Wednesday, February 27, 2008

The End of the Age of Excess ?

This economic downturn feels qualitatively different from ones that I remember. Instead of talking about cyclical changes, the breakdown of the securitised credit market is described increasingly as a systemic, secular challenge. The liquidity of the credit market may well have been irreversibly changed as banks are now forced to take on more risk directly, and as they consequently insist on tighter restrictions on borrowers.

The long term impact of these changes may well be profound. After an age of excess, we now enter an age of restraint, and it seems to me that the effects may be not just economic, but cultural and political too.

The breakdown of the post-war Bretton Woods international financial system that took place over the course of the 1970s led to an explosion of deregulation and easy money. The wealth that entered the system fueled a consumer boom which, despite cyclical downturns, has continued to expand until the beginning of the the latest crisis. Over that time, from being a net creditor nation, the US has become the worlds largest debtor. Now consumption accounts for nearly three quarters of the American economy. The spending power of the American consumer has helped to lift millions out of poverty in China, but it has also created an obese culture of disposable materialism. This culture is seen perhaps most clearly in the housing market. Once, replacing a bathroom suite or a kitchen was a once in a lifetime change. In recent years new kitchens and bathrooms are replaced after perhaps only two or three years.

This age of excess has spawned the cult of celebrity- pouring money and power upon the most unlikely individuals. These celebrities seem almost unlimited in their pointlessness- and their squandering ways are reported with glee by the fawning media. As role models they seem at best morally questionable, and their utterly materialistic world view reinforces an ethically and spiritually bankrupt existence. The age of excess has been an age of corruption and of indulgence. Wealth is all, so that Blair or to lesser degree Major having achieved power too young, shamelessly use their connections to acquire wealth that by historical standards is truly astonishing in a former Prime Minister.

The age of excess has been an age of license- little moral censure accompanies even the most egregious bad behaviour, yet perhaps for this reason, the age of excess has been a relatively free one. Older social certainties gave way to a greater tolerance- notably of sexual difference but also a more general tolerance that has advanced a more heterodox society.

The coming times, with global warming becoming more generally understood as a threat, seem almost inevitably a more restrained one. The price of pollution is likely to be factored into economic costs, but also there is a threat that putative environmental damage is used as a political weapon by a self interested and illiberal "green" movement.

Thus the emerging age of restraint risks becoming an age of constraint. There are growing threats to the general idea of liberty. Inevitably, I sense that social conservatism may reassert its power, but also restraints on liberty could emerge from many sources: politicians seeking to address the problem of climate change may impose non-market "solutions"; economic protectionism may roll back some of the gains made through globally freer trade. The authoritarian regimes in China and Russia may flex their muscles against a weakening West. Technology may become a severe threat to our traditional ideas of privacy and liberty.

The party is probably over, and much of the self indulgent and trashy age of excess may not be missed. However now, more than ever, it is important to set the limits of state power. If liberty is to be preserved, there must be restraint- not just in the economic sphere but across the gamut of society. A renewed power of things of the mind and a tolerant spirituality might be a positive factor in a new age of restraint. Yet in the political sphere, the political battles seem set to be more practical: about privacy and how far the state may protect the vulnerable by invading the privacy of the many. The fact that both Germany and the UK have been prepared to commit a crime- buying stolen confidential Liechtenstein financial records- in order to invade the privacy of presumed tax dodgers does not bode well for any future restraint by state authorities. When the state acts without obeying constitutional restraints, the threat to liberty is acute indeed.

The age of excess has created sloppy and self indulgent behaviour patterns: limitless incontinent passage of unnecessary legislation. The failure to apply lessons of discipline and hard work to the achievement of success, the cult of wealth to the point of greed, all have been corrosive. While by contrast, a sense of entitlement and of victim-hood has grown, supported by an unprincipled body of ambulance chasing lawyers. Personal responsibility has not been a major feature of the age of excess and to a degree one might argue that Society has been infantilised, especially in Britain and the United States.

