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Making sense of the Crosby case

Paul Mason | 19:58 UK time, Thursday, 12 February 2009

Sir James Crosby resigned. But the FSA released a statement saying that Paul Moore's allegations concerning HBOS "were taken seriously, and were properly and professionally investigated". It also revealed this about a KPMG report commissioned by the FSA into the case:

"the KPMG report also indicated that there was no evidence in the report that Mr Moore was dismissed due to being excessively robust in the discharge of his functions".

On the basis of this some newspaper commentators have declared Mr Moore's charges, first made on the BBC2 Money Programme and amplified on Newsnight, "without merit".

Today, Mr Moore has hit back. He has sent me the original response his lawyers drew up to the KPMG report. It states:

"the [KPMG] Report is imbalanced and has arrived at conclusions which, if reviewed by an external independent tribunal, would not be supported".

And he has issued a new statement through his lawyers:

"The KPMG Report itself was limited in scope. Indeed KPMG have accepted this themselves, so we would argue it never covered the essential issues raised by our client."

Mr Moore says that, 10 days after he responded to the KPMG report, HBOS settled his claim for compensation.

None of this is conclusive, but it means that two substantive allegations made by Paul Moore remain on the table and need to be answered by the FSA, the government and anybody concerned with the fiasco that happened at HBOS. They are:

a) That HBOS was at risk of breaching banking regulations because its aggressive sales culture, developed to expand the retail bank (i.e. the Halifax) in the early part of this decade, was running faster than the internal checks and balances designed to protect customers. So, in a document NOT released by the FSA last night, but which I can reveal, the regulator told HBOS:

"There has been evidence that development of the control function in the Retail Division has not kept pace with the increasingly sales driven operation...There is a risk that the balance of experience amongst senior management could lead to a culture which is overly sales focused and which gives inadequate priority to risk issues." (FSA Arrow Assessment and Risk Mitigation Programme, 1 December 2003)

b) That his attempts to raise his concerns were met with "adversarial, emotional and personal" responses at senior level. That there was a "cultural indisposition to challenge". Ultimately, he claims, he was forced to circulate himself comments that the official distribution mechanisms to the board had failed to distribute. I have seen evidence that his managers were annoyed about the "cc list" of the relevant email.

Moore's third charge was that he was sacked by Crosby on the pretext of the restructuring of his role and replaced by somebody who was not competent to do the job. This was what the KPMG report considered and it concluded that the selection of his replacement was handled correctly and that she was suitable for the job.

I have seen the letter James Crosby wrote to Paul Moore, in which it says the decision to abolish Moore's role and consider replacing him with somebody else "mine and mine alone". (Letter from James Crosby, 23 November 2004). We have it in black and white that Crosby initiated the process that led to Moore being sacked. What we are left with is "no evidence" that this was due to Moore being "excessively robust". And note the FSA's precise language:

"The report concludes that the report contains no evidence..."

Clearly the dispute between the two men will continue, as will Moore's criticism of the FSA. But the episode poses a wider question.

Last night's FSA statement outlined the chronology of its involvement with HBOS. Let's be clear the risks identified were to customers, because of the danger of mis-selling products through high pressure. However, this was an alarm bell that could have also flagged up the problem that eventually sank HBOS: to find the money to lend so aggressively, they went to the money markets and borrowed it.

Here's the timeline:

Late 2002 the FSA identifies the problem.

1 December 2003, the FSA's report identifies the problems that Paul Moore has to sort out.

18 December 2003. Gordon Brown appoints Crosby to the post of non-executive board member of the FSA itself, saying:

"I am delighted to announce these appointments. James Crosby is a leading industry practitioner with a wealth of experience in banking, fund management and the insurance field, and will bring a new perspective to the Board."

8 November 2004. Paul Moore is told he'll be sacked.

16 June: Crosby is knighted and asked to head a taskforce overcoming opposition to the introduction of ID cards.

29 June 2006. FSA writes again to HBOS saying there are "still control issues" and that "the growth strategy of the group posed risks to the whole group and that these risks must be managed and mitigated".

December 2007: Crosby is made deputy chairman of the FSA*

Thus, for three years Sir James Crosby was simultaneously in charge of a bank known to be at risk of breaching its regulatory obligations, and a member of the board of the regulator, indeed its deputy chairman.

The first question for the FSA is: how was this handled? What internal mechanisms were put in place to acknowledge that FSA operational staff may have to deal with problems arising with a bank run by a member of the board.

The second question is: when Sir James Crosby was originally appointed to the board of the FSA, was Gordon Brown personally made aware of the FSA's concerns about the bank's strategy?

* Thanks to those who pointed out this was in the wrong place in the original chronology.


  • Comment number 1.

  • Comment number 2.

    On January21st,2009, my local regional newspaper published a letter from me, attacking the "yes-man and salesman" cultures of the clearing banks and pointing out that those major banks had rid themselves in the early years of this century of their experienced risk-trained managers for reasons of age and cost (and probably their opposition to incessant change for change's sake) I also used the "Emperor's New Clothes" analogy reportedly used by Paul Moore in his Select Committee evidence this week.It has taken three years longer than I have been predicting since year 2000 for this house of cards to collapse. If this Government wants to restore proper assessment of risk and sensible retail and small business lending to the U K Banking system, there are hundreds of experienced lenders in their fifties out there who were forced into early retirement by the likes of Goodwin, Hornby, Crosby and Varley, who would be well able to rebuild professionalism and restore trust back into the banking industry.

  • Comment number 3.

    So, the reason for HBOS's problems remain not problems with the level or quality of sales but the failure of some assets and mainly lack of funding. Intersting but not RELEVANT TO THE DEMISE OF HBOS but possibly relevant to Crosby.

    I do have one other concern. Mr Moore has had several titles but he was never a director! Is this correct?

  • Comment number 4.

    Superb - please keep digging.

    It sounds very cosy at the FSA board.

    Gordon will say he was acting on the information he was given i.e. not my fault gov.

    Surely it is the government's job to be aware of a conflict of interests e.g. Crosby's position.

    If banks were so important they could not be allowed to fail, the government should have made sure they were working with the correct checks and balances.

    Somebody took their eye off the ball, or was too greedy for the huge revenues from banking profits to support their ideological dreams and egotistical struttings on the national stage.

    Will we ever get a government who will manage in the interests of the LONGTERM good of the people of this country.

  • Comment number 5.

    I have myself been a whistleblower to the FSA. The company concerned was a very small fry compared to the likes of HBOS, but nevertheless it was responsible for grossly mis-selling millions of pounds of investments to the British public around the year 2001. I had extensive insider knowledge and went to some considerable trouble to table full evidence of wrongdoing by two FSA approved directors of this FSA regulated company. Nothing visibly practical was done by the FSA as a consequence of my whistleblowing. However, very recently one of the two has been barred from being a UK company director by the UK's Insovency Service.

    I have to conclude from my own experience that the FSA ticks boxes and "expresses concerns", but is incredibly fearful of actually doing anything conclusive against people and organisations that are obviously 'dodgy'. Certainly it didn't seem fussed about acting in a timely manner.

    In the case that I was reporting, a couple of out-and-out confidence tricksters (and their sidekicks) were allowed to go on trying to sell hopelessly flawed investments to the unsuspecting British public, using "boiler room" sales tactics long after the FSA had been fully informed about them.

  • Comment number 6.

    Paul's post today is an analogy in characature of what is wrong with the system.

    The system has become convoluted with those talented in the use of smoke and mirrors and the application of mud to water such that that can simultaneously keep their lawyer friends in work and the general public in the dark.

    It really does take some considerable investigation a clear mind and some genuine integrity and courage to unravel the trail in Pauls's post.

    Pursue it to the end and what it boils down to is SIR James Crosby was allowed to occupy a position which was clearly a conflict of interest.

    I said SIR James Crosby was allowed to occupy a position which was clearly a conflict of interest.

    How does that happen exactly in a free and fair society?

    It does not.

    We do not live in a free and fair society.

    He resigned quickly and cited some noble ''did not want to bring the FSA into disripute'' straight out of the spivs handbook along with his cheesy grin.

    He knows how to protect his friends in high places as well it seems.

