Friday, October 10, 2008

Greedy Councils Risked Shopping At Iceland

Millions of pounds of council tax and profits from property sales have been squirrelled away in Icelandic slush funds, despite the warning bells. Now, so-called cash-strapped councils and police authorities, are crying foul after Iceland refused to cough up their cash. Greedy councils have kept mum while shopping at Iceland. 

The Icelandic connection has revealed the extent to which councils, police and other public bodies like Transport for London, have huge deposits in Icelandic banks.

BBC News revealed that local authorities along with police authorities and Transport for London hold deposits worth around £1 billion. 

That's £1 billion of public money that could have been spent on rubbish collection, coppers, libraries, jobs and a decent wage for council workers. 

Ordinary savers in bankrupt Icelandic banks who have set up shop here are safe because of government guarantees. And that will cost us a fortune.

Not so the public bodies, who are classed as "informed investors". Informed means they should have realised what was going on. They are supposed to be, er, informed. 

Instead greed took hold, as million of pounds of our cash was stashed away for a quick profit. 

After years of farming and fishing, Iceland woke up to the fact that rich pickings were to be made in the UK and they gobbled it up. 

It was party time. But everyone knew the volcano would erupt and after the party would come the almighty hangover. 

Many saw this coming. Credit ratings agencies were warning public authorities of the risks back in the spring. This afternoon, a LibDem treasury spokesman, Lord Oakeshott, revealed he warned the treasury back in July but they were "blind and deaf" and all he got back was waffle.

As for Brown's diplomacy - using anti-terror laws to freeze the UK assets of Icelandic bank, Landsbanki. That went down a bomb in Reykjavik. 

The government reckons local authorities have not been "reckless" in investing with Icelandic banks. Well someone has been.

The questions remain. How come councils and police authorities have got so much cash swilling around to invest? If they've got so much cash, why does our council tax keep going up? What checks were made by government on council investment? 

And how come this tiny rock in the middle of the north Atlantic was allowed to set up and operate so freely in the UK with little or no checks?

As the economic mess unravels each day as the devil in the detail of Brown's doomed £500 billion bank bail-out  is exposed and stock markets crash, the greed and exploitation of a flawed economic model is becoming more and more apparent. 

Brown was quick to point the finger of blame at poor little rich Iceland. Too quick. "They have failed not only the people of Iceland; they have failed people in Britain," he said. 

Methinks the man doth protest too much.


Benn's Public Banks The Only Solution

Labour grandee, Tony Benn, has called on the government to put the banks into public ownership. Power has switched from parliament to the City. Brown's doomed £500 billion bank bail-out is the final straw. 

The City now calls the shots and voters will see through it. On this issue, the Orange Party is more than happy to nail its colours to his mast. 

It has been observed here on a number of occasions how New Labour has cosied up to their pals in the City. 

Now, when times are tough, like Bush in the US, the answer has been to throw them more taxpayer's cash and borrow billions getting the country deeper in debt. The piper is calling the tune.

There's plenty of life in the old Labour dog yet. In June, Benn delivered a masterclass in politics over civil liberties. Now Benn's argument, over public-ownership, is a simple one and he makes the point forcefully: 

"The trouble is that the Prime Minister and the American President have been relegated to mere spectators, commenting on what has happened, and whose only role is to dish out more and more taxpayers’ cash."

Benn argues for public ownership of the banking system and the reason is accountability, sadly lacking in current economic policy.

Strategic public services such as the army, police, fire service, health care and education are still, in the main, in public ownership, despite New Labour's best efforts to sell them off. Why should the banks be any different. The seeds have already been sown with a nationalised Northern Rock.

For ordinary people, banks are somewhere you can trust to look after your hard earned cash. And somewhere to go for a loan without fear of being ripped off. That's a public service. 

"I have concluded that a publicly owned and accountable banking system would be better for Britain and judging from the way opinion is moving, I suspect that those views would appeal to people from right across the political spectrum," said Benn.

His view is shared by LSE economics professor and former MPC member, Willem Buiter, who believes nationalisation may be the only answer to restore confidence, as a temporary solution.

Liberal economist, JK Galbraith, referred to here on a number of occasions, doesn't call for public ownership but his acute analysis of the failed banking system in the years after the Great Depression has prophetic warnings of the doom ahead. 

