Category: Blog

               President Obama has declared that justice has now been done by the death of Bin Laden.

              If that is so, this should be the time for troops to leave Afghanistan. There is only so much training and preparation western troops can give to Afghan security forces. Advsiers and teachers could stay on to help them if that is the wish of their government.

              It would also be a good time for the UN to reconsider its position in Libya and decide if it has done all it can to protect civilians from the warring forces on the streets of their cities. Short of sending troops in to create and enforce a peace, it is difficult to see how much can be done from the air.

               The West should use the death of Bin Laden to rethink its commitment to military and political intervention in the Middle East, and bring an end to its so called war on terror. Many Middle Eastern countries need more consttitutional reform and more efforts to get dissenters to operate within a political framework. Those have to be local choices.  It does not  need external  military powers seeking to alter the balance of force and fear within each country.

              The Yes campaign has put up misleading posters as part of their contribution to this bad tempered referendum campaign. They want voters to believe that AV will make MPs in safe seats more accountable, and force them to appeal beyond their party suppport to those of differing views. This is wrong on so many counts.

              The most obvious way it is wrong is it ignores the arithmetic of AV polls. By definition  a “safe seat” is one where the current MP already gets more than 50% of the vote. It is deemed to be safe, because it does not matter how the opposition vote is cast, as more than half support the winning party. If a candidate already gets more than 50% of the vote with his or her current approach to politics, why should he or she  change it because AV has been introduced? The MP might well conclude that the “core vote ” strategy had worked in the past and would work in the future.

            It is wrong because it falsely assumes that MPs who get more than 50% of the vote behave in a tribal party way under FPTP. Sensible MPs understand two important things about democracy. The first is, MPs are elected to represent all the people in their area, however they voted or whatever their views. The second  is there is no such thing as a permanently safe seat. Some candidates have managed to lose seats that their parties have held for a long time and where they used to have very high proportions of the votes for that one party. Bermonsdey, for example, was a very  “safe” Labour seat  but the Lib Dems toppled them many years ago. The Conservatives have lost Ryedale, Winchester, Eastleigh and various other “safe” Conservative seats in the past.

              The two truths are related. If an MP did seek to abuse his position of trust with a large majority, and failed to look after the minority in  his area, this could become a matter which started to undermine him. It might lead to his party wishing to remove him as future candidate before it got out of control, or it could become a major issue in an election which damaged his vote or even lost him the seat.

             The Yes to AV campaign wish to side with those who dislike any arrogance or assumption by politicians. Unfortunately for the Yes to AV camapign there can be no monopoly of the anti politics feeling on any one side in this referendum, as everyone knows it is politicians that are the driving force behind both sides. The Yes campaign have misjudged this argument badly – AV would not humble any arrogant safe seater, but any sensible MP reaches out well beyond their party in order to represent their constituents in the round and to the best of their ability.

            We hear today that the Morecambe Bay gas field is being closed for four weeks for maintenance. The field accounts for 6% of UK gas production. We also learn that Morecambe South, part of the the field, is now taxed at 81% and may not re-open, owing to the high taxation.

           It is further proof that imposing higher tax rates may lead to less revenue than the Treasury expects. We need the gas. We have just lived through a couple of very cold winters, and even this spring face cold easterly winds which can bring frosts as late as May. If the government is serious about its wish to switch more of our economic activity into manufacturing, the UK wil need energy to fuel the factories and fire the furnaces.

             The combination of the carbon tax and the higher oil and gas taxes represent an obstacle to more manufacturing which the government should review. If part of Morecambe fails to re-open, we will simply import more gas from elsewhere, adding to the pressures on world supplies of hydrocarbon.

                 Let us hope the death last night of the world’s  “top terrorist” in US eyes will lead to closure and a change of policy after the dreadful events of the twin towers nearly ten years ago. Bin Laden’s death in Pakistan could be used to achieve  an earlier exit from  Afghanistan, as that was an  invasion justified by the need to secure it against terrorist use.

                The USA’s relationship with Pakistan now becomes even more important  to the USA’s general  relationship with the Middle East. It would be good if US reticence over intervention in Libya led to a general reappraisal of the wisdom of military intervention from outside at a time of simultaneous internal Arab revolts and revolutions. Sometimes the West should accept it cannot control or direct events, and it may be better to leave others to sort out the governing arrangements in their own countries.

           The Fed’s first news conference, held this week, apparently passed off well. It is difficult to understand why the press did not ask more and tougher questions. They have been waiting long enough for such an opportunity.

             The Fed, like the Bank of England, pumped up the bubble in 2005-7.  The Fed, like the Bank, decided deflation was just around the corner more recently, and has now created enough money to help cause inflationary problems right round the world. The latest figures show that even the USA herself is feeling the impact of  world commodity price rises, as the emerging market economies have been doing for some time.  Worse still for the Fed, and for the rest of the world, the first quarter GDP figures were not great. A combination of poor growth and rising prices is not good news.

            I suspect the rest of 2011will not be so bad in the USA. The tax reductions will take effect, and there will be some further boost from the various stimuli. Next year is more of a worry. This year they should worry about inflation.

            US politicians are at last debating how to get their deficits down, and some States are taking strong action to do just that. National politicians are talking about it, but still deferring the bigger cuts  until after the next Presidential election. They rely on the dolar’s status as the world’s reserve currency to see them through with more borrowing.

           The truth is that all too many western governemnts are still borrowing too much. This makes their budget strategies risky. The West has to wean itself off so much debt, and find new ways to supply goods and services on a bigger  scale that the rest of the world wants to buy. In the public sector there is still huge scope to do what needs to doing with less money spent. Public sectors in many western democracies have fallen far behind the best of the private sector when it comes to quality and efficiency.

