Black arm bands would not have been out of place. Something died in the Glasgow East on Thursday night, and it wasn’t just Gordon Brown’s hopes of winning the next general election. It was evident in the mournful faces of the Scottish Labour party workers as they grimly awaited their worst by election defeat in twenty years. Labour’s fifty year relationship with the Scottish voter is finally over. It’s time to move on.
The strange death of Labour Scotland has been taking place for well over a year now. In that time Labour have lost the Scottish government, two Scottish leaders, most of their councils, half their councillors and now the third safest Westminster seat in Scotland. If the Glasgow East result were to be reflected across Scotland at the next general election, Labour would be left with only one seat north of the border. And don’t think it couldn’t happen. The Scottish Conservatives remain the only party ever to have won a majority of votes and a majority of seats in a Scottish election, back in 1955. Yet in the 1997 general election they were wiped out in Scotland. When Scotland changes party it doesn’t mess about.
The trouble for Labour, and the reason for their black despondency, is that they can see no bottom to their current electoral recession. Gordon Brown is not going to go quietly, a housing slump is underway, a credit tsunami is looming and core Labour voters are suffering an unprecedented collapse in their material security. Real inflation, not the fantasy figures of the CPI, is really hurting those ‘hard working families’ Labour always talk about - just look at the latest breathtaking rise in domestic energy prices announced on polling day.
Meanwhile, Alex Salmond has forged a bond with the Scottish electorate which shows every sign of enduring. Labour hoped to wipe the smile off the SNP leader’s face in Shettleston and Easterhouse. They thought Salmond had finally overstepped himself, with his 12 pre-ballot victory tours and self-regarding declarations about Glasgow East being a battle between himself and Gordon Brown. But the Salmond smirk has got wider still. The SNP leader promised an earthquake and lo, the earth did indeed move. He can now say that no seat is safe in Scotland, and not even Labour can contradict him.
Yet, to everyone's credit, Glasgow East was a good clean fight, between able candidates, conducted without rancour, cynicism or dirty tricks. It was real honest street democracy. John Mason and Margaret Curran fought vote by vote, tenement stair by tenement stair, and while the margin of victory may have been small, only 365 votes, this was a great moral victory for the nationalists in the true sense of the word. The SNP fought a classic Labour campaign in Glasgow East, as the party of the people against the party of the establishment.
One thing Labour did get right: independence really wasn’t an issue on the doorsteps - not even after John Mason described himself in a TV interview as a “hard line nationalist”. But that is only because independence is no longer seen as a threat by Labour voters. The bogey of “separatism” is no longer enough to frighten them into the arms of Labour. The warnings about Scotland’s subsidies being cut off don’t work any more thanks to the oil price. The blindingly obvious reality is that, oil aside, London doesn’t give a damn about Scotland any more. The metropolis is another country with an increasingly alien political culture.
Gordon Brown’s determination placate this culture; to match David Cameron policy for policy in England, is killing Labour support in Scotland. The abolition of inheritance tax for the rich, the assault on incapacity benefit claimants, the ten pence tax band, the billions being handed casually to the banks. Brown tells the public sector workers to accept below-inflation increases while Network Rail bosses get six figure bonuses for ruining their own industry. John Hutton, the business secretary, tells us to praise millionaires while the living standards of Labour voters are shredded by commodity speculators in the City.
This is the fatal contradiction in the UK Labour party cannot resolve. Labour’s abandonment of social democracy in England makes it a loser in Scotland. Metropolitan political commentators in Glasgow last week just couldn’t grasp that Scotland really is different as they looked in vain for a Tory revival. And despite reports, there wasn’t one; no Cameron bounce, not even a spasm. The Tory candidate in Glasgow East, Davena Rankin, a black single mother, may have come third, but she actually managed to deliver a worse Tory share of the vote than in 2005.
Of course, Labour now try to portray the SNP as the “Tartan Tories”, and children of Thatcher, but it just doesn’t stack up, and Glasgow voters didn’t buy it. They can see that it is the SNP government which has curbed the right to buy council homes, abolished student fees, cut prescription charges, extended free personal care, frozen council tax. It is Alex Salmond who has moved to scrap PFI, end private sector involvement in NHS health care, save local hospital accident and emergency units, promote renewable energy, oppose Trident and the war in Iraq.
Meanwhile it is Gordon Brown’s Labour government which has increased taxes on people on low incomes while reducing capital gains tax paid by private equity pirates; has allowed executive pay to spiral out of control while delivering pious lectures about wage restraint. Britain has become a grossly unequal society under Labour, a haven for tax-avoiding plutocrats, a nation of property speculators and greedy celebrities who thrive in an economy which has switched from making things to making debt.
The people of Glasgow East are clearly sick of it - homeowners and benefit claimants alike. This long-suffering Labour community has been dismayed by the cynicism and sleaze of the Labour establishment. The machine politicians who are more interested in soliciting loans from tax exile businessmen than in promoting the interests of their constituents; who harvest hundreds of thousands in parliamentary allowances while turning their constituency homes into multiple occupancy business parks. The former Labour MP, David Marshall’s, parliamentary expenses did not become the dominant issue in Glasgow East in part because of the natural reluctance of politicians to throw the first stone. But the people of Glasgow East aren’t stupid; they know fine well what’s been going on.
For too long a London-dominated Labour Party has treated its core voters in places like Glasgow East as election fodder - to be graced by the occasional ministerial visit before polling day, and then forgotten for the next four years. They treat their own voters with contempt, thinking their quaint egalitarianism to be the anachronistic product of simple minds. But as this columnist has tried to argue, voters in Glasgow think and care very deeply about their politics: it is a question of moral propriety. People in Glasgow don’t vote on their pocket books, but on their consciences, and they have had it with Labour - at least in its present form.
