Thursday, 18 September 2008

Lib Dems when it is 1929

I voted Conservative in 1979 and Labour in 1997, the latter because it was a straight Labour-Conservative marginal. Otherwise I have voted Liberal and Liberal Democrat, and would again.

Cleggy has been a disappointment so far, in that he has the media looks and speaking ability, and has clarity, but he has made no particular impact. He is now trying this with his more 'orange' policy of cutting tax for middle and lower income earners.

The problem is this. With success, the Liberal Democrats have moved from a fringe of the regions party to a two parties within one. They cover the whole country now, but they did it first by taking Conservative seats where Labour were so far behind in 1997 and then, as Blair forgot the core Labour vote, started taking Labour inner city seats and became seen as a public spending supporting party.

The problem was exposed at the last election. Although they did well, they didn't do as well as they should have. The problem was the Conservatives dented their performance in the south, and so now redistribution has a tax cutting method rather than public spending, with more appeal to the south.

Labour did end the Conservatives' private greed and public squalor years. However, the narrative now is: 'All that spending but what's the result?' So the Liberal Democracts have to talk about efficiency.

There is also a genuine need to talk about simplicity. The Gordon Brown tax years have been those of complication, and of smoke and mirrors - which cauught him out recently that has been one cause of his demise.

We are now in a 1929 situation and politics cannot ignore this. It has allowed Clegg in his speech to talk about Labour as the living dead and other zombie jokes. This was a clear but moderate and uninspiring speech, delivered as if without notes but there were screens with text on (I noticed). It had to recognise prophetic and economics guru Vince Cable as well as promote himself: wisely Vince Cable, by not becoming leader, hasn't followed in the footsteps of Menzies Campbell, who was a foreign affairs guru with Charles Kennedy and yet lost so much when leader. Vince Cable will be needed to talk economics in these coming days.

With tough times now and coming the idea of having personal finance will appeal to many in the electorate: however, my own thought is that we will all have to scale down to a more basic existence. Mine cannot get any more basic, but I'm talking about people who have had work and lived on credit at the same time. When times are difficult, standard State provision - reliable public services - become more important and not less.

Actually Clegg said as such. If it is a less glamorous green economy that you want, then you need decent public transport. Labour never provided this. The Tory privatisations just continued on (indeed Labour have continued privatising) and these services became about consumer choice and add-ons, whereas they ought to be basic provisions.

We have a situation where the power of the State is being used to hold up some private banking institutions that have not operated carefully. One that did, enough, has just taken over a huge institution it could not have swallowed only a short time ago. Over and again liquidity is pumped into the system to counteract the vanishing of credit, but the shareholders are taking a massive hit - some of which constitute assets of other financial institutions. That Halifax Bank of Scotland ended up cheap meant it could be swallowed by a bank that still believed in savings backing up a percentage of lending. To think what the Halifax used to be: the most successful and reliable of Building Societies, that saw a main chance to be a bank, ended up with the Bank of Scotland, and the years of greed has led it to the pathetic end of being popped bubble.

The crashing of share values means a reluctance to invest via share issues or private companies becoming public. In terms of the real economy, the shifting out of the credit in terms of excess house prices means all the spending that was fuelled by the impression of wealth in housing has gone, and this has reverse multiplier effects in the economy. We should not have an economy that took advantage of a shortage of housing stock and allowed prices to spiral well beyond any ability to pay. A first political predictor of the end of this was the saintly Vince Cable again. You could tell things were wrong when ideas like part ownership were suggested by government and lenders so that people could afford to buy part of a house - and the prices notched up a bit further. Every time it was made a little easier to buy, the prices notched up again.

And then it all crashed.

In a way the Liberal Democrats could never make too much of this conference because the economy could be so different in a year. There could even be full blown economic depression. It is a good time to introduce their new leader, with his first competent speech.

We know that the Conservatives are sitting back and watching. Their timidity, and shadowing Labour, is not too helpful all of a sudden, so for that it's one up for the Liberal Democrats - but this is easily changed.

The problem is for Labour. Now is the time to actually change a leader, as they could have a run up until 2010. It is clear that Brown is under huge criticism now right to the core of his party. Even so recently he let people think there would be a fuel payment to help people with the steeply rising fuel bills (nothing for the unemployed of course, so they weren't disappointed). Then he announced that this would be a gimmick and people should lag lofts instead. He has done this before: expectations and disappointment. Political tricks, like the cut in basic rate tax and yet the initially unstated removal of the 10p starter rate, have haunted him and rightly so, as he has put playing politics over serving people.

Here's the point. In two years this government under Gordon Brown will be exhausted. The financial crisis of now is taking its toll and must. Plus it negates everything Gordon Brown did as Chancellor: far from being "an end to boom and bust" his ten year chancellorship was based on credit and housing. I kept wondering where was the added value, and some said it doesn't have to be in made things and can be in information. Somehow the real economy was slight, a mirage and a dance - stop dancing and you fall off. After all this Gordon Brown will be worn out: Alistair Darling looks worn out already and he has only been in the job a short while, as everything keeps going wrong.

The next election is due in 2010 at the latest. Somehow you get the feeling that in 2009 this government will be on its back. It will have nowhere to go and will have been eaten by crisis management. There will be a clamour for it to go. The Liberal Democrats, if they emphasise redistribution (and Clegg did) should take the northern seats where they are well second and the Labour vote vanishes. Of course Conservatives might adjust to talking poverty - they have been already. In the south the Liberal Democrats have to protect their gains, and tax cuts might help, especially if the Tories are timid. But even in a year this message might be overtaken by the nature of an economy where businesses cannot find funds to borrow, share prices are too low to get share issues made, where governments have spent billions on the crisis and have to invent money, and where state provision becomes a social necessity.

Oh and a further thought: can we afford these Olympic Games in 2012? I am still against us holding them, and won't succumb to the propaganda. When public spending will have to be careful and necessary, and it will be necessary, these games will be an extravagance where the money would be better spent elsewhere.

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