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Jeremy Corbyn refused to share platform with Tony Blair at pro-EU rally, says Gordon...

Published time: 7 Nov, 2017 10:15 Edited time: 7 Nov, 2017 10:32 Was Corbyn only...

‘US misled us over Iraq WMD claims’ – ex-UK PM Gordon Brown — RT...

A US report disputing the size of Iraq’s supposed stockpile of weapons of mass destruction...

Jail bankers who caused 2008 financial crisis, says ex-PM Gordon Brown — RT UK...

Millionaire bankers responsible for the 2008 financial crisis should be stripped of their bonuses and...

Theresa May won’t call general election… despite telling Gordon Brown he should have in...

Calls from opposition parties to hold a general election in the wake of Andrea Leadsom’s...

Ex-PMs Gordon Brown & John Major condemn Osborne’s attacks on welfare

Former Labour Prime Minister Gordon Brown has blasted Chancellor George Osborne’s plan to cut tax credits for low income families, saying they will push...

David Miliband Makes Not-So-Subtle Attack On Gordon Brown

David Miliband made a not-so-subtle attack on Gordon Brown in the Commons on Tuesday, as he railed against the coalition's plan to cut benefit payments.

The former Labour foreign secretary, who lost out on the leadership of his party to his younger brother in 2010, attacked the government's "rancid" legislation that would see benefits rise below inflation at 1% - a real terms cut.

"This rancid Bill is not about fairness or affordability. It reeks of politics, the politics of dividing lines that the current government spent so much time denouncing when they were in Opposition in the dog days of the Brown Administration. It says a lot that within two years it has fallen into the same trap," he told MPs.

He added: "We all know the style. Invent your own enemy. Spin your campaign to a newspaper editor short on facts – or high on prejudice. 'Frame' the debate."

Miliband's attack on the Bill was on the surface an assault on David Cameron and George Osborne, however the target was really, or at least equally, the former Labour prime minister.

Brown was often criticised for creating "dividing lines" as part of his electoral strategy while in office.

Miliband had strained relations with Brown while serving in his government, and is widely seen to have bottled his chance to seize Downing Street when the then prime minister was weak.

The now backbench MP made the intervention in the debate as rumours fly around Westminster that he is prepared to make a return to the Labour front bench under his brother's leadership.

SEE ALSO: Sarah Teather To Rebel, Attacks Rhetoric Of Benefit Debate

Gordon Brown Will Step Down As Labour Leader

By Philippe Naughton Gordon Brown announced tonight that he is to step down as Labour leader but wants to remain in No 10 for...

Gordon Brown faces ‘quit now’ calls as Labour MPs panic

By Philip Webster | Gordon Brown was facing public and private pressure to consider quitting for the sake of his party last night after...

Why Gordon Brown should halt ID cards

Geraint Bevan | Government departments cannot be trusted to keep citizens' personal data secure. It is not only in Italy that tax records are...

Make Gordon Brown pay

The next fortnight offers two golden opportunities to shape the future of politics in Britain. The mass walkout by thousands of public sector workers on...

Can we believe Gordon Brown?

'Ever get the feeling you've been cheated?" Johnny Rotten famously sneered to the audience at the San Francisco Winterland in 1978, just before the...

Gordon Brown still clueless on ID Cards

SpyBlog.org.uk Gordon Brown still clueless on ID Cards and the National Identity Register centralised biometric database Our unelected Prime Minister Gordon Brown still does not seem...

Gordon Brown threatens Iran’s oil interests

Gordon Brown threatens Iran’s oil interests unless it curbs nuclear ambition Philip Webster Gordon Brown last night proposed a worldwide ban on companies developing Iran’s oil...

Gordon Brown ‘will back air strikes on Iran’

In nuclear strategy, a first strike is an unprovoked surprise attack employing overwhelming force. First strike capability is a country's ability to defeat another...

Brown’s aide admits smear camping

Former British Chancellor and Prime Minister Gordon Brown his aide Damian McBride (From R)Former press secretary of ex-British Chancellor and Prime Minister Gordon Brown...

Brown resigns, Cameron to take over as PM

Gordon Brown resigned as prime minister on Tuesday and said Conservative leader David Cameron would take over, ending 13 years of rule by the...

Home Secretary ditched ID cards without telling Brown

GORDON Brown's main rival for the Labour leadership tore up the government's key ID card policy without informing the Prime Minister, it was reported...

Brown keeps silent on Iraq ruling

By ADRIAN ROBERTS THE government held its tongue on Wednesday over the order to release the 2003 Iraq war Cabinet minutes. But peace campaigners insisted that...

Revealed: Brown’s £1bn power windfall

By Juliette Jowit | Rising energy prices are on course to net the government a windfall of over £1bn thanks to a little-known scheme designed to...

Blair Advisers Oppose Brown’s Terrorism Plan in House of Lords

By Kitty Donaldson | Two of Tony Blair's former ministers and his top domestic security official said they will vote against anti-terrorism laws proposed...

Tougher terror laws actually enhance freedoms, claims Brown

By James Kirkup | The Prime Minister used a speech in London to defend his Government's record on civil liberties in the light of...

Blair/Brown ‘pretend society’ exposed

Via UK Watch | It all seems rather silly now, but it was not so long ago that many on the liberal left fully...

Brown told detention is excessive and out of step

By Alan Travis and Patrick Wintour | Europe's human rights commissioner is to write to Gordon Brown this week warning him that the proposal...

Brown: To Be More Than an Accessory to War Crimes

By Tariq Ali | Power can shape “truth”, but not for ever. That is one lesson that could be learned from the series of electoral...

Time to bin ID cards? Calls for Brown to “bite the bullet”

By Nick Heath | The government is facing calls to cancel its ID card scheme after it announced that all of the five remaining IT...

Brown admits mistake in abolishing 10p rate

By Patrick Wintour, Nicholas Watt and Allegra Stratton | Gordon Brown yesterday admitted making "mistakes" in abolishing the 10p rate of income tax as...

Brown wants tougher policy on cannabis

By Alan Travis | Gordon Brown's decision to overturn the advice of his own group of drug experts by pressing ahead with a tougher policy...

Blair thought Brown a liar, says Levy

By Patrick Wintour | The foreign secretary, David Miliband, warned yesterday that disloyalty to the prime minister would be fatal after a former Labour party...

Defiant Brown defends his economic record

By Andrew Porter, Robert Winnett and Myra Butterworth Gordon Brown has been forced to defend his premiership and in particular his economic record as he...

How Brown makes the poor pay more tax

Socialist Worker And widens the gap between the rich and the rest of us LOSER: Call centre worker Abolition of bottom rate tax band will hit a 24...

Brown urges G8 action on food scarcity

Patrick Wintour The Guardian,  Gordon Brown raised fresh concerns about the impact of biofuels yesterday, as he put rising food prices on the world agenda by...

Brown hits new low as voters desert Labour

Peter Riddell Gordon Brown’s leadership rating has fallen to its lowest ever level as a third of voters regard him as worse than Tony...

ID card rebels offer £1,000 for Brown’s fingerprints

Jamie Doward, home affairs editor The Observer, Sunday April 6 2008 Two of Britain's leading civil liberties groups are to offer a £1,000 reward for the fingerprints...

Brown backs army cadet corps plan for schools

Mark Townsend and Anushka Asthana Sunday April 6, 2008 The Observer Controversial plans for pupils in comprehensive schools to sign up for military drills and weapons...

Cameron, Brown and Blair expenses revealed

Gordon Brown, Tony Blair, the Tory leader, David Cameron, and 16 other MPs are to have their parliamentary expenses published today, after the Commons...

Defiant Brown set to tighten law on cannabis

Downing Street today signalled that Gordon Brown remains determined to tighten the law on cannabis, despite reports that the official advisory body is set...

Brown wants to send civilian force to war zones

A force of 1,000 civilians including police, members of the emergency services and judges, ready to be deployed to conflict zones around the world,...

Brown promises to meet Dalai Lama

Gordon Brown has said he will meet Tibet's exiled spiritual leader the Dalai Lama when he visits the UK.The prime minister has faced pressure...

Brown: There will be a public inquiry into Iraq

Gordon Brown has promised that the Government will hold a full-scale inquiry into the mistakes made in Iraq before and since the invasion five...

Brown’s secret talks on ‘new world order’

British Prime Minister Gordon Brown has begun secret talks with other world leaders on far-reaching reform of the United Nations Security Council as part...

Brown Prepares to Sell UK Out to Globalist EU

Brown refuses to allow a referendum on the EU treaty, insists sovereignty be handed over to the globalists in Brussels Gordon Brown is bringing Britain’s...

Brown cooling towards compulsory ID cards

 PM stresses it will be for parliament to decide  He may be seeking wriggle room on issue, says Vaz Patrick Wintour and Will Woodward The Guardian Senior Labour...

Brown suffers further poll slump

By David Clarke LONDON (Reuters) - Prime Minister Gordon Brown's Labour Party trails the Conservatives by the largest margin in more than 15 years, an...

Is Brown re-thinking ID cards?

By Nick Assinder The creation of a giant register of every card-carrying member of the British public was always one of the more controversial elements...

Book tells of foul-mouthed rows between Brown and Blair

Speculation over tensions between Gordon Brown and Tony Blair before this year’s handover of power at 10 Downing Street was reignited today with the...

Brown’s State – Watching You, Watching Everyone

Colcam Blair and New Labour turned the British into the most spied-on people in the western world. What then, is life going to be like for...

Liberal Democrats launch attack on Brown’s ‘surveillance society’

By Colin Brown Liberal Democrat leaders are to mount an attack on Britain's "surveillance society'' that threatens to wreck Gordon Brown's hopes of a cross-party...

Military commanders tell Brown to withdraw from Iraq without delay

By Raymond Whitaker and Robert Fox Senior military commanders have told the Government that Britain can achieve "nothing more" in south-east Iraq, and that the...

Is Homeland Security Preparing for the Next Wall Street Collapse?

Reports are that the Department of Homeland Security (DHS) is engaged in a massive, covert military buildup. An article in the Associated Press in February confirmed an open purchase order by DHS for 1.6 billion rounds of ammunition. According to an op-ed in Forbes, that’s enough to sustain an Iraq-sized war for over twenty years. DHS has also acquired heavily armored tanks, which have been seen roaming the streets. Evidently somebody in government is expecting some serious civil unrest. The question is, why?

Recently revealed statements by former UK Prime Minister Gordon Brown at the height of the banking crisis in October 2008 could give some insights into that question. An article on BBC News on September 21, 2013, drew from an explosive autobiography called Power Trip by Brown’s spin doctor Damian McBride, who said the prime minister was worried that law and order could collapse during the financial crisis. McBride quoted Brown as saying:

If the banks are shutting their doors, and the cash points aren’t working, and people go to Tesco [a grocery chain] and their cards aren’t being accepted, the whole thing will just explode.

If you can’t buy food or petrol or medicine for your kids, people will just start breaking the windows and helping themselves.

And as soon as people see that on TV, that’s the end, because everyone will think that’s OK now, that’s just what we all have to do. It’ll be anarchy. That’s what could happen tomorrow.

How to deal with that threat? Brown said, “We’d have to think: do we have curfews, do we put the Army on the streets, how do we get order back?”

McBride wrote in his book Power Trip, “It was extraordinary to see Gordon so totally gripped by the danger of what he was about to do, but equally convinced that decisive action had to be taken immediately.” He compared the threat to the Cuban Missile Crisis.

Fear of this threat was echoed in September 2008 by US Treasury Secretary Hank Paulson, who reportedly warned that the US government might have to resort to martial law if Wall Street were not bailed out from the credit collapse.

In both countries, martial law was avoided when their legislatures succumbed to pressure and bailed out the banks. But many pundits are saying that another collapse is imminent; and this time, governments may not be so willing to step up to the plate.

The Next Time WILL Be Different

What triggered the 2008 crisis was a run, not in the conventional banking system, but in the “shadow” banking system, a collection of non-bank financial intermediaries that provide services similar to traditional commercial banks but are unregulated.  They include hedge funds, money market funds, credit investment funds, exchange-traded funds, private equity funds, securities broker dealers, securitization and finance companies. Investment banks and commercial banks may also conduct much of their business in the shadows of this unregulated system.

The shadow financial casino has only grown larger since 2008; and in the next Lehman-style collapse, government bailouts may not be available. According to President Obama in his remarks on the Dodd-Frank Act on July 15, 2010, “Because of this reform, . . . there will be no more taxpayer funded bailouts – period.”

Governments in Europe are also shying away from further bailouts. The Financial Stability Board (FSB) in Switzerland has therefore required the systemically risky banks to devise “living wills” setting forth what they will do in the event of insolvency. The template established by the FSB requires them to “bail in” their creditors; and depositors, it turns out, are the largest class of bank creditor. (For fuller discussion, see my earlier article here.)

When depositors cannot access their bank accounts to get money for food for the kids, they could well start breaking store windows and helping themselves. Worse, they might plot to overthrow the financier-controlled government. Witness Greece, where increasing disillusionment with the ability of the government to rescue the citizens from the worst depression since 1929 has precipitated riots and threats of violent overthrow.

Fear of that result could explain the massive, government-authorized spying on American citizens, the domestic use of drones, and the elimination of due process and of “posse comitatus” (the federal law prohibiting the military from enforcing “law and order” on non-federal property). Constitutional protections are being thrown out the window in favor of protecting the elite class in power.

The Looming Debt Ceiling Crisis

The next crisis on the agenda appears to be the October 17th deadline for agreeing on a federal budget or risking default on the government’s loans. It may only be a coincidence, but two large-scale drills are scheduled to take place the same day, the “Great ShakeOut Earthquake Drill” and the “Quantum Dawn 2 Cyber Attack Bank Drill.” According to a Bloomberg news clip on the bank drill, the attacks being prepared for are from hackers, state-sponsored espionage, and organized crime (financial fraud). One interviewee stated, “You might experience that your online banking is down . . . . You might experience that you can’t log in.” It sounds like a dress rehearsal for the Great American Bail-in.

Ominous as all this is, it has a bright side. Bail-ins and martial law can be seen as the last desperate thrashings of a dinosaur. The exploitative financial scheme responsible for turning millions out of their jobs and their homes has reached the end of the line. Crisis in the current scheme means opportunity for those more sustainable solutions waiting in the wings.

Other countries faced with a collapse in their debt-based borrowed currencies have survived and thrived by issuing their own. When the dollar-pegged currency collapsed in Argentina in 2001, the national government returned to issuing its own pesos; municipal governments paid with “debt-canceling bonds” that circulated as currency; and neighborhoods traded with community currencies. After the German currency collapsed in the 1920s, the government turned the economy around in the 1930s by issuing “MEFO” bills that circulated as currency. When England ran out of gold in 1914, the government issued “Bradbury pounds” similar to the Greenbacks issued by Abraham Lincoln during the US Civil War.

Today our government could avoid the debt ceiling crisis by doing something similar: it could simply mint some trillion dollar coins and deposit them in an account. That alternative could be pursued by the Administration immediately, without going to Congress or changing the law, as discussed in my earlier article here. It need not be inflationary, since Congress could still spend only what it passed in its budget. And if Congress did expand its budget for infrastructure and job creation, that would actually be good for the economy, since hoarding cash and paying down loans have significantly shrunk the circulating money supply.

 Peer-to-peer Trading and Public Banks

At the local level, we need to set up an alternative system that provides safety for depositors, funds small and medium-sized businesses, and serves the needs of the community.

Much progress has already been made on that front in the peer-to-peer economy.  In a September 27th article titled “Peer-to-Peer Economy Thrives as Activists Vacate the System,” Eric Blair reports that the Occupy Movement is engaged in a peaceful revolution in which people are abandoning the established system in favor of a “sharing economy.” Trading occurs between individuals, without taxes, regulations or licenses, and in some cases without government-issued currency.

Peer-to-peer trading happens largely on the Internet, where customer reviews rather than regulation keep sellers honest. It started with eBay and Craigslist and has grown exponentially since. Bitcoin is a private currency outside the prying eyes of regulators. Software is being devised that circumvents NSA spying. Bank loans are being shunned in favor of crowdfunding. Local food co-ops are also a form of opting out of the corporate-government system.

Peer-to-peer trading works for local exchange, but we also need a way to protect our dollars, both public and private. We need dollars to pay at least some of our bills, and businesses need them to acquire raw materials. We also need a way to protect our public revenues, which are currently deposited and invested in Wall Street banks that have heavy derivatives exposure.

To meet those needs, we can set up publicly-owned banks on the model of the Bank of North Dakota, currently our only state-owned depository bank. The BND is mandated by law to receive all the state’s deposits and to serve the public interest. Ideally, every state would have one of these “mini-Feds.” Counties and cities could have them as well. For more information, see http://PublicBankingInstitute.org.

Preparations for martial law have been reported for decades, and it hasn’t happened yet. Hopefully, we can sidestep that danger by moving into a saner, more sustainable system that makes military action against American citizens unnecessary.

______________

Ellen Brown is an attorney, president of the Public Banking Institute, and author of twelve books, including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her 200-plus blog articles are at EllenBrown.com.

 

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Is Alex Salmond Having A Laugh?

Alex Salmond is not a Scot made of the dour Gordon Brown-cloth, but an altogether gregarious politician, boasting eyebrows that could shelter a family of five. Scotland's robust First Minister may not be everybody's cup of tea, but he's finally (final...

Labour Tax Plans A ‘Con’, Says Osborne

Chancellor George Osborne dismissed Labour's tax plans as a "con" which would see state inspectors assessing people's homes.

Labour leader Ed Miliband last week announced proposals to bring back the 10p lower rate of income tax which was scrapped by Gordon Brown, funded by a levy on homes worth more than £2 million.

george osborne

George Osborne claimed Labour didn't 'understand aspiration' in the UK

But Osborne said the coalition government's policy of raising the income tax threshold was a fairer way of helping the low paid and claimed Labour's "mansion tax" would end up being extended to more modest properties.

He told ITV's The Agenda: "It's very costly to implement. It means you have to send inspectors round the country valuing all the homes - not just the homes worth over £2m but those worth less."

The chancellor said there were not enough "mansions" to cover the cost of a tax cut for millions of people.

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"So either it's a tax con and the money comes from somewhere else or it's soon a homes tax and they say it's a mansion tax before the election and then very quickly (it) becomes a homes tax on many people who are not living in mansions at all."

Osborne claimed that "the inspectors get their foot in the door" and then "after the election suddenly it's everyone's homes that are potentially a target and Labour will have created a new tax".

The chancellor added: "It's just another thing that proves that I don't think they understand aspiration in this country."

Osborne acknowledged that the rich should be expected to pay more, but fairness in the tax system also meant allowing working people to "get on".

He said: "In a time like this you expect the rich to pay more and actually we are forcing the rich to pay more and indeed cracking down on those who don't pay their taxes but fairness is also about having a system where people who work hard and get on can get on in our society, fairness is about a welfare system that doesn't pay for people to stay at home.

"Fairness is quite a broad concept and people feel the system's unfair but I don't think this kind of tax con is a solution to that."

Deputy prime minister Nick Clegg, whose Liberal Democrats back a mansion tax, also rejected Miliband's proposals as a "pale imitation" of his own party's policies.

Miliband hopes to split the coalition with a Commons vote forcing the Lib Dems to choose between backing a mansion tax or maintaining unity with the Tories.

But in a keynote speech in the City of London Clegg said: "All we've got from Ed Miliband last week is some blatant plagiarism of Liberal Democrat ideas and still no remorse for the biggest economic meltdown in modern times.

"Labour cannot be taken seriously until its leaders apologise for the economic mess they created, apologise for the unfair tax system they left behind, and apologise for letting tax avoidance rip."

Labour vice chair Michael Dugher said: "Nick Clegg is a poster boy for a politician who breaks his promises and fails to deliver. Clegg and the Lib Dems will be judged for what they do, not what they say - and they are complicit in the Tory record of failure.

"The Lib Dems are cutting taxes for millionaires while millions of families are asked to pay more, seeing their living standards decline, wages failing to keep pace with inflation and cuts to their tax credits.

"Labour will vote in Parliament for a mansion tax. In government Labour wants to use this to pay for a reinstated 10p tax rate for low and middle earners.

"Nobody will take a word Nick Clegg says seriously as long as Lib Dems continue back this Tory-led government with all its unfairness and failing economic policies."

Shadow Treasury financial secretary Chris Leslie said: "It's laughable for George Osborne to claim his policies are fair when he's giving a huge tax cut to millionaires while forcing millions on middle and low incomes to pay more.

"Labour wants action now to kick-start our flatlining economy and help people struggling with the rising cost of living.

"George Osborne should back Labour's plan for a new lower 10p rate of tax paid for by a mansion tax on homes worth over £2m. This would be fair, help 25m working people on middle and low incomes and boost spending power in the economy."

David Cameron To Star In One Direction Video..

David Cameron will make his latest Comic Relief appearance by starring in a music video with teen heart-throbs One Direction, a spokesman for the charity said.

Cameron has followed in the footsteps of Tony Blair and Gordon Brown in getting involved in the fundraiser, which has raised £800 million since 1985 to help alleviate poverty.

one direction

David Cameron is to team up with One Direction for Comic Relief

He appears in the official video for One Direction's official Comic Relief single, a cover version medley of Blondie's One Way or Another and the Undertones' Teenage Kicks.

"Yes, he is in it," the spokesman said, but was unable to say what his role included.

The Prime Minister did not appear in clips from the video shown during last night's Let's Dance for Comic Relief.

Tony Blair starred alongside comic Catherine Tate in a for the charity fundraiser in the last months of his premiership it 2007, when he uttered Tate's Lauren character's "Am I bovvered?" catchphrase as she visited Downing Street for work experience.

Brown appeared in a comedy sketch with James Corden and with boyband JLS in 2011 - after he was voted out of office in the 2010 general election.

Cameron also appeared in that year's programme. The MasterChef segment saw him make approving noises as "chefs" Miranda Hart, Ruby Wax and Claudia Winkleman served him a three-course meal.

Mehdi’s Morning Memo: Dog Bites Man, Tory Home Secretary Attacks Judges

The five things you need to know on Sunday 17 February 2013...

1) DOG BITES MAN, TORY HOME SECRETARY ATTACKS JUDGES

Eighteen months after the home secretary, Theresa May, falsely claimed that an illegal immigrant was allowed to stay in the UK because of his pet cat, she's picked up the 'human rights help foreign criminals' baton once again - with a coruscating attack on the judiciary in an article for the Mail on Sunday.

The paper itself reports, on its front page:

"Innocent people will be subjected to rape and violent attacks by foreign thugs because judges have sabotaged a bid by Parliament to deport them, Theresa May warned last night.

"In an unprecedented public attack, the Home Secretary accused judges of tearing up the British constitution by flouting a decision by MPs to stop foreign criminals using the European Convention on Human Rights (ECHR) to avoid being thrown out.

"Using highly emotive language, Mrs May claimed there would be more muggings on Britain’s streets because judges let foreign law-breakers stay here. And she vowed to crush the judges’ revolt by rushing through tough new laws.

"Her onslaught follows a long-running row over foreign criminals and immigration cheats who use the ECHR’s ‘right to a family life’ provision to avoid being booted out."

Speaking on the Andrew Marr show this morning, however, human-rights lawyer and Labour peer Helena Kennedy said it was "absolutely imperative judges are not under the thumb of Home Secretaries." Kennedy dismissed May's article as "a populous bit of politicking", pointing out that the number of contentious cases referred to by the home secretary was "minuscule".

Note: There's only five things, not ten things, you need to know this Sunday morning as I am rushing out of the door to do a debate on the (lack of) big ideas in British politics, on the Sky News Murnaghan show at 11:40am, with 'Red Tory' philosopher Philip Blond and 'Blue Labour' thinker Maurice Glasman.

2) HIDE YOUR RINGS!

There's plenty of tax stories in the Sunday papers this morning, off the back of Ed Miliband's surprise 10p/mansion tax announcement on Thursday.

It looks like the Lib Dems are keen to try and wrestle back the wealth tax agenda from the two Eds - from the Mail on Sunday:

"Families will be forced to pay tax on jewellery and other heirlooms under controversial new plans drawn up by the Liberal Democrats.

"Under the scheme, tax inspectors would get unprecedented new powers to go into homes and value rings, necklaces, paintings, furniture and other family treasures.

"Householders would be forced to pay a new ‘wealth’ levy on the assets – with the threat of fines for those who refused to let snoops value their possessions."

That'll go down well with Tory backbenchers already annoyed by various Lib Dem policy measures and proposals.

Meanwhile, the Sunday Times report on the same story reveals that the Lib Dem business secretary Vince Cable is "said to be privately delighted that Labour has come up with the tax policy as it will put pressure on the Conservatives to give in to Lib Dem demands to adopt it. George Osborne, the chancellor, is said to have been sympathetic although Cameron vetoed it".

