Tuesday, September 22, 2009

The Woolas

Phil Woolas, the Immigration Secretary, is an interesting minister to keep an eye on. This is purely for the way Joanna Lumley ripped him apart on the Gurkhas issue earlier in the year. It's hard to take him seriously after that.

However, it is shocking to see on Newsnight that Dominic Grieve, his Conservative counterpart, couldn't deliver a knock out blow on the debate over Baroness Scotland. As I breezed over in my last post, it's a no-brainer. Ministerial Code - "must comply with the law". If you get fined by our justice system guess what haven't done...

Better debating skills needed Mr Grieve

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It Seems Rules are There to be Broken

Following on from the expenses saga that so far has left no-one facing charges and has lacked any real consequence thus far for the MPs involved we have now moved to a time where the political elite can make laws and break them with no real consequence either.

We cannot have law makers who create rules and break them existing law. That is simple enough as it stands. But to break a law that you helped create yourself and still expect the power to create more is absolutely unthinkable. There is no possible defence for Baroness Scotland. She created an ill advised law that business was decidedly against because establishing the legitimacy of a potential employee's right to work is red-tape-tastic. She fell short of it, thus proving not only its unworkable nature but also that she isn't to be trusted making law.

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The Oncoming Oil Crisis Gets Breezed Over Again

There were two stories on oil yesterday that entirely contradict each other. One where the Total boss Christophe de Margerie warns that we (whoever that is) are under-investing in tapping reserves. The other where oil prices have fallen by near $3 due to lack of demand.

The fact that these stories come about on the same day illustrates the short term thinking that historians in 50 years time are going to regard as madness. Selfish self interest makes the discoverers of oil fields think that their finds are their exclusive property to sell on and make themselves ridiculously wealthy ignoring the millions of years it took to form.

They genuinely don't seem to care when it runs out, just so long as they get the right price now.

"Finders, keepers" is supposed to an expression found in children. I guess not.

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Monday, September 21, 2009

Conference Season - Lib Dems - Part 2

Vince Cable has finally come out with something mildly resembling a land value tax. It is being worded as a property tax in the media but so far as I'm aware the details are fuzzy. As the BBC puts it, we don't know whether the figures to determine the value of property will be from Land Registry figures, house sale prices or a valuation carried out by the local authority.

It's a start and a policy in the right direction. Taxing the value of property on an annual levy of 0.5% where it is worth over £1m. Personally, I don't think it stretches down low enough. I hate the introduction of artificial barriers. Speculation, and especially housing speculation, forms the heart of economic crisis' and we must bring about disincentives that limit it.

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Sunday, September 20, 2009

This week on Answer the Question - Yvette Cooper

A nice little gem from Wednesday when Mrs Cooper shirked a question from an exasperated journalist (who seemingly had asked the same question a number of times).

This was when leaked figures from the treasury suggested that they have been working to a plan of 9.3% cuts once the election was bagged. All the while calling David Cameron "Mr 10%" and waffling about Labour investment vs Tory Cuts.

It's about 2 minutes into the video.

Source: BBC

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Conference Season - Lib Dems - Part 1

The controversy has begun. On the backdrop of education secretary Ed Balls saying he can save £2bn in his budget without affecting the quality of learning (which implicitly states that he's been wasting money) , the Lib Dem leader Nick Clegg has shaken the foundations of their flagship policy of scrapping tuition fees. This is naturally under the grounds that it'll cost too much in the current economic climate and it should be postponed.

I don't think it's the right line to take. The problem with party politics is that the leading parties all look far too alike. The Lib Dems need clear dividing lines and has to defend them strongly. If a flagship policy doesn't stand up to recession then they have to be very clear when they are talking about "nice-to-haves".

Personally, I'm not a big fan of scrapping tuition fees. The government wish to have a high level of univeristy attendance and that sucks up a lot of capital. Having 50% of the 18-21 year olds taking out of labour pool is a substantial finance burden and it needs consideration as to where those funds will come from. A low interest loan which waits for you to be bringing in a decent sized salarly before repayments begin is possibly one of the fairest ways divisable.

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Tuesday, September 15, 2009

The Things You Hear a Labour Advisor Say

Lord Mandelson leads the Labour Party. Sorry, that full stop came a bit early. Lets try again. Lord Mandelson leads the Labour Party into a new row with the Tories: Reluctant Labour Cuts vs Savage Tory Cuts.

There's a large dollop of truth in that line of thought. The Conservatives believe in a small state and because most of the civil servants the state employ are Labour core they have no problem making that number smaller. Labour on the other hand want the public sector big and protected to secure their core vote.

