Saturday, September 22, 2007

Simon Heffer wants war with Mugabe, can't find map

Simon has decided that Mugabe must go and that British military intervention is the answer. Now, Mugabe is a disgusting, murderous genocidal madman and he has wrecked his once-decent country in an orgy of robbery and violence. However, the hard truth is that no vital British interest is threatened by that tyrant, any more than in is by the Burmese Junta. What reason is there for British soldiers' bodies to be returned flag-draped from Southern Africa? Especially as none of the surrounding African countries appears to be prepared to raise a finger to help the suffering people of Zimbabwe. That fact presents a very practical problem in any case, that Zimbabwe is land-locked and surrounded by friendly powers who would not assist an armed British intervention. Simon makes light of this though.
I know our Army is overstretched, but if we can get them into Afghanistan we can get them into Zimbabwe.
What on earth does this mean? Just because our soldiers can be deployed to one country it does not follow that they can be deployed to any other country. This is illogic to the point of idiocy. Maybe we should gently remind Simon that a soldier can physically only fight in one war at a time, and hold a whip-round to get him an atlas.

His other stoke of genius is to privatise the Bank of England, the argument running like this.
As for the Bank he heads, I'd go the whole hog with the independence lark, and privatise it. If the clearing banks are unhappy with the way the lender of last resort conducts itself, then let them run it. The dozen institutions that have the largest deposits with the Bank of England should be allowed to nominate their chairmen to form the court of directors, and one of them should be voted in as governor on a rolling three-year contract. Then, if anything goes wrong, the banks have only themselves to blame and the Government is, happily, taken out of the equation.
Perhaps someone should hold Simon's hand and explain that 'if anything goes wrong' with the banking system it is not just the clearing banks that suffer, it is their customers and just about every one else involved in the British economy as well. The idea that the government could wash their hands of the regulation of financial services is bonkers, and bear in mind it was only a couple of weeks ago that Simon was calling for bankers who didn't behave as he would have liked to be locked up. So, he has travelled the spectrum from extreme authoritarian to libertarian in the space of a few days. Consistency is not really his strong point.

Friday, September 21, 2007

Basildon Council Cabinet passes Compulsory Purchase Order

It was Basildon Council’s Cabinet last night; that is the public meeting of the executive Councillors that run the authority to formally make the key decisions for the Council. Unlike some other Councils we run a mixed party Cabinet, with 8 Conservatives and 2 Labour members. We don’t have to, the Conservative majority could easily dictate an all-Conservative Cabinet, but this way is better for democracy. It does mean, however, that the Cabinet often disagrees and it did last night on two matters. One of these was a compulsory purchase order on a site in Basildon Town Centre. Now, these are often emotive because no one really likes the idea of an impersonal local authority taking away someone’s property, even though they are fully compensated. The trouble is that not doing them can often leave large-scale regeneration plans foundering because assembling the land for building projects can be stopped by just one holdout holding the entire project to ransom. In this case it was a garage, part of a national chain, where the site would contribute to a housing development that we desperately need. Out policy is that we only turn to CPO after good-faith negotiations have been exhausted, and they certainly were in this case. However, Labour, in the form of their leader, voted against it. Let’s hope they wouldn’t do anything so foolish if they ever were to run Basildon again. It is a lack of political push in things like CPO that leaves so many grand regeneration plans gathering dust on shelves. If you want to make a real change to your community it is not enough to talk the talk; you have to walk the walk, and that can mean making hard decisions. If you are not up for that then, frankly, don’t put yourself up for election.

It was the Labour leader alone last night, there was no sign of his deputy, who is now also the prospective Labour candidate for the Basildon and Billericay seat and there were no apologies either. If you are not up for attending Council meetings then that’s another reason to not put yourself up for election.

Thursday, September 20, 2007

Simon Heffer gets it wrong on Northern Rock

Simon opens his latest missive with the following:
Just as war is too important to be left to generals, the economy is too important to be left to politicians. This was blindingly clear from the antics on Monday, when a bank in no danger of failing was underwritten by the Government.
Presumably, Simon thinks that the economy should be run by journalists since he has called for borrowers and lenders to be locked up in previous columns. He is also wrong in a simple matter of fact: the government has not underwritten the bank; it has underwritten the depositors if the bank were to fail. Unless he has insider access to Northern Rock Simon also has no basis for his assertion that it is no danger of failing either. The stock market certainly does not agree; check out Northern Rock's share price, but what do they know against Simon's massive experience in wholesale finance? He then moves to his central thesis.

Taxpayers have now become bankers. At a stroke, the fundamentals of the capitalist creed on which many of us thought our economy was based are compromised. There is no price on risk, except that paid by the state with our money.

Can anyone actually be this stupid and still be able to use cutlery? Regardless of the government's guarantee Northern Rock are still facing the same penalty that any company faces when they make a bad decision: they are going to lose money. The price on risk, which Simon thinks has evaporated, remains the same. All that has changed is that were Northern Rock to go bust ordinary depositors would not be wiped out as well as shareholders. Why it is important for capitalism that grannies' lose their life savings just to drive the point home is unclear to anyone but Simon. His view is that in the absence of customers feeling financial pain British bankers will go crazy.

They now, as I see it, have carte blanche to take the most awesome risks with the money of their depositors, knowing that if they goof badly, the taxpayer will compensate their aggrieved customers.