3) 'NARROWLY AND EXCLUSIVELY FOCUSED'

Once again, the Observer lays into Michael Gove on its front page:

"Education secretary Michael Gove has been savaged by learned societies, academics and even one of his own advisers for devising a new national history curriculum that is narrowly and exclusively focused on Britain.

"In a letter in the Observer signed by the presidents of the Royal Historical Society, the Historical Association, the higher education group History UK and senior members of the British Academy, Gove is condemned for drawing up the curriculum without substantive consultation with teachers and academics.

"... Stephen Mastin, head of history at a school in Cambridge, who worked alongside historian Simon Schama as an adviser to Gove, said the curriculum bore 'no resemblance' to the drafts he worked on as late as last month... Mastin, who stood for the Tories at the last general election, said: 'Between January and the publication of this document – which no one involved in the consultation process had seen – someone has typed it up and I have no idea who that is. It would be scary if we become the only nation in the western world to not teach anything beyond our shores.'"

The paper's political editor Toby Helm adds:

"Michael Gove's Department for Education has taken steps to stop the Twitter feed @toryeducation – to which his own advisers have contributed – from issuing any more abuse against political opponents, critics and journalists.

"Senior government sources said the department had acted to ensure those contributing to the feed will now put out information in a neutral way and free of its previously abusive tone."

BECAUSE YOU'VE READ THIS FAR...

Watch this funny if slightly terrifying video of goats shouting like human beings.

4) AUSTERITY WATCH, PART 223

There's another schools story on the front of the Independent on Sunday - this time related to George Osborne, not Michael Gove:

"George Osborne is secretly breaking his flagship pledge to protect spending on schools, according to the Government's own analysis, revealed in a document leaked to The Independent on Sunday.

"A confidential paper drawn up by civil servants assessing the Department for Education's finances reveals that the Chancellor's promise in 2010 to increase the front-line schools budget in real terms for four years 'is not, in fact, what is happening'.

"The document says: 'Schools are subject to a real-terms cut in their funding because the rate of inflation is currently higher than forecast at the time of the Spending Review [in November 2010].'"

(On a side note, the chancellor will be pleased, however, with the splash headline on the front of the Observer:
"Osborne in pledge to help world's poor fight tax abuse".)

5) I TOLD YOU SO

It's whistleblower time! The Sunday Times reports:

"Ministers were warned more than 18 months ago that illegal horsemeat was getting into the human food chain.

"John Young, a former manager with the Food Standards Agency (FSA), says he alerted the government to a potential scandal of illicit horsemeat with drug residues in human food but was ignored."

Meanwhile, the Sunday Telegraph splashes on news that "British consumers face paying the price for the horse meat scandal": "Mark Price, the chief executive of Waitrose, says that in return for families knowing food is safe and genuine, it cannot be seen as a “cheap commodity” any longer."

The paper adds: "A European Union directive in 2006 ordered 'light touch' regulation, which led to the FSA cutting the number of meat inspectors."

Whistleblowers ignored. Light tough regulation. Loss of public trust. The horsemeat crisis is starting to sound a lot like the financial crisis - well, without the global recession and trillion-pound bailout.

QUOTE UNQUOTE

"William is very gifted, which gives us another interesting challenge in finding the right sort of education for him - impossible in the state system." - the Tory candidate in the Eastleigh by-election, Maria Hutchings, provoked, in the words of the Observer, "a storm of protest as political opponents and state-educated celebrities, said she had insulted state schools, including two local ones with glowing Ofsted reports".

PUBLIC OPINION WATCH

From the Sunday Times/YouGov poll:

Labour 43
Conservatives 32
Lib Dems 12
Ukip 9

That would give Labour a majority of 114.

From the Independent on Sunday/Sunday Mirror/ComRes Observer fortnightly poll:

Labour 36
Conservatives 31
Ukip 14
Lib Dems 8

That would give Labour a majority of 58.

140 CHARACTERS OR LESS

@paulwaugh Paterson 'completely' refutes claims that he was "asleep at the wheel" re horsemeat. But leaves open possibility Spelman was taking 40 winks

@jameskirkup Owen Paterson tells #murnaghan: "It is absolutely illegal to present a horse for slaughter that has taken drugs." Do horses *take* drugs?

@StewartWood Theresa May declares war on judges to deport foreign criminals, Cameron says we're a "soft touch" for foreigners... Lynton Crosby's arrived.

900 WORDS OR MORE

Andrew Rawnsley, writing in the Observer, says: "Ed Miliband's 10p tax pledge is smart politics but poor policy."

John Rentoul, writing in the Independent on Sunday, says: "Ed Miliband, the candidate from the planet Zog"

Rafael Behr, writing in the Sunday Times, says: "Gordon Brown is dead. Long live Gordon Brown."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan ([email protected]) or Ned Simons ([email protected]). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Is This Where The Secret JP Morgan London Gold Vault Is Located?

In a world defined by "financial innovation", where $1 of hard collateral can spawn over $1000 in repoed and rehypothecated liabilities (and assets), where "shadow banking" is far more important than traditional bank liabilities (and to this date remains completely misunderstood), and where every month the central and commercial banks force create over $100 billion in credit money (which end consumers refuse to absorb and which therefore ends up in the stock market), the concept of a "hard asset" is an increasingly redundant anachronism. Yet while the Federal Reserve has emerged as the bastion of the New Normal's financial innovation front in which the concept of money is backed by absolutely nothing other than the Dollar's increasingly fleeting reserve status, when it comes to the definition of "Old Normal" money - gold - it still is the domain of the first and original central bank: London.

At first blush, most would not associate London with the hard asset mecca of the world: in fact, when it comes to some of the most spectacular hyper-levered "New Normal" cataclysms in recent years: AIG, Lehman, MF Global, JPMorgan's London Whale, all of them originated in London. Yet for the most part these events occurred precisely because of the mindboggling leverage already employed by the London financial system. Recall that the UK has some 600% in financial debt/GDP - an unprecedented amount compared to any other developed world nation. Yet, paradoxically, the fact that there is so much financial leverage implies that there must be an abundance of hard assets at the bottom of the London Exter Pyramid. After all, financial counterparties, especially in this day and age, may be insolvent but they are not idiots, and all will demand at least some paper representation that there is a trace of hard collateral at the bottom of the latest financial Frankenstein CDO, SPV, CLO, CPDO, RMBS or [insert any other modern financial "asset" acronym]. And keep in mind we are talking private sector gold: Gordon Brown's epic blunder of dumping the sovereign UK gold at rock bottom prices hardly needs a mention.

Which is why in order to spawn such a gargantuan amount of financial debt, London, which for centuries was the financial capital of the world and which sequestered the bulk of the world's real, tangible wealth until the ascendancy of the US in the 20th century, London's commercial vaults, are literally full of gold (as much as it may pale in comparison with the total notional amount of liabilities it has created).

After all it is the London Billion Market Association. Not New York, Zurich or Singapore.

Why is London such an integral part of the gold financial world? We'll let none other than JPMorgan explain:

The characteristics of the London market uniquely support the use of gold as collateral by ensuring:

  • Quality and liquidity: “London Good Delivery” sets the standard for gold quality. Rigorous specifications as to size and purity ensure that each London ood Delivery gold bar meets pre-set standards with little to no variation between one bar and the next. This consistency ensures that counterparties will receive gold of an expected quality (99.5% fine), which allows the metal to be easily transferred between members of the London Bullion Market. Ultimately, this facilitates trading and market liquidity—both desirable attributes for collateral.
  • Flexibility: The London gold market uses both unallocated and allocated gold. In layman’s terms, allocated gold specifically identifies each gold bar with a specific owner. Allocated gold is essentially held in separate accounts; it cannot be pooled with gold from others to satisfy obligations. In contrast, unallocated gold is held in a general pool by the bullion dealer and the customer has a general entitlement to the metal, but not to a specific gold bar. The LMBA states that unallocated gold “is the most convenient, cheapest and most commonly used method of holding the metal.”

    In practical terms, unallocated gold is comparable to putting dollars, pounds or euros into the bank. Once deposited, the money becomes fungible—you can withdraw the same amount of money you put in, but you will not receive back the same exact bills that you deposited. The use of unallocated gold allows for amounts smaller than a gold bar to be used as collateral between counterparties—a significant benefit to a collateral program given that a London Good Delivery bar weighs 438.9 ounces, and gold is currently trading for over US$1,700 per ounce.

  • Transparency: Readily available price information promotes market transparency and aids in daily mark-to-market and margin calculations. Gold is priced by the market twice daily (morning and afternoon) and widely reported by both the financial press and data vendors. Use of a predictable daily price fix point allows counterparties to mitigate their daily exposure and set haircuts to manage ongoing price fluctuations. The afternoon U.S. Dollar London old Fix is viewed by market participants as the appropriate way to mark gold given daily price fluctuations and increasing values.
  • Ease of transfer: The London Bullion Market clears daily using paper transfers that evidence the unallocated gold held between members. This allows them to simply and efficiently settle mutual trades and transfers to/from third parties while mitigating the costs and risks associated with physical movement of bullion. The use of paper transfers and unallocated gold facilitate easy transfers between counterparties when needed.

And speaking of JP Morgan, incidentally the subject of this post, what do we know about their London-based gold vault services? Once again, in their words:

J.P. Morgan recently integrated its gold vaulting service in London with its tri-party collateral agency service.

  • J.P. Morgan operates one of the two largest commercial gold vaults in London (one of only six in the City) and is a member of the London gold clearing system.
  • J.P. Morgan is also one of the few truly global providers of collateral management services. As collateral agent, J.P. Morgan works with two parties that have an established collateralized lending or financing arrangement.

Who is the other largest commercial gold vault in London? Why HSBC of course: the bank which has recently been embroiled in virtually every scandal involving global money laundering, also happens to be the custodian for such massive (supposedly) physical gold repositories as those of the SPDR Gold GLD ETF. The HSBC gold vault is also known as "Gold's secret hiding place" as CNBC penned it, when Bob Pisani was allowed to take a look deep inside the vault's bowels but only after he was theatrically blindfolded (a visit which we commented on at the time).

Yet Pisani's blindfold, while theatrical, was premeditated: the number of people who know where the HSBC vault is located is a handful, because the last thing commercial gold vaults, and certainly their customers, would want to deal with is a Simon Gruber-type Die Hard 2-style goldjacking.

Amusingly it was none other than the Bundesbank who in November invoked the ghost of the fictional New York Fed gold heist when a member of its executive board told NY Fed's Bill Dudley that  "you can be assured that we are confident that our gold is in safe hands with you. The days in which Hollywood Germans such as Gerd Fröbe, better known as Goldfinger, and East German terrorist Simon Gruber, masterminded gold heists in US vaults are long gone. Nobody can seriously imagine scenarios like these, which are reminiscent of a James Bond movie with Goldfinger playing the role of a US Fed accounting clerk." This happened two months before the Bundesbank diametrically (and embarrassingly) flip-flopped and decided to, all pinky swears to the contrary, begin repatriating its gold from the New York Fed (and Paris) after all. But not London (at least not yet). It also perhaps means that the days of Simon Gruber may not be "long gone", especially if the whereabouts of vaults containing billions worth of gold bullion were known to the public.

And just like the SPDR would want nothing less than to have the address of the HSBC gold vault made public (the same goes for HSBC of course), so those other ETF providers who use JPM's London gold vault as a custodian, such as Blackrock's iShares IAU ETF, or ETF Securities, would want nothing less than to have the location of JPM's vault exposed.

Needless to say, the actual addresses of "LBMA Vault" provided by the LBMA in its Annex 2 for "The Good Delivery Rules for Gold and Silver Bars" lists the headquarters office of the vaulting firm, and certainly not the actual address, because it would have been somewhat disingenuous to blindfold Pisani just to deliver him toe 8 Canada Square, or the HSBC head office in London, the address provided by the LBMA as vaulting address of HSBC. And certainly the address given for the JPM vault at 125 London Wall, aka Alban Gate, which was the firm's headquarters until its move to 25 Bank Street in 2012, is the last place even one bar of gold would be found.

Which is why we were quite stunned to find, in the deep recesses of the internet (and hosted by the Indonesian stock exchange of all place), a trade ticket from May 26, 2011, issued by the Perth Mint of Australia to Avocet Gold Mining (a West African gold miner), in which the Mint confirms its purchase of 2,126 ounces of gold at a price of $1,526 for a total transaction price of $3.246 million.

What is notable about the trade ticket is the additional information provided for the account clearer, in this case, none other than JPMorgan Chase Bank NA, London, as well as the number of the Gold Account held by said clearer: "No. 01380" but what is by far the most interesting, is that the actual physical address of the JPMorgan facility is provided: 60 Victoria Embankment, London.

Ladies and gentlemen: we may just have uncovered the actual location of the ultra-secretive JPMorgan gold vault in the city of London.

Where is 60 Victoria Embankment, London? See below:

The building's southern/river face is the glorious facade of the City of London School which occupied this location from 1879 until 1986 (and which is currently situated just east of here along the Blackfriars Underpass, next to the Millennium Bridge).

As the map above shows, it is a rather sizable building, located just off the Thames river and steps away from the Blackfriars Bridge, whose official designation until recently was Morgan Guaranty Trust Company of New York, Ltd, a remnant from the firm's merger with Guaranty Trust Company in 1959 (recall that JPM was called Morgan Guaranty Trust until 1989).

A cursory media search about the otherwise very nondescript looking building at 60 Victoria reveals that it had been fully leased by JP Morgan as long ago as 1991. What is more interesting, is that the property had previously been bundled as part of a high-profile commercial mortgage-backed securities, or CMBS, deal called White Tower 2006-3. The deal consolidated properties formerly owned by one-time London real estate mogul, Simon Halabi, one of the financial crisis most notable falls from Grace, who had an estimated net worth of $4.3 billion in 2007, and in April 2010 was declared bankrupt, and whose current whereabouts have since been unknown.

White Tower 2006-3, most infamous for being the first CMBS deal to be placed in liquidation after the start of the currency crisis, held a variety of properties near and dear to JPMorgan's heart, first and foremost 60 Victoria Embankment, the 420,000 sq ft of office buildings fully let to JP Morgan Chase; but notably Alban Gate, the 382,000 sq ft office property located on London Wall
in the heart of the City and fully let to JP Morgan Chase. The latter also was JPM's UK headquarters until last year.

What happened next is interesting: in July 2010 Carlyle bought the bulk of the "White Tower" asset portfolio from the defunct CMBS, paying some £173 million for the 60 Victoria Embankment location. Three very short months later, none other than long-time 60 Victoria resident JPMorgan bought the very same building from Carlyle for a whopping £350 million: a transaction which doubled Carlyle's money in an unprecedented three months! At the time the now former CEO of JPM's investment bank Jes Staley (and who currently works for BlueMountain - the same fund that made a killing by squeezing none other than JPMorgan's London Whale traders), said, "These properties are long-term investments and represent our continued commitment to London as one of the world's most important financial centres." Frank Bisignano, chief administrative officer, added: "These properties are among the most attractive pieces of real estate in London. These buildings ensure that our employees will have the necessary technology, infrastructure and amenities to take our businesses forward." Curiously, JPM showed zero love for its Alban Gate location, which it promptly departed to go to its new Canary Wharf HQ, and Carlyle was forced to pull the sale of this property a year later as it did not get enough satisfactory bids.

A pressing question remains: why did JPM, a long-time tenant of 60 Victoria not submit its own bid for the location it knew it would end up purchasing outright in a few months from Carlyle anyway? Why overpay by £177 million in exchange for merely having one more middleman do a three-month transaction? We hope to find out.

Yet what is very clear is that there was something of far greater value to JPM at the 60 Victoria location than at its old headquarters.

What that "thing" may be, and what is the missing puzzle piece in this story, comes from a very peculiar article written nearly four years ago in an Abu Dhabi/Arab Emirates website titled TheNational, titled "Mystery gold cargo linked to Saad, Gosaibi feud", which described just that - the fate of a series of very peculiar gold shipments, the key of which once again involved the two main abovementioned players: Perth Mint and 60 Victoria Embankment.

We repost the entire story below, while highlighting the key parts:

The Qantas freighter QF71 that took off from Perth Airport on November 3 last year bound for London would not have attracted any special attention, despite the fact that it was carrying 1.2 tonnes of gold bullion, then worth about US$28 million (Dh102.8m).

Perth, in Western Australia, is home to Australia's Gold Corporation Mint, where bullion is processed and turned into standard 12.5kg bricks. From there, the ingots are shipped daily around the globe to vaults in America, Europe and Asia, evidence of the world's apparently insatiable appetite for the precious metal. But what made this shipment unusual was that it was the first of 15 such cargoes, of varying quantities and values, which over the next seven months were eventually unloaded mainly in London. Smaller amounts were also delivered to Dubai and Zurich.

The total value of the bullion exported in these operations approached $430m at current market prices, and it weighed 10.4 tonnes. The other distinguishing factor was the identity of the recipients, or "consignees" as they are known. According to documentation seen by The National, they were all companies associated with the al Gosaibi family of Saudi Arabia. The al Gosaibis have since fallen out spectacularly with their partner, Maan al Sanea of Saad Group, in the biggest corporate scandal to hit the Middle East, leaving about 120 banks worldwide with debts estimated at up to $22 billion and a decreasing likelihood of getting their money back.

In a global hunt for assets to offset their losses, the banks have looked into every corner of the Al Gosaibi trading empire and the Saad Group controlled by Mr al Sanea. A small army of lawyers, forensic accountants and corporate investigators has been hired to track down assets over which the banks believe they have claim. They have turned up property, financial investments, relatively small amounts of cash and other baubles of the wealthy, such as aircraft leases. There was even a private zoo. But the most curious discovery so far is the Gosaibi gold.

Perhaps the most remarkable fact about the shipments is that although there are detailed and specific records of them having taken place, neither party in the al Gosaibi-al Sanea confrontation seems to lay any claim to their ownership. Each side denies it was responsible for the shipments. Despite being regularly ranked among the world's billionaires, neither the family's controlling partnership, Ahmad Hamad Al Gosaibi and Brothers, nor Mr Al Sanea's Saad Group has any previous known involvement in the bullion business.

The first shipment took place just as the world appeared on the verge of financial meltdown last November. They continued until May, when the crisis in the two Saudi families exploded into the public domain after they failed to make repayments on loans associated with their banking businesses in Bahrain. The shipments reached a peak in late February and early March, just as tensions within the al Gosaibi family intensified after the death of Sulaiman, the family patriarch and chairman, on February 22.

One shipping document shows that, the following day, "a shipment of 21,500 fine ounces of large 12.5kg gold bars, minimum 99.5 per cent purity" was sent from AGR Matthey, a well known Australian bullion dealer, from Perth Airport via Singapore to London's Heathrow. From there, the bullion was moved to the vaults of Standard Bank of South Africa, located in the London offices of JPMorgan Chase at 60 Victoria Embankment, Blackfriars, London.

The shipment was marked "London good delivery", meaning it met the internationally recognised standards for bullion delivery and could be deposited alongside bullion of the same quality. The Standard Bank account in which it was deposited was in the name of Al Gosaibi Trading Services, one of the companies owned by the al Gosaibi family. But financing such a transaction - the gold was worth about $20m - is a complicated process.

The usual procedure is for the consignee to arrange a letter of credit with the supplier, which is then guaranteed by a bank. In this case, the letter of credit bears the reference number "Awal 157". Awal is the Bahraini bank owned by Mr al Sanea, but which is now in the administration of the Bahrain Central Bank. Ten of the 15 shipping documents bear the Awal reference, while the rest have reference to "TIBC", The International Banking Corporation, the al Gosaibis' Bahraini bank which is similarly in administration.

It is common practice in the trade finance business for those letters of credit to be separately financed by a third party, such as an international bank. This is what happened with the Gosaibi gold. The amounts paid for the bullion were drawn down from lending facilities with these global banks but those borrowings have not been repaid, banking sources say. International banks, so far frozen out of the settlement process in Saudi Arabia or offered derisory amounts by the feuding families, are keen to track down the location and ownership of this bullion, to seize and offset against debts owed them. While most of the bullion ended up in London, two shipments went to other locations.

Also on February 23, some 629kg of "London good delivery" were shipped from Perth on Singapore Airlines flight SQ226/SQ490 to Dubai International Airport. The shipment was delivered to the Brinks Global Services facilities at the Dubai Airport Free Zone, marked for the attention of: "Malcolm Clingham, for account of Al Gosaibi Trading Services Ltd." Again, the financing reference was "Awal 158". Attempts to reach Mr Clingham were unsuccessful. An employee of Brinks in Dubai said he left the company about four months ago.

The other non-London shipment took place on April 29, when 689kg of gold left Perth on Singapore Airlines flight SQ226/SQ346 to Zurich in Switzerland. The shipment was marked for delivery to: "UBS AG Zurich, for account Standard Bank PLC." Although no named consignee account was mentioned on the shipping document, the financing reference was "TIBC 438". The final shipment to arrive in London took place on May 6, when 722kg was placed on a Delta Airlines flight DL94 in Salt Lake City, Utah, in the US. This was marked for the Al Gosaibi Trading Services account at Standard Bank at the JPMorgan Chase building in London. The financing reference was "Awal 177".

So while there is plenty of evidence that the gold shipments took place, there is huge uncertainty about who initiated them, who owns the bullion, and even where the gold is now. The company named as the bullion account holder, Al Gosaibi Trading Services (ATS), is a wholly owned subsidiary of Bahrain-based Al Gosaibi Investment Holdings (AIH), based in Bahrain which is in turn owned by three family members. But the management control of ATS and AIH is in dispute.

In a legal filing in New York, John D Potter, a former general manager of Al Gosaibi Investment Holdings, declared that: "Mr al Sanea exercised complete control over the operations and activities of AIH, to the exclusion or virtual exclusion of the other directors and the shareholders." Lawyers for Mr al Sanea, the London firm of Harbottle & Lewis, declined to comment on the gold shipments. But sources close to the Kuwait-born financier have denied he was involved in the transactions.

Creditor banks, which asked to remain anonymous, have told The National that their inquiries to Standard Bank in London have not so far produced any positive indication of ownership of the bullion, or even confirmation that it is still in Standard's vaults. Through its South African head office, a spokesman for Standard Bank said: "Our executives in London are adamant they cannot comment - not even off the record - as this would be a breach of client confidentiality."

Whoever ends up owning the gold from Perth will at least have made some money out of the Saudi confrontation, which has affected the kingdom's economy and stock market, and ravaged the balance sheets of regional and international banks. The gold price has risen by nearly 50 per cent over the past year. The shipment last November, worth some $28m when QF71 took off from Perth, is now valued at $42m - wherever it might be.

Courtesy of TheNational, we now know that one of the key features of the building at 60 Victoria is that it houses at least the vault of the Standard Bank of South Africa: in other words, somewhere deep underground, there is, indeed, a major gold vault. We also know, that after leasing this location for nearly two decades, JPMorgan decided to take the plunge and bought it outright in 2010, in a transaction that as shown above was a scramble to park cash and to procure the property for sale. In other words, JPM now has sole custodial possession of all the vaulting services offered under its 60 Victoria Embankment address.

So is this where the legendary JPMorgan London vault is located? Certainly nothing short of Blythe Masters admitting on live TV that yes, this is where one of the two largest commercial gold vaults in the UK is located, and as JPM admitted previously, only one of only six commercial vaults in all of London, there will be speculation and one can't be certain.

However, a quick cursory virtual trip around this building using Google's Street View feature shows that this building, barricaded on every side by a dense forest of bollards, is as protected from outside interest (especially of the automotive kind) as any modern day fortress.

The building's entrance on John Carpenter street, just north of Victoria's embankment - bollards everywhere:

The building's reinforced back/delivery entrance: corner of Kingscote and Tudor: barriers, a reinforced gate with a screen on top of it, and even more bollards which surround the entire building and prevent the parking of any cars in proximity to the building:

And finally, not one, but two rows of bollards, cordoning off a 60 foot area in the street on both sides. South view:

And north view:

Needless to say, no car, or any other potential threat, can enter that ~60 foot space from either side.

Is that where, dozens of feet underground, the world's most secretive commercial gold vault is located? Just below what was once the main campus of the City of London School for boys.

h/t Ro

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Mehdi’s Morning Memo: Mili’s Mansion Gamble

The five things you need to know on Friday 15 February 2013...

1) MILI'S MANSION GAMBLE

If you're Ed Miliband, trailing on the economy in the polls and attacked for being a policy-free zone, what do you do? How do manage, as the Labour leader did yesterday, to unite the Telegraph's Dan Hodges, the Independent's Owen Jones and ConHome's Tim Montgomerie behind you? Why, you give a major speech on the economy in which you, in the words of the Guardian, "undo one of Gordon Brown's greatest mistakes by announcing that Labour intends to reintroduce a 10p tax band funded by a new mansion tax on properties valued at more than £2m".

