Free for all in the eurozone?

In Autumn 2008, I attended a small public meeting entitled 'Sound Money'. I learned that for years the commercial banks had been getting away with literally printing money by issuing loans on the back of money they simply did not have.

On leaving the meeting, I was fired with the righteous indignation of the newly awakened and immediately wrote about the power and irresponsibility of such banks on an online forum. Instantly, I was seriously flamed by a professional banker, who insisted that talk of banks creating money out of thin air was total rubbish and I should get a grip on fractional reserve banking rather than spread such blatant ignorance.

Duly chastised, I studied fractional reserve banking. Banks did indeed maintain a relationship between the deposits they received and the money they lent out. But this relationship – the multiple of the amount held against the amount lent – had been stretching for years. And, given the additional practice of banks like Northern Rock of borrowing further sums in the international markets to lend to borrowers, it was little wonder a run on the bank soon resulted in that bank's collapse and others quickly realising they could no longer continue lending on such thin reserves.

Commercial banks, of course, are responsible for their own solvency – at least, up to the point where governments deem that allowing them to fail would undermine public trust in the financial system as a whole. It's at this point we get government bailouts: RBS and Lloyds in the UK and, rashly, a financial guarantee for the whole of the nation's commercial banking system by the government of the Republic of Ireland.

I am a little weary of reprising my eurosceptic credentials, but suffice to say, if Ireland was a truly sovereign country – that is, if it managed its own currency, the Irish Punt – it might have had some hope of staving off the swirling pirhanas of the bond markets for a little further time.The practice it would almost certainly have adopted is the same as that used by such illustrious independent nations as the UK and the USA. I speak of Quantitative Easing (QE), of course.

The advantages of managing your own Central Bank sadly have been much underestimated across the capitals of Europe. Not only do yet get to manipulate your own interest rates and exchange rates, you also get the opportunity to engage in QE. It is a trick that commercial banks – especially those that have stretched lending beyond their means unto insolvency – must desperately envy. For QE is that ultimate goal of both alchemist and banker: the ability to actually create money out of thin air.

QE has received a mixed press from economists. Some instantly recognise that it must be a recipe for stoking inflation. Others are more sanguine and judge it may be a harmless tool to stimulate an economy at a time of deflation. No-one, however, seems to have pointed the finger at the damage QE may yet inflict on the Eurozone currency.

For many months, the European Central Bank (ECB) has been supporting government deficits in Greece, Ireland, Portugal, Hungary and perhaps even Spain. Greece and Ireland have been receiving rolling handouts to keep their debt payments afloat. Now, a 'once-and-for-all' financial package has been arranged for Ireland, with the ECB at the core of the deal.

The ECB may not admit to following other central banks, but it too provides funds by engaging in QE: printing money. And the EU in Brussels is determined that such financial support must appear unequivocal if the integrity of the eurozone and even the EU is to survive.

But what has been the reaction of the bond markets to this latest Irish financial support? The answer is very little – in fact, they seem to be saying "is that all?". And can you blame them?

QE represents a bottomless pit of an ever-expanding money supply. If demanding 5% yield for investing in Irish government bonds brings this kind of guarantee, why not demand 6%...7%...8%? Such printed money is effectively free. Roll on the bond market calls in Portugal, Spain and Italy!

If my doubts about QE seem as naive as my understanding of fractional reserve banking, just ask yourself where, when and how will it end? The European financial institutions are becoming slaves to the markets. Each new bailout devalues the euro's credibility. The bond markets may not be satiated until they've escalated and extracted every cent the ECB is willing to issue to defend eurozone solidarity. If the euro survives it may be minus several members.

Even more importantly, if the global financial system is to survive with future credibility it might be time to consider what is really meant by "sound money". It surely can't mean just printing ever more money for the benefit of bond traders.

Lord Young Resigns

Lord Young's job at Central Office has been to mediate between government and industry and recommend regulatory improvements that can help British businesses succeed. Talking up the positive aspects of the financial environment in which our businesses now operate (though perhaps not strictly part of Lord Young's brief) is as important as any government initiatives for encouraging business investment and ultimately creating more jobs.

Lord Young's error, however, seems to have been to translate this wishfully positive view of Britain's business landscape into a description of the state of our population as a whole.

Statistics offered by the NIESR suggest that Lord Young's "Britons have never had it so good" assessment was not too far wrong. It was, nevertheless, about 12 months out. In fact, it was this time last year, despite the recession, that Britons really had never had it so good in terms of spendable income.

So could Lord Young's analysis be forgiven for being "within the margin of statistical error" over the lifetime of the recession? Unfortunately, this surprisingly rosiest period for the average Briton occurred under the management of the previous Labour government. For it was they, we will remember, who were desperate to delay necessary cost-cutting measures that might affect the well-being of the population – at least in advance of the general election.

Since that election, all has changed. The effects of tax rises, inflation and the beginning of public service job cuts have taken the edge off the unprecedentedly celebratory good times of 2009! And, of course, we have all known this must happen.

In the end, this unfortunate political incident leading to Lord Young's resignation is all about relative perceptions. Undoubtedly, GDP growth has resulted in the nation as a whole being better off during this last recession than those before, such as 1981 (when David Young was special adviser to the Dept of Industry and a year later Chairman of the Manpower Services Commission).

But that was then – this is now. Such memories do not serve today's 30 year-olds facing redundancy.

Nor do such comparisons serve a government needing to justify the severe measures required to correct the public finances.

