Dawn

Dawn

Monday, May 10, 2010

So, over in Britain, Mr Brown has (inevitably but belatedly) placed his head on a (future) plate in order to crank up the pressure on the LibDems. Meaning that the Labour Party is putting forward an (unknown) leader as the potential Prime Minister after him. It will be interesting to see – if the Labour Party pulls off the miracle of a pact with the LibDems – how the country will react to this blatant horse-trading directed at retaining the power that the electorate clearly wanted them deprived of. Or, more importantly, how David Cameron will respond. Will he take the gamble of calling the bluff of the LibDems, forcing them to form a pact with the Labour Party that will struggle to avoid another election within a year at the most? Some, of course, see this as the best thing he could do – let his opponents drink the poisoned chalice of the country’s challenges, handing him a large majority as the next election.

The other interesting question is how the proponents of proportional representation etc. are enjoying the sight of the behind-doors political-dealing that is the meat and drink of coalition governments. And the uncertainty it produces.

Meanwhile – and more importantly – the leaders of the EU have finally decided that – hovering over an abyss – they need to go forwards in the direction of a real superstate, rather than go backwards to perdition by standing still. As our Ambrose has put it – “A European state is being created before our eyes. . . The euro's founding fathers have for now won their strategic bet that monetary union would one day force EU states to create the machinery needed to make it work. Or, put another way, that Germany would go along rather than squander its half-century investment in Europe's post-war order.” Quite rightly though – even as a (recent) advocate of such action - he adds the qualification:- “Whether the German nation will acquiesce for long is another matter”. Click here if you want to read more, including his brief detour into matters philosophical. I’ll just add that he feels that the fund on its own simply won’t be enough - “The answer - if the objective is to save EMU - is for Germany to boost its growth and tolerate higher `relative' inflation.” Which is not on the cards, apparently. So, Ambrose’s parting shot is that “While each component makes sense in its own narrow terms, the EU policy as a whole is madness for a currency union.” I guess we will continue to see if he is too pessimistic on this. Sooner or later.

Near term, I guess Portugal and Spain are off the hook and I imagine that the shares of Spanish banks rose at least as much as those of the British banks did today.

Finally . . . No great surprise to hear Gordon Brown using the phrase “progressive alliance” several times during his brief address to the nation tonight. But what was truly astonishing was to see how the UK media reacted as if his departure from office is something totally unexpected. I mean, can there really be anyone in Britain who felt he would be leader of the Labour Party for much longer?

I do hope I can stop writing about politics and economics soon. There are many things far more important in life. Though, as some Frenchman once put it - “In this world, nothing matters very much. And quite a lot doesn’t matter at all.”

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