More demands expected
Congratulations, you are now the proud, or maybe not, owner of a bank or two. You must now be wondering what you'll get for your share of the £37bn. The chancellor's promising you, or at least your representative, a place on the board and no cash bonuses for those who are not the people's representatives, and what's more, freer flowing loans to small businesses and homeowners. Expect more demands to follow soon.
Will, for example, the government guarantee the retention of the Scottish HQs of RBS and Bank of Scotland? And what about the Halifax headquarters of the Halifax? Will they promise to pass on interest rate cuts to mortgage holders? Will they even change that annoying muzak which plays when the bank puts you on hold? You see now that the people own the banks, the people are sure to make demands of the people's representatives who bought them on our behalf.
And what's more, there'll be demands to nationalise lots more. The new Transport Secretary Geoff Hoon dutifully took the underground home from Wembley after the England game on Saturday. Per chance, he bumped into the head of the RMT union, Bob Crow. "Now you're nationalising the banks", Crow said to him, "how about the railways?" How about it, ministers?
I'm 
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>the people are sure to make demands of the people's representatives who bought them on our behalf.
Damned right they are. Lets start with the Oft court case.
And lets get Brown to resign as its him thats put us in this despicable position.
The guy should be tried for treason.
Are you going to let him play the hero or will you robustly challenge him? If its the former, hang your head in advance!
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37 billion.. !!!!!!
Thats nearly a third of our Quango budget.
What is Brown thinking of?
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Why are the banks not telling us what they have done with their considerable previous year profits, or has it all been down to lack of due diligence. We haven't heard from a single banker yet.
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Mmmm, but I was more than a little perturbed to hear the Darling say that any government appointees to bank boards would have banking experience rather than civil service experience ... the very last thing we need at the moment is more people with banking experience.
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I'd like to see the following brought into the public sector ...
- retail banking (done)
- transport
- schools
- energy
- water
Everything else should stay as it is.
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Yes Nick. How very amusing. But a bit like 6th Form debating points don't you think?
In the meantime, in the real world, we can be grateful that we have a PM like Brown in office to deal with a crisis. As with previous major problem areas (foot and mouth, Northern Rock) there has been quick and decisive action; the UK can make a reasonable argument that the action taken here has been the model for decisions taken elsewhere, especially in the US and Europe.
With the Conservatives trailing in Brown's wake, and his demolition of Cameron at PMQ's last week, perhaps the outcome of the next election is not the forgone conclusion it had appeared to be.
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Oh dear, don't tell me we're on the slippery slope towards Orwell's worst nightmares.
The state is not best placed to run any industry, so I hope they do have some ideas of how to tidy up the problem of the banks balance sheets, and market liquidity, and then get out.
What mechanism is used for the government to acquire its stake in the banks, and I'm not referring to the preferenece share element? Are they acquiring shares from the market, at market prices, till they have the equity level they've announced? Or are they requiring the banks to issue them more shares directly, and if so at what price? Is this offer open to the general public, who might be inclined to buy if the price is right when there is also a level of government support? If not, do the banks have to get agreement from their existing shareholders to effectively dilute their equity stakes?
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Hi Nick
Can you find out what the govt plan to do for the small businesses for whom the rescue plan has been too late. I closed my business 3 weeks ago due to this terrible mess. I cannot find an answer to my question - and I agree with your comment above - the banking system should be more answerable to the general public.
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We are basically nationalising the Scottish banks, RBS and BoS, Royal Bank of Scotland and Bank of Scotland. This is being done by an unelected Prime Minister as defined by the fact that nobody in England has ever voted for him, and he was not elected as leader of the labour party, he was the only candidate and there was no vote. If there was please show me the voting papers, there are none.
So, a Scottish Prime Minister and Scottish Chancellor made the decision to nationalise basically Scottish banks.
This is a disgrace and Gordon must not be allowed to keep describing this as British banks. This is to save the labour party from annihilation at the hands of the SNP in the Glenrothes bye-election. This is nothing but pork barrel politics.
This is part of the labour party scorched earth policy of stripping England before the conservatives win control in England, but without overall control of parliament.
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One suggestion for the annoying muzak which plays when the bank puts you on hold could be highlights of the PM's greatest budet speachs:-
You know the ones:-
There will be no more boom to bust
Prudance
2p cut in interest rates
oh and the best one from his first two budgets
The major cause of boom to bust is house price inflation and under the labour goverment we will not allow rampent house price inflation
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Sir Fred Goodwin, 50, attended a grammar school in Paisley before studying law at Glasgow University, working as an accountant with Touche Ross, Clydesdale Bank and Yorkshire Bank. He was knighted for services to banking in 2004.
I hope he will now be stripped of his knoghthood for Diservices to banking 2008
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I can see all sorts of demands emerging for further nationalisation (rail network, water companies, gas & electricity companies etc) - and in principle, a great idea. One small ... technical problem .... where's the money coming from???? or perhaps the Government will borrow from it's (our) own banks ...
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I wonder if the government will break the contracts of those who work for the banks who have bonuses built into their contracts.
The reason why banks pay bonuses rather than higher salaries is because the bonuses are not part of the employees pension benefit. They can transfer their bonuses into their pension funds and get tax relief. This is what many do, why pay tax when you you can receive it as deferred salary when you get your pension, on which national insurance is not paid.
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It's back to the 70s. No doubt the banks will be required to give cheap loans to the socially disadvantaged. Hang on a minute, isn't that how Bill Clinton started the sub-prime fiasco ?
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Yep! Nationalie the railways purleeeese.
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Dear Nick
OK, a sense of humour is good in times of crisis. But rather than goad the government about more nationalisation, perhaps a closer look at senior executive service contracts is needed to tackle the root causes of corporate greed.
While Sir Gred Goodwin may have foregone his severance entitlements, there is a hell of a tail on this one not just in the private sector, but throughout the higher echelons of most of UK government (national, regional and local) as well as business.
Performance management is rarely welcomed by those in charge of anything.
Peter Kenyon
http://petergkenyon.typepad.com/
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It is a depressing to see the government taking control of our banks.
Things couldn't be any worse for the UK. At a time when we need much smaller government, it is growing beyond all recognition.
I'd much rather have seen the government provide a large pool of loan money available with published terms, than take shares in banks.
The other problem is that the bale out money, is largely to try and build confidence in the financial sector. What is the price of confidence?
I say that if Brown and Darling had not been holed up in their bunker and instead been leading from the front a few months back, that the cost to the tax payer of 'buying confidence' would be far lower.
No doubt - we will all now be required to work until the age of 85 - whilst having our pensions taxed the entire way.
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This comment was removed because the moderators found it broke the House Rules.
At a time when many people such as me are nursing losses of 40% on their ISA's and retirement funds, and are, or were, about to retire, facetious and inaccurate comments such as these made by Sgt Bilko really go down like a lead balloon.
Still, good news/bad news, it's all in a day's work for the hacks isn't it?
And, of course, if your pension is final salary/inflation linked and paid by HMG, who gives a **** about the rest of us?
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Anyone spotted the advertisement in Monday's newspaper...
'Money Made Clear'
by the FSA.
Isn't this the organisation that has been responsible for regulation of the money markets during the past years?
Irony!
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This comment was removed because the moderators found it broke the House Rules.
Potential justifications for railways nationalisation:
1. Private sector contractors are failing in their obligations: STRIKE ONE in my experience. Fire individual contractors if they are crap, but the ones I use are fine.
2. Customers are not being served effectively: STRIKE TWO. Far better deals now than under British Rail. Far better service. Far better punctuality.
3. Management have begged Govt to bail them out for having failed to raise private sector finance: STRIKE THREE.
I don't think there are any other ones.
Other than communist apparatchiks on a quest for personal power.
No doubt that's a good enough reason for Mr Crow??
Is it a good enough reason for UK CUSTOMERS? Eh????
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Back on 17th September, Brown seemed pleased with himself. He had "helped" to broker the Lloyds TSB takeover of HBOS, to avoid another massive injection of government funds.
Robert Peston wrote:
"However, for the avoidance of doubt, neither side has asked for taxpayers' money - either from the Bank of England or the Treasury - to facilitate this deal."
Today, the combined group will take a whopping GBP 17 BIL, to keep them stable.
Things are fast moving. But from a "no taxpayers' money" to GBP 17 BIL in 3 weeks suggests a gap in credible risk analysis. From the companies, the Treasury and the FSA.
Now Brown has his "Clause 4" moment out of the way, as Nick says, what's next? Let's hope its something with an engineering basis. Britain has some great, under-recognised and under-paid talent. At least they deliver "real" product.
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Darling has said that the government are not going to intefere in the running of the banks.
If this is the case, then what is going to change?
Err... nothing...
If he doesn't think he can run the banks better than the existing crews, then what is he doing getting involved at all, rather than leaving it to them??
If he does think he can run them better, they why are we being denied his genius in protecting our invesment??
The government can't have it both ways...
Unless the opposition and press collued to let them...
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Will the Government ensure that taxpayers money is lent prudently, so that we do not have further sub prime mortgage problems?
Will we have 2.5 x joint income multiples and maximum 95% loan to value, or in Gordon Browns attempts to continue the housing bubble, has he only extracted a commitment from the banks to lend lots of money, however irresponsibly?
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I don't know how the PM will have time to sleep. His obsessive wish to be in control will mean that he will be phoning up the CE's of the banks at 4 in the morning.
Nice to see that he is claiming the credit for this scheme, he claimed the credit for the last one and that didn't work. If it goes wrong he will blame his sidekick.
The reality is the FSA have been asleep for the last 10 years; or were they told not to interfere in the Chancellor's economic miracle?
We have all been made poorer by the actions and policies of this government.
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Again, the West Lothian question. Massive conflict of interest for a PM who represents a Scottish constituency.
Allegedly, Royal Bank of Scotland just happened to be the bank that got to the finish-line first to be bailed out. Thing is, the BoE should not bail out RBS. National Bank of a foreign power, with its own Parliament, and the English taxpayer bails it out? RBS EVEN PRINTS ITS OWN NATIONAL CURRENCY, that is how foreign it is.
Bail out Natwest if you like, by force majeure removing it from the command of RBS.
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Viva la revolucion! If only- this is a golden opportunity to revolutionise public services and essential industries in this country and return power to the people, or at least their representatives. However I won't hold my breath
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I'd like someone to have the balls to ask Gordon the Golem what happened to his celebrated ending of "boom and bust".
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You are getting the financial engineering now wait for the social engineering....
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So now we own part of the Banks, can we suggest that their outrageus penalty charges are abolished and that all monies taken in this way are repaid to the unfortunates who in the majority of cases go overdrawn by a few pence.
And while we are at it can we have decent interest rates on current accounts, instead of the paltry0.01% that most feel obliged to give.
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You can tell that Alistair Campbell and Mandelson are back.
The PM has got a new spin line - "Europe will follow Britain's lead".
So Brown is now out of the bunker and trying to build an image for himself.
The time to have taken a lead and inspire confidence in the markets was several months ago Mr Brown.
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I heard the age of irresponsibility is over - and yet this has happened! We are sitting on a massive loss this morning as HBOS and RBS have dived. Nice!
I'm sure we won't see our money back for a good 20 years as the banks won't be able to recover as they will be too scared to
1. Lose their jobs
2. Lose their bonus
3. Lose their shareholders (ie us) with risky lending
Bonuses may go but so will the record profits
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It has always been a dream of the old socialist order to nationalise the banks. Now, in order to 'save' the nation, that is what is happening.
