InfraMario

Mario Draghi, head of the European Central Bank, is in the doghouse. I don't mean with the European Political Class (our picture shows him troughing at the taxpasyers' expense with Mariano Rajoy, Prime Minister of bankrupt Spain), but with the markets.

Draghi announced on Wednesday that 'We will do everything within our mandate to support the euro, and, believe me, it will be enough'. There were little coded references in his speech before the ECB meeting to the effect that they would start buying the bonds of Spain and Italy, to keep interest rates down. So, what would he announce and how would the markets react? Thursday was Draghi Day. He announced nothing. Clearly he was either whistling in the dark or trying to bounce the Germans into shelling out without conditions.

Our Saxon cousins were having none of it. Spain and Italy can, if they wish, apply for assistance from the Financial Stability Fund, but there would be conditions attached. After that they might let Draghi buy some bonds but it wasn't certain.

As of the moment, Spain refuses to apply for a bailout, nervous of what conditions would be applied. Mario Monti of Italy who was boasting that there would be a shield keeping Italian bond rates down, is also disappointed.

The European Bond Markets had their worst day on record. Shares collapsed, Spain and Italy are paying more for their debt.

Thanks Mario

How we got here

A perfectly ridiculous post by Julian Huppert MP on the Spectator's Coffee House blog (recommended, btw) tells us much about our economic predicament.

Mr Huppert writes about cycling, currently much in vogue following a successful Olympics, and whilst saying that cycling deaths are surprisingly low, wants us to DO MORE. For those of you who don't understand government-speak this means taking money by force from hard pressed taxpayers and blowing it on some self-satisfying project. 'If we are to make a diference', Huppert smugly opines, 'we need £100 million to be invested annually in our cycling infrastructure....Every city should have a cycling commissioner promoting and advising on cycle safety.'

There is so much wrong with this, and by extension with Mr. Huppert, that it has to be tackled head-on.

First thing, Julian, is we haven't got any money. Remember? The wallet is empty and our debts are far, far too high. Your idea is that having blown billions on the Olympic Games, when something becomes popular we should chuck even more at it. Maybe instead we should instruct our athletes, like the Chinese and Koreans, to lose.

The second thing is that Britain is already struggling under a bloated state, which is stifling enterprise and initiative and you want to make it bigger. There would be more state employees taken on to administer the £100 million, managers, assistants, secretaries, lots of people can make a fairly good living playing with this kind of lolly. Then the commissioners. You don't think, do you, that this can be done without a little help? You must know what these people are like, Julian; there will be assistant cycling commissioners, deputy assistant cycling commissioners, local initiatives with more government employees travelling down to see how they handle this in Ashton-under-Lyne or Penzance.

Stop it, you idiot. Britain has got itself into a bad state by us listening to social democrat nonsense like this. No more. Mr. Huppert, your time is up.

Lastly I cannot help mentioning that whilst cycling has experienced renewed popularity, the people who are actually going out on bikes are people who would otherwise have taken some other exercise. The 'renewed popularity' is largely with overweight Brits sitting on sofas watching Bradley Wiggins on the TV while sipping beer from cans and eating pizzas.

They will probably like your idea.

Gruezi

Swiss National Day today.

As well as making watches and chocolate and money, they do this:

Olympics Report 4

Britain's athletes are not having a good Olympics. There was too much speculation, even assumption, that we would get a gold in this sport, another in that. Counting chickens before they are hatched, and the gods of sport don't like it.

The poor performance seemed to me typified when I saw headlines that a schoolgirl from Plymouth had won gold in one of the swimming races. Unfortunately she only lived, went to school and trained in Plymouth: she was swimming for Lithuania.

Britain's gymnastic team were on for a silver medal but the Japanese complained that they had been judged harshly and their appeal was successful. I really think the Olympics should be about objective victory - faster, higher, stronger is the motto - and we should ditch those 'sports' which are just about looking pretty in the subjective assessment of judges who just might be regionally or nationally biased.

One example is Tom Daley. A good looking boy and popular with the crowds, his sport is perfectly ridiculous. Synchronised Diving! Away with it, together with any other 'sport' where the winner can't be objectively assessed. Mr Daley should try swimming.

A Tale of Two Headlines

Daily Telegraph: Bankers found to have rigged Libor rates face jail

Financial Times: Iran sentences bank fraudsters to death

You can imagine the left-wing press cheering on this robust approach to bank regulation but I can't see it working here.

Although....

Olympics Report 3

Apparently a set of keys to the stadium, formerly in the hands of the police, have been missing for a week. The news is being treated with equanimity, as the organisers say that security has not been breached. How they can say this unless they know where the keys are, I don't understand.

Now imagine how it would be in the press if the private security firm, G4S, had lost the keys.

Rebalancing Britain

Chancellor of the Exchequer George Osborne will have breathed a sigh of relief last week as Standard & Poor's confirmed the UK's AAA rating with stable outlook (although the other two main agencies have it with negative outlook).

Much remains to be done in Britain and, as with the rest of Europe, it is not just about tinkering with the money supply. Osborne himself has spoken about rebalancing Britain and there is work to do on three fronts.

The Industrial Mix
Britain is overly reliant on the financial services sector, which constitutes 10% of GDP compared with 8% in the USA and 4% in Germany. It supplies around 10% of the tax take. Britain has more, bigger banks, so when the credit crunch came we were hit harder.

However, there is nothing wrong with doing something well, and rather than reducing our activities in the financial services sector, the solution is to build up other sectors, by making it more attractive to invest in Britain.

Nor should we return to old fashioned industries. We cannot compete in shipbuilding, clothing (except high fashion) and several other industries. It is interesting to note what has happened in the car industry. Britain last year produced a record 1.3m cars, but the growth has only happened as cars got more sophisticated, with more electronic and high added value engineering. Aircraft engines, at which we excel, provide a similar example. Life Sciences, pharmaceuticals, high-tech computer chips, these are the things we should be encouraging, without of course the government picking winners; we have had enough of that in the past. The Government needs to create the environment necessary for people to invest in these areas; it will do that by reducing taxes and cutting regulation (including opting out of much of the European system of red tape).

Diversifying markets
Britain is far too closely linked to European markets, with which we do around half our trade. Europe is no longer the great hope for the West; it is a declining, decaying structure based on the values and politics of the previous century. Growth will be in the East, in the developing BRICS economies, Brazil, Russia, India, China, South Africa and in Africa generally.

North-South divide
Lastly, something will need to be done about the regions other than the South East. For a while I thought that the proposed high speed rail link would help, but we can't afford to take it even as far as Birmingham.

Shovelling money into projects chosen by the government, or worse the EU, doesn't help. It never has. Paying successful companies to set up factories in deprived areas doesn't work either.

The only solution I can see is for the government to move out of London and into the regions. This would save money since property prices are lower away from London and wages less. With modern communications including video conferencing there would be no need for anything except rare visits to London by any except the top personnel. And the devolved offices would draw industry towards them as London does now. If you are a defence contractor you want to be lobbying where the Ministry of Defence is (Cornwall would be good). The hapless G4S Olympic Security maestros need to be brown-nosing the Home Office in their new offices in Newcastle, and so on.

Unfortunately all this will never be achieved while the Conservative Party is in coalition with the Liberal Democrats. The Business Secretary John 'Vince' Cable is a 1970s style socialist who seems unable even to peer into the current century.

It will have to be done some time, though.

Olympics Report 2

The opening ceremony was the most astonishing and impressive event I have seen. There was music aplenty, humour (including an excellent cameo by Rowan Atkinson) and Her Majesty's acting debut as she greeted James Bond and then seemed to parachute out of a helicopter into the arena. She delivered her lines like a pro.

