The Sunday Quote

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'' When in doubt, mumble; when in trouble, delegate; when in charge, ponder.

James Boren Quoted in The Official Rules by Paul Dickson, 1972
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Politics Today

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A Populus poll for The Times published yesterday has the Tories on 30 percent for the euros with UKIP in second place on 19, relegating Labour to third place on 16. The Lib-Dems get 12 percent, the Greens poll 10 and the BNP are on 5 percent (eight percent in the North of England).

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What is interesting about this is that Cameron's speech about needing a "massive, sweeping, radical redistribution of power ... from the EU to Britain ..." seems to have made no difference to UKIP's fortunes. Nor indeed has his apparently unequivocal pledge to give us a referendum on the Lisbon treaty.

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Would be Conservative voters are it would apear abandoning the Conservative Party in favour of UKIP.No doubt this is because the majority of people did not believe that Cameron meant what he said, doubt that was – it appears – entirely justified from comments in The Daily Telegraph on Saturday. In that paper, Andrew Porter interviews Cameron asking him outright whether he will "finally promise to hold a referendum on the Lisbon Treaty, even if it has been ratified elsewhere?" And the reply is the stock Tory answer: we will "not let matters rest, I think everybody understands this, if the treaty is ratified by everyone and the election isn't until 2010 and the Irish vote yes then obviously I won't be content with that."

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Thus, as suspected all along, the apparent promise to hold a referendum come what may was not a promise after all. Mr Cameron was playing word games and nothing at all has changed. By coincidence though, William Hague is interviewed by The Spectator, where he tells us that: "Trust in politics is now at an unprecedented low point; the shameless and deliberate abrogation of a binding manifesto pledge [on the treaty referendum] is surely one of the reasons why."Another reason is that thinking votors know that the Conservatives are playing word games on the possibility of a referendum on the Niece Treaty. Empty promises, it seems, are the politicians' stock in trade – and people are getting a tad sick of them.
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On the back of the Populus poll which brought us the current expectations of UKIP success in the euro-elections also come indications of support for "radical" reform of parliament. These included provision for a "recall", referendums on "important issues", fixed-term parliaments, more "free votes" in parliament, a cut in the number of MPs, stopping MPs having second jobs and a fully elected House of Lords. Also proposed was a change to proportional representation.

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It almost goes without saying that all proposals got a favourable reception. Seventy-seven percent went for more referendums, 74 percent backed fixed-term parliaments and 73 percent wanted more free votes. Even proportional representation got 56 percent support, a small but clear majority in favour.

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What precisely is the point of conducting this survey is not clear. Asking people, the majority of whom most probably have a limited grasp of how parliament works, much less of governance in general and constitutional theory, what is needed to fix a broken system, seems to have limited utility.

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The whole process is akin to taking a broken-down car to the garage, to be confronted with a list of possible repairs, with the family being asked to vote on what should be done.The great danger of this approach is that it gives spurious legitimacy to changes which will not necessarily fix the problem. With Gordon Brown also mooting changes, including proportional representation, the whole process is in danger of getting out of control.In days gone by, before even considering changes, we would have had something like a Royal Commission, thoroughly to explore the problem and to produce a report, following which there would be widespread discussion and debate.

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Whatever else, we must avoid knee-jerk reactions and quick-fix Elastoplast solutions. Above all, the politicians – who have made the mess in the first place – must not be allowed to dictate the terms of any reforms, with or without opinion polls.

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The Editor's 'Sunshinelady',

Churchill Gardens Jersey CI

The Booker Column

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Expenses but not as we know it; see Christopher Booker's column today, who has been doing some background research into the MP's expenses/allowances issue.
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The Sunday Quote:

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“...It is high time for me to put an end to your sitting in this place, which you have dishonoured by your contempt of all virtue, and defiled by your practice of every vice; ye are a factious crew, and enemies to all good government; ye are a pack of mercenary wretches, and would like Esau sell your country for a mess of pottage, and like Judas betray your God for a few pieces of money.

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“Is there a single virtue now remaining amongst you? Is there one vice you do not possess? Ye have no more religion than my horse; gold is your God; which of you have not barter'd your conscience for bribes? Is there a man amongst you that has the least care for the good of the Commonwealth?

