Because there are elections upcoming, American politicians decided to do what they are paid to do and represent their constituents' wishes - which have been running by some reports at 200-1 against the Paulson bail-out. Predictably the Republicans blamed Nancy Pelosi's speech - the speaker of the House is about as non-partisan as ours - and the Democrats blamed the dozen or so GOP representatives who flounced away from the deal because of Ms Pelosi's speech.

The fact is the Paulson bail-out is dead and Global capitalism cannot rely on nanny state. It is going to have to grow up and prove Ms Pelosi wrong when she says

when was the last time someone asked you for $700bn? It is a number that is staggering, but tells us only the costs of the Bush administration's failed economic policies: policies built on budgetary recklessness, on an anything-goes mentality, with no regulation, no supervision, and no discipline in the system...

Of course we all know that markets were never unregulated. And I suspect that at the root of many crises of capitalism is some badly thought out regulation. Let's face it, the regulators were still encouraging, nay demanding sub-prime lending well into the Noughies through the Community reinvestment act which judged banks by how much credit they were lending to poor, ethnically diverse communities, especially if they wanted to consolidate. That is sub-prime lending was demanded by the regulator. Think about that for a bit....

So the federal government, and the Regulators in the UK were encouraging irresponsible lending - actively stoking a bubble, whilst the regulators where not asking the question "what happens when house prices fall?". Meanwhile the incentive was for salesmen to ride the train and hope to jump off before it crashed. Everyone knew house prices would fall. What was the regulator doing to protect markets from such an event? Nothing - they were busy making sure that forms were filled in correctly. Making sure that poor people weren't getting honest advice but were driven into the arms of piece-work salesmen pedalling Capital asset pricing model crap according to criteria laid out by... you guessed it... the Regulator.

Sure, banks driven by short-termist shareholders chased revenue and increased risks, but there are sound banks out there. Goldman Sachs and JP morgan aren't converting to deposit-taking banks because of fear, but because they see an opportunity to buy everything in sight. Santander, HSBC, Barclays and Lloyds Even RBS are soundly capitalised the latter after begging its shareholders. These are making investments they would never have got past the regualtor last year. Only those former mutuals who do not have deposits to back their lending have gone bust, or those in the USA who most enthusiastically followed Bill Clinton's desire to foist debt onto the proles. It is no matter!

Regulators are stupid. They look in the wrong places for risk and wouldn't know it if it was charging them with pointy horns yelling "i'm risky". The best thing a Regualtor can do is ensure that no-one gets too big to fail, guarantee some or most of investor's deposits, and act as lender of last resort. Otherwise let the herd get on with it, and if some go bust, then that's Capitalisms great creation destruction cycle in action then.

In the UK it is possible to get over 6% on 3 month money. Over 100 basis points of free profit for any bank with the balls to take it. All it takes is for the banks to put greed over fear again and the problem is over - once that 6% seems easy money, it won't last long. Libor will fall, Mortgage rates will fall and everyone's singing... All the government needs to do is calm down!



Really we should be congratualting the electorate of the USA for forcing the legislators to force Wall Street to accept moral hazzard. I wish Governments would do the same - and leave well alone that which they don't understand. And I wish bankers wouldn't cry for mummy when things go bust. Are you men or are you socialists?

There have been an epic number of nominations this week, and I'm a finance wallah, so this has been a difficult time, death of Global capitalism and all that. Plus I had a long weekend with the TA. And I thought the Rota said I was on next week. So I make no apologies for the lateness of this post. Except this one: Sorry. I'd also like to add if I missed anything or misrepresented any of the posts, this is not deliberate, there were nearly 50 nominations to deal with; drop me an e-mail if you feel anything needs changing, or if I've missed anything.

Right let's kick off with serious stuff: the Pigeon blog. This week it's Stuart's turn to make our acquaintance.

The Great Big EU Blog censorship threat:

Mr Eugenides deals with the Marianne Mikko's plans to regulate eurosceptic blogs with his customary venom. Here's his demonstration of how to differentiate fact from opinion...

For example, "you are a braindead Estonian fuckstick" is fact; "I think you should go and fuck yourself, you braindead Estonian fuckstick" is opinion. See?

There are more dealing with this subject Charles Crawford; Shouting out loud, Berlaymonster; Nosemonkey; Chris White; Heresy Corner ... Even Jon Worth and Child of Europe cannot support the EU on this issue. England Expects has alas already been shut down by his EU employers; can we hope TEBAF* Margot gets the same treatment?

But for the best analysis here is an in-depth look from Redemption Blues, who gives you all the information on the proposal in all its nannying, anti-democratic glory. Why are 'they' so against blogging he asks?

...your writings can potentially reach an audience right across the globe; What could possibly be more conducive to "effective participation in the democratic process"? This is precisely what sets blogs apart, what makes them intoxicating for those who devote their time and energy to them. Their sheer variety is overwhelming: there are teenagers seeking catharsis for their hormonally-induced angst, feminists picking apart the latest batch of newspaper articles perpetuating gender stereotypes, even politicians anxious to show that they are not so out of touch as they are often lambasted for being. Yes, there is plenty of dross, yes, there are exquisitely crafted products that do not receive the recognition they deserve...