The paper's political editor Patrick Wintour writes:

"Brown abolished the 10p rate in 2007, prompting a revolt of Labour MPs and the low-paid. On Thursday Miliband described it as a mistake and the shadow chancellor, Ed Balls, said the abolition meant 'people understandably thought Labour was no longer on the side of the hard-working people we have always sought to help'."

And the paper's leader argues:

"Mr Miliband has begun to write something specific on what for too long has been Labour's fiscal blank page. For that alone, he deserves credit for a good day's work."

Lefty Lib Dems, such as the business secretary Vince Cable who first pitched the idea of a mansion tax in opposition, wil look with envy at Mili's mansion tax proposal.

Not everyone's happy - the Times calls the move a "sleight of hand". The Institute for Fiscal Studies calls it "a remarkable failure to learn from history".

Writing for the Huffington Post UK, Tory backbencher Robert Halfon MP, who has led the campaign for the restoration of the 10p tax rate, dismissed Miliband's proposal as "a PR wheeze written on the back of an envelope".

The Sun agrees with Halfon:

"[W]hy won't [Miliband] wholeheartedly commit his party to it — rather than describing it as an 'ambition?' Perhaps because it's a cynical stunt hurriedly thrown together to woo wavering voters at next week's Eastleigh by-election."

"Nevertheless," the paper adds, "The Sun welcomes Ed's idea of a 10p rate."

And, ultimately, you might say, from Labour's perspective, that's all that matters...

Note: For various technical reasons, today's Memo contains only five, not ten, things you need to know. Apologies.

2) DON'T YOU DARE COME HERE

'Compassionate' Cameron seems like a distant memory; now we have a populist PM who sounds like a Daily Mail leader writer.

From the Times splash:

"David Cameron was challenged by Brussels last night over his increasing efforts to impose tougher curbs on immigrants.

"The Prime Minister thrust the issue to the forefront of the Eastleigh byelection yesterday, saying that Britain must do more to deter immigrants by cutting their access to benefits and services.

"There's a lot more to do to make sure that we are not a soft touch," Mr Cameron told voters on his first campaign visit to the constituency in Hampshire.

"It was too easy for migrants from overseas 'to come here and take advantage of us', he added."

But the paper quotes EU Justice Commissioner Viviane Reding as saying: "There are one million British citizens living in other member states. Do you think those member states can discriminate against them because they are British citizens? You treat them the same as you treat national citizens."

Hear, hear!

3) DAVE VS THE SUPERMARKETS

It isn't just EU migrants who are in the PM's crosshairs - from the Telegraph splash:

"As Asda withdrew four beef products following the discovery of horse DNA in bolognese sauce, David Cameron was said to be increasingly angered at the way consumers had been 'misled' about what they were buying.

"The Prime Minister believes that senior executives of major stores should have given media interviews to explain why horse meat had got on to British plates and what checks were made with suppliers."

"A senior No 10 source said on Thursday: 'It is not acceptable for retailers to remain silent while their customers have been misled. The supermarkets need to justify their action and reassure the public.'

"The comments came as the food industry prepared to reveal the results of 1,000 tests carried out on products stocked by 13 retailers. They are expected to show that the horse meat scandal is more widespread than previously thought."

BECAUSE YOU'VE READ THIS FAR...

Watch this video of a ginger cat attacking a large potato.

4) AUSTERITY WATCH, PART 413

From the Times:

"More than a fifth of local authorities are set to defy the Government’s policy to freeze council tax from April. George Osborne had hoped that town halls would accept subsidies to stave off any council tax rises for a third year. But at least 81 councils in England and Wales — nearly three times as many as last year — have announced that they intend to put up taxes from April."

Meanwhile, the BBC reports:

"Government attempts to stimulate the economy have been criticised as 'expensive experiments' by an influential group of MPs.

"The Public Accounts Committee said the Treasury could not say what the effect of the Bank of England's quantitative easing programme had been.

"A flagship lending scheme had also 'failed' the MPs said."

5) 'MOVING THE GOALPOSTS'

Shock! Horror! A lack of money is a central factor in child poverty, say a group of experts. Are you listening, IDS?

From the Guardian:

"The government's desire to alter the official definition of child poverty risks deliberately downplaying the importance of money just as a series of government policies will reduce the incomes of poor families, a group of senior academics warn in a letter to the Guardian today... The letter, signed by some of the country's leading academics in this field, agrees [with the government] that in addition to the current measures used to count the number of children living in poverty, it would be 'helpful to track what is happening to the factors that lead to poverty and the barriers to children's life chances'.

"But they warn: 'It does not make sense to combine all of these into a single measure. To do so would open up the government to the accusation that it aims to dilute the importance of income in monitoring the extent of 'poverty' at precisely the time that many of its policies will be reducing the real incomes of poor families.'

"Professor Jonathan Bradshaw, the lead consultant on the UK's contribution to Unicef's Child Well-Being report, said he believed that the government was 'trying to move the goalposts' at a time when child poverty was increasing rapidly."

** "WAS IT WORTH IT? IRAQ, TEN YEARS ON"

Today's the tenth anniversary of the march against the Iraq war - for all the Huffington Post UK's special coverage of the march and the conflict, click here. For my latest column, 'On Iraq, the Hawks Were Wrong About Everything', click here.

The Guardian, meanwhile, has a poll showing:

"A majority of voters, 55%, agree with suggestions that 'the London marchers were right', because 'a war sold on a false prospectus delivered little but bloodshed'. That is almost twice the 28% who believe the marchers were wrong, on the basis that the war's achievement in 'toppling the dictatorship of Saddam Hussein' eventually made the world a better place."

PUBLIC OPINION WATCH

From the latest Sun/YouGov poll:

Labour 42
Conservatives 31
Lib Dems 11
Ukip 10

That would give Labour a majority of 114.

From yesterday's Evening Standard/Ipsos MORI poll:

Labour 42
Conservatives 30
Ukip 9
Lib Dems 7

That would give Labour a majority of 112.

140 CHARACTERS OR LESS

@steverichards14 Ed M has signalled distance from Brown era while using a Brown ploy- a popular tax rise and tax cut to symbolise fairness. Clever politics.

@schofieldkevinWhen Gordon Brown scrapped the 10p tax rate in 2008, @Ed_Miliband said: "Overall these changes make the tax system fairer."

@mrjohnofarrell: Fear I have already turned into political robot. Valentines card to wife just said 'Vote Labour in #Eastleigh for a One Nation alternative'.'

900 WORDS OR MORE

Polly Toynbee, writing in the Guardian, says: "Ed Miliband is a man with the makings of a brave and visionary leader."

Fraser Nelson, writing in the Telegraph, says: "Slavery, not horse meat, is the real scandal on our doorstep."

Liz Truss, writing in the Independent, says: "The curriculum we are introducing captures British history in all it's multi-layered, omni-racial glory."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan ([email protected]) or Ned Simons ([email protected]). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Ed Miliband’s 10p Tax Plan Attacked As ‘PR Wheeze’ By Tory Who Favours Move

Ed Miliband’s dramatic decision to outflank David Cameron on the economy by calling for the 10p rate of income tax to be brought back had been dismissed as a "PR wheeze" by the Conservative MP who has campaigned in favour of the move.

On Thursday the Labour leader said reintroducing the band - controversially scrapped by Gordon Brown - would make society fairer. In a keynote speech, he said the move could be funded by a new "mansion tax" on homes worth more than £2m.

Tory backbenchers, led by Harlow MP Robert Halfon, have been campaigning for the 10p rate to be brought back by George Osborne in next month's Budget.

But writing on The Huffington Post UK, Halfon said Miliband’s surprise announcement was "a half-hearted Damascus conversion" to the cause, suggesting it was made with one eye on the impending Eastleigh by-election.

"Only in 2008, HuffPost readers will remember, the Labour Leader said that abolishing the 10p rate of income tax for the poorest Brits was ‘fairer’, and he voted that way in Parliament," Halfon said.

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"What are voters to make of this? In my view, what the public want to know is this: is this just jam for the Eastleigh by-election or is this a substantive policy pledge?

Robert Halfon: Can We Trust Labour's Surprise 10p Announcement?

"Consider the record of the two main parties: Ed Miliband has whipped his MPs to vote against every single tax-cut for the poorest Brits that the Coalition has delivered; whether this is on council tax, fuel duty, or income tax.

"By contrast, Conservatives in government this April will cut income taxes for 25 million people. Two million will have been taken out of income tax altogether.

"And, the poorest who benefited from the 10p rate under Labour (until they scrapped it in 2008) now pay no income tax at all."

Halfon adds: "Today could have been a real policy announcement from Labour, rather than a PR wheeze written on the back of an envelope. As it stands, Labour’s suggestion would only mean an extra £34 a year for a family."

Labour's tax plan has been dismissed by David Cameron, who said it appeared as though it was not properly "costed".

"We'll discover over the course of the day all sorts of problems and issues with a policy that looks like it's been cobbled together overnight," he said.

Lib Dem Chief Secretary to the Treasury Danny Alexander said: "The two Eds are rather late to the party, wanting to cut taxes for those on low and middle incomes.

"After 13 years in government, the only action Ed Balls took was to raise the amount of tax those on low incomes paid by abolishing the 10p rate. It was the biggest tax mistake they ever made and it has taken them until now to realise their error.

Related on HuffPost:

Labour Plans Mansion Tax To Fund 10p Tax Rate

Ed Miliband has called for the 10p tax rate to be reintroduced, funded by a mansion tax on homes worth more than £2m.

In an audacious bid to outflank David Cameron, he claimed Labour would use next month's Budget to bring back the band controversially scrapped by Gordon Brown in 2007.

The measure, which if reinstated in full would cost an estimated £7bn, would be funded by a mansion tax on homes worth £2m or more, Mr Miliband explained.

The announcement was a surprise inclusion in a major speech on the economy in Bedford, which had been billed as featuring no significant new policy.

Workers would save £250 if the first £2,500 of taxable income was subject to a 10p rate instead of 20p, but Mr Miliband said his giveaway would depend how much a mansion tax raised.

He said: "A One Nation Labour Budget next month would lay the foundations for a recovery made by the many, not just a few at the top.

"Let me tell you about one crucial choice we would make, which is different from this Government. We would tax houses worth over £2m. And we would use the money to cut taxes for working people.

"We would put right a mistake made by Gordon Brown and the last Labour government. We would use the money raised by a mansion tax to reintroduce a lower 10p starting rate of tax, with the size of the band depending on the amount raised.

"This would benefit 25 million basic rate taxpayers - moving Labour on from the past and putting Labour where it should always have been - on the side of working people."

The Labour leader will be hoping that, in one swoop, he has stolen Mr Cameron's thunder and also appealed to the Lib Dems who champion a mansion tax.

The move is also a clear attempt to pile pressure on Chancellor George Osborne, who will deliver his Budget next month amid mounting concerns about the sluggish recovery.

And it will be seen as a clever tactical move as Mr Miliband tries to restore the public's trust in Labour on the economy because it is a clear rejection of his predecessor.

Tory MPs have recently been campaigning for the return of the 10p rate and the Prime Minister appeared to signal he was open to the idea at PMQs on Wednesday.

"We won't forget the abolition of the 10p tax rate," Mr Cameron said when Mr Miliband argued the coalition was doing little to help ordinary workers.

The coalition is already committed to raising the income tax threshold to £10,000 over this Parliament but the Treasury was also understood to be considering plans for a new lower tax rate.

Mr Cameron, on a visit to Eastleigh, said: "My prediction is that they won't have thought it through or costed it properly and we will discover over the course of the day all sorts of problems and issues with a policy that looks like it has been cobbled together overnight."

Ed Miliband Announces Plans To Re-Introduce 10p Tax Rate

Ed Miliband has announced a Labour government would reintroduce the 10p tax rate abolished by his predecessor, Gordon Brown, potentially benefitting 25m basic tax rate payers.

In a much-anticipated speech in Bedford on Thursday morning, the Labour leader said his plan would be funded by a mansion tax on houses worth over £2m.

He said: "Let me tell you about one crucial choice we would make, which is different from this government.

"We would tax houses worth over £2 million. And we would use the money to cut taxes for working people.

"We would put right a mistake made by Gordon Brown and the last Labour government."


Jim Pickard

Okay here is how miliband 10p rate only costs 2bn - only applies to first 1k of income above threshold. So only partial reversal of Gordo.

Despite being introduced by then-chancellor, Brown, in 1999, he then abolished the 10p tax rate it to much outcry eight years later.

As well as trying distancing himself from the sins of the previous Labour government, Miliband is keen for his 'One Nation' Labour Party to be seen as supporting hard-working people on lower incomes.

This is in contrast to a Conservative-led government that, according to the polls, is seen as favouring the wealthy with policies such as the controversial cut to the 50p top rate of tax and a reluctance to implement a tax on higher priced properties.

On Wednesday, at PMQs, David Cameron mocked the Labour leader for planning to give a speech without any policies in it.

Miliband declared: “Moving Labour on from the past and putting Labour where it should always have been, on the side of working people.


Joey Jones
So takes up an emblematic libdem policy and junks an emblematic gordon brown policy. V interesting.

“Britain is at a fork in the road. We can carry on as we are: falling wages, low growth, failure to tackle the deficit.

“Or Britain can take the path I have outlined: a recovery made by the many, tackling low growth and reducing the deficit, building not squeezing the middle, all of us playing our part in turning this economy around.”

In a Q&A session after the speech, shadow chancellor, Ed Balls, outlined how the mansion tax would work, saying he would work with the Lib Dems to ensure it's success.

Balls claimed it could raise over £1.7bn and he would be happy to start talks with the Treasury on Monday and work on plans with chief secretary, Danny Alexander.


Owen Jones

Labour's plan to reintroduce 10p tax - disastrously scrapped by Brown - funded by mansion tax will be very popular. Redistribution is back

Speaking to the BBC Balls said: "This is a very clear statement. It's what we want to do now and it's what we want to do in 2015."

Questions have been raised however in the wake of the speech as to the viability of funding the required cut through a mansion tax alone.


Jim Pickard

Sorry to break this to you all but return of 10p income tax rate would cost about 7bn pounds

Cameron rubbished the proposals on a visit to Eastleigh on Thursday.

He said: "My prediction is that they won't have thought it through or costed it properly and we will discover over the course of the day all sorts of problems and issues with a policy that looks like it has been cobbled together overnight," reports Sky News.

Treasury sources told the BBC the plans lacked "economic credibility".


James Chapman (Mail)
No-one who paid Gordon Brown's 10p tax rate pays any tax at all today http://t.co/GjrrmzfM

The government will have a chance to respond when chancellor George Osborne announces the Budget on March 20th.

Also in his speech Miliband stressed it was up to individuals to play their part in a successful British economy and to increase their own living standards.

He said: "When you play your part, when you make your contribution to the economy, you will be rewarded.

"And that Britain’s economic success will be built by the many, not just by a few at the top."

The Labour leader also highlighted the importance of skills training for young people who don't go to university and outlined a new vocational qualification.


Jonathan Freedland

As for Cam's "no policy" jibe, one Lab source says "Cameron yesterday was v helpful for expectations management! It set us up nicely."

He said: "We must end the culture which says University is always best and vocational education is second-best.

"It simply isn’t true.

"That’s why One Nation Labour will create a new technical baccalaureate, to complement A-levels."


Tim Montgomerie

Can't strategically disagree with Ed Miliband's speech. We should be increasing tax on high value properties and cutting income tax (1/2)

Other Labour proposals covered in the speech are to:

  • Break the stranglehold of the big six energy suppliers.
  • Stop the train company price rip-offs on the most popular routes.
  • Introduce new rules to stop unfair bank charges.
  • And cap interest on payday loans.


Joe Murphy
Something borrowed (Vince's Mansion Tax), Something blue (Halfon's 10p restoration) - Ed Miliband grabs both http://t.co/s7rogzdE

Miliband contrasted today's economic climate to that of 1957 when Conservative prime minister Harold Macmillan gave a speech just across the river celebrating a booming British economy, in a speech that became known as the “you’ve never had it so good” speech.

He said: "It’s what Harold MacMillan understood when he spoke here in Bedford more than half a century ago.

"We can rebuild this country, we can offer people hope.

"We can make an economy that works for working people.

"It’s a goal worth fighting for.

"It’s what One Nation Labour will do."

Ed Miliband's speech text network visualised

Mehdi’s Morning Memo: The Horsemeat Summit

The ten things you need to know on Wednesday 13 February...

1) THE HORSEMEAT SUMMIT

"Now it's British horsemeat in burgers," screams the Daily Mail on its front page. The paper says:

"Meat from British horses was discovered in takeaway burgers and kebabs yesterday.

"The shocking find, which implicates the UK for the first time in the food fraud scandal, came during police raids in Yorkshire and West Wales.

"Environment Secretary Owen Paterson described the development as ‘utterly and totally disgraceful’ but pulled out of making an emergency statement to the House of Commons."

His opposite number, Labour's Mary Creagh said she wouldn't be buying mince of any kind for the moment: "Let's just say that I'm not very keen on mince at the moment, I think I know a bit too much now."

And you know you're in the middle of a crisis when our rulers start having 'summits'.

The BBC reports that "Environment Secretary Owen Paterson will travel to Brussels on Wednesday for a meeting of European countries linked to the horsemeat scandal.

"Ministers from the Irish Republic, France, Romania, Luxembourg, Sweden and Poland will attend."

I can't wait for the official picture of the French and Romanian ministers shaking hands...

2) NO POUND OF FLESH

From the Huffington Post:

"University graduate Cait Reilly has won her Court of Appeal claim that requiring her to work for free at a Poundland discount store was unlawful.

"Three judges in London ruled that the regulations under which most of the Government's back-to-work schemes were created are unlawful and quashed them. The Department for Work and Pensions has not been given leave to appeal, but has said that, regardless, it will appeal to the Supreme Court."

The papers are divided on straight left-right grounds - the Telegraph leader says: "Workfare can still do the job for Britain." The Guardian, however, pens an editorial "in praise of... Cait Reilly", noting: "[T]he point is that Whitehall had assumed a free hand in foisting arbitrary, harsh conditions on unemployed people. Cait Reilly has caught it out – for failing to play by the rules."

Writing in today's Sun, 'compassionate Conservative' Iain Duncan Smith, the work and pensions secretary, is defiant: "Let me be very clear — our back to work schemes are successful and are not slave labour." He adds: "I disagree with the part of the ruling that found against our regulations and we will appeal against that, but crucially the court did not find that anyone's humans rights have been breached because we asked them to do a work placement in return for Jobseeker's Allowance."

3) 'OUR GENERATION'S TASK'

The issue of in-work poverty isn't just a big issue in the UK - last night, President Obama decided to tackle the issue head-on during his State of the Union speech:

From the Huffington Post:

"President Barack Obama on Tuesday night laid out a vision for a society in which everyone has a fair shot at a decent education, adequate health care and a job that pays a living wage.

"'It is our generation's task, then, to reignite the true engine of America’s economic growth -- a rising, thriving middle class,' said the president in the first State of the Union address of his second term. 'It is our unfinished task to restore the basic bargain that built this country -- the idea that if you work hard and meet your responsibilities, you can get ahead, no matter where you come from, no matter what you look like, or who you love.'

"The president's most notable proposal was to raise the minimum wage from its current $7.25 an hour to $9 an hour."

Will George Osborne follow Obama's lead in the Budget next month? Two stats are always worth remembering: 1) the majority of the children living in poverty in Britain live in working, not workless, households, and 2) the UK's minimum wage is now worth less in real terms than it did in 2004.

4) WATERBOTTLEGATE

Obama may have been giving the SOTU speech, but all eyes were on the Republican 'rebuttal' - my US colleague Jon Ward reports on the speech from 41-year-old Florida senator Marco Rubio, who is one of the favourites for the 2016 GOP presidential nomination:

"In his remarks, Rubio hit two things hard: stereotypes of conservatives, and the president. He came out against the former stronger than the latter, devoting an entire passage to rebutting the charge that Republicans want to protect the rich from higher taxes, and another to making clear his devotion to Medicare, in an attempt to stake out a politically viable position on entitlement reform."

Amusingly, Ward adds:

"The media-savvy Republican got favorable reviews, but his night was almost derailed by a bottle of water. When Rubio came to the 10-minute mark in his 14-minute speech, he paused, looked down and to his left, and then looked back at the camera as he bent and reached for a small Poland Spring bottle. For a few brief, excruciating seconds, Rubio took a sip of the water as he looked directly into the camera, and then put it quickly down and resumed speaking.

"Twitter exploded. Video of the moment was quickly posted, Democratic operatives cackled, and journalists complained about the volume of chatter about Rubio's thirst."

5) LEGISLATING FOR LEVESON

David Cameron's plans for a Royal Charter to regulate the press may be nowhere near as tough as the system recommended by Lord Justice Leveson but, according to a story on the front of today's Independent, a 'compromise' deal is close:

"Parts of David Cameron's blueprint to regulate the press could breach European law, the newspaper industry warned yesterday, as his plan to implement the Leveson Report was attacked from all sides.

"But despite criticism from Labour and the Liberal Democrats, some sources suggested the compromise was still possible with all-party talks due to begin tomorrow."

BECAUSE YOU'VE READ THIS FAR...

Off the back of Obama's State of the Union last night, why not re-watch this classic video of the US president slow-jamming the news on Jimmy Fallon's late-night show from April 2012?

6) EYE ON EASTLEIGH

From the Guardian:

"As the author of a seminal account of an activist's life during Labour's 'wilderness years', and later as a writer of jokes for Tony Blair and Gordon Brown, John O'Farrell has been cheering up the party's rank-and file for decades as the self-deprecating chronicler of middle class, left-wing angst.

"But after local members in Eastleigh last night selected him to be the party's candidate in the upcoming byelection, the comedy writer was settling down for the challenge of capturing the south-coast seat - although not quite immediately.

"'There is a great deal of hard work ahead. But first I am going to the pub,' he tweeted immediately after news emerged of his official selection over two other Labour members."

O'Farrell won't win in Eastleigh - where the two coalition parties are slugging it out for the top spot - and, thankfully, nor will Ukip's Diane James, who is reported to have said yesterday that all immigration into the UK should be halted in order to prevent Romanians from coming to the country and committing crimes here. Who says Ukip are a bunch of bigots, eh?

7) CLEGG THE CREDIT TAKER

Whatever happens to the Lib Dems in Eastleigh, for now, their leader continues be mauled by the papers - from the Telegraph front page:

Nick Clegg has been ridiculed after he appeared to claim credit for his part in securing a cut in the European Union budget.

Mr Clegg, the Deputy Prime Minister, last year claimed that Conservatives who wanted a budget cut had 'absolutely no hope'.

"At his weekly Deputy Prime Minister’s Questions session in the Commons yesterday, however, Mr Clegg claimed that he had spent 'months making the case for the tough approach' adopted by David Cameron in Brussels last week.
Tory backbenchers have described Mr Clegg’s comments as 'ludicrous and implausible'.

8) CASH-FOR-ACADEMIES

Ever wondered why so many schools are so keen to become academies? The Independent this morning splashes on news that

"Officials from Michael Gove's department are offering £65,000 'bribes' to convince reluctant headteachers to convert their schools to academies.

"The sweeteners are being offered to schools which drop their opposition to academy status – sparking claims that taxpayers' money is being spent on "buying off" critics of the Education Secretary's pet project."

Follow, as they say, the money...

9) 'GET OFF OUR PLANES'

To those of you who think Islamophobia is a myth, meet New Zealand MP Richard Prosser - from the Huffington Post:

"A New Zealand politician who sparked condemnation for suggesting Muslim men should be banned on Western airlines will not stand down.

"Writing in his column in Investigate Magazine, First Leader Richard Prosser said: 'If you are a young male, aged between say about 19 and about 35, and you're a Muslim, or you look like a Muslim, or you come from a Muslim country, then you are not welcome to travel on any of the West's airlines.'

"Labelling Islam a 'stone age religion', and claiming most terrorists are 'angry young Muslim men who hate the West', Prosser added: 'I will not stand by while my daughters' rights and freedoms, and those of other New Zealanders and Westerners, are denigrated by a sorry pack of misogynist troglodytes from 'Wogistan'.'"

Charming.

10) 'POLITICALLY CORRECT CENSORSHIP'

From the Telegraph:

"The BBC has been criticised as 'Stalinist' and 'politically correct' for allegedly trying to play down Harold Wilson’s pipe smoking in a five hour television special tomorrow night.

"However, Lord Donoughue, a former right hand man to Mr Wilson in Number 10, claimed that producers had been told to downplay Mr Wilson’s pipe smoking.

"Describing it as 'Stalinist', he said: 'Is the licence payers money being paid for these people. It is censorship – politically correct censorship. How many people do they have monitoring politically correct behaviour?'"

Donoughue adds: “He didn’t smoke it much in private. It was not always lit because he had to put it away in his pocket.

