Thursday, January 31, 2008

The End of Fed discipline

When people borrow too much, the best thing that can happen is a large dose of inflation. The nominal value of the debt stays the same, (plus interest) but the real value of the debt falls dramatically.

The second rate cut from the Fed in less than a week now takes interest rates under the US inflation rate.

The consequence will be a sharp fall in the US Dollar. All the massive debts that the US has contracted in Dollars will now fall in real terms.

The Fed is debauching the currency: the cardinal sin of Central Banking.

The consequences will include the end of the US Dollar as the sole reserve currency.

Meanwhile the ECB is maintaining interest rates in an attempt to reduce Eurozone inflation. This will hurt in the short term, but in the long term, it will prove to be a far wiser policy that the recklessness of the Fed.

Wednesday, January 30, 2008

What George W. Bush might have said

Madam Speaker, Vice President Cheney, Members of Congress, distinguished guests, and fellow citizens:
Seven years have passed since I first stood before you at this rostrum. In that time, our country has been tested in ways none of us could have imagined. We faced hard decisions about peace and war, rising competition in the world economy, and the health and welfare of our citizens.
These issues call for vigorous debate, and I think it's fair to say we've answered the call.
(LAUGHTER)
In that time I have honestly tried to put the interests of my country before all else. I have taken the words of the oath of office that I have twice made with the utmost seriousness. I know that in this, an election year, there will be new leaders emerging, Republicans and Democrats that will contemplate the oath I have taken and I know that all will consider the interests of our country and show that they can compete for votes and cooperate for results at the same time.
(APPLAUSE)
In the past seven years, we've all seen the images that have sobered us. In the face of a horrific act of violence on a clear September day, unprecedented in American history, we have made what I believed to be the right decisions at the time. Further attacks, in Jordan, in Madrid, in London, in Turkey have all demonstrated the ruthlessness of the criminals who identify with Al Qaeda. We were right to tackle the menace of the criminal regime of the Taliban and to eliminate them from power in Afghanistan. However, in the coming year we need renewed fortitude to complete the task that we have set and capture the perpetrators of the attacks on America and elsewhere and truly remove the forces that nurtured these monsters and oppressed the Afghan people . The advance of liberty is opposed by terrorists and extremists -- evil men who despise freedom, and whose enmity we are proud to oppose.
(APPLAUSE)
Yet, As the final year of my Presidency begins, I know that our country is by no means as united as it could be, and that it needs to be. I must shoulder my burden and admit to you and to the American people that I have made mistakes. Though I can not regret the fall of Saddam Hussein, I must now concede that my administration did not allow sufficient preparation for the post war situation in Iraq. I must plead in mitigation that I and my administration genuinely believed that Saddam had dangerous weapons and was prepared to release them to Al Qaeda for use against America and its allies. I took the decision to move faster in our preparations for war, since a failure to act, in my view, could have led to incalculable consequences.

It was a decision that has proven to be the hinge of my stewardship of this office. On reflection I gave insufficient attention to the counsels of our allies and this produced unnecessary friction at the outset of the campaign. More critically, my team was not prepared for the problems of a long term military engagement in Iraq. In particular, I should have been more proactive in maintaining sufficient strength to avoid the inter-communal violence that followed our success.

Thus it was that one year ago, our enemies were succeeding in their efforts to plunge Iraq into chaos. Yet now we have reviewed our strategy and changed course. We launched a surge of American forces into Iraq. We gave our troops a new mission: Work with the Iraqi forces to protect the Iraqi people, pursue the enemy in his strongholds, and deny the terrorists sanctuary anywhere in the country.

Despite my early missteps, over the past year, we've made good progress in achieving this.
Our military and civilians in Iraq are performing with courage and distinction, and they have the gratitude of our whole nation.
(APPLAUSE)
In Afghanistan, America, our 25 NATO allies and 15 partner nations are helping the Afghan people defend their freedom and rebuild their country.
Thanks to the courage of these military and civilian personnel, a nation that was once a safe haven for Al Qaeda is now a young democracy where boys and girls are going to school. New roads and hospitals are being built. And people are looking to the future with new hope.
These successes must continue. So we're adding 3,200 Marines to our forces in Afghanistan, where they will fight the terrorists and train the Afghan army and police.
Defeating the Taliban and Al Qaeda is critical to our security, and I thank the Congress for supporting America's vital mission in Afghanistan.
(APPLAUSE)
And I ask Congress to meet its responsibilities to these brave men and women by fully funding our troops. Our enemies in Iraq have been hit hard. They are not yet defeated and we can still expect tough fighting ahead. Our objective in the coming year is to sustain and build on the gains we made in 2007, while transitioning to the next phase of our strategy. American troops are shifting from leading operations to partnering with Iraqi forces and eventually to a protective over-watch mission.

As part of this transition, one Army Brigade Combat team and one Marine Expeditionary Unit have already come home and will not be replaced. In the coming months, four additional brigades and two Marine battalions will follow suit. Taken together, this means more than 20,000 of our troops are coming home.
(APPLAUSE)
Yet we have unfinished business before us, and the American people expect us to get it done.
The mission in Iraq has been difficult and trying for our nation, but it is in the vital interest of the United States that we succeed.

A free Iraq will deny Al Qaeda a safe haven. A free Iraq will show millions across the Middle East that a future of liberty is possible. A free Iraq will be a friend of America, a partner in fighting terror and a source of stability in a dangerous part of the world.
By contrast, a failed Iraq would embolden the extremists, strengthen Iran and give terrorists a base from which to launch new attacks on our friends, our allies and our homeland.

The criminals have made their intentions clear. At a time when the momentum seemed to favor them, Al Qaeda's top commander in Iraq declared that they will not rest until they have attacked us here in Washington.

