POLITICS CORNER

[Stanley]

There was a report on World Service this morning about the fraught atmosphere in the campaign in Greece leading up to the election today. The Greeks are confused and getting close to some sort of mass protest. It could well show in the results of the vote. Whichever way it goes it isn't going to be good news for EU, the IMF or the ECB. All the signs are that the whole Euro situation is coming to a head and the next 14 days are going to be interesting. When the dust settles I'm afraid that the buck will stop at the politicians who have failed completely to manage the system. My impression is that all they are doing at the moment is trying to buy time in the hope of a miracle. We are told that the market is a perfect regulator. I think that anyone who wants to argue against this proposition in the future will have some good ammunition.
The interesting thing is that though it is being kept under wraps money is being moved as the rich try to get their assets to the safest place, wherever that is!

[Tizer]

Viewpoint: Why the young should welcome austerity
By Prof Niall Ferguson BBC Reith Lecturer 2012, 17 June 2012

"Governments should be more honest about the size of their debts and young voters would be wise to get politicians to pay them off as soon as possible, says economic historian Niall Ferguson in the first of his BBC Reith Lectures. The critics of Western democracy are right to discern that something is amiss with our political institutions. The most obvious symptom of the malaise is the huge debts we have managed to accumulate in recent decades, which - unlike in the past - cannot largely be blamed on wars.

"According to the International Monetary Fund, the gross government debt of Greece this year will reach 153% of GDP. For Italy the figure is 123%, for Ireland 113%, for Portugal 112% and for the United States 107%. Britain's debt is approaching 88%. Japan is the world leader, with a mountain of government debt approaching 236% of GDP - more than triple what it was 20 years ago. Now, often these debts get discussed as if they themselves are the problem, and the result is a rather sterile argument between proponents of "austerity" and "stimulus". I want to suggest that they are a consequence of a more profound malfunction."
Continues here LINK

[Stanley]

Funnily enough Martha has just sent me his latest book, 'Civilization. The West and the Rest'. He published it in 2011 and I started it yesterday. The first thing that struck me was that it was a pity he hadn't delayed it for a year because the latest upheaval has escaped the net of his book. It sounds as though he has revised the lectures in the light of present knowledge. The speed things are moving now he might even be revising as he goes along!
The Greeks seem to have elected the more moderate faction in terms of modification of the austerity conditions but even they want easing of the terms and they may have to go further in order to get the coalition needed to form a government. They have three days to get their act together. Problem is Greece needs money immediately and the Troika will not be in any mood to start new negotiations, things are moving too fast. Hollande in France has won enough support to put his anti-austerity measures in place. This reflects the general position in Europe. We keep hearing what Merkel thinks but the big question in Germany is what do the electors think? I suspect that they are more inclined to the Hollande view than the Merkel position. It looks as though the markets and the finance ministers are viewing this as the answer to their problems. Somehow I doubt it. The phrase 'clutching at straws' springs to mind.
Osborne and Cameron have changed their tune and are trying to reassure us that we are not as vulnerable to EU or Eurozone problems as others. They have evidently realised that they went too far when they exaggerated the dangers to bolster their case for steady as she goes. This is political management when what we need is radical policy decisions. They are still tinkering with the mechanisms not readjusting in the light of the present situation. Like Spain, they are focussing on the banks instead of the growth problem. Speed is essential and they have not yet admitted that the most efficient way to kick-start the economy is address the fall in disposable incomes and demand in the domestic market. The toxic effects of their austerity measures haven't hit home yet in economic terms, the problem is lack of consumer confidence. This was the big mistake in their knee jerk reactionary policies and I'm afraid we will reap the whirlwind. This is one of Ferguson's main theses, that the problems we see in the west are are result of the failure of institutions like politics and financial management.
It's going to be an interesting few weeks.....

[Stanley]

If you are interested have a look at THIS. It's a piece by Paul Krugman on 'Greece as a victim. Worth a coat of looking at I think.

