Now the hard questions begin ...
The government has been forced by the Lords to drop its plans to detain terrorist suspects without charge for up to 42 days. Given the political capital Gordon Brown has invested in this proposal, such a setback would normally be of great importance in general, and very bad news for the PM in particular. But not in the middle of the financial crisis, with Mr Brown posing as saviour of the nation (and Europe and, tomorrow, the world!) and self-styling himself as a cross between Winston Churchill and FDR (helpful note to PM: be careful not to overreach for it inevitably results in hubris followed by a fall -- just ask Sir Fred Goodwin).
So the loss of 42 days has not made much of an impact on the public, though most had come to dislike it, and even in the Westminster Village it is only of passing interest when banks are being nationalised and recession looms.
As the dust settles on Momentous Monday (see yesterday's blog) the largely favourable reviews are being replaced with questions. Why, for example, is the government insisting that, as a price of the bail out, banks continue to lend to house buyers and small businesses at 2007 levels? You can understand why the government doesn't want the supply of credit to such targets to dry up -- which would turn an inevitable slowdown into a long and deep recession -- but 2007 was the height of the boom, when banks lent almost £120 billion in mortgages and business loans. To set the bar at that level surely risks yet another credit binge and a further fall just down the road.
Also, where will the government get the billions to prop up the banking system. Borrowing is the simple answer, but the likely consequences are anything but simple. The PM said yesterday that Britain was able to borrow freely because we enjoy "relatively low national debt because of the steps we have taken since 1997, where we wiped off perhaps more than around £100 billion of debt by reducing the proportion of debt in our national income."
I fear that is just factually untrue. According to the Office of National Statistics net debt when Blair-Brown came to power in May 1997 was £351 billion; in August of this year it was £632 billion in August (£545bn if you exclude Northern Rock, which the ONS says you can't), an increase of almost £300 billion rather than a £100 billion wipe out.
Even as a share of national wealth (GDP), things have not got better. In 1997, as the economy was entering a long period of growth, debt was 43% of national income (and falling). Today, after 11 years of growth, it is still 43% of national income (and rising -- even before the banking crisis). No wonder many economists think that, far from starting a new borrowing binge from a low level of debt, as the PM maintains, we are actually doing so from a rather high level.
Just how high it goes remains to be seen. Even before the bank bailout City economists were predicting that borrowing could be close to £100 billion in financial year 2009/10. The Institute of Fiscal Studies thinks borrowing will end up over 50% of GDP (that could be an underestimate) and could soon exceed an incredible £700 billion. The last time we borrowed proportionately that amount (the mid-Seventies), we had to be bailed out by the International Monetary Fund.
As the BBC's Business Editor writes this morning on his must-read blog, such levels of debt and contingent liabilities in Britain (and America and the Eurozone) "will probably dampen growth for years in the whole of the developed West, as governments may feel financially constrained from spending and investing on other services and projects, and the banks themselves are likely to devote all their spare resources to repaying their debts to taxpayers, rather than financing proper wealth creators."
We'll be speaking to an independent expert this morning to gauge just how deeply in debt the country is heading and we hope to have a Conservative perspective as well (is it really that different from the government's?). We also review the fallout from the ditching of the 42 days (and investigate the emergency legislation ministers still plan to keep up their sleeves).
The design critic Stephen Bayley will be here, along with former Cabinet Minister Clare Short, to discuss whether style or substance is most important in politics. And a new TV series is being launched which will see 10 teenage political wannabees put through their paces - culminating in a PMQs style debate in the House of Commons. We'll be catching up with two of the contestants, and the head judge of 'Election', Jonathan Dimbleby.
All that on the Daily Politics on BBC2 today at Noon.
© MMIX~RS~q~RS~~RS~z~RS~53~RS~)
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I hope you will be given sufficient time to present the truthful position in non-technical jargon. So often your time is cut short only to be followed by some trivia.
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Is Gordon Brown statesmanlike?
