The rebirth of Gordon Brown?
The Masters of the Universe are dead. Long live the Master of the Universe.
The death of the banks (at least as independent institutions) has, it would appear, been accompanied by the rebirth of Gordon Brown. Not only has his bank rescue package been backed by all political parties at home but it has also inspired similar plans in the EU and in the United States (once it was clear their own plan had failed to end the rout)
Indeed, the man who was today awarded the Nobel prize for economics, the American economist Paul Krugman, declared in today's New York Times that the Brown/Darling plan had "defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up" and praised the two men for showing a "combination of clarity and decisiveness" which "hasn't been matched by any other Western government".
This bounce in the market in Browns and indeed, Darlings too, has prompted the Conservatives to re-open hostilities and to side with the British people who, they claim, have "been handed the bill for boom turning into bust".
The Lib Dems too have warned of governmental hubris. What they both believe - and are surely right too - is that the politics of recession could be much less benign for Gordon Brown than the politics of the immediate crisis.
The political fallout of both events is, of course, no more predictable that the economic fallout. It would be unwise to speculate too much.
That surely is one lesson for all of recent events.
What can be stated with total confidence is that the prime minister himself feels more confident doing the job that at any time since he got it.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~16~RS~)
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Like I said before, never mind Krugman, let's see what Littlejohn has to say about all this before we go drawing any big conclusions.
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I agree that Brown and darling have led the way in beating this crisis, but I fear everyone is overlooking who was in charhge of the nation's banking practices for the last eleven years. Let us not be lulled into handing out plaudits to the person who seems to have turned his back on the excesses of the City's moneymakers.
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Nu-Labour thieve more and more
And they're lying like never before.
It's time to vote Blue
(What else can we do)
To show Nu-Labour the door?
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Three words: forty-two days.
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Peston puts some of this particularly well in his "Banks Should Be Boring" blog ... it's quite a punchy and well written piece (sorry Nick, not implying that yours isn't!).
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'the prime minister himself feels more confident doing the job that at any time since he got it'
Doesn't it also show that he is an expert at taking the credit for a plan, the outline of which - at least of what was needed - has been clear for some weeks now.
He certainly has been quick to praise himself for what was, in fact, the work of a large number of people at the Bank of England, the clearing banks themselves and the Finance Ministries in other major countries, not to mention Alistair Darling.
It will be interesting to see how long before we see his other area of expertise (shifting any blame on to others) in action.
Don't use too many of your critical faculties in puffing him up any more than you really, really, have to - he can do that himself well enough...
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Before we all get carried away in praising Gordon Brown for dreaming up the three point plan, may I remind you that Professor Nouriel Roubini was urging 'triage' on Bloomberg as long ago - yes, it does seem a long time ago now - as September 30.
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The rebirth of Gordon Brown? Pleeeese! We all want our money back, but this is hardly the Second Coming?
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Let's hope the HoL rejection of 42 days is the start of his re-death.
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The Nobel prize winning economist and leaders throughout the world recognise that Gordon Brown has led the world through this present financial crisis, But poor old Nick (Robinson) cannot, even now, bring himself to make even a limited positive comment in his TV reports about Gordon Brown -- not to mention Alister Darling who, as Brown's successor, found himself dropped in the middle of arguably the worst financial crisis the modern world has seen. Instead old Nick toadys around with goo-goo comments about the "leader" of the Opposition, albiet quite inkeeping with his softly softly approach in interviews with him (in severe contrast to those with Brown). One's mind goes blank at the mere thought of what an absolute mess we would have been in if Cameron had been PM. When interviewed on Sunday his in-depth contribution was that "something BIG has to be done".
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Perhaps Krugman would explain why the markets were in tailspin last week for two full days after the UK plan was published yet recovered substantially today after the eurozone biggies agreed a slightly more austere one.
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Why shouldn't he be happy,in his previous existence he was one of the prime architects of the buy today, pay next year culture.He failed to notice any of the troubles that were plain to many.His lack of maths skills by not realising that 20% is 2X10% has still left nearly 500,000 of the lowest paid worse offwith no one caring if they will get a permanent solution because their cause isn't new or sexy enough.Finally he is being aclaimed as the greatest economist the world has ever known,a step up from just being our greatest ever chancellor,by a fawning political press
during these days of lending billions remember Brown's poor that much less than that would put right.
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Am I going mad? Or are you? Did you really just call Gordon Brown 'the Master of the Universe' on R4 6 o'clock news? A shocking end to a shocking day of unashamed BBC promotion of Brown and today's despicable actions.
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And now Nick even knows the innermost thoughts and feelings of Gordon Brown: "What can be stated with TOTAL CONFIDENCE (by me, old Nick) is that the prime minister himself feels more confident doing the job that at any time since he got it." Boy! Just to have THAT sort of insight and knowledge!!!
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It is all very well, the noted economist praising the pilot.
The bald truth is - people will be in pain for many years to come, paying for the Brown decade.
It was Brown that got us into this during the "years of irresponibility".
It was Brown who created the weak touch regulation.
He is like the pub Landlord encouraging people to get boozed up all night and then expecting medals for using the shirt off of my back to bandage a boozer's consequent wounds.
He has by stealth communised the nation. No election, no vote - not flash, just Gordon.
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Nick, you say "the prime minister himself feels more confident".
Unfortunately, many of us do not share this confidence. The world economic crisis is certainly not all Brown's fault, but even before these recent events, Brown has left our national finances weak and exposed.
He has taxed, borrowed and wasted. He also foolishly dumped a large part of our gold reserve at the wrong price when he should have been more prudent.
He wanted us to believe that he had personally ended 'boom and bust'. (You'll notice he doesn't mention that any more)
There are also serious doubts as to how all these rescue packages are to be financed. Presumably, as a last resort, he can telephone to Royal Mint to hit the printing presses. But if word gets out, this could lead to a devaluation of the pound.
No doubt, if devaluation comes, Gordon will reassure us that this will not affect the pound in our pockets....
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Undoubtedly Gordon is in a win, win situation in the short term.
Once the dust settles - not so certain. When the causes of the conflagration are investigated, being the guy who called for the fire brigade might be of limited benefit if forensic evidence puts him at the scene of the fire's origin with petrol residue on his hands.
Possible charges? Sparking the blaze via encouraging - forcing ? - unsustainable levels of debt via his social exclusion agenda? Disabling the fire alarm by emasculating the Bank of England regulatory powers ? Leaving us unprotected by blowing the insurance fund on a public spending spree?
Supplementary question "Is winning the next election a good idea?""
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re: 4
Three syllables: ID cards.
Let's not let the economy cloud Labour's myriad other sins. They deserve a painful and gruesome fate for their spying, warmongering, cultural and societal damage etc etc.
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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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re: 10
One's mind goes blank at the mere thought of what an absolute mess we would have been in if Cameron had been PM.
We're in an absolute mess now.
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re: 9
I think we'd need garlic, stakes, silver bullets, holy water and crucifixes galore for that. And to chop off his head just in case.
But the forces of good will prevail in the end, and the Dark Lord Gordonmort and his forked-tongued serpent Mandelssssnake will perish in the purifying flames of May 2010.
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If you set fire to your local shop, and then find a way of putting it out. That foes make you a hero
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Who's been in charge for 10 years (Blair couldn't count his pocket money)?
Once again Brown "basks in glory" while ignoring the reasons why he had to act; the failure of the FSA and 10 years of increasing private and public debt together with PFI encouraged by you know who. Ten years of "economic growth" 50% of which was funded by the very banks he now describes as irresponsible.
Hardly the Master of the Universe, more like the Master of Irresponsibility.
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#3 power_to_the_ppl
"(What else can we do)"
Well, you could vote for a party that believes in electoral and constitutional reform to prevent any PM having near total power from the votes of less than a quarter of the electorate.
You might just wish you had if and when Cameron's reign ends in igmony like Brown's.
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To use one of your own favourite words, Nick: extraordinary! It is indeed extraordinary that the BBC should laud Gordon Brown as a hero when in fact he has just presided over the most spectacular boom and bust in British economic history, nicking his get-out-of-jail card from Nouriel Roubini (nothing wrong with that) and then lecturing every other government and its dog on how to run an economy.
The guy's got chutzpah, if nothing else. Unlike the BBC however, the electorate has rumbled Gordon Brown's crushing incompetence and will march him out of Downing Street by his ear when the time comes.
Regrettably, the other lot are just as clueless.
We get the politicians we deserve I suppose.
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Brown should make the most of his resurgence it won't last. People will remember in due course that he was part of the problem & he is putting the taxpayer further in debt, describing it as an answer to the collapse of the economy. It will mean many years of hardship before the country can recover.
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You. are. joking.
We haven't missed the rest of the news whilst Brown has been conquering the known cosmos.
1.4m records have 'gone missing' from the MoD.
42 days faces a 3 digit defeat in the House of Lords
Brown has finally got the Conservative message on re-capitialisation and looked at the Swedish bank rescue c1997.
Even in Europe they called it the 'Sarkozy Plan'.
Incidentally, 1997, around about the time Brown messed up the reform to banking regulations which precipitated this crisis.
Now, the BBC et al can rattle it's pom-poms and cheer for Lazurus but the public are absolutely livid.
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This comment was removed because the moderators found it broke the House Rules.
Hyper inflation will be the outcome of this. We are in recession now - I don't believe the figures of 0% - and this will last for at least 18 months. He wants more lending to restart the property bubble. Is he mad? Or are you? Please no more one sided reporting - facts only now Nick - and we are in serious trouble!!
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Nick's blog has a great sting in the tale viz "The Lib Dems too have warned of governmental hubris. What they both believe - and are surely right too - is that the politics of recession could be much less benign for Gordon Brown than the politics of the immediate crisis".
GB and Darling have done well but its like the Captain and Master of a ship sailing onto the reefs and just managing to get off holed and taking in water. Huraay for now but it all could have been avoided. They both took the parise for the voyage up to now and both must take the blame as well.
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Brown is seizing the current crisis as his Falklands Moment.
The situation has pulled him and his cohorts back from the gate of the knackers’ yard.
Enjoy the bouquets, Gordon, because when the dust from the global economic fallout settles, you’ll be left with your lightweight government of chancers, spin men and opportunists.
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Now Brown can get himself a share of the obscene profits the banks have been raking in on the back of the free for all lending he and his incompetence at the treasury was responsible for fostering. So far there has been no suggestion from him or his pet chancellor that they will tighten up the ease with which unsustainable credit can be obtained. This was what caused the runaway house prices in the first place, aided and abetted by the greed of builders , estate agents, and developers. No attempt was made to reign this in because the government had squandered so much of the country's wealth on useless and unsustainable social programmes that only the tax take from the housing boom and the financial sector was keeping the country's finances afloat. Now he swaggers around claiming to have saved the country from ruin. If he over the past ten years had displayed a bit more competence , the need to nationalise the banks would probably not have arisen and the nation may well have been in a better position to face the recession which is undoubtedly coming. As it is we now have a treasury with such a mountain of debt, that it is likely to have a disastrous effect, not on the political elite of this nation, but on the hard working taxpayers who for the last ten years, have, to echo a former labour chancellor " been squeezed till the pips squeaked "
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I generally think most folks don't get how events flow along and how competing egos interact, and can't let go of the mountain of funk. Only a short while ago everyone was talking up how smart they were. Now, it's all doom and gloom. The world hasn't changed but their perspectives have.
The numbers suggest the global economy is teetering on the brink of a new renaissance but they're so caught up in the illusion of short-term pain the promise of what's just around the corner has been pushed from their mind. But, the bust is as deluded as the boom: both are only as real as people make them.
Nobody ever listens. They know better and the prospect of belt tightening chews them up inside, so they thrash and scream even more. Every time they do this they slide further down the well of misery. You'd think folks would get a clue and just let go, calm down, and be happy. But, they're clever and think they're smart. It can't be that easy.
Just another day in hell. Enjoy your stay. :-)
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Thanks Nick. As a fully fledged died in the wool blue, I have to say that in my opinion Brown and Darling have conducted themselves very well over the last few days.
Whether it is enough to save the day remains to be seen but I must say that that a few things have ticked me off with the convervatives over the last week or so.
One, anyone with half a bean in their heads knows that we got where we are by a cross between both the Thatcher and Blair policies. Two, I don't think David Cameron really understands the hostility still felt by a significant portion of the population towards Maggie and as such I think it was unwise to mention her at the Tory conference and finally and for me most importantly, why when the country needs the political parties to be united do Cameron and Osborne say they support the action taken then appear to try and derail at every opportunity.
As one of your co-reporters commented this week Nick "this may be Gordon Browns Falklands War". I have a funny feeling they may have been right.
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re: 24
Well yeah but Labour have to be destroyed first in order for such a party to get into power.
First things first: Nu-Lab have been stealing our dinner money for too long. The time is past for putting drawing-pins on their chairs, we must punch the head bully right on the nose, then the whole gang will scatter. Down with Brown!
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If all the stuff Brown has put into place is so wonderful why have the markets fallen yet again? We had a mass bailout last week and it seems to have made no difference to anything, Lloyds-TSB/HBOS wee forced to merge a month ago and that has made little difference. In effect it seems as if Brown is going to have to nationalise the whole banking system of the UK.
After that and the markets continue to fall what then? Brown may get credit at the moment for 'sorting things out' but has he really? How much more tax payers money is going to be used to prop up the system? When public services are cut to make savings to prevent tax rises to fund everything then we will see how popular Brown is.
Of course unless Brown is hoping Cameron actually wins the next election and has to deal with the inevitable mess and unpopularity that causes. Lose in 2010 but win massively in 2015 - sounds like a decent plan.
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#29
"We are in recession now - I don't believe the figure of 0%"
You're probably right - the 0% refers to Q2 'growth' (i.e. April-June 2008). It will get revised later on, when the ONS have access to more accurate statistics, but its the best estimate of Q2 growth we have at the moment.