In the end, the age of excess has become an age of decadence. Now, in more straightened times the risk is that the zeitgeist that replaces this will be constraining, intolerant and ultimately authoritarian ideas.

Now, the tradition of devotion to freedom as the first principle of society is under threat. If all rules may be bent or broken, then the power of government becomes untrammelled and intrusive. Now, more than ever, we must set unbreakable limits to the activity of the state in all spheres, for failure to do so will give limitless power over the citizenship to authoritarian philosopher kings- whose interest in freedom may be questionable and self interested, at best.

Tuesday, February 26, 2008

Market Solutions

As the credit market continues to tighten, it is clear that major ramifications are already underway. Despite the fact that too many political figures insist that they can do a better job by regulating, in fact the market has a habit of being able to fix its own problems.

Ferrovial, who bought BAA a year and a half ago, are now finding their large debt burden hitting their profits severely.

However, there is a solution: they can simply sell assets.

From the point of view of the consumer, this would be good news. The lack of competition has led to inefficient use of the airports around London. The poor transport links to Heathrow has allowed the BAA owned Heathrow Express to become the most expensive train ride per mile in the world, yet passengers transferring between different London Airports must do so by either coming into London by train, or taking a bus or taxi directly- there is no direct train link.

Breaking up the monopoly would force competition and help to address the costs and the access problems. The invisible hand strikes again!

Monday, February 25, 2008

Drinking Responsibly

Both Labour and the Conservatives have been much exercised by the alleged culture of binge drinking in the UK. A report has suggested that the introduction of more relaxed opening hours for the sale of alcohol had not created a cafe culture, but had in fact increased crime. We are told that the UK is at the centre of an epidemic of binge drinking. Children are said to be out of their brains and out of control. David Cameron has suggested that adults who buy alcohol should be named and shamed with pictures. Frankly, after accusing the government of gimmicks, he might have left that idea in the wastepaper bin, where it belongs.

Although the media are whipping up a moral panic, and although it is undoubtedly the case that excessive consumption of booze generally leads to higher crime, the fact is that the UK is not actually at the top of international consumption of alcohol. France, Ireland, Denmark, the Czech Republic and even Luxembourg all consume far more alcohol per capita than the UK does.

What are we then to make of demands that the state should intervene in the market place and ban the sale of strong lagers ? What are we to make of criminal procedures being launched against parents who allow their children to drink ?

Frankly the law already has sanctions against drunkenness- to be drunk and disorderly is an offense. To commit crimes, whether drunk or sober is still well, criminal.

After the absurd number of new criminal justice acts passed over the past fifteen years, it seems plain that Political intervention to control peoples behaviour is highly unlikely to work. Restricting the freedom to drink is not the same as controlling crime. Moral panic leads to the foolish gimmicks that David Cameron proposes.

Instead of changing the law, it strikes me that allowing the Police and the Magistrates the freedom to control late night drinking as they see fit and insisting that public drunkenness not be tolerated should be enough. We already have the laws to control this problem. We do not need more laws.

Friday, February 22, 2008

Enough from Fayed already

As another day passes in the seemingly interminable inquest into the death of Diana, I am sure that I am not alone in losing patience with Mohamed Fayed.

Fayed (the Al- prefix is an honorific like the German Von- which he is not entitled to use) has over the years been repeatedly condemned as a dishonest and rather brutal individual who tends to use threats and bluster as part of his normal business. His illegal dismissals of staff at Harrods for example have, on more than one occasion, seen him condemned by the British legal system over several years. Therefore the tragic loss of his son has not been the cause of his erratic and generally poor behaviour, though of course it may have accentuated it.

Having had his day in court over the death of Diana and his playboy son Dodi, Fayed has made a number of very serious allegations about a very large number of people.

If the Inquest finds that Diana and Dodi were not in fact murdered, then I for one sincerely hope that all of those whose name Fayed has attempt to blacken, sue him. In particular the allegations that Fayed made against the bodyguard, Trevor Rees Jones and Kelly Fisher, Dodi's former girlfriend, were outrageous and disgusting- all the more so since these seemingly blameless people seem to have been more the victims of Fayed and less able to defend themselves.

