Wednesday, July 11, 2012

Understanding loyalty

I suppose it was inevitable that the opportunity to give the Liberal Democrats a good kicking was just too good to miss. never mind that the UK still has an upper house of Parliament that is partly hereditary and partly a mass of political cronies. Never mind that all parties are committed in theory to at least a partially elected upper house. In the end it was dirty politics and not high principle that won the day. As in so many decades past, the entrenched interests of political expediency stopped any real change.


Yet it is yet another example of why the UK is in such a deep mess.


Every political party publicly accepts the need to reform our constitution, whether that is for an English Parliament or for English regional/county government reform, or whether to turn the House of Lords into the national chamber, with the House of Commons being the English chamber- there are plenty of ideas of greater or lesser radicalism. In each case, the proposals insist on an elected House of Lords.


In fact the coterie of corrupt politicians have decided that they prefer not to ask the British people what they want in Parliament. Reform has- again- been put off sine die, and the reason this time is simply an attempt to smash the Lib Dems.


In the face of the enveloping corruption of the Murdoch scandal, the Liberal Democrats have been the only party never to have been involved. The suggestion by the contemptuous is that this was because they were never asked, and that they would have been as corrupt as the others, had they had the opportunity. That level of cynicism is par for the course in modern Britain- but it is just not true. Lib Dems opposed Murdoch on principle, just as they opposed the bonus culture in the City on principle, just as they believe in constitutional reform on principle.


Principles don't seem to count for much in a country where the electorate holds its leaders in general contempt, and seem unable to differentiate between the false prospectus of political blackguards like Peter Mandelson and George Osborne and the genuine principles of David Davis, Vince Cable or Frank Field. For this is not a party political rant- or at least not merely a party political rant- the electoral system does not allow the voters to make subtle choices, that is true, but in the end the country probably does get the government it deserves.


That is pretty bad news fro the UK right now.


From abroad I see an isolated, almost myopic, political culture led by opinion-formers in the media who are not far short of disgraceful in their willful ignorance. I see a playground contempt for education, sensitivity or intelligence. I see the virtues of service and hard work made a mockery by a welfare system that promotes the shiftless and the idle and a tax system that entrenches the rich against the poor and- especially- the middle. I see short termism running riot and eating the seed corn of the future to protect the ill gotten gains of the present: a whole generation bloating their pensions and stealing from its children. I see arrogance and ignorance walking hand in hand and triumphing over any dissent. I see a magic circle of privately educated kids seizing all the opportunities, while the mass of the population are mostly denied access to the levers of power and influence and turned into an underclass in their own country.


Britain has been a declining power over my whole life- the weak-kneed and weak chinned management cowering in the face of Kremlin-funded union bosses was the pattern of the cold war, but all the so-called Thatcher revolution did was destroy the unions by destroying industry and replacing it with the illusion of finance. We have cut our defenses to the point of absurdity, yet bloated our state to the point of bankruptcy. We have become masters of inactivity, prevaricators and sophists to a hypocritical man-jack of us. 


I got involved in Liberal politics because I believed that we could only begin to recover by following a radical road. I believed then, as I do today, in the moral rights and moral duties of the individual as the basis for a democratic and egalitarian society that would be fairer and more prosperous. 


That is not a majority view.


The British people seem quite content to live in an social environment that is coarsened by the brain dead banalities of "reality television", corrupted by the idea that wealth and "celebrity" can be bestowed irregardless of talent. It may sound curmudgeonly, but there are skills which are difficult which have far more social utility than the easy-come-easy-go values of an essentially decadent culture- but few in Britain seem to care and none prepared to take a stand and the public ridicule that this would involve.


In Estonia, I see a society subject to the same temptations as Britain, yet not succumbing in the same way. In China and in Asia too, the values of education and hard work have not been subverted by a social and political leadership that at least still fears its people rather than ignoring them. From being the number one power, Britain has declined into irrelevance. The hammer blows of the conflicts of twentieth century may have merely accelerated the pace of decline that was already under way, but few, a hundred years ago, could have predicted the total collapse of all that seemed valuable and enduring. In a way, it is remarkable that Britain did not follow the road to fascism- yet in the end the road of the easy option has created a decadent and self indulgent group of passengers- the epitome of all the can-do imperial spirit once despised. 


