Tuesday 9 August 2011

I noticed this comment from Malcolm G on Political Betting. I hope he won’t mind me copying it here. It sums up for me just how completely useless the government in London is. He’s talking about the riots in English cities and Cameron’s (and I suppose other's) reaction to them, dithering about whether or not to come back from holiday:

"It once again shows how inadequate Cameron is and what a pathetic leader he is, no matter what happens he is always behind the curve and forced to act. He seems to have no clue and whilst he can talk plenty it looks like he would have trouble running a bath never mind a country. Having surrounded himself with a bunch of similar types who will have been unlikely to have to even dress themselves so far in their lives never mind understand what is going on in the world, we seem to lurch from gaff to gaff. This lot are useless."

The unfortunate thing for Londoners is that the Metropolitan Police is similarly cursed with leadership you wouldn’t wish on a playgroup.

Cameron’s other great gaffe this week, rather less important perhaps, and one that should never have reached the press in my opinion, was the Italian café incident. He made his order at the bar and asked the girl to bring it out to the terrace. She replied that she was too busy, and he declined to leave a tip (which he was entitled to do if he thought the service substandard). However, ever the PR man, when he heard that the matter had caused what we call a “stooshie” in Scotland (a bit of bother), he went back, tipped her massively and had his photograph taken with her. Awwww. Of course, firstly, it is quite possible that, like in some French cafés, you will only be waiter served if you sit inside; if you sit on the terrace, its self service, so he may have been asking a busy barmaid to do something that was not her job. However, that may not be the case in Italy, at least in the upmarket cafés the likes of Cameron would frequent, and he may have been correct not to tip. If so, why did he go back and do a PR exercise? Dithering idiot.

Two questions on the financial crises in the world, that this economics illiterate finds puzzling :

Firstly, who or what is Standard and Poor? They are one of three credit agencies, so if they downgraded the US economy to AA+, why haven’t the other two? Who is right? On the basis of two to one seems to be that S&P isn’t! Does it have an agenda?

Secondly, if the € is in such a mess, how come it is more or less holding its own against the £?


  1. David Cameron’s “crisis what crisis?” approach is yet again a total disaster. Of course when you take away the little that the poorest in society have while the rich swan around untouched it is hard not to sympathise with them if they kick off, even while deploring mindless violence and wanton destruction. What has happened to the Big Society? Doing great in the rich areas, riots in the poor. At least Mrs Thatcher’s Tory government took years to get to this stage not months.

  2. Munguin:

    I heard an interesting factoid the other day on the radio. The average pension for a director of a FTSE 100 company is £170,000 a year.

    The average pension for a member of staff of a FTSE 100 company is £6,500 a year.

    Add to that the state pension of around £5,000. And the poor guy is still paying tax on £4,500 of it.

    What a lovely life to look forward to....for some

    Says it all.

  3. Firstly, who or what is Standard and Poor? They are one of three credit agencies, so if they downgraded the US economy to AA+, why haven’t the other two? Who is right? On the basis of two to one seems to be that S&P isn’t! Does it have an agenda?

    Friends of the Bankers just like MPs governing themselves, The IPCC checking up on the media and the police.... you understand our full and open democracy. stinks!

  4. Hmmm. How did I know it would be corrupt?

  5. Standard and Poor's has come under stinging criticism here in the states. Not really surprising I suppose, but actually warranted it seems to me.

    This is the credit rating agency that gave AAA ratings to the Collateralized Debt Obligations that brought down the world economy in 2008. More to the point today, they made a two trillion (with a T) dollar mistake in their calculation of future US debt. A mistake which was pointed out to them in a meeting at the Treasury Department before the announcement. They nevertheless proceeded to issue the downgrade based on a political rationale. The US Treasury then issued this statement:

    "The magnitude of this mistake - and the haste with which S&P changed its principal rationale for action when presented with this error - raises fundamental questions about the credibility and integrity of S&P's rating action."

    So perhaps China will now sell all its US Treasury bonds and load up on the sovereign debt of the AAA rated countries such as France and Austria......or maybe more likely Luxembourg and Liechtenstein. Maybe for that matter the AAA debt of Guernsey and the Isle of Man.

    But S&P aside, it was after all a small group of Republican radicals in the House of Representatives combined with a significant failure of presidential leadership that let it happen.

    There was a good piece in the New York Times about the general mess in Washington. President Obama's televised statement Monday was so weak and uninspired....almost childish I thought....that it actually seemed to panic the stock market. He said "No matter what some agency may say, we've always been and always will be a triple-A country." Honest to God, the president of the United States said that...on television! Instead of simply firing the speech writer who wrote it.


  6. Thanks for that explanation, and the article link, Danny. I've often wondered about S&P, and just why so much hangs on its pronouncements.

    It had occurred to me that it is the credit rating company of which we hear the most. And when the problems in Europe started, it seemed to precipitate, rather than reflect them. You couldn't help but wonder if there was some political agenda there.

    To have made such a massive error in its calculations of US debt and yet to have such influence over billions on the stock markets, which will reflect in people's pensions and companies' survival is something that surely needs investigating.

    It's true that we haven't heard anyone offer to pay more tax, but Danny, this is the kind of thing we hear in the UK when they suggest another universal benefit to be cut. And no one believes a word of it.

    'Why do I get a free bus pass when I am 60. I don't need it... it's a nonsense that the taxpayer subsidises rich people to use the bus.' Or, 'I don't need a winter fuel subsidy. Why...blah...'

    Of course it never seems to occur to them that they don't need to use the bus pass; they could always pay their bus fare. They don't need to keep the money they are given to help older people pay their heating bills; they could send it back as a gift to the government, give it to a charity, or to an old person who lives on the breadline. Indeed the same applies to the niggardly state pension.

    But do they?

    So even if one of two rich people said, 'hey, why don't you tax us billionaires more heavily, we'll help out this great country of ours that we love so dearly', it would be in the sure and certain knowledge that it will never happen.

  7. Spot on Tris. The issue of increased tax revenues from the wealthy will figure prominently in the work of the Special Congressional Committee on debt reduction that was formed as part of the debt limit bill. All that will play out before the end of this year, and is already generating controversy over the makeup of the committee.

  8. Can you see there being an increase in taxes under the current cohabitation arrangement, Danny?

  9. It seems unlikely. The first struggle will be within the 12 member Special Congressional Committee (three from each chamber and each party) which has the task of negotiating additional large deficit reductions before the end of this year. The six Democrats on the committee will push for tax revenue increases in the mix. The six Republicans will oppose it. They could well deadlock. (Which would trigger large automatic spending reductions across the federal government.)

    Another bite at the revenue apple will occur in late 2012. The 2001 Bush tax cuts expire in January 2013 unless Congress acts to extend or modify them before the end of 2012. If Congress fails to act, the tax cuts expire and a large across-the-board tax increase automatically results. Obama will want to extend the cuts for all Americans except the wealthy. The GOP will want to extend them for the wealthy too. It'll be a big tax fight, late in an election year, maybe with a lame duck congress. It's anybody's guess how that will come out.

  10. Thanks again for the explanation Danny. It sounds like a real mess.