The government's preferred message now is the need for a period of haircloth and ashes, in atonement for the financial excesses encouraged by the previous government. Woe betide anyone in government preaching that our immediate future might be relatively painless. It seems those bearing such embarrassing off-messages shall be hurriedly cast out.

It remains at least debatable whether it is Lord Young, or David Cameron, presenting us with a misleading impression of our present state of well-being. For example, we are certainly better off than than our Irish cousins.

Less debatable, unfortunately, is the sad political wisdom of Lord Armstrong when Cabinet Secretary that the prudent course is often to be economical with the truth.

Recess

This website is presently in a legacy condition, but may be revived at any moment the political environment enlivens and demands comment.

You are welcome to enjoy the purposeful prose set out below, which covers issues leading up to and including the May 2010 general election from a Conservative perspective.

New government: new politics?

So there I was...about to upload a commentary on the new government after an adequate time for reflection...when up shoots another political bolt from the blue to splatter all over the front pages.

No headlines proclaiming 'Rent Boy' that I've noticed yet, but the omens do not look especially good for the government's LibDem rising star, David Laws.

In my view, the most incriminating evidence revealed against him so far is perhaps the excessive utilities and maintenance bills claimed in addition to his rent. (Though charging taxpayers £950 for use of a bedroom does seem excessive even for London.) It continues to surprise how complex applying MPs expenses regulations can be. So I won't speculate on how soon, or far, Laws is going to fall.

Instead, here's my brief and generally upbeat - until yesterday - view of what I think of the new politics so far...

* * *
I have refrained for several days from commenting on the arrival of the new government.

One reason is a genuine ignorance of what was being developed within the two-party partnership. The other is awareness that first impressions are often not a reliable basis for firm opinions.

Initial impressions were that the Conservative side of government had given up philosophy and beliefs to create an alliance representing a new political party with an unknown manifesto.

David Cameron's new leadership style seemed to magnify the authoritarian nature he'd shown as opposition and campaign leader. The decisions without consultation to propose fixed term parliaments, a lock over the dissolution of parliament, and controls over the backbench 1922 Committee, suggested a ruthless intention to impose his new party over both Conservatives and the parliament.

However, a full three weeks have passed since the election. MPs have returned to parliament. We have had the Queen's speech. And most importantly, we have begun to see how the new government, through its ministers, intends to act and present its case in parliament.

I have been impressed by the natural confidence of the ministerial team. This may be a confirmation that Conservatives are indeed the natural party of government or just an awakening of our long-suppressed knowledge of how inadequate Labour ministers always were.

The shining performance of some of the LibDem team certainly reflects the latter. David Laws in the economics debate on the Queen's speech showed the metal of which he is made, even as he referenced some softer inclusions of LibDem policy. And David Heath, beardedly LibDem as he is, provided a cogent and conciliatory explanation of the 55 percent dissolution rule (as far as it has yet developed), and even made me think twice about whether it might actually be necessary.

Most of all, the Queen's speech debates this week, especially on foreign affairs and defence, showed parliament at its best. The depth and sincerity of argument from the government front and back benches, and the generosity of spirit shown to fellow parliamentarians, showed the stature that parliament is capable of when the right people are in charge. In fact, it's something I haven't witnessed for thirteen years!

There's a long way to go – and substantial disagreements between the governing partners and Conservative back and front benchers have yet to emerge – but, despite the election result, the presentation so far gives encouragement that hopes for a Conservative-style Britain look a little better than Conservatives might have hoped.

Should the Duchess of York be sacked?

On the one hand, Sarah Ferguson has been caught demanding a fee to introduce a scam businessman to her trade envoy former husband. Introduction fees are nothing remarkable. Political parties regularly raise funds by offering the presence of, and potential conversations with, influential politicians. Undoubtedly, businesses pay fees to middlepersons for access to important people, whether for an innocuous charity dinner, a networking breakfast, or a meeting on a private yacht.

An introduction is a limited commitment. In Ferguson's case, it simply requires attending a sporting event with said businessman and on Prince Andrew's arrival introducing one to the other. Job done. Fee received. If a businessman is willing to pay a vast sum for such an introduction, then Ms Ferguson might be admired for taking such businessman for all he's willing to give. After all, an introduction implies no commitment on future business relationships—and Ferguson is in no position to offer such guarantees.

On the other hand, the former husband is a significant member of the Royal family. His duties as a national trade envoy require an image of absolute integrity, not to speak of his constitutional position as a senior Royal. Ms Ferguson's money-raising exploit exposes her husband to suspicions of bias and corruption, even though he is specifically exonerated from awareness of his former wife's secretive deal. His integrity may be compromised by association—even if the association is merely that he continues to morally support his former wife.

The problem now is that this exposé—faked entrapment by newspaper though it was—not only puts Ferguson's public position in doubt, it also raises questions about the propriety and impartiality of using senior Royals as ambassadors for trade. Undoubtedly, Prince Andrew wants to be active and, even more, to benefit national prosperity in return for the state benefits he receives. And there is a long history of Royals doing such work, not least the present Prince Philip, Prince Michael and Duke of Kent. But in an age of ethical foreign policies, can an envoy of the Queen, subject neither to election nor FOI requests, ever be seen to be acting in a completely impartial manner when drumming up trade for British businesses?

Leaving that question open, Ms Ferguson's compulsion for embarrassing the Royal family ought to be closed. Perhaps a decent family pension and compulsory retirement would help.

The 55 percent rule

My curiosity lies in discovering who inspired this curious piece of potential legislation.