“If he was being interviewed or questioned, the moment he was asked a difficult question he would take out his lighter and light the pipe to give him time to think of an answer.”

QUOTE UNQUOTE

"The position is this. One of the most powerful, talented, intelligent and trusted women in the country wishes you to think that when she took some points for her husband in 2003 she had no real choice in doing so. It is the prosecution's function, if they can, to disprove that before she can be convicted." - Andrew Edis QC, who is prosecuting the Vicky Pryce case at Southwark Crown Court, giving his closing speech yesterday.

PUBLIC OPINION WATCH

From the Sun/YouGov poll:

Labour 43
Conservatives 32
Lib Dems 10
Ukip 9

That would give Labour a majority of 116.

140 CHARACTERS OR LESS

@LizMair: [email protected] asks what Republicans want to hear in #SOTU. My guess: "I'm resigning and handing this job off to a stealthily preserved Reagan."

@EJDionne Poor Marco Rubio: It was the gulp that roared. TV can be a cruel medium #sotu

@ShippersUnbound Don't understand the fuss over food. I love Haggis and I definitely don't want to know what goes into that...

900 WORDS OR MORE

Seumas Milne, writing in the Guardian, says: "Michael Gove is not just a bungler, he's a destructive ideologue."

Mary Riddell, writing in the Telegraph, says: "Ed Miliband can draw a line under the Labour Party’s war by opposing plans for secret courts."

Martin Wolf, writing in the FT, makes the "case for helicopter money".


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan ([email protected]) or Ned Simons ([email protected]). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Russia Flips Petrodollar On Its Head By Exporting Crude, Buying Record Gold

China has been a very active purchaser of gold for its reserves in the last few years, as we extensively covered here and here, but another nation has taken over the 'biggest buyer' role (for the same reasons as China).

Central banks around the world have printed money to escape the global financial crisis, and as Bloomberg reports, IMF data shows Russia added 570 metric tons in the past decade. Putin's fears that "the U.S. is endangering the global economy by abusing its dollar monopoly," are clearly being taken seriously as the world's largest oil producer turns black gold into hard assets. A lawmaker in Putin's party noted, "the more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency."

Putin’s gold strategy fits in with his resource nationalism, statist agenda, as Bloomberg notes when Russia defaulted in 1998 it took 28 barrels of oil to buy one ounce of gold, was 11.5 barrels when Putin came to power and when in 2005 it had fallen to 6.5 barrels (less than half what it is now), he went all in, telling the central bank to buy.

Russia has gone through bouts of hoarding before - from 1867's Tsar Alexander II to Lenin, for now, with more than five years left in Putin’s term, Russia plans to keep on buying - "The pace will be determined by the market," First Deputy Chairman Alexei Ulyukayev said in an interview in Davos, Switzerland, on Jan. 25. "Whether to speed that up or slow it down is a market decision and I’m not going to discuss it."

Via Bloomberg,

Putin Turns Black Gold Into Bullion as Russia Out-Buys World

When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.

Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.

“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,” Evgeny Fedorov, a lawmaker for Putin’s United Russia party in the lower house of parliament, said in a telephone interview in Moscow.

...

In 1998, the year Russia defaulted on $40 billion of domestic debt, it took as many as 28 barrels of crude to buy an ounce of gold, Bloomberg data show. That ratio tumbled to 11.5 by the time Putin first came to power a year later and in 2005, after it touched 6.5 -- less than half what it is now -- the president told the central bank to buy.

During a tour that November of the Magadan region in the Far East, where Polyus Gold International Ltd. and Polymetal International Plc have operations, Putin told Bank Rossii not to “shy away” from the metal. “After all, they’re called gold and currency reserves for a reason,” Putin said, according to a Kremlin transcript.

Lucky Guy

At the time, gold was trading at an 18-year high of $495 an ounce and the Moscow-based central bank held 387 tons, or 2.2 percent of its $165 billion total reserves. The share reached 3.5 percent within a month, according to data compiled by Bloomberg.

An ounce of gold for immediate delivery traded at $1,670 as of 7:24 p.m. Moscow time on Feb. 8. It rose 7 percent last year, the 12th straight year of gains. Analysts expect the metal to advance again in 2013, to $1,825 by the end of the year, according to the median of 26 forecasts in a Bloomberg survey.

“Putin’s gold strategy fits in with his resource nationalism, statist agenda,” said Tim Ash, head of emerging- market research at Standard Bank Plc in London. “It’s kind of a defensive play, but it worked, right?” Ash said in an interview in Moscow. “You need luck in politics and business, and clearly the guy has it.”

Brown’s Bottom

Other world leaders haven’t been as lucky. Gordon Brown, as U.K. finance minister, sold almost 400 tons of gold in the 30 months to March 2002, when prices were at two-decade lows. London tabloids have referred to the period as Brown’s Bottom.

Quantitative easing by major economies to support financial asset prices is driving demand for gold in the emerging world, said Marcus Grubb, head of investment research at the World Gold Council. Before the crisis, central banks were net sellers of 400 to 500 tons a year. Now, led by Russia and China, they’re net buyers by about 450 tons,

...

While Putin is leading the gold rush in emerging markets, developed nations are liquidating. Switzerland unloaded the most in the past decade, 877 tons, an amount now worth about $48 billion, according to International Monetary Fund data through November. France was second with 589 tons, while Spain, the Netherlands and Portugal each sold more than 200 tons.

No Hoard

Communist secrecy regarding the country’s gold holdings fueled speculation that party elites had amassed a huge hoard of bullion that they spirited out of the country before the Soviet Union disintegrated in 1991.

...

“When people ask about the party’s gold, my answer is always: Are you an idiot or something?” Gerashchenko, 75, told Afisha magazine.

For now, with more than five years left in Putin’s term, Russia plans to keep on buying.

“The pace will be determined by the market,” First Deputy Chairman Alexei Ulyukayev said in an interview in Davos, Switzerland, on Jan. 25. “Whether to speed that up or slow it down is a market decision and I’m not going to discuss it.”

Your rating: None Average: 4.3 (6 votes)

Proof MI6 and MI5 Aided Libyan Torture

Abdelhakim_Belhadj
New evidence has emerged that proves the UK was complicit in the kidnap and torture of a Libyan man. For over a decade British politicians including  Gordon Brown, Jack Straw and David Miliband have strongly denied that the UK had involvement with torture. Crucially, the files detail a meeting between senior heads of MI6,  MI5 and Gaddafi's external intelligence agency.

George Osborne Backs Bank Break-Up Powers

Misbehaving banks could be forcibly broken up, George Osborne is expected to warn the industry, in a move that will pave the way for a further fundamental shake-up of Britain's banking sector.

I understand that the Chancellor is preparing to back a call by the Parliamentary Commission on Banking Standards for regulators to have powers to split so-called universal banks such as Barclays and Royal Bank of Scotland (RBS) into their separate retail and investment banking components.

An announcement by Mr Osborne, which could come as soon as next week, will lay the foundations for arguably the most radical overhaul ever of British banking.

It would potentially go much further than a plan currently passing through legislation for a ring-fence to artificially separate retail and investment banks but allow both to exist within the same corporate entity.

A senior Treasury source has told me that Mr Osborne and Vince Cable, the Business Secretary, agreed in recent weeks that the Government should back the Parliamentary Commission's blueprint for 'electrifying' the ring-fence. Mr Cable is also expected to publicly support the move next week.

The news will delight Andrew Tyrie, chairman of the Parliamentary Commission, which was set up last summer by Mr Osborne and David Cameron in the wake of Barclays' £290m fine for rigging Libor benchmark interest rates.

The Chancellor is expected to outline his views in the same week that RBS settles with regulators for its role in the Libor scandal. RBS, which is 82 per cent-owned by the taxpayer, is likely to pay more than £400m in fines and is fighting to avoid a criminal prosecution by the US Department of Justice.

In the last few days, the industry’s reputation has again been dragged through the mire when the City regulator ruled there had been widespread mis-selling of products designed to help small businesses manage the financial impact of sharp rises in interest rates.

“The Coalition is totally joined-up on this,” one source said.

The precise detail of how Mr Osborne would want the new reserve powers to operate was unclear on Saturday.

However, he is likely to back the judgement of Mr Tyrie and his colleagues on the Commission that the industry regulator should have the ability to identify individual banks which are abusing the ring-fencing framework and pursue – subject to a veto from the Treasury – full separation of that banking group’s high street and investment (or “casino”, as Mr Cable has dubbed it) divisions.

The Chancellor is also expected to endorse the idea put forward by Mr Tyrie that there should be periodic reviews of the effectiveness of the ring-fence across the banking industry, with the first independent review taking place four years after the new structure is in operation.

Mr Osborne has already set in process far-reaching reforms of bank regulation. The Financial Services Authority, which was created by Gordon Brown in 1997, is to be abolished, and its powers are to be divided between two new bodies: The Financial Conduct Authority and the Prudential Regulatory Authority, which will sit within the Bank of England.

In its interim report last month, the Parliamentary Commission warned that banks were likely to attempt to manipulate the ring-fencing system for their own benefit. Mr Tyrie said the current banking reform proposals “fall well short of what is required”.

“Over time, the ring-fence will be tested and challenged by the banks. Politicians, too, could succumb to lobbying from banks and others, adding to pressure to put holes in the ring-fence,” he said when the report was published in December.

“For the ring-fence to succeed, banks need to be discouraged from gaming the rules. All history tells us they will do this unless incentivised not to. That’s why we recommend electrification. The legislation needs to set out a reserve power for separation — the regulator needs to know he can use it. Furthermore, we need periodic reviews of the sector to reassure us that the ring-fence as a whole is working.”

The banking industry has lobbied furiously against the electrification move, claiming that the existence of such reserve powers to break them up will deter big City investors from buying their equity and debt.

A powerful City lobbying group, the Association of British Insurers, recently published a report on the investment case for the major UK banks in which it argued that regulatory uncertainty was among a number of factors preventing investors from being able to commit their money to the industry confident that they would secure a commercial return.

That message will have sting in the tail for Mr Osborne, who is responsible for tens of billions of pounds-worth of taxpayers’ investments in Lloyds Banking Group and RBS. If the investor groups are correct, and the electrification proposal exacerbates that uncertainty, it risks permanently impairing the value of those shareholdings and denting the chances of ever recovering the money injected during the 2008 financial crisis.

Whitehall insiders said that the endorsement of the Parliamentary Commission’s report by Sir John Vickers, whose Independent Commission on Banking (ICB) came up with the ring-fencing proposals in 2011, had “tipped the argument in favour of backing Tyrie”.

Mr Osborne’s move will contain a silver lining for the big banks in that he will not be endorsing the most Draconian approach to policing the industry, which would have meant implementing full and immediate separation of each group’s retail and investment banking operations.

The Treasury declined to comment on Saturday.

George Osborne Backs Bank Break-Up Powers

Misbehaving banks could be forcibly broken up, George Osborne is expected to warn the industry, in a move that will pave the way for a further fundamental shake-up of Britain's banking sector.

I understand that the Chancellor is preparing to back a call by the Parliamentary Commission on Banking Standards for regulators to have powers to split so-called universal banks such as Barclays and Royal Bank of Scotland (RBS) into their separate retail and investment banking components.

An announcement by Mr Osborne, which could come as soon as next week, will lay the foundations for arguably the most radical overhaul ever of British banking.

It would potentially go much further than a plan currently passing through legislation for a ring-fence to artificially separate retail and investment banks but allow both to exist within the same corporate entity.

A senior Treasury source has told me that Mr Osborne and Vince Cable, the Business Secretary, agreed in recent weeks that the Government should back the Parliamentary Commission's blueprint for 'electrifying' the ring-fence. Mr Cable is also expected to publicly support the move next week.

The news will delight Andrew Tyrie, chairman of the Parliamentary Commission, which was set up last summer by Mr Osborne and David Cameron in the wake of Barclays' £290m fine for rigging Libor benchmark interest rates.

The Chancellor is expected to outline his views in the same week that RBS settles with regulators for its role in the Libor scandal. RBS, which is 82 per cent-owned by the taxpayer, is likely to pay more than £400m in fines and is fighting to avoid a criminal prosecution by the US Department of Justice.

In the last few days, the industry’s reputation has again been dragged through the mire when the City regulator ruled there had been widespread mis-selling of products designed to help small businesses manage the financial impact of sharp rises in interest rates.

“The Coalition is totally joined-up on this,” one source said.

The precise detail of how Mr Osborne would want the new reserve powers to operate was unclear on Saturday.

However, he is likely to back the judgement of Mr Tyrie and his colleagues on the Commission that the industry regulator should have the ability to identify individual banks which are abusing the ring-fencing framework and pursue – subject to a veto from the Treasury – full separation of that banking group’s high street and investment (or “casino”, as Mr Cable has dubbed it) divisions.

The Chancellor is also expected to endorse the idea put forward by Mr Tyrie that there should be periodic reviews of the effectiveness of the ring-fence across the banking industry, with the first independent review taking place four years after the new structure is in operation.

Mr Osborne has already set in process far-reaching reforms of bank regulation. The Financial Services Authority, which was created by Gordon Brown in 1997, is to be abolished, and its powers are to be divided between two new bodies: The Financial Conduct Authority and the Prudential Regulatory Authority, which will sit within the Bank of England.

In its interim report last month, the Parliamentary Commission warned that banks were likely to attempt to manipulate the ring-fencing system for their own benefit. Mr Tyrie said the current banking reform proposals “fall well short of what is required”.

“Over time, the ring-fence will be tested and challenged by the banks. Politicians, too, could succumb to lobbying from banks and others, adding to pressure to put holes in the ring-fence,” he said when the report was published in December.

“For the ring-fence to succeed, banks need to be discouraged from gaming the rules. All history tells us they will do this unless incentivised not to. That’s why we recommend electrification. The legislation needs to set out a reserve power for separation — the regulator needs to know he can use it. Furthermore, we need periodic reviews of the sector to reassure us that the ring-fence as a whole is working.”

The banking industry has lobbied furiously against the electrification move, claiming that the existence of such reserve powers to break them up will deter big City investors from buying their equity and debt.

A powerful City lobbying group, the Association of British Insurers, recently published a report on the investment case for the major UK banks in which it argued that regulatory uncertainty was among a number of factors preventing investors from being able to commit their money to the industry confident that they would secure a commercial return.

That message will have sting in the tail for Mr Osborne, who is responsible for tens of billions of pounds-worth of taxpayers’ investments in Lloyds Banking Group and RBS. If the investor groups are correct, and the electrification proposal exacerbates that uncertainty, it risks permanently impairing the value of those shareholdings and denting the chances of ever recovering the money injected during the 2008 financial crisis.

Whitehall insiders said that the endorsement of the Parliamentary Commission’s report by Sir John Vickers, whose Independent Commission on Banking (ICB) came up with the ring-fencing proposals in 2011, had “tipped the argument in favour of backing Tyrie”.

Mr Osborne’s move will contain a silver lining for the big banks in that he will not be endorsing the most Draconian approach to policing the industry, which would have meant implementing full and immediate separation of each group’s retail and investment banking operations.

The Treasury declined to comment on Saturday.

George Osborne Backs Bank Break-Up Powers

Misbehaving banks could be forcibly broken up, George Osborne is expected to warn the industry, in a move that will pave the way for a further fundamental shake-up of Britain's banking sector.

I understand that the Chancellor is preparing to back a call by the Parliamentary Commission on Banking Standards for regulators to have powers to split so-called universal banks such as Barclays and Royal Bank of Scotland (RBS) into their separate retail and investment banking components.

An announcement by Mr Osborne, which could come as soon as next week, will lay the foundations for arguably the most radical overhaul ever of British banking.

It would potentially go much further than a plan currently passing through legislation for a ring-fence to artificially separate retail and investment banks but allow both to exist within the same corporate entity.

A senior Treasury source has told me that Mr Osborne and Vince Cable, the Business Secretary, agreed in recent weeks that the Government should back the Parliamentary Commission's blueprint for 'electrifying' the ring-fence. Mr Cable is also expected to publicly support the move next week.

The news will delight Andrew Tyrie, chairman of the Parliamentary Commission, which was set up last summer by Mr Osborne and David Cameron in the wake of Barclays' £290m fine for rigging Libor benchmark interest rates.

The Chancellor is expected to outline his views in the same week that RBS settles with regulators for its role in the Libor scandal. RBS, which is 82 per cent-owned by the taxpayer, is likely to pay more than £400m in fines and is fighting to avoid a criminal prosecution by the US Department of Justice.

In the last few days, the industry’s reputation has again been dragged through the mire when the City regulator ruled there had been widespread mis-selling of products designed to help small businesses manage the financial impact of sharp rises in interest rates.

“The Coalition is totally joined-up on this,” one source said.

The precise detail of how Mr Osborne would want the new reserve powers to operate was unclear on Saturday.

However, he is likely to back the judgement of Mr Tyrie and his colleagues on the Commission that the industry regulator should have the ability to identify individual banks which are abusing the ring-fencing framework and pursue – subject to a veto from the Treasury – full separation of that banking group’s high street and investment (or “casino”, as Mr Cable has dubbed it) divisions.

The Chancellor is also expected to endorse the idea put forward by Mr Tyrie that there should be periodic reviews of the effectiveness of the ring-fence across the banking industry, with the first independent review taking place four years after the new structure is in operation.

Mr Osborne has already set in process far-reaching reforms of bank regulation. The Financial Services Authority, which was created by Gordon Brown in 1997, is to be abolished, and its powers are to be divided between two new bodies: The Financial Conduct Authority and the Prudential Regulatory Authority, which will sit within the Bank of England.

In its interim report last month, the Parliamentary Commission warned that banks were likely to attempt to manipulate the ring-fencing system for their own benefit. Mr Tyrie said the current banking reform proposals “fall well short of what is required”.

“Over time, the ring-fence will be tested and challenged by the banks. Politicians, too, could succumb to lobbying from banks and others, adding to pressure to put holes in the ring-fence,” he said when the report was published in December.

“For the ring-fence to succeed, banks need to be discouraged from gaming the rules. All history tells us they will do this unless incentivised not to. That’s why we recommend electrification. The legislation needs to set out a reserve power for separation — the regulator needs to know he can use it. Furthermore, we need periodic reviews of the sector to reassure us that the ring-fence as a whole is working.”

The banking industry has lobbied furiously against the electrification move, claiming that the existence of such reserve powers to break them up will deter big City investors from buying their equity and debt.

A powerful City lobbying group, the Association of British Insurers, recently published a report on the investment case for the major UK banks in which it argued that regulatory uncertainty was among a number of factors preventing investors from being able to commit their money to the industry confident that they would secure a commercial return.

That message will have sting in the tail for Mr Osborne, who is responsible for tens of billions of pounds-worth of taxpayers’ investments in Lloyds Banking Group and RBS. If the investor groups are correct, and the electrification proposal exacerbates that uncertainty, it risks permanently impairing the value of those shareholdings and denting the chances of ever recovering the money injected during the 2008 financial crisis.

Whitehall insiders said that the endorsement of the Parliamentary Commission’s report by Sir John Vickers, whose Independent Commission on Banking (ICB) came up with the ring-fencing proposals in 2011, had “tipped the argument in favour of backing Tyrie”.

Mr Osborne’s move will contain a silver lining for the big banks in that he will not be endorsing the most Draconian approach to policing the industry, which would have meant implementing full and immediate separation of each group’s retail and investment banking operations.

The Treasury declined to comment on Saturday.

Mehdi’s Morning Memo: Not So Fast Dave

The ten things you need to know on Wednesday 30th January 2013...

1) NOT SO FAST DAVE

Hurrah! From the Huffington Post:

"David Cameron’s hopes of limiting the impact of the 2015 TV debates by staging them before the election campaign gets underway appear dead in the water, after the head of Sky News torpedoed the idea.

"... [S]peaking to The Huffington Post UK, John Ryley, the head of Sky News, flatly rejected the idea.

"'Well, we believe the debates need to take place during the election campaign to be relevant to the voters," he said. "It would be bizarre to hold the debates while Parliament is sitting.'

"Ryley reminded Cameron of his threat to 'empty chair' Gordon Brown in 2010 if he refused to take part and said it would 'bad for democracy, bad for politics, and bad form' if Cameron tried to duck the debates."

Bad luck, Dave. Ryley - a former boss of mine - is a tough, no-nonsense character. It looks like those debates are going to happen - with or without the PM...

Meanwhile, if you read the full HuffPost UK feature on the 2015 TV debates - by Ned Simons and me - you'll learn, among other things, that senior Labour sources are suggesting Nick Clegg's time be cut and redistributed to Ed Miliband. Read our full piece here.

2) GAMBLING ON GAY MARRIAGE

From the Times splash:

"David Cameron is under mounting pressure to push through tax breaks for married couples as a way of averting a Tory rupture over gay marriage.

"Ministers are pressing Downing Street to make a Budget announcement in March implementing the party's promise to reward married couples in the tax system. Cabinet sources told The Times that George Osborne should act 'sooner rather than later' and that the Budget would be 'a good time to placate an awful lot of people'.

"MPs plan to use the coming weeks to warn a reluctant Chancellor that he will increase the risk of losing lifelong Tories from the party unless he acts."

It's a bizarre proposal - but Dave is desperate. Next week, MPs vote on the coalition's bill to introduce same-sex marriage and it's expected that almost half of the party's 303 MPs will vote against, on a free vote.

3) NASTY NICK

Was yesterday the day the Tory dream of a 2015 Commons majority finally came to an end? And were 'Nasty Nick' and his rebellious Lib Dems to blame? My colleague Ned Simons reports:

"Nick Clegg took his revenge on David Cameron today by successfully killing Tory hopes of redrawing the electoral map in a way that would aid the prime minister's reelection, prompting a serious rift between the coalition parties.

"Lib Dem and Labour MPs cheered as they narrowly defeated by 334 votes to 292 an attempt by the Conservative Party to change the number and size of constituencies before 2015.

"In an unprecedented move reflecting the split between coalition parties on the issue, Cameron agreed to suspend the requirement for government ministers to exercise collective responsibility for the vote."

Remember ConHome editor Tim Montgomerie's reaction to the boundary review failure last August? He called it the "worst single electoral setback [for the Tories] since Black Wednesday". Indeed it is...

4) DAVE THE WARRIOR

Today, as a story on the front of the Guardian reports, David Cameron will become

"... the first western leader to visit Algeria since the recent terrorist assault on the country's gas installations that left 35 foreign energy workers dead and saw 36 militants killed by Algerian security forces. Cameron's show of solidarity at the meeting in Algiers comes amid Tory fears that the prime minister is being slowly sucked into a long-term military conflict in the region, symbolised by his decision to send 330 British military personnel to the region to train African troops and support the French intervention in Mali."

Meanwhile, the FT reports that Cameron and George Osborne are "under pressure from Tory MPs to shield the armed forces from further defence cuts in this year's spending review, as the military is dispatched to a new war zone in Mali". And the Telegraph splashes on the threat to the SAS from "new defence cuts".

5) 'MALI WAR COULD BE BRITAIN'S VIETNAM'

That's the headline in the Mirror, which reports on Dave's decision to send another 200 British troops to train an African intervention force (taking the total UK deployment to 330) and quotes former cabinet minister Frank Dobson's comments in the Commons yesterday:

"The American catastrophe in Vietnam started with American troops in a training capacity."

Indeed it did - JFK hid behind the phrase 'military advisers'. Dobson's remarks were echoed by, of all people, Sir Mike Jackson, former chief of the armed forces, who supports the Mali deployment but also warns that a highly successful "conventional" conflict could give way to "a protracted guerrilla warfare away from the conurbations".

BECAUSE YOU'VE READ THIS FAR...

Watch this video of a kid who's won over the internet with his dance moves during a break in the recent Houston Rockets vs Indiana Pacers basketball game.

6) TORTURE INC

The Guardian's award-winning Ian Cobain reports:

"Allegations that British troops in Iraq were responsible for the widespread and systemic abuse of detainees through "terrifying acts of brutality, abuse and intimidation" were raised in the high court yesterday as lawyers representing former prisoners demanded a public inquiry.

"More than a thousand former prisoners complain that they were severely mistreated after being detained by the British military during the five-year occupation of the south-east of the country, while others - including women and children - say they were abused when their male relatives were being detained.

"... The hearing is the latest skirmish in a three-year legal battle between lawyers for the former detainees and the Ministry of Defence (MoD)."

On a related note, HuffPost UK will be hosting a public debate on Iraq - 'Was It Worth It? Iraq, Ten Years On' - on 7 February at 7pm at Goldsmiths, University of London. Speakers include former cabinet minister Clare Short, Times columnist David Aaronovitch, the Independent's Owen Jones and yours truly. Get your free tickets here.

7) 'BROTHERLY SHOVE'

This is my favourite headline from the morning papers - from the Sun, which reveals:

"Ed Miliband was talked out of matching the Tories' EU referendum pledge — by his brother David.

