Lebanon's banks fine shocker!

Apparently the fact that Lebanon's banks are in fine financial order is some kind of shock.

I was not born in the Lebanon, nor am I Lebanese, but I grew up there, and I can tell you I am not surprised.

There are various articles in the media, like this in the Financial Times, and this on the BBC and Robert Fisk here, who asks this:

But someone needs to explain to me how this little Middle Eastern cabbage patch is bouncing along so happily amid the cyclones ripping through the world's economy.

The answer is of course simple. The Lebanese have been engaged in the business of banking, both national and international, contracting, both national though more frequently international and trade for something like 4,000 years. After a while you get the hand of it, and avoid tulips, radio shares, the dot com bubble and so on.

The Lebanese banking sector has been both strong, and trusted in western markets for as long as western markets have existed, even in times of war. I was there when people tried to rob banks of there cash and gold reserves. It didn't work.

Yet the Lebanese banking system works on few rules, like adequate liquidity and not buying into risky investments.

In fact the reality is that the Lebanese banking rules are so short that anyone could understand them, to the point where they can't be got around.

Crucially also Lebanon's banks are regulated by their central bank, like ours were until Gordon Brown became Chancellor of the exchequer. With 0 years experience at banking as against 4,000 years he handed over the regulation of our banks to the Financial Services Authority who look after insurance and assurance, and came up with 8,000 pages of regulation.

Brilliant.

The Bank of England's pointless interest rate cut

Many people have been calling for the Bank of England to cut interest rates, even after last months massive shocker of a 1.5% cut which I said was pointless when it happened.

Well, they have done it again, and cut interest rates by 1% to an all time low of 2% which has not been seen for 57 years. If it goes any lower it will be lower than since the creation of the bank.

It seems some people think that what the Bank of England does on interest rates is relevant.

It isn't. Not even a little bit.

If you don't believe me try lending money to a bank, offering good terms for how long they keep it, and see how much they are prepared to pay. You will find that it is considerably more than 2%, or even 3%. In fact it is more likely to be at the range of 4.5% to 6%.

It is also clear that the Bank of England has absolutely no intention of lending money to banks at 2% either, so where is this money going to come from?

It should be noted that UK lending institutions have since 2001 lent £700 billion more than they have in domestic deposits. Non domestic lenders must think we are mad if we think they are going to buy a rapidly devaluing pound with high inflation to lend at a very low rate which will see their original capital devalued. In essence we are asking for people to give us money on a non commercial basis.

What is more savers are being savaged.

Here is a thought, going against just about every other commentator.

Put interest rates up, so that people are prepared to lend to inflation + 1%.

I know lots of people will howl, but the problem we have right now is less that banks are charging lots for money, and far more that they just do not have the money to lend, especially as lenders can get a far better rate lending to our government which is about to swallow a massive amount of cash.

The BBC has this.

Harriet Harman refuses to back speaker Martin!

I have just watched a clip of an interview from tonights News Night where Jeremy Paxman asked Harriet Harman if she had confidence in the Speaker Michael Martin or the Sergeant at Arms Jill Pays.

She refused to do so!

Oh dear!

I shall of course be watching at 10:30!

Greengate, Jill Pays, Speaker Martin and the Police

The Speaker of the House of Commons, Michael Martin made a statement in the house of commons today which as Iain Dale notes tends to lead to more questions than it gives answers.

Lets look at the arguments.

No body is above the law!

Rubbish. How is the archery practice going, and how many hackney carriages carry a bale of hay? Further more the police and other emergency services get away with speeding when on an emergency.

Clearly there are circumstances where the law is not applied because it is ridiculous or overlooked in the public interest.

Firstly many parliamentarians, and indeed many journalists and commentators have cited parliamentary privilege, and its breach in this case. This is not some antiquated old rule that allows members of parliament to do what ever they want, it is a protection that parliament has so that it can do its job of protecting people and their liberties from an over mighty state. The following resolution is passed before each session of parliament:

Any action taken by either a Member of Parliament or a stranger which obstructs or impedes either Parliament in the performance of its functions, or its Members or staff in the performance of their duties, is a contempt of Parliament. Examples of contempt include giving false evidence to a parliamentary committee, threatening a Member of Parliament, forgery of documents and attempting to bribe members.

This law clearly protects parliament and its members, not in all circumstances but where they are carrying out their duty. The main duties of an MP are to represent their constituents and to hold the government to account. The later is what concerns us here, and that is what Damian Green was doing. Alas it is frequently the case that a department that is not fit for purpose, such as the Home Office does not try to fix it self but hide its failings instead. This is where leaks come in.

