Breeding foreigners. Send them home.

It’s official: we are fornicating our way out of recession. A sudden increase in the fertility of British mums has pushed the population of the UK to over 61 million. Three quarters of a million new babies were born last year, leading to the biggest overall increase in population since 1962. Mothercare shares are booming; there’s a national shortage of baby buggies.

Even Scotland’s anaemic population is on the rise - though by less than south of the border - confounding recent forecasts that Scots were dying out. So, forget car scrappage schemes, fiscal stimuli and falling (or rising) house prices. The future of he economy lies in the bedroom, not the boardroom. That’s where a new generation of consumers is being conceived, ready to look after us in our old age. “Randy couples” as the Sun described them, are bonking for Britain.

But the most important thing politically about the baby boom is that this is the first rise in population in recent years that has NOT been caused immigration. In fact, net migration to Britain is down 44% as all those Polish plumbers have gone home because of the housing slump. It’s an astonishing reversal on previous years when the booming economy was sucking in migrants from Europe at such a rate that Britain was gaining the equivalent of Birmingham ever four years.

Groups like MigrationWatch the BNP and, er, the Prime Minister Gordon Brown, had been calling for “British jobs for British workers” and British homes for British layabouts. Well they don’t need to bother because the foreigners are all going home. Now there aren’t any jobs for anyone anymore, and no one can afford a house.

But the fall in immigration has somehow escaped the attention of the Daily Mail which managed to report the massive outpouring of EU migrants as as “Migrant Britain’s Bursting At Seams”. Eh? How so? Well, because, it seems, foreign born mothers are even more fertile than British mothers, producing 2.51 sprogs per womb compared to our 1.86. 56% of the increase in the number British babies last year was from foreign born mothers.

They’re breeding us out of house and home! Dusky foreigners bed-blocking the maternity wards of Briain. Alien wombs spitting out bratts like pips from a pomegranate. Something must be done to stop this plot to dilute the British gene pool! British mothers must increase their maternal productivity rates or our race is doomed.

We need a national sex drive to beat the slump in indigenous pregnancies. Government agents should be sent round men’s toilets sabotaging Durex machines. Pharmaceutical companies will be required to replace birth control pills with placebos. A new national pornography channel NPC could be started to get us all in the mood.

Alternatively we could all just calm down. This is a socio-economic phenomenon and more about recession than race. The same thing happened in the recessions in he 1970s and 1990s which also saw baby booms. Women’s job opportunities fall so many decide to have that baby they have been putting off for the sake of their careers - the big increase in fertility has been among women in their thirties. Also, when we stop shopping we start f@@king. Because the best things in life are free, after all

Red Adair Turner is right banks are socially useless

All praise to Lord Turner, the chairman of the Financial Services Authority, who admitted last week that much of what happens in the City is “socially useless”. Lord Turner of Ecchinswell makes an unlikely anti-capitalist; he’s a former vice chairman of the investment bank Merrill Lynch. But it takes one to know one, I suppose.

His call in Prospect magazine for a reduction in the size of the financial sector, and for steps to eliminate high risk practices, are radical and right. If capitalism is to be saved from itself, it should listen - not that it is. Lord Turner has been kicked all round the City by angry bankers and politicians. The Lord Mayor of London, Boris Johnson, said he was “crackers” for risking the City of London’s standing as Europe’s leading financial centre. The Association of British Insurers described his remarks as “Marxist”, and Angla Knight of the British Bankers Association, interviewed on BBC, refused to believe he’d actually said what he said. “It’s a race to who will sack him first” said one City figure.

So, what are they so upset about? Well, first of all Lord Turner said that a lot of the speculative activity that banks engage in has no real utility - it doesn’t benefit society or promote investment and economic development. Banks made very large sums of money during the boom years by developing highly sophisticated instruments designed almost entirely for speculation, for betting - like Credit Default Swaps. Now, insurance, everyone needs, but we don’t need a $50 trillion market in CDSs which has grown from zero in less than a decade. We all need mortgages - or most of us do - but we don’t need Collateralised Debt Obligations, insanely complex securities whose ultimate value depends pools of sub prime mortgages in America.

