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We are the banks

Robert Peston | 08:55 UK time, Wednesday, 24 December 2008

The past 18 months was a story about the collapse of lending to banks and by banks - and about how we as taxpayers came to the rescue by providing £600bn of loans, guarantees and capital to the banks, to keep them afloat.

The story of the next year will be about the implications of this continued shrinkage in the availability of credit and about the implications of this massive, unprecedented support given to banks by taxpayers.

As a nation, our fortunes in 2009 will be conspicuously tied to the fortunes of our banks as never before.

First, an economic recovery rests on the ability of banks to support viable businesses during what increasingly looks like a severe recession.

Second, and as important, the balance sheet of the British public sector can be seen as the aggregated balance sheet of some substantial banks - because the state now controls three banks, Northern Rock, Bradford & Bingley and Royal Bank of Scotland, and will have a huge stake in a soon-to-be created fourth, LloydsTSB/HBOS.

It means that if the perceived credit-worthiness of our banks - with their trillions of pounds of assets and liabilities - were to deteriorate further, that would have an impact on the perceived credit-worthiness of the state.

As never before, it matters to all of us that the banks run themselves in a prudent way. In an extreme and highly unlikely case, if the markets viewed our banks as recklessly managed basket-cases, that would have an impact on the value of sterling and on the ability of the government itself to borrow.

So our prospects and welfare depend to a huge extent on an institution that was created a few weeks ago by the Treasury to manage its investments in the banks, UK Financial Investments (UKFI).

Bank of EnglandIt's probably no exaggeration to say that - for the coming year or two at least - UKFI will be as important to all of us as the Treasury, or the Bank of England or the City watchdog, the Financial Services Authority.

UKFI's primary aim is to "protect and create value for the taxpayer as shareholder" - while also making sure that the banks we own provide "competitively priced" loans to small businesses and homeowners "at 2007 levels".

Those objectives are not quite irreconcilable - in that the banks over which it has sway should be capable of providing substantial credit to the housing and small-company markets without chucking good money after bad, even though this is a dire period of economic contraction and proliferating bankruptcies.

But, for the avoidance of doubt, UKFI has no ability to increase the supply of credit in the economy as a whole.

Remember that the ability of banks to lend is anyway being undermined by losses on the stupid loans they made in the boom years and also by the collapse in the price of houses, property and shares, which slashes the value of vital collateral that backs loans.

So many banks are lending less to big companies, they are lending less for commercial property transactions, they are lending less to City institutions, they are lending less in the form of unsecured personal loans.

Lots of overseas institutions are cutting back significantly on the bounteous credit they provided directly to the real economy in the UK during the preceding few years.

Also many bigger companies that borrow directly on wholesale markets by selling bonds and other securities are finding it much harder and more expensive to raise money.

And credit provided between companies that buy and sell to each other is being massively restricted, by a collapse in the availability of insurance for such credit.

All of which can be summed up as "ouch" for businesses and households - and is the primary reason why some companies are going bust, and why those that will survive are reducing investment and cutting jobs.

So even with £600bn and rising of support for banks from taxpayers, our banks simply don't have the resources to keep afloat real companies - manufacturers, exporters - that are vital to the future of the British economy.

Which is why early in the new year, the Treasury will announce details of yet more taxpayer lending, this time to ensure that credit is provided to viable and strategically important companies - such as the more efficient carmakers.

The line between private sector and public sector, which became blurred in 2008, may become almost impossible to see in 2009.

Comments

Page 1 of 9

  • Comment number 1.

    THE STATE (UK) IS NO LONGER

    CREDITWORTHY.

  • Comment number 2.

    10 years of continuos debt is a serious bummer if it does not even get reduced and is a heavy weight to bare on you shoulders.

  • Comment number 3.

    Gloomy thoughts Robert. We'll see what happens next year. Oh by the way have a nice Christmas. You've done a great job over the last year.

  • Comment number 4.

    The ever falling value of Sterling

    will impact on food prices on

    the shelves next year and

    distort the unrealistic inflation

    projections.

    A further 30% fall against the

    Dollar and Euro is on its way over

    the next 6/7 months. . .

  • Comment number 5.

    What will also unfurl is how this government perceives the role of those exceptionally well paid individuals in charge of the failed institutions.

    If they stay then I think Mr. Brown can kiss his proverbial goodbye. If they go then he will have regained some credibility with life long labour voters.

    Just a small reminder to Mr. Brown. There is no such thing as an exceptional individual, just someone in the right place at the right time and more often than not a little bit of help from family and friends. There are many many folks capable of doing the same job for much lower pay.

  • Comment number 6.

    A Marxist analysis of the economic crisis:

    http://www.wsws.org/articles/2008/dec2008/nbe1-d19.shtml

  • Comment number 7.

    My fear is that the money pledged by the goverment is only enough to stop the banks going bankrupt. The banks still do not have enough money available to lend to the wider economy.

    With asset prices falling, and bad debts increasing due to the contracting UK economy, our banks' balance sheets will come under increasing pressure during 2009.

    There is a significant risk the banks will need to come back and ask for more money from the government. It's either that, or they just sit tight and refuse to lend.

    The economy will not start to recover until all the bad debts have been unwound and written off. This will take a 2 or 3 years to process.

    In the meantime, we have to deal with the falling value of sterling, which makes it more expensive for UK institutions to borrow money from abroad, thus adding to the liquidity problem.

  • Comment number 8.

    Every victim was in the wrong place at the wrong time.

    Skip town keep moving to migrate westwards

  • Comment number 9.

    Its unusual to go into a recession

    with the BANKS BEING BUST at

    the OUTSET.

    But why our MESSIAH thinks that

    MORE BORROWING will RESOLVE

    the problem leaves me COLD

    with FEAR for his SANITY!!

  • Comment number 10.

  • Comment number 11.

    Double or Quits!

    Gordon Brown says to Mervyn King, "Could you help me Mervyn? I'm a bit short of money at the moment. I've taken on this business of saving the world, and a prime minister's expense account goes nowhere these days."

    Mervyn says, "Well we're not doing much on loans these days, you know, but I'll make an exception for you. What sort of money were you thinking of?"

    Brown says, "A hundred thousand, Mervyn."

    Mervyn says, "That's an awful lot all at once....."

    "Well, I'll tell you what I'll do," says Brown,"I'll open a savings account with you, and when you lend me the hundred thousand, I'll put it all in my savings account, and draw on it when I need it. And the interest on the savings can go to help pay off the loan, you see."

    Mervyn hums and ha's a bit, and says, "Well Gordon, as your Bank Manager, I have to ask you, when would you be expecting to pay all this off?"
    Brown declares, "When I've saved the world, of course."

    "But Gordon," says Mervyn, "what will you do if you don't save the world before you spend all the money? or if we have a general election before then?"