    I wish there was a way that we could lift the mist so that people could see how utterly controled we have become by the very system that was designed to protect us.

    The titles that were supposed to be bestowed upon those whom protect the greater good and show modesty and integrity have become the trophies of the cronies.

    The principal of common law, a thing that is in constant flux has been shoe horned into rigid written words, too complicated for a common jury to understand, only a highly trained specialist lawyer can understand it we are told.

    The principal of responsible financial services to allow the trading of goods and services and to promote innovation and progress. The once responsible guardians have been sidelined by spivs creating layers and layers of smoke and mirrors to hide their true get that cash bonus.

    They made the same mistake that has been made through the ages. Their extraordinary greed has now started to collapse their own system slowly but surely exposing its core.

    It is not a pleasant sight and people are starting to see it. No wonder they are starting to look worried.

  • Comment number 7.

    I thought the Labour guy's expression was interesting on the programme last night - the more the audience vented their anger the more worried he looked.

    It is the first time I have seen him look worried. At times I thought he actually looked frightened - was I just imagining things?

    The audience were very angry indeed and understandbly so.

    The anger was coming from all walks of life, workers and bosses, and they obviously had little faith in Labour solving this crisis.

    The anger towards the Government was only dwarfed by the anger towards the bankers.

    Any chance of getting a blog on what the atmosphere was like in the Midlands' 'studio'?

    We do indeed live in interesting times.

  • Comment number 8.

    The now discredited FSA was, it appears less use than a chocolate teapot when it came to being a roughneck copper on the City beat.

    But as quangos go it was a harmless old thing. Cheap to run by comparison and it did wonders for (financial) tourism too.

    Like the Grenadiers outside Buck House it stood for something. It bolstered up the British image. Its managers looked every inch like 21st century City gents. Cool.....Cool Britannia.

    Cool banks making cool deals. Cool property developers putting the Fizz back into the tired British hinterland.

    Cool Businessmen doing slick off-shore manufacturing

    Cool ideas from London Business School and Insead....the Knowledge Economy...Intellectual Capital....Discounted Cash Flows.....the Wall of Money

    I keep pinching myself to check that I really am seeing what I think I am seeing......the wholesale slaughter of every sacred cow in the post Berlin Wall world.

    Capitalism itself is in the emergency room drifting in and out of consciousness. I just prey to God that the patient makes it through.

  • Comment number 9.

    Another excellent blog, Paul.

    Keep going.

    More research please on the link between one specific FSA chap and Leichtenstein, and the general subject of links between the FSA and all tax havens.

    Fertile ground I suspect.

    We must snuff out these tax havens in order to give the new 'open' banking system that we need in the UK a decent chance to work.

  • Comment number 10.


    Brown's convenient state of not-knowing is precisely as Maggie's CSNK when at the Arms for Iraq enquiry. I have long suspected there might be 'constructive withholding', practiced by PM aides. I suspect Brown knew he did not know, at the relevant time. It all has a Machiavellian feel to it. 'A Prince ensures he does not know that which, at a later date, it would be unwise to be found to have known.'

    They have no shame and they make sure they have no awareness of anything that might be thought shameful.

  • Comment number 11.

    4. At 9:15pm on 12 Feb 2009, grannyfromthesticks

    Gordon will say he was acting on the information he was given i.e. not my fault gov.

    Also superb. I wish that was a URL one could acquire. I think it would be well stocked... and trafficked.

  • Comment number 12.

    I would strongly recommend reading an article on Bloomberg today entitled: "Bank Recovery Stalls on Donations to Congress". The link is here:

    The click on Michael Sesit's article noted above.

    The article is US-centric, but almost certainly has a degree of resonance in the UK. Essentially it links (totally legal) corporate and indivisual donations to political campaigns with (inadequate) regulation of financial services.

    Sesit's view is that the long-term recovery of the industry actually requires major changes to political contribution rules, otherwise banks etc will continue to buy influence. Again, I stress that the banks have done nothing illegal or improper under current rules, it's just the rules create very serious conflicts of interest for the politicians who supposedly control industry regulation.

    The numbers are truly staggering: almost USD250 million donated by individuals and political action committees ("PACs") in 2007 and 2008. 17 of the top 20 donors to the campaigns of the Chair and ranking Republican members of the Senate Banking Committee were financial services firms and their staff. Incidentally, RBoS was the 5th largest contributor to the Chair's campaign funds. Employees and PACs of Goldman Sachs were the biggest contributors to Pres. Obama's campaign funds, so those expecting to see GS's influence decline with Hank Paulson's departure are likely to be disappointed. For good measure, JPMorgan was the 6th largest contributor to Obama, and Citigroup the 7th. I think that puts his executive pay cap into some sort of perspective.

    I'm sure there are plenty of similar examples in the UK. Obama and Gordon Brown may well be very angry at banks' behaviour, but it will be interesting to see if they're angry enough to decline future contributions from the industry.

  • Comment number 13.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 14.


    Per my earlier post, I would just reiterate that RBoS was the 5th largest contributor to Sen. Christopher Dodd's (Chair, Senate Banking Committee) campaign funds in 2007-2008.

    Just thought it might be interesting to get a Treasury view on the ethics of this. Might also be interesting to get a comment from Mandelson on disclosure of political contributions in annual financial statements. I think this falls under his departmetn, deosn't it? I think the Companies Acts only cover donations in the UK. The fact that RBoS was such a large contributor in the US (and who knows where else?) suggests the disclosure rules should be extended to political contributions generally.

  • Comment number 15.

    Thanks Paul,

    Please, please keep up the good work, and don't let the powers that be threaten you into stopping. There is much more to come, and we are all depending on you.

  • Comment number 16.

    Another follow up on RBoS contributions to US political campaigns.

    I've just checked the 2007 RBoS financials (final 2008 ones aren't published yet). The 2007 report includes the following:

    "No political donations were made during the year and it is not
    proposed that the Group’s longstanding policy of not making
    contributions to any political party be changed."

    Now this is probably a perfect valid statement to make if we assume that it relates to the UK only, and there is a paragraph prior to the quote above that refers specifically to UK legislation. However, the quote above refers to the GROUP policy of not making political contributions. That simply isn't a true statement, is it?

    I've nothing against RBoS in particular. I'm sure that every UK-based bank with significant US interests has been making similar contributions there. RBoS just registered on the radar by vitrue of how much they'd contributed to the most senior politician with responsibility for oversight of the banking industry. It isn't illegal, but is a clear conflict of interest (for the politician not RBoS).

    RBoS' statement quoted above, however, does look to be rather misleading. I think they should be asked to justify it.

  • Comment number 17.


    I gather two post-pubic kids have demonstrated something or other? We must, of course, disapprove.
    Meanwhile (in another part of the wood) all the 'highly regarded ones' are too busy serving Mammon, with a side order of planetary destruction, to set sperm to egg.
    We can only applaud.

    I gather weapons are 'improving' in Gaza, and money has clearly evolved to a magical commodity. We will soon be able to go into space using only our 'mobile'.

    Those procreating kids had better get into line, or mankind is doomed.

  • Comment number 18.

    Sorry, but I'm now on a roll with this political contributions stuff.

    Another big beneficiary of financial services campaign money was Rep Barney Frank (Chair, House Financial Services Committee). 4 of his 5 largest contributors were from the industries his committee oversees.

    There is another story on Bloomberg today ("Merrill's Giant Bonuses Give Cuomo a Bonus, Too": see link at and click on this story by Ann Woolner).

    A couple of interesting quotes from this story:

    "The televised finger-wagging Frank’s committee administered to the CEOs this week hardly gave full voice to the fury of Americans trying to hold onto home and job against the tug of economic turmoil these very men helped create."


    "That same day, to get the stimulus package passed, Congress gave up a provision that would have forced companies benefiting from Troubled Asset Relief funds to pay back to the government any bonus they hand out over $100,000."

    Now, hands up anyone who thinks there is no connection between the easy ride banks etc have received per the above, and the campaign funding that got Rep. Frank and his colleagues elected to determine these matters in the first place.

  • Comment number 19.