But the EU seems to feel threatened nonetheless:

we are confronted with Ms Mikko’s patronising assumption that the Great Unwashed are idiots, devoid of an ounce (or should that be a gram?) of discernment and common sense. Even if this were true, the best means of remedying the perceived problem would indeed be to enable readers to maintain a critical distance from texts through developing their analytical skills, rather than clamping down on blogs.

The EU is showing its true colours of late: An arrogant bureaucracy bent on "ever closer union" and they will lie and defraud the people to achieve what, to them is a noble aim. The people are "xenophobic" or "bigoted" if they are sceptical of the benefits accrued by the grand march of integration. Blogging is just an irritation to that bureaucracy, which can be dealt with by the flick of a Brussels mandarin's pen: they certainly did not let referendums bother them. If the democratic will of the people expressed at the ballot box does not go the federasts' way, that ballot box gets withdrawn. If Referendums can be ignored so flagrantly, what hope is there for the mere freedom to tell our (un)elected masters to "fuck off"?

If blogging is ever to be a more powerful force in politics it must cease to be a bunch of incestuous conversations. DMK suggests a more ecumenical approach, of which Britblog roundup is a part and it is heartening that the great issue of censorship is the means by which the EU has united bloggers, sceptic and federast in a great wail in favour of free speech. This is good - and should make even the PC lefties think twice about trying to impose some sort of "voluntary code" here. Everyone should be entitled to their voice, however they chose to express it. One has no right to not be offended, nor should any political solution or project ever be seen as an a priori good. Everything must be argued in public, without fear or favour. Any other way lies tyranny, and Europe of all continents should find politicians who know better.

Now onto matters more parochial...

Politics

There's only one, Harry's Place, dealing with the seemingly endless US presidential election. Who won the first debate?

There are two blogs dealing with Ruth Kelly being fired quitting: Heresy Corner and StroppyBlog. Both are glad to see the back of her. Can't say I disagree.

The ID card is about to go Live for foreigners anyway. Boing Boing highlights how far the UK Government has already gone in its plan to turn the UK into the fourth Reich. But there is some positive news: The youth of today aren't too bad... They think the Government's ID card site is "creepy". Scribio ergo sum reports...

There are two blogs dealing with the Stockwell tube shooting inquest Heresy Corner again and HarpyMarx.

Finally there's the Liberal Democrats. Bless them. Liberal England has some advice for Nick Clegg. Suz blog says that Lembit has a serious side, and Hunterand Shooter deals with a councillor who's a nonce. Next left deals with Peter Hain's ideas on electoral reform: to my mind the last refuge of a failing party, but It seems quite important to the yellows: It is suggested none the less they're possibly desperate enough to compromise on PR! Finally Eddie Mair gets his revenge on Nick Clegg. That'll learn 'im to make prank calls

Socialism sandbox.

Gaian "economics" thinks nationalisation is a good thing. Or something.

Social issues

I cannot imagine how difficult prioritising 999 calls is. Hooray there are some people prepared to take the responsibility. They do not get the excitement of other bits of the emergency services. Nee Naw tells us what it is like...

Croilia deals deals with Toxic childhood, a book about how we're screwing up our children.

The F-word deals with plans to Ban Prostitution in hotels. Twice

Cruella deals with the other Feminist issue: Domestic Violence.

Natalie Bennett wonders what happened to the 2million 'Surplus' women.

The Daily Maybe deals with the different social spheres of Cambridge.

Miss Prism deals with the American Culture wars by pointing us to a review of Left behind, the Fundamentalist Christian Lunacy primer for rednecks.

Miscellaneous:

Why do the British talk about the weather?

A Short Story,

And Bridgit tells us about Islington's flowers.

Cranmer deals with the pinkos in the CoE.

Meanwhile here in France deals with Life in the pit (orchestra, not hell)

So that concludes a busy week in the UK blogosphere. Next week expect lefties crowing over the death of capitalism and libertarians trying to explain how it's all actually the Government's fault. Tories will be drooling over their conference bounce - we will be back to normal. In a week where the world seems crazy, at least the Blogosphere is united around the principle of free speech. And there will always be the pigeons.

We are not doomed.

As ever, nominees to Britblog [at] gmail [dot] com. Next weeks host is... Me according to the list, but actually I think it is Cabalamat over at Amused Cynicism..

*The Ever Blessed and Fragrant

Hank Paulson's plan to federalise the bad loans currently poisoning Bank's balance sheets is on a knife-edge. If it falls, we could have the worst day's trading since 1987, or if it is finally approved, we could have the best day's trading since urm... last Friday.

Every crisis has a cause rooted in the economy (except black monday, which was caused by black-box trading overwhelming markets). This one is simple. Banks, mindful of the shit their promises are backed by simply do not trust each other. This is manifested in the rate at which banks lend to each other rising relative to the rate they can get overnight with the Bank of England. This is called the Libor Spread, and it has been the story of this downturn in the markets. When Libor is rising the stock-markets are falling, and vice versa.

