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.
Saturday 23 July 2011
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.
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.
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.
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.
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.
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.
RUPERT MURDOCH AND THE SCANDAL
Ever since the News International story broke Rupert Murdoch's whole approach has been that of a tabloid editor intent on making the story bigger. He closed the News of the World though this was something no one had asked him or expected him to do but which guaranteed that anybody who had previously doubted the importance of the story would now know that it was big. He leaked the story about bribes being paid to the police, apparently in the expectation that this would embarrass the police and divert the story from himself, instead infuriating the police and making the story bigger. He clung on to Rebeka Brooks long after she had been discredited and had himself photographed in a suggestive pose with her that has inevitably excited comment and given the story a salacious twist. He has now been forced to accept her resignation, just as Prime Ministers who his newspapers have hounded were forced to accept the resignations of ministers whose transgressions his newspapers had exposed, thereby calling his judgement into question and ensuring that the story gets bigger still. He has scarcely spoken in public since the start of the scandal allowing every rumour to go unanswered. He first refused and then almost immediately agreed to appear before the House of Commons Committee,thereby simultaneously giving the impression that he has something to hide and that he is on the run. In a word he has done everything possible to encourage the "feeding frenzy" and to ensure that the story just goes on getting bigger.
I am no friend of Murdoch. I consider his exposure utterly essential for Britain's political health. I totally disagree with an article by Adrian Hamilton in the Independent today that says that criticism of Murdoch is a diversion from the real issue, which supposedly is the lack of transparency in British political life. That sort of logic dangerously underestimates the power and influence Murdoch has exercised until now and risks letting him off the hook leaving the situation exactly as it was before. It is also insensitive to the seriousness of the crimes that we now know have been committed.
At the same time I have to concede that there is something bizarre and even slightly pathetic about a vain old man who has so obviously lost the plot. I suspect that Murdoch has been surrounded by flatterers for so long that he has begun to lose his grip. His assertion to the Wall Street Journal that the matter has been handled "well" is astonishing and shows how out of touch with reality he has become.
Before writing Murdoch off as some sort of latter day Lear a word of caution is however in order. He remains a ruthless and powerful man and one not to be underestimated. He continues to enjoy powerful support from much of the press (not just the press he owns), which is becoming alarmed at the prospect of statutory regulation and of an inquiry into its methods and behaviour. The Daily Mail has for example concentrated its fire not on Murdoch but on the supposed hypocrisy of his critics. Murdoch also continues to have powerful support within the Conservative party. Practically unnoticed have been several statements of support for him by several Conservative MPs some of whom rebelled against their leadership by refusing to support the motion against the BSkyB bid at Wednesday's debate. His summons to appear before the House of Commons Committee on Tuesday may be the event that finally concentrates his mind and brings him back to earth.
I am no friend of Murdoch. I consider his exposure utterly essential for Britain's political health. I totally disagree with an article by Adrian Hamilton in the Independent today that says that criticism of Murdoch is a diversion from the real issue, which supposedly is the lack of transparency in British political life. That sort of logic dangerously underestimates the power and influence Murdoch has exercised until now and risks letting him off the hook leaving the situation exactly as it was before. It is also insensitive to the seriousness of the crimes that we now know have been committed.
At the same time I have to concede that there is something bizarre and even slightly pathetic about a vain old man who has so obviously lost the plot. I suspect that Murdoch has been surrounded by flatterers for so long that he has begun to lose his grip. His assertion to the Wall Street Journal that the matter has been handled "well" is astonishing and shows how out of touch with reality he has become.
Before writing Murdoch off as some sort of latter day Lear a word of caution is however in order. He remains a ruthless and powerful man and one not to be underestimated. He continues to enjoy powerful support from much of the press (not just the press he owns), which is becoming alarmed at the prospect of statutory regulation and of an inquiry into its methods and behaviour. The Daily Mail has for example concentrated its fire not on Murdoch but on the supposed hypocrisy of his critics. Murdoch also continues to have powerful support within the Conservative party. Practically unnoticed have been several statements of support for him by several Conservative MPs some of whom rebelled against their leadership by refusing to support the motion against the BSkyB bid at Wednesday's debate. His summons to appear before the House of Commons Committee on Tuesday may be the event that finally concentrates his mind and brings him back to earth.
THE SELF DESTRUCTION OF A COMMENTATOR
Media headlines today in Britain are dominated by one story: the resignation of Rebeka Brooks from her job as Chief Executive of News International. Elsewhere there is the continuing drama in Libya and the rest of the Middle East, rumblings in Egypt, a brewing financial crisis in the Eurozone and a gathering deficit crisis in the US where the parties cannot agree on a debt reduction plan whilst economic data (eg a shock rise in unemployment) suggest that the economy is teetering on the brink of a crash.
One high profile political commentator prefers to ignore these issues whilst focusing on something else, which he presumably feels is more important. That commentator is the Independent's former chief political editor, John Rentoul. His post in the Independent today is not about any of the matters that presently dominate the news but about a written submission made by the former foreign minister Jack Straw to the Iraq inquiry.
John Rentoul was once one of the most incisive and influential voices in British journalism. At some point however he succumbed to Tony Blair's charm and ever since he has been Blair's most passionate defender in the media. Ever since Blair's resignation his posts and commentaries have been dominated by one subject: Blair's virtue and why Blair was right to attack Iraq. In post after post and in article after article he returns to the subject obsessively, discussing in extraordinary detail and at astonishing length every twist and turn and revelation in the Iraq war saga in order to vindicate his hero. His use of Straw's latest submission to the Iraq war inquiry is a case in point. Stated briefly Straw's point is that the war against Iraq became necessary because the sanctions were disintegrating and in the absence of the inspectors, whom Saddam Hussein had expelled in 1998, the strategy of "containing" Saddam Hussein had failed. Rentoul appears to think that this somehow proves that Blair was right. He implies that the reason no other newspaper or commentator has mentioned Straw's submission is because of this.
