BBC BLOGS - Peston's Picks
« Previous | Main | Next »

Watchdog says markets not rational

Robert Peston | 18:07 UK time, Friday, 13 March 2009

Hector Sants, the chief executive of the Financial Services Authority, has delivered two thoughtful speeches in the past couple of days, in advance of the City watchdog's publication next week of its initial proposals on reforming the "structural regulatory architecture".

For me, the most striking assertion by Sants was this: "Markets have shown not to be rational; excesses have not been corrected by market discipline".

This represents quite an ideological shift by the regulator. It's a recognition (which many would describe as long overdue) that the disciplines of the market place are no guarantee that the management of businesses - and Sants is particularly concerned about banks and other financial firms - won't routinely make calamitously stupid decisions.

Sants elaborates: "The managers of the future must acknowledge and fight against 'the herd mentality'... The recognition that financial markets are not rational, but rather that they are a behavioural system built around personal aspirations, is critical to us effectively changing this time round".

As I pointed out in a recent note ("FSA admits huge mistakes"), the implications of this abandonment of free-market dogma are profound in respect of how the FSA will henceforth be doing its job.

In particular, it will not trust that the strategic decisions made by those running our biggest financial institutions are in the interest either of their own respective organisations or of the financial system.

So here's the question: if the FSA had been operating under the presumption that the private sector can routinely go bananas, would it have prevented banks like HBOS and Royal Bank of Scotland from expanding too fast and lending too freely?


That seems pretty far-fetched.

Would the regulator really have had the backbone to go against the grain of the prevailing market orthodoxy that only fuddy-duddy, boring, second-rate banks grew slowly and maintained a substantial protective cushion of capital?

Would it really have risked being chastised by shareholders, the business establishment, politicians and media for being Neanderthal opponents of entrepreneurism and wealth-creation?

To put it another way, we probably can't rely on the regulator alone - even a regulator with its eyes wide open - to protect us from a repetition of the current debacle.

Reform has to extend to the attitude of executive directors, non-executive directors and owners.

Sants, for example, says that the non-executives of banks and other systemically important financial institutions can no longer be part-time, well-meaning, business generalists.

They will have to become experts in banking, or insurance or other aspects of finance. And they may have to become full-time independent directors, rather than part-time, semi-detached coves.

However, recruiting such highly-skilled individuals, with relevant experience and no competing commitments, is easier said than done.

It is, for example, almost impossible to find a senior banker right now who hasn't been tainted by the current crisis - as is demonstrated by the torrid time the Bank of England is having in trying to find a brainy, tough individual to chair its soon-to-be reformed court (what it calls its board).

Goodness alone knows who has the relevant wisdom and character to act as a proper counterweight to the Governor.

But I digress.

For me, the most interesting challenge of the current crisis is for institutional shareholders, or the pension funds and insurance companies who hold shares on behalf of millions of people saving for retirement.

Since time immemorial (well, for the past 30 odd years), the presumption of many of these shareholders is that when they don't like what a company is doing, they'll sell the shares.

That seemed less bothersome than the alternative, which would be to act as owners and tell the company to mend its ways.

But the near total collapse of the financial system over the past 20 months, and the associated rout in global stock markets, may well have demonstrated that it's a massively sub-optimal approach to cut-and-run rather than to intervene and instruct the managers of businesses to change their behaviour.

The big point is that if the owners of banks, the institutional shareholders, had taken the time to understand the crazy risks the banks were running and had then done something about it, they would have avoided not only the losses they've incurred on their holdings in banks themselves but the far bigger losses they've suffered from the consequential meltdown in global markets.

Of course, when I say "they've suffered", what I mean is "we've suffered" - since these institutions are looking after our money, if we're saving for a pension.

And as millions of people are finding out as their pension statements land on their doormats, there's been a devastating collapse in the value of pension pots.

So perhaps the onus is on us to instruct those who look after our money that they are to become responsible owners, rather than neglectful absentee landlords.


Page 1 of 2

  • Comment number 1.

    There is nothing wrong with the market. It is when people like Gordon Brown interfere when the problem arises.

  • Comment number 2.

    The system is flawed. Effort should be directed toward a operable scheme. It will be frustrated because those in the system will lose the benefits of the trough. The system is further blighted because the voting system has been rigged to protect party interest. Change that and real progress would follow

  • Comment number 3.

    Frankly I don't give a damn what Hector Sands, Mervyn King or Alastair Darling say about the economy - They have lost any credibility.

    The very fact that they could not see the blindingly obvious regarding the credit markets shows that for all their well cut suits, six figure salaries and smooth talking they do not have a clue.

    We would do just as well behaving like the Romans and looking for auguries and omens in chicken entrails.

    The only people who really understood what was going on were the bankers when they allowed fractional reserve banking ro be created and the gold standard to be dropped. They have done rather well out of it.

    Why cannot anybody in the media or in politics/banking tell it like it really is?

  • Comment number 4.

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

  • Comment number 5.

    assertion by Sants was this: "Markets have shown not to be rational; excesses have not been corrected by market discipline".

