Now, where were we?

The accusation by Ed Miliband earlier this month that the Conservatives are engaged in a "great deceit" over the history of the financial crisis would be somewhat more effective a line if the Labour leader had not also decided to mislead the public on the issue.

Miliband said the Tories' deceit was "that the deficit was caused by chronic overspending rather than a global financial crisis that resulted in recession and a calamitous collapse in tax revenues". But, as Philip Collins later wrote in The Times, "Mr Miliband’s position is this: if only it hadn’t gone wrong, it would all have been all right ... The accusation against him, to which he seems blind, is not that spending 'caused' the deficit, but that he was driving too fast, with no insurance, when there was a crash." Collins describes Miliband's position as "half right", but adds "denying all responsibility for the deficit is a serious political error".

I would go further than this, and suggest Miliband's decision is a disaster, both for his party and his chances of winning the confidence of the country. This is because many people, if they choose to think about it, have noted that the Labour shadow cabinet which now so enthusiastically bashes bankers and finance capital is pretty much the same Labour cabinet which in government enthusiastically embraced bankers and finance capital.

Miliband's decision not to admit his party has rejected many of its former policies is baffling, and, to use a word, deceitful. It also cuts him off from taking the line that many centrist voters might like him to take.

Imagine, instead of bashing the Tories and pretending the state had nothing to do with the build up of the country's financial sector, he had said something along these lines: "As progressives, when in government the Labour party sought to harness the dynamic forces of this country's financial sector for the public good. We aimed to rebuild the country's diminished public sector and wished to enlist the support of its world-beating financiers. However, while in some areas this worked, and investment has poured in to our schools and hospitals, in other areas it did not work, and speculation was allowed to flourish sometimes unchecked, while low interest rates and limited regulation helped asset bubbles to form, one consequence of which is that our young people have been stripped of the hope of home ownership. It is essential that as a party, and as a society, we face the past honestly so that we can learn the right lessons for the future."

Effective leadership, as Sarah Palin has been forcefully reminded this week, is about transcending people's limited assumptions and prejudices. It is about staking out the moral high ground and forcing your opponents to tackle you on these terms. Miliband – maybe in contrast to the other Miliband brother – has shown that he is unwilling to take such a stance. Given the importance of the issues at hand, this decision is somewhere close to a tragedy for this country's progressives.

Updated to add: it looks like someone in the Labour Party has been reading my post! (Or, more realistically, have shown their own disagreement with Miliband's approach.) The Guardian reported today, 13 January, that Miliband is "to concede that the last Labour government must take some responsibility for the deficit to the extent that it did not do enough to regulate the banks, and acted too late to create a more balanced economy less dependent on financial services for tax receipts".