Monday, December 31, 2012

Only thing that really matters in 2013: is eurozone crisis over?

 On the morning of May 7th 2012, Greek voters woke up to discover that they had effectively voted to leave the EU. A majority of the new  members of parliament were in parties that rejected the crippling terms of the latest EU £110bn bailout package. It looked like the beginning of the end for the 11 year old European single currency. The cracks in the European Union began to look unbridgeable

Bond investors across the world reached for their phones. Many financiers decided that the euro was finished, and they placed their massive bets accordingly. It was reported that Lord Rothshild of the banking dynasty, had personally taken out a £130m“short” position against the battered single currency. Surely, the EU could not recover from this! If Greece fell, then so would Ireland, Spain, Portugal and Italy which were all in the same deflationary boat – saddled with over-valued currencies, forced to cut spending in a recession, crippled by unsustainable interest rates on their massive debts. A new word was coined to describe the countries on their way out: “Grexit”

Europe's political leaders seemed caught in the headlights; unable to reconcile the need for fiscal discipline with the imperative of restoring economic growth. In Greece, where the economy had shrunk by 20%, violent social unrest had become an almost weekly occurrence as EU-imposed cuts made the recession even deeper. In Spain, unemployment among under 24 year olds rose to over 50%.. And the contagion began to infect the entire eurozone as France lost its triple A credit rating and Germany, the most powerful economy in the EU, plunged toward recession.

In Britain, the political classes awaited the inevitable. Most of the British media had decided long since that the euro was a dead duck and that it was only a matter of time before it collapsed. You cannot have a single currency without a central government and a central treasury, with the power to intervene in national budgets and the power to issue bonds for every member state. Surely, Greece and Spain would see sense and leave the euro, devalue their currencies, default on their debts like Argentina in 2001, and seek to recover on the basis of low wages and cheaper exports. What alternative did they have? Sticking with austerity was leading to economic depression and social unrest.

But somehow, the inevitable didn't happen. The Greek political parties couldn't agree on a government and decided to hold another election on 17th June. This left the pro-austerity New Democracy, led by conservative Antonis Samaras,  with a reasonably firm mandate to stick with the euro, bailout and all. Greece would not default. Then, Mario Draghi, the head of the European Central Bank, announced that he would do “whatever it takes” to stop the single currency collapsing. Many believed this was just another empty promise from a bankrupt eurocrat, but Draghi proved true to his word. In September the ECB committed itself to unlimited purchasing of european government bonds, and the sovereign debt crisis began almost immediately to subside. The rate of interest on Greek, Spanish and Italian debt returned to pre-crisis levels.

Saturday, December 29, 2012

BBC's Year of Shame. See pages 2,3,4..94.

Herald 27/12/13

Whatever happened to Auntie? One of the prime casualties of 2012 was the BBC's reputation as a solid and dependable institution devoted to nature documentaries and unbiassed news. It was revealed as an demented bureaucracy, run by a management of grasping kleptocrats, harbouring sex criminals and using public money to defame innocent pensioners by calling them paedophiles.

OK. I exaggerate. The BBC is still a great institution...public service ethos...cultural guardian...David Attenborough etc. But if nothing else, the corporation has shown itself to be hopeless at broadcasting its strengths as well as its weaknesses. At one stage it seemed as if every BBC news programme was investigating other BBC news programmes. Shoals of BBC reporters were standing outside BBC premises waiting to doorstep BBC employees about the BBC. We lost track of the number of investigations that were launched over Newsnight, Lord McAlpine, Jimmy Savile. A new word entered the dictionary of infamy, when we learned that lots of senior BBC executives were being “recused” from their jobs. Which seems to mean suspended without prejudice so that they can be given large sums of money.

We now learn from the National Audit Office that 200 managers have received pay offs of more than £100,000 in the past three years. The public spending watchdog has described the BBCs severance packages of up to £900,000, as “excessively generous”. This news made me particularly annoyed because when I left the BBC some years ago I didn't get a brass farthing, or even a bronze bawbee. This was presumably because I hadn't been guilty of gross incompetence, defamation, sexual malpractice or sloppy journalism. I'll know better next time.

The remuneration practices of BBC senior management – most of whom seem to earn more than the Prime Minister - has been a bitter insult to the thousands of BBC employees who do not get large salaries for sitting on committees droning on about imagineering the blue sky challenges going forward. The BBC is not a highly paid organisation, compared with other professions. Most BBC producers – especially in Scotland - accept relatively modest pay as the price of doing a job they love. The BBC also produces an astonishing number of programmes – look at iPlayer – most of which are of very high quality, and makes them very cheaply. But somehow the BBC appears to be completely incapable of getting this message across.

