POLITICS CORNER

[Tardis]

Got sent this link today:

http://map.greenerhealthcare.org/bradfo ... tal-referr

Could be quite a change at Airedale if it was taken up across the "chronic" sick

[Stanley]

Crunch time in Greece this weekend, if the government can put the more stringent austerity measures into law the bail-out can go forward. If they can't, default looks inevitable. Either way the Greek population is facing a disaster in both economic and sovereign terms. Things may become clearer next week Whatever the result, attention will then focus on the other Mediterranean countries and the EU itself. This is just one more stage in the train wreck and I forecast that the this will be bad for the UK whichever way it goes. The only good thing about it is that we move slowly towards being able to quantify the effects and start reforms to our present policies in our best interests. Keep the tin hats handy lads!
Worth remembering that the EU/IMF plan was not formulated for the benefit of Greece but as a way of addressing the dangers Greece posed to the rest of the EU. Largely self-inflicted of course because it was always obvious that Greece could not survive in the long term as a full member of the Euro because it's GDP/Debt ratio was so bad and it was falsifying the figures. The 'solution' does not address the fundamental problem which is that Greece can't possibly pay back what it owes and there is the whole question of political stability in a country that is being squeezed till the pips squeak.
Who would have thought that the question of NHS reform would come down to whether to ditch the Bill or not. Biggest problem is that if it is thrown out the changes the government has already made before legislation is approved will have to be undone, but how? This is a political mess whichever way you look at it. Just what we needed....

[Tardis]

Blair is back in advisory role to the Labour Party according to the FT to seize the centre ground, so with Mandy stopping by too, and Prescott attempting to run a police force it looks like even they are losing faith in wierd Ed

[Stanley]

The Greek Parliament passed the new, more stringent austerity measures this weekend and the news has been flooded by the riots which ensued. This is a sideline, what actually matters is that the austerity measures as they stand will 'satisfy' the EU and the IMF and allow the current bail-out to proceed. Maybe... The problem is that the actual nuts and bolts of the measures haven't yet been agreed or analysed. The expectation is that the reality will be worse than what was presented to Parliament and that of themselves, they are so stringent that they will further damage Greece's ability to pay interest and remember, these are loans, not subsidies. In addition, this is only the start of the package, further loans will be needed. The fundamental problem of low productivity has not been addressed and these measures will damage present levels which are atrocious. The Greeks are being told that default and bankruptcy would be even worse but the question is for whom? The evidence of other countries which defaulted, see Iceland and Argentina, doesn't support this and it seems quite obvious that the whole exercise is being managed to alleviate the Euro problems rather than those of Greece. This does not address the fundamental problems of either Greece or Europe and I include the UK.
The Health and Welfare Reform Bill goes back to the Lords today and whilst they cannot block it attacks form all sides are mounting and the Coalition is coming under strong pressure not to amend but to drop the Bill altogether. This is not possible because the government has jumped the gun and started to implement the changes before the measures became law. Cameron is locked into an untenable position, he has to support a Bill which is generally regarded, not only by the Opposition but by important elements of his own party, as a potential disaster. Then there is the small question of his Libdem colleagues. Another factor is the possible effect on the next General Election and this too has not escaped notice. Michael Fallon's statement yesterday seems more and more ludicrous. I struggle to remember when I last saw a government in such a mess and I've been watching politicians for a long time!
PS. Remember when the people forecasting 3million unemployed were being attacked as doom-sayers?

[Tizer]

The Presidents of the EU and EC, Rompuy and Barroso, are in Beijing meeting with the Chinese Premier and hoping to get China to invest oodles of cash into the EU to save it from economic meltdown. As I've mentioned before, I find this very disturbing, the thought that European leaders (including the UK government too) are willing to go begging to the Chinese government which murders and terrorises its own people, while at the same time European countries condemn the Syrian government and supported the uprising in Libya. China is becoming less stable as its own economy falters and millions lose their jobs, as well as the gap having widened dramatically between the rich and poor, and there being protests on the streets of cities every day. What are we going to do when millions of Chinese start rioting and getting shot by the police and army? Just turn a blind eye and beg for more money?

