German conservatives: take back powers from Europe

The German conservative parties have broken with their pro-European tradition to campaign for taking powers back from the European level to the nation state.

Germany actually has a good record on this: their federal constitution bars the federal government from interfering with matters that are “reserved” to the Laender, or States. The sharp contrast to the Europe-can-do-anything in the Lisbon Treaty is notable.

I’m not sure of the details of the CDU’s plans, but there does seem to be a real opportunity here to re-balance Europe, particularly if Ireland rejects Lisbon again. I hope we are ready for it!

Credit cards about to go bang?

In the run up to the G20 conference, a few politicians and commentators have started to suggest that this recession will be over by the end of the year or soon after. The huge fiscal and monetary stimulus – tax cuts and interest rate cuts – will work through to stimulate demand again.

That could all be blown off course if the credit card industry goes bang in 2009. And there are signs that it might.

Consider the parallels with the sub-prime mortgage market:

• they are normally sold based on self-declared income – just like the “liars loans” that caused many of the problems with the sub-prime mortgages

• customers have relied on being able to transfer balances from one account to another – just like mortgage refinancing; if credit availability is sharply reduced and they’re not able to transfer, will these borrowers just default?

• many customers – so called “rate tarts” – have relied on teaser 0% rates and have got used to refinancing when the rate ends – just like those infamous Adjustable Rate Mortgages; will customers be able to pay the full 20% APR or will they default?

• unemployment is sharply up, equity withdrawal is now unavailable and both Yes Car Credit and Moneyback Bank have withdrawn from the personal loans market: these will all increase personal insolvencies and defaults; is this the spark that could start the vicious spiral, just as the house price crash sparked the mortgage crisis?

• how will banks respond? By cutting credit lines, refusing new applications and increasing minimum payments; this will all worsen the crisis, just as the repossessions and forced house sales drove down house prices and made the mortgage crisis worse

• banks’ default information is pretty meaningless: as long as credit is widely available, customers can play musical chairs, transferring their balances from one card to the next; banks treat this as 100% recovery, but what happens when the music stops and customers can no longer switch? Bank really have no idea what will be recoverable.

• Are banks holding enough capital to weather the storm? Given the capital is based on default histories, possibly not.

• Like mortgage loans, credit card debt has been repackaged and sold on in the wholesale markets; this is even more opaque than mortgages because credit card companies have had the option to repurchase bad debts. They have often done this, obscuring the true risks on these assets. When this becomes too expensive they will switch to passing the losses on, which will become a shock to the markets who will have thought they were buying low risk assets.

• Prepare for the inter-bank markets to freeze up again as, once more, no-one will know who’s been left holding the losses

• credit cards have a direct link to retail spending, much more than the mortgage market; the impact on the “real economy” could be severe

It might happen, it might not, but there’s plenty to worry about here. The credit card market is much bigger in the US and Britain than in the rest of Europe, so we would be hit the hardest. I don’t get the impression this will be over any time soon.

Libertas – making Europe more democratic?

I was recently fortunate to be at the launch of the UK branch of Libertas, the newly established pan-European party of Ireland’s Lisbon Treaty “No” campaigner, Declan Ganley. Unfortunately, I missed the main speech itself, but the organisers were good enough to put it on YouTube and it makes interesting listening. The publicity generally was fairly good, with coverage including the BBC, politics.co.uk, Belfast Telegraph, the Irish independent, European Voice and Irish Times. The Guardian restricted coverage to a Diary slot,

Just as interesting, though, was the impression gained from the mingling afterwards. The party condemns the “political elites in Brussels” and promote itself as an exciting “new form of politics”. Yet standing back and looking in, it looked like just another room full of white male middle-aged suits – much as you get in the other parties. Just three people there were under 40, with not a single woman there who wasn’t a party worker. I felt glad I had decided not to wear a tie!

The politics were remarkably fluffy: just three real policies – democracy, accountability and transparency – although “democracy” and “accountability” seem to me to be the same policy in different words. Even transparency is a remarkably hard concept to pin down: their MEPs will only claim expenses properly incurred, but first class train travel and a £70,000 salary are apparently just fair recompense for the job! Party workers were assiduously “on-message” even in private conversations; the message, vital as democratisation undoubtedly is – leaves plenty of other areas untouched. Key political issues – should Europe do more or less, should Government regulate businesses more or less – were left unclear. More importantly, with no party structures, no volunteer network for those with full time day jobs, and, of course, the ever-present role of founder Declan Ganley, there appeared very little scope for meaningful participation.

