What’s the point of the economic summit? Anyone?

The White House today announced the celebration of the economic summit in New York in mid-November. The G-20 countries are meeting up to design a new structure for capitalism. It definitely sounds glamorous, it sounds like a 21st century Bretton Woods.

But there are two key reasons  why this economic summit is complete rubbish.

The first reason is because by the time the summit kicks off on 13th of November the US electorate will have elected a new President. By that time the host of the summit, the man speaking on behalf the most powerful economy in the world, will officially be a lame duck, even if in practice he already is. Who is going to be seriously negotiating with a man who his own fellow countrymen believe to be an utter disgrace in economic affairs? specially knowing he is gone and a new, definitely more protectionist President whether Obama or McCain, could easily roll back any agreement they might have hammered down in this summit.

The second reason is the exclusion of Spain from the negotiating table. Now, I know most of you are going to roll your eyes and think this is just a bitter comment with a bit of a nationalist flair to it. And partly it is, that sentiment was what initially made me think about writing this post. But please bear with me, because I think I do have a point.

Brown, Sarkozy and Barroso have said they wanted Spain to attend the summit. The Bush administration has declined inviting Zapatero on the grounds that only the G-20 countries should attend. Now, I have no problem with the developing countries attending. But I do have it with the developed ones. Out of the G-7 countries (US, UK, France, Germany, Italy, Canada, Japan), five have had to save several of their national banks (US, UK, France and Germany), one is in a deep economic stagnation coupled with a serious leadership crisis (Italy), Japan which is ok and Canada which is pretty irrelevant in this case. Now, on the other hand you have Spain, which despite finding itself in a deep housing crisis and having been exposed to the credit crunch as much as the G-7 countries, has a banking sector that has not just weathered the storm but gone on the offensive buying banks abroad. Santander has bought three UK banks in as many years, Abbey, Alliance & Leicester and Bradford & Bingley and across the Atlantic it has bought Sovereign. BBVA has entered China through Citic Group and has become one of the most important banking entities in America through its BBVA USA network.

The reason for this is the regulatory system set up in Spain by both the government and the central bank. Weekly risk assessment committees asses Spanish banks investment decisions to guarantee their soundness. The level of savings guaranteeing liabilities are the highest (without being excessive or burdensome to business) in the Western financial system. Good regulation not excessive regulation, exactly what is expected of this summit. You don’t believe me? Read this and this.

Now, if the Spanish banking sector is done much better than its counterparts and this is certainly due to a better regulatory system. Why shouldn’t the country responsible for this system be invited to provide that experience to a summit on world financial regulation?

These are my two reasons why next month’s summit in New York will either be not more than a photo-op for world leaders (Gleneagles style) or a total shambles of inefficient regulation which will not stand for long and certainly not help reassure markets in the tough year to come.

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The big picture: the economy

Two days ago the Spanish finance minister, Pedro Solbes, wrote an article for the FT in which he explained the situation of the Spanish economy and the way the government plans to face the current crisis.

This article should be a must read for Alistair Darling and his entire department.

When an economic crisis hits home there are two messages that any government needs to put out to the electorate, a big picture analysis of what is going on and secondly a clear set of measures (no flipflopping, please) to handle that big picture.

A comprehensive and consistent approach to the economy is the only way to reassure voters that the government is able to handle the situation. In his article Solbes clearly presents the big picture of the state of the Spanish economy, its strengths and weaknesses. Transparency is a must in these situations, Darling needs to come out and clearly describe the state of the British economy so when proposals are put out there to alleviate the crisis the electorate understands what problem each one of them is targetting specifically.

Reassurance, information and transparency for stakeholders are the key to any succesful business, this Labour government needs to follow that exact same path to revive its fortunes for a comeback during the conference season.

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On Labour’s badly needed new message

As promised yesterday I would like to throw out there a couple of ideas for a new political message for Labour. Now that Brown is finally taking some time out (and hopefully getting some good sleep to clear his head) I hope No. 10 staffers are working hard on the new message and calendar to plan a proper (and final) comeback in September.

Here are my two contributions to the debate:

– Firstly, emphasise difference between the Tories and Labour on the economy. They are the party of the rich and powerful, Labour that of the middle and working classes, let’s remind voters of that. In Spain the Zapatero government is dealing with a serious economic crisis of similar proportions to that of the UK. Of course Zapatero, four months after his reelection, is taking a toll on his popularity because of the crisis. But he’s holding up by emphasising the differences in the way he and a Conservative government would handle the crisis. No government is going to have the silver bullet to finish off the crisis at once. It’s an international crisis, and for the UK economy, highly dependent on financial services, the global trend will mark the national trend. So the government should focus on alleviating the crisis for those that are more vulnerable to it. Zapatero has promised in Spain to guarantee social spending during the crisis no matter what, pensions, dependency law, minimum wage, work safety, they won’t be affected by the crisis and at the same time helping people restructure their mortgages to ease their economic circumstances (true, Spain had healthier public savings than the UK but there are ways around it, that’s the challenge for Labour economists). Moreover Zapatero has announced that no public money will be used to save private companies that are in trouble by their own mistakes, pure liberal orthodoxy. At the same time long term measures are being taken to guarantee a switch to a more sustainable economic model (energy saving, investment in railways, higher productivity, less construction and more manufacturing). These announcements give working people the feeling that the government is on their side, not using their taxes to pump up the same economic model that has caused the crisis. Sure, they still feel the pain, but in the long term until the crisis passes this is the only way to get through it. Moreover, Zapatero keeps reminding voters of what the Aznar government did during the 2000 crisis, freezing public sector salaries for years, reduction in public services investment and privatisations without a plan that turned public monopolies into private ones with no promotion of competition (think Telefonica). When voters see the differences between the two approaches they do come around to more progressive ways of doing politics. And this is what Brown needs to do in Britain. Alleviate the pain of the vulnerable and make sure to reform the supervision mechanisms to guarantee enough solvency in the financial sector for the future. Around these ideas should be Labour’s economic message.