The idea of Brown and Darling running the banks fill me with dread.
It's clear that the banks have made some very poor decisions about lending, but things could get much worse once the Dynamic Duo start dictating policy.
Be afraid. Be very afraid.
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Look behind the spin of Brown's news conference and the government hand-outs and a very different picture emerges.
This isn't nationalisation. There's little accountability and parliament does not call the shots.
Today we see another eye-watering bank bail-out which has nothing to do with helping people and everything to do with throwing more cash at the City and saving Brown's skin.
http://theorangepartyblog.blogspot.com/2008/10/bulimic-bank-bail-out-makes-you-sick.html
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With this newfound enthusiasm for nationalisation will Gordon drop the PFI as well?
Thought not.
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It was quite obvious to the most impartiial observer that after this press conference the government is deeply in trouble.
No cuts to hospitals or schools spending and no answers as to where the money was coming from; the government has taken a further dangerous step into the unknown.
It doesn't know how ths will work, it doesn't know who is responsible; it doesn't know how much more will be needed; it has no idea of the write downs necessary and it can't say where the money is coming from.
The pre-budget report will be suspended is my confident prediction.
Sterling is collapsing again and at the moment every single day of this crisis has been the equivalent of the entire meltdown under John Major.
The comparison with the Swedish experience of 1992 is specious and false as then the whole of the banks bad assets were nationalise by the government and put into a separate 'bad' bank called Securum.
There is no way the government could buy up all the bad assets of the British banks because it would bankrupt the government.
The new rescue package is already failing in the markets because it was put together in haste by second rate intellects with political agendas.
Talk of 'doing anyhting that is necesary' is insulting nonsense; talk of being the 'rock of stability' os patronising in the extreme. We are all going to be paying for this govenrment's incompetent deregulation and spendaholic ways for a long time for a decade.
What a soaring triumph for the newlabour spending machine.
Call an election.
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Well for the Billions of pounds spent I'd expect a lot in return, but here's just a few small requests:
- pass on fully any Bank of England base rate changes to variable and tracker rate mortgages (exiisting and new customers)
- base all customer call centres in the UK and allow customers the option of the first language of the operator they get connected to (e.g. separate customer service numbers for English, Welsh etc.)
- make administration charges (e.g. late payment) relate directly to the cost of the administration, and not use them as a profit making enterprise.
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Nick,
pity the poor moderators today.
I want, ney, demand a public inquiry into this shambles, no charges should be brought against anybody! Why? Because as soon as charges are brought everything will be silenced because of laws of contempt and that once charges are brought nobody can say anything until the case comes to court. On second thoughts Gordon would probably want charges to be brought, oh Terry you are such a cynic, or should that be sceptic.
Meanwhile the great Aspidistra sits in the corner picking its nose.
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In the past I have worked for banks that have been nationalised, not British banks, obviously.
The state owned all the commercial banks, who retained their original bank names, and who conducted their business, ostensibly in competition with each other.
In actuality, they all strived to benchmark with each other, since there was only criticsim as the likely outcome for doing anything out of step with the others. Plus all the staff were civil servants, and had the civil servant mentality. Plus all the top management were on three year tours of duty with a bank, and would simply get roatetd round to the next one on their list every three years.
I was working for them when they were trying to break out of the state owned environment, but it wasn't easy.
Meantime, I am very worried that we seem to be sleepwalking into the same situation here.
When I read some of the earlier posts from the usual suspects, crying out for further nationalisations (I thought clause 4 had been effectively killed off by Bliar) I despair.
History, not just British but all other countries, teaches us that state owned industries become feather bedded and technically bankrupt, simply kept alive by the state. When the banking sector is also owned by the state, then you have a problem.
Companies become unable to pay their bills, but are owned by the state and can't be allowed to fail Banks can't get money that they have loaned to these companies back, but since they are owned by the state, nothing happens. Eventually you can't get any external funding. Think Russia 1990-5.
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Robert,
are the moderators on a bonus or what. Are they just that little bit slow today or have you had to call in the lawyers.
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The problem with the BBC making these kinds of comments is that they are danger of becoming self-fulfilling prophesies. I would strongly urge the BBC to keep its opinions to itself.
"How people feel is to a large extent down to what people like us say and write" - BBC statement from Monday 29th September 2008, 9:23am (BBC Radio 4)
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The problem with the BBC making these kinds of comments is that they are danger of becoming self-fulfilling prophesies. I would strongly urge the BBC to keep its opinions to itself.
"How people feel is to a large extent down to what people like us say and write" ? BBC statement from Monday 29th September 2008, 9:23am (BBC Radio 4)
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So Gordon Brown now has physical control over exactly who's allowed to get a loan/account, and can personally delve into the bank/credit-card accounts of virtually everyone in the country.
Great; I feel so much safer/better now.
Doesn't this scare anyone? The idea of Gordon Brown owning pretty much every bank in the country outright is terrifying to me.
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This comment has been referred to the moderators. Explain.
Oh Gord(on)!!!
Does nobody remember how DIRE things were when nationalised industries were making huge losses and were run for the benefit of the trade union apparatchiks?
Hold tight, children, you're about to find out. We'll still be ripped off, only the rippers-off will be doing it at a loss to the taxpayer . . . .
I wish I were joking. I'm not.
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As banking has now entered the public sector presumably this now means 40% of Banks staffs final salary pensions will be index linked !! (ha ha)
I can't help feeling that this bail out is another wheeze for the fat cat Bankers to get themselves out of a hole at everyone's expense.
It would seem to me that 3 weeks ago LTSB could afford to take over HBOS without the (apparent) need for government aid, now they go cap in hand Why ? was MR Daniels playing chicken.
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OK, lets fix the current problem but having the dead hand of the state on the banking system will only be a short term fix. Long term we just need a better regulatory framework ..
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who has moderated my comment?
Was it because I was slightly critical of Mr Brown?
I am baffled. Will I get an email explaining it?
Brown created this mess, now we are expected to praise him for spending loads of our money in an ATTEMPT to sort it out, which may or may not work. I for one am not pathetically grateful.
Will this be modded as well? Is this Orwell's 1984?
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#6
Just read the breathtaking assertion by jimbrandt that
a) we should be grateful for having Gordon brown as leader...gratefull for what? For leading the first run on a bank in 140 years. For presiding over the age of irresponsibility and doing nothing about it?
b) for acting decisivley over Northern Rock? You waited six months while you dithered over what to do... billions of pounds were lost whilst you prevaricated.
Thois statement alone shows how delusional, incompetent and completely out of touch and out of control are the newlabour apologists.
Call that election.
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Yes Nick, very funny debating points. But, more seriously, here's a political tip for you to think about.
There is, from the UK Government's point of view, very good reason for retaining the Edinburgh HQs of RBS and HBOS. Possibly the biggest long term political implication of all of these changes is that it will surely make the break-up of Britain less likely than it was even a couple of weeks ago. With both of Scotland's main banks controlled by the UK Treasury into the medium term, it will be far more difficult for Alex Salmond to persuade Scots to back a quick dash for independence in the 2010 referendum.
Given the number of people employed by RBS and HBOS in the Edinburgh area in particular and their wider importance to the Scottish economy and national psyche, the Scottish electorate is likely to become very much more risk averse than before: the current banking crisis is therefore likely to dampen enthusiasm for major consitutional change North of the Border.
And the fact that Brown and Darling (both Scots) have performed well in the crisis could also lead to a resurgence of support for Labour in Scottish Westminster seats: who knows, Pa Broon may yet hold on to Glenrothes after all. Alex Salmond's popularity and the general competence of the SNP Scottish Government are likely to mean that the SNP will remain in power in Edinburgh for quite some time. But it may be that they will have to live with devolution for longer than they would wish.
So beyond the banking crisis perhaps the main political implication of all this is that the UK is unlikely to break asunder in the near future.
Prof Spof
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I never thought i would ever live to see a recession and a fiasco like this....
If i were the government i would not be appointing people with banking experience they would be far better off appointing people with bookmaking/gambling experience.....
These banks need their boardrooms swept clean of the incompetents who have put our nation at risk,just like we will sweep Labour from power and consign them to history when given our chance.
what a mess......and too all of these that think reporters are whipping up headlines,IMO many are understating the position because no one has come clean about the position we are in.
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Let's be clear that Gordon Brown created the current banking regulatory environment in the face of Conservative Opposition warnings that it would not be able to deal with a systemic failure. For example, (one example of many):
Quote: With the removal of banking control to the Financial Services Authority it is difficult to see how and whether the Bank remains, as it surely must, responsible for ensuring the liquidity of the banking system and preventing systemic collapse.
The process of setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day. End Quote.
(Peter Lilley, November 1997)
Any chance of an apology Mr Brown?
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"You must now be wondering what you'll get for your share of the £37bn..."
You wanna know?
Oh, yeah, you bet I'm wondering as I watch my firm being burned to ashes by the sudden collapse in sales. My 3 year old could figure that one out.
The same trainwreck I had to live thru under 'Sir John of Family Values' in the 90s.
Guy Croft
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Pot @ 11
... "I hope he will now be stripped of his knoghthood for Diservices to banking 2008" ...
Yes, symbolic only but nevertheless should happen. Far more important, though, is to claw back cash bonuses paid over the last 5 years to SFG and countless others. There's an excellent case for doing this because it was money received under false pretences.
Oh yes and with interest please if you don't mind, chaps.
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23 Fairlyopenmind
Very, very good point!
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I agree with Bob Crow. In fact, nationalising the railways would be very cheap, since there is not much left to nationalise, now that Network Rail is in public hands and the DfT micromanages franchises down to the level of how many coaches they can have. As franchises come up for renewal, they would simply be taken into the control of a state-owned enterprise. And new trains can by purchased by the state rather than by the Rolling Stock Companies who have been charging exhorbitant rates, which the taxpayer pays indirectly via the ~ £6billion annual subsidy to the railways. (We paid around £1.5 billion just before the railways were privatised.)
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Only the lunatic fringe would want to see everything private (inc. the police) or everything public (inc. every corner shop) so it's just a matter of getting the balance right, isn't it?
Here in the UK, we've been in thrall to the market and hence we've got the balance skewed too far in favour of the private sector. A little tweaking is required in order to get it right. All we need to do (now we've sorted out retail banking) is bring energy, schools, transport and water into the fold.
Result!
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My comment is not entirely on Nick Robinsons blog but what I want to know, as a tax payer, is "Where has the money gone"? If this is a global "credit crunch" who has the money? As a Council Tax payer, I assumed that the money was being spent on the police force and schooling and digging up roads - but apparently a lot of this is actually in an Icelandic bank that now cannot be accessed? The money men made bad decision errors and have lost money that has been paid out once by the tax payer and chances are whichever decision is made by the Government will penalise the tax payer and not the people that caused this situation. If I had made an error as catastrophic as this I would not be in a job! When I got my mortgage I could only borrow x3.5 of my salary - if you did not earn the money you did not get the mortgage. What happened to the strict borrowing rules? Who agreed to lend to people who do not earn a salary? Who was monitoring what the Banks were doing? Where does the buck stop? Because it should not stop with the tax payers who will be the ones that suffer at the hands of the money men who made these appauling errors.
