James Forsyth

James Forsyth

James Forsyth is former political editor of The Spectator.

Monday

James Forsyth

McCain’s near-impossible task

From our UK edition

John McCain faces an almost impossible task over the next three weeks. He has to claw back at least a six point deficit, the new Washington Post poll has the gap at 10 points, as the candidate of the incumbent party in an environment where 90 percent of registered voters think that the country has “gotten pretty seriously off on the wrong track”. Today, he unveiled a new stump speech. It uses the word fight, or some variation of it, 17 times and is beautifully written but it is hard to see it being a game changer. McCain almost certainly needs some outside event to intervene if he is going to get back into this race which seems to be breaking decisively in Obama’s favour. But at this juncture it is worth remembering two things.

James Forsyth

Why the government is taking common shares in these banks

From our UK edition

Last week the government stressed that it did not want to take seats on the boards of the banks into which it was injecting money. But today’s injection of £37bn into the Royal Bank of Scotland and into Lloyds TSB and HBOS ahead of their merger will see the government taking seats. The New York Times has an explanation for this volte-face: “It also turns out that the charters of some banks did not allow the issuing of enough preferred shares to boost the banks’ capital ratios to safe levels. This means that, in order to top up the banks’ reserves, the government needs to make part of its investment in the form of common shares.

James Forsyth

Turning Brown’s happier mood against him

From our UK edition

George Osborne’s piece in the Evening Standard today marks a stepping up in the Tory rhetoric on the financial crisis. Osborne ends with this line directed at Gordon Brown, “You presided over the biggest economic disaster of our lifetime and we will not let you forget it.” But in the short term, perhaps, the most effective Tory attack is the idea that Brown’s apparent enjoyment of this crisis is unseemly. Osborne frames the charge thus: “to regard today as a triumph, as some in government seem to do, is bizarre. And it misjudges the public mood. For this is no triumph. It is a necessary but desperate last-ditch attempt to prevent catastrophe.” If this line sticks, it could be potent.

James Forsyth

The key question

From our UK edition

Clive Crook’s column in the FT is, unsurprisingly, well worth reading. He is relatively relaxed about the political state of play after this crisis, arguing that the overall argument about the role of the state and government intervention in the market will be “rhetorically adjusted” but “about where it was before the crisis”. Crook’s thinking is that while the intellectual climate will become more favourable to the left, the realities will still keep politicians on a relatively fiscally conservative path. Crooks ends on this note: “The financial crisis was indeed a failure of regulation. The system was overwhelmed by innovation. Regulators are going to have to catch up and, you could say, try to hold innovation back.

James Forsyth

The financial crisis scalps another two banks

From our UK edition

If t is a weekday, there must be an injection of public money into the banking system. The government is going to take a majority stake in Royal Bank of Scotland and a roughly 40 percent stake in the bank to be formed from the merger being Lloyds TSB and HBOS. This move will require an outlay of up to £37 billion of taxpayer money. On the Today programme, Alistair Darling was unwilling to say whether this would be the last intervention that was needed or what the time scale for selling off the stakes that the government is taking is. It does, though, seem that Barclays has been able to raise £6.5bn without taxpayer assistance.

Sunday

James Forsyth

Psychological flaws

From our UK edition

The Mail on Sunday reports that the Tories are considering psychometric tests to assess which MPs are suitable to run departments. There is also talk of asking peoples’ secretaries to report on how they react to stress.  Unsurprisingly, the Mail find several MPs who are—anonymously—prepared to rubbish the idea as big brother, control freakery. But what I find most worrying about the whole story is this quote from a “well placed source” defending the scheme: “The idea is to find out before we get into government which Shadow Ministers are capable of controlling a major department and a big budget – and which ones are not.

James Forsyth

The banker precedent

From our UK edition

By rescuing the banks, Brown has illustrated that—in extremis—the government can find the money to do things. As Andrew Rawnsley argues in The Observer this is going to be a problem for Brown in the coming months: “ballooning government debt points to a severe squeeze on services. Whitehall is already anticipating the bloodiest spending negotiations for a generation. Mr Brown has guaranteed spending only on health and education, which implies serious pain everywhere else. Politically difficult in any circumstances, the boggling billions directed to the banks makes this even harder to sell to the voters. Every time a cut falls, the cry will go up: you could find £500bn for the banks, but you can't find £10m for my cherished public service.

