Christine Lagarde est magnificant

Fresh from having the FT crown her EU Finance Minister of the year, Christine Lagarde is seeking to salvage for France the honour which Thierry Henry, as Richard Williams so expertly describes, choose to throw away. She is doing so by demanding that the World Cup 2010 qualifier between France and Ireland be replayed. As with bankers’ bonuses, so with Henry, Lagarde is calling it as she sees it and seeing it as all fair minded people do.

This quality seems all too sadly rare in political leaders and should be all the more appauded because of this.  She has a character as steely and as fundamentally decent as that of Giovanni Trapattoni, while FIFA have shown themselves to be as weak and as culpable as Henry in refusing her demand.

What have the French to lose in volunteering to submit to Legarde’s demand and pressing FIFA to allow a replay? A place at World Cup 2010. But how great is this risk? Surely not so great given the roughness of the Irish diamonds (Glenn Whelan, Keith Andrews and Liam Lawrence, etc) that Trapattoni has polished and the purity of the diamonds that France could field (Henry, Nicolas Anelka, Karim Benzema, etc). The French should be confident of victory in a rematch. And what would they gain from volunteering to play this match? They would recover their honour, without which they are nothing, place at World Cup 2010 or no place at World Cup 2010. Nothing great has ever been accomplished without some risk being taken and the risk of putting this place on the line is more than justified by what the French stand to gain by doing so.

Green shoots?

Good analysis of the economy and public finances from Larry Elliott. He’s right to identify the struggles which some companies are still having in accessing finance as a key challenge as the pre-budget report draws nearer.  It must be a major worry that lending to businesses fell by £4.6bn in September – the eighth successive decline. What can Alistair Darling do about this?

Almost certainly less than the Bank of England may potentially be able to. “Inexplicably”, Willem Buiter convincingly argues, ”the Bank of England has not made full use yet of the instruments it has at its disposal.” Interest rates may go lower still (to zero or even beyond) and quantitative easing, which has taken a markedly different form in the UK from the US, might be revised in the UK. The UK’s programme has produced, in round terms, £2bn of outright purchases of private securities and £169bn of Treasury securities. There is a strong argument that shifting the balance between these purchases would do more to get credit flowing to businesses.

This isn’t a shift which it is within Darling’s gift to make, however, and Buiter does not anticipate “much joy … from fiscal policy as a means for boosting aggregate demand in the UK in the short run”. So, Darling’s ability to get credit flowing is constrained. Nonetheless, he’ll come under some pressure to provide greater fiscal stimulus in the pre-budget report. This might be a last gasp of Keynesianism. For this gasp to achieve anything, though, it needs to be the kind of smart Keynesianism that I have previously praised. This is a Keynesianism that recognises that what the government spends its money on matters as much as how much it spends.

The next round of monetary and fiscal stimulus must both put an emphasis on quality, not quantity. Well targeted government spending can make a difference, even on a limited scale, and the form which quantitative easing takes is as important as its scale. If these revisions can be made on both the fiscal and the monetary fronts, businesses may be able to access credit on more favourable terms than they can at present and, if this were to be the case, the green shoots really would be coming into view.

Labour should be fighters, not quitters, or even plotters

Yesterday, Nick Robinson divided the PLP into plotters, quitters and fighters. Today, Cicero Consulting, Jonathan Freedland and Rod Liddle have done great jobs of putting further meat on the kind of arguments that sustain the fighters;  We’ve had a Queen’s Speech that seeks to frame the General Election in “caring Labour versus cruel Tory” terms; and reports suggest that Compass are considering joining the ranks of the plotters. So, much is going on, it would seem. But, fundamentally, nothing has changed since July, which was the last time that I said: Labour has three options: 1.) Back Brown, 2.) Replace him, 3.) Allow him to continue without backing him. The quitters only exist because they have concluded that the second of these worlds can’t be achieved by the plotters. The quitters are right to draw this conclusion. However, the continued existence of the quitters and the plotters threatens to leave Labour stranded in the third world, so to speak, which is the worst of all worlds for Labour. There remains, therefore, no logical defence for a Labour person not being a fighter and embracing the first of the three worlds. Labour should be fighters, not quitters, or even plotters, as someone didn’t quite say. The arguments of Cicero, Freedland and Liddle provide much reason to believe that the world of the fighter is far from an awful or hopeless world.

Cracks in Tory discipline

As I was writing my last blog, Boris Johnson was writing his latest act of defiance to David Cameron. With commentary like this from the Spectator’s Coffee House, Johnson seems unlikely to cease pushing this envelope, not least when Andrew Sparrow is amongst those seeing this as part of a long term strategy to make Johnson Tory leader. What with Boris, the ‘Turnip Taliban’ and the looming EU-wars, subject of comment today from Max Hastings, there are various scenarios in which a breakdown of Tory discipline is possible; particularly, if the sheen of winning popularity that now attaches to David Cameron were to corrode. Then Cameron would really find out who his friends are (or aren’t).