And support for Galbraith comes from a seemingly unlikely source. Jeff Randall writing in the Daily Telegraph is firmly of the belief that Galbraith got it right: 

"His analysis of the greed and self-delusion that led to the unravelling of America’s stock market and the subsequent Depression is undimmed by time ... Replace 1929 with 2008 and the story, I’m afraid, is eerily familiar: a speculative orgy, crescendo, climax and crash. As this plays out, important people – business and political leaders – rely on “the power of incantation” to keep the rest of us calm. Their efforts are doomed to fail."

Brown is keen at the moment to spin the banking "crisis" for his own political ends. Blair developed a notorious "taste for war". Brown, a taste for the City. Both leave a bitter taste in the mouth.

As the devil in the detail of Brown's bank bail-out is exposed and share prices crash on the stock market, Benn's answer - fully accountable public ownership - is looking increasingly like the only realistic solution.


The Unsinkable Gordon Brown

He's riding along on the crest of a wave. The unsinkable Gordon Brown better make the most of it. The Glenrothes Massacre is just around the corner. Will Vince Cable ride in to save the day for Labour?

Brown has lived to fight another day because of the financial "crisis". He has been saved by the economic mess of his own making.     

Only a few months ago, Brown was more unpopular than Hitler. Now he's saving the country from economic doom, global warming and malaria. How times change. 

One thing is certain. In the cunning world of Brown politics, he has the interest of one thing at heart - his own survival and that of his beloved New Labour Project. 

The economic "crisis" couldn't have come at a better time. One could be forgiven for thinking it was all planned with immaculate timing. 

A true Labour rebellion melted away during the summer. A Blairite challenge evaporated a few weeks ago. Cameron, spitting blood during the Tory Party conference, turned into Cameron soft soaping Brown during PMQs. Cable no longer shoots from the hip. No-one is prepared to put their head above the parapet.

But it won't last. And Brown and his new team of political spin doctors and plumbers know this.

For the moment, all eyes are on the doomed £500 billion bank bail-out, where the devil is in the detail. But even that will be short-lived. Brown needs a few more tricks up his sleeve if he is to survive. 

He's already started, with a regional tour to explain just why he's risking billions of pounds of taxpayers cash to prop up the City. That tour could well end up in his own backyard - Glenrothes.

The sticking point is Darling, a man clearly out of his depth. Likely replacements come from the two Eds. But Balls is too hated, Miliband too young.

Westminster speculation centres on the popular and respected LibDem economist, Vincent Cable, brought in as chancellor - a government of all the people. 

Cable and Brown share a long history together going back to the Labour leadership under John Smith. Time to cast aside Party politics and all that. And time to totally wrong-foot the Tories and SNP.

This has never been about putting the best interests of people first. This is about Brown's survival, New Labour's survival. Trying to out manoeuvre Cameron's Conservatives in England and Salmond's SNP in Scotland. 

A week is a long time in politics - four weeks is a lifetime. Anything other than a New Labour victory in Glenrothes and the unsinkable Gordon Brown will have to go down with his ship.


Thursday, October 09, 2008

£500bn Bail-Out Won't Work For Us

An eye-watering £500 billion is being pumped into the UK banking system, interest rates cut by half a percent. Both measures prop up the banks. Neither will curb soaring inflation, rising unemployment or people struggling with insurmountable debt. These are measures for the City and by the City. As the banks sail off into the 'wild blue yonder', the legacy of this monumental bail-out will be with us for years to come.

Brown and Darling may have written their own suicide note as, in the months ahead, the true scale of the bail-out hits home. 

The subdued response in the commons from all Parties said it all. Generally, they took it lying down. 

The government spin has been swallowed hook, line and sinker, with few stopping to think of the dire consequences. Talk of part-nationalisation with a £50 billion taxpayer stake is a disturbing prospect. 

But Northern Rock was nationalisation. This is not. Taxpayer's cash is being used to buy preference shares in the banks. Control still remains with the shareholders with no publicly accountable voice on the board.

£450 billion (of which £350 billion is 'new' money) will be available for bank borrowing and guarantees. That cash will have to be borrowed on international markets, blowing any fiscal golden borrowing rule out of the water. At a time of tightening our belts the government is doing just the opposite. 

It saddles the UK with colossal debt for years, decades to come. Borrowing such a huge sum comes with strings attached. No one, not the IMF, is gong to lend cash without commitment to tighten the belt - and that means cuts in public services and public spending. 

Cutting interest rates may get thing going - for the banks - making it easier for them to lend to each other through the inter bank lending rate. But the Bank of England has, until now, been reluctant to cut interest rates. 