Indeed in my opinion I think that should the verdict of the inquest prove to be accidental death, then criminal charges should be brought against this odious man. If due process establishes that Fayed is a liar, then personally I would not want to have this vile, pathetic excuse for a human being in our country. The insults he has made against our Royal house, were they not so completely laughable, should not only render him ineligible for citizenship- he should be thrown out.

Tuesday, February 19, 2008

The past and the future of Kosova

The declaration of independence that the Parliament of Kosova approved on February 16th has been greeted by the international community with a certain weary resignation. The seventh country to have been carved out of the wreckage of Yugoslavia now takes its first toddler steps in the face of a certain amount of international dismay.

We are told that Serbia has lost the core of its history- yet, how true is this?

The province is named after the word for a blackbird in Serbian- Kos- in fact it is named after one particular battlefield: Kosovo Polje-the field of the Blackbirds. The battle took place on June 28th 1389. The battle took place at a key time for South East Europe, with the Ottoman Sultan Murad seeking to surround the declining Byzantine State and advancing into Europe. The army that faced the Ottomans was led by a Serbian princling, Lazar Hrebljanovic, and the various rulers of the petty states that emerged from the Serbian Empire of Stefan Dusan who had died in 1355. The Serbian army, like that of the Ottomans was a mixture of various of the peoples of the region, including speakers of Albanian- indeed it is conjectured that perhaps a third of the Serbian army was actually Albanian. In the end the battle closed with Ottoman Sultan and Serbian Prince dead. Although recorded as an Ottoman victory, it was still only in 1459 that the last Serbian kingdom finally fell to the Turks.

Meanwhile, the Kingdom of England lost control of Calais only in 1553, yet there is no serious attempt to "reclaim" Normandy or even Anjou, where even today one can find the graves of English Kings such as Richard the Lionheart and Henry II.

So why does any of this matter?

Firstly, during their years under the Turkish yoke, the Serbs began to create a series of myths surrounding the battle, with the day of the battle itself, known in Serbian as Vidovdan, becoming a holy festival to the Orthodox church. Indeed in several uprisings at the beginning of the 19th century, the spirit of the battle was invoked. Achieving firstly autonomy with the Ottoman Empire in 1815, Serbia finally gained full independence in 1878. Yet over all this time, in as far as evidence exists, the Turkish Vilayet of Kosovo was mostly Albanian speaking. Indeed in the same year as Serbia gained international recognition, Albanians gathered in the Kosovo city of Prizren and made their own case for autonomy.

In 1912, Albania became legally independent, and a year later Serbia had consolidated its victory in the Balkan wars-and with it control over Kosovo. In other words Serbian rule over Kosovo does not go back to "time immemorial" but actually only to 1913. Even then, there was the little matter of the First World war, so effective Serbian control in the province only dates to the 1920s.

All of this helps to explain why there are so few Serbs in to nominal cradle of the country- if they were ever the majority, which is dubious, those days were long past even centuries ago. Yet Serbs have claimed the province based on the national myths and the monasteries that were built to honour those myths during Turkish rule. Thus things stood through the creation of firstly the Kingdom and then the Socialist Federal Republic of Yugoslavia. Indeed Tito might have included all of Albania within his state, had not the split in Comintern taken place in 1948.

On Vidovdan 1986, a little known apparatchik in the Serbian League of Communists was visiting Kosovo. At the site of the battle, a nationalist Serbian demonstration took place. The Communist Police, mostly local Albanian speakers, took a dim view of this anti-Communist protest. Yet the Apparatchik from Belgrade took the side of the demonstrators. This fatal decision to ride the Serbian nationalist tiger ultimately led to the destruction of the very idea of Yugoslavia- the apparatchik was, of course Slobodan Milosevic.