Dave v Boris

The video of the Spectator/Threadneedle Awards is fun and worth watching. It features a classy speech from Politician of the Year, Peter Mandelson, who said that he shares with Boris Johnson, who presented him with the award, ”a driving ambition to do all we can to undermine David Cameron.” This brought roars of protest from Boris. Perhaps, as Lord Mandelson said, these protests were a little too loud, not least given what could be read into the sub-text of the speech which Mayor Johnson had earlier given on the same stage.

He referred to wisteria in the midst of a riff on MPs expenses. Now just as clearly as porno video equals Mr. Jacqui Smith, so wisteria brings to mind the leader of the opposition. May be, I’m just being paranoid on Dave’s behalf, but, quite possibly, Boris is doing his bit to try to keep alive this unfavourable image of Dave.

Should Boris fulfil what we are to take as his long term ambition, to succeed Dave as Tory leader, the bedrock of his support is likely to come from those Tory MPs who were annoyed by Cameron’s alleged double standards and poor handling of the MPs’ expenses scandal. So, Boris’ wisteria reference is a shout-out to those MPs; a not so subtle “I am your man.” Yes, somewhat less mega-phone and more subtle than the same such shout-out that Boris gave at Tory Party Conference with his remarks on the Lisbon Treaty. But a shout-out, nonetheless. And a rubber ring for himself; a rubber ring to carry his not inconsiderable girth from where he is now (City Hall) to where he wants to be (Number 10 or at least the Tory leadership). 

At the award ceremony, the Newcomer of the Year, Ken Clarke, described where Boris is now as “the world of buses and bus lanes.” When his current station is put like that, despite affording him the third largest personal mandate in Europe after the French and Portuguese presidents, it is easy to understand why Boris grasps for that rubber ring. After all, any man using a bus over the age of 25 is a failure.

The stage of Brixton Academy has been the pinnacle of many careers but on that stage last Monday night, for People’s Question Time, Boris didn’t cut the figure of someone who has achieved any kind of pinnacle. Indeed, it often seemed so much of a chore for the Mayor. Tony Blair and Ken Livingstone, unlike Boris and Dave, share little in terms of background and inclinations, but when Ken was Mayor they formed a great working relationship. This might be because Blair was confident throughout that Livingstone wasn’t after his job and had achieved his pinnacle. The same can’t be said of Boris and Dave.  Probably the battle of Waterloo was won on the playing-fields of Eton, but a war that began on those same fields has many more bus lanes and rubber rings to travel before it reaches its (inevitably bloody) conclusion.

Coverage of AIFM Directive report

A report that I co-authored for the European Parliament on the proposed Alternative Investment Fund Managers (AIFM) Directive has been picked up by the Financial Times, Reuters and Wall Street Journal.

I forgive Tatler

Johann Hari has won me over with this argument about celebrity:

“We will always have celebrities, and we will – if we are honest – always want them. If we rage against them Starsuckers-style, with an annihilating, snobbish superiority, we will lose the argument. The real struggle instead is to temper our instinct for fame – and stop it sucking up all the cultural oxygen.”

Consequently, I was probably wrong to argue that Tatler must be stormed for socialism. So, while I know it isn’t mutual, I forgive Tatler.

Tory arguments don’t add up

I know that the other day I again proclaimed the futility of negative politics, at least as far as the Labour Party at the moment are concerned. However, I was asked to comment on this letter from the Tory PPC for Copeland and couldn’t resist picking apart his arguments. I’d be amused at how weak they are, if the prospect of him being the MP for the seat where I grew up and where most of my family still live were not so appalling. This is what I had to say:

If David Cameron is so pro-nuclear, how is his close relationship with the avowed anti-nuclear campaigner and Tory PPC for Richmond Park Zac Goldsmith to be explained? Could it be that the Tories want to say one thing in Richmond Park and another in Copeland?

Irrespective of what they say in different parts of the UK, a Conservative government would not be heard in Brussels, as David Cameron has already made decisions which have, according to France’s European Minister, castrated British influence in Brussels. This materially impacts upon economic wellbeing in Copeland. Chris Whiteside speaks of removing barriers to new nuclear investment, but securing a higher and more stable carbon price would remove a key barrier to this investment. Lowering the cap in the EU-ETS is the best available policy lever for achieving such a carbon price, but this lever will only be pulled by a British government capable of commanding influence in Brussels and across the EU. The castration of British Conservatives in Brussels threatens the nuclear future of west Cumbria should we ever have a Conservative government.

It is odd that Chris Whiteside bemoans, rightly, attempts to misrepresent the policies of other parties and then proceeds not only to misrepresent Labour policy but also his own party’s history.  