"The under-fire Labour leader's refusal to offer a nationwide vote on Britain's membership has infuriated some senior party figures.

"One claimed Ed vetoed the idea after his older sibling sneered it was 'too populist'."

Meanwhile, the BBC reminds us that "MPs will have their first chance later to discuss the UK's future in Europe since David Cameron promised to hold a referendum on UK membership if he wins the next general election... The Commons debate will take place after Prime Minister's Questions."

Perhaps, just perhaps, we'll get some clarity on what Labour's referendum position actually is, and what the Tories will do if the Europeans don't agree to a 'renegotiation'. But I wouldn't hold your breath.

8) BANKERS NOT SO BASHED

More good news from the world of finance. From the Independent:

"Royal Bank of Scotland is facing criminal charges in the US over allegations its traders tried to fix Libor interest rates, it emerged yesterday.

"... It came as Britain's financial watchdog admitted that top bankers had escaped sanction for misdeeds during the financial crisis because it was 'easier to get the little guys' under Britain's regulatory system."

RBS, says the report, is likely to pay around £500m in fines - but still wants to pay out £250m in bonuses to its investment bankers. You could not make this stuff up.

9) PUSHED INTO POVERTY

From the Guardian:

"Thousands of children and their families who have sought refuge in the UK have been pushed into severe poverty by the low levels of asylum support, a parliamentary inquiry has revealed, concluding that the support system for asylum seekers is in urgent need of reform.

"The inquiry found evidence of children being left destitute and homeless, without state support, and forced to rely on food parcels."

The chair of this cross-party inquiry? Er, the former children's minister Sarah Teather MP.

10) STREWTH!

They're going to the polls down under. Well, not quite yet. From the BBC:

"Australian Prime Minister Julia Gillard has called a general election for 14 September... She said the announcement, eight months in advance, was "not to start the nation's longest election campaign" but to give 'shape and order' to the year."

"... Opinion polls suggest that the opposition, led by Liberal Party leader Tony Abbott, would win an election if the polls were held now."

Oh dear. For a laugh, though, (re)watch this classic video of Gillard tearing strips out of the "sexist" Abbott in the Australian House of Representatives.

PUBLIC OPINION WATCH

From today's Sun/YouGov poll:

Labour 42
Conservatives 33
Lib Dems 11
Ukip 8

That would give Labour a majority of 96.

140 CHARACTERS OR LESS

@ShippersUnbound Tory MPs selling shares in Jesse Norman after Lords rebellion sinks boundary changes. One texts to say: 'Jesse Norman: t***.'

@jameschappers What issue will Tory MPs pick for revenge on LibDems for last night's boundaries vote? (Labour are calling it 'Twit for Twat politics')

@heavencrawley "Clear examples from the past show no correlation between levels of support and numbers of asylum seekers in the UK". Finally, some sense.

900 WORDS OR MORE

Guido Westerwelle, Germany's foreign minister, writing in the Times, says: "Berlin shares Mr Cameron’s desire for reform in Brussels but not his vision for Europe."

Simon Jenkins, writing in the Guardian, says: "UK intervention in Mali treads a familiar – and doomed – path."

Mary Riddell, writing in the Telegraph, says: "Britain badly needs an Abraham Lincoln who will think big and act big."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan ([email protected]) or Ned Simons ([email protected]). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

This Time Is Different

Authored by Dr. Tim Morgan, Tullet Prebon,

The 2008 crash resulted from the bursting of the biggest bubble in financial history, a ‘credit super-cycle’ that spanned more than three decades. How did this happen?

As Carmen Reinhart and Kenneth Rogoff have demonstrated in their magisterial book This Time Is Different, asset bubbles are almost as old as money itself. The Reinhart and Rogoff book tracks financial excess over eight centuries, but it would be no surprise at all if the Hittites, the Medes, the Persians and the Romans, too, had bubbles of their own. All you need for a bubble is ready credit and collective gullibility.

Some might draw comfort from the observation that bubbles are a long established aberration, arguing that the boom-and-bust cycle of recent years is nothing abnormal. Any such comfort would be misplaced, for two main reasons: first, the excesses of recent years have reached a scale which exceeds anything that has been experienced before; and second, and more disturbing still, the developments which led to the financial crisis of 2008 amounted to a process of sequential bubbles, a process in which the bursting of each bubble was followed by the immediate creation of another.

Though the sequential nature of the pre-2008 process marks this as something that really is different, we can, nevertheless, learn important lessons from the bubbles of the past.

  • First, bubbles follow an approximately symmetrical track, in which the spike in asset values is followed by a collapse of roughly similar scale and duration. If this holds true now, we are in for a very long and nasty period of retreat.
  • Second, easy access to leverage is critical, as bubbles cannot happen if investors are limited to equity.
  • Third, most bubbles look idiotic when seen with hindsight.
  • Fourth – and although institutional arrangements are critical – the real driving dynamic of bubbles is a psychological process which combines greed, the willing suspension of disbelief and the development of a herd mentality.

“tulips from Amsterdam”

One of the most famous historical bubbles is the tulip mania which gripped the United Provinces (the Netherlands) during the winter of 1636-37. Tulip bulbs had been introduced to Europe from the Ottoman Empire by Obier de Busbeq in 1554, and found particular favour in the United Provinces after 1593, when Carolus Closius proved that these exotic plants could thrive in the harsher Dutch climate.

The tulip was a plant whose beauty and novelty had a particular appeal, but tulip mania would not have occurred without favourable social and economic conditions. The Dutch had been engaged in a long war for independence from Spain since 1568 and, though final victory was still some years away, the original Republic of the Seven Provinces of the Netherlands declared independence from Spain in 1581. This was the beginning of the great Dutch Golden Age. In this remarkable period, the Netherlands underwent some fundamental and pioneering changes which included the establishment of trading dominance, great progress in science and invention, and the creation of corporate finance, as well as the accumulation of vast wealth, the accession of the Netherlands to global power status, and great expansion of industry.

This was a period in which huge economic, business, scientific, trading and naval progress was partnered by remarkable achievements in art (Rembrandt and Vermeer), architecture and literature. The prosperity of this period created a wealthy bourgeoisie which displayed its affluence in grand houses with exquisite gardens. Enter the tulip.

For the newly-emergent Dutch bourgeoisie, the tulip was the “must have” consumer symbol of the 1630s, particularly since selective breeding had produced some remarkably exotic new plants. Tulips cannot be grown overnight, but take between seven and twelve years to reach maturity. Moreover, tulips bloom for barely a week during the spring, meaning that bulbs can be uprooted and sold during the autumn and winter months. A thriving market in bulbs developed in the Netherlands even though short-selling was outlawed in 1610. Speculators seem to have entered the tulip market in 1634, setting the scene for tulip mania.

The tulip bubble did not revolve around a physical trade in bulbs but, rather, involved a paper market in which people could participate with no margin at all. Indeed, the tulip bubble followed immediately upon the heels of the creation by the Dutch of the first futures market. Bulbs could change hands as often as ten times each day but, because of the abrupt collapse of the paper market, no physical deliveries were ever made.

Price escalation was remarkable, with single bulbs reaching values that exceeded the price of a large house. A Viceroy bulb was sold for 2,500 florins at a time when a skilled worker might earn 150 florins a year. Putting these absurd values into modern terms is almost impossible because of scant data, but the comparison with skilled earnings suggests values of around £500,0003, which also makes some sense in relation to property prices. In any event, a bubble which began in mid-November 1636 was over by the end of February 1637.

Though tulip mania was extremely brief, and available data is very limited, we can learn some pertinent lessons from this strange event.

For a start, this bubble looks idiotic from any rational perspective – how on earth could a humble bulb become as valuable as a mansion, or equivalent to 17 years of skilled wages? Second, trading in these ludicrously overvalued items took place in then novel forms (such as futures), and were conducted on unregulated fringe markets rather than in the recognised exchanges.

Third, participants in the mania lost the use of their critical faculties. Many people – not just speculators and the wealthy, but individuals as diverse as farmers, mechanics, shopkeepers, maidservants and chimney-sweeps – saw bulb investment as a one-way street to overnight prosperity. Huge paper fortunes were made by people whose euphoria turned to despair as they were wiped out financially.

The story that a sailor ate a hugely valuable bulb, which he mistook for an onion, is probably apocryphal (because it would have poisoned him), but there can be little doubt that this was a period of a bizarre mass psychology verging on collective insanity.

all at sea

The South Sea Bubble of 1720 commands a special place in the litany of lunacy that is the history of bubbles.

The South Sea Company was established in 1711 as a joint government and private entity created to manage the national debt. Britain’s involvement in the War of the Spanish Succession was imposing heavy costs on the exchequer, and the Bank of England’s attempt to finance this through two successive lotteries had not been a success. The government therefore asked an unlicensed bank, the Hollow Sword Blade Company, to organise what became the first successful national lottery to be floated in Britain. The twist to this lottery was that prizes were paid out as annuities, thus leaving the bulk of the capital in government hands.

After this, government set up the South Sea Company, which took over £9m of national debt and issued shares to the same amount, receiving an annual payment from government equivalent to 6% of the outstanding debt (£540,000) plus operating costs of £28,000. As an added incentive, government granted the company a monopoly of trade with South America, a monopoly which would be without value unless Britain could break the Spanish hegemony in the Americas, an event which, at that time, was wildly implausible.

The potentially-huge profits from this monopoly grabbed speculator attention even though the real likelihood of any returns ever actually accruing was extremely remote. Despite very limited concessions secured in 1713 at the end of the war, the trading monopoly remained all but worthless, and company shares remained below their issue price, a situation not helped by the resumption of war with Spain in 1718.

Even so, shares in the company, effectively backed by the national debt, began to rise in price, a process characterised by insider dealing and boosted by the spreading of rumours.

Between January and May 1720, the share price rose from £128 to £550 as rumours of lucrative returns from the monopoly spread amongst speculators. What, many argued, could be better than a government-backed company with enormous leverage to monopolistic profits in the fabled Americas? Legislation, passed under the auspices of Company insiders and banning the creation of unlicensed joint stock enterprises, spurred the share price to a peak of £890 in early June. This was bolstered by Company directors, who bought stock at inflated prices to protect the value of investments acquired at much lower levels. The share price peaked at £1,000 in August 1720, but the shares then lost 85% of their inflated market value in a matter of weeks.

Like the Dutch tulip mania, the South Sea Bubble was an example which fused greed and crowd psychology with novel market practices, albeit compounded by rampant corruption in high places. Even Sir Isaac Newton, presumably a man of common sense, lost £20,000 (equivalent to perhaps £2.5m today) in the pursuit of the chimera of vast, but nebulous, unearned riches.

Any rational observer, even if unaware of the insider dealing and other forms of corruption in which the shares were mired, should surely have realised that an eight-fold escalation in the stock price based entirely on implausible speculation was, quite literally, ‘too good to be true’.

In his Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay ranked the South Sea Company and other bubbles with alchemy, witch-hunts and fortune-telling as instances of collective insanity. Whilst other such foibles have tended to retreat in the face of science, financial credulity remains alive and well, which means that we need to know how and why these instances of collective insanity seem to be hard-wired into human financial behaviour.

made in Japan

In some respects, the Japanese asset bubble of the 1980s provided a ‘dry run’ for the compounded bubbles of the super-cycle. Japan’s post-war economic miracle was founded on comparatively straightforward policies. Saving was encouraged, and was channelled into domestic rather than foreign capital markets, which meant that investment capital was available very cheaply indeed. Exports were encouraged, imports were deterred by tariff barriers, and consumption at home was discouraged. The economic transformation of Japan in the four decades after 1945 was thus export-driven, and led by firms which had access to abundant, low-cost capital.

By the early 1980s, Japan’s economic success was beginning to lead to unrealistic expectations about future prosperity. Many commentators, abroad as well as at home, used the ‘fool’s guideline’ of extrapolation to contend that Japan would, in the foreseeable future, oust America as the world’s biggest economy. The international expansion of Japanese banks and securities houses was reflected in the proliferation of sushi bars in New York and London. Boosted by the diversion of still-cheap capital from industry into real estate, property values in Japan soared, peaking at $215,000 per square metre in the prized Ginza district of Tokyo.

Comforted by inflated property values, banks made loans which the borrowers were in no position to repay. The theoretical value of the grounds of the Imperial Palace came to exceed the paper value of the entire state of California. Meanwhile, a soaring yen was pricing Japanese exports out of world markets.

Though comparatively gradual – mirroring, in true bubble fashion, the relatively slow build-up of asset values – the bursting of the bubble was devastating. Properties lost more than 90% of their peak values, and the government’s policy of propping up insolvent banks and corporations created “zombie companies” of the type that exist today in many countries. Having peaked at almost 39,000 at the end of 1989, the Nikkei 225 index of leading industrial stocks deteriorated relentlessly, bottoming at 7,055 in March 2009.

The Japanese economy was plunged into the “lost decade” which, in reality, could now be called the ‘lost two decades’. In 2011, Japanese government debt stood at 208% of GDP, a number regarded as sustainable only because of the country’s historic high savings ratio (though this ratio is, in fact, subject to ongoing deterioration as the population ages).

2008 – the biggest bust

With hindsight, we now know that the Japanese asset bust was an early manifestation of the ‘credit supercycle’, which can be regarded as ‘the biggest bubble in history’. The general outlines of the super-cycle bubble are reasonably well understood, even if the underlying dynamic is not. To understand this enormous boom-bust event, we need to distinguish between the tangible components of the bubble and its underlying psychological and cultural dimensions.

Conventional analysis argues that tangible problems began with the proliferation of subprime lending in the United States. Perhaps the single biggest contributory factor to the subprime fiasco was the breaking of the link between borrower and lender. Whereas, traditionally, banks assessed the viability of the borrower in terms of long-term repayment, the creation of bundled MBSs (mortgage-backed securities) severed this link.

Astute operators could now strip risk from return, pocketing high returns whilst unloading the associated high risk. The securitisation of mortgages was a major innovative failing in the system, as was the reliance mistakenly placed on credit-rating agencies which, of course, were paid by the issuers of the bundled securities. Another contributory innovation was the use of ARM (adjustable rate mortgage) products, designed to keep the borrower solvent just long enough for the originators of the mortgages to divest the packaged loans.

The authorities (and, in particular, the Federal Reserve) must bear a big share of culpability for failing to spot the mispricing of risk which resulted from the on-sale of mortgage debt. The way in which banks were keeping the true scale of potential liabilities off their balance sheets completely eluded regulators, and Alan Greenspan’s belief that banks would always act in the best interests of shareholders was breathtakingly naive. In America, as for that matter in Britain and elsewhere, central banks’ monetary policies were concentrated on retail inflation (which had for some years been depressed both by benign commodity markets and by the influx of ever-cheaper goods from Asia), and ignored asset price escalation.

Meanwhile, banks’ capital ratios had expanded, in part because of ever-looser definitions of capital and assets and in part because of sheer regulatory negligence. Just as Greenspan’s Fed believed that bankers were the best people to determine their shareholders’ interests, British chancellor Gordon Brown took pride in a “light touch” regulatory system which saw British banks’ total risk assets surge to more than £3,900bn on the back of just £120bn of pure loss-absorbing capital or TCE (tangible common equity).

It does not seem to have occurred to anyone – least of all to the American, British and other regulatory authorities – that a genuine capital reserve of less than 2% of assets could be overwhelmed by even a relatively modest correction in asset prices.

Both sides of the reserves ratio equation were distorted by regulatory negligence. On the assets side, banks were allowed to risk-weight their assets, which turned out to be a disastrous mistake. Triple-A rated government bonds were, not unnaturally, regarded as AFS (‘available for sale’) and accorded a zero-risk rating, but so, too, in practice, were the AAA portions that banks, with the assistance of the rating agencies, managed to slice out of MBSs (mortgage-backed securities) and CDOs (collateralised debt obligations).

Mortgages of all types were allowed to be risk-weighted downwards to 50% of their book value which, at best, reflected a nostalgic, pre-subprime understanding of mortgage risk on the part of the regulators. In the US, banks were allowed to net-off their derivatives exposures, such that J.P. Morgan Chase, for example, carried derivatives of $80bn on its balance sheet even though the gross value of securities and derivatives was close to $1.5 trillion. The widespread assumption that potential losses on debt instruments were covered by insurance overlooked the fact that all such insurances were placed with a small group of insurers (most notably AIG) which were not remotely capable of bearing system-wide risk.

Meanwhile, innovative definitions allowed banks’ reported capital to expand from genuine TCE to include book gains on equities, and provisions for deferred tax and impairment. Even some forms of loan capital were allowed to be included in banks’ reported equity.

Together, the risk-weighting of assets, and the use of ever-looser definitions of capital, combined to produce seemingly-reassuring reserves ratios which turned out to be wildly misleading. Lehman Brothers, for example, reported a capital adequacy ratio of 16.1% shortly before it collapsed, whilst the reported pre-crash ratios for Northern Rock and Kaupthing were 17.5% and 11.2% respectively.

Well before 2007, the escalation in the scale of indebtedness had rendered a crash inevitable. Moreover, the two triggers that would bring the edifice crashing down could hardly have been more obvious. First, the resetting of ARM mortgage interest rates made huge subprime default losses inevitable unless property prices rose indefinitely, which was a logical impossibility. Subprime defaults would in turn undermine the asset bases of banks holding the toxic assets that the sliced-and-diced mortgage-based instruments were bound to become as soon as property price escalation ceased.

The second obvious trigger was a seizure in liquidity. The escalation in the scale of debt had far exceeded domestic depositor funds, not least because savings ratios had plunged as borrowing and consumption had displaced saving and prudence in the Western public psyche. Unlike depositors – a stable source of funding, in the absence of bank runs – the wholesale funding markets which had provided the bulk of escalating leverage were perfectly capable of seizing up virtually overnight. For this reason, a liquidity seizure crystallised what was essentially a leverage problem.

At this point, three compounding problems kicked in.

  • The first was the termination of a long-standing ‘monetary ratchet’ process – low rates created bubbles, and the authorities countered each ensuing downturn by cutting rates still further, but, this time around, prior rate reductions left little scope for further relaxation.
  • Second, economies had become dependent upon debt-fuelled consumption, and any reversal in debt availability was bound to unwind the earlier (and largely illusory) ‘growth’ created by debt-fuelled consumer spending. As figs. 2.2 and 2.3 show, the relationship between borrowing and associated growth had been worsening for some years, such that the $4.1 trillion expansion in nominal US economic output between 2001 and 2007 had been far exceeded by an increase of $6.7 trillion in consumer debt, and the growth/borrowing equation had slumped.
  • Third, some countries – most notably the United Kingdom – had compounded consumer debt dependency by mistaking illusory (debt-fuelled) economic expansion for ‘real’ growth, and had expanded public spending accordingly, a process which created huge fiscal deficits as soon as leverage expansion ceased. Ultimately, the leverage-driven ‘great bubble’ in pan-Western property values had created the conditions for a deleveraging downturn, something for which governments’ previous experience of destocking recessions had provided no realistic appreciation.

familiar features

Though, as we shall see, the bursting of the super-cycle in 2008 had some novel aspects, the process nevertheless embraced many features of past bubbles.

A number of points are common to these past bubbles, factors which include easy credit, low borrowing costs, financial innovation (in the form of activities which take place outside established markets, and/or are unregulated, and/or are outright illegal), weak institutional structures, opportunism by some market participants, and the emergence of some form of mass psychology in which fear is wholly ousted by greed.

Often, the objects of speculation are items which can seem wholly irrational with the benefit of hindsight (how on earth could tulip bulbs, for instance, have become so absurdly over-valued?) A further important point about bubbles is that they can inflate apparent prosperity, but the post-burst effects include the destruction of value and the impairment of economic output for an extended period. In reality, though, the bursting of a bubble does not destroy capital, but simply exposes the extent to which value has already been destroyed by rash investment.

Of course, the characteristics of earlier excesses have not been absent in contemporary events. As with tulip bulbs, South Sea stock and Victorian railways, recent years have witnessed the operation of mass psychologies in which rational judgement has been suspended as greed has triumphed over fear. Innovative practices, often lying outside established markets, have abounded. Examples of such innovations have included subprime and adjustable-rate mortgages, and the proliferation of an ‘alphabet soup’ of the derivatives that Warren Buffett famously described as “financial weapons of mass destruction”. Credit became available in excessive amounts, and the price of credit was far too low (a factor which, we believe, may have been exacerbated by a widespread under-reporting of inflation).

why this time is different

Whilst it shared many of the characteristics of previous such events, the credit super-cycle bubble which burst in 2008 differed from them in at least two respects, and arguably differed in a third dimension as well.

The first big difference was that the scale and scope of the 2008 crash far exceeded anything that had gone before. Though it began in America (with parallel events taking place in a number of other Western countries), globalisation ensured that the crash was transmitted around the world. The total losses resulting from the crash are almost impossible to estimate, not least because of notional losses created by falling asset prices, but even a minimal estimate of $4 trillion equates to about 5.7% of global GDP, with every possibility that eventual losses will turn out to have been far greater than this.

The second big difference between the super-cycle and previous bubbles lay in timing. A gap of more than 80 years elapsed between the tulip mania of 1636-37 and the South Sea bubble of 1720, though the latter had an overseas corollary in the Mississippi bubble of the same year. The next major bubble, the British railway mania of the 1840s, followed an even longer time-gap, and a further interval of about seven decades separated the dethroning of the crooked “railway king” (George Hudson) in 1846 from the onset of the ‘roaring twenties’ bubble which culminated in the Wall Street Crash. Though smaller bubbles (such as Poseidon) occurred in between, the next really big bubble did not occur until the 1980s, when Japanese asset values lost contact with reality.

In recent years, however, intervals between bubbles have virtually disappeared, such that the decade prior to the 2008 crash was characterised by a series of events which overlapped in time. Property price bubbles were the greatest single cause of the financial crisis, but there were complementary bubbles in a variety of other asset categories.

The dot-com bubble (1995-2000) reflected a willing suspension of critical faculties where the potential for supposedly ‘high tech’ equities were concerned, and historians of the future are likely to marvel at the idiocy which attached huge values to companies which lacked earnings, cash flow or a proven track record, and were often measured by the bizarre metric of “cash-burn”. Other bubbles occurred in property markets in the United States, Britain, Ireland, Spain, China, Romania and other countries, as well as in commodities such as uranium and rhodium. Economy-wide bubbles developed in countries such as Iceland, Ireland and Dubai. Perhaps the most significant bubble of the lot – for reasons which will become apparent later – was that which carried the price of oil from an average of $25/b in 2002 to a peak of almost $150/b in 2008.

This rash of bubbles suggests that recent years have witnessed the emergence of a distinctive new trend, which is described here as a credit super-cycle, a mechanism which compounds individual bubbles into a broader pattern.

This report argues that a third big difference may be that the super-cycle bubble coincided with a weakening in the fundamental growth dynamic. What we need to establish is the ‘underlying narrative’ that has compressed the well-spaced bubble-forming processes of the past into the single, compounded-bubble dynamic of the credit super-cycle.

It is suggested here that this narrative must include:

  • A mass psychological change which has elevated the importance of immediate consumption whilst weakening perceptions both of risks and of longer-term consequences.
  • Institutional weaknesses which have undermined regulatory oversight whilst simultaneously facilitating the provision of excessive credit through the creation of high-risk instruments.
  • Mispricing of risk, compounded by false appreciation of economic prospects and by the distortion of essential data.
  • A political, business and consumer mind-set which elevates the importance of the immediate whilst under-emphasising the longer term.
  • A distortion of the capitalist model which has created a widening chasm between ‘capitalism in principle’ and ‘capitalism in practice’.

Before we can put the credit super-cycle into its proper context, however, we need to appreciate three critical issues, each of which is grossly misunderstood.

  1. The first of these is the vast folly of globalisation. This has impoverished and weakened the West whilst ensuring that few countries are immune from the consequences of the unwinding of a world economy which has become a hostage to future growth assumptions at precisely the same time that the scope for generating real growth is deteriorating.
  2. The second critical issue is the undermining of official economic and fiscal data, a process which has disguised many of the most alarming features of the super-cycle.
  3. Third, there has been a fundamental misunderstanding of the dynamic which really drives the economy. Often regarded as a monetary construct, the economy is, in the final analysis, an energy system, and the critical supply of surplus energy has been in seemingly-inexorable decline for at least three decades.

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The End Of An Era

Authored by Dr. Tim Morgan, Tullet Prebon,

The economy as we know it is facing a lethal confluence of four critical factors – the fall-out from the biggest debt bubble in history; a disastrous experiment with globalisation; the massaging of data to the point where economic trends are obscured; and, most important of all, the approach of an energy-returns cliff-edge.

Through technology, through culture and through economic and political change, society is more short-term in nature now than at any time in recorded history. Financial market participants can carry out transactions in milliseconds. With 24-hour news coverage, the media focus has shifted inexorably from the analytical to the immediate. The basis of politicians’ calculations has shortened to the point where it can seem that all that matters is the next sound-bite, the next headline and the next snapshot of public opinion. The corporate focus has moved all too often from strategic planning to immediate profitability as represented by the next quarter’s earnings.

