We're not getting it Thursday 10 May 2012  The headline is attractive enough, Simon Carr in The Independent declaring, "Our leaders aren't in touch with their MPs, let alone the nation".Then, intriguingly, on the subject of "getting it" – the meme of the moment - Carr singles out Ed Miliband, telling us that "people were concerned about the cost of travelling to work and water bills". Thus, a politician who understands that people are concerned about the increasing costs of water is "getting it". However, if that is the measure, it is fascinating to see how few of the commentators in the legacy media are also "getting it". One only has to note the absence of comment on the putative water bill, an absence we noted in the previous piece. A good example of this is in today's opinion from The Great Oborne. Even though he writes about the cost of David Cameron's Coalition "growing ever more expensive" in the Failygraph, not a word about water sullies his script. But one then finds that it isn't only water that has been ignored. Squeezed into the Queen's speech was a proposal for "reform of the electricity market". We are told that a new law is required to make it deliver "secure, clean and affordable electricity and ensure prices are fair". Instinctively, one knows that the moment this administration starts talking about affordability, especially in terms of energy, it is going to cost us a whole lot more. And that is most certainly going to be the case here. The clue is in the order of the qualifying adjectives: "secure, clean and affordable". The idea of "affordability" comes third, and they are not looking for cheap electricity, but prices that are "fair". What does that mean? This is something that Oborne could most certainly have explored, as the detail pouring from The Independent tells us that the very last thing we can expect is cheap electricity. Instead, we must look to a massive investment in "low carbon power", by which means the looming energy gap is to be bridged. This will require pouring £110 billion into energy supplies and the grid - more than double the current rate of "investment". To achieve this, and to meet "legally-binding targets" on cutting emissions and boosting renewables, suppliers are going to get long-term contracts that "pay a steady rate of return for energy over the lifetime of new low-carbon generators". Essentially, we are being faced with more subsidies for wind machines. But that is only one small part of it. Plans for a "nuclear renaissance" have stalled, with the possibility that even EDF will pull out of the nuclear business in the UK. This makes gas an increasingly important alternative but op then pops Lord Smith, chairman of the Environment Agency. He tells us that "fracking" could be part of the UK's energy mix in years to come, but only with "the development of carbon capture and storage to make gas-fired power stations less polluting". The impact of that is effectively to double the energy cost and consumption rates, dramatically pushing up electricity prices - and we haven't yet finished with the energy bill. Tucked in there is the death knell for the coal industry. The bill will introduce an "emissions performance standard" to prevent construction of new coal plants which produce too much carbon dioxide. This also is carbon capture and storage. Unwilling consumers are to be forced to rely an unproven and probably unworkable technology which, even if it ever did work, would easily double the cost of coal-fired electricity generation. Putting all this together, the coded message from Mr Oborne's "ever more expensive" coalition in the Queen's speech was that we are to face not only a water price hike but massively increased electricity costs. The odd thing is that no one has thought to mention these small details. Yet, Carr tells us that Ed Miliband is "getting it". That seems hardly the case, and we're certainly not – at least, not at an affordable price. COMMENT THREAD Richard North 10/05/2012 |
A speech fringed with stars Thursday 10 May 2012  Slight though the content of the Queen's speech is, there was enough in it to give considerable cause for concern, not least the commitment to a draft bill on the "reform the water industry in England and Wales".Comment on this in the legacy media is minimal, leaving it to Business Green to tell us that legislative proposals are likely to be released for pre-legislative scrutiny before the summer recess, with the full bill coming in the next session of parliament. What is distinctly worrying here is that the bill will implement the reforms laid out in last year's White Paper. Ostensibly intended to drive new investment into the country's water infrastructure, we noted that it was the White Paper which marked a shift in water policy from the traditional one of meeting demand to mandating demand management and enforced rationing under the guise of encouraging greater "water efficiency" in homes and businesses. Thus, with no recognition at all, we are to see the implementation of EU policy, identified in our previous piece, locking us into a cycle of artificially induced scarcity and increased charges – on top of already excessive price hikes. Bizarrely though, this Queen's speech has been flagged up as being "family friendly", although there can be few things less friendly than unnecessarily increasing the costs of an essential commodity, while ensuring that it remains in short supply. Maybe, as there is to be a draft bill, there is an opportunity to press for changes at this late stage but, given this administration's enthusiasm for EU initiatives and the way it is still embracing the green agenda, one cannot be optimistic about securing any improvement. As for being a Queen's speech, therefore, that part of it might just as well have been fringed with a ring of stars. COMMENT THREAD Richard North 10/05/2012 |