There's a price to pay. Any big cut means higher inflation and higher unemployment. That concern has been thrown out of the window.

No-one has stopped to ask how we got into this sorry state. All the attention is focussed on the struggling banks. Who gives a toss about the banks. They and bad government caused this mess in the first place. 

The spin now is of bold, decisive action by the prime minister and his chancellor. Like Bush in the US, they are using the current financial disaster to make themselves look good and dig themselves out of a hole of their own making.

Borrow cash by all means - to kick start the economy - particularly to invest in manufacturing which has been decimated by the government, relying instead on an economy based solely on the financial world of the City. 

If the government was bothered about people, not their pals in the banking world, they would have taken the simple step of guaranteeing all savers deposits, as in Ireland and tacitly by Germany. That would not cost a penny and only kick in if a bank folded. 

Cash would only be used for people genuinely struggling as they come off the fixed term loans and mortgages. Others will have to face up to the harsh truth that they borrowed money too cheaply, without any checks and now, unlike the government, have to pay the price of reckless borrowing. 

In the US, Bush has pumped $700 billion of taxpayers cash in the banking system and the Fed billions more. It is having little effect. Treasury secretary, Hank Paulson, is today warning that some banks will still fail. The same could happen over here. 

People want jobs, affordable housing and tax cuts to help them through the hard times. The country needs a strong manufacturing base. The measures announced yesterday simply benefit banks not people.

As liberal economist, JK Galbraith, observed:

"For now, free at last from all threat of government reaction or retribution, the market sailed off into the wild blue yonder."


Wednesday, October 08, 2008

Balls And Cooper Let Off The Hook

Brown's favourite cabinet couple, Ed Balls and wife Yvette Cooper have been let off the hook over their use of MPs' homes expenses and can continue to stick with their boss. Any whiff of fiddling expenses would have meant resignations all round, leaving Brown with few friends in the cabinet.

Parliament's sleaze watchdog investigated the married ministers, after it was claimed they had been able to "maximise" their taxpayer-funded second homes allowances, by claiming their London home was their main home.

They faced a complaint from a Tory MP that they may have broken the spirit or the letter of the rules on commons' housing allowance, following a newspaper report accusing the couple of exploiting the rules to buy an expensive home and get their children into a "top state school".

Now parliamentary watchdog, the standards commissioner, John Lyon, said there was no evidence they had broken the rules. But he added MPs should consider changes to allowances for joint claims.

Balls and Cooper, always insisted they acted with the rules over their parliamentary housing allowances and may have been cleared of fiddling expenses but that was a lame excuse. 

This is public money. They are elected and accountable. You don't expect cheap accounting tricks from senior members of the government.


Brown Bails Out His Banking Buddies Again

More than £50 billion of taxpayers hard-earned cash is being pumped into the discredited banking system by Dithering Darling and Banksy Brown, along with £450 billion for bank borrowing and guarantees. What a couple of bankers. 

The High Street banks went cap in hand to the government for a blank cheque to oil the wheels of their day to day operations after it became clear they didn't have the cash to lend to each other. 

Now taxpayers have a stake in the part-nationalised banks and building societies to the tune of £2000 each, which is set to disappear down the black hole of smoke and mirrors accounting. 

The BBC reports a further £200 billion will be made available by the Bank of England for short-term borrowing to provide liquidity to banks and building societies. And, on top of that, there's a lending guarantee worth around £250 billion. All in all, a staggering £500 billion.

Time will tell whether this £50 billion bail-out on the hoof and the other £450 billion is too little too late or too much too soon. And, after the bail-out of Northern Rock and Bradford & Bingley, the question is where is all this cash actually coming from and where will it all end? 

In the US, Bush and his side-kick Paulson's cap in hand plea to Congress for $700 billion taxpayers bail-out cash had little effect. Now the Fed is being forced to pump billions more taxpayers cash into the US banking system. 

There's no reason to think the same won't happen over here, despite today's 0.5% cut in interest rates by central banks, including the Bank of England. 

Pumping taxpayers money into the banks means the taxpayer, not the bank shareholders, take all the financial risk. 

Shareholders still own the banks which can continue to make huge and risk-free profits, as well as paying themselves handsome dividends and director bonuses.

Brown and Darling are clearly out of their depth and the banks are calling the shots. 

Saving the banks in this way comes at a cost. The bail-out will bust Brown's golden rule on borrowing. The treasury will have to try to raise sufficient funds on the tight international money markets to pay our national debts. 