Q3 (July-September) will likely show some negative quarterly 'growth', while maintaining year-on-year growth. Q4 probably the same - giving us a technical recession. Q1 2009 may (60-70% likely) show continued quarterly decline and year-on-year negative growth - giving us a 'proper' recession.
All right-wingers (and others) apportioning blame, the notoriously left-wing Evening Standard editorialises today:
"The rise in Brown's market value may be short-lived when electors remind themselves that the problems that brought us to this pass took place under his aegis and include his 'light-touch' regulatory regime.
But if blame is being apportioned, it must be attributed squarely where it belongs, with the chief executives of the institutions which strayed disasterously outside their remit and competence. The directors of the companies who signed off their accounts, who never asked the right questions, must also be named and shamed"
Left-wing New Labour spin, I tell you!
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could it be he engineered this whole affair to take the pressure off his poor leadership and all the problems around his party?
no but its timing is perfect to help save his highly over paid job.
as for a rebirth well we can only hope its still born.
the people have suffered enough under both tony and gordon with there empty promises and media spin to be totaly lethargic to the political process,(as they wanted so they could drag us into europe via the back door, tax us beyond fairness,raise there expences and wages well beyond what other public sector worker gets, and sell our rights up the river.
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Contrary to the BBC line, Gordon Brown is not the supreme being, he is simply a sociopathic idiot who has destroyed our country.
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My impression is that the Labour government has more going for it than anything the opposition have to offer, and don't see why they should give way just because a bunch of thugs are shaking the bars of the cage.
I like the government's general plan to develop innovation and employment for the long-term, and the asset stripping and wishful thinking of the opposition parties would just derail that.
I want the best government we can get, not some bunch of wiseguys who just want to claim their turn at the wheel by default, and the electorate wouldn't forgive Labour if they just 'took a dive'.
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#38
In a word, no.
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Saved the world?
Should it not be time for a reckoning Nick?
Remember these?
Gordon Brown's 1997 Budget Statement - "I will not allow house prices to get out of control and put at risk the sustainability of the recovery."
Pre-Budget Report, 9th November 1999 - "Under this Government, Britain will not return to the boom and bust of the past."
Budget Statement, 21 March 2000 - "Britain does not want a return to boom and bust."
Pre-Budget Report, 8 November 2000 - "So our approach is to reject the old vicious circle of the...the old boom and bust."
Budget Statement, 7 March 2001 - "Mr Deputy Speaker we will not return to boom and bust."
Budget Statement, 22 March 2006 - "As I have said before Mr Deputy Speaker: No return to boom and bust."
Budget Statement, 21 March 2007 - "And we will never return to the old boom and bust."
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Why haven't the BBC reported on the fact that Brown said this morning during his speech that he wants lending to soar immediately back to the same unsustainable level that it was at the height of the debt-driven boom immediately before the bubble started to burst?
After re-capitalising the banks with tax payers' money, he wants to use that money to re-create exactly the same situation that drove them to the brink in the first place.
Why haven't they reported it? Oh, it's because the BBC and the Labour Government are, in fact, one and the same thing at the moment; it's now impossible to separate the Labour spin machine from the BBC.
The public are, as another poster put it, absolutely livid with Labour, and most people are also livid with the BBC for acting as a department of the Labour Government throughout the last 11 years.
Where's the balance? Where's the commentary that reports Brown is simply re-creating the whole mess all over again but this time using tax payer's money to fuel it to make the next crash even bigger?
Brown's long term plan is designed specifically to create another bubble as soon as possible; the next one that bursts will be fatal to the UK; we must stop this man before he succeeds in his attempts to drive us back to the stone age.
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Yes it has seemed a distinct possible for a few weeks that Iron Man has little to fear but rust. What if Krugman's blurb for him is all hype? It's not bad going, all considered.
Politics, eh? Whaddya know?
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The Rebirth of Gordon Brown? Nah, you can't judge the effects of action of this sort after a day. You can look at what has happened over the duration of Gordon Brown's chancellorship and premiership and see that this was inevitable. No one can be golden forever and he was bound to hit the wall at some point.
The only honourable thing for him to do now is resign and give someone else a chance.
My choice for replacement: Alan Johnson - people who are unassuming tend to be the people who just want to get the job done. Not that I want Labour in again. I think he would be the best candidate for Labour though and would make the competition tight.
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There was a comment either in this thread or the previous one which discussed the fact that the govt now have access to all our personal details.
"Please may I have a loan?"
"Yes, which way are you going to vote?"
Very insidious.
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Man, I'm really cheesed my post at #23 got referred to moderation. It was a work of art. I don't flinch at the Tory bile in here so that was a bit mean. But, I guess, the Tories must be scared of someone satirising their leader. They can dish it out but can't take it. That says something.
I remember how shrill Tories get when applauding Thatcher and all that desk banging when you mention the Falklands War. They're the first to polish that trophy but begrudge even an ounce of well earned success by Gordon Brown. He foresaw these problems and tried to stop them, and that's more than Thatcher ever did.
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This blog is absolutely priceless.
The right wing entrenched dogma thinly disguised as considered objective commentary.
After all what would Krugman know about ecnomics compared to say Power to the People banging on about garlic and stakes (again).
It must be so galling to the usual suspects on here to read the comments of someone with no vested interest or prejudice heaping unequivical praise on "the Brown Plan"
How disappointing for you when anticipating bad news with so much glee and potential rejoicing.
Just be thankful for all our sakes that Cameron and Osbourne weren't in charge or should we ask Krugman for his views?
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#46
That's the way of the world Charles. Sometime the voice of sanity is silenced. When the rest of us have posts removed of course, it is quite justifiable. The plebs must be made quiet.
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Also Krugman reminded people of Browns almost loan voice for the past 10 years calling for global regulation.
But hey what does he know
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LIBOR rate coming down tonight.
My God Brown nd Krugman are soooo stupid.
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46 Charles_E_Hardwidge
"He foresaw these problems and tried to stop them, and that's more than Thatcher ever did"
I beg to differ; he was advised of these problems over many years and ignored those warnings, he created the problems in the first place with his lack of regulation and advice to tell everyone to borrow as much as humanly possible, and his solution is to re-create the same problems all over again.
I'm far from happy with the tories, and I wish I could have read what you said before the bbc regime knocked it off, but the main reason I'm unhappy with the tories is because they're actively backing Brown in everything he's doing even though Brown's long term plan is going to end up in complete economic annihilation about 5 years down the line.
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with all the jobs on the boards of banks funded by the taxpayers.... perhaps our intrepid hero will have a "cash for honours" moment - placing donors in those positions?
this would solve labour's funding crisis...
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I suppose this is what makes politics so fascinating ... for politicians.
I think the natives would prefer a much quieter life but no, many of us are the unwilling participants in this car-crash.
Politicians wield enormous power and sometimes it is not used very wisely.
I'm sure the pols meant well, fuelling the easy-street debt over the past decades or so, which made the people who owned homes feel 'wealthier' and consequently many started using it as their personal piggy-bank.
Especially the buy-to-let leeches boasting about their 'portfolios' (thanks for that Janice Turner of the Times).
'Light touch' regulation of the City has generated its own timebomb for our banks.
So this heady brew has now exploded and almost unbelieveably Gordon Brown is showered with praise as he sorts out the mess he partly created.
And by goodness, Brown will get away with it too.
When he's finally fingered for it, it'll be like fellow NL partner-in-crime Tony 'Ecclestone' Blair, having departed the scene before he can be truly collared.
What a glorious game politics is ... for the professionals.
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"I like the government's general plan to develop innovation and employment for the long-term, and the asset stripping and wishful thinking of the opposition parties would just derail that."
Perhaps. My point was that just as Gerald Baker argued in The Times a few weeks ago that 2008 was the US Presidential Election to lose, I feel that the same comment is true of 2010 here.
Brown may have a plan and may be putting it into action. The question no-one is asking is how the tax payer is meant to fund everything. The Government have added mass sums to public borrowing to bail out the banks which has massively increased public debt. The 10 O'Clock news suggested that is now around a figure of 50%, something not seen since the 1970s. If this is true then we have two options -
1) The banks restore themselves to their financial footing post-August 2007 and the shares owned by the tax payer increase to cover the public debt (a gamble nonetheless.) However, there still remains a potential worry that the same problems experienced now will reappear when those shares are sold in say 10 years time to repay the 2008 funding. Therefore, will our banks need permanent public ownership to save people from themselves? If yes, then the loan for those shares will need repayment from elsewhere.
2) Pay the debt another way. The Government was already squeezed with public finances before it had to bail out the banks. It was widely accepted that there was no spare cash left and the mass investments by Labour in sectors such as education and the NHS would have to halt (if not be cut entirely.) The Olympic Games has also meant that funding has got to be diverted from elsewhere to pay for that. So, the Government either pay back the money by cutting services (unpopular but likely) or increasing taxation or introducing stealth taxes (unpopular)
Either way, we sort out a mess now at our peril for the future. Brown may be the master at 13/10/08 but will he take credit if the predicted rise in bank shares fails and he has to resort to option 2? Remember, many councils are worried about assets frozen in Icelandic banks - will that mean more money to bail out the system.
This plan looks great on paper but has serious flaws and is based on a hope that the market sorts itself out. Vince Cable, in the Commons today, warned the Government of hubris and of the impending dangers of recession.
The risk to the tax payer if this goes belly up is huge. That risk alone is enough to make Brown think carefully about winning in 2010.
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#35 power_to_the_ppl
Under the creaking quasi-democratic plurality system which prevails for Westmidden I would certainly agree that in the general election the priority should be to get rid of NuLab by voting in any particular constituency for whichever candidate has the best chance of defeating them.
With the Tories in 2nd in 221 NuLab seats in '05 and the LibDems 2nd in 106, some kind of electoral pact in those places could devastate NuLab, aside from the damage the SNP & PC will likely do. The price would probably be at least a switch to majority voting like the London mayoral and French systems.
But until assymmetric devolution is addressed by some kind of federal solution, the likelihood is that Scotland will go it alone, closely followed by Wales, leaving Cameron as the last PM of the UK and first of England.
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re: 49
If Brown thought it was that important he'd have implemented it here sooner.
Q: So why didn't he?
A: ka-ching!
There there... No more tears.
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I only recently referred a wave of posts that seriously crossed the line in terms of disruption or personal attacks on folks in here. That's the worst of the worst not the routine rubbish, and I'll do it again if things got out of hand in a similar way. That's only proper and nothing near what you're insinuating.
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Re-birth? the BBC have really lost plot now, i know no-one not even life long labour supporters, (and coming from East London, i am surrounded by them) that have a good word to say about brown and his government, and for most, they are adamant that they will not vote labour especially while brown is PM, most are equally adamant they wont vote Tory, most say they will vote green or liberal, a very small minority BNP, the handling of the credit crunch, hasn't swayed them either, fact is most are repulsed at browns smug arrogance,
i am a bit of a political junkie, so many of my conversation's turn to politics (sad i know) and i talk to a lot of people, markets, shops, pub's cafes, perhaps the BBC should try it without bias.
Oh and i wonder where the BBC banks the public fund it receives.
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Gordon Brown had a plan for global financial governance that he floated before this crisis hit. Nobody wanted to know at the time. That's just a fact. Thatcher didn't even see but was warned of the Falklands issue ahead of time. She didn't even try to lift a finger. That's another fact.
The real issues are quite subtle, and both the risk averse CBI and the Tories opposing fair wages got in the way. Those factors alone pushed up the growth of credit as a fuel to the economy: it was needed to stimulate action and create liquidity in spite of opposition.
The CBI and Tories want more Thatcherism but the real key remains innovation and jobs for the long-term. This is where the CBI and Tories don't even get Adam Smith let alone Kenyes: they're depressing influences on growth while Labour is positive.
(I doubt any right-wing economist could challenge what I've just said in spite of the performance they put on.)
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I personally know a few people who are multi-millionaires through the buy-to-let scheme. I didn't like it before it took off and remember tearing a strip off one friend when he just talked about the idea in outline. I can't say I approve of some of the people who 'make money' this way especially when they start thinking they're some sort of 'wealth creator'. They're not and probably never will be.
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56 pttp
And how do you implement global regulation in one country?
LOL
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57. At 10:54pm on 13 Oct 2008, Charles_E_Hardwidge wrote:
I only recently referred a wave of posts that seriously crossed the line in terms of disruption or personal attacks on folks in here. That's the worst of the worst not the routine rubbish, and I'll do it again if things got out of hand in a similar way. That's only proper and nothing near what you're insinuating.
If we need a moderator, then we have those provided by the BBC. I ignore this blogger's comments, and think the best way to deal with him is to give him the proverbial cold shoulder. If any of my comments suddenly disappear now, I will know who has been malicious.
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Robinson, this is what you should be writing about not fawning over this liar, thief and traitor to country Brown!
# Inflating enormous debt bubble
# Destroying pension schemes
# Massive PFI off-balance-sheet debts
# Massively increasing tax burden through fiscal drag
# Selling Gold reserves just before Gold tripled in value
# Creating the biggest trade defecit in 10 years
# Pricing hundreds of thousands of people out of owning their own home
The man is a disgrace and so is the BBC for allowing such nonsensical biased dross to enter it's pages!
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re: 61
You can't, which is why I included the word 'here' to indicate that I was talking about regulation in this country rather than global regulation.
You know exactly what I meant, but clearly you prefer to dodge the issue. So you can't answer--- just as I expected.
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The moderators upheld 90%+ of the handful I referred, and you're just some anonymous mouth with an agenda that appeared out of nowhere to troll and flame my hide, so don't pull the Mr Innocent in here, pal. You've either got me mixed up with someone else, or are a bit mixed up yourself. I suggest you fix it.
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This comment was removed because the moderators found it broke the House Rules.
16. DistantTraveller wrote:
"..........Presumably, as a last resort, he can telephone to Royal Mint to hit the printing presses. But if word gets out, this could lead to a devaluation of the pound."