So, the prospect of financial failure leading to a loss of their jobs, reputations, pensions and savings, most hold shares in their own institutions, is not enough. All that keeps these madmen in check is the thought that their customers might suffer. Not very plausible, Simon. He carries on in this vein for some time with no context on the credit crunch, the operation of wholesale banking markets, the comparative regulatory actions of the Bank of England, Federal Reserve or European Central Bank, nothing, in fact, that a decent treatment of the subject demands. Instead, we get a saloon bar rant of the type that first requires imbibing four pints and a double whiskey. He then gives Gordon Brown a bit of a kicking, conveniently forgetting that he has spent most of his journalistic career cheering him on, before moving onto familiar ground in criticising the Conservative Party. He demonstrates that he is unfamiliar with the Conservative front bench team in the process, which is pretty catastrophic for a political columnist. Hint Simon, you could always use google.

People shouldn’t write about things they no nothing about. The trouble is that in Simon's case that would not leave a great many topics for him to attempt.

Wednesday, September 19, 2007

Allan Davies Labour PPC for Basildon & Billericay

It appears that Cllr. Allan Davies in the new Labour PPC for the Basildon & Billericay constituency, where he will come up against the excellent incumbent John Baron MP, who is the current MP for Billericay.

Based on the Electoral Calculus website, the numbers look like this:

Basildon and Billericay
Region: Essex
MP John Baron (CON)
Electorate64,873 Turnout60.20%

2005 Votes2005 SharePrediction
OTH3,096 7.93%
MIN1,805 4.62%
CON Majority3,587 9.19% Pred Maj 9.18%

Allan is a current councillor on Basildon District Council who currently represents Fryerns, having done the chicken run from Laindon Park in May, leaving is replacement to get royally thumped by the Conservative candidate. He's actually quite a decent bloke, quite Old Labour, though a young man, and not one of these sad individuals that you occasionally find in all political parties who acts as if members of opposing parties are servants of Satan. However, if I had to pick between the two of them to have next to me in a foxhole, or a in meeting room for that matter, then it's John Baron every time. The good thing about Allan being the PPC though is that we should have a decent debate on the issues that matter to the people of Basildon and Billericay, not the unpleasant personalities that have emanated from some previous Labour candidates in our neck of the woods. It should make Basildon Council politics a little more interesting too.

Tuesday, September 18, 2007

Bank of England notices Credit Crunch

The Bank of England finally decided to inject liquidity into the money markets today, releasing £4.4bn at base. This comes weeks after the European Central Bank and the US Federal Reserve started doing the same thing and after repeated lectures from the Bank of England about how there would be no bailout and from the government about a 'return to old-fashioned banking'. Well in practice 'old-fashioned banking' has meant people queueing around the block in desperation to get their money back, and not providing bailouts has meant not providing bailouts to ordinary people who did not chose to punt their life savings on the money markets. That the Bank of England could have thought that they unique among western central banks had it right and the others were wrong smacks of an arrogance that has faced its comeuppance as they caved when the ghastly reality of their Victorian approach graced our TV screens. So, they have damaged confidence in the Banking sector and hence the wider economy when they could have averted it by doing what they are doing today two weeks ago. The government's supine 'trust me I'm Alastair Darling' strategy hasn't worked too well either.

We should all heave a sigh of relief that the short term crisis has abated, but how can we be confident for the future with these clowns at the helm?

Monday, September 17, 2007

Darling guarantees Northern Rock depositors' money at last

The Chancellor has finally guaranteed depositors' money in Northern Rock. That he did so today will come as a bit of shock to some people who were convinced that the Bank of England's loan facility was in some way a 'guarantee' that people's money was safe. It wasn't and until Darling spoke up the smart thing was to get your cash out quick. Now, there really is no need to panic, but there is still some case for evacuating from Northern Rock because while it is saying that it hasn't taken up any of the Bank of England's loan, that is soon going to change. When it does, cheap mortgage deals will start to be financed with expensive money cutting, or eliminating, the margin on the asset. Put simply, while Northern Rock has a good quality loan book in that few of its mortgagees are likely to go bust, it doesn't have a very profitable loan book and it is going to get worse. So, at the very least it won't be able to match the best deposit rates and at worst it may yet fail. If that happens your money may be safe, but it will probably be some time before you can get your hands on it. Simply because of better deals elsewhere and the possibility of some inconvenience then depositing elsewhere is still a rational option. What it isn't any more is immediately urgent, and people have some time to shop around and consider options.

On a political note, if the Chancellor was up for a guarantee then why wait until now? Loss of nerve or just bad timing? Both are pretty important in politics.

Sunday, September 16, 2007

Cameron, Brown, and Northern Rock

David Cameron has written in the Telegraph today to point the finger of blame at the current financial difficulties at Gordon Brown. His key points are that financial regulation is a matter for government and that Brown as Chancellor allowed both government and personal debt to rise unsustainably, making the economy fragile in the face of shocks of the kind we are now experiencing. He is right on all counts, and he deserves credit for putting a strong marker down that this is a political issue as well as a matter for the markets, especially if things take a turn for the worse. Brown should not be allowed to weasel out of his culpability in the general situation, and specifically on the Bank of England's approach to the credit crunch, which has been to place financial virtue above helping people out. I am sure that Northern Rock's customers are especially grateful for that hard-edged approach.

Until Black Wednesday the Conservatives had a seemingly unassailable reputation for economic management. They managed to lose it in more or less an afternoon and Labour has benefited ever since. It has been the economy that has kept a serially incompetent and dishonest government in power for a decade. A credit crunch, mortgage hikes, slowing housing market and rising prices are all factors that could contribute to a political paradigm shift, but much as I wish this lot out I wish it didn't have to happen this way.