Glamour, Substance and Europe - What To Look For on June 8th

Between June 4^th and 7^th the whole of Europe will go to the polls. More accurately, around 40% will. Despite high unemployment, company closures and governments being very active socially, politically and economically, turnout in voting for the 736 members of the European Parliament will remain low. Proportional representation means that voting is for a slate of candidates, rather than a specific one and the parliaments work is largely mysterious to many voters, despite the fact that it can affect many aspects of daily life. Most “ordinary citizens” feel disconnected from the important work of the parliament.

There are several things to keep an eye on when the results begin to appear. The first will be how deep the defeat of the Labour Party in Britain is and what this signals for the future of Gordon Brown, Britain’s embattled Prime Minister. Most of the chattering classes in London see the European election and the local elections in Britain taking place on the same day as marking a turning point in the politics of replacing a Prime Minister. If the defeat is devastating, especially in the local elections and Labour losses are high, key party figures begin to see their own political future on the faces of their fallen European parliamentary colleagues and local councilors. The knives will be out for Gordon. His response will be a reshuffle of his cabinet and a focused attempt to reassert his authority – the scale of the cabinet shuffle being in proportion to the scale of defeat in the local and EU elections. Gordon Brown will survive, but the party will have a full dress rehearsal for its expected defeat in May or June of 2010 when there must be a general election in Britain. Gordon Brown will be “damaged goods” and the internal strife within the Labour Party – something which it excels at – will help secure a victory for the Conservative Party in the 2010 elections.

A second development could be the winning of seats by the British National Party (BNP) and the United Kingdom Independence Party (UKIP). The UKIP, which won twelve seats at the last European election, wants Britain out of the EU. The BNP is the new incarnation of Oswald Moseley’s version of the British fascist movement – opposing immigration, EU membership and minority rights and favouring what we may see as a white supremacist position. At the last election the BNP secured just 6.4% of the vote – just 2% short of the votes requires to secure the allocation of a seat.

The third thing to watch is the pattern of voting in Ireland. The Lisbon Treaty, which gives a new constitution to Europe and, amongst other things, significantly strengthens the role of the EU Parliament, was rejected by the Irish voters in a plebiscite. When the votes are counted in June, it may signal a change of heart by the Irish or, more likely, a hardening of their opposition to the new constitution. Some of the parties standing favour Lisbon and some are opposed.

Finally, there is the pattern of voting in Germany. Angela Merkel, the German Chancellor, faces a Federal election in September of this year. No one party will emerge as an overall winner in these elections and some are suggesting that traditional coalitions may also not be easy to form, given the challenges that Germany faces. Merkel has committed to win a majority for CDU/CSU and FDP (the CDU/CSU's traditional coalition partner) in 2009 – the EU elections will tell whether she is on track to do so. At the last European election, the CDU/CSU won 44.5% of the vote and he FDP 6% - they need to do at least this well to signal an easy victory in September.

For pure entertainment, keep an eye on Italy. Prime Minister Silvio Berlusconi, facing divorce from his wife, originally selected several glamorous women with no substantive political background to run for office. It will be interesting to see whether Italians support glamour or substance.

Cap and Trade Dead in the Water?

Democrats in the Congress are deserting Obama’s climate change key legislative agenda – the cap and trade proposal. The most recent deserter is the Chairman of the powerful Agriculture Committee, Colin Peterson (D: Minn). Sen. Benjamin L. Cardin (D-Md.) called cap-and-trade "the most significant revenue-generating proposal of our time." Even scientists, like James Hansen and John Lovelock – the leading climate alarmists in the world – oppose the cap and trade legislation. In their view, the cap-and-trade approach is both “ineffectual” and “verging on a gigantic scam.”

There have been several technical analysis of the potential impact of the cap and trade legislation in the US. Most suggest that a full implementation and adherence to the emissions restrictions provisions described by the Waxman-Markey Climate Bill would result only in setting back the projected rise in global temperatures by a few years—a scientifically meaningless prospect. This assumes a reduction of U.S. greenhouse gas emissions of greater than 80%, as envisioned in the Waxman-Markey climate bill. It would produce a global temperature “savings” during the next 50 years of about 0.05ºC, assuming India and China also started to cut emissions.