Oh! It'll get out all right!
There will be yet another breathless "I have just been told...." by Peston & shares will tumble again.
I think Peston has helped Gordon nationalise the banks at a very cut price...
The losers are not just the the tax-payers, but anyone with a private pension and the bank shareholders..who are by no means all rich toffs
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Gordon's Falklands moment eh?
Well, yes.
An unelected leader in economic trouble chucking his weight around.
Now we await the despatch of a taskforce.
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Dear Nick, God threw the money men out of the temple
Gord threw them out of the banks,
Gord also wrecked the National pension schme by Taxing it, The masses will throw Gord out at the first chance, because he played with peoples lives, and their retirement for that there is no excuse.
Twelve years as Chancellor, and now as Primeminister, why did he not act twelve years ago?
God only Knows, and so does Gord, One thing is certain the money men are not going to like this one little bit.
I think Gord should visit Israel.
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I see the T^ory's are out in force on this blog.
One fact remains....................
IF Mr Cameron had a clue about anything, worthy of being prime minister, he has time to say it. HE could have told the government (and as it happens the world) what to do.
But no...he did a Bush and waited for Gordon to come up with a decent sound solution.
As for all you Torys, harping on about the last 11 years.....may i remind, that no Tory government since the war has ever managed more than a few years decent growth with out a bust. 10 years even with a bust at the end is why all you will hear from a Tory is resentment and jealousy.
p.s. in the last 11 years of high employment and growth, i do hope you all put a little a side, for bad times. What?, you mean you Torys are relying on the state in bad times?
tut tut.
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USA now announce intrduction of the "Brown Plan" to the American Banking system.
Excellent
Never done this before bur feel credit where due.
News.http://www.bbc.co.uk/blogs/nickrobinson/2008/10/banks_partnationalisation_good_or_bad.html#comment204
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Today's newspapers are at last waking up to who caused the mess in the first place: fatcats, over-ambitious mortgages and the credit card bubble have been in the news for ten years. Add in the useless, Labour-created FSA, and the shine of GB's "mastery" is soon tarnished. But "don't blame me, guv".
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64 PTTP
Must be much whailing and Gnashing of teeth in the PTTP household to see objective views such as Krugman's heaping praise on the "Brown Plan"
No don't tell me, its like the BBC all Labour spin and Bias?
Don't forget A is A.
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Nick,
If my memory serves me correctly, Brown claimed that he had ended boom and bust. Was he lying or just delusional? If it was his judgement that was poor, then why do we feel the urge to accept what he says now?
He got himself tied up in the 10p tax rate issue. Hardly the sign of the great man that many now try to portray. He is implicated in the issue of the Ecclestone Affair. He is also the architect of the hugely complex tax regime that ties business in knots. Finally, he is the man who brought back Mandelson for the third time.
A man of great intellect? A man who sees the bigger picture?
I don't think so. I would be more likely to believe the guy with the Board on the street corner telling us the end is nigh.
All the best
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"There are many lessons to be learned about what has happened over the last 10 years. There are many interrelated things that we have got to think about. I think at the macroeconomic level we probably allowed a boom to go on for too long, with too much rising house prices, rising share prices etcetera. There are issues that we need to think about about the whole macro-economy."
This is the opinion of Adair Turner, Chairman of the FSA. The very body charged by Brown to monitor bank lending, capitialisation and liquidity.
In terms of the Tories doing nothing or saying nothing. Cameron spoke on 28/03/08 on the issues of capital inadequacy and illiquidity AND international regulation. And quoted:
"In short, liquidity risk was all but ignored, credit risk was delegated, and market risk was backward looking. And we now know that not only did the regulators not know, but too often the banks themselves didn’t know, the full extent of the risks they were subjected to. But let me say again, any reforms at an international level will need care to ensure that in tackling the past problems they do not create the problems of the future. At the same time, we must all recognise that crises are inevitable, so a prudent Government, as we will be, that is committed to be, must improve our response to these crises when they appear."
George Osborne has been arguing for bank re-capitialisation since the NR debacle and in almost every single interview since then has spoken about capital adequacy and re-capitialisation as the remedy to these problems.
At no point have the Tories have argued for more regulation, just better regulation on a national and inter-national level.
The Tripartite arrangement simply does not work.
The BoE sets interest rates, incidentally on an inflation measure that Meryvn King has said is almost meaningless - CPI. King has argued that House Prices should have been included as with RPI. Brown changed the measure.
The FSA is supposed to monitor bank capitialisation and liquidity - which is has utterly failed to do. An arrangement set up by Brown as Chancellor.
The Government controls the money supply which has been ramped up to 10-15% year on year for the last 10 years - a massive inflation of the UK economy which has ramped up asset prices beyond any sense of their true value.
The Tories opposed this regulatory arrangement in 1997 and have argued ever since for better banking regulation. Peter Lilley in 1997 foresaw this very problem, a problem of Gordon Brown's own making.
Add to that a woeful sense of timing for selling Gold, PFI off-balance sheet (the very thing that got the banks got into trouble with derivatives) and spending every penny of tax revenue and borrowing up to it's eyeballs.
There's one nasty thing with credit - you have to pay it back. It won't be Brown that does that - it'll be someone else.
To quote an anonymous insider:
"Is this Brown's Falklands moment?"
"Yes, as Galtieri."
Quite.
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Gordon Brown and Alistair Darling may well have expertly closed the stable door and bolted it securely. Unfortunately many of the horses could well still be inside suffering from a terminal illness. We won't know whether they have been successful at throwing our money at the problem until it feeds throught to the economy. Both are crowing 'Didn't we do well?' and basking in the glory of gushing praise. They conveniently forget that they were partly at least the architects of some of our current financial problems. To take a football analogy it's a bit like Rio Ferdinand scoring a spectacular own goal at Wembley and then weighing in with a fabulous equaliser in extra time. That leaves his reputation in status quo with those who support him strongly and those who oppose him vigorously holding similar views to what they had before.
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70 'correctopinion', i think you will find that the Tory's along with Lib Dems and a lot of other experts professional or otherwise have been saying for along time that the financial sector was in dire trouble, and all of the proponents in this plan 'HAVE' been said before, but protection of the 'master' (brown) by media and labour itself, will 'NOT' recognise any one else, like i said before, brown as PM is the only one that 'CAN' put forward the plan and implement it, it does not mean that this plan will work i hope it does, but labour have a habit of taking a good idea, heralding it as it's own and then completely mismanage it.
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#77
"I think that you will find that the Tory's (sic) along with Lib Dems and a lot of other experts professional or otherwise have been saying for along time that the financial sector was in dire trouble"
Well, ever since August 2007 and the beginnings of the credit crunch. Easy to predict something once its happened isn't it?
Cameron would have far more credibility if, before the current crisis he:
* Criticised the City for creating complicated financial instruments that hid risk in ways they did not understand
* Criticised massive City bonus payments and the incentives to short-run risk-taking that is at the root of these problems
* Noted that housing was over-valued and that this was at the root of affordability problems of first-time buyers
* Said that there needed to be massive re-regulation of the City and state intervention as the free-market didn't work
* etc
Unfortunately he said the opposite. Now he watches what Brown says, and repeats it parrot-like, or uses what he learns under Privy Council rules to claim Labour's economic ideas as his own.
All the hot air about 'dithering' shows his inexperience. He would have rushed into a poor solution.
Instead, by 'dithering', we have a well thought out plan that is far more likely to provide taxpayer value (e.g. I was reading in the Metro this morning that if shares in the banks the Government purchased returned to the levels of last year, the Government would have a £230 billion windfall).
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@77
Your missing the point.
Leading the world to solve a world problem.
Gordon is succeeding, where all those who you talk of failed.
being correct, is no good if no one is listening.
ARE YOU LISTENING?
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Lets stop the hype and blow the smoke out of our eyes and reflect for a few moments on the events of this last year.
We, the poor benighted tax payers, now own 4 banks, two outright, and two where we are majority shareholders.
Our ownership has not been the result of a carefully thought out plan for growth and profit, it has been a panic driven measure of last resort, after all other efforts to resolve the problem have failed.
Northern Rock became a basket case and by the time of state ownership ha dbeen allowed to deteriorate to the point where this was the least worse option. Much has been made of the point recently that the bank has repaid half of the initial investment, as if that is a great achievement. To me it seems that they have quietly sold off some assets and repaid the cash. It also means they still have over 20 billion of public funding. It would be nice to know the value of any remaining assets that are securing that figure. That would be a more interesting headline.
Bradford and Bingley were well signposted as a problem post NR. We seem to have the worst of all possible worlds there. Good assets sold off, liabilities sold off to a Spanish bank along with guarantees from the british taxpayer, and the net loss satisfyingly sitting in the public purse.
Then we have RBOS and Lloyds, currently. We have provided guarantees for the deposits, we have agreed to accept undervalued assets as collateral, and we have thrown short term deposits at them. Now we have a 60 percent stake in one and a 40 percent stake in the other. As ordinary shareholders the amount of money invested is completely at risk, and for what purpose?
All banks all over the world have been playing financial pass the parcel for some years now. There are bundles of assets tied up with various financial engineering tools (interest rate swaps, caps, credit default swaps) which are being handed from bank to bank. the more tools that are used, the greater the degree of obfuscation about what the risk is and where it lies, and I wouldn't rely on any fool of a politician to work out a valid answer.
However, we are now big players in this. Having taken the stakes on with a lot of politcal bruhaha, we now need to know what the strategy is.
Do we expect government institutions to behave as commercial banks have been doing for their entire history?
If not, what do we expect from them? An orderly disengagement from these activities? Will this put them at a disadvantage to other banks that are not state owned/supported?
If it does, and the state-owned banks lose market share and value, and become uncompetitive and loss making, how much do we have to lose before closing them down completely?
Since the global financial system itself is struggling, the likelihood of finding an eventual buyer of the state banks is getting smaller every day. And it doesn't just apply to UK banks, it applies to banks all over the world.
We've had the panic, we've had the initially ineffectual response, and now we've had the big hits. Some respite seems to be the order of the day now, but now we need to know what the big plan is.
UK government borrowing as a consequence of the latest actions is way over the guidelines, but the government will escape censorship because everybody else is in the same position. But it will take decades to sort this out. Don't lose sight of the fact that it is banks, international and in all their guises, who buy state debt and make a profit out of it. Will UK banks be able to find the money to buy UK government debt? Will French, German, Chinese and US banks be in a position to buy it? And whose going to buy those government's debts.
Don't praise Brown too highly yet, he's only raised the ante. He hasn't gone all in yet. Or has he?
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Has it escaped your attention, Nick, that the founders of LTCM - the hedge fund that brought the world financial system to its knees ten years ago in 1998 were all Nobel prize winners too?
Doesn't mean anything except they got a Noble prize in economics.
Doesn't mean they now how to manage their way out of a paper bag.
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So just to clarify.
Brown has been announcing massively rising tractor production stats every quarter for the past decade.
Despiste this, the country suddenly notices that there is a massive tractor shortage (none to be found) and noone can go about their business.
Brown, spends a massive amount of our money on an emergeny tractor production plant - with a promise that tractor production will continue on its upwards curve.
And, for this, he is hailed as a genius?
If we had the tractors that he claimed over the past decade then there would be no emergency, and no need for the emergency expense.
If however we have not had the tractors that he claimed then he is mearly *claiming* to have solved a problem that was entirely of his own creation - still at massive expense to us. And will his new claim be any more reliable that those of the past decade...
Like taking off a pair of ill fitting shoes at the end of a long walk -- don't mistake relief for pleasure -- you still have the wounds to dress.
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#81
Ok, I admit it.
Robin - you are a better economist than Paul Krugman. Nobel, Shnobel.
I await your remedy to the current economic problems...
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re: 73, Eatonrifle
A certainly is A, even when Labour try to alter the past.
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68 Palacedim
Yeah the 'Falklands Moment' line that has been fed to the BBC reporters to regurgitate by the spin doctors is laughable isn't it?!
If there truly were a parallel to the Falklands, then Margaret Thatcher would have needed to have been governer of the Falklands for the 10 years prior to becoming PM. During this time she would have needed a 'light touch' approach to Argentina where she wiggled her bum and tried to attract them over, whilst ignoring any signs that things had got out of hand.
During this time she should have also lobbied to ensure that the armed forces were over stretched and under funded and also that there was not enough cash in the coffers to do anything other than hike taxes to an even more unacceptable limit to pay to defend the islands.
When the Argentinians invaded, she should also not have acted decisively and sent a task force almost immediately. Instead she should have dithered, Northern Rock style, until the US led the way and showed that it was OK for governments to try and intervene in some way.
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Banks exist to make money out of money. That's all they do, and its what they've always done. Banking is, after all, the second oldest profession.
They use their own capital, and funds deposited with them, to leverage their capital and lend multiple amounts to various borrowers.
The trick is to lend to people who can repay, thus ensuring the quality of the assets, and to charge more in interest on loans than you're paying for deposits.
That marks a successful bank, who can make a profit and repay the shareholders. Periodically mistakes are made, and some assets don't get repaid. This makes a loss for the bank, who take the money out of the shareholders account.
Assuming the shareholders account (capital and reserves) contains more than the loss the bank can continue in business. However, since its capital has been eroded it needs to either sell off assets and repay depositors until it reaches a size that is sustainable for its reduced capital, or it has to raise new capital.
This is where the rules have been changed, and where we come in.
Since we, the public, have become equity shareholders in these banks, the acid test of liquidity will become diluted. If the value of assets continues to deteriorate (by being restated following the new market realsim about banking assets), then the capital will be depleted. Bank liabilities will still need to be repaid, particularly those that benefit from the state guarantee. If deposits are not repaid, then the market won't lend any money to a defaulting institution, so it will be forced into liquidation.
In order to plug the gap, more money will be required from the equity investors. Are we, in the shape of the government, going to be in any shape to say no?