[Tardis]

Greece blinked first

[Stanley]

I wonder what the Greek election result would have been if Merkel had made her statement that there would be no election bonus two days earlier. Of course it could be the start of a negotiation position but it will weigh heavily on the actions of the new government if and when it gets it's act together. There were some interviews with ordinary Greek people on the World Service this morning. Germany in general and Merkel in particular seem to be the bogey men, all agreed that whatever happened they were in deep trouble. The markets gave their verdict after an initial hope-fuelled rally. Spanish bond interest is now over 7% and Italy's is rising. Nobody knows how much capital is flowing out of the Mediterranean countries but the suspicion is that it is big enough to be a significant part of the problem. The G20 conference in Mexico has become the Save Europe initiative. All the portents point towards a continuation of the slide towards oblivion not only of the Eurozone in its present form but possibly the original concept of the EU project. The short cuts taken at the conception of the Euro are coming home to roost. There has to be total political and fiscal union for the concept to work and this will become the new goal. Much talk of the arrogance of EU politicians in thinking it could work despite the flaws. My prediction is that the EU focus will be on internal reorganisation leading to a federal system and a smaller, possibly two-speed Eurozone. In effect, the failing countries will be left to sink or swim because the German electorate are not going to allow their treasury to be drained dry by what they see as the profligate members. All this will take too long to aid the global economy and it may be that the attitudes of the countries at present blaming Europe for all their problems instead of recognising that it is a symptom of a wider problem, not the cause.
Cameron gives advice to the EU to get their act together and address the problems in their policies and actions. He would do better to do the same thing himself and take notice of the evidence in the UK economy that austerity measures are part of the problem of low or falling growth. He should start putting into effect what he is recommending for Europe. They could start by reading the history.....

[Tardis]

The German Press is urging Merkel to leave the EuroZone, and without German support the whole of the EEC will have to be renegoitiated

[Stanley]

In case you hadn't noticed, the whole of the EU is being redesigned already!
Watching the comments coming out to the G20 in Mexico I was struck by the fact that Greece and Europe were the major topics. Understandable because it the moment they are the greatest danger to global economic stability but I fear that they might be used more as a scapegoat than a symptom of global ills in economic management and debt. The other thing I noticed was that the focus is moving away from austerity and starting to focus on ways to attack the real problem of economic activity. This is the area of policy where Cameron and Osborne are failing us at the moment.
I suppose the fact that 'inflation' fell by 0.2% last month will be hailed as good news by the Coalition and proof that things are improving. But.... It was the lessened world demand for energy that brought the price of road fuel down and low-margin selling of clothes to reduce stocks that effected the reduction. Food prices rose by 0.4% in the same month even though fruit dropped because of a good season. This hits the poorest in society. If you're not running a car or buying clothes you are actually worse off.

[Tardis]

Some people believe that Merkel has not told the German people just how much these bail outs are likely to cost those tax payers.

If Germany was to withdraw it would instantly mean a massive devaluation of the Euro, but also much greater difficulty in raising those funds for those cherished welfare state projects.

Like the great dickens quote, you can only spend what you have

[Tripps]

"Like the great Dickens quote, you can only spend what you have"

Where have you been for the last twenty years? "For everything else there's Barclaycard"

[Tardis]

"Like the great Dickens quote, you can only spend what you have"

Where have you been for the last twenty years? "For everything else there's Barclaycard"

OK until the bank takes away the card

[Tardis]

Local Politics

Pendle Scrutiny on Town Centres:

In the end it was agreed that Councillor Lindsay Gaskell and I (Kath Haydock) would work together to produce a plan which will focus on issues which are common to all our town centres such as town centre grants and planning considerations, and on potential alternative uses, i.e. other than retail.