Thursday, December 20, 2012

Better Together's secret weapon: Tony Blair.

Herald  18/12/12

First it was David Cameron, now Tony Blair has entered the fray. He told journalists at a press gallery lunch this week that he stood ready and willing to come to the aid of  Better Together's fight to keep Scotland in the UK. All we need is for Margaret Thatcher to come out of retirement to help save Britain and we'd have the set. The Scottish Nationalists are jubilant. 'Christmas has come early'', said Kenneth Gibson MSP. In Nationalist demonology, there are no blacker figures than these with which to scare the Scottish voters.

But I'm not sure. David Cameron is regarded as a benign irrelevance, Thatcher is ancient history to Scots under forty, and even Tony Blair is not the hate figure he was. In fact, he was never quite the hate figure he was said to be. There's little polling evidence that Scots had any particular loathing for the former Labour prime minister, who of course delivered the Scottish parliament after the 1997 referendum. One episode in particular testifies to the contrary.

It was at the height of the Keep the Clause row in 2000. Cardinal Winning and Brian Souter had staged their private referendum to show that Scots didn't want to lose Section 2a, which outlawed the teaching of homosexuality in schools. The late Donald Dewar was at sixes and sevens; the cabinet was split; the press were in revolt. Church figures were warning about homosexual role-playing being introduced to Scottish classrooms. UK commentators suggested that devolution had unleashed a latent homophobia in Scottish society.

Then, Tony Blair made a speech at the Scottish Labour Conference in Edinburgh in March 2000 in which he ridiculed the alarmism of the Keep the Clausers. “Kids are going to be force-fed gay sex education?”, he said referring to the adverts being posted across Scotland. “And it's Donald who's doing it? What utter nonsense”. And with that the panic subsided. I can't recall any single speech which has had such a direct impact on public debate as that one. Blair clearly carried conviction and people trusted him - rather more than his Scottish Labour counterparts. The Scottish Executive – as it then was - made some noises about supporting the family in the bill, the clause was dropped, and the issue duly died.

Of course, this was before the Iraq war, which destroyed Tony Blair's credibility. For many Scottish intellectuals Blair remains the Unforgiven, though memory of the war is rapidly fading into history for most Scots. Blair is probably more widely remembered here for the struggle with Gordon Brown, his embittered rival for the Labour leadership. In the years before Blair's resignation in June 2007, there was a widespread feeling in Scotland that, in some way, the then Labour Chancellor was more in tune with Scottish sensibilities. It was assumed, without a great deal of evidence, that he was less “New Labour” than Tony Blair, and that his attitudes to issues like the market reforms in the National Health Service was more true to Labour values. This was largely wishful thinking.

Monday, December 17, 2012

Forget Barroso, what if the David Cameron takes Scotland out of Europe.

 Sunday Herald 16/12/12

I don't know about Tantric sex, but the Prime Minister is certainly a teaser. Last week he informed hungry hacks at a Westminster press lunch that he had delayed yet again his long forecast speech on a referendum on European membership. He said that like Tantric sex, it would be worth the wait, though I'm not quite sure for whom. Perhaps he is suggesting that the opposition, or the EU, will be shafted. Or could it be Scotland?

Scottish debate on Europe has been depressingly parochial. For weeks, commentators and unionist politicians have been blasting the SNP for not being able to guarantee that Scotland would gain automatic entry to the European Union after independence. What the myopic chatterati have failed to grasp is that the UK is moving rapidly away from the EU and, under the present constitutional arrangements, is likely to take Scotland with it – at least if the majority of Tory MPs in Westminster get their way.

Conservative opinion on Europe has changed out of all recognition in the past 20 years, since the Tory Prime Minister, John Major, faced down his rebels and ratified the Maastricht Treaty creating the European Union. That was when it was still possible for a Tory PM to say that they wanted Britain to be “at the heart of Europe”. Not any more they don't. They are all eurosceptics now. It is extremely rare to hear anyone in the Conservative Party having a good word for Brussels, which is now universally condemned as a parasitical bureaucracy presiding over a basket case currency that will shortly collapse.