Now these assets on banks' balance sheets are themselves backed by loans which are in turn backed by property. How many people do you know who have been turfed out of their home for failing to pay their mortgage? Not many. Most Mortgages, even sub-prime ones are paid off. Therefore these assets have some value. True nothing like the value that was ascribed to them when the finance to make them was cheaper, but a value none the less. Part of the reason that they are so toxic to Banks' balance sheets is that as the market in them is shut, no-one knows what they are worth. If these were to be bought en masse by the treasury in return for non-voting preference shares, then banks would have no reason to fear lending to each other and all would be well again. In time, Mortgage backed securities would be saleable again and it is possible that the US taxpayer would make a profit, or would benefit from an equity stake in the businesses they've bought into. It is also conceivable that the tax-payer would make a loss, but this would probably be offset by the gains in tax revenue from businesses in an economy which may yet avoid a depression.

Which leads us to the politics of this. The candidates have a different attitude to a deal: Obama is positive because it makes him appear bi-partisan and statesman like but McCain is formenting revolt, in part to distinguish himself from Bush and in part to indulge in a bit of 'hang the banker' populism.

Having run round saying "we're doomed", politicians cannot subsequently put a brave face on failure. And the markets will take a very dim view of failure. My view is that we're not doomed, that this is just a normal recession except with the major victims being banks as opposed to manufacturing, and we've just got to get on with it as best we can. But I'm just a broker. Politicians, however love a crisis, because it makes them, and the solutions they think they offer, seem more important. Washington, and central government in the UK is attempting a power grab: in this the credit crunch is just like the great big War on Terror.

The majority in the house are democrats, and my guess is they are arguing over making sure the executives and shareholders of the banks suffer sufficiently for "causing" this crisis. (Federal legislation that aimed to prevent "outdated" and "discriminatory" lending practices, which it was thought were denying "the poor" the benefits of home ownership, had nothing to do with it...No siree...). So long as it's just bankers losing their jobs and homes then who cares eh? Let's face it: it's a dog-eat dog game, finance and if you can't take a joke, you shouldn't be there! But what about the blue collar workers - the secretaries and mail-room staff; the janitors and waiters? Everyone forgets about them in a desire to enjoy the fall of the "masters of the universe". But the democrats will come to some deal in any case. They have to.

Warren Buffet - the sage of Omaha who forsaw much of this crisis has just bought into Goldman Sachs to the tune of $5 billion. His maxim is "when everyone around you is fearful, get greedy and when everyone is greedy get fearful". He's an insider.

My guess therefore: there will be a deal today or at the weekend, and stocks and the Dollar will rally. Don't bet your house on it though.

The Labour Party and the Unions have decided that the latest "evil" are speculators who make "money out of other people's misery" by short-selling stock. For those who don't know short selling involves selling stock you don't own, in order to buy it back at a later date. By this mechanism it is possible to profit from a falling price. This can have the effect of creating a self-sustaining wave of selling, as long-only investors panic and bail out. There are too few buyers and too many sellers and the price falls rapidly. In this fear of something simple but poorly understood, the union chiefs have created an unholy alliance with bulletin board bores, who are forever pedalling conspiracy theories about Market makers and shorters deliberately manipulating the market for profit. It's all bollocks.

Of course it is in the shorters' interests to create these panicky market conditions, but it requires a credulous herd in order to create a profitable panic. Only the short interest in the shares of HBOS were just 3%. To put this in perspective the short interest in Ford motor company today is 18%. Shorters did not do for HBOS. Market uncertainty, regulatory panic and poor disclosure did.

The problem with short selling is that stock needs to be borrowed in order to sell it, and this costs, limiting the time frame for your bet. Long-only investors can buy and forget, as their risk (unless geared) is limited to their investment, and dividends are paid should the company make money. Not so shorters. If you got caught on the short side last Thursday evening, you would have been very, very badly burned the next day. Time ameliorates risk for Long investors, but not short ones. So shorting is inherently more risky than going long.

Despite this, short sellers fulfil an important function in the market - to drive the price to realistic levels as quickly as possible, by allowing those who believe the price is too high to signal this to the market where it is believed (on the orderbook) instead of where it isn't (newspaper columns and internet bulletin boards). Because their bets are short term, they can cause the pain of a change in market conditions to be over quickly, rather than drag it out over years. Inevitably, when the price has gone too low, there is a switch in sentiment, and all those short sellers have to close their positions - buying. This creates volatility at the bottom of the market, acting as an effective signal that things have changed, and is known as a short squeeze.

So at the moment you have ignorant lefties and bedroom day-traders screaming in satisfying moral indignation about "vulture capitalists" and on the other hand, you have outraged libertarians screaming at an unnessesary imposition on the workings of free markets. I'm somewhere inbetween. A regulator, if it is anything, should be able to spot a disorderly market. During such times it may become nessesary to curtail panic by preventing short selling - and that is what was done globally last week. It is temporary and when the markets are not undergoing the screaming ab-dabs selling at a passing shadow at the window, it will be once again possible to make money out of falling markets. But the markets will then be calm - with any luck you won't be able to.

