Is Obama a One Nation Tory? Everyone else seems to be these days…….

Alexander Pannett 12.10pm

The US election has been heating up and pundits have been evaluating the various merits and failings of the incumbent President. The election is really an evaluation of Obama’s first term rather than an appraisal of Romney’s credentials, despite his impressive performance in last night’s debate. If the American public approve of Obama’s track record then he will secure a second term. If not, then he will become a footnote of history.

But how can one evaluate Obama’s record? What has he achieved and what has he tried to achieve? Which part of the political spectrum defines Obama’s presidency?

Weighing up these questions has led to various commentators speculating as to what ideology Obama subscribes to. It is a difficult question as he reaches out to a wide variety, from doe-eyed idealists to committed third way Clintonites.

Interestingly several analysts have looked outside the US, and drawn parallels between Obama and the tradition of One Nation Conservatism in the United Kingdom. A tradition that emphasises compassion entwined with pragmatic efficiency. His pragmatic reforms have aimed to improve social mobility and reduce the gap between rich and poor and have been favourably compared to Disraeli’s attempts to unite the two nations of Victorian Britain.

Pragmatism mixed with compassion certainly appears to underpin Obama’s healthcare reforms and attempts to bring down the deficit. He has largely protected Wall Street from extreme elements such as the Occupy movement, extended the use of drone warfare against foreign adversaries and has provided government support to those polities, such as Detroit, that have suffered the worst from the Great Recession.

At heart, Obama’s policies have sought to conserve a unified American society whilst, in an Oakshottian sense, trying to re-discover the lost values of the American Dream that promoted social mobility, responsibility, freedom and a sense of society that was prosperous, unified and liberal.

Considering the current state of the revolutionary and ideological Right in America, Obama is the only true conservative candidate. It is the Republican Party that is in denial about the true state of the deficit, the only party that seeks to reduce revenue as a way of tackling the hole in the Government’s finances.

It is the Right that has deliberately courted a theo-political stance on values that divide rather than unite America. From abortion, health care to taxation, the Right have firmly targeted their policies towards certain minorities of America, infamously disavowing the remaining 47% of the population.

However, despite the similarity of Obama’s policies to a One Nation Tory credence, much of his pragmatic stance comes from the structure of the American political system. The Founding Fathers formed their system on checks and balances. No President can pass through radical legislation without severe concessions to Congress. This system, coupled with the current bi-partisan political atmosphere, has forced Obama into a pragmatic stance more than any ideological preference for One Nation politics.

Despite the forced nature of Obama’s One Nation stance, it does not detract from the fact that this brand of politics represents the central political ground for the modern post-industrial state. And it is the centre that wins elections for parties by appealing to the largest spectrum of the electorate. It is why Ed Miliband laid claim to the One Nation mantle on Tuesday, as Nick Clegg did earlier this year and Tony Blair did before him in his 1997 manifesto. It seems that everyone at the moment is clamoring to be adorned in One Nation TRG colours.

Obama may win the next Presidential election and, if so, it will be because he has claimed the centre ground through his One Nation policies of pragmatic and compassionate change. Ed Miliband will hope to emulate this success and he is right to try, despite the partisan constraints imposed by his union backers.

For the Conservative Party, they should learn from the political mistakes of the divisive Republicans and understand that it is only at the centre that the Conservative Party is at its best.

One Nation principles may be adopted by many parties but it is a natural position for the Tories. They should not squander this by veering to extremes that will impress none other than their core support.

As Obama knows, no party can win without appealing across electoral divides.

Follow Alexander on Twitter @alpannett

American Foreign Policy: how to lose friends and alienate people

Alexander Pannett 4.00pm

Yesterday’s announcement that the New York banking regulator may strip Standard Chartered, a major British Bank, of its New York banking licence for allegedly breaching US sanctions against Iran, demonstrates how myopically un-diplomatic the Americans can be.

Britain has a been a loyal and useful ally in America’s campaign to keep Iran from developing nuclear weapons. However, again we have been treated with blunt disregard for such loyalty.

Standard Chartered may or may not have breached the sanctions against Iran. We will have to see what the results of the investigation are and how material the breach is. However, there must be countless companies around the world that have breached the sanctions with Iran. A breach which stems from a contravention of US foreign policy rather than due to any financial malpractice.

Why did the Americans select a British bank?

This is especially concerning considering our financial services industry is already suffering from a torrid summer of allegations of Libor fixing and money laundering, allegations which originated in the US.

