Tuesday, September 18, 2007

To Go, or Not to Go


Talk of an October election has been bounding around for some time now; with Brown riding high in the polls, Cameron being hit by blow after blow, and Ming Campbell simply hobbling down the path of political oblivion at an ever more depressing (for the LibDems at least) rate. But then came Northern Rock.

Between Friday and Monday Northern Rock was witness to more than half its value being wiped out. By the close of trading yesterday Alliance and Leicester dropped 31% - Northern Rock looked contagious. And for the first time in British history the depositors at a commercial bank were given the 100% backing of the taxpayer.

All told things did not look good for the economy, and more specifically the government; the corollary of which meant a much reduced likelihood of an October election… but has that changed?

Since the start of trading this morning Northern Rock has seen its share price jump 8%, and Alliance and Leicester’s has rocketed up 28%. At first glance (and in politics that’s more often than not what matters) things appear to be getting better, Brown appears to have got things back under control, and the Labour base has been secured in the North thanks to the reassurance provided by the availability of a nice taxpayer guarantee.

So if you were Gordon, would the events of the past few days have made you more uncertain than you already were about an October election? Would the possibility of further turmoil in the weeks before a polling in October stop you in your tracks? Or would you look at the position of the Conservatives and the Liberal Democrats and take the plunge, knowing that things can only get better for them as time progresses?

My inkling is that the situation with Northern Rock has actually served to solidify Brown’s already very strong position by ‘reminding’ voters that he’s a man who can be trusted in a crisis, and if anything has actually made an October election more rather than less likely.

To return to the earlier question if you were Gordon, how would you read the situation? Would you take the plunge? Over to you…


JGS said...

"My inkling is that the situation with Northern Rock has actually served to solidify Brown’s already very strong position by ‘reminding’ voters that he’s a man who can be trusted in a crisis, and if anything has actually made an October election more rather than less likely."

Good Lord, Shane. That's as daft an assessment as I've seen in ages. Queues outside banks, a embarrassingly hesitant Chancellor and a last-ditch, u-turning rescue attempt by the regulators are hardly hallmarks of prudence.

Anonymous said...

Yes! He should go.
Politics aside this is no time to have a crowd of Etonian boy scouts trying to run the economy.Better the devil you know.The Cons. should have picked a MAN for the job.

Anonymous said...

If I were Gordon Brown I would be, in this as in all matters, excessively cautious, excessively stubborn and quick to resent anything which might undermine my authority.

This probably means no snap election. Which gives the Tories a little more time to get their act together. Which they certainly need.

Man in a Shed said...

Brown has mishandled the economy over the last 10 years. His greatest boast - about Bank of England regulation - has been shown to be a botched measure.

The crisis in confidence was as much a crisis in government confidence as the banks.

He may know much worse is coming and may have no choice but to try and con the country one more time before the storm breaks.

Anonymous said...

The rumour is Monday will be the announcement.

Anonymous said...

Broon and co can go to hell they want, but looks as if he and Darling will be taking our money with them. Broon should be asked when and if he appears again in public did the Chancellor have the authority to make a commitment to bail out Northern Crock with taxpayers' funds.

This shower of charlatans need to be held to account for their breathtaking incompetence.

AnyoneButBrown said...

Shane, I think your commentary has been good over the past couple of weeks, but this time you are dead wrong.
The key narrative that underpins most of NuLabs spin is that of economic strength due to the sagacity, prudence and excellent judgment of our chancellor and now PM Brown. That he and NuLab have been personally responsible for the benevolent economic situation of the past decade.
Golden inheritance from the tories...tosh! But its a good economic situation globally...no it because of Brown! It's all built on a credit bubble...nonsense!
No return to Tory boom and bust
A stable economic environment...and other such spin...

Well the wheels have come off that narrative a bit. Er, a run on a bank and the government dithering over what to do. Then making a nonsense of Bank of England independence by agreeing to underwrite Northern Rocks savings (or its it all savings?) over the BoEs head in an open-ended and panic stricken fashion does not look like stability to me.
We'll see but I don't think a Autumn election is made any more likely by this.
NuLabs economic credentials are not destroyed but it's a chink in the armour and allows the Tories to ask reasonable questions in the context of the banking crisis.
It's noticable how Brown has gone missing over the past few days and the glee with which the media have kicked NuLab and Brown...

Praguetory said...

Solidified his position!?. Brown who has overseen a 5% fall in the FTSE since seizing power looks to all and sundry like a man struggling with his footing at the edge of a precipice. If he goes early after this saga, it will look like the panicked actions of a weak leader who knows the game is up - which it will be.

Anonymous said...

How can Brown take the credit for anything on Northern Rock? He's been invisible for days... Plus all the shareholders are still down massively.

If he goes now, he is hostage to fortune. The financial world is very uncertain, the City scents blood with Darling, foot and mouth is still in the land. Brown may find the election is a perfect time for speculators to have a run at the pound - knowing Brown will have to capitualte to their demands, however unreasonable. Anything could blow the election campaign way off course.

I just don't think he is that much of a gambler.

Anonymous said...

