British Government All Over the Shop on Obama Bank Reforms

The contradictory statements emerging from Whitehall illustrate how much of a shock President Obama’s dramatic announcement on bank reform was to the British government. Obama proposes to break up the megabanks and put limits on the size of institutions and their trading activities. This was a u-turn by the administration and is not at all in line with what the British government wants.

As I wrote on Thursday, Obama’s unilateral move undermines the consensus of the last year that the G20 was the place to pursue reform. At that time all the rhetoric from Obama, Gordon Brown and other leaders suggested that the key was to ensure that financial reforms are co-ordinated across the G7, G8 and G20. There is little point in one country, no matter how large, legislating in this regard when the markets in which the banks operate are global. Banks would just move.

Iraq War: What Did Gordon Brown Really Think?

Some excitement about Gordon Brown agreeing to be interviewed by the Iraq inquiry soon, before the election.

However, it may be that on the day much of the focus will be on whether or not he was parsimonious in his attitude toward the armed services in the run-up to the conflict. Coming under pressure on this front in such a public forum may cause him some minor difficulties. But it’s not the real meat of the matter.

On funding he will likely say that he endeavored to ensure that the military had what it needed, within reason. He’ll say that there are always competing pressures in these circumstances, but it was his duty to balance the need to fund the military properly as it prepared for war with ensuring limited public resources were used efficiently. Where there were difficulties around shortages of certain bits of kit he’ll say lessons were learned, procedures have been overhauled at his instigation and that he is brilliant, blah blah.

Obama’s Extraordinary U-Turn on Banks

Earlier this week I was one of the speakers at an event in London held to assess President Obama’s first year in office. One observation I volunteered was that it was surprising that he had not been much more radical in taking on and breaking up what might be termed the “mega-banks”. Apart from some grumbling he seemed largely content to live with a corporatist settlement of large, bailed-out institutions carrying on pretty much as they had pre-crisis. I thought he might have reached back into American history to the progressive era and advocated trust-busting and curbs on monopolistic financial institutions. But no, he seemed content to be boring.

Well, I take it back… looks like I was wrong. Obama’s proposals announced on Thursday are potential dynamite. They suggest he wants to go much further on bank reform than previously imagined. So far there is only the outline, but essentially he wants to limit the size and concentration of banks and restrict their activities. If he gets his way they’ll have to choose between being commercial banks that take deposits from customers or banks that engage in proprietary trading - investing on behalf of the bank itself (where many have made vast profits and losses). They won’t be able to do both. He wants to break up the big banks.

No Tory Party After the Election

“A new day has dawned, has it not…” That’s what Tony Blair said in his speech in the early hours on the South Bank to his intoxicated party as it celebrated a historic win in May 1997. And how right he was, a new day had dawned. May 1 was over and May 2 was underway.

What a party it was. Labour had booked the Royal Festival Hall to toast its success when the polls closed. To the sound of “Things Can Only Get Better,” Labour partied. At the front of a crowd of invited activists and excited guests, Neil Kinnock and Peter Mandelson indulged in some particularly bad “dad” style dancing. Blair was treated like a conquering hero when he arrived from his constituency in Sedgefield and then made that speech.

But I’m told the Tories have no plans to hold an election night party this year. They want to avoid looking hubristic and intend to play it incredibly low-key. They could also look silly if they book a party somewhere swish and then lose — or end up in a hung parliament. Also, with it looking likely that many of the counts will not take place until the morning after the election, the result may become clear only on Friday afternoon. A drunken thrash in the early hours would look daft in those circumstances.

Already others are making plans for election night parties — and there’ll be the usual anticlimax snore-athons in London hosted by the broadcasters for invited guests — but the Tories themselves do not plan a party.

Scott Brown: Five Interesting Facts

The world is going to hear a lot more about Scott Brown, the surprise winner of Teddy Kennedy’s old seat in Massachusetts. He had just a week’s scrutiny before polling day because the media only woke up to the tightening of the Senate race with days to go. But he’s interesting and seems a relaxed, naturalistic and self-confident politician.