...Was a lot of waffle. Sure he made some noises about restraining "the spivs" in the city and promised more unearned boondongles for Labour's client state which went down well with the simian lumpenproletariat sitting in front of him, but he's still toast. He said nothing of interest to floating voters, nor did he offer anything like a coherent narrative. "Fairness?" as opposed to crushing injustice presumably. So he's still going to lose his job, the only question remaining is "when?".

(Via) Bloggers4Labour ask, in quite a thoughtful post what the left's response should be to the Crisis in capitalism. In doing so, B4L reveals the intellectual vacuity at the heart of Labour - whose project, a large activist state striving for "equality" - has been shown to be wasteful. So how can the left seize the opportunity presented to the anti-capitalist left by the credit crunch? In attempting to answer, B4L warns, apparently without Irony...

...to avoid reverting to Statism. .... to look Capitalism in the face and take what works - genuinely free markets and competition - and throw out what doesn't - 'favoured' corporations, preferential loans, Corporatism, a fawning appreciation of the power of 'business'...

but a fawning appreciation of the power of business whilst seeking to constrain free markets and competition with excessive regulation has been the defining charicteristic of the New Labour years.

Statism is the Labour way. It is what they do and in its post-socialist guise, reached its apotheosis under Gordon Brown. What we are witnessing is the final failure of the activist state. It is statism which has failed to deliver better public services despite massive (obscene?) spending increases on them. It must not be forgotten since cyclops abandoned prudence in 2000, we have endured the biggest rise in taxation in peace time history. And more, the Prime minister presided over the second fastest increase in borrowing at the same time. And the spending has been entirely wasted on pointless parasites like diversity outreach co-ordinators in local Government and an extra 200,000 civil servants worthlessly pushing paper around whitehall, in an effort to "direct" money at a burgeonning underclass. The tax code is an order of magnitude more complex than in 1997, generating employment for an army of tax advisers. Businesses are forced to employ compliance and tax collection staff who are state employees in all but name.

Can you think of something more ridiculous than someone calling himself "Bloggers4Labour" uttering the phrase "...without resorting to statism...."

Basically these guys are saying "the bloggertarians are right, but we cannot admit it to ourselves." This is the worst kind of political tribalism. Because they self-identify as "labour", they think that Labour will do what ever they do better than the Tories, who are by definition evil, even if they have the right policies. This is no different to Devils Kitchen who takes every Cameron speech he agrees with and says "yes, but I don't believe him". Bloggers4Labour does the same. They just cannot admit what they know to be true.

Actually look at what people say. Now the Liberal democrats are talking about Lower taxes, all they need to do is drop PR and Federasty and they've got my vote - the Lib-dems for all their faults do not have an Anne Widdicombe wing, as the Tories do. But as it stands, the Tories are for Lower taxes and freer markets. And they probably won't employ quite as many Gestapo as New Labour. And they certainly won't roll over quite so pathetically for the EU as labour has. This is not Libertarianism - that's probably because they're Conservative, but it is better than the current shower of a Government, and it is achievable. This also appears to be what Bloggers4Labour is calling for - a Tory Government. Naturally he also makes the wishful whinge about "equality", without saying how this could be achieved in a free market: that destroys the argument in an otherwise interesting post.

The reason Bloggers4Labour is "left" is that he favours equality over liberty. Unfortunately this is a zero-sum game. In order to ensure equality you must constrain the liberty of the successful to dispose of the fruits of their labours as they see fit. In allowing freedom, you accept that some will be rich and some poor. And the overwhelming majority of "the left" think the state is synonymous with society, feel it their moral duty to be generous with other peoples money via the tax and benefit system as a means to ensure "equality". Thus they demand, with a straight face and the certainty of the converted, for higher taxes they themselves will never need to pay.

Bloggers4Labour is calling for a rethink from the left, abandoning its century-held raison d'etre and swallowing wholeheartedly an alien creed - free-market liberalism. They are asking a party to do so during the 18-month fag-end of a deeply unpopular government, headed by an incompetent man who is less able to control is party than IDS was the Tories in 2003. If that is the Labour Party's best hope for renewal in office, as advised by someone who appears to be genuinely on their side; they're totally fucked.

Normally I quite like "the Law west of Ealing Broadway". The Magistrate applies the Law as it should be applied - fairly and with discretion. On occasions, however he gets a little onanistic about "the Law" - a habit of all who serve that great priesthood in the theocracy in which we live. That is the legal profession and assorted hangers on, who mistake "the Law" for Justice.