Banking is a risky business. Always has been, and always will be. Taking risks is the only possible way to make money. Not all risk taking is successful, but then that's what makes it so attractive, isn't it?
How much of your future income, the value of your home, your personal savings and pension, do you personally want to risk on running a bank?
How many banks do you actually need?
Our new state banks do of course have operations in other countries, in the form of branches and subsidiaries. We now own stakes in them. Has anybody worked out the value of any cross guarantees with other lucky owners of banks in other states?
This will run and run.
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83 Balhamu
I just had a look at Krugman - I liked this line - apparently Brown and Darling
"went straight to the heart of the problem ... with stunning speed."
I assume he knows nothing about Northern Rock which dripped on and on and on and on for months.
Brown and Darling only came up with a plan, after the US led the way and showed it was 'OK for governments to intervene'.
I suspect also - that Krugman is politically biased (against Bush) and will use any weapon to whack Bush over the head - at the moment that happens to be Gordon Brown.
So Gordon can now bask in a tiny bit of glory for a wee while. Wow!
Bush out. Brown out. Lets get some decent leaders over here and in the US.
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I see that inflation is now 5.2% officially on the Governments preferred measuing tool.
How long before trhe next public letter of apology from the Governor of the BofE to Darling?
How long before this measuring tool gets discrdeited and replaced with something more in line with the governments fictional desire for 2 percent?
How long before the public service unions come looking for pay rise more in keeping with the real rise in their cost of living?
When they do, what reasonable excuse will the government give for not acceding to their reasonable requests?
Anybody want to buy some candles?
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#85
Not wanting to keep the topic on the Falklands
BUT
Didn't Thatcher withdraw a lot of troops from the Falklands in the couple of years preceding the Argentinian invasion to 'save money'? Despite the political situation in Argentina, and the firm belief in many Argentinian's minds that 'Las Malvinas' belonged to them.
And isn't the reason Argentina saw an opportunity to invade because we withdrew said troops?
If we didn't withdraw troops, the opportunity to invade would never have been there. It was predictable that Argentina would be tempted - a populist move for a dictator to take and try and become a hero and the man who gave the islands back to their 'rightful owners'.
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£37bn of our money to solve a problem he helped to create.
More disaster than master.
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This comment was removed because the moderators found it broke the House Rules.
A word of caution from the London School of Economics Professor. Brown and Darling may well in the long run have secured a good deal for the taxpayer but at the expense of The City. Because of overly severe new knee jerk regulations money will flow out of London to financial Institutions abroad and that in the long run will impact adversely on our whole economy. Interesting stuff!
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So the all conquering Great Leader has saved the world from financial meltdown.
Can he now turn to alchemy to re-make our gold reserves that he gave away?
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#83
I'm not better than anyone. But I am saying Nobel prize winners got us into an enormous financial mess before by buying Russian debt in 1998. Every single partner at LTCM was a Nobel prize winner so it makes no sense to argue that these people should either be followed slavishly or not questioned about their opinions.
They are mortal after all.
This solution, which mimics but does not replicate the Swedish solution of 92, has its dangers. These dangers have not been pointed out by the Nobel economists; they are that Sweden entered into a long and deep recession. 5. percent real contraction in GDP which lasted for three years.
This is what we could be looking at after the Gordon Brown grandstanding moment. What do you do for a follow up after spending 500 billion on a bail out? There is nothing left and that money has to come out of the economy; hence the likely sharp contraction in GDP.
We may have been saved in the short term but nobody will have any more money in their pocket as a result of this intervention. The leverage still has to be reduced in the banks.
The real reason behind the scale of the rescue is newlabour wants to bail out the home owners who would be reposessed after the eleven years of excess leverage sanctioned by Gordon Brown's age of irresponsibility.
It's a national disgrace. He's using our money to take control of the banks so he can bail himself out of an election liabiltiy in eighteen months time.
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#87
Yes, Krugman was wrong, Jonathan. I was mistaken.
I will only listen to our in-house expert RobinJD now. He is the king of all economists. The best.
That's why the rest of the world aren't following the UK's lead in the design of their responses to the current financial crisis. That's why Cameron is suggesting a different plan. That's why every economic expert is saying how poorly thought out and ineffectual Brown's plan will be. Because Brown's plan is a load of rubbish.
What's that?
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#95
Glad you finally worked it out.
Shame it took you so long.
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#94
But what did the LTCM partners get their Nobel Prizes for?
Merton Scholes and Robert Merton (co-partners of LTCM) won their Nobel for a new model of pricing derivatives in financial markets.
Krugman won his Nobel for his insights into trade theory and globalisation. He, for example, predicted the problems that led to the 1997 Asian Crisis and also the problems that LTCM would run into.
A bit of a difference in their expertise maybe. Krugman won his for a broad approach to economic theory. Scholes/Merton for what was essentially a mathmatical model of narrow usage in the financial sector of the economy.
BTW You disagree with the rescue package that Brown (and the rest of the world economy) has launched? Just to check.
And if so, what's your answer? Let them go bust?
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I know the cosy Westminster village and the NuLab client state would like things to go back to business as usual, but they can't - the tax'n'borrow'n'squander culture has lumbered the taxpayers (and the taxpayers' children) with high taxes for decades to come - AND WE ARE ANGRY ! Brown is the chief culprit, and will be swept away at the next election (roll on that blessed day!) - but the only solution to our systemic problem (of a population living beyond it means) is for root-and-branch reform (and shrinking) of the public sector.
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89 Balhamu
I believe there were some cutbacks - but the UK forces were not so overstretched that they could not have responded.
Do you remember the news this summer. British warships have been patrolling without weapons loaded because of budget cuts. What?!
Given we are in two conflicts - Labour also showed appalling judgement by splitting the Defence Minister as a 'job share role' alongside responsibility for the Scottish office.
Defence does not seem to be a high priority for Labour, however, controlling the populace through use of ID Cards does seem of core interest to Labour.
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Now here's a funny thing, with acknowledgements to Max Miller.
It seems, according to Peston, the man who knows, that RBS might escape full nationalisation, because its share price is above the governments offer price.
Market forces are in control, and share are trading outside the governments range, which begs the next question. That being so, how long is the government's offer to buy going to be on the table?
If the price continues to go up for, oh I don't know, but the next two weeks seems reasonable in this quick changing economic climate, a while then comes down again, will the government still be there?
I do think we need to know, and a detailed explanation needs to be given, at least to parliament. After all, it's OUR money that is being wagered here.
Seemingly HBOS, involving Halfax's mortgage book, isn't so popular, given that the UK housing market (and the Spanish market, to name but one) is in decline, with the possibility that asset values are actually below the total liabilities, isn't so popular in the market. We'll get this one, no problem.
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95 Balhmu
I was only pointing out that it is a bit silly to accept this Krugman thing at face value.
I'd suggest that if Brown and Darling hadn't dithered over Northern Rock, for months, and instead acted as real leaders - that the cost of buying the 'confidence' of the city would be far lower for the tax payer.
Darling and Brown have at last acted - but only after the US led the way to show that government intervention was OK.
A big pat on the back to the backroom advisors who have come up with the current plan we are following - Krugman likes your approach.
I wonder what Krugman's views are on Browns's culpability for getting us into this mess into the first place, or his views on how Brown has hobbled our ability to escape the mess quickly?
Maybe Andrew Marr can get Kruggars on his show weekend so we can find out?
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#96
Call an election.
Elect Robin as PM.
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#98
I think you'll get your wish.
The Treasury are going to implement massive cut-backs in public spending 2008-2010 (indeed they already are - the latest spending review aimed to shrink the size of the state with respect to GDP, and inflation is helping reduce real expenditure as many public sector workers have pay awards linked to the CPI target).
Cameron will get elected in 2010.
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97 Balhamu
I'm also interested in Krugman's view on Gordon Brown (the master economist himself) having repeatedly told the public that "he'd ended boom and bust".
One other thing whilst I've got your attention - I wonder if Krugman wonders why Brown didn't follow his own advice from 10 years ago:
http://news.bbc.co.uk/1/hi/business/the_economy/183557.stm
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#97
The answer to your last point has to be emphatically, yes.
Any industry has to operate without a bottomless pit of public sector money to underpin it. 100 plus years of recent history from all over the world teaches us exactly what state intervention in and attempting to run any economic activity brings.
To be viable it has to know exactly how much it can risk, otherwise no sense of reality governs the decison making process. It's harsh but true.
There are always howls of protest, and I must admit some of them have been mine, when my money has been lost, but it is survival of the fittest after all.
We now seem to be in the game, but nobody has explained all the little rules that may be invoked, nor have they indicated exactly how much is at stake, and what benefits we will get, and what sanctions we can seek to impose if we don't get those benefits.
All that we, and the other players in the game, know is that our valiant leader will spend WHATEVER IT TAKES (his words) to restore a semblance of order.
In case you actually haven't spotted what has happened in terms of financial rescues, all bamks that fail and have unlimited losses go to the state, anything that is remotely viable and profit making stays in the private sector, until it is deemed to be irretrievable, then it can go to the state.
Let them go bust!
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Gordon Brown is doing what he's always done, he's attempting to re-inflate the debt bubble, he doesn't know how to do anything else, debt is his answer to everything. Only yesterday the current BOE Governor reportedly threatened to quit if the government tries to go ahead with lending money directly to the market to provide cheap mortgages. Go back to last year and the revelation by former BOE Governor Eddie George, talking about why the bank cut interest rates in 2005 to deliberately inflate the housing bubble and increase consumer debt, when it should have continued putting them up. Ask yourself, who in 2005 could have put pressure on the supposedly independent BOE to do such a thing.
Better still have a read of it yourself
http://www.independent.co.uk/news/business/news/exgovernor-george-says-bank-deliberately-fuelled-consumer-boom-441160.html
also at http://findarticles.com/p/articles/mi_qn4158/is_/ai_n18739255
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I see that the government (sorry, THIS government) is at it again. Benefits will rise next April in line only with the RPI (5%), instead of with the CPI (5.2%).
Why don't they use the higher figure?
But hang on - only a few weeks ago people on here were pointing out how awful it was that Brown used the distorted CPI when talking about inflation, weren't they?
One day the Conservative economic experts on here will accept that they can get things wrong like the rest of us - but I don't expect to see pigs with wings any time soon.
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#99 jonathan_cook: "I believe there were some cutbacks - but the UK forces were not so overstretched that they could not have responded."
While strictly true, this would not have been the case if Galtieri had managed to contain his enthusiasm to take up what he saw as Thatcher's invitation to invade for only a few more weeks. The government had already cut the airborne EW Gannets (which led directly to the loss of a number of ships), and one of the carriers (Hermes I think) had to have the scaffolding huriedly removed that had just been put in place to convert her to a helicopter carrier.
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#102
Indeed. There should be an election called and Gordon Brown should attempt to defend eleven years of the most scandalous gerrymandering known to man.
First throw out the Frank Field welfare reforms and instead create a client state of five million benefit dependents.
Second create a million new public sector jobs.
Third nationalise the banks so that by 2010 when all those who spent too much during your age of irresponsibility are haemorraging cash you can buy their mortgages and their votes too under a shared ownership structure.
The man is transparent, conniving and dangerous.
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Interesting isn't it.
The stock market collapses of the past weeks have been reversed by the action of various governments.
What those governments have done is underpin the loss making potential of the banks, and guarante their continuation in business, under any conditions.
This stock markets can rise again, mostly in the non-financial sector, which is what we are now witnessing.
Bank stocks now have a floor, the governments buy in level, and have fallen to meet it whilst other stocks go up.
Wonder if our financial genius also bought any call options on trhe FTSE, and other indices, to help offset the cost of our major investment in banks? This is, after all, what any self respecting banker would have done.
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Nick,
No doubt that GB has milked this for all it's worth and I suspect that he will see a substantial jump in his popularity in the next opinion polls. The Tories need a significant lead across the board to have any hope of winning the next election. If the Tory lead narrows sufficiently and stays there beyond the new year, I predict that GB will call an election in May next year, hoping at worst for a hung parliament, in which case he will do a deal with the LibDems and install Vince Cable at the Treasury, so he can blame the coming recession on him.
Anyone want to offer odds?
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#107
And we are still waiting for this government to come up with a strategy to defeat inflations, since waving a hig level of interest rate at it hasn't done the trreick.
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#108 jimbrant
In the current debate we are worried about the role of GB in trying to stabilise the UK and World economies (in the short run) and returning the UK to a non debt fuelled period of growth (medium to longer term). Is his plan likely to work? If so, great, no doubt inflation will be low and tolerable. If not, we could face either a return to high inflation (if the debt spiral resumes), or deflation if the plan fails.
I suspect most of us want to know if he is doing the right thing for the longer term, not what measure of inflation existed for September 2008, or am I missing something about the blog?
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#105
It's good that you have the bottle to keep your convictions even if the implications will be disasterous, certainly in the short-term and (more debatably) in the long-term. I admire you for it.
You have a lot more of my respect than some who would have been on here moaning no matter what action the Government took e.g. GB would make a rash, ill-thought out choice or would dither, it was a mistake to part-nationalise the banks but it would have been a mistake not to, or to just bung them taxpayer money with no accompanying responsibilities etc.
Though of course I would disagree with you about your remedy (I think the lessons of e.g. Japan failing to take action in a similar situation and being in a depression for the whole of the 1990s from which they are only starting to emerge is an example of the implications that can follow from this laissez-faire attitude).
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A triumph....
A master at chucking my money about.
Taking on spending commitments in my name all the time. Each time to sort out a problem he has created.
If constantly having to get the poor punter to bail you out in this manner is what gives you confidence that the next idea is going to be fantastic then it is not a spin doctor that he needs to bring back into Government, but a medical one!
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re: 106 ivegotyournumber
Hooray; finally someone who's also pointed out the question about "why is brown trying to re-create the same conditions that caused these problems in the first place?"