In reality Straw's point, as one might expect coming from such a source, is a clever inversion of the truth. In making it Straw starts with an outright lie, which is that Saddam Hussein "expelled" the inspectors in 1998. He did no such thing. This lie is one that has been repeatedly refuted including by the inspectors themselves, a fact which does not however prevent apologists for the war from constantly repeating it. Both Straw and Rentoul must know it is untrue. In any event the point about the "expulsion" of the inspectors in 1998 is neither here nor there given that in 2002 Saddam Hussein allowed them back.
As for the disintegration of the sanctions regime, this was undoubtedly taking place largely because most countries by 2001 had concluded that the British and Americans were using the question of Saddam Hussein's supposed secret weapons as an excuse to maintain the sanctions against him indefinitely. There was I remember growing international irritation at this and at the way in which the question of the weapons was being kept artificially alive with many starting to question why Iraq was being punished because three countries (the US, Britain and Israel) had a feud with its leader, Saddam Hussein. I have always thought (and thought at the time) that the true reason the war was launched when it was, was precisely because the US and Britain were becoming alarmed that the sanctions regime was about to collapse and decided that they could not afford the humiliation of having this happen with Saddam Hussein still in place. For what it is worth I would say that Straw's latest comments tend to bear this out. Whether they do so or not they do not excuse or justify the war or Blair's conduct.
Whatever, John Rentoul's endless harping on the same point reminds me of a pub bore. He is entitled to his views about Blair and Iraq even if he is now the only one to still hold them. He cannot complain that we do not know what his views are since for the last ten years he has passed up no opportunity to remind us of them. He has long since passed the point when it was wise for him to stop. If he cannot stop now then the Independent should ask itself whether he continues to deserve the very generous salary it pays him.
One high profile political commentator prefers to ignore these issues whilst focusing on something else, which he presumably feels is more important. That commentator is the Independent's former chief political editor, John Rentoul. His post in the Independent today is not about any of the matters that presently dominate the news but about a written submission made by the former foreign minister Jack Straw to the Iraq inquiry.
John Rentoul was once one of the most incisive and influential voices in British journalism. At some point however he succumbed to Tony Blair's charm and ever since he has been Blair's most passionate defender in the media. Ever since Blair's resignation his posts and commentaries have been dominated by one subject: Blair's virtue and why Blair was right to attack Iraq. In post after post and in article after article he returns to the subject obsessively, discussing in extraordinary detail and at astonishing length every twist and turn and revelation in the Iraq war saga in order to vindicate his hero. His use of Straw's latest submission to the Iraq war inquiry is a case in point. Stated briefly Straw's point is that the war against Iraq became necessary because the sanctions were disintegrating and in the absence of the inspectors, whom Saddam Hussein had expelled in 1998, the strategy of "containing" Saddam Hussein had failed. Rentoul appears to think that this somehow proves that Blair was right. He implies that the reason no other newspaper or commentator has mentioned Straw's submission is because of this.
In reality Straw's point, as one might expect coming from such a source, is a clever inversion of the truth. In making it Straw starts with an outright lie, which is that Saddam Hussein "expelled" the inspectors in 1998. He did no such thing. This lie is one that has been repeatedly refuted including by the inspectors themselves, a fact which does not however prevent apologists for the war from constantly repeating it. Both Straw and Rentoul must know it is untrue. In any event the point about the "expulsion" of the inspectors in 1998 is neither here nor there given that in 2002 Saddam Hussein allowed them back.
As for the disintegration of the sanctions regime, this was undoubtedly taking place largely because most countries by 2001 had concluded that the British and Americans were using the question of Saddam Hussein's supposed secret weapons as an excuse to maintain the sanctions against him indefinitely. There was I remember growing international irritation at this and at the way in which the question of the weapons was being kept artificially alive with many starting to question why Iraq was being punished because three countries (the US, Britain and Israel) had a feud with its leader, Saddam Hussein. I have always thought (and thought at the time) that the true reason the war was launched when it was, was precisely because the US and Britain were becoming alarmed that the sanctions regime was about to collapse and decided that they could not afford the humiliation of having this happen with Saddam Hussein still in place. For what it is worth I would say that Straw's latest comments tend to bear this out. Whether they do so or not they do not excuse or justify the war or Blair's conduct.
Whatever, John Rentoul's endless harping on the same point reminds me of a pub bore. He is entitled to his views about Blair and Iraq even if he is now the only one to still hold them. He cannot complain that we do not know what his views are since for the last ten years he has passed up no opportunity to remind us of them. He has long since passed the point when it was wise for him to stop. If he cannot stop now then the Independent should ask itself whether he continues to deserve the very generous salary it pays him.
Saturday 9 July 2011
RUPERT MURDOCH IS THATCHER'S CREATION
It has taken a former Conservative cabinet minister David Mellor writing in the Guardian today to state what broader commentary has avoided saying, which is that Rupert Murdoch is Margaret Thatcher's creation. Before Thatcher, Murdoch was the owner of two uninfluential tabloids, the Sun and the News of the World. Both were considered a fun read by the largely male working class readership that bought them. They attracted such readers not because of their politics but because of their cheerful exuberance, easy writing and girlie photos. They did not at this time possess the air of menace for which they are famous and which they have today.
The "Murdoch empire" as we know it today emerged during the 1980s. In 1981 Thatcher set aside competition law to hand over to Murdoch the Times and the Sunday Times. Contrary to what Murdoch's admirers say he is not the "saviour" of the Times or of the Sunday Times. When Murdoch bought the Times it was still considered the best and most authoritative British newspaper whilst the Sunday Times had shortly before experienced a glorious era under the brilliant editorship of Harold Evans. Under Murdoch the Times has suffered an astonishing eclipse, losing influence and readers so that it is today a shadow of its former self. No one today would count the Times as a leader in global news or would claim that it has the international reputation or influence of the Guardian or of the Financial Times. As for the Sunday Times, though its circulation has increased it too has suffered a dramatic loss in reputation and prestige.
