Why choosing Hilary is a vote of confidence in the economy

Talking at dinner with a friend, he remarked on an excerpt of a radio interview, a Wu Tang Clan member had at a New York Radio station. Responding to the question of whom he would support out of Barack Obama or Hilary Clinton, he said, ‘well I made a hell of a lot of money under the first Clinton, and I intend to make some more under the second’. It was Hilary’s husband President Bill Clinton, who popularized the phrase ‘it’s the economy, stupid’. And when the hype of Obama goes down and some of the election hysteria makes away for the inevitable candidate scrutiny, the economy no doubt will feature as it always does in the mind of the voter, including that of the Wu Tang Clan member.

President Bush campaigning in 2004, made a stop to a rally, the beginning of his speech saw him wearing an open collar shirt with rolled up sleeves, and there he confidently jabbed his right arm forward whilst proclaiming, ‘Our economy is strong!’. It was a refrain he used throughout his successful presidential bid. The economy will most definitely be an issue in the primaries right up until the duel between the Democrat and Republican pick.

Barack Obama’s message of change and hope is admirable. However, there is a major caveat. Hope, no matter how audacious it is, cannot balance the budget, or lower the current account deficit, nor will it create jobs. A good economy, cannot be hoped for, it must be worked on.

Hilary Clinton is taking some hits in the polls, some have put it down to a twenty or so point lead facing an inevitable downturn, others says she didn’t fair well in the last televised debate. And then there is the free-trade issue. Hilary Clinton, in contrast to the other presidential hopefuls, does not appear to be a free-trade supporter. As already mentioned, it has been suggested that this is a reason for the downturn in the polls for the former First Lady. I find this slightly curious because Hilary’s apparent free-trade position would surely have a lot more American support than ire; as to many, free trade is seen as attacking the domestic job market (through a knock on effect). Polls are funny thing though, aren’t they.

So as Hilary’s lead decreases and the hype of Obama moves in the opposite direction, the economy is seen, as ever, looming in the background. And just as it appears Obama has cross-cultural appeal, it also seems to others and the rapper in the radio interview, that Hilary has a ‘hell of a lot’ of appeal. For her I am sure, she will hope, that him along with many other Americans will put their money where the mouth is and in that, getting the votes of confidence that she and Bill have been vociferously courting.

Brown’s brash socialism

‘Long term plan’, ‘Long term vision’ are a couple of buzz words (or terms) that the Prime Minster Gordon Brown throws around a lot, which is why the accepted view that his Chancellor’s forwarding of the reformed capital gains tax, was ‘not thought through’, is, when viewed along side Brown’s way of doing things, not totally accurate. For this is a man who would seem to have planned what colour socks he would wear to the opening ceremony of the 2012 Olympics, because ‘long term vision is what matters to the British people’ (I am sure though the color of socks don’t and if they do to some, that’s just weird). The presentation, and its manner may have been belatedly opportunistic (announced after the killing of an election that-never-was), but it was thought through. Remember, this was a pre-budget report, no doubt, many months in the planning. The disappearance of the capital tax gains relief was not a mistake, it was deliberate, it was socialism.

As the prime minister switches temporarily from using his ‘moral compass’ to the socialist one, we see that this tax issue is and will be one of many actions of Brown’s brash socialism. Taxes regarding climate ‘change’, air travel, are one of many areas Gordon Brown has targeted to get more ‘revenue’ so that he can ‘invest’ more in public services. Some sectors of the public sectors have a planned increased investment, of over four per cent above inflation, and guess who will be paying for that.

So Brown appears not to be forwarding ‘hurried’ and ‘ill-prepared’ policies as first thought, but ones which indicate his leftist agenda and which say he is not afraid to upset the business men and women of the country. His predecessor, Tony Blair, made it a habit to take on his party and leave the business sector alone, Gordon Brown seems to not be afraid of taking on the business sector and letting his party alone. Brown may regret that when the very same people who will have turned against him, eventually come to vote at the next general election; making him one the shortest-serving prime ministers of the last one hundred years. The Prime Minister may do well to keep his brash, socialist tendencies in check. If he doesn’t, the electorate will.