The BBC's man in the City and the treasury, Robert Peston, sent Downing Street into a spin yesterday when he leaked details of a secret meeting between the High Street bankers and government. This exposed a weak political leadership at the beck and call of the bankers. 

What is needed is bold, decisive leadership and a well-thought out economic recovery plan, not a bumbling and fumbling Brown and Darling. Bail-outs on the hoof are not the way to run an economy.

What is clear is that we have a chancellor and prime minister who are prepared to take risks with the economy and people's livelihoods, by using taxpayers money to prop up their pals in the banking system. And that could lead to political suicide.


Tuesday, October 07, 2008

Dithering Darling Is Out Of His Depth

Darling sits on the horns of a dilemma. Does he nationalise the banks or face the dire consequences. Or does he pray for an economic miracle. What is becoming increasingly clear is that he's out of his depth. 

The stock market plunged deeper into the red today, punishing dithering Darling's commons non-statement. Here is a man without an economic plan - or if he has one, he's keeping it very close to his chest. 

As markets crashed round his ears, Darling was clutching at straws, making a worthless and totally uninspiring commitment "to do everything necessary to solve the crisis." 

He needs to be bold. He needs to be decisive. He needs to restore confidence and stability otherwise the economy is doomed. Sadly, not words we associate with the chancellor or his prime minister.

The High Street banks could go bust. Without government help they may fold. Darling's decision boils down to whether to nationalise the whole banking system. 

The chancellor and prime minister Brown are under increasing pressure to guarantee depositors' money, as in Ireland and elsewhere. 

But protecting the bank's liabilities in this way, means putting them under state control. Putting government money into the banks means the taxpayer, not the bank shareholders, would be taking all the financial risk. 

Shareholders would still own the banks which would be free to make huge and risk-free profits, as well as paying themselves handsome dividends.

With smoke and mirrors accounting, no-one knows the true scale of bank debt. It must runs into trillions of pounds. Adding such a sum of money to the precarious national balance sheet would be unimaginable. Printing more money is fraught with danger for the whole economy.

And saving the banks comes at a cost. How can the treasury hope to to raise sufficient funds on international money markets to pay our national debts. 

In the US, the much-vaunted $700 billion Paulson bail-out was the final desperate act of the Bush administration and it looks as though all of that taxpayers' money made no difference.

Over the last 12 months, Brown and Darling, have been caught out and exposed as just a couple of sharp whizz kids, riding on the back of the economic boom but unable or unwilling to cope with the bust. 

A chancellor and prime minister who take risks with the economy and people's livelihoods, by using taxpayers money to prop up their pals in the banking system, are heading for political suicide.


Obama's The Loser In Down and Dirty Campaign

With much of the media fawning over Obama like a bunch of demented high school kids, the McCain campaign has finally come out fighting and Obama has fallen into the trap. 

The campaign is getting down and dirty. McCain is having to do what the media should have been doing a long while ago - holding a candle up to the characters of both candidates and probing for weaknesses. 

Until now, the Obama campaign has kept its cool. Generally they've risen above the claims. 

Links with terrorist, Ayes, black power pastor, Wright and crook, Rezo were cast aside as lies and smears. And, with the media backing, they go away with it.

Palin's attack, accusing Obama of "palling around" with unrepentant former Weather Underground terrorist, William Ayers, brought a swift rebuttal. That's to be expected. But they then followed it through with counter-claims. A bad move from the Obama camp, it played into McCain's hands. 

It was a weak attack. McCain was one of five senators investigated 20 years ago by the Senate over Arizona tycoon Charles Keating, who was convicted of fraud after his bank collapsed.

But McCain's Keating and Palin's own 'Troopergate' are spot news. Headlines today, forgotten tomorrow. But it gives the McCain camp the excuse to hit back even harder. And Obama has more to lose.

It was observed here a while ago that the McCain strategy is all in the timing. First talk up the strengths of your candidate's character - a Vietnam war hero - then demolish the character of the opponent. 

With a month to go and flagging in the polls, the McCain team can unleash its final shots in a tightly controlled campaign grid. 

Links with Ayers and the Annenberg Foundation was the first shot, despite the media's best efforts to play down Ayres as just a "hippy radial". 

This was a Weatherman - a domestic terrorist whose bombing campaign struck fear into the heart of the US establishment at the time of the Vietnam war. Obama served on a charity board with Ayers. His links to him are much more than "a guy who lives in my neighbourhood.’' 