For thirty years I have campaigned for an alteration to the trajectory of the country of my birth- and it has changed: it has got worse. In the end, I have preferred to live and work in a society that is more open and more open minded than my own: the recovery of Estonia from the black night of Nazi and Soviet oppression has inspired me for decades, first as a hope and then as a reality. I have tried to speak out for the things I believe in and stood and been involved in an untold number of elections, but whereas in the UK Liberalism is treated as a contemptible eccentricity, in Estonia it is the leading school of politics, and people are prepared to engage in genuine debate- a debate built around fact-based analysis and not the illusory bromides of an unchangeable personal "opinion" based on mere ego and on no facts whatsoever.


The failure of House of Lords Reform in Britain is perhaps a more symbolic than real milestone, but it marks yet another wrong step, yet another cop-out, yet another triumph of those who are trying not to notice the lapping tide of the flood that will ultimately drown them.


Given the contemptible display of the Tory rebels, it is easy to think that "whom the Gods would destroy they first make mad", but for a while these braying fools can enjoy their triumph.


I -for one- will curse them to my dying day. The decadent bastards who put self interest and political convenience above the real need for reform and justice.


The Liberal Democrats have been out matched and out played. The price though may be not merely their political eclipse at the next general election. It will be the growing sense of despair that simply no change is possible in the face of these pigs slavering at the trough, who took Murdoch's money, took the City's money- and sold the once great birthright of the island nations for a mess of pottage and chance of some threadbare, mangy ermine for themselves

Monday, July 09, 2012

Playing the blame game as economic recovery is delayed again

As the economic crisis of the West grinds on, I find myself noting that the mistakes of policy are more and more political mistakes, and that the failures of leadership are more and more failures of political leadership.  Attempting to create a safer banking system by forcing increases in reserves, through Basel III or restrictions in concentration, is in fact having almost the precisely opposite effect to that intended. The increase in reserves has not made banks safer, but it has forced a dramatic shrinking in bank balance sheets. The result is a crash dive in lending- especially to the critical small and medium enterprises sector. This is now getting to the stage where, in the words of a senior banker operating across the Baltic and Nordic markets who I was speaking to over the weekend: "within five years, no bank will be able to afford to take on SME lending". This continued credit crunch carries not only short term implications, but also long term implications, since the creative destruction of capitalism requires a healthy ecosystem of SMEs in order to grow.


I have noted before the failure of political leaders to understand the technical implications of the legislation that they are passing, however the scale of the mistakes at virtually all levels of policy making reflects not only a failure of understanding, but of vision. As the 29th or 30th emergency summit on the Euro passes with repeated failure to engage with the strategic crisis at the root of the single currency debacle, it is easy to become frustrated with the inflexible positions of Germany and France.


To a degree the positions of the EU leaders are now so well rehearsed that it is easy to believe a new stability has already been achieved. In fact the reality is that the gaps remain largely unbridgeable. The alienation between the Germans and the French is palpable, and the determination of France to create more wiggle room for themselves is matched by an increasing German determination to impose an unflagging and inflexible discipline. Meanwhile the British position: half in/half out, attracts opprobrium and contempt for the UK in equal measure from virtually everyone. As much as the British hope that the Germans are seen as the villains of the peace, the fact is that it is the image of the UK that is now the most negative one. Isolated, introverted and largely ignorant, the ability of the UK to project its point of view is now quite weak in economic affairs. "Punching above its weight" is the cliche that British diplomats like to use to describe the position of the UK, yet after the badly mishandled Cameron veto, it is clear that the position of Britain in EU economic debates is rather less than its size admits. Meeting German foreign policy officials in the past few days was a shock: not merely contempt but ill disguised loathing of the "the island" is now the standard view in Berlin.