I thought the ceremony was a bit long and it had unfortunately been hijacked by the bien pensant left. In a panic to seem racially inclusive they even had a black Victorian mill owner, which would have been a surprise at the time; agricultural labourers were seen trudging unhappily towards appalling industrial towns whereas in fact they couldn't wait to get out of the countryside, where many were starving.

And then there was a long piece about the National Health Service. I am a great fan of Great Ormond St. Hospital for children and indeed have contributed to its appeals, but there was too much of it. As for 'NHS' being illuminated everywhere, while children bounced on beds and nurses danced, it was ridiculous. The reason Great Ormond St. Hospital has so many financial appeals is that the State funding system is unable to provide it with enough money so it has to appeal to the public. The British Health Service is a failure, and nothing short of a national disgrace. Many of the nations present have a better health service, by dint of theirs not being owned and operated by the state, and they do not treat it, as the British do, as a religion: hospitals where people die from diseases caught in the hospital make for a rather shabby god.

Apparently the Director, Danny Boyle, was personally responsible for this, it being a reflection of his political views. It is a tawdry reflection on socialism that the State took money from the people to put on a spectacular, advertising the right-on political beliefs of the literati minority.

It is a disgrace that Mr. Boyle was allowed to get away with this, and we deserve an answer from Lord Coe and the other comfortably paid advisers as to how he did.

The rest of the ceremony was good, though.

PS Why on earth is the principal language French? Who let them get away with that?

In the wrong order

In Britain a plumber has been jailed for 12 months for taking money in cash and not paying tax on it.

You may remember a rather silly remark recently from a Treasury minister called Gauke to the effect that paying plumbers in cash was immoral. Of course it was nonsense -  you are quite entitled to expect that the plumber pays his tax - but a criminal offence occurs when he doesn't pay the Revenue what it is due. The Revenue have taken the unusual step of publishing the guy's photo on line.

All right and proper. It's just that I can't help feeling it would have been better optically to have prosecuted a couple of rich people first, then got on to the poor ones.

Olympics Report

Part of an occasional reporting series, to show I'm not just a moaning minnie.

To the surprise of many of us, the Games got underway two days before the Opening Ceremony. This would be, you would have thought, for some minor sport, to get the crowded schedule over with. But it was with football, the most popular sport in the world. In the ladies matches, Britain won, as did North Korea, despite having withdrawn for a while when the organisers put the flag of South Korea on the TV screens.

The men's football is tonight, which should at least see the end of our lot.

David Cameron made a pretty speech for the not-the-opening-ceremony, and this, I think, is the right thing to do. He needs to associate himself as much as possible with this, and if he can, bring in George Osborne to claim that, having masterminded Bradley Wiggins' victory in the Tour de France, he will now be taking the credit for any other successes.

Despite warnings from this blog, Team GB has not yet changed its title to Team UK.

Fixing the blame

British GDP dropped 0.7% in the last quarter, the radio waves are filled with breastbeating and ill-informed analysis, and Lord Oakeshott, a backbench LibDem peer, has called for the Chancellor George Osborne to be replaced by Vince Cable.

In my view, Osborne is far from perfect, but probably the best of a bad lot, except for those like William Hague who would be much the same. What we really need is for the media to stop allowing politicians to get away with recommending solutions which involve more government spending. On this, Labour's Shadow Chancellor Ed Balls is like a stuck record. And he's wrong.

Britain already has a bloated state, which has been built up on  borrowings which have reached the level of insanity. Even though we have record low interest rates, we spend just under £50bn a year in interest. Even after the 'savage cuts', 'too far, too fast' as Mr. Balls would say, we are spending, in real terms, the same as in 2007/8.

Osborne's plan was this: if he could be the first European Finance Minister to make cuts he would get a reputation for prudence and he wouldn't need to cut so much. In fact, he's hardly cut at all: current spending, even in real terms, is higher than in 2008/9 or any previous year. As for what cuts there have been, Osborne wanted to make them as painless as possible, keeping the LibDems on board; and so instead of cutting current expenditure, he cut public investment, which at £26.6bn is around half what it was when they came to office.

So the Osborne strategy was minimal cuts, making savings with lower investment, relying on growth in the economy to drag us along. I said at the time that I thought it a mistaken policy, because we needed desperately to reduce the size of the State: we needed to cut much, much further, not on welfare, which would be impossible, but on the myriad other claims on the taxpayer's purse. What was certainly not wrong with the plan was cutting too much.

It started well, with 800,000 new private sector jobs, vastly outnumbering the couple of hundred thousand lost in the public sector. What Osborne was not anticipating was Europe.

When we joined the EEC we traded with the whole world, a relic of our once having been the world's premier maritime nation. After 1973, the EEC (now the EU) pursued a policy of 'Fortress Europe', putting tariffs on imports from abroad. In particular, in going along with this, we hurt the Commonwealth, the old Empire. After a while our principal trading partner, for imports as well as exports, was Europe, as the Eurofanatics had intended. Now Europe is in trouble - I once described our policies as 'holding on to the coat tails of a man falling back on top of you'. The Commonwealth, by contrast, is doing well, growing at a much faster rate, and that is where we need to redirect our energies. I shall deal with rebalancing of the economy in a later post this month.

What Osborne could not have guessed, and nor did anybody else, myself included, was the incredible dithering of Merkel, Sarkozy and the rest. When it was obvious, two and a half years ago, that Greece needed to leave the euro, instead of kicking them out in order to save the rest, they put tiny bandages on a massive wound and the problem is still ticking over to this day. In addition Spain is now going under, Italy not far behind, and even Germany has been threatened with a downgrade by the ratings agencies.

Europe, our main trading partner because of the insane British Foreign Office policy since 1975, is going under, and dragging Britain down with it. The reason is, as I have mentioned before, that the euro is a political manoeuvre - it  never had any basis in economics - and they are loathe to look like idiots in abandoning it. And the Eurofanatics aren't just in Brussels: the Foreign Office, which I believe should be closed in the public interest, is crawling with them.

Osborne could not have known that it would come to a mass European suicide - I, an ultra sceptic didn't guess they wold be so stupid - and cannot be blamed for it. But the result is that our export markets are depressed just when they were supposed to be showing the growth that would pull us out of the mire.

Osborne must make stronger cuts, and use the money saved to reduce taxes on people and on businesses, and he must steer the British economy away from the sinking ship across the channel.

Let's carry on with the same captain, only more determined to hold his course. 

Europe

I am indebted to Fabrizio Goria for this...

Bread and Circuses

I know I have hardly mentioned it, and I want to assure readers that I am aware of a major sporting contest taking place in the UK. I don't want to seem like that judge who didn't know who the Beatles were (a popular beat combo, m'lud).

But I remember remarking at the outset that the bidding process was a good contest in which to come second and I harbour my resentment to this day. It's just that the organisers are saying there's nothing we can do to change matters, we've got the Olympics, so let's stop whingeing and make the best of it.

Which is fair enough. But I don't think critics should be silenced, so just for the record....

I resent the fact that this has turned into a commercialised kitsch-fest. Andrew Rawnsley in the Observer said said that 'It is like stepping into a dystopian future in which Britain is run by a military junta headed by Ronald MacDonald.' I expect only some of the stories are true, like inspectors banning bagels in the five-ring symbol, but there is without doubt an unnecessary degree of control over people's behaviour in the name of commercialisation. Life in Britain is cheap and crappy enough without this invasion of commercial gauleiters.