If he is then he's no FDR - "New Deal", nor is he Churchill......"asign victory ..to this deliverance ....but it may be the end of the begining"
If he is a statesman then unfortunately it must be Chamberlain "...peace in our time"
The mess has been caused by the fatal combination of imprudent borrowing and lending and inept regulation. And his solution? - to borrow more, to re-mortgage the entire country !
As an economic policy it is about as subtle as a sub-prime family who, facing eviction, approach "Ocean Finance" (or any other tv advertised loan shark) and ask for more credit.
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not sure pestons blog can be called a must read. when a journalist becomes a bigger story than the one they are reporting something is unbalanced?
the financial story at the moment is watching the short stirling chart and seeing if it will break its trend line.
The political story is the political class is the guardian class and its clear they failed to guard us.
before all this broke up financial journalists said whenever they spoke or used charts on tv people [editors etc] used to mockingly yawn at them [like 'not another chart steffi?' paxman] . Is this financial illiteracy among all sections of society the result of peer pressure? Snobbery even? An enforced dumbing down?
With that culture in the BBC would mortgage borrowing or buy to let debts ever make a storyline in eastenders?
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I don't think GB should worry too much about dropping the 42 day legislation.
He can always claim that he is conceding to the pressures of democracy. Hard not to give any leader a bit of credit for doing that.
Forcing things through doesn't actually do politicians as much credit with Joe Public as they seem to think. Its a sign of a Dictator rather than a Leader.
The best example of that is TB's war on Iraq. The amount of arm-twisting that went on to get MPs to vote the way TB wanted was incredible to watch unfold on TV. Whilst the war has achieved the objective of ovethrowing a regime and things seem to have improved for some Iraqi's in some respects, no significant evidence of WMD was found. Iraq remains unstable and a huge ongoing drain on the UK Taxpayer...
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Our Government now has control of our banks and by default control of the stock market and capitalism.. But our Government and country are owned by the EU a dictatorship in power forever. So now the EU controls the banking system.. NOW America and Europe think its such a good plan they will all follow suit..
If anyone was to say to you that an audacious plan to take over our wealth and our capitalist societies you be laughed at..
ITS JUST BEEN DONE. They created the problem then solved it.
Bush and his Bilderberger friends who want complete control of the west they say to compete against the rising threat of china russia and india is actually a power grab..
They are taking over democracy IE the EU now has its constitution and owns us. So how did they do it? Through long term planning and Bush
The Community Reinvestment Act (CRA) is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities,
Although not part of the CRA, in order to achieve similar aims the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 required Fannie Mae and Freddie Mac, the two government sponsored enterprises that purchase and securitize mortgages, to devote a percentage of their lending to support affordable housing
between 1993 and 1998, $467 billion in mortgage credit flowed from CRA-covered lenders to low- and medium-income borrowers and areas. In that period, the total number of loans to poorer Americans by CRA-eligible institutions rose by 39% while loans to wealthier individuals by CRA-covered institutions rose by 17%.
http://www.washingtontimes.com/news/2008/sep/28/illegal-immigrant-factor/
Bush allowed 11 million illegal immigrants in then let them borrow which became the majority of sub prime loans that has taken europe and America into a depression.
In order to get out of that depression the British government buy a decisive share in all major banks..
Business cannot function without loans Banks provide them This means the government and by default the EU has control over our stock markets and capitalism in general.
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Re 3: I find Pestons blog (and this one) is an essential read at the moment. Peston has an easy to understand style, informative and educational. It helps me understand what is going on, or at the very least think that I do, and it allows me to express some sort of an opinion even if other people do think my comments are complete rubbish. But that's all part and parcel of blogging and the wider political debate...!
Well done Robert and the BBC. Pestons Picks is a good service.
I suspect Robert might end up in a bigger job one day soon. He's emerged from nowhere to establish a reputation and become as big a personality as Jon Simpson, someone obviously worth listening to and reading.
All reporters have their moment of good fortune, being in the right place at the right time (like Brian Hanrahan and the Falklands)when a crisis breaks. Lets not begrudge Robert his moment of opportunity.
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One other observation.
I've really enjoyed the broad cross-party and grudging international consensus during this financial crisis and it does seem as though it has allowed things to be done which simply wouldn't have been possible 18 months ago...
