this isn't another Greece, it's much more simple, the consequence of reckless landing by the banks for overblown construction based on the mistaken theory that in the 70s the world had invented the 'New Economy'. Remember that phrase? What happened was that the banks piled in lending money that they hadn't got and had to borrow (phantom funds) to clients who failed as reality struck home leading to the original credit crisis of 2008. The scale of the problem only became apparent when the Spanish government forced an amalgamation of some of the biggest lenders and formed the new institution Bankia. It turned out that they had liabilities exceeding assets of at least €19billion (and rising). This is where Spain made the same mistake as the UK did in 2008. They bought a large proportion of the bank's bad debts, in effect they nationalised the bank and it became government debt. The markets recognised the syndrome, the government was borrowing money (more phantom money) at low interest rates to support the unsupportable. The consequence? Spain's bond rate climbs to a level which is unsustainable. Why did they do something that was obviously a repetition of the original mistake. Political stability and protection of the living standards of the electors. The story rumbles on.
But.... we are seeing consequences which may, in the end, be a way out of this catastrophic sequence of bad judgements. There is a growing recognition that the banks should not be allowed to make the risk, take the profit and then offload it onto government. We shall see less of this solution, instead, the shareholders and the banks will have to take the first hit. It will take a long time for this change to make a difference but at least sanity seems to be creeping in.
Funnily enough this was what I was arguing for four years ago, large sections of the bank debt should be abandoned and left to the markets to sort out. Instead of chucking all the money at the banks who were 'too big to fail', at least half should have been injected into the domestic economy to stimulate activity and gain the benefits of the multiplier effect as the funds moved through the economy. The people who argued against this 'Keynesian' solution saw nothing wrong in using deficit based finance to shore up the institutions which had caused the problem in the first place but who were seen to be 'essential to the economy'. It may be that we are seeing the start of the modernisation of the capitalist system that prevailed until five years ago. About time.... We need 21st C solutions, not blind adherence to a 19th C concept.
Sorry to go on but another thing that struck me was that all over the world small groups of experts are sat in small rooms thinking the unthinkable, the total collapse of the global economy. These may be the forums that will eventually force the shift from our present unsustainable model. I wish them well....

[Tardis]

Interesting to hear Evyn davies opening question on Today to Lord Precott of wasnae me: "Are there more important issues to write to Ms May about?"

They were talking about the unpaid volunteers on work experience for the jubilee who an employee of the company left on their own for 2 hours at 3am.

[Tizer]

We might all get a surprise and find that `total collapse of the global economy' doesn't occur, indeed perhaps cannot occur. The `too big to fail' might turn out to be correct in more ways than one - the global economy might have a life of its own, a built-in resilience, that means we can't even make it fail if we tried. After all, we've all got to carry on our lives and that means selling, buying, bartering will continue. The commentators would throw up their arms in disbelief if they heard me saying that, but stranger things have happened. Economics is based more on opinions than on any rigorous science, and the opinions are often those of people with a vested interest in the outcome.

[Stanley]

You're right of course Tiz. The thing that strikes me is that when out financial system writes off an asset, say in a forced bankruptcy, the physical business and labour resource is still there unchanged. Consider a repossessed house falling in value. In both cases it isn't the actual resource or asset that has deteriorated but the capacity of that resource to provide profit for the financial industry. People speaking in defence of capitalism quote this as an example of how the market makes cheap assets available to new owners unencumbered by debt. Problem is that this mechanism often results in scrapping or under-use of assets including the labour force. This has always been a good argument for state ownership of the 'commanding heights of the economy' because they can ride out the storm. Opponents of state ownership argue that it is not economic, what they really mean is that it is not part of their profit-making machine. What can't be argued against is that the money injected into the asset by government circulates through the economy and a proper cost/benefit analysis shows that in the end it is profitable for the country. Classic example is the Thatcherite policy of abandoning the smokestack industries and frittering away the windfall of North Sea Oil on benefit payments to a massive pool of unemployment for political advantage. Add to this the social damage and then try to argue in favour of the policy. When the Western governments talk about global collapse they mean collapse of the financial system. It may be that this is what is needed to bring us to our senses. One thing is certain, the present system is unfit for purpose!
As for Pressers defence of the 'volunteers' left under the bridge.... He was right to raise the question of the use of inexperienced people being used for 'security'. The whole of the security industry is a disgrace, most employees have no overtime, many do not have proper benefits and almost all are on annual contracts. Go out and talk to them and you'll find that in order to earn a living wage they have to work long and unsocial hours with no security. Notice that one of the incentives offered to the unpaid volunteers was a certificate that means they are qualified for a job in the security industry for two years. No mention of any training given to them to qualify for it.

[Tardis]

Notice that one of the incentives offered to the unpaid volunteers was a certificate that means they are qualified for a job in the security industry for two years. No mention of any training given to them to qualify for it.

Even the beeb reported that there was full training, equipment and uniforms provided. Not to mention the coaches that brought them into London

The company also admitted the mistake, and I believe that they are to sanction the employee who turfed them off the bus

But getting into London 'early' is an even bigger shock, if you've ever tried to drive into it.