More of Obama's dodgy Chicago characters won't be far behind. Attack-dog Palin has already said voters should pay more attention to Obama's relationship with his former church pastor, the Reverend Jeremiah Wright. By voters, she means the McCain campaign.

Expect more on Obama’s key role in Ayers’s Chicago Annenberg Challenge (CAC), his two-decade membership of a Black Power church and his relationship with fraudster, Tony Rezko, along with Obama's true source of funding and most importantly, his background and eligibility to run for president

Counter attacks with revelations over skeleton's in both Palin's and McCain's cupboards pale into insignificance. 

Both sides are getting down and dirty and that's just how it should be when you are about to elect the most powerful person on the planet. 

Tonight both presidential candidates square up for round two of their TV debates. 

This election will be decided on the trust and the strength of character of both candidates in the closing few weeks of the campaign. 


Sunday, October 05, 2008

Palin Digs Heels Into Obama's Terrorist Links

Disturbing revelations over Obama’s background and terrorist links have been brought out into the open, as part of McCain's campaign to expose weakness in his character and fitness for US president, as the race for the White House enters its final month.

The attack comes from Republican vice-presidential candidate, Sarah Palin, who has highlighted Obama's links with unrepentant former Weather Underground terrorist, William Ayers, which has been an open secret in the US Main stream media for some while. 

Palin's aides said the time had come to take the gloves off and dig the heels in. Expect more in the coming weeks. 

The US blogsphere is rife with details of Obama's links with Ayes which, with exceptions such as the Wall Street Journal, have been given only a passing reference by much of the Main stream media, which has firmly nailed its colours to the Obama mast and accepted him at face value.

The attacks on Obama's character chimes with TV ads by outside groups, questioning Obama's ties to Ayers, convicted former Obama fundraiser Antoin 'Tony' Rezko and Obama's former pastor, the Rev. Jeremiah Wright.

Attack-dog Palin accused Obama of "palling around with terrorists" because of his association with the former 1960s radical, stepping up the campaign's effort to portray Obama as unacceptable to American voters.

Palin's reference was to Ayers, one of the founders of the group, the Weather Underground. Its members took credit for bombings, including non-fatal explosions at the Pentagon and US Capitol, during the Vietnam War era. 

Obama served on a charity board with Ayers several years ago and has been at pains to play down this relationship, dismissing Ayers as just ‘a guy who lives in my neighbourhood,’ and ‘not somebody who I exchange ideas with on a regular basis.’ 

Palin told a group of donors, "Our opponent ... is someone who sees America, it seems, as being so imperfect, imperfect enough, that he's palling around with terrorists who would target their own country." She also said, "This is not a man who sees America as you see America and as I see America."

Ayers, the former Weatherman, became a professor at the University of Illinois in Chicago. He founded the Chicago Annenberg Challenge (CAC) in conjunction with $50m funder, the Annenberg Foundation. Obama was brought in to be CAC's first chairman of the board. Trinity United Church of Christ, headed by Pastor Jeremiah Wright, also received funds. 

In the Wall Street Journal, Stanley Kurtz, writes that documents in the CAC archives make it clear that Ayers and Obama were partners in the CAC.

Kurtz has also been trying to discover just who appointed Obama to the CAC board.

One unsettled question is how Obama, a former community organiser fresh out of law school, could vault to the top of a new foundation?

Kurtz here adds that Obama has sought to obscure the role Ayers played in choosing him to lead the CAC and also details how the CAC tried to obstruct Kurtz’s inquiries by blocking his access to the records.

Nor is the relationship with Ayers the only question-mark over Obama’s associations with organisations specifically designed to put Obama in the White House, as WorldNetDaily and Global Labor and Politics reveal.

Questions over Obama's background and links with dodgy Chicago characters, have been raised by the Orange Party on a number of occasions. What is startling is that if any other candidate had even a fleeting relationship with Ayers, his presidential bid would have ended before it even began. 

Yet details have emerged about Obama’s key role in Ayers’s CAC and its funding of radical groups, his two-decade membership of a Black Power church and his relationship with fraudster, Tony Rezko.

Melanie Phillips, who has given a detailed account of Obama's links in the Spectator, sums it up well: 

"Obama appears to sit on a nexus between Marxist revolutionary activists, unrepentant former terrorists, Black Power racists, Chicago mobsters – oh, and a Saudi who is trying to buy up America. And yet despite all of this, virtually no-one in the mainstream media is asking any questions. Has there ever been a more staggering, surreal and scary race to the White House?"