For, the good news is that Glasgow East could be a kind of catharsis for Labour in Scotland. Labourites know now that they must change or die; that they cannot continue as a unionist tail to the London dog. Labour will have to reinvent itself in Scotland if it wants to restore its privileged position as Scotland’s national party, a role it occupied for five decades. This doesn’t mean becoming a national-IST party, at least not in the separatist sense, but it does mean restoring Labour to the moral mainstream of Scottish political opinion.
Labour has used by-elections before to change tack. After Winnie Ewing took Hamilton 1967, Harold Wilson set up the Royal Commission on the Constitution. After Margo MacDonald won Govan in 1973, Labour abandoned its opposition to devolution in the Dalintober St. Declaration. After Jim Sillars took Govan by-in 1988, Labour threw its weight behind the Scottish Constitutional Convention making the Scottish Parliament inevitable. Now, after Glasgow East, Labour must find it within itself the will to change again: to make itself an explicitly Scottish party, with its own constitution and leadership, committed to an autonomous Scotland with full tax and economic powers within a reformed, federal United Kingdom.
Wendy was right: there really is no alternative. Even the 39 Scottish Labour MPs, as they finger their collars this weekend, must realise that the game is up in Scotland. Many will be dreading the belated publication next month by the Westminster authorities of details of their parliamentary expenses. Their faith in Brown is long gone. The next general election in Westminster already is already lost, which means that they will be facing a Tory administration in London for the next decade.
Instead of sitting back and allowing the SNP to take-over their home territory, Labour MPs should be moving to merge with the Labour MSPa in Holyrood to form a new Scottish political organisation, a new cohesive political formation. The election of the replacement for Wendy Alexander should be turned into the election of a fully fledged Scottish leadership with functional autonomy from Westminster. The new Scottish Labour Party could then formally disengage from the UK policy-making process and cease automatically to take the Labour whip in the Commons. The Tories are anyway going to curb Labour’s voting rights in Westminster as their answer to the West Lothian Question, so might as well beat them to it.
Has Labour the will and the energy to make the change? I don’t know. None of the leadership candidates so far shows much sign of recognising the nature of the task ahead. But it is the only sure way of persuading Scottish voters that the Labour party, the party they have supported for the last half century, deserves to win their votes again. It is the only way that Labour can re-emerge from the grave they have dug themselves. Yes, there is life after Glasgow East, but not as Labour currently knows it.
Monday, July 28, 2008
Earthquake in Glasgow Many dead.
Glasgow belongs to Labour no more. Alex Salmond promised a political “earthquake” in Glasgow East, and once again he has delivered, on a 22% swing. http://news.bbc.co.uk/1/hi/scotland/glasgow_and_west/7522153.stm This is an astonishing result, tearing the heart out of Labour in Scotland and sending shock waves through Downing Street. Glasgow East was Labour’s third safest seat in Scotland, its twenty-fifth safest in the UK. It is the constituency of the great John Wheatley, leading figure in the first Labour government in the 1920s. If they can’t hold the line here, then Labour cannot hold the line anywhere.
Glasgow East is the SNP’s most stunning by-election victory since Jim Sillars took Glasgow Govan in 1988, overturning a similar 19000 majority, and kick-starting the constitutional process that ultimately led to the creation of the Scottish parliament. John Mason, the victor of Glasgow East, was a capable candidate but he has none of the flair and charisma of Jim Sillars - which makes this victory even more resounding.
It was an unvarnished triumph for the SNP - the party of government in Scotland - rather than for an individual candidate. And it is a person vindication for Alex Salmond. Many commentators believed that the SNP leader had been altogether too prominent in the campaign - he visited the constituency 12 times - and was in line for a personal rebuff. But, clearly, not even Glasgow is immune to the Salmond’s populist magic. Who dares, swings.
Of course, it also represents a massive protest against Labour in a constituency which has every reason to be disenchanted with this government. The dismal health and life-expectancy figures tell their own story. Glasgow East was also a protest at rising food and fuel prices and the abolition of the 10p tax band. In truth it was hard to think of any positive reason for voting Labour in this corner of post-industrial Scotland at this particular moment in the political cycle. But it is still a remarkable achievement for the nationalists to have successfully harvest the votes of the disenchanted and to have boosted the turnout to a respectable 42%, not far short of the general election. The Tories and the Liberal Democrats were nowhere in Glasgow East with 1,639 and 915 votes respectively.
Labour’s policy forum in Warwick today http://www.tribunemagazine.co.uk/2008/07/11/tribune-comment-warwick-ii-must-rescue-labour/has been turned into a wake, mourning not just the loss of Labour hegemony of Scottish politics, but also of its core vote. There can no longer be any doubt that Labour is facing electoral oblivion under Gordon Brown. Of course, the Prime Minister is not going to resign immediately, and Number Ten is clearly hoping that Glasgow East will be forgotten by the time the party gathers for the annual conference in the autumn. But following the worst local election results in England since the 1960s, the humiliation of losing Crewe and Nantwich and being beaten into fifth place by the BNP in Henley, Glasgow East must surely be a wake up call to even the most complacent Labourites. Change, or die.
It is also a wake up call for the Union. If no Scottish seat is safe from the seduction of nationalism, then we must begin to take seriously the possibility that the United Kingdom may be finished, at least in its present form. The SNP minority administration in Holyrood, elected so narrowly in May 2007, has been immensely popular. Labour has been plunged into a terminal crisis in Scotland, having lost two leaders, half its councillors and now a crucial by-election. The other unionist parties are failing to provide any significant challenge to the SNP, which has grown in authority since it took over the reins of power in Holyrood.
