Friday, 21 March 2008

Cut, cut, cut...cut, cut, cut...

The US Federal Reserve (or "The Fed" if you're a too-cool politico or city type), cut interest rates again in attempt to stave off recession in the US. Will it work? In short, no. The Fed's reactionary approach of late (I'm not sure Alan Greenspan would be responding in the same fashion), shows a real failure to understand the most basic aspects of human psychology. Apart from the fact that banks worldwide are less willing to lend to each other and to us normals, the real issue is that public confidence in these institutions has taken a massive hit.

You might be thinking, "But isn't the Fed trying to restore confidence in the economy?". Yes, that's exactly what the Fed thinks it's doing. In fact, by making such dramatic rate cuts (about 3% in the last 6 months) the Fed is merely underlining the fact that there are lean times ahead. It's like shouting from the rooftops that we're in big trouble and hoping that it will resolve everything. Unfortunately for the Fed, and probably the rest of us, that shouting is going to fall on deaf ears.

I imagine the rate cut will offer some short term bump in economic performance, but it will take a lot longer for public perceptions to shift and for confidence to grow.

Friday, 14 March 2008

Boring, boring, boring (AKA The Budget)

Was it just me, or was this year's budget the most depressingly boring in years? In a way, I pity Alistair Darling; him being the human face for Gordon Brown's "leadership" on budget day. Poor Alistair hadn't a drug-free-athlete-in-the-Olympics chance of adding colour to Gordon's beige economics. For me, it was the government's failure to introduce the much-discussed plastic-bag tax that summed up Labour under Gordon Brown. Such a simple thing, and yet it could so easily have added a spark to this year's banality and shown that Gordon Brown actually has the capacity to make forward-looking policy decisions. After all, who would the plastic bag tax have adversely affected? Apart from plastic bag manufacturers, no one is really going to find themselves in economic turmoil because of it...if you think about it. It is a tax on laziness ("just didn't bother to bring one") and forgetfulness ("oh, I left it at home again"), and yet this tax would have signalled a government commitment to make real, society-level changes on environmental policy. I'm in agreement with Nick Clegg on this one...this was a "meagre, tinkering budget" with little evidence of leadership, even between the lines.

Gordon Brown still thinks he has adequate time in the chair to make up for Labour's lost ground in the polls. However, if he continues to squander every opportunity to make real decisions, we could be looking at Primeminister Cameron in a couple of years time. Scary!

Sunday, 2 March 2008

The Long Road to Lisbon

It was an utterly shocking outcome. It seems that 88% of the British public are in favour of a referendum on the treaty of Lisbon. What makes this result doubly surprising is that the poll was carried out for the completely unbiased "I Want a Referendum" campaign group. Whether the poll itself is flawed or biased is, in fact, irrelevant. Let us instead consider the potentially monumental impact of this poll. Yes, that's right folks, it will have absolutely zero impact on Britain's acceptance or rejection of the treaty. Unfortunately for anti-EU and anti-treaty groups, Britain's brand of constitutional monarchy makes no legal requirement for the holding of a referendum on any matter; it is for parliament to decide.

Aside from these issues, the simple fact is that such a poll will tell us very little about whether the treaty will ultimately be ratified or rejected. Furthermore, considering the Lib Dems are likely to support Labour in the passing of the treaty in parliament, the treaty is practically a shoo in as far as the UK is concerned. In fact, the only country where the treaty will be (by law) ratified by the people is Ireland.

For the Irish people there are many issues to consider in the run up to the referendum - the status of EU commissioners, Ireland's neutrality, and the roll of national governments in the EU, to name just a few. With any luck we'll be looking at those in a more detail as R-Day approaches (the date has yet to be finalised in Ireland). Whatever the outcome, I hope that the European Union will actually respect the decision of the Irish people.