Euro madness

 

                 So the leaders of France and Germany met. They ruled out in advance giving the markets what they said they wanted. There is to be no borrowing by Greece or Portugal, Italy or Spain, on a common credit card with Germany standing in as guarantor. I can understand the German reluctance.

              Meanwhile, behind the scenes, the officials have to move closer to such an outcome. The failure of governments to implement the July package before they all went on holiday left the markets unappeased. Bond traders took it out on Spanish and Italian bonds. The European Central Bank stepped into the breach, and bought up £20 billion of Euro sovereign bonds last week. They managed to get the borrowing costs of Spain and Italy down by 1%, from 6% to 5%.

             This is a backdoor way of harnessing German credit worthiness to help the others. Germany is the largest shareholder in the European Central Bank, which is now flexing its version of the joint Euro credit card to buy in these bonds. This subsidises the borrowing costs of the weaker countries. The European Central Bank has promised not to print the money to do the buying – we will see. If it does not print the money then it has to borrow it.

               The average credit rating of the zone is stronger than the credit rating of the individual weak countries whose bonds the Bank is buying. This route can only lead to success and happiness if the weak countries are transformed and get their own credit rating back up to the average of the zone or better. If this does not happen, then the ECB is prone to incur  losses and the credit status of the whole zone is likely to reduce.

              The President and the Chancellor mainly discussed how they can exert more control over the budgets of the wayward sovereigns. The problem is finding politicians and officials in any of these countries willing and able to cut deficits. France and Italy have now announced additional deficit reduction programmes to march alongside the programmes for Portugal, Greece and Ireland put in by the IMF and EU.  Spain also has one in place.

              The announcement that German growth slowed to 0.1% in the second quarter, hard on the heels of the news that France did not grow at all in that three months,is a further strong headwind against deficit reduction. Euroland remains unable to make up its mind whether to press on with the type of fiscal union and single country government that could rescue the currency, or whether to expel the members that are the farthest away from meeting the requirements and average standards of the zone as a whole. The middle way they are trying remains the muddled way which just leads them from one crisis to another.

            Mrs Merkel had to refuse to allow the issue of open above board Euro area bonds, each stamped with a German guarantee, giving the weaker members access to cheaper credit. Instead it will have to be done by the back doors of the EFSF and the ECB. The results of the talks was no answer. There are three possible answers.

1. The miracle occurs, and the weak countries convince markets they have got on top of their debts and deficits so they don’t need any more subsidised loans.

2. The weaker members leave the Euro

3. The stronger states allow the weaker ones to borrow more at a subsidised rate, whether this is done through a beefed up fund to transfer cash, or through hugely expanded government bond buying by the ECB, or by the issue of Euro bonds.

 

Meanwhile, slower growth for the whole area is bad news. It means the stronger members don’t have so much financial or political leeway anymore to help the weaker ones. What a mess.

What the UK government needs to do immediately is to rule out imposing a Tobin tax on the City. As the UK wants nothing to do with the Eurozone, it should not be expected to raise a tax to pay for its failings. If the Eurozone needs extra taxes to pay for all the excess public spending, then the obvious  choice would be a tax on motor car and wine production, something Germany and France do a lot of, not on financial services, something the Uk does more of.

 

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110 Comments

  1. lifelogic
    Posted August 17, 2011 at 6:57 am | Permalink

    Indeed your three possible answers says it all – which will they choose and when will they finally choose it or will it just be forced upon them?

    Why are so many of the proponents of the EURO in the Conservative & the LibDem parties not a little more humble at this time when they were clearly as wrong on this (and the ERM) just as they are now with their absurd alternative green energy policy and ever bigger state sector.

    • lifelogic
      Posted August 17, 2011 at 7:34 am | Permalink

      I see the BBC is keeping up its global warming propaganda with home planet this week. With the exception of Prof Philip Stott who seems fairly balanced on the issue by BBC standards.

      http://www.bbc.co.uk/programmes/b0137x70

      No one sensible is saying that climate change in not real (it has always been real since the earth was formed). No one is even saying that humans do not contribute to it. The truth is surely that C02 is only one or very many factors in a very, very complex weather system that cannot reliably be predicted. On balance hotter is probably better than colder anyway. Without world agreements (which are not going to happen) it just move the C02 emissions overseas. Finally there are far better ways to spend the money with much more positive benefits per £1 than on CO2, wind farms, PV cells and electric cars.

      The BBC and Cameron/Huhne line is an absurd waste of money – regardless of what you or the BBC believe on the C02 theory.

      • oldtimer
        Posted August 17, 2011 at 10:12 am | Permalink

        I agree with you. Some of the advocates claim the moral high ground. For example Oliver Letwin, writing in the Daily Telegraph, Saturday 13 August 2011, in a feature headlined Age of Energy said: “…these dramatic shifts will give Britain moral world leadership in the climate change debate.”

        Understanding the causes of climate change is a matter of science not of morality. As you say the causes are many, complicated and are not yet understood. To claim that the science is settled is not justified by the available evidence. It is certainly does provide not a sound basis for the policy enshrined in the Climate Change Act.

        • oldtimer
          Posted August 17, 2011 at 10:13 am | Permalink

          Last sentence is mangled! It should read:
          It certainly does not provide a sound basis for the policy enshrined in the Climate Change Act.

        • lifelogic
          Posted August 17, 2011 at 7:22 pm | Permalink

          Indeed the science can not be settled because they do not know the future of all the variables suns activity, new technology and countless millions of others affecting the weather, they do not know even that warmer will not on balance be better.

          Predicting the lottery balls is clearly a much easier problem to predict can they do that?

      • uanime5
        Posted August 17, 2011 at 4:16 pm | Permalink

        It seems you have failed to grasp the science. While you may find climate “very, very complex” there are scientists who understand it very well and they have found that if humans keep adding more and more CO2 to the atmosphere this will cause the planet to keep heat up. Therefore by reducing our CO2 emissions we can slow down the warming process and possible even reverse it.

        • oldtimer
          Posted August 17, 2011 at 5:51 pm | Permalink

          Not so! Scientists have not established this. What they have done is produce computer programmes that predict this on the assumption that man-made CO2 will produce a catastrophic warming effect. But this remains no more than an assumption, not a demonstrable fact.

          • Kenneth
            Posted August 17, 2011 at 8:47 pm | Permalink

            I am just confused. I don’t know what to believe.

            It makes my blood boil that we have an institution which we pay a lot of money for and which has a stated duty to inform the public.

            However, as the BBC has decided to take part in the propaganda itself, we can not rely on it for impartial information on this matter.

        • lifelogic
          Posted August 17, 2011 at 7:09 pm | Permalink

          As it happens I am a physicist by training. Scientists know a great deal about the movement of round balls on a snooker table (and impacts and elasticity and friction and air resistance) but can they predict the exact positions of the snooker balls after 4 shots 1 minute later say? Even if they have all the data and with weather they do not even have that.

