The paradox of foresight. Vince Cable and the crash

"The Storm - the world economic crisis and what it means"  By Vince Cable. 

   We’ve heard of the paradox of thrift, but there is also the paradox of foresight.  People who see things coming are very rarely rewarded for their presience,  in fact they’re usually dismissed as a bit looney, much as Vince Cable was back in 2003/4 when he was telling anyone who’d listen that the housing bubble was out of control and would lead to economic disaster.  He was firmly put down by Gordon Brown then chancellor, for “writing articles in the newspapers that spread alarm, without substance, about the state of the British economy”.  Well, now we know.

   Cable wasn’t alone in being vilified for stating the obvious. Professor Nouriel Roubini, of New York University, was and  still is  called “Dr Doom” for his forecast that the credit bubble was going to collapse. In my own small way I was dissed by estate agents and economists for writing articles in this newspaper in 2004-6 criticising the banks for handing out mortgages in excess of 100%  at five or six times salary.   Nonsense, I was told, how else can people get on the “housing ladder”?  Irresponsible to talk the market down. 

    Cable is right to locate the origins of the financial crisis in the housing market, rather than in the inverted pyramid of exotic derivatives built upon it. It was the greatest asset  bubble in human history, a global madness,  fuelled by government subsidies and Asian lending, that led to the tripling of house prices, and the creation of trillions of in imaginary wealth.  This became securitized into toxic financial instruments,  like the infamous collateralised debt obligations,  which were sold on to other banks.

     People often ask why banks handed mortgages to people who couldn’t afford to pay for them.  It was because the prevailing wisdom, in financial institutions and in government,  was that house values always rise; therefore if the householder defaults, the property can simply be repossessed and sold on at a higher price.  It was a no lose bet. Until everyone lost when gravity reasserted itself, house prices collapsed, and all those myriad bonds based on mortgages became impossible to sell. 

    People in Scotland still get very angry if you say that house prices are  too high. Incredibly, local authorities like Edinburgh and Dundee are now offering 100% mortgages to first time buyers rejected by the banks who are now - rightly - demanding 25% deposits.  Utter madness. Actually using public money to lure people into negative equity.   The continuing decline of the housing market - Cable believes UK house prices have another 20%-30% to fall -  ensures that the banks and local authorities will have more write downs, more toxic assets, more losses which the public sector will have to pay for.   

  This is where it gets messy for Vince.  The paradox of foresight means that you  are called upon to give solutions for the very problems you sought to avoid.  In trying to get to a solution for the world economy Cable - like the Irishman- wouldn’t start from here.  Unfortunately he has to.  And he has to stick to Liberal Democrat party policy, which which is against nationalisation of the banks.   Cable says banks will have to be regulated “as if they were nationalised”. But he goes on to doubt whether the public will continue to finance the failures of this radioactive private financial sector with its obsession with bonuses.  He should grasp the nettle: either banks are part of the market economy, in which case they must be allowed to go under, or they are “too big to fail” in which case they should be nationalised.  The moral hazard is too great to allow banks to carry on speculating safe in the knowledge that the taxpayer will come to the rescue when things go wrong.  As he says, this is “socialism for the rich”. 

  Which brings us back to the paradox of thrift. Cable is torn between orthodox Keynsianism - borrowing to spend - and the realisation that we are all spent out and need to save.  “The longer term need will be to boost savings for pensions, long term care and the financing of mortgage deposits. There is a long period of austerity ahead”.  Damn right there is, but the Liberal Democrats aren’t calling for it. Their policy, when last I looked, was for tax cuts, increases in spending and yet more subsidies first time buyers.  

   Denial over housing has been replaced by denial over debt - public and private.  No one wants to tell the truth: that we have been spending beyond our means for decades and now have to face the reckoning. The great danger, as Cable warns, is that  democratic governments will not be prepared to tell the voters what they don’t want to hear.   Foresight is a terrible thing.  

    

Whatever happened to the moral compass

 You know things are really bad when Blairite ministers start attacking Brown for not being left-wing enough.  This week we had the extraordinary spectacle of one of the apostles of New Labour, the former Transport Secretary, Stephen Byers, calling on Gordon Brown to scrap identity cards and shelve the Trident missile system - in so doing joining an unlikely front with the SNP. Perhaps he had advance warning of the story from my colleague, Rob Edwards, about the latest radioactive discharges from the submarines in Faslane on the Clyde

The continuation of Britain's "independent" nuclear deterrent was a key issue for Tony Blair and he made sure that he secured a vote on the renewal of Trident before he left office. Biometric identity cards were also a touchstone for New Labour, seen as an indispensable weapon in the "war against terror". Stephen Byers coming out against these policies, even as economy measures, is a bit like Tony Blair saying he supports the tax increases on the rich - which, incidentally, he has made clear he does not.

Earlier, the Blairite old guard has emerged from the woodwork looking for payback.The Damian McBride smear e-mails affair allowed former Blairite ministers such as Alan Milburn and Charles Clarke to attack Brown by association.There is something tragic in this turn of events for a Prime Minister who made such a virtue of his "moral compass" when he took over. Most of us thought that Gordon Brown really was a "pretty straight kind of a guy", to echo Tony Blair's self-assessment, and that he had roots in Labour's social democratic traditions. "Best when we are Labour", as he said at the 2006 Labour conference.

 Everyone in Westminster knew that Brown had long supported a 50% tax on higher incomes but had been over-ruled by Blair. Similarly, his deafening silence on the Iraq war and on Trident replacement before he took over from Tony Blair gave many the impression that he was not thirled to Blairite defence policy either.

Perhaps if Brown had really followed his moral compass, and had had the courage of his convictions, he might have been able to renew the Labour project when he took office in the same way that Barack Obama has changed the climate of opinion in America. Brown could have taken the initiative and offered to put Trident on the negotiating table, not just to save money, but to stop nuclear proliferation. It is no longer the cold war shibboleth it was in the 1980s.

Last week's Budget tax increases looked like a political tactic designed to wrongfoot David Cameron by making him support the super rich. Yet it has been highly popular with a public which is sickened by the wealth and irresponsibility of bankers such as Fred Goodwin. If Brown had raised taxes as a matter of principle, he might have been on to a winner; unfortunately, it has been seen as just another exercise in the politics of spin.The McBride e-mails affair confirmed that, as far as the black arts are concerned, Brown is no different from his predecessor, and possibly a lot worse. No-one believes that he didn't know what his closest aides were up to.

And now, incredibly, the expenses scandal has landed on the No 10 doorstep, with Brown appearing to defend the indefensible. This is doubly ironic, since no-one believes that Brown is remotely corrupt or sleazy. If only he had approached the allowances question as a moral issue, and declared upon taking office that he would make Westminster as honest as Holyrood, he could have been the PM who cleaned up parliament. Instead, it looks like the Tories who will clean up at the next General Election. I don't know about New Labour, but it looks like Gordon Brown RIP.

MPs must wake up to the age of thirft

That YouTube video of Gordon Brown trying to explain his policy on MPs' pay looks like going down as his comic epitaph. Rather like James Callaghan at Guadeloupe saying "crisis, what crisis?" in 1978, or Thatcher elbowing John Sergeant aside at the Paris Summit in 1990, it's the one that will run and run. No politician since Richard Nixon has looked so shifty on camera. Partly, it was that plastic smile that the PM plants on his face at inappropriate moments, as if someone other than he is in charge of his facial muscles.