    A very good article, and I am glad to say, one that lays out the facts and in chronological order. This helps us all to get around the smoke and mirrors constantly employed by our deeply disturbing prime minister "there was nothing wrong with HBOS's risk profile, the problem was with their business model"
    The sequencing of events is important too, just as the undoubted supporting "hard evidence" provided by Paul Moore (memos, reports, minutes etc).
    Keep it up, if I know Paul Moore he will need all the support he can get as the government and financial institutions bear down on him.

  • Comment number 20.


    By way of help, insert into your timeline the FSA's Financial Outlook January 2006. No-one is going to tell me these people werent reading this. It directs banks to look at complex liquid financial instruments that might become illiquid and to run risk tests for this event.

    " Increasing complexity in the wholesale markets is a theme that we highlight in several of our Priority Risks"

    " Given the current environment of high liquidity levels, it is important that market participants consider how they would operate in an environment where liquidity is restricted." FSA 2006

    Very important warnings! Keep digging..

  • Comment number 21.


    Why fret JP? Barack Obama is not like the others. What is more, with Tony to advise him and God mentoring both, a new Dawn has broken - has it not?

    Look at the untroubled early lives of these two. Did they not both find the practice and enactment of (adversarial) Justice attractive?
    Are they not both blessed with charisma and astonishing (outward) calm? How could we question their goodwill, competence and judgement?

    Hell - it's gonna be OK!

  • Comment number 22.


    Three points

    a) The Crosby Report to Government on reviving the Mortgage market proposed the buying of mortgage backed assets from Banks in exchange for Government Bonds.
    To the tune of saddling the Taxpayer with 50 to 100 billion of debt.

    i.e. Crosby proposed to land the Public with the risk and future losses that whistleblower Moore directly warned Crosby about ( and ignored )

    Not unsurprisingly, the Public do not wish to carry the losses that Crosby was forewarned about.

    b) Crosby ignored the foresight Warning; and thus walked open-eyed into the loss; and then proposed to Brown how to pass on the Crosby losses to the Taxpayer.

    Thus covering his forewarned loss by passing this on to the Public
    Which reminds me I must look up one or two legal definitions of Board Member responsibilities in relation to inappropriate governance.

    c) Furthermore, Crosby also sat on the FSA Board which has regulatory responsibility into such incidents as whether Crosby's own activity of ignoring the foresight warnings was deemed inconsequential or not, to the near collapse of the British banking system.
    Which of course is central if regulatory cover-up is to be investigated.

    All very murky and yet as you say, some reporters align themselves with Crosby and say the affair is "without merit" ????

    A lot more to crawl out of the Boardroom woodwork in this matter I think.

  • Comment number 23.

    Yes - whichever way its cut, it is definitely smelly.

    Yet the issues around HBOS / Moore are still side issues I think. The core has to be a government and political and financial infrastaructure that is still more focused on how things look, their cosy personal relationships, and saving face, than getting to the heart of fixing things.

    The Treasury select committee is a joke and so far, I still fail to see anywhere a concerted and considered approach to actually putting things right. The HBOS stuff is interesting - but a diversion from whats really important.

    At present no-one in Brown's team is up to the job of coping with the current situation. Unfortunately there are no glimmers of competence in the opposition - the only possible exception being Vince Cable perhaps.

  • Comment number 24.

    The culture that Paul Moore was up against is nothing new and is likely to be replaced as soon as this banking storm has blown over. There are no morals in world trade and in the handling of money. Exposing the immorality and extracting apologies from the miscreants is laughable when the damage has been done. The culture that exists in handing a knighthood to every Tom, Dick and Harry along with bonuses and expenses to parliamentarians is the root cause of this fiasco. If there is genuinely nothing it it for them [ snouts in trough brigade] then we might begin the route back to ethical standards and mutuality.

  • Comment number 25.

    Excellent post and comments. Keep it coming as this issue needs to be brought out and fully answered so we get an improved system that actually works.

    My own view is that if the FSA had called a halt to what was going on they would have been jumped on by the Treasury not to rock the boat and the 'growth'! that was bringing in so much revenue at the time.

    The FSA tends not to be not proscriptive in case they get sued.

  • Comment number 26.


    If Brown's 'Mr Hyde' half actually DELIGHTS in dark, destructive, nihilistic activity (the sort of things that the psychologically hurt child gets into) you might have all your answers in one neat (delete neat- insert crumpled) package. I worked closely with a man, deemed mature, who would lie to a customer when the truth would have served. Brown STILL leads a nail-biting existence. He demonstrated RAGE (child) regarding the Granita episode and loves a fiddle or a stunt, however poorly disguised.
    He attempts pathetically fake smiles and recently, blankly, declared himself angry.

    That's your man. What sort of people will he draw to him? Think Tony!

    They all come out the same orifice. AND WE VOTE THEM IN.

  • Comment number 27.

    and where do all roads lead back to?

    Gordon talks about bankers having qualifications. So should politicians. Would we allow people to run a cruise liner without some evidence of competence? Yet politicans are allowed to run the uk on the rocks all the while saying 'this is a golden age'. Now we row in the lifeboats and not everyone is rowing.

  • Comment number 28.


    Would they be schooled in manipulation of the electorate Bookhim?

    Don't forget the voters. They need schooling in broad awareness and a CERTIFICATE OF VOTING COMPETENCE.

    All that glisters . . .

  • Comment number 29.

    I agree it was a fantabulous - if chilling - Newsnight on Wednesday, and that the politicians did indeed look like rabbits in the headlights. I think they see the Westminster bubble is very likely the next one to pop, and they really don't have the faintest idea what to do about it.

    HELPING people simply doesn't occur, does it?

  • Comment number 30.

    Well done Paul - far better than Peston's supine response. He thinks that the most important British "business" story today concerns Chelsea Football club. With 2 million official unemployed I find this rather surreal.

    Keep digging - and watch your back!

  • Comment number 31.

    Good stuff as far as it goes, but of course all these people are in the same LODGES.

    How can they not promote each other? To do otherwise would mean social exclusion at the next lodge dinner.

    Edinburgh is also notorious as the home of some of the oldest lodges in the country.

    I don't want to get all 'conspiratorial' but it is a simple fact that these people move in the same circles as top politicians, police,
    judiciary etc.

    We can point this out and complain,but it won't really get us anywhere. This 'cancer' is far to deeply embedded in the 'elite' culture of the UK (and worldwide).

  • Comment number 32.

    It's all so much more than just toothless regulators and business leaders and politicians as bed partners.

    We all, government, investors, banks, shareholders, etc., etc. created - or probably more accurately imported from the US - a culture of quick-fat-profit and big-bonus that permeated all the financial industies. Just about none of the (temporary) winners in this situation minded this all that much.

    That has led, through the failings of many to prevent it, to a financial industry that is highly untrusted by even the financial industry!

    This HBOS episode has all the hallmarks of that culture - arrogance, ego, make lots of money, disinterest in taking responsiblity, **** the legality or morality, etc.

    But that culture wasn't one that protected or promoted the financial industries, indeed it has all but destroyed them. This type of manager / executive was a predator, not a saviour.

    Whilst humanly speaking we would all love to get rather rich, rather quickly and with very little effort on our part, we also all know that greedy individuals or groups make other people poorer.

    Whatever cow is being milked, it will eventually run dry.

    And yet HMG think this is the sort of person to take an 'acting' lead role in the FSA?

  • Comment number 33.

    #26 Barrie loving your way with words. He's a complicated man, who no one understands but his woman, and he really has shafted us royally. The picture you paint sounds disturbingly similar to the last character played by the late Heath Ledger.

    #29 for another dose of chilling you should take a look at the recent article by George Monbiot on the Guardian site. It was an open letter to Hazel Blears, a pretty accomplished and comprehensive polemic demolishing her personal record and that of the government. So far it has well over 1000 responses supporting what he says, many from posters who, like me, are no great fans of Monbiot.

    Many of them seem to be from ex party members, which corresponds with what Paul was saying in an earlier post about the hollowing out of the political parties.

    #30 Yes it did seem a slightly odd choice. But then people have been on at him to give the banking angle a rest. And we don't know how much pressure he's under to keep churning stuff out. Or indeed to not churn certain stuff out. I think RPs rapid fire slightly scatter-gun approach is pretty well balanced by Mason's less frequent but more substantive posts.