I wish the BBC and labour supporters would read your post and those links.
Nobody from the BBC or any labour supporters have answered this question yet, and it's by far the most crucial point that's been raised so far because we're heading for total annihilation in the long term if we blindly follow Brown's "new" plan.
see also:
43. At 9:36pm on 13 Oct 2008
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Browns 'solution' only has to fend of the bust for about 18 months - he wants to win the next election at any price - so that is his only horizon.
Consolidating all the banks debts into one simple monthly payment may seem to ease things in the short term.
But unless you take advantage of any breathing gap to slash your spending so you are no longer living beyond your means, and also have enough to cover the 'single montly payment'. You are just putting off the fateful day, which will return with interest.
Brown has not made us well off - he has just turned the bailif away for now.
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116#
If you're talking about the fact that GB has asked that lending returns to 2007 levels then of course this has to happen at least for a while, thousands of viable busineses are in danger of collapse because they have been denied credit that previously they would have had. This is essential due to cashflow problems mainly because of larger companies extending payment delays to up to 120 days. And of course at Mortgages availabillity will return when banks are re-capitalised. What are you suggesting that the Banks simply lock the cash up in a big safe?
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Our Government now has control of our banks and by default control of the stock market and capitalism.. But our Government and country are owned by the EU a dictatorship in power forever. So now the EU controls the banking system.. NOW America and Europe think its such a good plan they will all follow suit..
If anyone was to say to you that an audacious plan to take over our wealth and our capitalist societies you be laughed at..
ITS JUST BEEN DONE. They created the problem then solved it.
Bush and his Bilderberger friends who want complete control of the west they say to compete against the rising threat of china russia and india is actually a power grab..
They are taking over democracy IE the EU now has its constitution and owns us. So how did they do it? Through long term planning and Bush
The Community Reinvestment Act (CRA) is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities,
Although not part of the CRA, in order to achieve similar aims the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 required Fannie Mae and Freddie Mac, the two government sponsored enterprises that purchase and securitize mortgages, to devote a percentage of their lending to support affordable housing
between 1993 and 1998, $467 billion in mortgage credit flowed from CRA-covered lenders to low- and medium-income borrowers and areas. In that period, the total number of loans to poorer Americans by CRA-eligible institutions rose by 39% while loans to wealthier individuals by CRA-covered institutions rose by 17%.
http://www.washingtontimes.com/news/2008/sep/28/illegal-immigrant-factor/
Bush allowed 11 million illegal immigrants in then let them borrow which became the majority of sub prime loans that has taken europe and America into a depression.
In order to get out of that depression the British government buy a decisive share in all major banks..
Business cannot function without loans Banks provide them This means the government has control over our stock markets and capitalism in general.
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Anti - moderation test:
- Robert
- Peston
- Labour
- Stool pigeon
- Mouth piece
- For spin doctors
- Uncritical of government.
- BBC stopped doing
- Investigative
- Journalism
- and instead reads out
- Sheets prepared by PR teams.
- Nick Robinson
- Should ignore the
- Young upstart
- Peston,
- Who only gets scoops
- Because he flatters
- The mendacious one.
- I'd like to see Nick
- Give the Conservatives a hard time
- over their plans for the future.
- And also give Brown a hard time over his 11 year record
- And culpability for our current
- Issues.
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re: 118 Eatonrifle
I'm suggesting that the lending level at 2007 was too high; it's self-evident because it was the level/type of debt that existed by 2007 which was the cause of all these problems.
Some of those loans need to be called-in or written off. You can't pump in tax payer money to temporarily fund an unsustainable situation.
By all means pump in money to temporary create liquidity and to stave off bankruptcy of the banks as an emergency measure, but do not use it to temporarily subsidise bad loans because you're only storing up bigger problems for the future.
Read the links/info; what you're suggesting makes no logical sense (it's the same thing as Brown is suggesting), and is intended to re-create the same conditions that created the whole mess in the first place.
see also: 117 the-real-truth, who mentions the same thing.
Live within your means (individuals, governments, and entire countries), or else you will pay the price and you *will* go bankrupt; it's a mathematical/logical certainty.
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#120
Hidden messages eh? Maybe they won't spot it?
That.
Was.
Absolute.
Tripe.
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#119
well spotted, Sir.
I made this social engineering point some weeks ago only to be shouted down by the usual apologists for newlabour.
It's gerrymandering on a grand scale. Why do you think they nationalised Northern Rock rather than let it go to Lloyds? Stuff capitalism we'll have those mortgages, houses and votes. 36 out of 39 constituencies in Tyne and Wier are newlabour. Stand up for your own.
now they have a taste fot it and have gone for the largest mortgage lender in the Uk - HBOS out of concern to eb the 'Rock of stability'.
This is evasive, back door politics except they've been rumbled.
Dead cats onlybounce once, fortunately. Gordom's cat has bounced too soon and still only managed to close the gap to 10% with the tories. not enought o get re-elected, mercifully.
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#121
But why are most of our institutions in trouble?
Is it primarily because of holdings of UK mortgage debt and associated credit default swaps?
Or is it primarily because of holdings of US sub-prime mortgage debt and associated credit default swaps and financial engineering of the banks.
My understanding of the financial troubles are that the inter-bank lending market froze over in summer 2007, due to fears that banks had large holdings of sub-prime debt and associated securities. Northern Rock found it difficult to get short-term funds to re-finance their loans as a result, which is what tipped it into difficulties. The problems with short-term inter-bank lending are a) Worries that other banks hold this toxic US debt; b) Worries that they themselves hold this toxic US debt and needing to protect themselves for the worst.
Yes - you are right that there are issues due to banks holding over-valued mortgage debt from the UK. But I think the scale of the problem is not actually that large - we did not have the large scale mortgage fraud in the who were given mortgages could - for the most part - afford to keep up repayments on them. We'll see what happens to the Northern Rock loanbook over the next few years and what, if any, losses will be made on it by the taxpayer.
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Gold stocks have gone for a song and our economy is based upon a housing stock that, inspite of everything, is still massively over-valued.
Brown will not be in power come 2010 - it makes sense for him to put a sticking-plaster over this shotgun wound and let the Tories inherit billions of pounds worth of debt.
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122 Balhamu
I'm afraid that was a genuine test at #120..... hence the title 'moderation test'
One of the downfalls of this blog is that innocent postings get moderated. The 'house rules' are not a good guide as to what gets blocked.
I have found that once moderated, similar content , with similar words automatically disappears into the ether when you press post - no matter how many times you re-draft it.
My experiment shows that you can post the same content the next day - and it doesn't just disappear into the 'ether' when you press post.
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I don't understand how the various support packages have changed the fundamentals.
Has any action, either already implemented or proposed, to prop up the banks with our money actually changed the nature of the debt profile which is the heart of the problem?
If not, all taxpayers now have a share of that toxic debt. And the ratio of toxic to good debt is worsening and will continue to worsen as property markets continue to collapse, businesses close and unemployment increases.
So, to make an apolitical observation - Labour or Conservative in 2010 - we are screwed. Taxes up, spending in real terms down is my forecast.
For those who think this view unreasonably pessimistic. The Darling solution is based on the Swedish solution of 1992 and 16 years on the Swedes have only got 50% of their money back.
Once again, our politicians are shielding us from all of the facts. I don't believe that there is an alternative of doing nothing - but it would be nice to be treated as adults and for our politicians to tell us in an unspun way what the real medium term impact will be.
A rebirth of Gordon Brown? Temporary at best. His new found reputation will start to unravel as quickly as it was made once the journos start digging.
I don't think the Conservaties are coming out of this looking too smart either. Their message of "Smaller Government" and "Sharing the Proceeds of Growth" at a time of bank nationalisation and recession makes them look like they haven't read the newspapers.
We need Cameron and Co to tell us what their view of the next 10 years is and what they intend to do to fix things. Sharing the proceeds of NEGATIVE growth sounds like a tax rise to me.
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#124
I'm afraid you have made it crystal clear why you fail to understand any of this debate. UK anks dod not fail in the summer of last year because of the troubels inthe US.
Uk banks have failed because they assumed monumentally large levels of leverage (way in excess of their US counterparts) borring moeny in the wholesale credit markets.
Onee liquidity dried up with the smallest wobble on the US credit marekts, their business model was exposed to be a sham; you simply cannot lend out your balance sheet 30 or 40 times over keeping equity ratios of around 3% (RBS) and expect to get away with it.
Never seen 'A beautiful life' ??
They took this mdoest experiment and strapped on the after burners. They are now paying a heavy price for their leverage.
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Nick Isn't it sad that when the world is going through this terrible financial crisis, that when our prime minister and chancellor come up with a plan that is considered good enough for Europe and now the USA, their are still all these Tory wise ar*ses on here that cannot be magnanimous and for once in their blinkered lives give credit where credit is due, it makes me sad to think that these people with whom we share these islands have only political bias in their lives ,if this plan works out then we should all rejoice and thank God that someone thought of a way out. I was going to write a much stronger criticism of you Tories but you disgust me and however much I remonstrated with you it would not convey how annoyed I am at your small minded attitudes.
This is our country and we are all trying to save it from financial ruin, we are renowned in this country that when facing adversity we stand shoulder to shoulder, not that I have seen much of that from the two phoneys that promised that, but as people lets at least give credit where credts due.
I can do without all the armchair economists giving me their opinion, if you have a plan then tell it to DC and GO because there's nothing surer than the fact that they haven't.
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123 robinjd
there was no offer on the table from Lloyds that could have been accepted, there where other offers from Virgin that also was unacceptable, it was not up for sale at any price, the government waited to see if someone would come up with a decent offer they didn't the rest is history/
Incidentally Northern rock have now paid back fifteen billion out of the twenty two billion they borrowed.
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129 Grandantidote
It would be far easier to give Gordon a pat on the back for this plan if he or Labour supporters could admit some or all of these things:
1. Regulation has been a mess for years. The lack of co-ordination between FSA, Government and Bank of England has been appalling and G.Brown has been responsible.
2. Gold sell off was stupid. We need reserves to leverage at a time of crisis.
3. When G.Brown says we are well placed to weather the storm that is incorrect - especially when he obfuscates and says that he has reduced government spending by £100m
4. That we have been promised an end to Boom and Bust - which was a mistake.
5. That our financial planning has not considered a 'bust', thus we have borrowed up to the hilt of the 'golden rule' - with no money in reserve.
6. That confidence in the markets would have been higher if Brown and Darling hadn't dithered for so long about Northern Rock and had been leading from the front throughout the entire crisis - and not for just the last week.
7. That G.Brown launched a 10p tax on the poor at a time of rising cost of living.
8. That the 'new plan' is the work of the many and not the two (Brown and Darling) in isolation.
It is very difficult to give Brown any credit when he lies, obfuscates and tries to pull the wool over the public's eyes.
Everyone apart from hard core Labour supporters are livid with Brown. If Labour or Brown want appreciation for this plan, then they are going to have to eat a lot of humble pie.
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Here are some banking questions that our governmental bank friends can answer:
What are the total assets of Northern Rock?
Are these at original face value, or at some notional market valuation?
What are the liabilities of NR? How much of these have come from the tax payer? What is the total value of the individual deposits in the bank (which are subject to the unconditional government guarantee).
Is the bank now in profit and able to be sold to the public?
What is the price that HBOS and RBS shares are being subscribed for by the government?
How long is this price going to be valid?
These should be asked at PMQs and at any time any government minister appears in public on an interview or question program.
Don't buy any guff about price sensitive information, these are valid questions and in the public domain.
Think about this, the stock market is up for all but those banks the government is rescuing. They are on the floor of the government's bid price.
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#128
The banks didn't fail in 2007, no.
But that's when - and why - the trouble started.
You are correct that the fear started because banks had leveraged their balance sheets highly to 'invest' in this toxic waste (US sub-prime debt and associated securities) that the bank bosses, shareholders or auditors did not make the effort to understand properly or simply could not.
The current crisis is about US sub-prime fear halting inter-bank lending and stopping banks from lending to other sectors of the economy.
Any real impact of people in the UK not being able to meet re-payments on their mortgages, forcing the banks to take a small hit through repossessing assets that are worth less than the loans against them, has not yet been felt (see repossession stats, and negative equity stats).
Q/ What should the Government have done differently to prevent contagion from these US assets?
A/ Regulate the banks a lot more closely and interfere more in their day-to-day affairs to check that they weren't trying to pull a fast one on their investors.
The side-effect of that would have been the flight of capital and financial firms from London to places with less strict financial controls. I thought the regulation that we had was 'stifling' and causing this to happen anyway, and this was one of the reasons why the Government were not much cop according to right-wingers.
Why weren't right-wingers,such as yourself, pushing for this radical increase in regulation between 1997-2008. Surely this situation of the state accepting a limited role and deregulating this much is the culmination of Thatcher's dream?
Cameron knows that because of this, it is hypocritical for the Conservatives to blame Labour for deregulation, so they do not try and do so. They also (in contrast to you) agree with what the Government are currently doing, waiting for Gordon to say something and then saying what a good idea it is.
Instead, small changes are emphasised. Gideon (and the crowd on here) are trying to blame the decision to take bank regulation away from the BoE and towards the FSA for the crisis. And also trying to blame the Government for keeping debt at the same level as a % GDP. This made next-to-no difference to the evolution of the crisis, it just may have made the medicine go down faster once the financial body was already chronically ill.
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129:
If Gordon Brown's plan works then good for him and good for us but let's just put a few things straight. It's not just his plan. An army of advisers have had their little pinkies in this solution and we have no idea at the moment whether it will work or not. It's far too early for that even though yours truly has already been boasting about his perceived achievements.. If people are slow to acknowledge his part in the plan maybe it's because he's partly to blame for our present financial malaise. It doesn't make his detractors wise ar _ ed, blinkered, small minded individuals with no national pride. That's the kind of language that makes me fume! Credit will be given when positive results ensue. That won't include higher unemployment and taxes. There will be a price to pay for all of this and none of us will be shielded from the consequences. Right now none of us know the future so let's just wait and see shall we.