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full nationalisation would work out better that what this government has done.
lloyds tsb who only recently bought the failing halifax hbos is now in trouble itself but the taxpayer has to fund not only lloyds but halifax as well?
well thats wrong in any book and seems like the taxpayers money is being conned out of the governments grasp. is this government so inept they forgot they helped lloyds takeover halifax?
or is there another reason lloyds can expect a double ammount of bail out money.
it still will do nothing to stop market traders trading and causing further problems down the line.
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Gordon Brown is "leading the way" and is making Britain a "rock" with these measures (incidentally - funny how it's Brown who gets economics attributed to him as PM or Chancellor)
that may be true, even if his plans are reactionary and nothing particularly inventive - somewhat aggressive, but not radical
the sad thing is, I hope people won't accept Gordon as our new hero, as Labour have started plugging him as such - fact is when we get out of this he will have multiplied the debt that he already piled on this country with his reckless spending and ignored the warnings of a bubble for several years, i don't think people mind the debt to save our skins right now, but the level of debt already in existence was unacceptable, economic theory very obviously says you should be saving during a boom - but because he was arrogant enough to say there was no boom and bust, which was just an excuse to take on risky levels of debt, he decided to spend more than income - he's a menace who's using the situation to his personal advantage
simply put: when you're wealthy and in a good job and put yourself in debt, what happens when you get fired?
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Re 6
Gordon Brown didn't act decisively with Northern Rock. He dithered for 6 months. And, if my memory is correct, Lloyds TSB offered to bail NR out with the support of £30m from the taxpayer. As a result of Brown's dithering that opportunity was lost and the taxpayer ended up with a liability of £100m. Also, his dithering was at the very least a contributing factor the queues of depositors wanting to withdraw their money and to the loss of confidence that has snowballed into the situation we have now.
Brown in charge? Heaven help us!
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While I have been quick to criticise Gordon Brown recently, I have to say that his actions over the past few days appear to me to be as positive as could have been under the circumstances.
I don't think that this in itself will save his job or his party but it may reduce the number of seats that will be lost in the election to come.
On the other hand, the semi-nationalisation of the banks, if effective, will encourage open discussions on a similar approach to energy and transport.
And that could make all the difference.
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The first Comment sums it up.
Gordon Brown allowed house inflation to rip due to the low interest rates.
Low rates were cause by Gordon Brown not including mortgage costs and council tax in the inflation figures.
10 years of low inflation - who is he kidding?
The Banks carried out irresponsible lending - multiples of earnings, which the FSA approved (the FSA rules being created by Brown).
No doubt the interviewers etc will fawn over Gordon Brown the saviour.
When the UK gave Alan Greenspan his Knighthood, brown insisted upon putting on the citation: 'for services to financial stability'. What a joke.
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Dear Critic013 et al, It was not Mr Brown who is ultimately responsible for the problems we have now. Perhaps you were in short trousers at the time (or even now) but the deregulation of the financial institutions which led directly to the problems in the USA which ultimately has affected us here, was due to the free market reforms of a certain Mr Reagan and Mrs Thatcher. These 'reforms' led to the structural instability, unsustainability and ultimate failure of the financial institutions, along with the root causes of so many other of our social problems, too long a list to discuss here.
The silver lining of all this is that hopefully we will now see the final death of Thatcherism and perhaps the return of such concepts as 'Society' where cooperation is seen as equally important as competition, and where self interest (see Adam Smith) is not interpreted as selfishness and greed, and regulation of financial institutions is not seen as the intervention of the so called 'nanny state'. Lets hope that all that free market idiocy is relegated to the dustbin of history where it belongs. Perhaps the present pain is worth the long term gain!
Just think, a certain Mr C, (the one with a 'cunning plan') was extolling her virtues at a certain party conference in B'ham just a short time ago. God help us if those Muppets get in next time.
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Brown: "There is an undertaking to restore the availability of loans to homebuyers and businesses to what it was last year."
Oh dear; he still doesn't understand. That was the thing that got us into this mess in the first place; too much lending to the wrong people and not enough capital to back it up. He's missed the whole point.
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This is not a fatuous posting.
Presumably the direct stakes the government is taking in the banks (not the preference shares) will be held by the Bank of England, or its nominee company. These shares will be held by the state, effectively us. Will we be told the price at which these shares have been acquired by the state on our behalf?
Presumably the Bank, or the nominee company, will go on the shareholders register along with the other registered shareholders. All the shareholders will be liable to lose their money if the bank does fail, which government involvement is intended to prevent. Did the existing shareholders get a vote to decide to reduce their equity participation in the company? Did they get a chance to sell their existing stake to the buyer at the purchase price? Did they get a chance to subscribe for further shares at the same price as the buyer? Some of the existing shareholders in these banks are foreign investors, in some cases national investment companies of foreign governments. Have they been given any preferential, or different, treatment to investors in the UK, some of whom are pension fund managers, who like to keep their holdings in terms of market share.
Since share prices have bounced today, presumably we are now in profit on our new investment. What plans does the government have in mind to organise an orderly sale of their significant shareholding when the time is appropriate (not right now, obviously). Are there going to be quiet talks with preferred (from the government?s point of view) buyers, or a public offering?
These are the sort of questions that need to be asked of the government in the emergency debate that this crisis demands, particularly when considering the amount of, as yet, unearned money the government is committing to spend on our behalf. I?m watching with interest to see when this might take place.
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I gather Gordon the Golem expects the electorate to award him a bonus of five extra years for his excessive risk taking with the public finances, which are about as transparent as the "off-balance sheet" assets of the banks.
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The railways could benefit from nationalisation if there was a "big plan" that would accommodate growing population and climate factors. But I don't see a viable plan.
So if there is the anticipated carbon shortfall that we have known was projected for 2020 and we are not ready will the government of the day say: "Its a global problem and nothing to do with us!".
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I would like to be able to make my claim now,
Can I be re-capitalised. as well, please..?
At firstI thought £100,000 would be enough but after I thought about it a bit more, the worst case scenario means I think maybe £200,000 would be better..
I have to say that without recapitalisation the risks of a systemic collapse that would bring down my children's Pocket money allowance, before spreading to engulf the local Pub, Garden Centre , takeaway and God know's what else just don't bear thinking about
I await your reply Mr Chancellor just let me know when you have cleared it with Mr Brown.
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Great 'poisoning of the well' action by Brown & Darling!
Would the Tories even want to win the next election now? I can't imagine Cameron and his buddies got into politics to run a load of nationalised banks in a country where the public have totally lost all appetite for equities. They can leave all that to the socialists to sort out for another five years...
A 'snap' election could well be on its way!
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Armchair economists beware. For all your bleating about the situation! Unfortunately the banks have been allowed to sit at the centre of our economy in an unsustainable way. The bail-out, and yes it is that, is a necessary evil or we all fall.
The professionals agree with the PM and CoE. I for one hope they are right.
As for other industries - I think it has been shown that govenrments running things doesn't work - but now, obviously, neither does complete free markets. Tougher regulation is now possible as the price of the bail out.
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Councillors should go to prison for misappropriation of funds.
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More has to be done than just inject billions to part nationalise certain banks. The market is reacting unfavourably to RBS, HBOS and Lloyds.
I am very uncomfortable about creating very large banking corporartions, particularly (a) if they need to be bailed out (b) they become difficult to manage as frequently they have many different brands and markets. RBS group should not have acquired ABN AMRO. As a former employee of HBOS, that merger or acquisition never created a happy working environment. There is case for splitting up those two entities again. But BOS would definitely be the stronger unit.
Taxes need to be cut, as people do not have the means to spend more. Plus more people are more savvy about financial affairs and are not so stupid as to take out more loans over and above their already crippling debts to spend the economy out of recession.
Was it not only a few months ago that public pay sector deals were being agreed at 2 percent per annum as any more would cost millions that the country could not afford? how times change...
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Free banking?
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There is something missing here. We--the public- have not yet been asked if we support these so called "bail outs".
Of course--it was the right thing to do in the emergency short term--but does the electorate get a look in anywhere at all as all and everything gets nationalised just like a communist state ?
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When AD was pressed by Sian Williams on BBC News this morning to deny that Sir Fred would not be collecting his £500,000 pension, AD skirted round this by saying that he could not discuss individual cases.
That comment surely means that Sir Fred will walk away with his large pension intact.
The whole thing stinks.
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Maybe what the government should do is ask for normal working people to volunteer to be representatives on these boards. As we are untainted by the troughing that seems to go on, normal people will be more able to say "The emperor has no clothes", rather than the very people who are selling the emperor his new outfit.
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I own more banks? Wasn't Northern Rock and Bradford & Bingley enough banks for anyone?
Can anyone tell me what the FSA has been doing recently? Weren't they meant to ensure that this sort of thing never happened?
I think we should be told.
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So we have Brown and Darling on TV to tell they have had to BORROW £37bn to prop up a banking system in their image.
And from a Government that's in serious hock to the tunes of hundreds of billions already.
BORROW from where, oh yeah, the banks.
Labour replaced the previous regulatory framework in 1997. This is the result.
We have to pay for their mistakes.
Blaming the bankers is very convienient, HSBC and other haven't keeled over have they?
Pardon me if I am not happy and not in on Gordon's jokes; it's my hard work and millions of us that has to pay for Brown's mistakes.
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@56
Never thought I would say this.
I agree with you wholeheartedly sagamix
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Another thought about the Unions suddenly jumping in about nationalisation.
I'd consider their proposals on the following condition: that they, as organisations, become non-party-political.
They represent one group of stakeholders: their workers.
The Govt, on the other hand, must represent the totality of the UK population, IRRESPECTIVE OF WHETHER THEY VOTED FOR THEM. It is intolerable for them to bow down before the demands of one small subsector.
So for the Unions to come back to the top table, they must remove party political allegiance.
OK?
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So, it seems that underlying this rescue plan is the desire of Brown and Darling for the banks to 'start lending again.'
But wasn't that what got us into trouble in the first place? Responsible lending is of course essential to the economy, but irresponsible lending leads to ruin.
Gordon knows all about borrowing, as he has landed this country with a huge public debt - even before this latest crisis. He is the master of tax, borrow and waste.
The idea of the Dynamic Duo now running the banks should fill us with fear. But instead the BBC seems unwilling to challenge what is being done - and instead portrays Gordon as some sort of saviour.
What short memories people have!
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Gordon is showing real leadeship on this issue. Other governments are following his lead. Old dogmatic approaches for and against nationalisation are irrelevant. The operating environment requires a decisive plan of action and that is exactly what GB and Alistair Darling have delivered.
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In the real world this was a necessary decision taken by the right leader at the right time. So far from being the thin end of the wedge of resurgent nationalisation that the USA and other countries are now following in Brown's wake. Socialism is not very popular in the USA, you know.
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#51
You're right.
With Northern Rock we should've rushed into a solution that we hadn't thought through, and bung billions of pounds to the private sector to take it off our hands (an alternative solution that some from an elite Oxford drinking club were suggesting).
Interesting article that I'm sure you'll heartily agree with Mr J D.
Gordon leads and the world follows
Call Robin a taxi.
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#66 terryd15
Dear Critic013 et al, It was not Mr Brown who is ultimately responsible for the problems we have now. Perhaps you were in short trousers at the time (or even now) but the deregulation of the financial institutions which led directly to the problems in the USA which ultimately has affected us here, was due to the free market reforms of a certain Mr Reagan and Mrs Thatcher. These 'reforms' led to the structural instability, unsustainability and ultimate failure of the financial institutions, along with the root causes of so many other of our social problems, too long a list to discuss here.
