Keynesian Economics - the illusion exposed

So you STILL think a Keynesian economic model is a good way to run an economy do you? For many years I have believed it is a dangerous drug with disaster written into its genes. The financial madness we are currently living through is but the latest episode. People want to blame someone else, anyone else, the current targets are 'greedy bankers' and the financial markets, when they should really be looking themselves in the mirror - politicians are afraid to tell voters the truth and the voters are quite happy to go along with the lie, indeed the voters punish any politician sufficiently mad or courageous (take your pick) to puncture the myth. Watch this to see the whole scam laid bare, almost literally:



Me? I haven't believed in Keynesian scam economics for a long, long time - a much better, healthier system is available though, commonly known as Austrian Economics. You? You have to ask yourself a very simple question - do you want to waken up and face reality or do you want to continue to take the soma, which in this context is all that Keynesian economics represents?

Thirteen Years of Labour Lies, Deceit and Mismanagement

Watch this video-clip compilation to remind you just how awful was Labour's most recent tenure in office. Just 101 days ago this shower of shysters was the government of this country:



- Point of information: this video-clip is indeed a 'propaganda piece' put together by the Conservative Party prior to the last General Election, but that in no way detracts from the absolute truth of everything shown in it.
(The idea for including this video-clip here is 'filched' without shame or apology from an article in the excellent Guido Fawkes blog.)

Nairn and its public swimming pool and leisure complex

Highland Council is in a big fix - it is running a very significant deficit in relation both to its council tax-payer base and the relatively low-density population of what is the largest local government region by area in western Europe. Apparently it is still looking for GBP36mio of cuts to meet a savings target of GBP59mio over a three-year period. This is a massive amount and it seems that harsh choices will have to me made.

Like most people who have a close connection with Nairn I would regard it as a real tragedy were its swimming pool to be forced to close for financial reasons. A significant part of the local economy depends upon the summer tourist trade and the pool, along with various other leisure installations locally adds a lot to the attractiveness of the town for visitors. Local residents, and particularly local children, benefit too from having such a facility where they can exercise and learn a healthy sport, both as part of their school curriculum and in their leisure-time. So it is good to see that a primary school pupil, Fiona Cameron (no relation), has launched a Facebook campaign to save the pool and the campaign has now grown to the extent that the regional Press & Journal newspaper has a major article on it today.

However, much as I support the campaign (and I have added my support to Fiona's Facebook campaign), I reirerate that harsh choices are going to have to be made. I hope that one of the necessary savings won't be to cut funding for the Nairn swimming pool, but recognise that it may happen. It is inescapable that somewhere throughout the Highland Council area there are going to be a lot of disgruntled people. The vast bulk of council funding does not in fact come from the locally-raised Council Tax, but instead comes from central government 'block grants', which of course are ultimately funded by Income Tax or other kinds of taxes. Councils and governments have only three ways of procuring funds - to levy taxes, to take on borrowing commitments or to run-up completely unfunded debts. Alternatively they can curtail spending. Borrowing and debts can be allowed to accumulate for a few years, provided the providers of the funds 'continue to play ball', but as is usual (and I without apology slip into 'political mode') under a Labour government we have over the past 13 years tested that policy to destruction and landed ourselves with absolutely enormous levels of debt that will remain with us until well into the adulthood and probably middle- and later-years of youngsters such as Fiona.

I hate to be harsh, but people get the governments and local councils they vote for and deserve. All political parties (including the one I might be more inclined to support) promise electorates a lot when they need their votes in the run-up to elections and avoid too much mention of how all the 'largesse' they offer is to be paid for. The Labour Party is always a 'tax and spend' outfit which has ALWAYS (and I repeat, ALWAYS) left the country with more debt on leaving office than existed when it arrived in office and whilst it is perhaps too early to judge, the SNP is probably in the same mould - it is definitely a left-of-centre political party, just as is the Liberal Democrat Party. It is perhaps too early to judge the SNP completely because they operate currently under a very-limited electoral mandate. It is not inevitable that a political party seeking 'separation/independence' (a policy I do not support, of course) should be left-of-centre, but that is what the SNP is in my estimation and in that of most other objective observers. Personally I would be much more open to SNP ideas if it was rather more centrist or centre-right in its political outlook and willing to propose policies based on sound economics, rather than simply going down the typical left-of-centre route of promising the electorate more of everything whilst promising that taxes will not be raised, or that only the mythical 'rich' will be squeezed until the pips squeak.