My political bias suggests the naivety and apparent unworkability of the 55% rule places it squarely as a Liberal Democrat concoction. But who knows? In true consensual coalition form, it seems intended to provide equal protection to both parties from a presumptive dissolution of parliament.

Many observers have declared that an artificial bar to parliament being subject to re-election, after a majority of MPs have voted a lack of confidence in the government, is simply unconstitutional.

More to the point, as Christopher Chope MP has pointed out, the 55% rule is unworkable and therefore meaningless.

If the situation arose that either governing party pulled out of the coalition, a minority Conservative government would be unable to resist the subsequent majority overturning the 55% rule. This would then enable a vote of confidence to defeat the government causing immediate dissolution of parliament and a new general election.

If Cameron and Clegg choose to resist objections and force this new rule through parliament, they may believe its very existence will act as resistance to ever testing its principles in practice.

However, starting a new era of political reform with legislation regarded as both unconstitutional and unworkable is not a good advertisement for the political process or for the new form of government.

Put simply, sticking to the 55% rule doesn't add up.

UPDATED today

Sir George Young, justifying the rule, refers to the Scottish parliament requiring a 2/3 majority to achieve a dissolution. This type of measure is required, apparently, to manage the increased political stresses that arise within coalition government.

That is as may be. But this is more than just a simple supply and confidence measure. Together with fixed term parliaments, it has the strong flavour of European style government—where coalitions are the norm, governments appear to change but people and policies stay the same, and no-one can ever kick the bu––ers out.

UPDATED again

The more this issue is discussed and attempts are made to explain it, the clearer it seems that the root lies in the determination to establish [a] fixed term parliament[s].

Few people seem to consider a fixed term parliament as controversial or unwarranted. Yet, as we see, nothing is so straightforward or without constitutional consequences.

The 55% dissolution rule gives politicians the chance to cobble together an alternative coalition government if the existing coalition partnership fails. In the present Con–LibDem case, this would actually enable the LibDems to seek to join a coalition with Labour and others if the present coalition failed. (Or Conservatives might join with Labour, of course!)

All of this would take place without reference to the electorate—and would be enabled by the determination not to dissolve parliament within the timeframe of a fixed term parliament.

Consider fixed terms as the actual democratic problem and it presents the issue in a different light.

Moving up and moving on

So as the dust starts to settle in Downing Street it seems we have a new governing party.

It should probably be no surprise that an energetic marketing man should feel the urge every few years to step up, move on and try his hand at something new.

The emotional impact of such change usually affects just a few fellow workers. In David Cameron's case, the impact is felt by several million close followers—plus 306 dependent members of parliament.

Yesterday, in the No 10 rose garden, Cameron justified his move by saying his negotiations with Nick Clegg led him to believe a full coalition between Conservatives and LibDems was not only possible but desirable. The alternative—the risk of needing to fight an election again in several months and possibly losing—clearly focused his mind.

The full-blooded coalition was an intelligent decision but rash and risky. Cameron's willingness to fully engage with this new big idea may have led him to set aside the impact it could have beyond Westminster. The Big Coalition concept remains untested among the thousands of both party's workers and millions of supporters outside the meeting rooms off Whitehall.

Yet it seems we must adapt to the proposition that elected politicians lead and their parties must follow—or be left behind. We live in extraordinary and critical times. And a coalition government of national emergency may be the most rational solution to addressing the country's issues.

Meanwhile, party workers like myself who may feel abandoned by the new politics, might consider an analogy with a family experiencing a new birth. As elder siblings we have become used to our familiar domestic environment. Now a new member has arrived the attention we expect has been transferred to nurturing the new arrival. We will have to adapt—in time may get used to it.

Certainly, for now we can only be hopeful, and magnanimous, and allow this powerful new government time to set about its unprecedented tasks in the way it presently thinks best.

A Very British Coup

Two days ago I wrote that Gordon Brown's attempt to steal the election by partnering with the LibDems would be an undemocratic poltitical coup.

Today, it seems likely the prize for achieving a coup in British politics falls squarely with David Cameron.

Full details have yet to be announced of the concessions Cameron has made to his new Liberal Democrat partners, but in addition to five Cabinet posts they include twenty junior ministerial positions. That amounts to 44% of the LibDem parliamentary party.

The most interesting question—as yet to be revealed—is whether this coalition is a takeover of the Liberal Democrats by Conservatives or a takeover of the Conservative Party by David Cameron.

The first proposition is not hard to justify. The opportunity to lock LibDems into a five year parliament and remove substantial opposition in parliament to the Conservative programme is a political achievement without parallel by David Cameron.

The second proposition—that Cameron may have done as much or more to change the nature of Conservatism in Britain through the coalition government he has formed—has yet to be fully uncovered.

Cameron led a very insular policy development group in the run-up to the election and the grassroots party handed him open-ended trust that all would be for the best if it won the election.

The subsequent negotiations with the Liberal Democrats were even more secretive. We may learn that Cameron has conceded so much to the LibDems that the party he leads will find it hard to recognise Cameron's policies as Conservatism.

This could yet be revealed as even a coup in reverse, in which Cameron has willingly adopted a change in the philosophy of the party to reflect a broader liberalism, if not social democracy.

Either way—whether it is Cameron or Clegg who has shifted the most—we have seen a remarkable realignment in British politics in the space of just five days.

Sense and justice prevails - at last

Here at Pol-e-tics we feel exhausted. The energetic run-up to the election, the all-night marathon following results, the dawning of a victory so narrowly missed and the daily roundabout of LibDem indecision ... towards the end it began to pall.

But now the elation of victory is sublime!