    "Well that's easy," says Gordon. "In that case you lend me two hundred thousand. Then I pay off the first loan, and fill up my savings account, and we go on from there."

    Mervyn thinks about it and says "Well that seems reasonable, Gordon. I'll make it a hundred thousand pounds available to you right away. There now."

    "Pounds!" says Brown. "I was talking about MILLIONS!"

  • Comment number 12.

    We don't need to teach our children maths because they won't need it now.

  • Comment number 13.

    #5 is spot on timing is everything.

  • Comment number 14.

    it sounds like the new capitalism will be about more poorer people and there will be different degrees of poor to distinguish the various poor and poor poor classes

  • Comment number 15.

    It may add to the debate to view: www.moneyasdebt.net
    www.monetaryreform.org
    Part nationalisation of banks in the western world should be viewed as an opportunity for governments to take back control of the money supply.

  • Comment number 16.

    it's panto season!

    You couldn't write it any better!

    Who is the Fairy Godmother?

    When will the magic wand change their ways?

    Gordon Brown et al obviously believe in Father Christmas coming to the rescue!

    Have a good one everyone!

    Tigs

  • Comment number 17.

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

  • Comment number 18.

    Indeed, Robert, we are all bankers today: only not by choice but by conscription.

    My message to the political class is that often when conscript armies have been placed under severe and unjust stresses they have been known to mutiny.

    We face an economic environment in which the life-blood of the economy, namely the provision of ever-expanding credit, has gone into progressive collapse. This process continues and will not get better until it can be seen that asset prices have hit the floor. This is believed to be between a year and eighteen months away.

    There is also no doubt that in order to minimise the effects of this very negative circumstance there will need to be substantial credit provision to the housing and SME markets without chucking good money after bad. The good people have to be protected.

    This means that taxpayer funded credit must only be supplied to individuals with a sound credit record and companies with defined prospects of producing profits. This should not be allowed to develop into a credit free-for-all for the usual suspects.

    What we now need from the government is a proposal as to how we are to start establishing the fundamentals of our eventual recovery and future economy.

    I am very uncomfortable knowing that this essential function is in the hands of a government which has demonstrated time and again that its only priority is its own secular interest.

    Over the next twelve months these issues are going to loom larger and larger in the political firmament.

    Yet I don't want to hear loose talk about the next election.

    I want to hear talk about a National Government to initiate a public discussion with a view to creating a new political and economic consensus to replace the one which has so fundamentally failed.

    The alternative is that we take to the streets which in terms of financial rectitude would be just stupid.

  • Comment number 19.

    As always, an incisive piece of journalism. I enjoy reading Robert's pieces - I may not always agree with him, but as is oft (mis)quoted, I will defend his right to break the news that we need to know.

    Some commentators 'blamed' Robert for the so-called collapse of Northern Rock.

    However, had Gordon 'Prudence' Brown not taken away the authority of the Bank of England over the banking system when New (sic) Labour came into Government, the Bank of England would have been able to resolve that situation.

    Dithering Darling and the Farcial Services Authority are just as much to blame...........

  • Comment number 20.

    As stated here previously, we are entering into the next social economic phase of modern living. Social capitalism. This is not socialism nor is it capitalism. It is both, melded into one. We will see more and more of this kind of ownership split, ie, between regular share holders and us, the taxpaying block shareholder. However we are not directly represented on any board or at any shareholders meetings, except by proxy of course in the form of a minister or two, therefore our votes will be nonexistent and thus the power is kept nicely out of our hands, thereby finding the tricky solution of how to keep the people out of power while using them to support those in power.

    We all know that the current situation is changing due to the words Sub Prime being almost nonexistent now on all media outlets. The new kid on the block is Global Economic Contraction. This monster will cover all ills from lack of money, lack of jobs, lack of food (soon to be back on the agenda as the issues were never solved), lack of cheap fuel (forget recent falls, fuel is a diminishing commodity and gas will soon sky rocket). Well I could go on, but it is the season to be merry. So I wish you your last real happy Christmas, because when you look back you will see it as being a time of innocence.

  • Comment number 21.

    Could be time to join the Euro - methinks!

  • Comment number 22.

  • Comment number 23.

    5. At 09:23am on 24 Dec 2008, mar39241 wrote:
    "Just a small reminder to Mr. Brown. There is no such thing as an exceptional individual, just someone in the right place at the right time and more often than not a little bit of help from family and friends. There are many many folks capable of doing the same job for much lower pay."


    I totally agree - their are many people so wrapped up in their own self importance they expect to be paid huge amounts of salary and then get in a position where they can either influence their pay assessment or just give themselves the pay rises. They are probably right to think their job is more important than e.g. a footballer, but they are wrong to think they autumatically should get paid huge amounts of money.

    The whole system is totally out of control
    because it's easy to spend other peoples money - If organisations were run by people spending their own money they would be more careful about paying it out.

    Here is a couple of examples :-
    1. Chief executives of County Councils who get paid more than the Prime Minister.

    2. The Chief of the Financial Services Compensation Scheme has paid her self ?? - £237,000 salary package per annum – a 32% rise since the previous year - more than the Prime Minister !!

    Can anyone explain how a person who oversees the administration of a local council or a person who oversees the payment of compensation can be paid more than the Prime Minister ??!! How many life or death decisions do these people have to make ??!!

    Good if you can get it ??!!

  • Comment number 24.

    So, now the UK Government (you and me) also own the toxic 'derivatives'. These debts and bets are worth some $500 trillion. Compare that to the GDP of the whole planet of just $50 trillion and you get some idea why this fantastic burden of debt and/or potential liabilities can NEVER be repaid.

    True, the financial crisis started with sub-prime mortgages, BUT it is far deeper than that. After all the total of sub-prime mortgage debt is reported as being some $1.5 trillion, whereas world Governments have so far pump close to $10 trillion into the banks. If the problem was sub-prime mortgages, or now 'banks not lending to each other', this $10 trillion cash injection would have solved it long time ago.


    The only solutions I can think of are
    a) hyperinflation to degrade the whole of that debt (following Zimbabwe)or
    b) legal cancellation of all derivative contracts (!!) or
    c) collapse of the whole financial system incl just about all banks, and starting all over again.

    If it comes to c) then that will include the UK economy as a whole, now that we own much of the problem. Thanks Gordon!

    Pumping borrowed money into the economy in the utterly vain hope of recovery is just about the worst possible strategy.

    And then the little problem of Energy and Growth.

    2008 is the end of the Era of Growth (as growth is predicated on the availability of cheap energy) and 2009 will be the start of the Era of Decline.

    Next year the world production of crude oil, for the first time in history, is likely to decline for geological, not political or economic, reasons. Peak Gas will follow some 10 years later.