I don't believe it was ever likely in October and I think you are only isolating one of his many problems.

Yes, Northern Rock has made them look as if they are panicking but does he want another outbreak of foot and mouth during the campaign as well?

Has anyone noticed how Gordon has done his dissapering act in a crisis?

I still believe it will be 2009 before we see an election and he will hold it on the same day as the
Euro elections to allow voters to kick Labour by voting Tory in the Euro poll but still keep him in power for one last time.

Anonymous said...

Don't forget inflation was down again today at 1.8%. He's probably thinking "i'll wait because I can actually handle the economy, so it isn't going to go off the boil like everyone has been predicting (for about 10 years)" especially if everyone panics this much at a non story he'll look like he is calm as anything, while tories are running about like headless chickens screeming "DON'T PANIC"!

AnyoneButBrown said...

Can I just add that the spin that is been put about around this banking crisis being over are dead wrong. The BBC is leading with "Savers return to Northern Rock" and Sky with a slightly less positive "Northern Rock queues tailing off".
Er, the city doesn't think so. NR's shares have fallen from some £12 a year ago to a close of just over £3 today. In light of the governments more than generous offer to underwrite NRs management incompetence late yesterday, NRs shares closed up by a paltry 8%. Yes EIGHT% (they fell over 40% yesterday).
The city is voting with its money.
I think there's more to come....

Anonymous said...

Labour's public approval depends on two things:
1. If the banking stumbles lead to a recession.
2. If Conservatives can make hay out of it. [Tony isn't around anymore so Dave doesn't know who to parrot.]

I'm doubtful about both of these happening, especially the latter.

Anonymous said...

Bring it on Gordon. Do a Harold Wilson.

Anonymous said...

I believe you might be right Shane, but not for quite the same reasoning. I think that he may well call it early as it seems (and he knows) we're on the edge of an economic downturn. He doesn't have many more cards he can play to calm nerves after last night's move. He'll be hoping we're too ignorant to realise this if he calls an early election...

Anonymous said...

I thought it reminded voters that when the going gets tough, Mr Brown hides under his desk and refuses to speak to anyone.

Chris Paul said...

June 2009 - how many times do I have to tell the lot of you?

David Lindsay said...

Things would be so much better if that reassuring, naturally respect-commanding George Osborne were at the Treasury. Don't you reckon...?

Anonymous said...

chris paul.
2009? Oh dear.

tgf ukip said...

ttgfcmnAll the intelligent analysis that takes place on blogs like this is irrelevant. What Joe Public has seen is TV pictures of a financial crisis followed by pictures of a grey haired distinguished looking Chancellor announcing action that appeared to resolve that problem with the BBC announcing evaporating queues and a rising share price. However, even as I write Brown's personal taxpayer- funded pollster Deborah Mattinson of Opinion Leader Research will be measuring voter, and particularly C2 voter, response. If, as I suspect, she reports positively then you could be right Shane.Don't forget though Brown is not a gambler so if he does go then it definitely means there's a lot more bad economic news in the pipeline. David Lindsay is dead right about one very important thing though - in any major financial crisis could Joe Public feel himself being reassured by seeing on his TV screen that truly impressive figure of junior bank clerk, The Boy George.

Anonymous said...

Anon, 5.30.pm

The real rate of inflation - RPI - went up between July and August: from 3.8% to 4.1%. So RPI is over twice the CPI measure that the MPC uses to set interest rates.

This large disconnect is a key reason for the house price bubble and therefore for the Northern Rock collapse. And who decided to use the CPI measure? Only one guess allowed.

Anonymous said...

Hmm, let's ask ourselves,

1. will the farmers vote for Gordon, with the spreading FMD caused by failures at a Govt lab?

2. will the young doctors vote for Gordon, with the appalling failure of MTAS and forecasts of even worse next year?

3. will the unemployed young nurses vote for Gordon?

4. will all those who lost their pensions vote for Gordon?

5. will the families of our recent war-dead vote for Gordon?

6. will the victims of cutbacks in flood defenses vote for Gordon?

Just thought I'd ask.

Manfarang said...

If Northern Rock had failed would we all be in Queer Street?

AnyoneButBrown said...

A bit late I recognise, but but on reflection overnight, I think I was wrong with my earlier comment. You are perhaps right and Brown will go for an October election.
What has change my mind is the thin-skinned response to the problems at Northern Rock. NR was in no danger of failing and depositors money was safe. The only issue for NR was that it perhaps could not write any new business. Yes very damaging but the bank would not fail. Darling steps in and gives a 100% tax payer funded guarantee. Why?
The TV pictures of panicking grannies withdrawing their life savings were very damaging to aspirations for an early election.
They knee-jerk government reaction proves they are thinking politically short and not long.

The Half-Blood Welshman said...

No danger of an autumn election in the middle of the FMD crisis his government caused. Can you imagine what a propaganda gift that would be for the Tories?

In any case, in this morning's Telegraph (sadly, only the print edition) an anonymous source (Ed Balls) was on about how Brown is seriously considering an autumn election. So now we know it will be May 2010.