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Blog, 7th September (Updates 12th and 17th September) |
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Written by Austin Mitchell
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07 September 2007 |
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The Bank`s buggered it. King Merv is obsessed with retribution and high interest rates. Punish the overlenders. Punish the overspenders. Moralism as a system of economics.
He`s refused to boost liquidity as the Fed and the Euro Bank have done. He`s refused to reduce interest rates though there can be no easing of the crisis and no economic recovery without that.
Once there`s a crisis over bailed up debts you`ve got to ease the problems at the top for banks and hedge funds by more liquidity and ease the problems of repossession and failure at the bottom by lower interest rates. The Bank allowed the credit bubble. It can`t now burst it in a belated fit of morality..
Nominate Merv for the Montique Norman Award.
Will Cameron last until Xmas? Place your bets now. It`s only the thought of an early election that`s keeping him on. Gordon should announce “no election until 2009” then the Tories can chuck Cameron. Then we can call the election.
Only two questions to ask about a referendum on the Euro Constitution.
(i) Is the “Reform Treaty” substantially the same as the Constitution on which we promised a referendum in our 2005 Manifesto?
(ii) Who`ll win?
Answers: Every other euro PM says it is – And the electorate will reject it for that reason. Which is why Gordon doesn`t want a referendum. But in refusing it he`s conceding that he`s ready to foist it on the People at the same time as he wants to give them more power. Q.E.D.
UPDATE, 12TH SEPTEMBER
Dreadful sense of déjà vu on Gordon`s demand that public sector pay settlements be below inflation.
Crap. It`s the 1960s and 70s revisited.
It will mean major confrontation.
It won`t work.
It isn`t necessary.
But apart from that it`s OK as a PR gesture. You can`t have a pay policy for the public sector alone. The real pressures for inflation are utility, food and fuel prices and more for public sector workers will have a beneficial effect in boosting demand, which is flagging in the face of the credit crunch.
Give `em the money Barney. After wasting £70 billion on consultancies we can spare a few pence for the public sector.
UPDATE 17th SEPTEMBER
The crumbling of Northern Rock is yet another triumph for Mervyn King. Instead of pumping out liquidity and reducing inter bank interest rates in August, as the Fed and the Eurobank did, he obstinately insisted that it would be a “moral hazard” to protect the irresponsible. That`s doubtful morality and daft politics. He should have known that if the refusal to relieve all led to the failure of any one, Government would force him to bail it out.
Mervyn’s mess up now becomes Gordon’s problem. If he’s sensible Gordon should go for an October election. Yet now an early poll could create the inevitable impression that we`re going because we know that things are going to get worse. My view is still go early. In difficulties the people will look to a strong leader who`s tried and trusted, not young glibberty gibbets.
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Bob Worcester tells me I`m wrong about an early election and equally wrong in believing that the result of going on will be a hung Parliament. His forecast is an election on 3 June 2009 and a Labour majority of 20 over all parties. He`s usually right. In fact there`s a case for cancelling the elections as too expensive and just asking Bob.
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Early election Prolong’s Active Labour. It would protect most of our majority because the Tories are divided and in a mess, the Liberals have no policy except Iraq and things are going well unless you`re a Northern Rocker.
Carrying on means a loss of the new ball`s shine and its bounce and an accumulation of the grudges and grumbles which build up round longevity. That doesn’t mean we’d lose later. But it does point to a hung Parliament. In which, if the Lib Dems have any sense, we’d have to face up to Proportional Representation.
So it`s vote early or begin to study PR in my book. I must be mad disagreeing with Bob Worcester. |