Operation self-deception Wednesday 9 May 2012  And so it comes to pass that even Der Spiegel is using the same language, describing how the entry criteria for the european single currency were fudged on numerous occasions, to allow the euro to go ahead. The news magazine's finding comes following its request to the German government for the release of hundreds of pages of documents from 1994 to 1998 on the introduction of the euro and the inclusion of Italy in the eurozone. The papers include reports from the German embassy in Rome, internal government memos and letters, and hand-written minutes of the chancellor's meetings. The documents, says Speigel prove what was only assumed until now, that Italy should never have been allowed to join, and that the decision to invite Rome to join was based "almost exclusively on political considerations at the expense of economic criteria". This, the magazine goes on to say, also created a precedent for a much bigger "mistake" two years later, namely Greece's acceptance into the eurozone. The reality, though, is that this was not a mistake. Nor was it ever a question of whether it was a "stupid idea". To think in those terms is completely to miss the point. It was always a political idea, based on the idea espoused by Monnet that political integration could be achieved by stealth, through incremental economic integration. Nevertheless, while Speigel goes off the rails by talking in terms of a "mistake", it does acknowledge that the process was deliberate. The driver of le projet at this time was Helmut Kohl and, instead of waiting until the economic requirements for a common currency were met, he went ahead for profoundly political reasons. Kohl wanted to demonstrate that Germany, even after its reunification, remained European in its orientation. He even referred to the new currency as a "bit of a peace guarantee", making Italy the "perfect example of the steadfast belief of politicians that economic development would eventually conform to the visions of national leaders". Operation "self-deception" began with the Maastricht treaty and the commitment to launch the euro by 1999, with members being required to meet strict convergence criteria. But, "as luck would have it", Italy fulfilled all requirements as the date approached - surprisingly so, given that it had acquired a reputation for notoriously imbalanced budgets. The country had undergone a miraculous cure, on paper at least. However, what the papers show is that German Chancellery officials in Bonn had their doubts, suspecting that the figures may have been fudged – although that should hardly have come as a surprise. In 1995, former commission official and now whistleblower Bernard Connolly had written of blatant "manipulation and distortion". Despite this, in February 1997, following a German-Italian summit, one German official noted that the government in Rome had suddenly claimed, "to the great surprise of the Germans", that its budget deficit was smaller than indicated by IMF and the OECD. Shortly before the meeting, a senior German official had written in a memo that new posting rules for interest had alone resulted in a 0.26 percent decline in the Italian budget deficit. A few months later Jürgen Stark, a state secretary in the German finance ministry, reported that the governments of Italy and Belgium had "exerted pressure on their central bank heads, contrary to the promised independence of the central banks". The top bankers were apparently supposed to ensure that the EMI's inspectors would "not take such a critical approach" to the debt levels of the two countries. In early 1998, the Italian treasury published such positive figures on the country's financial development that even a spokesman for the treasury described them as "astonishing". The convergence criteria required that total debt of a euro candidate could be no more than 60 percent of its annual economic output, but Italy's debt level was twice that amount, and the country was only approaching the reference value at a snail's pace. Between 1994 and 1997, its debt ratio declined by a mere three percentage points. A debt level of 120 percent meant that this convergence criterion could not be satisfied, says Stark today. "But the politically relevant question was: Can founding members of the European Economic Community be left out?" For a political project, the answer was quite obviously "no", and despite considerable evidence that Italy could not meet the convergence criteria, at the Brussels European Council of May 1998, Kohl felt the "weight of history", deciding that the euro would go ahead, stating: "Not without the Italians, please". That was the political motto, says Joachim Bitterlich, Kohl's foreign policy advisor. The documents now seen by Spiegel suggest that, to get there, the Kohl administration "misled both the public and Germany's Federal Constitutional Court". What was remarkable at the time was that four professors had filed a lawsuit against the introduction of the euro. The suit was "clearly without merit," the government told the court, arguing that it would only be justified in the event of a "substantial deviation" from the Maastricht criteria, and that such a deviation was "neither recognisable nor to be expected". Yet, following a meeting between the chancellor, finance minister Theo Waigel and Bundesbank president Hans Tietmeyer, on the case before the constitutional court, the head of the economics division at the Chancellery, Sighart Nehring, noted in mid-March 1998 that "enormous risks" were associated with Italy's "high debt levels". It was left to Italian prime minister Romano Prodi, and Carlo Ciampi, former governor of the Italian central bank, to clean out the stables but, while reforms were able to reduce new borrowing, they did not dent the structural problems. Thus, the Italians in 1997 twice suggested postponing the launch of the euro, but the Germans rejected the idea. It was "a taboo", says Kohl's former advisor Bitterlich, pointing out that the Germans were pinning their hopes on Ciampi. "Everyone felt that he was Italy's guarantor, in a certain sense, and that he would fix things". It was also clear that Kohl was determined to wrap up monetary union before the 1998 parliamentary election. Thus the Italians were permitted formally to fulfil the Maastricht criteria with a combination