David Cameron is a pragmatist, and doesn't want to cut economic ties with Europe, but he is under increasing pressure and not just from his parliamentary party. The UK Independence Party is snapping at Tory heels in southern constituencies, and the UK press, led by the Daily Mail and the Sun, with their five million readers, are increasingly europhobic. According to YouGov, a clear majority of English voters say they either want to leave the EU or renegotiate the terms of British entry. The Labour leader Ed Miliband has turned trappist on Europe, because he doesn't want to be on the wrong side of public opinion, and is likely to back a referendum on Europe after the next general election. The Liberal Democrats have also called for a referendum on British membership.

Cameron, when he finally gets over his coitus interruptus, is expected to say this: Britain will make a series of proposals for renegotiation to Brussels along the lines of “back to the Common Market”. In other words, Britain would explicitly be opting out of the European Union, and rejecting its right to legislate on UK internal affairs. This will be a momentous step. It will almost certainly be rejected by the European Union because there is actually no Common Market left to join. Britain would have to opt out of the EU altogether and seek status such as Norway, which is part of he European Economic Area.

Friday, December 14, 2012

Independence in Europe. Jose he say "no".

It recalled the BBC Director General, John Entwhistle, being jeered by MPs over the Newsnight/Savile affair.   John Swinney, the Scottish finance secretary, was ridiculed by the House of Lords economic committee on Tuesday for trying to argue that an independent Scotland would be able to remain in the EU because it would still be part of the UK when the negotiations took place. The “last refuge of the scoundrel” sneered one Peer. “Doesn't know what he's talking about” said another

Their Lordships eyes rolled to the ceiling in mock amazement as a diffident Swinney tried to argue that the President of the European Commission, Jose Manuel Barroso, had not said what he clearly had said in a letter to the committee. Namely, that after independence Scotland would become “a third country with respect to the EU” and that the various treaties “would no longer apply on its territory” and that the new entity would have to apply for membership “like any other state”. The chairman, Lord McGregor, treated Swinney as if he were a rather dim sixth former at a minor public school.

It wasn't really John Swinney's fault – the constitution and Europe isn't his brief after all, it is Nicola Sturgeon's. And the patronising Peers, like Lord Forsyth and Lord Lipsey, are of course political appointees and hardly independent authorities. He had been left dangerously exposed by his own party, who've tried to ignore this issue for far to long expecting that it will go away. This won't do. You can't be the party of 'independence in Europe' when the top guy in Europe is suggesting that Scotland would be ejected from it.

Nicola Sturgeon has been dragged kicking and screaming to give a statement on EU membership to Holyrood on Thursday, just as Alex Salmond was dragged to the chamber to explain the non-existent legal advice in October. This is undignified.  Barroso has chosen to get involved in this issue for his own political motives. Bureaucrats, like cushions, ten to show the imprint of the last people who sat on them. Barroso is under pressure from other member states, like Spain, who have their own separatist movements, not to say anything that might encourage secession.

Monday, December 10, 2012

Autumn Statement: The End of the World As We Know IT . (That's if you're on benefits)

 Sunday Herald 9/12/12
   According to the Mayan calendar, the world will end on the 21st of December, but reading the commentary on the Chancellor's autumn financial statement last week, you could be forgiven for thinking that apocalypse had come early this year. George Osborne's admission that his austerity policies will last at least until 2018 has led to much anguish and soul-searching as the Great Recession, as it has been called, slides into a Great Depression.

It's bad. No point denying it. Britain's slump has already lasted longer than in the 1930s,though the impact has been disguised by falling unemployment figures. However, this is largely because millions of people are now working part time in dead end jobs with no security and no future. The problem of public and private debt remains as serious as ever. British households owe more than annual GDP and government borrowing has actually been increasing – though this was disguised by Treasury jiggery pokery in the autumn statement, adding one-offs like the sale of 4G mobile phone licences. The Bank of England has been printing money like there's no tomorrow and British exports have been falling despite the low pound.

All we hear is doom and gloom, as Sir Mick Jagger puts it (though at £400 a ticket he's never had it so good). Some are saying that this is a structural change in post-industrial economies and that we can no longer rely on growth naturally returning after recessions; that we are turning Japanese and face a lost decade or two. But we should beware economic defeatism, however seductive. Doing nothing is not an option, and the government's refusal to act is not entirely because it has run out of things to do. There are other agendas at work here – like cutting welfare and the public sector. The Tories don't want to let a good crisis go to waste. 

Friday, December 07, 2012

George's Christmas message to the poor: abandon hope.