In fact, we could do without a lot of the financial products that have been created by our financial services industry over the last thirty years. With profits insurance policies that don’t deliver any profits. Endowment mortgages that not only fail to deliver any bonus payments after thirty years of saving but can’t even meet the original mortgage loan. I’ve contribute to personal pensions most of my adult life and, like most people, would’ve been better leaving it in a building society. Then there are all the other scams and devices developed to promote the debt society. Credit cards with low minimum repayments which ensnare people in huge debt because they don’t realise that they are paying 27% interest rates. Payment Protection Insurance, which is a plain rip off. Precipice bonds, split capital trusts, buy-to-let mortgages based on phoney valuations. 125% mortgages that put people in negative equity even before they cross the threshold. Equity release schemes that con older people into giving up the value of their homes. Those evil Christmas saving clubs which dump the risk on the saver when anything goes wrong.

Okay, I’m going a little wide of what Lord Turner was actually targeting which was complex derivative trading. But a great deal of what goes on in financial services is not only socially useless, but economically damaging. Selling people financial products that deliver poor investment returns, because the profits are creamed off in high commission charges, may benefit financial advisers and banks, but it doesn’t help the economy because it makes people averse to saving. One of the chief causes of the financial crisis was the absence of a savings culture and the increase in personal debt. But if people have no confidence in the savings vehicles, how can they be expected to save? Pensions have such an appalling reputation, that most people refuse to have anything to do with them, leaving millions with the prospect of a miserable old age, and the state with the burden of looking after them.

It is important to bear this in mind when we hear City spokespeople bang on about how much the financial services sector contributes to the economy. It is the second largest source of GDP after manufacturing and provides 40% of all corporation tax. The government loves the City precisely because it has delivered a great deal of tax revenue in the past. But if this revenue is based on financially inefficient or positively fraudulent financial products, then the benefit is illusory. The losses elsewhere in the system will cancel out any tax gain. Finance is not like manufacturing. It does not make products that add value and are traded as commodities. At best it provides a service, but if the services damage peoples’ wealth then they should be stamped out.

We need nothing less than a reformation of our entire financial system, starting at the top, with the mega-banks and their leverage and speculative trades, and working down to the level of the financial advisers. Modern life requires all adults to enter into complex and sometimes frightening debt obligations and investments, like mortgages and pensions, where the saver is expected to take on almost all the financial risk. We don’t deal on equal terms with the providers of these financial products because we are not experts and they are. People are expected to take long term bets on where the stock market will be in thirty years time while handing their savings over to financial institutions that use them for speculation in the meantime.

This really won’t do any more. Nor will allowing more and more of the wealth of society to be channelled to the rich through the intermediation of the financial system. We have an economy which is based on huge income and wealth disparities. But as John Maynard Keynes noted sixty years ago, when more wealth goes to the rich, less and less of it is devoted to consumption. The rich don’t buy more things, they start investing in assets, which inflate in value. That ultimately that led to the Wall St Crash and he Great Depression.

In Britain and America, there has been a similar decline in consumer spending power in the last ten years which was masked by rising house prices. People were able to continue spending because they borrowed more and more against the value of their houses. This was unsustainable. Eventually, the system blew up. But the fundamental problem of deficient demand in the economy remains.

This is why Lord Turner’s call for a tax on international financial transactions could save the financial system. A "Tobin" tax, so called after the US economist, James Tobin, would the steam out of speculation, but more importantly it would also help to distribute bank profits to the poor and to “public goods” like combating climate change and away from speculation. We’re told that Lord Turner is for the chop for speaking out. More fool them. He could be their only hope.

Edinburgh Festival is still the Greatest Show on Earth

I went to hell and back with the Scottish culture minister, Mike Russell, at Edinburgh this year. It was at the opening night of Silviu Puracarete’s Faust at the Royal Highland Centre in Ingliston. Half way into the most lavish production ever mounted at the Edinburgh Festival, the stage divides and the audience of 500, VIPs included, are herded by women in pig masks through the stage to take part in a kind of black mass presided over by an androgynous Mephistopheles. It’s all bare breasts and fire-eating. Crazed witches fornicating with pigs.

This is what is called “immersive” theatre, and it certainly puts you in the thick of it. The Lord Provost of Edinburgh.George Grubb, was there complete with chain of office and a train of civic dignitaries. I watched for a reaction as he was approached by a naked women covered in blood holding a real pigs head on a plate above her head. He didn’t flinch - though his chain seemed to dance a little in the firelight. I was assured that he thoroughly enjoyed it all and Mike Russell was still raving about it when I caught up with him again at the Edinburgh Book Festival two days later. “The sight of not one, but two fork lift trucks carrying flying witches really made it for me”