My note: nothing about retail, car parks, toilets, signage, roads which are most distinctly within the remit of the Council.

and if you are at all interested the Scrutiny next week is on Countryside Access, which is basically footpaths etc. You can give submissions to Kath via:

kath.haydock@pendle.gov.uk

Documents may appear on the pendle website, but I find tend to have the wrong date on them

[Stanley]

Jeremy Hayward let the cat out of the bag yesterday when he said that less than 25% of the cuts had taken effect and we face at least ten years of austerity. Just what I have been saying but as things are going at the moment ten years could be optimistic. Cameron's right wing is getting restive, they are looking at the next election. How long before plans are made for the old politician's ploy of a give-away budget prior to the election?

[Stanley]

Gove surprised everyone with his proposals for changing exams. It transpires this morning that he kept them secret from everyone including his civil servants because he didn't want anyone 'watering them down' before he unveiled them. So he must have been absolutely sure he was right? "Beware of Certitude"..... Nick Clegg is not happy, two speed coalition?
Christine Lagarde of the IMF has advised the Eurozone to pursue closer economic links (LINK). Quite unusual for the head of the IMF to interfere so openly in the internal affairs of sovereign countries. Could be an indication of how they view the ongoing problems. An EU minister referred openly to the the fact that the Euro 'has a week' to sort out the problems. The markets will react and this could be crucial. It could be an interesting week.

[Tardis]

Interesting to note that the tax debate has not moved on to the subject of how to reform HMRC to remove much of the complexity that ensures accountants can drive these offshore tax haven vehicles

[Stanley]

No surprise there, it's Parkinson's Law. All administrative systems expand to occupy the areas available to them. See Benefits, National Insurance etc.
I'm trying to fathom what's going on in Europe, interesting problem because of course we haven't got all the facts. We get signals Like Conti in Italy(!) saying that there is a week to save the Euro. I'm fairly certain there's a deeper game going on here. On the one hand the Eurozone ministers are doing everything they can to 'reassure' the markets and the global fundholders. The latest figure of €130billion in the rescue fund (not new money, they have included all the money floating round in other EU Intervention funds etc) is obviously not enough to cover worst case if Ireland, Spain, Portugal and Italy join Greece in the slide. Merkel makes hard-line statements about no retraction of austerity measures but at the same time is forced to accept wider opinions about the need to relax austerity and stimulate growth. I think the basic problem is that Germany, as the strongest economy has to run with the hare and the hounds at the same time. The German electors won't wear spending 'their funds' to support the dodgy economies but at the same time Germany can't be seen to be threatening what is in effect the withdrawal of Germany from the Euro. The public face at the moment is a balancing act between these two policy imperatives. I have little doubt that in the back rooms the exit strategy from the present version of the Euro is being worked on and the most likely scenario, perhaps the only one that can work, is to have a two tier Euro structure with a core of the most robust economies and a periphery of second class Euros at a lower international rate for the secondary members. The root problem for the countries that are in trouble is that they can't adjust their rate, in simple terms they can't devalue. This was the problem built into the Euro when it was first put in place and the only way it has survived is by using sticking plasters. The problem now is that the size of the plasters needed is too big for even the whole of the EU to support. They are defending the indefensible and the logic is that this has to stop.
So, what is going to happen? I don't know, but it has to be quick, the time-scale is now weeks if they are lucky. I don't know what the cunning wheeze will be that solves the problem but I can't see it being done without radical surgery, the dodgy economies are going to have to be left to sink or swim but within a framework that gives the impression that the greater EU project is still intact. A good trick if they can pull it off. The train wreck continues. Tin hats dusted and at the ready!
It's sad for someone like me who saw the worst effects of a Europe divided and at war. For that reason I was always in favour of the European Project but at the same time was wary of joint fiscal control and loss of sovereignty. It looks as though my reservations weren't too far from the truth. With hindsight we had a narrow escape when the debate was whether to join the Euro. I doubt if I'll see a resolution or a relaxation in austerity during my lifetime. What a legacy for our kids......

