Michael Meacher MP

2012, even just a year ago, was the year when things began to get steadily better.   It’s amazing what a year can do.    We can now see 2012 as the year of make-or-break for the euro, Britain surveying life on the rim of Europe or even outside the EU, the Chinese economy decelerating fast, the US in political lock-down, and global joblessness now exceeding 200 million.   There’s no escaping the coming slump, it’s just a question of how deep and nasty and long-lasting it turns out to be.   Worse, all the wrong decisions are being made.   Cameron bats for Britain by picking winners (which no market-trained British government was ever supposed to do) and promptly picks the City of London at the recent EU summit, the biggest millstone of all.   Then Merkel-Sarkozy demand a fiscal stability pact as the price of saving the euro, which would deliver Europe over to constant deflation and high unemployment.   So congratulations to Cameron for staying out, but for all the wrong reasons! (more…)

The feebleness, impotence and tardiness of the Government in dealing with the banks could hardlybe more starkly highlighted.   Everyone (almost) agrees that the UK finance sector is far too big – its liabilities equal 5 times Britain’s GDP – and the economy urgently needs to be rebalanced away from the City towards a revival of manufacturing.   So what happens?   The Government sets up the Vickers Commission which takes a year to come up with the wrong policy and then the Government takes another 6 months to confirm the wrong Vickers conclusions.   Vickers recommends (i) Chinese Walls ring-fencing retail from investment banking, which the City scam merchants will get round in no time, and (ii) raising capital adequacy ratios from Basel III’s 7% to 10%, which is the opposite of what is needed in recession when demand is low and credit hard to obtain.   On the crucial requirement of rebalancing the economy Vickers said nothing.   But as so often the markets are well ahead of the Government. (more…)

The take-up by the eurozone banks of €489bn from the European Central Bank (ECB) ought to be good news as a sign that the ECB is now at last, having refused to do so in 2011, ensuring eurozone banks can fund themselves adequately next year.   The ECB believes they will need €720bn of loans in the first quarter of 2012.   Previously this money would have come from outside investors, but in current circumstances where the fear has been that a big European bank might collapse any time, any roll-over of funds by international investors seems very unlikely.   So in principle the ECB initiative should have been applauded.    In practice however the fact that the take-up was twice that expected probably indicates the reverse: that the pressures in eurozone banking are even worse than previously thought. (more…)

The Shadow Cabinet, as reported, is rightly concerned that Labour is not doing a lot better in the polls, given that austerity is beginning to bite hard and Osborne was forced to admit in the Autumn Statement that this will continue for (at least) another 6 years, making a whole decade of stagnation if not of actual impoverishment.   It is important to be clear about the reasons for public disquiet about Labour, however wrongheaded the evidence on which it is based.   From polling the main arguments appear to be (1) that the constantly repeated Tory claim that they are ‘clearing up Labour’s mess’ has gained widespread currency in the electorate’s mind, (2) that whilst the public agrees that one shouldn’t cut too far too fast, they feel that further short-term spending to generate growth would make matters worse at a time of high indebtedness, and (3) that the sovereign debt crisis in the eurozone is the major cause of slow or no growth.   How should these perceptions be countered? (more…)

The Government saved the Ministerial statement on public pensions to the very last day of Parliament before Xmas – always a sign that the most contentious and unpopular business is being left to the point where it will get least attention.   On this occasion, in the run-up to Xmas the mood is for settling, but in the cold light of January it will look rather different.   The Government have wisely conceded that staff with less than 10 years to retirement will keep their existing pension arrangements, but apart from that (which should never have been proposed in the first place) there’s no budge.   Look at what’s on the table. (more…)

It’s always good to know that Nick Clegg is on side so that one can be sure of the smack of firm government and that things are going to be done as promised.   So it’s splendid news to learn that today Clegg is assuring us that there will be no let-up in clamping down on bonuses.   Except that we hadn’t noticed that there was any clamp-down on bonuses going on from which there would be no let-up.   However we’re still relieved to know that Clegg will be ‘taking a tough stance’ if the government-owned banks RBS and Lloyds pay out generous bonuses in the bonus season about to begin.   In his words, “let no-one be in no doubt about our determination to use our clout as the major shareholder in these banks to block any irresponsible payments or any rewards for failure”.   Gosh, the bank bosses must be quaking in their galoshes at the storm about to break.   What puddle, one wonders, did the deputy PM have in mind to threaten them with? (more…)

We have sadly reached that point in the year when, with no much happening, the media regresses into what they feel most comfortable with – gossiping about personalities as though the world wasn’t facing the most dire crisis for a century.   What crisis, what crisis? as one prime minister famously said.   Never mind that 130,000 families are about to lose their homes as the housing cuts roll in, that austerity is being pushed manically beyond any sensible limits, that real incomes are stagnating for a decade, that bosses now grasp for themselves 350 times more than their average paid worker, that the hollowing out of British manufacturing foretells declining UK living standards in future decades, that there is no new business model in sight to replace the one broken by the financial crash, that no banking reform worth the name has been imposed to prevent another massive financial crash – the list of global and national threats goes on and on.   But none of this makes the headlines – only the antics of wealth, bling and celebrity. (more…)

Cameron’s veto, whilst giving red meat to the Eurosceptic bloodlust, has distracted attention from the far more important issue of whether the fiscal compact is the right answer to the Eurozone’s problems.   The veto has managed to spark an extremely unhelpful and potentially damaging fusillade of accusations between Britain and France, gratuitously exacerbated not only by the French prime minister egging on the credit rating agencies to downgrade Britain but also by Osborne provocatively linking the French economy with Greece and Portugal (just as he continues equally ridiculously to link Britain with Greece if his austerity diet is not digested in full).   But what counts is not this childish finger-pointing, but what would happen if the fiscal compact proposed at the rectn summit were actually adopted.   That is not a happy scenario.   A choice between the fiscal compact or a veto, both bad, deserves a third option.   Clegg, for the first time in this crisis in which he has swung all ways like a weathercock, has begun helpfully to look for one.   That line of thinking needs to be advanced. (more…)