I resent, at the same time, that this is costing the British taxpayer upwards of £10 billion (some say £20 billion) despite the heavy handed use of sponsorship. If there's going to be plenty of sponsorship it should be costing us nothing. This absurd expenditure comes at a time when the Chancellor's, and the trade unions', view of savage cuts is shaving a few hundred thousand off welfare. I discount David Cameron's suggestion that when you factor in the gains from the Olympics we are making a profit as daft at best, dishonest at worst.

I resent the fact that this is making Britain 'a showcase to the world'. It is going to show up a lot more than we might wish. If the G4S security scandal showed us anything, it is that our civil servants are incapable of writing commercial contracts, because they are too sheltered from the grubby facts of life. Of course G4S shouldn't get their £57 million management fee when they have drastically underperformed, but they will get it unless it is written in the contract. Equally it seems obvious that to save money they held off on recruitment until the last minute and we didn't monitor them.

Another aspect which will be showcased is our trade unions, with border staff and tube drivers striking at the last minute, in the latter case even after we bribed them not to. It was known even seven years ago that there was a new breed of disruptive left-wing union leaders and that alone should have shouted that we weren't competent to run the games. Now anyone who was thinking of investing in Britain who has seen this 'showcase' will know what the place is like.

I resent the fact that no one has highlighted the constitutional element of having the army on the streets. This is something we have tried to avoid these 300-odd years.

I resent the fact that people have been forced to have missile batteries on top of their homes.

I resent the fact that some of the roads we have paid for will be taken from us and allotted to the IOC nomenklatura.

And I resent the corrupt, cosseted IOC themselves. In my view they should have been arrested as soon as they got off the plane.

Having said that, On With the Show!

Bearing up

The horrifying events in Colorado, where a young man opened fire in a cinema, have led to mumblings, but no more than mumblings, about gun control. This is, after all, an election year. Even so, I should have thought some brave journalist might have asked Messrs. Romney and Obama whether they had had cause to reconsider their views on the subject.

In Britain the key date was 1997, also an election year, where, after a massacre in  school in Dunblane, the then Conservative government and opposition Labour Party were tripping over themselves to show they cared. Anything of this sort is likely to result in a curtailment of civil liberties and so it proved. Relatives of the bereaved formed the rather tweely named Snowdrop campaign and persuaded Tony Blair to ban all pistols (they were by now known as 'handguns') as soon as he became Prime Minister. In a way Blair's statement 'I don't think people should be allowed to own handguns' said it all: in his rush to show he cared he forgot that our system of government is not that you can do something if the State permits it, but that you can do anything you like unless the State forbids it.

This difference is extremely important. It means that it is not for us to show why we want a gun, but for him to show why we shouldn't have one.

In the end gun crime went up in Britain, and the British Olympic shooting team had to practise in France.

It is in America that this difference is spelled out. There is a specific right to 'bear' arms (although no concomitant right to 'bear' cigarettes, another thing which can damage your health, or to 'bear' an open bottle of beer in your car, even though you are not drinking from it).

A Texan once told me that he insisted on having a firearm in case National Government invaded his state. I don't know, perhaps we are all mad.

But the American system would appear to allow a little chipping away at this 'bearing' arms business. They might think - and a bold candidate might announce it as policy - that a young man should not be allowed such sophisticated weaponry, or to buy arms and ammunition over the internet.

But I don't reckon they will.

Do it standing up

What the British Health Scare Industry is going to make of the news that a sedentary lifestyle kills as many people as smoking, I don't know.

Perhaps they will ban sitting down at work or in public spaces; make it illegal to drive while sitting down when you have a child passenger; put health warnings on seats 'Sitting kills'.

My own take on the matter is that smoking kills even fewer people than sitting. So perhaps we can have an apology for the persecution of smokers.

Syria

The admission by the Syrian Government that a suicide bomber has killed both the Defence Minister and his deputy, who is Assad's brother-in-law, gives pause for thought.

One's first thought is to wonder if this conflict, for so long kept out of Damascus, may now be reaching its endgame. For myself, I don't think so - it may serve to make Assad's regime, now desperate, more dangerous.

The second thought is to wonder how it happened. They have plenty of people to choose from to guard top level meetings, and it must have been difficult for this one to have got through the security checks, equally difficult for him to be turned.

The next ting is to wonder, as I have before in these pages, what sort of people the 'Free Syrian Army' (who have claimed responsibility) are. We know what type of organisation usually uses suicide bombers.

Lastly there are the statements from passers-by, who say they heard no explosion and saw no broken windows. Has Assad had a disagreement with the Defence Staff, executed them (as Saddam Hussein used to do) and tried to persuade the world that it is insane terrorists from extremist Islamic groups who are trying to overthrow the regime?

Maybe we shall never know, but it is further evidence that, unless we do, we should not involve ourselves in this conflict.

Sicily

There is talk that Sicily is likely to default on its debts, and that Prime Minister Monti has written to the Governor who, confusingly, is called Lombardo, asking him to resign. Well, that should pay it all off, eh Mario?

So what is this? If the debt had been guaranteed by the Italian State it would be included in the national debt figures (which are high enough as it is, at a smidgen under €2 trillion). No, these are debts incurred by Sicily on its own. People, companies, have lent money to Sicily, expecting to get it back. How much is it? I bet we don't know to within 50%.

One forex magazine simply said 'Who collects a Sicilian debt?'

Good grief!

In, I think, the first time they have played together the two music giants Bruce Springsteen and Paul McCartney had the electricity turned off as they were playing in Hyde Park, London, because they had gone over the allotted time. One of the musicians said that if they had finished they would still have been off stage by 11pm.

It is incredible that we have still got these people, whose more-than-my-job's-worth attitude seems to have ruined a memorable occasion. Here, I think, is a good direction to point the expenditure cutbacks.

Oddly enough it is not the first time it has happened to McCartney, whose Beatles concert from the studio roof in 1969 was also stopped by police.

Le Quatorze juillet

Bastille Day today, and this blog's good wishes to our French friends, Les Grenouilles.

New President François Hollande will be leading the celebrations. At his inauguration the Heavens opened and the poor chap was soaked to the skin. Let's hope he fares better today, though showers are forecast in Paris.

Friday 13th

Friday 13th July, 1934  Hitler announces the completion of and his responsibility for the purge known as the Night of the Long Knives

Friday 13th July, 1962  British Prime Minister Harold MacMillan sacks seven members of his cabinet, in a move known as the Night of the Long Knives.

Friday 13th July, 2012  British Prime Minister David Cameron, in a move known as the Night of the Long Knives....nah, he hasn't the courage.

The Stones

50 today



When I was a kid, you were either Stones or Beatles. For me it was only Mick and Keef and the boys.

I hear they're rehearsing again....

Inglorious Twelfth

It's an old joke and I've probably told it before in these pages

Captain: We are about to land at Belfast Airport. For those of you adjusting your watches, put them back 300 years.

Today is 12th July, when Protestants in N.Ireland celebrate the Battle of the Boyne, a skirmish between a Dutch King of England and an Anglo-Scottish former King of England 322 years ago.

The modus operandi is for the Protestants to march past Catholic areas, taunting them, until the Catholics rush out and they all have a fight.

This year the Protestants say they have a secret plan to avoid casualties, but I can give them a better one: don't do it. Stay at home and behave like modern people.

Italy: and now...

The Financial Times reports that investors are already asking themselves what is likely to happen after Monti, who has said he will not stand in 2013.

And well they should: the PdL, the largest party, has been doing polling as to which leader would get them most votes. And it's not the current leader, Mr. Alfano......

Bonjour, mon petit

François Hollande has been in London on an official visit. Turns out the French have come up with another shorty. Although his election publicity puts him at 5cm taller than his predecessor (presumably without Sarko wearing his heels), he appears a little altitude-challenged.