It's so refreshing to have someone with such a rose-tinted view of the last eleven years. Bless.
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#73 sdwatson
Tougher regulation is now possible as the price of the bail out.
You mean like the sort of regulation we had before El Gordito swept it all away and replaced it with the incompetent FSA?
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The media are so soft on Brown - they 'report' the spin almost word for word.
How can any self respecting reporter allow Brown to pose as the global saviour and yet ignore his role in:
a) causing the problem
b) making the depth of the problem worse
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And, Robin, the author of that article is Nobel Prize winning economist Paul Krugman (he won the award today).
Do you think he is better qualified than you to talk about the current economic situation and the quality of responses to it?
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#6
"With the Conservatives trailing in Brown's wake, and his demolition of Cameron at PMQ's last week, perhaps the outcome of the next election is not the forgone conclusion it had appeared to be."
If you can call that final, childish dig "demolition" then good luck to you.
Brown richly deserves a verbal kicking over this whole fiasco. But in the last month the Tories have risen above that and have spared him both barrels. After the last 11 years and his disgusting, hypocritical speech in Manchester in September, I can tell you my vote is a foregone conclusion.
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'the people are sure to make demands of the people's representatives who bought them on our behalf'
Do you mean that financial policy should be dictated by popular demand?
Perhaps the government might, for a change, try using a little foresight and wisdom and reduce their tendency to be surprised by the unintended and unexpected consequences lof their actions...
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How does Mr Browns idea of holding the banks 'at arms length' correspond with having Government representation on the boards of banks interference in their operation? I heard nowhere in the statements that there would be Government appointed Directors.
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Now our glorious leader has part nationalised a couple of banks and saved the world, will he tell us how he intends to stop these institutions reverting to the dishing out of 125% mortgages to all and sundry ? Isn't it time to set by law the amount of mortgage that can be given i.e. no more than 3 times salary and at least 15% deposit. This would reduce the risk , reduce the cost of housing, put a lot of estate agents out of business and stop the obscene profits being made by developers builders and speculaters. Sadly it will never happen, our glorious leader would never upset the upper classes and rich laour supporters to that extent.
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#66
Do you think that Henry Ford should be made responsbile for all road deaths? After all, he made the motor car affordable to a larger group of people thus creating thep roblem we have today? Or is highway enforcement and policing the problem?
Do you think that a free market is the problem? Or the enforcement of the rules?
Do you think that the FSA is doing a good job in banking supervision? Or do you think that it should have been left with the Bank of England, as it was before Gordonomics took hold?
Do you think that the FSA is doing a better job at understanding the markets, or was it better when the specialist bodies were in charge of regulation, as it was before Gordonomics took over?
Do you think it was a good idea to lighten the rules on individual insolvency, just as the credit explosion was taking off? Do you remember the obscence adds on the telly saying you could write off 75% of your debts, under a new Government scheme? Anyway, who cared - it was the banks who had to pay the price.
Do you think that Gordon - who has luxuriated in the glow of increases in GDP and a low inflation and low interest rate environment for a decade - thought for one moment it was all down to Thatcher?
Of course not. He continued the free market economics because, properly regulated, they made sense.
He undermined regulation. No one else did.
To pin the blame on Thacher and Reagan is out of date rubbish.
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6. jimbrant
You are a card
Northern Rock was a quick decision was it, lord help us if Brown decides to ponder on something then.
The Tories are trailing... mmmmm OK.
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No idea if this is true or not, but hey.
Caught the last fragments of a new sarticle on radio 4 this lunch time.
The claim was that Northern Rock have almost paid off half of their government borrowing.
Interesting if true.
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#81
All Brown's faults?
Why are Iceland's banks in crisis?
Why are the problems in Russia's stockmarkets?
What are German banks in trouble?
Why are American banks in trouble?
Why are Asian stockmarkets in a state of collapse?
Why are the IMF very concerned?
Why are global commentators calling recent events a paradigm-shifting shock to the world's financial institutions?
Gordon Brown seems to wield a lot of destructive influence to turn a domestic UK problem into a world destroying episode of financial contagion!
Alternatively, not much of the blame can be pinned on Brown - though a failure to regulate more closely (e.g. regulation strong enough to have stopped UK institutions investing in sub-prime US mortgage debt, and issuing associated insurance) and prick the housing bubble can be. That's what Dave and Gideon and other Conservatives always said wasn't it?
Oh. They said the opposite? We need to deregulate more? Really? Oops.
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85 Peteholly
It is a plan of sorts I suppose....
Part of the problem is we are being 'spun' a Gordon is the saviour of the universe message. When we all know he is one of the architects of the problem.
Also - we know Brown is overstating his impact - in Europe the plan is know as "The Sarkozy solution" - and the plan is modelled on a previous Swedish bail out anyway....
Yet the finger prints of Brown are unmistakeable. In September we were told that HBOS / Lloyds takeover would not require a single penny of tax payers money. Today it seems that they got their sums wrong to the tune of £13 billion pounds which will now be required by HBOS / Lloyds.
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sitting back and waiting for things to reveal themselves is often the best way with gordon brown.
from his press conference this morning:
* why a press conference and not a statement to the house?
brown's lack of respect to uphold labour's side of the political process is sadly lacking.
* when questioned on the FSA's role in the troubles, brown let it slip that "not all the debts were on the balance sheets of the banks"
- so the banks have been hiding bad debts off their balance sheets, to allow them to borrow more money at a lower interest rate?
which part of this is not fraud?
if i hide my outstanding debts from credit reference checks, to enable me to borrow more at a lower rate, i would be in serious trouble, why does this not apply to the banks also?
this reveals that the FSA were not watching the banks as they should have been - under previous governments the Bank of England would have had access to all this information, so either gordon brown took this power away from the FSA or the FSA did not exercise the power, which one is it?
the FSA have a serious amount of questions to answer!
this also reveals why banks have stopped lending to each other - they have all been hiding outstanding borrowing off their balance sheets, to the point where none of the banks knows how much is "hidden"
* gordon brown's own words, "this process must be stopped, the banking system should be open and accountable!"
- practice what you preach prime minister - you are the biggest culprit for hiding outstanding debts off the country's balance sheet!
this has allowed you to borrow more with the IMF as well as avoid explaining to the taxpayer and parliament how much interest we are paying as a nation.
would gordon brown now agree that his own government cannot be allowed to hide debts off the UK's balance sheet and "be open and accountable"?
would he also agree that he too, has been reckless and his process of hiding outstanding balances "must be stopped"?
for more than a decade now gordon brown has been doing this and allowing the banks to do the exact same thing, how can he slate the banks for their part and not point the finger of blame at himself?
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Re the comment along the lines that the state is not the best entity to run the banks. Well maybe you are right but at least the cock-ups will be our cock-ups and if by some miracle we make a quid then it will be our quid. What do you suggest? We let the bankers run the banks? I thought we had just tried that one.
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I hope the banks give very low interest loans so that people can purchase more granite counter-tops, giganta TVs and obnoxious SUVs. After all, we need to stop the "real" economy crashing too.
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Instead of heaping praise on Tweedle Dee and Tweedle Dum (aka Brown and Darling) for such a "world-leading" rescue plan, commentators might reflect a bit more on their culpability in getting us into this mess.
Should we be so grateful to the arsonist for chucking buckets of water on the fire?
They need to be held accountable for what they have done.
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Surely nationalising half of our banking system gives one side or other an advantage - either the RBS/Lloyds/HBOS lot will win due to a tilted playing field through government help, or they will be handicapped by government interference and HSBC/Barclays/Santander will pull ahead.
Either way we lose half our banking system and the result will be a virtual monopoly with massive effects on consumer choice.
Something to celebrate?
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@ 97
... "Citizens of Airstip One" ...
etc etc etc. Can't we have a pause from low grade parody of nineteen eighty four?
Please say we can.
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#66 terryd15
Dear Critic013 et al, It was not Mr Brown who is ultimately responsible for the problems we have now. Perhaps you were in short trousers at the time (or even now) but the deregulation of the financial institutions which led directly to the problems in the USA which ultimately has affected us here, was due to the free market reforms of a certain Mr Reagan and Mrs Thatcher.
-------------------------------------------------------
No, it was the subsequent mis-stewardship of the free market over the last eleven years by the incumbent who is hell-bent on giving himself a boost in the polls.
Poor wee lamby..
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Carrots - #99
If this is true, and Northern Rock have paid off half their "loan" in such a short space of time, doesn't it just go to show how much money the banks are still making out of us.
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Ancient Chinese wisdom from the Tao Te Ching by Lao Tzu:
Chapter 60
========
Governing a large country
is like frying a small fish.
You spoil it with too much poking.
Center your country in the Tao
and evil will have no power.
Not that it isn't there,
but you'll be able to step out of it's way.
Give evil nothing to oppose
and it will disappear by itself.
========
I think we are poking the fish too much.
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The real problem has still to come - the reallignment of the property system.
I am a young professional, in a flat, earning above average wages. Considering upsizing my property, had a rough look at A&L website (my current lender), and given my circumstances, ie, a car loan and a little debt, on their lending criteria I cannot afford to buy the flat I am currently in!
It is all very well bailing out these banks, and I totally understand the reasoning, but the bigger problem will be the affordability of property, and inflation that has been generated on them over the past 10 years!
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It IS Brown/Blair's fault. It has become global because for centuries the world has looked to Britain for many reasons and interests.
You only have to go to another country to see how their news reports on things here from Royal events, to pop songs and singers, business, invention, politics the list goes on.
A huge proportion of the world speaks English as a first or second language. We are one if not the most famous country in the world, possibly second to the USA.
Millions of foreigners cross ten or more countries to get in here illegally as we are a soft touch.
Yes, the government allowed this country and finances to get out of control and they are now trying to proclaim they are the saviours of the world.
Brown's ratings here were so low and he has been so reviled that he thought "what the hell, let's go for it, I've got nothing to lose".
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Interesting article by Trevor Kavannagh in The Sun today.
The political editors in that paper make or break political careers and help 'Joe public / six pack' see through 'spin and government whitewash'
It doesn't look like The Sun are ready to accept Gordon as saviour of the universe and neither have they forgotten that Brown is one of the architects of the problem:
http://www.thesun.co.uk/sol/homepage/news/columnists/kavanagh/article1799929.ece
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denzil @ 102
.... "how can Brown slate the banks for their part and not point the finger of blame at himself?" ...
Please sir I know the answer to that, it's because he's a politician!
Also, forgive me but I find myself in the mood to do a bit of chanting.
- Schools!
- Energy!
- Transport!
- Water!
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#100
Ah, so it's all the Tories' fault is it? Got it.
So if Labour have been in power for 13 years, just when do they start bearing some responsibility for the economy?
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13 years? Make that 11. It just seems longer.
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Can some one explain to me with the price of oil, and gas failing why has the prices in the energy markets not been passed on. With a massive rise in energy prices a month ago, Petrol at well over £1.00 a litre and Diesel well over a £1 reducing this would be a good first step. oh I forgot the treasury need the massive tax on this to (bail out) sorry buy out the banks
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Oh dear, who complained about my post #97?