    No matter what investment is made in oil or gas fields, the total production from 2009 onwards will decline by perhaps 4% on average every year, thus our primary energy sources will halve every 20 years or so. This ‘peaking’ has already happened in 60 oil producing countries around the world, incl USA (1972) and UK(1999) and now, from 2009, global production will also begin to decline.

    Most people believe that other forms of energy will take the place of oil and gas. That will not happen. There is currently no combination of alternative sources energy that comes anywhere near to replacing oil and gas.

    The 1930s depression was bad enough, but this decline will be on a massively larger scale. To start with, it will be at least 40 years long. 40 years will take us to about 25% of current energy usage, which is about the level of energy we can expect from all renewable sources combined. So at that stage, provided Governments have been wise enough to have invested massively in renewable energy, renewables may be able to take over from fossil fuels and perhaps stabilise the world economy.

    However, pumping trillions of dollars into rescuing banks and car manufacturers and further trillions into ‘restarting the economy’ may impoverish governments to a point where no investment will be possible where it is really needed, such as renewables.

    So, what should we do now? I suggest:
    a) embrace the Green New Deal incl. £50 billion per year invested in renewables in UK. This £50 billion investment will be easily repaid through lower import bills for fossil fuels in the years to come.
    b) forget about tax cuts or increases in current spending, they won’t do any good anyway and just add more and more to national (mine and yours) debt
    c) and go sustainable ( meaning: if you can't continue doing the same thing for say 100 years without damage, then its not sustainable)

    Look at www.transitionnc.org/?q=node/73 for much more info.

  • Comment number 25.

    A great piece Robert.

    Thanks for telling the truth all year instead of attempting to spin away what will be a nightmare 2009.

    At least millions of people have now had some time to put their finances in order and stop overspending. This will make the difference between going under or not in many cases.

    I also agree with you about Sterling. It is for this reason the government has gone quiet about saving everybody and peoples jobs. They know they cannot.

    HBOS alone needs £200bn over the next 18 months to refinance its mortgage book.

  • Comment number 26.

    What a mess!
    I worked in Banking from the 60's to the end of the 80's, and in those days Banks, when considering lending, used CCC (Character, Capability, Capital) or PARTS (Purpose, Amount, Repayment, Time, Security). Then this went out of the wiindow with selling loans to all and sundry, and it became you may not want it but we insist on giving it - lets continue to roll up your debts! Let's not forget all those letters from credit card companies insisting on giving out large limits, as long as you could sign your name on an application form.
    I have a feeling that this Country will not pass these two simple tests now, and we will all in the workhouse!

  • Comment number 27.

    As an engineer I find this very worrying.

    The Treasury and the City have put a huge amount of effort into deindustrialising the UK - not supporting tech companies properly, selling off companies to overseas buyers etc - but have got away with it in the eyes of the uneducated masses by claiming that it's all down to the market and of course ownership isn't important anyway.

    Now that the lines between the Treasury and the City have become even more blurred and are essentially one entity then deindustrialisation could accelerate.

    What can we do about this Robert?

  • Comment number 28.

    As I've said before, the UK's economic depression is likely to become a clinical one.
    If it isn't already !

    The only good news I can think of for 2009 is, er, um, er....

    I can't think of any actually.

    Suggestions anybody ?

    PLEASE !!!!!

    Before I top myself...

    How about a New Years Resolution, Robert. To write about some good news in the economy at least every other day ?

    There's got to be some out there.
    Hasn't there ?!!!

    If some good news (n.b. not spin) is broadcast regularly on the BBC, we might all start to feel better, spend a bit more and pull ourselves out of this depression...

    That could be all it requires. A Reporter who's clearly got the ear of the nation to start reporting a few genuine good news stories. I don't mean that you should cover up the bad news, scandals and controversies as they should still be reported, but also seek out and report the postive, optimistic, good news stories...

    If Gordon Brown is no longer admitting to saving the World, perhaps Bob Peston will...

  • Comment number 29.

    24. At 09:56am on 24 Dec 2008, TransitionPaul wrote:

    The only solutions I can think of are
    a) hyperinflation to degrade the whole of that debt (following Zimbabwe)or
    b) legal cancellation of all derivative contracts (!!) or
    c) collapse of the whole financial system incl just about all banks, and starting all over again.
    +
    I propose we proceed with all 3 solutions outlined above in the same sequence

  • Comment number 30.

    We might be headed for deflation in the short term, but only a massive and lengthy bout of inflation will reduce this huge debt... and that's bad news for us pensioners with no debt and a few quid in the bank. Back to the 70s? As Robert said some weeks ago: we'll all be impoverished. Happy New Year!

  • Comment number 31.

    Ten wishes for 2009:

    1. Peston/BBC do some "business" reports on how small and medium sized businesses are coping with bad debts, reduced credit lines, falling order books and redundancies. You know those places where "hard working families everywhere" actually work.

    2. Gordon Brown admits his role in the crisis (what crisis??). He cannot claim 9 years of growth, only dicate the year of the crash as being "global issues". Admit it was a lot his fault, and he will have many more supporers.

    3. Vince Cable to sensationally defect to the Tories, to replace George Snob-bourne. An eminently nice bloke who talks in plain English, and looks like you dad. They can then hopefully create a new economic way to offer (some/any) credible alternative.

    4. Bankers own up to their role, then repay some tax payers money by repaying their bonusses and ill gotten gains. Banks then focus on keeping depoists safe to reward savers, and prudently lending to real people for real things, with adequate cover. Oh, and we all be nice to the staff on the counters . . it's not their fault.

    5. A moratorium on reposessions, until the banks have a clear policy. This should be matched by a moratorium on IVA's and personal bankruptcy, to stop people copping out from their responsibilities.

    6. That the British Public makes it their duty to become informed on the effect of all the changes on their lives, so when that marvellous thing called Democracy kicks in and they wield their vote each soon, they choose on the basis of knowledge, not tabloid/BBC headlines.

    7. Invest in British manufacturing - innovation, productivity and quality craftmanship. There is no point in a Buy British campaign, if we don't make or do anything anymore.

    8. Widen the debate beyond the "new economy" to other related issues to the society we want for the next 30 years. What is our energy policy?? How will we use town centre shops lying empty, as the world moves online? Debate immigration and economic migration separately - what do we want and need??

    9. Alexander Curzon to replace Lord Mandelson as MINISTER FOR BUSINESS

    10. Over the next few days we can all appreciate those things in life which are free - our health; our families and children; our marvllous parks and countryside; the laughter and Company of friends - and take time to reflct that, despite how bad things will get, where our priorities do lie.

    Merry Christmas all. Keep smiling.

  • Comment number 32.

  • Comment number 33.

    when are the banks going to be forced to come clean and disclose their toxic debt? i suppose GB did due diligence before bailing them out so he knows what they are, as (forced)shareholders we also should be told....

    when are the big four auditors going to be brought to book? They signed off the accounts of all these companies..........

    when will it dawn on GB that borrowing to pay ones debts is the road to ruin....