My fellow Americans, we will not rest either. We will not rest until this enemy has been defeated. (APPLAUSE)
In the work ahead, we must be guided by the philosophy that made our nation great. As Americans, we believe in the power of individuals to determine their destiny and shape the course of history. We believe that the most reliable guide for our country is the collective wisdom of ordinary citizens. And so, in all we do, we must trust in the ability of free peoples to make wise decisions and empower them to improve their lives for their futures
(APPLAUSE)
I must also acknowledge to the American people that I have waited too long to try to tackle the causes of much extremism in the Middle East: the continued impasse in the Holy Land. To some great degree, the road to peace in Iraq or Afghanistan is one that starts in Jerusalem. Palestinians have elected a president who recognizes that confronting terror is essential to achieving a state where his people can live in dignity and at peace with Israel.
Israelis have leaders who recognize that a peaceful, democratic Palestinian state will be a source of lasting security.
This month in Ramallah and Jerusalem, I assured leaders from both sides that America will do and I will do everything we can to help them achieve a peace agreement that defines a Palestinian state by the end of this year.
The time has come for a Holy Land where a democratic Israel and a democratic Palestine live side by side in peace. My goal is to foster a new framework where practical solutions can be found to create the conditions for a complete settlement of the outstanding issues and the full implementation of the road map for peace.
(APPLAUSE)
As Americans, we believe in the power of individuals to determine their destiny and shape the course of history. We believe that the most reliable guide for our country is the collective wisdom of ordinary citizens.
And so, in all we do, we must trust in the ability of free peoples to make wise decisions and empower them to improve their lives for their futures.
To build a prosperous future, we must trust people with their own money and empower them to grow our economy. As we meet tonight, our economy is undergoing a period of uncertainty. America's added jobs for a record 52 straight months.
But jobs are now growing at a slower pace. Wages are up, but so are prices for food and gas. Exports are rising, but the housing market has declined.
At kitchen tables across our country, there is a concern about our economic future. In the long run, Americans can be confident about our economic growth, but in the short run, we can all see that that growth is slowing.
So, last week, my administration reached agreement with Speaker Pelosi and Republican Leader Boehner on a robust growth package that includes tax relief for individuals and families and incentives for business investment.
The temptation will be to load up the bill. That would delay it or derail it, and neither option is acceptable.
(APPLAUSE)
This is a good agreement that will keep our economy growing and our people working. And this Congress must pass it as soon as possible.
(APPLAUSE)
We have other work to do on taxes. Unless Congress acts, most of the tax relief we've delivered over the past seven years will be taken away.
Some in Washington argue that letting tax relief expire is not a tax increase.
Try explaining that to 116 million American taxpayers who will see their taxes rise by an average of $1,800. Others have said they would personally be happy to pay higher taxes. I welcome their enthusiasm. I am pleased to report that the IRS accepts both checks and money orders.
(LAUGHTER)
(APPLAUSE)
Most Americans think their taxes are high enough. With all the other pressures on their finances, American families should not have to worry about the federal government taking a bigger bite out of their paychecks. There is only one way to eliminate this uncertainty: Make the tax relief permanent.
Members of the Congress should know, if any bill -- raises taxes reach -- reaches my desk, I will veto it.
(APPLAUSE)
Just as we trust Americans with their own money, we need to earn their trust by spending their tax dollars wisely.
(APPLAUSE)
Next week, I'll send you a budget that terminates or substantially reduces 151 wasteful or bloated programs, totaling more than $18 billion. The budget that I'll submit will keep America on track for a surplus in 2012.
American families have to balance their budgets; so should their government.
The people's trust in their government is undermined by congressional earmarks, special interest projects that are often snuck in at the last minute, without discussion or debate. committee reports that never even come to a vote.
Unfortunately, neither goal was met.
So, this time, if you send me an appropriations bill that does not cut the number and cost of earmarks in half, I'll send it back to you with my veto.
(APPLAUSE)
And tomorrow I will issue an executive order that directs federal agencies to ignore any future earmark that is not voted on by Congress.
If these items are truly worth funding, Congress should debate them in the open and hold a public vote.
(APPLAUSE)
Our shared responsibilities extend beyond matters of taxes and spending. On housing, we must trust Americans with the responsibility of home ownership and empower them to weather turbulent times in the housing market.
My administration brought together the Hope Now alliance, which is helping many struggling homeowners avoid foreclosure.
And Congress can help even more.
Tonight I ask you to pass legislation to reform Fannie Mae and Freddie Mac, modernize the Federal Housing Administration, and allow state housing agencies to issue tax-free bonds to help homeowners refinance their mortgages.
(APPLAUSE)
It's been a difficult time for many American families and, by taking these steps, we can help more of them keep their homes.
To build a future of quality health care, we must trust patients and doctors to make medical decisions and empower them with better information and better options.
We share a common goal: making health care more affordable and accessible for all Americans.
(APPLAUSE)
The best way to achieve that goal is by expanding consumer choice, not government control.
(APPLAUSE)
BUSH: So I propose ending the bias in the tax code against those who do not get their health insurance through their employer. This one reform would put private coverage within reach for millions, and I call on the Congress to pass it this year.
(APPLAUSE)
Congress must also expand health savings accounts, create association health plans for small businesses, promote health information technology and confront the epidemic of junk medical lawsuits.
(APPLAUSE)
With all these steps, we will ensure that decisions about your medical care are made in the privacy of your doctor's office, not in the halls of Congress.
(APPLAUSE)
On education, we must trust students to learn, if given the chance, and empower parents to demand results from our schools.
In neighborhoods across our country, there are boys and girls with dreams. And a decent education is their only hope of achieving them.
Six years ago, we came together to pass the No Child Left Behind Act, and today no one can deny its results.
Last year, 4th and 8th graders achieved the highest math scores on record. Reading scores are on the rise. African-American and Hispanic students posted all-time highs. Now we must...
(APPLAUSE)
Now we must work together to increase accountability, add flexibilities for states and districts, reduce the number of high school dropouts, provide extra help for struggling schools.
Members of Congress, the No Child Left Behind Act is a bipartisan achievement. It is succeeding. And we owe it to America's children, their parents and their teachers to strengthen this good law.
(APPLAUSE)
We must also do more to help children when their schools do not measure up. Thanks to the D.C. Opportunity Scholarships you approved, more than 2,600 of the poorest children in our nation's capital have found new hope at a faith-based or other nonpublic schools.
Sadly, these schools are disappearing at an alarming rate in many of America's inner cities. So I will convene a White House summit aimed at strengthening these lifelines of learning.
And to open the doors of these schools to more children, I ask you to support a new $300 million program called Pell Grants for Kids. We have seen how Pell Grants help low-income college students realize their full potential.
Together, we've expanded the size and reach of these grants. Now let us apply the same spirit to help liberate poor children trapped in failing public schools.
(APPLAUSE)
On trade, we must trust American workers to compete with anyone in the world and empower them by opening up new markets overseas.
Today, our economic growth increasingly depends on our ability to sell American goods and crops and services all over the world.
So we're working to break down barriers to trade and investment, wherever we can.
We're working for a successful Doha round of trade talks. And we must complete a good agreement this year.
At the same time, we're pursuing opportunities to open up new markets by passing free trade agreements.
I thank the Congress for approving a good agreement with Peru. And now I ask you to approve agreements with Colombia and Panama and South Korea.
(APPLAUSE)
Many products from these nations now enter America duty-free.
Yet many of our products face steep tariffs in their markets. These agreements will level the playing field. They will give us better access to nearly 100 million customers.
They will support good jobs for the finest workers in the world, those whose products say, "Made in the USA."
(APPLAUSE)
These agreements also promote America's strategic interests. The first agreement that will come before you is with Colombia, a friend of America that is confronting violence and terror and fighting drug traffickers. If we fail to pass this agreement, we will embolden the purveyors of false populism in our hemisphere.
