Monday, 30 January 2012

Mary Ann Sieghart on the greatest policy blunder of the second half of the 20th century...

The European people have yet to fully understand the real incompetence behind the Euro project. But a good starting point is this excellent piece from Mary Ann Sieghart in the Independent. She concludes with the words, millions of European citizens are now paying (the) price in unemployment, crashing living standards and a desperate future for their children. Someone must be held responsible for the predictable catastrophe caused by this grand idea. Mitterrand is now dead; at the very least, Kohl and his fellow architects should be disgraced.

Tuesday, 24 January 2012

The Limits of Welfare

'A welfare state that works is one that encourages independence. That was Beveridge's insight and a test that the welfare state now fails' concludes the leader in the Times this morning.

Opponents to Iain Duncan Smith's proposed £26,000 welfare cap (equivalent to a gross salary of around £35,000) 'are simply a plea to retain a welfare system which has long since slipped clear of the intentions of it's founders.'

The opposition of the bishops comes in for particular criticism having 'managed to avoid both economic reality and popular opinion at the same time. At a time of severe pressure on the public finances, the country is not engaged in a morality play but, even if it were, the bishops have got the morality call wrong.' Ouch.

Wednesday, 18 January 2012

Explaining Labour's 'U-turn'...

Danny Finkelstein points out in today's Times that Ed Miliband's new economic policy is to continue to oppose the cuts as 'too far and too fast', but to accept that Labour will not reverse them. To which many will ask what is the point of opposing the management of the deficit if it cannot offer the alternative? Especially since it has argued and voted against each and every measure to manage the deficit created by Labour?

Does Labour accept that it spent too much before the financial crash of 2007? No. Does Labour accept that it spent too much after the crash? No. Does Labour accept that the Coalition's plans to reduce borrowing over the lifetime of this parliament were correct? No. So what exactly is it saying? Two things. Firstly, the Labour party want to increase borrowing in order to cut borrowing. Secondly, they are against the Coalition cuts, but at the same time accept them. Clear? Not really.

So let me explain it to you in a different way.

The Conservative party knows that the Euro is a disaster. They have known this since the Euro's earliest conception, and clearly and repeatedly argued why the Euro was ill-conceived and how it's destruction would come about. The European political class of course, was not listening. They are still not listening. But rather than continue to oppose it with every breathe, Cameron and Osborne have chosen to move on. For the last twenty months they have supported Eurozone members - despite the carping from Sarkozy - by urging them to integrate further and more quickly into one federal country, knowing that only in those circumstances will the Euro as a currency become viable.

The Conservatives fully realise the implications of such a move by the seventeen Eurozone nations, effectively becoming one country. They also know that Britain would never give up its sovereignty in such circumstances. Yet they suggest that the Eurozone do something that they themselves find totally abhorent.

You may call this dishonest, disengenuous or even unprincipled. It is all of these things. And it is exactly what Labour is now attempting in its economic policy.

Monday, 16 January 2012

Referenda questions...

A couple of thoughts on the Scottish referendum.

Firstly, this referendum so changes the game throughout the union that it must be put to every voter no matter where they live. It must be a fully national referendum providing a definitive answer to a profound question.

And secondly the question of Devo-max should be put, but not as an alternative - a stepping stone to independence - as Salmond would wish.

The principal question - independence, yes or no - is the important one. But a choice between devo-max or the current level of devolution should be put to those who vote against independence as a secondary question. That way it is not posed as an alternative to independence, but fully recognised as an important choice of degree to those who support the union.

Same old Fitch

Sarkozy may have been downgraded from triple A on Friday, but one ratings agency, Fitch, was notable by it's absence. Both the wonderfully Dickensian sounding Standard & Poors, and Moody's confirmed France's reduction to AA+ principally, I would venture, because it's banks have lent around €480 billion to southern Europe. The equivalent sum from UK banks being around €80 billion.

These of course are the same ratings agencies which spectacularly failed to signal the worst banking crisis in recent history.

And the reason why Fitch failed to follow suit? No doubt some astute financial analysis the others had missed. Indeed, so enamoured was the company by France, it went on to confirmed that it wouldn't change Sarkozy's triple-A rating, come rain or shine. The reason? It's main shareholder is French.

Wednesday, 11 January 2012

The Scottish people don't deserve Mr Salmond...

So finally, having firstly accused the British government of interfering in Scottish affairs - as if Scotland were not a part of the United Kingdom - Alex Salmond and the SNP opt for the 700th anniversary of Bannockburn as their chosen date for the forthcoming referendum on Scottish independence. No emotion there then. Just hard-headed scottish pragmatism.

The first question he needs to answer is which currency Mr Salmond would choose for Scotland - the pound, the euro or the deep-fried Mars bar. If the answer is the pound, would the English let it keep sterling? What a delicious irony awaits there. And as recent events in euroland have shown, monetary union without political union is a nightmare.

Then there's the question of EU membership. For many years the SNP beguiled the Scottish people with the prospect of joining what Salmond liked to call the 'arc of prosperity' - a string of financially prosperous islands across the Atlantic seaboard of Europe: Iceland, Scotland and Ireland. Oh dear. Only Scotland it would seem survived that illusion. Principally because its banks were bailed out by the British taxpayer - something not available to the other two nations. Because of course, they were independent.

'Independence within Europe' was another of Mr Salmond's worthy slogans. Except that as a new member of the European Union the Scots would have to commit to joining the Euro, even if it were to be some way into the future - the EU does not have euro and non-euro members, just euro and pre-euro. Another interesting position for Mr Salmond to have to justify to the Scottish people. Not to mention Scotland's financial committments to the euro bailout fund which would automatically ensue from their membership. But the other side of the coin would also be true. How warmly do you imagine would Germany welcome into the eurozone another small country which spends considerably more than half its GDP in public spending? And this one doesn't even have the sunshine...

Then there is the small matter of the Royal Bank of Scotland which managed to go bust in the most spectacular way through its irresponsible lending policies and inept management. Either Mr Salmond could take responsibility for repaying the £40 billion that mostly English taxpayers have put into it or it could remain the property of the British taxpayer.

There is also of course, the national debt. The Institute of Economic Affairs has calculated that if an independent Scotland assumed its share of national debt dictated by its proportion of public spending then it would start life £110 billion in the red. The question which follows is, would Scotland then still have a triple A rating in the financial markets? Not likely.

Of course, according to the SNP there is £1 trillion in black gold beneath the waters of the North Sea. But UK oil revenues are highly volatile - last year they were £6.5 billion, this year £13 billion. And with the ending of the Barnett Formula, through which Scotland receives a £10 billion annual subsidy from English taxpayers - and which funds many of Mr Salmond's most popular programs, from free university education to free care for the elderly - it will need to make up the shortfall.

All that is quite an ask of any politician. But I am constantly assured by the media that Mr Salmond's judgement and ability is up to it. I just wonder, given the extraordinarily inept judgement that he has shown in the past, whether the Scottish people deserve such folly.