James Forsyth

Brown gets a poll boost but the Tories are still ten points ahead

From our UK edition

There are two ways of looking at today’s YouGov poll, the first carried out since the announcement of the government’s rescue plan for the banks. The first is to see it as evidence of how the financial crisis is reviving Gordon Brown’s premiership. Labour are up three point to 33 percent—their highest rating with YouGov since February, 59 percent support the government's rescue plan and Brown and Darling are 33-27 ahead of Cameron and Osborne on the question of who voters trust to best handle this crisis. The other, and to my mind more accurate, way of looking at it is of proof of how much trouble Labour is still in.

Saturday

James Forsyth

Another blow to Palin’s reputation

From our UK edition

The report into Troopergate doesn’t disqualify Sarah Palin but it does tarnish her reformist credentials, one of the assets that she was meant to bring to the ticket. The McCain can point to the fact that the report says that “Governor Palin's firing of Commissioner Monegan was a proper and lawful exercise of her constitutional and statutory authority to hire and fire executive branch department heads.” But its criticism of Palin for “abusing her power” and the portrait it paints of her governorship are damaging. McCain made several gambles in picking Palin. The biggest was that Palin would be ready for primetime on the biggest political stage of all. After Palin’s impressive speech at the convention, it seemed that this might just pay off.

James Forsyth

Is there a case for suspending the markets?

From our UK edition

The White House yesterday dismissed Silvio Berlusconi’s suggestion that the markets should be shut down for a few days. But support for this idea is still gathering pace. Steven Pearlstein, the Washington Post’s respected business commentator, makes the case for it today: the markets could use a timeout just about now, something that lasts longer than a weekend and gives policymakers around the world the chance to get a good nice sleep and evaluate their options without feeling like they have to respond to every movement flashing across their Bloomberg screens.

James Forsyth

Brown admits comprehensives failed urban Britain

From our UK edition

Gordon Brown’s desire to have it both ways is quite incredible. In his conference speech Brown took a personal and cheap shot at David Cameron, accusing him of using his children as props. But now he is perfectly happy to use his children as the backdrop for a soft-focus interview with Alison Pearson of the Mail and to talk on the record about their health issues. But once you have got over this and the irony of Brown, who keeps stressing that he is a serious man working flat out to try and solve this crisis, taking time out to indulge in sofa politics you’ll find there is a revealing and important quote in the piece. The Prime Minister is prepared to concede to Pearson that “comprehensives did not work in the cities”.

James Forsyth

Brown’s flawed war plan

From our UK edition

Gordon Brown wants to style himself as the leader Britain needs for the coming ‘economic war’. His political survival depends on persuading, one might use another word here, the electorate that only he has the toughness, experience and knowledge to lead us out of this financial turmoil. I suspect that Brown will get a boost for being in charge and appearing to have a plan at the moment. But when this crisis turns into a recession, the public will turn on Brown. Charles Moore comes up with a brilliant analogy for Brown’s predicament in his Telegraph column today: “This week he resembles Neville Chamberlain in September 1939. He has declared war, and he is our leader and we wish him luck. But we know that it was his mistakes that helped get us into it.

Friday

James Forsyth

The Brown Greenspan bond looks very different now

From our UK edition

Gordon Brown is very proud of his friendship with Alan Greenspan, he has hailed him as “the world’s greatest economist” and “the most successful” central banker in history. When Greenspan stepped down from his role as chairman of the Federal Reserve, Brown quickly appointed him as an economic advisor to the British government. As Prime Minister, Brown has had Greenspan to stay at Chequers. It is easy to see why Brown was so drawn to Greenspan and why he thought the association was politically beneficial. But in the coming months it could turn into a political liability for Brown. Rather than being seen as a friendship between two economic titans, it might come to be seen as one between two of the men responsible for the age of irresponsibility.