Oililtics and the slippery slope

Memories of the 2001 petrol-pump protest have been evoked once again, with the same group of lorries drivers et al threatening action because of the consistent rise in the price of oil. (One litre of petrol is a pound and a penny). And, as all sides of this oil issue complain about the price-the lorry drivers say oil is too expensive, the oil companies say their profits haven’t mirrored the rise in price because of increasing costs of production-the underlying issue floats to the surface, isn’t this dependence on oil setting the world, particularly the industrialized nations on a slippery slope to disaster? Isn’t it time for some cold turkey?

Last week saw unprecedented financial action taken by the central banks of U.S, Canada, Switzerland, U.K as well as the ECB, which involved them pooling money together in aid of financial markets (actually financial institutions) that have been suffering petit mal triggered by the so called ‘credit crunch’. Merits and demerits of this particular policy is for another time, the point to be made is the essence of the collaborative action taken by these nations to tackle a perceived economic/financial threat. The spirit of such collective action needs to be engaged once more, this time in regards to the temperamental nature of the price of oil. This site is not suggesting any form of price controls or similar state intervention, (as a side note however it has to be said that the level of duty (tax) on petrol should be looked at); what needs to happen is another multi-lateral collaboration which would aspire to the general desensitization of economies to oil price fluctuations.

One prong in the attack would be exert more pressure on the individual nations within OPEC, such as Saudi Arabia encouraging them to be more responsive to rises in the price of oil by a mirrored increase in the supply; and in addition to that, the pomp and pageantry she and other countries receive during states visits (and lucrative business and economics links forged on these events) should have the hosts gain a return also. Another prong in the fork, is the use of other known oil reserves, which would mean including drilling in areas that environmentalists (and the Nobel prize winner, Al Gore) may find distasteful; and the final prong would be an aggressive concerted effort of the state and private sector to harness renewable sources of energy as well increased production of electric, hybrid, bio-fuel cars, a sure sweetener for the environmentalists.

So as Christmas draws near along with the festive cheer and the fairly unfestive oil prices, the taste of cold turkey as opposed to the traditional piping hot one, may not be that bad of an idea.

Northern Rock

 

‘More money has been given to Northern Rock than primary schools are given in a year, or what the government spends on defence’ said, rightly, Vince Cable the Liberal democrat MP. And it is the ink of the tax payer (once again) that the government uses when signing the cheques to Northern Rock.

Northern Rock, a relatively small and previously successful mortgage lender, based in the north of England, came to the point of collapse in September. Its growth model, heavily dependant on U.S debt, came into problems when payers in ’sub-prime’(not the nicest of terms) mortgage markets became defaulters, choking up credit in their respective creditors, which in turn financially locked-out sister lenders, in this case, Northern Rock. Other banks and financial institutions have been affected by the so-called ‘credit squeeze’; almost weekly, major financial institutions, have issued statements to its shareholders, then to the stock market, then to the public-via the media, of the billions of dollars that have to be ‘written off’ because of the ‘credit squeeze’.

Northern Rock has been hit severely, why? Because the people who created and ran their profit making model exposed the firm recklessly and to a high level. As a result, the taxpayer has given Northern Rock, twenty four billion pounds; yes, for those who run Northern Rock, Christmas really has come early for them.

Why should the public purse pay for the clear and avoidable mistakes of a private firm? While there is a case for securing the deposits of the customers at the firm, ‘there should be a sting in the tail’ for the shareholders as one economist put it (they shouldn’t be helped as the depositors are). One economist at a London university on this issue says the risks to the financial markets and the economy are too great and therefore money has to be spent on this firm. The line chimes well with the government view on this, the Prime Minister in the House of Commons a fortnight ago, said that expenditure on Northern Rock is done with ‘economic stability’ in mind. Now you have to buy the argument that, economic stability is at risk because of the financial melt down of a small mortgage lender. The economist at the university pointed to the market crash of 1929, and said it was because government did not act, that the crash happened. Well the reasons for the crash is perhaps debatable, what needn’t be though, is the fact that the circumstances of the 30’s is different from the those of the 00’s. Northern Rock, poorly run, inflated by greed and debt, should not be given public money frivolously.

The market is well able to sort it self out, and if that means in sorting out this mess, that the expulsion of some firms is a result, well then, so be it.