But it was also the sheer audacity of trying to bounce parliament and his party this week into endorsing a new scheme of MPs' allowances which is actually worse than the existing discredited system and likely to cost more.

There was no way that a flat-fee system - known as "sign on and sod off" in Brussels - was going to allay public concern about the misuse of public funds. Nowadays everyone, even journalists, has to furnish receipts before claiming expenses, and the public cannot understand why MPs should be treated any differently. It was the revelation that MPs could put all manner of items from bath plugs to porn movies on expenses, no questions asked, that brought about the crisis in the first place.

 Brown has been forced to dump his own plan to stave off a humiliating defeat in the Commons vote later this week. He still appears to favour a flat-rate fee, albeit one requiring MPs actually to stay overnight when they claim it. This will not work because it still fails the test of transparency. I don't understand why they don't just introduce the system in operation in the Scottish Parliament where everything is open and above board, and where parliamentary expenses are no longer a political issue.

Instead, there is talk of resignations in July when the public finally learn what MPs have been up to. Many have been using their £24,000 second-home allowance to leverage multiple mortgages and have become property developers owning second, third and fourth homes yielding hundreds of thousands in capital gains. Hardly surprising that MPs were relaxed about the house price bubble when so many of them were making so much money out of it. I'm sorry, guys, but the party is over. Wake up to the age of thrift.

The age of thrift or the age of inflation?

 David Cameron was right to warn about the debt crisis last year,  when everyone else was talking about fiscal stimulus and the need to boost spending.  You can’t stimulate a corpse.  But note how cagey Cameron is now about how the Tories would hack back the debt mountain .  Apart from scrapping identity cards and cutting out waste, he has been as vague as the Chancellor.  

     An ordinary person, burdened by debt, can do two things: save, or go bankrupt.  Governments have a third option:  eroding the value of the debts themselves.  Saving is hard: it needs a saving culture for a start, and we don’t have one. We have been conditioned by two decades of Ponzi capitalism into taking on ever greater debts to pay off the debts we already have.  The entire thrust of government policy is to force people to take on even more debt to boost retail sales. 

    So, let’s forget about saving - like the environment, you just know the government isn’t serious about it. So, how else do we pay back the debt?  Privatising he health service and education isn’t feasible, and cutting entitlements, like public sector pensions or unemployment benefits would likely cause civil unrest. The alternative is to rely on inflation to erode the value of the debt.   10% a year would do nicely, and in case you think inflation is ancient history, remember that inflation was running at nearly 10%  as recently as 1990, during the last recession. 

  Suddenly those frightening figures don’t seem so scary. A decade of inflation would turn a trillion into five hundred billion. The financial press has been discussing this openly since the Bank of England announced that it was going to start printing money, or “quantitative easing”.   Inflation is usually good for stock markets, first because it erodes corporate debt and discourages investors from holding cash.   Inflation is also good for the housing market because it disguises falling prices and because it encourages people to take on bigger mortgages paid back in depreciated pounds.   Governments love it because their debts just disappear; inflation is a kind of get out of jail free card.

     But problems arises when the people who lose out decide that they won’t go quietly.  The first casualties are pensioners, who see their living standards eroded, but traditionally they don’t go out on the streets. Nor do savers, who effectively have their savings stolen from them by inflation.  Resistance comes from foreign bondholders and organised workers. 

   The last time governments tried ride the inflation tiger was in the 1970s, after the disastrous “Barber Boom” under the Tory chancellor Ted Heath.  That “dash for growth”  ended up in bank failures, collapsing house prices, and mounting debts which the government thought it could ‘manage’ through inflation. That was until workers started to resist the erosion of their living standards.  Trades union membership was high in the 70s, and the UK was a largely manufacturing economy.   Led by the miners,  workers went on strike for higher pay, and the scene was set for the great industrial confrontations that led to Thatcherism. 

  The lesson of history is that once you start inflation, it’s very difficult to control it.  Price rises peaked at 24.2% in 1975.  Imagine your salary losing a quarter of its value every year.  Rampant inflation eventually forced the Labour government to negotiate a loan from the IMF in 1976 to stave off bankruptcy.  This was because bond investors at home and abroad refused to buy government debt.  In effect, the UK became insolvent, like HBOS,  and had to cut public spending and increase interest rates to restore the confidence. 

   There are suggestions that the government is preparing for a trip to the IMF today.  An unnamed minister told the Daily Telegraph before the budget that going to the IMF for funds should be thought of as “like going to a spa to recuperate”.  Years of living on debt have made politicians believe that, like the banks, we can all be bailed out. But they will likely discover that the only thing they have borrowed is time. 

Just how bad are Britain's debts?

 A trillion here, a trillion there, and pretty soon we’re talking serious money Britain is now one of the most indebted countries in the world. We have personal debts of £1.5 trillion; national debt rising to £1.4 trillion; unfunded public sector pension liabilities of another £1trillion; and all this on top of a £1.3trillion bank rescue programme.  Britain is in deeper debt now than  after the Second World War and our children will be paying it off for most of their working lives. 

   Of course, figures like these eventually become meaningless - a trillion won’t fit on most pocket calculators. Even the politicians can’t grasp them because they are literally astronomical - the kinds of numbers used for the measurement of the universe.  But this fuzziness about value, is itself becoming an economic factor.  Psychologically, we are already entering a pre-inflationary world, where value ceases to have any fixed meaning. 

    No, we’re not there yet.  In fact, one measure of inflation, the RPI is expected to be negative for most of this year.  Deflation, or falling prices, is seen as the immediate enemy by bankers and ministers.   But the trillions of debt piling on top of each other tell us only one thing: that the next government will have little choice but to try to inflate its way out of the debt burden. The alternative: tax increases and public spending cuts would be politically unsustainable on the scale required.  No matter what politicians in all parties may say now, inflation is their plan B. 

    The surest sign of this was the way the Budget made no serious attempt to explain how the government intends to pay back the colossal debts racked up during the bubble years, other than to make fantasy assumptions about growth returning to 3.5% in 2011. This ‘forecast’ was an insult to the intelligence of the electorate, and the Chancellor has rightly been condemned for delivering it. No serious economist believes that such a “trampoline” bounce back is possible. 

    Yet even on these fantasy forecasts, the government is STILL planning to borrow more over the next five years, than the total sum of all government borrowing for the last three hundred.  There are doubts about whether the government will be able to raise even the £220bn it needs this year to keep its head above water.  Public borrowing is running at 12% of GDP the highest in the G20 nations.  Not even Ireland is in such a bad way.  Britain is now heading inexorably for a debt crisis comparable to 1975/76 when a similar finance and property crash led to a run on sterling and a dash for the IMF.  Only this time, it is much, much bigger.

Class war, what class war?

  The red flag was hoist over the Treasury last week according to hyperventilating sections of the British press.  “Return of Class War”! screamed the Daily Telegraph.  “New Labour RIP”, growled the Spectator. Even the more sober commentators in the financial pages talked of the chancellor’s “vindictive and destructive”  war on wealth which would provoke a new brain drain. “A great budget for Switzerland and Hong Kong”, according to Anatole Kaletsky in the Times. 

