It’s 2005. Tony Blair is about to fight his second general election as prime minister. To pay for the campaign, Labour secretly borrows millions of pounds from some kind-hearted businessmen.
Three years later, and the time has come to pay £10 million of it back. Only... Labour can’t afford to. Because it's deeply in dept — to the tune of £20 million.
Many Britons will know exactly how the Labour party feels. Labour has presided over the biggest credit boom ever. Britons’ personal debt now exceeds the country’s GDP.
Labour has called the donors together for an emergency meeting. Here’s what a Labour spokesman will say (while looking at the floor and scratching the back of his head sheepishly):
"Erm, yeah, listen guys. About that £10 million we owe you. Erm... bit of a problem. Any chance we can work something out? A repayment plan? Stretched out over, say, nine years?"
That’s right. Labour could ask for up to nine years to pay the money back. The Secret Millionaires have agreed to the meeting in principle. But I reckon there’ll be a few heated words aimed in the direction of red faces once the meeting starts...
Let’s take a step back and look at what this all means. On a fundamental level, it’s scary. The party running the country cannot pay its debts!
It’s also worrying on a political level. Labour’s battered finances mean it is increasingly dependent on the unions. Labour raised £5.9 million in the fourth quarter of 2007 (compared with the Conservatives’ £11.3 million). A massive 77% of this came from the unions.
The unions’ influence doesn’t end there, either. Labour had lined up City fund manager David Pitt-Watson to take over as party general secretary. But Pitt-Watson’s pulled out. Why? Because if he took the job, he could be personally liable for Labour’s debts.
The reason is because the Labour party is an unincorporated association. The party of government is being run like a village cricket club.
So they can’t get Pitt-Watson in to try and sort out the mess. Instead, then, it looks like Ray Collins of the Transport and General workers Union will get the job. Presumably he can us cash from his union mates to make sure he doesn’t end up carrying those debts.
Labour’s attempts to cosy up to businessmen have ended with them being more dependent on the unions. Ironic, but also alarming.
As I wrote last week that, Britain could face a Summer of Discontent in the next few months. We’ve already seen industrial action at Grangemouth, as well as strikes by teachers and civil servants.
The unions know the government is weak. They also know they have Labour in their pocket.
Bank of England keeps rates on hold
An outbreak of common sense on Threadneedle street. Mervyn King must read Fleet Street Daily...
The Bank of England has voted to keep the base rate at 5%. Yesterday our very own shadow Monetary Policy Committee predicted, with a 5-4 margin, that rates would come down to 4.75%.
Oh we of little faith! One hopes that the Bank realised that a quarter-point cut would do virtually nothing to aid the economy. Rather, it would merely have weakened the pound, stoked inflation and damaged the Bank’s credibility.
This isn’t to say we won’t see further rate cuts in the near future. But, for now, the bank seems to be sticking to its core, inflation-fighting mandate.
We now await the June meeting with baited breath...
Big news for Manraaj’s copper play
"Looks like my copper play could be about to take-off," says an excited Manraaj Singh.
It takes a lot to lure Manraaj Singh from his emerging markets den. Apart from our morning meetings, Manraaj doesn’t like to stray too far from his research.
As I write this he’s standing beside me, with that trademark gleam in his eye. Manraaj’s Profit Hunter service holds a very interesting copper miner, operating in a part of the world most investors wouldn’t dream of putting their money in.
But Manraaj isn’t most investors!
Now he’s on the cusp of something potentially massive. A deal which could re-open the biggest copper mine in the world.
"It’s not a done deal," admits Manraaj. "But if it goes through... pow! I like my profits with a shot of adrenaline!"
Manraaj’s copper play is already up 84%. But that’s small beer compared to what might happen next!
If you only look at one indicator this year, make it THIS one...
Garry White is still incensed by oil analysts.
"They get paid all this money, and they’re just WRONG all the time. The consensus forecast of 33 analysts is that oil will average less than $100 this year. It’s been above $100 for weeks now — it was over $123 this morning! Their forecast is WRONG!"
Instead of listening to the analysts, Garry prefers to do his own homework. And according to Garry’s favourite indicator, the rest of 2008 will be very interesting for oil, whatever the analysts say...
Until tomorrow
Ben Traynor
Editor
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