So we must come together, pass this agreement, and show our neighbors in the region that democracy leads to a better life.
(APPLAUSE)
Trade brings better jobs and better choices and better prices. Yet, for some Americans, trade can mean losing a job. And the federal government has a responsibility to help.
(APPLAUSE)
I ask Congress to reauthorize and reform Trade Adjustment Assistance, so we can help these displaced workers learn new skills and find new jobs.
(APPLAUSE)
BUSH: And I ask Congress to reauthorize the Reform Trade Adjustment Assistance so we can help these displaced workers learn new skills and find new jobs.
(APPLAUSE)
To build a future of energy security, we must trust in the creative genius of American researchers and entrepreneurs and empower them to pioneer a new generation of clean energy technology.
(APPLAUSE)
Our security, our prosperity and our environment all require reducing our dependence on oil. consumption over the next decade, and you responded. Together, we should take the next steps. Let us fund new technologies that can generate coal power while capturing carbon emissions.
Let us increase the use of renewable power and emissions- free nuclear power.
(APPLAUSE)
Let us continue investing in advanced battery technology and renewable fuels to power the cars and trucks of the future.
(APPLAUSE)
Let us create a new international clean technology fund which will help developing nations like India and China make greater use of clean energy sources.
And let us complete an international agreement that has the potential to slow, stop, and eventually reverse the growth of greenhouse gases.
(APPLAUSE)
This agreement will be effective only if it includes commitments by every major economy and gives none a free ride.
The United States is committed to strengthening our energy security and confronting global climate change, and the best way to meet these goals is for America to continue leading the way toward the development of cleaner and more energy-efficient technology.
(APPLAUSE)
To keep America competitive into the future, we must trust in the skill of our scientists and engineers and empower them to pursue the breakthroughs of tomorrow.
Last year, Congress passed legislation supporting the American Competitiveness Initiative, but never followed through with the funding. This funding is essential to keeping our scientific edge.
So I ask Congress to double federal support for critical basic research in the physical sciences and ensure America remains the most dynamic nation on earth.
(APPLAUSE)
On matters of life and science, we must trust in the innovative spirit of medical researchers and empower them to discover new treatments while respecting moral boundaries.
In November, we witnessed a landmark achievement when scientists discovered a way to reprogram adult skin cells to act like embryonic stem cells.
This breakthrough has the potential to move us beyond the divisive debates of the past by extending the frontiers of medicine without the destruction of human life.
(APPLAUSE)
So we're expanding funding for this type of ethical medical research. And, as we explore promising avenues of research, we must also ensure that all life treated with the dignity it deserves.
And so I call on Congress to pass legislation that bans unethical practices such as the buying, selling, patenting or cloning of human life.
(APPLAUSE)
On matters of justice, we must trust in the wisdom of our founders and empower judges who understand that the Constitution means what it says.
(APPLAUSE)
I've submitted judicial nominees who will rule by the letter of the law, not the whim of the gavel. Many of these nominees are being unfairly delayed. They are worthy of confirmation, and the Senate should give each of them a prompt up-or-down vote.
(APPLAUSE)
In communities across our land, we must trust in the good heart of the American people and empower them to serve their neighbors in need.
Over the past seven years, more of our fellow citizens have discovered that the pursuit of happiness leads to the path of service. Americans have volunteered in record numbers. Charitable donations are higher than ever. Faith-based groups are bringing hope to pockets of despair with newfound support from the federal government.
And, to help guarantee equal treatment of faith-based organizations when they compete for federal funds, I ask you to permanently extend Charitable Choice.
(APPLAUSE)
Tonight, the armies of compassion continue the march to a new day in the Gulf Coast. America honors the strength and resilience of the people of this region. We reaffirm our pledge to help them build stronger and better than before.
And tonight I'm pleased to announce that, in April, we will host this year's North American Summit of Canada, Mexico, and the United States in the great city of New Orleans.
(APPLAUSE)
There are two other pressing challenges that I've raised repeatedly before this body, and that this body has failed to address: entitlement spending and immigration.
Every member in this chamber knows that spending on entitlement programs -- like Social Security, Medicare and Medicaid -- is growing faster than we can afford.
We all know the painful choices ahead if American stays on this path: massive tax increases, sudden and drastic cuts in benefits, and crippling deficits.
I've laid out proposals to reform these programs. Now I ask members of Congress to offer your proposals and come up with a bipartisan solution to save these vital programs for our children and our grandchildren.
(APPLAUSE)
The other pressing challenge is immigration. America needs to secure our borders. And, with your help, my administration is taking steps to do so. We're increasing work site enforcement, deploying fences and advanced technologies to stop illegal crossings.
We've effectively ended the policy of "catch and release" at the border. And by the end of this year, we will have doubled the number of border patrol agents.
Yet we also need to acknowledge that we will never fully secure our border until we create a lawful way for foreign workers to come here and support our economy.
(APPLAUSE)
This will take pressure off the border and allow law enforcement to concentrate on those who mean us harm.
We must also find a sensible and humane way to deal with people here illegally. Illegal immigration is complicated, but it can be resolved, and it must be resolved in a way that upholds both our laws and our highest ideals.
(APPLAUSE)
This is the business of our nation here at home. Yet building a prosperous future for our citizens also depends on confronting enemies abroad and advancing liberty in troubled regions of the world.
Our foreign policy is based on a clear premise: We trust that people, when given the chance, will choose a future of freedom and peace.
In the last seven years, we have witnessed stirring moments in the history of liberty. We've seen citizens in Georgia and Ukraine stand up for their right to free and fair elections. We've seen people in Lebanon take to the streets to demand their independence. We've seen Afghans emerge from the tyranny of the Taliban and choose a new president and a new parliament.
We've seen jubilant Iraqis holding up ink-stained fingers and celebrating their freedom.
These images of liberty have inspired us.
(APPLAUSE)
On the homefront, we will continue to take every lawful and effective measure to protect our country. This is our most solemn duty.
We are grateful that there has not been another attack on our soil since 9/11. But this is not for the lack of desire or effort on the part of the enemy.
In the past six years, we've stopped numerous attacks, including a plot to fly a plane into the tallest building in Los Angeles, and another to blow up passenger jets bound for America over the Atlantic.
Dedicated men and women in our government toil day and night to stop the terrorists from carrying out their plans. These good citizens are saving American lives, and everyone in this chamber owes them our thanks.
(APPLAUSE)
Protecting our nation from the dangers of a new century requires more than good intelligence and a strong military. It also requires changing the conditions that breed resentment and allow extremists to prey on despair. So America is using its influence to build a freer, more hopeful and more compassionate world.
This is a reflection of our national interests. It is the calling of our conscience. America opposes genocide in Sudan.
(APPLAUSE)
We support freedom in countries from Cuba and Zimbabwe to Belarus and Burma.
(APPLAUSE)
America's leading the fight against global poverty with strong education initiatives and humanitarian assistance. We've also changed the way we deliver aid by launching the Millennium Challenge Account.
This program strengthens democracy, transparency and the rule of law in developing nations, and I ask you to fully fund this important initiative.
(APPLAUSE)
America is leading the fight against global hunger. Today, more than half the world's food aid comes from the United States.
(APPLAUSE)
And tonight, I ask Congress to support an innovative proposal to provide food assistance by purchasing crops directly from farmers in the developing world, so we can build up local agriculture and help break the cycle of famine.
(APPLAUSE)
As I consider the future ahead of us I remain full of hope for the promise of America. Though I acknowledge my failings in office, yet I draw solace in the strength of this great country. The secret of our strength, the miracle of America, is that our greatness lies not in our government, but in the spirit and determination of our people. When the federal convention met in Philadelphia in 1787, our nation was bound by the Articles of Confederation which began with the words, "We the undersigned delegates." Constitution, he offered an important revision, and opened with words that changed the course of our nation and the history of the world: "We the people."