Cameron has been dignified throughout—keeping his distance from the media—which will make the sight of his appearance finally to declare a Conservative-led government all the more dramatic and satisfying.

The fact is that over the election and subsequent negotiations the Conservatives have won!

There have been doubts over the negotiations within all three parties. This is unsurprising given the electoral result produced a situation our traditional party system is not designed to cope with.

The Labour party deal was never going to be a winner—even if it had been sealed. Some sensible Labour MPs were willing to acknowledge that a Libd–Lab pact would be undemocratic.

Then many Conservative supporters believe Cameron went too far and should have tried to run a minority government. Again, this would be an undemocratic result that ignored the numbers delivered by the electorate.

More party political still, some Conservatives believe Cameron should have walked away from any government. This would leave other parties to do their worst until an inevitable fresh election restored Conservatives to power with a sound majority.

But such a strategy is just not part of Conservative DNA. Conservatives are pragmatic but above all responsible. The country needs a government, and a Conservative government. To walk away from the challenge would be cowardly, damaging and irresponsible.

Can Conservative parliamentarians work with the LibDems?

The LD leadership has not covered itself with glory over its negotiating tactics. Conservatives are familiar with LibDems facing two ways according to their audience. But what we have seen at play is the division between right and left that still lies at the heart of the LibDem party.

The liberal faction that stresses civil liberties and personal responsibility can make accord with Conservatives. The social democrats will have to live with the reality that Labour could not, or would not, deliver an alliance.

A lot has yet to be revealed about the Conservative–LibDem relationship and how it manifests in policy decisions. The alliance will be awkward and fragile.

But at last Labour is gone. Conservatives are substantially in power. And the process of bringing energy to restoring the nation can finally begin.

Brown's exit fractures the coup

A 'political coup' is a commonplace description of many commonplace events in political life. But the proposed partnership between Labour and the LibDems is a political coup for real.

Yet it seems to me that Gordon Brown's resignation—on which this coup depends—ironically throws a sizeable spanner into the grinding works of the potential LibDem–Lab coalition.

How will it be possible to line up the necessary minority parties to provide a notional majority, when none of them will know who their leading political partner will eventually be?

No minor party can rely on a new Labour leader honouring promises given today, whatever potential leadership candidates may say.

At best, such a coalition would have a maximum lifetime up to this autumn—just four and a half months including the summer.

The election of a new Labour leader would surely be the point when a new general election must be called—to establish leadership credibility and to try to bolster a parliamentary majority.

What party would consider it worthwhile to engage in such a sordid, unreliable and time-limited pact?

Apparently, the LibDems are such a party: such is their desperation to put electoral change before the political needs of the country.

But will any other parties—even though they too might benefit from electoral reform—be willing to share the consequences of the public's growing disgust at this attempted political coup in return for just 140 days in government?

And since the LibDems have handsomely illustrated over the past four days just what a "fair votes" election means, a coalition designed to achieve voting reform will probably have its aims duly turned down by a disgusted public.

Representation in proportion

Monday p.m. 10 May

The Conservatives do need an arrangement with the LibDems.

Not only is this necessary to have reasonable expectation of passing financial and deficit reduction measures in parliament: it is also necessary to provide electoral legitimacy to the government, which a minority government wouldn't have.

The LibDems do not need an arrangement with the Conservatives, unless they can be offered sufficient agreement on support for crucial LibDem policies.

The Conservatives would also benefit from a power sharing agreement by diluting the poison in the debt reduction chalice and spreading the electoral consequences.

The LibDems could suffer electorally by being party to severe measures. But they could gain from the statesmanship shown by enabling government to proceed and the rise in media profile provided by participation in government.

The Conservatives cannot deliver substantial voting reform. This could only be achieved legitimately—in public and political eyes—through a national referendum. Holding a referendum would need to be agreed by parliament. Only a decision to present this option to parliament and a contribution on the options to be presented to the public would be in Conservative hands. However, the Conservatives could offer other political reforms—such as Lords elections by PR, re-sizing constituencies, recall of politicians and a smaller parliament.

Going too far in supporting electoral reform in exchange for parliamentary support would be unacceptable for the Tory party. Creating a full coalition without substantial support for electoral reform would be unacceptable to many LibDems.

The best solution for both parties therefore seems to be a mid-way house that presents neither full coalition nor full independence.

Detailed agreements could be reached on a range of Conservative policies that LibDems would support, perhaps in modified form. And a number of LibDem policies could be introduced without party political difficulty. These agreements would be published to reassure both parties.

LibDems would not take cabinet posts, could retain their independence, and continue to provide criticism of Conservative government policy outside the areas of support.

Of course, LibDems could still opt to partner with Labour. But I don't think it's excessively party political to say this would be a shameful election result.

Seeing the Big Picture

There are different ways to fulfil a task. One can do it my way, the familiar way, the way we've always done it. Or one can try to see the bigger picture and respond as actual circumstances demand.

David Cameron has surprised by stepping out of his Conservative clothing and showing willingness to consider other modes of operation to address the task he has been set of governing the country.

Some, especially in the Conservative party, may find Cameron's flexibility no surprise at all. For some dedicated activists, it may confirm he's no Conservative at all. But for others, seeing the bigger picture, inside and outside the party, it may confirm him as a statesman of our times.

Cameron could have opted for the challenge of a minority administration, but he evidently saw – ahead of many commentators – that this would not deliver 'strong, stable and decisive government'.

So he's gone further and faster than many could imagine to bring the political crisis the indecisive election has caused to a stable end.