[Stanley]

I share your concerns Tiz but unfortunately we're in a world where money rules everything as the Greeks are finding out. I see that the Germans have already insisted on more onerous conditions in the Greek government's austerity drive.
Did you see the TUC research on under-employment yesterday? They estimate that the true total of unemployed, and those in jobs which do not pay a living wage is about 6.3 million.
I noted yesterday that when Ossie cherry-picked the Moody's health warning on the UK economy his conclusion was that they were giving him and his policies a vote of confidence. He must have missed the bit about growth.... Hope springs eternal but what a way to run a railway!

[Tardis]

Must be time for an EU statement or summit, everything is about to crash and burn, but it looks more likely that Greece will be 'ejected'

[Tardis]

I'm not sure that George was cherry picking, more like clutching at pragmatism.

Certainly was no support at all for the Ball's economic view point.

More interested in the fact that Labour seem to have reversed their police on Police Reform. Yvette is spiining her opposition still, but her position is being under mined by the rest of the shadow cabinet.

[Stanley]

Mervyn King's quarterly report more downbeat than usual. In effect he recognises that the economy is flat lining and no reliable signs of any change. No prospects of any relief for under-employed. The problem about this is that it takes no account of the EU mess. The bail-out is not yet finalised and even if it is passed it is only a sticking plaster for the EU's benefit. Conditions in Greece are dire, German auditors in positions of power. Talk of ring-fencing bail out funds so that the Greeks can't use it for anything but paying the banks off. Funny thing is that I thought that was the whole point in the first place!
My forecast is still that Greece will eventually default and be cut loose from the mainstream Euro. That's when the crap hits the fan for the other lame economies and that could include the UK. The train wreck continues, tin hats on lads!

[Whyperion]

Why would there be any support for Balls' ideas, if they are sensible and work then the financiers and mega loan sharks dont make as much money , no wonder they are not supportive.

[Stanley]

Whippy, they may have to start taking notice of advice to adopt a more Keynesian model when they realise that the present policies are not stopping a long-term downwards trend in standards of living for the mass of the population. This is votes and that's what moves politicians in the short term. Notice that the Tory's core vote, the middle classes, see themselves as hard done by.

[Tardis]

I'm sure I don't need to mention that to follow a true Keynesian model, you must be able to borrow the money to support the policy. Simple economics really,

So far this government has managed to borrow more money, just to attempt to keep the lid on the deficit increase.

Government spending is up, but it has had to be redistributed into the priority areas.

I am sure that the Labour financial policy will change shortly, as it has done with almost everything else.

[Bruff]

You know I do struggle with economics, me. A few weeks back we had that Laffer Curve flagged and when I looked at it I thought, well that a neat hypothesis. Clearly, levelling no tax brings non in; and levelling a 100% tax rate brings none in either as what's the point? Ergo, lets draw a symmetrical curve. Great. But useless in the absence of empirical data as to the true shape of this 'curve', save that one can quote it to make political as opposed to economic points.

Same here. Keynesian? Friedmanite? The Austrian School? What's the evidence base for these theories, or models? Perhaps there doesn't need to be any, which is fine. But there is a tendency of folk to resort to the 'economics', as if the 'economics' will predict the 'economy' in the same way theories in the physical sciences predict the movement of the heavens for example. I increasingly suspect that economics is a collection of belief systems, politics if you like. And so when the next Chief Economist comes on TV spouting about this and that, they should be acknowledged as simply a believer with their own agenda, not some great advocate of a fundamental truth. With which, of course, there is nothing wrong at all.

Richard Broughton

[Tardis]

Economics is a broad study area,and as the old saying goes "get 2 economists in a room and they will give you 3 opinions".

The rationale behind the Balls approach is true Keynesian policy, but it falls down when you then have to go to the international money markets to borrow the money. If you could raise the money here it would be much simpler, but the banking crisis ensured that we have zombie banks, our interest rates discourage savers, the tax policies have ensured that bankers are offshoring although they still work in London as non-doms, and the business taxes and the massive imbalance in the world economies vis-a-vis China/India etc has ensured that investors do not want to come here when they can manufacture and ship to the UK an item which they can not make here for the same price. Plus they get to keep more of their profit.