By trusting the people, our founders wagered that a great and noble nation could be built on the liberty that resides in the hearts of all men and women. By trusting the people, succeeding generations transformed our fragile young democracy into the most powerful nation on earth and a beacon of hope for millions.
And so long as we continue to trust the people, our nation will prosper, our liberty will be secure and the state of our union will remain strong.
(APPLAUSE)
So tonight, with confidence in freedom's power and trust in the people, let us set forth to do their business.

God bless America.

Monday, January 28, 2008

Trying to do too much

The dramatic falls in global markets over the past couple of weeks have created a rather panicky mind set amongst many of the key players. However, whatever Ben Bernanke may hope, the global financial crisis is not going to come to an end because of emergency rate cuts by the Fed. The fact is that the credit binge now needs to unwind to a still greater degree before stability can be restored. This is not a situation that is likely to respond to the short term moves that policy makers primarily use to influence the markets.

On the other hand, the idea the George Soros puts forward that the current troubles are the end of a "sixty year super cycle" seems to take his theories of "reflexivity" into the sci-fi realms of Hari Seldon's Psychohistory created by Isaac Asimov. Nevertheless, that the credit markets and the housing boom now need some significant structural adjustment, is a given, the question is one of scale.

It is also a question of timing.

A few months ago, I wrote about the coming global storm. The storm has indeed now hit, and major adjustments on asset prices are underway. There are, however, so many moving pieces in the modern market economy that any forecasts we make may have highly unexpected effects. The two careers that Nassim Taleb has the least respect for are politicians and securities analysts, since they are the people most inclined to "epistemological arrogance". To that list I think we could now add central bankers.

The job of a central banker is to control inflation. It is not the job of the central banker to second guess the markets. Arguably the Greenspan years saw a rescuing of the markets as each speculative bubble burst: emerging markets in 1997/8, tech stocks in 2001 and finally (and most damagingly) property now. In each case the effect was that overall consumption grew yet further, to the point where consumers were eating their own seed corn- relying on a speculative property bubble instead of real savings to fund their future.

"Helicopter Ben" has continued his mentor's policies, but with consumption at 72% of US GDP, there is now no where to hide. A significant adjustment is inevitable. The emergency rate cut will not have any substantial effect, indeed arguably, if recession is inevitable, at this early stage some have made the case for a rate increase in order to speed the process of adjustment, one key factor of which is an increase in savings. To be honest, this is not relevant- the only factor that the fed should be measured by is their stewardship of the currency. By any measure this is parlous. essentially the repeated speculative bubbles have debauched the US currency to the point that it is now no longer a universally attractive store of wealth. The price of gold reflects the dramatic way that the Dollar has declined- and underlines the failure of the Fed under both Greenspan and Bernanke to fulfil their mandate.

Both Federal reserve Chairmen must take their share of the blame. Both tried to do more than their pure remit. Both a responsible for the mess that the US credit market, and now the global economy find themselves in.

Thursday, January 24, 2008

The Curse of Blog

Well, a rather smug and arrogant British politician is forced out of ministerial office following the referral of his financial dealings to the Metropolitan Police- I see that Guido Fawkes is happily dancing on Peter Hain's political grave, and indeed claiming his political scalp as the first victory of the insurgent blogosphere over the political class, and indeed the "old media".

The blogosphere redux ?

Well, I am not too sure about that.

The medium has changed quite a bit from the heady days of last year when a blog was being created every blink of an eye.

Despite the supposed triumph of the transforming technology, I see that several very good blogs, like InnerWest, seem to have passed beyond, and even A Liberal goes a Long Way- a former Lib Dem blog of the year- now seems to have dropped out. Newmania, for the more rabid Tories, also seems to have disappeared too.

Sure, there is a limit to what a given individual feels like telling the world. More the point, perhaps it is fair to say that people are also recognising the limits of blogs. They do not change the world, they may not be very influential, they are merely a medium.

Though Guido may feel triumphant, the fact is, that probably 98% of the UK has probably never heard of him. Despite the passion and anger that many bloggers seem to be holding back with extreme difficulty (obviously except Devil's Kitchen who has never knowingly held back anything) the fact is that the audiences are still pretty small. The attention that 18 Doughty St tried to attract for its ideas of blogging television were brave, but at a time when BBC Three is now becoming a webcast TV station it seems to me that in the end, this is television, with television economics, rather than the very low barriers to entry that characterised the original blogosphere. Although perhaps things like Youtube have influenced TV economics, in the end blogs are a different animal. The fact is that most bloggers generally do not have the perfect face for television, and the more rabid opinions expressed look far more acceptable as the written word than they would being spoken.

Of course, there are the superblogs: Iain Dale, Guido Fawkes, et al, and there are also the platform blogs, like Comment is Free and Politicalbetting.com, and there is a long tail of others which are not particularly widely read. Some are interesting, some are humorous, some are thoughtful, some-probably including this blog, are a bit hit and miss. I often say that I write about five good blogs a month- yet in order to maintain any kind of traffic, I still have to write at least around twenty a month. A good columnist with a national newspaper is probably more readable, since they can hone their pieces a bit more than I have time for.

However, despite the limits of blogging, in the two and a half years or so since I took up this blog I have now reached the grand total of just over 50,000 page loads, with about 20,000 individual readers. These have been largely British and American, but I also have regular readers around the world: in Estonia, Zambia, New Zealand, Georgia, and so on. A few are people I know personally, many more are not. I see from my stats a pool of about a thousand regular readers. I am regularly nominated as a good Liberal Democrat blogger, although Jonathan Calder frankly is usually both more amusing and more eclectic than I am.

This blog continues to return to certain themes: usually political, and is focused upon the general theme of political freedom and choice. The ideology of Liberalism is also applicable, I believe, in foreign policy, and I clearly see threats emerging from such powers as Russia.

Given the rather specialist nature of this blog and the rather, shall we say "individualistic" character of its author, I have actually been quite surprised by the size of readership that it attracts- several hundred people a day are now reading what a friend described as "the stuff you tend to say when we are in the pub". Not a super blog, but I hope a blog which gives people a point of view and perhaps provokes some ideas. It seems to fill a modest need, so I shall try to stick with it for a bit.

Tuesday, January 22, 2008

How TV works

I am occasionally asked to comment for Business TV channels on aspects of my work in emerging markets. Today, as I walked to get my lunch, I saw a TV crew- as you often do around the streets of London. The only difference was that I know the journalist and stopped to say hello.

As you do with journalists, we had a chat and arranged a drink. Five minutes later he called me.

The US Fed had just made an emergency rate cut and all the stuff he had been doing was now out of date.

Could I help?

Well, my specialism is quite specifically emerging markets, but for such a big story it was not hard to come up with the three lines that the news story called for. So I gave my views to camera on the street outside my office. When it was over I asked my friend which obscure business channel we were on.

BBC News at 10, apparently- so "Hello Mum!"

Mayor of London: Time to get serious

The steady stream of exposees and innuendo about Ken Livingstone have become a crescendo. The latest is the full length Dispatches programme, which comes on top of a consistent set of stories from Andrew Gilligan in the Evening Standard.

The implication is that Ken Livingstone is a drunk and sleazy politician.

As regular readers of this blog will note, that is a view that I have put forward for some time.

I do not believe he is fit for office. I do believe he should be replaced.

However, the leading opponent of Crony Ken is currently the equally absurd Boris Johnson.

The litany of Johnson's questionable career begins with the fact that he was sacked for making up quotations for an article he wrote as a trainee journalist. Despite his starter marriage, which ended in divorce, and a further marriage which produced four children, Johnson caught the public eye when he lied rather obviously about his considerable philandering, including a four year affair with Petronella Wyatt amongst others.