    This assertion is invalid because the market has been interfered with by Sants own organisation and by his puppet masters. The market is persistently and consistently seeking to remedy the current debacle. Protectionist interests in HMG, BoE et al, are thwarting it.

    As with all things the government meddles in, their action serve to cause personal responsibility to atrophy. In this particular instance HMG is the creator of moral hazard. The solution is to remove all regulation and all state interference in the free-market, otherwise we cannot talk of a free market.

  • Comment number 6.

    Not rational? Hector should take a look at this -

  • Comment number 7.

    It has been evident for many decades now that the so called 'shareowning democracy' that our World leaders have been describing to us has been illusionary as your comment re-inforces.
    Perhaps it is time that the inciduous relationship of fund managers being courted by senior executives such that they are in the same club and working to mutual ends with little regard for individual 'small' holders of the stock, should be broken.
    When a fund managers holding in a company is deemed that of a sleeping or annonymous partner, then given no voting rights, the interests of a 'democracy' can prosper. This will require a binding vote on remuneration committee reports. This would be one way to ensure both greater corporate disclosure/honesty, and also accountability.
    Too often the 'by default' approval or abstention by fund managers allows corporate boards free reign over their plans.
    The only other means to increasing accountability is for the funds to poll their members on all important decisions so that they are representing the views of the community they represent. Since this will cost them (and ultimately us) and that really they would have no interest in doing this, I prefer the non-voting rights route.
    Then perhaps markets will be a little less irrational.

  • Comment number 8.

    Robert, just a thought re one point you make above.

    "They will have to become experts in banking, or insurance or other aspects of finance".

    The senior non-exec director at RBS was Bob Scott who was previously Chief Exec of the UK's largest insurer. and had been Chairman of the Association of British Insurers amongts other roles (see below)

    This didn't seem to stop the problems at RBS.

  • Comment number 9.

    [i] At 10:53pm on 13 Mar 2009, gruad999 wrote:

    There is nothing wrong with the market. It is when people like Gordon Brown interfere when the problem arises.[/i]

    ROFLMAO. That's the funniest thing I ever read.

  • Comment number 10.

    Michael Fowkes,

    Please don't give up the day job, be it poetry or the lyrics to the next non top 40 hit, your link was not worth the effort and I feel cheated of my time referring to it.

  • Comment number 11.

    Just a long way to say.

    Nationalise the banks, the private sector can not be relied upon to be responsible (really!).

    Ermm but who is going to run them, everybody is tainted?

    Repeat that loop of thought ad-naseum until everything collapses.

    lets just vote with our accounts and shift everything to long standing ethically run banks with ethical constitutions and track records, let the rest wallow in that of their own making.

    nothing else makes sense.


  • Comment number 12.

    @SoapboxJoe - I'm afraid my work may be too intellectual for the likes of you, but never mind.

  • Comment number 13.

    How is a herd animal going to fight against herd instinct?

    It's pointless recruiting so-called specialists and experts to regulate the markets because they also develop a herd instinct, and have the desire to look like they know what's happening, especially when things go pear-shaped. That's human nature.

    Look at the steps the aviation industry have had to take to circumvent the tendency for alpha males to put their ego first when there's an aircraft malfunction, even to the point of crashing the plane. That's why aviation has developed procedures that have to be followed by everyone, no matter how senior they are, and the business of flying an aircraft is closely monitored.

    What's needed in banking are very strict rules that everyone has to stick to, the rules should be decided by shareholders as well as "experts", and everything should be transparent.

  • Comment number 14.

    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.

  • Comment number 15.

    "They will have to become experts in banking, or insurance or other aspects of finance"

    So will the FSA.....

  • Comment number 16.

    Hector Sants has a probem. His ultimate boss, the 1st Lord of the Treasury, has authorised the printing of more money and is hoping that enough fools can be found to believe long term that these new pieces of printed paper have 'REAL' value. Everyone who can count to ten knows these bits of paper will simply take us from a financial bubble that should have been avoided, directly into an inflationary bubble.

    Car workers are wise enough to understand that world financial reality means it is far better to be able to compete and take a 10% pay cut. But how does Hector Sants protect these wise car workers sacrifice being lost to his bosses inflationary money printing confidence trick?

  • Comment number 17.

    Is Sants thick?

    How long has it taken him to come to this conclusion? My head hurts, but not from trying to figure that one out!

    Ah, the regulators are of immense intellect and worth every penny.... There goes an onion flying past the window, again!

    There are two types of shareholders, the fund managers who are all part of the same rotten game, and the ordinary Jo - you know those guys who paid the managers to do a job they didn't do. And all those Jo folk are so busy trying to keep a roof over their head they don't have all day every day to watch what the directors are up to.

    The Universities are always looking for ways of subsidising themselves. Why not ask the Profs to regulate the markets?

    Periodically move the oversight from one univeristy to the next to reduce nepotism creeping back in? Could slip in some environmental scientists while they are at it. A few other fields too, such as agriculture, the biological sciences, the physics guys while we are at it. Some decent mathematicians to count up who lost what would be useful.....