So perhaps, if I may, I'd like to encourage younsters like Fiona to pursue her laudable aim, but perhaps also to encourage her parents and her school-chums' parents to consider carefully how they cast their votes at the coming election. Even more important, youngsters like Fiona need to realise that it is the votes of adults over the past 20 years that have landed us with the spend-thrift Labour government we have and which has grown national debt hugely and left nothing in reserve to cope with the occasional economic downturn, a major example of which the world is currently expriencing and which, along with the basic level of debt, is necessitating the cuts in spending that might see the Nairn swimming pool have to close. Perhaps, too, when Fiona and her friends reach voting age, presumably in approximately 10 years, I hope they can consider that whichever political party they do decide to vote for, offers policies based on sound economics, not on the never-never mentality offered by Labour and potentially too by the SNP. I doubt if Labour ever could be reformed, because hopelessness at running an economy is in its genetic make-up, but perhaps if it has to be the SNP that youngsters in Scotland end up supporting they can use their influence to steer the Party toward sounder economics. Obviously I'd prefer if they voted Conservative, but I am nothing if not realistic and reasonably pragmatic - an SNP based on sound economics, even with its core policy which I oppose strongly, would be far better than it ending up as a Scottish version of Labour's socialist debt-creating nightmare.

That's the real campaign that Fiona and her chums need to fight.

Britain and the EU - and the "Lisbon Treaty" non-referendum

The UK was promised a referendum on the now-defunct "EU Constitutional Treaty" at the 2005 General Election by all the major UK political parties. Since then the "EU Constitutional Treaty" has been rejected by both France and the Netherlands in referenda and superseded by the "Lisbon Treaty" which is said by its fervent supporters to be something very different from the rejected constitutional treaty, but by everyone else is said to be almost the same and to copy more or less verbatim much of its text.

I remain, despite everything, a strong supporter of the UK remaining an active participant in the EU, but at the same time it sticks in my craw, in a major way, that the British people have been denied any say in whether we should have ratified the Lisbon Treaty or not. Today the 27th country, the Czech Republic, finally ratified the treaty so it will become law effective 1 December 2009. End of ... (as they say)

Tomorrow it is expected that David Cameron, Conservative leader, will announce what will be the formal reaction of his Party to this fait accompli by our sad excuse for a Government, the Labour Party and its Leader and our current Prime Minister Gordon Brown. In advance of this the Shadow Foreign Minister, William Hague, has said that with the Czech ratification and entering into force of the Lisbon Treaty that the campaign to have a referendum on the matter is no longer possible or relevant and that the Conservative wish to hold a referendum ended today:

"What has happened today means that it is no longer possible to have a referendum on the Lisbon Treaty. "We have campaigned for that referendum for many years, we believe passionately that there should have been a referendum so that the British people could be consulted. "But now that the treaty is going to become European law and is going to enter into force, that means that a referendum can no longer prevent the creation of the President of the European Council, the loss of British national veto. "These things will already have happened and a referendum cannot unwind them or prevent them - and that means that our campaign for a referendum on the Lisbon Treaty therefore comes to an end today. We think that is a bad day for democracy. "Gordon Brown and the Labour Party promised people a referendum at the last election and people have never been consulted in a referendum or a general election."

The actual Foreign Sectretary, David Milliband, is quoted as saying:

"So much for David Cameron's cast-iron guarantee to hold a referendum on the Lisbon Treaty. "But he is still not being honest with people. The fact is you can't simply opt out of treaty obligations because to do so you need the agreement of the 26 other member states. "David Cameron's position on Europe is false and dangerous. He is willing to risk Britain's standing and the rights of British people because he is still not prepared to stand up to the right of his own party."

That's the "fait accompli" I referred to earlier.

We must wait to see what David Cameron comes up with tomorrow (in the "we won't let the matter lie there" strand), but meanwhile I have a few questions of my own.

Granted that this country generally observes the terms of commitments it enters into, unlike many of our fellow EU-members (who seem often to 'nuance' their legal commitments to suit their own convenience) what can realistically be done? I have a suggestion. A new Conservative government, assuming one is elected next year (as seems highly-probable), should simply declare it is withdrawing our ratification of the Lisbon Treaty pending a referendum of the British people. What, in practice, is the EU going to do about it? I would submit - nothing! Naturally, there would be a great deal of huffing and puffing, but beyond that very little. Are they going to send an army across the Channel to thwart the will of a newly-elected British government? I very much doubt it! And in any case, no country in Europe (other than the British or perhaps the French) would be capable of mounting an operation, and I don't think the French (who are nothing if not pragmatic), if push came to shove, would even consider participating in such an operation. I reiterate, I am basically strongly pro-EU (I am in no way a 'euro-sceptic'), but I just don't believe that if the British people decide they don't want to be, and won't be, bound by a treaty over which they have had no say, that anyone is going to take any practical measures to stop them/us. And I remind any sceptics that this country is one of the major net-contributors to the EU budget. In practical terms threats against us are just so much bluff. This country stood up, alone, against much stronger odds in 1940 so I do not see how or why anyone should be overly-concerned with what a bunch of pampered Brussels bureaucrats in 2009/2010 might come up with. Bring it on, I say!