In the end Milosevic, created by Kosovo as a political force, was destroyed by it too. His decision to inflict the violence on Kosovo that he had already unleashed on Slovenia, Croatia and Bosnia and drive all the nearly 2 million Albanians out of the province was a catastrophy. The attempt at ethnic cleansing came on top of prolonged oppression of the Albanians, and in the end the international community resisted and ended Serbian rule.

The fact is that by attempting to destroy Kosovo, Milosevic forfited Serbia's legitimacy- perhaps always a little tenuous- as the ruler of the province. In the end it has become totally unrealistic to expect the people of Kosova to accept any kind of rule from Belgrade.

The myths of Serbian history may be strong, but the realty of brutality and oppression is stronger.

The new Republic of Kosova has made solemn declarations of protection to all citizens, irrespective of language, religion and culture. The international community must hold the newly independent government in Prishtina to its solemn promises. The governments in Prishtina and Tirana reject the idea of greater Albania- they argue that what is needed is a European solution to South East Europe, where borders become much less powerful. If Serbia is ready to engage with the new state, then there is much to gain.

Serbia will gain nothing by truculence and resentment - but positive engagement with the new state will finally end the cycle of myth and sacrifice that has characterised the history of the country since 1815.

In that spirit, I welcome the creation of this new European state. Europe has little to fear and much to hope for in a democratic, tolerant and open Republic of Kosova. We should insist that they keep the promises that they have made to their minorities, especially to the Serbian minority, but we should also give the new state our blessing and our recognition.

Thursday, February 14, 2008

The infantilism of the British Snob

Last night I had the privilege to attend a dinner in central London hosting the President of Lithuania, Valdas Adamkus. It was a hugely well attended event, with a variety of different attendees. The bulk of the guests were members of the UK's large Lithuanian diaspora. Some were those forced to leave Lithuania by the Soviet occupation. Some were more recent arrivals. Others were those, like myself, who have very long standing connections with Lithuania and the fight for freedom and independence. I was proud to have the honour to be presented to the President in a short meeting that proceded the reception and the dinner.

The centrepiece of the evening was the presentation of a national decoration to Baroness Thatcher. As a supporter of her foreign policy- though precious little of her domestic agenda- I was happy enough to applaud the frail elderly lady that she has become. Her health is clearly poor and yet she was able to address a short speech to the audience of several hundred. As I listened I recalled with some anger the fact that her removal from office allowed the utter disgrace of Douglas Hurd's comtemptible behaviour in the Yugoslav wars- the Iron Lady would never have tolerated such double dealing.

Naturally amongst the audience were several British Conservatives. Amidst a certain amount of joshing, we concluded the dinner in the bar where several politically minded individuals enjoyed a spirited debate.

One of my British friends attending the dinner has learned to speak the Lithuanian language with great proficiency and he and I entered into a conversation with a senior British Conservative. Despite the wide ranging discussion, the thing that surprised me was just how impressed this middle aged man was with the fact that my friend was an Old Etonian.

To be honest, although I have occasionally teased him about his patrician family, I would find it bizarre to label my friend entirely through his school- yet this was what this Conservative was doing. To me the qualities that are interesting about my friend are his experience and his- rather non-conformist- attitudes, yet the Conservative could not stop coming back to the issue of the school.

How utterly strange that a man of significant achievements, and a member of our Parliament should give such deference to a school! Even, of course, if it is the same school as his boss, it still strikes me as very strange that someone should find this to be the most critical factor in a person.

I realised that snobbery lies in a kind of infantilism. Personally my heroes are those who overcome trials and adversity and who yet manage to contribute, whether in ideas and intellect or sport or leadership or in some other form of endevour. The idea that one should defer to someone merely because they went to one high school and not another; because of some spurious intrinsic values, rather than because of their wider attainments in life just seems plain wrong.

