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Paul_Amery

Listed below are comments made by Paul_Amery between Sunday, 1st June 2008 and Tuesday, 11th November 2008.

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The rising taxpayer burden 09:51am on 11 Nov 2008 The transfer of risk from banks and corporations to the taxpayer means that the next leg of the debt crisis will hit governments, who will have trouble financing their huge budget deficits and refinancing existing loans. Current bailouts may cause the biggest crash of all - state insolvency.
Why our banks are vulnerable 1:48pm on 30 Sep 2008 Another attempt at a quick fix which is fundamentally unjust and runs the risk of exacerbating bank runs elsewhere. Before any bank is given support it should be forced to scrap its dividends and place a salary cap on all staff - say at 100,000, pouns or Euros.

And why anyway should taxpayers take on an open-ended commitment to institutions which are a black hole? Let them fail, pay out depositors up to the relevant limit and too bad if you are a share or bondholder - it's your responisibility that these institutions were so badly managed.
B&B: end of an era 3:11pm on 28 Sep 2008 Think through the consequences from the nationalisation of both Northern Rock and Bradford and Bingley (over and above the burden inflicted on the taxpayer) and it will become clear why these institutions should have been allowed to fail.

First, the banks are allowed to carry on offering high deposit rates, but now with a government guarantee. This automatically puts other banks at a severe disadvantage and forces them to offer even higher rates, putting a further squeeze on the margins of what are already weakened institutions.

Second, the government will now be responsible for foreclosing on delinquent mortgages and turfing those who are behind on payments out of their homes. Think how prepared or willing they will be to do this - and if they don't, how will other banks enforce their own debt contracts?

Allowing bank failures would mean a sharp but short recession from which we could move on. Prolonging the life of mismanaged institutions that ought to fail will create a depression.
The football bubble 11:06am on 02 Sep 2008 I'd like to echo previous comments - we are in the middle of a sterling crisis, Darling's comments at the weekend were surely worthy of a blog, the government is intervening in the housing market, the bank liquidity scheme is about to expire, and you write about football?
May be as bad as early 90s 9:09pm on 09 Aug 2008 As bad as the early 90s?

The coming depression will be the worst for generations, far outstripping the experience of 90-92, 80-82, 73-74, and even worse than the early 1930s.

To understand why, one needs to look at the ratio of debt in the economy to the underlying economic output. This is far higher than at any time in the last 100 years. See Australian economist Steve Keen's blog for some revealing charts. The subprime crisis will probably be seen in hindsight as the peak of the debt bubble. As the great debt pyramid unwinds, insolvencies and bankruptcies will soar and economic output will collapse, irrespective of what governments do.
Stamp phobia 9:16pm on 07 Aug 2008 HIPS, stamp duty, the 10% U-turn, the non-dom U-turn, the Corporation tax U-turn, the CGT U-turn, the fuel tax rise U-turn, the waste of taxpayers' money on Northern Rock, dodgy accounting for PFI deals, the raid on pensions, fostering the debt bubble, fiddling the inflation stats....the astonishing incompetence goes on and on

The only reasonable question to ask Darling or Brown in an interview would be "Why haven't you resigned yet"
Treasury's mortgage rescue plan 09:02am on 29 Jul 2008 All the government's initiatives to help end the credit crunch have so far involved stimulating more debt creation. Unfortunately this will not work as the problem is the existence of too much debt to start with. It is perfectly sensible to allow mortgage lending multiples to fall back to a maximum of 75% of home value and three times income. And, as others have said, throwing more money at a deflating bubble will only end up lining the pockets of bankers who should have been sacked by now. Let the banks cut their dividends first, and abolish bonus schemes, before asking for state help.
FSA burns hedge funds 9:57pm on 14 Jun 2008 The FSA is making a very big mistake. Its job is to regulate the market, and to ensure a level playing field for all using it. What it has done yesterday is to intervene on one side of the field only. The market in any stock is a balance between buyers and sellers, with the price set at the margin between the two. There is no free lunch for short sellers. On every position they risk their capital, and are often forced to cover at a loss. By setting different disclosure requirements for longs (3%) and shorts (0.25%), and by suggesting that a short position of more than 0.25% is in itself "market abuse", the FSA is foolishly taking the longs' side - imagine a football referee reducing one team to seven men at the start of a match, and blindfolding the goalkeeper.

Whether or not the HBOS or any other rights issue fails or is left with the underwriters should be left to those involved in the market. It's none of the regulator's business.

And, Robert, restricting or banning stock lending will harm those long of stocks just as much, or even more than the shorts, by reducing stock market liquidity and causing the cost of trading to go up dramatically.

Together with the rushed rescue of Bradford and Bingley two weekends ago, which was apparently brokered by the FSA but during which the existing shareholders were cheated by the abandonment of previous underwriting commitments, the abuse of preemption rights and a free anti-dilution clause for the new shareholder, this intervention is seriously damaging to the London market's reputation for basic competence and fairness.
Short-selling banks 11:31pm on 03 Jun 2008 Indeed, Robert, you could put an effective end to short-selling by stopping stock lending. But if you did that market liquidity would dry up and shares would head down for far longer and far further than if the status quo were left unchanged. Remember that shorts have to repurchase the shares they've sold short. They can and often do get it wrong - and are forced to cover at much higher prices, at a loss.

There is an interesting study in the US, by Professor Owen Lamont, which shows that the companies complaining most vociferously about short sellers are typically those that have most to hide. It's called shooting the messenger. The negative views of shorts are a vital antidote to the chronically bullish and often misleading spin published by companies' directors, their legions of PR agents, and government ministers, all of whom have a vested interest in painting things in a rosier light than is deserved.

Those with a few minutes to spare might care to look up on Google the public statements from the managers of Enron and Worldcom in 2001 - or of Northern Rock and Bradford and Bingley in the months before their problems surfaced.
Private equity shores up B&B 11:41pm on 01 Jun 2008 By the way, Robert, perhaps you could investigate how the FSA is getting on with its widely-trumpeted inquiry into the short-sellers of HBOS? That story has gone a bit quiet. Perhaps they'd be better employed investigating the directors of Bradford and Bingley for creating a false market in their company's shares by telling everyone, on April 14, that they were "not intending to issue equity capital by way of a rights issue or otherwise".

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