          Is predicting the weather in 100 years time an easier problem? It is not. Have you heard of Chaos theory? How can you control the climate by controlling (or so far not controlling) just one of the variables that effect it CO2? Do you know the suns activity for the next 100 years, meteor impacts, genetic developments perhaps in sea weeds or agriculture or volcanic activity or all the new technologies coming through over the next 100 years.

          Have they taken these all into account and also the feed back mechanisms. The clearly cannot and have not.

          Anyway who says hotter is not better anyway. If they want to spend vast sums of money do it on clean water, inoculations,
          malaria, basic health care better by far and cheaper by far.

          Please get real and shake this religion out of your head.

        • davidb
          Posted August 17, 2011 at 9:47 pm | Permalink

          And which physical science is your degree in? Which university did you learn the scientific method at?

          Arts graduates dominate the media. Their understanding of science is seldom credible in my experience. There is nothing proven fact about man made global warming. But why let fact stand in the way of a good bit of hysteria, eh?

          • lifelogic
            Posted August 18, 2011 at 9:05 am | Permalink

            Many arts graduates I know cannot even understand simple concepts such as entropy, energy conservation and conversion, sampling theory, game theory, probability. They often do not realise that electricity cannot really be stored cost effectively. Or understand how batteries are very expensive and heavy for the small amount of power they can hold compared to a petrol tank.

            They still have strong view on areas that they have do not a clue about.

            Rather like me having strong views on Shakespeare’s sonnets but without having bothered to read them.

        • Fred Bloggs
          Posted August 17, 2011 at 11:49 pm | Permalink

          I am also a physicist (Oxford doctorate in theoretical physics) and have been reading the science of AGW for years. All I can tell you is that it is a lot of exaggerated claims made from very weak science. And at the risk of sounding like a intellectual snob, the top climate scientists of today were the third raters (university of east anglia FFS!) of my day. Back then climate science was a place for the dim and dimmer so I would not believe any of their outrageous claims.

          Climate science is a science which is in its infancy. We do not understand many of the drivers of our climate – for example there is currently an experiment going on at CERN to establish the effect of radiation on cloud formation. The results of this experiment are not known yet but could completely blow apart the current understanding. Then again they might now. WE DO NOT KNOW YET. So how can the science be settled ?

        • colin greenfield
          Posted August 18, 2011 at 9:33 am | Permalink

          Uanime5.I do not know if you believe what you have written but James Delingpole et al have given ample evidence that you are wrong.

      • Bazman
        Posted August 17, 2011 at 9:30 pm | Permalink

        Is this guy some sort of right wing Troll?

        • Andrew Shakespeare
          Posted August 18, 2011 at 10:39 am | Permalink

          You’re a left-wing troll.

          You’ve been on this blog before.

        • lifelogic
          Posted August 18, 2011 at 8:00 pm | Permalink

          I am not sure what right wing means different to different people. I am just a humble realist, scientist/mathematician who observes the world as it is. I think that a small state, fewer regulations, a logical/reality based, energy policy, fewer parasites, less religion and lower taxes but with good law and order (without capital punishment) and with good civil liberties is probably best for all.

    • Alan
      Posted August 17, 2011 at 7:57 am | Permalink

      So far in this crisis (since 2007) the euro is doing better than the pound and the Eurozone’s GDP is doing better than the UK’s GDP, so those of us who supported the euro are not yet clearly wrong. Judging on financial facts alone you could even argue that we were clearly right, but I will wait until things are clearer before making either claims or apologies. With any luck the crisis will drag on for so long that all sides will be able to claim they were right, and we will all be happy. Economics seems to be like that.

      Reply I f you lived in Greece you would not think the Euro was working

      • A.Sedgwick
        Posted August 17, 2011 at 9:50 am | Permalink

        Calm before the storm that hopefully will see us out of the EU.

      • Robert K
        Posted August 17, 2011 at 10:00 am | Permalink

        The euro may be doing better than the pound, but that is because of the strength of Germany. It doesn’t prove that the euro is working. Also, the euro is weak versus currencies other than the pound and the US dollar – such as the Swiss franc and the renmimbi

      • APL
        Posted August 17, 2011 at 10:38 am | Permalink

        Alan: ” .. so those of us who supported the euro are not yet clearly wrong. ”

        To those of you who supported the Euro, and I imagine wanted to impose a foreign currency and explicit foreign control over the British economy, I say, Why don’t you just go and live in a European country of your choice. Anyone would do. What is your obsession with converting the UK into some sort of pale imitation of the Soviet Union?

        • sjb
          Posted August 17, 2011 at 6:11 pm | Permalink

          Why is it Eurosceptics never seem to have any qualms about foreign troops being based in the UK?

          I don’t recall ever hearing demands for a referendum about our membership of NATO – another organisation where member states pool sovereignty.

          reply: Because we have a veto over everythign NATO does – we do not have to commit our forces to a NATO mission unless we say yes, and we do not have to let other troops in unless we say yes. Happy to have same arrangement with all the EU wishes to do.

          • APL
            Posted August 17, 2011 at 8:28 pm | Permalink

            SJB: “Why is it Eurosceptics never seem to have any qualms about foreign troops ..”

            As ‘Eurosceptics’ we have two tasks;

            1. To regain British independence from the European Union.
            2. To regain control over our political class.

            Once we have those to under out belt, we could look at our relationship with NATO or any of the other NGOs.

            SJB: “another organisation where member states pool sovereignty.”

            NATO was instituted for a specific reason, after the Cold War, the fall of the Berlin wall and the liberation of the former Soviet satellite states, it should have ceased to exist. However, I wasn’t consulted.

          • sjb
            Posted August 17, 2011 at 9:31 pm | Permalink

            If President Obama considered hundreds of US soldiers were in mortal danger but could be saved by using NATO assets based in the UK, does anyone think he would accept a British veto on their use?

          • APL
            Posted August 18, 2011 at 12:29 am | Permalink

            sjb: “hundreds of US soldiers were in mortal danger but could be saved by using NATO assets based in the UK ..”

            Scratches head while contemplating the US navy which has half a dozen* naval battlegroups [each with amphibious and air assault capacity]. While it would be nice to think such a scenario might arise – where the UK was essential to a US military operation, it is unlikely to the point of vanishingly small.

            What you would find is the reckless UK political class jumping up and down trying to curry favor with Obama to give an impression to UK electorate that the UK ‘punches above our weight’.

            Control the politicians, we control their policies!

            * I don’t know how many Naval Battlegroups the US has, but we don’t have any.