I am sure that many people have listened to the babble of Pesto, and the much clearer focus of Stephanie in this area.

In an era of a credit crunch, and I would ask what that actually means to you, it is much harder to attract the finance that you would need without provoking the inflation or default options.

As an example: if you borrow money on a bond at a rate of 7% per annum, that would mean after 10 years the money repayable is now 200% of the original. The only way for a government to 'pass this on' to the populace is through inflation and the money markets themselves will factor in this kind of response to the foreign exchange markets.

Rocket science it isn't, but you need to maintain the confidence of the markets to ensure that you can borrow the money because otherwise you are left with the lender of last resort (Central Bank) or default.

The UK economy is slowly inflating away the vast asset price bubble that built up under the last government.

[Stanley]

Richard, join the club! The more I look at economics the more I realise I don't know! Only thing I would say about Keynes is that he saw the problems and it was Keynesian principles that worked to finance WW2. It took a dire situation to trigger use of his economics.
My problem at the moment is that economists only seem to be anywhere near accurate when they are reacting to whatever has already happened. They have a bad track record when being proactive and that's where we are now. The economists are advising the politicians with what are no more than educated guesses and on the present evidence are failing miserably. Add to that self interest and the immense influence of the major capital holders and you have all the ingredients for an unholy mess. I see no evidence to suggest that this isn't where we are and it's getting worse.

[Tardis]

On queue:

Housing market figures reveal that there are only two areas in the country that have seen rises since 2007. So nearly five years of stagnant or declining asset prices depending upon the dates of the Halifax survey.

Economists never solve problems.

The thing that will get the country out of the mess is producing and selling something to someone else. It will take time, but after Gordon saved the world he forgot to tell everyone the price he paid.

[Stanley]

Note the way Cameron is keeping well away from commenting on the economy and leaving any 'announcements' to his henchmen. He's going for the populist targets, this week it was excessive boozing and whiplash boosting insurance costs. Important topics but not the main event.

[Stanley]

News this morning that Liberal and Tory peers have warned Cameron and Clegg that they are prepared to disrupt parliamentary schedules as a protest against the proposed reforms. Great, self-interest before their duties as parliamentarians. What a splendid example they are setting!
Reports from Spain of an increase in violent protest against economic reforms. The beef at the moment is that redundancy pay has been cut by one third and in some cases where firms are in trouble by half.
The sticking plaster on the Greece problem frays at the edges before it is applied. This rumbles on and the outcome is unclear. The smart money is on Greece leaving the Euro. A default isn't being ruled out by anyone. Banks with Greek bonds have taken a loss of one third. Nobody has said anything yet about what this does for their liquidity. Depressing isn't it.....

[Tardis]

News this morning that Liberal and Tory peers have warned Cameron and Clegg that they are prepared to disrupt parliamentary schedules as a protest against the proposed reforms. Great, self-interest before their duties as parliamentarians. What a splendid example they are setting!

They are opposed to the policies put forward by Nick Clegg to reform the upper chamber.

More power to their elbow. You don't solve the issues by voting in more politicians

[Tizer]

We're still in that window of time (a few months) between the US troops leaving Iraq and the Iranians burying their nuclear plants deeper underground, the period in which the Israeli military can bomb the plants. But a think tank chappy on the radio this morning said it would take a couple of weeks of air strikes, not just a one-off, and even that wouldn't destroy all the plants, there are too many. We hear relatively little about the danger and I get the impression that governments are holding their breath.

[Tardis]

Looks like Labour may be getting desperate:

Ed Balls, tries to pull the policies of the right wing think tank The Tax Payers Alliance with his call for tax changes. Not much further right wing than that. Pity he hasn't costed his rhetoric though.

Then today, even the beeboids get excited about Andrew Lansley getting harangued on his way into Drowning Street by a jeering mob, then when someone does a fact check it turns out the crowd is paid for by Unison.

Obama seems to have committed the US to pull almost $2 trillion from the budget, although this still has to go through the senate and congress. That will be put the European austerity into absolute relief. It will stop any recovery there in its tracks, especially with the tax hikes he envisages.