The crime it is alleged has been committed is that of misconduct in public office, or aiding abetting conspiring to cause misconduct in public office, defined in CPS guidance as:

a) A public officer acting as such.

b) Wilfully neglects to perform his duty and/or wilfully misconducts himself.

c) To such a degree as to amount to an abuse of the public's trust in the office holder.

d) Without reasonable excuse or justification.

Now where do we start? If you read this article on the subject here on wikicrimeline and this case here where the Attorney general sought the advice of the court, it is clear that no crime has been committed, further more that the police would have established such by merely asking what had been leaked and where it had turned up.

In order for the crime to be committed it has to in effect injure the public interest as well as falling well below the standards of the office holder. Rather obviously the leaks which are complained about are in the public interest and in fact have caused to government to fix things which it knew were broken but sought to hide.

Even if you could accuse Chris Galley of the offence (which you can't because you can't show he injured the public interest) then we have the question of parliamentary privilege. This protects an MP from interference in his job as an MP amongst other things, and in this case the job of holding the government to account. Clearly if the government is trying to hide its failings then the only way to get hold of information is via leaks. It is the legitimate business of parliament and there have been leaks for as long as there has been government.

It gets worse for the government because the cases involving leaks to the press have all either been lost by the Crown on appeal or thrown out before the jury trial started.

Some say "Ah but that does not put him above the law!" well, I say cobblers. It does not put him above the law as in he can ignore it, but laws apply differently to different classes of people. The order which states parliamentary privilege gets passed every year by parliament and so one would have thought it superseded the common law offence which we are talking about.

Then some even cite the case of Lord Cochrane who they say was arrested whilst sitting on the government benches supposedly to prove that parliamentary privilege does not make you immune from the law. The argument is sophistry at its very best. Lord Cochrane was arrested after having escaped from prison having been found guilty of fraud. It can't be said that the criminal act of which he was accused was part of the legitimate business of a parliamentarian so obviously the question of parliamentary privilege did not arise for it to be put aside.

Greengate, Harriet Harman plans a secret meeting!

Apparently Harriet Harman, Jacqui Smith and Speaker Michael Martin (along with Jill Pays sergeant at arms and others) are having a secret meeting tomorrow to discuss Speaker Martin's statement about the arrest of Damian Green.

Needles to say that is highly irregular as it includes no members of opposition parties.

All this we know from a leaked email sent to the Conservatives.

Iain Dale has this.

Sharon Shoesmith sacked!

Sharon Shoesmith, Haringey head of children's services has been sacked with immediate effect according to Ed Balls the children's minister, after what he has described as a devastating interim report into the death of baby P, who as you will know died of persistent horrific long term abuse.

Makes you kind of glad she did not resign. I do hope she does not get some kind of massive payoff.

I am also pleased, that unlike Gordon Brown, Ed Balls has not tried to use this case for party political advantage but seems to have done the right thing.

The BBC has this.

More later when the situation is clearer.

The Political implications of the arrest of Damian Green

I note that the political implications of the arrest of Damian Green are growing by the hour.

It started as outright horror on the opposition benches, with both David Cameron and Nick Clegg coming out strongly, followed by people like Tony Benn (Viscount Stansgate as was).

Well over the weekend whilst there has been briefing by the police against Damian Green (who is going to investigate that leak?) and cobblers talked by the Alleged Home Secretary Jacqui Smith we have had some interesting cover been broken by members of the cabinet.

We have had Harriet Harman, Jack Straw coming out against, whilst the speaker Michael Martin will make a statement on Wednesday. Now even Gordon Brown the Prime minister has come out and said there may need to be an inquiry.

The police are looking very bad as is Jacqui Smith.

The BBC has this.

Damien Green and the Police's contempt of Parliament

In order for Parliament to hold the executive to account it needs to operate without fear and also needs to be given information which the executive does not want it to hear. In other words leaks. They are part and parcel of parliament holding government to account.

There is an offence of Contempt of Parliament which is defined as (Also see here):

Any action taken by either a Member of Parliament or a stranger which obstructs or impedes either Parliament in the performance of its functions, or its Members or staff in the performance of their duties, is a contempt of Parliament. Examples of contempt include giving false evidence to a parliamentary committee, threatening a Member of Parliament, forgery of documents and attempting to bribe members.

Clearly as getting leaks and using them to hold government to account are part of parliaments daily business then interfering with that is contempt of parliament.

