On the campaign trail: Romney gets his facts wrong

Turns out Jeep isn't moving to China.

There must be pool reporters covering the Romney campaign trail who by November 6 will have the Kid Rock song “Born Free” indelibly burned into their brains. Whenever it plays, for the rest of their lives, they will flinch and remember the campaign-trail – because every time Romney or Ryan appears at an event, it is Born Free that heralds their arrival. Every god-damn time.

It plays again in Defiance, Ohio – just up the road from where I'm staying in Hicksville – when a grinning Mitt Romney strides out to speak to a large and enthusiastic crowd on the high school football field, his hair slightly wind-blown. It was an all-star event; Romney was supported by both Ohio Governor John Kasich and Senator Rob Portman, who had played the role of Barack Obama in Romney's debate preparations.

The audience of around 8,000 was, as usual for Romney, an older, whiter crowd, many who had come in from surrounding counties, Paulding, Williams, Puttnam, Henry, rural farmland areas which are more naturally conservative than the town of Defiance, which has a large United Auto Workers union presence and a huge GM foundry on the edge of town.

Governor Kasich's speech was bullish. “I remember when Ronald Reagan beat Jimmy Carter and restored the American dream. And folks, I've got a feeling that this is that kind of election...” but Romney's address was workaday. “That Obama campaign slogan, 'forward'; well it doesn't feel like moving forward to the 23 million Americans out of a job. I'll tell you what does feels like moving forward: getting a new President!” was followed by massed chanting of “Mitt! Mitt! Mitt! Mitt!” and the re-hashing of Romney's usual stump-speech “five-point plan” to deficit reduction, but – apart from at one point – nothing new to see here; even “you did build that” got an enthusiastic redux.

Local reporter Jack Palmer wasn't too impressed with Romney's performance. “I didn't hear any new stuff,” he tells me. “But he was well-received by the crowd. The atmosphere was pretty good, though – they had some country music singers first.”

One line was new, though, and played especially well for Romney here: “I heard this morning,” he told the crowd, “that Jeep is thinking of moving production to China.”

This would be a huge blow for the President. There is currently an enormous Jeep factory in Toledo, an hour from Defiance, and others in the state and in Michigan, and their survival is a key tenet of Obama's reelection – at a visit to the Toledo plant in June he said that the car “symbolises freedom”.  “I'm not sure about that [Jeep line], says Palmer, skeptically. “I hadn't heard that. You'll have to fact-check that.”

I check it, and unfortunately for Romney it isn't true at all. The line came out-of-context from a Bloomberg interview with a Chrysler executive – in context, he is actually saying that the company is thinking of expanding Jeep into China, not in fact closing and moving plants from the US: good news for American autos, not bad.

To remove all doubt, Chrysler said in a statement that: “Bloomberg recently produced a story that led some to incorrectly believe that all Jeep production could shift to China from North America. That is not true, and Bloomberg quickly amended its story to eliminate any potential inaccurate perception. To be clear, Jeep has no intention of shifting production of its Jeep models out of North America to China.”

Outside the rally, meanwhile, 150-odd Obama supporters and union activists were protesting, including Roger Molnar, a resident of Defiance. He tells me people have come to protest for  wide variety of reasons. “We're for Obama, but there's people with [libertarian candidate] Gary Johnson signs, stop the war with Iran signs, we are the 99 per cenr signs – there are a lot of issues here. The unions have their signs going on.”

Jacob Gallman, a cook at a restaurant in town, is also skeptical of Romney. “Personally, I think some of the stuff he does and says seems like he's almost set up to fail. It's hard to take him seriously.”

Mitt Romney. Photograph: Getty Images

Nicky Woolf is a writer for the Guardian based in the US. He tweets @NickyWoolf.

Ralph Orlowski / Getty
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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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