[Tizer]

Never mind Obama and the trillions of dollars, let's worry about Rick Santorum getting anywhere near the White House. From Huffington Post, 7th February 2012: Rick Santorum targeted primary rivals Mitt Romney and Newt Gingrich on Tuesday for allegedly buying into the "bogus" science of man-made climate change, while proudly declaring that he himself had never believed in the "hoax of global warming".

[Stanley]

Tiz, I noted that as well. Dinosaurs....
Much discussion about the Greek bail-out this morning and it's noticeable that the commentators are getting even more sceptical about the outcome. There is a growing recognition that this is not an initiative to 'Save Greece' but to save the Euro. The people of Greece are getting the dirty end of the stick as the EU tries to mitigate the effects on the Euro. The overwhelming opinion amongst the sceptics is that in terms of the effects on the Greeks, they would be netter off defaulting, declaring bankruptcy and starting again at Year Zero, free of debt. It would be hard for five years but the question is how much harder than the bail-out? They would also retain autonomy and sovereignty. I see another advantage as well, the capital holders who made money out of Greece by charging interest, often excessive, on Greek Debt would suffer and perhaps learn a lesson. They are being partially protected at the expense of the Greek people and this will do nothing in terms of them learning lessons about usury. All right, it has implications for the UK as well but in the end these lessons have to be learned as part of the long march towards a better international finance system which is what we need. Better to bite the bullet than wait for the next inevitable crisis.

[Stanley]

I forgot to have a go at Teresa! Mustn't leave her out! Quite obvious that her concept of management is that the buck stops with the management and what Labour did five years ago. Isn't she responsible for anything? I remember Bruff warning us at the time of the 2007 reorganisation under the egregious Dr Reid that too many cuts were being made, too much reliance on unproven IT systems and a general run-down of a service which, when properly staffed and allowed to get on with the job performed perfectly well before the 'experts' in the Home office poked their noses in. Teresa typifies the modern ministerial attitude when things go wrong. Oh for the days when Lord Carrington resigned on a matter of principle and accepted responsibility for what had happened in his department.
Standing back and looking at the overall performance of the Coalition, it's pretty dire. Knee-jerk policy making and refusal to overtly reverse policies that are quite obviously damaging the country. Cameron tries to appease the right wing of his party whilst publicly espousing populist policies and points of view. For instance he makes the right noises about the bankers but how is he going to attack his paymasters? If this subject is raised the Tories immediately start screaming about Labour being in thrall to the unions but fail to recognise that apart from being a matter of history, the unions founded the party, the political contribution is voluntary. Cameron out of office and seeking election said that the next big scandal was lobbying and political funding. Funny how this went on the back burner as soon as he was in power. Same applies to PFI and many other problems. Now he is facing the Gordian Knot of the NHS reforms. His party have realised that even if they work this won't be apparent before the next election and they are going to be vulnerable to attack as the party that sold the NHS down the river. Unfair in a way but this is politics not rational management. You're right, I'm not impressed!

[Stanley]

Reported that Cameron said yesterday "It is intellectually unsustainable that in a time of economic stress workplace conditions should remain unchanged". (I paraphrase) Really? Does the same apply to the conditions we allow the capital holders to operate in? Or are they a protected species. Exactly the same pattern as during the inter-war years. Go for the easiest target!
Interesting interview with an economist yesterday in which he questioned the way money was being injected into the UK economy. His thesis is that QE money goes straight to the banks and is not finding its way into the general economy. Same applies of course to the bail-out of €130billion into Greece. In both cases no benefit to the economy through the Multiplier Effect. Protecting the banks is not necessarily the best use of the money. I note that the UK borrowing requirement for this year is on track to be £127billion. Like Greece, all this has to be paid back.
Meanwhile, in another part of the forest. Have you seen the reports of displaced persons in Afghanistan living in tents in the coldest winter for years and dying from the cold? The Afghan minister for refugees said "It was regrettable". And this after the billions pumped into the area to 'improve conditions'. Wonderful how the current preoccupation with the economy wipes other problems from the news pages. Meanwhile the poorest suffer and die.