The bill envisions a cap and trade revenue to the US treasury of $400 billion, increase energy costs to a level of app. $3,000 a year more per family and lead to some 800,000 job losses. At least, this is the view of Senator Jim Inhofe – the Senate’s resident climate change skeptic. Pointing out that the vote on this aspect of the budget secured just 39 votes in the Senate – Obama needs 60 for the legislation to become law – Inhofe makes clear that he thinks that the cap and trade scheme is “dead in the water”.

Experience elsewhere – especially the EU – suggests that cap and trade, unless really carefully enacted and enforced, will lead to some people becoming quite wealthy, most people becoming poorer with almost no impact of CO2 emissions. A pharmaceutical company in France, for example, has switched its core business from producing health products to selling carbon credits – its more profitable. They continue to emit exactly what they emitted before the scheme began.

Some law makers in the US are beginning to tout the idea of a carbon tax – along the lines of that implemented in British Columbia. This too is dead in the water. Almost all law makers are opposed to a carbon tax, arguing that it would have substantial negative impacts on the economy in general and “ordinary” families in particular. While the promise is that other taxes would be reduced, the reality of the US debt-ridden economy is that the government needs all of the tax revenue it can get. The suggestion is that a carbon tax would be simpler to administer than a cap and trade scheme. In the history of US tax law, no “simple” tax has remained simple for long – it would get very complex very quickly, with exemptions, different rates for different industries and special cases. It is not going to happen.

Obama has committed to reducing CO2 emissions to 1990 levels by 2020 – a cut of 14% on current levels – and then a cut of 80% of the 1990 C02 emissions by 2050. The IPCC has already said that the 2020 target is far too low and should be nearer 25%. The target is important – it reflects the extent of Obama’s commitment and is the lowest target set by any G7 nation. It also represents what Obama thinks is realistic – something other countries do not seem to take into account when setting targets (almost none of which are ever met).

If the cap and trade legislation fails, as looks likely, Obama has released his secret weapon: the Environment Protection Agency. They have ruled that CO2 is a pollutant and falls within their remit to regulate. They will begin to develop regulations, focusing on major polluters first – watch for the coal industry and coal fired energy plants to be targeted – they have already placed a hold on several coal fired powered plants which were about to be approved. Also targeted will be buildings and emissions from transportation. The EPA is a blunt instrument which will enact regulations within existing legislative frameworks, not requiring permission from Congress.

As the US develops its opening position for the Copenhagen Climate Change global summit in December, a failure to pass cap and trade and the setting of very modest targets would signal that the US will not lead the Copenhagen negotiations. Instead, the EU will be the lead organization. According to several diplomatic sources, preliminary work on the summit is not going well. The faltering US legislation and low targets, coupled with the continued challenge by China and India over their role in climate change and the implications of establishing global targets are challenging the diplomats to find a meaningful compromise. Also challenging is the demands of developing nations for an annual payment of $600 billion to compensate them for the impacts of climate change, largely driven by the developed economies. Copenhagen will be a battle, and largely symbolic.

The good news is that it is getting cooler, the global climate is well within its normal range, the arctic ice is getting thicker and there is growing recognition that climate alarmists, who base most of their arguments on climate change models rather than actual observations, are being revealed as exaggerators and polemicists. It will be an interesting period between now and the end of the year.

Gordon Brown is a Dead Parrot

Gordon Brown is, as Monty Python might say, “a dead parrot” as a Prime Minister. He is amongst the walking dead of British politics. Following his half hour of sunshine in the immediacy of the G20 summit in the first week of April, his decline has been rapid and remarkable.

The fall begin within hours of the summit’s ending. It became clear that the numbers he gave for “new” stimulus activity were a fiction – no new money of any kind for the British economy. Then we moved into full sleaze mode. The British Home Secretary, responsible for all aspects of British law, submitted a claim for expenses which included porn films watched by her husband. As all MP’s expense claims are about to published, but much sleaze is leaking out. Brown then appeared in a bizarre video on You Tube looking like a cross between Simon Cowell and Rasputin, with a bizarre smile. He proposed a cleanup plan for MP’s expenses, which was quickly rejected by all concerned. Worse, it angered his own party.

As if this wasn’t enough for him to appear a plonker, he then proceeded to get confused in the House – leaving and then returning on a run when he remembered he was to make a parliamentary statement –much laughter on the Tory side and shaking of the head on the Labour benches. Several cabinet members began to suggest, off the record, that Brown had lost the plot and it was time for him to go. The Deputy Leader of the party, Harriet Harman, suggested that Labour’s mistakes needed to be atoned for. Former cabinet members also started to suggest that Brown was a dead duck.