You are left wondering whether this is a party genuinely trying to accommodate a broad church of opinion and understandably avoid the impression of “splits” or something more sinister – a secret agenda trying to worm its way in through the back door under cover of mock outrage.

It reminded me of an article I’d read recently on OpenDemocracy, which described democracy as just a structured way for the various elites to get their way. Was Libertas just that I wondered: a tool for those elites – city Hedge Funds and media barons, perhaps – who realise their stranglehold on Westminster isn’t enough any more, so they turn their fire on the new threat.

No doubt the question will be answered in due course, as the election starts and Libertas finds itself under scrutiny. I hope I will end up reassured – because Europe genuinely does needs more democracy. The political elite there urgently needs a severe kicking to get it out of its anti-democratic mindset.

I just wonder if Libertas is the party to deliver it?

Wrong to join the euro without a vote

Former Labour MEP and pro-European, Gisela Stuart, has written an interesting article in the Daily Telegraph. In it she says:

Politicians can no longer rely on the electorate’s implied consent or promote deeper political integration by stealth without making the institutions accountable. Trying to create political union, let alone any European identity, from above undermines any tendency for one to grow naturally; and to establish monetary union – now in so much difficulty – without political union was asking for trouble.

Great to hear someone who understands the inner workings of the EU realising the folly of transferring power to the European level without the consent of the people.

But the folly is continuing: Following Slovakia’s referendum-free accession on 1st January this year, eight more countries are expected to adopt the Euro in the next five years. The commission is currently pressurising Poland to drop it’s plan to have a referendum on euro adoption; they cannot be allowed to succeed.

Ireland is also being pressured to ratify the centralising Lisbon Treaty – and threatened with expulsion from the EU if they don’t.

Will they change tack? Not on their own. They need a political kick – like one promised from Libertas maybe?

Freedom Bill

A great exercise well worth supporting – whether you’re a Liberal Democrat or not:

http://freedom.libdems.org.uk/

Europe moves another step from democracy

Poland’s pro-European Prime Minister has caved in to pressure from the euro-centralists and announced he wont be allowing the Polish people to choose when they decide to join the euro.

What effect will this have? Germans and Dutch are still resentful they had to give up their strong currencies for the euro and didn’t have a say. This played a part in the defeat of the European Constitution referendum in the Netherlands.

Will the strategy work?

Under the rules for joining the euro, a currency must first be part of ERM II for at least two years.  There are no active plans to join ERM II at the moment and the government is worried about even going in without the constitutional changes that are required for adoption. Elections are due in 2011 and these changes – whenever adopted – would require a 2/3rds majority in parliament. The current parliament is just short of this:

Anti-referendum:

Civic Platform (gov) 209 seats

Peasants Party (gov) 31 seats

Left & Democrats (opp) 53 seats

Pro-referendum:

Law & Justice (opp)(anti) 166 seats

Total: 460 (gov=240  52%)  (pro=293  64%)

So any way round, the decision to join can’t be finalised until after the next election, which is due in 2011.

His argument – that the decision has already been made – is nonsense. Just like Sweden, Poland has a “pocket veto” over joining the euro – they have decided to do it, but they are allowed to choose when. If they don’t want to join they can simply say “not now”.

We need to change the dynamic in Europe, bring democracy to the fore. This is why I’m supporting Libertas in the European elections; lets maximise the force of democracy at the centre of Europe and build pressure there to defer to the will of the people and accept that democracy is good for Europe.

Bavarian right correct about euro-referendums

The Christian Democrat party from the southern German state of Bavaria, the Christian Social Union, has called for more use of referendums to fundamental changes in the EU such as the accession of Turkey.

This is absolutely right, and great to have another ally in our fight for more democracy in Europe.  Let’s hope he’ll also back referendums for:

1) Constitutional changes like those in the Lisbon Treaty – which European leaders decided not to ask the people about.

2) Accession to the Euro, which the Polish people are being pushed into joining without a referendum.

3) Enlargement, where it results in a significant change to the nature of the EU – as it would with Turkey or Ukraine.

Libertas – the eurosceptic party?