Could there be a hidden agenda to undermine the City of London and re-assert New York as the pre-eminent financial capital of the world? There are already strong reports that US banks are warning clients away from Europe. US regulators have also been openly criticising European regulators. The CFTC has even suggested that it should be the sole global regulator for OTC derivatives.

Such a power grab is alarming and should be resisted by European governments. It also overlooks the fact that the credit crunch started in the US, as did many of the high-risk banking strategies that preceded and exacerbated it. New York is hardly a model of pristine banking. CFTC was the regulator of MF Global and failed to spot the risky abuses at that institution.

I am not defending banking policy that contravenes UK sponsored sanctions merely because a bank may be domiciled in the UK. My main concern is that the US seems to be disproportionately investigating and attacking British banks, whilst American banks appear to be given a soft treatment. This is a passive form of protectionism.

It is particularly dangerous to undermine a global bank for foreign policy concerns at a time when the world is standing on an economic precipice, with the entire banking system close to collapse. Could the US regulators not have picked upon a company that posed less systemic consequences for the global financial system?

The US regulators have also managed to trump Mitt Romney by giving the British government an intense headache during the middle of an incredibly testing Olympics when the eyes of the world are on the UK. I cannot imagine it will have helped Anglo-US relations.  If this allegation had to be made public, could the US not have waited a further week or two to minimise the damage to market confidence in the European banking system?

Sometimes you have to wonder why we even bother supporting the US if this is how we get treated. With friends like these, who needs Iran.

Follow Alexander on Twitter @alpannett

The Ned Kelly Tax should stay in France

Alexander Pannett 1.07pm

It appears we may need to get the red carpet out for our new business guests from France earlier than we thought we would.

Francois Hollande has this week implemented the Financial Transactions Tax, commonly known as the Robin Hood tax. This is a 0.2 per cent levy on share trading in France. The Gallic plan is for the tax to become implemented Europe-wide, which would disconcertingly hit the City of London, Europe’s largest financial centre, more heavily than anywhere else.

Craig Barrett wrote the following about the perils of the tax in August last year.

“A Tobin Tax seems to me to be much the same. It’s not even particularly pretty. It is referred to as a “Robin Hood tax” in the mistaken belief that it takes from the rich and gives to the poor, missing the point that Hood was simply returning the proceeds of over-taxation to the tax-payers rather than acting as some species of socialist redistributor.

The compelling results of a study made by the Adam Smith Institute demonstrate that a tax on all trades from one currency into another simply wouldn’t work. For Britain, it could be disastrous. Some 20 per cent of the UK’s GDP is generated in the City of London, whose generated wealth is already subject to taxation. Foreign exchange trading in the UK accounts for 36.7 per cent of the world total. If we were to adopt a Tobin Tax, that proportion would surely fall - the revenue gained from further punishing the financial sector would come nowhere near to replacing the revenue lost as a result of the inevitable flight of financial institutions to other jurisdictions.And that’s because for a Tobin Tax to work, it has to be universal.”

I also had this to say about the tax back in November last year:

“A Tobin tax would not have prevented such extreme short selling as the temporary bans did and would have hampered market reactions to flawed economic models. It would not have prevented the credit crunch nor would it have alleviated the consequences of the financial crisis.

Worse, the tax would have a disastrous effect on London’s position as the world’s pre-eminent financial center. The City competes in a global market and the tax would result in the cost of trading being higher than competitor financial centers in Asia, North America and the Middle East. Investors and financial institutions would move their business away to cheaper jurisdictions, which is why the tax has not received any support outside Europe for it to be implemented by other major financial centres.”

I would also point out that the UK ‘s decades old stamp duty reserve tax of 0.5 per cent. on share transfers has not prevented the worst excesses of the City. It did not prevent the recent LIBOR scandal or the Credit Crunch. Therefore the argument that a further tax of 0.2 per cent. on financial transactions would be a panacea to the current financial malaise rings hollow.

The tax probably should not even be known as the Robin Hood tax. After all, Robin Hood’s main objection was that the hard working parts of the population were disproportionately paying for the luxurious pursuits of the more leisurely inclined. Throw in some green tights and some dodgy American accents and you are pretty much there.

Quite the opposite to the French tax, which should be more accurately called the Ned Kelly tax, as it steals from hard working types and the perpetrator wears a giant steel helmet, blinding him to the real world and allowing him to ignore all criticism…….. 