    Paul, in 'The Anger Out There' you said at the end you were going to write about the people you met on your travels. Hope you haven't shelved this, sounded good.

  • Comment number 34.

    Politicians seem to have failed to understand that any trust that existed pre-crunch has evaporated. Where it did exist - vested in either credible politicians (admittedly there were few of them) or the Banking / FS Industry - it was borne out of ignorance, inertia and over-optimism. To make that point really clear, most people trusted the Banking / FS industry to look after their cash, pensions etc. and they trusted politicians to ensure that there was a suitable level of regulation and legislation in place to provide the necessary 'checks and balances'.

    We now know that this trust was wholly misplaced. The politicians, the regulators and the Banks have all been drinking from the same trough - literally - totally conflicted, totally culpable.

    People don't trust (and why should they?) the same collection of individuals to solve the problems they were instrumental in creating. There's no credibility left, and certainly no trust. We're also hearing a lot about witch-hunts and rushing to judgement. There's no witch-hunt, but we are allowed to judge. Judgement comes with hindsight, the passing of time, over which an individual's choices can be judged by their outcomes. The judgement that people are coming to supports what I wrote above - it all stinks.

    And finally, what about accountabilty? People don't want token gestures, false apologies and mealy mouthed words from politicians. "No reward for failure" one of the most repulsive phrases uttered so far, and seemingly unchallenged to date. It's a weasel-worded phrase that's going to allow those who uttered it to claim after the event (i.e. after £billions are paid in bonuses at bailed-out banks) that the "few" who caused the problems haven't been "rewarded", but the other 199,500 employees who've "done nothing wrong" will have collected their bonuses unchallenged. Make no mistake, people are livid that employees who would otherwise be on the dole without taxpayers money being pumped into their institutions are going to collect.

    Trust needs to be earned - it doesn't come as a bonus!

  • Comment number 35.

    #24 Sadly I cannot agree more with your depressing comments. The economic system determines all other institutions of a society-political, social, media, religious, family etc.'the superstructure' according to Marx. As long as the economic system is based upon greed, selfishness, property and profit then it follows that society itself will be based upon the same 'values'. It is the system which is hopelessly corrupt, and no amount of investigation into who did what and who didn't is going to change that unless we change the economic system.

  • Comment number 36.

    Another comment, not about the specifics which you are doing a great job on, Paul, but about the generalities of our mess, with the objective of starting to consider what new regulations/laws/system we might adopt to ensure this does not happen again, and indeed will make our western capitalist model in fact a fairer and more efficient one for the 'people'.

    I wonder if you can have a look on Newsnight at the options - maybe do a 'special' - go back to basics and consider really big ideas?

    It seems to me that small adjustments to the 'system' like 'greater independant assessment of members of the FSA', or 'increased disclosure of conflicts of interest', while heading in the correct direction, are nowhere near the scale of the revolution we require.

    Matters to kick off the discussion?

    - Sharia law regards simple debt as usury, while largely equity investments are OK. I'm guessing the principle here is that the 'lender' takes a much greater interest in whether the 'borrower' can actually pay back anything at all - which sounds quite good. One would imagine if this principle were adopted we would not be in this mess. Our UK mutual building society models are kind of half way there to this principle. Maybe in the new world 'banks' should only be able to be called such if they give a certain portion of their shares to those who deposit money with them, with board representation etc - a hybrid between a BS and a bank of today, or maybe all 'banks' should be forced to adopt the BS model?

    - Disclosure - why in this age of the internet could 'banks', and indeed not just banks but any 'financial services outfit' not be forced to disclose their management accounts which would include details of all borrowings/loans over £100k say, and all individual salaries over £100k say (but missing out the individual names involved)?

    - Monetary policy - should it not include asset prices in its target?

    - Centralisation of system control (i.e. merge FSA and BoE)

    - Funding of political parties - surely it must now be done by the state?

    - Banning of lobbyists from parliament

  • Comment number 37.

    Yes, Minister!

    The legions of mandarins, be they permanent secretaries (who thought that anyone other than a temp was anything but permanent), or under-sectretaries or parliamentary advisers or just middle managers are the force to be reckoned with here (don't get me started on lobby-ists etc).

    Anyway, I am still trying to get my head around all the shuffling that is going on at good old UK FI. Phil Hampton off to RBS before the ink was even dry on the press release announcing his arrival at UK FI. Then of course Moreno, and what about Kingman, come on. Who is kidding who, this "gentleman's club" stretches far and wide, and the minor kerfuffle of a full-on banking crisis will not shift this mob, they are stuck on like limpets.

    Perhaps a new code of corporate and civil service governance is what we need - and then a few more women in the board-room that would shake things up.

  • Comment number 38.

    Yes, Minister!

    The legions of mandarins, be they permanent secretaries (who thought that anyone other than a temp was anything but permanent), or under-sectretaries or parliamentary advisers or just middle managers are the force to be reckoned with here (don't get me started on MPs and the cash for honours mob).

    Anyway, I am still trying to get my head around all the shuffling that is going on at good old UK FI. Phil Hampton off to RBS before the ink was even dry on the press release announcing his arrival at UK FI. Then of course Moreno, and what about Kingman, come on. Who is kidding who? This "gentleman's club" stretches far and wide, and the minor kerfuffle of a full-on banking crisis will not shift this mob, they are stuck on like limpets.

    Perhaps a new code of corporate and civil service governance is what we need - and then a few more women in the board-room that would shake things up.

  • Comment number 39.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 40.


    goldchrisevans (#5) Doesn't surprise me. It happens all over the place, not just Financial Services - people only care now because more have been directly hurt through the consequences. Voices have been raised about the ineptitude of the MHRA/NICE over pharmaceutical spin, and elsewhere in the Public Sector, where millions if not billions are squandered on programmes which have no effect, nothing ever happens - people still keep taking their salaries, peddling panaceas which don't work, go on jollies (CPD they call it), spinning nonsense to their colleagues and the next generation etc. After a while, the more experienced just give up 'whistle-blowing' as it's so depressing seeing nothing come of any of it. Over time, one sees more incompetents in senior positions as a consequence, and so it all continues until a mess like this hits the fan..

  • Comment number 41.

    #36 Interesting suggestions, but I think you are still tinkering around the edges. It is difficult to have the words 'capitalist and fair' in the same sentence. I have just watched last Wed's Newsnight-I had to be restrained from hitting the computer screen every time any politician spoke. When Oliver James spoke he makes such sense. Am I easily taken in or just a hopeless idealist?

  • Comment number 42.

    I just don't think the public are getting this, and I have realised why.

    The great British Public, inured following generations of being told 'how it is' by their elders and betters, only ever learns lessons if they are couched in a wrap of humour.......

    This tsumami of a recession, caused by the smug incompetence and greed of the financial, legal and political sectors, is only starting to reach the homes of we the people because our jobs are no longer secure. Not the corruption, not the zero savings rates, not the printing of money, not the expensive Euro, not the MPs expenses claims; nope, we can stomach all that forever.

    So still not much groundswell for change as far as I can see from the peeple.

    Why is that?

    I reckon it is because we have no TV comedy shining a spotlight on the guilty, and ridiculing them.

  • Comment number 43.

    Why is that?

    I reckon it is because we have no TV comedy shining a spotlight on the guilty, and ridiculing them.

    What the BBC should be doing right now, Paul -and I hope it is already in the pipeline- is producing an up-to-date version of~

    That was the week that was
    Spitting Image
    The Day Today
    a less esoteric Bremner, Bird, Fortune
    or something in the vein of.

    Get Chris Morris, Armando Iannucci, even Sacha Baron Cohen to stop what they are doing, and get onto this right now.
    Satirical, biting, honest & factual, that's all it needs to be.

  • Comment number 44.

    continued ......

    The Home Secretary getting paid for two homes,
    Ed balls & Yvette Cooper maybe claiming for 4 ... (removed just in case)...
    Crosby having 2 conflicting jobs,
    Brown claiming it's all the fault of the USA,
    the Lords for sale,
    David Rubberband insulting the Indian Prime Minister,
    Bonuses for Bankers,

    the list is endless, and they should be ridiculed in everyone's on prime time TV.

    Or has the BBC not got the bottle?


    (please forward to Commissioning Editor with biggest cojones).

