So where has all the money gone!

What Brown, Darling, Cameron and Osborne have in common in this financial crisis is it was correct to save the banks and because of the cost of doing this with taxpayers money things like health and education will be cut. The differences will be in how big the cuts are. The Tories are reverting to old style Thatcherism so forget all about the hug-a-hoody PR.

I read on the BBC website that Mandelson said soundbites are not dead. How about this one then? Following on from Tom Cruise's "Show me the money" in Jerry Maguire, "Follow the money".

Now I'm sure there are good reasons for keeping the banks solvent, bailing them out so they can repay the people they owe money to may be a good thing. Maybe the future earnings and tax income of the City investment banks justifies paying off the present investors in them and keeping London's reputation untarnished among the rich and powerful. If this is the case shouldn't Darling show us the maths?

Now don't confuse saving the banks with small depositors savings or even bank workers jobs. Deposit insurance protects the former and nationalization after bankruptcy would take care of the latter. All I am saying is there was an alternative, bank failure, to throwing billions at the banks. It might not have been the best option but it would be nice to know why not.

So where did the money go? Who had invested in all these failing funds and bad investment instruments at the banks? I wonder whose names would come up. For sure from the UK would be the pension funds. So we have indirectly bailed out some pension funds but that doesn't stop Mandelson talking about the problem of funding the Post Office workers pensions needing outside money. Who else? Must be some UK based hedge funds I guess but then I would be looking overseas. How about the Russian oligarchs, the oil rich Arab sheikdoms and the money that the Chinese have been putting out on the world markets instead of raising the standard of living of their own people. On top of that we would find the rich and famous both from the UK and overseas. Probably find we bailed out the Blairs and the Camerons.

Wouldn't it be nice to know?

Phil Woolas - What a Wowser

From Wikipedia - Wowser: The Australian writer C.J. Dennis defined it thus: 'Wowser: an ineffably pious person who mistakes this world for a penitentiary and himself for a warder'.

So what is going through the mind of Immigration Minister Phil Woolas? He says that in a worse case it would mean 100,000 immigrants coming in if he allowed ex-Gurkha servicemen to settle in the UK. I just saw him on TV saying that if he allowed in the Gurkhas it would open the door to other groups to go get a court ruling. Are there other groups that the UK owes as much to as the Gurkhas? If so we should let them in also.

Woolas shows all the worst in New Labour. He's the man behind the counter at the dole office, the petty bureaucrats that run our health service, and all those well paid administration jobs that Blair and Brown have created. What they can't see that everyone else in the country can, is they are shooting themselves in the foot every time they open their mouths. The tabloids couldn't have made it up. We have a wheelchair bound, VC wearing, Gurkha next to Joanna Lumley protesting outside parliament.

You wouldn't mind as much if it was just one New Labour groupie, but like the Mandelson Post Office statements, Gordon Brown jumps right behind with support. Brown must go and better before the election than after.

New Labour - Militant with Money!

If I lived in the UK it would probably be back in my old home in the Erith and Thamesmead constituency. Right now I would really be pissed off as the New Labour leadership tries to fix the selection of the next Labour candidate against the wishes of the local Labour members.

First the London party takes away control of the selection from the local party and declares it an all women shortlist. Then the Blairites drop in the 22 year old daughter of Blair advisor, millionaire and now Baron Philip Gould with unlimited money to spend. So it looks like Erith will get the Hon. Georgia Gould as their Labour candidate.

If the leaders of Militant have anything on their consciences it should be that they opened the door to the most undemocratic faction in the Labour Party's history, New Labour.

At last a choice.

I have been getting a little too one-eyed recently and allowing my dislike of New Labour and the sleaze around them to miss some important choices coming up ahead. The Tories and New Labour are beginning to split away in how to deal with the economic crisis. Up until now Brown, and Blair before him, have been following the economic ideas of Milton Friedman who inspired Thatcher and Reagan. This did not give David Cameron much room to maneuver. John Maynard Keynes, pictured, and his ideas were consigned to the dustbin of history. Now it's beginning to change. As Brown starts to look for Keynesian answers to the crisis Cameron has stayed true to Thatcherism.

As much as the Tories would rather not get tied down on policies before the election, and many of the voters will let their dislike of New Labour control their vote, the election will have an enormous effect on the standard of living of most British voters. Now I cannot pretend to be an expert on economics, but seeing that the experts have got it so wrong recently I will try and explain what I feel is the difference between the parties policies and the results this might give.