The police officers involved need to be arrested and brought before parliament.

The speaker, Michael Martin also needs to be relieved of his position as he has clearly failed to protect parliament.

Labour bloggers are apparently talking all sorts of twaddle on the subject. Consider this from Daniel Finkelstein on what was leaked to Gordon Brown when he was in opposition and ask yourself the question; would you want that stifled? Would that be in the interests of democracy?

Iain Dale also has this, Dizzy has this and Guido has this. The Guardian also has this.

Stasi arrest Damien Green over telling the truth!

After in sheer disbelief looking around for a bit and reading various reports it appears the East German Secret Police (Commissioner, New Labour Commissar Comrade Ian Blaire) have arrested Damien Green the Conservative Shadow immigration minister for the heinous crime of having proof the government are telling lie after lie after lie after lie shoved in his hand and quite possibly telling people about it in an attempt to hold the executive to account.

The speaker of the House of Commons, Michael Martin allowed the police to search his house of commons office.

This is all unheard of stuff in this country and is reminiscent of all sorts of totalitarian regimes, such as Hitler's, Stalin's or indeed East Germany's/ (Oh, and of course, the EU).

Be afraid, very afraid. Or just stand up and say NO!

The BBC has this, the Telegraph has this. Iain Dale has this and Guido has this.

Woolworths to be saved?

Last night we received news that Woolworths was being put into administration, broken by the burden of excessive debt.

I felt very sorry about that, not least because up to 30,000 jobs could be lost, but also because I regularly buy things there and always have. Last night I was fitting an external draught excluder in the dark. I used a battery powered rechargeable fluorescent lamp bought from Woolworths several years ago. Still works fine!

The good news is that Woolworths might well be rescued! Good.

The administrator will keep Woolworths open until after Christmas, but with a bit of luck it will be rescued by then.

The BBC has this.

What I could have done with an extra £100 a month!

It is I have to say fascinating talking to real people of all parties, including those running businesses, middle and low earners and hard bitten old Labour types.

None of them can see much point in what this government is proposing to do with VAT.

However, looking at the relative costs, both Bob Piper (not new Labour, not old Labour, just Labour), the Adam Smith institute, Iain Dale and indeed I agree on is that it would be oh so much better just to raise personal income tax allowances, for the same cost as the VAT giveaway to £10,000 per year giving every wage earner £66 per month, or for the cost of the whole package over £100 per month.

It would have lifted millions out of tax and really incentevised work.

I could really do with the money. I wont see any of the VAT decrease, but i would see cash in my pocket, to do with as I want.

Now wouldn't that be good?

VAT cut wont work and wont help the poor

Alistair Darling's pre budget report is out and it is nothing of the sort it is an emergency budget as the debt bubble comes home to roost.

The VAT cut wont work in that it will not sufficiently boost spending.

It crucially will do very little for middle and low income earners whose budgets are already stretched as they already have little spare to spend on items on which you pay VAT that has not also been clawed back in duty raises.

Consider the average family budget. What is it spent on at the moment and why is it squeezed? Well lets look at the top items.

1. Housing costs (rent or mortgage) no VAT.
2. Food. Mostly no VAT (Special cases luxury foods such as biscuits not essential ones like cakes, go figure.)
3. Gas and electricity. No VAT reduction as VAT is only charged at 5%.
4. Transport costs. Fuel VAT cuts will be made up for by increases in duty.
5. Beer, wine and cigarettes. All VAT reductions to be more than clawed back.

So there you have it. Any presents most of us can buy this Christmas will be priced at something like £9.99, or some variant there of. Can you imagine that dropping to £9.77? No, me neither. (That said all praise to those retailers who do use those sort of numbers o show they are doing there bit!)

What is more as massive shop discounts have not brought about nirvana what will a paltry discount do?

Now, what will help. Well when lower household gas and electric bills turn up they will relieve the pressure on hard pressed households and may even make them feel good. Rises in tax credits will help for those who claim them as well.

All in all it would have made much more sense to cut income tax though.

The BBC has this.

National Insurance and Fuel to rise!

Is Alistair Darling having a laugh?

National insurance to rise again and petrol and deisel duty to rise to take account of drop in VAT!

National insurance is in effect a tax on jobs!

What a git!

Pound set to fall as government promises to borrow out of recession!

The pound will fall during the course of the day as the markets work out that this government is going to try to borrow its way out of recession.