.“Ye sordid prostitutes, have you not defil'd this sacred place, and turn'd the Lord's temple into a den of thieves by your immoral principles and wicked practices? Ye are grown intolerably odious to the whole nation; you were deputed here by the people to get grievances redress'd; your country therefore calls upon me to cleanse the Augean Stable, by putting a final period to your iniquitous proceedings, and which by God's help and the strength He has given me, I now come to do.

.“I command ye, therefore, upon the peril of your lives, to depart immediately out of this place! Take away that shining bauble there, and lock up the doors. You have sat here too long for the good you do. In the name of God, go!”

Oliver Cromwell, addressing 'The Rump Parliament in 1653, setting up a short-lived nominated assembly before being made Lord Protector of England.

Perhaps we need his help now, just a thought!

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Our Parliament

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On the popular ToryBoy blog Tim Montgomerie points out that Parliament (he means the House of Commons but it is a common mistake) needs more MPs like Douglas Carswell. He is probably right. Douglas is a good MP and shows commendable independence and strength of character, consistently attacking Speaker Martin (not just when that becomes fashionable) for not doing his job and being a government stooge; speaking his mind on various issues; and joining the Better Off Out campaign. Not that it is particularly clear what the latter will achieve.

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There are, of course, similar people in the House of Lords but they do not receive handsome remuneration or indeed appropriate publicity and the upper House's work goes mostly unrecognised.

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Not for the first time, political commentator Charles Moore has put his finger on the spot in The Daily Telegraph, today. The headline and strap – accurately reflecting the text of his column – which exactly articulates the salient point: "The House of Commons is ours, not theirs. Don't ruin it, reclaim it

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… Our thirst for revenge over the expenses scandal is understandable but there is an alternative."Writes Mr. Moore, "We must save the House of Commons. I never thought that, in writing such a sentence, I would be swimming against the tide of British public opinion, but people are so angry about the revelations of MPs' expenses that they seem not to care what happens to the entire institution."

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Nothing in the torrent of coverage in the past days, led by The Daily Telegraph, has served to strengthen Parliament and many of the proposals for "reforms" will not in any way improve the situation, while the claque - always easily pleased – rushes in to applaud Mr Cameron for his "leadership", what he proposes is essentially a statist solution which does nothing at all to reinforce the primacy of Parliament.

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In fact – as one might expect – he is simply reacting to events, his measure in part being damage limitation and in part and attempt to make political capital out of the situation. But his response has been of a party leader – which he is – not that of a parliamentarian. Thus, the "Cameron way" – as outlined by Moore

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…… is to decide that MPs have been so despicable that they need to come under greater control. Some external authority – as yet undefined – will watch over them. They will work exclusively as MPs. If they are housed at our expense, it will be in barracks, with prefects to make sure they are all in bed by lights-out at 10.30.

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There will be regular inspections of the contents of their boots. The logic is that if you cannot trust MPs, you cannot allow them to have much power. So parliamentary government collapses.

This is the wrong move. As a party leader, soon to become Prime Minister, Cameron has a vested interest in fostering a weak, compliant parliament. Its job will be – as it is now – to constrain the executive, which he will lead.

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In strict terms, parliament is the "enemy" of the government, as indeed governments are the enemy of the people. We should tolerate them only because the alternative – of not having a government – is far worse.

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Importantly , at every point, it is governments – not parliaments – which should be bound, hamstrung and constrained by rules which limit their freedom of action, their powers and their reach. What the Telegraph and the media is doing is turning Parliament - our Parliament, into the enemy, while the claque rush gleefully into the trap, and rejoice at the prospect of a Parliament in chains, not realising that those chains will be their chains.

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Thus, the task, as Mr Moore avers, is to reclaim Parliament, to rehabilitate and to strengthen it. The baying of the crowd has never been a rational guide for action, and it is not now. Citing Edmund Burke, writing about the French Revolution, Moore quotes him saying, "Rage and frenzy will pull down more in half an hour than prudence, deliberation and foresight can build up in a hundred years." It remains, writes Moore, a useful warning.

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Putting it more prosaically, we are in danger of throwing the baby out with the bath water. And, in this, one needs to remember that The Daily Telegraph is a commercial operation – its primary concern is to sell newspapers. That it has achieved, spectacularly. But, despite its protestations, that does not mean it is a friend of democracy.

