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23 march 2013, what in the world is going on ?

The markets remain calm, and a million cypriots seem half a world away, but what's going on there is an absolute breakdown, with a root cause of an oversized banking sector, like iceland, ireland and, yes, the uk. Though a year in the making, and with many deadlines past, the crystalisation of the crisis this week seemed a surprise, not least to the cypriot body politic, which rejected the deal its leaders made to secure the bail-out they asked for. Russia spurned their advances, thrusting them back to their european reality, and the ecb, rather precipitously, if legally, brought about a final climax by threatening to turn the taps off on monday. They can't now back down, hence cyprus passing extraordinary laws on friday night, with a final component, of the banking levy, needed saturday. This should be enough to persuade the eurogroup on sunday to send ten billion euros down the tubes to save the island. Though an astounding shock to the system, the levy on bank accounts is just a tax, designed as everyone knows to raise some of the necessary cash from russians parking large amounts of money offshore. It was the cypriots who tried to make it all encompassing in order to not be seen to be singling out the russians and so try and keep some of those deposits that are now the anchor of their main (tax haven) industry. The cost of that has been a wider erosion, across europe, of the basic idea that banks are not just any company we lend our money ("savings") to, but are tightly-regulated so even if they go bust our money will somehow flow back to us intact. For the euro, it is yet another major hurdle suddenly to be overcome, and although it will endure, its reputation and dynamics will take yet longer to recover. In "german" voters again facing down "southern" spendthrifts, and living to tell the tale, it is another dose of reality that makes the euro less a dream and more the sort of bitter battle and roller coaster that any currency must go through as a rights of passage, and all the stronger for it on the other side. For the broader eu, those effects are trickier, as the union was always built more on the dream element than hard core everyday governance, and that is looking ever more altered, especially for the "new" member states of 2004 like cyprus, and especially for the broader group of smaller states as the bigs, albeit reluctantly, take more steely control. Europe is ever less now about dreamy ideas and statements and ever more the real business of economy and finance that needs proper management and is inevitably less flexible in a crisis to sensitivities. Whatever doesn't kill you though, makes you stronger.

16 march 2013, and so it came to pass

It's nice to be right sometimes, and that seems the case (see 23 january 2013) as bibi finally forms a coalition with the two new forces in israeli politics and, more importantly, without the ultra orthodox parties. The two have boxed clever, and together, to make sure the coming revolution against the deeply-entrenched settlement the haredi have won for themselves over decades is finally reversed. OK, tzipi first was a nice touch, but won't change the fact that she is a don quixote fig leaf who will duly do her job for the next few years, tilting at the windmill of peace to keep the rest of the world just about off israel's back while the government's real business, of fighting back the ultra-orthodox, takes place; and a big battle it will really be. However, with the main opposition labour as much in the camp on this as the government, the chances of success, amazingly, are high. Less so for the peace process, and once again my old comrade-in-arms jonny freedland - sigh - has beat me to it and written the article I wanted to write, with the excellent (if unpithy) headline "you're not a tourist, obama. Go to israel with a message". 46 years of occupation has corroded the soul of the nation he concludes, drawing not on the left, but from the hardest of israel's hard men, the former heads of the security service (the gatekeepers). He also highlights another oscar nominee, 5 broken cameras. Like me, most people I know are strong supporters of the "two state solution", an option that on our watch is tragically slipping away. One of those two states is palestine, and there will never be a secure, jewish and democratic state of israel without a state of palestine. If that sticks in the throat, spent a little time to consider the alternatives.

13 march 2013, not the papal elections

I was chairing a meeting the other day when a well-spoken elder reeled off what he thought were the 3 occasions he could vote - "and the european elections" I added. The fact that the european parliament is just an afterthought (if that) for most europeans (and especially british) belies its importance, as over 75% of domestic laws now originate at eu level, which has consistently grown with each treaty. Despite its oddities (see 12 february 2011) the parliament is now co-legislator of almost all european activity, and although it won't block the budget, it has on occasion put its foot down, like making the whole commission resign in 1999. I have written before (see the quiet road to 2009) how while most elections tell a story, the "european" elections tell 27, as they are correctly, if unfortunately, characterised as second-rate national elections, each with their own electoral systems, voting patterns and national issues. For all that the turnout is dismal though, it's still higher than US congressional elections. Now comes another initiative to boost turnout and mobilise the european demos, as the commission, yet again, tries to make the next election, in may 2014, a more singular event. The main proposals are for each party to use its european name (for example the british labour party is the party of european socialists and the liberal democrats are the alliance of liberals and democrats) and for each party to nominate a commission president. The voting would be all on the same day and feature tv debates. There is little new here, and this earnest attempt to start to bridge the eu's "democratic deficit" will fail, because for all that the member states bemoan it, too many still claim the unique right to a national demos and don't want to see further moves towards encouraging a european one. Oh, and my cousin has composed some music