      And all because of a long overdue abolition of an unjustifiable tax break on pensions and a few pence on income tax for the superrich, which most of them won’t pay anyway.  As the Queen of Mean, Leona Hemsley famously put it: “Only little people pay taxes”. Big people have tax lawyers.  The Institute for Fiscal Studies questioned whether the measures will ever raise the £7bn in  revenues projected in the Red Book because of avoidance schemes. 

  Which doesn’t mean the government shouldn’t try.  It’s curious that taxing the wealthy is always presented as unfair, whereas tax avoidance is seen as morally acceptable.  The taxes may not bring in a lot of cash,  but a silent cheer went up nevertheless last week from all of those little people who have lost so much as a result of the delinquent behaviour of the financial elite.  The post budget opinion polls revealed that increasing taxes on the rich is popular. Which of course is why the government did it.

   Petty and vindictive? Well, we have a tax system which has long been a welfare state for the wealthy.  I mean, why should a quarter of all the money the country spends on pension tax relief go to the top 1.5% of income earners?   Higher rate pension tax relief never made any kind of fiscal sense.  And talk of a return to punitive taxation is very wide of the mark.  Look at websites like Wealth Bulletin and you’ll find that many accountants believe the rich have got off lightly given  the current climate of opinion.  Deloittes estimates that people earning over £250,000 a year will pay £12,000 more in tax as a result of the new 50% rate and he abolition of other reliefs - that’s if they choose to pay it.   Poor old them; heart bleeds.

  But if all the little people are going to have to pay thousands more in tax to pay for the mistakes made by the financial plutocracy, why shouldn’t the very rich pay a little extra too, if only to make the rest of us feel better?  It’s a question of fairness.  In the Great Depression, Franklin D. Roosevelt increased taxes on the rich (over £250,000 in today’s money) to an incredible 90% .  He did this, not to raise revenue, but to legitimise increased taxes on the less well off.  And you better believe they are coming. 

   If the superrich are not prepared to make even this week’s very modest contribution to the cost of repairing the economy wrecked by unrestrained greed, and insist on flying away to their tax havens, perhaps we should wave a fond farewell.  I may be blinded by class hatred, but the masters of the universe haven’t exactly left the British economy in great shape.   Free transfers might be a very good thing for the footloose financial elite.  Let someone else pay for their bonuses and cope with the fallout from their inscrutable derivative trades.  We’ll be paying the cost of their excesses for the next twenty five years.

 

    However, I suspect it will take rather more than an optional fifty pence tax band to send the superrich packing. They’ve been doing very well here in the past decade. The top 1% of income earners - mainly people in finance, property and law - have seen an unprecedented growth in income and wealth,  according to the IFS.    Britain has become a deeply divided and unequal society under Labour, and the chancellor’s tax tweak isn’t going to alter that. Most of the rich set up companies and  pay themselves in dividends which are taxed at a lower rate than income tax - a loophole the government is fully aware of, but has chosen to ignore.  Private equity barons have famously been paying less tax than their cleaners.  Financiers can declare themselves as non-domiciled and, for a flat fee of £30,000, shelter their entire foreign earnings from UK tax. 

  

   It isn’t being anti-capitalist to believe that plutocracy - the unrestrained accumulation of wealth and power by this small minority - is undesirable.  The kind of entrepreneurial people who grow new businesses and develop mew products and markets don’t work in the City of London and they aren’t all that rich.  75% of new jobs are created by small businesses employing only a handful of people. Yet the crisis caused  by the parasitical superrich is causing 300 of these small firms to go out of business every day, throwing hundreds of thousands of people out of work. No bail outs for them.

  

    Last week, the IMF said that the bank rescues so far have cost the taxpayers of Britain £130bn.  Now, call me a class warrior, but given that astonishing transfer of public money to  delinquent bankers, the chancellor would surely have been within his rights to put a cap on bank bonuses and golden parachutes, as is being proposed by the EU. It’s widely accepted that the vast rewards sought by the financial superrich were a major cause of the financial meltdown.

    But no, Gordon brown isn’t interested in limiting wealth. The budget measures were the very least he could do to meet the public demand for some kind of redress for the banking  scandals like Sir Fred Goodwin’s pension.   Brown is more interested in wrong-footing David Cameron than on eating the rich.  The Tory leader, though, saw this one coming, and has wisely refused to reverse the 50p tax increase. The rich should take note. They should regard the tax hike as a symbolic gesture of collective atonement for the appalling mess that has been left by the era of low taxes and low regulation.  With their unreasonable howls of anguish it is they who are now in danger of launching a real class war.

 

     

Scrappage is garbage

This was supposed to be a white collar recession in which the middle classes in the financial sector would be feeling the pain first. Hasn't happened. The biggest increases in people claiming jobseekers allowance have been in old industrial areas like Glasgow, where the number of people unemployed and claiming benefit has increased by nearly a third in the past year. There, the unemployment rate is now 5.2%; whereas in Edinburgh, home of stricken RBS and HBOS, only 2.8% are without work. There really is no justice in this recession. The non-financial areas of Britain didn't cause the crisis, but are suffering disproportionately from the results. 

You might have thought this would make the government think of subsidising jobs for a change instead of banks, but no chance. The Treasury has ruled out subsidising short time work or giving help to companies to retain skilled workers. There's nothing left in the kitty for job creation, we're told. Except in the most bizarre form, which is the proposal to pay people to scrap perfectly usable cars. The government is apparently planning to pay £2,000 to owners of vehicles over nine years of age if they buy a new one

The propose 'scrappage' scheme has been widely criticised by economists – the Financial Times said it was like paying people to break windows in order to keep glaziers employed. It is supposed to boost the UK car industry, but the vast majority of new cars sold in Britain are imported, so most of the money will go abroad. It is supposed to help the environment, but most of the pollution created in a a vehicle's lifetime happens during its production, so scrapping serviceable cars will only contribute to environmental degradation. People who can't afford new cars will be unable to take advantage of the scheme, which is wide open to fraud and profit taking by car dealers. 

The scrappage scheme – like the bank rescues – shows that the government really has no coherent philosophy of how to deal with the economic crisis in the real world, as opposed to the fantasy world of finance. Ministers spend most of their time with bankers and the lobbyists from special interest groups like the car dealers, which makes them acutely vulnerable to expensive schemes which benefit the few at the expense of the many. The Chancellor should be investing in job-creating public works, like house building and renewable energy. And he should be addressing income inequality to boost consumer demand.

What Darling should do

 So is the worst behind us? Have we bottomed out? Are we on the long slow haul to economic recovery? Well, that's what the Chancellor, Alistair Darling will be telling us this week, as he reveals how he intends to get us to pay for the record public sector deficits in the coming years. Is he right? It depends who you are. 

If you are a banker in one of the big international banks like Citigroup, JP Morgan or Wells Fargo, then you are whistling a happy tune as these insolvent institutions return to profitability. The fact that this has been based on massive injections of public cash - $45bn to Citigroup alone – won't bother you because you will be too busy calculating your bonuses. With trillions being injected into the banking sector in America and Britain, near-zero interest rates, and the Bank of England effectively printing money there is bound to be some response in the markets. Shareholders in bankrupt British institutions like RBS HBOS/Lloyds have seen a recovery in the value of their stocks. This has contributed to a modest recovery in the FTSE index which has crawled across the 4000 barrier once again. Some financial commentators even to see signs of life in the housing market. 