Ownership of these two titles however gave Murdoch a dominant position in British newspapers. As the owner of the Times and of the Sunday Times he was taken seriously in a way that he simply had not been before. The prestige that Murdoch gained by acquiring these two titles also undoubtedly helped him as he began his assault on the US media market. The Times was by far the best known British newspaper in the US at this time and as its owner Murdoch possessed a credibility that he would simply not have had if he had come to the US as just the owner of two down market tabloids.
Thatcher's support was also crucial in enabling Murdoch to get his Sky venture off the ground. Central to the success of the Sky venture was Murdoch's acquisition of exclusive football rights, someting that again could not have been achieved without the Thatcher government's support.
As for the claim that Murdoch and Sky improved the quality of British television by allegedly increasing its diversity, the claim is bizarre. On the contrary until the 1980s and the appearance of Sky British television was universally acknowledged to be the best in the world, something which no one would seriously claim today.
What the emergence of Sky and the relentless war Murdoch has waged against the BBC and the other terrestial broadcasters has done is sap the self confidence and morale of the BBC and the other terrestial broadcasters and undermine their public service ethos. In the case of the two commercial terrestial broadcasters, ITN and Channel 4, they also lost advertising revenue as viewers were drawn off to Sky as a result of its possession of exclusive football rights. In order to try to preserve their audience share and in the case of the terrestial broadcasters some of their advertising revenue the BBC and the other terrestial broadcasters were forced into a ferocious ratings war with Sky in which Sky had an immense built in advantage as a result of its possession of the exclusive football rights. What suffered was the quality of British television, which experienced an immediate and sustained collapse. Broadcasters such as Channel 4, which had made their name as quality producers, had to move down market embracing such things as reality television with programmes such as Big Brother.
As for Sky (or BSkyB as it eventually became), its most notable characteristic as a broadcaster is its failure to spend money on programme making. Sky's business model is largely based on imports from the US where Murdoch's eventual ownership of Twentieth Century Fox gives it a further advantage. In this way it keeps down its costs and increases its profits. In order to compete the terrestial broadcasters, ITN and Channel 4 and eventually Channel 5, found themselves obliged to copy this model. Failure to do so would have put them at a disadvantage in attracting outside investment. As a result programme making budgets and activity across the whole range of British television have been slashed. The effect has been demoralising with a general impoverishment of British television, which has gone from thinking of itself as a public service into becoming a mere business driven purely by profit making. Even the BBC has been affected by the general malaise, a condition exacebated by the perpetual war Murdoch wages against it in which he can count on the support of those politicians who for whatever reason are in his pocket.
Overall as one looks at the effect Murdoch has had on British television the conclusion has to be that his effect has been overwhelmingly negative. The tradition of brilliant and sustained programme making and exceptionally high production values that was once British television's glory has been lost. There has been a general coarsening and a loss of diversity, not its increase. Anyone who remembers what British television was like before Thatcher, Murdoch and Sky knows that this is so. For those too young to remember I challenge them to compare old serials like Quatermass, The Prisoner, I Claudius and Brideshead Revisited with anything made today.
Thatcher's support also enabled Murdoch to win his battles against the print unions and to transfer his newspaper operation to Wapping. In the realm of right wing folklore this squalid dispute distinguished above all by Murdoch's ruthless methods towards the strikers and the intimidation and harassment of the strikers by the police, has been invested with a sort of Homeric quality. It is falsely represented as some sort of existential struggle in which Murdoch allegedly broke the stranglehold of the print unions thereby liberating newspapers from their grip and enabling them to survive.
It should be said outright that this fantasy, like all the other anti union fantasies of the 1980s, has no basis in fact. New technology made change inevitable whilst the claim that but for Murdoch's victory in the Wapping dispute newspapers in Britain would have died out is ridiculous. Newspaper circulation post the Wapping dispute is lower than it was before and continues to fall whilst newspapers are actually less profitable today than they were then. The mythology of the Wapping dispute serves as yet another example of the right wing tendency to blame Britain's economic problems not on the incompetent managements that run its businesses but on the hapless workers employed by them.
In return for this help Murdoch gave Thatcher the unstinting support of his media group. This went far beyond the usual expressions of support for her and for her policies. It was during the 1980s that the Sun under the brutally effective editorship of Kelvin Mackenzie developed its bullying tone and its technique of character assassination. It was also during this period that the Sun developed its method of crude news manipulation and distortion of news.
Murdoch placed these dark arts at Thatcher's disposal. Throughout the 1980s she was their beneficiary and her political enemies, whether Labour or Conservative, were their victims. The reason Thatcher never had an Alistair Campbell is because she did not need one. Murdoch did the job for her. The two became so close that they routinely spent Christmas in each other's company, a fact conspicuously not mentioned by Thatcher in her memoirs where in fact she does not mention Murdoch at all.
Following Thatcher's fall Murdoch was left in the immensely powerful position he had built up with her help. He has never had the same kind of close relationship with subsequent Prime Ministers that he had with Thatcher. What he has instead done is trade the techniques he perfected on her behalf in the 1980s in return for ever growing political influence, which he has used to advance his private commercial interests. This means that he has effortlessly switched support between Conservatives and Labour whilst inciting both to engage in a bidding war against each other for his favour. Following the May 2010 election his influence reached its apogee with the appointment of Andy Coulson, one of his key lieutenants, to the post of the government's Director of Communications. This set the stage for his intended takeover of the remaining shares of BSkyB.