Go back three months and the line was "Labour investment vs Tory Cuts". This was Gordon Browns line and this change only shows him up as being either weak, stupid or both by having to be told by Alistair Darling and Mandelson that this phrase was never going to wash.

Also at the event where the Business Secrectary was speaking was a former advisor to Hazel Blears. Judging by the angle he was approaching the next election at he was probably the one that told Hazel that flashing a cheque in front of the TV camara was a good idea.

His view was that time has passed on so much that we may have forgotten or not lived through how bad and nasties the Conservatives were when they were in power and we'd be making a mistake to vote them in again on that basis. If only his memory was a little longer, stretching back to the 70's. With the same arguement applied, there's no way Labour would have been voted back into government in '97 if memory of their previous occupation was strong.

Very few will be voting Conservative because they think they'll be great or even good. Most will be voting to give Labour and Gordon Brown a well deserved, brutal and public punishment beating.


Brown Watch 15/09/2009

I think I say this every week that I don't want to run down Gordon Brown each time I feel like writing a blog post but he just has this way of saying things that set me off.

His interview with bank-run horn blower/Business Editor of the BBC Robert Peston yesterday:

Peston: It turned out that our banking system here in the UK was one of the two weakest in the world. The other banking system that was in as much difficulty was the American banking system. Do you have no personal regret about failing to spot that?

Brown: No, I've been very clear. We should all have been supervising more.

You what? He has no regrets about not spotting the weakness of the UK banking system yet in the same paragraph says they should have been supervising more. The man that bought us and demanded "light touch" regulation knows it was a mistake but doesn't regret it.

Then he goes on about saying that we have learnt the lessons this crisis should teach us and that he wants to teach the rest of the world. All the while that sickly smile of his comes about as finishes the sentence that takes the scene away from the domestic to his more comfortable turf of the international.

Furthermore. He refuses to talk timing of these inevitable oncoming cuts in public spending. This time he's hiding behind France, Germany and the USA. Happy to lead when it comes to spending money, desperate to follow when it comes to saving it. For a man that has "saved the world" he don't half find it hard to just plain save.

The implied logic of that is he is not sorry about leading us into this mess. Reassuring that. Best let him get back to poisoning the well...

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Housing and the False Dawn

Thankfully there is at least Ernst & Young telling us not to read too much into the current housing statistics which the media is giving the rose tint treatment.

Things are looking up we hear. Monthly increases of 1% or so. The cash rich are buying and the few are selling. Not much of a surprise that the mild house price flop has evened out briefly. Loss aversion is rampant and there is little downside. The answer to affording the mortgage on an overpriced house is to lower the interest rate. Why move and lose money when you can stay on with the repayments maybe £100 or more less than what they were this time last year?

Eventually something is going to have to give. Interest rates can't stay low forever. Ever increasing borrowers in arrears can't be shielded from the lender's dogs indefinitely. The axe continues to fall as companies repair their over-extended balance sheets.

I'm not meaning to paint a picture of doom and gloom. It doesn't have to be that way. Just saying we've got to get real some day. With the UK average salary at £33k that would put the necessary average house price at roughly £140k (3.5 x salary + comfortable 20% deposit). We're not there by a long shot with average house price still lurking about the £200k mark.

Headline, until the housing market drops somewhere in the order of 30% we're a long way off sane housing prices.

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Sunday, September 13, 2009

Recovery - Or Something Like It

Today was the first time I saw anything of 4 million as a headline feared jobless number as a prediction for the how extensive this recession could be. This came from Brendan Barber, the TUC leader.

Whilst there are recently published figures indicating we are leaving technical recession there is still consensus that unemployment is going to continue rising for some time to come. At the moment those numbers are coming from the private sector as the government "stimulus" and dedication to spending money that doesn't exist on the public sector continues.

Spending is going to have to ease off sooner or later. Redundancies aren't the intention but they will be coming. The "stimulus" is also based off outdated figures. When the treasury was expected to make a loss in July of £500m the loss turned out to be £8bn. We can't afford to be 16 times worse off for long. That would turn Darling's £175bn annual deficit into £2.8tn. Whilst I don't expect things to get that bad, the more figures like that show up, the quicker the "stimulus" will peter out.

Whilst keeping employment high remains a keen objective of any government worried about falling tax receipts, keeping a balanced balance sheet is more important.

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Silly Season

The media talk of August as the silly season. Which is somewhat contrary to what happens today when the political programming resumes for the autumn.

Already I've heard Alan Johnson talk of Gordon Brown as having no faults that need fixing (despite the Prime Minister's own confession to the trade union bosses that he does) and John Denham saying that we should trust labour to get the balance right when it comes to the UK PLC books when they are probably doing enough with "bringing spending forward" to do Enron proud.

Welcome back "sane" season.

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