The City is looking for a budget that leaves them free to make money again, by avoiding any regulation on their behaviour. No windfall taxes on their bonuses for example, such as those introduced in America following he AIG scandal. Financiers don't want to see any curbs on tax avoidance schemes, hedge funds, private equity groups. Or any extension of the 45% tax band which applies on earnings over £150,000. But I suspect the plutocrats can sleep easily in their beds this week. This doesn't look like a Chancellor interested in banker bashing. 

So, if you are in finance and investment, you are feeling more optimistic than for many months. However, if you are in what politicians call 'the real economy', recovery is a very long way off. Manufacturing is still suffering job destroying carnage and likely to continue to do so for the rest of this year as unemployment rises to over three million by early 2010. Tens of thousands of jobs are being lost every week as even big name firms in the forefront of new technology like BT, Nokia, Toshiba announce record losses. 

Both the construction industry and the wind and wave power sector are in a disastrous state at the moment, with mass lay offs planned as projects are cancelled or shelved in the recession. Yet, there is a chronic shortage of homes in Britain and a pressing demand for renewable energy. The collapse in the price of oil has made many alternative energy projects uneconomic and even huge wind farms like the London Array are in danger of being shelved. The government appears to believe that the only renewable source of energy is nuclear power, which is why it is proposing to use public funds effectively to subsidise the import of nuclear power stations from France. 

The Chancellor should be increasing taxes on the very rich in order to finance increased spending by the middle classes and the poor. It is the failure of demand that is prolonging the recession. By allowing a disproportionate share of national wealth to go to a small number of immensely wealthy people, the government is depriving the high streets of buying power. He should be giving help to savers – especially the old – who have been devastated by low interest rates. Britain is desperately in debt and must regain the habit of saving if the economy is to stabilise. The Chancellor should also be addressing the distortions in the housing market before another bubble emerges. 

Estate agents claim that buyer interest is at record levels and that the bottom of the housing market is in sight. If so, now should be the moment for the Chancellor to remove the capital gains tax exemption which encouraged so many people to turn their houses into investments and pensions. He should remove the tax relief on mortgage interest which led to the buy-to-let boom. Why should we taxpayers be paying the mortgages of private landlords? And Darling should also signal that there is to be stricter regulation of mortgage lending so that people are not lured into taking on debts they cannot afford. The surest way to prevent the next housing bubble is to prick it before it starts to inflate. Unfortunately, this doesn't look like a bubble-bursting budget.

Instead, it is likely to be a budget for debt as British public borrowing leaps to 11% of GDP next year -  according to IMF figures - the highest in the entire G20. And it will be worse the year after that, as the national debt heads for the £1 trillion mark. The government is funnelling billions into a financial black hole month after month and can only replace it by more borrowing. This is going to lead to record public sector deficits for many years, according to the Institute for Fiscal Studies. It will mean big tax increases of over a thousand pounds a year for average families and a freeze on public spending. The Chancellor will try to delay the impact of the pay back until after the next election, so most of this will be in the fine print. This will be a budget for recovery which will set most us back a pretty penny. 

What really happened in South Queensferry last week

   The capo di tutti capi,  the mafioso boss known only as The Gordfather, slowly sipped a flaming sambucca as he gazed knowingly around the highly polished antique mahogany table in his lavish home in swanky North Queensferry.  The assembled bosses of the warring Scottish families shifted uneasily. They’d come to pay their respects to the Gordfather knowing that, if they refused, they might not be around long enough to get another invitation.. A chair stood ominously vacant where Annie “bell” Goldie of the once-powerful Tory mob would have sat had she not come down with a mysterious illness.  

    “There has been much unpleasantness between our families in recent times’, said the Gordfather finally, “Too much blood has been shed, too much business lost, too many friends gone”.   The Gordfather’s eyes mostened as he looked at the ceiling.   “For does not Wendy Alexander sleep with the fishes?”   The bosses eyed each other nervously.  Bendy Wendy been the old man’s favourite. 

   “But Gordfather”, piped “Bugsy” Salmond, “no one wants peace more than I.  I seek only to promote the interests of my family.  But Pretty Boy Murphy here and his wise guys have big eyes and have shown me much disrespect.  They wrecked our new protection racket, the local income tax.  They whacked my bag man, Sonny Boy Swinney over the futures trust scam. These guys is sick in the head, Gordfather, there isn’t nuthin’ you can do with them”.   

   “Enough”, said the Gordfather his hushed voice full of menace.”I know that my boys can get a little excitable.  But we now have a common enemy now.  The People”. 

  “The who?” muttereed Tavish “Terror” Scott from behind the solid silver fruit bowl.

   “The People, dumb ass. We’re getting heat from public opinion over the parliamentary payola and our property deals...” 

  “Just tell me whre they are, Gordfather”, interrupted The Grey Man “and I’ll make them dead”. 

   “Do not speak unless I tell you to”, barked the Gordfather, ”or you join Wendy!   The public has a beef with all of us and they’re going to cut off our big pensions, our second and third homes. Our big cars. Our free flat screen televisions.  Even our porno movies.  Who is going to pay for them now? We gotta work together on this or we’re all whacked.”

  “Ok Gordfather”, said Salmond. “You give us back the five hundred big ones that you are taking out of our stash in the next financial year. Then we can all be family.”

   A dark cloud crossed over the Gordfather’s craggy, lived-in face. “Ok, my friend. Deal.  I’ll do the drop personal.  But first, we will kiss on it’. The capos froze. They knew it could only be the kiss of death, from the Gordfather. 

Green Shoot Index goes up/down

The green shoot index went through the roof last week as economists forecast a v-shaped, trampoline recovery. They based their findings on figures from the OECD that suggested the economies of developed nations - excluding America and Britain - were showing signs of life. Or rather that they were showing signs of dying a little more slowly than had previously been forecast. Seasonally adjusted, this meant that the pushing-up-the-daisies index was in negative territory for the first time since a little while ago.

Or to put it in more statistically meaningful terms, the green shoots were growing backwards at a slower rate than they had been only last month. The world rejoiced at the news. Stock markets leapt and politicians turned to their expense accounts in relief. The mortgage lenders announced that the housing slump had been a sampling error and that house prices had actually been rising, credibility-adjusted, all along. The largest leap in unemployment in Britain for nearly thirty years was dismissed as a lagging indicator that could be discounted on the upside.

But the trampoline recovery was to be short lived. By mid week the killjoy Bank of England warned that the v-shape leap would likely be followed by a head-down slump as the economy bounced off the trampoline altogether and landed in the flower beds. In Britain the debt overhang, and the under-hang of bankers on lampposts, meant that there would not be sufficient finance for a v-shaped bounce to become a self-sustaining orbital high. The British financial services sector has given up on the real economy in order to focus on its core function, which is to deliver bonuses for bankers.

The Bank’s governor Mervyn King, warned that Britain could face the worst slump since the depression, or it might not. He unveiled a new fan shaped recovery graph which showed that, seasonally adjusted, the economy could grow a lot in the medium term or it could shrink a lot in the medium term, but that either way it would be bad for the brown-trouser index.