It's a sad day when I left the croft
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Nick
It is rather amusing that Brown is taking all the plaudits for trying to sort out a problem that his Govt. played a major part in causing. The Labour Party have been disingenious in not telling us that our increased living standards over the past 10 years have not been based on real improvements in the economy but by increased levels of borrowing.
The Conservatives are just as bad. Until recently they have been trying to take the credit for the economic "miracle" in the UK over the past decade. In their eyes, this was all down to the condition which they left the economy in 1997. I haven't heard this claim being made recently! It is just a little inconsistent with their new message.
It strikes me that none of the politicians are competent at economics. I reckon that all the Govt is doing at the moment is borrowing more money in an attempt to continue a "boom" in the developed west which has being going on since the 1950s. If it is succesful, we will get a few more years out of it but it can't go on forever. We are witnessing the passage of power to the emerging economies.
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I preferred my life before I owned a bank or two.
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i think we should at least ask to see the books!
If they did this good a job of cooking the books on subprime, whats the crack with derivitives?!!!!
There's a lot of math to do yet, so no one and that means no one can claim we are out of the woods, if they do , then they are lying, plain and simple!
Also we should ask, real quick, just how much the money there now printing will de-value the existing money in circulation?
Hyper inflation, now that would be scary, better we are honest and declare that we are bankrupt, and re value our assets before we loose them! and our bubble of denial bursts!
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#100.
Sorry but are Spanish, Canadian and Swedish banks in trouble?
Or just the ones that operated to a very loose framework.
It was Brown that removed the UK's regulatory framework from the one devised by the Tories in the 1980s.
It was Brown that took away BoE oversight on bank balance sheets and gave it to the FSA.
No-one is suggesting that the bad debts were created in the UK.
However, how that debt has become engrained into our banking system and also how the banks have operated have been directly influenced by Government policy.
They have to play to the rules and the government owns the rule book and referee whistle.
It was told to blow it several times over the last decade by the IMF.
Must have been a dog whistle.
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To # 5 sagamix add some form of state interest in farming. The UK cannot stand on its own 2 feet when it comes to both energy and food. If we don't fix these 2 critical aspects of our society then prepare yourself not for a recession or a depression, but a new dark age (literally).
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105 Mr-Basil-Brush
A very good question and analogy - it is odd that we are expected to be grateful now that the arsonist is throwing water on his own fire isn't it?!
Is the arsonist in this case using billions of gallons of Perrier water that he has bought using a credit card that never gets around to paying off?
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The spin machine is back in town. Brown is the hero of the hour. I suppose we ought to be grateful.
That is to say, "if you are going to be shot in the leg, far better that the guy with the pistol is a surgeon"
Good research from #54 - should be obligatory reading for those who keep quoting (out of context) the Conservative position regarding regulation of the sector.
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#110 The_Stock_Guru
Ancient Chinese wisdom from the Tao Te Ching by Lao Tzu:
Makes a change from Zen I suppose
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... and another thing. Since the banks have, in recent years, taken such huge stakes in housebuilding firms, perhaps the nationalised banking system will soon roll into becoming a nationalised housebuilder?
Soon, Gordon Brown will be desparate to find ways of gainfully employing the torrent of unemployed shortly to hit the welfare system. Meeting his precious target of building millions of new homes for millions of new immigrants could allow Gordon to strut the world stage once again inviting other less gifted politicians to follow his lead.
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101 jonathan_cook: "Part of the problem is we are being 'spun' a Gordon is the saviour of the universe message. When we all know he is one of the architects of the problem.
Also - we know Brown is overstating his impact - in Europe the plan is know as "The Sarkozy solution" - and the plan is modelled on a previous Swedish bail out anyway...."
With acknowledgement to balhamu, I can do no better than point you to the article by Paul Krugman in yesterday's NYTimes. To quote a few lines:
"What we do know, however, is that Mr. Brown and Alistair Darling, the chancellor of the Exchequer (equivalent to our Treasury secretary), have defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up................... the Brown government has shown itself willing to think clearly about the financial crisis, and act quickly on its conclusions. And this combination of clarity and decisiveness hasn?t been matched by any other Western government, least of all our own...........Luckily for the world economy, however, Gordon Brown and his officials are making sense. And they may have shown us the way through this crisis. "
What's more, it appears that the fundamental rejigging of the Bretton Woods global regulation system that Brown has been advocating in vain for some time now seems finally to be recognised as necessary by those who have been blocking it.
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#107
was it you who got my post pulled?
It was an obvious reworking of 1984, but the way things are today its not far from the truth.
I wasn't directly rude to anyone specifcally or by name, and didn't use any bad words or immoderate language.
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It makes me sick to see Brown glorying in his new role as 'saviour of the world economy'.
It seems to me that the UK has been one of the hardest hit of the western economies. How many major banks here have nearly gone to the wall... Northern Rock, Bradford and Bingley, HBOS, RBS, Lloyds?
And we have Brown, probably the worst chancellor ever, who has put all our savings at risk having failed to create effective regulation of the banks in the UK.
He blames everyone else but himself. It took over a year to force him to very reluctantly admit he made a mistake over the 10p tax. This man is a walking disaster. We are stuck with him because of the very mess he helped to create and because the parliamentary party are made up of MPs only selfishly thinking of their own salaries and pensions over the next 18 months.
There is something seriously wrong with the political set-up in this country which allows an unelected head of the executive to be in charge for an extended period, without the electorate having a say in the matter.
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#120
So did the shareholders who have lost most/all of their savings.
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moraymint @ 123
... "To # 5 sagamix add some form of state interest in farming" ...
Ah yes, thanks. No problem, please see below.
Farming!
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@ 114 - sagamix
- chant away my friend, ill even accompany you on the hand symbols!
i was discussing gas supplies with aneighbour last night, he asked why every single household on the street where we live, all pay different amounts for our gas supply, despite it being mined in the same place, sent through the same pipeline, received from the same gas terminal in the same pipes....
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JCook @ 124
... "A very good question and analogy - it is odd that we are expected to be grateful now that the arsonist is throwing water on his own fire isn't it?! Is the arsonist in this case using billions of gallons of Perrier water that he has bought using a credit card that never gets around to paying off?" ...
Let's really torture this analogy, shall we?
And was the credit card issued by a UK bank that went heavily into self cert and multiple BTL?
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#124
Quite so... and will then be scratching his head wondering how to deal with the water damage. Or at least his successors will.
Talk about a hospital pass ...
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114. sagamix
See youre on a roll today.
The trouble is that will only be your first target.
Socialism creeps and pervades all things. In 5 years and we will be back to 1970.
FREEDOMMMMMMMMMMM
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I am now more confused than ever.
The FSA is now making reference to how they will administer and add checks and balances to this mess; however am I right in assuming they were the regulatory body who should have seen this coming and imposed more discipline onto the banks.
As a business man my company cannot sell modest insurance to clients when they move house, without some sword of Damocles falling on my neck. However the FSA seem to have been more interested in obtaining fees from business than doing their prime job of risk assessment.
I also think the auditors need to be brought to account, as we have to justify our balance sheet and would not be allowed to continue in business if assets did not exceed liabilities, I can remember when the bank required my personal guarantee for the company.
Just a few thoughts from confused.com
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Nick,
Do you think any fingers of blame will be pointed towards Sir James Crosby? He was, after all, HBOS Chief Exec until July 06 when Andy Hornby took over so he had at least as big a part in shaping the mess the group find themselves in.
And will this do any damage to the credibility of the delayed Crosby Housing Finance Review?
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I think many banks may have been suffereing from having too many chiefs and too few indians. We are all aware how difficult it has become to get over the counter service in our banks in recent years. Has the move away from face to face customer service actually done them any good ? We would all like our bank to be within walking distance of our home, but many branches have closed and replaced their services with telephone and internet banking. I, and many others, like to pay cash or cheques in and get a receipt on the spot. It's easier to keep abreast of personal and business finances that way. But recently I have had to wait, in a queue, for up to 16 minutes for this service at my bank. Whilst waiting in the queue, there are frequently, elderly with sticks looking uncomfortable and small children growing impatient. Perhaps it's easier to keep large amounts of cash and use it over the weeks as it is needed, rather than queue for more than fifteen minutes for the pleasure of handing it over to the bank. May I suggest the decline in over the counter services could have added to the current problems banks are experiencing.
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100. balhamu
Afternoon,
Youre the stats guy around here whats the story with NR paying back almost half its government borrowing already.
Is it true?
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It seems the real world continues apace whilst we are all busy here.
So, Brown and Darling have taken major stakes in two banks, and claim full responsibility for the current bounce in the stock markets.
We seem still to have missing data in the form of flash memory sticks, hard drives and laptops, and you have to wonder how much this will be added to when these banks come into the government's circle of incompetence. If that isn't a valid question, then I don't know what is.
The government's attempt to impose the 42 day rule is under discussion again in the Lords. Now we know why Mandelson was bought (yes, the r is deliberately missing) back. To bolster the governments vote, and to menace the nay sayers.
People are still dying, but it's as if nothing else matters in the world but the financial crisis. Maybe it's because its the only "positive" thing happening for Lucky at the moment.
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#balhamu
On the Northern Rock - I'm aware that you like to cherry pick your favourite its of the narrative and ignore the whole, so it is no surprise you choose to ignore the fact that Lloyds offered a solution before all this blew up that would have cost the taxpayer nothing...nothing at all.
Instead, grandstanding Gordon waited to 'invest' 100bn pounds on behalf of hard working families to 'save' Northern Rock (now in run off)
As for your extraordinary pitch about Nobel prize winning economists...I have no stage fright about that subject having read it at Uni...it has no predictive power whatsoever. in fact the degree of predictability moves in inverse proportion and opposite direction to the number of economists commenting.
Call a taxi? Why are you going somewhere balhamu? Call the little green van with square wheels for you.
nce to see newlabour apologists losing their rag over the Great Giving Gordon's miraculous financail rescue machine...fallling at the first hurdle with no plan B. But that's what you get for a second rate team with second rate degrees advising a third rate prime minister who hs been behind events since the moment this kicked off.
Blustering and spluttering about rocks of stability just makes us all even more worried about the poor man's sanity.
What flavour takeaway wil be served at tonight's meeting of the Treasury and the National Economic Council?
A purging and cleansing chicken phal, perchance?
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Just when Gordon Brown was beginning to finally look like he may have had a tiny shred of leadership about him. He blows it completely!
Gordon Brown could stride the world basking in the glory of this crisis as a way to appear statesman like. So long as he uttered tough sounding, but ultimately empty, platitutes he could appear like a man who actually had a clue. The fact was that all the tough rhetoric was devoid of detail or answers. Now we are beginning to see the detail and what is there?
Proof that Gordon Brown has actually learned NOTHING from this crisis!
He has been treating the greatest economic catastrophy in the last 80 years like it was personal triumph. Oh and YES, he IS to blame for much of it! Then when we look to his solution, what is it? It is a bumper billion pound tax-payer funded mass implementation of the exact same problem that caused the crash in the first place. MASSIVE LENDING AT 2007 LEVELS??? The man is a serious danger to all. Election now please!
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mint @ 127
... "and another thing. Since the banks have, in recent years, taken such huge stakes in housebuilding firms, perhaps the nationalised banking system will soon roll into becoming a nationalised housebuilder?" ...
Okay, sounds good. Think we'd better do a quick recap otherwise we'll lose track of where we are.