Ignore the comments about all governments around the world doing the same, its tosh. The Chinese have stacks of cash so are not borrowing and no serious country is looking at budget deficits as big as ours.

Expect the pound to hit a 52 week low today, and for the record it would have to go below $1.45.5 to £1.

The BBC has this on the current rate of the pound.

A Super Tax for the rich at 45%!

Apparently the Pre Budget report (or really a mini/maxi budget with brown pants) will say there will be a new super tax rate of 45% to be brought in after the next election.

Ha ha ha ha ha ha ha ha ha!

Is that the best they can do?

Obviously they will be playing this as "making the tax system fairer" except it won't. If you get get the super rich to pay 20% tax that would make the system fairer, but in fact they avoid it. (more on that later).

So it will make a challenge in the politics of the next election. Labour will go down the Old Labour lines. The reality though is this, this tax increase will bring in £2.5 billion a year compared to a budget deficit that will have risen to an eye watering £150 billion a year notwithstanding the fact that we appear to have guaranteed the banks to a level of 400% of GDP.

Expect there to be pressure on the pound tomorrow.

The BBC has this and the Times has this.

PS.

Had this been an honourable government someone would have resigned over these leaks. They won't, it is not an honourable government.

VAT cut to 15% but will it work?

The broadsheets today are filled with "speculation" that VAT will be cut to 15%, the lowest that being in the EU allows.

Of course were this true, any chancellor with honour would resign, but then new Labour chancellors have been leaking budget information since 1997 and have no honour so don't expect that.

However moving on the the substantive point. Will it work?

No.

Well, what it may do is drive up consumer spending, mostly on imports, but only for a while. It will be a bit like waking up in the morning with a massive hangover then having a large glass of whiskey to get drunk again. That may get you over the hangover for a bit, but you still have to get over the hangover.

The hangover here of course is massive debt. Consumer debt has tripled under New Labour, with our banks lending £700 billion more in loans than they had in deposits. That deficit is a massive problem.

On top of this government is borrowing hand over fist in some kind of weird attempt to have a bit of a sobering drink. It won't work.

The fact is that we have a millstone of debt that has funded an asset boom around our necks. This will need to be paid off and this will take an age. During that time we will face lower growth than we otherwise would have done.

The Times on Sunday have this, The Observer has this, the Telegraph has this, the BBC has this and the Spectator Coffee House blog has this.

John Sergeant forced of Strictly come dancing

I have to say I am gutted that John Sergeant has been forced off strictly come dancing, and it is clear to me that it is the shows loss not his.

John is popular with the public.

Some people say he is his own man, but it is clear from what he said that he is feeling the animosity of both the judges and other contestants, and that is his sole reason for leaving.

That is wrong. The rules are that the public get a say. Thats it. If the judges and other contestants don't like it they should go.

The BBC has this and this.

The BNP members list leak

This has been making big news. The BNP have expressed concern whilst Labour are expressing some delight as BNP activists get witch hunted out of jobs.

I do not approve of the BNP, but this is wrong and smacks of McCarthyism.

What is worse though is that Labour are very wrong if they think it is good for them. It will in fact grow support for the BNP which, as the BNP is a left wing party, is strongest in Labour areas.

The BBC has this.

Tax cuts should be for life, not just for Christmas!

It has to be said that is one hell of a soundbite, and indeed David Cameron has a point.

Here is the scenario:

You work, you get given a tax cut. It will last one year or maybe two. Taxes will rise after that. What would you do?

What is more what will the money markets do? They will know that there will be but a temporary boost to the economy and crucially they will know that nothing is yet being done to solve the debt bubble both private and public that there is in the UK economy.

In short the markets will tank. They are currently in headless chicken mode already.

The BBC has this on the debate.

So what is happening to the pound?

So what of George Osbourne's reckless undermining of the pound that Labour were so concerned about?

Well as Guido points out, the pound has rallied. When I wrote yesterday the pound was at $1.47, and had in the last few days hit a low of $1.45. Now it is currently trading at $1.50325 up some 3 cents since yesterday. (Current price is here)

Quite impressive and clear proof that Labour were talking rot in saying that George Osbourne's comments may damage the pound. In fact the way the reporting went over the weekend changed and started to highlight both the drop in the pound over three months and the level of the current budget deficit in such a way as to force to government to stop saying they will borrow and spend, replacing that with affordable borrowing. In many ways that tone change may have helped today's rally and would not have happened without George Osbourne's efforts.

What will sink or save the pound though is the pre budget report next Monday. Then we will see how the markets view the government.