For more on this subject, see Craig Barrett’s article from August: ‘The Robin Hood Tax is a soundbite tax worth ignoring’.

Follow Alexander on Twitter @alpannett

Three quick-fire solutions to the economic crisis

Henry Hopwood-Phillips 10.06am

  1. LIQUIDATION. In 2000, when ex-Federal Reserve chairman Alan Greenspan stated, “an organisation that is very large is not too big to fail, it may be too big to be allowed to implode quickly. But certainly, none are too big to orderly liquidate”, he was breaking a shibboleth.
    The last time "orderly liquidation" had been implemented was in 1907, almost thirty years before the “Too Big to Fail” doctrine was formulated effectively by the introduction of deposit insurance in 1934
    This should be allowed to happen now. Though markets, like people, rally in the short-term off short fixes, quick highs, solution-lites, they also in the long-term, like people, prefer discipline, transparency and honesty.
    The problem with this solution is that too many banks have been “zombified”. Governments have played their cards and there is an awkward feeling that it is too late to try and reshuffle the deck.
  2. HYPERINFLATION. Ben Bernanke, the incumbent Federal Reserve chairman, gave a speech in 2002that reminded indebted governments that they had little incentive to control inflation. In it he informed the audience: “The US government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many US dollars as it wishes at no cost”. 
    The Weimar school of debt reduction is doubtless attractive and perhaps most resembles the current path. However, though prices and wages would rise with the tide and debts vanish beneath the waves of time, the fact remains that the inflation created would most likely be non-uniform. Banks can and do ultimately absorb all the benefits of inflation through various “transaction costs”, shoring up their positions in an illiquid interbank lending market.
  3. JEWISH DEBT JUBILEE. From the Lords of fiat money to the Lord of all. Perhaps it is no coincidence that the Kondratiev wave cycle - at approximately fifty years - lasts for almost the same amount of time as the debt jubilee cycle of the Bible. The Lord told the Jews in Leviticus 25:10, ”This fiftieth year is sacred—it is a time of freedom and of celebration when everyone will receive back their original property, and slaves will return home to their families.”
    Perhaps we should take this as being if central banks printed out money that could be especially tailored/enabled to being spent solely on paying off debt then getting back to year dot might not be so difficult as commonly supposed.
    The obvious risk is the huge moral hazard such an action would create. But anything must be better than this economic malaise.
    Follow Henry on Twitter @TheHolySmoke

UK economy: Our demons are not deflationary but systemic

Henry Hopwood-Phillips 11.17am

We live in a time in which political correctness handicaps political honesty and a lack of capitalist courage hobbles market transparency. Churchill famously remarked, “when the eagles are still, the parrots begin to jabber”. And Orwell warned us that “to see what is in front of one’s nose needs a constant struggle”.

We are stuck in an economic quagmire because fractional reserve lending, in layman’s terms “unbacked credit”, has created a system funding activities (mostly non-productive) that a free market would never support. Activities that consume and do not produce any real wealth.

This in turn creates an atmosphere in which checks and balances in the capitalist system, e.g. Glass-Steagal Act (repealed 1999), start to seem anachronistic. Attitudes of important offices, e.g. mortgage underwriters, become lax. And collateral values are allowed to decline, as easy credit distorts the market.

In 2007-8, this credit bubble started to rupture. The trigger was US sub-prime mortgage lending but no doubt the day of judgment would have come sooner had the ‘masters of the unvierse’ not chopped and mixed good and bad debts into unfathomable CDSs, CDOs, MBSs and other jargon-heavy “investment vehicles”. Banking talents seemed to lie in obfuscation rather than financial genius. Banking solvency suddenly became an issue as banks were revealed to be over-leveraged and over-exposed.

The solution in the US was the TARP, which hoovered up illiquid “troubled assets” in return for spreadsheet honesty, the conservatorship of Fannie Mae and Freddie Mac, the bailing out of AIG, and Dodd-Frank regulation to ensure mistakes were not repeated.

In contrast, the UK (and Europe to a lesser extent) nationalised bad banks and kept credit spreads fairly opaque, fearing that to allow any of its interconnected clique of megabanks to fail would precipitate a domino effect. Private debt effectively became public debt overnight. Privatised profits and socialised losses united socialists and capitalists in anger against a managerialised system.