The U.S and the Chinese econo-demoractic threat

Double digit figure growth and a roaring economy is one picture of China, the United States’ sliding dollar and indebtedness to the Chinese, has their political and economic establishment, furiously scratching their heads, and saying ‘what should we do about China’? Yet the threat faced, is not just an economic one, it is also democratic. For the key issue is, how will the U.S and indeed the west deal with a prosperous, independent and a democratic China?

One well-respected academic on international relations, said that yes, even though China’s economics growth rate should be noted, at the same time it should also be recognized that it is not sustainable. The academic continued to say wealth and capitalism are intimately linked with democracy, and that as the amount of money within a society increases so will to the desire to have a say in the political process. In other words, the politics cannot hold down the economics. Not forever anyway.

There’s has been no greater advancement in wealth, technology and overall prosperity than that in the age of democracy. The U.S.A, the primary proponent of this age, has given us security, contemporary culture and currency (dollar reserves) amongst many other things; none would have come about if it had not been for democracy. If the dollar was the seed, then democracy was the soil, for true and sustained success come as a result of freedom-not just the liberty to vote but also the liberty to say where money will be invested.

China may never be the great power it craves, and the one, which the west esp. the US fears, because Chinese politics will not let its economy and economics go far. There are not that many greater examples than that of the Soviet Union. The Soviets in the Cold War, a war of arms-building and spies, annexes and proxies, spent as much as they could but in the end collapsed. Incidentally Vladimir Putin the soon-to-be prime minister but currently president of Russia, blames former president Boris Yeltsin for the economic melt-down and harps back to the ‘greatness’ of Cold War Russia. Yawn. His revisionism is a nice narrative to help cement his power in the Kremlin and its surroundings, the reality though is the American living standard and many other things were far superior to that of an average Russian. I say that to say this. Towards that end of the Cold War, the Soviet Union was out-thought, out-maneuvered, and more importantly out-spent. And with being out-spent the Soviets were defeated in one key area, ideology. The ideology of democracy and the dollar.

Money does make the world go round and the Chinese will soon find that out, it can huff and puff, but the reality and history has shown that countries which are economically self-repressive can only go so far. Which brings to mind a quote concerning economics that Lord Pattern recalled on Newsnight, ‘things that can’t go on forever, don’t’. The U.S and the west should bear that mind when scratching those heads again.

‘Donor-gate’ and the “state-funding of parties” propaganda

Channelling over half a million pounds through several people, businessman David Abrahams funded the Labour party this way, because he didn’t want to draw attention to one of the many ‘charitable deeds’ he was doing. This method of funding is illegal, different apparatchiks within the Labour Party were aware of Abrahams actions but at the same time claimed, they didn’t know it was against the law. Incidentally it was the Labour party who brought in these very laws whose senior figures now claim a lack of knowledge. The Prime minister strongly assured the public of his ignorance-regarding the whole proxy donations hoo-hah, but he didn’t stop there. In his opinion the public, namely the taxpayer, should bankroll the political parties in order for donation issues like these, to not come up again. Many beg to differ with the Prime Minister concerning this.

As a point of order, Mr Brown need not suggest the overhaul of the party funding system because of the Abraham’s saga, this issue came about not because of a lack of laws, but the people involved apparently breaking the existing ones. So the prime minister sought to muddy the waters of the issue with a patently false suggestion that the latest donation issue was a result alack of laws and the only way for it is the whole system be turned over. Politics. Now, the state funding of political parties is wrong for the key reason that it is diametrically opposed to the centrality of democracy, that being freedom. There is neither freedom nor democracy in mandating the public to fund any political party. No matter how the loud the obvious followers of the Rousseau ‘forced to be free’ type democracy within the Labour Party shout, truth and opinion is louder, people must chose who they will support, they should not be ‘forced to be funders’.

And therein lies the economic issue underpinning all of this; the added burden of more taxation on the public. ‘The government has no money’ so the adage goes, and so, in their plans, the public will be used yet again to fund the party-political-propaganda and squabbles over numerous points of ‘policy’ before and around an election period. The public must not be chased for a ‘contribution’ to this power play. If a party wants to run a country, it itself has to seek the funds to do so; issues like the recent proxy donors should indeed be looked at, but more so in terms of stronger penalties for the offenders rather than an overhauling of a system.

Making the public pay for party politicking would not be democratic or economically sound.