      • lifelogic
        Posted August 17, 2011 at 8:37 pm | Permalink

        Or Ireland, Spain, Portugal or even Italy.

    • lifelogic
      Posted August 17, 2011 at 8:33 am | Permalink

      I see the government is announcing more “enterprise zones” today. While I welcome easier planning and reduced taxes in general doing it just in certain small zones is a very good way of making businesses locate in the wrong place.

      It is what most people would just call unfair competition to businesses in other areas.

      Tax and other concessions should be for all areas not just silly selected zones.

      • A.Sedgwick
        Posted August 17, 2011 at 9:52 am | Permalink

        Agree totally – more rules, more regulation, more controls, more bureaucracy, more government.

      • Robert K
        Posted August 17, 2011 at 10:00 am | Permalink

        yes!

      • Bazman
        Posted August 17, 2011 at 7:13 pm | Permalink

        How would this help geographically isolated areas with high unemployment? Often the problem is that there is no business in that area other than state funded jobs like the NHS and the council. Why would any private enterprise go there when they could just go somewhere accessible with less logistic problems and travel expenses? They could just be left to decay which is another option. The people should just get on their bikes Huh?
        More fantasy from someone who’s personal understanding of economic problems is never further from their own circumstances and prejudices.

        • lifelogic
          Posted August 17, 2011 at 10:10 pm | Permalink

          “Often the problem is that there is no business in that area other than state funded jobs like the NHS and the council.”

          That is perhaps the reason there is little real business or employment in the area if the best paid jobs are all in the state sector and it dominates economic activity there.

          • Bazman
            Posted August 18, 2011 at 7:18 pm | Permalink

            Read above again.

    • lifelogic
      Posted August 17, 2011 at 9:19 am | Permalink

      I see in the telegraph that Nick Clegg is threatening a mansion tax again should they scrap the absurd 50% rate income tax rate. Is anything the so called “Liberal Democrats” propose remotely sensible? I suppose they do at least make the Tories look good by comparison.

      We are paying a very high price for Cameron’s loosing of the last sitting duck election.

      • Robert K
        Posted August 17, 2011 at 10:01 am | Permalink

        “Is anything the so called “Liberal Democrats” propose remotely sensible?”
        No

        • lifelogic
          Posted August 17, 2011 at 8:38 pm | Permalink

          Perhaps just the odd civil liberty proposal?

      • APL
        Posted August 17, 2011 at 2:20 pm | Permalink

        Nick Clegg has also been involved in some unlawful behavior himself when in Germany. Where he apparently destroyed the life work of a German professor.

        Oddly, according to Nick, that incident was irrelevant because he was drunk at the time.

        • APL
          Posted August 18, 2011 at 12:00 pm | Permalink

          Amused to see this post has not been published.

          [smile]

      • Simon
        Posted August 17, 2011 at 9:19 pm | Permalink

        Lifelogic ,

        Taxes on labour and production are amongst the most damaging taxes .

        Wouldn’t it be less damaging to shift the burden of taxation towards other things such as taxing land based on it’s unimproved value ?

        • lifelogic
          Posted August 19, 2011 at 10:06 am | Permalink

          The last thing we need is more taxes or any kind. Taxes on property are not really any better than any other taxes. What is needed is less pointless government expenditure, regulation and market distortions like green energy and similar.

    • lifelogic
      Posted August 17, 2011 at 9:56 am | Permalink

      Finally to depress everyone further we see unemployment rising to £2.5M. A well run country with lower regulation, a sensible size of state sector, without a silly expensive green energy policy and without the minimum wage should be able to have unemployment levels perhaps £250K if it is the size of the UK.
      One tenth of the current level.

      It just need a few simple changes of direction by Cameron and the ball and chain Clegg but no sign of any action as usual.

      • lifelogic
        Posted August 17, 2011 at 10:35 am | Permalink

        Also fewer unemployed would surely give less rioting, less benefit expenditure, a happier country and less need for the vast armies of the state and the legal aid lawyers who deal with all these pointless problems created by socialism, BBC think and the over large state.

        Win win again.

        • Bazman
          Posted August 17, 2011 at 7:02 pm | Permalink

          More right wing fantasy devoid of any factual evidence. There is a There are a large number of jobs available but, most require some sort of experience and/or specialisation. The supermarkets can only employ so many and even they tend to employ people from a retail background.
          Who would work for less than Six quid an hour and why should they, bearing in mind that a person after living expenses on £6.50-7.50 would have less than£200 a month spare to pay for food, travel to work and sundries? This is assuming the employer needs them for enough hours and geography is on their side. You constantly fail to answer this simple question and many others when challenged like it. Daily Mail type propaganda at it’s worst.

          • Simon
            Posted August 17, 2011 at 9:24 pm | Permalink

            Are you sure there are large numbers of jobs available for people with the right skills set ?

            Isn’t this one of the myths propagated by the CBI ?
            – that there is a skills shortages and the Govt needs to relax Visa requirements to bring in labour from abroad ?

            What industries are these jobs in and what sort of roles are they ?

          • lifelogic
            Posted August 17, 2011 at 10:18 pm | Permalink

            “why should they”

            Because if they do not someone else will have to work for them why should they pay for them?

            Anyway they still get benefits and are slightly better off working than purely on benefits (or certainly should be Osbourne) and how will they ever learn to work at all if they do not start somewhere? Who knows they might end up owning a whole chain of shops or countless other useful things.

            Where is your optimism?

      • lifelogic
        Posted August 17, 2011 at 7:17 pm | Permalink

        I see the BBC is describing the increase in the unemployed to 2.5 Million as “unexpected”. Unexpected by whom I wonder? Not by anyone who is at the coal face or has tried to borrow money at good rates for expanding a business recently (from a bank) or has recently looked at the absurd employment and health and safely laws or the size of the over blown and largely parasitic sector.

  2. Freeborn John
    Posted August 17, 2011 at 7:03 am | Permalink

    Merkel &. Sarkozy also announced who they want to pay for this. Their version of ‘fiscal union’ is one where their appointee dictates tax and spend in the eurozone periphery but does not raise the funding to keep the eurozone together from eurozone taxpayers. Rather the funds are to come from the largely London-based financial services industry in the form of a ‘Tobin tax’. Predictably the BBC completely ignores that Uk industry is being asked to pick up the euro tab, but why have Cameron & Osborne not come out and said that the idea that the City of London is to fund the euro life-support machine is completely unacceptable?

    The magnitude of ECB buying of Italian and Spanish bonds last week shows how expensive it is to keep the euro alive. This is not a burden than the UK financial services industry should be shouldering. Cameron has to insist the Tobin Tax  has to be eurozone-only with a complete opt-out for the UK.

    Reply: I agree and have called today for the Uk to rule out taxing London to pay for the Euro’s imperfections.