There is a healthy rivalry between the two countries at these events, and as well as having a bodyguard of the Coldstream Guards, a regiment which fought at Waterloo and later occupied Paris, he was conducted conducted by the superb figure of Major James Coleby, against whom he looked like one of those children that footballers bring on to the pitch at the start of a match.

The French Press are claiming he was tricked and that Sarko would have avoided the encounter.

The House of Lords

As I write, the House of Commons is debating for the second day a bill to reform the House of Lords. There will be a vote tonight.

When I was born, there was only one sort of 'Lord'. A few families had the right to send their eldest member to parliament and when he died his son got the job / privilege. Then Life Peers were introduced (known to the hereditaries as 'day boys') and there was some sort of balance. Then Tony Blair, in a bid to 'reform' the second chamber, got rid of all but around 90 hereditaries, but replaced them, not with a new system, but with his own placemen.

With the system of hereditary peers, if you closed your eyes and crossed your fingers, you could almost see some sense in it. It never claimed to be democratic, you got what you were given, almost as if the Upper House had been chosen by God. Some were hard working and clever, others were stupid or feckless or both. A brilliant soldier could father a worthless fool, an idle good-for-nothing could father a brilliant lawyer.

It was indefensible after about 1850, but in some respects it worked.

The system introduced by Blair was the worst of all options. Whoever commanded the House of Commons could stuff the Lords with his cronies (Blair did).

So the thing needs changing.

I have no objection to an Upper House 80% elected and 20% appointed: the appointed ones could help the machinery of government work, introduce some specific talent like the Church or the Military and stop the thing being too political. And let me say I don't believe it would create some constitutional anomaly if both houses were elected: that they would both have the right to claim electoral legitimacy. Most other countries have two elected houses and they each know what they are there for.

But a word needs to be said about how they would be elected.

The proposed system, of 'party list' is the worst of all Proportional Representation versions. What happens is that you would vote for your party and the party would decide who was first on their list, second, etc. There would be no connection between the electorate and the person who got the position. We can't have this, particularly since the people have recently voted in a referendum against using some new system for elections. It means the political class would have an even greater grip over our country (you don't imagine anybody who spoke his mind would get the job, do you?), at a time when they are already too strong. Strangely enough, most of the media, in particular the BBC, accept PR as naturally fair, as if there could be no argument against it.

The peers need to be non-proportional (see the electoral legitimacy point above). I would suggest two per old county, so the Isle of Wight would get as many as Middlesex, and their job would be to speak up for their region. This is what happens in the USA and there is no reason why it wouldn't work for us. There would be a straight ballot and the two candidates with the most votes would be elected. This would keep the Upper House at under 150 which would be good.

This new bill is rushed and, with its PR element, the creature of the Liberal Democrats, who I had thought were supposed to be junior partners in the coalition. Mr Cameron has given into them for short term political advantage, playing with our constitution for his own narrow political gain. He should be ashamed of himself.

The people of Britain deserve a properly thought out amendment to their constitution and when we have got one, they deserve to vote on it.

The right result

The crowd ooh-ed and aah-ed, his pretty girlfriend cried and it looked as if the Duchess of Cambridge might too. Andy Murray, the first British men's singles finalist since anyone can remember, seemed to me to lose rather well.

And that is what we Brits like, isn't it? I was left wondering what we would have done if he'd won: applauded his Swiss opponent to the roof, suggested that maybe Federer deserved better and that our guy, whilst skilful, was a bit lucky? Let's face it we like a plucky loser and the audience seems to have taken the rather unloveable Mr Murray to its heart.

My favourite Murrayism:

Commentator: how difficult will it be for your parents watching you?

Murray: I'm not bothered, really. It's worse for me.

Gotta love him.

The Brits

As I write, England beat Australia at one-day cricket, a Brit was one of the winning men's doubles at Wimbledon, where a Brit will contest the men's singles final this afternoon, and a Brit, Bradley Wiggins wears the maillot jaune in the Tour de France. 

It probably augurs badly for the Olympics.

Eurozone: where we are now

Well, there's to be another summit, giving hope to the millions of people who...er...are interested. And Our Dear Leaders, conscious that the people want something new, are, this time, not having lunch. But dinner. I'm sure my readers will join me in hoping they get nice things to eat and drink. It will be in Brussels where both the chips and the chocolate are excellent.

Let's see what has been going on since the last success.

At the summit at the end of June, as we all know, there was a coup against Chancellor Merkel, orchestrated by Mr. Monti of Italy, which made the heir to Bismarck cave in on whether Spain's banks could borrow money rather than Europe giving lending it to the Spanish Government which would lend it on to the banks. Woo-hoo! Also the ECB would be able to invest, if that's the right term, in Spanish and Italian bonds.

Now we learn from an EU official that in fact the Spanish Government would have to guarantee these loans. What the official thought this guarantee was worth he didn't say.

In the meantime we hear from Finland that it has not agreed that the rescue funds should intervene on secondary markets, as Mr Monti said, and that it would not stay in the euro if it meant bailing out other countries (a bit late for that, I should have thought). Holland seems to agree, while Germany still hasn't even finalised the existence of the rescue fund.

Further south, you will remember that Greece elected a new government which was in favour of the bailouts in principle but would aim for gentle renegotiation. After the first meeting with  the Troika, the ECB, IMF and EU, the finance minister said they couldn't go for renegotiation since they hadn't fulfilled their previous promises (in fact they have hardly done anything towards fulfilling them). As I warned before, there is now likely to be widespread civil unrest, as Syriza-organised protest loses its patience with what can only be described as a bunch of liars.

Then Southern Cyprus, which has run out of cash. It is one of the three presidents of Europe, for the second half of this year, so at least there will be one vote in favour of bailing the blighters out. Christofias, the Prime Minister, has said they should receive generous treatment because all they did wrong was invest in Greek government bonds which were..er..worthless.

The markets were cock-a-hoop when they pulled off the last massive success, then enthusiasm declined and now Italy is paying more than 6% for its money and Spain is paying more than 7%.

I wonder what unanimous success story they can achieve on Monday night?

LIBOR (2)

Show me a judicial enquiry, or for that matter a Royal Commission, and I will show you a weak politician or a corrupt one. Jim Callaghan was the master of this, having hordes of lawyers and civil servants scribbling away on any issue he found difficult, confident in the knowledge that, by the time they reported, the issues would be forgotten by the public and Sunny Jim would be safe in the House of Lords.

In this case it was the Opposition which wanted a Judicial Enquiry, hoping by the time of the next election they would have got over the stigma in the public's mind of having brought the economy to its knees. The Government is right not to let this happen and, of course, is enjoying itself enormously.

Let's just deal with where the bankers come into this. I joined the City of London in the mid '70s and found the people simply normal. I never heard any of this 'my word is my bond' stuff: it was intended for stockjobbers, a now defunct breed, to the effect that if they agreed to sell you shares at 10p, they wouldn't subsequently sell them to someone else for 11p. It wasn't a morality statement, just a contract term. Closer to the City's working methods was a friend in an American bank, who said his employers' unofficial motto was 'If you can't kick a man when he's down, when the hell can you kick him?'

Normal people. If you leave a £50 note outside it will eventually disappear into someone's pocket. Normal. Unless, that is, it is watched night and day. That is what we call regulation.

When Gordon Brown became Chancellor he wanted to emaciate the Bank of England, which he didn't like, and set up a new tripartite system of regulation, involving the Bank, the Treasury and the new Financial Services Authority. It has been an unmitigated disaster. Nobody knew what anybody else was doing. In the case of the FSA, which also had to regulate the insurance policy on your fridge, it was either out of its depth or asleep on the job. Probably both.