Shareholders rushed for the exit as the footsie stumbled over itself and fell headlong onto the downside. The Baltic Dry shipping index was soaked by renewed sentiment. Confidence in bank stocks rose on a counterintuitive anti-bear bull rally as hedge funds liquidated short positions in a profit-taking pause for breath.

Green shoots ended the week on a low high when Ladbrokes, the betting agency, announced that punters had got lucky in March. Bookie profits had been left standing when Mon Mome won the grand national on 100/1. Alistair Darling said that he intended to scrap the treasury in future and start putting the public finances on a Dundee Shuffle at Aintree since that was more reliable indicator than a statistically meaningful sample of economic forecasters.

MPs expenses: revolution now?

“It’s a revolutionary moment”, said the former standards commissioner, Alistair Graham. “This is like the storming of the Bastille, only the prisoners aren’t being let out”. The historical comparison was perhaps a little over the top, but everyone seems to accept that British politics will never be the same. The question is, what comes next?

Westminster certainly can’t be allowed to return to the bad old ways. At least there is a political consensus on the need for change. Mind you, we said that about the banks and the bonus culture, and at the slightest hint of an economic recovery, the bankers have gone right back to the trough. How can we prevent the MPs scandal ever happening again?

Well, first of all by demanding complete transparency. One of the most common excuses given by shamefaced MPs dragged before the cameras to explain why they claimed for expensive flat-screen TVs, moat-cleaning and flipped houses is that the system was deficient. It wasn’t their fault; the rules were wrong. Trouble is, they only discovered how wrong the rules were after they had been exposed by the Daily Telegraph. Clearly, if they had known that their expenses claims were going to be made public, many MPs clearly wouldn’t have made them. As Lord Nolan put it, during the last great sleaze scandal in 1995, “daylight is the best disinfectant”.

Transparency has to be policed of course, and the precondition for disinfecting parliament is for the Speaker, Michael Martin, to go and go now. He has long regarded himself as the keeper of the perks, even before becoming Speaker. I discovered this in the 1990s when I was a lobby hack in Westminster and wrote a column about MPs expenses, describing some of the practices that everyone knew went on. He accused me of defaming the parliamentary group of MPs and had me reported to the deputy sergeant at arms. Now as Speaker he likens himself to a trades unionist defending pay and conditions - this is completely inappropriate, as are the methods used to silence dissent.

As the former standards commissioner, Elizabeth Filkin, discovered when she tried to investigate allegations about Scottish MPs, the Speaker is the apex of a system designed to protect MPs from scrutiny. She resigned in disgust. Speaker Martin must resign also, not just because he is an irascible buffoon who can’t even read a prepared statement coherently, but because he doggedly refused to allow MPs expenses to be made public under freedom of information. Indeed, he spent tens of thousands of pounds of public money in legal fees trying to prevent the public learning how their money was being spent. The best suggestion I’ve heard all week is that he should be replaced by Kate Hooey, the Labour MP who got an inarticulate
ear bashing from Martin last week for daring to challenge his handling of the expenses issue.

Needless to say the expenses rules have to be changed. MPs, like MSPs in Scotland, - entitled to claim legitimate expenses. But this does not give them the right to make substantial capital gains on properties paid for by taxpayers. In my view the flipping scandal is of far greater importance than all the ridiculous manure and trouser press claims. One MP, Greg Barker, made £320,000 profit out of buying and selling a second home in London financed by his allowance. That is as close to public theft as it is possible to get without actually robbing the Bank of England. This culture of property speculation made every MP a stakeholder in the greatest property bubble in economic history. If MPs had been required to pay their own way, and buy their own houses, they would have been rather less relaxed about the house price spiral that has crucified their constituents and left a generation unable to afford a home.

Which takes us onto MPs pay. The former minister, Michael Portillo, said grandly on BBC last week that there is no way he could be persuaded back into politics “because it would mean trying to live on £63,000 a year”. His point was that no one could reasonably be expected to survive on such a pittance. We have heard variants of this argument all week from MPs and apologists It reveals an astonishing detachment from reality. Only MPs who have been cosseted and pampered at public expense for years, and have lost touch with their constituents, could believe that £63000, plus legitimate expenses, is not enough to live on. It is more than three times average earnings. 96% of the British population live on less than £63,000 a year. If last week was the Bastille, just wait until MPs demand a 40% pay increase - which is what many think they are worth. The tumbrils will be trundling down Whitehall, a guillotine erected in Parliament Square, and MPs’ heads impaled on railings on Westminster Bridge. Just don’t go there.

A lot of people, like the comedian Michael Fry, still say that we are getting this out of proportion and that most MPs are perfectly straight and hard working public servants. But that is only partially true. Anyone who has seen parliament evolve in the last twenty five years knows that the character of MPs has changed. They have become less principled, less independently-minded, more career-oriented. Even Labour MPs became preoccupied with reward, complaining that they would be making much more in the private sector - sometimes correctly, as in the case of Tony Blair who walked out of Downing Street and into a sinecure at JP Morgan for a reported £2m a year. Peter Mandelson summed it up when he said that Labour was now “completely relaxed about people becoming filthy rich, as long as they pay their taxes”. Or rather didn’t as was the case with MPs and their second homes.

We need fewer MPs - now that we have devolution, we don’t need 650 in Westminster and a third could go tomorrow without anyone noticing. The remainder need to show more independence. What is the point of parliament when it voted for the Iraq against MPs own consciences; which allowed the biggest property bubble in history to grow unchecked. We need a new kind of MP - one who wants to enter parliament out of principle - to change society, not change houses. I just don’t believe that there aren’t people like that in Britain anymore. Hopefully, when this discredited and disgraced Labour government falls from office they will find their voice.

Damian 2 - The Final Conflict

It was a dreadful week for the government, a real horror show. The Number Ten director of strategy Damian McBride,was caught proposing to  smear opposition MPs with crude sexual innuendo.  Headline writers were amused when it emerged that his namesake, Damian Green, the Tory immigration spokesman, had been threatened with life imprisonment for leaking an embarrassing home office immigration memo.   The government and the police seemed to be completely out of control, arresting opposition politicians ,beating innocent citizens on the streets and then trying to cover it up under the blanket of national security.  I don't know about the Damians, but the omens are not good for Gordon Brown.  

This is what happens when governments lose the plot and they become accident prone. Things fall apart; the centre does not hold. It happened to the Tories under John Major after his 'back to basics' speech in 1993.  Incomprehensible scandals suddenly emerged as if from nowhere that year, such as the Tory defence committee chairman, Michael Mates, giving the renegade businessman, Azil Nadir, a watch with the words “Don't let the buggers get you down” written on it. Then there was the unfortunate Tory backbencher, Stephen Milligan, found asphyxiated during an autoerotic sex act. These bizarre unrelated episodes were symptomatic of an administration which had become a victim of events rather than a master of them.

We haven't had any actual fatalities yet this time – apart of course from the unfortunate weapons inspector David Kelly - but Damian McBride has certainly dragged Gordon Brown's government into the same x-rated sewer with his email nasties – one of which claimed that a Tory MP had left a sex aid in a hotel bedroom after a night of illicit passion. It is immaterial whether Gordon Brown knew in detail about the black ops planned in his name. Damian McBride was one of the Prime Minister's closest aides, and Brown could not have been unaware of the kind of things he was getting up to. The PM is a media politician to his bitten fingernails and he is also an incorrigible control freak who would have made a point of knowing who his attack dogs were biting. 

