Saturday 23 July 2011

HAVE THE US AND THE UK EVER PREVIOUSLY DEFAULTED ON THEIR DEBTS?

I am writing this post in the light of one remarkable piece of false historical revisionism that is being peddled in the context of the deficit negotiations currently underway in the US.  This is the claim that the US has never previously defaulted on its debts.

This is simply untrue.  In 1933 the US government decided that it would no longer honour its obligation to exchange its currency for gold and to pay its debts in gold as it had previously committed itself to do.  It simultaneously devalued its currency reducing its value as against what those who were holding it had thought it was worth.  This was an openly acknowledged default as was admitted at the time and as a Judgment of the US Supreme Court shortly after confirmed.  In 1971 the US government broke the remaining link between the US dollar and gold, which meant that the US thereafter refused to honour its previous obligation to exchange dollars for gold on demand from foreign (principally European) central banks.  That too by any definition was a default.

The UK has similarly made grandiose claims about how it too has supposedly never defaulted on its debts since the fourteenth (or was it the thirteenth?) century.   This too is nonsense.  In 1931 the British government also decided that it would no longer honour its previous commitment to exchange its currency for gold and to pay its debts in gold.  This was possibly the biggest psychological shock the world financial system has experienced to date.  The British government had succeeded in maintaining sterling's value on the gold standard without interruption since the sixteenth century.  The idea that sterling might come off the gold standard and no longer be exchangeable for gold in peacetime was thought inconceivable.  The entire world financial system had been constructed on the assumption of sterling's stability and convertibility into gold so sterling's sudden devaluation caused a total collapse in confidence across the whole world financial system.  To make matters worse the British government shortly after in 1932 announced that it was making a straightforward default on repayment of its war debt to the US, which it had incurred during the First World War.  The ensuing panic caused a bank run in the US and led directly to the US default of 1933.

The UK undertook two further major devaluations of its currency in 1948 and 1967.  These too should be treated as defaults since they took place during a time of fixed exchange rates.  The effect of these devaluations was that individuals who held sterling on the assurance that it could be converted into other currencies at a certain value found overnight that their holdings of sterling were worth less than the British government had told them would be the case.  Subsequent devaluations that have happened since 1967 differ in that save for the brief period when sterling was within the European Exchange Rate Mechanism the British government has not committed itself to holding sterling to any particular value.

These are the most obvious and best known defaults by the US and British governments made over the course of the twentieth century.  There have certainly be others in previous centuries.  Charles I was for example obliged to convene parliament in 1641 because he too could not honour his debts.  I believe that the US government also defaulted on its debts during the Civil War.

I do not know where the fantasy that the US and the UK have never defaulted on their debts comes from but as I hope I have made clear in this post this claim has no basis in fact.

OSLO

There has been a rush to judgement in connection with the Oslo tragedy.  Now that the possibility that the act was the work of Islamic groups has been excluded I would merely say this:  Norway is an orderly and stable democratic country.  That will not change if the tragedy is the work of a neo Nazi or far right group as some are suggesting.  Nor will it change if, as at the moment seems more likely, it is the work of an angry and deranged individual.  In the latter case there is a limited amount that any society however peaceful and orderly can do to guard itself against such people.  At this moment on this day further analysis or judgement about what happened is out of place.

Friday 22 July 2011

REPORTING SYRIA

Every Friday for several weeks now the western media publishes the same story.  This is of protests in Syria, which are invariably said to be the "amongst the biggest" or "the biggest ever".  A list of towns in Syria is given where the protests are said to have taken place.  References are made to film supposedly of the protests appearing on YouTube. Reports are provided of violence against the protesters by the security forces.  Dozens and sometimes scores of people are said to have been killed.  These deaths are then added to a mounting total of deaths since the protests began, which is then published every week and now runs to well over a thousand.

It requires careful reading to notice that these reports all have one origin, which is the Syrian opposition, and that they lack any credible outside verification or corroboration.  Whilst protests have unquestionably taken place it is a remarkable act of faith to assume that those who claim to be organising the protests are the ones who can be trusted to report them accurately.