The irony is that as Murdoch's political influence has grown the actual sway of his newspapers has declined. It is probably true that Labour support was affected in the 1980s and early 1990s by the vicious press campaigns he waged against it. The effect was not however as great as was widely supposed. Labour lost support in the 1980s not because of Murdoch's hostility but because of its vicious civil war, which did the party's reputation immense damage and from which it took a full decade to recover. Labour's recovery and its landslide victory in 1997 owed nothing to Murdoch. On the contrary Murdoch's decision in the mid 1990s to throw his weight behind Labour was based on his calculation that Labour was going to win. As a seasoned political blackmailer Murdoch realised that he could not afford to be seen to back a loser. By backing Labour he was able to take undeserved credit for its victory whilst keeping his reputation as a kingmaker intact. The lack of Murdoch's real influence on the political allegiances of the British electorate is shown by the fact that notwithstanding all the shifts and turns in Murdoch's political loyalties the greater part of the working class readers who buy the Sun have consistently done what working class voters normally do, which is vote Labour.
The "Murdoch empire" as we know it today emerged during the 1980s. In 1981 Thatcher set aside competition law to hand over to Murdoch the Times and the Sunday Times. Contrary to what Murdoch's admirers say he is not the "saviour" of the Times or of the Sunday Times. When Murdoch bought the Times it was still considered the best and most authoritative British newspaper whilst the Sunday Times had shortly before experienced a glorious era under the brilliant editorship of Harold Evans. Under Murdoch the Times has suffered an astonishing eclipse, losing influence and readers so that it is today a shadow of its former self. No one today would count the Times as a leader in global news or would claim that it has the international reputation or influence of the Guardian or of the Financial Times. As for the Sunday Times, though its circulation has increased it too has suffered a dramatic loss in reputation and prestige.
Ownership of these two titles however gave Murdoch a dominant position in British newspapers. As the owner of the Times and of the Sunday Times he was taken seriously in a way that he simply had not been before. The prestige that Murdoch gained by acquiring these two titles also undoubtedly helped him as he began his assault on the US media market. The Times was by far the best known British newspaper in the US at this time and as its owner Murdoch possessed a credibility that he would simply not have had if he had come to the US as just the owner of two down market tabloids.
Thatcher's support was also crucial in enabling Murdoch to get his Sky venture off the ground. Central to the success of the Sky venture was Murdoch's acquisition of exclusive football rights, someting that again could not have been achieved without the Thatcher government's support.
As for the claim that Murdoch and Sky improved the quality of British television by allegedly increasing its diversity, the claim is bizarre. On the contrary until the 1980s and the appearance of Sky British television was universally acknowledged to be the best in the world, something which no one would seriously claim today.
What the emergence of Sky and the relentless war Murdoch has waged against the BBC and the other terrestial broadcasters has done is sap the self confidence and morale of the BBC and the other terrestial broadcasters and undermine their public service ethos. In the case of the two commercial terrestial broadcasters, ITN and Channel 4, they also lost advertising revenue as viewers were drawn off to Sky as a result of its possession of exclusive football rights. In order to try to preserve their audience share and in the case of the terrestial broadcasters some of their advertising revenue the BBC and the other terrestial broadcasters were forced into a ferocious ratings war with Sky in which Sky had an immense built in advantage as a result of its possession of the exclusive football rights. What suffered was the quality of British television, which experienced an immediate and sustained collapse. Broadcasters such as Channel 4, which had made their name as quality producers, had to move down market embracing such things as reality television with programmes such as Big Brother.
As for Sky (or BSkyB as it eventually became), its most notable characteristic as a broadcaster is its failure to spend money on programme making. Sky's business model is largely based on imports from the US where Murdoch's eventual ownership of Twentieth Century Fox gives it a further advantage. In this way it keeps down its costs and increases its profits. In order to compete the terrestial broadcasters, ITN and Channel 4 and eventually Channel 5, found themselves obliged to copy this model. Failure to do so would have put them at a disadvantage in attracting outside investment. As a result programme making budgets and activity across the whole range of British television have been slashed. The effect has been demoralising with a general impoverishment of British television, which has gone from thinking of itself as a public service into becoming a mere business driven purely by profit making. Even the BBC has been affected by the general malaise, a condition exacebated by the perpetual war Murdoch wages against it in which he can count on the support of those politicians who for whatever reason are in his pocket.
Overall as one looks at the effect Murdoch has had on British television the conclusion has to be that his effect has been overwhelmingly negative. The tradition of brilliant and sustained programme making and exceptionally high production values that was once British television's glory has been lost. There has been a general coarsening and a loss of diversity, not its increase. Anyone who remembers what British television was like before Thatcher, Murdoch and Sky knows that this is so. For those too young to remember I challenge them to compare old serials like Quatermass, The Prisoner, I Claudius and Brideshead Revisited with anything made today.
Thatcher's support also enabled Murdoch to win his battles against the print unions and to transfer his newspaper operation to Wapping. In the realm of right wing folklore this squalid dispute distinguished above all by Murdoch's ruthless methods towards the strikers and the intimidation and harassment of the strikers by the police, has been invested with a sort of Homeric quality. It is falsely represented as some sort of existential struggle in which Murdoch allegedly broke the stranglehold of the print unions thereby liberating newspapers from their grip and enabling them to survive.
It should be said outright that this fantasy, like all the other anti union fantasies of the 1980s, has no basis in fact. New technology made change inevitable whilst the claim that but for Murdoch's victory in the Wapping dispute newspapers in Britain would have died out is ridiculous. Newspaper circulation post the Wapping dispute is lower than it was before and continues to fall whilst newspapers are actually less profitable today than they were then. The mythology of the Wapping dispute serves as yet another example of the right wing tendency to blame Britain's economic problems not on the incompetent managements that run its businesses but on the hapless workers employed by them.
In return for this help Murdoch gave Thatcher the unstinting support of his media group. This went far beyond the usual expressions of support for her and for her policies. It was during the 1980s that the Sun under the brutally effective editorship of Kelvin Mackenzie developed its bullying tone and its technique of character assassination. It was also during this period that the Sun developed its method of crude news manipulation and distortion of news.