    • lifelogic
      Posted August 17, 2011 at 7:42 am | Permalink

      On Tobin tax I assume Cameron does not agree?

      Just as on insurance “equality” he seems to believe that men live as long women and have the same number of car accidents. And that 95 year old’s can do, say building work, just as well as 25 year old’s do.

  3. Duyfken
    Posted August 17, 2011 at 7:09 am | Permalink

    Other answers, albeit unfavoured, may include: a) ditch theEuro, b) Germany leaves the Eurozone, effectively achieving “a)”, and c) other stronger countries quitting, their finding no advantage in funding the weaker members or from distaste at being governed through decree by the axis powers of Germany and France.

  4. Mike Stallard
    Posted August 17, 2011 at 7:16 am | Permalink

    When a similar crisis hit the truly democratic USA, there was a heated discussion and the problem was postponed until after the next election. Very sensible.

    In Europe the Eurocrats have not got a clue. There is no general discussion at all, no tea party, no setting out of the alternatives (see above). Mr Rompuy has been put in charge (of what exactly) and every single country is about to lost its most treasured possession – its independence, its dignity and its freedom.

    So much for adopting a secret, very clever and very socialist form of government without listening to what the people of Europe want.

  5. Single Acts of Tyran
    Posted August 17, 2011 at 7:26 am | Permalink

    There is perhaps a fourth option…

    The strong countries could leave the Euro and if you were German, wouldn’t you?

    Reply If I were German I would not have wnated to enter the Euro in the first place, and would now wish to re-establish the successful DM

    • Acorn
      Posted August 17, 2011 at 8:38 am | Permalink

      JR, don’t forget the Germans accepted the Euro in exchange for a free hand annexing East Germany.

      • zorro
        Posted August 17, 2011 at 9:08 am | Permalink

        And in the longer term Europe…….

        zorro

  6. Sue
    Posted August 17, 2011 at 7:32 am | Permalink

    This is what they’ve been heading for. The conspiracy theorists predictions have finally come to fruition.

    (An integrated Europe-ed) is born and not a bullet has been fired. All we need now is for Cameron and Osborne to sell us out completely and WW2 with all those deaths will have been for nothing.

    Welcome to your Nightmare.

    • norman
      Posted August 17, 2011 at 8:21 am | Permalink

      What you’re forgetting is that this time it will be different. Tyranny hasn’t worked in the past because, well, there tends to be tyrants at the top.

      The current crop of Eurocrats are more compassionate, have our interests at heart and are generally all good eggs.

      They would all make great characters in a Kafka novel.

      What can possibly go wrong?

      • Norman Dee
        Posted August 17, 2011 at 3:20 pm | Permalink

        You need to use italics or something otherwise some people might think you are serious, which you cannot possibly be.

        • norman
          Posted August 17, 2011 at 8:50 pm | Permalink

          I’m not serious but the really scary thing is that there are people out there who do take such a view!

  7. Martin Cole
    Posted August 17, 2011 at 7:35 am | Permalink

    Perhaps the stronger members leaving the euro would be another, possibly more sensible outcome?

    Before yesterday’s meeting in Paris President Sarkozy spent the day with his Prime Minister and their Finance Ministers considering deeper cuts, I have not seen what decisions, if any, were taken, however, unless spending cuts are realistic (ie huge by British standards) and tax rises severe enough to endanger the coming French re-election campaigns of these gentlemen’s party, then France will very soon be pushed by the markets into the club of weaker members, thereby condemned to remain within the old euro group.

    Notwithstanding the foregoing, the body language and obscure terminology surrounding the planned continuing “rapprochement” by the two leaders, led our household to believe that if these two leaders remain in power their objective has been set as complete fusion, regardless of the desires of their electorates.

  8. Peter Campbell
    Posted August 17, 2011 at 8:07 am | Permalink

    If Euroland goes down the single credit rating -central control route it won’t save the currency. How can it if the deficit and over regulation problems remain? In fact it is more likely that these problems will get bigger and the eventual collapse more painful and damaging than if it broke up now.
    It’s certainly a fact that they lack politicians with the courage and ability to cut deficits, as does the UK and USA. We are all going to suffer for the failure of government everywhere.

  9. DBC Reed
    Posted August 17, 2011 at 8:32 am | Permalink

    What appears to be happening is that, by refusing loans to weaker countries, Germany is reducing demand for its own exports hence the slow growth. This is the problem for highly capitalised sophisticated economies seeking to export to less sophisticated countries: the latter don’t have any money.The usual brilliant solution is to give the importing countries money to buy your goods.Thats such a good idea.
    Or you could transfer the money by buying their raw materials but this simply denudes the importing country of wealth . I am beginning to sympathise with those protestors (girls mainly) who stand round at demos with a banner saying Capitalism is n’t working

  10. alan jutson
    Posted August 17, 2011 at 9:14 am | Permalink

    See from press reports about the Fernch German meeting, it suggests no more bail outs until a more financially integrated union has been set up and in operation, then Germany may back it all up, but only after a legal limit on each countries debt has been set.

    Reports suggest that Germany and France have agreed similar tax rates, and corporation tax rates from 2013.

    Clearly it is up to the other countries to agree a closer or intergated financial arrangement, if that is what is deemed the right move for them (I wonder what the electorate think, or indeed even get to vote on it)

    Setting a legal maximum limit for a countries debt seems like a good idea, borrowed perhaps from the USA.

    John, any thoughts on a legal debt limit for the UK, if so what would be a sensible limit, perhaps based on the last known factual GDP (last years output), not some fantasy guess of what GDP may be in the future ?.

    Perhaps we should also have a legal tax limit, based on the same GDP criteria ?

    reply: I for once like the EU idea – 3% annual deficit limit and 60% of GDP total debt – pity that was one rule they broke

    • Caterpillar
      Posted August 17, 2011 at 10:06 am | Permalink

      (On JR’s reply)

      I like the EU rule but I think one needs either,

      (a) automatic respnses to thresholds being reached (- I think Poland has some at 50, 55, 60% debt to GDP) or,

      (b) to align goals, as I have said before,

      (i) If in deficit (or greater than 3%) public sector pay is cut (or public sector workers’ tax increased) if in surplus then public sector pay is increased (or tax decreased)
      (ii) Incumbent Govt parties to be docked votes if entering an election with greater than 60% debt to GDP.

      Otherwise any golden rules are just there to be broken.

    • Robert K
      Posted August 17, 2011 at 10:08 am | Permalink

      Governments should not be allowed to borrow, full stop. Borrowing is simply deferred taxation. It allows governments to massage economic performance to appeal to voters. If a government wants to “invest” in something (itself a misnomer) it should raise taxes to pay for it. That way, taxpayers know the cost of any given policy immediately. Given that state spending is de facto mal-investment I would vote for a party that promised and delivered a reduction in taxation as a percentage of GDP from half to a quarter.