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Enough is Enough

Fact: MPs regarded their additional cost allowances as an "entitlement", following which a system was set up to enable them to claim them. They represented a covert – and largely tax-free – pay rise implemented on the sly by a legislature which did not have the bottle to make the public case for higher salaries.

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All the rest is detail and, however odious they might be, it is unfair to pick on individual MPs. Collectively, they are all guilty – some were just more creative than others in the paperwork they submitted which allowed the fees office to give them the money to which, under the system, they were entitled.

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The fact is also that the political journalists – and many others – knew all about the system. It was put in place in 1972 and has been part of the remuneration system ever since.The basic mistake the MPs made, of course, was not to adopt the European Parliament system, where the MEPs are given a block grant, no questions asked, and no receipts required. Thus, perfectly legally, and with only minor and occasional protests, MEPs are able to trouser £45,000 a year as "office expenses", nearly twice the amount paid to MPs for their "expenses", with no damning paperwork that can be used against them.

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Thus, for the media now to indulge in a feeding frenzy, touting its high moral – but incredibly selective - principles and "outing" individual MPs, is little short of hypocrisy. The system is at fault but, for more than thirty years, MPs have kept that system in place and the media have conspired in allowing it to continue.

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Fixing the system, however, will change nothing. If anything, it will make it worse. With the intense media scrutiny now directed at individual MPs, many of those who might have thought of becoming MPs will now think otherwise. The net effect will almost certainly be a continuation of the trend towards hiring professional MPs, colourless, apparatchiks, whose main claim to fame will be their ability to keep their expenses accounts in order and tick the right boxes on their claim forms.

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What will not be addressed – and nor is it being addressed – is the competence of MPs and the performance of Parliament as an institution. Egregious examples of its failure are seen even today, but they are lost in the torrent of prurient outrage over what amounts to trivial sums of money.

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Thus do we say enough is enough. The madness of the crowd is upon us, from which there is no escape when it is all over Parliament will not be a better place. We will not be better off. We will have achieved nothing.

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The Sunday Quote

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"In Germany they came first for the Communists,

And I did not speak up because I was not a Communist,
And then they came for the trade unionists,

And I did not speak up because I wasn’t a trade unionist.
And then they came for me

And by that time there was no one left to speak up’’

A German, Pastor Martin Niemoller, Nazi Concentration camp survivor.


This posting is dedicated to the memory of Peter Painter a 17 year old Victoria Collage School Boy from Jersey CI who was arrested one day in the summer of 1943, deported to occupied Europe along with is Father by the German Military Occupying forces. According to a French resistance survivor, interviewed in 1946, Peter died in a squalid cattle truck in his Fathers arms on a frightful railway journey to the notorious Belson Death Camp during 1944. Their 'crime' was to have listened to the BBC on a hidden Wireless, this was forbidden under Occupation Rules.

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The Jersey civilian informers who provided the information to the German Military Police were exposed in an article titled: ''I accuse'' written by the then Jersey News Editor William Troy, printed in the Jersey Evening Post 64 years ago today. Peter Painter along with his father who it is assumed perished on arrival at Belson have no known grave. Lest we forget.

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ID Cards

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It was reported recently that the controversial ID cards scheme will be piloting in Manchester in the autumn. This, in spite of the fact that the scheme is estimated to cost billions per year, and is entirely unnecessary. Both main opposition parties in the UK have vowed to scrap the scheme, seeing it for the waste of money it is... - Read More
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Unintended Consequences

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Commenting on the expenses controversy, Iain Watson, BBC political correspondent, makes a statement of the blindingly obvious. He writes, "Seemingly endless stories about MPs who, in the main, have not broken any rules - even if the rules themselves are being questioned - diminishes, from a low base, any remaining public trust in politics."

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A worrying issue is the opportunity cost. While the political claque is indulging in its feeding frenzy, over what is in effect little more than bicycle shed syndrome, all sorts of things that should be in the news are not being reported by the MSM.There is an awful lot happening out there at the moment but the media seems to have given up trying, while the British political blogosphere is retreating into its own bubble and pulling up the drawbridge. This orgy of introspection is not healthy, since most people are politicaly apathetic at the best of times.