So to those who want an enquiry into bankers' behaviour let me say this: The City employs some very intelligent and aggressive people. The reason they are always trying to make as much money for their banks as possible is that that is what they are paid to do, and the more they make for their employers the more they earn. There, glad I could help with that.

A couple of extra points. The way to stop people losing confidence in LIBOR is to base it on real trades: the quoting banks submit their last five trades and an average is picked, ignoring any obvious anomalies.

Secondly, is there much difference between fiddling the LIBOR quote downwards and Quantitative Easing, where interest rates are fiddled down by the government by printing more money and buying government debt?

Greeks bearing CVs

Having said just a week or so ago that he will 'roll out the red carpet' for French tax exiles, Mr. Cameron now 'vows' (did this take place in a church?) to protect Britain from Greeks fleeing their country's economic collapse.

Doubtless he hasn't a racist bone in his body (in fact I sometimes wonder if he has any bones in his body), and I shan't make my own preferences clear, but if this is the way he is thinking he should tell us which nationalities he likes and which he doesn't like, perhaps setting out his reasons.

Life and Liberty

It's the 4th July.

'We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are Life, Liberty and the pursuit of Happiness.'

And while we are on the subject of Liberty, here's another quote 'I will close Guantànamo Bay' - B.Obama

There remain 120 people in Guantànamo who have had their liberty taken away without being charged with, much less convicted of, any offence.

Alice

Two anniversaries today. As for the more recent, it is 150 years ago that Charles Dodgson, a mathematics don at Oxford, together with a friend, took the three daughters of Dean Liddel for a boating trip (they'd probably be asked to sign the sex offenders register today). Over tea on the riverbank Dodgson invented and told a magical story which he undertook to write out for Alice, one of the girls, and published using his nom de plume Lewis Carroll.

And thus was born the European Union Alice's Adventures in Wonderland.

Cameron and the referendum

In Britain, David Cameron has been making a complete idiot of himself over the possibility of a vote on the EU. He was in favour, then he was against, now he seems to be back in favour. His own party are fed up, the opposition are calling it a 'shambles' (fair enough) and the people must be wondering what they've got which passes for a government. Cameron dithers until the moment when leadership is required, then vacillates.

My own position is clear. I came to the conclusion in 1991 - more than 20 yeas ago - that Britian would be better off both financially and democratically if it left the EU. Therefore what I want is for the government to stand up and say 'enough is enough. It is time for us to leave.' In view of the fact that there was a referendum in 1975, albeit over a different body, there may be a need for one now, for symmetry. But belief is required to make such a decision, and our Prime Minister has no beliefs at all.

But I am not on the side of the in/outers. A referendum is not a viable policy in itself. My side might lose it, if the Eurofanatics, amongst whiom we must include Cameron, persuade the public it is too risky to leave, and a small adjustment to the Fisheries Policy will be enough.

And Cameron doesn't want an in/out referendum any more than I do. What he wants is to renegotiate what we can and then put it to the people. I don't much object to this, except we are relying on Cameron to negotiate toughly (ha!) and not just say that some trivial change was the best he could do. His backbenchers must hold his feet to the fire, and produce a comprehensive shopping list of what he ought to achieve.

But the thing now is timing. Cameron will try to say that there is no need to do anything immediately, because a new Europe is emerging and we should wait and see how it turns out. He mustn't be allowed to get away with this: it is more vacillation. It may be that something new happens in Europe before the next British General Election, but it is unlikely to be anything in our interest: Merkel and Hollande and that funny little Belgian bloke aren't likely to say the future is a loose association of nation states based on free trade, are they? It will either be more Europe or, equally likely, more dithering and the same thing. We don't need to wait for that.

If they are to move towards more Europe they will need a new treaty (they may in any case need one for the latest accord to bail out Spanish banks) and as soon as this is mooted Cameron must be in there with his shopping list while he still has the threat of a veto. That is how to negotiate.

But I do wish it was anyone other than Cameron in charge of this.

Recovery

Those who are concerned that a country leaving the eurozone would face massive devaluation and subsequent implosion should remember Thailand.

The Asian financial crisis began 15 years ago today, and the Thai Baht rapidly lost half its value. Thailand started to grow again within a year and despite world slowdowns has grown at around 5% since then, doubling the size of its economy since the crash. It is predicted to grow at 5.5% this year and 7.5% next.

It can be done.

The Revoluciòn is back!

Congratulations to Enrique Pena Nieto, who appears to have won the Mexican Presidential Election, but without a strong popular mandate..

His party, which glorifies in the oxymoronic name 'the institutional party of revolution' (PRI) just about sums up the Mexican electorate: it's got to be racy (Revoluciòn!) but you never know with change (Institutional). The PRI ruled Mexico without interruption from 1929-2000 (institutional indeed) when they were voted out on charges of corruption.

Unfortunately the sorry lot which replaced them weren't much better and so institutional revolution is back with a..er..whimper.

Slowing down

I posted earlier this year about attempts from officialdom to tell you what time it is. In brief, someone unelected has decided that time is not measured by where the sun appears to be in the sky, which has been good enough ever since the ancient Ptolomeic scientists got interested in it, but in the decay of caesium. Unfortunately the world is slowing down, whereas the caesium is not, so tonight they are adding another second to the time.

Let the world be warned that this blog is sovereign territory and does not possess any caesium, nor does it plan to invest in any. The extra second is not recognised here, nor is caesium time generally.

This blog is getting older and, like the planet it is on, slowing down gradually, alas.

More nutcases

In an upset even out-upsetting an unknown knocking favourite Rafa Nadal out of Wimbledon, Italy beat the much fancied Germany in the European football cup, with two goals from the outrageously talented Mario Balotelli.

Mr. Balotelli plies his everyday trade in Manchester and is regarded by the British Press as two goalposts short of a football pitch. All I can say is let's have a few nutcases in the England side. In addition, Mr Balotelli went and hugged his mother, and then made modest speeches, in two languages, congratulating the players who had helped him score the goals.

Contrast this with the England team.

LIBOR

An acronym much in the news today, including some hysterical submissions from the ignorant end of the press and from the leader of the Labour Party.

It is about an answer to the question 'what is the interest rate?'. Many years ago when I started work in the City, the latest thing was syndicated loans, where as many as a hundred banks would group together to make a a huge loan sufficient for a major infrastructure project. Naturally one loan required one interest rate, so two or three would be nominated to give their cost of funds at a certain time of the morning, usually 11am after the initial frenzy had calmed down, and an average would be taken. That was the London Interbank Offered Rate, LIBOR.

These days LIBOR applies to literally hundreds of trillions of dollars worth of debt instruments and so has become institutionalised, under the aegis of the British Bankers Association and Reuters.

It now seems some banks have been guilty of feeding in a rate to suit their own book.

Now, I have a mortgage linked to LIBOR, most of our mortgages are, directly or indirectly. So I might have been worried when Ed Milliband said that the British Public had a grievance. But a close inspection appears to show that the rogue banks quoted low, so as to keep their own funding costs down. So I shan't be suing, thanks Ed, claiming I've been paying too little. The people who lent me the money might have a beef. But they're another bank.

This is, however serious: now this function will have to be overseen (by the Bank of England, for preference).

This has been crooked and dishonest, but no more than that. I think the heads of any banks indicted for this will have to consider their positions. But it's not the end of the world. Move along.

Egypt best of a bad job

Many people will be depressed about the result of the presidential elections in Egypt, some angry. That at least seems to be the feeling in the West, although I think it is mistaken.