Because something is against the Law is not a moral reason to forbid something. A law is a manifestation of the fact that someone somewhere has decided that something should be illegal. If a law is widely, nay universally broken, then it is not the population who are wrong, but the law itself. The possession of Marijuana is an obvious example. The rule of Law works on two provisos: that the law is consented to, and it applied proportionately and fairly. The speed camera* is neither. It is arbitrary. It applies the same punishment to someone doing 10%+4 mph over a stated limit at 5am on a sunny, dry summer Sunday as at rush hour in a contraflow in freezing fog, when even the stated speed limit is probably too high. The people suspect that road safety takes a distant second place to revenue collection. And they're right.


So when a magistrate suggests that someone who sells lawful equipment that warns of speed traps in order to prevent the grossly disproportionate punishment meted out to someone who gets caught, should not call the police when he is burgled, he is being a self-reverential, smug, po-faced twat. Normally I agree with his take on matters legal, but in this case, he is plain wrong.

What we need is more traffic police catching tailgaters, undertakers, Reps doing their e-mails and secretaries doing their nails; perpetrators of careless, aggressive and dangerous driving. We need to clamp down on the kind of arsehole who in Jeremy Clarkeson's words thinks about his "gearstick aggression strategy" for his commute in his 3rd hand BMW M3. In short, as in all things, give people like the police discretion to enforce dangerous driving legislation and leave the arbritary automatic enforcements of outdated and unfair limits to the Tax authorities.

The Magistrate would generate more respect for "the law" from those who are subject to it, if he exercised the discretion that was so lacking in the rest of the speed camera system by indulging the occasional mistake from an otherwise careful driver; instead of enforcing the law to the letter, like the automata that goes flash in your rear view mirror.

If you want to help the campaign to rid the country of this scourge, captain Gatso's website is here.

*I have been caught just once in nearly a decade and a half of motoring, and believe that to be caught by one represents a crime under "due care and attention". Even so, I resent them deeply.

The last time I took 2 weeks off, Bear Stearns went bust. This time, it was the rest of wall street, or so it appeared as I furtively used a mobile phone from a trench in Northern Ireland. Being a simple broker, I've never really been involved in complex products, and I bemoan the incentive system which causes people to lard their investments with leverage and complexity. This is not just the big banks and their big clients, but all of us too. It is as Chris Dillow points out, the 'principle-agent' problem. The incentive when building products designed for the long-term is to go for short-term saleability - that way lies a whacking great bonus. Failure to control this excess means the wreckage of once proud banks lie, Ozymandias like as monuments to man's Hubris; a result of an attempt to create money from securities backed by an illiquid asset whose price sometimes falls. The complexity of CDOs allowed brokers to be unconstrained by managers who barely understood the product regulated by people who certainly didn't. Thus highly remunerated bankers succeeded for a while in polishing the turd of sub-prime mortgages.

It is about greed, but it is also a regulatory problem. Regulators are mostly staffed by failed bankers. They are mere bureaucrats, interested in box ticking. If the city wants to get something past them, they will. The regulator's incentive to stop them is just not great enough, and the bureaucrat just isn't as immaginative as the bloke who stands to make "fuck off" money (ie sufficent money to allow you to say "fuck off" before you put the phone down). The regulator, like a bad General, fights the last war, and will certainly not be able to avoid hardship and financial crises in the next decade. This is because the next crisis will come from where they are unexpected - almost by definition. Like wild fires, recessions might be better if you had regular small ones, rather than pouring liquidity in an attempt to keep the boom going for ever. Let's call that the "Brown - end to boom 'n bust" approach. Worked well, didn't it?

You know you're in a recession when you look at the balance sheet before you look at the Profit and Loss account. So we're going to move into a time of conservative investment strategy. Companies will boast about their low debt and consistent dividend payouts. Nevertheless, companies outside the financial sector will be OK. Their profits may drop, and they will be a lot more cautious with their hiring - if you haven't got a job it may be harder to get one - but otherwise financial life will go on. It's interesting that Lloyds TSB the safest of the British banks has decided to buy HBOS, taking advantage of the low price and regulatory panic to get a mega deal past the profit police, and Barclays bought the business of Lehmans for $250 million, the kind of money they lose down the back of the sofa. Could we be doing to America what they did to us in the 80's?

Which brings us to the final political point. This is not the end of capitalism, but the end of a 15-year credit expansion, all part of Capitalism's great creation-destruction cycle. This is an opportunity for conservatively managed businesses to pick the gems in the ruins. What will turn this credit crunch recession into a depression, however is protectionism. When countries try to defend jobs, everyone loses. So stupid lumpen lefties are calling for the nationalisation of banks, protectionism and ever more regulation, seeing the free marketeers on the back foot they are taking their chance while their enemy is weak. We would be mad to give into them now because whatever the problems with free-market chaos, it is not as disastrous as a centrally planned, isolated economy. Whatever the problems with free-market capitalism, the solutions proposed by the left are certainly worse.

In any case, I'm back at my desk so the problem's over.

I am Sorry to have failed to entertain you for the last week. Travelgal is traveling in the far east and The dude is Serving his country on a Territorial Army annual camp. I had hoped to have an internet connection, but orange failed me. Normal service will be resumed one week hence. Do not go away! There will be a photo of me manning a number of macine guns appearing here shortly.... I bet you can't wait!