Yet the need for wide scale political reform is just one more thread in this crisis. The institutions of Western capitalism are being challenged: externally from Chinese state capitalism and internally from the astonishing misapplication of capital that a corrupt and mismanaged banking system has built up over the course of the last twenty years- a disaster which was largely orchestrated in the City of London. Now the politicians in a vain attempt to close the stable door long after the horse has bolted are making further critical mistakes.


Recession is indeed the new normal, and it could be another decade before the situation changes. A ten year depression is on the cards, and at the end of it, Europe will have gone from being about 25% of the global economy to less than 7%. The power and influence of Europe will go the same way. After nearly four hundred years as the cockpit of human history, Europe is poised to become a backwater- and the failure of the political systems at both European and national levels is becoming a major factor in the implosion of Europe. 


And Britain, both for its politicians and its financiers, is getting a lot of the blame.

Tuesday, July 03, 2012

Diamond should face a trial

OK, so the Barclay's scandal is just one amongst many. However, the reaction to the forced exit of the unlovely Bob Diamond from the Barclay's PR guys: basically "spread the shit as widely as possible on the government agencies" is so blatant, that to be honest, the government should have a very simple response.


Arrest and charge the lot of them.


Any Barclay's employee or agent that has been involved in the "take as many of the bastards as I can" project of the unlamented Mr. Diamond should be charged with an attempt to pervert the course of justice. Diamond himself should also be charged. 


Trying to blacken the name of HM Government in this puerile way is pretty pathetic, and it does seem to me that legal moves "pour encourager les autres" are rather overdue.


Does rather underline why Diamond was a shit though.


PS: still think Murdoch should go to gaol first.

Time for remorse

Bob Diamond is a figure who it is hard to love. 


Ever since he made the comment that the "time for Banker's remorse was over", he left a huge hostage to fortune, in the event of anything going wrong at Barclays.


As we now know, something has gone wrong, and in the event, Mr. Diamond's bullishness has become his downfall- the time for remorse is now is the almost inevitable headline in most newspapers.


Yet, although Bob Diamond may not be the most sympathetic creature, the reality is that - as his own resignation shows- he has not been in control of events.


The fact is that the huge banking conglomerates carry within them the seeds of their own destruction. The interconnected nature of the global financial markets has created vast black boxes within the various banks, where few- if any- can understand, let alone control, the risks.


The resulting lack of transparency has allowed financial malpractice and even criminality to flourish unchecked. All the Basel III and other regulations have done has been to increase the insurance premium for a bank failure, without actually tackling a) the financial crimes of the past years and b) improving the efficiency and honesty of the international banking system. Instead of creating greater competition, the governments and regulators have responded to the crisis by forced mergers and shot gun marriages: not only concentrating bank ownership- in many cases into the hands of the hapless tax payer- but also concentrating credit risk, market risk and indeed the risk of fraud, into ever larger institutions.


Now, the LIBOR rate fixing scandal clearly proves large scale collusion of virtually the entire banking system in criminal activity. It is inevitable that inquiries and investigations will find further issues- and the cleaning of the stables will take many years. Unfortunately this will also mean that the repair of the banking system will also take years- and that in turn is likely to mean that credit conditions - at least in the West- will remain tight and growth flat to negative for many years too.


Yet even this necessary catharsis will probably not solve the crisis: that can only come from a large increase in competition and far more transparent market conditions. The regulators should be considering how to break up the financial conglomerates into different, separate businesses.


After the Great Depression, Investment banking was separated from deposit taking. One of the major causes of the crisis has been that investment banks gained control over deposit bases and then used them for both highly leveraged and highly speculative activities. It is clearly time to restore the status-quo-ante and ensure that simple market intermediation can not ever again become position taking businesses based on depositors money.


The fall of Bob Diamond is a satisfying story of hubristic arrogance facing a humiliating nemesis- and sure, I too let out a little cheer at the fall of a seeming villain. However with the sole exception of Vince Cable, there are few who have actually "got" what the problems in the financial markets really are- and certainly the Chancellor and the Prime Minister, with their coterie of hedge fund friends, still seem lost in the face of the repeated hammer blows to the system.