Latest polling figures put the Conservative Party, with David Cameron at the head, some 19 points ahead of Labour, fueled by the realization that the April budget figures will lead to a prolonged period of real austerity – cuts in government services, increased taxes and more challenges for health care. If the situation remains the same at the election, which is due before June 2010, Labour would be severely thrashed – the conservatives would have a majority of 170 seats.
The big test will come in June when the Brits goes to the polls for the elections to the European parliament. Normally this is a big yawn, but David Cameron has asked the people of Britain to use this election to show their disgust with Brown – vote to show that you want change. While the total voting will be small, Labour will do badly. It will be a symbolic defeat.

What is important is that Labour MP are now seriously worried about retaining their seats in the coming election – its clear that many will not. Some are already moving to suggest that the party replace Brown before the election – which means he would have to go between now and the middle of July. Brown will not go, so we have trench warfare within the party = more seats will be lost. Brown will shuffle his cabinet in the summer, leading to more disgruntlement – more warfare. More seats lost.
So it doesn’t look at all good for young Gordon. Even Tony Blair is letting it be known that he is not at all happy at how things are going. Its fascinating to watch the decline and fall of someone who should never have been Prime Minister.

Lies, Damned Lies and Statistics

Al Gore: “…unfortunately we still live in a bubble of unreality. Nobody is interested in solutions if they don’t think there’s a problem. Given that starting point, I believe it is appropriate to have an over-representation of factual presentations on how dangerous it is, as a predicate for opening up the audience to listen to what the solutions are, and how hopeful it is that we are going to solve this crisis.”

Lord Monckton observes:

My contribution to the 2007 report illustrates the scientific problem. The report’s first table of figures - inserted by the IPCC’s bureaucrats after the scientists had finalized the draft, and without their consent - listed four contributions to sea-level rise. The bureaucrats had multiplied the effect of melting ice from the Greenland and West Antarctic Ice Sheets by 10. The result of this dishonest political tampering with the science was that the sum of the four items in the offending table was more than twice the IPCC’s published total. Until I wrote to point out the error, no one had noticed. The IPCC, on receiving my letter, quietly corrected, moved and relabeled the erroneous table, posting the new version on the internet and earning me my Nobel prize. The shore-dwellers of Bali need not fear for their homes. The IPCC now says the combined contribution of the two great ice-sheets to sea-level rise will be less than seven centimeters after 100 years, not seven meters imminently, and that the Greenland ice sheet (which thickened by 50 cm between 1995 and 2005) might only melt after several millennia, probably by natural causes, just as it last did 850,000 years ago. Gore, mendaciously assisted by the IPCC bureaucracy, had exaggerated a hundredfold.

Lord Monckton also notes:

“At the very heart of the IPCC’s calculations lurks an error more serious than any of these. The IPCC says: “The CO2 radiative forcing increased by 20 percent during the last 10 years (1995-2005).” Radiative forcing quantifies increases in radiant energy in the atmosphere, and hence in temperature. The atmospheric concentration of CO2 in 1995 was 360 parts per million. In 2005 it was just 5percent higher, at 378 ppm. But each additional molecule of CO2 in the air causes a smaller radiant-energy increase than its predecessor. So the true increase in radiative forcing was 1 percent, not 20 percent. The IPCC has exaggerated the CO2 effect 20-fold.

Why so large and crucial an exaggeration? Answer: the IPCC has repealed the fundamental physical the Stefan-Boltzmann equation - that converts radiant energy to temperature. Without this equation, no meaningful calculation of the effect of radiance on temperature can be done. Yet the 1,600 pages of the IPCC’s 2007 report do not mention it once. The IPCC knows of the equation, of course. But it is inconvenient. It imposes a strict (and very low) limit on how much greenhouse gases can increase temperature. At the Earth’s surface, you can add as much greenhouse gas as you like (the “surface forcing”), and the temperature will scarcely respond. That is why all of the IPCC’s computer models predict that 10km above Bali, in the tropical upper troposphere, temperature should be rising two or three times as fast as it does at the surface. Without that tropical upper-troposphere “hot-spot”, the Stefan-Boltzmann law ensures that surface temperature cannot change much.

