Ed Balls looked less credible by using the chancellor's Mansion House speech as an opportunity to score party political points
So George Osborne hasn't embraced a plan B to prevent the British economy's double-dip recession becoming a second great depression. He's simply "maxed out plan A", so Treasury officials have been saying, in order to boost business lending and keep the ship afloat in the raging storm. This is no time to score party political points. Let's leave that to Ed Balls. It's a moment to welcome the chancellor's relaxation of policy in response to changing circumstances.
You can read his speech – it's here – at the annual City/Whitehall bash in the Mansion House. Not a bad speech, I thought. It did at least address his critics' charges. Yet when heard in tandem with the governor of the Bank of England's speech – here – it scared the black tie trousers off veterans of such occasions such as the Mail's ex-Guardian City editor, Alex Brummer. The Guardian's Larry Elliott calls it "squeaky bum time".
In short the Treasury and Bank have decided to pump credit into the system to free up more loans to businesses and domestic borrowers, but have again rejected fiscal stimulus – for instance the temporary VAT cut urged by the shadow chancellor, Balls – which really would constitute plan B. This is more plan B-minus. The gloomy BBC pundit Robert Peston's banking chums, patriots to a man, promptly told him off the record that it probably wouldn't work because creditworthy firms lack the confidence to borrow and commercial banks won't risk lending to riskier clients despite the latest subsidy.
Will the protracted eurozone crisis finally be resolved or finally become Lehman Brothers II, dragging down us and the wider global economy a second time? That remains the crucial question. "We are hitting the panic button,'' the Lib Dem motormouth Lord Oakeshott helpfully told the morning newspapers. Well, that's better than not hitting it. Even Oakeshott concedes that.
Osborne has twice said this week that it may take a Greek exit from the eurozone to make the zone's leaders hit their panic buttons and do what's necessary to save the project. Germany can't do it all, protests Chancellor Merkel, the voice of German angst. If we all behaved like Germany we'd all soon be bankrupt, including Germany.
I have often wondered what it was like to live through the 1930s, that sense people had of drifting towards a cliff but unable to do much about it. With every day that passes this sense of helplessness in the face of anonymous but overwhelming forces grows stronger. So it is always good to hear a politician echo FDR's famous rallying cry of 1933 that "we are not powerless" in the face of the storm.
The gloom-mongering classes need reminding of that all the time. If plan A doesn't work, maxed out or not, try plans B to Z. Overnight ministers have trimmed the Vickers report on bank reform, a good day to bury controversial news, but at least they have finally got a plan.
Yet there remains a curious air of unreality about it. Many people in Britain – far more in Spain and Greece – are suffering privation in varying degrees. But many others are not, just like the 1930s when swathes of good new housing sprang up on city outskirts (it's still there) and those in thriving new industries enjoyed the new perils of consumerism. British city centres still thrive despite the boarded up shops and "to let" office blocks. Countless TV channels pour out escapist pap. In the 30s it was radio as depression-hit Europe plunged into revived nationalism and eventually war.
Such perils exist again now. Protectionism, the curse of the 30s, is creeping back in different forms (crafty China used a variable VAT rebate which is compatible with WTO rules), despite official denials. Look too at Sunday's Greek elections where parties of the right like Golden Dawn compete with the leftwing romantic escapism of Syriza, whose leader Alexis Tsipras (dark glasses, jeans and a sharp BMW bike, we get the picture Alexis) admires Venezuela's Hugo Chávez. If only Greece had some oil under the ground instead of having just one month's supply in the depots if things get nasty, as they may.
All sorts of separate crises bubble away, a mixture of fate and opportunism. Thirty years after the Falklands war ended (Laurence Topham's Guardian film is here), Argentina's populist government is making another hack-handed attempt to whip up an international storm to regain the islands against the settled will of their inhabitants. Fortunately its economy and military are in an even worse shape than ours, but it is a desperate sign of desperate times, a reminder of how much international authority and cohesion has eroded in some ways – not all – since 1982 when the UN worked well in the crisis.
Egypt, where last year's military coup against Hosni Mubarak (I have yet to spot much of that Arab spring) has been capped with Thursday's court-dissolution coup against the new Islamist parliament, is looking as scary as Greece at the eastern end of the Mediterranean.
How might the politics of either state impact upon the fragile Israel-Palestine-Iran triangle or the brutal sideshow now being waged by the surely doomed Assad regime in Syria and its neo-Stalinist Russian patrons? This is the way that interconnected worlds end, not with a whimper but with a mistimed, opportunist bang.
A crisis here, a false move there, a new regime in Beijing, a looming US presidential election, overstretched systems everywhere. David Cameron, for one, is engrossed in the finer points of his social engagements with Rebekah "country suppers" Brooks for Lord Justice Leveson, unfortunate to say the least as Europe topples.
In such swirling uncertainty I thought Ed Balls called it badly wrong – again – when invited to comment on the Osborne speech on Radio 4's Today programme. As with Syriza's Alexis Tsipras in Athens (who wants to stay in the euro, but postpone economic reform) the differences between Balls and Osborne are not quite so big as the shadow chancellor would have us believe. Pace and timing are important, but also matters of fine judgment.
But Balls persists in blaming Britain's flatlining economy on the coalition's 2010 austerity programme which – says he – derailed Labour's recovery model which saw growth resume in late 2010. "The spirit of Philip Snowden [renegade Labour chancellor] and Montagu Norman [austerity-driving governor of the Bank of England]" hung over the Mansion House last night, he claimed. It's a UK fiscal problem – tax and spend – not the liquidity problem Osborne is addressing, Balls insists.
Well, up to a point, Ed. But not really. Yes, the coalition may have slammed the brakes on spending too hard and fast in May 2010 – I think they did – but our world is very different from the 1930s, even the world of the poor (which may be what IDS is trying to say). In any case, the Today programme's grown-up economics sharp-shooter, Evan Davis, is too smart to put up with Ed for long.
Won't you admit that the rise in the price of global commodities – notably food and oil – have helped cause Britain's slowdown, Davis asked Balls? And (as Osborne says) the eurozone crisis too? So it's not just the austerity package to blame for the double-dip. Balls wriggled and more or less agreed. How much more persuasive would Gordon Brown's clever (too clever by half?) henchman have been to open-minded listeners if he'd conceded the point graciously.
Davis put him more firmly on the spot when he asked Balls for an estimate of how much the UK economy would grow if the government were to boost demand fiscally – as distinct from cheaper money – by cutting VAT for a while? Osborne said at the Mansion House that in the current state of the economy that would probably push up inflation (again) and simply suck in imports to meet revived demand. Balls repeatedly ducked the challenge.
Why do I pick on Balls when important Tory grassroots writers like ConHome's Tim Montgomery are rallying behind maxed-out Plan A? Partly because they're not all rallying – try this from Tory MP Douglas "Kamikaze" Carswell – and others like the Telegraph's Jeremy Warner seem underwhelmed.
All of which makes it important for Labour to sound statesmanlike to be credible in a crisis. Voters are less interested in blame than in solutions. No party has a monopoly of error or success. As more successful witnesses at Lord Justice Leveson's inquiry have reminded us – Blair, Major and even Cameron – the smart thing to do is give credit where it's deserved. Gordon Brown used the occasion to settle some scores and did badly. As his clever apprentice, Balls should have learned that lesson long ago.