Going around Edinburgh at Festival time is like a road movie of contemporary culture - you’re bombarded by so many striking images, ideas and experiences it’s hard to make sense of them all. You just have to give in to it. At the McEwen Hall I witnessed a Chinese version of A Mid Summer Night’s Dream, reworked as if it were a video game, in which everyone dies in frenzy of martial arts. Not quite what the Bard intended. I went to a play called Hotel, by Mark Watson, which took place in a real hotel and in which every room was a play within a play. In another highly regarded production, Internal, the audience become participants in a kind of existential speed-dating. I spent a surreal night in the plant houses of Edinburgh’s Botanic Gardens watching luminous gramophones playing random sounds while electric fireflies buzzed around the trees and a kind of pipe organ belched real flame. Or maybe I was on drugs and just hallucinated it all, I sometimes wonder.

The Edinburgh Festival is an intensely physical experience, not least because of the weather: the almost constant rain and wind can really take it out of you. Then there’s the getting around. There are 2,000 different productions in Edinburgh in August in more than 250 venues. The secret is to go by bicycle because the roads are choked most of the time - plus you don’t risk being breathalised. Mind you, it pays to remember where you leave the damn thing. In week three I mislaid my wheels and suffered several days of missed appointment misery.

Edinburgh is by far the biggest arts festival in the world, a cultural feeding frenzy during which the city’s population doubles. Size isn’t everything, though, and in recent years there has been mounting anxiety about just how long this growth can can continue before the Festival collapses under its own weight. Many feared that 2009 might be the year of Peak Fringe when the whole thing started to run out of cultural energy. Last year’s ticketing fiasco, when the Fringe box office crashed, felt like it might be the beginning of the end for a morbidly obese Festival. Then there’s been the economic recession, swine flu, the tram chaos, competition from upstart festivals Manchester stealing Edinburgh’s cultural crown. But it hasn’t happened. Astonishingly, the Edinburgh Festival seems to have bounced back even more dramatically than the stock market. Ticket sales at the Fringe have been running about 20% up on 2007, which was its best year to date. All the Festivals - International, Fringe, Book, Art - have more than theld their own and are dragging Edinburgh out of recession.

Partly, this is down to the new professional organisation of the Fringe, which has reinvented itself after last year’s near death experience. It now occupies the vast concourse of Edinburgh University’s Appleton Tower (the university now provides the venues for more than half of all Fringe shows). “Fringe Central” feels a bit like an airport departure lounge: performers, administrators and journalists hang out guzzling coffee and muffins and preparing for the next flight of fancy. But while the the Fringe has been a commercial success, this Festival hasn’t really taken off artistically. There have been no “stand out” Fringe productions, like Riot Group or Aurora Nova’s physical theatre of past festivals; there’s been no “Black Watch” moment or indeed anything at all from the National Theatre of Scotland.

But the critics aren’t complaining. Aficionados like the celebrated cultural writer, Joyce MacMillan, Mark Fisher of the Guardian and Neil Cooper of the Herald all insist that the general standard has been reassuringly high, despite the absence of lofty peaks. The productions put on under the Made in Scotland label - part financed by the Scottish government’s Expo Fund - have been particularly well received, including the Year of the Horse about the late cartoonist, Harry Horse, and Nic Green’s feminist-revivalist Trilogy by Arches at St Stephens.

There has also been great excitement about the free festivals that have been springing up everywhere. The Forest Fringe in Bristo Place, an elegantly decrepit church hall owned by Edinburgh University, has turned into something like 1960’s ‘arts lab’ where experimental theatre groups put on shows for nothing. In one piece, House, people were invited to smash up the furniture in a home and recreate it. There was also a sea shanty musical about a mermaid who turns to prostitution,. Last time I passed, a guy in a top hat was playing an exploding piano mounted on bicycle wheels.

Neil Cooper believes Forest Fringe shows that the Edinburgh Festival is capable of re-inventing itself and that the “stranglehold” of the big comedy venues is being broken. “There’s a real sense of rediscovery, of excitement, applying some of the radical ideas from outside the mainstream that made the Festival Fringe so vibrant thrity years ago.” You can’t help being charmed by the improvisations and scratch productions, but free theatre can only be a marginal force since it it is incapable of mounting the kind of big budget productions that keep the International Festival in the international running.