  • Comment number 45.


    why do I have to split this into three to get logged in for moderation.

    How does this software work?????

  • Comment number 46.


    For some years, we have been wondering why some top-level directors are so clever yet – frankly – so incompetent. We have discussed how managers get promoted to director, the psychology of directors, and the decisions they make.

    We have written a monograph which draws four threads together:
    • The theory of evolution (this being the anniversary of Darwin’s birth).
    • The factors at work in promotion of managers to director level.
    • The trend in recent years to "strengthen business governance".
    • The current crisis in banking and what might have prevented it.

    The monograph is arranged under these headings:
    1. It is indeed a jungle out there!
    2. Formal career paths don’t lead you to become a director
    3. Managers must make decisions with little or no information
    4. Higher level managers make more random decisions
    5. You can rarely measure the effect of management decisions
    6. Higher level managers get away with worse decisions
    7. Directors may never get to learn from their mistakes
    8. Directors feel comfortable with guessers rather than calculators
    9. 2nd and 3rd level managers must filter directors’ decisions
    10. Middle managers must be trusted to get on with business operations
    11. A formal cascade of objectives can damage business effectiveness.

    It is nice to find some of our conclusions are supported by others. “In a job like mine… you only really have a 55% chance of being right, now matter how bright you are.” James Crosby.

    We don’t say any of these things are good or bad; they are just a consequence of evolutionary forces. Is there a way we can post the full document explaining our points to you?

    (We joint authors are a senior civil servant, a CxO in an IT company, and a director of his own company with experience of technical risk management. We have close to 100 years experience in business between us.)

  • Comment number 47.

    DOWN AND DIRTY (#41)

    The ideal individual is one that knows it is an animal and then does its best to behave like a human. The ideal state is one that knows we are animals and then attempts to put in place a culture of humanisation and humanity.

    What we have, is a mass of confused, hyperactive quasi-animals with no idea of the above, led by the least capable.

    We function to natures laws - we MALFUNCTION to the ones we overlay. Only when our culture is in harmony with nature, can we live sustainably and peacefully.

    Yes: right now, optimism is a bit hopeless. Try whistling.

    PS Oliver James makes even more sense when he is not angry.

  • Comment number 48.

    helenhay (#41) "When Oliver James spoke he makes such sense. Am I easily taken in or just a hopeless idealist?"

    You're probably a good person, but yes, "easily taken in" AND probably "a hopeless idealist" too. He said populist, theatrical stuff, just as Shami did on Question Time a week or so ago. It's for his future consumers. Maybe Newsnight Review will plug his next book? Excuse the cynicism but there are real issues here and nobody will touch them because they are too politically incorrect. That's what's really causing the trouble - avoidance and denial.

  • Comment number 49.

    Paul, you're on the right track, so far. The chronology is so important.

    Having worked alongside a compulsive liar - not in a financial setting but in a very influential position in education - who enjoyed the thrill of duping everyone, all the time, shamelessly, it isn't in the least bit surprising to me that we have corruption throughout the banking system, to the point where the way back to safety has been blown up.

    My experience has left me utterly cynical. Don't talk to me about whistleblowers, they are eaten for breakfast by the people who live on cheating and lying.

    The cheats in the system are like that bank robber in the film "Heat" planning his last heist, for him "the action is the juice". The money isn't the goal for them, just the kick they get from getting away with crime.

    To judge from what I observed in the sphere I was in, the next move by the main players in this disaster of financial meltdown is for one of them to step out and offer to "rescue" us.

    We are at the Trojan Horse stage of this epic story and if something turns up now that looks too good to be true, that's because it is.

    What's needed is facts and keeping laws and regulations and a lot of common sense. And the ability to stomach the truth.

  • Comment number 50.


    "What's needed is facts . . . . . and a lot of common sense. And the ability to stomach the truth."

    Precisely Tigger. Even the truth of Nature's urge to procreate using ripe and ready kit (and the significance of that) is lost on our dim leaders. As for their own unsuitability 'in post', that is the last thing they inspect.

    Every complex 'civilisation' so far has died out, yet there are a few 'primitive' ones, still enduring.

    In time, even the dumbest politician might get a weak grasp of some construct - the obvious takes 'a little longer'.

  • Comment number 51.

    Interesting thought-women directors in banks.

    How many men do you see on the branch counters? I wonder why that is?!

    Women managers are around in banks, but not not as many as men.

    There is a woman at the top of the FSA, but are there any women directors in the holding company appointed by the government?

    I wonder why women at high levels in financial institutions are thin on the ground? I wonder if it is to do with the belief some men hold (as I was told in no uncertain terms many years ago when I was on a branch counter by an older male customer) that a woman has no place dealing with other people's money?

    Or is it simply that not enough women are not part of the 'old school tie' network, or other wholly male organisations?

    However, a word of caution re women in positions of power-there are some that are more cut throat, devious, dishonest and back stabbing than their male counterparts. I have met a few and for every 1 decent female in a power position, there are 3 REALLY dangerous ones!

    Despite this, perhaps banking directors need to be appointed from the lower ranks, regardless of being male or female? How can anyone with no banking experience possibly do their job properly and have faith put in them to steer a financial ship?

    Most certainly banks need to go back to being boring-perhaps there should be no bonuses at all, a flat modest salary and boards comprised of those who have risen through the ranks or, at the very least, retail banking experience?

    A degree in economics, maths or any other subject is not, imho, as important as real 'line of fire' experience.

    After all, rocket scientists, mathemeticians and economists created the vehicle for the greed which produced this unholy global mess.

    It's high time this whole rotten core were smashed to smithereens and decent honesty installed in it's place.

  • Comment number 52.

    Gordon Brown has reciprocated years of huge tax income received from the square mile within City of London in the form of less regulations, and has awarded bank bosses by giving away knighthood and peers like free iPods. He should be the man who says sorry first, as he has played a key role in the making of this financial crisis that has brought this country’s economy to its knee. Sir James Crosby’s immediate resignation came as a shock, but it is a subtle reminder that the rope may be burning a bit too close to the prime minister himself.

    After seeing the whole chain of events unfolding, it is hard to imagine that Brown had no prior knowledge of the risky growth strategy deployed by Sir James Crosby, while he was chief executive at HBOS and later on as deputy chairman at FSA. Surely Gordon Brown had been advised about his credential as the men at helm at HBOS, before appointing him to a key role at the government’s financial regulatory body. It is also hard to believe how a potential conflict of interest arising with this appointment has never been raised to the PM during his decision making process. I hope an independent inquiry into Paul Moore’s whistle-blowing and the gross ignorance of risk control at HBOS wholesale mortgage business will shine some light on this. I have admired Adair Turner’s work for years, and trust that he will conduct a thorough investigation and make a fair judgment of the case.

    If the prime minister is later revealed to have lied while giving evidence before the Commons liaison committee, he should be forced to resign immediately on the grounds of lying to the British public as a member of the government, and being complicit in allowing bankers to extend excessive lending that has brought banks under. I personally think it is best for him to be honest with these investigations, in order to limit the ramifications which could prove quite damaging, but as always, our great leader is not one to admit defeat or mistake, a song comes to mind “it wasn’t me”.

    P.S. Happy Valentine’s Day, everyone! I know trolls are at large on this forum, but don’t give up on us! ^^

    Sincerely, h

  • Comment number 53.

    I see in today's Telegraph at:-

    that Michael Fallon, MP for Sevenoaks and deputy chairman of the Treasury Select Committee writes:

    "HSBC does not lend more than it holds on deposit, anywhere in the world"

    Is that true? It seems most unlikely that HSBC could survive in a world where all other banks operate under the fractional reserve system. If it is true, how do they do it?

    If it's not true, then should Michael Fallon be deputy chairman of the Treasury Select Committee?

  • Comment number 54.

    #51 "real 'line of fire' experience" - does the current situation count as effective experience?

    This approach can be applied across the board - those responsible have been caught red-handed. Make them sort it out under threat of prosecution if necessary. In a way, the current crisis could be a great opportunity for change.

    I've often found the tendency of reporters to try to get politicians to admit mistakes in an adversarial manner to be very tedious. A detailed article such as this blog is so much more preferable.

  • Comment number 55.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 56.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 57.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 58.

