Would the real coward please stand up?

Benazhir Bhutto, the supposed saviour of democracy in Pakistan, has been assassinated. This has prompted Gordon Brown, our self-appointed expert on courage, to describe the perpetrators as "cowards [who are] afraid of democracy".

It strikes Woody that this is an excellent example of what psychologists call projection - casting your own obvious failings onto others in an attempt to distance yourself from them.


Just in case anyone forgot, Brown the Clown:

• Bottled out of standing against Smith for the party leadership in 1992
• Bottled out of standing against Blair for the party leadership in 1994
• Did everything he could to ensure that he was handed the party leadership without any opposition or general election
• Bottled out of a general election in November 2007, when he realised he might lose

So who's really the coward who's afraid of democracy?

Woody apologises for falling off a cliff in his blogging earlier this month. He hopes to be more consistent in future.

Ignorance should be no excuse

Another week, another scandal.

The Labour Party have been caught breaking a 2000 law they themselves introduced by taking money from David Abrahams when he was known to be avoiding public disclosure by channelling his donations through his employees.

According to the 2000 Act, anyone who did anything which could have made it easier for the secret donations to be made, has committed an offence. The relevant section is below.

Offences concerned with evasion of restrictions on donations

(1) A person commits an offence if he—

(a) knowingly enters into, or

(b) knowingly does any act in furtherance of,

any arrangement which facilitates or is likely to facilitate, whether by means of any concealment or disguise or otherwise, the making of donations to a registered party by any person or body other than a permissible donor.

This is why all the key players are making ignorance the central plank of their defence. Because if they were in anyway knowingly involved in the arrangements, they would have committed an offence.

In Brown's case, he claims:

"I had no knowledge until Saturday night, either of the donations or of the practice which had grown up where they were improperly declared to the Electoral Commission... The money was not lawfully declared."

Woody says: If that's true you should be ashamed, because you had no oversight over the fundraising practices of your own party. And if it's false you should be even more ashamed because you have brazenly lied and cooperated in breaking the law.

In Harman's case, that she did not know that the money came from Abrahams rather than from Kidd.

Woody says: I refer the right dishonourable lady to the answer I gave above.

In the case of Abrahams himself he claims:

"Until the weekend I didn't know it was illegal for a person who hadn't personally donated to have to declare his hand to the Electoral Commission."

Woody says: And I didn't know I couldn't w**k on the bus. You broke the law, and you should face the consequences.

And in any case, the law is totally flawed - ignorance should be no defence at all.

If ignorance is a permissible defence then all Brown and Harman would have to do (and in practice exactly what they seem to have done) is to say to their funding teams "Just get the money in, I don't care how you do it, I just don't want to be told about it or involved in any way."

And then the team would have carte blanche to break the law, with Brown / Harman knowing full well that in the unlikely event that it comes to light they would be able to claim ignorance.

Such a law simply encourages politicians to deliberately lose sight of fundraising, when in fact they should be held responsible for it.

The whole thing stinks to high heaven.

It's not Black Wednesday - it's a lot worse

Jack Straw, the "Minister for Justice", is furiously fighting back against allegations that Discgate is Labour's equivalent of Black Wednesday - when Britain was forced out of the ERM in 1992,under the Chancellorship of Norman Lamont (right).

He says: "The idea that this is an equivalent to Black Wednesday is utter nonsense."

He's quite right - it's much worse than that.

Black Wednesday was a short-term embarassment which had very beneficial consequences for Britain in the medium-term. It was foolhardy to lose money trying to fight what was a necesssary devaluation of the pound. But once we were ejected, interest rates could come down, enabling us to revive the economy in a way that would have been impossible within the ERM.

Nor did it 'ruin' the Tories' reputaton for economic competence, as is so often claimed. The Tories' reputation was ruined by trying to keep us inside the ERM, not in us being ejected from it. The effort to keep us inside it meant much higher interest rates which triggered a housing market crash and painful recession.

Most people had no idea what Black Wednesday meant, only that they couldn't afford their mortgage any more or were out of a job.

The Discgate saga, on the other hand, is a huge, catastrophic failure in the short-term which will probably have very negative long-term consequences for both the UK and the Labour Party.