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All too soon, we will see another immutable law kick into action – the law of unintended consequences. Ignore certain issues, or do not protest and politicians have a nasty habit of leaping up and biting you hard when you least expect it. At which time it is too late, thus is how political extremists win!

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Some Of Our Millions are Missing

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In a detailed piece we are invited to get worked up about EU missing millions. Not only are they missing, the EU and UN have abandoned investigations into what happened to £60 million worth of funding for Kosovo, with allegation of serious fraud and corruption.

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The funds for "economic reconstruction" to help rebuild a war-shattered Kosovo ten years ago were hit by at least 11 scandals involving 12 cases of alleged criminal activity and 27 examples of alleged breaches of rules on the awarding of contracts and nepotism.The trouble is, no one is really going to get interested. There is nothing anyone can do about it. No one will be held responsible. No one is accountable the fact of life is that people have better things to do with their lives than rail over things over which they have no influence, the course of which they cannot change.

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So those of us who follow these matters mutter into our real ale shrug and move on to mutter about something else. The sad bit is that an MP whose partner has claimed £10 for a porn movie on parliamentary expenses, Ah! That's something people relate to feel some how they have some influence over and relate to it as if a plot in a soap opera.There in lies the difference between UK and EU politics.

Not reported this week was an interesting exchange in the House of Lords about the EU budget. Lord Campbell of Alloway, asked:

Her Majesty's Government what is the justification for the projected increase in the United Kingdom's net contribution to the European Community Budget to £6.5 billion in 2010-11.

Not an unreasonable question at a time of financial difficulties.

The response by Lord Davies of Oldham was the usual one - we really do not like the system and we really would like to rectify matters but as we can't we shall just have to keep handing the money over. I wonder if all those people who promise such reforms ever bother to read these replies and ever ask themselves why the situation is as it is. (Yes, Open Europe, Libertas and Taxpayers' Alliance, I am referring to you.)When he was pressed by Lord Campbell, Lord Davies became so snappy and rude that their lordships expressed their displeasure. He then proceeded to snarl:

My Lords, the House will appreciate that, if such a solution were available, all—or the majority of—European states would follow the strategy. However, the issues are more complex because the problems with accounting in the European budget are largely the fault of expenditure that is partly controlled by the member states; so it will not do to say that the issue relates directly to the European Commission or any other institution. Member states, too, must improve their standards of accountancy and effectiveness, which is exactly what the United Kingdom has been doing.

That last sentence is questionable in view of the fact that statistics have become meaningless under this government, what with all the shifting of goalposts and chaning of parameters.The question of enlargement was ignored and the subject of the surrendered part of the rebate, raised by Lord Waddington, pooh-poohed. Then Lord Lea of Crondall got to what his side see as the crux of the matter:

My Lords, is it not the case that the thesis, "We want our money back", is demeaning for a country in our position in the world after the G20 and all the commitments that we have entered into? The Conservative Party policy, "We want our money back", would mean that there would be no EU, which is what the Conservatives are driving at.

Well, actually, there is nothing demeaning in a country's representatives taking good care of its money, however rich that country might be.Which politician was respected more, Margaret Thatcher who got the rebate or Tony Blair who gave it away?

Anyway the soap opera continues while more and more billions of UK taxpayers money is given to the EU and millions upon millions is lost, in return for what exactly?

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The not so accurate weather forcast

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The Met Office is forecasting a ''barbecue summer after two summers of rain''.

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Welll now , given the shortcomings in past summer forecasts from the Met Offoce in London how much credence should we give this one?

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Remember the summer of 2007? On 11 April of that year, the Met Office chirped: "The summer is yet again likely to be warmer than normal. There are no indications of a particularly wet summer." - the wettest summer for England and Wales since 1912. Temperatures were below average.

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In April 2008, the Met Office projected: "Summer temperatures are likely to be warmer than average and rainfall near or above average." That didn't prepare people for one of the wettest summers on record, with high winds and low sunshine. Chief meteorologist Ewen McCallum said: "We can expect times when temperatures will be above 30C (86F) - something we hardly saw last year."

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Mr McCallum admitted recently in a news conference that seasonal forecasting is still in its infancy - a cross between climate change prediction and tomorrow's weather forecast.But he said normal forecasting had massively improved, with the four-day forecast now as good as the one-day forecast when the Met office started more than 30 years ago.