For half a century we have been measuring the temperature in the upper atmosphere - and it has been changing no faster than at the surface. The IPCC knows this, too. So it merely declares that its computer predictions are right and the real-world measurements are wrong. Next time you hear some scientifically-illiterate bureaucrat say, “The science is settled”, remember this vital failure of real-world observations to confirm the IPCC’s computer predictions. The IPCC’s entire case is built on a guess that the absent hot-spot might exist”.

John Houghton, second Chairman of the IPCC, wrote in 1994 that ‘unless we announce disasters, no one will listen, setting the tone and focus for the narratives which have followed climate change science and the IPCC since.

Canada and the EU NAFTA Like Deal in the Making

Canadian government officials are in Prague seeking to open talks on a wide-ranging agreement with the EU. While labeled a trade agreement by many, it is in fact much broader. We will wait to see just what the EU will agree to, but make no mistake: it is a significant agreement.

What it will seek to do is more closely align Canada with some of the work of the EU, especially as it relates to sustainable development, the movement of people and intellectual property. Though trade is a strong focus – the EU is Canada’s second largest trading partner after the US, with a total of $109.4 billion (€70.3 billion) in trade in 2007 making Canada the EU’s eleventh largest trading partner – the “soft” agreements on sustainability and labour mobility may be of most interest.

Changing trade arrangements to remove barriers, especially in services, could be mutually beneficial. A study commissioned by the Government of Canada suggests that changed rules could yield $18.26 billion (€11.6 billion) for the EU and $12.9 billion (€8.2 billion) for Canada in terms of additional GDP contributions, with services leading the way. This would require the elimination on tariffs on bilaterally traded goods, easing restrictions on services and opening up competitive bidding on government contracts to EU companies and giving equal access to such contracts for Canadian companies bidding in the twenty seven countries of the EU.

Behind this focus on trade is a desire to strengthen intellectual property protection, a more effective enforcement of labour laws and the focused enforcement of the environmental protection legislation and the freer movement of labour. In particular, there is a desire to make it easier for Canadians to serve as executives for European companies, for there to be much easier arrangements for credential recognition and more efficient tax arrangements for individuals moving between Europe and Canada.

Also on the table is opening up the possibility of increased foreign ownership in media and airlines, the regulation of financial services and the encouragement of foreign direct investment by EU in Canada and Canadian in the EU.

Canada already has several other agreements with the EU – on science and technology, on aviation and on cultural exchanges. This new agreement will be substantial and very comprehensive - all Provinces, except Newfoundland and Labrador, have signed up to the framework for the agreement and have participated in shaping the key agenda for this weeks talks. There are significant concerns, including the implications for Canada’s fisheries and fur trade and for environmental protection under the terms of the treaty. Newfoundland is concerned that EU fishing fleets may have too easy an access to an already stressed fishery while others are concerned that the EU will force Canada into a “green” strategy that is not in keeping with the economic interests of Canada. For many, including the Canada-EU Business Council, the agreement is more substantial than the NAFTA agreement, but is moving through a process of negotiation almost unseen by the public.

Climate Change Update

There have been several developments on the climate change front.

First, the Department of Climate Change and Energy in the UK has been named as having the worst CO2 emissions for a UK government building. As part of a general review, which observed that the government cannot even meet its own targets for buildings it controls, the Department responsible for moralizing and preaching cant even follow its own strictures. “Do as I say, not as I do” seems to be the government mantra.

Second, the good news. The Antarctic ice shelf is getting thicker. The sea ice around the continent is far above average. Also, note the colder than average sea surface temperatures around Antarctic (according to NOAA). If the media is going to discuss the Wilkens Ice Shelf, they should also discuss these other data. The expansion of the sea ice coverage implies a significant cooling.

Third, more good news. The Rector of the University dedicated to climatology in Russia (St. Petersburg Hydrometeorological University, a regional educational hub of the World Meteorological Organization / WMO) has concluded that the period of cooling we are now experiencing will return the pattern of climate change to its more normal seventy year cycle. He said that in "three or four years, all these factors have subsided after a few years the trend of global warming on its way to a gradual cooling. There is every reason to assume that the projections of future warming are not justified: in the next decade, we go to the climatic norm, which was 70-years", - assured Professor Lev Karlin , the Rector of the University of Hydrometeorology.