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130 Grandantidote
I agree - good news that Northern Rock has paid back this amount. Before we celebrate, however, we need to look at the detail.
Like many of Gordon Brown's budgets, there was a sting, hidden by apparent good news. We need to check the small print of the deal.
It remains to be seen how much money the tax payer has gambled and lost.
Gambled and Lost?
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If the majority of the views and opinions on this newlog represent most voters. God help us all at the next election.
If they represent the views of Conservative voters and Conservative Party members and that party wins the next election I can't see it staying in power very long.
If there were considered argument and examples for what is being slung and alleged against Gordon Brown most of the above entries could be taken seriously.
But, in my opinion, the sane entries are rather few and far between... on the other hand, maybe I am being very unfair and they come from children. If they do... well done girls and boys, its good to see you taking an interest in politics.
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#130
Nice to see that you don't let a little bit of accuracy obscure a nice point scoring opportunity.
When it was nationalised NR had 25bn of loans, 30 bn of guarantees and a mortgage book of 55bn, making a total of 100bn of "credit" that was granted.
It has certainly paid back some of the borrowings, so that only 11.5 bn is outstanding, but the guarantees are still in place. Oh, and let me think, how much has the value of the mortgage portfolio increased in the past year?
Oh, and at the time it was acknowledged that this meagre sum put the governemnt's public sector debt figures well outside the golden rule, which, of course, we now know doesn't exist, and was only a figment of El Gordo's febrile imagination.
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#130 Grandantidote.
The bailout has just postpond the crunch (at huge risk to the taxpayer) it is not a solution.
Yes, there is more money in the system, loans will continue this year as last - but where will the money for next years bail out come from ??
RE: Northern Rock
The government put a load of taxpayer funded chips on 'red', and and so far hasn't lost the stake.
The wheel is still spinning, and even if it does come up red, winning at roulette is no indication of inteligence. Particularly if the only plan you have if you lose, is to play again with double the stake... Soon you will be talking about big sums money - and stealing the pensions of our great grand children before they are even born.
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re: 129 grandantidote
I'm not trying to score party-political points; I'm just pointing out that Brown's "plan" is doomed to cause another bigger crash in the medium term because although the initial bail-out is needed given the situation that he's created, the reversion to unsustainable debt levels is just plain insane.
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So, Nick, let me see if I have this right:
A battleship captain who steers his ship onto the rocks through his own incompetence, then manages to dream up a scheme to refloat her, albeit it in a way that will inflict even more lasting damage to the vessel, is worthy of being lauded as the greatest master mariner of all time? Would this be before, in lieu of, or after the court martial for hitting the rocks in the first place?
Just wondering.
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129 Grandantidote
Wouldn't it be a shame if Gordon nicked the plan?!................. he does have previous doesn't he?!
Who is the real Master of the Universe?
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#129
Isn't giving GB 'credit where credit is due' before we know if all of this actually going to work, a bit like giving a banker a bonus before we know if his deal is actually going to make a profit?
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#130
Grandantidote
the size of the Northern Rock balance sheet when the government took it on was 117bn pounds.
This makes the 17bn it has paid back look rather meagre.
Kindly back up your information in future with the correct facts.
The government is on the hook for a further 100bn of poor quality assets and there isn;t a dman thing we can do about it.
The tax payer is subsidising this.
I personally would far rather Lloyds had 'got a bargian' and this mess wouldhave been avoided altogether.
Check your numbers before you make an apolgy for this spendaholic government.
And call an election.
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re: 136 newtactic
On the other hand, I can't take anyone seriously who says that Brown has absolutely no blame for any problems we have, and that everything he does is perfect, and that he's now the leader/saviour of the planet.
Ask most reasonable people whether they agree with the labour/bbc line of Gordon being a supreme infallible being, or if they think that he's got a few things wrong, and I think you'll get your answer; nothing to do with party politics, just good old fashioned common sense and the ability to spot that the emperor has no clothes.
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@ 89 - balhamu
"... Didn't Thatcher withdraw a lot of troops from the Falklands in the couple of years preceding the Argentinian invasion to 'save money'?"
This is correct, thatcher did indeed remove troops - compare this to brown's approach to taking powers to intervene away from the bank of england
"... And isn't the reason Argentina saw an opportunity to invade because we withdrew said troops?"
again, this is correct - compare this to the banks seeing an opportunity to borrow money and hide it off their balance sheets, as the government (via the FSA) did not intervene
"... If we didn't withdraw troops, the opportunity to invade would never have been there. It was predictable that Argentina would be tempted - a populist move for a dictator to take and try and become a hero and the man who gave the islands back to their 'rightful owners'"
once again, an accurate assessment (even if it is with hindsight) - the same can be said of gordon brown with the current situation.
* if we didnt withdraw troops the opportunity to invade would never have been there - if brown hadnt taken powers away from the bank of england, the opportunity for banks to hide borrowing from their balance sheets would never have been there.
* it was predictable that argentina would be tempted - it was also predictable that banks would be tempted to over stretch, as their business is to make money.
* a populist move for a dictator to take and try and become a hero - one has to wonder, after 18 years of being out of government, and faced with the strongest economy any outgoing government would have left in centuries (if not ever) why then did the banks suddenly announce support for labour?
could it be that the banks saw restrictions were going to be lifted, allowing them to make money?
brown's plan to remove powers to step in and control banks, could easily be seen as "a populist measure"
* the man who gave the islands back to their 'rightful owners' - was brown the man who gave the power of borrowing and making money back to the banks?
i would say he was.
an interesting comparison.
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129. grandantidote wrote
This is our country and we are all trying to save it from financial ruin, we are renowned in this country that when facing adversity we stand shoulder to shoulder, not that I have seen much of that from the two phoneys that promised that, but as people lets at least give credit where credts due.
I can do without all the armchair economists giving me their opinion, if you have a plan then tell it to DC and GO because there's nothing surer than the fact that they haven't.
I have deliberately refrained from commenting on financial solutions, because whatever else I may be an expert on, its certainly NOT financial. While defintely not a supporter of Brown, I wish him the best of luck and pray he can succeed in getting us out of a dreadful quandry. As you say, Grandantidote, we are renowned in adversity for standing shoulder to shoulder. I remember my parents, who marched in the Thirties, actually supporting Churchill wholeheartedly when he led this country to defeat Hitler. My grandfather who was a huge devotee of Lloyd George, joined the ARP at the age of 70, and proudly said that in his boilersuit he looked like Winston. Prior to this, the Conservatives were a bad smell in his household!
On a foolish subject, on the other current forum, I am being dogged by you know who. He has had me referred for nothing whatsoever. Fellow bloggers have rallied to my support, and following advice (which you too once gave me) I am maintaining copies of postings sent. If they are removed, I may have justification for claiming libel. It would be so nice if the BBC explained why specific postings are removed, but I think it also depends on the personal views of the guy/gal on duty at the time.
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136:
Yet another blogger whose only defence of Gordon Brown consists of throwing insults at his many detractors. If that is all you have in your locker bring it on!
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#137
Assume the mortgage loan book is £100 billion. This is the amount that is included in the 'Rock inclusive' ONS debt figures.
There would be £100 billion losses (and so the £100 billion is true debt) if:
* Everyone has a 100% mortgage
* Houses are now completely worthless - i.e. they could only be sold for £0
* Everyone defaulted on their mortgage
Do you agree that this £100bn loss scenario is unrealistic?
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Ok. Hope you're still with me.
Let's assume a very apocalyptic scenario. This is intended to be a massive exaggeration of what the worst reality could conceivably through at us. The real situation will be far more benign.
* 30% of Northern Rock borrowers default on their mortgage payments (15 times the 2% of homeowners - 247,000 of 12,873,000 home-owners - who found their houses repossessed in the 1991-93 recession)
* Loan:Value ratios of defaulters is, on average, 90%
* House values of defaulters fall 40% from when they purchased them
This absolute worst case will cost £100bn*0.3*0.9*0.4= £11 billion.
- - - - - - - - - - - - - - - - - - - - - - - - - - -
Finally, let's consider a reasonable worst case.
* 6% of NR borrowers default on their mortgage payments and are repossessed (three times 1991-93 levels, reflected a potentially more toxic NR mortgage book)
* Loan:Value ratio of defaulters of 90% (don't know what this is for NR as a whole - this seems reasonable)
* House values of defaulters fall 25% from when they purchased them
The cost: £100bn*0.06*0.9*0.25=£1.3 billion.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Surely this implies that if anyone is "letting a little bit of accuracy obscure a nice point-scoring opportunity" it is you and others who suggest NR will cost the taxpayer £100 billion or anything like that amount.
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Brown is being massively over-hyped here.
It did not take a genius to work out that if the banks were short of cash, they needed more cash and that this would have to come by way of equity (i.e. issuing more shares).
The banks had been issuing more shares (called rights issues) and raising more money.
The problem was that there is a limit to what the market will put into a given company (e.g. HBOS).
There are two reasons why Brown was first:
1. Bush tried another way and it was pretty useless.
2. British banks were next weakest because of their exposure to US prime debt and dodgy UK loans in a falling property market.
The model came from Sweden over 15 years ago. And the Tories - novices though they may be - were talking of the possible need to put in capital before Brown's master plan was announced.
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Amazing indeed.
For ten years Brown sat and watched as the housing market developed into an unsustainable bubble; just as he said he wouldn't.
For ten years he revelled in the City's rampant growth and all those lovely tax returns it gave him. There was no need to look at capital adequacy regulation of course because as our master told us; we were past boom and bust. The UK economy was roaring ahead based on sound fundamentals, certainly not because of huge government spending, a large financial sector and a frothy housing market.
For ten years he watched as the average Briton became one of the most indebted individuals in the world, national savings dwindled and increasingly people had to resort to credit just to pay back other credit. But Gordon Brown knew better than to let these trivial facts detract him. So up went taxes even further and so did borrowing. Phew, thought Gordon, just as well I'm not regulating financial services more otherwise there'd be an even bigger black hole in public finances.
For ten years there were calls from opposition party's and independent observers, "Gordon don't you think you should slow the rate at which your spending? After all you've already had to re-write your own borrowing rules and that's with keeping PFI and other commitments off balance-sheet."
"Oh you nasty Tories," came Gordon's reply, "all you're interested in is cutting public services and taking us back to boom and bust! Trust me the economy is in great shape"
So now ten years later with the backdrop of increasing home repossessions, businesses failing and rising unemployment our proud leader steps forward and, some would say, leads the world in finding a remedy: borrowing and taxing more. And for good measure he has uncovered the true cause of our problems. It was those awful free-marketeers in the Conservative Party and, apparently, Gordon had in fact anticipated this crash years earlier.
Amazing. Truly amazing.
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To be reborn you first have to die.
Nick - I like your thinking on this one.
Maybe he'll come back as something useful.
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@ 133 - balhamu
"... The current crisis is about US sub-prime fear halting inter-bank lending and stopping banks from lending to other sectors of the economy."
sir, i have to disagree with your view.
the US sub prime issue is a sideline in my opinion. it was the spark that lit the fuse.
i dont deny it put a major dent in the financial world, but our problems are much closer to home.
* gordon brown took away the powers that allowed the bank of england to step in and force a bank to recapitalise itself before further borrowing was allowed.
* this "power" was given to the FSA to uphold, which they admit they did not do.
gordon brown on monday gave away the fact that "not all of the borrowing (of any kind) was on each bank's books"
this would be the same as me taking on a £100,000 mortgage, then hiding this from another bank, whilst i took on another mortgage for £100,000 in order to sell the house on quickly for a hefty profit.
i wouldnt be able to get away with this.. the banks got away with it, over years they over extended and hid borrowing "off balance sheet" profiting from lower interest rates on each new borrowing, as well as the quick sale profits.
if an individual did this, they would be guilty of fraud.
so i would question both gordon brown and the FSA on this.
- were the FSA pressured into turning a blind eye by gordon brown? (sounds ludicrous maybe - but he was inflating a housing boom over the same time period)
- or was gordon brown totally unaware of the FSA not exercising its powers?
the second question there i cannot believe. as warnings have been flagged up about the possible problems for years, 6 times a persons income being lent on a home, would reveal clear danger signs to me.
- exactly when did gordon brown find out that the banks were hiding money "off balance sheets"?
he stated it in his press conference on 13th october 2008, so why wont he tell us when he first discovered this information?
* now he wants to reinstate borrowing at 2007 levels - as another posted has said, this is dangerous!
banks will not lend to each other because of "toxic debt" and the US sub prime debts, this is a smokescreen, they will not lend to each other because they do not know how much extra borrowing is contained "off balance sheet"
again gordon brown comes in for critisism as any business (banks included) used to have to declare losses over a year, in that year.
after gordon brown's changes, banks can now announce parts of losses, in monthly lumpsums.
it might shore up its share price in the short term, but it also creates a drip feed of bad news that drags the whole process out over a longer time period.
i would voice my concerns and anger just as equally at cameron and co if they had been in power and done this.
sir, i think there is a lot more information we do not know about this problem, that has yet to be revealed.
from what we know so far, it would appear obvious that the actions of gordon brown seem to be involved regardless of scenario.
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I am gonna sit back till 2010 and just enjoy all the Tory's getting more and more frustrated about there limpness and in ability to effect anything
YOUR NOT IN POWER!!!! PLEASE GET OVER IT.
well done Gordon Brown, that's what your paid to do, nice to see someone on above average salary earning it for once.
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Clearly, Nick understands much more the theatricals surrounding the ongoing economic upheaval than Mr. Paul Krugman.
For decades, the grand economic theories in one form or another have reduced the richness of social relations between 'people' in different societies to the mechanics of economic activities between 'things' worldwide.
As the recent financial crisis reveals, the people element, esp. in power struggle, always underlies the problems arising from the flow of things, tangible or intangible.