I think I have spotted his problem, the Met Office was actually founded in 1854. So as with so much of what he says he is actually technically correct, in that it is more than 30 years ago, but hardly accurate!

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As time moves on ....................

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The media and the blogosphere are buzzing with that anniversary. Thirty years ago the Conservative Party, led by Margaret Thatcher, won the first of four elections and began a government that proved to be the most radical in its reforms than any since Attlee's 1945 one that sealed this country's socialism. One can discard the left-wing canard that Mrs Thatcher destroyed this country's economy and political life. Britain in the 1970s was not a happy or efficient country.

A more insidious myth is propounded by some of the younger Conservatives that in 1979 the country deliberately voted for radical reform. Absolute rubbish. The country rather hesitantly voted for the Conservatives, anyway, and nobody outside the immediate circle around Thatcher knew that she had any ideas beyond the widely shared rather vague assumption that "something needs to be done" with a country that had, apparently, reached rock bottom.James Callaghan who lost in 1979 also promoted the idea that there was a sea-change in opinion because it suited him to say so. In actual fact, he lost the election because he was perceived to be a bumbling incompetent. The third question that needs to be asked is whether those radical reforms have really changed the country or were they as Mark Steyn says in a recent article, largely about Obama, just a blip, a slowing down in the collapse?
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In retrospect it can be argued that Mrs Thatcher was not a conservative – she was a liberal. Her free market ideology was influenced by the economist Milton Friedman and the author Friedrich Hayek, both of whom described themselves as liberals. Furthermore, conservatism has not traditionally supported the ideas of any particular type of economic system, free market or not. Traditional conservatism has sought to maintain social stability through maintenance and gradual progression of the current social order. The market system which Thatcher imposed upon Britain radically altered our society in a very short period of time – some of the effects of which we are only just beginning to feel now. It was an economic revolution rather than a slow and gradual process.

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Better Off Out

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In the wake of that BBC poll that showed 55 per cent of this country's population would like to see us out of the European Union and in the midst of a huge financial crisis (made far worse by our own government as well as the EU, to be absolutely fair) Better Off Out is being relaunched as a cross-party group in both Houses.

The Better Off Out website gives the full press release as well as some other information about the group. The aim is to co-ordinate a parliamentary campaign of questions, both oral and written and, whenever possible, debates, thus raising political and public awareness of the EU and its dire influence on this country. Needless to say, this blog stands with the group and is ready to assist its work in every way possible.

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Our Best Friends

Monty 'Sunshinedog'

Green Island Jersey CI

.Man’s best friend could be just the rescue package Brown needs
By David Williamson of the Western Mail
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IF YOU visit a pet shop within walking distance of Westminster, do not be surprised if a hefty man with a deep Scottish brogue is examining the merits of a selection of puppies.

A politician’s career would be fried if he attempted to deflect a tough question in a press conference by playing a banjo. But play with a dog and photographers will drown out bleating inquiries about bail-outs for billionaires with the snap of flashbulbs.

Times are tough for Gordon Brown and a canine could be a source of solace and spin.

In the run-up to the 2001 election, Tony Blair attempted to rekindle the youthful euphoria of 1997 by arriving at Downing Street with a guitar case. What are the chances we will soon see Brown clamber out of his car with a five-week-old wolfhound?
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Global fascination with the arrival of the latest White House dog demonstrates the genius of President Obama’s news-spinning and contrasts with the clunking despair at the heart of the Labour machine.

On the night of his election, Obama promised his daughters a puppy. This was one campaign pledge that was quite easy for the press and public to track.

He soon added a new twist by announcing the hound would have to be hypoallergenic to protect the health of his eldest daughter. This portrayed Obama as America’s super-dad. Yes, he was cautious and hyper-intelligent, but he was not a closeted boffin; just as his daughters would have to wait for a safe puppy, so the populace could not expect an instant solution to financial malaise.

Economists will argue for years about the merits of his stimulus package and political opponents will disparage early claims that the nation is on the road to recovery.

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But each time Americans see Obama’s daughters frolicking with Bo, the Portuguese water dog (the decision not to imitate JFK and buy a Welsh terrier should not be taken as a snub), they will remember that their president is a man who keeps his promises and their hearts will throb with hope.