of tricks and creative accounting, not least by introducing a "Europe tax" and selling the national gold reserves to the central bank and imposing a tax on the profits. Chancellery officials were well aware of what was going on, as indeed were Dutch officials who argued that without "credible proof" of the longevity of the consolidation, Italy's acceptance into the eurozone was "unacceptable". In the spring of 1998, however, the EU statistical office came to the rescue, certifying that the Italians had satisfied the Maastricht criteria. At that point, there was "no longer any reason to bar the Italians accession to the euro". Even though many knew that the figures were sugar-coated, no one dared say so publicly. Warning signs and non-compliant figures were steadfastly glossed over, especially through the German general election campaign, when Kohl kept the campaign focused on domestic policy. Even after the election, right up to the launch of the euro, Italy's high debt ratio was ignored. Now, says Spiegel the files from the founding phase of the monetary union reveal that the original construct cannot function. "A monetary union amounts to more than shifting several billion euros back and forth. It is also a community of fate. Shared money requires shared policy and, in the end, shared institutions". Thus, it says, if the members of the monetary union quickly make up for what they neglected before embarking on the euro adventure, the project of the century can still succeed. But the longer the necessary reforms are delayed, the more costly the journey becomes for everyone. Even to the last, then, the magazine is ignoring its own findings – that the euro was indeed a political project, in which economic considerations took the back seat. The founders went with what was politically achievable at the time, hoping then for a beneficial crisis to arrive, legitimising the measures which had been omitted but which always had been essential. To call these measures "reforms" is a travesty. They were deliberate omissions, the ultimate deception being that consequences of their omission could be dealt with without devastating consequences. That alone was a reckless gamble, and one which has yet fully to play out. Neither the deception, nor the self-deception are over. COMMENT THREAD Richard North 09/05/2012 |
What else is the meaning of democracy? Wednesday 9 May 2012 Against the backdrop of averring that we, the British people, shared the responsibility, Gollanz wrote: We do not escape by the plea that we have not understood these things, or that we have "not been interested in politics", or that we were powerless against our Government. It is precisely for being docile, unpolitical, servile to their Government that we attack the German people. It is our business to be interested in politics, and to control our government. What else is the meaning of democracy?This fits with my own aphorism: "democracy is not a spectator sport", but I like the assertion that it is our business … to control our government. There is a pervasive view within government that they are the masters and we are the servants, but it is and must always be that it is the other way around. That the servants are out of control does not change that relationship. It is for us to assert it – and we make a start on 14 July at The Old Swan. And this will be the first of our efforts. For those others who have asked, on the agenda is to set up a nationwide series of meetings. We, the people are on the move. COMMENT THREAD Richard North 09/05/2012 |
Chalk versus chese Wednesday 9 May 2012  Westminster, you will be pleased to learn, is offering an agenda for the entire term which, has as its key issues: "new flexible working rules, swifter support for disabled children and an overhaul of the adoption system". Compare and contrast the apparent energy and dynamism of the Brussels parliament. The agenda for just this week covers mobile roaming charges, measures to improve airports, piracy, how to support the Arab Spring countries, and a resolution calling for clearer rules to protect journalists accused of defamation. In addition, we are told that EP president Martin Schulz will today unveil his vision for the EU's future, to coincide with Europe Day. The EU Parliament will also vote on 43 reports concerning the 2010 accounts of EU institutions and agencies as part of the EU's annual approval procedure. Thus we have the Queen, sitting in the House of Lords, in the midst of a pastiche representing centuries of tradition, offering "her" government's vision for the treatment of disabled children. And, at almost exactly the same time, the EU parliament kicks off a debate on the entire future of Europe, while Brussels celebrates a Festival of Europe. The comparisons are invidious, and there is a strong element of comparing chalk with cheese. But they are there to be made, and they are not entirely without meaning. COMMENT THREAD Richard North 09/05/2012 |
They don't mean nothing Wednesday 9 May 2012  And now we have the leader of the opposition. Pointing to figures showing that 71 percent of people in Harlow did not vote on Thursday, he said: "I think there is a crisis of politics in this country …". Notice the subtle difference though. We see it in terms of "democracy". Miliband the politician focuses on the politics. He then says: "I want to reach out and understand why you don't trust any politicians, why you don't believe any of us can answer the questions that you are facing in your life". But the thing is he doesn't want to understand. Even if he did, he probably wouldn't be able to cope with the answers. And that's why we have a crisis … and why Miliband utterances are just words. He doesn't mean what he says. COMMENT THREAD Richard North 09/05/2012 |
It's really grim daarn there Tuesday 8 May 2012       Richard North 08/05/2012 |
New outbreak of looting Tuesday 8 May 2012 "Will Tuckley was paid £258,782 in the financial year 2010 to 2011, making him the sixth highest earner across the country’s 426 local authorities and third in London - not including those paid extra for redundancy...