      • APL
        Posted August 17, 2011 at 8:33 pm | Permalink

        Robert K: “Governments should not be allowed to borrow, ..”

        Well at the very least the population ought to be consulted in a Referendum. Then hit hard with the increased tax required to discharge the tax.

        Aversion therepy.

      • norman
        Posted August 17, 2011 at 8:54 pm | Permalink

        I think governments should be allowed to borrow as much as they want. However, I think government spending should be capped. A US study commissioned by Reagan in teh 80’s (including Milton Friedman, Walter Williams) came up with a figure of capping spending at 19%. That sounds great to me.

        Politicians could then argue about raising all this by taxation, all by borrowing, 15% tax, 4% borrowing, etc, etc. but spending, including interest payments, capped at this level.

        The problem with capping borrowing limits, as we saw recently with teh American debt ceiling, is that once you hit that ceiling politicians present you with a ‘unless we raise it now we are facing Armaggedon’ scenario and if your spending is way up, like Brown elevated it, it would be far too difficult to go from a feast to a famine.

  11. C777
    Posted August 17, 2011 at 9:28 am | Permalink

    An EU superstate run by unelected officials with a proven track record of incompetence .
    A recipe for disaster, just look at the mess they have made out of it so far.
    Where’s Churchill ?
    We need one.

    • Norman Dee
      Posted August 17, 2011 at 3:22 pm | Permalink

      Taking out more insurance won’t help !

    • uanime5
      Posted August 17, 2011 at 4:21 pm | Permalink

      The EU is run by elected officials.

      Also what good would a Churchill do? We’re not planning to go to war with any other EU Country?

      • norman
        Posted August 17, 2011 at 9:01 pm | Permalink

        I think you’ll find most of the people who run the EU are not elected, including the president, foreign secretary, all the bureaucrats, and if I could be bothered going to their site I could find a whole lot more by going to the page with von Rompuy and Baroness Ashton and seeing who else is on it.

        I think the one thing we can all agree on with absolute certainty is that the EU doesn’t do democracy. See the EU constitution referenda for examples of why, when various countries rejected it they did a find and replace of ‘EU Constitution’ with ‘Lisbon Treaty’ then forced Ireland (the only country who still needed a referendum after this not-so-clever wheeze) to keep going until they passed it.

  12. oldtimer
    Posted August 17, 2011 at 9:33 am | Permalink

    I too noticed that the intent is to tax financial transactions to pay for some of this. I am unclear about the current arrangements. Is the UK actually able to veto such a measure or is it bound by majority voting?

    If the veto remains available, Cameron and Osborne no doubt, will be persuaded by an appeal to their community spirit and the wish to see the eurozone to take a more concrete form. After all, was this not what Mr Osborne was calling for last week? All these look like steps towards another euroland stitch-up.

    Reply; A tax matter should require unanimity, but they might try a fiddle proposing it as a single market measure on Qmv

    • oldtimer
      Posted August 17, 2011 at 9:46 am | Permalink

      Thank you for that reply.

      I see that, on his blog yesterday, Douglas Carswell raised the question of the future of Qmv in the context of fiscal union and whether those calling for it had fully thought through the implications. That is a very good question, as well as a leading question. Do you know the answer?

      Reply I want us to have a veto for us over anything that could affect us. What the others do would not then worry me.

  13. Tedgo
    Posted August 17, 2011 at 9:37 am | Permalink

    I do not think increasing tax on car production would be very sensible, it would simply move valuable manufacturing jobs to the far east. In fact to raise taxes and re balance trade we need quite swingeing increases in import duty on Chinese manufactured goods. A lot of the west’s problems is the imbalance of trade with China.

    Since Maggie’s era is has been all too easy for Corporations to move manufacturing to the far east. Corporations greedily want to manufacture cheap to maximise their profits selling in the west, without any regard in the long term how the west is going to pay for them.

    I think another solution also involves China. In a coordinated action by Europe, USA and UK simply offer China 10p in the pound, dollar or Euro as appropriate, on the bonds which China holds. It would be “a like it or lump it” approach, then we can all start again.

    reply: I was making a debating point to try to show how unfair and silly the EU proposal is re one of our main activities.

  14. Brian Tomkinson
    Posted August 17, 2011 at 9:41 am | Permalink

    The creation of the Euro was a vital plank in the relentless development of a United States of Europe. This mission is always denied by politicians because they don’t want their people to have a say in this transfer of power but intend to present them with a “fait accompli”. The actions of the political leaders should be seen against this background. What sense is there in having such divergent economies as members of a currency zone if they do not intend for that zone to be governed by one government. A government in whose formation the peoples of those member states will have no say. It will be expected that other members of the EU will eventually be drawn in to this same “super state” again on the basis that there is so much integration that it is not possible to stand alone or as a secondary member of the union. Those who developed this scheme boasted how this would end the disastrous history of European wars. By denying their peoples any say in what essentially is a coup d’etat, far from ensuring peace and prosperity in Europe, they have sown the seeds of future conflict.

  15. Jose
    Posted August 17, 2011 at 10:09 am | Permalink

    France and Germany have ‘form’, they have both broken the rules concerning the -3% annual deficit and simply ‘argued’ their way out of the consequences. Even Cameron must have realized by now that the EU is in reality a ‘cosy’ union of 2, Vichy France hanging on the coattails of manufacturing Germany.

    If they decide to penalize the City then Cameron can simply refuse to agree any future budget, the budgets can still be vetoed by us. Further, for every penny they wish to raise in tax on the City, we simply reduce our ‘membership subscription’ by a similar amount.

    Better still, give them notice that we will be terminating membership within this parliament.

  16. Robert K
    Posted August 17, 2011 at 10:16 am | Permalink

    Euro madness indeed. Merkel and Sarkozy have no democratic mandate for the discussions they are having. They seem, in effect, to be divvying up the governance of Europe between them. Economic catastrophe is looming, a catastrophe largely the resopnsibility of the eurocrats on the Continent, Gordon Brown here and Bush/Greenspan in the US, yet these two “leaders” simply see an opportunity to pursue their own agendas for the creation of a single European state with Germany in the driving seat and France acting as shotgun. Now where have we seen that before?
    Please can we have that referendum to get us out of this madhouse?
    (According to the FT this morning: “The two leaders, speaking after a two-hour meeting in Paris, said they were committed to greater integration in the eurozone. They pledged to prepare annual budgets on harmonised economic outlooks, work towards a common corporation tax by 2013 and proposed a twice yearly summit of eurozone leaders. They also want all 17 members of the eurozone to be obliged to produce balanced budgets a constitutional requirement, and plan to revive proposals for a European tax on financial transactions”)

  17. Denis Cooper
    Posted August 17, 2011 at 10:23 am | Permalink

    “There is to be no borrowing by Greece or Portugal, Italy or Spain, on a common credit card with Germany standing in as guarantor.”