While Westminster tinkers with Barnett formulas and the voting rights of Scottish MPs in the House of Commons, Scotland is already going its own way. It may still be possible to prevent complete separation by moving to a form of federalism, with Scotland given greater economic autonomy. But the way things are going, Scotland could be an independent nation within ten years. The entire UK will be shaken by the earthquake in Glasgow.
Glasgow East is the SNP’s most stunning by-election victory since Jim Sillars took Glasgow Govan in 1988, overturning a similar 19000 majority, and kick-starting the constitutional process that ultimately led to the creation of the Scottish parliament. John Mason, the victor of Glasgow East, was a capable candidate but he has none of the flair and charisma of Jim Sillars - which makes this victory even more resounding.
It was an unvarnished triumph for the SNP - the party of government in Scotland - rather than for an individual candidate. And it is a person vindication for Alex Salmond. Many commentators believed that the SNP leader had been altogether too prominent in the campaign - he visited the constituency 12 times - and was in line for a personal rebuff. But, clearly, not even Glasgow is immune to the Salmond’s populist magic. Who dares, swings.
Of course, it also represents a massive protest against Labour in a constituency which has every reason to be disenchanted with this government. The dismal health and life-expectancy figures tell their own story. Glasgow East was also a protest at rising food and fuel prices and the abolition of the 10p tax band. In truth it was hard to think of any positive reason for voting Labour in this corner of post-industrial Scotland at this particular moment in the political cycle. But it is still a remarkable achievement for the nationalists to have successfully harvest the votes of the disenchanted and to have boosted the turnout to a respectable 42%, not far short of the general election. The Tories and the Liberal Democrats were nowhere in Glasgow East with 1,639 and 915 votes respectively.
Labour’s policy forum in Warwick today http://www.tribunemagazine.co.uk/2008/07/11/tribune-comment-warwick-ii-must-rescue-labour/has been turned into a wake, mourning not just the loss of Labour hegemony of Scottish politics, but also of its core vote. There can no longer be any doubt that Labour is facing electoral oblivion under Gordon Brown. Of course, the Prime Minister is not going to resign immediately, and Number Ten is clearly hoping that Glasgow East will be forgotten by the time the party gathers for the annual conference in the autumn. But following the worst local election results in England since the 1960s, the humiliation of losing Crewe and Nantwich and being beaten into fifth place by the BNP in Henley, Glasgow East must surely be a wake up call to even the most complacent Labourites. Change, or die.
It is also a wake up call for the Union. If no Scottish seat is safe from the seduction of nationalism, then we must begin to take seriously the possibility that the United Kingdom may be finished, at least in its present form. The SNP minority administration in Holyrood, elected so narrowly in May 2007, has been immensely popular. Labour has been plunged into a terminal crisis in Scotland, having lost two leaders, half its councillors and now a crucial by-election. The other unionist parties are failing to provide any significant challenge to the SNP, which has grown in authority since it took over the reins of power in Holyrood.
While Westminster tinkers with Barnett formulas and the voting rights of Scottish MPs in the House of Commons, Scotland is already going its own way. It may still be possible to prevent complete separation by moving to a form of federalism, with Scotland given greater economic autonomy. But the way things are going, Scotland could be an independent nation within ten years. The entire UK will be shaken by the earthquake in Glasgow.
Thursday, July 24, 2008
Why not turn all tyrants into holistic healers?
Healers with long flowing beards are reaching for the razors. The pigtails are being cut off and top knots are going the way of the mullet. Forget the financial crisis, it’s been a desperate week for the alternative therapy industry since the ‘Beast of Bosnia’, Radovan Karadzic, was discovered beneath a guru’s beard posing as a New Age practitioner in something called “human quantum energy”, which he claims to channel through his skull via his platted hair. A real head-case in other words.
That it is apparently so easy for a genocidal mass murderer to recycle himself as a benign mystic and lecturer in Ayurovedic medicine has been seen as a poor reflection of professional standards in complementary medicine. But perhaps we should be seeing in this inspired career a solution to the problem of what do to with dictators. A harmless alternative to homicidal megalomania.
Others may even have beat Radovan to it. Saddam Hussein was also discovered with a beard and long grey hair living in in a hole in Iraq. The assumption was that the Butcher of Baghdad was hiding from the American armed forces, but perhaps he was really on a hardcore meditation retreat, preparing himself psychologically for a future of spiritual leadership. He was certainly living a life of fasting and contemplation.
Maybe we should be discretely suggesting to other tyrants that it is time to make the personal political and start taking up alternative lifestyles. Robert Mugabe, of Zimbabwe, would be a shoo in for assertiveness training. Kim Jong Il, the communist dictator of North Korea, already has the oriental appearance which would allow him to make a fortune in herbal medicine. Than Shwe of Burma could chill out as a specialist in Reiki foot massage and psychic channelling. Pervez Musharraf of Pakistan may be a Muslim, but that shouldn’t prevent him doing his bit for holistic medicine by taking up aromatherapy and crystallography.
There are more than seventy countries in the world ruled by dictators, who suppress freedom of speech and the right to a fair trial. Far better to have them turn chiropractice than more conventional forms of torture. And there are also some pretty dodgy democrats too like Vladimir Putin, who with his KGB experience would be great as a life coach specialising acupuncture.