The negotiations to secure a deal with the LibDems to form a new government will probably, inevitably reveal shades of the shabbiness we've come to associate with such deals.

But the difference with coalition deals of the past is that this one is not intended to support a weak and disgraced government. It is intended to introduce new, fresh government that can survive the party politics of parliament and deliver the decision-making the country urgently needs.

And there are political advantages for the Conservatives. It is possible that a Tory–LibDem deal could see the end of Labour socialism that Margaret Thatcher long sought to achieve.

Labour have been thoroughly outmanouvered. First by the electorate and now by the willingness of Cameron to go beyond party limitations to embrace a more liberal vision of Britain.

Whatever emerges from the Cameron–Clegg discussions (and even a weakened Clegg has indicated statesmanship too) Brown and his cohorts have become Yesterday's Men, sounding more desperate, shabby and divorced from the reality of British politics by the hour.

Cameron, on the other hand, has revealed his intelligence by recognising the electorate are not yet ready to go solid blue.

But he is now the man of the moment. And with good grace, sound judgement and not a little creativity, he could be the statesman to form a government that finally addresses both the electorate's and the nation's needs.

Who says who stays, who goes?

I'm intrigued by the Constitutional Arrangements established by the Cabinet Office for this election.

As I understand it, if the governing party receives the most seats but fails to gain a majority, it assumes a right to continue in power until winning or losing the vote on the Queen's speech.

Perhaps this is just a formal iteration of an acknowledged procedure. Yet my memory tells me the convention was that the Monarch herself decides who will be allowed to try to form a government.

I'm not actually advocating the Conservatives form an alliance with the LibDems, or with any other parties, but, in theory, there are potentially stronger options available than Brown trying to cling to office with a minority government.

Is this another instance of our constitution being 'modernised' by politicised officials—just like those in Brussels?

I presume the Queen's opinion on this constitutional matter also hasn't been sought.

UPDATE: Wed 5th May
Professor Robert Hazell, of the Constitution Unit at UCL, tonight confirmed the impact of the constitutional arrangements he has recommended for the event of a hung parliament.

If Cameron gains the most seats, but less than a majority, by Friday morning he'll be claiming victory and a right to form the next government—with or without others' help. But according to the newly defined procedures, Gordon Brown will still get first bite at the cherry.

If Brown can fix an arrangement with other parties that could survive the Queen's speech, then he'll be able to continue in government and the Conservatives (despite winning most seats) won't get a chance to offer a plausible alternative.

This doesn't sound very fair to me.

Professor Hazell may be called to defend his recommendation, together with Gus O'Donnell at the Cabinet Office.

N.B. Hazell is an expert in constitutional reform research that is substantially funded by the Economic and Social Research Council (ESRC), which in turn is funded by the Department for Business, Innovation and Skills, which is of course Lord Mandelson's department.

The ups and downs of a travelling salesman

Gordon Brown's drama today reminds me of a time, long ago, I worked with a pair of travelling double-glazing and central heating salesmen.

My task was to walk estate streets, knock on doors, and make appointments for their sales visits. When sufficient appointments were gathered the sales guys swept into the estate in their top-of-range limo, smoothed down their mohair suits and began their staged sales blag inside each family home.

To prospective customers they presented themselves as successful entrepreneurs, oozingly sympathetic to domestic problems, with every solution to a home's structural needs. It was a sleekly experienced pursuasive act, using every psychological cue, with the sales guys aiming to become adopted as the decision-maker's best friend and even godfather to any children.

Back in the car, the story was very different, whether they'd experienced a sale or a fail. Those who had rejected the sales guys extended efforts were illiterate, no-hoping idiots. Those who had succumbed to their sales act were idiots too—soft-headed, malleable suckers who'd fallen for all their tricks.

Fortunately for the salesmen, there were no hidden microphones recording the their real feelings toward the often vulnerable people they sought to pursuade, befriend and lift money from.

UPDATE
The nice man, nasty man trick. Sometimes when interviews went badly, a sales guy would return with a colleague who would harangue the householder in front of his family for not taking advantage of the opportunity he'd been offered. Nice guy would then intervene to calm and resolve the situation, playing down disagreements and smooth-talking the customer into gratefully accepting a very special offer.

Comparisons between these professional styles and those of our Prime Minister are, of course, subjective.

Keep the Genie in the Bottle(fair votes, hung parliaments & coalitions)

David Cameron has improved but Nick Clegg has got worse. Now he insists on 'fair votes' as his price to support a minority government.

Clegg says the genie can't be put back in the bottle: coalition government is becoming a reality and electoral reform must follow. But what would this really mean?

Quite simply, coalition government is inefficient and ineffective. The policies it introduces can never be the policies of its member parties. Policies will alway be compromises and fudges—agreed by arguments behind closed doors—and not designed to effectively address the issues.

The Lib Dems say proportional representation will deliver 'fair votes'. In fact, PR would lead to none of the voters receiving their electoral choices. Neither Lib Dem voters, nor Conservative voters, nor Labour voters would get the party policies they want.

Indeed, the only way to ensure any votes delivered a guaranteed result would be to add a box marked 'Coalition Government' to the ballot paper for voters to approve. Following this to its conclusion, all party names on the ballot may as well also be removed, since coalition government would always be the only electoral winner.

Acute observers will note that just one voting option at elections is the format used in countries like Cuba, North Korea and Burma. But this is effectively what would result from introducing Lib Dem PR. Election after election the result would be the same. No matter how disastrous the previous coalition government, the next election would produce yet another coalition. And so it would go on— for ever and ever.