Similarly, the home secretary, Jacqui Smith's protestations of ignorance about the arrest of the Tory front bench spokesman Damian Green are massively unconvincing. Her permanent secretary, Sir David Normington, surely could not have called in the anti-terrorism police – via the cabinet office - without the home secretary knowing about it. It would have been more than his job was worth to do anything so drastic without referring up. And if she really didn't know that her own department was locking up opposition politicians then Ms Smith should resign for incompetence. 

Civil servants, acting in her name, called in the police over leaks that were politically embarrassing but noting to do with national security.  She knew the nature of the leaks because she had had to answer for them after they emerged in the press. The documents revealed 1: that the government had tried to cover up the licensing of 5,000 illegal immigrants as security guards; 2: that an illegal immigrant had been employed by the House of Commons on a forged identity pass; and 3: that some home office officials fear that the recession will lead to an increase in crime.  None of these had anything to do with terrorism or endangering the British public, as Ms Smith continued to allege even after the case had been thrown out by the Crown Prosecution Service. 

Damian 11 is a worse scandal than Damian 1. At least McBride was not in a position to call in the anti-terrorism police to arrest opposition politicians.  Damian Green was arrested and his parliamentary offices searched. He was held for four hours by police interrogators who told him he could face life imprisonment. As a senior politician, he was knowledgeable enough about the law to dismiss this threat as absurd, and he had the support of powerful friends. Others detained under spurious anti-terrorism laws are not so fortunate. Christopher Galley, the 26year old civil servant who leaked the memos to Green was also told by anti-terrorist officers that he could get life imprisonment for his 'crimes'. He was stripped, deprived of his possessions and subjected to foul mouthed abuse by interrogators who forced him to name names. 

There is a sinister pattern here. Dirty tricks. The manipulation of public information. Unconvincing denials from ministers that they knew what was going on. At the heart of it all, a preoccupation with national security, which is more about this government's desperate search for electoral popularity rather than any actual threat to British citizens. Systematic encroachments on human rights are being justified by a “war” against terrorism, which has never been declared and is not being fought.. Like the retention of DNA samples (in England), an invasion of privacy which effectively criminalises tens of thousands of innocent people. The brutal behaviour of the Metropolitan police in handling demonstrators is also excused on the grounds that the baton-happy officers are protecting the public from potential terrorists. Gordon Brown even used anti-terrorism laws against Iceland when he froze their bank deposits in Britain. 

Last week we saw the government in a new and sinister light. The veil was swept aside to reveal an administration which has lost its bearings and no longer has any sense of moral or political purpose, other than survival. Governments are not brought down by events like economic crises; they destroy themselves by undermining their own legitimacy. The Conservatives are left as the only bulwark right now against the creation of what is beginning to look like a nascent police state – an authoritarian regime in which undue power has been handed to the law enforcement agencies. The police are clearly out of control, beating and berating innocent citizen, like the newspaper seller Ian Tomlinson who, it seems, did not die of a heart attack under a hail of misslies from G20 demonstrators, as we were originally told by the police, but from internal bleeding after his brutal treatment by officers. 

 It is profoundly shocking that a Labour government should have allowed this to happen on its watch. That a politician of the integrity of Gordon Brown could preside over the arrest and intimidation of elected politicians is incomprehensible. The Labour Party was born in the face of repression by the authorities. Over decades it fought for parliamentary accountability, freedom of speech and freedom from wrongful arrest. This was the week it all came to an end as Brown’s moral compass was shattered beyond repair. 

Alex Salmond won't accept spending cuts in Scotland

And so to the SNP conference in Glasgow - the 75th anniversary of the party's founding. We heard an uncharacteristically low key speech from the SNP leader Alex Salmond. The toughest street fighter in Scottish politics has reined in his invective, curbed his killer instinct and called for consensus and constructive engagement. .

So, do we buy this user friendly, positive Alex Salmond, eager to pull together, even with bis most bitter enemies? The FM said the SNP "is not the anti Labour party". Well, that'll come as a surprise to those bruised Labour leaders who've suffered rough end of his tongue in Holyrood.

But this is sensible politics. The last thing the Scots want to see right now is endless party political bickering while people are thrown out of their jobs. The numbers claiming job seekers allowance in Glasgow has risen by nearly a third in less than a year. They expect the political classes to join together and do something about it.

Salmond is right that Scotland faces unprecedented problems. "I can't stand here and say when it will end, but I can say that it will end", he told conference. Yes, but not anytime soon, I fear. He insisted that investment in skills and schools will do the trick. "Public investment leads to confidence,confidence leads to private investment and growth".

The First Minister also has a point when he says that Scotland has strengths in renewable energy, life sciences, creative industries. But the problem is that these are all taking a severe beating in the recession - especially renewable energy which has been undermined by the collapse of the oil price. Scotland's big money earner in recent years has been the financial services sector which is being downsized faster than the twn towers in 200i.

There's somethingin the argument that public invesment is crucial to maintaining economic activity, and that "stimulus is best delivered at state level". But whether he can expect public spending to be retained at historic levels in Scotland in the next decade is another question entirely. Britain is in severe debt - at every level. The kind of increases in Scottish spending that have happened in the last decade - when the Scottish budget almost doubled - cannot be repeated. A disproportionate number of Scots are employed by the public sector, and there is going to have to be some shrinkage.

The First Minister's speech was a pre-Budget warning to the Chancellor, Alistair Darling, not to proceed with his threatened £1bn cut in the Scottish budget. That is understandable politics, but dodgy economics. I don't see how Scotland can fail to experience a big reduction in public spending over the next few years. It would be perverse for the UK exchequer to exclude one part of the UK from an austerity programme designed to pay back the trillion pound deficit being racked up during the bank rescues.


Of course, if Scotland had control of its own finances, it could borrow to the extent that the markets allowed it; and it could raise taxes to finance public projects. The argument for this is becoming stronger by the week. Indeed, the only way to rebalance the Scottish economy, and to introduce fiscal discipline, might be through full fiscal autonomy. The Conservatives understand this now, and it can surely be only a matter of time until Labour get the message too.

I know where you live

      I've been doing this blog for a week and I have been reminded why I stopped doing it before.  I used to do pieces for Guardian Comment is Free and had to trawl through anything up to two hundred comments, many of which were abusive.  I really couldn't be bothered.   Why make myself depressed over a lot of stupid, ignorant posts from anonymous butt heads?  

      Of course, you don't have to read them and you don't have to respond.  But it doesn't quite seem in the spirit of the blog to ignore them completely.    You get a very disturbed view of humanity.  And of the blogosphere which seems to be populated by homophobic morons like these people who sent me these comments over the last 24 hours.  

Anonymous: Nothing objectionable about being homosexual. I guess you havnt had shit on the end of your knob? 

Dillinger: Macwhirlspin, do the good people of Britain a favour and contract lung cancer....you really are a total hoon 

Karin: You matey have got two faces and both of them need a good skelp.

Dave Hansell:  Opinions are like arseholes - everyone's got one and in cases like this it's impossible to tell the difference between the opinion and the arsehole spouting it.

   Nice.  Though I don't quite understand the last one.  If opinions are like arseholes, then presumably everyone's opinions are going to look a bit arsehole-like, including his.  