    When will BBC journalists (inter alia) start to hold these failed bankers and politicians to account and demand answers to pertinent questions.......

    when will disaster really hit home owners as they realise those endowment mortgages wont pay off the mortgage.......and GB has vaporised your pension....welcome to retirement on benefits..........

    Apart from that may i wish one and all a very happy christmas and a healthy 2009
    it will be interesting reading robert's blogs this time next year and see who was right!

  • Comment number 34.

    The image that best sums up the govenment's actions is of a losing gambler doubling his bets. Unfortunately, the amount of OUR MONEY that GB/AD have on the table is literally unimaginable, and unless some things start to go right very soon, our collective debts will become too big to ever pay back.

    And no 5 is right, there are no exceptional bankers, just well-connected individuals who happened to be in the right place at the right time. The salaries they command are just rent-seeking, not earned wealth.

    As for the future of the pound, well who knows? Certainly Britain is in deep trouble, but the major exporting countries are faring no better. This really is a world depression that we are entering and the real dangers are not a few redundancies but civil unrest in this and other countries, and armed conflict between countries.

  • Comment number 35.

    Thanks Robert for your analysis over the last 12 months. You really are a good reporter.

    And thanks Gordon. Your achievements were greater. You achieved power, bankrupting the country in the process. You really will be remembered. Why did Tony not go earlier?

    Say goodbye to your savings.

    Merry Christmas.

  • Comment number 36.

    Quote:....."In an extreme and highly unlikely case, if the markets viewed our banks as recklessly managed basket-cases, that would have an impact on the value of sterling and on the ability of the government itself to borrow."


    As pointed out previously in these blog comments, the risk of default by HM Government is priced much higher in the markets than that of McDonalds (of the red-nosed clown fame) !!!!


    This is where, Robert, you are selling the UK's people down the river by stating that all will probably be OK, and the government is in control. By not taking decisive action now, in a few months (maybe 6, maybe 26), Britain will fail and be bankrupted, and all hell may break lose !!

  • Comment number 37.

    It's a Mad Birthday World (yes, it's my birthday today)

    Lending to banks, reluctantly, yes. I can see there would have been anarchy on the streets if HBOS had gone down, taking 22 million accounts with it.

    But lending to car makers? As others have pointed out, no one is lending taxpayers money to the construction industry, much less to hard hit estate agents. I would argue that car makers actually have the least good case of all.

    The steady drip drip of the environmentalists arguments about cars, coupled with the sudden oil price shock last summer have, I believe, changed the world forever when it comes to motoring. I can scarely believed that once I thought it essential to trade up every five years max to a new car. The one I have now is six years old and will do me for as long as it can still get from A to B and until there is a new cheap hybrid or oil free form of vehicle on the market. Until then , for this city dweller, there's public transport.

    I know this is not possible for people who are not city centre dwellers, but if even a small proportion of people see things as I do, then those vast acres of unsold cars will remain unsold and gvt loans will merely result in more acres of rusting unwanted vehicles joining them month by month. (Back in the USSR!)

    I appreciate it must be hreatbreakng and difficult for people whose livelihoods depend on the motor industry. As it was for miners in the 80s. But surely for the country as a whole it is cheaper and more sensible to concentrate on benefits and retraining for the workers and stop expecting the world to resume after a brief hiatus and it once was.

    But I guess there's too many votes in the motor industry in the Midlands for such a sensible course of action. I expect the announcement that Tata are 'pumping millions into Jaguar' is just to soften us up for the millions we taxpayers are going to be pouring in.

    And so the Madness continues. Happy Christmas

  • Comment number 38.

    You know when things are bad when Governments stop looking for countries to invade and start giving dates for when the troops are coming home.

    Governments understand Marshal Law and when it will be needed.

    The 2nd greatest Superpower on earth as recognised by each and every government on this planet as being its own population. When they get piss*d, and they are going to get really piss*d, then governments need to start preparing for great social upset.

    When the lights go out, the fuel become too expensive, the social dole is empty, rubbish is failing to be cleared, we may then see real change. So if all the people here on this blog wonder why the governments of the world are borrowing more and more money to get deeper and deeper into debt, then you have your answer. Fear.

  • Comment number 39.

    Robert - How dare you - The spell checker on this blog is American

    Color or Colour - guess which word has the red line under it.

    This is the BBC, isn't it?

  • Comment number 40.

    Quote: "First, an economic recovery rests on the ability of banks to support viable businesses during what increasingly looks like a severe recession."


    No, there is little, if no, chance of an economic recovery based on resuscitating the banks. When this banal dream does not work it will just bankrupt and enslave our children and grand-children with its debt to foreigners.

    Pain now, by making sure the insolvent losses of the banks are not transferred to the UK Government, would lead to Britain losing its ability to pay for imports, six to twelve months of unrest, but thereafter a rebuilding and growing and strong Britain that will build itself back into the world player it is.

    But Gordon Brown doesn't want that, and would rather let his dangerously acute appendix rumble and worry about it bursting later, than operate and deal with it now.

  • Comment number 41.

    Looks like war with doom, gloom and the rise of the anti-christ to me. Isn't life fun and a Merry Christmas to you all.

  • Comment number 42.

    UKFI may well have a crucial role in the unfolding of the issues of credit and financial stability but there is still little sign the Government understand the depth and magnitude of the economic crisis.

    There is no sign that they are prepared to take the powers that are available through ownership and statute.

    This is a government that has out laissez faired Thatcher but is in denial on the analysis of the outcome.

    It amounts to a form of worship by Brown (and earlier Blair) of all things private sector and privatised in spite of most of the woes of the government having their pathology in a wholly out of date micro view of free enterprise and 'free' markets.

  • Comment number 43.

    It is critical that sound money** is re-established. Without sound money we will have neither credit in the World nor in the Country.

    The Bank of England and the Treasury must cease destroying the value of money (and the currency) We, as a Nation, are talking rot when we seek to prevent other countries engaging in competitive protectionist policies when that is exactly the policy of the British Government through continued devaluation of sterling.

    Those who ran, and still run, the Bank, the Treasury, the FSA who ran this country into the sand must go.

    ** sound money means that borrowers should expect to pay a fair price for the money they borrow and savers and investors should expect a fair return - zero, or effective negative, interest rates are NOT compatible with a functioning economy or sound money. (Fair = 6 to 8 percent.) Must happen by June 2009!!!

    Merry Christmas and a Prosperous New Year to all. (Well not too frugal anyway!)

  • Comment number 44.

    I think it is a bit silly to keep criticising Gordon Brown. He is in charge because he knows a lot more about what to do with money and stuff than any of you people. If you knew about money and stuff you would not just write on the blog all day.