    Well, there already is such borrowing by Ireland and Portugal through the European Financial Stability Facility or EFSF:

    http://www.efsf.europa.eu/about/index.htm

    The EFSF issues bonds to borrow money from investors – so far, three issues totalling €13 billion – and those bonds are rated AAA because each of the eurozone states guarantees 120% of its pro rata share of the repayments due to the bondholders – a clear breach of Article 125 TFEU.

    The EFSF then lends money to the governments of distressed eurozone states – so far, €3.6 billion to Ireland, and €5.9 billion to Portugal.

    In this March 2011 paper from the European Parliament:

    http://www.europarl.europa.eu/document/activities/cont/201103/20110317ATT15734/20110317ATT15734EN.pdf

    it is recognised that these EFSF bonds are already a form of Eurobond.

    However even before the breach of Article 125 TFEU by the “credit enhancement mechanism” for the EFSF bonds, there is in fact no identifiable legal base in the EU treaties for the eurozone states to establish anything like the EFSF, or for the leaders of the member states of the EU as a whole to agree that the EU institutions will be involved in its operations.

  18. sm
    Posted August 17, 2011 at 10:38 am | Permalink

    The EU needs money it will raise euro-taxes or it could print. Based on trends we will accept this tax. As no doubt we will pay via the backdoor when the ECB needs more money. Then also by the IMF and bilaterally.

    A tobin tax without sanction against domestic players using external markets will probably fail. Perhaps worldwide agreements are in play?

    Any taxes raised should stay with the UK treasury who are subsidising banking anyway.

    You have to wonder what unhidden non democratic ties bind all our ‘representatives to the ‘common purpose’ when EU matters arise?

  19. zorro
    Posted August 17, 2011 at 10:47 am | Permalink

    The annual deficit/GDP total debt rule gave the impression that fiscal stability would be the norm, but they let in countries who fiddled the entry criteria. This was a warning sign to show that nothing was sacred in allowing monetary and political union at any cost.

    The economic crisis has allowed Germany to dictate on its own terms. Of course, they won’t hear of Euro bonds or money printing…..yet…..until they get the maximum leverage.

    John, I am afraid that Frau Merkel will be demanding more than her free Greek beach hut timeshare. The only way that she will say that she can guarantee German acquiescence in complete monetary union is by cheaply hoovering up a lot of PIGIS assets, one way or the other.

    Zorro

  20. outsider
    Posted August 17, 2011 at 11:24 am | Permalink

    The French are not stupid. As I recall, they already have a law introducing a “Tobin” type tax but it does not come into force until everyone else agrees.

    The UK would make a diplomatic and PR gaffe if it ruled out such a tax per se. In principle, taxing financial transactions, as in stamp duty, is no worse than taxing jobs or domestic fuel.

    It would be much better to say that we favour such a tax, provided only that all the other major financial centres agree (which is unlikely) and that the tax is levied by each state for its own purposes. Remember that proponents of an international tax have already earmarked it for aid to poor countries.

    I suspect that the French, who know how to play this game, have introduced this as a bargaining chip that they can graciously give away in order to secure UK agreement to treaty changes without conceding anything that the UK actually wants.

    The greater practical issue (though not for us) is harmonising corporation tax inside the eurozone: a disaster for Ireland, Slovakia and other new eurozone members.

  21. Damien
    Posted August 17, 2011 at 11:40 am | Permalink

    JR: I cannot see how we can avoid the damaging effects of a Euro Zone Tobin tax. If we veto this measure then all transactions made by EU citizens through the FTSE (other than the UK exempt citizens) will be liable. Merkle and Sarkozy will happily collect that if we do not.That is a considerable windfall for the Euro Zone. Remember that the ‘no double taxation’ principle would not be breached by the Tobin tax if we unilaterally stayed out. It is my guess that this will be the reason why the UK goes along with this proposal plus it has the added benefit of introducing a new tax that the general public would not object to.

    Buried in the text of the speeches by the terrible twins was a not-s0-subtle reference to Ireland’s 12.5% corporation tax. The proposal is for ‘harmonization of corporation tax’ in the Euro Zone area. If Sarkozy persists with this he may find that Ireland having banked the bailout money would be prepared to leave the Euro. For a small economy this is price worth paying rather than losing sovereignty over its right to set its taxes.

  22. Bill
    Posted August 17, 2011 at 11:42 am | Permalink

    The Merkel Sarkozy way appears to be an integration of the eurozone, but at a distance.
    No Eurobonds.

    Too much reliance on the wayward members to get their budgets under contol, imposed by legislation. Overseen by a central council.

    Not sure how many people believe that you can put the toothpaste back in the tube.

  23. Denis Cooper
    Posted August 17, 2011 at 11:43 am | Permalink

    As an aside, I note how Merkel and Sarkozy have calmly taken it upon themselves to decide that Rumpy Pumpy should preside over the new “economic government” of the eurozone.

    There is a relevant protocol attached to the EU treaties, reproduced below, but:

    a) the protocol doesn’t say that the President of France and the Chancellor of Germany shall jointly agree on who shall be the president; and

    b) it so happens that the person they’ve nominated is already being employed by taxpayers across the whole of the EU as the President of the European Council, a full time job within one of the EU institutions, and his job description as laid down in the EU treaties does not include this new function on behalf of just the subset of eurozone states.

    Page 283 here:

    http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0201:0328:EN:PDF

    “PROTOCOL (No 14) ON THE EURO GROUP

    THE HIGH CONTRACTING PARTIES,

    DESIRING to promote conditions for stronger economic growth in the European Union and, to that end, to develop ever-closer coordination of economic policies within the euro area,

    CONSCIOUS of the need to lay down special provisions for enhanced dialogue between the Member States whose currency is the euro, pending the euro becoming the currency of all Member States of the Union,

    HAVE AGREED UPON the following provisions, which shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union:

    Article 1

    The Ministers of the Member States whose currency is the euro shall meet informally. Such meetings shall take place, when necessary, to discuss questions related to the specific responsibilities they share with regard to the single currency. The Commission shall take part in the meetings. The European Central Bank shall be invited to take part in such meetings, which shall be prepared by the representatives of the Ministers with responsibility for finance of the Member States whose currency is the euro and of the Commission.

    Article 2

    The Ministers of the Member States whose currency is the euro shall elect a president for two and a half years, by a majority of those Member States.”