Murdoch placed these dark arts at Thatcher's disposal. Throughout the 1980s she was their beneficiary and her political enemies, whether Labour or Conservative, were their victims. The reason Thatcher never had an Alistair Campbell is because she did not need one. Murdoch did the job for her. The two became so close that they routinely spent Christmas in each other's company, a fact conspicuously not mentioned by Thatcher in her memoirs where in fact she does not mention Murdoch at all.
Following Thatcher's fall Murdoch was left in the immensely powerful position he had built up with her help. He has never had the same kind of close relationship with subsequent Prime Ministers that he had with Thatcher. What he has instead done is trade the techniques he perfected on her behalf in the 1980s in return for ever growing political influence, which he has used to advance his private commercial interests. This means that he has effortlessly switched support between Conservatives and Labour whilst inciting both to engage in a bidding war against each other for his favour. Following the May 2010 election his influence reached its apogee with the appointment of Andy Coulson, one of his key lieutenants, to the post of the government's Director of Communications. This set the stage for his intended takeover of the remaining shares of BSkyB.
The irony is that as Murdoch's political influence has grown the actual sway of his newspapers has declined. It is probably true that Labour support was affected in the 1980s and early 1990s by the vicious press campaigns he waged against it. The effect was not however as great as was widely supposed. Labour lost support in the 1980s not because of Murdoch's hostility but because of its vicious civil war, which did the party's reputation immense damage and from which it took a full decade to recover. Labour's recovery and its landslide victory in 1997 owed nothing to Murdoch. On the contrary Murdoch's decision in the mid 1990s to throw his weight behind Labour was based on his calculation that Labour was going to win. As a seasoned political blackmailer Murdoch realised that he could not afford to be seen to back a loser. By backing Labour he was able to take undeserved credit for its victory whilst keeping his reputation as a kingmaker intact. The lack of Murdoch's real influence on the political allegiances of the British electorate is shown by the fact that notwithstanding all the shifts and turns in Murdoch's political loyalties the greater part of the working class readers who buy the Sun have consistently done what working class voters normally do, which is vote Labour.
Friday 8 July 2011
CLOSING THE NEWS OF THE WORLD
I write this post hours after James Murdoch on the instructions of his father announced the closure of the News of the World.
No one should be under any doubt of the purpose of this manoeuvre. It is to draw attention away from the fact that nothing has really changed. The News of the World will doubtless be replaced by a Sun on Sunday whilst the management of News International (including Rebeka Brooks), which bears ultimate responsibility for what has happened, remains in place. John Prescott was totally correct when he said that the closure of the News of the World punishes the innocent (the workers and reporters whose lives are bound up with the paper) whilst letting the guilty walk free.
Meanwhile the government has pressed ahead with its plan to conduct two separate inquiries into the scandal. The inquiry into the misconduct of the police will be conducted by the Independent Police Complaints Commission, an organisation that I know well and which in my experience can be relied upon to protect the police. There is no word so far about the form or purpose of any other inquiry or who will head it. Nor is there any indication that the government is prepared to stop News International's takeover of BSkyB. As I discussed in my earlier post the beneficiaries of these moves are Rupert Murdoch and News International.
No one should be under any doubt of the purpose of this manoeuvre. It is to draw attention away from the fact that nothing has really changed. The News of the World will doubtless be replaced by a Sun on Sunday whilst the management of News International (including Rebeka Brooks), which bears ultimate responsibility for what has happened, remains in place. John Prescott was totally correct when he said that the closure of the News of the World punishes the innocent (the workers and reporters whose lives are bound up with the paper) whilst letting the guilty walk free.
Meanwhile the government has pressed ahead with its plan to conduct two separate inquiries into the scandal. The inquiry into the misconduct of the police will be conducted by the Independent Police Complaints Commission, an organisation that I know well and which in my experience can be relied upon to protect the police. There is no word so far about the form or purpose of any other inquiry or who will head it. Nor is there any indication that the government is prepared to stop News International's takeover of BSkyB. As I discussed in my earlier post the beneficiaries of these moves are Rupert Murdoch and News International.
Thursday 7 July 2011
THE ABSURDITY OF INTERNATIONAL CREDIT AGENCIES PART II
A few hours following my post though obviously not in response to it the Daily Telegraph published an article by Ambrose Evans-Pritchard defending the credit rating agencies. Allegedly "suppressing" the credit rating agencies amounts to "suppressing" free speech. Evans-Pritchard even goes so far as to adapt in their defence Pastor Martin Niemoller's famous poem "First they came...", which given that this poem concerns the Nazi genocide some of us might feel is both tasteless and grotesque.
What is bizarre about Evans-Pritchard's article is that he actually concedes the main part of the case against the credit rating agencies, which is that they absurdly over assessed the credit worthiness of the Mediterranean economies before the crash. What I find still more bizarre is that though he admits the credit worthiness of the Mediterranean economies was grotesquely over assessed he nonetheless says that the bond holders who made loans to these economies in "good faith" should be protected and even "cherished". Instead he puts all the blame for the catastrophe in the Eurozone squarely on the euro.
Let me say at once that I accept some of the case that is being made against the euro. As I shall argue in a later post the way the euro was created was almost guaranteed to exarcebate the differences between the more industrially advanced economies of the north and the poorer and more backward economies of the south. That does not justify using the euro as a scapegoat to shield the international financial community from its mistakes. Why should mere membership of the Eurozone encourage lenders to throw caution to the winds and lend money to fragile economies without heed to their underlying lack of competitiveness and their deteriorating balance sheets? Why should membership of the Eurozone encourage credit rating agencies to over assess the credit worthiness of those economies? Why should bond holders engaging in commercial decisions be protected from their losses? Why should credit rating agencies that blundered so catastrophically be allowed to walk away with their reputations and authority intact? Lastly, why should bond holders who relied on these credit rating agencies be protected?