    And what about Peston - nobody had heard of him until the credit crunchy. Maybe you should think about the coincidence of him appearing and then everything going wrong. Perhaps if he wasn't in all the media all the time telling people how terrible everything is then things might not be so bad.

  • Comment number 45.

    The one truth you should have emphasised a bit more, is that banks must lend to " Viable ' businesses ; a bit more emphasis on" viable "wouldn't go amiss . Lending to failing business is a definite no-no. Merry Christmas, :: we'll get back to constructive demolition of Nu Lab after New Year.

  • Comment number 46.

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

  • Comment number 47.

    Quote:.... "the Treasury will announce details of yet more taxpayer lending, this time to ensure that credit is provided to viable and strategically important companies - such as the more efficient carmakers."

    In an economy where there are hundreds of thousands of new cars without any buyers, and more being added to unsalable inventory every day, no car maker is efficient !!

    And with the UK's car plants being older and less technologically efficient than the newer Eastern European plants (where labour costs are anyway much lower), UK's car plants can never be efficient at present. Robert, you are being mischievous.

    Best bet is to mothball car plants for two years, and then begin them again when they are purchased out of bankruptcy/insolvency.
    You have a two year skill-drain in the meantime, but this is surely the least-bad option.

  • Comment number 48.

    #44 - Yes let us all believe that if you put your head in the sand, then the bogey man will disapear. Or better still, let us all close our eyes and wish it all better.

  • Comment number 49.

    HOW TO BE HAPPY

    1 Need little

    2 Want less

    3 Envy no-one

    4 Owe nothing

    5 Walk on the sunny side of the street


    Forever Young (apols to Bob Dylan 1974)

    May you always be courageous

    May your feet be ever swift

    May you have a strong foundation when the sands of time do shift

    May your heart be always joyful

    May your song be always sung

    May you stay forever young.


    and a very Happy Christmas to you all from me and him outdoors

  • Comment number 50.

    With the economy, we seem to be witnessing something akin to 9/11 - the pillars of the economy have been struck by 747s, fires are breaking out everywhere, and the firemen have rushed in to save the situation.

    What we don't dare to acknowledge is that any minute now, and with very little warning, the whole infrastructure is going to collapse in a pile of dust and rubble.

    From Ground Zero, we will then see the emergence of New Capitalism.

    Isn't it time to start devoting our attention to what that will look like? My prediction is that the building blocks of the New Economy will be, not institutions, but empowered individuals armed with laptops and a connection to the internet, collaborating in virtual teams, and building the virtual corporations of the New Economy. Not such a bad future!

  • Comment number 51.

    #16 Re the panto season. It's well worth looking at Tim Harford's cautionary tale of [Unsuitable/Broken URL removed by Moderator] on the FT website.

    Re Robert's blog. I'd like to say something optimistic on Christmas Eve, but it's difficult. It seems to me that the banks' once private debt, has become de-facto sovereign debt. Which means that the rest of the economy is going to be subordinate to the banks for the forseeable future, and not the other way round as it should be.

    The real economy should come first, even if that means banks in administration.

    Rebuild Britain 2010

    This is the second version of the draft website - a bit less offensive. It is only a draft. To participate, join us.

    And think - as Christmas is effectively a rebranded winter solstice festival:

    Darkness shall give way to the Light! - but only if we make it do so, metaphorically speaking.

    Merry Chrimbo everyone! Look after your loved ones.

  • Comment number 52.

    We enjoy your 'well-informed' predictions, Robert: keep them up.

    Time for everyone else to have a go ! Merry Xmas

  • Comment number 53.

    Cheer up 'everyone in the West' you could have been born Zimbabwean! Perspective is everything, lets rebuild a more fair and sustainable society. Stop worrying about your losses or your future and send some hope from what you have left to those less fortunate than you.

  • Comment number 54.

    #44. bobgateaux wrote:

    If you knew about money and stuff you would not just write on the blog all day

    Bob,

    Would it not be wonderful if life was that simple...

    The people who run things self select like minded people who will massage their egos and accept the model that their view of the system has created - those of us who oppose, or even deviate marginally from the accepted orthodoxy of such a model were weeded out in the selection process long ago. Just try getting yourself into any British political party - there is nothing more spiteful or closed than a constituency party selection committee!

    On the subject of making money: my guess is that most of the blog participants here have sufficient funds to meet their needs and the time to spare to indulge their mostly altruistic desire to make things better for their fellow man. Otherwise why would most offer a practical critique of affairs?

  • Comment number 55.

    #44 If you knew about money and stuff you would not just write on the blog all day.



    ...has it not occurred to you that i have time to blog because i retired as a wealthy man after selling my business and shares at the top of the market.........i have more real experience than GB and the government put together.

  • Comment number 56.

    I was expecting at least a "Merry Christmas" to the 600k readers of this blog, RP! Last year you did a song and apologised for being miserable!

    By the way, I got that number from your Panorama - Astounding!

    It's my last morning of work today, so Merry Christmas Robert, supercalmdown, alexander curzon, javaman, kikidread, etc!

    ps Just started reading Who Runs Britain - Very good, but shouldn't the 11th word of the very 1st sentence be "the"?

    Happy holidays and see you all in 2009!

  • Comment number 57.

    Can the next 18 months be about not listening you to creating self fulfilling prophecies-and creating your own wealth of the back of the misfortune of others
    Have A Good Peaceful Christmas

  • Comment number 58.

    *24 TransitionPaul

    In relation to your post

    I have been invited by the conservative party

    -You are invited to the Conservative Party Keep Britain Working Event to be held on Tuesday 6th January 2009 in Ipswich.

    The aim of the event is to share with you the latest thinking from the Conservative Party about the current economic downturn and to hear your views about measures that could be taken to alleviate the challenges we face.

    The forum will be led by Andrew Lansley MP and will include business representative groups and businesses, local authority representatives, voluntary sector organisations working with business, the self employed and unemployed.-



    Solutions to alleviate the challenges we face has already been exposed and debated since Jimmy Carter. I am afraid that the future under the so called leadership of the conservative party looks as bleak as the actual present ruling party.
    “Where there is no vision, people perish”

    As president, Carter created two new cabinet-level departments: the Department of Energy and the Department of Education. He established a national energy policy that included conservation, price control, and new technology. Foreign oil imports were reduced by 50% from 1977 to 1982.

  • Comment number 59.

  • Comment number 60.

    Well I think it's time to start putting together a list of 'Who is going to the wall first' next year.

    I propose (in numerical order)

    1. Bank CEO's
    2. The Treasury
    3. The Government
    4. Anyone claiming to be an 'economist'
    5. The media
    6. The media again
    7. Any other capitlaist.


    Just to clarify, by 'going to the wall' - I don't mean going bust!

    I have made a pledge that when the revolution comes I will hand over my worldly goods to the revolutionists in exchange for my life.
    I suggest the rest of you do the same.