This report explains that this acceleration towards ever-greater immediacy has blinded society to a series of fundamental economic trends which, if not anticipated and tackled well in advance, could have devastating effects. The relentless shortening of media, social and political horizons has resulted in the establishment of self-destructive economic patterns which now threaten to undermine economic viability. We date the acceleration in short-termism to the early 1980s.

Since then, there has been a relentless shift to immediate consumption as part of something that has been called a “cult of self-worship”. The pursuit of instant gratification has resulted in the accumulation of debt on an unprecedented scale. The financial crisis, which began in 2008 and has since segued into the deepest and most protracted economic slump for at least eighty years, did not result entirely from a short period of malfeasance by a tiny minority, comforting though this illusion may be. Rather, what began in 2008 was the denouement of a broadly-based process which had lasted for thirty years, and is described here as “the great credit super-cycle”.

The credit super-cycle process is exemplified by the relationship between GDP and aggregate credit market debt in the United States (see fig. 1.1). In 1945, and despite the huge costs involved in winning the Second World War, the aggregate indebtedness of American businesses, individuals and government equated to 159% of GDP. More than three decades later, in 1981, this ratio was little changed, at 168%. In real terms, total debt had increased by 214% since 1945, but the economy had grown by 197%, keeping the debt ratio remarkably static over an extended period which, incidentally, was far from shock-free (since it included two major oil crises).

From the early 1980s, as figs. 1.1 and 1.2 show, an unmistakeable and seemingly relentless upwards trend in indebtedness became established. Between 1981 and 2009, debt grew by 390% in real terms, far out-pacing the growth (of 120%) in the American economy. By 2009, the debt ratio had reached 381%, a level unprecedented in history. Even in 1930, when GDP collapsed, the ratio barely topped 300%, and thereafter declined very rapidly indeed.

This report is not, primarily, about debt, and neither does it suggest that the problems identified here are unique to the United States. Rather, the massive escalation in American indebtedness is one amongst a host of indicators of a state of mind which has elevated immediate consumption over prudence throughout much of the world.

This report explains that we need only look beyond the predominant short-termism of contemporary thinking to perceive that we are at the confluence of four extremely dangerous developments which, individually or collectively, have already started to throw more than two centuries of economic expansion into reverse.

Before the financial crisis of 2008, this analysis might have seemed purely theoretical, but the banking catastrophe, and the ensuing slump, should demonstrate that the dangerous confluence described here is already underway. Indeed, more than two centuries of near-perpetual growth probably went into reverse as much as ten years ago.

Lacking longer-term insights, today’s policymakers seem bewildered about many issues. Why, for instance, has there been little or no recovery from the post-2008 economic slump? Why have traditional, tried-and-tested fiscal and monetary tools ceased to function? Why have both austerity and stimulus failed us?

The missing piece of the economic equation is an appreciation of four underlying trends, each of which renders many of the lessons of the past irrelevant.

trend #1 – the madness of crowds

The first of the four highly dangerous trends identified here is the creation, over three decades, of the worst financial bubble in history. In his 1841 work Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay (1814-89) identified a common thread of individual and collective idiocy running through such follies of the past as alchemy, witchhunts, prophecies, fortune-telling, magnetizers, phrenology, poisoning, the admiration of thieves, duels, the imputation of mystic powers to relics, haunted houses, crusades – and financial bubbles.

A clear implication of Mackay’s work was that all of these follies had been consigned to the past by intelligence, experience and enlightenment. For the most part, he has been right. Intelligent people today do not put faith in alchemy, fortune-telling, witchcraft or haunting, and – with the arguable exception of the invasion of Iraq – crusades have faded into the history books.

But one folly remains alive and well. Far from confining financial bubbles to historical tales of Dutch tulips and British South Sea stock, the last three decades have witnessed the creation and the bursting of the biggest bubble in financial history.

Described here as ‘the credit supercycle’, this bubble confirmed that one aspect, at least, of the idiocy identified by Mackay continues to wreak havoc. Insane though historic obsessions with tulip bulbs and south seas riches may appear, they are dwarfed by the latterday, ‘money for nothing’ lunacy that, through the credit super-cycle, has mired much of the world in debts from which no escape (save perhaps hyperinflation) exists.

Perhaps the most truly remarkable feature of the super-cycle was that it endured for so long in defiance of all logic or common sense. Individuals in their millions believed that property prices could only ever increase, such that either borrowing against equity (by taking on invariably-expensive credit) or spending it (through equity release) was a safe, rational and even normal way to behave.

Regulators, meanwhile, believed that there was nothing wrong with loosening banking reserve criteria (both by risk-weighting assets in ways that masked leverage, and by broadening definitions of bank capital to the point where even some forms of debt counted as shock-absorbing equity).

Former Federal Reserve boss Alan Greenspan has been ridiculed for believing that banks would always act in the best interests of their shareholders, and that the market would sort everything out in a benign way. But regulators more generally bent over backwards to ignore the most obvious warning signs, such as escalating property price-to-incomes ratios, soaring levels of debt-to-GDP, and such obviously-abusive practices as sub-prime mortgages, NINJA loans and the proliferation of unsafe financial instruments.

Where idiocy and naïveté were concerned, however, regulators and the general public were trumped by policymakers and their advisors. Gordon Brown, for example, proclaimed an end to “boom and bust” and gloried in Britain’s “growth” despite the way in which debt escalation was making it self-evident that the apparent expansion in the economy was neither more nor less than the simple spending of borrowed money.

Between 2001-02 and 2009-10, Britain added £5.40 of private and public debt for each £1 of ‘growth’ in GDP (fig. 1.3). Between 1998 and 2012, real GDP increased by just £338bn (30%) whilst debt soared by £1,133bn (95%) (fig. 1.4).

Asset managers have a very simple term to describe what happened to Britain under Brown – it was a collapse in returns on capital employed.

No other major economy got it quite as wrong as Britain under Brown, but much the same was happening across the Western world, most notably in those countries which followed the disastrous Anglo-American philosophy of “light-touch” financial regulation.

trend #2 – the globalisation disaster

The compounding mistake, where the Western countries were concerned, was a wide-eyed belief that ‘globalisation’ would make everyone richer, when the reality was that the out-sourcing of production to emerging economies was a self-inflicted disaster with few parallels in economic history. One would have to look back to a Spanish empire awash with bullion from the New World to find a combination of economic idiocy and minority self-interest equal to the folly of globalization.

The big problem with globalisation was that Western countries reduced their production without making corresponding reductions in their consumption. Corporations’ outsourcing of production to emerging economies boosted their earnings (and, consequently, the incomes of the minority at the very top) whilst hollowing out their domestic economies through the export of skilled jobs.

This report uses a measure called ‘globally-marketable output’ (GMO) as a metric for domestic production, a measure which combines manufacturing, agriculture, construction and mining with net exports of services. By definition, activities falling outside this category consist of services provided to each other.

At constant (2011) values, consumption by Americans increased by $6,500bn between 1981 and 2011, whilst consumption on their behalf by the government rose by a further $1,700bn, but the combined output of the manufacturing, construction, agricultural and extractive industries grew by barely $600bn. At less than $200bn in 2011, net exports of services did almost nothing to bridge the chasm between consumption and production.

This left two residuals – domestically consumed services, and debt – with debt the clincher. Between 1981 and 2011, and again expressed at constant values, American indebtedness soared from $11 trillion to almost $54 trillion.

Fundamentally, what had happened here was that skilled, well-paid jobs had been exported, consumption had increased, and ever-greater quantities of debt had been used to fill the gap. This was, by any definition, unsustainable. Talk of Western economies modernising themselves by moving from production into services contained far more waffle than logic – Western consumers sold each other ever greater numbers of hair-cuts, ever greater quantities of fast food and ever more zero-sum financial services whilst depending more and more on imported goods and, critically, on the debts used to buy them. Corporate executives prospered, as did the gateholders of the debt economy, whilst the vast majority saw their real wages decline and their indebtedness spiral. For our purposes, what matters here is that reducing production, increasing consumption and taking on escalating debt to fill the gap was never a remotely sustainable course of action. What this in turn means is that no return to the pre-2008 world is either possible or desirable.

trend #3 – an exercise in self-delusion

One explanation for widespread public (and policymaker) ignorance of the truly parlous state of the Western economies lies in the delusory nature of economic and fiscal statistics, many of which have been massaged out of all relation to reality.

There seems to have been no ‘grand conspiracy’ here, but the overall effect of accretive changes has been much the same. In America, for example, the benchmark measure of inflation (CPI-U) has been modified by ‘substitution’, ‘hedonics’ and ‘geometric weighting’ to the point where reported numbers seem to be at least six percentage points lower than they would have been under the ‘pre-tinkering’ basis of calculation used until the early 1980s. US unemployment, reported at 7.8%, excludes so many categories of people (such as “discouraged workers”) that it hides very much higher levels of inactivity.

The critical distortion here is clearly inflation, which feeds through into computations showing “growth” even when it is intuitively apparent (and evident on many other benchmarks) that, for a decade or more, the economy has, at best, stagnated, not just in the United States but across much of the Western world. Distorted inflation also tells wage-earners that they have become better off even though such statistics do not accord with their own perceptions. It is arguable, too, that real (inflation-free) interest rates were negative from as long ago as the mid-1990s, a trend which undoubtedly exacerbated an escalating tendency to live on debt.

Fiscal figures, too, are heavily distorted, most noticeably in the way in which quasi-debt obligations are kept off the official balance sheet. As we explain in this report, the official public debts of countries such as the United States and the United Kingdom exclude truly enormous commitments such as pensions.

trend #4 – the growth dynamo winds down

One of the problems with economics is that its practitioners preach a concentration on money, whereas money is the language rather than the substance of the real economy. Ultimately, the economy is – and always has been – a surplus energy equation, governed by the laws of thermodynamics, not those of the market.

Society and the economy began when agriculture created an energy surplus which, though tiny by later standards, liberated part of the population to engage in non-subsistence activities.

A vastly larger liberation of surplus energy occurred with the discovery of the heat engine, meaning that the energy delivered by human labour could be leveraged massively by exogenous sources of energy such as coal, oil and natural gas. A single US gallon of gasoline delivers work equivalent to between 360 and 490 hours of strenuous human labour, labour which would cost perhaps $6,500 if it were paid for at prevailing rates. Of the energy – a term coterminous with ‘work’ – consumed in Western societies, well over 99% comes from exogenous sources, and probably less than 0.7% from human effort. Energy does far more than provide us with transport and warmth. In modern societies, manufacturing, services, minerals, food and even water are functions of the availability of energy. The critical equation here is not the absolute quantity of energy available but, rather, the difference between energy extracted and energy consumed in the extraction process. This is measured by the mathematical equation EROEI (energy return on energy invested).

For much of the period since the Industrial Revolution, EROEIs have been extremely high. The oil fields discovered in the 1930s, for example, provided at least 100 units of extracted energy for every unit consumed in extraction (an EROEI of 100:1). For some decades now, though, global average EROEIs have been falling, as energy discoveries have become both smaller and more difficult (meaning energy-costly) to extract.

The killer factor is the non-linear nature of EROEIs. As fig. 1.5 shows, the effects of a fall-off in EROEI from, say, 80:1 to 20:1 do not seem particularly disruptive but, once returns ratios have fallen below about 15:1, there is a dramatic, ‘cliff-edge’ slump in surplus energy, combined with a sharp escalation in its cost.

Research suggests that the global average EROEI, having fallen from about 40:1 in 1990 to 17:1 in 2010, may decline to just 11:1 by 2020, at which point energy will be about 50% more expensive, in real terms, than it is today, a metric which will carry through directly into the cost of almost everything else – including food.

crisis, culpability and consequences

If the analysis set out in this report is right, we are nearing the end of a period of more than 250 years in which growth has been ‘the assumed normal’. There have been setbacks, of course, but the near-universal assumption has been that economic growth is the usual state of affairs, a rule to which downturns (even on the scale of the 1930s) are the exceptions. That comfortable assumption is now in the process of being over-turned.

The views set out here must provoke a host of questions. For a start, if we really are nearing a cliff-edge economic crisis, why isn’t this visible already? Second, who is to blame for this? Third, how bad could it get? Last, but surely most important, can anything be done about it?

Where visibility is concerned, our belief is that, if the economy does tip over in the coming few years, retrospect – which always enjoys the 20-20 vision of hindsight – will say that the signs of the impending crash were visible well before 2013.

For a start, anyone who believed that a globalisation model (in which the West unloaded production but expected to consume as much, or even more, than ever) was sustainable was surely guilty of wilful blindness. Such a state of affairs was only ever viable on the insane assumption that debt could go on increasing indefinitely. Charles Mackay chronicled many delusions, but none – not even the faith placed in witchcraft – was ever quite as irrational as the belief (seldom stated, but always implicit in Western economic policy) that there need never be an end to a way of life which was wholly dependent on ever-greater debt.

Even to those who were happy to swallow the nonsense of perpetually expanding indebtedness, the sheer scale of debt – and, relevantly in this context, of quasi-debt commitments as well – surely should have sounded  warning bells. From Liverpool to Los Angeles, from Madrid to Matsuyama, the developed world is mired in debts that can never be repaid. In addition to formal debt, governments have entered into pension and welfare commitments which are only affordable if truly heroic assumptions are made about future prosperity.

At the same time, there is no real evidence that the economy is recovering from what is already a more prolonged slump than the Great Depression of the 1930s. We are now more than four years on from the banking crisis and, under anything approaching normal conditions, there should have been a return to economic expansion by now. Governments have tried almost everything, from prolonged near-zero interest rates and stimulus expenditures to the creation of money on a gigantic scale. These tools have worked in the past, and the fact that, this time, they manifestly are not working should tell us that something profoundly different is going on.

The question of culpability has been the equivalent of Sherlock Holmes’ “dog that did not bark in the night”, in that very few individuals have been held to account for what is unarguably the worst economic disaster in at least eighty years. A small number of obviously-criminal miscreants have been prosecuted, but this is something that happens on a routine basis in normal times, so does not amount to an attribution of blame for the crisis. There has been widespread public vilification of bankers, the vast majority of whom were, in any case, only acting within the parameters of the ‘debtfuelled, immediate gratification’ ethos established across Western societies as a whole.

Governments have been ejected by their electorates, but their replacements have tended to look very similar indeed to their predecessors. The real reason for the seeming lack of retribution is that culpability is far too dispersed across society as a whole. If, say, society was to punish senior bankers, what about the thousands of salesmen who knowingly pushed millions of customers into mortgages that were not remotely affordable? The suspicion lingers that there has been a ‘grand conspiracy of culpability’, but even the radical left has failed to tie this down to specifics in a convincing way.

The real causes of the economic crash are the cultural norms of a society that has come to believe that immediate material gratification, fuelled if necessary by debt, can ever be a sustainable way of life. We can, if we wish, choose to blame the advertising industry (which spends perhaps $470bn annually pushing the consumerist message), or the cadre of corporate executives who have outsourced skilled jobs in pursuit of personal gain. We can blame a generation of policymakers whose short-termism has blinded them to underlying trends, or regulators and central bankers who failed to “take away the punch-bowl” long after the party was self-evidently out of control.

But blaming any of these really means blaming ourselves – for falling for the consumerist message of instant gratification, for buying imported goods, for borrowing far more than was healthy, and for electing glib and vacuous political leaders.

Beyond visibility and culpability, the two big questions which need to be addressed are ‘how bad can it get?’ and ‘is there anything that we can do about it?’

Of these, the first question hardly needs an answer, since the implications seem self-evident – economies will lurch into hyper-inflation in a forlorn attempt to escape from debt, whilst social strains will increase as the vice of resource (including food) shortages tightens. In terms of solutions, the first imperative is surely a cultural change away from instant gratification, a change which, if it is not adopted willingly, will be enforced upon society anyway by the reversal of economic growth.

The magic bullet, of course, would be the discovery of a new source of energy which can reverse the winding-down of the critical energy returns equation. Some pin their faith in nuclear fusion (along lines being pioneered by ITER) but this, even if it works, lies decades in the future – that is, long after the global EROEI has fallen below levels which will support society as we know it. Solutions such as biofuels and shales are rendered non-workable by their intrinsically-low EROEIs.

Likewise, expecting a technological solution to occur would be extremely unwise, because technology uses energy – it does not create it. To expect technology to provide an answer would be equivalent to locking the finest scientific minds in a bankvault, providing them with enormous computing power and vast amounts of money, and expecting them to create a ham sandwich.

In the absence of such a breakthrough, really promising energy sources (such as concentrated solar power) need to be pursued together, above all, with social, political and cultural adaptation to “life after growth”.

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Pizzagate: PM Snapped Enjoying ‘Raucous’ Dinner While Economy Burns

A picture of a chipper David Cameron enjoying dinner with Boris Johnson and the Chancellor, despite being forewarned of the dire state of the economy, has prompted ire on social media.

The three Tories laughing and eating pizza while Britain's economic recovery slammed into reverse has been dubbed #pizzagate on Twitter with many criticising the PM fo his apparent lack of concern.

pizza gate

Greenpeace's head of media Ben Stewart took the picture of the dinner in Davos

Greenpeace's head of media Ben Stewart, who was also dining at the Alte Post pizza restaurant and took the picture, described the meal as "raucous" and said the PM and Osborne were "laughing uproariously" and joking with London Mayor Boris Johnson.

Damien McBride, who was a close aide to Gordon Brown at the Treasury and in 10 Downing Street, said: "What on God's Green Earth was Osborne doing eating pizza in Davos when he knew GDP was back in negative territory?"

Some tweeted that GDP clearly stood for 'George and Dave's Pizza'.

However some have turned on Stewart, accusing him of being hypocritical, as he was in the same Davos restaurant and worked for a charity.


Frank Manning
Amazed at complaining about Cameron having dinner while he eats at the same restaurant (paid for by donations to Greenpeace)

Stewart responded:


ben stewart
Nope not paid by Greenpeace, and I had cheapest thing on menu (pizza, £22, too much courgette)

Asked whether Mr Cameron was embarrassed to be snapped enjoying himself in a restaurant the night before the release of bad GDP figures, the Prime Minister's official spokesman told reporters: "The Prime Minister and Chancellor have been in Davos banging the drum for British business, entirely consistent with the case we have been making that this is a global race, and also making the case for the kind of open, free-trade global economy which the Prime Minister was talking about in his speech yesterday and which is so important to outward-looking economies such as the UK's."

The spokesman declined to discuss whether alcohol was drunk with the meal, saying only: "The Prime Minister and Chancellor and others had dinner last night."

What do you think of the picture? Leave your own caption in the comments below.

The Real Reasons Why Germany Is Demanding that the U.S. Return Its Gold

gold_bars_7_200

The German’s are demanding that the U.S. return all of the 374 tons of gold held by the Bank of France, and 300 tons of the 1500 tons of bullion held by the New York Federal Reserve.

Some say that Germany is only demanding repatriation of its gold due to internal political pressures, and that no other countries will do so.

But Pimco co-CEO El Erian says:

In the first instance, it could translate into pressures on other countries to also repatriate part of their gold holdings. After all, if you can safely store your gold at home — a big if for some countries — no government would wish to be seen as one of the last to outsource all of this activity to foreign central banks.

As we noted last November:

Romania has demanded for many years that Russia return its gold.

Last year, Venezuela demanded the return of 90 tons of gold from the Bank of England.

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As Zero Hedge notes (quoting Bloomberg):

Ecuador’s government wants the nation’s banks to repatriate about one third of their foreign holdings to support national growth, the head of the country’s tax agency said.

Carlos Carrasco, director of the tax agency known as the SRI, said today that Ecuador’s lenders could repatriate about $1.7 billion and still fulfill obligations to international clients. Carrasco spoke at a congressional hearing in Quito on a government proposal to raise taxes on banks to finance cash subsidies to the South American nation’s poor.

Four members of the Swiss Parliament want Switzerland to reclaim its gold.

Some people in the Netherlands want their gold back as well.

(Forbes notes that Iran and Libya have recently repatriated their gold as well).

The Telegraph’s lead economics writer – Ambrose Evans Pritchard – argues that the German repatriation demand shows that we’re switching to a de facto gold standard:

Central banks around the world bought more bullion last year in terms of tonnage than at any time in almost half a century.

They added a net 536 tonnes in 2012 as they diversified fresh reserves away from the four fiat suspects: dollar, euro, sterling, and yen.

The Washington Accord, where Britain, Spain, Holland, South Africa, Switzerland, and others sold a chunk of their gold each year, already seems another era – the Gordon Brown era, you might call it.

That was the illusionary period when investors thought the euro would take its place as the twin pillar of a new G2 condominium alongside the dollar. That hope has faded. Central bank holdings of euro bonds have fallen back to 26pc, where they were almost a decade ago.

Neither the euro nor the dollar can inspire full confidence, although for different reasons. EMU is a dysfunctional construct, covering two incompatible economies, prone to lurching from crisis to crisis, without a unified treasury to back it up. The dollar stands on a pyramid of debt. We all know that this debt will be inflated away over time – for better or worse. The only real disagreement is over the speed.

***

My guess is that any new Gold Standard will be sui generis, and better for it. Let gold will take its place as a third reserve currency, one that cannot be devalued, and one that holds the others to account, but not so dominant that it hitches our collective destinies to the inflationary ups (yes, gold was highly inflationary after the Conquista) and the deflationary downs of global mine supply.

***

A third reserve currency is just what America needs. As Prof Micheal Pettis from Beijing University has argued, holding the world’s reserve currency is an “exorbitant burden” that the US could do without.

The Triffin Dilemma – advanced by the Belgian economist Robert Triffin in the 1960s – suggests that the holder of the paramount currency faces an inherent contradiction. It must run a structural trade deficit over time to keep the system afloat, but this will undermine its own economy. The system self-destructs.

A partial Gold Standard – created by the global market, and beholden to nobody – is the best of all worlds. It offers a store of value (though no yield). It acts a balancing force. It is not dominant enough to smother the system.

Let us have three world currencies, a tripod with a golden leg. It might even be stable.

How Much Gold Is There?

It’s not confidence-inspiring that CNBC’s senior editor John Carney argues that it doesn’t matter whether or not the U.S. has the physical gold it claims to hold.

In fact, many allege that the gold is gone:

Cheviot Asset Management’s Ned Naylor-Leyland says that the Fed and Bank of England will never return gold to its foreign owners.

Jim Willie says that the gold is gone.

***

Others allege that the gold has not been sold outright, but has been leased or encumbered, so that the U.S. does not own it outright.

$10 billion dollar fund manager Eric Sprott writes – in an article entitled “Do Western Central Banks Have Any Gold Left???“:

If the Western central banks are indeed leasing out their physical reserves, they would not actually have to disclose the specific amounts of gold that leave their respective vaults. According to a document on the European Central Bank’s (ECB) website regarding the statistical treatment of the Eurosystem’s International Reserves, current reporting guidelines do not require central banks to differentiate between gold owned outright versus gold lent out or swapped with another party. The document states that, “reversible transactions in gold do not have any effect on the level of monetary gold regardless of the type of transaction (i.e. gold swaps, repos, deposits or loans), in line with the recommendations contained in the IMF guidelines.”6 (Emphasis theirs). Under current reporting guidelines, therefore, central banks are permitted to continue carrying the entry of physical gold on their balance sheet even if they’ve swapped it or lent it out entirely. You can see this in the way Western central banks refer to their gold reserves.

Indeed, it is now well-documented that the Fed has leased out a large chunk of its gold reserves, and that big banks borrow gold from central banks and then to multiple parties.

As such, it might not entirely surprising that the Fed needs 7 years to give Germany back its 300 tons of gold … even though the Fed claims to hold 6,720 tons at the New York Federal Reserve Bank alone:

Even Pimco co-CEO Bill Gross says:

When the Fed now writes $85 billion of checks to buy Treasuries and mortgages every month, they really have nothing in the “bank” to back them. Supposedly they own a few billion dollars of “gold certificates” that represent a fairy-tale claim on Ft. Knox’s secret stash, but there’s essentially nothing there but trust..  When a primary dealer such as J.P. Morgan or Bank of America sells its Treasuries to the Fed, it gets a “credit” in its account with the Fed, known as “reserves.” It can spend those reserves for something else, but then another bank gets a credit for its reserves and so on and so on. The Fed has told its member banks “Trust me, we will always honor your reserves,” and so the banks do, and corporations and ordinary citizens trust the banks, and “the beat goes on,” as Sonny and Cher sang. $54 trillion of credit in the U.S. financial system based upon trusting a central bank with nothing in the vault to back it up. Amazing!

And given that gold-plated tungsten has turned up all over the world, and that a top German gold expert found fake gold bars imprinted with official U.S. markings, Germans may have lost confidence in the trustworthiness of the Fed.  See this, this, this and this.