There have been markedly fewer foreign productions on this year’s Fringe, which may be do to with the recession, or may be because the Edinburgh faces greater international competition. But Mike Russell, insists that Edinburgh is still “the cultural capital of the world in August”. To prove it the culture minister even took to the stage to the stage himself for an Edinburgh Book Festival show devoted to his favourite poetry. And no, it wasn’t all Burns. There was Pablo Neruda in there along with the Russian poet Anna Akhmetova and even a dash of Tennyson. No one can deny that Mike Russell has a cultural hinterland. And while he has no formal responsibility for the Edinburgh Festivals everyone I come across seems to think he is good news - though Joyce Macmillan, thought that his suggestion that the Fringe is getting too big showed that “he didn’t understand the first thing” about what makes the Edinburgh great.

But size is issue that simply won’t go away. It is the constant complaint of festival goers that they simply can’t find their way round Edinburgh. And even critics like Mark Fisher concede that the sheer scale of the festival makes it difficult for individual shows to achieve critical mass. Edinburgh University has become almost a Festival city within a city. A giant purple cow dominates Bristo Square, heart of the university. George Square gardens have become a multimedia fairground and you could spend easily three weeks at the Pleasance complex without exhausting its programme. Everywhere you are assaulted by people telling you that they are the funniest people on the planet, when only a few of them really are.

Joyce MacMillan says it is “absolute tosh” to say that comedy is a has overwhelmed the Fringe, and that there is more theatre than ever before. Which is true. She is right to oppose any attempt to limit the fringe, or impose overall quality control, because it would undermine its spontaneity and dynamism. No one curates the Fringe and no one subsidises it - apart from a pittance from the council. Anyone who wants to put on a show in Edinburgh can hire a venue, get on the boards and show the world what they’ve got - even if it’s just a dose of self-delusion. The Fringe is the ultimate free market in culture.

But the trouble with free markets is that money talks and those that have the most shout the loudest and get the most attention. The Edinburgh Festival Fringe has been colonised by a handful of big commercial comedy-oriented venues which spend a fortune on promotion . They charge ever higher rates for their one hour shows but this doesn’t guarantee quality. One critically acclaimed and allegedly four star comedy show I saw, John Gordillo’s Fxckonomics, was so excruciatingly unfunny that I was desperate to leave after five minutes.

The future of comedy must surely be more along the lines of the Stand in York place, Edinburgh’s leading year-round comedy venue. The Stand has soul - a sweaty basement reeking of beer is surely the correct atmosphere for edgy comedy. The proprietor, Tommy Sheppard - a stern critic of the big money promoters - keeps prices ticket prices low, ensures that people get value for money and that performers aren’t ripped off. Very few performers make any money in Edinburgh in August, and most leave with debts running into thousands. But they have to be here; Edinburgh is still the place you have to go if you want to make it.

Curated festivals- within- festivals, like Made in Britain, the British Council Showcase, Forest Fringe, may equally be the future for theatre in Edinburgh. The Art Festival really came in from the cold this year, or so I’m told, though the only thing I managed to catch was the RSA's Discovering Spain and a few things at the Dean Gallery. The Edinburgh Book Festival, has of course been adroitly quality controlled by director Catherine Lockerbie for the last nine years. Possibly the most emotional event on the fringe circuit was her leaving party in the tent city she has created in Charlotte Square. It was quite a send off: instead of a clock she got a poem from the poet laureatte, Carol Ann Duffy, performed live and supported by a trumpet player. I want one of those too.

There’s no doubt that Catherine Lockerbie has made the Edinburgh Book Festival what it is: one of the biggest in the world, and a great commercial success. But there is a view that, like the Edinburgh Festival as a whole, it's becoming too genteel, too old, too safe. People say that it lacks controversy and doesn’t attract any really big name authors, any show-stoppers. But I don’t advise you to say this to Ian Rankin, the Rebus author, who’ll tell you in no uncertain terms that that the EBF’s great achievement has been to hold onto its roots. It has kept celebrity culture at bay and avoided becoming, like Hay on Wye, a part of the corporate entertainment industry.

Point taken. But my own experience of fronting events at the book festival is that it has been growing older just a bit faster than I am, and that’s worrying because I’m the wrong side of fifty. There’s nothing wrong with a literary Glastonbury for the over-fifties, of course. The International Festival is similarly mature - the average age of the audience at the opening Festival concert, Handel’s Judas Maccabeus, must have been touching sixty. Older people read books and newspapers and still vote in elections and they can be very combative. As the Times columnist, David Aaronovitch, author of “Voodoo Histories” discovered at a session I chaired at the Book Festival. He was taken to task on everything from Iraq to the assassination of JFK and emerged shell-shocked but exhilarated.

