Today's article in The Observer concerning the near shut-down of the City of London as a consequence of the terrorist attack on Thursday reinforces the political danger that Blair is now in.
Three days ago at the G8 Conference, Blair was vying to lead the world on matters of aid to Africa and global warming. He had also come back victorious from Singapore with the London Olympic Games under his belt. In two months' time, as President of the European Union, he could have enjoyed telling the French and the Germans how to run their countries. Diplomatically, of course.
Today he faces the distinct possibility that by far the greatest chunk of the UK's foreign earnings -- from the financial services of the City of London -- will start to decline as hundreds of foreign banks and finance houses decide to relocate to safer places elsewhere. The country will also lose a large chunk of earnings for several years from foreign tourists -- particularly high-spending Americans. Shortly, a meeting of the International Olympics Committee might decide to relocate the 2012 Games elsewhere.
Some of the above is likely already. All of it is certain if there is another attack similar to the one of three days ago. It is difficult to imagine that the person or group that perpetrated the attack realised just what huge effects the bombs would have had other than just horror. Or perhaps that's because we patronise terrorists and imagine that they're not intelligent. Nevertheless, that has what has happened and the political and economic repercussions of it are only now becoming clearer.
The UK Foreign Office, the Ministry of Defence, the senior General Staff of our Defence forces, 50-odd retired Middle East diplomats of great experience and the vast majority of the intelligentsia of this country were opposed to the invasion of Iraq, just as were the CIA and the State Department in America. Among other things, what they said was that if America and Britain invaded Iraq then it would only increase international terrorism that first started in the repressed population of Saudi Arabia and was the fundamental cause of 9/11.
Their voices were stifled or simply ignored and Blair went ahead by frightening the House of Commons and the more credulous of the population with lies about British people being liable to be attacked with weapons of mass destruction within 45 minutes. How utterly absurd it all sounds now, and yet he and Geoffrey Hoon, the Defence Minister, went ahead with Bush, and a reluctant Jack Straw, the Foreign Secretary, to his permanent disgrace, allowed himself to be dragged along with it. In the process Bush and Blair have possibly damaged the United Nations Organisation beyond repair, too. The UN is no great shakes and badly needs reform but treating it with contempt is no way to go about it.
Well, Blair has made his bed and he'll have to lie on it now. Top of the world one minute, in deepest trouble the next. If Blair continues to take no notice of that part of the British population that actually thinks about serious matters and is concerned about them, then he'll have to start taking notice of those powerful businesses that actually create the profits and incomes on which government taxation depends. These voices will be heard privately. We'll have no knowledge of their conversations in the media.
If one single -- even trivial -- bomb attack takes place in the near future in London then the economic consequences will be immeasurable. So far, Tony Blair hasn't said a single word about withdrawing, or not withdrawing, British troops from Iraq. And the reason why he is silent so far is that he has now got to try and find the words or the method by which troops will be withdrawn in a way which is, apparently, nothing to do with our invasion of Iraq or its byproduct, the London terrorist attack.
Keith Hudson
<<<<
TOTAL CITY SHUTDOWN WAS MINUTES AWAY
Bank of England to cut rates and boost confidence after bombs
Richard Wachman and Heather Stewart
A tripartite committee consisting of officials from the Treasury, the Bank of England and the chief City watchdog, the Financial Services Authority, considered shutting down the City after the bomb attacks in central London on Thursday.
Members of the secretive committee, chaired by Andrew Large, deputy chairman of the Bank of England, held conference calls during the morning when London share prices were plummeting, wiping billions of pounds off the value of London's leading companies.
The committee feared that panic by shareholders and a breakdown of communications between clients and bank dealing rooms could have led to the creation of a false and disorderly market, jeopardising financial stability.
On the advice of the committee, the London Stock Exchange has powers to order the suspension of all trading, in much the same way as activity on Wall Street was halted on 9/11.
But as it became clear that the attacks were not on a scale that many had feared, and that the main banking and broking centres in Canary Wharf were unaffected, the committee decided to take no action.
Observers say that the committee became most concerned when UBS, the Swiss bank whose offices are near Liverpool Street station, the site of one of the explosions, briefly evacuated its trading floor, while LCH.Clearnet, which settles stock market and commodity trades, evacuated its office near Aldgate. The tripartite committee's powers are advisory, but in the event of a devastating external attack its recommendations would normally be acted on by individual market regulators and government agencies. Rob McIvor, a spokesman for the FSA, told The Observer 'The tripartite committee did not meet, but its members did confer by phone with each other regularly during the day and also with the major City firms in the afternoon.'
Last year the tripartite committee carried out a market-wide exercise to test the financial system's resilience to threats such as terrorist attacks.
Meanwhile, the Bank of England is set to slash interest rates to boost business and consumer confidence, which was faltering even before the terrorist outrages.
Digby Jones, director-general of the CBI, says the Bank of England should move urgently to cut rates and shore up wobbly consumer confidence in the wake of the bomb attacks. 'I am very disappointed with the Bank, that they didn't cut on Thursday. I think all the ingredients for needing this are there. I think a little bit of stimulation of the economy in the light of this assault would be good.'
The CBI had already demanded a quarter-point reduction in borrowing costs to put a floor under declining consumer spending, but Jones said last week's events strengthened his view that a cut is necessary.
Analysts are widely predicting a reduction in interest rates at next month's meeting of the Bank's Monetary Policy Committee, as the housing market slowdown continues to sap confidence and consumer spending. David Brown, chief UK economist at Bear Sterns, said 'We are not in robust shape right now. Consumer and business sentiment remains weak.'
Roger Bootle, economic adviser to Deloitte and Touche, who believes rates will be slashed to 3.5 per cent by the middle of next year, said the housing market has been crucial to the sharp slowdown in growth since the beginning of the year. 'The consumer data is very soft and I think the housing market had an awful lot to do with that.'
The Observer -- 10 July 2005
>>>>
Keith Hudson, Bath, England, <www.evolutionary-economics.org>
_______________________________________________ Futurework mailing list [email protected] http://fes.uwaterloo.ca/mailman/listinfo/futurework