1 march 2012, che confusione

This has been brewing on my computer for some days now, but the economist beat me to it, and, I must admit, with a better headline. As they note, a quarter of voters didn't in this week's italian elction, and of those that did almost third % voted for silvio berlusconi, the most clownish premier since baron bomburst; and a further quarter voted for a real clown. Meanwhile, marvellous mr monti (10 november 2011) got just 10%. And so, just when we were beginning to think it was safe to get back in the water, up pops the unfortunately irrepressible jack in the box that is berlusconi to throw everyone right back under a bus. You can't blame him for trying though, so of course it's the italian electorate that will have to shoulder the blame for this unhappy drop off the cliff, although there's an important point about the ability of both winners (and indeed others around europe) to exploit anti-euro/pean sentiment in troubled times, and the perecption of democratic deficit. Clearly the soothing balm of monti medicine that restored credibility and sustainability was less attractive than the cod letter sent by the maestro offering everyone their money back if only they'd vote for him. So who is going to form the stable and sensible government that italy, and the euro, desperately need ? No wonder the markets dived, and will no doubt remain in roller coaster mode until there is a government, or the inevitable next election, be it 2 months or 2 years away. What a shame.

23 february 2013, zzz

So, my prediction of doom (6 january 2010), that the uk will lose its aaa rating, has finally come to pass. However, it is just one agency, one notch and many years on, and so more like a rap on the knuckles than a hanging at dawn. Worth recalling too that in the intervening period no less an economic powerhouse than the usa also lost its - we must always say "prized" - aaa status; and walls have not come crashing down just yet. Sterling though, not being the dollar, will certainly take a big hit on this though, especially after taking one last week after it emerged that the bank of england is moving in the direction of printing yet more money. For domestic politics, it will be a big stink as the opposition make hay. Early in his tenure the finance minister (a local mp here, george osborne) put quite a lot of the justification for fiscal consolidation on keeping the aaa rating, and so that will rebound now on an already-damaged politician, and there's probably another helping to come if we discover soon we are in a triple dip recession, which is as likely as not. With even the likes of moodys and the imf hedging their bets in saying too much pain, the pressure will be on more than ever this budget season, but as there's really no turning back now, economically or politically, that may just set up a "no turning back" moment, as osborne's party were always going to stand or fall on whether the economy is perceived as having sufficiency turned around by the next election (7 may 2015) or not, and this is just really doubling down, as I think the latest americanism to get broad acceptance on these shores has it. We shall see.

22 february 2013, shock and pawe

I've spent a lot of my week on something that many roads have led me to in the past years, but on which I have not really travelled: the children of the great unwashed; or "early years" in the jargon. Though not quite one myself, I was born and bred in a serially-unemployed household and so knew deprivation, but not of the kind that has been pulled from the back of my conscious in the last few days to the front. It's a world of far too many streets where most are unemployed, alcohol and other drugs are rife, mothers smoke and don't breastfeed, depression is a norm and infant mortality rates are serious. Children starting school are already obese and have tooth decay, and domestic abuse and crime are real and present dangers, as are injured children turning up at hospital. I was intellectually sucked into this world years ago by an excellent study that identified this basic system failure as a key cause of economic underperformance, and I'm back now as an intellectual exercise in transforming the norm of providing public services from dependence on an ever-dwindling government grant to self-sustaining investment. Poverty though, even in this abundantly rich country we live in, is emotional, and so are children, making the two together an exercise worthy of a cause.

13 february 2013, smooth and tumble

A very pleasant distraction from work today, with a visit (strategically vital of course) to mediacityuk, the new home of the bbc. It is amazing. Deserving of the uk epithet, manchester's own little canary wharf really does start to make you believe the hype that some of the things happening around the place really are of a size and quality that have resonance around the world. And this just a stone's throw (albeit a large one) from manchester united. Not only do coronation street, bbc sport, 5 live radio, cbeebies (once a permanent feature on our box; alas no more) and breakfast (which I never watch, strictly today for me) beam out from what were once abandoned docks, but there's real digital research and development going on behind closed doors, as they try to invent the next iplayer. Here. I peered down onto the match of the day studio from the gantry, got to grips with the nasa-command style control centres that tv gets made from these days, gazed across europe's largest purpose-built studio and strolled past mr tumble's wardrobe. Yes, total corporate capture, but sometimes you've got to take a step back and admire what's been achieved to recharge the inspiration batteries and help make the next steps forward. Tomorrow, the 10,000 children in the conurbation's most deprived households. They could do worse than watch mr tumble.

