Amid the financial turmoil, Peter versus George is the key battle

Andrew Forbes

It's not an even fight. Try Redwood vs Mandleson. Hague vs Mandleson. Davis vs Mandleson.

Peter Farrington

The Tories may fear the return of this 'big beast' but in fact most ordinary people are repelled by the fact that Mandelson is back.

Huw Thornton

I agree, Andrew. Osborne is goind to need some really good help in a face to face with Mandelson.

Brown is now starting to look like a contender, after recent events. He has successfully changed Labour's narrative.

There is going to have to be a rethink if this is to be fought. Where is the new Tory narrative?

Huw Thornton

Good article BTW Fraser. It shows that the champagne undrunk at conference is going to need to be kept corked a little longer.

Hysteria

Is it just me? I find the whole thing tedious in the extreme...........

john problem

If only all their brain-power were used to benefit the country. Mandelson's grand-dad said 'the purpose of politics is to improve human nature.' Apart from the revolting
condescension of this remark, one wonders if his grand-son has any care for the populace. Ah well, we may be confident, may we not, that at least business in Britain will now improve....

Dirty Euro

What about that rumour that Osbourbe called Fox a little ####. That is rude.

Dirty Euro

The real fight is between Dirty Euro and John Redwood. Dirty Euro has allready rubbished John Redwood for the fool he is.

Antipodes Spectator

Is it only in England that a career can survive not one but several reversals, all of which one would have thought were terminal? Is it only in England that a government desperate to survive will gather unto itself the rejects and the justly ostracised of yesterday? Are we seeing the death throes of all judgment, all accountability, all shame, all embarrassment?
Alistair Campbell was interviewed on ABC radio in Canberra this morning. Did he have any regrets? Well, he of course regretted the "circumstances " leading to the suicide of David Kelly. But he has since searched his soul (apparently he has one) ever since, and has judiciously concluded that "we" couldn't have done anything differently. How about telling the truth? Might that have worked? At a time when Adam Boulton's "The Tony Years" is giving a rather less forgiving account of Campbell's behaviour, I find his refusal on the ABC this morning to acknowledge any fault breathtaking. Then, even more breathtakingly, this unembarrassable pachyderm went on to detail the help he has already given "Gordon" (everyone is "Tony" or "Gordon" unless they're "Cameron") at the weekend conference, and the help he will be giving him in future. Is he going to convince the electorate that "Gordon" is as shallow, meretricious and cynical as "Tony"? Will the kingmaker create a clone of his first success. It is a tribute to Brown's greater substance that such a project seems doomed to fail.

Charlie

Shallowness of character combined with a lack of rigorous thought are the main reasons why we are in this mess. Warren Buffet, Peter Schif and Dr Cable appear to be some of the very few who realised the parlous state the UK and the American economy has become over the last 5-7 years. The western financial system has long been a fool's paradise. The City has behaved with all the probity of an 18 C aristocrat gambling away their inheritance. The real skill will be the ability to offload blame -poor regulation and government overspend due to Brown or reckless practices undertaken by hedge funds, bakster and private equity companies who are the main financiers of the Tories. As it easier to blame reckless hedge funds and private equity companies and bankster( to quote MacMillan) than the B of E, FSA and Brown, I think Mandelson will win the blame game. After all poor policing is not an excuse to break the law.To paraphrase Bobby Jones, the great golfer" I should not be praised for obeying the rules".

Ben

Well if you think we're prepared to give Broon one second more than his allotted deadline in 2010 you are sadly mistaken. Look at the wreckage Fraser. It happened on Broon's watch and he's at least in part to blame: faulty regulation, lax supervision, and leading by example in taking the nation on a totally unsustainable spending spree. These courtly pas-de- deux you go on about bear no relation to the hardships being experienced in the real world.

Try climbing out of the Westminster bubble!

Denis Cooper

"Meanwhile, Vince Cable is rightly asking whether the Bank of England’s Monetary Policy Committee had the right original remit. This is the smoking gun: its inflation-only target was an anachronism which flooded the economy with dangerously underpriced debt."

The original remit wasn't perfect, because the Chancellor set a single inflation target in terms of RPI-X, when there should really have been two inflation targets - the first for retail prices, the everyday "cost of living", and the second for house prices.

Of course the two are interlinked, and no doubt when the MPC are forecasting future retail price inflation their economic model will attempt to take into account the spillover of equity from a rising housing market into the general economy.

It must happen, not only because rising house prices may spur people to seek ways to withdraw equity from their own houses, but because parents die and their houses are inherited by their children and in many cases sold.

Hence even without active equity release by homeowners there is a continuous process of money being released from the housing market through the death of older people, some of which is then pushed out into the wider economy by their middle-aged inheritors, while money is borrowed by younger people and returned to the housing market. So as house prices rise, the middle-aged inheritors can spend more, while the young must take on more debt.

Nevertheless, the Chancellor should have asked Parliament to amend Bank of England Act 1998 to widen the MPC remit to require them to pay direct attention to house price inflation, perhaps allowing him to set a target range.

Instead, he did exactly the opposite by changing from a general inflation target expressed in terms of RPI-X - which at least includes some weighting for house prices - to the EU's Harmonised Index of Consumer Prices, or CPI, which does not include house prices.

Mervyn King did warn that this could cause problems, in this January 2004 speech:

http://www.bankofengland.co.uk/publications/speeches/2004/speech211.pdf

"From May 1997 the target was 2 ½% for RPIX inflation. But in December the Chancellor gave the Monetary Policy Committee a new target for inflation. It is 2% as measured by the Consumer Prices Index or CPI, formerly known as the Harmonised Index of Consumer Prices.

What is this new inflation measure, and how will it affect monetary policy? On the RPIX measure, inflation was at or above target for the whole of last year. In contrast, the CPI measure of inflation was below 2% throughout the same period. Indeed, CPI inflation has been below 2% for all bar three months since May 1997, and it is almost six years since it was last above 2%. How can it be possible for inflation to move from above to below target - just like that? To answer that question, we need to examine how inflation is calculated."

As King pointed out, "RPIX includes both house prices and Council Tax. Those items are omitted from the basket of goods and services used to construct the CPI."

So when Brown told the MPC to target CPI, he was in effect telling them to ignore soaring house prices when they were setting interest rates.

hadrian

Could anything be more repugnant to the ordinary man-in-the-street than the self-serving, venal doings of our most of our political class as described in this article? Little wonder cynicism and contempt run riot. Malign plotting feuding and jealousies..and this from the class who have the temerity to presume to 'change human nature'! No, that is a spiritual matter well beyond the power of all politicians and comprehension of most of them.
Mandelson, Campbell, et al are all blasts from a benighted past and if our populace are stupid enough to vote them in again, may hell mend us all. Gordon Brown simply confirms our suspicions that he is as unscrupulous as the rest of them.