Democracy: inaccurate, misleading and inappropriate. Peter North 08/05/2012 |
Perpetuating the crisis Tuesday 8 May 2012  Proof, if any was needed, that water policy is being driven by consumer need comes with this reporton water leakage, retailed originally by the Guardian. We are told, on the one hand, that almost a quarter of the entire country's four billion gallon water supply – around 750 million gallons (3.4 billion litres) – is disappearing from the system every day because companies have failed to stop leaks. Yet, on the other hand, in the midst of widespread water shortages, with 20 million customers subject to restrictions, the water regulator Ofwat is not proposing to tighten leak targets, even though that, in itself, will exacerbate the leakage problem. The issue here is quite straightforward. To solve with the supply deficit, two obvious things are required – to increase storage capacity (which is needed to cope with the eleven percent increase in population) – and reduce leakage. We have already seen how water industry plans for increased storage capacity have been blocked by government, which leaves leakage reduction as the only short-term strategy to enable supplies to be maintained, and now this is not to be pursued. Shadow water minister Gavin Shuker, we learn, has condemned the decision, as one might expect – although the Labour administration has had its part to play in blocking storage capacity enhancements. Shuker asserts that there are "vested interests at play", noting that, "It costs more to repair leaks than the immediate value of the water itself". It thus makes sense, he says, for water company to ignore leaks, even if it doesn't stack up in the long term for us, the consumers, or for our environment. This, however, is missing an altogether different point. Where leakage rates are so high, on top of an already increased demand, companies have to increase pressure in order to maintain flow rates. This in turn increases the stress on an already aging infrastructure, adding to the already unacceptable failure rate. It is, thus, not even in the longer term interest of the water companies to permit such a high leakage rate, and it certainly does not help the consumer to have a situation where the entire storage capacity is drained every 700 days, owing to leakage, before even a single gallon of water is actually used. But what it does do is maintain the atmosphere of perpetual crisis, thereby apparently legitimise the consumption reduction agenda which forms the main element of current government policy. And there we have it. By sitting on its hands over storage capacity, and now leakage rates, the government can easily sustain the crisis atmosphere, then pushing for higher prices – ostensibly to finance supply improvements but in fact to incentivise water "efficiency" measures and thus drive down end of pipe withdrawals, otherwise known as consumption. And pay we do. The average annual customer bill for water has risen by £64 since 2001 and is now £376, while the companies collectively made £2 billion in pre-tax profits and paid £1.5 billion in dividends to shareholders in 2010-11. For government, is a classic example of exploiting the "beneficial crisis", but in this case the administration is going one step further, actually creating the crisis, a totally artificial crisis, in order to promote its preferred solution. Cynical, does not even begin to describe it, but that is now the way our masters play the game. COMMENT THREAD Richard North 08/05/2012 |
Not buying it Tuesday 8 May 2012 The legacy media likes nothing better than a spat, and if one doesn't exist, it has been known to invent one. With Hollande barely having had time to down a celebratory drink, therefore, we have the Wail and various others rubbing their proverbial hands in glee at the prospect of a Franco-German dust-up. Bruno Waterfield, for instance, is having a good run at it, and much of what he writes is plausible. However, we've seen this sort of thing before. But when push comes to shove, France and Germany have always buried their differences in the interests of European unity. If there ever was a serious fracture in the Franco-German axis, it would be the beginning of the end for le projet, and I don't see that happening just yet. Like any politician, what Hollande said about the fiscal pact in order to get elected, and what he does about it once elected, will be two very different things. He and Merkel may have to go through a ritual dance before he rows back, but this is very different from the terminal row that some media sources are projecting. Thus, I'm not buying the idea that we're into a major tussle between Merkel and Hollande. It may be happening, it could happen, but I'd like to see a bit more evidence that this is anything more than political theatre, before I get too excited. COMMENT THREAD Richard North 08/05/2012 |
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