[Stanley]

The new government in Greece has revealed its shopping list and like any starting position in a negotiation it calls for more relaxation than the EU finance ministers will countenance. Merkel offers no relaxation and no doubt the result will be a compromise. Question is will the Greeks accept it. It's going to be hard-ball and some sort of a decision has to come next week. Interesting......
Meanwhile, at home, Cameron gives the clearest evidence yet that he is increasingly being influenced by the right wing of the Tory Party. He has targeted housing benefit paid to young people 'after the next election' which is pure Tory dogma. Once more he focusses on the easy target of those in most need. It remains to be seen whether this will be a successful election strategy, the electors are beginning to see through the current strategies which are increasingly being seen as favouring the rich at the expanse of the poor. The gap between the haves and the have-nots is widening further and will be a major debate. As in the inter war years, the distribution of wealth is the key to increasing domestic consumption, or to put it another way, the widening gap is holding the whole of the UK back, including the rich, as growth and productivity falls. This is short-sighted and partial economic policy and must be addressed. It should be the next target for the Opposition. No joy for the LibDems in all this, they are being marginalised within the Coalition and their election prospects are dire. It remains to be seen whether they will realise this and fight back. If they are to do anything they need to start now and this bodes ill for the Coalition.

[Stanley]

I like Rowan Atkinson's comment in his new book that the 'Big Society' is a load of aspirational waffle and is simply a cover for spending cuts. I'll bet he doesn't like the latest moves on cutting HB to young people either.

[Nolic]

Comrade, don't you mean Andy Williams? Nolic

[PanBiker]

Is it not Rowan Williams who made the quote?

[Nolic]

Panny, I was trying out my sense of irony Nolic

[Big Kev]

The thought of Andy Williams and Rowan Atkinson, saying it together, tickles my sense of humour.

[PanBiker]

Panny, I was trying out my sense of irony Nolic

It obviously didn't register with me.

[Stanley]

It did with me Comrade and yes, it was a senior moment!
I could swear I heard Cameron mention a 'culture of entitlement' in his speech about cutting Housing Benefits for the young. I wonder if he has ever considered that there is a similar culture on the playing fields of Eton and in the hallowed halls of Oxbridge? What's the difference between an entitlement to rule and an entitlement to support when it is most needed. His argument seems to be against unearned privilege and I suspect there is more of this in the Establishment than in the underbelly of the country. After all, the parents of these young people paid their taxes and fought for a safety net in society and perhaps have more 'entitlement' than someone who fell into privilege (often gained under very dodgy circumstances) by an accident of birth. I'm not sure he has thought this one through.
As forecast, Cyprus applies for a €1.8billion bail-out. Shouldn't be any problem, that's small change from the back of the EU sofa compared to the other failing economies. They take over the Presidency of the EU at the end of June and it will look bad if their banks are going down the pan at the same time. They are already junk bond status.
Some discussion this morning about the role of the ratings agencies with the director of the new body which checks their operations. The general view seems to be that despite the fact that in the past they have been slow to pick up on dangerous situations they have got their act together now and it's unfair to shoot the messenger. I reckon that's about right, they seem to be on top of the job now in terms of sovereign debt. Still some questions about their role with private companies because it is the companies themselves that pay for the ratings.

[Tripps]

"What's the difference between an entitlement to rule and an entitlement to support "

Perceptive comment - reminded me of a song from the Geordie folk singer Jez Lowe The Bulldog Breed. Sounds better with a geordie accent though......

Son of mine, tell me why are you sighing
What worries and cares are you hiding
Father, the whole world is dying
It's crying but no one pays heed

Oh but son, there are people in places
Though we don't know their names or their faces
Still, we're safe in their wealthy embraces
They call them, the bulldog breed

They are the cream of the crop, my son, they're the bulldog breed
They're better than you or than me, my son, the bulldog breed
They're genuine top pedigree, my son, they're the bulldog breed

Ah but Father, these people you mention
There's a lot you can do in prevention
To stop all this death and starvation
If they're so good, surely they'll know

Son, they're working for Queen and for Country
They're too busy to tend all and sundry
Some are born to suffer, go hungry
My son, it has always been so