Maybe Obama is himself the solution

Thank God the Americans now have a President they can feel good about. He inherited the perfect storm of a mess on the economic front and he has wasted no time in rushing through measures such as the stimulus package. However, it is still too early to see results. Yet 100 days into his Presidency 70% of Americans like him as a person and 60% like how he is handling the job. Since a major factor in how deep this recession goes and how long it lasts is business and consumer confidence, this "feel good factor" may be enough in itself to tip the balance in the right direction.
Here in the UK we are not similarly blessed. With GB it is less "feel good" and more "feel sick". This is a lesson for the Tories though - re-branding themselves as the austerity party may chime with the times, but we also need a little inspiration. Dare I say it, a little hope.

Despite the recession, Government governs best when it governs least.

I have argued in an earlier post that the recent banking failures that triggered the recession were as much a failure of appropriate regulation as of the market. The key words here are "appropriate regulation". Here in the UK the Government seems to have responded not by fixing that specific omission, but by gleefully spreading the tentacles of interference yet further into our business and lives. "We don't know how to fix that problem, so lets look busy "fixing" something else".


A classic example is the dramatic difference in "public information" style advertising here compared with the US. For one effective advert (like the stroke awareness campaign) there must be ten that just make you scratch your head in disbelief. (Do we need Government to tell us not to leave a hot cup of tea within reach of a toddler?) It is depressing to learn that the Government is the single highest spender on media space in the country (outspending even Proctor and Gamble). If the Tories need to find some quick efficiency cuts that would be a good place to start.


What has driven me to write today though is The Equalities Bill - or as The Week puts it "a charter for pen-pushers". This is being introduced by Harriet Harman (a one woman job creation scheme - her own job that is) and amongst other things it will impose on public bodies a "duty" to award contracts wherever possible to firms that employ the most women and ethnic minorities etc etc. I do not believe that positive discrimination is the way to solve the inequalities in our society - the result is a dumming-down that benefits nobody. Nor can you legislate "niceness". The aims of the new law include opportunity for all and an end to all social divisions. Oh and could we have more sunny days too please?

Glass-Steagall - an idea whose time has come (again)?

When the G20 leaders meet in London next week, a key item on the agenda will be how to reform worldwide regulation of the banking industry. They could do worse than take a look at the Glass-Steagall Act of 1933 (USA).
GSA was enacted in the aftermath of the Stock Market Crash of 1929 to separate commercial from investment banking activities. At the time it was thought that "improper banking activity, or what was considered overzealous commercial bank involvement in stock market investment, was deemed the main culprit of the financial crash" http://www.investopedia.com/articles/03/071603.asp
Sound familiar?
Commercial banks chafed at these restrictions, and with their eyes on the rich profits of their investment banking cousins eventually secured the repeal of the Act in 1999.
The basic principle for reforming regulation of the financial services/banking industries should be this: if the institution provides such services (i.e. taking deposits and making loans) and is of such a size that it can not be allowed to fail, then it should be tightly and boringly regulated as a commercial bank. Financial institutions which offer riskier products and services should be more lightly regulated, provided that it is made absolutely clear that they will not under any circumstances be rescued from the public purse. The principal regulation over these institutions, investment banks, should be a limit on their size (so that they do not become "too big to fail")

It's time to increase interest rates

Continuing to reduce interest rates below around 3%, as the Bank of England has done in a frantic effort to boost the economy, won't work. The net borrowers are hardly affected; if they feel any benefit at all through reduced mortgage payments it is marginal - far outweighed by the fear of losing their jobs and so not being able to make the payment at all. The net savers tend to react by saving more, especially as pensions have been so badly hit by falls in the markets. This was exactly the problem faced by Japan in the 90's. So maybe it's time to try something counter-intuitive (from an economist's point of view) and increase interest rates?

Tony Blair visits the Gaza Strip - finally

We heard recently that Tony Blair, Special Envoy for the Middle East Quartet, has visited the Gaza Strip - two years after his appointment to the role.

http://news.yahoo.com/s/afp/20090301/wl_afp/mideastconflictgazablair

What has he been doing all this time? Wouldn't you think that someone who holds this position should have at least shown his face in Gaza before now? I suppose he had to rush there to get in before Hilary Clinton's visit...

It has also recently been announced that he is to be one of three recipients of the Dan David Prize for 2009, awarded by Tel Aviv University, worth $1 million. The prize was awarded in recognition of "his exceptional leadership and steadfast determination in helping to engineer agreements and forge lasting solutions to areas in conflict".

http://http://www.haaretz.com/hasen/spages/1064798.html

Is it possible that the Spinmeister has actually been working diligently behind the scenes and out of the limelight for the greater good of the Middle Eastern peace process all this time? But shouldn't someone in this position be impartial? How does this square with accepting a prestigious award from one side?

If the Government keeps lecturing us, we'll tune out the good stuff

On returning from living in the USA for many years it is hard not to be struck by the excessive intrusion of the Government into our daily lives. One example is the "public service" ads which run on radio and television, lecturing us on the dangers of smoking, drinking, driving without a seatbelt or how to be responsible parents etc. They make me sick.
However...I recently saw one on TV that was breathtaking in its effectiveness and simplicity. It was the NHS ad for F.A.S.T. - how to recognize the signs of stroke and what to do. Several years ago I received an e-mail passed on by a friend with similar information. I saved it just in case, but I would not have been able to tell you what it said. Now I can.

http://www.nhs.uk/actfast/Pages/recognise.aspx