           Reining in private sector debt is more difficult. To avoid a second phase to the Credit Crunch the authorities have to set a monetary policy which avoids a further collapse of asset prices, undermining bank loans and threatening the stability of the weaker institutions. They also have to avoid printing oney which generates inflation or asset bubbles. Finding the balancing point is never easy. So far we seem to have rapid price inflation in commodity markets, and a shortage of credit for small and medium sized enterprises. It is going to take a change of approach to banking regulation and to money policy to rebalance western economies that have relied too much on borrowing and consumption, and too little on saving and investment. Tax systems could be more helpful to reinforce these messages.

               It was interesting to hear Mr Farage on Any Questions arguing that Yes to AV is a step on the way to a fairer voting system. I doubt his support will tip the balance in favour of AV. Once again UKIP will bang the drum and exhort its troops, but may only  demonstrate it cannot win a referendum any more than it can win seats at  a General Election.  

               It is difficult to understand UKIP  logic in  preferring AV. I cannot see any  seat in the country where AV would have given the job of MP to a UKIP candidate after AV recounts. Maybe UKIP  hopes more people would give their first preference vote to UKIP,  in the knowledge they could  vote Conservative as second choice to avoid a federalist Labour or Lib Dem winning.  If this strategy had any degree of success it would simply split the Eurosceptic vote more than it is already, making it more likely the federalists would get past the 50% threshold first as other candidates second and third preferences were counted. If UKIP was at all successful in lifting its first preference votes under AV then  of course it is less likely those voters’ second preference would be decisive or even come into play, depending on how split the rest of the votes were. If the aim is to win more second and third preference votes, on recent election performance few  of these would be valuable, as the UKIP candidate would be one of the first to be excluded for having too few first choice votes.

AV is not a proportional system, as Mr Farage acknowledges. Under AV the majority of the highest polling party might have been increased in past elections, not diminsihed. One thing for sure is AV would  not give seats to parties that come well down the poll on first preferences.

              Yesterday was a national celebration. In many communities street parties sprung up without official assistance, subsidy or guidance on how to do them. In many cases people probably just shut their side street and got on with, safe in the knowledge that the pettifogging Inspectors were likely to be having the day off. It was a day when the Union flag predominated and was flown with pride.

              What was so good was the celebration of the amateur, the work of the unsung heroine or hero locally who organised and arranged the party, and the loving hard work of the many who baked cakes, made sandwiches, assembled garden  tables and flat packed  chairs and converted their Close or Avenue into an out doors venue.

             It was a treat to have a day without money. The street parties were there  just to enjoy and to discover our common enthusiaism for our country and its ancient ceremonies. No colecting tins were rattled, no entrance fees requested. We knew we could rely on each other to supply our share of the fare and to enjoy the shared occasion.

               It was day for the amateur. It was a day for over the top home baked cakes, that lacked the mechanical precison of the shop cake but gave us something more precious – the love and flavour of home baking. It was day for party games and sports , a day to meet and talk to the neighbours, a day to put the car away and enjoy a slower pace of life. It was a day for colourful bunting and childrens’ drawings.

Let street parties thrive. I hope many  enjoy their extra day’s holiday, and wish the Prince and his bride a long and happy marriage. We should say “Thank you” to all who are working today to keep the country’s services running.

    The USA has just had its bad winter moment. Its first quarter 2011  GDP figures were disappointing, with the snow as the leading suspect.  Parts of the USA had a savage winter with snow disrupting activity despite better preparation and mechanisation to handle it than in the UK.    

         Inflation is also on the rise in the USA. If you print enough extra dollars, and drive the value of the currency down enough, you will discover as the UK has done that things get dearer when you import. Japan has just had another debt warning, as the amounts she needs to borrow to repair the damage of the tsunami and earthquake mounts. At least Japan so far has borrowed the money the state needs from Japanese savers, leaving her less vulnerable than European countries that have a penchant for spending foreigners’ money.

             There are plenty of critics around saying China is past her best and will encounter problems from here. The latest argument is that China now has an ageing population which will be less energetic and successful than the youngsters who have powered Chinese growth to date. I think these critics are a few years too early. They underestimate the driving force of seeking better living standards in a state without generous welfare benefits on western lines. There are still millions of people to come off the land and into better paid factory jobs, and many wage rises ahead for those already in the urban areas. The Chinese five year plan assumes a huge increase in living standards over the next plan period. It got off to a flying start with a 20% increase in the minimum wage this year. Under the last five year plan many Chinese got higher wages by making things the west wanted to buy on borrowed money. Over the next five years more and more Chinese will earn better money from making things their neighbours want to buy using hard earned money.

          The west is still busy with Midle Eastern wars and wrestling with its huge debts. Meanwhile the emerging economies are still growing very strongly and showing every intention of working their way to much greater prosperity. If the west is serious about maintaining and improving  its living standards and getting more people into jobs, it has to take this competition seriously. That requires western governments to become much more business friendly, to attract the jobs, capital and enterprise to western places, or merely to keep here what we already enjoy. It  also requires having plenty of friends around the world who want to buy our goods and services.

             It is typical of modern spin led politics that the Prime Minister’s choice of this catch phrase to a noisy Commons should be regarded as so significant. Whilst it is a phrase that the rest of us do not normally use, it is hardly the cruellest put down.

            The country is at war in two Middle Eastern countries. The country is seeking to recover from a huge debt and banking crisis. The government is embarked on reforms of the NHS, benefits system and education. We are a few days away from a referendum on our voting system and from numerous Council elections about local services and the Council Tax. Yet the thing which gets the Opposition Spin doctors into orbit is the use of the phrase “Calm down dear”.