But Edinburgh can’t afford to cater to only one section of the community, however well informed, and it needs young blood. Johnathan Mills is certainly doing his bit with productions like Faust which made a nonsense of the whole debate about high and low art. You could take it on so many levels: from soft porn to moral philosophy, depending upon whether you followed the surtitles or not (it was in Romanian). Or as someone in Ingliston put it: “With tits and a text from Goethe you can’t really go wrong, can you”. Increasingly, International Festival Productions, like the Traverse’s Last Witch or Michael Clark’s choreographing of David Bowie appeal to the same audience as attend the Fringe comedy factories. The old boundaries just don’t apply any more, and this cultural convergence should attract a wider audience.

And next year, for the first time, all tickets for the Edinburgh Festivals will be available from one outlet. This may seem a technical point, but it is a profound culture change. It means that from the punter’s point of view, all the Edinburgh Festivals - Art, Book, International, Fringe - will eventually be as one. This will be more convenient, but will it just lead to more gigantism? And if the Fringe already dominates by virtue of its size, will putting the other Festivals under its roof dilute their identities even further? I doubt it - not as long as the work is up to standard.

That mind-blowing Faust answered many of the questions that have been raise about where the Edinburgh Festival is going in its 63rd year. First of all, Edinburgh is still the boss: where else could you see a play involving 100 actors in a barn the size of an aircraft hanger? Faust could have been a gigantic flop, a monumental embarrassment - Adams Family Values meets Night of the Living Dead. But it wasn’t. The Australian Director of the International Festival, Johnathan Mills has a feel for the spectacular and has the self-confidence to pull of real theatrical coups. By common agreement, this is the year he finally arrived.

The Ingliston Walpurgis also confirmed that Edinburgh’s relationship to its Festivals has changed out of all recognition. Not many years ago, a production like this, featuring necromancy, bestiality, paedophilia would have caused a public outcry and had the city fathers frothing in disgust. Even I shifted uneasily in my seat when a group of eleven year old angels entered the carnival of lust, one of them to be raped by Faust. But it is almost impossible to shock anyone nowadays, even Morningside matrons. And the city no longer sees the Festival as an alien intrusion of international pornographers. Incredibly, the majority of tickets at the Fringe are sold to citizens of greater ‘Embra’.

This local identification has given the festival a secure base financial base and allowed it to sail through the recession. It doesn’t depend on a footloose international cultural elite anymore, and yet it remains the greatest show on earth. I’m absolutely, after this exhausting cultural trip, the Edinburgh Festival hasn't reached the end of the road - even if I have.

Megrahi: Cock up and conspiracy

If it goes on like this, they'll have to put Kenny MacAskill in protective custody. If the threats on the internet are anything to go by, the Scottish Justice Secretary is in mortal peril for his decision to release the Lockerbie bomber. Open season has been declared, now the director of the FBI, Robert Mueller, has accused MacAskill of “giving comfort to terrorists around the world”. When I saw yesterday's headlines about the Scottish government being brought down my fleeting thought that the US had decided that Scotland was now part of the axis of evil and in need of regime change.


Did the SNP miscalculate the reaction to the decision? Yes, frankly, they did. The Saltires in Tripoli were a shock, as was the volume of the international outcry. The Scottish government thought they were acting responsibly and within the law – which they were. Kenny MacAskill observed due process and his decision to release Al Megrahi, on the advice of the Parole Board and the prison governor, was reasonable even if itmight have been politically naive. Mr Mueller's claim that the action was “a mockery of the rule of law” is dangerous nonsense from the director of a police agency.


Was there an element of hubris? Well, the SNP clearly wanted to show Scotland and the world that they could handle a great international issue such as this in their own way and in their own time. That they could do without the embrace of either London or Washington. The easier route might have been to go along with Tony Blair's 'deal in the desert' in 2007 and allow Megrahi to spend the rest of his short life in a Libyan jail under the Prisoner Transfer Agreement arranged between London and Tripoli. This would have squared Col Gadaffi, ended the appeal process and allowed everyone involved to – in Whitehall parlance – 'draw stumps'. But the SNP isn't much into cricket.


Alex Salmond was incensed at the thought of the perpetrator of Scotland's worst terrorist atrocity being moved to Libya under a secret arrangement which had been signed and sealed behind the backs of the Scottish government and the Scottish law officers. And all to further the interest of BP and British Aerospace, for shame! He made an emergency statement in the Scottish Parliament two years ago and insisted that any decision on Megrahi's fate should be made in Scotland by Scots. Which is exactly what happened. But the downside was that it has allowed the UK government to wash its hands of the decision, despite having been up to its eyeballs in the machinations over Megrahi.