Ambrose Evans-Pritchard's article is in fact a classic example of the refusal of advocates of untrammelled free markets to practise what they preach. The reality behind the over assessment of the Mediterranean economies by the credit rating agencies and the willingness of private lenders to lend to these economies in disregard of their economic fundamentals is that an assumption existed that if any of these economies ran into serious trouble Germany would pay to bail them out. Nothing in the European treaties or that the German or any other government ever said ever so much as hinted at such a thing. On the contrary the relevant treaties and repeated statements by the German government made it absolutely clear that the Eurozone is not a transfer union and that Germany does not stand as guarantor for the debt of any other country merely because that country happens to use the euro. Anyone who loaned money to such a country on that assumption was therefore quite simply making a mistake for which they have no one to blame but themselves. To talk of such lenders acting in "good faith" and of the need to "cherish" such lenders is therefore preposterous. That however is what Evans-Pritchard is saying, which is another way of saying that he thinks that despite the clear language of the treaties and of the numerous statements of the German government bond holders who foolishly made loans to these countries should be allowed to keep their profits whilst the overburdened German tax payer should shield them from loss.
What is bizarre about Evans-Pritchard's article is that he actually concedes the main part of the case against the credit rating agencies, which is that they absurdly over assessed the credit worthiness of the Mediterranean economies before the crash. What I find still more bizarre is that though he admits the credit worthiness of the Mediterranean economies was grotesquely over assessed he nonetheless says that the bond holders who made loans to these economies in "good faith" should be protected and even "cherished". Instead he puts all the blame for the catastrophe in the Eurozone squarely on the euro.
Let me say at once that I accept some of the case that is being made against the euro. As I shall argue in a later post the way the euro was created was almost guaranteed to exarcebate the differences between the more industrially advanced economies of the north and the poorer and more backward economies of the south. That does not justify using the euro as a scapegoat to shield the international financial community from its mistakes. Why should mere membership of the Eurozone encourage lenders to throw caution to the winds and lend money to fragile economies without heed to their underlying lack of competitiveness and their deteriorating balance sheets? Why should membership of the Eurozone encourage credit rating agencies to over assess the credit worthiness of those economies? Why should bond holders engaging in commercial decisions be protected from their losses? Why should credit rating agencies that blundered so catastrophically be allowed to walk away with their reputations and authority intact? Lastly, why should bond holders who relied on these credit rating agencies be protected?
Ambrose Evans-Pritchard's article is in fact a classic example of the refusal of advocates of untrammelled free markets to practise what they preach. The reality behind the over assessment of the Mediterranean economies by the credit rating agencies and the willingness of private lenders to lend to these economies in disregard of their economic fundamentals is that an assumption existed that if any of these economies ran into serious trouble Germany would pay to bail them out. Nothing in the European treaties or that the German or any other government ever said ever so much as hinted at such a thing. On the contrary the relevant treaties and repeated statements by the German government made it absolutely clear that the Eurozone is not a transfer union and that Germany does not stand as guarantor for the debt of any other country merely because that country happens to use the euro. Anyone who loaned money to such a country on that assumption was therefore quite simply making a mistake for which they have no one to blame but themselves. To talk of such lenders acting in "good faith" and of the need to "cherish" such lenders is therefore preposterous. That however is what Evans-Pritchard is saying, which is another way of saying that he thinks that despite the clear language of the treaties and of the numerous statements of the German government bond holders who foolishly made loans to these countries should be allowed to keep their profits whilst the overburdened German tax payer should shield them from loss.
NEWS INTERNATIONAL AND THE GOVERNMENT
The latest news on the News International story is that the government is refusing to postpone consideration of the BSkyB takeover whilst at the same time appearing to resist calls for an inquiry to be headed by a judge. No cogent reason has been given as to why the inquiry should not be headed by a judge. Given the nature of the allegations that the inquiry will have to consider the logic of appointing a judge to head it seems irresistible. Failing to appoint a judge to head the inquiry will weaken the inquiry and diminish its impact.
The government seems also to be trying to set up two separate inquiries even though the logic of the situation clearly requires one inquiry. It is totally unclear why there should be two inquiries instead of one when any inquiry if it is to do its work properly has to look at all the facts. Having two separate inquiries not only runs the risk of the two inquiries working at cross purposes but also means that their respective reports will have diminished impact since they will each deal with only part of the matter. Frankly the attempt to set up two inquiries looks like an attempt to narrow their terms of reference and to limit the matters they are able to consider in a way that can only help News International.
After hearing this news I am sure I will not be the only person who will be wondering why the government is bending over backwards to help News International despite all the evidence of illegal and criminal activity that now exists. Nor will I be the only person to start to wonder about the reasons for the Prime Minister's behaviour as he puts his reputation on the line not just on behalf of News International but also on behalf of Rupert and James Murdoch, Andy Coulson and Rebeka Brooks, all of whom it turns out he counts as his friends.
The government seems also to be trying to set up two separate inquiries even though the logic of the situation clearly requires one inquiry. It is totally unclear why there should be two inquiries instead of one when any inquiry if it is to do its work properly has to look at all the facts. Having two separate inquiries not only runs the risk of the two inquiries working at cross purposes but also means that their respective reports will have diminished impact since they will each deal with only part of the matter. Frankly the attempt to set up two inquiries looks like an attempt to narrow their terms of reference and to limit the matters they are able to consider in a way that can only help News International.
After hearing this news I am sure I will not be the only person who will be wondering why the government is bending over backwards to help News International despite all the evidence of illegal and criminal activity that now exists. Nor will I be the only person to start to wonder about the reasons for the Prime Minister's behaviour as he puts his reputation on the line not just on behalf of News International but also on behalf of Rupert and James Murdoch, Andy Coulson and Rebeka Brooks, all of whom it turns out he counts as his friends.