The really shocking economic news is that in the last recorded quarter, June to September, there were 13 jobs lost in the public sector for every 1 job created in the private sector.   Altogether the number of people employed in the public sector fell by 67,000, and over the same period only 5,000 jobs were added in the private sector.   It isn’t simply that unemployment is now rising sharply and probably within the next 2 years will hit 3 million, the highest level of 20 years.   Even more it exposes the profound flaw in Osborne’s economic policy that the privatisation of the economy that was meant to flow from the deliberate shrinking of the public sector has utterly failed.   It all follows from the ideological prejudice that the public and private sectors are interchangeable so that squeezing one will simply enlarge the other, while in fact of course they have complementary roles and require a cooperative partnership, not a policy of aggressive exclusivity. (more…)

The final pull-out of US troops from Iraq marks the end, or perhaps just one stage of the end, of the biggest military disaster since Vietnam.    Every US-UK goal behind the invasion has been lost, in some cases humiliatingly.   Iran, the target for revenge after the sacking of the US embassy in 1979, emerges as a rusubg regional superpower with its political establishment now in full control of Iraq.   The US goal of semi-permanent military bases in Iraq as the custodians of the oil-fields has been abandoned after demands from Maliki, the Iraqi prime minister, himself heavily pressurised by Iran.   The US army is being rushed to the exit before Iraq has the secuity force strength sufficient to protect it against external aggression.   Internally, so far from being the ‘sovereign, stable and self-reliant’ state applauded yesterday by Obama, is in fact rent by schism.   If this is winning, what would defeat have looked like? (more…)

Now the deed is done, the price is going to have to be paid.   At a rowdy Commons PM statement yesterday Cameron kept on chanting his mantra that what he had done had been in the national interest, without ever explaining how being in a minority of up to 26:1 or leaving an empty seat at the EU top table was in the national interest.   I asked him whether it was not bizarre to marginalise Britain on the sidelines and throw away our international influence from Washington to Beijing, all to protect the City of London from regulation when actually it urgently needed regulation, and anyway his veto can’t protect  the banking sector from any future EU finance directives?   He denied it, but didn’t answer the question (he never does, he doesn’t do explanation or detail).   Today Olli Rehn, the EU Commissioner for economic and monetary affairs, confirmed exactly what Cameron denied.   He said:”If the PM’s move was intended to prevent bankers and financial corporations in the City from being regulated, that is not going to happen”.   Checkmate. (more…)

RBS crashed in 2008, costing taxpayers £45.5bn to bail it out.   The FSA (Financial Services Authority) report published today (482 pages long!) indicts everyone – Blair, Brown and Balls for insisting on ‘light-touch regulation’ (i.e. the bank could do whatever it wanted), Cameron and Osborne for demanding even less regulation, and itself – the FSA supervision was ‘flawed’ and ‘provided insufficient challenge’ to the bank (i.e. it let the bank get away with whatever the bank wanted to do).   It’s an appalling story of incompetence, arrogance, and anti-regulatory ideological prejudice.   So who’s been punished for costing the country £45bn?   Nobody – neither the politicians, nor the FSA, nor Goodwin himself, the main culprit who walks away with a pension of £6,586 a week.   That tells you a lot about Britain today: the power-holders don’t do punishment, only the victims.   Taxpayers are still £20bn out of pocket for what they’ve lost on their 83% stake in RBS. (more…)

The sky has never looked darker in this generation.   Britain has been marginalised on the sidelines and its influence thrown away with Washington, Beijing and New Delhi solely to protect the City of London from regulation, when actually it urgently needs regulation, and a catastrophic veto won’t even protect the banking sector anyway from any future EU directives on financial services regulation.   Never has so much been thrown away for so little.  The narrow blinkered obsession of the unreconstructed Tory Right has triumphed, as it did with the Corn Laws in the 1840s, appeasement in the 1930s and resistance to de-colonisation in the 1940s, but this time never has the tail wagged the dog with such disastrous consequences.  Not even Thatcher’s support for the ‘yes’ campaign in the 1975 EU referendum dissuaded them.    But it doesn’t end there. (more…)

It is almost surreal that Cameron exercised his veto when (i) there had been no serious or detailed examination of EU financial services regulation at the point when he did so, (ii) financial services regulation was not a central issue on the agenda at all, and (iii) there had been no discussion on the real subject of the Summit which was how once and for all to resolve the lingering Eurozone sovereign debt crisis.   It is also truly bizarre that he used the UK veto when it meant that (iv) so far from protecting the interests of the City of London he was leaving them more exposed to any future EU objectives, and (v) he was sacrificing British involvement in any future EU decisions on the development of Europe, putting Britain in a perilous position against any unpredictable contingencies which might threaten us. (more…)

The political fallout from Cameron’s ejection from the EU Summit can hardly be exaggerated.   Here is Britain not just pushed to the margins outside the Eurozone, but with the future of Europe being decided without even Britain being in the room.   Castlereagh must be turning in his grave.   Then there’s the domestic fallout.   The Tory Right, now with their tail up, are going to go for the kill: the EU doesn’t want us, and we don’t want the EU, so the people must be given a say to determine whether we now come out.   The consequences oif this fast-moving scenario are momentous.   If there is a referendum and the vote is to come out, the political and economic implications for Britain will be nothing less than catastrophic.   And the coalition, on which Cameron’s power hangs, could well be shattered in the process. (more…)