  24. Steve S
    Posted August 17, 2011 at 12:31 pm | Permalink

    Michael Noonan says that any transaction tax should be imposed across the EU rather than just the eurozone. What a surprise! Our special friends in Ireland want to make sure the UK is well and truly roped in to the detriment of the UK’s biggest industry, while they retain their corporation tax. We signed up to EU oversight of the city, so why would we not sign up to this? It isn’t as if we actually have this country’s best interests at heart anymore is it? Ever closer union is the primary purpose of our EU regional representative Mr Cameron.

  25. rose
    Posted August 17, 2011 at 12:44 pm | Permalink

    It is indeed urgent. Pre-empting the tax on FS the most specifically urgent at the moment. So even the World Service is leading on hackgate again. (I had to look up what you meant by Groundhog Day, thinking it was American for Candlemas, but it is a useful phrase.) My worry is that the lumpenintelligentsia will support such a tax, not just as another example of their beloved “pooling”, but because they think they hate the FS and want them punished..

  26. Mark
    Posted August 17, 2011 at 1:08 pm | Permalink

    “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.”

    Ben Franklin penned those words in a situation that has interesting parallels with today’s EU.

    The letter was a salvo in a power struggle between the governor and the Assembly over funding for security on the frontier, one in which the Assembly wished to tax the lands of the Penn family, which ruled Pennsylvania from afar, to raise money for defense against French and Indian attacks. The governor kept vetoing the Assembly’s efforts at the behest of the family, which had appointed him. So to start matters, Franklin was writing not as a subject being asked to cede his liberty to government, but in his capacity as a legislator being asked to renounce his power to tax lands notionally under his jurisdiction. In other words, the “essential liberty” to which Franklin referred was thus not what we would think of today as civil liberties but, rather, the right of self-governance of a legislature in the interests of collective security.

    What’s more the “purchase [of] a little temporary safety” of which Franklin complains was not the ceding of power to a government Leviathan in exchange for some promise of protection from external threat; for in Franklin’s letter, the word “purchase” does not appear to have been a metaphor. The governor was accusing the Assembly of stalling on appropriating money for frontier defense by insisting on including the Penn lands in its taxes–and thus triggering his intervention. And the Penn family later offered cash to fund defense of the frontier–as long as the Assembly would acknowledge that it lacked the power to tax the family’s lands. Franklin was thus complaining of the choice facing the legislature between being able to make funds available for frontier defense and maintaining its right of self-governance–and he was criticizing the governor for suggesting it should be willing to give up the latter to ensure the former.

    In short, Franklin was not describing some tension between government power and individual liberty. He was describing, rather, effective self-government in the service of security as the very liberty it would be contemptible to trade. Notwithstanding the way the quotation has come down to us, Franklin saw the liberty and security interests of Pennsylvanians as aligned.

  27. matthu
    Posted August 17, 2011 at 1:34 pm | Permalink

    ” A tax matter should require unanimity, but they might try a fiddle proposing it as a single market measure on Qmv”

    In other words it will have all the usual characteristics of an EU stitch-up including (a) disguising a tax matter as a single market measure on Qmv or
    (b) an employment matter as a health and safety matter or
    (c) an environmental matter as a security matter

    Thanks for reminding us of all the reasons why we want to get out.

  28. Bill Llewellyn
    Posted August 17, 2011 at 1:43 pm | Permalink

    John, we are relying on MPs such as yourselves to spell out to the government what an utter catastrophe a tobin tax would be for the UK. I believe it could destroy our financial services industry with the loss of hundreds of thousands of well paid white collar workers in key conservative constituencies in the South East.

  29. Simon
    Posted August 17, 2011 at 2:33 pm | Permalink

    I would rather financial transactions were not additionally taxed because it is too close to accepting a premium for them being underwritten at non commerical rates by the taxpayer .

    The banks are still an unregulated disaster waiting to happen so it would be better for the tax payer to have as little to do with them as possible .

    Three years on and they are all still too big to fail and failing to lend to business .

  30. Kenneth
    Posted August 17, 2011 at 4:11 pm | Permalink

    Reading between the lines it seems they have made up their minds at last: your option 2, John : weaker members leave the Euro

    However France is a big problem. It will not join a currency union if it means having to take orders and lectures from the Germans.

  31. Simontm
    Posted August 17, 2011 at 4:16 pm | Permalink

    One of the issue is how exactly will they get the Tobin tax through? OK the Lisbon Treaty is an enabling treaty but it hasn’t been tested has it and it will be interesting as to whether there is room to use it to push the tax through.

    In addition, what is the political will both here and in mainland Europe to prevent this from being pushed through? After all, it is one of the main lines in the sand for the UK and the idea of a non-eurozone country being taxed to save the eurozone is going to anger a lot of people irregardless of the damage it will do to the UK economy.

    • cosmic
      Posted August 17, 2011 at 8:07 pm | Permalink

      Well, there’s always the Referendum Lock.

      • Denis Cooper
        Posted August 18, 2011 at 7:58 am | Permalink

        LOL.

    • APL
      Posted August 18, 2011 at 4:17 pm | Permalink

      Simontm: ” .. one of the main lines in the sand for the UK .. ”

      When did the ‘red lines’, those that must not be crossed, turn into ‘lines in the sand’ ?

      It is a rhetorical question, but I guess it was when the redlines were crossed and someone hastily drew a line with sand a little further down the path.

  32. Badger bill
    Posted August 17, 2011 at 5:27 pm | Permalink

    Flicking through the TV channels the other night their was an American who suggested that Germany should bow out and leave the rest to get on with it.

    If parliament goes over to the EU the recent riots will be as a tea party. There is a limit to what the silent majority will put up with and parliament is nearing that at the monment with its incompetence, venality and lack of spine!

    Firsts and blues at Oxbridge indicate that the person is good at passing exams and such like. Running a country on behalf of the people is a different matter!

  33. Bazman
    Posted August 17, 2011 at 7:23 pm | Permalink

    How is Germany with it’s high tax rates, generous welfare system and impossible to police borders one of the richest and most advanced countries in Europe despite years of Daily Mail scare stories and predictions of failure? It must all be a BBC lie.

    • rose
      Posted August 17, 2011 at 9:49 pm | Permalink

      It has paid great attention to its education and training, and has a strong national identity and work ethic.

    • lifelogic
      Posted August 17, 2011 at 10:37 pm | Permalink

      GDP per capita in Germany is well below that of many other countries and quite similar to that of the UK . It has better economies of scale, better transport connections with other (many lower cost countries) than the UK. It also has a more efficient & far better run state sector and education system. It could do far better still – not all is rosy there by any means. Despite the BBC’s current pro manufacturing depiction of it as a great power house.

    • Alan
      Posted August 18, 2011 at 8:55 am | Permalink

      I think Bazman has raised one of the most important and interesting questions that UK politicians should be addressing, and rose and lovelogic have provided some thought-provoking answers.