Choosing to announce the selection of this pooch as he approaches his 100th day in office is a honeymoon-prolonging masterstroke.
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Brown’s spin-hacks should have been e-mailing each other ideas for interesting pets (or, if they wanted to be radical, great policy concepts) {Right, Sunshine Bella, in deep thought} rather than concocting lurid nonsense about rivals’ family lives.
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Mr Brown should be advised not to imitate ostrich-loving music legend Johnny Cash who was nearly killed by his giant bird.
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All Prime Ministers long for a place in the history books, but being the first forced out of office by an ostrich is an accolade nobody wants.

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Just a thought

No matter how often and how carefully one explains, as I do to overseas clients from time to time, that the UK not having a presidential system prime ministers are not elected, too many people respond by complaining (to put it politely) that Gordon Brown or whatever stupid nickname they decide to give him was not elected.
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Indeed not and neither was any prime minister, especially not those who took over between elections. That would be Churchill in 1940, Eden in 1955, Macmillan in 1957, Douglas-Home in 1963, Callaghan in 1976 and Major in 1991 as well as Brown in 2007. It is the party that is elected and it is the party that decides who is to be the leader.
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In many ways this is unsatisfactory and shows up once again that there is no real separation of powers in the UK with the Executive being part of the Legislative and, consequently, strongly in control of it. That, rather than the existence of parties, imposes constraints on MPs. (We are assuming that MPs, unconstrained, would actually be decent human beings.)One could argue that with a smaller majority the Legislative would acquire more control over the Executive.
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Given the fact that between seventy and eighty per cent of our legislation comes from the EU with Parliament either knowing nothing about it or being unable to reject it, control of government is all our parliamentarians can hope for - power they cannot have and, apparently, they do not miss it.

Assuming that the UK country will one day be independent and sovereign again, should we not think of a different political system, one which would separate the two branches of government? Should the resignation of a Prime Minister necessarily entail a general election, thus allowing the people have some say in the matter of the next leader of the country?

Alternatively, could we not have something resembling the American system in which the head of the Executive is elected separately from the Legislative and then chooses his cabinet, which is then approved of or otherwise by the Legislative? The question there would be how to reconcile that with a Monarchy, which is still the most popular body in this country and has many useful attributes, not least keeping politicians in their place.

It used to be the case that an MP who accepted a paid governmental position or an "office of profit" had to resign and a by-election was called. Though this principle is enshrined in the Act of Settlement (1701) and Act of Union (1707) and is still adhered to in the United States where it was enshrined in the Constitution. Since 1919, however, we have abandoned the notion in Britain and MPs are merrily accepting emoluments under the Crown without having to face the electors again. Despite the howl of outrage that would follow such a suggestion, a return to the ideas written into the Act of Settlement could be a first step towards a better regulated political system of separated powers. Well it was just a thought!
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In my View

Banking is too important to be left to Bankers is the conclusion of a report issued last week. The effects of the continuing banking crisis will be felt for generations, a committee of MPs has warned last week.

The Treasury committee, in its second report on the crisis, said that it had been caused largely by the banks' own reckless behaviour. "Bankers have made an astonishing mess of the financial system," said committee chairman John McFall MP adding "The culture within parts of British banking has increasingly been one of risk-taking, leading to the meltdown that we have witnessed''. Though as most small business operators will confirm that risk taking has not in fact been with banks lending to small businesses - the risks were taken, as is now well recognized, with reckless domestic mortgage lending and irresponsible and unaccountable high risk strategies in the complex and mysterious world of hedge funds, dodgy derivative bank securities and over investment in overseas emerging markets.

The scale of the losses incurred by the banking sector is difficult for most people to comprehend the figures are truly colossal. The total losses of British banks so far are a huge £207 billion of which only a third has so far been written down. The much troubled euro zone banks have lost £600 billion but have only so far written down 17 per cent of that loss. The low ratio of write downs by the banks is an indication that the banking sector's woes are far from over, the crises has yet to reach rock bottom and the consequential misery is likely to cast a further cloud over the business world, particularly small businesses.

This recession unlike the recession before or indeed the one before that is different in that this down turn in the economy is bank lead. The solution to the economic crises thus cannot be found within the banking world for they are the problem not the solution.