From Herald 5/12/12
   In 1931, when the Labour government of Ramsay MacDonald cut unemployment benefit in an economic depression, the Labour party split and was almost destroyed as a political force for the next decade. But the cuts in welfare made in the Chancellor, George Osborne's autumn statement have not only failed to cause a split the Liberal-Tory coalition, they've won the support of the Labour opposition. In his bumbling Commons response yesterday, the one thing that the shadow chancellor, Ed Balls had no difficulty saying clearly was that “Labour supports the cap on benefits”.

Except, of course that it isn't a cap, but a cut in real terms, since benefits like Job Seekers Allowance will rise at only 1% per year while inflation has been running at 2.5-5%. This represents a significant slice of a very meagre income. The current maximum rate for Job Seekers Allowance is £71 per week. I had to double-check that figure because at first I didn't believe anyone could possibly be live on it.   Of course, those receiving JSA will also be entitled to housing benefit and council tax relief, but that still leaves them with very little for the bare necessities of food, clothing, heat. Living on that kind of level for any length of time would not just be soul-destroying, for many of us it would be life-destroying.

The Chancellor justified the cut, which will take nearly £4bn out of the pockets of welfare claimants over three years, on the grounds that he was taking an equivalent amount from the rich by capping tax free pension pots, ending Swiss tax havens and altering changes to tax thresholds. But this is hardly comparing like with like. Losing tax relief on the top quarter million of a £1.5 million pound pension fund is hardly going to hit as hard as losing £5 out of a £71 allowance, and that is what the poor sod on JSA is looking at over the next three years. And since there is all party support for this squeeze, there isn't much hope of a reversal.

One of the remarkable achievements of this Coalition has been to fundamentally change the terms of the debate over welfare during this recession. There seems to very little public sympathy now for those on benefits. I hesitated before writing this column about welfare because I'm aware that, for many people, the issue is simply a turn off: heard it all before, country's run out of money, we've all had to tighten our belts. Labour focusses relentlessly on “hard working” middle income families – who, it is claimed, lost £1,000 a year through yesterday's jiggling with tax thresholds and entitlements. The Liberal Democrats used to be the party of conscience, but they are now signed up to the austerity programme and seem to have lost their voice.

Monday, December 03, 2012

Leveson Press Law. Don't worry, it'll never happen.

    The debate over Lord Justice Leveson's call for statutory regulation of the press has unfortunately turned into a political bun-fight. Labour are so eager to court popularity by hammering the gutter press that they've embraced the Leveson Laws with hardly a moment's pause. Meanwhile, from the opposing camp comes the din of grinding axes as special interests led by the Murdoch press line up behind David Cameron against Leveson's “statutory underpinning”. Many believe the PM is only opposing regulation because he wants to keep the press barons on side for the next election.

But while politicians are always guilty of courting the press – even our own First Minister , Alex Salmond, couldn't resist offering to bat for Rupert as Leveson pointed out acidly – we should give the Prime Minister some credit for having genuine reservations about the rush to reintroduce regulation after three hundred years. And yes, I know regulation doesn't mean “political control” - but you have to look at how this new “independent” regulator would work.

Let's imagine that the Leveson proposals are adopted into law. What happens then? Well, the new Press Standards Commission is appointed by a panel overseen by the regulator, Ofcom. Since Ofcom is appointed by government, a line of influence is already open. The PSC drafts a code of conduct requiring journalists to behave properly, not hack phones, not harass famous novelists, not tell lies about people who've lost children, not blag medical records of politicians' children from the NHS -  In other words: obey the law. But since it is the courts that enforce the law, what else would the commission do? How would the Commission enforce good behaviour? Well, it would license the press – decide who is a legitimate accredited journalistic operation.

Lord Leveson doesn't use the word, “license” but he does propose a “kite-mark” for reputable organs. In exchange for being licensed, the newspaper would have certain legal protections in defamation and other cases. Lord Leveson says that those who don't play along would have to pay full court costs in defamation actions even if they WIN the case. So, if Lord X sues for defamation, and the Sunday Herald win on the grounds that what they have said about him is true, it might still have to pay the costs of the litigation, which could run into hundreds of thousands of pounds.

  Licensing raises the whole issue of compliance. Editors would have to show, even before they embark on a story, that they have fully discussed the implications, not just all the possible legal consequences, but whether they are within the Commission's code. If they are not, and the story leads to court action, they could effectively lose the protection even if story is true. So we can already begin to see some of the difficulties this might cause in a fast-moving news environment.