Fourth, the current global cooling is now in its 8th year. The declining ocean heat content is at least in its 5th year. Sea level rises have slowed or stopped. Record rising Antarctic ice extent and rapidly recovering arctic ice since the 2007 cycle minimum indicates that, while changes are taking place at the poles, both are cooling. The sun is in a deep slumber. All of this despite increases in CO2 emissions. You would think that the emperor has no clothes argument would started to be heard, but instead we have legislators and UN officials, spurred on by gallant and increasingly chthonic and vociferous NGO’s, hell bent on destructive legislation aimed at increasing energy poverty, disrupting industry and causing job loss. Go figure. Time for a really cool look (sorry for the pun) at actual data rather than models. Even James Lovelock is concerned about models shaping policy when there is evidence to be had.

The Age of Thrift is Upon Us

One of the ways we can look into the future is by understand the indebtedness of a country. It is simple really. If a country owes more than it generates in income from producing goods and services, then that country relies on lenders to support it and will have to reduce its government services while at the same time increasing taxation. At some point, cuts to services and tax rises become a condition of people continuing to lend them money – like the IMF or China buying US government bonds. On the other hand, a country that owes nothing but produces significant income from goods and services can expand government services without significantly raising taxes. The way in which we normally look at the future in this way is by looking at government debt as a percentage of GDP.

When we look at this number for 2008, we get some interesting idea of the state of things when the recession was just getting going. Remember: zero percent would be remarkable, but very good. The US had 75% debt to GDP, Canada at 63% and the UK at 47%. In fact, Government debt in the UK was at £697.5 billion ($1232 billion) as compared to just 30% of GDP in 2002 – a steep rise. The April 22nd budget forecast was for debt, by 2013, to reach 75% of GDP. Not at all good.

If this isn’t bad, it gets worse. Many analysts point out that the official government debt figures exclude certain liabilities – for example, the government’s pension commitment to its employees and to citizens, its bail out of the banks which, though may be paid back, may not, and so on. The Centre for Policy Studies argues that the real national debt is already £1,340 billion ($2,370) – worse than not at all good – it is 103.5 per cent of GDP.

But this pales into significance when we turn to the US. As of April 7, 2009, the total U.S. federal debt was $11 trillion ($13 trillion Canadian) - about $36,676 per capita. After Obama’s budget is passed, this will rise to $15 trillion – 75% of estimated GDP by 2013, assuming an economic recovery and significant growth from 2010. Like Britain, the US has unfunded liabilities for health care, pensions and bailouts. As of the beginning of April, when these are added to accepted national debt, the total indebtedness of the US is $53 trillion ($63 trillion Canadian) – very not good. Most of the official debt is held by China and Japan.

Canada has a national debt of app. $461 billion - $13,771 per capita – half the per capita debt burden of the US. Though this represents 53% of GDP, we have a long way to get to get to the major debt leagues. Even the worse case scenario forecasts for post 2009 budget debt, takes us to the top of the first division – well below other G7 members.

So we look in the mirror as Canadian’s and see generally strong position. But our British friends are nor braced for much higher taxes (especially if they earn £150,000 a year or more – the so called “rich”) and deep cuts in services. Our southern cousins are looking at the temporary expansion of government activity – car dealerships, intrusions into health, more spending on education – followed by tax hikes and budget cuts. Lenders will start to get particular about the extent and cost of state services – watch for the lending market getting tighter as more and more governments both print more money (called “quantitative easing” in Britain, isn’t that nice) and seek to borrow more at the same time. Someone is going to call “time” on this brand new government sponsored Ponzi scheme. Thirft will be the name of the next decade.

Don't Panic - People Were Dying from Flu Before Mexican Flu Broke Out!

There is nothing like a few cases of serious flu to stop the world in its tracks and get everyone showing just how foolish they can really be, given a chance.

The Mexican Flu (I call it this out of respect to my former employer. Art Price, who is also part of a major hog farming family) is a scare which is helping to sell newspapers, support ailing TV news and fills an obvious void in our need for a sense of crisis to spur us into action. A very small number of people are suffering flu symptoms and an even smaller number have died. In fact, there have been 93 confirmed cases in the US, 19 in Canada, 13 in New Zealand, five in Britain, four in Germany, 10 in Spain, two in Israel, and one in Austria. In Mexico, where the outbreak is serious, there are currently 2,500 cases of suspected Mexican Flu (only 36 are actually confirmed) and 199 deaths. Total deaths globally stands (according to The Guardian and the BBC) at 207.

