Economically, the Coalition is heading for a Fall from Grace
Unfortunately, on the same day the CBI predicted that the first interest rate rise in two years will come ‘earlier rather than later’ in 2011. Mortgage brokers agreed, saying that if the Bank of England raises rates by 0.5 per cent, most lenders will increase their standard variable rates by 0.75 per cent to help balance their books. This is because they’ve all become so robust again, their senior officers deserve £7 million bonuses.
That in turn means that voter costs will go up, and their house values will go down – another two factors rarely associated with electoral triumph. The downward house price thing is already happening: prices fell 1.3%, on average more than £2,000, between November and December – far more than the 0.4% economists had forecast. The average house ended 2010 worth £5000 less than it started. Or put another way, the downward rate is accelerating.
Being a trained psephologist myself, I can further confirm that a string of positive trade figures play well with the electorate. Having dipped towards the end of the year, export figures are likely to get worse – given that our largest trading partner the EU is far too busy with its Mad Hatter’s Tea Party to worry about actually making or buying anything. (There is also the question of Who Stole the Tarts, a matter on which most of Christine LaGarde’s brain is engaged – along with How Many Beans Make Five).
The Lisbon Government is beginning to get some of the hot-cold-hot-cold treatment Dublin got before its own crash, a very bad sign indeed. The euro is at a four-month lows versus the dollar, with traders nervously awaiting an auction of Portuguese sovereign debt this Wednesday. Western Europe is now, officially, considered a greater credit risk than Eastern Europe. This is an achievement of which the fathers of the euro can feel justly proud. And – naturally – another one of many reasons why any secessionist in the UK must be dangerously mental.
But if this vice is tightening equally on each of the Coalition’s two testicles, it’s hard to feel much sympathy for either of them. Nick Clegg’s candidate is going to be unceremoniously dumped by the Saddleworth electorate in the next few days, and if you sell out every principle for which you were supposed to stand, the electorate – yes, even the dumbed-down one we have today – will have its day in the Court of public opinion.
Equally, David Cameron may get his ears boxed during the passage of his horribly cynical Europe Bill. I think it more likely that the punishment will be no more than a clip around the ear’ole (the Tory Right is hang-tied by the much worse prospect of Labour getting back into power) but even so, the Cameron-Hague-Osborne troika’s sell-out on Europe makes Clegg’s PR U-turn look like a matter of degree by comparison. [For the hundredth time, AV is a majoritarian system: it is not PR, and if anything is worse than FPTP].
I had high hopes for the Coalition when it was first formed. I was blown away by the businesslike way the Hague-Letwin team for once bamboozled the Mandelbum Brownshirts, and – to be frank – simply relieved that an election strategy failure had been snatched from the jaws of Gordon.
But since then the Government has made four Cardinal errors, and together they make for a veritable Vatican of a mess:
1. Trimming on the cuts
2. Extending the deficit-cut period
3. Abandoning any idea of vigorous EU reform
4. Not addressing the bank/entrepreneurial growth problem.
It is only the last of the above that separates The Slog from the braying nutters at the outer limits of the Tory Right. This is because it involves questioning the current model of capital finance – and that’s exactly the sort of thing that can get a chap blackballed from the 1922 Committee.
Bank has become Big. Big does not like Small. Especially not Small Interloper keeping the market open and competitive. A real and proper intellectual revision of what modern Conservatism stands for would’ve included a major baseball bat reality check being applied to banking’s contemporary mentality – away from allowing Big to gorge, and towards taking good old fashioned risk. That is, risk based on ideas, numbers, imagination and ROI expectations – not on wild punts and paper derivatives that no longer bear any relation to the original commodity.
This remains the big issue. Not whether the Coalition can escape from the clutches of mindless investors incapable of putting the species before the dividend; but rather, whether it (or any other Establishment Party) could ever summon up the balls to face out The Dogs of More.
This isn’t ‘anti-capitalist rhetoric’: it’s a declaration of war on monopolism. Only when every government and citizen has signed the same pledge will we escape from this feral Hell.