This may especially be true since the Fed refused to allow Germans to inspect their own gold stored at the Fed.

Currency War?

The gold repatriation is – without doubt- related to currency.

As Forbes notes:

Officials at the Bundesbank … acknowledged the move is “preemptive” in case a “currency crisis” hits the European Monetary Union.

***

“No, we have no intention to sell gold,” a Bundesbank spokesman said on the phone Wednesday, “[the relocation] is in case of a currency crisis.”

Reggie Middleton thinks that Germany’s demand for its gold is part of a currency war.

Jim Rickards has previously said that the Fed had plans to grab Germany gold:

Jim Rickards has outlined possible plans by the Federal Reserve to commandeer Germany’s and all foreign depositors of sovereign gold at the New York Federal Reserve in the event of a dollar and monetary crisis leading to intensified “currency wars” and the ‘nuclear option’ of a drastic upward revision of the price of gold and a return to a quasi gold standard is contemplated by embattled central banks to prevent debt deflation.

Is that one reason that Germany is demanding its gold back now?

China is quietly becoming a gold superpower, and China has long been rumored to be converting the Yuan to a gold-backed currency.

The Telegraph’s James Delingpole points out:

Back in the mid-1920s, the head of the German Central Bank, Herr Hjalmar Schacht, went to New York to see Germany’s gold. However the NY Fed officials were unable to find the palette of Germany’s gold bullion. The Chairman of the Federal Reserve, Benjamin Strong was mortified, but to put him at ease Herr Schacht turned to him and said ‘Never mind, I believe you when you when you say the gold is there. Even if it weren’t you are good for its replacement.’ (H/T The Real Asset Company)

But that was then and this is now. In the eyes of the Germans – and who can blame them? – America has lost its mojo to such a degree that it can no longer be trusted honour its debts, even in the unlikely event that it were financially capable of doing so. Which is why, following in the footsteps of Venezuela’s Hugo Chavez (who may be an idiot but is definitely no fool), Germany is repatriatriating its gold from the US federal reserve.  It will now be stored in Frankfurt.

***

[Things] may look calm on the surface, but this latest move by the Bundesbank gives us a pretty good indication that beneath the surface that serene-seeming swan is paddling for dear life.

If you want a full analysis I recommend this excellent summary by Jan Skoyles. The scary part is this bit:

Every few months there is a discussion regarding what China are planning on doing with the gold they both mine and import every year, with many believing they are hoarding the metal as an insurance against the billions of US Treasury bonds, notes and bills they hold. Many believe they will issue some kind of gold-backed currency in the short-term and dump its one trillion dollars’ worth of US Treasury securities. Whilst, at the moment the US seem to take their monopoly currency for granted, should the Chinese or anyone else behave in such a manner, the US will need to respond – most likely with gold, which on its own it does not have enough of.

Anyone who thinks this isn’t going to happen eventually should read Peter Schiff’s parable How An Economy Grows And Why It Crashes. If something can’t go on forever, it won’t.

In other words, Rickards and Skoyles appear to argue that Germany may be repatriating gold in the first round of musical chairs in which China is preparing to roll out a gold-backed Yuan.   Under this theory, the rest of the world’s currencies will sink unless their nations’ can scramble to get their hands on enough gold to lend credibility to their paper.

Postscript: Michael Rivero thinks that the war in Mali is connected:

Mali is one of the world’s largest gold producers. Together with neighboring Ghana they account for 7-8% of world gold output. That makes them a rich prize for nations desperate for real physical gold. So, even as Germany started demanding their gold back from the Bank of France and the New York Federal Reserve, France (aided by the US) decided to invade Mali to fight “Islamists” working for “Al Qaeda.” Of course, “Islamists” has become the catch-all label for people that need to be killed to get them out of the way of the path to riches, and the people being bombed by France (aided by the US) are not “Al Qaeda” but Tawariqs, who have been fighting for their independence for 150 years, long before the CIA created “Al Qaeda”. Left to themselves, the Tawariqs could sell gold to whoever they want for whatever they want, and right now China can outbid the US and France.

Mehdi’s Morning Memo: Fiddling The Figures

The ten things you need to know on Wednesday 16 January 2013...

1) 'FIDDLING THE FIGURES'

Coalition ministers - led by George Osborne and Iain Duncan Smith - have been keen to highlight "record high" employment figures in the UK, as well as the net creation of around half a million new jobs over the past year, but the Guardian has some rather interesting news for us this morning:

"Government claims to have created an additional 500,000 jobs in the past year have been called into question after it was revealed that one in five of the people involved are on government work schemes, including tens of thousands still claiming unemployment benefits.

".. [F]igures obtained by the Guardian from the Office for National Statistics show that just over 20% of this total (105,000) involves those on largely unpaid government back-to-work schemes, the majority of whom are still claiming jobseeker's allowance.

"They include unpaid workers doing voluntary and mandatory work experience in supermarkets and charity shops.

"Many more tens of thousands with no jobs, training or pay, who simply attend regular job hunt workshops as part of the work programme run by the Department for Work and Pensions, are also being counted as employed."

You couldn't make it up...

2) EUROPE: EVERYONE'S GOT AN OPINION

Less than 72 hours to go till the big Cameron speech on Europe in the Netherlands. Everyone - everyone - seems to want to give the PM some advice on what he should say/do. First, there's Eurosceptic Tory MPs - from the Telegraph:

"The Fresh Start group of Conservative backbenchers will throw down the gauntlet to the Prime Minister... as it sets out proposals to return responsibility for laws to Westminster and cut Britain’s bill for EU membership by billions of pounds a year."

"A copy seen by The Daily Telegraph recommends four “significant revisions” to the EU treaties:

"• The repatriation of all social and employment law, such as the Working Time Directive;
"• An opt-out from all existing policing and criminal justice measures;
"• An “emergency brake” on any new legislation that affects financial services;
"• An end to the European Parliament’s costly monthly move from Brussels to Strasbourg."

Then there's the "veteran Europhile", Ken Clarke, who issues this warning to the PM in the FT:

"Europe is not the primary interest of the British public and all kinds of things can arouse protest," Mr Clarke said in an interview with the Financial Times.

"... Mr Clarke admits that pro-Europeans have abandoned the battlefield and must regroup quickly. 'All referenda are a bit of a gamble. I don't think we can take a Yes vote for granted,' he said. 'I think one of the problems is, because so much of the media is overwhelmingly eurosceptic, no one has really campaigned very vigorously for the case for British leadership in the European Union for probably a decade or more.'"

Then there's Sir Nigel Sheinwald, the UK's former ambassador to Washington DC and Brussels, who tells the Guardian:

"I just cannot see any logical basis for thinking a move to the sidelines, or particularly a move out of Europe, would be anything other than diminishing to UK's capacity, standing, influence, ability to get things done and capacity to build coalitions internationally.

"... In any event other members of the EU would regard any really significant proposals by us to renegotiate as opportunistic, given the main areas they are going to be examining are ones they would say are necessary for the euro to survive and prosper."

Finally, there's the former (Labour) foreign secretary, David Miliband, writing in the Times: "Don’t be the PM who takes us out of Europe."

Lots to digest. Dave - over to you.

3) OUT OF CREDIT?

Perhaps, just perhaps, the PM should focus less on Europe and more on the British economy. He also might want to re-read the Conservative Party's 2010 manifesto, which promised to "safeguard Britain’s credit rating".

Because the Guardian has some bad news for Dave and for Gideon:

"Fitch, the credit ratings agency, has warned the chancellor that Britain could be stripped of its prized AAA status if he fails to boost the country's economic situation in the spring budget

"The agency said the UK remains under "significant pressure" following the autumn statement in December, when George Osborne conceded that growth would be lower over the next two years and for that reason he was likely to miss one of his two debt reduction targets."

Losing the triple-A crown at some point in 2013 could cost the chancellor, in particular, any little credibility that he might have left. He has, as the HuffPost UK documents here, staked his political and economic reputation on 'AAA'.

4) "STALINIST" NHS

The coalition's safest pair of hands, Jeremy Hunt, is back in the headlines again. From the Daily Mail:

"All medical records - including prescriptions and test results - are to be stored on computers and shared between hospitals, GPs, care homes and councils.

"Jeremy Hunt will pledge a 'paperless NHS' by 2018 to help save lives by allowing different parts of the NHS to communicate more effectively.

"... But the records 'free-for-all' raises fears that confidential information could be accessed inappropriately.

"Mr Hunt admitted the system was 'Stalinist' - in being driven from the top - but he said this was vital for patient safety."

5) OBAMA VS THE SECOND AMENDMENT

From the BBC:

"US President Barack Obama is expected on Wednesday to unveil wide-ranging measures aimed at curbing gun violence.

"The proposals could echo measures, considered the toughest in the nation, passed in New York state on Tuesday.

"Mr Obama has said he favours bans on assault weapons and high-capacity ammunition magazines, as well as broader background checks."

Good luck, Barack!

BECAUSE YOU'VE READ THIS FAR...

Watch this video of a drunk guy sing 'Bohemiam Rhapsody' - really loudly - on the New York subway.

6) BANKS WIN, WE LOSE (PART 1)

From the Telegraph:

"Taxpayers are sitting on a loss of £18 billion on government shareholdings in RBS and Lloyds Banking Group, which were acquired during the financial crisis.

"Grant Shapps, the Conservative Party chairman, compared the bank bail-out to Labour’s decision to sell the country’s gold reserves. 'Labour sold gold at a record low price and now it seems they massively overpaid for the taxpayer stakes in the banks,' he said.

"... Michael Cohrs, a member of the Bank of England’s financial policy committee, told MPs on the Treasury committee that the government had 'probably' overpaid for its stakes in the nationalised banks and that taxpayers were unlikely to enjoy the returns that had been seen in America."

Thanks, Gordon and Alistair.

7) BANKS WIN, WE LOSE (PART 2)

From the FT splash:

"In the face of withering criticism, Goldman Sachs has abandoned a plan which would have allowed bankers to benefit from a cut in the top rate of income tax by delaying UK bonus payments until after the start of the new British tax year.

"The Wall Street bank decided at a board meeting not to press ahead with the proposal after the governor of the Bank of England denounced the plan."

So, banks on the run, eh? Not quite. After all, why are banks still paying out massive bonuses to begin with, given the lack of lending and the ongoing economic stagnation? As the Telegraph reported earlier this week:

"Analysts expect the Wall Street bank to have amassed a total compensation pot, which includes bonuses and salaries, of between $13.3bn (8.2bn pounds) and $13.8bn for 2012... [t]hat is up from $12.2bn in 2011."

All in this together? I think not.

8) ROYAL 'VETO' UPDATE

The Guardian follows up on its exclusive from yesterday:

"Government ministers have exploited the royal family's secretive power to veto new laws as a way to quell politically embarrassing backbench rebellions, it was claimed on Tuesday.

"Tam Dalyell, the sponsor of a 1999 parliamentary bill that aimed to give MPs a vote on military action against Saddam Hussein, said he is 'incandescent and angry' that it was blocked by the Queen under apparent influence from Tony Blair's government. It also emerged that Harold Wilson used the Queen's power to kill off politically embarrassing bills about Zimbabwe and peerages."

9) MINISTERS VS LAWYERS

From the Times:

"The Government is facing a backlash from senior legal figures over plans to curb what ministers see as a 'growth industry' in judicial review challenges.

"Lord Woolf, the former Lord Chief Justice, and Lord Goldsmith, the former Attorney-General, warned that the Government should proceed with “caution” with any changes that could be seen as restricting the right to hold politicians to account.

"... The number of judicial review cases jumped from 160 in 1974 to more than 11,000 in 2011, costing the taxpayer millions in legal fees. But in 2011 only one in six applications was granted and even fewer were successful when they went ahead."

10) THE RETURN OF GORDO

Our ex-premier returned to the Commons yesterday to participate in a debate and give a speech - it's worth reading Ann Treneman's sketch in the Times:

"For the first time in 14 months, Gordo was in the Chamber.

"Dozens of MPs came to watch, peering at him as he appeared, at 6.44pm, at the tail end of a debate on Scotland. His fellow Scots stared at him as if they hardly recognised him. Alistair Darling, his Chancellor, moved as far away as possible. A small doughnut of hardcore Gordo fans formed around him."

"Almost Never Spotted was there for the adjournment debate on why the Government should save the Remploy factory in Fife. It started at 7pm.

"... When the lesser mortals stopped speaking, Gordo arose, his voice booming, his stomach protruding to the extent that his shirt-button deserves to be mentioned in despatches. He had known the factory for 30 years and he had a plan to save it. This involved the Government relaxing its financial restrictions. Gordon Brown asking for money!

"... When it was over, the Almost Never Spotted left, his shirt button relieved to have survived. When, I wondered, would we see him again?"

A very good question.

PUBLIC OPINION WATCH

From the latest Sun/YouGov poll:

Labour 44
Conservatives 32
Lib Dems 10
Ukip 9

That would give Labour a majority of 120.

140 CHARACTERS OR LESS

‏@David_Cameron Delighted that principle of wearing religious symbols at work has been upheld – ppl shouldn't suffer discrimination due to religious beliefs

‏@BenPBradshaw Bad ministers blame the #civilservice & if No 10 find out what's happening from the media it's because they don't have a grip @BBCr4today

@ShippersUnbound As we hang earnestly on the wisdom of Sir Nigel Sheinwald remember it was he who thought Barak Obama had no chance of getting elected

900 WORDS OR MORE

Mary Riddell, writing in the Telegraph, says: "Ed Miliband needs bolder answers over the European Union and immigration."

Simon Jenkins, writing in the Guardian, says: "Europe: no more talk of in-or-out. Let's think opt-outs."

Daniel Finkelstein, writing in the Times, says: "Public servants have private interests, just like the rest of us. They’ll only change if we make it worth their while."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan ([email protected]) or Ned Simons ([email protected]). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

Mehdi’s Morning Memo: The Poor Get Poorer Next Up, Pensioners

The ten things you need to know on Wednesday 9th January 2013...

1) THE POOR GET POORER. NEXT UP, PENSIONERS

Surprise, surprise - from the Huffington Post UK:

"The Government’s controversial plans for a real-terms cut in working-age benefits have cleared their first Commons hurdle by 324 votes to 268, majority 56.

"...The vote followed a tempestuous five-hour debate in parliament in which senior Tory and Labour MPs clashed over the benefits bill.

"Some four Liberal Democrats, including former minister Sarah Teather, rebelled against their leadership to vote against the below-inflation cap, while former leader Charles Kennedy and backbencher Andrew George voted in both lobbies - the traditional way of registering an abstention."

Much was made ahead of yesterday's debate - by Lib Dem rebels such as Sarah Teather and even Tory MPs such as Sarah Wollaston - of the crude and divisive rhetoric of 'strivers vs shirkers', of 'scroungers' and 'skivers'. The morning after the vote, little has changed - consider the splash headline on the front of today's Daily Express:

"Party Is Over For Benefit Skivers"

Charming. The harsh truth, hoever, is that benefits are now at their lowest levels since the founding of the welfare state more than 60 years ago. And as the economist Stewart Lansley has written, the government's Benefit Uprating Bill "marks a new low in the post-war history of welfare in the UK... it is unprecedented since the war. The last deliberate political move to lower the real incomes of the poorest members of society was more than eighty years ago in 1931."

Speaking after the vote, Barnardo's chief executive Anne Marie Carrie said: "By voting to break the link between benefits and inflation today, MPs have risked condemning children in Britain's poorest families to growing up stuck in the poverty trap, as their parents struggle to cover basic costs of living."

But onwards and upwards, eh? Or should that be downwards? The Times and the FT both splash on news that the coalition may be turning its attention to pensioners' benefits next; from the Times:

"David Cameron is being urged by senior Conservatives to scrap benefits paid to richer pensioners as part of an overhaul of the welfare system.

"Ministers are pressing Mr Cameron to ensure that payments such as the £300-a-year winter fuel allowance are withheld from wealthy pensioners."

The FT says:

"Wealthy pensioners will no longer be insulated against the full force of austerity measures after the next election... Tory strategists said it was time to stop shielding better-off pensioners from cuts.

"In a sign of things to come, Iain Duncan Smith is looking at stopping winter fuel payments to pensioners living in Spain, Greece and other warm countries by applying a 'temperature test'."

No mention in any of these reports that means-testing tends not to work, or that Britain has one of the worst rates of pensioner poverty in the European Union.

Still, let's not forget that it was benefit claimants and the elderly who caused the crash with their dastardly credit default swaps and excessive bonuses. Oh wait...

2) '70 MISSED PLEDGES'

From the Telegraph:

"David Cameron and Nick Clegg will on Wednesday publish a candid assessment of the Coalition’s successes and failures that was excluded from its Mid-term Review, The Daily Telegraph has learnt.

"The Deputy Prime Minister declared last month that the Government would provide voters with an audit of which targets it had missed and which it had achieved alongside the official review.

"But the annex, which consists of about 100 pages, was not published on Monday. Its existence emerged only when one of Mr Cameron’s senior advisers was photographed in Downing Street on Tuesday carrying a document that discussed the advantages and disadvantages of releasing it. The audit is understood to concede that the Coalition has missed dozens of pledges covering pensions, road building and criminal justice.

"... However, its existence was unknown to many ministers and advisers.

"It is understood that the Coalition has missed more than 70 pledges."

Oh dear. But to be fair to the coalition, that's 70 out of the 480 measures in the 2010 coalition agreement, i.e. less than 15%. Then again, to be unfair to the coalition, didn't they just mark their own answer papers? How is that credible?

3) LABOUR'S DAVID BOWIE

More news from DavidMilibandWorld. Let's begin with Ann Treneman's Times sketch, which focuses on David Miliband's impressive and impassioned intervention in yesterday's welfare debate in the Commons, in which the former foreign foreign secretary denounced the coalition's benefit uprating bill as "rancid":

"It seems that Bowie is not the only David making a comeback these days. Mr Milibanana, as he will always be to me, has made it clear that he is a man chafing in the confines of the cell that he has made for himself. Yesterday was a David Bowie moment and he was loving every moment of the attention."

"... He sat down, a man in search of applause. David Bowie's new single is called Where Are We Now?. In Mr Milibanana's case, though, the real question is, where is he heading?"

Well, the Mirror's Jason Beattie might have an answer for us. He begins his 'exclusive' interview with the Labour leader today with this paragraph:

"Ed Miliband today paves the way for his brother's political comeback by revealing time has healed their bitter rift. In his first major interview of 2013, the Labour leader fuels speculation David could return to the Shadow Cabinet by also refusing to guarantee that Ed Balls will stay on as Shadow Chancellor until the 2015 general election."

Beattie adds:

"Although they did not spend Christmas Day together, they did have a family get together to exchange presents.

"[Ed] and Justine gave David and Louise some wine 'and other gifts'. David gave his brother a book on the Boston Red Sox baseball team.

"'Look, of course it was a bruising leadership contest and as time goes on that sort of recedes and that's good for our relationship,' says Ed..."

Meanwhile, the Telegraph's James Kirkup notes how the elder Miliband took a bit of a dig at "the political tactics of Gordon Brown":

"Mr Miliband, who quit the Labour front bench in 2010 when his brother Ed beat him to the leadership, said trying to use the [welfare] issue against the Opposition showed ministers were taking a similar approach to the former prime minister.

"'This rancid Bill is not about fairness or affordability,' he said. 'It reeks of politics, the politics of dividing lines that the current Government spent so much time denouncing when they were in opposition in the dog days of the Brown administration. It says a lot that within two years it has fallen into the same trap.'"

Ouch.

4) PRIVATISE, PRIVATISE, PRIVATISE

Oh look: yet more privatisation of bits of the public sector. So much for the coalition staying on 'the centre ground'.

From the Guardian:

"The justice secretary, Chris Grayling, will today outline plans for the wholesale outsourcing of the probation service with private companies and voluntary sector organisations to take over the rehabilitation of the majority of offenders by 2015.

"The public probation service is to be scaled back and 'refocused' to specialise in dealing only with the most dangerous and high-risk offenders and public protection cases. The majority of services will be contracted out on a payment by result basis."

According to Harry Fletcher, of Napo, the probation union: "This move is purely ideological. It is being rushed through without proper thought to the consequences. It will be chaotic and will compromise public protection."

Juliet Lyon of the Prison Reform Trust isn't impressed, either:"Why not build on the success of joint work by probation, police and voluntary organisations, rather than break up the probation service and put the public at risk?"

5) LORDS-A-LEAPING

From the Sun:

"Trade Minister Lord Marland last night became the second Tory peer to quit in two days.

"The blow to David Cameron came just 24 hours after Lord Strathclyde said he was resigning as Leader of the House of Lords.

"Lord Marland told the PM he felt his ministerial responsibilities were making it difficult for him to sell British business around the globe.

"...Friends of the former businessman said he shared Lord Strathclyde's frustrations with being in a Coalition Government with the Liberal Democrats."

Oh dear.

BECAUSE YOU'VE READ THIS FAR...

Watch this video of a bird (!) dancing to Dubstep.

6) SO HOW 'LIBERTARIAN' IS UKIP?

The UK Independence Party's critics on the left and the right were rubbing their hands with glee last night.

From blogger Sunny Hundal's Liberal Conspiracy website:

"UKIP is facing a backlash tonight from its own members after the chair of Young Independence (the party’s youth wing), Olly Neville, was abruptly ousted from his role.

"His offence? Stating his opinion in the media that Cameron was right to pursue the legalisation of same sex marriage. So much for the party’s dedication to libertarianism.

"Olly Neville himself published emails on Twitter that recounted his removal as chair."

Former Tory MP Louise Mensch weighed in from New York, via - where else? - Twitter:

"So #UKIP show themselves to be every bit the bunch of loons we thought they were - sacking a youth leader for supporting gay marriage."

Meanwhile, Ukip spokesman Gawain Towler tweeted:

"@OllyNeville removed as YI Interim Chair for misrepresenting UKIP policy (not marriage views)."

Hmm...

7) THE PRO-EU FIGHTBACK BEGINS...

...with - what else? - a letter to the Financial Times:

"British business leaders have warned David Cameron that the UK premier risks damaging his country's economy by taking it out of the EU, if he seeks 'wholesale renegotiation of ... membership'. Mr Cameron will this month set out, in a speech in the Netherlands, his plan to renegotiate Britain's membership and put the outcome to a referendum in the next parliament.

"But leading business figures, including Sir Richard Branson, Virgin Group chairman, and Chris Gibson-Smith, chairman of the London Stock Exchange, warned, in a letter to the Financial Times, that Mr Cameron's renegotiation plan could fail.

"'...To call for such a move in these circumstances would be to put our membership of the EU at risk and create damaging uncertainty for British business, which are the last things the prime minister would want to do,' the letter said.

"Other signatories are Roland Rudd, chairman of the Business for New Europe campaign group; Sir Roger Carr, CBI president; Lord Davies of Corsair Capital; Gerry Grimstone of TheCityUK; Jan du Plessis of Rio Tinto; Sir Michael Rake of BT; Sir Martin Sorrell of WPP; and Malcolm Sweeting of Clifford Chance."

8) WATCH OUT! THE CYBER ATTACKERS ARE COMING

From the BBC:

"The UK is at risk of an attack in cyberspace because of government "complacency", MPs have warned.

"The Defence Select Committee said the threat that cyber attackers posed could 'evolve at almost unimaginable speed', and called for rapid action to protect national security.

"The committee also said the British military's reliance on technology could leave it fatally compromised."

9) 'TROLLING', UNIONIST-STYLE

There's been violence on the streets of Belfast for six nights in a row, with 60 police officers injured and the police bill soaring to more than £7 million.

So how best to calm things down? Why not fly the Union Flag to mark Kate Middleton's birthday?

Eh?

From the HuffPost UK:

"[P]olice are gearing up for a tense day as the Union Flag is flown for the first time since the controversy over its use, to mark the Duchess of Cambridge's birthday.

"The occasion of Kate's birthday is one of the United Kingdom's official 'flag days.'"

This won't end well.

10) CONGRESS VS COCKROACHES

You think our elected politicians in Westminster are unpopular? Check out the US Congress's latest approval ratings over in the United States. According to a new report from Public Policy Polling:

"Our newest national poll finds that Congress only has a 9% favorability rating with 85% of voters viewing it in a negative light. We've seen poll after poll after poll over the last year talking about how unpopular Congress is but really, what's the difference between an 11% or a 9% or a 7% favorability rating? So we decided to take a different approach and test Congress' popularity against 26 different things.

"And what we found is that Congress is less popular than cockroaches, traffic jams, and even Nickelback... Now the news isn't all bad for Congress: By relatively close margins it beats out Lindsey Lohan (45/41), playground bullies (43/38), and telemarketers (45/35)."

Hurrah!

PUBLIC OPINION WATCH

From the Sun/YouGov poll:

Labour 44
Conservatives 32
Lib Dems 10

That would give Labour a majority of 120.