Was there a convict-for-contracts deal? There was never any explicit linkage between Megrahi's repatriation to Libya and the UK energy deals – there didn't need to be. It's not how these things are done. There were clearly 'understandings', as has been confirmed by the publication of recent correspondence between Gordon Brown and the Libyans. There was an assumption that Megrahi would somehow find his way back to Libyan soil. But the prime minister always stressed that the final decision would be taken by the Scottish government, not him.

Why didn't the Scottish government just let Megrahi rot in Greenock? MacAskill could simply have said that the enormity of the crime was such that the public interest, here and in America, would not have been served by allowing Megrahi to be released even on compassionate grounds. But Kenny MacAskill is a lawyer and bit of a stickler for due process. He was determined demonstrate good faith by conducting a consultation into the Megrahi affair, once it became clear that Megrahi had a terminal illness. The result of that consultation was clear: Megrahi should be released on medical grounds.


The climate of opinion over Lockerbie in Scotland is very different to that in America. Public debate here has been heavily influenced by highly articulate individuals such as Dr Jim Swire, whose daughter Flora died in Pan Am 103, and by the indefatigable Tam Dalyell, both of whom believe Megrahi is innocent. The Scottish Criminal Cases Review Commission has said that there is enough evidence to suggest a miscarriage of justice. This doesn't mean Megrahi is innocent, and MacAskill hasn't disowned the verdict of the Lockerbie judges delivered in Camp Zeist in 2001. However, this intellectual climate must have contributed to MacAskill's decision that there were no grounds for denying Megrahi his rights under Scots law.


But why did Megrahi drop his appeal? The Scottish government insist that they did not make this a condition of his release and that they wanted the appeal to go ahead. Not everyone believes them. Conspiracy theorists believe there must have been a last minute stitch up between London and Edinburgh to prevent anyone learning the truth of what really did happen in 1988. Scotland doesn't want any further reputational damage to the Scottish legal system, while Westminster doesn't want any further light shone on its dealings with Middle Eastern nations like Iran and Syria. The foreign secreatary, David Miliband, has already placed a Public Interest Immunity Certificate on documents which might have been useful to Megrahi's defence.


My own view is that while Scotland and London had a common interest in drawing a line under the affair, there was no actual collusion. The simplest explanation might be that Megrahi himself didn't think the appeal would succeed and preferred to claim, on his home territory, that his release was confirmation of his innocence. And so the Lockerbie bomber was allowed to go home to a hero's welcome in Tripoli, and to the embrace of a triumphant Col Gadaffi. Gordon Brown has been able to dump responsibility for the repatriation of Megrahi onto the Scottish government, while UK companies benefit from billions in oil and other contracts. Well, for now.


But the Prime Minister's failure to comment upon Megrahi's repatriation is being ridiculed and the Conservatives are determined to implicate him as an accessory to the release of the Lockerbie bomber. To pretend that London had nothing to do with the Megrahi affair is an insult to the public's intelligence. There is both cock up and conspiracy here in equal measure and enough suspicion to keep journalists and lawyers in business for many years. The only certainty is that we will now never know the truth about Adelbaset Ali Mohmed Al Megrahi - may he rest in peace.

MacAskill was right about Megrahi

The defining moment of devolution? Scotland a “pariah nation”. The end of Tartan Week in America? The Scottish government was attacked on all sides last week for letting the Lockerbie bomber, Adelbaset Ali Mohmed Al Megrahi, return home to his family. “It’s the world versus Scotland” cried the Sun. You’d have thought that the justice secretary, Kenny MacAskill, had just released a mass murderer. He had of course, but only so he could die. It’s how we do things here.

The implication of much of the coverage was that, through a combination of incompetence and deviousness, the Scottish government had provoked an international incident which has seriously damaged Scotland’s image abroad and brought into question the devolution settlement. According to the Telegraph, Scotland had “waved its little fist” at world opinion and would suffer the consequences, including an end to foreign investment. This was a ludicrous over reaction from press and politicians feeding on public indignation.

I can’t see any reason why MacAskill’s “act of humanity” should lead to Scotland being shunned by the community of nations, just because a few saltires were flown in Tripoli on Megrahi’s return to Lybia. The episode could have been handled better, I’m sure, and Kenny MacAskill’s somewhat robotic delivery - the Rev I M Jolly meets the Terminator - didn’t help. People may disagree with his decision to release Megrahi, but it was clearly his to take and he acted with some dignity under intense pressure.