So, after a while, I began to feel increasingly irritated with the barrage of snobbery. I have never felt particularly strongly about private education in the UK. I went through the state system, my siblings largely through the private system. Personally the quality seems variable and the private sector a lot more mixed than one might believe. However when an influential individual shows such strange attitudes I did begin to feel that the educational apartheid that seems to be reducing British social mobility is actually exceptionally malign. Of course as a Liberal, I would not ban private education, but the absurd snobbery that has been created now concerns me greatly.

The intricacy and idiocy of British snobbery still, it seems, has not died yet.

Monday, February 11, 2008

Nick Clegg and Economic Liberalism

Slowly, slowly we progress: Nick Clegg's speech on the economy, while I was away in Estonia, was reasonably trenchant, especially in claiming the mantle of Economic Liberalism.

I think the stuff on the Banking system was very much to the point:

"The truth is, the British banking industry is cosseted and closed. It is not truly competitive.
For years it’s been almost impossible to get a new banking licence. New banks are usually just a subsidiary of existing banks.
And the Northern Rock episode has demonstrated that it’s also nearly impossible to stop being a bank.
The government and regulators are too afraid to let a bank fail.
Unless we lower the barriers to market entry and market exit, we will not have a truly competitive banking industry that can eradicate the poor service and high charges consumers currently face.
To make true competition possible without jeopardising customers, deposit protection needs to be beefed up, and widely publicised, to protect individuals’ deposits and give them confidence in the banking system.
Deposit protection should be peer-funded by the banks themselves, as in the US.
And then we need to look at making banking truly competitive again: allowing new entrants in more easily and allowing failure too.
Whatever happens, the Bank of England also needs – at a senior level – to secure greater expertise in relation to the workings of the financial markets."

This is good, and the other thing that impressed me was that the thread of the speech was very clear. He set out the key principles and then showed how policies flowed from them. The key ideas: open markets, competition, are all reflected in the specific policy agenda that he put forward.

Nick Clegg is increasingly impressive: he has a clear agenda and a clarity of thought which marks out a definate direction. At a time when Gordon Brown has broken all his golden rules, and when Cameron seems to go out of his way to obfuscate and hide whatever his political agenda actually is, such directness is particularly refreshing, I think.

Friday, February 08, 2008

A few words about the Archbishop of Canterbury

Oh dear.

Sharia law at any level in the UK?

No chance.

Disestablishment of the Church of England as the State religion?

Long overdue.

Thursday, February 07, 2008

When Europhobia becomes simple bigotry

Once again I post from the Estonian capital, Tallinn. Though not exactly tropical, the weather is actually unseasonably warm: + 3 degrees Celsius.

In a brief moment I check out the news, and with it Mark Mardell's generally excellent Euroblog on the BBC website.

Unfortunately, I end up in a kind of dispair at the unrelenting determination of the British to destroy their own national interests. Mark had blogged about the fact that the European Investment Bank had provided finance to the commercial operations of the BBC. The extraordinary howls of protest that this normal commercial transaction has provoked, marks out the protesters as blind bigots. Their line of reasoning is that the editorial line of the BBC is pro-European (a debatable prospect in itself), and that this is because of the money that has come from "Europe" i.e. the European Investment Bank.

The EIB, though originally set up under the 1957 Treaty of Rome, is not a part of the structure of the European Union. Its shareholders are individual nation states, and it functions under the strict oversight of of external auditors and internal risk controls, which are fully transparent.

Like that of the World Bank and the IMF, the mandate of the EIB is intended to focus of development projects, though these are judged within a commercial context. The idea that the BBC is somehow being bribed to trim its editorial line would be outrageous- if it were true. It is simply not true, no matter what the paranoid Europhobic bigots might chose to beleive.

The fact is that the level of Europhobia in the UK is now reaching psychotic levels. Daniel Hannan, the Conservative MEP, was extraordinarily offensive the other day when he argued that the European Parliament was behaving like Stalinist Communists. Ten EU member states have managed to shake off the yoke of Communism, and suffered death and Communist oppression on an industrial scale. The result is that, certainly here in Estonia, it would be hard to find a society more committed to democracy. To suggest that these countries would willingly relinquish their freedoms, is just plain wrong. As a senior CEE diplomat said to me- "we are becoming more and more disillusioned with the utter failure of British leaders to engage with EU at any level; we increasingly feel patronised and ignored, and British isolationism is not just dangerous for the EU, but for the UK too".