So those who think voting Lib Dem would be a novel idea to freshen up the parliamentary system should be careful what they wish for. The Lib Dem insistence on introducing PR would mean an electoral dictatorship and the end of democracy in Britain.

If you're thankful to live in a democratic country then don't give that choice away. You won't ever be forgiven.

The Hollow Man

On last night's first TV debate, David Cameron was empty of anything to suggest he should be a Conservative Prime Minister. The fact he chose to accept the script of his US advisers, rather than talk straight Conservative policy to the British electors, is poor decision making itself. But I'm now left with the suspicion that without his script he would have had nothing to say at all.

In my last blog, I observed how the style stasi at CCO were now directing Cameron in the same disastrous way they had ruined the aspirations of the last two Tory leaders. After watching Cameron's peformance last night – Hollywood-style to a T – I put the blame not just on the advisers but on the man himself.

It is Cameron who has chosen to make this election a presidential race rather than a policy one. He has long sought to present the Conservative party as almost a one man band. But US Presidential races are about style not substance. In contrast, the problems in Britain are simply too great to believe they are for one person to solve. We have always had a cabinet government system, albeit the power of the primus has waxed and waned among the pares. But a cabinet of various talents offers observable strength as well as the confirmation of a team of like-minded conviction.

Cameron has sought to offload his one man responsibility for fixing the country by inviting us all to become members of the government. This ties in well with Conservative philosophy of personal independence and smaller government, but the public still need leadership, direction—and policies.

Last night, Cameron failed to elucidate Conservative policy on any question. Although the party has just issued a thick manifesto (which voters will never read), at this great public opportunity Cameron failed to illustrate it at all. Which suggests he is still too scared to reveal Conservative policy to the voters (i.e. his lack of conviction) or he really is just a hollow man and doesn't have Conservative philosophy in his bones.

The rise of Nick Clegg in the TV debate, illustrates another flaw for Cameron in adopting the US Presidential style. US elections are bi-partisan, enabling two contestants to fight each other and be compared directly. The three-way format negates the opportunity for Cameron simply to be compared with Brown on style. Put Mohammed Ali, Frasier and Foreman in the ring together and style would not be the winner. The revealing factor from Clegg was that he showed himself as a conviction politician. Even Brown, is his boring way, seemed to believe in much of what he said. Only Cameron remained aloof, refusing to really engage with the solutions he was offering, and restricting his answers to single well-rehearsed examples of the points he wanted to make. It must be the way they do it in the United States!

There are more debates to come and more pitfalls to fall into for each contestant. I hope Cameron learns that he needs to engage with the public as a potential Prime Minister rather than as a distant President. Sacking his American presentational advisors might be a good first step on this path.

Left as it is, Cameron's leadership of the Conservative party appears ever more like an exercise in management rather than of political conviction. I hope I'm yet to be proved wrong on this. If Cameron goes on to win his election, and becomes a good party leader and prime minister, I'll support him all the way. But at the moment, my doubts are rising.


P.S. Naturally, I will still be out on the doorsteps supporting my local candidates—parliament and government is a collective exercise.

Cameron Real

I've begun to dislike Dave Cameron's TV appearances. This began around the time the election was called. I'm sure there is a connection.

I have observed, with dismay and eventual horror, how the last two Conservative party leaders at their respective election times were grabbed by those responsible for 'style' at Party HQ and turned into performing seals, devoid of recognisable human behaviour.

For some time, I thought Dave was on top of this threat and had the measure of the style stasi at CCO. He's a former PR man himself, after all. He could justifiably say "I just don't need any of that—I'm already a PR pro". But never dismiss the power of the psycho-image-makers.

We know William Hague today as intelligent, suave and cool. But back then, he appeared as a teenaged rebel in order, apparently, to impress the voters. The baseball cap worn backwards against a backdrop of funfair rides, was more 'Princess of Wales–average mother' than wise party statesman. At party conference, he seemed like a frog-marched marionette—this time more 'Andy Pandy' than wise leader—with his ever-present minders pulling all the strings.

Then there's the debacle of the much respected, IDS, which has passed into infamous management history. Prior to his elevation to party leader he was known in Conservative circles (eurosceptic ones) as a thoughtfully concise man of clarity, integrity and high principle—and an excellent public speaker. But after emerging from the style gurus' mill he became a walking and talking disaster.

Dave has begun to suffer no less. Watch him arrive for his public performance set pieces. The self-concious walk. The wave. The look. Surely this is a man about to walk on the stage of the highest accolading body known to man—the Hollywood Oscars. And as he speaks—deliberately turning to left, right, and centre, arms consciously embracing all—do we hear sincerity? No, we hear Hollywood scripted sound-bite-speak. No wonder the voters are beginning to doubt the message.

Just occasionally we get to see the real David Cameron. At the press Q&As, immediately after the manifesto launch, he forgot to look directly at his questioners, forgot to place impact pauses into every seventh word of his replies, and forgot to be kind, sympathetic or understanding to the gathered reptiles. Instead, they got his message direct. He was forceful, uncomprising, sraightforward and coherent—and most of all ordinarily human. Just the way a campaigning party leader ought to be.

Will the voters ever get to see such a Cameron? Perhaps, as elected Prime Minister, the image controllers may let him be. But for the moment, as long as the image-makers can spot a video camera they'll control the shots. We can only hope that by the time polling day arrives voters will be prepared to do just anything to get Brown removed.

In the meantime, I'll watch the upcoming Presidential Prime Ministerial debates on TV with interest.