As banks all deleveraged at once, a credit crunch ensued. Servicing nationalised debts on already fragile fiscal bases became untenable in the politically undecided and therefore economically rootless eurozone. As market confusion spread over where the buck effectively stopped within EU institutions, debt prices for PIIGS began to rocket and further “stop-gap” bailouts were required.

A fall in money stock, caused by a credit crunch, is usually followed by a fall in prices, i.e. deflation, as stable services and goods chase less money. However, central banks, as Milton Friedman famously said, “are always looking to correct their last mistakes”. Deflation is the spectre that haunts the mistakes made by central banks during the Great Depression. And so the central banks print money. They print money for government bailouts, print money to get banks loaning, print money to increase general liquidity.

The problem with all this is that loose monetary policy caused the mess in the first place. And it is now prompting moral hazard by acting as its own solution. It insincerely pretends to fight off the deflation that would raise the debt burden because in fact central banks don’t want you use their quantitative easing (QE) to pay off debt because that would decrease the money supply (causing deflation); in fact, they want you to increase your debt in order to buy irresponsibly and continue the consumption bubble that would continue the prosperity illusion.

Side effects of deflation, such as a fall in economic activity, might be painful but all the pain is, in reality, the burning away of the inflation that no longer reflected the actual wealth produced. Shattering illusions of prosperity caused by money pumping. Would you rather live in a castle on a cloud or a house on the ground?

The debate on what principles our monetary system should be based upon, whether it be fiduciary, commodity-based or various hybrids, is for another place at another time but what must be clear is that fiat money and fractional reserve banking do not impose a natural limit on the growth of money supply. The current system has failed us and yet no real debate on the essentials seems to be occurring.

Follow Henry on Twitter @TheHolySmoke

George Osborne’s credit is running out

David Cowan 2.00pm

The Osborne brand has been heavily devalued since George Osborne’s politically disastrous budget. It initiated the ‘omnishambles’ of the past few months which was then followed by a ridiculously long set of U-turns over taxes on pasties, caravans, charities, heritage, and petrol. After weeks of government ministers loyally defending the budget these policies were swiftly and unceremoniously ditched with little or no notice. Often these announcements came within days of each other with the consequence that loyal ministers and MPs had been made to look incredibly foolish.

Just think of Chloe Smith on Newsnight after George Osborne announced that the autumn increase in fuel duty would not go ahead. Even the Secretary of State for Transport, Justine Greening – a loyal Osbornite by all accounts – was kept in the dark about the change of policy. The U-turn over fuel duty was perhaps the most misjudged as it still managed to backfire on George Osborne as that very same morning Ed Balls had called for such a change of direction in The Sun. As a result it looked more like a victory for Ed Balls and another wobble from George Osborne. Many in the Conservative party now see him as “too damaged” to be a credible successor to David Cameron.

Last week Osborne made his bid to regain some of his credibility as de facto Chief Strategist of the Conservative party with a provocative interview in The Spectator where he claimed that Labour aides were “clearly involved” in the Libor scandal, but without mentioning names. When it resulted in a clash in the House of Commons debate that very same day Ed Balls exclaimed “He has impugned my integrity in The Spectator!” It was a very partisan performance delivered in order to boost Conservative MPs’ confidence in him. George Osborne may appear to have done this by securing a parliamentary inquiry into the banking industry, instead of a judicial one, which will undoubtedly question Ed Balls and the other architects of the faulty regulatory system which helped precipitate the financial crisis in 2008.

But to many Conservatives the parliamentary exchange between George Osborne and Ed Balls looked like a sordid display of petty politics- not statesmanship. While it is of course important that Ed Balls et al are made accountable for their disastrous policies, there is still a feeling that George Osborne is far too focused on playing politics instead of doing his job. If this perception dominates how the electorate see him at a time when Britain has gone into a double-dip recession, the Eurozone crisis is engulfing the continent, 2.61 million people still unemployed, and the Bank of England printing money like there is no tomorrow, then the Osborne brand will continue to decline in value.

Within the wider context of the various deficiencies in George Osborne’s economic and financial policies, this run on his credibility is only going to continue. His plan for growth is far too heavily dependent on a policy of cheap credit from the Bank of England and fiscal stimulus from the Treasury (see my article on last year’s Autumn Statement) and clearly is not working. Another problem is that his deficit reduction plan has so far been implemented through tax rises while spending cuts will not actually start to bite until the eve of the next general election and will continue into the next parliament. It is now very likely that on polling day in 2015 the electorate will still be feeling the pinch of meagre growth, rising cost of living, and harsher spending cuts.