  • Comment number 61.

    In all of these blogs there is an unquestionned assumption that after an hiatus of say two years, the economy will begin to revert to its previous size. This seems to me to be a false assumption.

    It may be that the credit bubble over the last decade accounted for as much as 20% of the world economy. This credit, in fact, just didn't exist at all. It was fantasy credit based on fantasy investments and gave an impression of a much larger global economy than was actually the case. So the idea of a recovery is surely a myth. What will happen is that the economy will shrink say by 20% (if we are lucky) and stay there i.e. that will be its proper size.

    We need to accept this and take the medicine now... not create more fantasy credit and start the process all over again.
    So the Government's 'hair of the dog' response is delusional and immoral. It is based on an inability to face reality and a selfish urge to get future generations to bale out our greedy lifestyles today. I for one think too much of my children and grandchildren to sign up to this 'greed on greed' approach.

  • Comment number 62.

    #50 - Yes - great idea - I'll just stop a moment to put a virtual log on my virtual fire and take a bite from my virtual food and continue living my virtual life while in my real life I get on with keeping myself warm, fed and earning a real living doing real things.

  • Comment number 63.

    As an ex-military man I learned that the first principle of war is "selection and maintenance of the aim". Selecting the right aim (or mission) is critical. If the mission is clear, your chances of success are raised; if the mission is ambiguous, you're stuffed from the start.

    The UKFI's mission is ambiguous; it will fail.

    The UKFI can't simultaneously "create value" (that means taking risks to achieve rewards), "protect value" (that means avoiding risks to, er, protect the extant value) and "provide competitively priced loans" (that means shifting between risk-taking and risk-aversion, depending on market forces at the time).

    So, here we go then as the politicians assume leadership of the banking system - a group of people never reknowned for their clarity of purpose ("selection of the aim"), steadfast approach to challenges ("maintenance of the aim") or commercial acumen (risible).

    Gordon Brown (self-proclaimed saviour of the world) starts by coming up with a woolly mission for the UKFI, thereby guaranteeing that it's downhill all the way from here. Unlike you Mr Peston, my money is on "the markets [viewing] our banks as recklessly managed basket cases" in the fullness of time. It's not "if" the markets will crucify the UK, it's "when". My forecast is before the end of 2009. We're already witnessing a slow-motion run on the pound.

    Forget party political ideologies, manifestos and general elections. Put simply, I'm just getting really, really angry at all this stuff: the near-criminal incompetence of our political elite (all parties are failing us badly) is now becoming a serious threat to our way of life here.

    Where's our latter day version of Winston Churchill for goodness sake? Whoever you are, you'd better stand up and make yourself known pretty soon.

  • Comment number 64.

    When does UKFI become a Sovereign Wealth Fund?

  • Comment number 65.

    Trust has gone!

    That's the problem, and I don't see how it can be restored easily. With very difficult times ahead, it will be unlikely that the hard decisions that need to be taken will be accepted by everyone.

    And, if we are now the banks, that's a recipe for disaster before UKFI even begins!

    Every GBP that's spent on regaining a sound economy will be contentious unless we have some trust in the system.

    This is a problem that cannot be resolved by the usual spin or the giant fist or even a change in government. We are at the end of an era.

  • Comment number 66.

    I'd like to ask the government what it is doing for its customers (i.e. the people) when it comes to providing the right to participate in decisions that affect our future?

    Did we get to choose becoming "shareholders" of the banks? Isn't a share something that i) potentially pays dividends ii) can be sold at a profit if its value increases iii) provides the right to participate in decisions of the entity that issued the shares?

    Mr Brown, can I sell my shares please? I'd like to invest in something with a future.

  • Comment number 67.

    # 50 Michael Wolff

    Nothing personal (I deplore rudeness), but your post is tosh I'm afraid.

  • Comment number 68.

    "It means that if the perceived credit-worthiness of our banks - with their trillions of pounds of assets and liabilities - were to deteriorate further, that would have an impact on the perceived credit-worthiness of the state."

    One step to take to improve the perception would be for the government to ensure the removal of all the fat cats at NR, TSB/HBOS, RBS and BB. Thereby sending a clear signal that those responsible cannot do it again.

  • Comment number 69.

    To resolve the current credit/banking crisis with require one or both of the following; the banks acknowledging that they have findamentally moved away from providing a secure haven for investment, and possibly a greater "nationalisation" of our banks. The Northern Rock and the Halifax Building Societies used to be watchword for northern pragmatism and common sense....

    The banks have targeted profit above all else in recent years (so has the Building Society I work for!) with a culture and reward system which has reduced the accountability of decision makers. Short term gain has has created institutionalised "Ponzi Schemes" forever trying to keep up with the Jonses so as to not be left behind.....
    It is amazing how many unbroken things are currently being fixed because they are not whizzy enough....

    ALL of the credit crunch risks were identified many years ago (at least 6 from where I sit) but nobody wanted to be left behind in the good times.

    Much as I have enjoyed Robert's articles this year they have not probed deeply enough. Many of the reactionary decisions now being made to protect lending positions were identified at least 12 months previously but not acted upon.
    That is the question that should be asked - why??

  • Comment number 70.

    #52 - you just don't get it. we're currently at a critical stage in the latest technological revolution - IT and telecommunications.

    We haven't begun to realise the full potential. This economic wipe-out will clear the way for its full fruition, in the same way that 1929 cleared the way for the car and plane driven economy, that is now about to collapse.

  • Comment number 71.

    Re no 60: In ordinary times it should be the politicians who are first in the queue for re-education when the enraged mob has broken through the last cordon of anti-terrorist police around the Westminster bubble, and the ropes are being flung over trees and lamposts. But I've come to agree with you that bankers are even more deserving of revolutionary justice than govt ministers and their assorted hangers on the press and civil service.

    More seriously, let's just pray that in 2009 these people realise just how isolated their lives are, insulated by the bubble of power from ordinary folk, and that they acquire some understanding of just how hated and despised they have become.

    Merry Christmas.

  • Comment number 72.

    I have never seen such a collection of uneducated drivel as is found on this comments page. From the marxists/socialists proclaiming the end of capitalism to the tin-foil hatted innumerates who obviously have no idea of accounting/finance.

    It is quite amusing though - a bit like going to the zoo

  • Comment number 73.

    experts had been warning (i.e. banging on) about bad investmenting in the market in CD's and similar asset types such as derivatives etc.

    "Music, games and DVD chain Zavvi has gone into administration, Ernst & Young has announced, threatening 2,500 jobs."

    Same thing happened with tower records

  • Comment number 74.

    #39. there is no spell checker on this blog. there may well be one on your browser though.

  • Comment number 75.

    Merry Christmas Robert, you have done a fantastic job this year.

  • Comment number 76.

    How our banks were rescued!?! Indeed!