For many, again particularly in the West, the Arab spring was a secular affair. In those days of the crowds in Tahrir Square it was easy to dream of a Western style democracy, with rights for everyone, but in truth whilst it may have started this way it was only because the Muslim Brotherhood was late on parade.

In the end the contest turned out to be between Ahmed Shafiq, a former Mubarak henchman whom nobody quite trusted and Muhammad Mursi, the Muslim Brotherhood candidate. Mursi won, but omewhere in the political mix lies the spectre of the military.

Mubarak was of course a military officer and he exerted his power through them. And the military have been reticent about giving up power, a surprise to some people but not to everyone. They want to be entrenched in the constitution, in the way the Turkish Army is. But Egypt hasn't yet got a constitution. The similarity is that like the Turks, the Egyptian army sees itself as a bulwark against Islam.

So if Egypt had voted fr the Mubarak henchman Ahmed Shafiq they would have got more army control. With Mursi there will be tensions, of course, particularly as he fights for authority in the constitution to come, but one side might well balance the other.

An Islamic government is probably bad news for women and quite possibly for minorities such as the Copts, but people may come to view it as the best of a bad job.

Keeping up with the times

Her Majesty the Queen, described by one paper as 'in touch with the times, as ever' has updated the royal precedence.

This means that The Countess of Wessex (née Sophie Rhys-Jones) has to curtsey to the Duchess of Cambridge (née Kate Middleton), even at home(!), whereas la Cambridge-Middleton (if these two women are married to princes why aren't they princesses?) has to curtsey to Princesses Beatrice and Eugenie and Princess Alexandra (no idea who she is), except when her husband is with her, in which case she can presumably show her respect with a two fingered salute.

It seems a wife takes on the splendour of her husband if he is there but not if he isn't. But what happens if he is officially there but is late, or has to go to the lavatory? Does A curtsey to B and then as William returns, zipping himself up, B frantically curtseys to both of them?

This kind of feudal chivalric nonsense harks back to the 13th century and really has no place in our modern life. I don't suppose anyone minds curtseying to the Queen but let's leave it at that.

HELLO? It's out of date crap...... No, no reply.

The death wish

Greek Prime Minister Samaras is recovering from eye surgery, whilst the new finance minister collapsed before he was even sworn in. The Troika of IMF, EU and ECB have delayed sending a gauleiter beancounter / Bohnenzaehler.

I think this is a good move by Greece. Given they need more money and have hardly applied any of the required supply side reforms, I would advocate an outbreak of bubonic plague.

PS According to the Italian Sole 24 Ore paper, whilst the Greeks claim to have reduced the civil service by 94,000 in the last 2 years, 70,000 of them, kicked out of the door, have climbed back in the window, so headcount has reduced by only 24.000. I'd stay in hospital, Mr. Samaras.

The housemaid's baby

Where the European Project, the whole damn thing from the Coal and Steel Community to the euro, comes a cropper is with democracy. You may remember the absurdly self-important José Manuel Barroso saying he didn't want any lessons in democracy. He said that Europe consisted of 27 democracies, but he didn't say that Europe was itself a democracy: the assembled journalists would have been rolling in the aisles clutching their sides.

Now Greece, for some the birthplace of democracy, has elected a government, supposedly from parties in favour of the bailout (in fact largely from the ones which agreed it) and they, trying to be as inclusive as possible, have said they want just a little renegotiation of the bailout, not a complete one. A housemaid's baby of a renegotiation. An extra two years.

Now in my view Merkel might have agreed to this, sent down a few beancounters (the word Bohnenzaehler really does need to be invented for this particularly Euro-use) and imposed a few more minor conditions. But she has come up against the great European bugbear. What, the Germans are now asking, if a future Greek government didn't want to agree to the terms? What if the Greeks, those pernicious long-standing democrats, voted for someone the Germans didn't like?

And it seems quite possible. The Greek system says that the party which gets most votes gets first shout at forming a government. So what has happened is that whilst the majority voted for parties against the bailout, Samaras has nobbled the mildest of these and got it to agree to the housemaid's baby. But Tzipras and Syriza will not be silent in the days to come and it is not impossible that it could force Samaras' government out of office. By the way when I say they were against the bailout, they weren't against receiving the money, oh no, it was the conditions attaching to it which they opposed.

So is Merkel prepared to take the risk? Expect another fudge.

Syria and Turkey

Interestingly the BBC led with 'Syria shoots down a Turkish plane' whereas several others had 'Syuria admits to shooting down a Turkish plane'. Perhaps a fine point of expectation or legality but this could be important here.

If the Turkish fighter was indeed inside Syrian airspace then the Turks will be red faced, firstly for making such a cock-up and secondly because the plane seems to have been shot down rather easily.

If, however, the Turkish plane had not crossed into Syrian airspace, then since Turkey is a member of NATO, whose charter says that an attack on one is an attack on all, there had better be some nifty diplomatic footwork.

One sometimes feels guilty about not getting involved but really the last thing we need is an escalation of this conflict.

Solstice

The summer solstice is today, the longest day of the year (in non-leap years it is the 21st).

For many it is the first day of summer. Where I am, the temperature is forecast to reach 35 - 37C (95-100F) so we are hoping summer isn't a lot hotter than this.

The very name summer solstice makes you want to howl at the moon or commit some pagan act, but I expect I shall have an early night.

Dumpty speaks, too

The other unelected president, Dumpty, is better known as Rumpy or Herman Achille van Rompuy (No.3 President is the elected leader of a member state, which from 1st July will be Christofias of plucky little bankrupt Southern Cyprus) . I don't quite know why, but Rumpy Dumpty also got to the lunch G-20 meetings in Mexico. His statement was almost as remarkable as Humpty's:

'Greek voters have made a clear choice about staying in the euro currency, following weeks of uncertainty in the financial markets'

In fact the Greek voters were voting for a ruling party, not whether to stay in the euro, but to this extent they have indeed made a 'clear choice': most of them voted for parties opposed to the bailout.

Humpty speaks

José Manuel Barroso, one of three presidents of Europe, is lunching attending the G-20 summit in Mexico. Asked by a reporter 'Why should North Americans risk their assets to help Europe?' he replied 'Frankly we are not here to receive lessons in terms of democracy or in terms of how to handle the economy.'

Many people, in particular those living in Spain or Greece, will have an opinion on how brilliantly the ruling European élite have handled the economy, but I wanted to pick up on this 'democracy' business.

You see, the G-20 is not just a meeting of 20 nations, it is a meeting of 19 nations plus 'Europe', and Europe, 500 million odd people, is represented by Barroso. Remember voting for him?

I have mentioned before how these Alice-in-Wonderland characters believe that merely saying something makes it true, but it defies belief that he thought he could get away with this: that a former Maoist, not elected to leadership but chosen by a few pals for whom he subsequently had to do favours, should purport to represent an entire continent and then tell the world he needed no lessons in democracy.

I think we all need a lesson in democracy, so we can identify Mr Barroso for what he is.

'When I use a word,' Humpty Dumpty said, in a rather scornful tone, 'it means just what I choose it to mean - neither more nor less'

Brian Hibbard

This blog is sad to record the death of Brian Hibbard of the a capella group The Flying Pickets. The group were solidly left wing politically, coming together during Mrs Thatcher's reign. They took every small decision relating to the band by popular vote.

They were horrified to hear that Mrs Thatcher liked this record. So did I.

The elections

In France, Marine Le Pen failed to be elected but her niece, the photogenic Marion Maréchal Le Pen seems to have won the vote in Carpentras. François Hollande has swept all before him and can enact his programme without support from any other party. It is an impressive victory but I can't help feeling that France has made a mistake.