I will start with the Tories as this is the easy one. It's now clear that David Cameron will not try and spend his way out of the recession/depression. This is the pure laissez-faire much favoured in the past by the likes of Thatcher and Enoch Powell. Companies and banks in trouble will be allowed to fold. As less people are at work and able to pay tax, social services will be cut. The government will rely on charities to support the weakest. We will start to see deflation and a depression like that of the 1930's will occur. We will see strife on the streets. Those with considerable cash savings will benefit although house prices will tumble as more default on their mortgages. In the end the middle class will be hurt along with those underneath but the very rich will get away without too much pain. This will be explained by Cameron as not allowing future generation to be saddled with the enormous debt.

Now to New Labour. Brown and some of the others seem to have had a road to Damascus moment and are seeing the dangers in a Thatcherite answer to the crisis which following those ideas has led them into. It might be that some of these New Labour ministers can't bring themselves to break from old ideas and there are rumours that Alistair Darling may resign if forced to keep on spending. So what is the Keynesian response to the crisis? Basically it is to spend our way out of the recession. It will need money printed and acceptance of inflation to work. What they are attempting is to buy growth. This was how FDR pulled the US out of the depression, although the war may have contributed also.

What effect would New Labour's policies have? Well because of inflation, unless interest rates rise fast, those with cash savings will see the real value decline. It will be hard to see this policy propping up housing prices, or at least the real property value after inflation, but the fall could be less than that with depression and deflation. If we get the desired growth, then those in the middle class and lower may see a smaller drop in their standard of living than otherwise. Inflation will of course make the government debt smaller in real value. The danger is stagflation where we have the inflation but no growth which is a possibility as the damage to the economy is already so great. That could put us into a pre-war German-like situation. One of the problems that could lead us in that direction would be if the government was forced to protect the exchange rate or get finance for the government debt by raising interest rates.

So we are caught between a rock and a hard place and a decision will have to be made. The Tories would much rather we didn't think about the outcome of their policies while Labour has no guarantee that theirs will work. I know what way I'm leaning, but I suspect that Brown and Blair have created such a bad smell that it will make no difference.

12 Years Too Late!

Gordon Brown, quoted on the BBC website says the following. "Laissez-faire has had its day. People on the centre-left and the progressive agenda should be confident enough to say that the old idea that the markets were efficient and could work things out by themselves are gone."

Unfortunately this statements negates the economic policy that Tony Blair and Gordon Brown came in with 12 years ago and followed until the banking system crashed. They worshipped Thatcher's policies and now Brown is going to lead the Labour Party into its biggest defeat since the 1931 post-MacDonald election.

If there really are 120 Labour MPs who are willing to go against the New Labour leadership in support of the Post Office workers then now is the time to be looking at a leadership election that will allow all the party to have a say. Otherwise it's just posturing like Peter Hain and Harriet Harman have been doing. Labour needs a caretaker leader to clean out those who turned their backs on the basic principles of the party. There must be one moderate MP who is not beholden to the Blairites surely.

Guilty Men

Guilty Men was published in 1940 naming and calling for the retirement of those politicians responsible for the policy of appeasement with Hitler's Germany. Within weeks it had sold over 200,000 copies. It would be interesting today to see who would be named for responsibility of today's economic crisis.

James Crosby, pictured right, would be an easy target. He was in charge of HBOS during its most badly managed period and managed to fire the compliance manager who tried to warn the bank of the problems it was getting into. Yes the bankers are responsible but they couldn't have done what they did with the help of the politicians. Both in the UK and the US politicians from Maggie Thatcher and Ronald Reagan through to the Blair/Brown and GW Bush have done all they could to remove regulation that controlled the worst of the financial industry's scams and frauds.

Gordon Brown must carry some of this blame, but I suspect we will never hear him say he's sorry. He will continue to say it was an international problem outside of his control. Crosby was his favourite banker and Brown made him 2nd. in command of the regulators, the FSA, that should have been monitoring what the banks were up to. Now making a poacher the gamekeeper is fine and often works but it does rely on the poacher knowing that poaching was wrong. For the promotion and honours given to James Crosby, Brown should at least apologise.

For being a bad driver you can be sent to prison even if an accident wasn't intentional. Let's see some bankers in prison for the bad management they gave while driving the country into this economic crisis.

When will they ever learn?

New Labour is in trouble for its spin again. "No more boom and bust" is already haunting Gordon Brown and they let him have "British jobs for British workers" in his party conference speech. Now that construction workers are going on strike in agreement with him, do the spin doctors feel foolish or are they too thick skinned.

What was this British jobs for British workers meant for; what does it mean. It was just a sound bite to catch the evening news. It was to undercut the Tories by being more to the right of them again. Maybe the trouble with telling lies is when people believe you rather than when they don't.