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stevenpalmer

Listed below are comments made by stevenpalmer between Tuesday, 10th March 2009 and Friday, 26th June 2009.

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Why banks must be allowed to die 01:26am on 26 Jun 2009 The issues about banking don't just apply to the UK. If the UK applied regulation without regard to what other major countries are doing then banks would simply move some of their activities to other countries. Banks operate internationally and regulation will need to as well as the crisis showed the interdependence of countries in the global economy. Last year, the Tories where gloating about the critisms of the German government about the UK economy - yet the Germany economy despite its supposed "prudent" fiscal policies is in a far worse economic position than the UK. International problems require international solutions and the banking problem is no exception.
Making banking boring 8:00pm on 02 Apr 2009 You can almost feel the disappointment of those on this blog who wanted the G20 summit to fail. Will those who persistently call for the banks to fail please now stop - it's not going to happen and last time it did in the 1930's is hardly an ideal example to support your wishes. For those calling for an election also please stop as there will be one, probably in about 13 months time. Let's hope that the banks will become boring again, and do what they do best, use depositor's funds to lend to individuals and businesses that can pay them back, and let's hope the attack on tax havens also works.

There is a long way to go and unemployment will get worse before it gets better, but it does appear the G20 are taking the appropriate steps, and that the UK goverment and BoE have an appropriate monetary and fiscal policy. There are real long and medium term issues that will need to be addressed - the UK and the US will have to consume less and save more in the future and interest rates will have to rise. Other Countries will need to spend more so that the Global economy has a letter balance between creditor and debtor nations. Germany has been very severely hit by the recession - more so than the UK - and needs to increase domestic consumption. The UK will need to save more and there are signs that this is happening.
Barclays may reject Asset Protection 10:45pm on 28 Mar 2009 It could be that the immediate banking crisis may have been resolved, and that major UK banks are not going collapse, which despite some of the commentators in this blog thirst for revenge is a good thing. There will however be consequences which include government ownership of a substantial part of the sector, long term reduction in the value of banking shares, continuing credit difficulties and a permanent increase in regulation.

Barclays priority has been to avoid partial government ownership but have done so partly through good fortune in that it was RBS which ended up ABN Amro not them, and partly by screwing their existing shareholders with the Qatar deal.
Will Obama pay Goodwin's pension? 1:13pm on 24 Mar 2009 My understanding is that D&O insurance covers Directors if they behave incompetently but not if they behave crookedly. It seems unlikely that Fred the Shred behaved in an illegal manner so the insurance would cover his case. The issue is that Fred the Shred is not solely to blame - other directors and institutional investors supported ABN Amro which is the immediate cause of RBS' fall from grace.

The CPI/RPI debate is interesting. Inflation either remains a problem or doesn't depending on which index is used. Monetary policy either has to increase interest rates to reduce inflation or decrease interest rates to remove the threat of deflation, which is what has happened. A consequence of the reduction of interest rates is to reduce the value of the currency, leading to the price of oil increasing, leading to price increases. Bank and government policy is currently based on deflation and recession being a more important issue in the short term than inflation, but the CPI figures show inflation hasn't gone away.

RPI may now be around zero, but in September which is the month used to calculate state pension and benefit increases, it was at 5% so those dependent on state pensions and benefits will do (relatively) well.

Globalisation is in general a good thing, but it implies some form of global regulation, or at the very least a global view of how business should be regarded.

Fred the Shred's pension is tabloid tittle-tattle and I think we've all had enough of it in this forum. It might make us all feel a bit happy if his head was on a stick on London Wall, but the real problems caused by the credit crucnh, and the effect on the employment, inflation, income, interest rates and the rest of the real economy are much more important.
Nothing should be taken for granted 1:28pm on 22 Mar 2009 The TV license is an easy target, particularly when you're in opposition and don't have to implement it. For the Tories public spending is a real problem area. There are some easy targets, but they won't save very much, and the electorate are very distrustful of the Tories on this issue. Whoever wins the election will have to make substantial reductions in public spending. Labour did what it promised - it substantially increased resources, but it failed to sufficiently reform the public services. Extra money some problems, but reform is needed.

The BBC output is still the best, just to look at today we have Countryfile, Yellowstone, Ladies No1 Detective agency and Top Gear, as well as excellent Radio stations. Is Jonathan Ross paid too much? - yes, he is. Is there rubbish and repeats on the BBC? yes there is. Have there always been such critisms of the BBC? yes, there have. I subscribe (and far greater cost than the TV license) to cable TV. I get quality sport, channels with excellent US imports, and channels full of repeats of stuff originally seen on the BBC.
Rock blew whistle on economic flop 00:23am on 21 Mar 2009 I predict that Manchester United will win the 2007/8 Premier league
I pretict that Barak Obama will become US President
I predict that sometime in the last 20 years inflation will be higher than it is now.