    Now, the trouble with reading stuff like this - and it is typical - is that you end up starting thinking like them. You want to get out there and bite their teeth out.  You want to strangle them.  Like being in a car when someone gives you the finger or honks at you.  You have to fight the urge to roll down your window and tell the bastards to F@@k Off.  

  This rage saturates the blogosphere and it's very difficult not to get infected by it.   Like, how do some of these c@nts seem to know my own bloody personal email address when it isn't on Blogger?  It's a like being stalked by mad people.  I'm going to get a weapon and blow their shitty little heads off....you see if I don't!!!

Dixon of Wood Green speaks about the issues of today

 Our policemen are wonderful.  They are a thin blue line between order and chaos.  So what if they slap the odd woman in the face and beat her legs with their batons.  She asked for it didn't she? 

 She was quite clearly giving disrespect, and we know what disrespect leads to. It leads to anarchy that's what it leads to.  And as for noncy newspaper sellers who get in our way, well, we know how do deal with them too. 

 When you see us coming, you better step aside if you want to look after your health.  Because we are the metropolitan police territorial support group and we own this town.  Yes, own it.  Are you listening you cruddy mob of leftie, cider-swilling job-dodgers.  

Politicians are corrupt and weak, but we are strong and we know what this country needs.  It needs a bit of order on the streets and a bit of respect for officers of the law. 

If you don't want to get hurt then don't get in our way.  Some people call it a police state.  We call it the exercise of proper authority.  This country has gone to the dogs and we are the handlers. 

"Gordon Brown is gay" - except that he isn't

   Final word on the Damian McBride issue.   Michael Brown, the Independent journalist and former Tory MP said on the World Tonight this week that in 1993 when he was in the then government whips' office he had a discussion with the Tory MP Giles Brandreath about smearing Gordon Brown. 

     They had heard rumours that the then shadow chancellor was gay and thought they should maybe spread the word around a bit.  After the conversation they dropped the idea as unethical and probably counterproductive.   Michael Brown is himself gay and it may seem odd to us today to think that there is anything objectionable about being homosexual.  But things were different back in 1993.  Actually rumours of a sexual nature followed the Chancellor throughout the 1990s - they were completely false, but kept being recylced. 

   The point about this is that it is quite difficult to say that this action of discussing a smear in the government whips office is any different in principle to discussing it in an email.  After all, the McBride-Draper exchange was never intended for publication.  It was supposed to be a private discussion between friends. If it had remained that way would their actions have been unacceptable?  You could argue that a discussion in the whips office is more serious than an exchange of emails. 

   Indeed, should the Conservative Party apologise for the fact that senior government figures - whips Brown and Brandreath - contemplated smearing Gordon Brown?  Of course a lot of time has passed, and there is no record of the discussion - except now that it is now on BBC Iplayer for Tuesday 15th April 2009.  You can go and listen to it. 

   I'm not trying to defend Damian McBride here, who has behaved badly.  He clearly intended his scribblings to be considered for publication in the proposed  Draper/Labour blog, Red Rag.  His smears of Tory MPs were more numerous and more objectionable than the smear proposed by the Tories sixteen years ago. 

    Nevertheless, something about this whole affair has left me feeling distinctly queasy.  If private conversations are no longer private; if every off key or dodgy remark is actionable; if every piece of gossip is considered defamatory, whether it is published or not, then we are altering the rules of private and personal conduct pretty massively.  

    Of course, McBride should have remembered the first rule of the internet: never put in an email anything you wouldn't write on a postcard.   But I wonder now if someone had overheard him speak in a derogatory way about opposition MPs, or had heard him recycle lobby gossip - for that was what he was doing, many people had heard these rumours - would he have had to resign then?  

     This penetration of the personal leads to the worrying possibility that any disaffected employee of any organisation could severely damage a fellow employee by revealing the content of private conversations.  Say a newspaper editor discussed the chancellor's sex life during an editorial conference or told a story he or she had heard about an MP being caught with their trousers down.  The remarks may not have been intended for publication, but the mere mention of them in a context in which they could theoretically find their way into printcould presumably now be actionable.  

    Certainly, it would be a great way to get rid of an editor you didn't like.   Or a political rival.  Careless talk costs jobs. 

Guido is right. shock

My bete noir, Guido Fawkes, makes a number of very good points in his article in the Times today. The Westminster lobby is a cabal. Print journalists should have exposed Damian McBride and his wrecking crew long since. The parliamentary system has been corrupted by the explicit and implicit deals done between governments and journalists over access to important stories.

I suffered from this myself in the ten years or so I spent in the Lobby from 1989 -1999. It was a very unpleasant place in many respects. Hacks are extremely insecure and require a reliable stream of stories to please their editors. No stories, no jobs. This allowed people like Peter Mandelson and Alistair Campbell to have undue power over a sometimes supine and biddable press corps.

I well recall Campbell marching up and down the press gallery, where political hacks are stuffed into airless and overcrowded rooms, like a drill sergeant at boot camp. He would march up behind you and bark about the bollocks you were writing and how real journalists would cover real stories and not just this process. The real stories of course were the ones being peddled by his lot.

However, the annoying truth was that Campbell, like all spin doctors, did have a lot of genuine stories to farm out. It was not too difficult to build a career on courting a couple of leading spinners and dining out on the exclusives you were given. I was - am - a columnist paid to comment and reflect - so I had the luxury of not having to beg for stories to keep my job.

The other way that leading spinners - MPs as well as press secretaries - would deal with journalists they didn't like was to approach their editors direct to tell them how incompetent the errant hack actually was. "So and so - really, he's completely out of his/her depth. Never gets any stories. Nobody speaks to him". Happened to lots of us. In fact, it's amazing that some many stories do come into the public domain. That's where the role of a parlimentary opposition comes in.
..

Now I have your attention

I can't reply personally to all the responses to my stuff this week. Thanks to everyone who contacted me making very valid points - and in doing so provided the best answer to my blogophobic posts. I'm going to make a few general points.

I agree that the old media for which I work, has failed to come to terms properly with the new. The dead tree press is in a bad way, and we can't yet see the wood for the trees. This is because the architecture of the blogosphere is very different to the 'one-way' media of old. If you want to be a practioner, or a citizen journalist, it is extremely difficult to get heard. The best way is to make inflammatory attacks, preferably on other bloggers. This is the easiest and quickest way to get noticed and to generate traffic for your blog - as my silly stunt this week has confirmed. And apologies again to Iain Dale and Alex Massie for abusing them gratuitously.

Attention-seeking behaviour is turbocharged on the web. To get a blog going you need as many links and hits as possible and this can best be done by hooking into a current controversy and making inflammatory statements about the bloggers who are talking about it. This is why the blogosphere gets so personal. You want to establish links to the main blogging sites because this is the surest way of attracting people back to your own. I don't know if I'm making this very clear - I don't fully understand it myself yet - but it clearly works in practice. This is why it gets so personal so fast.

As in all forms of new media, the blogosphere isn't quite what it appears on the surface. Sophisticated bloggers use search engine optimisation techniques to get their blogs promoted. I have actually been closed down by Blogger because they thought I was using one of these techniques. There is a science to blogging which mitigates against its mission statement as a new and accessible democratic medium of comment and debate. There is an inbuilt tendency to the ad hominem and the inflammatory.

