One of the key marginal seats in the upcoming general election is my own constituency of Withington, in South Manchester, which is making national headlines for its too-close-to call battle between Labour and the Liberal Democrats. Comprising a clutch of suburbs not far from Manchester city centre and Manchester University, Withington is home to a large student population. Traditionally safe Labour territory, in 2005 there was a stunning 17% swing to the Liberal Democrats who pulled off a surprise victory over Labour, winning by a mere 600 votes. This time around, Lib Dem MP John Leech is involved in an epic struggle with Labour, who have listed Withington as number 3 on their list of target seats. I met him two days after the first leaders’ debate and talked to him about the Nick Clegg effect, the coming hung parliament and the prospect of a Lib Dem-Tory coalition, tuition fees, dirty campaign tactics… and Eddie Izzard.
The big news in international diplomacy is that the Americans have managed to get the Chinese to come on board with potential sanctions against Iran. This is quite a coup, given that relations between the two countries have recently been about as warm as Pingu’s handshake. But if this article in the Guardian is true, then it seems that the bargaining chip the Americans used to get the Chinese to be so agreeable is the threat of the U.S. branding them a currency manipulator. China, who have been pursuing a cunning plan of devaluing their currency by buying up American dollars in order to boost their exports, do not want to be called out on their trickery. All of which means that America has a pretty high-value bargaining chip which they can use to extract some concessions from the Asian dragon.
What a pity, then, that they’ve chosen to waste it on an agreement over Iran sanctions, which, for reasons put more eloquently by an actual expert on the subject here, are a bad idea. In a more perfect world where the major powers weren’t so cockeyed on the subject of how to contain Iran, the bargaining chip could be used to get so many worthwhile concessions out of China. For example, if the Copenhagen Summit was anything to go by, the Chinese are going to be a real thorn in the side of any potential international treaty on climate change. Then there’s China’s alleged cyber-attacks and scary censorship of the internet, which has led to Google basically abandoning it. And of course there’s China’s awful human rights record and habit of sticking their fingers in their ears and going LALALA when it comes to the issue of Tibet, not to mention their habit of trading with and selling arms to the likes of Sudan, Zimbabwe and other friendly African dictatorships. The list goes on. And on.
So there are many useful concessions America could have squeezed out of China. Instead they wasted what is quite a potent threat on more pointless and counter-productive posturing on Iran. Great. Obama’s had a good couple of weeks on the domestic and international scene, but for me this hits a real sour note. China is going to be a big problem in the next few years and it seems America just threw away an excellent bargaining chip. The question is, how many more does it have up its sleeve?
In yesterday’s Guardian, Simon Jenkins complained that none of the major UK parties are attacking the Chancellor Alistair Darling’s decision to bail out the banks in 2008. After watching Tuesday’s Chancellors debate, Jenkins was left wishing for some “good old Labour blood and guts”, someone who could say to the would-be Chancellors:
“You blew it! When those petrified, knock-kneed smoothies from the City came pleading for help, you caved in and gave them the people’s money. You panicked, you bunch of creeps.”
Now I’m all for a bit of bank-hating, and I agree it’s important to stand up to any ”petrified, knock-kneed smoothies” that come your way (has there ever been a better description of bankers in the credit crunch?) and I definitely agree with Jenkins when he says that the better option would have been to nationalise the banks, not bail them out, but the idea that a better option would also have been to let the banks fail isn’t left wing, it’s just wrong. And it’s particularly wrong to say this:
Of course we shall never know what the world would be like today had Darling reacted differently in 2008. It could hardly have been worse. Some scenarios, such as just letting the banks fail, are undeniably hairy, though the global market in finance is astonishingly resilient and would, by now, probably be picking up the pieces and getting back to normal. America still eats and breathes, despite the failure of Lehman Brothers.
Wow. Saying that America still eats and breathes despite the failure of Lehman Brothers is like saying that Dick Cheney still lives and breathes after his heart attack. Technically true, but avoiding the minor detail of the triple-heart bypass in between. The crash of investment bank Lehman Brothers started the credit crunch proper and almost brought the world’s financial markets to their knees. Its collapse sent waves of panic through the markets, causing investors to try and dump all their dodgy financial products, which simply made the crisis worse. The mistake of the US government was to assume that the financial markets could cope with the failure of Lehman Brothers, and it learnt its lesson by bailing out all the other massive banks that needed help, and in doing so (narrowly) averted the complete collapse of America’s banking system
If Darling had let banks like RBS fail instead of bailing them out, then Britain might have had its own mini Lehman Brothers crisis. Jenkins says “it could have hardly have been worse”, but it really could have. At least we still have a functioning banking system. Obviously this doesn’t mean we shouldn’t still be angry about the respective parties’ current approach to the banks - no-one seems to be willing to make the banks pay for the mess they created, and no-one is taking the steps necessary to stop it happening again - but venting this anger by wishing that we’d just told the bankers to, uh, go collapse themselves instead of bailing them out is not admirably Old Labour, it’s just silly.