- Schools!
- Energy!
- Water!
- Transport!
- Farming!
- Housebuilding!
We all agreed now?
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#15 - Flamingpatricia
They are nationalised. Network Rail "own" everything but if nationalised officially, the cost would be counted on book.
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#115
Read what I wrote, rather than taking my more equivocal stance as blind support of the Government.
In particular, read the bits where I said that the Government should've regulated more (though it seems a lot of regulation would have been required to prevent the bad practices that happened) and pricked the housing bubble earlier (and not gone after the politically attractive arms-race with the Conservaitves - but destructive policy - of encouraging more FTBs in the market and not counselling caution because of over-valued housing).
Saying the Conservatives wanted to go further with deregulation of the financial sector (as they did want to do) is not blaming them for what happened. I'm merely saying that things would not have been different (and probably worse) if their deregulation programme pre-1997 was continued in full (as they wanted) post 1997.
#122, #125
So if the Bank of England had oversight rather than the FSA, none of this would have happened? You're living in a dream world. It may have made the response (i.e. the bail-out) a bit quicker, granted.
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"A very good question and analogy - it is odd that we are expected to be grateful now that the arsonist is throwing water on his own fire isn't it?!"
What is really galling is that the arsonist is throwing OUR water on HIS fire!
And WE are supposed to be grateful?
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114. sagamix
Surely all the private hospitals need to come under state control dont they.
Private health care kicks a huge hole in your drive for equality.
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Tuga @ 129 asks Sagamix @107
... "was it you who got my post pulled? It was an obvious reworking of 1984, but the way things are today its not far from the truth. I wasn't directly rude to anyone specifcally or by name, and didn't use any bad words or immoderate language" ...
and Sagamix replies as below:
No, I have never referred anything on here. I've had a few of my own modest efforts taken down and I know it can be quite annoying.
Having said that, I am finding these 1984 spoofs rather tiresome (yours was about the hundredth in the last week) hence my comment at 107. Its disappearance is not the worst thing that's ever happened, I have to say, but I can assure you my "complaint" (as it were) was addressed only to you.
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I will let Brown speak on his reforms in 1997...
20th May 1997. Chancellors statement to the House of Commons on the Bank of England.
This is what he said about Labour's reform of financial regulatory practices in 1997.
"It has long been apparent that the regulatory structure introduced by the Financial Services Act 1986 (FSA) is not delivering the standard of supervision and investor protection that the industry and the public have a right to expect. The current two tier system splits responsibility between the Securities and Investments Board (SIB) and the Self Regulatory Organisations(SROs), together with the Recognised Professional Bodies This division is inefficient, confusing for investors and lacks accountability and a clear allocation of responsibilities. Reform is long overdue to simplify the delivery of financial service regulation, and this was a key commitment in our Business Manifesto. At the same time, it is important to preserve the beneficial aspects of the current Act, including practitioner involvement and differential levels of regulation for wholesale and retail business.
I can announce today that work is to start immediately on the legislation needed to simplify and reform the regulatory system at an early opportunity. I am announcing our intentions in advance to give the SIB and the self-regulating bodies the opportunity to work on the detailed implementation of our proposals, to ensure the smoothest possible transition to the new regime. I am confident that the simpler system we are proposing will reduce compliance costs, and increase public confidence in the regulatory regime.....
....These reforms are founded on sound economic principles. This is a long-term policy for long-term prosperity. It provides the building blocks for a new economic strategy for monetary and financial stability aimed at enhancing longer term growth and prosperity. I am confident that their success will be reflected in a stronger and more robust economy for the long term."
This is what Peter Lilley Shadow Chancellor said in 1997. Hansard 11/11/1997 para.732
"The Bill will hive off debt management to a new quango under the Treasury. We know that funding policy is an intrinsic part of monetary policy, and the Bill will leave the Bank as a one-club golfer without even a putter left in the bag. How will the Treasury, the Bank and the new board co-operate to handle monetary policy? If they need to get together, why is it necessary to separate them in the first place?
With the removal of banking control to the Financial Services Authority--the "super-SIB"--it is difficult to see how and whether the Bank remains, as it surely must, responsible for ensuring the liquidity of the banking system and preventing systemic collapse.
What happens if the needs of the banking system conflict with those of the inflationary target? That has happened in the past in the United States, and it could conceivably be happening in Japan. I understand that there is a suggestion that a committee is to be established to work between the Bank, the FSA and the Treasury to try to cope with that sort of problem. If that is necessary, why is it necessary to hive off powers in the first place? "
That quote chills me to the bone, that is exactly what is happening.
And did we get that Committee between the FSA, BoE and Government.
No, we've just had Brown & Darling dithering.
Now can someone tell me if we are so well placed to ride the economic storm, why has our regulation failed where as in Spain, Sweden and Canada it hasn't?
Incidentally, Brown's much vaunted rescue plan - vaunted by the Tories about a month ago and actually the Swedish plan used ten years ago to rescue their banks from a similar fate.
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Whatever next.
According to an array of news items over the past few days, Luck has turned into superman, or something similar.
Last week he was promising petrol price cuts, something he is totally unable to deliver unless he cuts taxes.
Now we've had the bank rescue and apparently he has a plan to save the rainforest. Also, today, he claims that his government will be the rosk of stability this country needs, and that the country has pent up housing demand.
All he's gotta do now is start sowing some seeds, and he'll single handedly solve the food crisis and all the other ills that are affecting us.
Is it his spin doctors going mad (can't be, he promised no more spin), or is it him working overtime to come up with all these great wheezes, or is it reporting, attributing everything to him whether or not its true, or the headline even passes the test of credibility?
I think we should be told.
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#58
The point is though, the situation is as it is so that the figures are off the balance sheet.
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114. sagamix
Better add pharmaceuticals to that list, they profit out of our misery.
Thats just plain wrong, no way take control.
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Bring back #97 please!
Or are Gordon's Thought Police moderating?
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Why is Brown looking so smug - he has taken us to the brink of fiscal catastrophe.
The BBC coverage of him has been exceptionally favourable - Andrew Marr would hear no dissenting voices on his Sunday show and the BBC news yesterday implied Brown was in Europe to speak to the rest of Europe - when in fact he was attending an economic summit.
I doubt the European leaders who have not squandered their national reserves would be interested in the "Brown plan" or will it be the "Darling Plan" if it backfires?
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"If this is true, and Northern Rock have paid off half their "loan" in such a short space of time, doesn't it just go to show how much money the banks are still making out of us."
Don't be silly. Northern Rock have paid off their loan because they put up their mortgage rates so high that their customers moved their mortgages elsewhere.
Unfortunately the ones who have moved are those that can - customers with equity, jobs, no unsecured debts etc.
The remaining half that WE own (because we the taxpayer own the Northern Rock mortgages) are the customers who can't remortgage elsewhere because they have no equity, no jobs, no income at the level they claimed to have, unsecured loans, credit card debts etc. This is what is called TOXIC DEBT - the very root of the problems we face.
Paying off the first half of the government loan to us is one thing, but I will be amazed if NR pay off the other half anywhere near as fast or as easily.
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Carrots @ 136
... "The trouble is that will only be your first target" ...
No, not to worry, please see @ 144 where all us Clear Thinking Progressives are drawing the line.
That's about right, yes?
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As a reluctant part-owner of HBOS, my demand is both modest but fair:
Get Howard, the singing-dancing suit, and all his friends, off our TV screens for good.
His jolly, primetime surfing antics feel strangely forced and inappropriate, and risk encourging normally mild-mannered viewers like myself to put my fist through the screen.
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denzil @ 133
... "I was discussing gas supplies with aneighbour last night, he asked why every single household on the street where we live, all pay different amounts for our gas supply, despite it being mined in the same place, sent through the same pipeline, received from the same gas terminal in the same pipes" ....
Mmmm but it's still (strictly speaking) different gas, isn't it?
This is the "Colgate versus Crest" argument we're having here. I mean, are they any different. Is it increasing our freedom of choice, in a meaningful way, to have the both?
Yes, perhaps we can attempt to sum up this whole debate, complex and important though it is, in just the one question ...
Do we really need more than one toothpaste?
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#142
re Northern Rock:
Yes, Lloyds did offer a solution to Northern Rock.
The taxpayer would bung them a lot of money with no strings, allow Lloyds to cherry-pick the best parts of the loan book and leave the toxic waste with the Government, and underwrite any losses that Lloyds would have made on the remaining loan book.
A good deal for Lloyds!
However, the Government in refusing to panic (or by dithering), considered the options fully and decided Lloyds' offer was poor value to the taxpayer.
If the Government could have kept this stuff off of the books they would have done, hence the long delay in nationalising it and the protracted attempts to negotiate a deal that was acceptable to the taxpayer with the private sector before taking it into public ownership as a last resort.
You would have bunged the millions to Lloyds and only kept the toxins through rushing through their "offer" I guess? Value to the taxpayer is unimportant I guess when an ideological principle is at stake.
re having read economics
You do a good impression of someone who has forgotten what they learnt. Much as I value your judgement, I think I'll stick with the Nobel Prize winning economist thankyou.
I read economics, am familiar with the work of Krugman on trade and globalisation, and trust his judgement (and the judgement of another Nobel Prize winner Joseph Stiglitz) on the quality of the remedies.
The right-leaning economists (i.e. disciples of Friedman and Hayek) are rather quiet right now. Not a word. What happened to the market system with no intervention at all being efficient and self-correcting? What happened to regulation being bad? What happened to the renumeration schemes devised for bankers in the free-market being efficient? Why do we need a bail-out?
Maybe you can find me an alternative academic view from this school of thinking.
I'm no 'apologist'. I have many criticisms which I have made of this Government's approach on this site. Just exposing the "Let's Pretend" economic approach that informs much of the rabid right-wing rantings here.
What would you do in this situation Robin? Where's your answer?
#140
Haven't seen anything about Northern Rock - they release their latest trading figures tomorrow...
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Carrots
@ 148
... "Surely all the private hospitals need to come under state control dont they" ...
Nope, we're happy with basic health care in the public sector and the rest private. Save a ton of government money that way too.
@ 153
... "Better add pharmaceuticals to that list, they profit out of our misery" ...
Now you're being sarcastic, aren't you?
We're sticking with our manifesto @ 144
Moderate. Eminently reasonable. You can vote for it if you want.
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i dont blame the bankers or those on the stock markets directly but when this government loosened the restraingts they were freed to blow multi millions on high risk deals that would if worked as they did in the most part earn them and there banks millions, but when it went wrong its up to the taxpayer to bail them out, what happened to all there profits, and why didnt they provision for disasters.
bankers and all suffer the same problem as the majority thats a lack of foresight and plain old greed.
the government are to blame but they have ridden to the financial rescue in the nick of time just like the us cavalry in westerns, playing to the media looking good and whitewashing over all the problems they have failed to resolve.
oh but they will gain peerages and mess up the lords too reguardless of there honesty.
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#150
too true..al of it.
but what, pray, does balhamu have to saty about all that?
"it would have been much worse if the tories had been in power"
This argument is now all the newlabour apologist have to offer "it would have been much worse if you ahd been in power"
Try this for an argument in court "more people could have been killed in that accident if someone else had been driving other than me"
Doesn't really work does it.
Time newlabour apologists stopeed pretending what life would have been like without them and accepted what a car crash it has become with them in charge. Total and utter disaster.