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This is just as laughable as Tony Blair becoming Middle East Peace Envoy.
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#145
Interesting take.
While Brown took powers away from the Bank of England, he didn't abolish them. He put them with the FSA. So the parallels do not really hold with Falklands withdrawal - it would be more putting the troops into a different division.
You're right that lack of regulatory powers allowed banks to hide things off of balance sheets. There was, however, political consensus over not giving regulatory authorities powers to adequately police this, and some voices were telling the government to go even further and criticising it for not doing so. It would have 'stifled innovation' and led to banks looking for alternative homes such as New York, Shanghai or Frankfurt. May have been a good thing in hindsight though.
The Government didn't 'withdraw' regulation. It failed to appreciate that introducing it was necessary and that the political consensus and the siren voices of the right were wrong.
You are probably right that the impacts of not regulating banks restrictively were politically popular - lack of mortgage regulation allowed a housing boom. It was less politically popular in other respects e.g. the pay of bankers and tolerating inequality - that was more politically necessity, or at least considered so after Labour's 18 years in opposition.
So, the Government failed to introduce necessary regulation. I agree. In retrospect, the banks should have been regulated heavily, maybe even if the cost of it was them moving elsewhere to do business.
Where I don't agree is right-wingers on here claiming that the Conservatives would have regulated harder or trying to claim that shifting regulatory powers to the FSA were most to blame in this crisis (about the only difference that would allow them to be seen in a positive light - rather than talking about how they had criticised the Government for 10 years for not deregulating enough, being too concerned with inequality and the 'politics of envy' in thinking about bankers bonuses).
And another area I don't agree is trying to put far too much a domestic policy emphasis on a crisis that is quite clearly global. It was sparked by fradulent sub-prime mortgage loans in the US, financial engineering of risky insurance securities against these, and globalised finance meaning all banks held a sizable chunk of this toxic waste. Banks were scared to lend to one another (the credit crunch was sparked by sub-prime fear), and then scared to lend to anyone at all (as the fear spread to what was on their own balance sheets). Domestic policy (e.g. the housing boom) had an impact, but compared to the impact of the global situation a small one.
Compare to the 2 Conservative recessions which were entirely rooted in domestic policy - the first as "unemployment was a price well worth paying" for reducing inflation, the second due to crippling the economy with high interest rates in the early 1990s to meet policy goals of fixing our exchange rate to a booming re-unified Germany (though the early 1990s recession has some similarities in the existence of a housing boom that made/will make the downturn worse).
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Somewhat ironic that the dour Broon singlehandedly created the current world economic catastrophe, now claims credit for his master plan to get us out of it.
Only 50 years of Conservative rule will get us back on track....eventually!
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It's well known that Prime Ministers / Presidents are hooked on the power thing. It is what drives them. It gives them a high and some of them (like this unelected creep) are totally out of touch and out of step with the electorate.
Got his five minutes of fame and some. Let's hope he doesn't keep rising up like Phoenix out of the ashes, t'would be too much for my poor heart to bear.
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I don't know if anyone has heard Cameron living in a dream world on the Jeremy Vine show today (listen again Tuesday, approximately 8 minutes in).
The first part of the interview was quite amusing.
JV: "Do you think it (the Government's plans) is right for Britain"
DC: "I think it's right for Britain...the one thing worse than putting taxpayers money into banks is not doing it"
Take note, my right-wing friends. You need to sort your leader out, he's saying the Government plan is a good thing. A bit off-message for you?
And then, he adds, without it seems realising how ridiculous he sounds:
"I said at the beginning of the Conservative conference that we needed 'something big' and I had in mind recapitalisation and putting taxpayers money into banks"
Right.
When he said "Something big", he had in mind exactly the plans the Government came up with.
Why so shy? Why didn't he say it? He could be feted as having the plan to save the economy and further bash the nails into the Government's and Brown's coffin but he chose not to.
Call me a cynic, but I think 'something big' is quite an ambiguous phrase and doesn't mean "take radical action to recapitalise the banks with taxpayers money", particularly after criticising the Government's actions in taking NR under the taxpayers wing.
Laughable.
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134 Miss waldorf
I had thought that you would have known how a democratic government works.
Of course there are a
"An army of advisers have had their little pinkies in this solution "
Every decision made by any government in this country is done in this way admittedly the final decision is made by the PM whoever he may be.
It's far too early for that even though yours truly has already been boasting about his perceived achievements.
I haven't heard anyone boasting not the PM or the Chancellor, I have heard many knowledgable commentaters praise the action of these two but not heard one sign of boasting, only the boasting that the disgruntled Tories like to tell us the've heard.
That's the kind of language that makes me fume!
If you want to do a little fuming Miss Waldorf have a read through the first eighty or so Tory posts on this blog and if they dont make you cringe with embarressment
then nothing ever will.
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@ 156 - balhamu
"... You're right that lack of regulatory powers allowed banks to hide things off of balance sheets"
sir, my point is that the regulatory powers were there all the time.
the FSA could have used them to step in and stop the rot (so to speak) but they did not.
this is why i question wether or not gordon brown or blair, was putting pressure on them not to action them, as brown/blair were building an economy on a housing boom, having the FSA limit banks borrowing and stopping them for placing more borrowing "off balance sheet" would have stifled the bubble.
gordon brown has said that the FSA did not see all the banks borrowing as some of it was "off balance sheet" - how long ago did he know this?
if it was when northern rock went under, then hes had a while to pull it back in, loaning the banks the money to cover off balance sheet debts might be a better alternative to what we have now and personally, id have revealed to the world that the FSA failed to do this.
if (as i suspect) hes known a lot longer, then this would show everyone that in one way or another he has prevented the FSA from doing its job, and inturn, he could have prevented the economy and the taxpayer taking such a huge hit with extra borrowing and the interest that has to be paid upon it.
Gordon brown's silence on this matter, is deafening.
in the current climate, to fund his proposals already announced, labour are faced with a problem due to lost tax revenue.
he could:
* cut public services - to manage to cover the whole in the finances hed need a drastic cut, one of the biggest a labour prime minister has done in history, so not a chance of this.
* raise taxes - hes already in the doghouse with the voters for this, hed find it almost impossible to hide any of them, thepublic are wise to it, again no chance of him going down that route.
* increase borrowing - this is how he will do it.
how much of the "financial crisis" borrowing will be allocated to other areas of policy?
will he be able to see that big chunk of funding on the government's books and be able to resist spending some of it elsewhere?
we the public need to see, exactly how much of the banks borrowing is "off balance sheet"
we need brown and the FSA to answer the question, how long has this been going on? when did they first find out about it?
as it stands, gordon brown wants to return banks lending at 2007 levels, at the same time as not enforcing regulations already in place (ie, stopping banks borrowing "off balance sheet" and overstretching)
this is a dangerous road to go down - as we are there now, he wants to put it off (until after an election?) and then go down the same road again?
madness!
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143 Robin jd,
"Check your numbers before you make an apolgy for this spendaholic government."
My information came straight from the chancellor on the floor of the house in just the last few days, strangely enough I would rather take his word than the word of all the Tory pseudo economists on this blog.
I won't ask you to check your figures I know your far to pretentious for that.
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Grandintidote here's one for you:
http://uk.youtube.com/watch?v=acPLCUVg0pU&feature=related
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146 Warning123.
Once again we appear to be in agreement although on oposite sides. nice post.
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This comment was removed because the moderators found it broke the House Rules.
Robin,
Rumours in the media that Gordon Brown may call an election! Probably not true, but just think...
Are you excited? Will you be happy if they're true?
Or will it be perceived by you as a shameless attempt to get 5 more years before the recession hits and the success of the bail-out and to take advantage of current Conservative dissarray and a blip in the polls?
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The City of London is a financial playground with of many intelligent and greedy individuals.
Whilst their bonuses and pay structures are obscene, no legal actions have been taken against them which means that no laws have been broken. We therefore have to look at the regulators.
The teacher who is responsible for the actions of financial playground is the FSA and the Headmaster is the Government and they have allowed the financial playground run a riot for 10 years.
Mr Brown is therefore 100% responsible for recent financial crisis and his rescue plan is simply using taxpayer’s money to rectify his mistakes.
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#57 Charles_E_Hardwidge
I only recently referred a wave of posts that seriously crossed the line in terms of disruption or personal attacks on folks in here. That's the worst of the worst not the routine rubbish, and I'll do it again if things got out of hand in a similar way. That's only proper and nothing near what you're insinuating.
That's the spirit Charles. Stake out the moral high ground for yourself and don't let any of the others lay claim to it.
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#70 correctopinion
p.s. in the last 11 years of high employment and growth, i do hope you all put a little a side, for bad times. What?, you mean you Torys are relying on the state in bad times?
Oh I've been putting money aside for my retirement all right. Trouble is, some clown in a brown suit stole it all.
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I am surprised this government hasn't saved money by only giving child benefit to either
a} the first child only
or
b} those who really need it (means tested)
Think about it, there are thousands if not millions of very well off people in this country to whom "child benefit" for their family is a drop in the ocean and in some cases an embarrassment.
Before Labour pinches that one I want to put it on record that it was the brainchild of Robert Hughes a Conservative MP for Harrow!
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I had a couple of posts removed, one about that insessant zen muttering.
Guess I know who moofed it now.
Cheers.
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#166
I'll be very excited balhmu.
I'd like to see him try to explain why last week it was terribly important to be the firm hand at the tiller and not bother us with party political matters but after a small bounce in the polls he feels it's okay to have a pop.
Stranger things have happened.
Go on. Call that election.
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Everyone keeps talking about the success of the bail out. How on earth can we judge if the plan (which after all is only a matter of a few days old) has worked before giving the measures time to reach the economy? This would be like the soccer press proclaiming Chelsea as future Premiership champions just because they won their first three matches in fine style. This is not to say that that they don't however. Jumping the gun is an old habit of The Press which tends to sell newspapers. At this early stage all you can really say is that the problem has been stabilised. The hoped for recovery is a long way off in the future.
Possible flies in the ointment probably won't incude inflation because that is predicted to fall dramatically next year. Increased unemployment and higher taxes are however a real possibility. How else can these measures be paid for in the long run? Expenditure on schools, hospitals, policing, defence etc. will also have to be maintained at increasing levels.
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Totally agree, Miss Waldorf.
We won World War II but the effects were long reaching and devastating. Maybe that's Gordy's strategy.
However, I hope he has taken into account all those who are going to be seeking benefits if they lose their jobs to add to those fraudulently getting it.
As somebody else said on here earlier, that's the financial situation (which some argue is Brown's forte) but the human element and effects, well now, that's a really complex thing.
Like the Iraq war, we won it but the winning of the peace is still a bloody thing....
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#172
So you would criticise calling an election, as it should've been called a couple of months ago, when there seemed to be no solution to the financial crisis, the Government was a bit more unpopular than they currently are and Brown's leadership was seemingly up for grabs.
To state the obvious, the Government made a big mistake (from their point of view) in not calling an election for Autumn last year. The Conservatives were quite obviously delighted that they did not, whatever they said in public (off-the-record they freely admit this). Good they didn't - just think if you had 4.5 more years instead of just 1.5!
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#129 grandantidote
... but as people lets at least give credit where credts due.
Wasn't that what got us into this mess in the first place though, giving credit to those who weren't worthy?
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I find this current situation that affetcs everyone around the Globe is being turned into a Brownie point plunder session. Now that banks across the UK have been given a life line after years of Brown policises failing he is turning it into a Unionist issue. He is now saying The Uk has bailled out two Scottish banks and that this would only happen being part of the union. Cheep tactics for misinformed people.
Of course we are reliant on The traeury bailout because all of the cash flow from Scotland flows to an English treasury.
This is party point scoring and is a disgrace.
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#148
Sorry its taken a while to respond, but work occasionally gets in the way.
Now I didn't suggest that NR would lose the whole 100 bn, but it's an interesting thought that anywhere between 1 and 11 bn of losses is somehow acceptable.
Your thought process is very much along the line of generals, on both sides, in the first world war deciding how many men to sacrifice.
In any case, that's just NR. There is also the matter of B&B, where the net figure is a clear loss, and of course the involvement in RBS and HBOS, who are way bigger than NR was.
I appreciate that "something had to be done" otherwise the politicians would have been criticized for inaction. Bit what is actually being done is not the right way to go about it.
Let's be clear, the issues people are exercised about is potential loss of jobs if banks fail and protection of individuals deposits.
The solution is forensic. Take on to a state run bank the customer liablilties (which are guaranteed anyway) and a selection of essential assets. From a UK perspective only, these might be mortages on Uk homes, and selected business loans, to ensure those businesses can continue. If the assets exceed the liabilities, then the government bank can obtain the funding from the market place. If not, they have room to expand business in the appropriate area.
All the other assets (including loans to other countries and particiaptions in CMOs and other paskaged deals) can be left with the original bank, along with deposits from the money markets and entities who don't benefit from guarantees, and let them work out their salvation in the time honoured way.
At the moment we have the worst of all possible worlds and, significantly, we are the only major economy that is bailing out its banks to this degree. This is the same economy that El Gordo and his chums have been proclaiming for the past few months that we are best placed to weather the storm.
So, putting it all together, the current formula will bring an untold amount of losses into the national debt, which we will have to fund, perhaps whilst smiling, perhaps through gritted teeth.
I'll see you in the queue at the Sally Army soup kitchen in the near future.
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I was not suggesting a loss of £1-11 billion was *acceptable*. It's a shame that the taxpayer is going to have to pick up the tab for private sector inadequacies.
What I was saying is that the losses associated with the Rock will definitely by less than £100 billion. So your attempt to put that £100 billion in the "National Debt" column is highly misleading - the net impact will definitely be lower.
The £11 billion is an "apocalyptic" figure remember. The £1 billion will be closer to the mark, and even then probably an over-estimate.