– A second idea is that Labour needs to go on the offensive. Find wedge issues, remember the Tory revolt on comprehensive schools?, to stir the Tory backbenches. There are plenty of issues that Cameron is embracing that old Tories are simply uncomfortable with, on social issues, civil liberties, environment. Let’s put those divisive issues out there. Voters are only seeing the nice face of the Tories because Cameron is doing well, let’s show their nasty side by bringing up those issues where their leadership and backbenchers disagree. There are plenty and some of them long overdue to be taken into consideration.

These are my two contributions to the debate on a new message for Labour. They need to emphasise what are the differences between the parties, what makes Labour a better choice, and that should be that it cares about people and it supports them better through difficult times than the Tories would ever do.

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The census of shame

The so-called Maroni census, named after Italian Interior Minister Roberto Maroni, is the latest and gravest attempt in Europe to haunt inmigrants and violate their human rights.

The Maroni census created by the Berlusconi government aims at recording the identities of all Gypsies in Italy, but not just their identity also their ethnicity and religion. The census is an specific attempt to control the Gypsy community in Italy, both national and foreigners, and discriminate them for their ethnicity despite the Italian Constitution, and the EU charter for that matter, guarantee of equality independently of race, ethnicity, gender, religion, etc.

The Maroni census is the last example of ‘paranoia Europe’. Tougher laws that gamble with basic human rights both within the new European directive and national governments’ legislation. While the economic boom was happening we well used inmigrants to provide cheap labour and take care of our elderly, children and clean our houses. But when the bust has arrived we are being so ungrateful to those same people; we have made them scapegoats of an economic model we built and enjoyed.

It’s easy to attack inmigrants because they have no political voice in Europe. They are politically speaking second class citizens. Anti-immigration rhetoric is popular with natives and it doesn’t hurt because inmigrants don’t vote. Maybe it’s time to change that. The Spanish Socialist Party (PSOE) had its federal convention this past weekend in Madrid. The delegates approved a proposal to allow non-EU inmigrants residing in Spain to vote in local and regional elections. I applaud this action. The right to vote for legal inmigrants will show political parties that pseudo-racist and xenophobic populism has an electoral cost, moreover the inmigrant communities will gain a certain level of political power for their communities to be taken into account rather than marginalised (think of the French banlieus here).

An inmigration vote is the best thing that could happen to a Europe who was once proud of its openness. If inmigrants were to vote our politicians will think twice about using inmigration to manipulate the electorate. How are we to lecture other nations on human rights if we are unable to respect them ourselves?

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How in tune are you with your party leader?

Today’s Spanish daily Publico has an article on the compatibility between the Zapatero government and its electorate in terms of political positioning.

Zapatero hasn’t been doing too well lately due to the economic crisis. But when those that voted for him in the May 9 general election were asked how close where they to Zapatero’s political ideas the results were pretty stunning. In a scale from 1 to 7, 1 being extreme left and 7 extreme right, Zapatero was perceived to be at 2,9, left of the centre. Maria Teresa Fernandez de la Vega, deputy Prime Minister, was on 2,8 and Jose Bono, the House Speaker was on 3,6. Then PSOE voters were asked to position themselves in the same scale, the average Socialist voter in Spain position himself on 2.9, exactly the same point as Zapatero.

Despite the economic crisis, which has an international component to it and a national construction boom that has aggravated it, this can only be good news for Zapatero. If Zapatero is able to steer the ship through the economic crisis and forced by events finally restructure the Spanish economy to make it less dependent on construction and internal consumption, in other areas he’s perfectly in tune with his electoral base.

I would like to see an analysis like this on Gordon Brown and the Labour electorate. It could probably give Labour a point of reference on where they are failing and which direction to go. I think in a sense Brown is probably trying to neutralise the negativity of the economic crisis by going right on social legislation. He will be wrong to do that, they aren’t related, the economy should take his full attention while maintain his original views on social issues where probably his electorate was in tune with him before the latest right wing turn. Personally I see myself agreeing with Brown on social liberalism and welfare state while much more to his left on immigration and civil liberties.

How do you see yourself in relation to Brown?

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PSOE aims to become the flag-bearer of European social-democracy

PSOE, the Spanish Socialist Party, under the leadership of President Zapatero has announced the creation of a leading European social-democratic think tank based in Madrid.

Jesus Caldera has left the Cabinet, where he served as Minister for Social Affairs, to lead this new project. Caldera was the main policy-wonk behind Zapatero’s candidacy to the leadership of PSOE in 2001 and has coordinated both the 2004 and 2008 electoral manifestoes for PSOE. He also was the person behind the inclusion of 3 Nobel Prize winners in the design of the 2008 electoral manifesto and the implementation as Minister of the new Dependency (believed by experts to be the fourth pillar of the welfare state) and Equality laws.

The party’s Federal Convention, which will be held in Madrid from the 4th to the 6th of July 2008, will vote on the Executive Committee’s proposal to set up the new foundation within the next 6 months.

PSOE aims to take over the progressive ideological leadership left vacant by the German SDP and the British Labour Party in recent years.

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