As far as his own party’s history is concerned, it is one thing to attempt, as Cameron and Andrew Lansley, the Conservative health spokesman, are doing, to re-brand the Conservatives as champions of the NHS. Great is the joy for the sinner who repenteth. But it is quite another to ask us to forget the sin, as Chris Whiteside’s perplexing praise of the record of past Conservative governments on the NHS asks us to do. The NHS was on its knees when Labour came to government in 1997. We turned it around because we have always believed in the NHS and not seen it “as a 60 year mistake”, as a Conservative MEP recently described it; comments which cause one to doubt the sincerity of the repenting we are being asked to embrace.

As for misrepresenting Labour policy, since when has Budget 2009 been a leaked document? This very public document set out plans for a cumulative 6.7 percent reduction in public spending over the three years from April 2011. I can only presume that the 10 percent figure that Chris Whiteside refers to is the reduction which is implied across most of the public sector by the Conservative commitment to both match Labour’s spending restraint and ring fence increases in health spending. This ring fencing is intended to convince us of the sincerity of Tory repenting on the NHS, but one’s confidence in this sincerity is further shaken by Chris Whiteside’s capacity not only to confuse a leaked document with Budget 2009 but Labour Party policy (which is for a 6.7 percent reduction) with Conservative policy (which is for the 10 percent reduction he refers to).

Nonetheless, Whiteside is correct to be concerned about public debt and we look forward to the Chancellor, Alistair Darling, setting out full plans for the management of public debt in the Pre-Budget Report later this month. He will do so on a basis that both preserves confidence in the public finances and maintains the public services that Labour has turned around since 1997. To re-coin a phrase, this will be prudence with a purpose. Chris Whiteside’s obvious lack of either prudence or sincere purpose is a danger to Copeland.

Can UKIP save Labour? Or can Labour save itself?

Given that the Guardian now report that David “Cameron faces Eurosceptic backlash after Czech Lisbon treaty decision”, it seems an apt moment to revisit this question: ”Could UKIP still save the day for Labour?”

Perhaps confounding expectations of what the Spectator would be like with Fraser Nelson as editor, James Forsyth at Coffee House has been quick to man the trenches on Cameron’s behalf and insist he “hasn’t broken a pledge on Europe”. Such activity from someone, who is, among “the leading commentators”, according to Danny Finkelstein, to well “understand what the Cameron team are trying to do” might suggest that this team is worried that UKIP could indeed save the day for Labour.

I’m doubtful that Nigel Farage and co have it in them to save Labour’s speck (at least any more than the BNP have the potential to steal this same bacon by similarly undercutting the vote of one of the major parties). But, certainly, it is in Labour’s interests to widen and magnify the divisions that obviously linger within the Tory Party on Europe.

Ah, a dividing line, Number 10 surely cries. But I hope it doesn’t. As I have argued elsewhere, Labour needs to be more realistic about our capacity to impact perceptions of the Tories. Essentially, our capacity in this regard is almost zero. Instead of trying to mine this very limited potential, we should be focusing on changing perceptions of ourselves; presenting a positive case for Labour. This argument holds on Europe as much as it does on other areas of policy. So, rather than any ”clever” tactical games, I suggest that Labour makes a positive case for the EU and for our position on the Lisbon Treaty and the future of the EU, while hoping that the snipping of Bill Cash et al opens up the divisions within the Tories that any ”clever” tactical games would seek to achieve and, in so doing, pushes some Tory voters in the direction of UKIP.

It might seem madness (even suicidal) to attempt to present a positive case for the EU and Lisbon Treaty in the UK at the moment. But, first, a more negative politics of dividing lines ignores the reality of our ability to impact perceptions of the Tories. David Aaronovitch’s ability in this regard is probably now stronger than the whole of the Cabinet’s combined. Second, part of the reason that this seems madness is because the dots between the Lisbon Treaty and our national interest remain so un-joined. Take, for example, Daniel Korski’s well-made argument today: ”Europe has the US president it wished for, but Barack Obama lacks the strong transatlantic partner he desired.” This is profoundly true and it is manifestly in the UK’s interest that the EU becomes this strong transatlantic partner. It is far more likely to be able to perform such a role once the improvements to its systems of governance enabled by the Lisbon Treaty are in place.

Labour should make arguments of this kind; arguments that are global and universal in focus, as we leave Cameron and Cash to petty and parochial arguments (Cameron and Cash even sounds suitably like a petty and parachial firm of solictors). Combining UKIP with an enlightened and far-sighted approach from Labour could yet save the day.

Welcome to Lehman Sisters

Interesting developments. And news to delight Harriet Harman, amongst many others, I am sure. Efforts are afoot to create Lehman Sisters or something akin to it. Amidst the continuing regulatory and legislative whirlwind that the financial crisis has – not unreasonably or unexpectedly - unleashed, it is noteworthy that the creation of Lehman Sisters is a market outcome, not the consequence of a regulatory or legislative initiative. As such, I hope it has been properly factored into counterfactual analysis of the government’s latest plans, as part of H. M. Treasury’s impact assessment processes. These plans now seem somewhat unnecessary if these counterfactuals really can conclude that another financial crisis will be avoided in the world of Lehman Sisters et al.