Call that election now.
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Nick,
It is clear to me that there are a lot of people out there who have absolutely no concept of how economies operate or how the UK has managed to remain a relatively wealthy nation. Was it by dint of the extraordinary powers of G Brown and others to be all seeing and all knowing, or was it through individuals getting together through their enterprise and labours?
If it was the former, then how is it possible that Communism failed and that the USA became the biggest global economic power? If it was the latter, then let us hope that government ownership is short term at worst.
Do not expect government spending to be able to rise each year if there is little or no industry in private hands.
Meantime, the government seems to think it has struck another National Lottery with access to funds that they can direct as they wish. Heaven help us all.
All the best
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I'm no economist but seeing as I now own a bit of these banks I vote for some name changes:
HBOS to become Halifax Bank of Britain
RBS to become Royal Bank of Britain
We can call then HBOB and RBOB for short.
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161. sagamix
mmmm sounds like a logic problem again.
We let the people buy extra health care, prolong life with a better service, meds etc.
But we dont let them improve their childrens education with a private service.
Equality in education but not in life saving services.
That wont wash with the rest of your party.
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#160
another classic newlabour reponse... offering your interpretation of what 'would have happened next'
You don't know what would have happened next to Northern Rock except the billions of pounds lost by shareholders would have been avoided and the company could have been kept afloat, instead of run down as it is being done by this government which dithered for six months before allowing it to go bust.
The government has not prevented jodb losses, has not protected mortgage holders who have had to go elsewhere to get new financing and has stuffed the shareholders with its indecision.
Savers were not the only stakeholders in this business. How very newlabour of you to see only one side of the story.
As for your myriad of economists I have only one reply and it concerns too many cooks spoiling the broth. I don't need a team of advisors I need someone to actually make a decision; something newlabour seem to have a paralysis about.
Monetarism? Why on earth do you think we have this problem? Friedman would not have allowed you to grow the broad money supply at a compound 12-15% over eleven years without a severe warning of asset or consumer price inflation and its consequences.. er housing crash anyone?
You need to gop back to the drawing board with your econmic policies after a spell in spendaholic rehab.
Now call that election and defend your record.
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re: 163
Time newlabour apologists stopeed pretending what life would have been like without them and accepted what a car crash it has become with them in charge. Total and utter disaster.
Call that election now.
Well said, though I don't think balhamu is the worst offender. Labour have had 11 years to get things under control but they sat back and raked in the cash instead. Now they dance to the music of blame, failing to see that they are all equally guilty of unbridled avarice and destruction through neglect. Only an election will satisfy our hunger for roast Nu-Labour pork.
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In my view, the root cause of the problem we are now (and belatedly) grappling with is the crazy bonus culture on Wall Street and in the City.
Not the payment of bonuses, per se, but the payment of massive cash bonuses based on very short term "profits". This led to (at best) excessive risk taking and (at worse) falsification of the accounting numbers. Not just senior directors but at all levels in the front office. Junior traders trousering half a mill in an average year? Give me a break. Ridiculous and obviously ridiculous, wasn't it? Just had to stop.
If the bonuses had been in the form of stock which had to be held for, say, 5 years then I don't believe we would have seen anything like the level of nonsense that is bringing us all down. I don't want to now see us knee jerking too far the other way either ... you know, rigid rules for who can borrow and how much deposit they have to find. I'm quite happy for this to be a risk reward banking decision. The higher the risk, the higher the interest rate, you know the sort of thing. Bankers will make good decisions, left to their own devices, PROVIDED that their remuneration model is reformed. The private versus public sector question is, in my opinion, unimportant compared to this issue. I guess we have more chance of a satisfactory outcome if it's public sector but who knows?
As regards who's to blame for the disaster, it's obviously a whole range of culprits so perhaps we can get them into some sort of order. I go as follows (in order of the worst first) ...
1. Alan Greenspan
2. Wall Street
3. The City
4. Gordon Brown
5. Margaret Thatcher
6. Joe Public
I have JP last, not because his impact is the least, but because our reasonable expectations of his behaviour are the lowest.
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Look, this is where I cam in....
Tony Blair spent years getting on and off planes jet setting about the world showing off trying to make himself an historic figure (did that all right) whilst he ignored us back here. Some people getting into huge debt, greedy businesses, greedy consumers, over lending, overspending.
When we got fed up with him he handed over to Caretaker Brown who had been a man on a mission and missed the slot when John Smith died. Bit late now but Brown is having a now or never moment (he's nearly sixty) so he is carrying out phase one of his master plan to effect the New World Order (look it up on Youtube) and he hopes like hell it will work but if not he will disappear into the highlands with his sporon whilst we are left with the fall out.
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#163
"What would balhamu say"
Are you seriously telling me that if the Bank of England were in charge that the worldwide financial problems would not be happening?
I can see your points in making the response to the crisis swifter and more effectual.
But I don't see that merely placing the relevant parts of FSA under the BoE umbrella would have stopped it happening.
Without seriously (and I mean seriously) enhanced regulatory powers, the banks would have still behaved in the same way.
For a political party (and those who share deregulating right-wing views) to be credible in saying "We should have had more regulation to stop this" and "We should have pricked the housing bubble earlier and discouraged first-time buyers", it helps if they weren't saying the opposite at the time.
Having been saying over 11 years that Brown regulates too much (and, specifically regulates the mortgage market too much), doesn't do enough to encourage FTBs into the market (e.g. plans to abolish stamp duty on FTBs) and not suggesting more regulation of loan:value ratios that lenders use, it would seem a tad hypocritical to say more regulation was required. Cameron understands this, which is why he is quite silent on these points.
I fully take the point that the tripartite regulatory structure seems to have slowed down the state's reaction to the crisis to some extent (well done Peter Lilley - very prescient it seems - though how have countries with a single regulatory bodies coped and why aren't they taking the leadership in the response to the crisis?). But it is ridiculous to claim that it would've stopped the crisis happening - it would more have shut the stable door a bit quicker once the horse had bolted.
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sporran typo!
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doug @ 165
... "We can call then HBOB and RBOB for short " ...
Then merge them to create BOB. I like that!
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Carrots @ 166
... "Equality in education but not in life saving services" ...
Well, there you go. Education is crucial to equality of opportunity (as we've debated at length) but Health isn't. 'Course, in an idealised world, you wouldn't be able to gain access to better health care by being wealthy but I'm nothing if not a pragmatist so we'll have to let that one go. Anycase, the NHS is juggernauting out of control as a consumer of common resources so the time has come to prune it back, I'm afraid.
... "That wont wash with the rest of your party" ...
Ah but I'm the leader (and only paid up member) of my party, Carrots, so it jolly well will!
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Will they even change that annoying muzak which plays when the bank puts you on hold?
Nick, they'll change it to the cabinet riotously belly-laughing as they swig champagne and gobble caviar at our expense. Funny how they claim there's not enough money for fuel for the elderly. We know the truth.
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128 Jimbrant
Thanks for re-posting the article Balhamu noted.
Can I double or quits you and refer you to another article.
This article concludes that Brown's current exuberance will be replaced by very bad news for Brown around about Christmas time once the worst of the current crisis is over and Brown's 11 years of failure (which have caused many of the problems we are currently facing) catch up with him.
Here is the link:
http://www.independent.co.uk/opinion/commentators/bruce-anderson/bruce-anderson-yes-the-tories-should-blame-brown-959312.html
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#167
Robin - disagreeing with you is not being an 'apologist for new Labour'. An 'apologist for the truth' perhaps?
re Northern Rock
The Government WANTED to keep Northern Rock in the private sector. They bent over backwards (and got levelled with a dithering charge) to try and get a private sector solution that was in the taxpayer's interest. They couldn't - the offers on the table were poor value. If the Government desired nationalisation, it could have done so straight away without considering the options and spending a lot of taxpayers money trying to craft a deal.
Why should Lloyds TSB have been given a shedload of profit at the taxpayers expense?
Why should shareholders be protected from their lack of oversight of what those they had contracted to run their company were doing, and the risk involved in needing to regularly re-finance loans in the event of the capital markets seizing up? No Government action and they would have gone bust, don't forget.
But, hey. Ideology demands taxpayer sacrifices doesn't it?
re monetarism
Friedman's solution (at least as interpreted by policymakers in the 1980s) would have been to engineer a recession. That certainly sorts the money supply out.
Any mainstream policymakers - anywhere - suggesting that the money supply is the correct target of monetary policy?
No. Because it's been shown not to work - the 'velocity of circulation' is too unstable for it to work (I'm assuming as an economist you have some familiarity with the Quantity Theory and why it didn't work in practice)
re defend my record
I have no record to defend. I am an observer, like you. Just a far more informed and impartial one.
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#171.
IF the BoE kept its debt management portfolio - which it already had under the 1986 provision.
IF a bank had ratcheted up too much debt, the BoE could simply have made that bank capitalise itself sufficiently to cover them in the event of default.
Under the financial reforms that Brown made, he took that power away from the BoE.
So they couldn't do it anymore and the FSA did nothing of the sort.
Despite IMF warnings galore about UK consumer and banking debt, averaging about 1 a year.
SO...
things like 5x mortgage and buying securitised mortgages would have come under that BoE debt management remit.
End of argument.
This is Brown having to plug a hole in the ship of his own making.
It is not his 'Falklands' moment or 'Churchill' moment; this is a disaster of his own making.
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I tend to think that's true. Giving too much attention to the banks and having the media open its mouth too much is destabilising.
Good times, bad times. Personally, my mind is more on investment and society. Being miserable doesn't achieve much so I'm aiming for where the puck is going to be.
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134 Sagamix
To torture the analogy properly:
The arsonist had just fallen out with an accomplice, who is believed to be responsible for starting many of the fires, some as far away as Iraq and is thought to go by the name of Tony Blair.
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169 Sagamix
Whilst I agree that it is a range of culprits to blame - I'm staggered that you have veered from the party line and correctly fingered Brown for a share of the blame (quite rightly).
Blaming Thatcher though - laughable! No way!
I'd disagree that City Boys are more to blame than Brown. For the reasons I make this statement please see posting 54 - the consequences of Brown's actions were predictable back in 1997.
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#176
No you can't.
Paul Krugman (my article) is a Nobel prize winning economist from the US. A specialist in this field, and no hidden agenda.
Bruce Anderson is a conservative political columnist noted for his right-wing anti-Labour views. Former political editor of the Spectator and contributor to the Daily Mail. Has no Nobel prize in economics. Not a specialist and has a (not so well) hidden agenda.
Can left-wingers quote what Will Hutton says? Or Polly Toynbee? Or would you consider that to be a partial source?
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I agree. The real issue is corporate and individual culture. The CBI and their Tory pals haven't helped that with craving more power and wealth for themselves. Only today, I read they're calling for more deregulation and sacking people to preserve their own skins.
I had my first bad dream in ages last night. Everyone in the dream looked like Cameron dressed up in his Bullingdon togs, and they were invisible horse skipping around the place and shouting "Rupert! Rupert! Rupert!" at each other. Scary stuff.
The CBI and the Tories need to get over their risk averse and anti-social tendencies, which is why I don't believe the Tories have changed or are anywhere near ready for government. Only Labour is looking ahead of the curve and safeguarding peoples stake in the economy.
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RobinJD, Jonathan Cook and others,
I understand that you are very anti-Labour from your political viewpoint (fair enough - I'm not saying it negates your critiques completely).