It wasn’t, as the Guardian suggested, an attempt by an upstart Scottish government to forge its own independent foreign policy. MacAskill acted within his powers as the minister with responsibility for the Scottish criminal justice system and consulted widely before he made his decision. He was advised by the parole board and the prison governor to release Megrahi on compassionate grounds in accordance with Scottish legal tradition. And speaking personally, I am rather proud that this country seeks to act with compassion, even towards a convicted mass murderer. I don’t see what purpose would be served having his bones rot in jail, other than to placate public opinion in America.

The whole episode was saturated with hypocrisy. The foreign secretary, David Miliband, may have been “distressed and upset” by the scenes in Tripoli, but it was the UK government that initiated the diplomatic process that led to the Megrahi’s return to his homeland. They willed the end even if they didn’t determine the means. The initial contacts over the fate of Megrahi were made by London - specifically by Tony Blair in his ‘deal in the desert’ with Colonel Muammar Gaddafi in 2007. After that meeting, a Prisoner Transfer Agreement was signed by the British government, and it was made clear that the abandonment of al Megrahi’s appeal would be a condition of his transfer to a Libyan jail. This was why Megrahi made his regrettable decision to abandon his appeal against the decision of the judges in Camp Zeist in 2001.

As it happened, he needn’t have, since the Scottish government short-circuited the whole process by releasing Megrahi on humanitarian grounds. But be in no doubt: the UK government is entirely content with the decision, which is why there has been no official condemnation and why the Prime Minister, Gordon Brown, has been uncharacteristically silent on the matter. Far from there being a diplomatic rift between Edinburgh and London, there was actually a community of interest between a United Kingdom government eager to normalise commercial relations with Libya and the Scottish government seeking to exercise its own judgement on the fate of prisoner in a Scottish jail. Both sides may deny it, but they were - in a very real sense - in cahoots.

The Libyan leader, Col Gaddafi, predictably gave the game away when he congratulated “my friend” Gordon Brown and the British Government for their part in securing Megrahi’s freedom. He even praised the Queen for “encouraging the Scottish government to take this historic and courageous decision, despite the obstacle.” He went on to tell Libyan television that “in all commercial contracts, for oil and gas with Britain, (Megrahi) was always on the negotiating table”. The UK government can’t deny this and it hasn’t attempted to.

So, where does this leave Lockerbie? Well, without any “closure”, clearly. Absent an appeal, as urged by the Scottish Criminal Cases Review Committee, there can be no re-evaluation of the soundness of the evidence against Megrahi. The Scottish government insist that they didn’t want Megrahi to drop his appeal - but perhaps they didn’t try all that hard to stop him. After all, compassionate release means that the Scottish legal system need not now be brought into question again over the Lockerbie verdicts. Many influential voices in Scotland, including Dr Jim Swire, the father of a Lockerbie victim, believe that Megrahi was wrongly convicted on the tainted evidence of the Maltese shopkeeper, Tony Gauci. The defence claim that Gauci, the only person to identify Megrahi, failed to make clear before an identity parade that he had seen a magazine picture of Megrahi. It is also said that Gauci was given millions of dollars by the Americans for his evidence.

The conspiracy theories will reverberate for decades. There have been suggestions that it was Syrian-backed Palestinians who were really responsible for the bombing of Pan Am flight 103. It is claimed that new evidence suggesting this has been suppressed by the British government. Public Interest immunity certificates have been placed on these papers preventing publication on the grounds that disclosure would damage British national security. Unless there is a public inquiry , these documents will never be revealed, and none of the governments involved - here or abroad - seem willing to launch one.

Where does it leave Scotland? Well, as the fog of recrimination clears, its seems that the worst charge against the Scottish government is one of being soft on convicted mass murderers. Many believe that Megrahi should have been executed for his crimes; that he forfeited the right to live when he ignited the device that killed 290 people in 1988. But that isn’t how we see things here. It may be Scotland against the world, but that doesn’t mean Scotland is wrong. And history will confirm that Scotland did not act alone

Beware the green shoot

House prices bounce back! The Daily Mail became an even greater parody of itself last week as it proclaimed the return of the housing boom and celebrated the end of the recession. The City of London has decided that the good times are here again, and a government desperate for good news is echoing its triumphalism.

Well, I hate to be a moaning minnie but the recession is most definitely not over, and we'll be living with the consequences for many years, as unemployment mounts and public spending is axed. All that has happened is that the banking crisis has been resolved by the input of hundreds of billions of public money. If you throw 1.2 trillion pounds at any economy and start printing money by the tens of billions, then something has to give.