He also has a consistent pattern of being forced to apologise by his employers for insensitive or false remarks. His friendship with convicted fraudster Darius Guppy led to him being accused of threats of violence against a journalist- and Ian Hislop was able to humiliate him and negate his denials during an appearance on Have I Got News for You by reading verbatim a transcript that was taped of Johnson which appeared to be quite conclusive against him.

In short Boris Johnson is a serial and proven liar, whose bumbling public persona imperfectly covers a pattern of dishonesty of the most personal kind, a man who, by his own admission, finds it impossible to grasp the basic tools of administration. A man- in short- not fit to be Mayor.

There is, however, a candidate in the race who is not the kind of politician- as Livingstone and Johnson are- who values being a "celebrity" above the people that they are elected to serve.

A man who has had a whole career serving the community quite literally on the front line. A man who has not been afraid to tackle radical solutions to the problems of crime. A man with considerable personal integrity.

The only genuine and serious candidate for Mayor of London is the former Deputy Assistant Commissioner of the Metropolitan Police: Brian Paddick .

UPDATE: Johnson does it again!!- He is *again* forced to apologise . This time for a load of language that he used that is by even the broadest standards unacceptable and actually is racist.

Give it up Boris- a joke's a joke but people have stopped laughing now.

Sunday, January 20, 2008

Sunshine on a rainy day

I have been exceptionally busy here in Tallinn, so inevitably blogging has been sparse. Indeed I missed all of the excitement on this very blog. I think it speaks volumes about what people think of Peter Hain, that even the rather tired joke about him on these pages has received such wide currency!

The fact is that whatever happens now, Peter Hain is a politician who is well passed his sell-by date.

In fact the entire government have that slightly stale smell about them. Even David Milliband our kid foreign secretary does not look fresh. Indeed his absence of gravitas is so extreme that it is practically comic.

The ongoing crisis between the UK and Russia is watched with considerable interest in Estonia, where they have all too much experience of the crude and rather brutal methods that the current mob of crooks in the Kremlin have used as their foreign policy. I met with Mart Laar, the former Prime Minister, yesterday and exchanged thoughts about the problems of Russia. While Edward Lucas in is polemical and passionate book "The New Cold War" points the finger at Russian strength, both Mart and myself are equally concerned about their weakness. For example, despite the large inflows to Russia as the result of the high prices of oil, gas and other commodities, the fact is that the money seems to be leaving the country just as rapidly. Large parts of the infrastructure are in a critical condition. The electricity grid, in particular could have a total breakdown, were winter temperatures to fall towards their seasonal average, as opposed to the unseasonably warm period that we are facing now. If the grid collapsed it could take weeks or even months to bring the system back up to full operation. Sub stations, cables and generators are all on a knife edge, and yet the urgent investment that is needed has not taken place.

Meanwhile, Mr. Putin´s enemies reveal that his personal fortune is over 4o billion Euros, and white elephant projects like Nord Stream are maintained as methods of pressure on foreign powers.

There is no gas to send through the Nord Stream pipeline.

In the face of such bone headed and brutal stupidity, the timorous wrist slapping of our boyish foreign secretary just looks absurd.

Thursday, January 17, 2008

No Snow

This time, another trip to Estonia
Always a pleasure to come to a country where the safety Nazis do not have the last word
Also a place where Liberalism is a given- the answer is always "why not?"instead of "why bother?"
The whining Daily Mail subtext of fear and defeat seems to be a very long way from a country where the worst already happened.
When you meet Estonians the verbs are never "can not", only "possible, although difficult". What a relief from the fear and negativity of 98% of British politics.

Perhaps that explains why Estonians will be richer than the UK quite soon, even after the recesssion that strikes Estonia before Britain....

Tuesday, January 15, 2008

Where does David Cameron stand on Europe?

Liberal Democrats are not anti-European. We believe that the European Union needs significant reform, but we also believe that it is a positive force for the political and economic well being of British Citizens.

What, however, are the Conservatives?

Are they Anti-European, as so many of their members seem to be?

Are they Pro-European, as Christopher Beazley, a veteran Conservative MEP, certainly is?

For many Conservatives, membership of the European Union is, as it is for UKIP, a complete anathema. However, David Cameron says that he does not want to withdraw from the European Union .

Personally, therefore I get a little tired of being accused by some Tory nutters of being some fanatical anti British traitor because I also support membership of the EU. The furious rage and malice that these anti-European Conservative people often bring to their arguments is usually highly unpleasant and almost entirely counter-productive. The contempt, for example, that these Yahoos have poured on Christopher Beazley's head since he announced his retirement is little short of disgusting.

Christopher and I know each other slightly, since we have taken part in several academic seminars at UCL-SSEES. I have therefore had the pleasure of several thoughtful discussions on various subjects, including the future of the Baltic, with him.

As political opponents we can not be expected to agree on everything, but I would regard his views with respect, even when they are not my own.

A lack of courtesy is one thing that I have got used to from the more unreconstructed element of the anti-European fanatics when I debate with them. The horrible vituperation and wholly unworthy personal attacks against Christopher Beazley -by his own side- I have found absolutely shocking.

Mr. Cameron too may disagree with some of Christopher Beazley's positions, but he really ought to protect him from the howling mob of barbarians whose continuing personal attacks are truly vile.

If he is not prepared to defend an honourable and long-serving MEP, then perhaps we are entitled to ask more firmly: "Mr. Cameron, do you support continued British membership of the European Union".

It is a straight yes or no answer.

He can not placate the anti-European mob with equivocations; he should defend an honourable and decent man.

Monday, January 14, 2008

Hain: Disorganised Indeed

A secretary was leaving the Department of Work and Pensions last Friday evening when she encountered Peter Hain, standing in front of a shredder with a piece of paper in his hand.

"Listen," said Mr. Hain, "this is important, and my secretary has already left. Can you make this thing work?"

"Certainly," said the secretary. She turned the machine on, inserted the paper, and pressed the start button.

"Excellent, excellent!" said Mr. Hain as his paper disappeared inside the machine. "I just need one copy."

Nick Clegg finds his voice

This feels like the beginning of something big.

If Nick Clegg had said this during the leadership campaign I would have unhesitatingly voted for him.

This is an authentic Liberal voice, and one that is going to make a dramatic difference. A few of the quotes I would highlight:

"The first step is to scale back the vast monster of Whitehall. Whitehall should get out of the business of the day to day running of public services in Britain. That strategy doesn’t work. We will draw up plans for radically shrinking the size of all our public service departments - to re-focus them on setting broad objectives for the local agencies and people who deliver on the ground."

"Marrying our proud traditions of economic and social liberalism, refusing to accept that one comes at the cost of the other. On that point, if not all others, the controversial Orange Book in 2004 was surely right."

"There are two crucial dividing lines in British politics. First - the dividing line between progressives and conservatives - between those who believe in tackling inherited disadvantage and removing the scars of poverty, and those who don’t. And second - the dividing line that splits liberals from the advocates of big government solutions - a dividing line that splits the progressive cause"

"As John Stuart Mill warned in 1859: "A state which dwarfs its men...even for beneficial purposes, will find that with small men no great things can be accomplished."

