Archive for June, 2012

If Cameron wants a Thatcher Moment he should go after the bankers!

Posted in Banking, business with tags , , , on June 28, 2012 by Tom Leatherbarrow

A few months ago the Government saw great opportunity in the proposed tanker driver strike.  The word from Tory Central Office (we know this because it was all over the newspapers) was that the Government saw the dispute as a potential ‘Thatcher Moment’ when the Government rallied the general public around a foe that threatened the economic prosperity of the country and defeated it, just as the Lady had with the miners.  Francis Maude was duly sent out with the advice that we should all stock up on petrol by filling jerry cans, just as the Thatcher Government had stockpiled coal.  We all know how it ended.

My feeling at the time was that the Government was fighting an old battle.  Much has changed since the long summer days of 1984.  The Public & Commercial Services Union went on strike over outsourcing of jobs on Monday, did you notice?  I suspect not because three separate tranches of legislation, the Prior Act, the Tebbit Act and the Trades Union Act of 1984 have brought the unions into line, democratised them and left them needing to listen to their members before the shout goes up “everybody out.”  If they step out of line the penalties can be ferocious, as the miners found out.

So where should the Government look if it wants a ‘Thatcher Moment’?  News comes this morning of another powerful pressure group who threaten the economic prosperity of the country. In fact this pressure group has already been bailed out once by the public to the tune of hundreds of billions.

One suspects that Barclays £290 million fine levied by both the Financial Services Authority in London and the regulators in the United States for manipulation of interest rates is just the tip of the iceberg. If RBS, HSBC etal get sucked into this then the entire integrity of UK banking and LIBOR (London Interbank Offered Rate), which is used to fix mortgages amongst other financial instruments across the globe, will be called into question.

I could go over, once again, all the arguments for dealing with the bankers, including the ‘too big to fail’ argument, bonuses, lending to small businesses, the rebuilding of balance sheets with QE money, but why bother?  All you need to do is Google any of Mervyn King’s, the Governor of the Bank of England’s comments over the last few years to see how worried he still is.

I have no doubt that the bankers will want to position this as a victimless crime, but somebody, somewhere is always holding the dumb money.  If it is found that it is the general public, among others, who have been screwed over once again this story has the capacity to make the leap from the business pages to the front pages.

If Cameron wants a ‘Thatcher Moment’ which cuts through to Joe Public or Worcester Woman, this morning it is staring him right in the face!

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What if the Eurozone just keeps applying sticking plasters?

Posted in economics, Politics with tags , , , , , on June 21, 2012 by Tom Leatherbarrow

A thought occurred to me watching Channel 4 News last night.  We are all it seems waiting for some anarchic / cathartic moment with the Eurozone crisis.  A cataclysmic earthquake which causes the entire structure to fall apart and countries forced to start printing their own money.  We are all expecting to see massive capital flight to safe havens, terror stricken faces on central bankers, horrified Germans, delighted Tory MPs and various economists trying to tell us that they predicted this all along.

But what if this doesn’t happen?  What if the Eurozone leaders keep on applying sticking plasters just big enough to stem the bleeding but not big enough to finally cure the patient?

I suspect we have been conditioned to expect the anarchic resolution scenario in this country in part due to our ejection from the Exchange Rate Mechanism in 1992.  That day all hell broke loose with massive currency trades, emergency interest rates of 15 per cent, a Chancellor of the Exchequer caught in the headlights and screaming currency arbitrage traders bellowing at each other across London trading floors.  Oh and George Soros looking very happy because he made billions that day and Peter Jay of the BBC seemingly the only person who knew what the hell was going on!

Ultimately, however, the experience was cathartic.  The UK economy, released from the stranglehold of the ERM blossomed, which is what many predict will happen if the likes of Greece and Spain are cut adrift or leave the Eurozone of their own accord, devalue their currencies and use inflationary pressure to reduce debt.  Then again, nobody is really sure.

Personally, I am beginning to believe that the key date is not when Greece or Spain’s next government bond repayment is due but the German elections when Angela Merkel has to face the electorate next year.  Once Merkel herself is released from trying to get re-elected then we might see some progress on a growth strategy for the Eurozone.

As I write I note that Angela is talking at the G20 about getting the “big bazooka” out to finally deal with this.  We’ll see, I’m increasingly of the belief that European leaders are not up to the task and that we are condemned to one sticking plaster after another with European, not just Eurozone, economies bumping along the bottom for a good while yet!

Forty years ago today journalism started on the road towards its finest hour!

Posted in Media, Politics with tags , , , , , on June 18, 2012 by Tom Leatherbarrow

40 years ago today the Washington Post carried a small story at the bottom of page one with the headline “Five held in plot to bug Democratic offices”. This was the start of what is probably the greatest journalistic triumph of all time.

At the time nobody much cared, but within two years the dogged pursuit of the story by the Post, in particular journalists Carl Bernstein and Bob Woodward, had caused the story to be renamed, creating a suffix which has become synonymous with political scandal ever since.

Watergate, as it became known, is the mother of all‘gates. In simple terms it was, in Nixon’s words, a “third-rate burglary”of the Democratic Party office in the Watergate complex perpetrated by White House henchmen and designed to uncover embarrassing information about candidates for the Presidency.  In reality, it is the story of how journalists on the Post, in the face of unprecedented political and peer pressure (for months no other newspaper would touch the story) uncovered a political scandal which brought down a President.

In many ways this was the high water mark for the profession. With a series of brilliant scoops, often using unnamed sources, the Post linked campaign contributions to the Committee to re-elect the President, or CREEP as it was known (you couldn’t make it up!), to the bank account of one of the Watergate burglars and then linked the White House to the burglars in the person of Charles Colson, Special Adviser to the President who was effectively in charge of campaign dirty tricks.

When Nixon embarked on a cover-up, the Post continued its pursuit alleging that the White House had instructed the CIA to illegally block the FBI investigation and that documents had been shredded at the Justice Department.

As Nixon wriggled on the hook the Post linked Presidential advisers of increasing importance with either the original break-in or the cover-up, eventually forcing Nixon to sack his most senior advisers, namely Chief of Staff HR ‘Bob’ Haldemann and policy adviser John Ehrlichman. When the Senate started investigating, and the Oval Office “tapes’ became public knowledge, Nixon’s fate was sealed. In all 43 people went to prison for Watergate related crimes, although of course not Nixon himself.

Forty years on the media landscape looks very different. The web is making traditional print news look, at best sluggish and, at worst, positively outdated. Newspapers across the country are closing, merging or going down one edition per week. Social media is making us all into ‘Citizen Journalists’ armed with our iPhones to record events to post ourselves on YouTube. Twitter and trending allow instant sharing of information.

Most importantly, journalism itself is now in the dock.  Parallels between phone hacking and Watergate have been made before, but it is startling that the key lesson, that the cover-up is at least as bad as the original crime, appears not to have been learnt. For the White House substitute News International with all of its alleged shredding, obstruction of justice and non-denial denials.

However, it would be wrong to paint journalism as an outdated and dying profession.  The Telegraph’s investigation of MPs expenses proved that investigative journalism can perform a public duty in the 21st century. The challenge for Leveson is to bring the press into line without strangling the opportunity for the sort of investigation which holds our public officials up to scrutiny and can bring down a President.