For the UK it will probably undermine the public's already shaky faith in government management of data. Indeed why anyone would voluntarily give the government personal information, or tell them the truth any more, is beyond me. This is on top of the potentially disastrous consequences of organised criminals using the data to commit large-scale fraud.

Remember that before this happened the tax credit system was already responsible for nearly £2bn of fraud and overpayment. What's going to happen now?

For the Labour Party, it should - taken together with the numerous other cock-ups they have presided over - ruin their reputation for the prudent management of government affairs. Whether it does so depends largely on whether it does indeed end in large-scale fraud and how smart the Opposition are in exploiting this.

Icebergs don't give you soft landings

With the good ship housing market having apparently hit an iceberg, there are nonetheless still people out there who still think that a 'soft landing' might be possible.

By 'soft landing' they mean some period of stagnation of house prices, presumably followed by the resumption of crazy levels of inflation like we've seen over the past 10 years.

This is pie in the sky. It's of the very nature of these things that there can be no soft landing, that house prices will fall, reposessions will soar, and unemployment will increase, before things eventually bottom out in a few years' time.

Why?

In short, because it's an inherently unstable market, where investors expectations of price changes become self-fulfiliing. Sellers who expect price falls will try and sell as soon as possible, but they will find that buyers are waiting for those price falls to materialise. And if sellers refuse to drop prices, they will simply pull the rug out from underneath the sellers of the house they were going to buy. And so on.

The very factors that led to the boom in the first place are going into reverse and there's little that anyone can do to stop it. Where before we had irrational exuberance, we will now have a period of mounting fear and panic, before reality eventually sets in again.

To summarise, we have: rising borrowing costs, less mortgage availability, weak income growth, and increasing expectations of price falls. That's a crash in the making.

Interestingly Spreadfair now projects that house prices will fall by 7-8% (in nominal terms) by end 2008. I'd probably sell that if I wanted to hedge against falls. But not owning any property, I'm hedged up to my eyeballs anyway.

The ship is sinking, evacuate!

A liner is sinking off the Antarctic after hitting an iceberg.

Meanwhile mortgage approvals hit a record low.

Something about this feels very ominous.

Deckchairs? Titanic? Anyone?

Don't pay any attention to this idiot

News reaches us that "Sir" John Gieve, member of the Monetary Policy Committee, voted for an immediate rate cut at the last meeting of the Bank of England.

Woody would like to remind people that Gieve has a track record as an irresponsible idiot. He was Permanent Secretary at the Home Office when Blunkett tried to fast-track his nanny's visa but conveniently 'couldn't remember' how it happened. That earned him a knighthood.

He was still Perm Sec when the Home Office was accused of colossal financial mismanagement. He was also personally involved in the (now forgotten) release of a thousand foreign prisoners who should have been deported.

Needless to say this qualified him for a plum job on the MPC, particularly as at the time GB really needed to get rid of Andrew Large who was far too hawkish for his liking.

He's an idiot and a stooge, probably under direct orders from the Clown himself to reignite the economy.

So if Gieve voted for it it's almost certainly the wrong thing to do. Fortunately it seems likely that other factors will prevent rates from coming down anyway.

1. Sterling is relatively overvalued, making it much harder to cut rates without immediately importing inflation. (This is not the case with the dollar.)

2. Commodity inflation has been soaring and will continue to do so while the yuan is so under-valued.

3. King doesn't want to be seen to make the same mistake as in 2005 when an injudicious rate cut prompted the property market to take off again. Unlike Gieve, King is no idiot.

So rates will probably stay on hold until well into the New Year at least.

NB Woody is quite happy to be debt-free and renting for the time being.

Why is Brown apologising?

Woody is confused.

Brown yesterday apologised for the loss of two discs holding personal data on 25 million children. But why?

If it's a genuine apology then that means he is admitting he is responsible for the breach - in which case surely his position as PM is untenable.

He can't simply be apologising 'on behalf' of HMRC, because HMRC have already apologised for it. They are not some wayward child that Brown has to apologise 'on behalf of'.

On the other hand if it's not a genuine apology then he's just being insincere isn't he? And doesn't that just add insult to the injury already caused?

It seems that Labour think that an apology is just what you do when things are so bad you can't spin your way out of it.