It is an act of faith which recent events show is unwarranted.  Back in February, just a month before the protest movement in Syria began, a wave of protests hit Libya.  As is now the case with Syria western reporting of the protests in Libya amounted to reproducing claims about the protests made by the Libyan opposition.  Many of these claims were extremely lurid.  Thus the western media uncritically reproduced stories of peaceful protesters being fired on by heavy machine guns, of mercenaries attacking protesters with machetes and of the Libyan air force bombing residential suburbs.  Inflated claims were made of the number of protesters killed with figures eventually running into thousands leading to talk of genocide charges.

On the ground investigations in Libya by such agencies as the International Crisis Group and Amnesty International have since shown that the claims about the protests made by the Libyan opposition in February and uncritically reproduced by the western media at the time were almost entirely untrue.  The Libyan authorities did not fire on peaceful protesters with heavy machine guns.  There are no large numbers of machete wielding mercenaries in Libya.  The Libyan air force did not bomb residential districts.  As for the number of people killed the true number turned out to be not the thousands claimed by the Libyan opposition but the hundred or so reported at the time by the Libyan government.

There is no reason to think that the claims the Syrian opposition are making today are any more reliable than the claims the Libyan opposition made in February.  Uncritical acceptance of Libyan opposition claims led western governments into a military intervention they probably now regret, which has turned out to be based on a string of wrong assumptions and false facts.  Given that this is so one wonders why in reporting Syria the western media seems so intent on making the same mistake.

WHY THE MURDOCH SCANDAL IS LIKE WATERGATE

Before giving the Murdoch scandal a rest there are two claims concerning it which I wish to challenge:  These are

1. That the scandal concerns essentially trivial subjects and is the product of hysteria; and

2. That because the public is uninterested in the scandal it will fade away.

Both of these myths, which have many takers in the news media, betray a fundamental misunderstanding of the scandal. 

This is not a scandal driven by public outrage.  Nor, as I have previously said, is the scandal ultimately the result of media exposure all the claims about the importance of the Guardian's coverage of the scandal notwithstanding.  Once all the false commentary and analysis is stripped away the true driver behind the scandal stands revealed as the police investigation launched following the High Court's decision to grant John Prescott a Judicial Review. 

The moment this fact is grasped the dynamic of the scandal becomes clear.  The reason we now know about the hacking of Milly Dowler's telephone and the bribing of police officers is because these facts have been discovered as a result of the new police investigation.  The reason the News of the World was closed down is because these facts had come to light as a result of the new police investigation.  The reason Andy Coulson and Rebekah Brooks have been arrested and in the case of Rebekah Brooks forced to resign is because the new police investigation has made them criminal suspects.  The reason Cameron has been embarrassed by the scandal is because of his personal links with Andy Coulson and Rebekah Brooks, who the new police investigation has shown are criminal suspects.  The reason senior police officers have resigned is because the facts brought to light by the new police investigation have called into question their decision to close down the earlier police investigation.

None of this would be happening if the new police investigation had not produced evidence that serious criminal offences had been committed.  Industrial scale hacking of people's phones and the bribing of police officers are very serious criminal offences especially when, as in this case, they seem to have been done as part of "fishing expeditions" and not as part of a journalistic investigation into a serious story to which the public interest defence might apply. 

In addition, as often happens when the corrupt practices of a large organisation are being investigated, the new police investigation has brought a host of other illegal practices to light.  Over the last few weeks we have heard allegations of theft, burglary, perjury and obstruction of justice.  Only yesterday on Newsnight we learnt that Mark Lewis, the solicitor who represents some of the people whose phones have been hacked, had himself apparently been spied on and hacked.  If true (and it has not been denied) this would be interference in the confidential relationship between a lawyer and his clients, which is another serious criminal offence.

All this makes for a complicated and messy story.  It is understandable that amidst the welter of claims and allegations the public has lost track of the detail and become bored.  Once however it is understood that public outrage and media frenzy are not the motor driving this scandal the fact that the public is bored can be seen to be largely beside the point.  Given the inexorable nature of the criminal legal process it ultimately does not matter whether the public are bored or not.  The scandal will grind on regardless up to the point when the criminal legal process is finally exhausted.  Given the scale of the wrongdoing so far exposed this could take years.