Why I'm backing the teachers — for once

—Teachers threaten strike action over spending cuts.
—Teachers threaten strike action over SAT tests for 11 year olds.
—Teachers threaten strike action over excessive workloads.
—Teachers threaten strike action over Pupil Councils appointing teachers.

Have you seen any of these headlines over the past 48 hours?

The annual strike calls from the NUT conference (in Liverpool next week) come as no surprise. But what struck me most forcefully today was the anguished complaint from the NASUWT teachers' union—broadcast on Radio 4—which explained the cause of the last strike proposal I've listed above.

Apparently, pupils in state schools are now accorded the right to vet future teachers at their interviews for a teaching job.

The exasperated union leader described this process on the Today programme as 'demeaning, embarrassing and humiliating'. Pupils were regularly rejecting potential teachers simply for their appearance or their mannerisms. She regarded the process as unprofessional and undignified and was willing to call her members to strike to get this pupils' right removed.

The irony of this teacher's complaint didn't fail to leave its mark.

For years, teachers have objected to the disciplined diktats of Ministers of Education, who insist on tests for pupils, yet have supported the socialistic, child-centred agenda that has poured out from the educationalist civil servants at the Ministry itself.

Now, the dystopian vision—the inevitable and ultimate consequence of the fervent child-centred activism of the DofE—has come to pass. And teachers realise they don't like it.

Margaret Thatcher, on assuming office, set about shaping up the Civil Service with a zeal of her own. The impenetrable obfuscation and personal agendas of the 'Humphrey Appleby's' of Whitehall were to be a thing of the past. Their role, henceforth, was to implement government policy. But the one Department she admitted she never penetrated was the DofE.

For decades, the Department of Education, or whatever it has come to be renamed, has got away with ploughing its own destructive path through the lives of successive generations of eager, open-minded, optimistic children.

By removing adult rules and discipline and replacing them with a theorised notion of child-centred human rights they have left a void in terms of behaviour, values, direction and aspiration. Too often this void is filled with the anti-social behaviour that we almost expect now from many children and teenagers.

Twenty and twenty-first century educational psychology has failed. It has produced a nightmare for teachers and a hardcore community of feral children and wasted youth.

So I say to all Conservatives, and others—when teachers start striking for the right to teach, go out and join these hard-pressed evangelists on the picket line.

Raise your voices and harmoniously cry:

What do we want? —a decent disciplined education system.

When do we want it? —as soon as Gordon Brown calls the general election!

Where is the Conservative future?

The trouble with Tory party presentation right now is it's not getting across a properly holistic message. Ticking off the government for a disastrous economic policy and telling us we have endless misery ahead is hardly an enticing approach.

This may be a problem with the media not focusing on what the party wants to say. But it seems more evident from what we do get to see and hear that it's the campaign strategy that's at fault.

When addressing realities to the British public the Tory party must acknowledge that we have all become used to paternalistic and invasive government. This has to change of course - for budgetary reasons as much as its economic and socially disincentivising effects. But changes in the way government is expected to communicate cannot be made or appreciated overnight. To engage with the public today the Tory party needs to speak as Harold Macmillan, or even Harold Wilson, once did.

The message will, of course, be quite different. The public needs to be encouraged to take on the challenges of mending Britain for themselves. But the Tory party's role right now must be to explicitly set out an agenda of change across every aspect of economic and social life. The public needs to know that the Tory party understands the depth and breadth of the issues that afflict us and will support the population's own skills and energy in tackling them all, towards a better life.

Instead, the Tory party focuses 90 percent of its message on attacking Labour for the economic mire we're in without offering any picture of the sunny uplands that can be the reward of individuals working together to overcome it.

People do need positive objectives. If they can be shown clearly where the problems lie, the path to tackle them, and the encouragement necessary from a government in waiting that they will receive every reasonable support in tax measures and business and social initiatives that enhance the private and third sectors, then people will be able to recognise and appreciate such messages and see a positive future ahead.

The small team presently determining the party's message at Tory HQ is simply not enough. Cameron focuses on attacking Brown for his redundancy. Osborne focuses on Brown's economic inefficiency. And Gove focuses on the introduction of a handful of 'free' schools and academies that no-one quite understands. Grayling, Grieve and Lansley get a word in occasionally. But overall, the public doesn't see a joined-up potential government, they just see a handful of Tories picking over isolated issues without a coherent message or strategy that addresses the lives of people or the nation's future as a whole.

Gordon Brown was wise enough to adopt Tory policy - on the budget - for the first two years of New Labour government. It helped ease the public into accepting change. Cameron seems to think that his socially conscious messages achieve the same thing. But the public are fed up with top down social engineering. Yet, while they do want change, they still need the messages of change to be delivered in the all-embracing way they've become used to over 13 years: especially when the country's future seems so fragile and uncertain.

Thatcherite Tories might be repelled by such a paternalistic approach. But Margaret Thatcher, gender confrontations aside, was an arch paternalist – concerned for the cost of eggs in the housewife's basket as much as telling us what was good for us all. Yet her accomplishments were not achieved in isolation, but through a high profile, active and effective ministerial cabinet.

Dave Cameron is no Margaret Thatcher. But he is supposed to be a communicator. At this moment he needs to communicate a broad and all-encompasssing message to the nation as a whole: that Conservatism is the country's salvation because it acknowledges the worth of individuals, of every status and from every sector, working with dignity together. And as a reflection of this, he needs to push forward his whole shadow cabinet team.

He needs to show that the nation's future is not about the personalities of Gordon or Dave, but about changing the whole ethos of government, giving people personal responsibility and supporting this with clear views from across the ministerial spectrum of just how renewal and a positive future can be reached over the lifetime of the next Conservative parliament.