Aside from an unfortunate acronym, BO will be a great President. He will be remembered - not least it has to be said because of the colour of his skin - whatever he does, should he make it to office. So why are we, here at AVBD defying our countrymen 86% of whom prefer Obama to McCain? It is because I would rather have a Creationist than a Socialist near the Whitehouse. And as McCain is neither, he gets our vote. Barak Obama a socialist? Yes, he is. He has the economic instincts of the more lumpen members of the British Labour party, who see profit or wealth and their socialist brains with their simple binary programming think 'tax', see a free market and think 'protection' and therefore the good Senator is unlikely to win any prizes for economic management. But rhetoric aside (and that is as much about who is going to vote for you as what you will do once they have) there is not really that much Obama or McCain can do to really make a mes of the economy that the economy is not doing to itself.

The problem is that Government thinks it is it's role to regulate and control the economy. In any free market system, there is a creation-destruction cycle. This is what gives the economy its strength

BO is however a peacenik, and is unlikely to embroil the USA in too many wars. (The USA is a superpower and therefore cannot avoid them entirely). The easiest way to spend less is to fight fewer wars. This will be offset by protectionism, which is inflationary and can turn a recession into a Global depression.

But in terms of Americas reputation with the world, BO will be hugely sucessful. Anyone would be after the Shrub

This year We've made it to Number 24 in the right of centre blogs list over at Iain Dale's ... We're getting there! What do you think I need to do for a top 10 slot next year?

I'm delighted too that the Waendel Journal, Mr Eugenides, Raedwald and Heresy Corner all scored in the Top 50. I've noticed a move away from bilious ranting (satisfying though this is) towards more thoughtful analysis. The anger at the sheer mendacity and incompetence of this Government is still there, but with the Brown regime in its death throws people are looking to the future. In this, there is a split in the right. Most of the rightish blogosphere is less than enthused by the prospect of a Cameron Government. Whilst the people who think he's just blue Labour have thankfully crawled back under the stones, there's little enthusiasm for what little of his agenda is now clear.

Then there's the Tory bloggers, who are simply enjoying Brown's pain. But they too are now thinking about the future and coming up with ideas about what a Conservative government should do. It is likely that Cameron will disappoint both arch Thatcherites and Libertarians. Perhaps that is no bad thing. Radiaclism in Governemnt is dangerous. I like to think I'm somewhere in the middle: in the Tory Party, but not of it. Radical (extreme even), but realistic about what can be achieved. I certainly know that my brand of Anarcho-Libertarianism is not exactly popular. Cameron will win the Next election and I for one will celebrate. After all anything has to be better than the rubbish we've put up with for over a decade. The next stage - moving the Centre Ground and public opinion towards libertarianism will be a much, much harder prospect.

Update: I'm at an astonishing Number 42 ( the meaning, of course, of Life the Universe and Everything) in the Overall Top Political Blogs list. Thanks to everyone who voted for me!

Some lefties have come here suggesting that because we thought Palin ticked all the right boxes for McCain's VP, we somehow endorse her occasionally barking views. We don't.

In any case, I'm not sure she is a creationist. She is on record as saying that Intelligent design should be taught in schools alongside eviluton evolution, which is not the same thing. I disagree that ID should be met with anything other than a derisory snort of ridicule, but most Americans are with her, not me. Not that I would be particularly fussed if she was a "world in 6,000 years old - made in a week" loony.

She is against abortion. So is the largest and most populous faith in the world, and the evangelical backbone of the GOP, so it's hardly a controversial view. Wrong, yes, but there are more people who agree with Mrs Palin that with Joel, Travelgall and Me. We're the ones who need to explain our views, not Mrs Palin. This is why she's running to become Vice President of the USA and not us (the fact we're British doesn't help either).

Thirdly the charge is laid that she is in favour of Oil exploration in the Arctic. Shocking, isn't it? Only on the left is it axiomatic that oil exploration is an a priori bad. I would rather it happen in Alaska with strict environmental controls than say... Russia, who could bomb neighbouring countries (for example) without a peep from the international left, let alone spill a bit of the black stuff. This is merely Anti American prejudice dressed in Eco-lunacy.

Travelgall observes American politics more closely than I do, and is more tolerant of Religious enthusiasm. I frankly coudn't give a toss who McCain picks as his running mate, and the only reason I support McCain as enthusiastically as I do is because I've £10 at 10-1 on him winning (I picked him before he was selected as GOP candidate). Plus the fact that anyone as enthusiastically supported by Joel and his fellow travellers on the left as Obama, is likely to be a fucking disaster. By your enemies are you known. On that basis alone, I'm getting more enthusiastic about Mrs Palin by the day.

Always bankrupts the country. At least the Tories in the late 90's merely had a moral and spiritual vacuum at the heart of Government, while the country itself was being run quite well. The bills were paid and the taxes falling. Not so this time round.