It is not enough for Mr Osborne to announce inquiries, parliamentary, judicial or otherwise: these are, in the approved manner of Sir Humphrey, simply substitutes for real activity. The time has come to draw up a green paper and then a white paper for the wholesale restructuring of the banking system to be carried out by legislation before the next election in 2015.


It is not a time for inquiring what we should be remorseful about: it is a time for legislative preparation in order to avoid some remorseful day that may come again for us in the future. 


It is a time for action, not emotion. Action this day.

Monday, July 02, 2012

Tory Troubles

The past few weeks have not shown the British Conservative Party in a very good light. The large numbers of "Enoch was right" articles, to commemorate the centenary of the old devil simply reminded me why he had so few political (and not many other) friends. Pedantic and rigid, his vision of Britain was blinkered. Far from being some iconic lost genius, the rather sad cheerleaders from the right wing press simply reminded me of how often the Tories are wrong- and when they are wrong, how seriously wrong they can be.


The nonsense of Jeremy Hunt's support for Murdoch was another one of those "whom the Gods would destroy, they first make mad" moments. The fact is that Murdoch has been a poisonous and probably criminal influence on British politics for decades. Only the completely blind, or those blinded by arrogance, could have failed to see that the return of Murdoch to the Tory fold was hardly likely to be straightforward. Thus the whole-hearted support by the Conservatives for the BSkyB bid was, to say the least, badly timed. In fact is was completely misconceived. At a time when Labour might have yet been tarred more aggressively for their crawling to the Dirty Digger, the Tories managed to snatch defeat from the jaws of victory and portray themselves as even more craven than Labour to the moral vacuum at the heart of the Murdoch Empire. It was was a wholly avoidable blunder- and foolish in the extreme. 


Given that the Liberal Democrats owe Murdoch precisely nothing, you could hardly expect that Nick Clegg would take any blame, and indeed it was obvious that he would actively disassociate himself and the Lib Dems from anything that looked like support for Murdoch. It was not the Lib Dems who hung Hunt out to dry, it was the Tories themselves and the huge blunders they made that left the Culture Secretary so isolated.


And then there is Europe. 


Oh Dear: here we go again. The Conservatives just can not let this lie. They know that withdrawal is not an option- and in an in/out referendum there is every chance that the UK would vote strongly for their own self interest and stay in the EU-  even if, as in the 1970s, there is precious little love for the "Common Market".  The supposed pressure from UKIP is said to be making the Tories nervous, but apart from the Euro elections themselves, the UKIP is likely to remain a marginal force in national British politics: it is invisible both in the House of Commons and across all tiers of local government- and there is no sign that this is going to change.


Yet despite the misteps of the Conservative party, which they themselves are responsible for, the grumbling Tory MPs continue to look to the Lib Dems for scapegoats. "If we cannot get support for Hunt over BSkyB, then there will be no Lords reform" seems to be the message. It is of course cutting off the Tory nose to spite their own face. A breakdown in Lords reform would probably mean the end of the coalition- and it is not just the Lib Dems who are facing pressures in the opinion polls.


The last few weeks have shown the Conservatives at they most intellectually lazy and callously miscalculating. It certainly reminds me why I dislike their attitudes and quite often their personalities too. However, as the weeks pass, I grow happier with the performance of the Liberal Democrat Ministers. Calmly and with no little humour they have performed their duties with dignity and competence. The polls remain awful, but there is a growing sense that things are not getting worse, and we may even see a modest recovery. It is not forgotten that Labour made most of the mistakes that caused the crisis, and that mere apologies are not enough. Ed Miliband does not articulate a particularly coherent or compelling vision, and Ed Balls is widely disliked.


The Conservatives are beginning to get the treatment that the Liberal Democrats had in the first two years of the coalition. We had the moral fibre to cope: I wonder if the Tories do too? 


British politics remains in flux, and although commentators are quick to dismiss the Lib Dems, the fact remains that the people have not yet spoken, and that when they do those who were prepared to sell their souls to Murdoch may yet be punished for their cynicism and their hubris.


I bloody hope so- seeing some genuine contrition on the faces of George Osborne or Ed Balls is something I would give a lot to see.