    Shouldn’t that programme be re-titled “How our banks were granted a temporary respite”?

    The arrogance of Alistair Darling and the smugness of Gordon Brown will be wiped away in 2009.

    Our analysis is once again showing that stock markets are set to plummet at least another 50% next year, as yet more banking woes are unveiled and major corporations fail.

    Let’s hope that it’s not just glib sound bites and the money printing press that the government have left in their armory, or else God help us one and all!

  • Comment number 77.

    Robert,

    When are you going to be allowed by the BBC to directly blame Gordon Brown for creating this UK crisis by artificially increasing the money supply which created this bubble with his huge public sector borrowing over the last few years?

    This allongside changing bank regulations allowing them to become reliant on wholesale borrowing above their deposit levels plus a whole range of socialist policies.

  • Comment number 78.

    I would take issue with the idea that the main reason some companies has gone bust is the withdrawal of credit. The main reason is that the companies have not been well managed and their finances were not robust. The credit crunch has played its part, but for every company that has gone bust there are companies who can still get credit. The difference between those companies is leverage, earnings prospects, assets values and other management controlled criteria. If all companies had made contingency plans for a severe downturn then none would have gone bust.

    I would take issue with the idea that UKFI's aim is to make sure banks we own provide competitively priced loans to small businesses and homeowners at 2007 levels. The evidence is that Northern Rock and Bradford and Bingley are the worst banks for withdrawing credit. They are being run with the aim of minimising the loss to the taxpayer. The two banks who have announced significant actions to increase lending to small businesses are HSBC and Barclays. How ironic that the one thing the government turns out to be ruthlessly efficient at is banking. The UKFI’s dual aims doom it to failure on at least one aim. Either it makes big losses for the tax payer or it restricts lending to businesses. Off course the government can do nothing about the likes of GMAC and GE Money which are American lenders withdrawing credit, and these were very active in the Car loan, electrical loan and unsecured loan arenas. The UK/ Irish parts of these companies are the ones who should have been nationalised.

    Saying that credit will be provided to strategically important companies - such as the more efficient carmakers seems unlikely. The UK government seems unlikely to lend money to Nissan, Honda, Ford and BMW, but to less efficient carmakers like land rover jaguar and Vauxhall. This would clearly be anti competitive and Nissan, Honda, Ford and BMW would have every right to close their factories in the UK. Any strategy should be aimed at car manufacturing as a whole in the UK not just those that beg loudest. A good start may be to sort out car loan availability, but also tax incentives to stay in Britain and providing sponsoring for green technologies. Blanket loans just create moral hazard with companies returning for more and continuing to be run on the basis that the government is always there to bail them out.

    Now we come to the rather horrifying thought that the line between private sector and public sector is blurring. Considering how bad the government is at running most things this is worrying, except of course being ruthless efficient at withdrawal credit as bankers. We already know some of the problems that are going to come up in 2009 that will hit the banks. Housing will fall another 10 percent minimum( more like 20 if you believe some), credit card loans will start to default expecially after Christmas, car loans will start to default as people are stuck with loans greater than the value of their cars, the big thing to hit banks of course will be commercial property values dropping by up to 50 percent. The fall in commercial property hits companies ability to lend, hits banks profits, hits pensions and because of the way the government calculates GDP and its balance sheet, the government will go a lot more into the red. We all know it is coming, we know it is bigger than problems caused by housing and possibly the credit crunch so far and yet there appears to be no semblance of a plan to deal with this.

    As to whether the fates on the banks are linked to the government then some how I doubt it. All those big investments in new shopping malls which will become empty will come back to the banks, but most of that will be hedged. Proper hedging is why the banks will most probably survive while the UK treasury will fail much worse as it takes on the full impact of the downturn.A sterling fall and currency revaluation seems likely at this point, along with the government being forced to start to balance its books properly by external investors.

  • Comment number 79.

    # 61 chiefexec

    Yup, that's right.

  • Comment number 80.

    #44 bobgateaux:

    "I think it is a bit silly to keep criticising Gordon Brown. He is in charge because he knows a lot more about what to do with money and stuff than any of you people. If you knew about money and stuff you would not just write on the blog all day."

    What Gordon Brown knows a lot more about than the people on this blog is getting into power and doing everything he can to hold on to it. Whether he knows more about money then becomes irrelevant because his priority is to maintain his grip on power. Providing the best solution for the country's financial ills comes a long way second, if it is considered at all.

    All those in politics: the government, the opposition, the press and the financial institutions have all sought to play down the seriousness of the situation, ostensibly to avoid talking things down and thus making things worse. However it is clear that at each stage the comments and forecasts they make are getting worse: we've gone from a possible recession to a short recession to a rather deeper recession and now Robert's saying it may be a "severe recession". So what is important is what they are doing rather than what they are saying.

    I'm not looking for Darling to say it is going to be severe, but we should be seeing government action that appreciates that it's going to be very bad, rather than short term measures to paper over the cracks. That's why holding on to the 12 Billion pounds for the VAT cut would have been better so that they had some reserves for helping out those who lose their jobs and hard-pressed pensioners who are losing their savings a little further down the line.

    Gordon Brown has the potential to become the most reviled PM in history, so you won't think about Neville Chamberlain "Peace for our time", you will think "We're helping hard-working families".

  • Comment number 81.

    As far as I can see, its as simple as this!
    The banks and the government are to blame for this ridiculous mess!

    When I purchased my house 10 yrs ago, the mortgage was based entirely on 3 times my anual income. ( the bank even called me to tell me there was a shortfall of £300 to purchase the mortgage ).
    Could you imagine that happening two years ago??!!

    If the banks had stuck to these principles, then we still be prospering today...

    1. If you could not afford a mortgage, then so be it.

    2. This would then have prevented house prices increasing to the most ridiculous prices known!

    But because the banks started to lend money...willy nilly... then this just inflated house prices!!

    Merry Christmas Everybody!!

  • Comment number 82.

    # 72 dmjeffrey

    So what's your (constructive) contribution exactly? Please enlighten us.

    And that's me signing off for now. Merry Christmas to all, and may you have an interesting 2009!

  • Comment number 83.

    Mr Peston - will you please make your New Year resolution to stop talking all this doom and gloom all the time? You are not helping matters. Just leave the experts to get on with sorting things out.

    I do not uinderstand why you are on the telly and on the web sites all the time and talking nothing but doom.

    And why do you always report things in a way that suggests you are really clever and knew all along what would happen - if you know all about everything why don't you tell us beforehand what is going to happen? That way we could make things better.

  • Comment number 84.

    Let me see if I've got this right, we are screwed!

  • Comment number 85.

    4,

    very true, very scary - In fact I'd say hairy (where is he, he used to post on here all the time)

  • Comment number 86.