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read Simon Jenkins in the Guardian balhamu....
very interesting exposé
http://www.guardian.co.uk/commentisfree/2008/oct/15/credit-crunch-banking
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Why are people giving Gordon Brown so much credit for saving the world's banks - have correspondents & world leaders no knowledge or memory - all he has done is copy what the Scandinavian's did in the 1990's - if it was in literature he'd be sued for plagarism. He would be much more of a statesman if he gave the credit where is belongs instead of trying to claim it for himself.
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#179.
Whoa boy.
until it's repaid, or cleared out in a final way, that's exactly where it belongs.
If its not repaid then its outstanding, and if its outstanding, then it has to appear in current government financial commitments.
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I'm no apologist for this Government, but does anyone out there really think that the Tories would have been any better in this situation? Remember that the excesses of the free market caused this crash, the whole greed and obscene bonus culture. So do you think that the Tories would have placed any tighter controls on things? Of course not, they would have had even less controls and an even bigger disaster. So stop using this as another stick to beat Labour and Brown in particular. A bit more socialism and social responsibility wouldn't go amiss right now, and a lot less greed and selfishness. And will people stop moaning about their own savings and pensions. If the Government doesn't get control of this we'll all lose everything, so again, a little less selfishness and more of a broader view please!
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This article from Polly Toynbee's Guardian posted by another blogger on a previous post really encapsulates my own feelings precisely.
http://www.guardian.co.uk/commentisfree/2008/oct/15/credit-crunch-banking
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#182
Look, the only way you can seriously suggest that the debt should be accounted for as £100 billion is, as I said, if you believe that:
* Every Northern Rock mortgage holder will default
* Every house that NR holds a mortgage against is completely worthless
* Every NR mortgage holder has a 100% mortgage
And you accuse others of misleading with statistics?
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170 Flame Patrica
If you had been reading my posts, you would have seen that I spoke about the subject below asking just that question.
This subject has been raised for a number of years, and it is hardly a brainchild of anybody, and certainly not of Robert Hughes,just because he said what many others have said before him it doesn't mean that its a original thought, if it was then I could say it's my brainchild for I have been putting this argument forward for many years long before the Labour got into power.
Some one broached the subject a few years ago and the Tories were kicking and screaming Unfair!.
As I mentioned in my post some time ago.
A rather well off lady was being interviewed on TV and was asked if she needed the money, she replied of course not, rather indignantly, the interviewer said well you return it to the government do you,her reply was"no, I let it accumalate and then I by my self a nice little painting with it."
this interview was some five years ago but it stuck in my memory.
you must not believe that the Labour party are all sitting around thinking lets wait a little bit longer the Tories will come up with an idea that we can pinch then we'll get out of trouble. It's absolute nonsense
They would have been waiting a hell of a long time for the Conservatiys to come up withan idea that was fair and worth while pinching.
There was even one Tory clown on here this week that indicated that the plan the government have put into place was the brainchild of DC, if the plan was to fail the same guy will be writing on here ,DC told them it would fail, it's pathetic.
the truth of the matter is that the Tories have not contributed one thing to help the current situation, and have now reverted to attacking the government since they have seen a rise in the popularity of Prime minister Brown.
You said,
"Think about it, there are thousands if not millions of very well off people in this country to whom "child benefit" for their family is a drop in the ocean and in some cases an embarrassment."
"Before Labour pinches that one I want to put it on record that it was the brainchild of Robert Hughes a Conservative MP for Harrow!"
Old news Patricia.
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181 Master Cutler.
You have heard the PM claim the credit have you.
"He would be much more of a statesman if he gave the credit where is belongs instead of trying to claim it for himself."
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#180
I would agree with much of that (other than the apportioning of blame). We don't really want to nationalise industry, but to beef up regulation a lot to make it work.
The idea that business and those who work for them will be 'socially responsible' left to their own devices without an incentive structure that motivates them to achieve that is defunct (the first because their duty is to their owners, the second as their duty is to themselves).
The uber-right-wingers conception of free markets as meaning no regulation is wrong. Regulation performs a useful function in ensuring businesses behave in the ways society wants (e.g. a chemical plan ignores incentives to reduce costs by dumping chemicals in the river as regulation forbids them to). It should be rigorously enforced to give a high probability of getting caught, and come with high penalties that make breaking the rules be bad for business.
It leaves Cameron in a tricky position. Regulation, we have been told by right-wingers, has been set at too high levels by the Government 1997-2007. It has stifled innovation, and made us uncompetitive risking financial company moves to New York, Frankfurt and Shanghai. We should rely on the social responsibility of companies to 'do the right thing'. The benefits of regulation have never been acknowledged by the right-wingers, until now.
The idea that none of this is the fault of bankers grates. Not only was the behaviour of bankers in systematically under-estimating risk to maximise their bonuses a cost to society as a whole, it represents a massive failure in their duty to the shareholders that employ them as they have destroyed the value of their companies. If bankers acted in the best interests of shareholders, none of these problems would have emerged. Corporate governance reform is essential, along with safeguards to prevent incentive schemes that are not in a company's best interests being implemented.
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There's a financial merry-go-round going on here.
There is no special, magical, fincancial bucket earmarked for government use only.
There is only the global financial market, and its size actually exceeds all the actual money in circulation. This is possible because of the extension of credit that banks make using commercial judgements, which have been shown to be faulty.
Be that as it may, that's the picture. If any government decides, for whatever reason, that it wants money it goes to the banking bucket, directly or indirectly. It issues bonds to the market, and the banks buy them in the first instance.
They have an asset which needs to be financed, and they normally sell it on to retail customers, such as insurance companies. Some if it gets in to the hands of investors (you or I) directly or in the form of fund managers who are pooling our investments. Any of the unsold assets will need to be funded by the banks borrowing from the market.
Any assets bought by you or I will be in the form of new money (earnings), which is fine and normal, or by switching out of another asset that we already own, which is inconvenient and doesn't increase liquidity.
Should we need to be selling assets anyway, to pay our increasing bills, then we exacerbate the problem.
Then the governments come along with a new rescue plan, which requires further borrowing from this (inexhaustible?) bucket, and so it goes on.
Currently most assets are viewed as being tainted, and certainly not worth their face value, possibly not even the original purchase price even if that was below face value.
Normal practice would be keep writing down the value of the assets until the capital has been wiped out. Any depositor not subject to a banking industry (as opposed to government) guarantee becomes an unsecured creditor, and suffers the consequence of normal commercial risk.
The distinction between a banking industry guarantee and a government guarantee is that the former should be backed with cash deposits, whereas the latter wil be funded by more borrowing out of the same bucket.
Not all assets are toxic, but they are currently priced below face value because there are no ready buyers available. Talk to any estate agent or car trader.
So our bold government has issued a blank cheque for 2 banks, with more to follow, and is completely ignoring the fact that it is going to take the funds to pay for this out of the same bucket that it is pouring the money into. It hasn't noticed that there is a hole in it, dear Liza.
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"Flash" Gordon should be "Crash" Gordon. Remember he was the one who sold our gold reserves when the gold price was at an all time low. He is the one who as Chancellor sat back and let the financial tide go uncheked and unregulated as he was reaping mega amounts of tax revenues.
Sorry Gordo but you are responsible in a big way for the unpreparedness of our economy to weather the storm
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In recovery circles it said, '... an alcoholic will steal your wallet, a drug addict will steal your wallet and then help you to look for it ...'
Power is the drug, money the paraphenalia. Addiction is not the problem of course, the problem is malediction, ie male (latin for bad) and diction (talk)
All the broken words and spin over the hyears have rendered the whole system vulnerable to addiction in all its forms both for the populus and for the establishment.
A vicious circle of sickness that is now exposed by the symbolism of the collapsing banks.
Will we wake up to the real message.
Contradictions are now being enacted to break the prisons of old dictions - then the benediction can reach the sick malediction.
Wise assessment of prediction processes might be the order of the day again and melting down the golden calf - again!
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It’s GB’s Falklands moment and I for one am delighted. He is an eminently decent man with far more ideological and intellectual depth than his predecessor (not difficult, I admit). The attacks on Brown by Cameron over the last year have bordered on the obscene. True it is the duty of the opposition to oppose, but the Tories have gone way too far.
The moral high ground is with Brown. Yes of course the laxity of his years as Chancellor is in the shadows to haunt him. But just remember that a year ago Cameron and the rest of the opposition were arguing for less regulation not more and lambasting Brown as some sort of Stalinist control freak! In fact he should have been more control freakish not less and the Tories look very stupid indeed at the moment.
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How can it be the rebirth of Gordon Brown he is an unelected PM. Instead of losing his bottle he should be a man and call and election after all in his book he did write about how he loved people who took risks when all was against them. Stalin would be proud of you Gordon.
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Well, for those out there who have been taken in by this man, you only need look at his latest mind numbingly sophisticated response to the considerable jump in unemployment.
Read this:
Mr Brown said one way to tackle unemployment and at the same time climate change was to train people to install loft insulation.
He said: "We are training large numbers of additional people to do that work in insulation and that will become one of the unemployment programmes that will grow over the next period of time."
Now I dont know about everyone else out there, but the last time I laid some loft insulation, the instuctions went along the lines of:
1. Remove packaging
2. Lay in space between beams
3. Dispose of packaging
But good old Gordon wants to spend £100m of our money teaching people to do simple tasks.......so n'out new there then!!
You simply couldn't make this stuff up
Read full story: http://itn.co.uk/news/d5c938f28b9e0e3957714c79adcee201.html
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Doesn't it sum up the deceit in Government when the "Gordon Brown save the world" wasn't dreamt up by his nibs or the Treasury but by the Directors of Standard Chartered Bank, Peter Sands and Richard Meddings. The Gordon Brown plan piled in the previous week.
How about him publicly acknowledging the facts rather than basking in a false glory?
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I am totally disgusted with the press' coverage of the so-called rebirth of Gordon Brown. there are plenty of economists who fundamentally disagree with at least some of the measures he has been peddling around the world and there is very little if any voice of dissent.
I fundamentally disagree with the bail out package and believe much more could have been done without committing so much of the taxpayers' mone. Gordon Brown is gambling with all of our futures and I for one have very little faith that he is doing the correct thing. He has no modesty, quick to blame world events for the fact that he he is presiding over the worst unemployment in recent history. He is also blaming world events for the economy's dire state, something that he had ten years in charge to help strengthen or at least put money aside to help combat, then he takes credit for measures that he did not come up with, that are copied from experiences in other times and countries (eg. sweeden in the early 90s) he is the most unbelievably incompetetnt politician of our time. He was unelected and it's time woters had a say. If people believe what he is peddling, then they only have themselves to blame if they vote for him, but at the moment, noone voted for him and he is morgaging our childrens' futures and our pensions on a half baked plan. Look the markets hate this, it's obvious, had he done absolutely nbothing the result would probably have been better.
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Can't believe Brown's posturing as 'Superman' given he presided over the very authority that was supposedly keeping an eye on the banks in the first place; and he was happy to take the money that was built on a mountain of debt that was so obviously going to collapse at some point.
There are also plenty of ways that his plan could unravel. For instance, who in their right mind will buy or keep shares in a nationalised company offering no dividends for goodness knows how long; and the huge job losses that will have to happen for the HBOS/Lloyds merger to work will reflect rather badly.
What a mess and a great deal of it down to 'Superman' Brown.
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Bail out or not I am absolutely sure ther is still one almighty 'black hiole' when it comes to finance. This Government have spent the lot and more. The taxpayers will be the losers. Both should pack their bags.
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BIG BROTHER DATABASE DIGITAL SERVERS WILL LOG THE DURATION OF EVERY: EMAIL; TELEPHONE CALL; INTERNET CONNECTION; THEN IT WILL SEND YOU THE BILL FOR THE DIGITAL TRAFFIC YOU SEND THROUGH IT AND FOR ALL THE SERVICE CHARGES FOR THE USE OF IT. IT S ANOTHER ONE OF GORDON BROWN’S STEALTH TAX RE-BORN.
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The question is: what sort of capitalism do we want? Surely it must be fair, sustainable and accountable, not characterised by greed and obscene bonuses that offend most of society. Let's have a national enquiry that gets to the bottom of the problems, naming and shaming the culprits. Let's hear politicians calling for all banking bonuses in the last year to be paid back! That would pay for lots of public services.
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There is no rebirth, merely a postponement of the inevitable. Although they may approve of his actions many people don't like him as a person and can see right through his attempts to constantly big himself up in the face of damning evidence against him!
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This recession is rather like global warming.
I would love to know how it could have been avoided?
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202:
You're right. There is no way The Global Crisis could have been avoided. Noone disputes that. It is the parlous state of our own economy after years of overspending and overborrowing before it struck that is in question.
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187:
If Gordon Brown doesn't claim the credit for his economic prowess in his memoirs then I'm a dutchman. He may not openly crow and boast about his supposed excellence but his very demeanour shouts it out.
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The complete collapse of the London stock market and confirmation of recession (24/10) will certainly wipe any smile from our friend, who seems to have gone to ground today rather than bounce around mouthing economic platitudes.
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David Cameron said today was the day the "10 year threat of recession actually became real."
The £ is down against the $, however we need to lower the pound anyway to encourage foreign investment in the UK.
The likes of Lidl certainly seem very appealing to the credit crisis affectees...yet this really doesn't do our economy any ffavours. People need to invest in UK based firms, and carefully spend their money.
"Buy one get one free" is a killer. Being sucked into buying that extra one product that you don't need and spending that extra £1.50 is the story of the past few years..economies of scale is what is really needed...and fast.
Where do the profits of the large supermarkets really go? Does the Multiplyer effect actually exist in the UK anymore? I don't think so. Sunk costs within expansion to battle against each other is pathetic.
What is the OFCOM VERSION OF SUPERMARKETS?
My advice is to spend wisely, locally and save at the same time too. Don't apply for things you may not be able to afford in 5months time..nothing is for certain.
By the way im a student...so don't start about saving money...we know best.
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