      I will add one statistic that hints that we in the UK are perhaps doing better than we often think: the EU’s data on ‘Actual individual consumption’ – the value of goods consumed by each individual, whether the payment comes from the individual or from the state – shows that the UK’s is the third highest in western Europe, exceeding Germany’s and much the same as Switzerland’s. Only Norway and Luxembourg do better. Perhaps we spend more of our wealth on high priced houses, or perhaps we borrow more than others, or maybe more UK residents are actually working and spending abroad (which still counts as UK consumption), or maybe spending is restricted to a relatively small number of very rich individuals. But it is not out of the question that we actually have a higher standard of living than we realise, and higher than most other countries in Europe. From my own observation I find this hard to believe, but then it is very difficult to judge such things accurately.

      However, I will say that coming across this statistic has made me feel more cheerful, so I hope it does the same for others.

      • rose
        Posted August 18, 2011 at 11:07 am | Permalink

        Two German jokes heard this am on the wireless to bring you down to earth:

        1) Germans like a laugh too – but after the work is done
        2) The best way to help Greece is not to go on holiday there and line the pockets of some oligarch, but to support the German economy which pays its taxes. Then Berlin can help Athens.

    • Andrew Shakespeare
      Posted August 18, 2011 at 10:37 am | Permalink

      Did you see yesterday’s economic-performance figures for the German economy?

      Not good. Not good at all.

  34. Andrew
    Posted August 17, 2011 at 9:44 pm | Permalink

    Thought I would re-post given that you actually enjoy interacting with the public..

    John, just what is it that convinces Tory ministers to keep to the coalition agreement right now? Surely Cameron should push through as many Conservative policies as possible right now. There cannot be a time in recent history where the public are so receptive to a pro-family/lower tax/lower business regulation/distance from the EU/’tough on crime’ agenda.

    He has a month to tell the LibDems to get on board or out of the way. They are sitting ducks – flush them out NOW with ‘the game has changed’ talk and produce proper conservative policies that re-assert personal responsibility, not ‘freedoms’.

    I realise that the BBC-Labour Islington consensus will be a formidable opponent once open war is declared, but cosseted ministers who haven’t met anyone outside of the Westminster puddle must be made to realise that there is a groundswell of opinion ready to marginalise the far left of the BBC if there were Tories willing to take them on. I honestly feel that just as there was a tipping point coming against the Murdoch megalopoly, there are millions out there who feel the same about BBC-Labour.

    Is there anyone in the government willing to take on the BBC by the way? They are already re-writing history when it comes to the riots.

    The LibDems can be flushed out NOW, but it has to be now. Politics is a ruthless business and the Libdems are impeding the national will in virtually all areas of government. It is legitimate to say the game has changed. Can there ever be a time in history when a left wing- free libertarian-socialist strand to government policy can be so ill-judged?

    Everything that the LibDems stand for has been shown to be incredibly wrong in the last few months – The Euro, Higher Taxes, Expensive energy, Unrestrained immigration, Personal Irresponsibility, Reckless government spending, European integration, Soft Policing, Political correctness….

    The country know this. Their vote has collapsed because they were thought to be Labour-Lite, but having been forced to climb down from the golden podium of student politics and join the real world, they have been found out.

    Miliband is Michael Foot with a better haircut but half the intellect, a quarter of the political nous and an eighth of the principle.

    Go for it now.

    • Acorn
      Posted August 18, 2011 at 8:22 am | Permalink

      Andrew, don’t repeat this post on twitter or facebook, you could get four years for insurrection.

    • rose
      Posted August 18, 2011 at 12:36 pm | Permalink

      The best demonstration in practice that what you are advocating would work, is what happend over AV when the PM gave a good strong lead. I am convinced a lot of people were wavering, brainwashed, on that, but he pulled them back by being unequivocal. The liberals thought they had it in the bag, because of the media and the tone of public meetings; and they might have, if he hadn’t really fought.

      • Andrew
        Posted August 18, 2011 at 3:46 pm | Permalink

        If ever there was an example of The Islington Consensus it was on AV. Everyone who the BBC-Labour party (or the Liberals) knew and spoke to was in favour of AV. The voting maps showed it beautifully. Ergo, they believed the vote would easily be won. Only when forced to go out of Islington and speak to Real People did they realise what a catastrophic mistake they had made and only then did Cameron come out of his bunker and show a hint that he has some b**lls after all.

        Again today, the airwaves are full of ‘excessive sentencing’. Even the Telegraph talks about it.

        Out in the country, people are saying ‘Hang on, these idiots arranged a time and a place for rioters to gather to smash up the town? Just what exactly is Incitement to riot if not ‘Let’s meet up round the back of Woolworths at 7pm and smash the town up? during a period of widespread rioting elsewhere? If ever there was a time when incitement might actually work it was then. It wasn’t harmless Facebooking – nothing like it.

        Four years is about right given that the plan WAS INTERCEPTED by police. The riot could easily have happened if the plan was not intercepted in which case 20 years would be about right.

        We lock up more people than anyone else in Europe because we have more criminals than anyone else. We should be locking up twice as many people as we do with longer sentences and then 4 years for trying to orchestrate a riot would not seem ‘disproportionate’. If I hear the insightless argument ‘knife crime only gets 1 year’ again I will have a seizure. D’OH!

        • rose
          Posted August 18, 2011 at 11:13 pm | Permalink

          Even the Telegraph? It has been one of the silly, irresponsible papers for some time now. Does anyone know why? (I have my theories.)

        • rose
          Posted August 18, 2011 at 11:15 pm | Permalink

          I thought the PM showed some guts when he thought FPTP was going to be lost, not saved.

          • rose
            Posted August 18, 2011 at 11:19 pm | Permalink

            PS all the public meetings I went to gave the impression the public wanted AV/PR too. So did all the emails I got. I wasn’t aware that the pro-reformers came up against clear evidence to the contrary. I never did.

          • Andrew
            Posted August 19, 2011 at 10:29 am | Permalink

            Do you live in one of these areas by any chance? I imagine one could super-impose sales of The Guardian over the areas that said yes…

            http://www.guardian.co.uk/news/datablog/2011/may/06/av-referendum-results-map

          • rose
            Posted August 19, 2011 at 3:04 pm | Permalink

            Andrew, no I don’t live in one of those areas, and I noticed as soon as the results came in, which they were – with amusement, especially at the ones whose dons used to get two votes!

            I really do think that while there are plenty of sensible people who feel furious at having been ignored by government, there are still quite a few people who respond to strong leadership, and they are only getting it from the BBC and Guardian at the moment.

  35. electro-kevin
    Posted August 17, 2011 at 11:01 pm | Permalink

    Tobin Tax: I get the impression that there are those in government (and around it) who would say “If the Euro fails then we fail.”

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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