As he begins his journey - which ends up with him either in the the White House, brought down soon under the weight of intense media pressure or ending up somewhere in-between in relative obscurity - it’s worth laying out what we know about him so far.

1) His chirpy daughter Ayla was a contestant on American Idol (Series 5, apparently). Since then she’s been trying to get her singing career off the ground with limited success. Something tells me her father’s victory and all that media attention might give her a boost. By happy co-incidence she has new album out, on Tuesday 26th January. It’s called Circles (aren’t all pop albums of that kind called Circles or something similar?). It features a track called “I’m so happy”. Indeed.

The Myth of Lord Laming’s Brilliance

In the strained exchanges between Gordon Brown and David Cameron at Prime Minister’s Questions on child deaths and abuse in Doncaster, one name was invoked as though it somehow settles all arguments. Yet again, with a social work disaster in the spotlight, the prime minister reached for the sainted Lord Laming.

Cameron asked if the full reports from Doncaster will be published. Brown said no, he had taken advice from various sources and thought it best not to publish in full. He cited Lord Laming’s advice on this matter in particular. Laming is a name that gets right-on MPs of a particular kind nodding gravely: “Ahhhh… if Lord Laming has pronounced then that must be right.”

Brown then put on his best “don’t be silly” voice and told Cameron: “Lord Laming is respected right across the country.” Is he? Is this actually true? I’m not overflowing with respect for him, and I’ll wager I’m not alone.

PMQs: Cameron Should Mind His Manners

Why is David Cameron tending to lose his weekly encounters with Gordon Brown of late? The next clash is about an hour away, as I write. The Conservative leader used to win regularly but has struggled a bit recently.

First, Brown (having survived so many coups) is bouncy and won’t go down without a fight.

Second, there’s something intrinsically wrong with the way Cameron is approaching the clashes. In declining to give the office of prime minister due respect, he makes it easier for Brown to attack him in kind, with abuse. Instead, Cameron would be better off if he minded his manners. Let me explain.

Happy Anniversary, Mr. President

A year ago, Barack Obama was sworn in and delivered a speech that seemed historic at the time. With distance it has diminished to such an extent that today it seems mundane, just a great big blank. What did he say? Something about the work of rebuilding America, and… er.

Now the crushing defeat he and his party have suffered in Massachusetts frames the first year of his presidency. The Democrats losing what they had thought was their safest seat — practically owned by the Kennedy’s for 57 years — could sink his health-care plans. And it shows he is electorally mortal: Well organized opposition can beat him.

Geoff Hoon Resumes Normal Service

Geoff Hoon is an interesting man. This is a view that I accept is deeply unfashionable in many circles. But after his evidence to the Iraq inquiry (a calm, unexciting performance praised by Adam Boulton) it’s worth pointing out that there’s more to the former Defence Secretary than his caricature.

1) He’s of the old English right in Labour, a section of the party that has dwindled to almost nothing. But if it was still a serious force it would have much to contribute to any discussion about that party’s future. Amidst the sterility of the debate about how or whether to revive New Labour, the Labour right’s traditions have much to commend them. Its advocates were interested in manufacturing and the economy beyond banking, pro-social-mobility, Atlanticist and not obsessed with Whitehall micro-management to the point of madness. If Labour loses the election it should fish in these waters and will find it more productive than listening to a hundred speeches by David Miliband.

Rather Inflationary All This Deflation, Isn’t It?

We are told by the Bank of England that there is no need to worry about inflation right now. The problem it is fighting is deflation, by printing money and keeping interest rates low. That makes the publication of the latest CPI figures today rather awkward. The annual rate jumped to 2.9% in December, a rise of 0.6% on the previous month.

Yes, yes, there are special factors. This time a year ago the figures were depressed as the knock on of a surprisingly big fall in the oil price. And the Bank will say that today’s figures are a blip. Perhaps they are right.

But it is ammunition for those who say that having started an experiment in printing money — which usually leads to inflation — the Bank now doesn’t know how to stop. Has its experiment unleashed unintended consequences that will be difficult to control? We’re about to find out. And watching nervously are the politicians who know that inflation, if it takes off, is hard to handle without huge damage being inflicted on the government of the day.