140 CHARACTERS OR LESS

@OwenJones84Desperately waiting for coherent, confident opposition to Tories' onslaught on working poor and the unemployed from Stephen Timms #newsnight

@Mike_Fabricant I regret to admit that instead of listening to @owenjones84 on #newsnight , I was mesmerised by a zit on his forehead.....#

@BorowitzReport AIG suing the US government is like a drowning man who's been pulled from the ocean kicking the lifeguard in the balls.

900 WORDS OR MORE

Mary Riddell, writing in the Telegraph, says: "Labour believes George Osborne will be snared by his own welfare benefits trap."

Daniel Finkelstein, writing in the Times, says "Cameron holds the aces": "In the struggle between Europhiles, Eurosceptics and Europhobes, the middle ground is stronger than people think."

Seumas Milne, writing in the Guardian, says: "This economic model isn't delivering jobs or decent wages. The real scroungers are greedy landlords and employers."


Got something you want to share? Please send any stories/tips/quotes/pix/plugs/gossip to Mehdi Hasan ([email protected]) or Ned Simons ([email protected]). You can also follow us on Twitter: @mehdirhasan, @nedsimons and @huffpostukpol

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How Republican Sociopaths Have Ruined America


Much of what ails society today is the proliferation of sociopaths. I’m not just talking about hardened criminals either; sociopaths are everywhere, in all walks of life. In fact, the traits they possess are the very traits which impel one to succeed and rise to positions of power in a capitalistic society. CEOs, Wall Street billionaires, politicians, military chiefs, intelligence operatives, and right-wing talking heads are among those who have used their sociopathological personality disorders to rule America.

Wouldn’t it be nice if we could identify a sociopath before he/she comes to power? Think of how much better our lives and our country would be if only we knew who the conscienceless bastards really were before we voted for them, came under their employ, listened to their cons, fell prey to their manipulation. The problem is, they are not easily identified because they wear masks. They try to fit in by mimicking normal behavior in public. Some are even charming. They seduce us with their outward appearance of normalcy, but inside they are godless devils bent on perverting the greater good for their own means.

In the past 35 years America has slowly been transformed from a nation of common purpose to a nation of the rich, by wealthy, and for the sociopathic few. That’s because many of the people in power (mostly Republicans) have been crass opportunists concerned with self- advancement at the expense of the greater good. In the age of Reagan, the self-centeredness was heightened to a virtue. The 1980s gave rise to a rogue’s gallery of Gordon Gekkos and their “greed is good” philosophy. It wasn’t just Reagan and his policies though, it was the sociopaths he ushered into public service—the Bushes, Donald Rumsfeld, Dick Cheney, Oliver North, William Casey and a whole band of despicable criminals. The country became more selfish, less communal, and more cynical. It was then that we started letting the Almighty buck rule all facets of American life. The more money you had, the more admired you were. Fuck generosity and compassion for the less fortunate.

Since then, sociopaths have started illicit wars, drained the national treasury, raped Mother Nature, ruined the climate, and given rise to Rush Limbaugh, FOX News, Newt Gingrich, Paul Ryan, Ted Cruz, et al. There seem to be more sociopaths than human beings in positions of power. Maybe that was the whole point. Now the Extreme Court (uh..er…Supreme Court) has gotten in on the act, by making it easier for sociopathic billionaires to control (read subvert) the democratic process. Smarmy Vegas casino operators (like Shel Adelson) and fascist industrialists (like the Koch brothers) have far more say in how our government operates than 99% of us.

As a public service then, I am herewith giving you tips on how to spot a sociopath. If you recognize them in someone, alert authorities and resist the urge to succumb to their wiles.

Traits of a Sociopath (based on the work of psychologists Robert Hare): While some experts believe that sociopathy has a genetic origin, Hare believed that a sociopath’s behavior “is shaped by social forces and is the result of a dysfunctional environment.” Hare formed a list of traits common to sociopaths. Here are the most prevalent:

--Sociopaths are manipulative and very skilled at taking advantage of the good intentions of others . Allen Dulles, former CIA chief, is a good example. He was appointed by President Eisenhower in 1953 after promising Ike that the CIA could avoid WWIII by overthrowing socialist and communist countries around the globe via bloodless coups. Eisenhower, a decent man shaken by the horrors of the second World War, turned over foreign policy to Allen and his brother Foster. The Dulles brothers, sociopaths of the worst kind, turned America into quasi-fascist Orwellian state by using their enormous power to control the media, murder innocent citizens, evoke hatred of America around the globe, and cover up the assassination of JFK. All the while, the Dulleses were enriching themselves and their corporate partners—the Forbeses, the Browns, the Rockefellers, the DuPonts, the Hunts—the oldest, richest families in the country. And Kennedy haters all.

--They have a grandiose sense of self; they think they are better than everyone else, and if they have more money or power than others they use this to their constant advantage. Moreover, the fact that a sociopath may be wealthier than others or in a position of power over others merely confirms in the sociopath’s mind that he/she is better than others. In the modern age, who feels more entitled than the richest among us? The Koch brothers, desperately trying to buy the government, runs roughshod over the poor, the elderly, minorities, and social safety nets. They care only their own profits. We should have carved a big “S” in their foreheads at birth, just as Brad Pitt marked Christoph Waltz with a swastika in “Inglourious Basterds.” Our lives would be much better if we knew whom we were dealing with upfront.

--They are pathological liars; when they are committing acts that harm the greater good of society, they never tell the truth, even if they are caught in a lie. To this day, Dick Cheney and Donald Rumsfeld and their lackeys still deny that the Iraq war was about oil, despite all evidence to the contrary.

--They have no remorse or guilt, regardless of how heinous their actions are. When recently asked if he would do anything differently, if he had to do it all over again, Cheney responded, “No.”

--They lack empathy and are callous in their treatment of others. Mitt Romney dismissed 47% of the country with one glib comment.

--They are contemptuous of those who seek to understand them. One of Allen Dulles’s protégés, Frank Wisner, head of the CIA’s Operation Mockingbird in the 1950s, once famously bragged, “The press claims to be free and open in America. But they are nothing but my personal puppets. I can pull any string I want and they will follow along.”

--They do not perceive that anything is wrong with them. Even if they are proven wrong, and even if all about them acknowledge their wrongdoing, the sociopath will never admit to wrongdoing. See Dick Cheney quote above.

--They are authoritarians; in many cases, they were raised in authoritarian homes where the appearance of uniformity and conformity far outweighed love, compassion, empathy, and charity as laudable qualities. Henry Kissinger once said of Richard Nixon (a raging sociopath), “Imagine what he could have been if anyone had ever loved him.”

--They are secretive; at all costs they strive to keep their true behaviors and thoughts hidden. Allen and Foster Dulles, Dick Cheney, Donald Rumsfeld, George Bush, Richard Nixon, and Oliver North were nothing if not secretive.

--They are paranoid. Can you imagine anyone more paranoid than Dick Nixon?

--They diligently present a “normal” outward appearance when engaging others. This is what confounds us about all sociopaths. Usually we don’t unmask them until it is too late.

--They experience pleasure from enslaving their victims. And all people they encounter are potential victims, even loved ones. “Loved ones” is a misnomer, because sociopaths are incapable of love. Again, Dick Cheney is the perfect example of someone who seemed to derive pleasure from inflicting pain. Witness the detainees at Guantanamo. Cheney does not consider what he did torture, yet a 600-page nonpartisan report says he did exactly that.

--When they collaborate, they feed off one another, and their actions become even more diabolical. No better example of this than the Cheney-Rumsfeld partnerships during the two Bush presidencies.

http://www.amazon.com/Presidents-Mortician-Tim-Fleming/dp/098882907X

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‘Stereotyping Poor Families Is Not The Answer’

Iain Duncan Smith has been criticised for saying some poor parents will spend money on alcohol and drugs rather than their children.

In a keynote speech, Mr Duncan Smith called for a new "multidimensional measure" of child poverty to operate alongside the existing income-based measure, to better reflect the reality of children's lives.

Speaking at the Kids Company charity in London, he argued that there was too much focus on moving families over an "arbitrary poverty line" without a proper understanding of the real problems they were facing.

"For a poor family where the parents are suffering from addiction, giving them an extra pound in benefits might officially move them over the poverty line. But increased income from welfare transfers will not address the reason they find themselves in difficulty in the first place," he said.

"Worse still, if it does little more than feed the parents' addiction, it may leave the family more dependent not less, resulting in poor social outcomes and still deeper entrenchment. What such a family needs is that we treat the cause of their hardship - the drug addiction itself."

But Matthew Reed, the chief executive of the Children’s Society, accused Duncan Smith of peddling a "fiction" on poverty.

“Millions of children up and down this country are living in poverty because their families do not have enough money to live on, access to decent housing or affordable childcare," he said.

"Let’s separate fact from fiction. The vast majority of families in poverty are struggling because they can’t afford the basics - not because they are wasting cash on drink and drugs.

"Most of these children are in low-income working families. We know from our extensive work with families that parents are doing their very best. Every day they are making harsh choices between heating their home, buying school shoes or putting a hot meal on the table.

"Stereotyping children and families struggling to make ends meet is not the answer."

He added: "Cuts to housing benefit, council tax benefit and other key support – together with proposals to cap benefit increases for the next three years - will plunge even more families into poverty. The government needs to take immediate action to end child poverty once and for all."

A survey commissioned by the Department for Work and Pensions published today revealed that the public believe a child having parents who are addicted to drugs or alcohol is the most important factor in causing poverty. A child’s family not having enough income was rated as only the fourth most important.

Rhian Beynon of Family Action said: "Iain Duncan Smith must not sideline income poverty. Money matters desperately to the families we support. Having enough income means food on the table and money in the meter.

"We already have a child poverty measure - changing the goal posts will not benefit those families in and out of work struggling to keep their heads above water."

Claudia Wood of the think tank Demos added: "New poverty measures have to be effective at tackling poverty, and a policy that only focuses on the small minority of people with drug and alcohol addiction ignores the majority in need."

Earlier on HuffPost:

Friday Humor: Miniature Predator Drone Goes On Sale To Bipolar Public Reception

Just because there is a superficially-pacifist, yet supraficially genocidal, dictatorially-inclined egomaniac in every one of us, the moment the Maisto Fresh Metal Tailwinds 1:97 Scale Die Cast United States Military Aircraft - US Air Force Medium Altitude, Long Endurance, Unmanned Aerial Vehicle (UAV) RQ-1 Predator went on loss at Amazon (we would say sale, but that would imply some probability of profit, which as even the hotdog guy, knows is never going to happen at AMZN), everyone scrambled to buy one.

However, only those first in line got one: everyone else was greeted by a "Currently unavailable. We don't know when or if this item will be back in stock" sign. So what does one do: what one should have done in the first place before going for the one impulse purchase that can murder innocent children half way around the world courtesy of the latest iPad app "iKiller": read the customer reviews of course.

Below is a broad sample of the rather bipolar main street America response when faced with the opportunity of having the same great power, if not so great - or any - responsibility, as is given, by some 25% of the population (factoring for the 55% or so who don't vote) to the president of the USA, even if on a 1:97 scale.

First the big thumbs up:

By Raini Pachak

This is the best toy ever. Finally, I can pretend that I'm a winner of the Nobel Peace Prize!
It's like I'm sitting right there in the White House with my very own kill list!

By Rambone

My son is very interested in joining the Imperial forces when he grows up. He says he's not sure if he wants to help police the homeland or if he wants to invade foreign countries. So I thought a new Predator drone toy would be a nice gift for him. These drones are used both domestically and internationally, to spy on people and assassinate them at the Emperor's discretion. He just loves flying his drone around our house, dropping Hellfire missiles on Scruffy, our dog. He kept saying that Scruffy was a terror suspect and needed to be taken out. I asked him if Scruffy should get a trial first, and he quoted Lindsay Graham, Imperial Senator: "Shut up Scruffy, you don't get a trial!" I was so proud. I think I'll buy him some video games that promote martial law for Christmas.

By Maurice Cobbs

You've had a busy play day - You've wiretapped Mom's cell phone and e-mail without a warrant, you've indefinitely detained your little brother Timmy in the linen closet without trial, and you've confiscated all the Super-Soakers from the neighborhood children (after all, why does any kid - besides you, of course - even NEED a Super-Soaker for self-defense? A regular water pistol should be enough). What do you do for an encore?

That's where the US Air Force Medium Altitude, Long Endurance, Unmanned Aerial Vehicle (UAV) RQ-1 Predator from Maisto comes in. Let's say that Dad has been labeled a terrorist in secret through your disposition matrix. Rather than just arrest him and go through the hassle of trying and convicting him in a court of law, and having to fool with all those terrorist-loving Constitutional protections, you can just use one of these flying death robots to assassinate him! Remember, due process and oversight are for sissies. Plus, you get the added bonus of taking out potential terrorists before they've even done anything - estimates have determined that you can kill up to 49 potential future terrorists of any age for every confirmed terrorist you kill, and with the innovative 'double-tap' option, you can even kill a few terrorist first responders, preventing them from committing terrorist acts like helping the wounded and rescuing survivors trapped in the rubble. Don't let Dad get away with anti-American activities! Show him who's boss, whether he's at a wedding, a funeral, or just having his morning coffee. Sow fear and carnage in your wake! Win a Nobel Peace Prize and be declared Time Magazine's Person of the Year - Twice!

This goes well with the Maisto Extraordinary Rendition playset, by the way - which gives you all the tools you need to kidnap the family pet and take him for interrogation at a neighbor's house, where the rules of the Geneva Convention may not apply. Loads of fun!

By Jonathan D

Brown people around the world beware! Always ready to drop a few Hellfire's worth of freedom on unsuspecting civilian gatherings in various middle eastern nations, this Predator model is the perfect addition to any toy collection. Instead of just talking with your children about how our country conducts diplomacy by assassinating people we don't like along with whatever innocent bystanders may be in the blast radius, this Predator model allows for creative play acting and recreation of the murder scene itself. I was sorely disappointed to find out that it's now out of stock and I can't buy dozens more to add to the realism.

By Mr. Ronald M. Ayers

Like most children, my sons and daughters fantasize a lot about killing, usually their teachers and/or other kids at school. For a modest amount of money this toy allows them to take their fantasies to a new level. Instead of using a toy gun or knife or even a video game, this baby takes their blood lust over the top. Now, with a fleet of killer drones, mass genocide of third world peoples is possible for my little ones. As others have noted, a lack of bloodied bodies to go along with the drone is a problem. Perhaps the maker will see fit to remedy that problem in the future.

BTW, I first found about about the toy drones through my children's therapist. The kids have been torturing kittens and puppies and the wife and I sent them to a headshrinker to try to get them to transfer their murderous impulses to third world humans. Their therapist recommended this little gem of a toy. The kids are so excited by it, my son is even talking about joining the military when he turns 18 just so he can pilot a drone. Thank you Amazon for making this excellent product available so kids can experience the glory of killing.

By holmestim

I enthusiastically await the prospects of teaching my grandchildren how to promote Democracy from the comfort of my Desktop! Nothing like making church parking lots out of wedding parties and family events!

By Vanessa Carlisle

I bought this for my son and he spent countless, blissful hours simulating massacres of weddings, funerals, and other family gatherings of brown skinned foreigners! He even realized that if he circled the drone back around on the first responders, his effective kill rate soared! Neat-o!

Educationally, this toy can't be beat - inculcating a predilection for indiscriminate, imperialist violence against non-combatants from oppressed and marginalized communities is precisely in accordance with truly "American values!"

By Trilobyte

This is an awesome toy to instill a sense of exploration in your child. Geography of foreign lands will come naturally as you and your child act out imaginary strikes on Pakistan, Afghanistan, Yemen, Syria, Libya, and many more! Combined with the optional targets, the wedding,the funeral and the dusty road with an American citizen and his son, you can act out these scenarios very realistically! Teaching the moral superiority and callous disregard for other people and nations has never been easier.

By Julia Nelson

The Maisto replica RQ-1 Predator satisfies the requirement for realism, accuracy and detail in manufacture alongside excellent of playability. The blister pack reminds us of the danger of choking, this attention to detail (especially when the Predator is used in dusty countries in the troubled Middle east) suggests that the Maisto marketing department have really done their homework. I bought ten of these for my boy because, as he so rightly says, "So many countries, so little time". He hasn't played with his Matchbox V2 Buzz Bomb once since he became a "Drone Operator". It's given him a real grasp of imperialism, murder of innocents, the art of war and the complex geography of the Middle East. Thank You Maisto, we look forward to your Cluster Bomb, Land Mine and Gas canister multi pack with anticipation hitherto unseen in the world of play.

By Gordon M. Wagner

The coolest detail about this toy are the small body fragments you can litter around your target area following a drone missile strike on a wedding party. THEN (this is where the real fun begins) you circle back in an hour and fire MORE missiles at the people rescuing survivors and mourning the dead! Sure if another country did such a thing we'd decry it as heinous terrorism, but when good Ol' Uncle Sam's finger is on the joystick, you can bet that we call what we hit our target, no matter what.

Seriously? This toy is inappropriate and ought to be removed from Amazon as soon as possible. If it hasn't occurred to you, "drone" murder is still murder. As in "war crime". As in "international tribunal".

ORDER NOW and get FREE packs of Cluster Bombs (banned by all countries except the US and Israel) as well as the latest 2013 assortment of Land Mines (also banned by international treaty except for the US and Israel).

By redpleb

Nothing teaches your kids about the fact that they may one day be the target of an extra-judicious execution by executive order via a flying death robot from the movie Terminator, then this beautiful piece of replica toy war crimes.

By Michael Liszewski

This model is a 100% accurate scale model, and you will likely be thrilled that the "for ages 3 and up" disclaimer only applies to those remotely flying the Predator, not its potential victims.

... and those not quite so enthusiastic:

By Defenestrate

I thought if I bought this, I could kill random people without facing justice. It doesn't work! It won't kill people, not even brown ones.

THIS IS AN EDUCATIONAL TOY AND I HOPE TO GOD THAT MY FELLOW MURCUN SHEEPLE LEARN SOMETHING FROM IT.

 

By sandinista death squad "sandinista death squad"

I thought this would come with "baseball cards" of American civilians living in other countries that I could target for termination, I had to satisfy myself by destroying everything in my house and giving up on everything I ever believed in, liberty, freedom, and due process!

By HDTV shopper "HDTV"

Whenever my 7-year-old takes his dose of psychotropic medication, he's always obsessed with First Person Shooter videogames. Boy, I want to thank Amazon for their patriotic act of making this MALE (awesome friggin' acronym, Maisto!) unmanned aerial vehicle (UAV) available. At first, when little Tommy unwrapped this gift from Santa, he said, "this blows," but when I informed him that this would give him an opportunity to blow up people "Who Hate Us For Our Freedoms," well, little Tommy just lit up.

Now, father and son sit in Little Tommy's tree fort, pretending we're in a 63-degree military installation in Tampa or New Mexico, toggling a joystick and doing some real "collateral damage" on women and children in Pakistan, Afghanistan or Yemen! It's a true bonding experience for father and son -- we're Real American Heroes, making up our own kill list and angling for that Nobel Peace Prize we so richly deserve for bringing Democracy to The Middle East and Africa! [...]

Plus, the real bonus is that I'm preparing Little Tommy for a future career. Let's face it -- our Congress has shipped all our manufacturing jobs to China, and Little Tommy is hopelessly addicted to psychotropic medication. His brain is fried, OK? So I thought he might have a great future with the TSA, groping other 7-year-olds or grandmothers at unconstitutional checkpoints, but considering there will be 30,000 REAL DRONES OVER THE SKIES OF THE U. S. OF A. by 2015, Little Tommy is actually preparing himself for the career of a lifetime by practicing to take out his fellow American citizens with a Hellfire missle. Hoowah! www. nowtheendbegins .com/blog/?p=8504

Look, I listen closely to everything the Brit Piers Morgan tells me. The Second Amendment right to own firearms is evil. So I've destroyed all of Little Tommy's toy guns. But piloting a killer drone is freaking awesome. I highly recommend that all you sheeple step up like me and be REAL American patriots. Turn in your guns, eat your GMO foods, drink your fluoride water, breathe in your chemtrails and BUY YOUR BOYS THIS AWESOME, AWESOME TOY for your kid! Remember -- they hate us for our freedoms. So we need to kill thousands of brown people we don't know remotely with the push of a button. Baba booey, y'all!

By Barry D. Berns

What's next, depleted uranium Play-doh? Yes, let's teach our children that endless war for the benefit of billionaire defense contractors and bankers is okay, that it's okay to kill unarmed civilians as long as it's in the name of "Democracy," that murdering innocent men, women and children is okay as long as it's the government telling you to murder them. I won't mention 9/11 "conspiracies," but isn't it obvious to all by now that war is a racket? Only the mega-rich profit from war while everyone else either suffers or dies. Oh yeah, let's arm and install those evil terrorists in Libya and Syria while we irradiate and/or sexually molest people at our airports to protect us from them. No wonder Al Qaeda has been called "Al CIA Duh." Of course, you need a nebulous "enemy" or boogeyman to fight an unending war. Orwell's "1984" was not supposed to be a book of prophecy.

In a word, disgusting.

By USS LIBERTY

My Ritalin®-fueled first grade son thought it would be so much fun to play "Drop the Hellfire missiles". But when he brought it to school, the taxpayer-funded armed guard overheard him say the word "Hellfire" during recess. The principal immediately assigned him to indefinite detention. Then she called the media, and shamed him at the national level. Now he's depressed and taking Zoloft®. Where did we go wrong? Oh well, at least my new husband and I can finally take that 7 million dollar vacation to Hawai'i! Talk about change... "Yes we did!"

By Gk Harris

A toy but it's still quite dangerous. My 7-year-old son launched this in the school playground and hit a Pakistani kid in the eye. These things just can't help themselves.

By Chai T. "texaschai

Disappointed in the price of this toy. Thought it would be paid for with my hard-working, middle-class, high tax rate taxes as the real ones are, but apparently not! Of course I'm kidding. There is no middle-class anymore.

By zc2012

DO NOT BUY THIS TOY! JUST MOVE TO PAKISTAN AND YOU WILL SEE THEM DROPPING BOMBS ON YOU.. AND IT ITS FREE! WELL NOT FREE... JUST PAID FOR BY THE AMERICAN TAXPAYER.

h/t Redpill

Your rating: None Average: 5 (15 votes)

Letter to a Reporter

A reporter, who will here remain nameless, had asked me little more than a year ago to comment on the question of “jobs” available to philosophy majors.  I don’t think she liked my response, which was in the form of a long letter, but I think it may be appropriate for this forum, so here it is, in its entirety—Lewis Gordon

***


Here are my thoughts.   The formulation of “the job market” confuses the question of education with vocational training.  If it were a matter of simply training people for jobs, a stratified society with assembly-line employment would be a better social arrangement.  In truth, the job situation is a function of artificial scarcity because of misguided, often neurotic, and very contradictory efforts. 

The first is this silly notion of insisting on the private sector as the sole or at least fundamental source of employment.   The goal of the private sector is profit, not employment, so regardless of training, no one would have job options in that sector without necessity being imposed on it, for, again, the goal there is to make profits, which by definition requires lowering costs, including minimizing the hiring of workers, who are regarded in the private sector more as a necessary evil than subjects of obligation. 

On the other hand, the reason for the public sector is the common good (however that is defined), and if that good necessitates employment, it should, in effect, provide that, just as public universities, we should remember, were created through the commitment to and the necessity of an educated citizenry.   To insist, then, that government abrogates its responsibility for the public good—which includes the production of public employment where there are no or at least few private ones—means, then, a stalemate situation of unemployment.

Although there are detractors to the notion of government filling employment gaps, I recommend consulting this community of economist who argue for full employment in response to the naysayers:


I mention all this because the question of the humanities depends on understanding the distinction between education and certification.   The latter is more linked to employment opportunities; the former pertains to long-term questions `of quality of life.  Philosophy is rooted in the activities that led to the emergence of schooling and higher education in the first place.  It is, in its origins, from ancient understandings of free time (
scholē) to devote to the cultivation of one’s humanity; liberated from the necessities of simply staying alive, the view was that one could then dedicate one’s time to uniquely human activities.  In effect, then, the humanities are about learning to be more human.

Students who study philosophy have historically taken many paths.  Some become teachers (primary through secondary), others continue their education and become college or university professors.   And still others go on to the professional schools (e.g., law or business), and there are those who enter other professions, as my colleague Don Baxter at the University of Connecticut outlined in a report, “What Can I Do with a Philosophy Degree?”:

In France, the most prestigious professional path for many is to achieve a teaching degree in philosophy (especially at the École normale supérieure and the Sorbonne) and then move on to other disciplines while bringing that knowledge to them.

In the past, it was understood that humanities degrees offered an application pool of people with strong thinking skills and cultivated reflections on maturity and ethical life—in s