In defence of bankers' bonuses

"Bankers are greedy bastards ... they're paid obscene sums of money ... all they're interested in is getting rich quick."

No argument there then. At least not where investment bankers are concerned.

As some of the world's major banks announce astounding staff bonuses—on the back of record profits achieved through the benign conditions set up by alarmed governments—it's unsurprising that taxpayers want financial retribution. And alarmed governments are minded to respond.

But let's look at bankers' bonuses from the other side.

Suppose you are fortunate enough to have substantial capital to invest in the stock, bond or commodity markets. Or perhaps you are the treasurer of a large corporation seeking a profitable return on corporate funds. Or maybe you are a hedge fund manager needing access to market trading.

What you need is the services of a reliable investment bank.

Such banks over the last ten years became dominated by derivatives speculators: Guys who were pulling in container loads of synthetic profits without needing or caring to know whether real markets were up or down.

But those guys are now largely dead and buried, metaphorically speaking, along with all those non-performing derivative vehicles left on their, or other banks, books.

The guys that are left at such banks now are traditional investment banking traders—buying and selling stocks, bonds and commodities at a profit, if they follow the market right.

But, as an investor, how can you know such traders will really look after your money? How can you trust their judgement? How can you be confident that the precious funds you place into their management really mean as much to them as they clearly do to you?

The answer is simple. Traders are paid bonuses to make profits. Successful management of client accounts brings profits to the firm and bonuses are the bribe that ensure traders manage client accounts well.

But do they really need to be bribed to look after our money wisely? Can't they just accept a salary for doing their job like most everyone else?

Well, who would you trust with your money? Someone who is paid a fixed salary whether they're effective or useless? Someone who arrives at 9:30, leaves at 5:00, takes three hour lunches and wastes half their desk time playing poker online?

Or would you rather trust someone who focuses every working minute analysing the markets, trying to secure client profits, because profits mean big bonuses and that's what keeps them pinned to their desk?

It's a no-brainer really. Funny that most of us can't see it this way.

It must be because most investment bankers are greedy, are paid obscene amounts of money and just want to get desperately rich quick!

Avoiding crashes — a word from the wise

       I am instinctively sceptical of big government—whether it be authoritarian national government, or regional or global governance. Big government rarely, if ever, properly understands the problems it claims to address—witness the global financial crash.

However, the opposite alternative—allowing economic activity to proceed without monitoring or check—also has its downside: witness the global financial crash.

So what is the solution?

I'm not sure I have one. But the answer must lie closer to the factors of economic production than the factotums of authoritarian government. It's only at the sharp end of economic activity that true knowledge lies and practical observation takes place.

However, how do we encourage those involved in economic generation to regularly report on their businesses. And how can we trust what they say?

Government has many select committees that invite senior representatives to comment on their, often troubled, industries. But what imminent pre-crash truths could have been learned from the CEOs of Lehman Brothers or RBS? Certainly very little indeed, since they were totally ignorant of the dangers they were in, or were in denial, or would have simply remained economic with the truth to protect their positions.

Other bodies in UK, such as the BofE, FSA, ONS, etc., seek to obtain real-time data on economic activity to inform policy-makers. But as we see from the financial crash, such data can be insufficient, unreliable or misunderstood—or the facts simply get ignored.

I've been reading a narrative* about the financial crash in the US, seen from the inside viewpoint of a financial trader at Lehman Brothers. This particular guy worked in the distressed bond department, where the skills required were to anticipate corporate financial disasters and take timely action for the benefit of the bank's clients and the bank itself.

This department began to notice worrying signs about the US financial economy back in 2005. They were concerned about the growth of unregulated credit default swaps (CDSs), which became disembodied bets against corporate collapses, and the vast expansion of the housing mortgage market, led by brokers not deposit takers, which generated collateralised debt obligations (CDOs), packaged and quickly sold by banks like their own with the active assistance of the major US credit rating agencies.

While the specialist derivatives traders, egged on by the management board, raked in profits hand over fist, without apparent risk or applied banking skills, the guys in the traditional trading departments who dealt daily in value and risk watched this phenomena with growing concern but were unable to be heard against the tide of profitability and the belief that the holy grail of a self-generating financial nirvana had finally been found.

Suffice to say, the guys on the lower deck were right, the profit-crazed management supporting the derivatives traders were wrong.

But how do governments, regulators, and the public who are put at risk, obtain the right information from the right people to be able to make wiser judgements than in the recent past?

It may sound like another aspect of intrusive big government, reaching in to the rivers and streams of the land, but perhaps some communication forum needs to be found that regularly enquires into the temperature of industry and particularly finance. The unique feature of this forum would be that its participants would be middle managers rather than the leaders of industry. In other words, those who deal directly with the trades, the clients and the finances that make the cogs of our economy work. Difficult to achieve, particularly where whistle-blowing is involved, but possibly worthwhile for the result.

Given the experiences we've recently been through, there is a self-interest in coal-face managers revealing trends and potential risk. At Lehman Brothers, the 'distressed traders' group took its own action—taking massive short positions against the activities of its own bank. Sadly, this could never match the colossal debts that finally stuck on Lehman's books. Nor did it affect the $14 trillion dollars of toxic debt that Lehmans and other Wall Street banks had already spread throughout the US and then the globe.

If only these wise, traditional, but actively engaged managers had had a way to speak to someone with ears to hear—it might all have been so different.

* The book is: A Colossal Failure of Common Sense by Larry McDonald