In Greece, as I advised, it paid to take no notice of the doomsayers. New Democracy, the centre right pro-bailout party, beat Syriza and will now form a coalition with PASOK. So Greece will be run by the people who have run it since the Colonels, in other words the people who got them into this mess. The people's choice, though, was stark; Syriza thought it could call Merkel's bluff and stay in the euro, which was disquieting. Only a few tiny parties, with minuscule support, thought, as I do, that it would be in Greece's interest to leave the single currency. The Greeks, who believe, quite erroneously, that the euro is a good thing for them, played it safe.

So Greece is condemned to be welfare dependent. It cannot service its debts, it cannot borrow more money from the markets, and it cannot exp'ort its way out of trouble because its currency, the euro, is over-valued for Greek needs by at least 30%. It will leave the euro eventually and it is only to be hoped that some politician grasps the nettle, and that it is not too late, and too painful.

A dog writes

Politico 44 'A living diary of the Obama Presidency' asks whether the dog Bo is a political liability.

A spokesdog for the First Pet said it was typical: you climb the greasy dogbasket to the top and then the green-eyed monster begins to strike. Far from being a political liability, the country is going to the dogs because Bo's advice is never taken. Wife more popular than you? Dig up her vegetable garden. Trouble with Angela Merkel? Bite her on the leg.

It is to be hoped that this dogged pursuit of the only effective member of the White House team will now cease.

Who's up for a crisis?

And it's the Greeks' turn today. All the European Press have talked up this story to almost apocalyptic levels. I think it worthwhile taking a look at the facts.

Syriza, which nobody had heard of prior to the first round elections, is an agglomeration of leftists of all hues, Greens and special interest groups. It is not a movement.

These are not British style first-past-the-post elections. Syriza may well emerge as the largest party, although that is far from certain, but it certainly will not have anything like enough votes to govern on its own. On Monday there will begin the series of negotiations and horse trading which do so much to damage the world's perception of proportional representation. No need to panic yet.

Forewarned is forearmed, the saying goes, but it doesn't apply to the European élite. You'd have thought that with so much advance notice of this they would be ready with a series of responses to cover all contingencies. They're not, and will start to think about it when the grown-ups get home from the G-20 binge in Mexico.

If Mr Tsipras were to be able to form a coalition, he would then have to do as he promised and try to renegotiate the bail out package. Some leaders (Merkel) will be wholly against this whereas others (Hollande) will be grudgingly in favour. These negotiations could run for months, while the EU drip feeds the Greek economy.

Never forget that the Euro is a political game. Its supporters don't want anyone to leave, ever.

So no need for tht extra blood pressure tablet on Monday. What is likely to happen is in fact the worst case scenario, that no one knows what to do or dares do anything, and we carry on kicking the can down the road, until the next crisis..

France votes

Second round parliamentary elections in France. Hollande is expected to confirm his majority, which won't please La Merkel too much.

All eyes will be on the Front National, which is expected to get seats in the parliament, and in particular on Marion Maréchal-Le Pen (great name!), the third generation of her family to ..er..serve. Her chances are good, by all accounts.

Let's face it, she doesn't look like the Far right candidate

Magna Carta

Today is the 797th anniversary of the signing of the Magna Carta. Parts of it are still valid in English Law, and it remains one of the foundations of the American Constitution.

There is rather a nice article in the Daily Telegraph suggesting that we have this day as a national holiday, something I would favour.

Originals were sent to many cities, including Salisbury, Lincoln and London. Go and see one if you can. It sends a shiver up your spine.

The end and the beginning

This was just flashed by Reuters:

Draft conclusions for EU leaders' 28-29 June summit say there is a need for much stronger banking and fiscal integration, underpinned by enhanced Eurozone governance.

Blink and you could miss the extraordinary Alice-in-Wonderland nature of Europe. This is the publication of the conclusions of a meeting which is due to begin in a fortnight's time.

OK, I know the important part of these meetings is the lunch, but these are the leaders of 27 different countries, surely one of them might spark a debate by saying something interesting or original? They could decide that the weather was to blame for the crisis, or that Luxembourg should be kicked out for being too rich, or that the game wasn't worth the candle and rather than being governed from Berlin they'd all rather go back to their national currencies.

But no. They'll be told what to think.

The Falklands

The news, which reaches us on the 30th anniversary of the end of the Falklands War, that the Islanders are to hold a referendum on their choice of sovereignty, is, in my view, a bit daft.

Whatever the result, and it is almost certain to be a resounding vote to stay in (despite my revelation recently that 0.6% of the population is Japanese), the Argentines will claim, rightly, that we stuffed the place with British. Their claim, whatever its validity, is much older.

The effect the vote will have, though, is to stiffen the resolve of any future British government which thinks of giving them up. In this sense it is an astute move by the Islanders.

Major whinng

The Leveson Enquiry, a long-running investigation into the relations between government and the press in Britain, seems to hold the Westminster Village in breathless excitement, while leaving the vast majority of people indifferent. It certainly seems to generate more heat than light.

Latest up was Sir John Major, one of the weakest Prime Ministers we have ever had. According to his testimony he invited Mr Murdoch to dinner in February 1997 and was told that the Murdoch papers would not support the administration while it pursued its European policies.

And this is supposed to be something of an indictment of Murdoch.

Hell, if Major had invited me to dinner in 1997 I should have told him I wouldn't support him unless he changed his European policies. I think Murdoch is to be applauded.

Major was out a few months later. But his demise was not caused by the Murdoch press, it was because the British people were fed up with him and his party, and, in part, because of Europe. And we had a glossy alternative in the form of Tony Blair, who it turned out wasn't much different.

It's a shame to see Sir John whining about this15 years later, but really his memory should be a bit clearer.

Where they got the plan

A little déjà vu regarding the Spanish non-bailout





(Actually in dollar terms it was more like $120 billion and still not enough)

Round up the usual suspects

The USA has offered rewards totalling $15 million for information on the whereabouts of leaders of the Somali Islamic militant group al-Shabaab.

An al-Shabaab spokesman has replied 'Whoever reveals the hideout of the idiot Obama will be rewarded with 10 camels, and whoever reveals the hideout of the old woman Hilary Clinton will be rewarded with 10 chickens and 10 roosters.'

I think I may be able to help here: would they be young, breeding camels or the stringy old sort we usually see?

Spain

Perhaps I misunderstood, but Spanish Finance Minister Luis de Guindos seemed to give an arrogant little talk, almost telling the assembled hacks they were jolly lucky to see him at all. Normally Prime Minister Rajoy doesn't speak to the press but this time he stood up for long enough to declare that this deal is great news for Europe (I am not making this up). He then went off to see a football match in Poland, while other members of the government went to see a tennis match in France. Nothing to see here, move on please.

So, the Spanish banks are getting €100bn from Europe?

No. The Spanish state (the money will be paid to an arm of the Government) is getting €100bn from the European taxpayer.

The money is described as coming from The EFSF / ESM, which is confusing. The first of these bodies, the European Financial Stability Facility, is down to its last €200bn, but €93bn of that is due from Spain.

The European Stability Mechanism is not yet in existence, not having been ratified by, among others, Germany. The German Parliament has already said it shouldn't be used to rescue banks

So this will sort it?

Ummm....not really.First there are doubts as to whether €100bn will be enough. Spanish banks already have admitted to €80bn of bad property loans, out of a total of €400bn. Analysts expect the Spanish property market has a further 30% to fall, which could double the amount of property loans in the 'bad debt' category.

But the markets are happy?