We've borrowed ourselves out of a debt crisis, and someone will have to pay. The only thing certain is that it won't be the people who were responsible for the crisis in the first place. Stuffed with our cash, the bankers have stopped panicking and returned back to doing what they're really good at, which is rewarding themselves. Well, they're like rock stars aren't they, or professional footballers. So said John Varley, the chief executive of Barclays last week, whose name has yet to appear on the transfer list for Real Madrid. Bankers, we're told, are just paying themselves what they're worth. No one goes around saying that Simon Cowell isn't worth it or that David Beckham is overpaid.


Perhaps, but then they aren't being subsidised by public money. Barclays isn't in public ownership but it recorded £4.5bn of bad debts last week and would be in severe difficulties were it not for government support and liquidity injections. Most of the nationalised bank chiefs wouldn't be earning anything at all if the government hadn't bailed them out last year because they'd have been out of a job. They have no right to use public funds to pay themselves mega bonuses again.


But where is the public outrage? How do they get away with it? Sir Fred Goodwin, who was pilloried for taking his £16m pension pot with him as he left the sinking ship of RBS pointed out last week that there were 200 in his own bank who were earning more than he did. They still are, even though Royal Bank of Scotland is in state ownership and its staff are officially classed as public sector employees. Far be it for me to side with the archetypal scumbag banker, but Sir Fred has a point. Executives in all the big banks are as guilty of misappropriating public funds as he was since they are only in business because of the bank of you and me.


It gives me no satisfaction whatever to point out that this is exactly what this column said would happen last year after the government bailed out the banks without reforming them. I said that their first priority would be to enrich themselves; that they would use low interest rates to bolster their own balance sheets rather than lend to business; and that they would block any attempts to extinguish speculation or reform the shadow banking system. Well, bonuses are back, lending is down and regulation is out the window. Faced with a systemic collapse of the global financial system, the government abdicated and handed all power to the banks. But at least we now know who's really running the country.


Just don't say that the market has 'corrected itself'. This has nothing to do with market forces or even capitalism. The economy is now at the mercy of a handful of financial institutions, with balance sheets larger than Britain's GDP, which have been allowed to hoover up far greater subsidies than the old nationalised industries of the 70's could ever have dreamed about. Lloyds reported a loss of £4 billion last week and bad debts of £13bn. But the Lloyds share price actually rose. Why? Because shareholders know that the losses are about to be taken on by the tax payers in the Asset Protection Scheme.

The APS sounds like a kind of bomb disposal for banks, and in many ways it is. However, it is defusing hundreds of billions of mortgages and property loans made by HBOS before it was merged into Lloyds. These are housing loans given to people who can't repay them and dodgy investments in property companies which have since gone bust. Make no mistake – we are taking on the losses of HBOS; saving a dead institution. It's like the government bailing out Woolworths and letting them go back to pick'n'mix marketing. HBOS's terrible twin, RBS, is about to dumpt around £250bn in dud loans and other assets onto the APS so that the vast majority of any losses will be borne by us. So much for the taxpayer making "a profit" on the rise of RBS's share price.


It's the same with Northern Rock. The government is reportedly planning to split it into a 'good bank', with the profitable mortgages and all the retail deposits, and a 'bad bank' holding all the dud mortgages unsellable bonds and other junk. Guess who gets to keep the rubbish? It was the Rock's irresponsible lending – those 125% “Together” loans – that helped push the housing market into cloud cuckoo land. But hey, house prices are booming again, so what's the problem? Soon we'll all be using our homes as cash machines again just like the good old days of 2007.


Well, if house prices really are booming again the last thing we should be doing is celebrating since are still unreasonably high by any historic standards. Young families have to take on onerous mortgages which lock them further into the debt cycle; investment is diverted from productive uses; and speculators start taking crazy risks again. A responsible government would be trying to get house prices back to affordable levels.


Fortunately, the recovery is likely to be very short-lived as actual sales are still barely half of what they were two years ago and mortgages are still very hard to come by for people without cash or housing equity. Many of those who already have large mortgages have been given a huge windfall thanks to the lowest interest rates in British history. They're been trading up to larger houses and buying flats with cash. But anyone who thinks that mortgage rates will stay this low for long deserves everything coming to them. It is all funny money chasing funny money, a new turn of the roulette wheel of debt. The casino economy is back, and guess what: we're all losers.