The possibilities are endless and, remember, turning dictators into quacks is a lot cheaper than invasion, sorry “humanitarian intervention”. Which brings us to one other really sinister character who is still on the loose and evading justice. Responsible for an illegal war and the deaths of tens of thousands of civilians, Tony Blair is believed to be posing as a Middle East peace envoy and promoter of global faith awarness. It’s surely time he too was exposed and sent to the Hague for a fair trial.
That it is apparently so easy for a genocidal mass murderer to recycle himself as a benign mystic and lecturer in Ayurovedic medicine has been seen as a poor reflection of professional standards in complementary medicine. But perhaps we should be seeing in this inspired career a solution to the problem of what do to with dictators. A harmless alternative to homicidal megalomania.
Others may even have beat Radovan to it. Saddam Hussein was also discovered with a beard and long grey hair living in in a hole in Iraq. The assumption was that the Butcher of Baghdad was hiding from the American armed forces, but perhaps he was really on a hardcore meditation retreat, preparing himself psychologically for a future of spiritual leadership. He was certainly living a life of fasting and contemplation.
Maybe we should be discretely suggesting to other tyrants that it is time to make the personal political and start taking up alternative lifestyles. Robert Mugabe, of Zimbabwe, would be a shoo in for assertiveness training. Kim Jong Il, the communist dictator of North Korea, already has the oriental appearance which would allow him to make a fortune in herbal medicine. Than Shwe of Burma could chill out as a specialist in Reiki foot massage and psychic channelling. Pervez Musharraf of Pakistan may be a Muslim, but that shouldn’t prevent him doing his bit for holistic medicine by taking up aromatherapy and crystallography.
There are more than seventy countries in the world ruled by dictators, who suppress freedom of speech and the right to a fair trial. Far better to have them turn chiropractice than more conventional forms of torture. And there are also some pretty dodgy democrats too like Vladimir Putin, who with his KGB experience would be great as a life coach specialising acupuncture.
The possibilities are endless and, remember, turning dictators into quacks is a lot cheaper than invasion, sorry “humanitarian intervention”. Which brings us to one other really sinister character who is still on the loose and evading justice. Responsible for an illegal war and the deaths of tens of thousands of civilians, Tony Blair is believed to be posing as a Middle East peace envoy and promoter of global faith awarness. It’s surely time he too was exposed and sent to the Hague for a fair trial.
Wednesday, July 23, 2008
Financial crisis. How bad is it going to get?
So, just how bad is this financial crisis going to get? Well according to Bob Junjuah of the Royal Bank of Scotland: “A very nasty period is soon to be upon us. Be prepared”. It’s not like the RBS to go around making alarmist statements but it has warned of a “global equity and credit crash” this autumn. Morgan Stanley bank has forecast a “catastrophic event”. The hedge fund guru John Paulson says global losses from the credit crisis, currently $300bn, may reach $1.3 trillion.
Yet only a few weeks ago, everyone in the City and Wall St. seemed to be saying that “the worst was over”; that the fundamentals were sound; and that once the banks had owned up to the full extent of their losses, then things would begin to get back to normal. Clearly, they haven’t, as anyone who has tried to get a mortgage recently will have discovered. And with the oil price spike - which Gordon Brown is trying to flatten at the Oil summit in Jeddah - there has been a switch of sentiment back to deepest gloom.
You think I’m exaggerating, don’t you? Well, let me quote an email I received at the weekend from Moneyweek Magazine. Under the heading “Bloodbath Britain” the magazine screams in bold type that “The UK is about to be battered by the biggest financial storm of our lifetimes”. It goes on to predict five forthcoming disasters. “Disaster one: the housing market crashes wiping up to 40% off the value of your property. Disaster 2: 1000s of businesses go bust as the credit crunch hammers consumer spending. Disaster 3: Unemployment leaps by 30-50% as a 1980’s style crisis devastates the job market. Disaster 4: Sterling collapses by 10% and the price of everything from petrol to food skyrockets. Disaster 5: shares investments and cash all lose value destroying wealth and crushing retiral dreams”
At first I thought this might be a spoof, or perhaps a posting from the Socialist Workers Party. But this is no leftist doom-monger warning of the collapse of capitalism but a hard-headed and practical share and property buying guide. Moneyweek goes on to advise on what stocks you should buy to hedge the stock market collapse, mainly commodities. It would be as well handing them a razor and some hemlock.
Now, we do not want to ‘talk ourselves into a recession” to use the current political cliche in Westminster. But it’s important to know what the financial world is thinking. It’s not just prophets like the billionaire George Soros, who has been warning that this is a crisis comparable to the Great Depression. Look at the work of Nouriel Roubini, the prolific New York University economics professor, whose “12 steps to financial Armageddon” is essential reading. Even Martin Wolf of the Financial Times said last week that “on the supply side of the world economy, almost every piece of news has been bad.”
Or try looking at website, The Market Oracle, which has been running increasingly apocalyptic posts from highly informed US financial commentators many of them on the political right. It’s UK editor, Nadeem Walayat correctly forecast the British housing slump, almost to the month, and continues to chart its decline, which he now believes will lead to a 50-60% drop in British property prices, peak to trough.
I’m almost tempted to say: lighten up guys, it can’t be as bad as all that. Warren Buffett, the “sage of Omaha” is said to be buying shares again. Employment is still high and retail sales actually jumped last month - to everyone’s surprise. Maybe all this hysteria is a temporary blip. But I think the warnings should be listened to precisely because they are not coming from the usual suspects, but from people who know the financial system from the inside.