The Government, Treasury and FSA, nearly all political and economic commentators believed what was the overwhelming consensus in 2007 that we wouldn't have a recession, house prices may decline, but not by much and that the world economy would remain strong. They were wrong to think that. The Tories and the Lib Dems (including Vince Cable) called for less regulation - they were wrong about that and the government was wrong not to strengthen regulation. The Socialist Worker Party has constantly predicted over the past 40 years that Capitalism will be in crisis. Every 15 years or so they are right in their prediction; it doesn't mean they are right in their analysis.

There was a world wide bubble and most did not predict correctly when it would burst or indeed recognise that it was a bubble.

The National Audit Office produce useful reports when their findings are useful for the future. I'm really not sure this is the case with Northern Rock; given the consensus that existed at the time I suspect what happened would more or less have happened whatever political party had been in power - the Lib Dems wanted to nationalise Northern Rock earlier, the Tories probably later, but we'd have ended up more or less in the same place.

The real issue is where we go from here and which political party has the best solutions. Labour, who I support, will need to convince the electorate that despite the problems, they can deliver in the future. The Tories seem to me to be too relient on the electorate blaming Labour and don't have seem to have any convincing alternative to what the Labour government is doing, while the Lib Dems have some gaping holes in their programme including wanting to join the Euro.

The economic situation is to put it mildly, very difficult. E Europe and the major net exporting countries are very badly affected - just look at what is happening in Japan and Germany. Monetary policy has been loosened and fiscal stimulus underway. These actions will hopefully be enough to turn the world economy round, at which time the US and the UK economies will need rebalancing with greater savings and interest rates will need to rise to encourage saving and to reduce inflationery pressures. Getting the balance right will be difficult - if we get it wrong then inflation, a public funding crisis and a full blown sterling crisis are likely. Get it wrong the other way and the recession will be prolonged and much deeper than it needs to be.
Saying sorry 00:09am on 14 Mar 2009 The problem the Tories have is that they don't really have many ideas for dealing with recession. At this stage they can get away with this and just critisise the government who inevitably are loosing support as the recession bites hard. When the election comes people will want to know what they would do differently and the truth is they don't have a convincing answer.

Now the existing anti-Labour public feeling may well be sufficient to get the Tories elected in 15 months time, but they will have to deal with a whole load of difficulties. Winning the election may be the start of their troubles as the solutions offered by the Tories are neither robust, nor do they chime with the public mood of greater intervention.
Watchdog says markets not rational 11:56pm on 13 Mar 2009 Whatever regulation we end up with is certain to be more stringent that we've had previously. How to balance the demands for stricter regulation with allowing markets to operate with minimal interferance is almost certainly not going to be achievable.

The comments by Sants about markets not being rational is a real radical departure from previously policy. But what does this mean in practice for regulation? What will actually be put in place to stop bankers going mad in the future?

Institutional shareholders largely cheered on the banks while they did the things we are condemning them for now. You can't rely on them to act as a constraint - far too often they do the opposite. So it is up to regulation, and the likely result will be a constrained financial system for some years to come - not necesserily wholey a good thing.
What does Libertas really want? 12:26pm on 10 Mar 2009 The issue of democratising the EU is an important one. Opponants of the EU often talk about democracy but oppose more for the EU because this is seen as legitimising the EU when that is the last thing they want. EU supporters if they support more democracy are accused of wanting a Federal Europe.

So we end up with the worst of all worlds, with little democracy, EU legitimacy undermined, and many voters using Euro elections simply as a way of kicking the parties they dislike. Although I personally support the Lisbon Treaty, the campaign to have another referendum in Ireland reminds me of Brecht's comment on East Germany Communist Party that the Party were disappointed in the People and therefore the Party should elect a new people.
What am I bid? 10:25am on 10 Mar 2009 The likely result of the next general election, based on the polls is a Tory majority of around 50 seats. The election is probably a year away and things can easily change. However I confidently predict the following:

1. There will not be any BNP or other Nazi candidates elected
2. There will not be a GNU (government of national unity)
3. There not be lots of independents elected
4. The Tories and Labour will be by far the two largest parties

There is a possibility of a hung parliament. Proportional representation is unlikely to be an acceptable price to pay for either Labour or the Tories to gain Lib Dem support and therefore a minority government followed within a year by fresh elections.

Current Tory support is brittle - they don't really seem to have convinced people that they have an effective alternative to Labour and if green shoots of recovery do begin to be seen Labour could yet win the election.

As for the Lib Dems, game theory does seem very appropriate. I cannot see how they with their strongly pro EU policies could work with the predominately anti-EU Tory policies. The problem for the LibDems is that no one really knows what they stand for - they have lots of policies but few recognisable principles other than being fanatically pro-Europe and wanting to join the Euro now.

In the 1980's they said they would replace the Labour Party as the opposition party - in the late 90's they said they would replace the Tories and now they are back with replacing the Labour Party again. You may not like Thatcher, you might not like Blair but at least you know they stand for something - Cleggy is just the last of the summer whiners!

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