"Government should step away from daily management, and instead make sure that public services are held clearly to account through effective, independent systems of inspection. We should consider merging the Qualifications and Curriculum Authority, OFSTED and parts of the Schools department into a new Educational Standards Authority, independent of ministers, accountable to Parliament - and active in promoting innovation and best practice.I don’t think it should be acceptable for any school to have over half of young people leaving without 5 good grades. And it shouldn’t be acceptable that we have such low standards for GCSE pass scores that the Government reports as "passes" some grades which we know are in reality of no value in today’s labour market. What value exactly should an employer place on a G or F grade? You can get a G, in some cases, for a mark of about 20%. It’s time to call a fail, a fail. And raise expectations by abolishing the two lowest pass grades for GCSEs."

"I didn’t come into politics just to transfer power from a set of national politicians to a set of local politicians. That’s a necessary first step, but it is not an end in itself. We need to empower people who use and people who deliver public services every day. We know central government gets in the way of that happening. But let’s not pretend that local government is blameless. Councils too can impose bureaucracy, insist on unnecessary control"

"Freedom. Innovation. Diversity. Yes, choice too. These are liberal words. Let us take them back. If we yield liberal language and liberal values to our opponents we do nothing but damage to our liberal cause.

This is the 21st century - the age of Youtube, and Facebook, and Wikipedia. The age not of top-down management, but of people taking control of their own lives, creating the tools to deliver services to each other. We no longer want to be treated as if we should be grateful recipients of inflexible, and sometimes second rate, state services delivered from on high."

Friday, January 11, 2008

An end to the Night-Mayor

Last night was the first of doubtless many debates between the candidates for Mayor of London.

To be honest I have been in a gentle kind of despair about the idea of Ken Livingstone, who I believe to be incompetent, doctrinaire and rather crooked, holding on to his job.

Certainly, the idea of Boris Johnson- the clownish, gaffe prone Conservative candidate- replacing Livingstone is really not appealing at all. I think I prefer the dubious crook to the embarrassing clown.

However, one candidate last night actually did come over as a sound and sensible figure. Brian Paddick was a guy who one can imagine dealing with - God forbid- a major terrorist incident. He also has interesting ideas about how to tackle the mess in transport and already knows far more than other two do about Policing.

He is clearly thoughtful and intelligent.

Between the posturing of the two gargoyles -Ken and Boris- Brian Paddick looks extremely good. If Boris's campaign implodes , as it easily might, and the rumours of Mayoral shenanigans prove to be more than rumours, then Brian Paddick could even end up as the winner of the contest.

I certainly hope so- I believe him to be much better qualified than the other two.

Thursday, January 10, 2008

Blair is no Cincinnatus

There is a story in ancient Rome of Cincinnatus- the hero who took political power at the specific request of the Senate and then saved the city when it was menaced by the Volscians and the Aequi. The same thing happened again when the city was faced with a revolt by the plebians- the same class as Cincinnatus himself.

In each case, when his job was done, he relinquished power and returned to his farm where he lived modestly.

I don't think he filled his boots with consultancy jobs which he was not really qualified for and which were offered to him entirely because he had previously held supreme power. He therefore did not aim to make as much money as possible by exploiting his previous status.

No- that epitome of greed is one Tony Blair.

Liberal Democrats v Conservatives: the battle in the blogosphere

It is probably fair to say that the advent of Nick Clegg, the new leader of the Liberal Democrats, has not been greeted with unalloyed joy by our Conservative opponents. Indeed, it would hardly be wrong to say that the past few weeks has seen some "pretty robust" debate between Conservative and Liberal Democrat bloggers. Even the Queen Mum of blogging, the generally genial Iain Dale seems to have been featuring as many stories as he can to try to show Liberal Democrats in as poor a light as possible.

Neither, to be fair, has the traffic been all one way: I have "fisked' Mr. Cameron's rather half-baked proposals on health, and attacked several of the Conservative positions that have emerged from the fog of their policy making process. Most Liberal Democrats have attacked the Conservatives probably with more vigour even than the distrusted, discredited Labour government.

So what lies behind this sharper debate, this emerging war in the blogosphere?

Partly- in my view- it reflects a fundamental similarity between the tactical position of the two parties. Both are opposition parties, combating an intensely cynical and centralising labour government. In that sense the two parties face a tactical overlap. Partly, also, the Liberal Democrat and Conservative bloggers are more oppositional and a whole lot more lively that the generally rather dull -even complacent- Labour blogging world.

However, it also reflects a fundamental disconnect between the two parties. Ever since Cameron became leader of the Conservatives he has tried to put his tanks on the Liberal Democrats' lawn, by trying to claim "liberal" positions for his party. However, the way he has set out liberal aspirations is seen by most Liberal Democrats as fundamentally dishonest.

The major example- though not the only one- is that he has shifted the Conservative ground to oppose the illiberal idea of ID cards. Liberal Democrats have always opposed ID cards- on principle- but initially Michael Howard, the then Conservative leader, supported them. The shift by Mr. Cameron, is portrayed as being of the same root as the consistent opposition by the Lib Dems. Yet in fact the Conservatives have in fact been inconsistent, and this has excited deep suspicions that the whole of Mr. Cameron's "Liberal-Conservative" strategy is not about principle, but simply to drown out the Liberal Democrats. Were that to happen, then the Conservatives electoral advantage, once gained, would not be used for liberal policies, but rather variations of the same old Conservative centralism and authoritarianism.

Liberal Democrats would argue that the only proof of Mr. Cameron's sincerity would be a commitment to change the electoral system.

Rather than Mr. Cameron's newly minted "liberalism" being seen as a necessary change of view from a party which has had to leave behind much of its previous policy baggage, it is seen as a direct challenge not just to the Liberal Democrats but also to Liberalism by a Conservative party that has not in fact changed very much, but which instead intends to do lasting damage to Liberalism.

I have always opposed Socialism, in all its forms. I believe in the transformational power of individual freedom. However my ideology, informed by JS Mill and John Locke is not the same as the Conservative ideology informed by Burke. I resent the constant implication from Conservatives that the ideology which they partially claim for themselves- Liberalism- is irrelevant in the hands of the party which claims all of the mantle of liberalism: the Liberal Democrats.

Despite being often patronised and sneered at, I am still happy to go head to head with the Conservatives, and in many ways that is a more productive and rewarding debate than one with the ideologically bankrupt managerialism of the Labour party. So in the sharp debate that is emerging between our two parties, I would say "Vive La Differance".

A new start for Georgia

Despite the continuing pressure from Russia, Georgia has been able to hold presidential elections that have been generally recognised as free and fair.

The incumbent, Mikheil Saakashvili, has been able to hold on to office, with about 52% of the vote. It is a slap in the face to Russia, which is the only country that has refused to recognise the elections as free and fair. Despite the intimidation, subversion and occasional violence, Russia has not been able to achieve its goal of undermining the independent minded Mr. Saakashvili and replacing him with someone more compliant to Russian wishes.

When the Russian fomented protests forced the election, there were concerns expressed that Mr. Saakashvili would attempt to create an authoritarian regime, similar to those in neighbouring Azerbaijan and Armenia. However, the continued engagement with liberalism, openness and democracy by the government has allowed a democratic solution to emerge. Despite desultory protests, the fact is that the elections, closely watched by international observers have indeed been free and fair.