The old press faced the same dilemma of course. It was always easy to get readers by saying outrageous things - by lies, smears and half truths. But a culture of editorial discretion built up over the years and consigned attention seeking and sensationalism to the outer fringes of the tabloid press - such as the National Inquirere or the Sunday Sport.

I really want to have a debate about this because it is clear to me that the future of journalism has to be on the web. But we still don't have a way to go about it. It's a little like democracy itself. Everyone accepts that the old party structure is dead. But the new form of politics - a politics without parties - has not yet been born. And the mother of the new media - the web - isn't even pregnant yet.

And another thing

The other problem with blogging is its immediacy. Yes, I know that this is supposed to be its great virtue. But it is really a curse. Iain Dale says that he updates his blog five times a day. Five times a day! That's more like a psychological condition than citizen journalism. It's really not possible to have five things that are worth saying every day.

Again, this is how the blog form actually shapes a lot of the content. The idea is to make as much of an impact as you can within the parameters of the hundred and fifty word post. Unlike newspapers, no one actually sits down and reads a blog, in the way they read a newspaper or a magazine. You can't cuddle up with a computer - even a laptop. I don't know how bloggers manage to preserve their eyesight sitting in front of the computer for that long. You have to hit and hit hard.

But there is a more serious issue. The form requires that sources and information comes largely from the blogosphere itself. This is because to promote the blog you need to link to as many other bloggers as possible. I'm useless at it as you can see. In fact I'm useless with the web full stop. Surreal things always seem to happen when I try to use it.

For example, Blogger has just told me that it is going to take my blog off the air because it thinks it is a spam blog. Something to do with repeating words and search engine optimisation. I had been doing this as part of my controlled experiment in blog-promotion. Of course I am not a spammer, I am a real person. Honest.

Blogger has a link to a form which you are supposed to fill in to plead your innocence. But when I hit that link it comes back to my own edit blog page. I'm sure there is a reason for this, but I can't work it out. This means that I will be removed with extreme prejudice in twenty days time and there will be a warning plastered over this blog until I can prove I am innocent.

I'm contemplating a new form of it - slow blogging. These will be very very long pieces that need to be downloaded, taken away and read. But the trouble is finding the time...

The Ugly Truth about blogger Iain Dale, Derek Draper and all bloggers

Just for the record, I don't have anything against Iain Dale. When I said that he was a right wing bigot I was of course misquoting the blogger manque, Derek Draper. I have nothing against Alex Massie or Guido Fawkes either...No, on second thoughts Guido Fawkes really does sound like a nasty piece of work.

But this puerile attention-seeking on my part was entirely to demonstrate my point: that the blogosphere encourages personalised attacks and that the best way to get a blog noticed is to attack prominent bloggers. I can't be bothered putting in all the links but if you search my name on google blogs you will see the controversy that my previous posts provoked. It is now being called "Blog-gate", apparently, and blogs are trying to out do each other in their efforts to put me in my place. I've even been called "rectum" a witty allusion to the fact that I am rector of Edinburgh University.

Of course, I asked for it. That was precisely the point. Blogging is all about traffic and and achieving critical mass. To get a blog noticed it has to attract as many hits and links as possible. This is so that it will appear on search engines like Google. When I googled my name my J'accuse the blogosphere came second top.

Other people then start to read about it. When I was on Newsnight last night I was introduced as Iain Macwhirter who now writes a blog. This is amusing because of course there has been a blog on this space for over three years. There are probably a million words on it but it has never raised anything like the interest it has this week. By the way, I started posting my Sunday Herald and Herald pieces here because I found I couldn't get search them any more on the papers' own websites. No, I don't understand either.

Look, there are lots of very good and intelligent blogs - take Paul Krugman's Conscience of a Liberal or Robert Peston's blog on BBC business, But the most effective way to get noticed is to go ad hominem. Because of what economists call disintermediation (now google that!) on the web, everything becomes personal. The sheer immediacy of the web means everyone is on a hair trigger.

Bloggers have feeds that send them every post that uses their name. Iain Dale got back almost before I had posted my remarks saying "And to think you get paid for this". Which is quite funny because of course I don't. Blogging doesn't make money - it is all about getting noticed. The money comes later from speaking, consultancy interviews on tv etc if you get the hits. This was what Derek Draper was looking for with his proto-blog that cost Damian McBride his job.

I have been thinking of starting a rumour that Draper leaked the offending McBride emails to Guido Fawkes deliberately to build up interest for his blog when it finally emerges. The only problem is that people might think I'm joking.

Alex Massie Iain Dale: These Bloggers Don't Write They Ejaculate

Bullseye. I decided it was time to enter the ranks of the bloggers, so I penned an article in the Herald which I hoped would elicit some comment. I said that "bloggers don't write, they ejaculate" amongst other highly uncomplementary things, and added that "the blogosphere has been hijacked by sociopathic egos with extreme views who spend most of their time attacking each other". You can read the piece below this post.

As expected, I was soundly bitch-slapped by the blogging fraternity. I instantly entered the blogosphere as "quote of the day" on Iain Dale's diaryand was subjected to excoriation throughout the blogosphere. For those who don't know, Iain Dale is the blogger's blogger, following Guido Fawkes daily screenwipe. Alex Massie also quoted my column extensively in his blog.

This rather beautifully confirmed what I had argued, namely that the blogosphere is a new frontier of ego-journalism, in which the content of the contributions matters far less than he identity of the blogger.

This is more than a little worrying, because this is the new journalism that I will presumably have to adapt to as the old print media declines into insolvency.

Like most journalists I am a bit of an egotist as well, so I'm not saying that I am in some way morally superior. You can't pontificate day in day out without being just a tad, well, self-opinionated. But the blogosphere is technologically determined in that it is a field which has been taken over by a particular kind of savvy geek. It's immediacy and its lack of any cost-base makes it ideal for people who love their computers and hate the world.

Which I don't. I like the idea of the internet - a digital democracy where all can have their say - but I loathe the practical reality of it. The people who tend to post comments after newspaper articles tend to be of a particular personality type, who indulge their rage behind the anonymity of silly pseudonyms. It is a little like speaking to an audience wearing Donnie Darko masks. This has now become institutionalised in the form of the blog, which is an extension of this kind of citizen journalism.

I also hate the practice of working on the web - links and search engine optimisation strategies - which is about as interesting as programming a video recorder. I can't bring myself to start blogging at one am either. Immediacy is everything on the blog, and it is a medium which positively discourages reflection and any kind of serious thought. It is, as I said, a medium of ejaculation - you splurge your emotions, raw and runny, straight onto the electronic page, and - click - it's away and 'out there' for eternity. Probably.

I have written for decades very widely all sorts of political, cultural and economic issues in the Sunday Herald, The Herald, The Guardian and The New Statesman. But I have never had any presence on the blogosphere before. I can see now that the way to making a name for yourself here is to attack the bloggers, as personally as possible.

So perhaps I should say that Iain Dale is a right wing bigot who writes a totally unreliable and poisonous diary of self promotion. Guido Fawkes, aka Paul Staines, is a demented crypto-fascist who has made racism respectable on the web. Alex Massie writes a turgid and tiresome and frequently incomprehensible column and trades on his name.

Hey, I think I'm getting the hang of this! Roll on the google ads...