Contrary to the claims being made by banks many small businesses whose growth is fundamental to the economy are finding it very hard to obtain loans, except with much higher charges and fees. This is a situation that is being closely monitored by the Federation of Small Businesses' FSB Bank Watch scheme. Their detailed scrutiny of the banks will need to be long since despite optimistic noises from corporately closeted bankers there are dark storm clouds building in Europe which will threaten recovery on our shores.

We will do well to pause and remember that back in the '90s British bankers with the support of most of the corporate world (but not small businesses) and many politicians were spending vast amounts of money urging us to join the single European currency, the euro. Had this powerful group had their way the banking crises and economic cries that we are all in some way suffering from today would have been far worse than it is.

A large slump in the economy in Europe and the increasing likelihood of the collapse of the euro - a currency that is used by 16 nations in the so called euro zone - is a huge storm in the waiting. The most important fact about the euro as a currency that is not understood by most people is that it is a political construction and is therefore doomed to failure; it is only a matter of time. Recently I emailed five investment managers from large corporate fund managers seeking their opinion on the effects on equity markets of the demise of the euro. Without exception the answers I received demonstrated an acute (a depressing) lack of understanding of the political reality of the euro; an example that investment 'experts' work in a very self focused bubble.

The euro is not the product of a market driven economic process but is rather the product of a political idea. This means that from it’s inception, European monetary union (the euro) has served a political function to which economic and financial realities were always to be subservient. In short, when times get tough it won’t work and sorting out the mess of the euro's inevitable collapse will cost the banking world and the tax payer huge amounts; this will impact further on the UK despite the fact that we rightly rejected entering the euro twelve years ago.

The arguments for not joining the euro club at its inception are more true today, particularly the fatally flawed notion that one exchange rate and one interest rate are appropriate for economies with very different and disparate histories, structures, performances and sovereign governments. There are also institutional problems with the management of the euro which are now causing big problems, notably that the institutions of the European Union suffer from a well known ‘democratic deficit’. The European Central Bank that controls the euro lacks the kind of transparency that characterizes both the Federal Reserve Board in the US and the Monetary Policy Committee of the Bank of England.

When the euro fails as one day soon it will, the cost to the people of Europe will be huge, some of that cost will inevitably impact on the UK economy which we can ill afford on top of the cost of the current rescission.

So there we have it a very gloomy state of affairs. The lesson, in my view, is that Corporate Bankers, Investment Managers, Politicians when left un challenged cause economic mayhem, that is all the more reason for an effective well informed media and attentive lobbying organisations.

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North of Bradford

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Dr Richard North continues his Afghan "season", with another offering over on Defence of the Realm.
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Thirty Years Ago

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The media and the blogosphere are buzzing with that anniversary. Thirty years ago the Conservative Party, led by Margaret Thatcher, won the first of four elections and began a government that proved to be the most radical in its reforms than any since Attlee's 1945 one that sealed this country's socialism.One can discard the left-wing canard that Mrs Thatcher destroyed this country's economy and political life. Britain in the 1970s was not a happy or efficient country.

A more insidious myth is propounded by some of the younger Conservatives that in 1979 the country deliberately voted for radical reform. Absolute rubbish. The country rather hesitantly voted for the Conservatives, anyway, and nobody outside the immediate circle around Thatcher knew that she had any ideas beyond the widely shared rather vague assumption that "something needs to be done" with a country that had, apparently, reached rock bottom.James Callaghan who lost in 1979 also promoted the idea that there was a sea-change in opinion because it suited him to say so. In actual fact, he lost the election because he was perceived to be a bumbling incompetent.The third question that needs to be asked is whether those radical reforms have really changed the country or were they as Mark Steyn says in a recent article, largely about Obama, just a blip, a slowing down in the collapse?

In retrospect it can be argued that Mrs Thatcher was not a conservative – she was a liberal. Her free market ideology was influenced by the economist Milton Friedman and the author Friedrich Hayek, both of whom described themselves as liberals. Furthermore, conservatism has not traditionally supported the ideas of any particular type of economic system, free market or not. Traditional conservatism has sought to maintain social stability through maintenance and gradual progression of the current social order. The market system which Thatcher imposed upon Britain radically altered our society in a very short period of time – some of the effects of which we are only just beginning to feel now. It was an economic revolution rather than a slow and gradual process.

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