What has spooked them is a complex of factors, of which the doubling of the price of oil is only the most obvious. The oil spike being seen as a consequence of low interest rates and the decline of the dollar, which has ignited a speculative boom in commodity prices, similar to the dot.com bubble which burst in 2000 and the real estate bubble which has been imploding since 2006. This is a highly unstable situation. It has arisen just as inflation has returned with a vengeance to Asian countries like China and India, the countries which manufacture most of what we buy. Inflation in Vietnam is 25%.
This inflation is feeding back into the West through import prices just at the moment when central banks are trying to head off recession by lowering interest rates. The fall in the value of the dollar and sterling (down 14% this year) has turbocharged imported inflation in the two most indebted countries in the developed world: Britain and America blitzing household budgets. Cash-strapped British consumers are sitting in houses which are dropping in value just as they are coming under pressure from the banks to repay some of their £1.4trillion debts.
As the British property market follows America into default and repossession, there is expected to be a collapse of consumer spending. The next wave of bank losses is expected to be credit cards, car loans and student loans, which are already defaulting in America, and corporate bonds which are looking highly vulnerable. This has caused further shock waves through the derivatives market - the collateralised debt obligations and such like - which are being marked down once again.
Despite hundreds of billions of dollars worth of “liquidity” being pumped into the system by central banks, the credit crisis actually getting worse. The mortgage market is flat lined. Hedge funds are collapsing as their leveraged bets go sour. Libor - the rate at which banks lend to each other - is almost back to levels it reached last summer. Everyone is looking for the next big bank failure and wondering how long central banks can continue to bail out dud institutions.
Meanwhile, the world’s stock markets are falling: 50% in China, 30% here if you strip out unstable oil, mining and commodities. The commodities boom is due for a sharp correction and many banks are in deep trouble. Which is why analysts are warning of a further stock market and credit shocks this autumn. They believe we haven’t begun to recognise the scale and ramifications of this crisis. Until we do we, and the politicians, will remain passive victims, unable to recognise the need for concerted global action.
Sorry to ruin your breakfast - but there it is.
Yet only a few weeks ago, everyone in the City and Wall St. seemed to be saying that “the worst was over”; that the fundamentals were sound; and that once the banks had owned up to the full extent of their losses, then things would begin to get back to normal. Clearly, they haven’t, as anyone who has tried to get a mortgage recently will have discovered. And with the oil price spike - which Gordon Brown is trying to flatten at the Oil summit in Jeddah - there has been a switch of sentiment back to deepest gloom.
You think I’m exaggerating, don’t you? Well, let me quote an email I received at the weekend from Moneyweek Magazine. Under the heading “Bloodbath Britain” the magazine screams in bold type that “The UK is about to be battered by the biggest financial storm of our lifetimes”. It goes on to predict five forthcoming disasters. “Disaster one: the housing market crashes wiping up to 40% off the value of your property. Disaster 2: 1000s of businesses go bust as the credit crunch hammers consumer spending. Disaster 3: Unemployment leaps by 30-50% as a 1980’s style crisis devastates the job market. Disaster 4: Sterling collapses by 10% and the price of everything from petrol to food skyrockets. Disaster 5: shares investments and cash all lose value destroying wealth and crushing retiral dreams”
At first I thought this might be a spoof, or perhaps a posting from the Socialist Workers Party. But this is no leftist doom-monger warning of the collapse of capitalism but a hard-headed and practical share and property buying guide. Moneyweek goes on to advise on what stocks you should buy to hedge the stock market collapse, mainly commodities. It would be as well handing them a razor and some hemlock.
Now, we do not want to ‘talk ourselves into a recession” to use the current political cliche in Westminster. But it’s important to know what the financial world is thinking. It’s not just prophets like the billionaire George Soros, who has been warning that this is a crisis comparable to the Great Depression. Look at the work of Nouriel Roubini, the prolific New York University economics professor, whose “12 steps to financial Armageddon” is essential reading. Even Martin Wolf of the Financial Times said last week that “on the supply side of the world economy, almost every piece of news has been bad.”
Or try looking at website, The Market Oracle, which has been running increasingly apocalyptic posts from highly informed US financial commentators many of them on the political right. It’s UK editor, Nadeem Walayat correctly forecast the British housing slump, almost to the month, and continues to chart its decline, which he now believes will lead to a 50-60% drop in British property prices, peak to trough.
I’m almost tempted to say: lighten up guys, it can’t be as bad as all that. Warren Buffett, the “sage of Omaha” is said to be buying shares again. Employment is still high and retail sales actually jumped last month - to everyone’s surprise. Maybe all this hysteria is a temporary blip. But I think the warnings should be listened to precisely because they are not coming from the usual suspects, but from people who know the financial system from the inside.
What has spooked them is a complex of factors, of which the doubling of the price of oil is only the most obvious. The oil spike being seen as a consequence of low interest rates and the decline of the dollar, which has ignited a speculative boom in commodity prices, similar to the dot.com bubble which burst in 2000 and the real estate bubble which has been imploding since 2006. This is a highly unstable situation. It has arisen just as inflation has returned with a vengeance to Asian countries like China and India, the countries which manufacture most of what we buy. Inflation in Vietnam is 25%.
This inflation is feeding back into the West through import prices just at the moment when central banks are trying to head off recession by lowering interest rates. The fall in the value of the dollar and sterling (down 14% this year) has turbocharged imported inflation in the two most indebted countries in the developed world: Britain and America blitzing household budgets. Cash-strapped British consumers are sitting in houses which are dropping in value just as they are coming under pressure from the banks to repay some of their £1.4trillion debts.