When Gordon Brown abandoned sanity Tory spending plans in 2000, he started with a remarkably strong fiscal position. For the next 8 years, he enjoyed unprecedented levels of Global growth, boosting tax revenues and keeping unemployment low. He ran an economy with increasing numbers of people - not an ageing population like much of Western Europe, which should help pay for social costs such as pensions. Because of relatively free labour markets (a Tory policy maintained in the face of bitter resistance from Labour and the EU) British unemployment remained lower than in much of Europe.

So Britain should be able to weather the storm better than Western Europe, or the US where the financial crisis started, Shouldn't it? In fact it looks like the UK might be the only G7 country to endure a recession this year. Well done, Gordon. Bravo. The sad fact is that it was so predictable and I can legitimately say I told you so.

Yesterday, the Ex-Chancellor announced a package of measures to help the housing market, and take some of the pressure off him at his upcoming party conference. The only word that can be used to describe this package is 'pathetic'. And the press across the political spectrum agrees. A rise in the threshold of stamp duty which means it is not going to be paid by buyers of one bed flats and run-down ex-council flats, about 10 miles further south than previously, a shared ownership scheme that will be taken up by fewer people than (nationalised) Northern Rock alone will repossess this year; and that's it! The Ex-Chancellors sock-puppet has taken to running round in soiled long-Johns shouting "we're dooooomed, I tell ye" resulting in a collapse in the Pound.

With the Chancellor breaking the fundamental rule of economic management of the economy: Never talk the economy down, The prime minister is hiding in Kirkaldy and refusing to come out from under the kitchen sink except to repeat his mantra that he's "getting on with the job" and even more bizarrely that "this is what the people want"; it is clear that there is nothing left in the heart of New Labour. Inevitable comparisons are being drawn with John Major's government but I can't help thinking this is worse.

The fact is the 8 years since Gordon took the reins of the economy, he has spent and spent and spent. Very little of this has had any positive effect. There may have been some improvement in the NHS, but at the price of doubling the expenditure on it. Is it twice as good? Education? remember the priorities of Tony Blair in 1997? Remember Tony Blair? And the kids are still illiterate. Despite ever increasing council tax, the bins are now being emptied every two weeks in many places. And then there's the rules, compliance with which drives up costs insidiously.

I frankly couldn't give a toss if the dole queue snaked round the block, if it was the army of worthless apparatchiks hired by this most incompetent government who were getting fired. But unemployment is not increasing amongst the Tapeworms. It is small business going under as a result of the consumer slowdown, whose depth and severity can in part be laid at the door of nearly a decade of tax policy. It is big business reducing headcount in anticipation of a demand crunch or in response to the unavailability of credit. The Tapeworms, hiding out in their council offices, self interestedly ensuring Government diversity targets are met or dreaming up new ways to ensure that single people do not get laid, remain in safe employment.

Before you even start thinking about what this Government has done to our most basic freedoms, you need to look at the management of the economy. The only person who I know who self describes as a "Socialist" declares almost proudly his profound ignorance of economics. The Labour party screw the economy up, every single time they get their hands on the train set. They over tax and they over spend. They do not understand fiscal restraint. They do not understand that the tax-payer is not a bottomless pit of money. They think that failure to spend on pet projects is "putting money before people". They think state spending is more 'moral' than selfish 'private' spending. They therefore think it appropriate to measure inputs. As a result, they have the budget management of the chavette in front of 'price drop TV'. Labour has failed the country and now the money has run out, there is nothing left to give any stimulus to the economy. So the poorest people, in the lowest paid jobs will lose them. The Labour Party has therefore failed the stupid people who voted for them worst of all.

One of the defining things which separate those on the left from those on the right is the attitude to inequality. The left broadly think that inequality a bad thing and reducing inequality is the principle thing a state is measured by. The right, on the other hand are intensely relaxed about it, and tend to focus on absolute income - so long as the poor are getting richer in this view, it doesn't really matter how much faster the rich are doing so.

Despite the fact that no-one would seriously claim that the living standards of the poor are getting worse - they aren't - the left still claim (over and over and over) that "the rich are getting richer and the poor are getting poorer" This isn't true and lefties do their argument a great disservice by trotting it out. It's lazy cliche like this that poisons political debate.

There are many reasons that extreme inequality is bad. It can be blamed for crime, for unhappiness and ill health. And one would be partially right to do so. Inequality does contribute to some of these things. But it is not their cause. Instead, inequality is a symptom of a deeper malaise. Inequality is only a cause of crime and disorder if the poor feel alienated and hopeless - they lose their stake in the system. Furthermore, it is not as linear as people think. The left tend to focus on the extremes - the investment bankers and the welfare system, the right focus on the Average.

Most people with jobs, even on the minimum wage, can have a home, TV and a Car. It will be a small home and a old vehicle (and get punished by this Government as a result). Better still, a minimum wage job can, with application lead to a better paying one - and overtime can raise your income quickly. We're not French, and I know of no person rich or otherwise who works a 35 hour week - so end the lunacy of attempting to ratify working time directive. because people can prioritise money over time if they wish, Inequality amongst people with jobs is therefore just about choices and positioning. I've gone for an easy life and shorter hours at the cost of lost pay. My corporate lawyer and investment banker friends have gone the other way, and they're absurdly busy and I hardly ever see them. But it is not just professional jobs. I have friends who are builders and plumbers. We all started with low pay and work hard to build things up. None of these people regard themselves as 'poor', and neither do I - though I've been earning much less than the median for the last 3 years.