    I have listened to Gordon browns comments before the select committee and what has shocked me is that even though KPMG carried out an investigation ( albeit it limited apparently ) and the FSA too apparently carried out its investigation Mr Brown commented that the reason HBOS fell as that its whole business model was wrong
    Surely that is the point of the FSA and the treasury dept to oversee those commercial activities in the banking system which as likely to give rise to the collapse of confidence in the market place esp in the banking industry Many people were commenting that their business model was risky even before northern rock collapsed

    This leads me to another point I really think that the banks should now drop this idea of being a retail bank and going back to their core activity stop going into avenues they know nothing about and get back to basics

  • Comment number 59.

    Sir Howard Davies, had a "heightened interest" in toxic
    financial instruments in 2002, apparently did nothing to stop
    their toxic effect at the FSA, and is now a non-executive Director of
    Morgan Stanley and a member of the advisory boards of the China
    Banking Regulatory Commission (since 2003) and the China
    Securities Regulatory Commission (since 2004) and currently
    Director of the London School of Economics and Political

    His appointments have included Executive Chairman of the
    Financial Services Authority from 1997-2003. He was the first
    Chairman of the FSA, the single financial regulator for the UK
    financial sector. He was Deputy Governor of the Bank of England
    from 1995 to 1997, until the incoming Labour government asked
    him to create the new regulator.

    In 2004 he became a non-executive Director of Morgan Stanley. He
    was appointed to the Board of Paternoster Limited in 2006 as a
    non-executive Director. Paternoster is a regulated insurance
    company that takes on the risks associated with companies' final
    salary/defined benefit pension schemes and assumes the
    responsibility for paying their pensioners into the future.

    In a previous post at:-

    I wrote:

    As far back as 7 years ago, on Tuesday, 26 February, 2002, 08:49
    GMT the BBC published this article entitled "A scandal waiting
    to happen?"

    in which Sir Howard Davies, then chairman of UK regulator the
    Financial Services Authority, was quoted warning about the
    perils of dealing with toxic financial instruments. During a
    speech on insurance regulation, Sir Howard remarked:

    "One investment banker recently described synthetic CDOs to me
    as 'the most toxic element of the financial markets today'. When
    an investment banker talks of toxicity, a regulator is bound to
    take a heightened interest."

    A year later this inconvenient regulator with "a heightened
    interest" was getting in the way of this new way of pumping up
    the money supply via the backdoor, and had often been reported
    warning of the asset bubble in property in the UK. So, in true
    Yes Minister fashion, Sir Howard Davies was shunted off to a new
    job at the London School of Economics.

    There is no way they can credibly say that nobody saw it
    coming. And that must include Gordon and Tony.

  • Comment number 60.


    A footnote : Charlie Bean of the BoE just gave a speech to the NFU in Birmingham. He admits that the BoE stability report of July 2006 warned them of funding liquidity risks etc. but goes on to say that none could have foresaw the virulence of subsequent events and if interest rates had been raised, unemployment and growth would have suffered and things probably would have got to the same point.What's interest rates got to do with it, hey? He then goes on to say that macro prudential regulation of banks is the answer.

    Come on, Mr Bean - we all know that - what he didnt say is that the BoE, FSA and Treasury are the Tripartite Standing Committee charged with protecting us from systemic financial shocks! What we want to know is why didnt any of these august bodies enforce regulatory oversight on risks they had identified three years ago?If they had, this 'virulent' crisis could have been mitigated or the contagion snuffed out and we, the taxpayers, protected.

  • Comment number 61.

    A long and fascinating post just got eaten by this wonderful system the BBC's spent so much money on.

    Let me summarise this examination of the FSA, otherwise known as McKinsey UK Unlimited.

    Virtually every one of the old school of the FSA Board has been on a sinking ship. Many sunk the ship themselves, counting the LIFFE amongst the wreckage.

    Peter Fisher - ah, the case in point.
    Peter Fisher is MD of Black Rock Inc., whose Black Rock Financial Management Inc. is responsible for running a Delaware company liquidating the vast bulk of AIG's SCOs. In other words, an American UKFI. In other words, ANOTHER CONFLICT OF INTEREST.

    Adair Turner and Carolyn Fairbairn, both double firsts in economics from Gonville and Caius, and both McKinsey people, together with Howard Davies (FSA Chairman before Callum McCarthy), William Hague, John Banham. Some familiar names in the downfall of John Major there...

    Callum McCarthy - weakened KB to its current private-business-only position.

    Sally Dewar - Equities Manager at LSE who pumped the .com bubble, jumped ship just before it burst.

    Karin Forseke - the CEO who destroyed LIFFE as a world market in 1996-7

    John Gieve - the Private Secretary who rendered the Home Office Unfit for Purpose and was rewarded by being made the Bank of England's Deputy Governor for Financial Stability. I quote from the NAO report on his 2005 accounts: “Sir John Bourn, head of the National Audit Office, reported to Parliament today that the Home Office had not maintained proper financial books and records for the financial year ending 31 March 2005. Sir John Bourn therefore concluded that, because the Home Office failed to deliver its accounts for audit by the statutory timetable, and because of the fundamental nature of the problems encountered, he could not reach an opinion on the truth and fairness of the Home Office’s accounts.”

    David Kenmir - secondarily responsible for the FSA's foul-up on Northern Rock, going to head the FSA - Food Safety Agency.

    Professor David Miles - the Treasury's 2004 Miles Report on Long-Term Fixed-Rate Lending suggested first-time borrowers borrow in the short-term market. Bet he's loved now...

    Jon Pain - has only ever worked for Lloyds, no qualifications. There may be some skeletons in the Cheltenham & Gloucester cupboard dating from his 2005 dismantling of their borrowing policy.

    They cost nigh on 300m a year to recover 22m in 2008, fiddling with small fry. Their failure to deliver was obvious on results alone, quite apart from the general public resentment on bank charges and insurance.

    And with this we expect to dig our way out from under? Really?

  • Comment number 62.

    #60 "What we want to know is why didnt any of these august bodies enforce regulatory oversight on risks they had identified three years ago?"

    Yes, that's the big question but I doubt we'll get a straight answer. What we need to know is what are the precise details of the changes to regulation actually being implemented (or a definite time scale for implementing proposed changes).
    Then we can deduce the reasons for the failure and make up our minds about culpability.

  • Comment number 63.

    My 61 connected 59 to the original post, taking a series of on the record facts to explain the common thread running through the FSA, from Howard Davies to Adair Turner to Carolyn Fairbaird to John Banham to William Hague.
    It associated a mission-critical failure to two other directors, a complete absence of qualifications to a third, a serious error of advice in a Treasury Report which led to the collapse of the banking system to a fourth, and a Hampton-level conflict of interest in the fifth. Which just leaves the three most junior with reputations up to the job, for all that one of them seems to be somewhat street-credible.
    Perhaps I should post bit by bit? No, you go look each one up and see how we got into this mess. Start by googling that first string of names and ask yourself whether the UK is a hegemony of somewhere else.
    And perhaps the moderators should consider looking for other jobs.

  • Comment number 64.

    I have googled the names and I am asking myself if my 'somewhere else' is the same as your 'somewhere else'??????

  • Comment number 65.

    My 64 is now released on Bob Peston's blog as 644. It took the moderators 16 hours to check three hours' work.


  • Comment number 66.

    Which blog?

  • Comment number 67.


    Glad to see your post made it in the end on PM's most recent blog #644.

    Such rampant cronyism should be exposed in Panorama or similar.

    The only possible reason I can think of as to why it is not is because of the complicit cronyism at the BBC. Their spirit was broken after the Dr David Kelly affair it seems.

    They throw the general public 'titbits' to keep it vaguely real every now and again such as the SIR James Crosby / Paul Moore afair but then it falters. Noboddy follows it through to the end to dogedly expose the whole sorry mess top to bottom.

    One has to ask why?

    Where is the bravery?

    Have the libel lawyers and the like as a part of the bigger crony network got the whole system so tied up in knots free investigative journalism is no more for fear of retribution from the very system that is supposed to uphold our values?

    I better stop now I just get so wound up about it all if I think about the legions of knights of the realm in boardrooms of the banks and their rejects whom run the FSA, then I think about the seven engineers in my company whom lost thier jobs today and it is too much.