9 february 2013, it’s a boy !

I am impressed. After a couple of years or so of process and negotiation, which is the way of these things, 27 different countries have agreed a budget for a 28th which is the sum of them (see the state we're in) for the next seven years. Nor is it small, coming in at just under 1 trillion euros, or around 1% of the budget, about what the uk spends on culture, for example. Even more impressive, they have collectively taken into account the public opinion of the woman on the clapham omnibus who doesn't know whether or not all this austerity is right, but thinks that if every other government in europe is cutting expenditure, so should the eu. And a little bit more prioritisation never did any harm to a system. It's also very positive in the ongoing battle for the eu to be seen as a "good thing". This happy compromise came about as it spoke to a varied coalition of those that want to "reform" the eu, who come in many varieties, those who just want to trim it, and those who actually want "more europe" but would like it to be some combination of leaner and, well, more austere. And so now to the real work of what the money is actually going to be spent on. It's also a girl, or it was 28 years ago (ahem) when my other half was born; happy birthday !

2 february 2013, hilaryous

There's a lot of it around, but I'm going to have a go too. Bill was there when I was at my most intense political period (not least in israel, read christmas in bethlehem for the optimistic pax clintona period) and I have many times written that he was an exceptional president, at least from the waist up. The redoubtable madeleine albright was his (foreign) secretary of state, who lit the path. Then came hilary. They were always a double act, and even before the end of bill's time the baton passed as she easily won her senate seat, very effectively winning hearts and minds. 2008 then brought a dilemma: what to do as the eminently wonderful obama became a serious candidate, at hilary's expense. I must admit I was easily won over to him at an early moment, but to the end had deep doubts about whether, having won the nomination, he could actually beat the traditional white male he would face. Hilary, who was easily above the threshold, seemed a safer bet. In the end of course it all worked out, with hilary gracefully becoming secretary of state and making the role her own, even as the administration she was part of will hardly look back on foreign policy as either defining or transformative. Slips, like the killing in benghazi, seemed not her fault, as did vacuums in policy, like ducking entirely the israel-palestinian peace process. For a while it seemed she might stick around, becoming the first woman at defence, for example, but eventually it became clear she will retreat to consider a presidential run in 2016. If the chips sit well, the biggest thing against her will be her 69 years, the same age as reagan won his first term, so adroitly turning it to his advantage in the debate against walter mondale when he promised "I will not make age an issue of this campaign. I am not going to exploit for political purposes my opponent's youth and inexperience." It is not, I am sure, the last we have seen of one of the very rare women who doesn't even need a presidential surname attaching; happy hunting, hilary.

23 january 2013, indelible

The opposite of risk-averse is putting on paper (or whatever this is) thoughts about the likely outcome of israeli coalition negotiations; but here we go. Whatever the instant consensus, this was not a defeat for netanyahu. Hardly a resounding victory, but at the end of the day he's still going to be prime minister and the most dominant figure in the country's history since ben gurion. Habayit hayehudi might not have won the "biggest surprise" award, but 12 seats was astounding, and allied to the likud it gives them a 42 seat starting point, making it the bedrock of the coalition. And stand together with his mentor bibi's former chief of staff surely will, no doubt merging with the likud just before the next election, a now tried and tested formula. The big decision then is whether they go with the traditional ultra orthodox (shas and utj bringing in 18 seats) or with the winner of aforementioned award tomi - sorry yair - lapid. This is a no brainer, both because secularism, the economy and the haredi-in-the-army issue has defined this election (much more so than the peace process), and because of arithmetic: lapid's 19 seats bring a majority, and will snag others to join too. The power then, as well as the zeitgeist, is all with lapid, but there is little doubt they will seal the deal and we can genuinely expect, for the first time, a shift in the balance on a fundamental israeli axis. Not alas from hawk to dove, but from religious to secular, which is big beans to most (secular, jewish) israelis, and who knows how one shift in the infinitely-fortified status quo may in time lead to another.

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