THE ABSURDITY OF INTERNATIONAL CREDIT RATING AGENCIES
News that Portugal's credit rating has been downgraded from "AA" to "AA minus" has provoked a storm of criticism in Europe. The downgrade will make it more difficult for Portugal to borrow on the international money markets because international banks use a country's credit rating when assessing whether to lend to that country. A country's credit rating also determines the rate of interest it pays on any loans. The decision to downgrade Portugal's credit immediately after it has received a bailout is akin to pulling the rug from under Portugal's feet. It also negates the steps the European Union is taking to try to help Portugal.
Personally as someone who has had bitter experiences with credit rating agencies I think the whole practice needs to be outlawed. Firstly there is no rhyme or reason to how credit rating agencies assess individual countries. Portugal's current rating of "AA minus" remains substantially higher than Russia's junk bond "BBB" rating notwithstanding that Russia has paid off most of its debt, has the lowest debt to GDP ratio of any G20 economy, runs a substantial trade surplus, has a balanced budget and at around $500 billion possesses the world's third biggest foreign currency reserves. Portugal's rating is only marginally lower than China's, which is "AA3", notwithstanding that China also runs a large trade surplus and at around $3 trillion possesses the world's biggest foreign currency reserves. As of 1st January 2011 Portugal's credit rating at "AA" was actually higher than China's, which was then "A1". That the credit rating agencies have assessed all three countries wrongly is shown by the fact that since the financial crisis hit in August 2007 it has been Portugal that has needed bailout support whilst Russia and China have not. In the meantime the two countries whose economies stand at the epicentre of the world financial crisis, the US and Britain, and which continue to run massive trade and budget deficits and where government and private debt has exploded to many times the level of GDP, retain an "AAA" rating.
Secondly use of credit rating agencies means that banks instead of carrying out a proper investigation of a country's fundamentals and exercising their own judgement in effect contract this function out to the credit rating agencies. The whole financial disaster the world has experienced is to a large extent a direct consequence of the way in which banks have relied on credit rating agencies to make their decisions for them.
This is bad practice at many levels. Firstly instead of making individual assessments credit rating agencies rely on mathematical formulae when deciding what ratings to set. This reflects the fallacy, especially prevalent in the US, that results drawn from mathematics are somehow "objective" and "scientific" and therefore true. In reality this results in absurd outcomes as I know from my own personal experience. When I needed urgently to borrow some money some years ago I found that banks would not lend to me because my previous avoidance of debt meant that my credit rating as assessed by the credit rating agencies was poor. The rationale was that as I had never taken on debt I had no previous credit history on which the credit agencies could assess me. The result was that I was unable to borrow from the banks even though I had never defaulted on a loan and even though I possessed assets with a far higher value than the money I needed to borrow.
Secondly, though the fact is never admitted, there is obvious political bias in the way the credit rating agencies do their work. All three of the big credit rating agencies are American and are funded by US banks. Not surprisingly they continued to give the big Anglo American banks the highest "AAA" ratings right up to the moment when they all crashed. Similarly they continue to give the US and Britain "AAA" ratings even though the US's and Britain's exploding debt levels and systemic budget and trade deficits scarcely justify this.
In fact the true purpose of credit rating agencies is exposed by my last paragraph. It is to ensure that international capital continues to flow into the US and Britain and specifically to the US and British governments and to US and British banks. Given that this fact is so obvious it is difficult to understand why anyone else takes them seriously.
Personally as someone who has had bitter experiences with credit rating agencies I think the whole practice needs to be outlawed. Firstly there is no rhyme or reason to how credit rating agencies assess individual countries. Portugal's current rating of "AA minus" remains substantially higher than Russia's junk bond "BBB" rating notwithstanding that Russia has paid off most of its debt, has the lowest debt to GDP ratio of any G20 economy, runs a substantial trade surplus, has a balanced budget and at around $500 billion possesses the world's third biggest foreign currency reserves. Portugal's rating is only marginally lower than China's, which is "AA3", notwithstanding that China also runs a large trade surplus and at around $3 trillion possesses the world's biggest foreign currency reserves. As of 1st January 2011 Portugal's credit rating at "AA" was actually higher than China's, which was then "A1". That the credit rating agencies have assessed all three countries wrongly is shown by the fact that since the financial crisis hit in August 2007 it has been Portugal that has needed bailout support whilst Russia and China have not. In the meantime the two countries whose economies stand at the epicentre of the world financial crisis, the US and Britain, and which continue to run massive trade and budget deficits and where government and private debt has exploded to many times the level of GDP, retain an "AAA" rating.
Secondly use of credit rating agencies means that banks instead of carrying out a proper investigation of a country's fundamentals and exercising their own judgement in effect contract this function out to the credit rating agencies. The whole financial disaster the world has experienced is to a large extent a direct consequence of the way in which banks have relied on credit rating agencies to make their decisions for them.
This is bad practice at many levels. Firstly instead of making individual assessments credit rating agencies rely on mathematical formulae when deciding what ratings to set. This reflects the fallacy, especially prevalent in the US, that results drawn from mathematics are somehow "objective" and "scientific" and therefore true. In reality this results in absurd outcomes as I know from my own personal experience. When I needed urgently to borrow some money some years ago I found that banks would not lend to me because my previous avoidance of debt meant that my credit rating as assessed by the credit rating agencies was poor. The rationale was that as I had never taken on debt I had no previous credit history on which the credit agencies could assess me. The result was that I was unable to borrow from the banks even though I had never defaulted on a loan and even though I possessed assets with a far higher value than the money I needed to borrow.
Secondly, though the fact is never admitted, there is obvious political bias in the way the credit rating agencies do their work. All three of the big credit rating agencies are American and are funded by US banks. Not surprisingly they continued to give the big Anglo American banks the highest "AAA" ratings right up to the moment when they all crashed. Similarly they continue to give the US and Britain "AAA" ratings even though the US's and Britain's exploding debt levels and systemic budget and trade deficits scarcely justify this.