The best parallel is the Watergate scandal in the US in the early 1970s.  That too began with the discovery of a serious criminal offence, namely the burglary of the headquarters of the Democratic Party's Presidential campaign in the Watergate building in Washington.  Proper investigation of that crime (and burglary is a very serious crime) was also initially suppressed through use of illicit pressure on the police and the payment of hush money to the burglars.  Though the seriousness of what had happened was obvious to a small number of people (notably the two Washington Post reporters Bernstein and Woodward and their editor) the political class and the public initially showed no interest.  As with the Murdoch scandal the Watergate scandal finally exploded only when the investigation of the burglary was reactivated after evidence of the suppression of the previous investigation was exposed.  As with the Murdoch scandal this brought to light a whole host of other criminal offences that often had no connection to the burglary but which did expose the culture of criminality in the organisation under investigation, namely the White House staff.  As with the Murdoch scandal the public quickly became bored with a scandal the details of which it was unable to follow, a fact which induced a false sense of complacency amongst those being investigated and their supporters, which as the criminal investigation ground inexorably on was eventually shown to be misplaced.

The Murdoch scandal is not quite as serious as the Watergate scandal because the person at its centre, Rupert Murdoch, does not occupy the kind of constitutional position held by Richard Nixon, the person at the centre of the Watergate scandal, who was President of the United States.  This should not disguise the fact that the current scandal is for Murdoch every bit as dangerous as the Watergate scandal was for Nixon.  For one thing the crimes exposed in the course of the two scandals, wire taps, phone hacking, burglaries and conspiracies to obstruct and pervert the course of justice, are exactly the same.  The fact that the driver of the scandal is a criminal legal process over which unlike public opinion Murdoch has no control means that the scandal is more dangerous to Murdoch not less.

Sunday 17 July 2011

THE MURDOCH SCANDAL - TAKEN AT THE FLOOD

The shock resignation of the Metropolitan Police Commissioner Sir Paul Stephenson and the arrest and questioning for a whole day of Rebekah Brooks shows that the Murdoch scandal has now acquired a terrifying momentum that may be impossible to stop. 

Off the top of my head I cannot remember a single previous example of a Metropolitan Police Commissioner resigning in quite this way.  Inevitably the resignation will excite speculation about whether Sir Paul Stephenson knows or suspects things that have not yet been made public and has left his post before these things are exposed.  Whether or not this is the case the pressure upon other police officers and upon Assistant Commissioner Yates in particular can only now intensify and the chances must be strong that more resignations from within the Metropolitan Police will now follow. Sir Paul Stephenson's resignation must also make it more likely that this affair will end in criminal charges with some of those involved going to prison.

There is a tide in scandals as there is in the affairs of men and this one is now in flood.

ED MILLIBAND AND THE POLITICAL IMPACT OF THE MURDOCH SCANDAL

The media, which has spent the better part of the nine months since Ed Milliband was elected Labour leader, pouring ridicule on him has now as a result of his handling of the Murdoch scandal suddenly discovered his qualities.  The result is that where he was previously subjected to a torrent of criticism he is now receiving a cascade of praise.  Journalists, particularly left of centre journalists but even some more right wing journalists, have been falling over themselves in praise of Ed Milliband's brilliant handling of the crisis, which has supposedly rescued his leadership.  The Independent a few days ago published an editorial saying that the scandal was the "making of a Labour leader" whilst in the Observer today Andrew Rawnsley in a typical piece says that as a result of the crisis Ed Milliband "has taken off his L plates".

I agree that Milliband's handling of the Mudoch scandal has been deft.  At the outset of the scandal he demanded that the BSkyB bid be dropped, that there be a single judge led inquiry and that Rebeka Brooks should resign.  All three of these demands have been conceded.  In the meantime Cameron has been made to look uncomfortable and evasive.