So what's the difference between people with jobs? Modern cars, for example are so good, that in practical terms there is little difference between a Rolls Royce and a 5-year old Mondeo estate. Except the Mondeo is cheaper, more efficient and will carry a sofa. The real difference is what the Rolls Royce says about you. And as the state should have no interest in whether you buy an Aston Martin or a Mini - so ensuring some statistical measure GINI grows or shrinks is entirely irrelevant. A building is a building. You may have more rooms and higher priced sofas, but if you work, you can still either rent or buy. A big house is a luxury, but there are very few people in work who do not have a fixed abode of some sort. Unless you fall into debt - your fault if you do - the only difference between people who work is access to positional goods. All that matters therefore is the percentage of households without work.

When the leftie talks about 'poverty' he, just like the righty is thinking of the benefits and casual work, single parent family on a council estate, the long-term unemployed, and the transient population of people existing in bed and breakfast accommodation (who form the majority of those described as "homeless"). Well such people are going to be poor in any society. Real poverty, where it exists in this country is amongst these long-term benefit recipients. The left seem to believe that statistical jiggery pokery lifting some people in this group out of relative poverty defined in an entirely arbitrary way as on one side of an income line and plonking them on the other side of that arbitrary line represents a great achievement. What we need is stable families with jobs - not a bigger benefits bill. This is about education, and the tyranny of low expectations found in the grottier end of the Comprehensive system. So it is about improving education. It is about reducing benefits dependency. It is not about how much investment bankers are paid - any measure of poverty which would increase because Warren Buffet and Bill Gates move to the UK, is a nonsense.

Unity, in a typically long and detailed post, describes the origin of this type of poverty. He blames the Thatcher reforms for destroying whole industries removing the economic raison d'etre of entire classes and regions of people. This causes the large spike in inequality in the 80's as people 'thrown on the scrap heap' to use the left-wing narrative, were unable to take advantage of the large increase in wealth in the '80 and 90's and lost hope turning to crime, resulting ultimately in today's 'broken society'. If this is the case, we need to ask why are people still on benefits more than two decades after the event? I accept that the Thatcher reforms were painful, but they were also necessary and long overdue. What was not expected by the Thatcherites was the moral breakdown amongst the working class. Norman Tebbit suggested that people do what his father did and get on their bike and look for work. People who did as advised are now firmly middle class. But He is loathed on the left as "Thatcher's favourite Norman 'Get On Your Bike' Tebbit, one of the most extreme right-wing politicians this country has ever produced". The left still do not think it important to ask why, some people are still on benefits. The fact is that the habit of worklessness had set in before Thatcher, and the welfare state is to blame. The welfare state worked for a Generation, until it changed the culture of those it sought to help.

The welfare state, helped by leftist teaching in schools that the rich and powerful do unto you and therefore you should be grateful for the crumbs thrown to you by benevolent socialists, removes the incentive to strive. A culture of entitlement replaced the self-relient WWII generation's pride and stoicism. This, allied to the obscene marginal tax rates endured by those on the minimum wage, and the tax burden endured by even the lowliest paid worker mean that the incentive is to get yourself 'on the sick'. Once you accept your role in life is to milk the benefits system, there is no point in working for education, no point in struggling to obtain independence and little point in trying to maintain family - there is little point in doing so as you will face withdrawal of benefits for living as a couple. And that is as a result of poorly thought out and bureaucratic benefits system, which combined with poor education, engendering a total lack of imagination is the cause of long-term benefits dependency, single parenthood and long-term unemployment.

So inequality is about the choices people made and continue to make in response to the options presented to them. Unfortunately the options presented to too many people are poor and that is a policy issue. Poverty is something that is amenable to Government action, but its solution does not reside in the current benefits system. Inequality, on the other hand is a result of freedom, and is not so amenable. Back in the day, people did what their fathers did and were grateful for their jobs. There were benefits of this lack of freedom in the form of tightly knit communities but at a cost of stultifying social conservatism. Now it is easier to succeed, especially if your parents are engaged in your education. It is also easier to fail and fall back on the state. The Welfare safety net has for some become a squalid hammock in which some people decide to reside for their entire lives. That is one option which needs to be removed.

So Unity is right. Inequality did increase under Thatcher as a result of her Government's policies. It does not nessesarily follow that those policies were wrong. Inequality has remained high because of the way the Welfare state is structured, despite (because of?) new Labour's extra spending and it needs urgent reform. You want ideas? Well I'm torn between the Citzens basic income combined with a flat(er)-tax and a simplified, less generous and time-limited version of the system we have. I'm no expert, but I can see that almost anything is better than the bureaucratic tax and benefits system we have at the moment.