As the British property market follows America into default and repossession, there is expected to be a collapse of consumer spending. The next wave of bank losses is expected to be credit cards, car loans and student loans, which are already defaulting in America, and corporate bonds which are looking highly vulnerable. This has caused further shock waves through the derivatives market - the collateralised debt obligations and such like - which are being marked down once again.
Despite hundreds of billions of dollars worth of “liquidity” being pumped into the system by central banks, the credit crisis actually getting worse. The mortgage market is flat lined. Hedge funds are collapsing as their leveraged bets go sour. Libor - the rate at which banks lend to each other - is almost back to levels it reached last summer. Everyone is looking for the next big bank failure and wondering how long central banks can continue to bail out dud institutions.
Meanwhile, the world’s stock markets are falling: 50% in China, 30% here if you strip out unstable oil, mining and commodities. The commodities boom is due for a sharp correction and many banks are in deep trouble. Which is why analysts are warning of a further stock market and credit shocks this autumn. They believe we haven’t begun to recognise the scale and ramifications of this crisis. Until we do we, and the politicians, will remain passive victims, unable to recognise the need for concerted global action.
Sorry to ruin your breakfast - but there it is.
Saturday, July 12, 2008
Glasgow East. Labour goes South.
It’s often said that people in constituencies like Glasgow East would vote for a monkey provided it was wearing a red rosette. I would not dream of comparing Labour’s capable candidate Margaret Curran to a sub-human primate, but I suspect even she would agree that her party have made monkeys of themselves.
Labour could hardly have got off to a worse start in this crucial by-election. Its Scottish leader, Wendy Alexander, resigning on the eve of the campaign over a Holyrood fund-raising scandal; the sitting Labour MP, David Marshall, resigning on health grounds amid expense account allegations, and Labour’s intended by-election candidate, John Ryan, resigning even before he had been selected. Margaret Curran hasn’t resigned yet, but she doesn’t even appear to know what constituency she’s living in so maybe she’ll get round to it.
Yet despite all this, the smart money is still on the monkeys to win in Glasgow East. If so, this represents quite heroic dedication to a lost cause by the good folk of Greater Shettleston. After a decade of Labour government, nearly half the population here is living on benefits, life expectancy is lower than in Russia after the Soviet Union collapsed, and unemployment is running at nearly twice the national average. Loyalty is its own reward, they say, and Glasgow East is living proof.
But I don’t seek to disparage the voters of Glasgow for supporting Labour so doggedly over the years. Those who know this part of the city insist that the people here are not suffering from mental delusion or a chronic brain cell loss but from a kind of anachronistic altruism: they do what they think is morally right rather than what is in their narrow self interest. They’re a little like Robert Tressell’s “Ragged Trousered Philanthropists. Residents of Glasgow East can see perfectly well what Labour has done, or not done for this broken community, but many believe that, in the end, Labour is still the party of the working man - even though most of the men are on incapacity benefit - and that voting Labour therefore must be the correct moral choice.
This is reinforced by the leaders of the influential Catholic Church - a third of Glasgow East voters are Catholic - which has traditionally looked to Labour in West Central Scotland to secure the interests of its faith community. There has been speculation that the goverenment has postponed this week’s debate on the Embryology Bill to avoid giving offence to local church leaders - a maneovre which, I’m afraid, sounds only too in keeping with the cynical standards of this administration.
But this moral imperative represents a problem too for the SNP. Many Glaswegians still regard the SNP is a selfish party out to line its own tartan nest by redirecting oil revenues to it Scottish business friends. Alex Salmond rather encouraged this view by making “Scotland’s Oil” and cutting fuel duty the centrepiece of its campaign launch last week, forgetting that most people in Glasgow East don’t actually own a car, and that many feel that the oil is a national resourse, to be used 'for the good of all’. You may laugh, but that’s the way they think in traditional Labour constituencies. Crude resource politics don’t work in places where people vote not on their pocket books but on their consciences.
And the SNP would be wrong to believe that the “Tartan Tory” tag can no longer be hung around their necks. We are about to discover that Labour is suddenly a party of red blooded socialists. They will be out and about in Glasgow parading their anti-capitalist credentials - at least until polling day. They’ll paint the Nats as the modern Thatcherites, in the pockets of businessmen like Brian Souter and Donald Trump; bent on cutting services and cutting business rates. Enough voters might even believe it.
So, what do you say to the people of Glasgow East? Should they continue to vote with their hearts or with their heads? By rejecting Labour they could place themselves on the map for the first time in Shettleston’s history. It’s no accident that nearby Glasgow Govan has been showered with infrastructure benefits, Garden Festivals, Science Centres over the last 20 years. Govan voted twice for the SNP in by-elections - in 1973, when it returned Margo MacDonald, and in 1988 when it returned her husband, Jim Sillars. The surest way to get noticed in the pork-barrel world of West Central Scotland Labour politics is to play the nationalist card. Otherwise you are just voting fodder.
Now, Glasgow East may be perfectly content to remain routine feedstuff for the great Laboru ruminant. That is a choice it is entitled to make and the voters deserve respect for their decision. But they should also reflect on whether Labour any longer deserves loyalty on this scale. Yes, this is the constituency of John Wheatley - health minister in the first ever Labour government in 1924 whose Housing Act created mass council housing and released thousands of Glaswegian families from the grip of the slum landlords. But is the spirit of Wheatley alive today? It is a grim irony that his former constituency now has some of he worst health statistics in the developed world, according to the United Nations, and that Glasgow housing is in a dreadful state.