James Forsyth

Brown’s Canute moment

From our UK edition

“I’m trying to get the oil price down, and get the fall passed on directly to people at the petrol pumps and then on to gas and electricity bills.” PS I realise that I’m being a bit unfair to King Canute who was actually trying to demonstrate the limits of his powers to his followers.

James Forsyth

Brown won’t be smiling for long

From our UK edition

Opinion is divided in Westminster between those who think that with the financial turmoil the political plates have shifted in Brown’s favour and those who believe that any bounce Brown is getting from this crisis will be temporary. I’m firmly in the latter camp and I’d say that Iain Martin has it exactly right in his Telegraph column this morning: “In the years ahead there will be unemployment, hardship and social dislocation. Borrowing will be higher, taxes will rocket, spending on services will fall, and it will have its origins not in the Thatcherite mid-1980s but in the past decade of the most reckless financial mismanagement. Labour over-spent, over-borrowed and failed to regulate adequately.

Thursday

James Forsyth

Kirsty Wark jumps the shark

From our UK edition

If Coffee Housers missed it, I’d thoroughly recommend watching Kirsty Wark’s interview of George Osborne on Newsnight. It could easily be mistaken for a parody of BBC bias. Wark starts off by suggesting that the Tory governments of the 1980s are to blame for the current crisis; even Gordon Brown hasn’t attempted to claim this. She then proceeds to be unable to understand why the Tories think differently about bankers’ bonuses now that they are being paid for with taxpayer money rather than bank profits. I’m normally reluctant to claim that the BBC is biased, much of its political coverage is excellent.

James Forsyth

Tory economic thinking isn’t being discredited by this crisis 

From our UK edition

A lot of people are opining that the Tories, as a party of a centre-right, are in trouble because of this financial metdown. Nicholas Watt says in The Guardian today that “[Cameron] faces the same questions being posed to all centre-right parties across the world - and which appear to be inflicting such damage on John McCain's presidential ambitions. The Tories and the US Republicans are being asked what the champions of light regulation have to say after the spectacular failure of this approach.” While in the Mail Peter Oborne, one of the smartest people in journalism, writes that “The Tory Party has a desperate problem in the coming months - how to defend a failed economic system that is core to its political beliefs.

James Forsyth

Panglossian or prescient?

From our UK edition

Laurence J. Kotlikoff and Perry Mehrling have a fascinating opinion piece in today’s Washington Post arguing that we are actually all going to be fine and that the coming recession is going to be quite modest—at least in the US. Here’s the nub of their argument: “Uncle Sam (a.k.a. Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke) is doing precisely what's needed to avoid the mistakes of the 1930s. With credit markets drying up, he's turning on the faucet by recycling our panic dollars back into the financial market. The government is taking in our money (in exchange for Treasury bills) and using it to make mortgages and buy up the assets we're too scared to hold. It's doing this via the Treasury, the Fed, the Federal Deposit Insurance Corp.

James Forsyth

Banks can’t splash the public’s cash

From our UK edition

Lots of people are mocking the Tories for being concerned about bankers’ salaries; Simon Hoggart ribs Cameron for sounding like a Trot at PMQs yesterday. But the Tory position is actually entirely reasonable. As long as these banks were getting by without state aid it was up to them and their shareholders how much they paid their executives. But now that they are going to be taking public money, we as taxpayers have a legitimate interest in these decisions - a point made in the latest issue's leader. It would be a sensible step if the government were to declare that a condition of any bank receiving public money would be that it does not offer a total compensation package to its employees worth more than the salary of the Prime Minister, £189,994.

James Forsyth

The debt we’re in

From our UK edition

Robert Chote, the director of the IFS, does the invaluable job of totting up in today’s Telegraph just how much debt the country has racked up recently. “In September last year, public sector net debt stood at just under £515 billion or 36.8 per cent of national income. Since then, the nationalisation of Northern Rock has added a further £87 billion and the Government's day-to-day borrowing another £30 billion. By August this year, net debt had reached £632 billion or 43.3 per cent of national income, roughly the level that Labour inherited from the Conservatives in 1997.