A wealth of radical policies for growth has come from across centre-right politics. Conservative MPs have set up groups like the Free Enterprise Group, 2020 Conservatives and The Growth Factory in order to formulate new policies to liberalise the economy. Numerous think tanks have delivered fascinating reports on boosting growth, like the Institute of Economic Affairs’ ‘Sharper Axes, Lower Taxes’, the Centre for Policy Studies’ ‘Small is Best’ publication and helpful infotoon, and the TaxPayers’ Alliance’s 2020 Tax Commission Report. They are all calling for the same spirit of Tory radicalism which has been advanced by Michael Gove and Iain Duncan-Smith, with a clear economic plan based on larger spending cuts, lower taxes, deregulation and sound money.

It is of course difficult for Osborne to recalibrate his economic and financial policies more firmly in this direction because of the Liberal Democrats. But this then begs the question of what happened to ‘Orange Book liberalism’ which was so superbly articulated by David Laws? The coalition seems to baulk at every opportunity of providing a more robust plan for growth. Instead we have seen streams of micro-initiatives put forward while radical policies, like the Beecroft Report’s proposal for making it easier for employers to hire and fire employees, get side-lined. Policy making has become a zero-sum game in which decisions are prevented from happening whilst civil servants are left to their own devices with disastrous consequences, like in this year’s budget. The coalition simply cannot function without an effective policy machine with both parties contributing to new economic radicalism.

George Osborne is undeniably a political animal. He has had numerous political coups like in 2007 when his inheritance tax cut pledge helped spook Brown into bottling the election, but there is a serious job to be done. If we are going to see an effective plan for growth based on spending cuts, lower taxes, deregulation and sound money which has the support of both coalition parties then George Osborne has to focus, otherwise the blood of electoral failure in 2015 will be on his hands.

Follow David on Twitter @david_cowan

Despite slowdowns, economic stalemate between Europe and China is set to continue

Henry Hopwood-Phillips 3.44pm

Economic data from China is mixed. The bad news is that after first-quarter GDP growth of 8.1 per cent, second-quarter growth is being revised downwards from 9.5 per cent to 7.8 per cent by Caixin, one of China’s leading financial publications.

Reuters reckons second-quarter growth will fall even further, by 7.6 per cent, the weakest rise since 2008. Other indicators fare no better. Industrial production has risen by the lowest amount in three years, at 9.6 per cent. Electricity consumption fell to 3.7 per cent from 7 per cent in March. Property prices fell in over half of China’s seventy leading cities. And manufacturing PMI suffered its eighth consecutive month of contraction, from 48.8 in  June to 41.8 in May.

The second set of statistics paints a rather different picture. Exports were expected to clock a 6.8 per cent rise but instead surged by 15.3 per cent to $181.1 billion, mostly due to American demand. Not only that, imports only increased 12.7 per cent, giving a healthy trade surplus of around $18.7 billion. One of those imports was oil, which was bought at a record rate of six billion barrels a day in May due mainly to its low price and unstable future.

Bears point to a real estate bubble, over-capacity, over-investment, and a consequent lack of inflation as signs of over-extension. Bulls tend to side more with Jim O’Neill of Goldman Sachs who notes that the historical weight placed on production stats is misplaced and that “indicators of consumption are becoming more important”; and Jack Perkowski of Forbes who reckons “the phrase ‘property bubble’ will no longer be in the vocabulary” reasoning that it must have bottomed out after nine-months of decline.

The Chinese government, noticing a slow-down in demand, has not been slow in reacting. It has cut its interest rates for a second time. Consequently the yuan weakened against the US dollar in Shanghai.

Further measures are also being taken. The monetary authority is pumping 225 billion yuan into the financial system by conducting reverse-repurchase operations. The last steps to lower the amount of cash banks need in reserve, started in November and freeing up 1.2 trillion yuan for lending, are being implemented. And investment projects, many in the underdeveloped interior and western parts of the country, are being fast-tracked.

Beijing also hopes to boost energy demand by subsidising energy-saving white goods to the tune of 26.5 billion yuan. Such measures make a mockery of bullish claims that the Chinese government would intentionally try to cool the economy down in order to tactically restructure it.