I will observe with interest what my namesake David Cameron has to say tomorrow. I hope he will demonstrate the resolve and courage the situation requires.

Labour forced to come clean over budget deficits

After months of pretending that whilst the country is in deep economic 'doo-doo' nothing need change in the level of spending the State indulges in, it seems that the Chancellor of the Exchequer, at least, is steeling himself to say in public what most people already know - that part (a major part) of the corrective medicine for the country's soaring budget deficits will have to be cuts in spending on some of Labour's sacred cows. The phraseology of these "Government Minister will say ..." stories, based on press-releases (or leaks) of forthcoming speeches, always amuses me. What if the speech never happens, will the press-release simply be buried? Anyhoooo, here's what Alistair Darling apparently will say:

"Gordon Brown and I have spoken of the hard choices needed in public spending over the coming years. "We won't flinch from the difficult decisions that will be necessary, and we will always act guided by our core values of fairness and responsibility. "This will be our test of character. Properly targeted public investment can and should make a difference. "That means making choices and setting priorities - shifting resources to the front line. It means more efficiency, continuing to reform, cutting costs, public and private sectors working together."

Bringing the name of the Prime Minister into his speech has a two-fold purpose:
- it gives Mr Darling's forthcoming 'revelations' an aura of official policy, tarnished only by the justifiedly-soiled reputation of Gordon Brown;
- it tries to bind the hands of the Prime Minister into not flying-off into his usual realm of fantasy economics in the coming political 'cycle', specially his Labour Party conference speech, when Darling obviously believes the 'comrades' will have to be told the truth.

I'll wait to hear with baited breath just how tough Mr Darling plans to be in practice in reining in the out-of-control spending on some of Labour's shibboleth policies and just how much 'spin' will be employed when announcing these cuts to the public. Or indeed whether Gordon Brown will as usual 'chicken-out' of allowing his Chancellor to get on with doing the job he obviously still cannot accept he is no longer [ir]responsible for.

Labour and Darling's strategy in pre-releasing this speech to the BBC (who are dutifully splashing it across their headlines today) is to 'soften-up' the ostriches amongst the British people who haven't yet wakened-up to the disastrous economic situation that this Labour Government will bequeath to its successors when finally it gets booted out of office! Hopefully very soon now ...

Governor of Bank of England rubbishes Government's economic policy

The Governor of the Bank of England, Sir Mervyn King, seems finally to have lost patience with the Government and become willing to say in public precisely what he thinks of Darling and Brown's strategy for getting the country's finances back in ... well not exactly in some kind of order, because that's going to take a VERY long time ... but at least make a sensible start on reducing the frighteninlgy-high budget deficits. Here's what he said this afternoon before a House of Commons Treasury select committee and it's pretty explosive stuff:

"We are confronted with a situation where the scale of deficits is truly extraordinary. This reflects the scale of the global downturn, but it also reflects the fact that we came into this crisis with fiscal policy on a path that wasn't sustainable and a correction was needed." "There will certainly need to be a plan for the lifetime of the next parliament, contingent on the state of the economy, to show how those deficits will be brought down, if the economy recovers, to reach levels of deficits below those which were shown in the budget figures."

The extent of the rift between Threadneedle Street and Downing Street is clear from this FT report on today's meeting, too.

Quite extraordinary and one imagines that the Prime Minister and the Chancellor of the Exchequer cannot have enjoyed learning of what Sir Mervyn had said. He is of course quite correct and it needed to be said - one presumes that there will be consequences of one kind or another for him, tempered only by the fact that Labour is now very weak politically, even if whilst Brown remains Prime Minister he still retains a certain, now rather shabby, aura of power. Today, too, at Prime Minister's Questions, David Cameron tore into Gordon Brown and his usual spin in a manner that was most satisfying to behold.

The Governor of the Bank of England is not the only senior establishment figure to have seemingly lost whatever faith they may have once had in the 'Dear Leader', if the audience Her Majesty the Queen granted to Sir Mervyn King in March last is a guide.

Is Gordon Brown set to go down in history as the worst Prime Minister this country has ever had? I've thought he was complete rubbish ever since his first budget was announced in 1997 and it gives me absolutely no pleasure that my fears at the time that Labour's latest period in government would end, sooner or later, in financial ruin for the country have become a frightening reality. So the answer to that question is "Yes", at the very least as far as my own lifetime to date is concerned.