    All reved up and no place to go.

    Thanks Rahere Keep at it.


  • Comment number 68.

    here is my earlier post that was pulled by the moderators with the offending article removed in case any of you were curious.


    Just managed to watch your 'Road to Wigan Pier' Newsnight contribution.

    It answered a question that has been bugging me. I could not reconcile in my mind the awful economic picture with the fairly modest (by comparison) increase in unemployment figures.

    The answer is the flexibility in the labour market that was not there before as you piece demonstrated through interaction and chatting to real people (instead of reading out govenment statistics...well done Paul MORE please).

    I wonder what would happen to the unemployment figures if you pro-rata in the people who are now working reduced hours? Can you do that ?

    That is one of the options my company is looking at for example as a way to preserve skills, to in effect share the work. I am aware of many others whom are considering or have already done the same.

    In addition it would be useful to have a measure of those whom have accepted a salary cut also. The raw 'unemployment figures' are no where near sophisticated enough as a measure of utilisation in todays modern flexible labour market.

    Unemployment figures which factor in what is becomming increasingly common 'work sharing' and also 'mean income' would be much more useful. Have a go why not? It will give the backroom boys in the economics Dept something to think about at the BBC.

    The next logical step from that is to listen to what the market is telling us.

    It is telling us if we all work a little less and find a way to be satisfied with less we may have a sustainable economy in the long term and, possibly, a more balanced and enjoyable life with more 'spare time' when we are in our prime as oppose to towards the end of our lives.

    In order to do that there needs to be investment to become self sufficient in energy and food ( in so far as practically possible) combined with sustainable housing projects.

    local councils have become too big to be effective now and the people too 'distant' from the public services they supply to feel connected to them. Hence you get kids vandalising a playground, wait for 'the council' to build it again then, vandalise it again. they would not do that if it was part built and funded directly by the immediate local community.

    Everything needs to be done on a more localised level.

    The investment needed to create this would generate the jobs required to 'get us through' this transition period' with a vision at the end that people work for longer ( say up to 75) but work less hours throughout their lives, say 4 or 3.5 days per week.

    Surely that is better than working like maniacs while simultaneously trying to bring up a family such that we can retire at 60.

    We live too long for that now. The whole system is simply out of date, not fit for purpose, not fit for the rapidly changing times.

    There is in fact, a FANTASTIC opportunity out there to really do something special off the back of this turmoil. The enormous frustration for me is that none of the political parties are prepared to be radical enough or have the vision to sell it to the people and get everybody involved with it.

    It has to be mainstream though this time, it can not be sold by a 'swampy' type figure in a baggy jumper with a cheeky grin.

    It needs to be properly worked out and sold by the level headed engineers, scientists, doctors of all types and maybe a couple of financial people on a tight reign one lawyer and 1/2 a politician


  • Comment number 69.

    Jericoa-not sure even 1 lawyer and 1/2 a politician is safe!

    Where, oh where is our modern day Oliver Cromwell?

    We need him desperately-although he'd probably be been arrested by now under anti terrorist legislation!

  • Comment number 70.

    As usual some great points. As I have said before, I still think education is the key. As long as the people in power-both visible and those in the shadows-have a largely uneducated populace, then they can literally get away with 'murder'. I have a degree in politics and economics and just about have some idea of what is going on. Having said that I find Rahere's comments tax my poor little grey brain cells to the limit-long may he keep writing!!

  • Comment number 71.


    I am not sure where he/she is but we have an idea how we may go about it...hence vegetable grower had to remove a post from view on our external blog.


  • Comment number 72.

    helenhey (#70) "..have a largely uneducated populace..."

    But what if it is an uneducable populace? Too many people assume that if the problem is x the solution is to apply not-x pixie dust. The truth is that we have no such stuff according to all the evidence. We can not raise ability through education, just equip what's there, and that appears to have been declining through a number of social measures.

    This point requires very deep-thought.

    It is not as simple as you (and most other well meaning) people make out.

  • Comment number 73.

    I do not believe that the whole of the population has the ability to understand complicated economic, political theories etc. But I do believe that a very large percentage of our population has ability and a level of intelligence that can understand a lot more than they are encoouraged to by our woefully inadequate education system. Far from being 'simple', I think it is incredibly complicated and would involve the dismantling of many other supporting institutions within a society. I find the comment 'and most other well meaning people' interesting, if a little patronising.

  • Comment number 74.


    Yes I think the point does require deep thought, and I don't think the earlier poster was under any illusions about its simplicity.

    I actually think the question "but what if it is an uneducable populace?" might be simplifying the situation.

    Your declaration that "we can not raise ability through education, just equip what's there" sounds very vague. What is it you mean by 'ability' and 'equip'?

    If your measure of ability is IQ and you contend that this cannot be raised by education then that is a possibility, but the jury is very much out.

    But as Helenhey said the question is not ability, but level of education. It does not take the IQ of a genius to grasp the main themes in our current situation.

    When you say "and that appears to have been declining through a number of social measures" what is it that you are saying is declining, in what population, and from what baseline?

  • Comment number 75.

    Thanks for the supportive comments.
    Your last paragraph is particularly perceptive. I would also like to know what is meant by 'social measures'?

  • Comment number 76.


    I suspect jaded jean (gene?) is of the school that humankind will split eventually into two evolutionary types, the 'elite intellectual' and the 'rest'. His point being that there is a genetic pre-disposition to intelligence if you accept that premise you may as well think about how best to manage that in some kind of social engineering way....

    It gets real messy in terms of ethics and what (if anything) we should do to deal with the issue (if it is an issue).

    See what I mean and where this might go!

    Personally I think IQ is over-rated and happiness under-rated as a life experience measure.

    My IQ is pretty rubbish by the way, I failed to understand why anyone would want to ask such a string of useless questions (number many apples jack ate etc) and put such a high value on the outcome...but hey.. what do I know.


  • Comment number 77.

    #69 work sharing sounds too good to be true....because it is. Upping the retirement age I agree with
    #72 uneducable pupils is not something I have ever seen.....cannot anyone of sound mind and body be educated?....At least to a level that suits their particular disposition?

    Skills (or lack of) can certainly hold economies back in a benign environment, I agree.

    But in today's decidedly malign economic environment, superior worker skills cannot alone reverse the economic shrinkage that we are suffering from. We can see some very skilled workers at for instance Jaguar or RBS whose firms are going down hill fast.

    There is a lot of talk at the moment about rescuing strategic industries and protecting vital skillsets, which looks to be predicated on a questionable assumption.

    The assumption that for instance car making is an industrial goal in its own right seems not to have been fully thought through.

    Suppose for instance (and all business studies students get taught this) that we looked at industries from a different point of view. In the case of cars we could make a very simplified assumption that the main sectors within the car industry are say; family travel (Ford Focus?), executive travel (Audi A6?) and leisure (Jaguar XK?)

    OK so we are in a depression...but will family travel go away? Not likely but there maybe some reduced spending.

    Will executive travel go away? Not really likely but the spending maybe heavily reduced.

    Will leisure vehicles go away? Almost certain to reduce by 75%....not a good business to be in.

    So if leisure vehicles is a bad business to be in why allocate scarce engineering resources to it?

    It is interesting to do a similar analysis on the fuel industry.
    Suppose you choose fuel for domestic housing, fuel for holiday jets and fuel for buses as the categories......By my estimates fuel for households and fuel for trains and buses would be a great game to get into. But fuel for holiday jets??? OK maybe if you can find a customer you can trust to pay his bills.

    OK so the household fuel industry looks like a good one to get into.......worth putting some engineering resources into would you not think?

    In fact there are more engineering skills deployed in the leisure vehicle industry than there are in the household fuels industry. That you will agree is not a very sound strategy for jobs or wealth creation.

    So getting exercised about the damage caused by a shrinkage to say Jaguar_Land Rover does not appear to be the world's best example of strategic thinking.....And the people coming up with these strategies are very well educated education is not helping to formulate good strategies let alone implement them.

