Thursday, 16 October 2008

Labour Recovery Requires Defeat in Glenrothes

Anyone else think that the Brown / Darling bailout is a little like someone cutting your throat then trying to make amends by offering an elastoplast?

Now the deeds have been done, it seems that the long awaited scrutiny is on the way judging by tonight's Panaroma. Such programmes can never guarantee that the opinions offered by their guests are representative but the overall impression about the Dynamic Duo's action was along the lines of 'It's the bloody least they could do'.

We'll return to this theme another day, but sooner or later, Brown is going to have to explain his part in getting us into this mess. He is by no means uniquely culpable but he is culpable nonetheless.

I welcome Labour's bounce in the polls. Frankly, it is no good for anyone when the outcome of an election becomes a forgone conclusion. I suspect that Brown and Darling have got a far bigger problem on their hands with the 'real' economy however.

All this activity may fix the banking system but there is no guarantee that this is going to stimulate the increased demand our economy so badly needs. Even supposing the banks start lending to each other again, who are they going to pass these loans on to? All these folks that are losing their jobs? I don't think so. All these small businesses that are seeing their order books plummet? Try again.

Trouble is we are already in the ever-decreasing circle of recession and the only ways to stimulate demand are to increase public spending and seriously cut interest rates so that those of us who still have a job and a house have more cash to burn. Unfortunately, Brown's stewardship of the economy has left us with a ridiculous national debt and spiralling inflation. Is there any way to increase spending without tax rises? If taxes are raised won't that cancel out any benefit in cutting interest rates? Tell me it's not so Darling.

One bi-product of this flurry of activity is that Labour now think they can hang on in Glenrothes and that Brown's involvement may even be a positive. Time will tell of course but I suspect that if they do hang on it will do little to prevent their demise at the next election. On the other hand, might a defeat in Glenrothes ram home the message that sorting out the banks is one thing but the real job at hand is sorting out the economy?

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