As the Putin regime continues to challenge the West- the latest action being the appointment of the outspoken nationalist Dmitri Rogozin as Ambassador to NATO- the re-election of Saakhashvili is a significant victory for the forces of Liberalism against the faltering dead-end authoritarianism of the anti liberal Vladimir Putin. It remains to be seen, whether either the West or Mr. Saakhashvili himself can effectively capitalise on this victory, but it is a token of hope.

Tuesday, January 08, 2008

A Pipe, A Chancellor, Security and the New President of Russia

Nord Stream is the extremely controversial plan to build an undersea gas pipeline from Russia to Germany. It is controversial for two different sets of reasons. One is concerned with the potential environmental damage of the pipeline on the already damaged and degraded waters of the enclosed Baltic Sea. The seabed of the Baltic is said to contain a large amount of different poisons in its sediments that would be stirred up by the construction. Such poisons included heavy metals, phosphate and other pollutants that have run off from the land, but also includes the remains of large numbers of mines that were laid during the first and second world war, which have not been fully mapped and have never been entirely cleared.

However it is not so much the environmental issues that have created the greatest controversy, it is the political issues. Firstly, the undersea route by passes the already existing pipelines between Russia and Western Europe- it avoids land transit through countries such as Poland and Belarus. Although one argument suggest that this saves running costs from transit fees, in fact the costs of construction and maintenance of an undersea pipe are substantially higher than any conceivable pipe over land. Furthermore, given the occasional cuts in supply, the Central and Eastern European transit states believe that the major purpose in by-passing them is to be able to use the threat to cut off supply for credibly- enforcing a de facto monopoly and raising prices beyond the global market level. More to the point, the new pipe would be able to supply the major Western European markets and increase their economic dependence on Russian gas supplies. Again, the CEE states believe that this would be to their considerable disadvantage, since Western European support for the East, in their periodic disputes with an authoritarian and assertive Russia might be much less forthcoming.

These concerns may not be baseless paranoia either.

Germany, which has been particularly courted by both Gazprom and the official Russian government, now has a series of public conflicts concerning how Russia has used its relations with key individuals. The first and growing scandal concerns Gerhard Schroeder, the one time Chancellor, who took the job of chairman of Nord Stream, and with it some extremely large financial arrangements. As Chancellor, Schroeder had championed the scheme and drawn a veil over the gathering gloom about Russian democracy. He and his wife, indeed had adopted Russian children from the Russian city of St. Petersburg, the home city of President Vladimir Putin- an exceptionally rare occurrence to gain official sanction. As a result, Mr. Schroeder seems to have become exceptionally loyal to Russia- trying to lobby Estonia to back down, for example during the Bronze statue crisis- a crisis to a very great degree of Russia's making. If Nord Stream was trying to allay the security fears of the countries between Russia and Germany, he could hardly have done a better job- at destroying confidence.

The fact that the Managing Director of Nord Stream, Matthias Warnig, has confirmed that he was an agent of the feared and hated East German secret police, the Stasi has only added to the atmosphere, not only of sleaze that surrounds the company, but of something far more sinister.

Now, the costs of the pipe are set to grow dramatically. First thought to be EUR 5 billion, now the construction cost is estimated to be EUR 8 billion, and some are even forecasting EUR 11 billion. These numbers would probably not be economic for a commercial organisation, but Gazprom, ever more increasingly, is not such an organisation but in fact a significant part of the Russian state. Certainly, in Sweden, there are growing concerns that a proposed platform, close to the coast of the Swedish island of Gotland, would be used to spy upon the Royal Swedish Navy. Indeed, Swedish legislators look increasingly set to refuse permission for the construction of any pipe in its zone of exclusive economic interests without major changes. Given that Latvia and Estonia already oppose the pipeline, it may be that Nord Stream will need radical changes- including spurs to the countries that it was intended to by-pass.

As costs escalate and the political heat is turned up on the project, it is interesting to note that the prospective new president of Russia, Dimitri Medvedev has been on the board of Nord Stream for several years, in his capacity as Head of Gazprom.

This is a wilfully divisive project- a Trojan Horse that will increase West European dependence on Russian gas supplies, but allow Russia to blackmail Eastern European customers with threats of cutting supply. It will create a Russian listening post in the middle of the Baltic Sea, compromising Swedish and NATO security. It has already created scandal at the heart of German politics. All of which the Siloviki at the heart of the Kremlin will regard as being well worth the extra costs already.

However, NATO should have forced major changes to the project, and indeed have been prepared to ensure that the project did not go ahead at all without major safeguards. Now, it is up to Sweden - and for all of our sakes, I hope that they play a much harder game than the subverted German establishment.

In the new cold war, one of the most important battle lines is money. The West must resist the blandishments and inducements- as Gerhard Schroeder seems to have so signally failed to do- and stand up for its own best interests.

This is a serious and significant battle- we shall see what the result will be in the Swedish Riksdag.

Monday, January 07, 2008

The UK is NOT richer than the USA

I see that something is being made of a new statistic that purports to show that Britain is richer than America for the first time in over a century.

Well, as Disraeli might have said there are"lies, damn lies and statistics"

In fact the reality of the difference in wealth between the two countries should reflect the relative purchasing power of the Dollar versus the Pound. There are several ways of measuring the difference in purchasing power, and one of the best is the Economist "Big Mac index". The Big Mac is a standard basket of different goods: bread, meat etc. The price of the hamburger is easily measured and can be compared between different currencies. If one normalises the prices, then we can obtain a crude measure of purchasing power parity.

When we do this between the US and the UK, we find that the Big Mac is 18% more expensive in the UK than in the US, in other words, we could say that Sterling is 18% overvalued versus the Dollar. So, far from British lifestyles exceeding those of America, in fact we could say that we are roughly 18% poorer. So the statistic that GDP per capita in the UK is GBP 23.500, while in the US it is "only" GBP 23,250 is meaningless. If you make the statistic at purchasing power parity, in fact the Americans are indeed still richer. So, while George W. Bush continues to blunder around he has yet to reach that particular nadir... at least so far.

Brown at the midterm

In the six months since Gordon Brown became Prime Minister there has been an extraordinary volatility about British politics. Opinion polls have shown first a strong Labour lead, then, following the mishandling of the speculation concerning a possible autumn election, the Conservatives took the lead. The election fever that gripped the country created unexpected pressures: the Conservative leader was able to relieve the pressure on him by some astute handling of his party conference. Liberal Democrats, by contrast, were squeezed so intensively that Ming Campbell felt compelled to stand down. Now, as we enter 2008, a new political agenda seems to be emerging.

Gordon Brown, somewhat battered by the blow back from the election that never was, has begun to launch a charm offensive in the media: a long interview with the Observer yesterday was paired with an appearance on the Andrew Marr show and then this morning he was on the Today programme. A veritable blizzard of appearances from a Prime Minister who has hitherto been slightly reclusive clearly indicates some new year's resolutions in Downing Street.

I think it is too easy for the Prime Minister's political opponents to right him off- as the typically misfiring William Rees Mogg does in today's Times. To a degree, despite his early mistakes, Brown still has some powerful weapons in his armoury. As PM, he still controls policy, and remains able to dictate much of the political agenda- and wrong foot the Conservatives, as the inheritance tax policy theft has shown. Even his dour demeanour, often mocked, may prove to be an asset in the more complicated economic environment that the credit crunch is confronting us with. In short, rather than looking a the death spiral of NuLabour, we may in fact only be looking at the midterm blues. In fact, the fact that Labour have been so roundly thrashed in previous years local elections may even give them an opportunity to stage something of a comeback this year. Furthermore, the selection by the Conservatives of the pointless Boris Johnson as their candidate for Mayor of London, even gives a chance for the equally pointless and more odious Ken Livingstone to hang on to his job. So the May elections may prove to be a real disappointment for the opposition.