China knows the oil that lubricated the post-war global economy is running dry. As the purchasing power of the Western consumer, based at first on rising wages but later on rising house prices has evapourated, no significant replacement has compensated for that lost demand. According to Bloomberg’s David Roseberg over 80 per cent of the world’s top economies are now posting a contraction in industrial activity. The EU and US together account for approximately 40 per cent of Chinese total exports but China knows that its long-term future lies with its own domestic consumer. This is why it has not been afraid to upset the laissez-faire apple cart by playing dirty with its currency, by using state funds to stockpile underpriced rare earths whilst imposing quotas and caps that ensure they remain in its domestic market, by refusing to “save” the eurozone, and by imposing duties worth £2.1 billion on US-made cars.

But the long term is naturally a long way off. Though there is talk in some quarters that the West needs to restructure its economy from a consumer-driven to an export-based one and that China needs to do exactly the opposite, the fact remains that the Chinese, with no real welfare state to speak of, are driven by both economic necessity and to a lesser extent culture, to save and supply rather than consume and demand. The West also has a tendency to overlook the old cronyist fundamentals of the Chinese economy which ensure the masses have little option but to stash their cash.

The fact is that much of the economy is still run on political rather than economical capital and that many bad debts are still sloshing round the system. Current generations are also living with the repercussions of the one-child policy legacy left to them by Xiaoping in 1979. They must save because demographically fewer and fewer people must support an ageing 1950s baby-boom generation.

In the short to medium-term the Chinese middle classes are not going to be either big enough or rich enough to fill the demand gap left by western homo consumericus and that gap remains unfilled by both BRIC and MIKT countries. This is the biggest single factor in the Chinese growth slow-down from averaging 10-13 per cent in the past decade to more humble 8-9 per cent IMF predictions this year.

But the Chinese have so far refused to invest in European customers who live in a eurozone that, according to Jin Liqun, Chairman of CIC, they believe to be profligate, lazy and politically undecided. China wants a eurozone to rise in its own image, with a freer market at ground level and a more centralised political command.

However, both seem unlikely to materialise and so, ceteris paribus, until one side blinks the economic stalemate looks set to continue.

Follow Henry on Twitter @TheHolySmoke

Britain does need a banking inquiry

Michael Economou 10.30am

The late historian Ronald Syme wrote, “In all ages, whatever the form and name of government, be it monarchy, republic, or democracy, an oligarchy lurks behind the façade.”

It is difficult to argue that twenty-first century Britain is any different. Recent revelations in public life have begun to unveil a network of power, privilege and wealth that exercises a disturbing control over our country.

Politicians of all parties toady to media moguls and millionaires, trading policies for good stories and donations, while cabals of journalists and bankers abuse the system for profit.

The twisted mask concealing this state of affairs has developed cracks, through which we have glimpsed the true face of institutionalised corruption and an esurient elite. Cash for honours, the parliamentary expenses scandal, phone hacking, endless tax avoidance tales, and now the scandal of rate fixing among our major banks - these are all symptoms of the same disease, an economic and political culture built on cronyism and deceit.

The solution has never been reactionary leftism, anarcho-capitalism or any other sinister ideology pedalled by fringe politicians. The cure is sustained, old-fashioned One Nation conservatism that genuinely tries to end the frightening gap between the rulers and the ruled.

The Government should embrace calls from across the political spectrum for an inquiry into the British banking industry. The Governor of the Bank of England, Mervyn King, has argued against such a step on the grounds that “there must be many people who work in banking today who know that they are honest, hard-working and feel they have been let down by some of their colleagues and indeed their leaders.”

But this is precisely why we need an inquiry. The actions of a few rotten bankers are destroying the reputation of an entire industry. Just this year, banks have been attacked for mis-selling PPI, fixing Libor rates, and mis-selling interest rate swaps to small businesses. It is unlikely to end there.

What should we expect from a banking inquiry? Hopefully enough information for the Government to carry out the sensible reforms needed, rather than the futile and punitive tax rises that the Tories and the Labour party have used to get one over each other, and which act merely as punishment rather than rehabilitation.

Moreover, fish rot from the head down. If we don’t insist on better leadership from those at the top, then Britain shall sink under its own cynicism and disillusionment. Of course, a banking inquiry would only be a relatively small step, but it is necessary for us to fix thoroughly the banking system, build a new conservative consensus, and make sure that the British people don’t turn in their (entirely justified) revulsion to the sort of political movements that can only make things worse. It is time to smoke out the rats and put our economy in order.

Follow Michael on Twitter @MichaelEconomou