So what would be the effect if the parties could agree (for example) that the transport infrastructure was not fit for the 21st Century (which it isn't) and something needed to be done. Could we see new railway lines urgently being built to take some of the strain off the roads ?
And what about global warming. What could be achieved on that problem if we had similar cross-party consesnsus ? Heat-pumps and Solar panels installed at minimum cost to every householder on every property in the country ? Combined Heat and Power schemes serving a whole neighbourhood, great support for other forms of micro-generation of electricity...?
Does oppostion for oppositions sake get in the way of progress sometimes ?
Where is it written that Her Majesty's opposition has to oppose good ideas and common sense just for the hell of it ?
Cross party consensus could be a good thing for the UK where it is genuinely possible to achieve that.
Perhaps this crisis will set a precedent for a new improved method of doing business in the House of Commons ?
Wouldn't it be great to watch a bit of mutual co-operation for the greater good of the country instead of all the Yah-boo feeding time at Whipsnade Zoo stuff ?
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6. the only people peston's blog fools or 'entertains' are those who don't know the markets. so beware of trusting it.
e.g today he is calling this relief rally in a bear market as 'market euphoria'. That is clearly not only ludicrous but misleading. There are many such pestonesque examples.
if people are entertained by it then fine but do not hold it up as accurate copy.
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The somewhat artificial debate about 'style or substance' is a waste of time. Since WW2 the PMs who spring to mind are probably Churchill, Attlee, Macmillan, Thatcher and Blair. Some had 'style', some had 'substance', but they are remembered for what they achieved, how they changed the country, or for what happened during their premiership. .
A more sensible yardstick might examine 'character' and 'competence'. The incompetent and the unlucky are soon forgotten or are not highly regarded, whatever their character. But every PM has a certain character, which is interesting in its own right without necessarily reflecting success or failure in office.
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Re: 8 Lets agree that we've put both sides of the argument about Peston, eh ?
Not fair to clog up Andrew Neils Blog too much, but at least the number of comments has hit double figures today !
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You seem to be really put out that the PM has made the Tory character assassination machine look very small.
Also picture Shakespeare: “The Taming of the Shrew” with Cameron as Katharina. It looked like that in Parliament.
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Andrew,
As an avid reader of newspapers and viewer of multiple TV channels, I do not share your view that the PM is in anyway posing. I am not sure he is capable of that type of behaviour. I think that you are being a little mischievious and allowing experience gained within the Murdock Empire to cloud your judgement. It was the winner of the Nobel Prize for economics that said that the PM had played his part in dealing with the world crises with "stunning clarity"
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#12 The quote actually started with "has" thats a big difference from what you are implying. I am really worried about this spend, spend, spend attitude that GB has been advocating of late.
The term personal savings is one term that I have heard in a while. The economy seems to find massive funds in a crisis and with the grand standing delusion of the PM at the moment, is the scene set now for abandoning the restraints that were imfamously in place not less than a year ago? 40M pounds for the Police pay deal seems like positively loose change now, in the grand scheme of things it was then, but now.....
Years ago, people saved for goodies, loans required a person to guarentee the payments. Sure things changed under Thatcher, but NuLabour have endorsed credit as the xanadu of life today, so normal infact that people have quarms about getting an IVA or even worse made bankrupt. Easy come, easy go is the legacy of Browns economic policy
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Having just looked at The Daily Politics website - its worse than I thought...
It actually says' VOTERS'.
If its like the other comres polls for this programme, it is. Its just members of the public, 40% of which do not vote.
If this is done on the same basis, then thhat is a misrepresentation of the poll.
I am sure its not deliberate but its very bad.
Mike Smithson
NOTE: Today’s Daily Politics Com Res poll, as usual, is of zero value. It is not past vote weighted, there is no element of filtering on certainty to vote and simply should not be put out in this form. The BBC should get a grip on its polling and insist on modern methodologies which ComRes do with their voting intention polls.
This is paid for by your licence fee and those interested in politics should expect better.
UPDATE 4.30pm SPREAD BETTING PRICES
Mike Smithson
We do expect better.
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