FT.com / Brussels – Berlin hits out at ‘crass’ UK strategy

At the FT:

Germany’s finance minister has launched a stinging attack on the “crass Keynesianism” pursued by Gordon Brown, the British prime minister, fuelling tensions on the eve of European economic crisis talks in Brussels.

Peer Steinbrück accuses Mr Brown in a magazine interview of “tossing around billions” and saddling a whole generation with a bill for paying off British debt.

At the Telegraph, “Brown’s economic rescue plan ineffective says German minister”:

Peer Steinbrück launched an outspoken attack on Mr Brown’s fiscal stimulus package, saying a cut in VAT would have little impact and predicting that the huge debts the Treasury is taking on will be a burden on the UK economy for a generation.

The remarks are an embarrassment for the Prime Minister, who has repeatedly claimed his plans have set the template that other countries are following.

They came the same day Mr Brown was ridiculed in the Commons for declaring that his policies had “saved the world.”

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Telegraph – Government panel to keep food prices down

The new Council of Food Policy Advisors, chaired by Dame Suzi Leather, Chair of the Charity Commission, will advise on food distribution and consumption as well as pricing.

Food shopping bills rose at their fastest rate since records began last year, with bread, rice, pasta and meat all going up by well over the rate of inflation.

And this is before the impact of the falling pound on food imports. This looks awfully like the road to price controls: price controls do not work [1, 2] and they never have:

In 284 A.D. the Roman emperor Diocletian created inflation by placing too much money in circulation, and then “fixed the maximum prices at which beef, grain, eggs, clothing and other articles could be sold, and prescribed the penalty of death for anyone who disposed of his wares at a higher figure.” The results, as Schuettinger and Butler explain, quoting an ancient historian, were that “the people brought provisions no more to markets, since they could not get a reasonable price for them and this increased the dearth so much, that at last after many had died by it, the law itself was set aside.”

Much better to let farmers get on with it.

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Dominic Lawson: It all went wrong when we left the gold standard

Thanks to Graham for pointing out this article by Dominic Lawson promoting Austrian-school economics:

As the chief economic advisor to the Austrian government in the 1920s, Mises put his theories into practice and slowed down inflation in his native country (which, as a Jew, he later fled). He used his “cycle” theory to forecast that the “New Era” of apparently permanent prosperity in the 1920s was illusory, and that it would end in runs on banks and depression: The Wall Street crash of 1929 was exactly what Mises had predicted.

Mises believed that any currency which was not backed by gold was powerless to resist the depredations of governments and bankers addicted to the possibilities of limitless credit. Until the past few weeks, this has been seen as a bizarrely old-fashioned and eccentric outlook; but I would not be surprised if many young people – who have hitherto been comfortable with the idea of money as something which can just exist in the ether, travelling through the digital highway – now wonder whether anything of intrinsic value lies behind it all.

As far as Mises was concerned, even money made of paper, if it had nothing behind it other than the good word of politicians and central bankers, was inherently unsound; he lived just long enough to see the United States of America – where he ended his days – break decisively with the international Gold Standard.

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And see also, in the Telegraph today, “Fear triggers gold shortage, drives US treasury yields below zero”:

The investor search for a safe places to store wealth as the financial crisis shakes faith in the system has caused extraordinary moves in global markets over recent days, driving the yield on 3-month US Treasuries below zero and causing a rush for physical holdings of gold.

Perhaps if money was backed by a real asset, it would serve as a real store of value and matters would be somewhat simpler.

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Back to the USSR

From the Guardian:

Tanks rolling into neighbouring countries, the media back under state control and Kremlin policy shrouded in secrecy … Luke Harding reports on why Russia seems hellbent on reverting to its Soviet past.

“The Soviet Union had global ambitions. It believed in socialism and social justice. Now the main ideological idea is nationalism and anti-Americanism. There are no positive ideas any more, only negative ones,” Kryshtanovskaya [Russia's leading sociologist] says.

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In Hard Times, Russia Moves In to Reclaim Private Industries — NY Times

Mr. Putin, the former president and current prime minister, has long maintained that Russia made a colossal error in the 1990s by allowing its enormous reserves of oil, gas and other natural resources to fall into private hands.

He has acted uncompromisingly — most notably in the case of the Yukos Oil Company in 2003 — to get them back.

Now, the Kremlin seems to be capitalizing on the economic crisis, exploiting the opportunity to establish more control over financially weakened industries that it has long coveted, particularly those in natural resources.

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Cameron: put the economic choice in the hands of the people

The hope of avoiding crushing debt and of fixing our society:

David Cameron has called on the Prime Minister to call an election and let the people of Britain decide what we want for our economy.

Speaking at the London School of Economics, David spoke about the “clear choice that is emerging in British politics” on the economic problems facing the country.

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Preston: summary fines for swearing and bad behaviour

Thanks to the Jeremy Vine Show over lunch:

Spitting, swearing and aggressive behaviour will be BANNED from ‘Proud Preston’.

Anyone who flouts the tough new code could be arrested or fined by patrolling police officers or council enforcers.

Council officers can fine people £75 for offences like littering, while police can give out fixed penalty notices of up to £80 for a range of offences.

Of course the target behaviour is unacceptable, but do we really want to replace personal responsibility with summary justice for minor misdemeanours? Callers to the show overwhelmingly thought so…

Surely we can do better?

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David Davis: Damian Green affair must never be repeated

Sometimes vindication can be a bitter pill. Despite the intensity of my belief that this government was systematically undermining our historic freedoms, even l was shocked by the senseless and insensitive behaviour of our police force in arresting my close friend and colleague, Damian Green.

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Irish will vote on EU’s Lisbon Treaty for a second time next year

Irish voters who rejected the Lisbon Treaty in June will be asked to vote again on the issue next year, paving the way for controversial EU laws to be introduced in Britain.

Predictable, but an affront nevertheless.

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Bill to allow Commons searches with no warrant — The Independent

From The Independent:

The vow by Commons Speaker Michael Martin to prevent “unauthorised” raids on MPs’ offices in the wake of the Damian Green affair was seriously undermined last night as it emerged that the Government is preparing new laws to allow investigators to mount parliamentary searches without a warrant.

Defending his position, Mr Martin last week pledged that no one would be allowed to search any parliamentary office until they had produced a warrant and obtained his personal permission. However, legislation included in the Queen’s Speech on the same day Mr Martin made his promise will make it simpler for officials to enter the House of Commons to carry out searches without the permission of parliamentary authorities.

The Political Parties and Elections Bill, aimed at tightening up the law on political donations, would extend the authority of Electoral Commission inspectors – or police on their behalf – to give them access to MPs’ offices as part of any investigation of alleged breaches of funding regulations. The only authorisation required would be a “disclosure notice” issued by the commission itself.

The Bill also permits the watchdog’s inspectors to enter the homes and offices of MPs and anyone who has donated to a political party, if there is a “reasonable suspicion” of a breach of the rules. A magistrate’s warrant is required but no prior notice will be given and parliamentary authorities would not be consulted in advance.

MPs have also pointed out that the infamous Regulation of Investigatory Powers Act 2000 allows covert surveillance of politicians in Parliament. We all ought to ask if our democracy is heading in a healthy direction. Many may be sick of politics and politicians but I hope and believe that the majority wish to live in a country where it is possible to oppose the government of the day, and to support financially opposition parties, without the threat of prosecution.

You can write to your MP here. If you live in a Labour constituency, or you know someone who does, I particularly recommend a letter.

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