If the worst happens, and we have a Labour government (as we have had since 1997), how would you prefer they acted?
Using their left-wing instincts, regulating the private and financial sectors extensively and interfering a lot in the decisions of private business?
Or a more politically pragmatic approach of listening to what right-wingers say, and taking a middle-view? Defintely not the 'left-wing instincts' one. And listening to right-wing voices and the Conservative (correct) view has to be good right?
The second is what the government have done in their attitudes towards regulation. And it typifies a lot of what New Labour have done in a range of policy areas - left-wing views tempered by a more pragmatic approach and what is politically acceptable to Middle England and right-wing voices.
Ok, so its not your first-best of having a real right-winger like John Redwood trying to cut all 'unnecessary' regulation and free innovation. But it's a next best.
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Right, I hope you are with me so far.
The right-wing (Conservatives) advised cutting regulation. Too much regulation, including in the mortage market and the financial sector, was stifling innovation. How was London to compete with New York, Frankfurt, Shanghai etc with such regulation on the banking sector? Why was the state even involved in interfering with the judgements of the private market. It should keep its hands off of this - none of its business.
Labour listened, but not enough. Regulation was still too high for right-wing tastes.
The right-wingers now tell us we had too little regulation. This was only apparent to them a couple of months ago. But Brown is at fault, as he shouldn't have listened to them.
Who's at fault?
Labour and Brown for listening.
But not Conservatives and right-wingers, who's medicine the Government accepted, but in limited doses.
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This appears to be your argument.
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Now its all over can we have the story on who leaked what to whom and when. Given the financial implications in future years, I think we ought to know.
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JCook @ 180 and 181
... "Blaming Thatcher though - laughable! No way!" ...
Well I only have her number 5, don't I? (and below Brown). You have to blame her to some extent, if like me you have the City as quite high on the list, because she "set the City free". Free to blow us all up.
On the analogy, nothing to add so I guess you win!
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"whats the story with NR paying back almost half its government borrowing already."
Yes it more than likely is true. NR have been encouraging mortgage holders to move to other banks. Those with decent mortgages are going (to Lloyds TSB?), the dross is staying. If you remember the government changed £3b loan to equity in NR so it looks likely that it will be a basket case of sub-prime mortgages, but then who in government cares as long as they can get re elected by a gullible voter.
My view is that it isn't just Sir Fred who should go.
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@ 183
... "I had my first bad dream in ages last night. Everyone in the dream looked like Cameron dressed up in his Bullingdon togs, and they were invisible horse skipping around the place and shouting "Rupert! Rupert! Rupert!" at each other. Scary stuff" ...
Oh thanks a bundle. Now I'm going to struggle for my 8 hours as well.
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@ 182
... "Paul Krugman (my article) is a Nobel prize winning economist from the US. A specialist in this field, and no hidden agenda. Bruce Anderson is a conservative political columnist noted for his right-wing anti-Labour views" ...
Never mind about your high faluting Krugmans and your airy fairy Bruce Andersons, I want the truth ... what's Littlejohn got to say about it?
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#183
Are you sure it wasn't Tony Blair in his private school togs Charles? If the chap was wearing a Boater I'm fairly sure it would have been Tony. Especially so if it was Rupert Murdoch you're talking about.
There is in fact no knowing what any of the other regulators would have done.
All we know for sure is what this one didn't do. And that is to safeguard the national interest.
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Nick - just who is more dissappointed with what can only be described as a truimph for Brown - you or Cameron?
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174. sagamix wrote:
.... Education is crucial to equality of opportunity (as we've debated at length) but Health isn't.
Pretty skewed definition of equality
I would have thought equailty in the right to life was the first thing people would want.
and just to be clear here your manifesto promises to allow private health care but you plan to cut back on NHS spending.
Do you think youll be able to quel the riots on your own?
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I get fed up of these sectartian arguments left v right. They are all right in part and all wrong in part. The debate is intrinsically sterile. If that is what you want then go ahead. Polish your position. Live the illusion.
I dont care whether it is Brown or Thatcher or Mickey Mouse who is the root cause of this problem.
I hoped this sort of farce would not happen after the Lamont debaucle in the early nineties. It has come around again but worse.
The bad bit for me is it was clearly coming for years and many, many capable people warned of problems. Brown was at the helm and ignored them. In the same way the Iceland issue was raised months before the crash there and it was ignored. It is quite frankly a farce to suggest the British public is getting decent government at present. Government appears brain dead. Stick some financial electrodes in and get a reaction. That is all that is happening at the moment, the options are one, there is is no choice, you need more than one option for choice. Please do not adulate Brown and Darling for doing something in which there is no choice, any muppet can make that decision.
At this stage it is almost inevitable Brown gets the heave ho. The problem with all these arguements is they do not apply any pressure to the most likely occupant of number 10 fairly shortly. It is making sure that polictican is kept on the short and narrow that is the challenge. Assuming it is DC, which is highly likely, all we will get is I can't do this because of the previous administartion, There is no money in the pot because of whatever. Before you know where you are you will be back in the pit again.
Notice how little information is coming out about what changes are being implemented, all there seems to be is lets try and pump up the volume again. Then it will be we should all be relieved as well as being relieved of our wallet. Lets just move along, dont ask too many questions. The issue is not what happens now, it is what happens 1 AD, one year after Alistair Darling.
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Will the demands include a continuation of the banks' support for the Government's "social exclusion" agenda - particulalry the extension of credit and mortgages to those who previously would have been refused on economic terms and whose ability to repay is at best questionable.
Oh hang on. Isn't that how we got on to this slippery slope in the first place ?
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Rescue package?
The system we are just throwing more money at is flawed. A few heads on here raised these issues. It is impossible to pay the loans given out as the money never existed and was created by the method below.
If more people were aware of this:
How Much Can Deposits Expand in the Banking System?
The total amount of expansion that can take place is illustrated on page 11. Carried
through to theoretical limits, the initial $10,000 of reserves distributed within the banking
system gives rise to an expansion of $90,000 in bank credit (loans and investments)
and supports a total of $100,000 in new deposits under a 10 percent reserve
requirement. The deposit expansion factor for a given amount of new reserves is thus
the reciprocal of the required reserve percentage (1/.10 = 10). Loan expansion will be less by the amount of the initial injection. The multiple expansion is possible because
the banks as a group are like one large bank in which checks drawn against borrowers'
deposits result in credits to accounts of other depositors, with no net change in the total
reserves.
See Modern Money Mechanics for more info
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#176 jonathan_cook:
balhamu beat me to it with #182. Just to add that Anderson is biographer for Major (he was part of the group that got him made party leader) and Cameron. His views tend to be bizarre and not too closely related to the truth (eg he thinks that Darwin died a Christian, and that creationism should be taught in schools). He thinks that Blair forced Brown to accept independence for the BoE, whereas according to Campbell (who was there) it was the other way round if anything. And he makes great play of 'his' idea that the Bretton Woods international system needs replacing without realising (it would seem) that Brown has been trying to persuade the rest of the world of this for some considerable time (see his speech at Harvard last year for example).
So your riposte is hopelessly unbalanced; 155mm howitzer versus peashooter!
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Carrots @ 192
... "Education is crucial to equality of opportunity (as we've debated at length) but Health isn't. Pretty skewed definition of equality" ...
No it makes perfect sense. Equality of Opportunity is the big thing for me and Education has a far greater impact on that than Health.
I'd love a fantastic free for everyone Health Service but it's not affordable, sadly.
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At the moment BBC Parliament is having a Human Rights Debate. Iraq War is being discussed, and genocide, amongst other issues. Yet, missing is any discussion of the destruction systematically taking place of Great Britain, its values, ethos and standards. The speakers are so busy declaring the rights of everyone else, that they have forgotten that charity begins at home. I dare not write anything else, since I'm sure the Moderator is fuming over this with a big blue pencil.
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The Turbo-Tories around here can't even read words on a page properly but I'm slightly amazed that you'd try to tell me what I see in my own dreams. No lie is too big, and no blow is too low for you folks that you don't even know when to stop.
That's true but you go and add mind on mind, so compounding the delusion. You can try and fix things or persuade people but it just piles funk on funk. Zen recommends that you just let go of it. This is easier said than done but I find it useful.
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#196 "He thinks that Blair forced Brown to accept independence for the BoE, whereas according to Campbell (who was there) it was the other way round if anything."
Just to correct my own post, this is wrong. Having checked, I see that Blair was arguing for BoE independence in 1995, and while I can find no evidence that Brown opposed the idea there is also little to say that he was in favour.
I plead senility and an increasingly unreliable memory. I can only imagine that I was thinking about the '5 tests' for joining the Euro, where I believe Brown did 'bounce' Blair.
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re: 199
Zen recommends that you just let go of it. This is easier said than done but I find it useful.
Says the blog censor.
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i think gordon brown has a problem, which is of his own making.
since taking the top job, hes always portrayed himself as "good in a crisis" yet each time, the crisis is found to be of the labour party's own making.
* foot and mouth outbreak - found to be from a government/private lab, gordon rides to the rescue, seen to be sorting it all out and being strong.
one problem though - it was the government part of the lab that had tipped foot and mouth samples down the sink and the government had failed to repair the drainage of the lab, which they were warned about more than 12 months earlier!
they didnt sort the drainage they didnt make sure that procedures were actioned despite the "regulator" keeping an eye on them.
* pensions - despite constant warnings from financial bodies and unions, as a result of labour's policies, they have to release a report prior to the break up of parliament one summer, warning that everyone currently under 40 will have to work until 68, as "people are living longer"
once again, gordon rides to the rescue, devises a big plan for the british people to sort out the mess and saves the day!
anyone with half a brain can see that his policies created the problem in the first place!
* UK financial crisis - labour remove power from the bank of england to step in and force banks to recapitalise themselves should they overstretch - fuelled by huge profits, the banks then hide debts "off their balance sheets" so they can borrow more and more and make more and more profit.
the FSA who are there to watch for this, do nothing.
america sparks the crisis, it could have been japan it could have been russia, etc, once the spark catches light, gordon comes riding to the rescue!
he draws up a solid plan to protect people (after they have lost homes jobs businesses savings pensions shares) and proclaims himself to be "good in a crisis" and "a rock for the people" amazing how he manages to sort out yet another problem that he created!
see the pattern forming?
whats next on his "ride to the rescue" crusade?
* will he lower the cost of petrol for the UK (after keeping taxes high on it for years)?
* will he save the taxpayer/council/charity from the evil enemy of icelandic banking system (after his credit advisery set up advised them all to invest and said it was safe)? will he loan iceland the money so they can pay it back to us after "coming up with a plan?"
* will our hero save us from the energy companies (after years of allowing them to lower capacity to store our energy and over charge the individual)?
gordon brown is like a rubbish version of hong kong phooey, with delusions that hes a number one super guy!
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#199
Sorry Charles, but I kinda feel that you're painting others in the way you feel about yourself.
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Hey Nick... wanna game of Monopoly, Browny and Darling are joining us.
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179. How are things in the computer gaming business in America?
I could never get into that fantasy world but I am sure it means everything to you!
Maybe you could invent one with Tory Blair and Crash Gordon but there again your market over there might not be as interested as you.
It could be the centre (ooops sorry CENTER) of your world perhaps. Dream on......... hope it doesn't end in a nightmare! (nitemare).
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