In the 2008-9 flu season (which we are still in) there have been 25,952 reported cases of flu in the US. Of these 66.5% were Type A (which includes the H1 strain) and the balance were Type B. In the US so far this year, excluding Mexican Flu, fifty five children have died. In the UK in 2008-9 prior to the Mexican Flu scare, there have been 1,925 reported influenza cases (85% Type A) and some 1,266 deaths due to respiratory illness have occurred, some of which may be associated with flu. In Canada in the 2007-8 season, Canada had 12,256 cases of flu (57% Type A). In 2008-9 so far the number of cases appears similar to previous years - 5,283 Type A cases and 8,767 Type B cases for a total of 14,050 cases.

In 2007 the H5N1 bird flu killed 59 people worldwide, making it a small problem compared to other death causes. However, this was the flu that the WHO claimed was the sign of a coming pandemic that would kill up to 150 million people. A case of chicken little.

So should we be in pandemic mode. No. The situation, according to the UK Medical Officer of Health, Professor Sir Liam Donaldson, is concerning but not yet alarming. He pointed out that death from flu is not usual, but not uncommon and that most people have dealt with flu and recovered, as have the first two Scottish cases – the honeymooners who went to Mexico to return to an isolation ward in a Scottish hospital are now home and well.

Cancelling vacations, ruining the carefully laid plans of school children, walking about Heathrow in face masks en route to Canada (which I saw on Tuesday) are all out of proportion. Even if the WHO moves to a full pandemic flu statement later today, it simply signifies the need they have for attention. The less we panic and the more we stay in good health, wash our hands and don’t sneeze all over people the better.

Top Ten Observations from a Trip To Europe

London - Edinburgh - Amsterdam - Utrecht - London - Filey - London and this is a collage of images:

1. Girls wearing very short skirts who constantly pulled at them to try make them longer - why not just buy a longer skirt?
2. Pink - and I mean very pink - hair.
3. Skirts on top of jeans on top of leggins..
4. Drinking in the street - London, Amsterdam and Edinburgh - wasn't that warm either.
5. A preoccupation with being seen to do the right thing - buying organic, buying fair trade, offsetting CO2, worrying about the carbon footprint - the media have done a good job selling righteousness.
6. Insightful newspapers - thank goodness for the Guardian and Telegraph. No idea what The Times is anymore.
7. Growing presence of the lisp.
8. Men with very very close cropped hair and a new celebration of baldness.
9. Sport. Everywhere. All the time. Sick.
10. Extremes.

Will be back in September, this time France and possibly Italy..

The End of New Labour

Several days after the budget of debt, as the UK’s 2009-10 budget statement is being characterized, the analysis is in and it is not good.

The budget made clear that by 2013, net government debt in Britain would be 75% of GDP – more would be spent on debt servicing than nursing. In the coming year alone, the UK Government will need to raise £175billion in loans from the market to fund commitments made to provide government services. However, the independent analysis of the budget suggests that even this is probably a low estimate – it is based on a model for recovery from recession which no one seriously believes. Should the growth forecast be wrong (1.5% in 2010 and 3.5% in 2011), then both taxes need to rise for all considerably and significant and substantive cuts will need to be made in public services. The budget itself sees £15billion in “efficiencies” in the pubkic services next year – coming mainly from health and education.

In its analysis, the left-leaning Guardian newspapers, sees the situation in stark terms – rolling back the state and ending state intrusion in many aspects of life. In 2010, government spending will be equivalent to 46% of GDP. By 2018, this will be reduced to 37.5% - lower than when “New Labour” first came to power in 1998. The Financial Times, who derides the economic growth model on which the budget is based, suggests that there will be a pre-election massaging of the situation with all of the “tough” work to be done after June 2010, probably by a Conservative government.

The cynical analysts suggests that the budget was a trap set to devastate an incoming Conservative government who will be faced by a fiscal crisis and the need to dramatically cut spending across the board, which will make them quickly unpopular – returning Labour to power after a short five year period of recuperation and rebuilding. Only by being honest, clear and very direct about what the problem is and how they will tackle it will the Conservatives win the support of the people for the challenging work ahead of remaking the State – the real challenge of the fiscal debacle.

All agree that Gordon Brown is finished. At the height of his international power at the end of the G20 summit at the beginning of April, he ends the month as a failing leader fiscally and the head of a party which is morally bankrupt - surrounded by sleaze and corruption. No one is openly jockeying for position within the Labour Party, but there are few voices loudly supporting either the party or its leader.