The Europhobes have constructed a non-existent bogeyman. The fact is that the UK is going to pay an ever higher price not just for going it alone, but for telling those countries that choose a higher level of integration and co-operation that they are the enemies of freedom.

The contrast between the Northern Rock fiasco and the rather more deft way that the European Central Bank has handled the bail-outs in Spain is instructive. It is not just a function of the Bank of England and the FSA making mistakes in the bail out. The fact is that the greater liquidity of the Euro finance markets allowed the ECB more flexibility in financing their problem instituions. The less liquid Sterling market offered much less potential, especially given the sums involved.

Unless the British stop conducting the debate on the European Union as though the EU was some kind of pogrom against British liberties, then the nation as a whole risks becoming treated like the embarassing, aggressive British drunks that in summer litter the Old Town square here in Tallinn. British national interests are being sold down the river alright: by the bigots who can not be bothered to get their facts straight, and whose visceral Europhobia is offensive and irrational.

Tuesday, February 05, 2008


Since the 1988 US Presidential elections only a Bush or a Clinton has sat in the Oval Office.

Hillary Clinton wishes to extend this run for at least another four years or even eight.

28 years of Bush-Clinton-Bush-Clinton!

Yet these are Presidents who have not actually been very successful. The policy mistakes of Bush one, the integrity mistakes of Clinton one, the policy catastrophy of Bush two, and then what would Hillary Clinton bring?

What a council of dispair, that American politics is reduced to the dynastic machinations of two families.

So, as the Republicans, for the time being, look outside the Bush family- indeed John McCain looks in many ways to be an opponent of the Bushes- should not the Democrats seek to break the circle too?

I certainly hope so. I respect John McCain, and believe that he would be a President who could help to reconstruct the international image of his country- so badly mauled by George W Bush.

I do not believe that the cynical and divisive Clintons could make the bridges that they need to build.

As for Barack Obama- well, he may be an unknown quantity now, but he too brings a sense of hope.

Tonight's vote could be critical for the whole future of the US- and the World.

Friday, February 01, 2008

Jobs for the Boys

The supposedly shocking scandal of Derek Conway handing over tens of thousands of Pounds to his own family has certainly cheered up the nation.

I mean, obviously the cash element is rather annoying, and one can only hope that he will be forced to pay back a bit more than the GBP 13,000 than has been his current sanction, together with his suspension from the House.

However, who could resist the rather louche Henry Conway? A totally unashamed hedonist, seemingly focussed only on the fripperies of life: parties, fashion and his boyfriends. I mean, we might have been able to forgive Conway pere had his son been a charity worker or a brain surgeon, but the host of the "F**k off, I'm Rich" Party (as it has been universally noted in every newspaper), seemed to have no redeeming virtues.

The problem for David Cameron is, of course, that a significant number of people think that he himself is far more like the Conway boys than he is like the rest of us. Arrogant, and filled with a sense of entitlement, and even perhaps a little ambiguous with regard to money. As products of the public school system, either of the two Conway sons or Henry's "close friend", the fabulously named Mr. Pratte could have been nominated as "the Parasite's Parasite".

It hurts Mr. Cameron, and despite the punishment that he has now inflicted on Conway senior, the delay in reaching the conclusion that he did simply highlights the understanding that Cameron would have beeen prepared to show, had but the media allowed.

The media, of course, did not allow, and this is a timely reminder of the fragility of Mr. Cameron's own position. The public revulsion at the greed of the Conway family is overlaid with envy and anger at the lifestyle of the two sons. The problem for Mr. Cameron is that many people, probably unfairly, regard Mr. Cameron himself as being very much in the same gilded group as the Conway sons.

And they are not popular.