Labour will try to argue that the stalled Glasgow housing stock transfer is in the tradition of John Wheatley, but that botched semi-privatisation has about as much to do with social housing as an interest-only mortgage. It is to Labour’s shame that it has taken a nationalist government to curb the right to buy, a policy which has diminished the quantity and quality of council housing by selling off the best properties at knock-down prices. New Labour is too committed now to Thatcherite economics to contemplate a return to council housing.
The SNP has no social democratic traditions to fall back on, but it has become a repository of the policies New Labour has discarded. . The Nationalists are wise not to compare themselves with the Independent Labour Party and Red Clydeside - as they did so disastrously in the 1990s. But they must somehow to demonstrate that they have become the inheritors of that social democratic tradition to win the moral high ground. The Nationalists should be highlighting measures like free prescriptions, abolition of university tuition fees, extension of elderly care and suchlike. A few attacks on the banks and big oil wouldn't go amiss either.
Still, Glagow East will take a lot of persuading. The link with Labour is more than just a question of political affiliation; it is almost an existential question about what this communty believes about itself. And there is one final point. This isn’t a normal by-election. Glasgow East voters realise that they could kill the UK Labour government on Thursday week by voting Labour out of its third safest seat in Scotland. Gordon Brown would probably be finished. Many voters here believe Labour deserves to lose Glasgow East, but more may decide that Britain doesn’t deserve a return of the Tories. Better the monkeys you know than the monkeys you don’t.
Labour could hardly have got off to a worse start in this crucial by-election. Its Scottish leader, Wendy Alexander, resigning on the eve of the campaign over a Holyrood fund-raising scandal; the sitting Labour MP, David Marshall, resigning on health grounds amid expense account allegations, and Labour’s intended by-election candidate, John Ryan, resigning even before he had been selected. Margaret Curran hasn’t resigned yet, but she doesn’t even appear to know what constituency she’s living in so maybe she’ll get round to it.
Yet despite all this, the smart money is still on the monkeys to win in Glasgow East. If so, this represents quite heroic dedication to a lost cause by the good folk of Greater Shettleston. After a decade of Labour government, nearly half the population here is living on benefits, life expectancy is lower than in Russia after the Soviet Union collapsed, and unemployment is running at nearly twice the national average. Loyalty is its own reward, they say, and Glasgow East is living proof.
But I don’t seek to disparage the voters of Glasgow for supporting Labour so doggedly over the years. Those who know this part of the city insist that the people here are not suffering from mental delusion or a chronic brain cell loss but from a kind of anachronistic altruism: they do what they think is morally right rather than what is in their narrow self interest. They’re a little like Robert Tressell’s “Ragged Trousered Philanthropists. Residents of Glasgow East can see perfectly well what Labour has done, or not done for this broken community, but many believe that, in the end, Labour is still the party of the working man - even though most of the men are on incapacity benefit - and that voting Labour therefore must be the correct moral choice.
This is reinforced by the leaders of the influential Catholic Church - a third of Glasgow East voters are Catholic - which has traditionally looked to Labour in West Central Scotland to secure the interests of its faith community. There has been speculation that the goverenment has postponed this week’s debate on the Embryology Bill to avoid giving offence to local church leaders - a maneovre which, I’m afraid, sounds only too in keeping with the cynical standards of this administration.
But this moral imperative represents a problem too for the SNP. Many Glaswegians still regard the SNP is a selfish party out to line its own tartan nest by redirecting oil revenues to it Scottish business friends. Alex Salmond rather encouraged this view by making “Scotland’s Oil” and cutting fuel duty the centrepiece of its campaign launch last week, forgetting that most people in Glasgow East don’t actually own a car, and that many feel that the oil is a national resourse, to be used 'for the good of all’. You may laugh, but that’s the way they think in traditional Labour constituencies. Crude resource politics don’t work in places where people vote not on their pocket books but on their consciences.
And the SNP would be wrong to believe that the “Tartan Tory” tag can no longer be hung around their necks. We are about to discover that Labour is suddenly a party of red blooded socialists. They will be out and about in Glasgow parading their anti-capitalist credentials - at least until polling day. They’ll paint the Nats as the modern Thatcherites, in the pockets of businessmen like Brian Souter and Donald Trump; bent on cutting services and cutting business rates. Enough voters might even believe it.
So, what do you say to the people of Glasgow East? Should they continue to vote with their hearts or with their heads? By rejecting Labour they could place themselves on the map for the first time in Shettleston’s history. It’s no accident that nearby Glasgow Govan has been showered with infrastructure benefits, Garden Festivals, Science Centres over the last 20 years. Govan voted twice for the SNP in by-elections - in 1973, when it returned Margo MacDonald, and in 1988 when it returned her husband, Jim Sillars. The surest way to get noticed in the pork-barrel world of West Central Scotland Labour politics is to play the nationalist card. Otherwise you are just voting fodder.
Now, Glasgow East may be perfectly content to remain routine feedstuff for the great Laboru ruminant. That is a choice it is entitled to make and the voters deserve respect for their decision. But they should also reflect on whether Labour any longer deserves loyalty on this scale. Yes, this is the constituency of John Wheatley - health minister in the first ever Labour government in 1924 whose Housing Act created mass council housing and released thousands of Glaswegian families from the grip of the slum landlords. But is the spirit of Wheatley alive today? It is a grim irony that his former constituency now has some of he worst health statistics in the developed world, according to the United Nations, and that Glasgow housing is in a dreadful state.