    Just a thought, but did you know that the heat rejected by the cooling systems of Britain's supermarkets could be used to keep a half a million three bedroom houses in heating and hot water for free? Thus potentially saving the export of £300 Million of our hard earned pounds to Russia and Saudi Arabia every year as well as creating the same number of jobs as those, almost certainly to be lost, in the leisure vehicle industry.

    To summarise, making strategic industrial choices will take a lot of time and energy. But it could be a process worth doing.

    Any thoughts on a strategy for the bus and train fuels industry??

  • Comment number 78.

    #77 iceland express

    ''work sharing sounds too good to be true....because it is''

    I have some really good news for you. It is not 'too good to be true' it is ineviatable.

    If you click on my name and scroll to my post on 26th january (an orwellian episode) I explain why in some detail.

    I would be interested to know what you think.

  • Comment number 79.

    #78 Jericoa
    I looked at your posting from the 26th - well written.

    I have also come to the conclusion that as much as half of the economy is predicated on making stuff that we all could well do without.

    I then started to ask myself what the millions upon millions of economically inactive adults, who would be left behind in a world focused only on useful enterprises, would do for a living.

    I got stuck.....I have no answer

    But and this is the biggest "but" of our generation.....people must have paid work....mass unemployment in Britain would be inhumane. Full employment is more important than technical wizardry or high gdp per head

    The thing is....there is an immeasurable quantity of work that needs the conundrum does have a solution.

    I suggest that there are many many ways to solve the are some of them
    -Process of NOT making more Jaguars than you can profitably sell
    -Nurture essential industries over the long term eg. renewable energy, Biotechnology
    -Look at opportunities in developing countries eg. build a modern rail network in Africa
    -Make high carbon transport much dearer than low carbon transport Eg. lorry transport 50 times more expensive than rail or canal
    -Tax foreign fossil fuel to the rafters and at the same time allocate 20 per cent of all road space to cycles and horses
    -Put a 150mph average speed limit on all passenger planes Eg. encourage the development of hybrid turboprop/gliders
    -Tax foreign food to the rafters
    -Bring back university grants for engineering and science students

    As I say the answer is not knowable at the moment but as sure as night follows day there can be enough work for our citizens (maybe not for everybody else's but for ours yes).

    In principle it looks like living standards across the board must plummet for all our sakes.

  • Comment number 80.

    #79 Iceland express

    I agree with a great deal of what you say the last line stands out though in particular to the contrary.

    ''living standards across the board must plummet for all our sakes''

    It depends if you call both parents working 40 hours aweek while trying to bring up 2 young kids and keep up with the 'joneses' to have that trip to disneyland and a new car every 3 years and the latests games console is in fact a 'living standard' worth preserving.

    Personally I think it looks more like a deep rooted addiction than a 'living standard'

    It does not bring much contentment in itself, short term ' fixes' of happiness yes, long term contentment and feeling comfortable in your own

    I think if most people asked that question of themsleves honestly they would come to similar conclusions but we are led by the nose with no real viable comprehensively and credibly worked out alternative for us to live our lives unless you want to 'drop out' completely. That is simply not a practical proposition.

    It runs very deep the trouble we are in. A good starting point would be to look at what is a 'good living standard' then build a new economic model around that.

    I really dont see that we have anything to lose in terms of 'living standards' and everything to gain by deep rooted fundamental change on how we live and work. I really do believe the technology is now available (thanks for that capilatism) that we can start to live in a completely different way.

    It feels like wading through treacle trying to get that message accross but I really do believe it and will keep trying to anyone who will listen.

    I think it would be a fantastic gift to leave for those who follow us, unlike what we are creating at the moment. It has got to be worth pulling ourselves away from our TV's and computers, getting off our backsides and fighting for it (in a non violent way).

    Everybody just looks like rabbits caught in headlights to me at the moment.



  • Comment number 81.

    Jericoa-as usual interesting and perceptive comments!
    What ever happened to the 30 hour working week. The rest of one's time to be filled with 'leisure pursuits' and community projects. Some ideas would include-growing food, walking, yoga, painting, debating, visiting the old and infirm etc. If we had a society more based upon needs instead of wants and enjoyed the more 'simple pleasures'-good food and company-then we wouldn't need to produce so many worthless goods. Science should be used to make our working life easier i.e. robots do the mundane and soul destroying jobs not humans- and the jobs we do more meaningful. Impossibly utopian I can hear lots of people say, but unless we have something more meaningful to aim for in life what is the point of it all?

  • Comment number 82.

    iceland express, Helenhey and Jericoa-
    you are thinking along the right lines. Oddly enough concepts and ideas like these have been floating around for decades, but it takes a crisis like the one we have now before people take them seriously. Carry on thinking, and don't forget to translate it into action.

    I personally estimate that there are several million jobs in this country that are not strictly necessary, and as such people could do other things, whether science research or running days out for OAP's.

    With the level of technology we have now, I see no reason why living standards should fall below the average in this country. If you measure living standards by resource use, then it will have to fall, but if you measure it by access to amenities, healthcare, work, clothes and food, then it has probably been falling for a number of years already. I'm sure I recall reading in several different places how the average American worker was best off in the late 70's, and their life has actually been getting worse since then due to changes in the available work, pressure for lower wages, increases in healthcare costs etc.

  • Comment number 83.

    #82 calcination

    It is nothing new you are quite right but it is an idea who's time has come. I also agree that knowing is not enough you must take action.

    That is the hard part, the Green Party and similar where these ideas would traditionally reside dont have mainstream credibility and probably never will.

    The parties with mainstream credibility are out of touch / too much under the influence and reliant on the existing system for funds and general support to consider undermining it.


    Paralysis in a time when big decisions and fundamental investment for change is needed.

    It is a source of great frustration to me that we know what the answers are but there appears to be no credible outlet to

    1) Get the message out there and debate it.

    2) Do anything about it.

    I feel both the politicians and the media are failing us dreadfully at the moment in this respect.

    I suffer from the same paralysis in being fully occupied keeping my job, bringing up a family, paying the bills and keeping a roof over our heads to 'do more' about it.

    All I feel I can do at the moment is to keep posting here and we have set up a seperate forum also for some like minded people but we need a helping hand.


  • Comment number 84.

    #5 goldchrisevans - It seems that you have had a very similar experience to me. I too recently was an FSA whistleblower and again apart from a small fine nothing much happened - to my knowledge they (the FSA) have done nothing to safeguard the public.

    Maybe we need an association of whistleblowers to keep pressure on them?

  • Comment number 85.

    alphaptarmigan- what we need is a better press which informs people, and more people who get annoyed about things. Sometimes it seems the only people willing to ask difficult questions are Private Eye.

    The point is in getting information out to people. The internet can be useful for that, although it would be interesting to see how long such a website lasted before the lawyers got onto it.

  • Comment number 86.

    #85 calcination

    I agree with the sentiment but I dont think there will be a shortage of people 'annoyed about things' in the comming months. The trouble will be that they will have no positive and creative focus for their anger.

    Noboddy is offering a coherant, compelling vision of an alternative future worth building for subsequent generations, if they are they are getting next to no media coverage or credibility.

    The blue collar workers will mostly be the ones who take to the streets eventually but at the moment the only thing they are getting united behind is the slogan.

    'British Jobs for british Workers'

    Provided by none other than the spectacularly incompetant Gordon Brown and hijacked by a grateful BNP.

    The anger will come, it is the direction in which that anger will be turned which worries me more.

    The white collar middle classes need to get angry too, and find an alternative voice to extremists and the hopelesly 'in bred' incumbent political judicial and economic elite.


  • Comment number 87.

    Jericoa (#76) "I failed to understand why anyone would want to ask such a string of useless questions (number many apples jack ate etc) and put such a high value on the outcome...but hey.. what do I know."

    Items are selected so that when aggregated, a standardised (normal) distribution with mean of 100 and SD of 15 is created against which individuals can be relationally measured. It's just a measuring scale. It's because results correlate well with other measures (like income, employment etc) that such measures are pragmatically useful. If shoe size bore the sme relationships would you be arguing disputing the value of measuring feet?

    Most peole don't realise that in many respects, tests like the USA SATs and our own Key Stage SATs are just IQ proxies.

    You're right in your assessment of my position, but I have arrived at that not out of choice, but on the basis of the available empirical evidence. If more people had respected that evidence we might not be facing this.



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