Having conceded this point, I feel I must make the point that the Ed Milliband of the last two weeks was the same Ed Milliband who led the Labour party during the previous nine months.  Ed Milliband was not "failing" as Labour's leader during this period as the media said.  On the contrary under his leadership Labour has been making steady if unspectacular progress as shown by the party's electoral performance, which has improved substantially over that in the general election a year ago.  Since Milliband became its leader Labour has won every by election it has fought and came first and substantially increased its vote in May's English local elections.  The defeat of the AV referendum and the SNP victory in the Scottish elections in May were not electoral disasters for Labour but for the Liberal Democrats. 

This sort of progress would not have happened if Ed Milliband had not been leading the Labour party with some skill.  Media criticism of Ed Milliband has been thoroughly misplaced and reflects the extreme disjunction which exists between politics as the media perceive them and as they are perceived in the rest of the country.  As for Ed Milliband's effective handling of the Murdoch scandal, this is not because he has suddenly discovered great qualities in himself that no one knew existed.  Rather it is because Ed Milliband is and always has been a much more intelligent and skilled political tactician than the media (and his Blairite critics in the Labour party) have up to now wanted to acknowledge.

The same disjunction also exists with respect to the Murdoch scandal as a whole.  Though the scandal has shaken the political geometry in Westminster and shocked the press, I doubt that it has had anything like the same impact in the country.  One should remember that most people have daily contact with the tabloids and the police in a way that the sophisticates of the Westminster village do not.    When it comes to the tabloid press and the police most people, at least in my experience, have always taken a pretty cynical view of them both.  It will not have come as a surprise to most people that the Murdoch organisation engages in hacking, robbery and other criminal activity or that police officers take bribes.

For this reason I doubt that the electoral impact of the scandal will be very great.  What matters to the larger electorate is the deteriorating state of the economy and the fact that the standard of living is continuing to fall as people become more and more financially pressed. I suspect that Ed Milliband, who strikes me as having a much better grasp of political realities than do his present admirers and previous critics, understands this fact well.

Friday 15 July 2011

THE POLICE, THE MURDOCH SCANDAL AND JOHN PRESCOTT

As far as I can tell the defence the police are making for their failure to pursue the original hacking enquiry is that the branch of the police charged with investigating the matter was inundated with what it felt was more important work, namely its anti terrorist investigations.

This excuse grossly underestimates the seriousness of the crimes that are being alleged.  Industrial scale hacking of people's private messages and conversations is or should be a very serious matter.  When this is being done for financial profit, as it obviously was in this case, it is more serious still.  If the branch of the police that had conduct of the case was unable to accord it sufficient resources then the correct response should have been not to close the enquiry down but to transfer its conduct to a different branch of the police or even to call for help from other police forces.  Besides this excuse does not explain why, given the constant flow of revelations, the police stubbornly refused to reopen the enquiry for so many years after they originally closed it down.

There are two other important points I want to make.

The first is that this affair has exposed an extremely ugly form of inverted snobbery in British life.  It seems that the police, most of the press and a large section of the public believe that breaking into someone's private correspondence and conversations is fine so long as they are rich and famous but unacceptable if they are "ordinary people".  I am not usually someone who defends the rich and famous but I am unable to see why the fact that someone is rich and famous should make that person fair game or excuse criminal acts of which they are the victims.

Secondly, the claim that it was the press that exposed the story is untrue.  Though the Guardian and its reporter Nick Davies deserve credit for keeping the story alive, the true hero of this affair is John Prescott who successfully brought a judicial review against the police and their failure to take the hacking of his phone seriously.  From my personal knowledge I know how very difficult it is to get the High Court even to issue claims against the police and how reluctant the High Court is to meddle in the police's work.  Bringing proceedings against the police in the knowledge that behind the police stood Rupert Murdoch and his newspapers required considerable courage and Prescott (who has been the object of press attacks on many occasions and who must therefore have known what he was potentially letting himself in for) on this occasion showed it.  Once the High Court found in Prescott's favour and the police became obliged to conduct a proper investigation of the matter it was only a question of time before the truth came out.