In fact the true purpose of credit rating agencies is exposed by my last paragraph. It is to ensure that international capital continues to flow into the US and Britain and specifically to the US and British governments and to US and British banks. Given that this fact is so obvious it is difficult to understand why anyone else takes them seriously.
BSKYB TAKEOVER
One comment that repeatedly gets said with which I must take issue is the suggestion that Ministers cannot simply block the BSkyB takeover because the process is somehow "quasi judicial".
Obviously I am not party to the legal advice but I question whether this is so. The mere fact that the decision rests with Ministers surely means that they do have discretion. If the decision was indeed "quasi judicial" then it would not be made by Ministers but by some sort of impartial "quasi judicial" body like a tribunal. Judicial Review is a mechanism whereby the High Court can review the way Ministers make a decision to ensure that the decision itself is legal and that it is made in a lawful way. I do not see why a decision to refuse News International's takeover of BSkyB would be illegal. Contrary to what is often said about judicial meddling the High Court is actually very reluctant to interfere with a Minister's exercise of discretion so provided it is all done in a lawful way I cannot see why the High Court would want to overturn it. To my mind this whole business of Ministers being supposedly "forced" to make a decision in News International's favour smacks of an excuse concocted to allow the government to do something it has decided to do, which is hand over BSkyB to News International, which it knows is controversial and unpopular.
Obviously I am not party to the legal advice but I question whether this is so. The mere fact that the decision rests with Ministers surely means that they do have discretion. If the decision was indeed "quasi judicial" then it would not be made by Ministers but by some sort of impartial "quasi judicial" body like a tribunal. Judicial Review is a mechanism whereby the High Court can review the way Ministers make a decision to ensure that the decision itself is legal and that it is made in a lawful way. I do not see why a decision to refuse News International's takeover of BSkyB would be illegal. Contrary to what is often said about judicial meddling the High Court is actually very reluctant to interfere with a Minister's exercise of discretion so provided it is all done in a lawful way I cannot see why the High Court would want to overturn it. To my mind this whole business of Ministers being supposedly "forced" to make a decision in News International's favour smacks of an excuse concocted to allow the government to do something it has decided to do, which is hand over BSkyB to News International, which it knows is controversial and unpopular.
Wednesday 6 July 2011
PHONE HACKING SCANDAL
The media today is dominated by stories of the phone hacking scandal with news that private detectives employed by News International hacked the telephones of various famous murder victims. It seems that the police have been provided with copies of emails by News International's Andy Coulson authorising payments of tens of thousands of pounds to individual police officers. This is incendiary. It means corruption on the part of the police and a system of organised bribery by News International. If News International has been in the habit of bribing police officers whether for information or for some other purpose this may explain why the police have proved so reluctant up to now to investigate its affairs. Buying information and protection from corrupt police officers is the sort of activity one associates with the likes of Al Capone, not with a reputable news organisation and is enough by itself to justify a public enquiry.
Saturday 2 July 2011
LABOUR WINS INVERCLYDE BYE ELECTION
To the general surprise of most political commentators and to the disappointment of quite a few the Scottish Nationalist Party not only failed to obtain an upset victory at the Inverclyde bye election but came a distant second to Labour. Though the SNP vote increased considerably this was at the expense of the Liberal Democrats whose vote collapsed. The Labour vote held firm.
Followers of this blog will find nothing surprising about this result. It exactly repeats the results of the Scottish Assembly elections in May. Those elections have been misreported and misunderstood as a disaster for Labour whereas in reality the Labour vote held firm. What the Scottish Assembly elections and the Inverclyde bye election both show is a collapse in the Liberal Democrat vote in Scotland as Scottish voters who formerly voted Liberal Democrat react extremely negatively to the Liberal Democrat Party's coalition with the Conservatives in Westminster. What the Scottish Assembly elections and the Inverclyde elections also show is that these former Liberal Democrat voters for the moment overwhelmingly prefer the SNP to Labour so that the increase in the SNP vote is almost exactly proportional to the collapse of the Liberal Democrat vote.
Since what these voters at the moment are doing is registering a protest vote this is not surprising. The reason many of these voters voted Liberal Democrat in the first place was because they are anti Labour. The SNP provides them with the perfect vehicle to register their protest vote without voting Labour. This does not mean that these voters necessarily support independence. Nor does it mean that the SNP will win a general election in Scotland given that as I said in a previous post in such a general election when Scottish voters will be voting for a government in Westminster and not registering a protest vote or voting for an Assembly in Scotland the dynamics of the contest will be completely different.
Followers of this blog will find nothing surprising about this result. It exactly repeats the results of the Scottish Assembly elections in May. Those elections have been misreported and misunderstood as a disaster for Labour whereas in reality the Labour vote held firm. What the Scottish Assembly elections and the Inverclyde bye election both show is a collapse in the Liberal Democrat vote in Scotland as Scottish voters who formerly voted Liberal Democrat react extremely negatively to the Liberal Democrat Party's coalition with the Conservatives in Westminster. What the Scottish Assembly elections and the Inverclyde elections also show is that these former Liberal Democrat voters for the moment overwhelmingly prefer the SNP to Labour so that the increase in the SNP vote is almost exactly proportional to the collapse of the Liberal Democrat vote.
Since what these voters at the moment are doing is registering a protest vote this is not surprising. The reason many of these voters voted Liberal Democrat in the first place was because they are anti Labour. The SNP provides them with the perfect vehicle to register their protest vote without voting Labour. This does not mean that these voters necessarily support independence. Nor does it mean that the SNP will win a general election in Scotland given that as I said in a previous post in such a general election when Scottish voters will be voting for a government in Westminster and not registering a protest vote or voting for an Assembly in Scotland the dynamics of the contest will be completely different.
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