    Those with any sense are now trying to liquidate all their assets and use the cash raised to purchase a smallholding with a small amount of livestock and a generator capable of running on used cooking oil.

    There will be no recovery from this in our generation...the wheels on the rollercoaster are only just starting to twitch, wait until they really start to move and watch the plummet into full scale financial anarchy.

  • Comment number 87.

    2009 will see the new reality unfold. It's going to be very bloody. But with a sense of black humour, we can watch as the rest of the developed world - particularly Europe finds that the total value of corporate debt due plunges their economies even further down than the UK already is.

    Strangely, we will not see a massive run on the pound. The US dollar will shrink at an even faster rate and the Euro will probably crack as the individual economies panic under the pressure.

    Having said that, we will not just face economic pressure. There is a very strong likelyhood of social unrest.

    So enjoy Christmas and New Year we will need the memories to sustain us next year.

  • Comment number 88.

    I disagree, it is not about the banks at all.

    Peston, your monolithic view of a centralised economy is a throwback to the corporate 1970s.

    Then again, we have a government resurrecting the zombie economic policies of that era.

    The inescapable fact is free market economies are built on billions of everyday micro-economic decision made by the population.

    Banks only figure in some of decisions. However, to procure services or spend earnings figure in the majority.

    The propensity to spend is always much, much lower in a recession.

    What 2009 will be about is SME's trying to keep afloat. 50% of our GDP is created by SMEs. There is evidence already that SME's with capacity and orders are turning down work because they can't extend credit terms.

    Expect 2009 to be about loan guarantees for SMEs, calls for a bonfire of small business red tape and pressure to reduce SME corporation taxes.

    The banks in 2009 will do the economically prudent thing and repair balance sheets. Incentives to encourage saving and also re-pay the government loans as quickly as possible will not create 'cheap credit'. Quite the opposite.

    Those banks that were sensible during the credit boom madness will mop up the demand for credit and take market share. However, with the risks of default (through unemployment), lending rates will reflect this.

    Consumers will still feel the pinch and still HAVE NO CONFIDENCE, consumer spending will stagnate and unemployment will continue to rise. Consumers will exercise financial prudence, favouring to repay debt rather than spend.

    Until a government is installed with a strong policy on sound money, fiscal and monetary responsibility, the public will not feel the compunction to spend their earnings.

    The good news is that the banks cannot lose.

  • Comment number 89.

    88. At 11:33am on 24 Dec 2008, PhaetonFlanFlinger wrote:

    What 2009 will be about is SME's trying to keep afloat. 50% of our GDP is created by SMEs. There is evidence already that SME's with capacity and orders are turning down work because they can't extend credit terms.

    Please clarify your acronyms
    SME=Subject Matter Experts?

  • Comment number 90.

    On the subjects raised by comment no. 31, 'When democracy kicks in...' and comment no. 50, ‘The new economy’.

    Democracy could be so much more than what it is now. Here’s just a few examples. ..
    i) Rather than just getting one choice, we could be given many.
    ii) We could choose the policies we want.
    iii) We could choose from more than just a handful of parties, and we can make this choice whenever we want.
    iv) The government could treat its citizens as customers, and realise that listening to customers makes you successful.
    v) The customers are also shareholders, so get to choose how the government is run.
    vi) The government encourages its customers to participate in decision making.
    vii) The government is accountable to its customers for fulfilling the commitments it makes to them.
    viii) The government measures its success by tracking against targets. When something is off target, it proposes steps to rectify rather than just lay blame.

    Doesn’t this sound a bit like what happens in a free market economy? You know, the one our so called democratic governments interfere with, but don’t let us choose if or how?

    Granted, it is a bit more complex than this. But to make things better, shouldn’t we have an idea of what success looks like?

  • Comment number 91.

    We cannot be the only household planning to put savings into National Savings. There must be quite a lot of money out there looking for a 'safe' home. Can this money not then be put to work improving national infrastructure and rebuilding the economy?

  • Comment number 92.

    I think we can comfortably change the year or two to 10years or so.....

    AT LEAST !!!

    We are a laughing stock and yet our leaders still claim its someone elses fault.

    Could you have a review of which banks/building societies are worthy of us investing money in ???

    Or do we have to take gambles ourselves to try and find a return worth calling that for our savings.

  • Comment number 93.

    Robert, Have you ever given thought to your involvement in all of this. Your constant doom and gloom stories have certainly spread a real feeling of fear into the business community. Should should take a good hard look at yourself and the problems you have and are still causing. I hope you have a great holiday thinking about the lives you have effected.

  • Comment number 94.

    SME = Small / Medium Enterprises




    What use is national or any other savings when cash is worthless ?

    Hard tangible assets are the only thing worth having, and when there is nothing to be had then assets that enable you to survive are the only ones worth having.

    You don't have to look far (Zimbabwe) to see a nation with worthless cash in action.

  • Comment number 95.

    Small Medium Enterprise.

    http://en.wikipedia.org/wiki/SME

  • Comment number 96.

    This whole current financial problem could be solved if all the city bonuses of the last ten years were paid back. All it would take is for the US and UK governments to agree on a repayment strategy. The masses are getting agitated by the fact that a few people have caused all this mess and are getting away with it.

  • Comment number 97.

    keep telling it like it is Mr Peston.

    Merry xmas!

  • Comment number 98.

    #91 czetkin

    I wonder what would happen when you want to withdraw your savings. Would someone tell you that you had payed for a three metre length of a new railway line and you could use it whenever you wished?

    Merry Xmas!

  • Comment number 99.

    72. DMJeffery: I have never seen such a collection of uneducated drivel as is found on this comments page. From the marxists/socialists proclaiming the end of capitalism to the tin-foil hatted innumerates who obviously have no idea of accounting/finance.-


    Presumably you mean, not like those mathematical geniuses who currently inhabit the city, working diligently and bravely in our world-respected and cherished banks, hedge funds and financial institutions. They're all good with numbers aren't they? And they've done such a terribly good job of running the economy this year as well.


    Hopefully they'll all get their bonuses.

    Heaven knows, they deserve them!



















    As if.

  • Comment number 100.

    Post 89,

    SME = Small to Medium Enterprise.

    In plain old fashioned language a small to medium sized business. Generally employing between 5 and 50 people.

    I wonder how many of the bloggers here have also read the following news story from this site

    http://news.bbc.co.uk/1/hi/business/7791234.stm

    It appears the UK taxpayer now indirectly owns Formula 1 as CVC who own the rights have borrowed the money to pay Bernie Ecclestone for them from RBS. The way things are going with Formula 1 with Honda pulling out the UK taxpayer could be looking at a big loss on this investment.

    We can add to this the GBP 200 million that RBS lent the Americans to buy Liverpool FC which it seems highly unlikely they can pay back anytime soon.

    Looks like the UK taxpayer will soon be a big player in World sport.

 

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