A new political party is bursting onto the European scene, ready for the European Parliament elections in June this year. Libertas, who successfully campaigned for a No vote in the Irish referendum on the Lisbon Treaty, are running candidates throughout Europe and say a vote for them is a vote against the Lisbon Treaty – something that most people were denied when it was ratified without a referendum.

Libertas are keen to describe themselves as “pro-European” and dislike being called “euro-sceptic”. “Declan Ganley himself said “Point to anything that Libertas or I have ever said that is any way Eurosceptic. We are exactly the opposite“

However, many of the people associated with the party have been described – often self described – as euro-sceptics, such as Philippe de Villiers and Jens-Peter Bonde. Libertas has also been described as “euro-sceptic”, and there was a very interesting debate on Wikipedia about whether Libertas should rightly be described as “pro-European”.

The problem is this: one of the key issues facing Europe is the question of which powers should be exercised at the European level and which at the member state level. Those supporting more powers in Brussels are generally termed “pro-European” and those supporting fewer powers are termed “euro-sceptic”.

Libertas clearly has a contribution to that debate – the idea they’re “off the spectrum” portrays the party as just passive outsiders. In fact, Libertas were quite clear in the Irish referendum: vote no, in order to prevent harmonisation of corporate taxes. That on it’s own places it on the euro-sceptic side of this spectrum.

Many people associate “pro-European” to mean in favour of transferring powers to the European level: more integration and fewer national vetos.  We will have to wait to see the details, but it appears Libertas is opposed to this.

If Libertas spends all its time trying to insist on people calling them “pro-European” and objects any time the “euro-sceptic” label is applied, they will waste all their effort in fruitless arguments with frustrated journalists. A better use of this effort would be to concentrate on the core message of democratising and devolving power in Europe.

Libertas needs to get over the euro-sceptic tag.

Losing the plot on public transport

Nick Clegg launched an interesting set of proposals on spending the £12bn cost by the 2.5% VAT cut on “green” investment instead.

A great idea you might think, until you look at the detail.

One idea is to “reopen old railway lines and stations and open new ones“. I had a look to see the nearest one to us – it was the Matlock to Buxton line. Unfortunately, I’m not sure Nick even managed to read  the report, except to cite its capital costs; it makes grim reading: not only would it cost £100m and cause noise damage to the local environment, but all it would give is a passenger-only 50mph slow train, once per hour that reduces car traffic by a measly 2% (1,000 journeys per day in the first 10 years). It would require an initial subsidy of nearly £6 per journey and still £3 per journey even after ten years. Frankly we’d be better off putting everyone in a taxi!

The report sums up:

“The inclusion of wider economic benefits within the TEE [Transport Economic Efficiency] calculation still result in Benefit/Cost ratios … of less than one – indicating that, even with the inclusion of other benefits, all the options are worse than the Reference Case [of doing nothing].”

Or to put it another way, a complete and utter waste of money. Token environmentalism with minimal net positive impact, a long requirement for annual susbsidies and a project that will only be shut down in a few years when a future government realises just how crazy it is!

There was me thinking the point of “investment” was to get some kind of return. Keynesian economics encourages governments to spend money during a downturn on things that help long-term growth of the economy. A high speed rail link from Nottingham to London might do that; a low speed white elephant that no one uses would be money down the drain.

Parliament should choose our next Monarch

Prince Charles has caused plenty of headlines recently when he said he would “speak out” when he becomes king, and the Queen hinted she would retire in five years.

The response – even from normally loyal media – has been overwhelmingly negative. Even the Daily Mail has told Charles to “put a sock in it“

The big problem with a monarchy is it works fine if they are doing a good job – which is generally how British people look at the current Queen. When you get a bad egg, they can be difficult to shift, in contrast to a bad politician who just gets booted out at the next election!

Traditionalists would have us believe that our royal succession has been a smooth path all the way from Alfred the Great, the mathematical application of arcane rules. The historical reality is very different – there have been many times when the English/British people have intervened to select the royal they wanted on the throne – the Glorious Revolution and Act of Succession being obvious examples.

Republicans, on the other hand, want to use the controversy to abolish the monarchy and replace it with an elected head of state.

Even if I agree with the principle, I’m not sure public opinion is there yet, so I propose a middle way: lets codify the principle of consent and make Parliament select our next monarch.

Like the Emir of Kuwait, lets give Parliament a formal role in approving – or disapproving – the succession of a new monarch. This would be consistent with our history – a reformist rather than revolutionary act and would have popular support.