The Liberal Democrats are looking like a pretty poor bet in the short term. The schedule of the leadership election has meant that the emergence of Nick Clegg as the leader has come at a time of considerable competing distractions. Even his first time out at Prime Minister's questions is likely to be overshadowed by the result of the New Hampshire primary- although to be honest this is probably a good thing, since it will take a lot of the pressure off the occasion. Soon, the new leader will have to move beyond the rhetoric of comfort zones and actually define himself and his party- and again the May results will provide a benchmark for his success in the task.

For David Cameron, although he has begun to unite his party to a much greater degree, the knowledge must still be with him that only four months ago he was on the ropes and looking increasingly shop-soiled. The Conservatives still have much to do to demonstrate their credibility, which could disappear as quickly as their leader's hair line seems to be doing.

So, we seem to be in a much more competitive political environment, but that in itself does not condemn Labour to an inevitable defeat- more's the pity. I think we can expect a bout of political trench warfare. The challenge for Nick Clegg is how to avoid this war of attrition and still remain relevant. Making speeches about the end of the two party system is all very well, but we need to establish a coherent ideological agenda- to look more like the air force than the Conservative and Labour infantry below. That is the challenge for Nick Clegg in 2008.

Friday, January 04, 2008

The 44th President

The great machinery of American democracy has seemed incredibly flawed in recent years.

I have occasionally felt very close to Marcus Tullius Cicero: a man who wanted to defend the Roman Republic's tradition of liberty, but who was defeated by the corruption and decadence of the Republic's own institutions. Incidentally his 2101st birthday took place yesterday.

I, like Patrick Henry in 1776, have felt that Western Liberalism stands upon a knife-edge: "I know not what course others may take; but as for me, give me liberty or give me death!". I feared that the entrenched political elite in the United States has eliminated all but the already rich and powerful from the national political process. I feared that the Senators, that club of billionaires, no longer speaks for State or Union, but solely for the power of money. The final insult, it seemed to me, was the flawed election of George W. Bush, which seemed to ignore the form of democracy, let alone its spirit. With the advent of Hillary Clinton as a serious candidate, there seemed every prospect that only a Bush or a Clinton might be President between 1988 and 2016- a 28 year span.

Thus the primary season began.

The problem with the Iowa caucus is that it tends not to give the eventual final result, but rather it generally has to be interpreted. Thus, the actual result from the Hawkeye state is not usually particularly likely to be the final result in the national primary campaign. Yet, finally the US election season can tuck into its first result.

From the point of view of the UK, almost any candidate can be an improvement on the hapless, incompetent, dishonourable, dissembling, posturing sack of cack that we- rather fearfully- watch in the Oval Office right now (I stand by my judgement that the 43rd President is the worst to occupy that office in the 232 years of American history).

The new President will face some highly demanding questions almost immediately he -or she- takes the inauguration oath. However, I am also becoming increasingly impressed by the rapidity with which the US economy is adjusting to new conditions following the credit crunch. The fall in the Dollar is boosting exports dramatically, and the deficit issues are indeed being brought into a more sustainable shape as the US economy rediscovers its competitiveness. The journey is only just begun, but the most extreme potential problems that the credit crunch could bring seem- at least for now- to be firmly off the agenda.

China, supposedly unstoppable last year, has seen statistical adjustments that show a more realistic- and much smaller- set of economic data. More to the point, there is now a greater realism about what the country can actually deliver. Product recall scandals, inflation and the archaic banking system amongst many other issues show the limits of the Chinese model.

America is finding that it is still able to compete with the behemoth.

So, the 44th President may not face the worst case economic scenarios that only a few weeks ago were being discussed. Despite this, in international relations, there will be plenty in the in-tray. Despite the short run -relative- success in Iraq, the war continues to cost the US dearly in blood, treasure and in reputation. The use of Guantanamo bay as an extra-judicial prison is a spit in the eye to all the American constitution stands for. The use of torture, illegal rendition and the rest of the so-called "war on terror" continues to undermine both America's view of itself and its worldwide reputation. That will be the principal legacy of George W. Bush.

Though we do not yet know who will be the 44th President, the fact is that the field has now, already been narrowed down to two candidates on the Democratic side and three candidates on the Republican side. At least one message we can take away from Iowa: it is quite unlikely that a Republican can be the 44th President. The differential turnout between Democrats and Republicans was 2:1. Democrats are enthusiastic and motivated, while Republicans are uncertain and divided. Mike Huckabee, the Republican victor of the caucus, is not greeted with the clamour that Barack Obama, the Democrat victor, receives and indeed he gained less votes than any of the other two of the top three Democratic candidates, John Edwards and Hillary Clinton.

So, which of the Democrat candidates can win?

As I remarked, I hate the idea of Hillary Clinton as the 44th President, so maybe my judgement is not sound in these matters. However, if Senator Obama wins in New Hampshire, I believe that he could be poised not only to capture the Democratic nomination but also win the Presidency by a landslide.

If that is the case, the reputation of the United States will be utterly transformed. It would indicate what Americans most hope is true about their society: that race is no longer an issue, that opportunity truly exists for all.

More to the point, it gives hope that the system might not be broken. Even on the first day of office, that would be a far more substantial and positive legacy than anything the 43rd President is set to leave us with.

Thursday, January 03, 2008

Spoofing

Sean Thomas, writer, contributor to Pb.com and wannabee right wing nutter has managed to make me laugh for several minutes through what starts off as a seemingly straight piece of travel journalism.

The easily offended should not click on the link, everybody else should make sure that they are in a place where laughing loudly will not cause embarrassment.

Wednesday, January 02, 2008

Cameron: OffSick

Where to start on David Cameron's dim witted idea to fining health care trusts that do not hit targets on MRSA?

The last thing that hospitals that are already struggling with erratic funding need to deal with is some extra complication that could reduce the transparency of their funding still further.

A free market would probably respond by pricing in an acceptable level of MRSA risk- is that what Mr. Cameron really wants? Well, no, he probably wants to eliminate MRSA risk completely. That however requires strict hygiene rules- probably including drastically limiting visitor access to the wards- a policy likely to be highly unpopular. However Dave doesn't think about "unintended consequences".

As for the "independent" regulator of the Health service- presumably called OffSick in line with OffWat and OffTel- I have to ask why the current Department of Health is not able to perform this function? How much disruption and extra cost would the creation of such a regulator cause? Frankly, how effective it likely to be anyway? Has anyone done a cost-benefit analysis on this project?

These ideas from Cameron are totally half baked. At a time when much heat and light is already being generated by the supposedly unacceptable fact that the health service delivers different services depending on which of the home nations that it serves, the fact is that diversity is becoming built-in to our health care system. While it is clearly right that minimum safety standards should be enforced, this gimmicky policy of fines is an absurd waste of time. I have no problem with diversity of supply in health care, but the implications of this Conservative policy are expensive and wasteful.