All eyes are on David Cameron and the front bench of the Conservative Party, who do not yet appear like a Government in waiting – not like Blair and Brown did a year before the election they won so convincingly in 1998. They have a lot to do – solidifying their approach to the fiscal maelstrom that awaits them, rethinking the role of the State in every aspect of daily life and considering the future of its relationship with Unions, lobby groups (especially the very powerful environmental lobby, which has convinced people that only governments can save them by stopping natural cycles) and the growing army of (rightly) concerned pensioners. There is a lot at stake. Cameron spoke yesterday of a new era of austerity in which every aspect of life which involves government would have to change so that Britain can again be proud, safe and secure – no specifics. He will need to get very explicit for people to trust him.

New Labour has always been about rhetoric – its name alone is an example. What is “new” about Labour is that it is not Labour as we knew it at all – rather than pale pink socialism, it is pragmatism, idolatry and deceit. Its time is at an end, and this budget was its death knell.

Last Roar of the Celtic Tiger ?

Two weeks ago the Government of Ireland increased income tax, cut spending, offered early retirement to public servants in key areas who were aged fifty or older, cut the expense allowances for MP’s by 10%, cut unemployment payments in half for some categories of recipients and cancelled the traditional Christmas bonus for seniors. Forecasting that debt serving will take close to 12% of tax revenues, the Government accepts that it is in trouble.

There are signs of trouble everywhere. Shops boarded up, “last chance” sales, tensions on pay day in pubs – the day pink slips are more common than pink gins. But the biggest sign is that Dell, once the major employer with its activities connected to one in six jobs in Ireland, is leaving to move to Poland to focus on Russia and emerging economies and spend more of its resources in Asia. The closure of its manufacture plant in Limmerick took 1,900 jobs. While it is leaving some activities in Limmerick, the work that supported the core economy of the region is gone.

Ireland is not the worst case in the Europe in terms of being challenged by the recession – that honour goes to the Ukraine, which is struggling to meet requirements for an IMF bailout, though a loan has now been agreed. Iceland, dramatically affected by the sub-prime collapse of credit, is a close second. But Ireland is the most symbolic. The Celtic Tiger, as it was known, had a reputation for outstanding economic performance. In 2005 it could boast being amongst the world's wealthiest countries since its economy grew nearly five-fold since 1973. It boasted one of the world's highest levels of GDP per capita, some 20 percent above the European average—while 30 years before it was 35 percent poorer than the average. It was a role model for focused innovation and structural supports for industry development – policy tourists loved going to Ireland and then using it as a case study of how to run an economy.

How the mighty fall. Some residents of Dublin think that this challenges now faced by this small country of just over two and a half million people is retribution for not supporting the EU constitution in a referendum in 2008. Others think that it is due to the caprices of corporations, like Dell, who will move an entire factory to save a few million here and there – this after eighteen years of claiming that Ireland was by far the best place it could be. Those who work at the forefront of economic policy and understand these dynamics claim that they are victims of the irresponsibility of US financial institutions.

But it doesn’t matter. People are hurting, families and struggling. Citizens are confused by how quickly a truly vibrant economy could go sour. The government is caught between a rock and a hard place – it has to be fiscally responsible, otherwise the economy is at risk, but it also has to help its people.

One serious concern is that many of the young unemployed will be lured to a life of crime, linked to the work of the “real IRA” – the body insistent on unification of Ireland, but who funds its activities through drugs and protection rackets. Recent shootings north of the border are seen by some as a resurrection of old struggles.

A tough budget, with strong signals of stringency and belt-tightening, coupled with a focused innovation strategy may be the way to proceed – it is certainly what is happening – but it will be a long haul. On the road to recovery, many will be injured and much will need to be repaired. It will be tough.

What is impressive is that the Irish politicians from the Prime Minister down are confronting the issues head on. Promoting austerity is seen as responsible economics. Downplaying rhetoric and not engaging in the blame game is creating a social context where there is a reluctant acceptance that what has to be done has to be done. There is anger – just discussing these issues near the Guinness brewery brought out passion and fear – but there is also understanding.

For now, the Celtic Tiger is not roaring and Ireland may no longer be “king of the jungle” of economic policy and innovation strategy. But it will be back. The Irish are very resilient and they know what it took to build one of Europe’s most vibrant economies. They will dust off their wounds and start again. The tiger may be quiet, but it is not dead.