Labour will try to argue that the stalled Glasgow housing stock transfer is in the tradition of John Wheatley, but that botched semi-privatisation has about as much to do with social housing as an interest-only mortgage. It is to Labour’s shame that it has taken a nationalist government to curb the right to buy, a policy which has diminished the quantity and quality of council housing by selling off the best properties at knock-down prices. New Labour is too committed now to Thatcherite economics to contemplate a return to council housing.
The SNP has no social democratic traditions to fall back on, but it has become a repository of the policies New Labour has discarded. . The Nationalists are wise not to compare themselves with the Independent Labour Party and Red Clydeside - as they did so disastrously in the 1990s. But they must somehow to demonstrate that they have become the inheritors of that social democratic tradition to win the moral high ground. The Nationalists should be highlighting measures like free prescriptions, abolition of university tuition fees, extension of elderly care and suchlike. A few attacks on the banks and big oil wouldn't go amiss either.
Still, Glagow East will take a lot of persuading. The link with Labour is more than just a question of political affiliation; it is almost an existential question about what this communty believes about itself. And there is one final point. This isn’t a normal by-election. Glasgow East voters realise that they could kill the UK Labour government on Thursday week by voting Labour out of its third safest seat in Scotland. Gordon Brown would probably be finished. Many voters here believe Labour deserves to lose Glasgow East, but more may decide that Britain doesn’t deserve a return of the Tories. Better the monkeys you know than the monkeys you don’t.
Friday, July 11, 2008
Wuthering Brown
Gordon Brown comparing himself to Heathcliffe from “Wuthering Heights” was bad enough, but having to listen again to the caterwauling of Kate Bush really was too much. Talk about bad dreams in the night.
Actually, Broon was fitted up over Heathcliffegate. He was clearly joking when he “agreed” in the New Statesman interview that he was like the Wuthering madman. The PM was trying to be matey; trying sound human and self-deprecating Unfortunately, Brown just doesn’t have the knack of sounding human.
The image of the dour and vengeful character from the northlands sticks too easily to him. And it has stuck in the minds of the metropolitan media now they’ve done with Stalin and Mr Bean. Yes, London increasingly regards the Prime Minister as a borderline psychopath so deranged by sadness and rejection that he is capable of digging up the dead. Who knows, after Glasgow East, it may come to that.
Actually, all the Wuthering diverted media attention from a more serious blunder. This was Brown’s proposal that we should all eat up our leftovers and not waste food. Why we could save eight poonds a week and ease pollution and waste. He didn’t actually mention the little black babies in Africa, but it was in that vein.
Not only was this patronising and economically illiterate as a solution to commodity price inflation, it occurred in the very week that Brown was off to the G8 jolly in Hokkaido, Japan for an eighteen course banquet. That this gathering of the world leaders regarded a feast of caviar, milk-fed lamb and sea urchin to be an appropriate working lunch for a convention on the food crisis tells you all you need to know about why the world is in a mess. Oh, and that G8 menu in full: Words “Anglais”, to be eaten with large helpings of humble pie in Brown sauce. Followed by hard cheese.
It was a bumper week for Brown-ups. He placed so many feet in his mouth that his face is turning into a boot camp. Road tax is turning into another ten pence tax row, with Tories and their well-heeled and well-wheeled media friends weeping crocodile tears about low income people in big cars who’ll have to pay more. How could Brown be so beastly, they wept as they climbed into their fuming Chelsea tractors
As usual the Treasury had got its numbers wrong, so that when the PM said that a majority of motorists would benefit from road tax changes, what he meant to say was that a majority would not benefit and 9 million would end up paying more. Exactly the same confusion arose over the numbers losing from the scrapping the ten pence tax band. Doesn’t anyone have a calculator in HM Treasury?
Actually, Broon was fitted up over Heathcliffegate. He was clearly joking when he “agreed” in the New Statesman interview that he was like the Wuthering madman. The PM was trying to be matey; trying sound human and self-deprecating Unfortunately, Brown just doesn’t have the knack of sounding human.
The image of the dour and vengeful character from the northlands sticks too easily to him. And it has stuck in the minds of the metropolitan media now they’ve done with Stalin and Mr Bean. Yes, London increasingly regards the Prime Minister as a borderline psychopath so deranged by sadness and rejection that he is capable of digging up the dead. Who knows, after Glasgow East, it may come to that.
Actually, all the Wuthering diverted media attention from a more serious blunder. This was Brown’s proposal that we should all eat up our leftovers and not waste food. Why we could save eight poonds a week and ease pollution and waste. He didn’t actually mention the little black babies in Africa, but it was in that vein.
Not only was this patronising and economically illiterate as a solution to commodity price inflation, it occurred in the very week that Brown was off to the G8 jolly in Hokkaido, Japan for an eighteen course banquet. That this gathering of the world leaders regarded a feast of caviar, milk-fed lamb and sea urchin to be an appropriate working lunch for a convention on the food crisis tells you all you need to know about why the world is in a mess. Oh, and that G8 menu in full: Words “Anglais”, to be eaten with large helpings of humble pie in Brown sauce. Followed by hard cheese.
It was a bumper week for Brown-ups. He placed so many feet in his mouth that his face is turning into a boot camp. Road tax is turning into another ten pence tax row, with Tories and their well-heeled and well-wheeled media friends weeping crocodile tears about low income people in big cars who’ll have to pay more. How could Brown be so beastly, they wept as they climbed into their fuming Chelsea tractors
As usual the Treasury had got its numbers wrong, so that when the PM said that a majority of motorists would benefit from road tax changes, what he meant to say was that a majority would not benefit and 9 million would end up paying more. Exactly the same confusion arose over the numbers losing from the scrapping the ten pence tax band. Doesn’t anyone have a calculator in HM Treasury?
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