Markets rose this morning, but how long that will be the case is a moot point. Firstly, Spain can now be seen not to be able to raise the money it needs on its own. Whatever Rajoy says about this not being a bailout, that’s what it is. Secondly, Spain is responsible for 12% of the Eurozone bailout funds, which must be worth commensurately less now.

Finally the loans will be on the terms designed for the ESM, which means that existing bondholders rank behind the EFSF / ESM, which will make them grumpy. Those which have English Law bonds will call default, as they did in Greece, and have to be paid off.

But Europe is happy?

We....ll, the Germans don’t want this, the Irish will ask for the same terms as Spain got, the Finns are refusing and want collateral.

Describing all this as ‘good news for Europe’ reaches a level of mendacity which would have made Tony Blair blush.

France votes

France goes to the polls today, for parliamentary elections. If the Socialists do well, Hollande will have his mandate for the changes he wants. He has already tickled his electorate's fancy by reducing the retirement age for some workers (just as every other country is increasing it). If he does badly, the changes will be more modest as he gets used to what the French call 'cohabitation'.

The predictions I have seen are that it will be somewhere between the two. Expect a good result for Marine Le Pen, as Sarkozy's UMP is leaderless.

The Inspector calls

Despite having a typical middles class obsession with the rule of law, I have never had much time for the British Police. The times I have come in contact with them I have found them blokey, rude, judgmental and racist. And they seem to concentrate austerely on things the public aren't interested in, whilst ignoring what we regard as important (robbery, violence etc).

I used to support the reintroduction of capital punishment until the West Midlands police showed how they stitched up innocent people in order to improve they success rate.

So this blog congratulates the Home Secretary, Theresa May, for recommending someone independent as Inspector of Police. I find it astonishing, and very unhealthy, that this post has always been filled by a newly retired policeman.

Good luck to Tom Winsor.

Europe: what's going on

We know a little bit more about the 'Plan' referred to previously, following Mr. Cameron's visit to Germany.

The Eurozone hates the British when we sound off on Europe, and indeed rather hates us for not having made the monumental errors they have. But the whole world is affected by what is going on in Europe and we are entitled to voice our opinion, as is Obama, who does so regularly, and the Far East (China has just said it will not buy any more European debt).

What the rest of the world wants is a quick solution to all this, before the contagion spreads. And for most people that means Eurobonds (ie Germany guaranteeing the debts of all the others). For myself I am dubious abut eurobonds economically, legally (are they permitted under the German post-war constitution?) and politically (is it in Britain's interest to have a united Europe kow-towing to an over-powerful Germany?).

Merkel recognises the potential constitutional difficulty and recognises the even stronger political dangers: she comes up for re-election next year, and a commitment to use unlimited wodges of German taxpayers' cash to bail out countries Germans don't approve of would be an albatross round her neck.

What Merkel wants now is a banking union, where 'Europe' bails out banks in difficulty and guarantees the depositors, as happens in Britain and the United States. This would, she knows, involve a number of new Euro-institutions, monitoring the banks, controlling individual states' involvement with their banks and so on. And she knows that some countries are not fit enough to go along with it and some countries will not tolerate the loss of sovereignty it implies. Merkel doesn't expect this banking union to include everyone. When she says the solution is 'more Europe' she means 'more Europe for the few'.

It's funny, when I used to campaign against the Maastricht Treaty the first thing the Europhiles used to say was 'of course nobody wants a two-speed Europe'. And now, that two speed version is exactly what the europhiles are campaigning for.

The banking union will take time: 2018 has been mentioned. And the short-term? Merkel wants to continue with the austerity.

I think Cameron is making a mistake pushing for eurobonds. Apart from the reasons above why I don't like the idea I think there is a political mistake here, too. They will come up with some new Euro-Treaty, which Britain won't like because it will effectively pawn the City of London (Michel Barnier the economics commissioner has already spoken about a 27-nation Financial Transaction Tax). Cameron will have to veto the Treaty and it will be clear he is vetoing the very thing he had been campaigning for.

Not clever economics, not clever politics. Meanwhile the German economy is tailing off, the French are forecasting a downturn, German and Austrian banks have been downgraded, Spain is insolvent and can't even prop up its own banks, and the Greeks are reduced to soup kitchens. And no one has apologised.

Venus passing

The wonderful pop group Dr. Hook used to sing a song called 'I got stoned and I missed it' in which, amongs other things, someone was giving dollar bills away but our hero, unfortunately.....

I was in fact in good shape for the passage of Venus across the Sun, which I am aware won't happen for another century or so - far longer than I am likely to live anyway - but dragging myself out to see a dot on the sun really didn't seem worthwhile.

I suppose many people felt the same. Anyway this is what we missed.

Da Chookie

This blog sends its best wishes to Prince Philip, Da Chookie Enbra, its favourite royal, for a speedy recovery.

The old seadog was being attended to by his nurses instead of watching a concert of Shirley Bassey, Cliff Richard and Tom Jones.

How he must be kicking himself!

The Death List

A couple of years ago I described the case of Anwar al-Awlaki, an American citizen whom President Obama had decided to kill. He was indeed killed, as I predicted, by an American drone.

Encouraged by this, Obama has created a system. Called The Death List, although not, I fancy, by him, it is brought before him on a regular basis and he decides who lives and who dies. If your name is ticked the stealth drone will come, maybe not today or tomorrow, but it will come, silent and undetected, and destroy you, and of course anyone who is anywhere near you: your children, your friends, perhaps a whole village of innocents.

I know there is a war on terror, but I am just wondering how comfortable you feel about this? I don't feel comfortable at all.

Urgency

Well! There's talk in Brussels of a plan! Yes! Exactly what we need now is a PLAN! And it would solve the problems of the banks by getting them bailed out without it costing the taxpayer! And the plan could be in operation by 2018! Yes! And there will be meetings and conferences and agreements and Heads of Agreement and Yes! LUNCHES! (general cheering).

In the increasingly less likely event of Europe having a monetary system by 2018, our prescient rulers have decided that all banks should be equal: that, for example, Romanian banks bail out German ones (six German banks have been downgraded today). And it wouldn't be the taxpayers that coughed up. No. It would be the people who had lent money or deposited it in, say, Commerzbank.

So between now and 2018 any bank which wants to expand, as a part of an economy growing to create more jobs, would find that no one wanted to buy its paper because the ruling class in Brussels has said that the people shouldn't have to bail it out if it all goes wrong. So they won't expand and the jobs won't be created.

If you were unemployed and your family struggling to make ends meet, you could be forgiven for wishing that some of these people (their jobs and pensions are OK by the way) just shut up.

The Face that launched....

A thousand ships and boats will assemble on the River Thames and sail downstream tomorrow.

Britain is in festa for four days to celebrate the 60th anniversary of the Queen's accession to the throne. The anniversary was in fact in February but it doesn't pay to hold celebrations in Britain in the winter months; indeed it seems likely it will rain on the flotilla tomorrow, but spirits are so high it won't matter.

The only other monarch to have a diamond jubilee was Queen Victoria. In those days a diamond jubilee was 75 years but it was reduced to 60 years because they needed to hold a trade festival.

Best wishes to Her Maj.

Ireland

Ireland voted yesterday on the Fiscal Pact - the only country in the Eurozone to be given a vote.

Only 50% of those eligible to vote did so. I think it was that most people simply didn't understand the arguments. This is not that they were badly explained; the ruling elite don't want the likes of us understanding the arguments.

The deciding factor appears to be that they might have need of the European Stability Pact in the future, which I suppose is fair enough. The other side of the coin is that they give up their financial independence.

Depressing.