    Glad to see the 404 has been sorted, although wasn't that a tad long?

    I do hope every detail of the SFO investigation is brought to light in court.

    Would it really have risked being chastised by shareholders, the business establishment, politicians and media for being Neanderthal opponents of entrepreneurism and wealth-creation?

    Yeah, they would, actually - how much money did Hugh Fearnley-Whittingstall need for a resolution about chicken welfare, something that would benefit us all?

    Time for my painkillers. Hopefully, then, the planet can stop and I can get off somewhere sensible for a pleasant walk!
  • Comment number 18.


    Sweeping generalisations again taken out of context - the only reliable pricing mechanism that is observable throughout the banking credit crisis (really it is not a crisis but a major multiple market adjustment) has been and is the ability of mutiple shareholders and buyers to form their own view of general stock exchange prices.

    The phrase you can't buck the market is frequently used here and generally across a basket of shares the market pricing mechanism works pretty well - the thing that is not understood that the major maket pricing adjsutments in progress are the result of massive uncertainty when price/earning ratios running into perpetuity have gone straight out of the window and the underlying stability of the world finacial system will multi inter dependent economies and banking systems are quaking on multiple, over-printed currencies that are out of control and quantification.

    H. Sants comments are most alarming that senior figures in the regulatory system cannot explain the underlying conditions preventing e.g. our pensions and saving being under-pinned by the belief that a prime commercial property in the city of London should have a capital value equivalent to something like 20 or 25 times the full market rental value from 2007. We all know (and some knew in 2007) that this was overly-optimistic.

    The fact that the herd now realise this - why should this mean that the pricing mechanisms of capital markets for e.g listed shares is based on irrational behaviour by the herd. I for one woud be more worried if the FT 100 was now near anywhere like 6500 index price. It should be encouraging that share pricing mechanisms are reliable and sensitive and reactive to risk and uncertainty - this pricing mechanism is the only major economic indicator that is current and working properly and keeping us all informed.

    For once, I will refrain from my 'goon show' accusations as the situation is too serious to dwell on the feeble minded.


    The stock market can be used to drag us out of the mess but we need a new platinum index based on preferred investments in essential industries and services e.g. prescription drugs, recycling, new energy, new transport, new technology and make sure the pension funds invest at least 20% of pension contributions. We need rationalist investment in UK companies here to ensure growth on UK internal market first - we also need a formula for measuring benefit to the internal economy so that potential investments can be evaluated. The investment benefits to the Uk economy must be evaluated in resource credits as well as 'money'.

    We also need pension mortgages to allow people to reinvest in property and release capital - let people choose - its their own pension money and savings.

    The watchdog needs to look at non.doms and tax evasion and give tax breaks to companies providing investment resource credits in the UK economy. This can all be done through a new stock exchange listing of resource backed investments credits - the Green 100!

  • Comment number 19.

    Would it be possible Robert to have a report on British banks / building societies who were prudent who didnt gamble money that they had invented and are a sound and prudent investment for those of us that no longer have confidance in the Government run nationals.

    Are there any ???

    Also are Gordon Browns plans to further deregulate the mutuals which i have seen alluded to on this blog still in progress or have they been quietly dropped........

  • Comment number 20.

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

  • Comment number 21.

    No 1 is right. The market has been and is being corrupted by politians, most notably Golem Brown.
    Recessions serve a purpose. They're the market's means of correcting excess and few would surely argue that Golem Brown hasn't encouraged excess on a biblical scale, by removing inflationary items from the preferred measure of inflation to prolong the boom.
    Now Golem Brown isn't allowing the market to do its job of correcting his excess. He's creating zombie banks that will be a burden on the economy for decades. The foolish are not being punished. That's a corruption of the market.

  • Comment number 22.

    watchdog says "the pope is not a muslim"

  • Comment number 23.

    Quote, "For me, the most striking assertion by Sants was this: "Markets have shown not to be rational; excesses have not been corrected by market discipline"." End Quote

    The Looting of America’s Coffers

    New York Times
    Published: March 10, 2009

  • Comment number 24.

    From the standpoint of self interest all the interested parties acted rationaly,however looked at colectively we witnessed an orgy of exponential capital destruction on a scale never seen in peacetime.

    All wages , bonuses and costs were paid for out of fictitious and unrealized "profits "on the back of negative reamortization.

    What we are left with are huge toxic banks too big to fail ,demonstrating the principle of survival of the filthiest by the Darwin Charlies running the politico/financial alliance of the damned, fools who set out to believe the lie "That things can only get better"

    With the assistance of fractional reserve banking ,debt [which failed to originate nominal interest at the same time as capital]was inevitably converted into profit through negative financing,that is until now when the whole top heavy system of self imposed delusion turned turtle[surprise surprise]

    Anyone inteligent enough to model the inevitable outcome of fractional reserve banking in relation to bad debt was bribed with bonus or dissmised for noncompliance by the fools now running the show.

    The peculiar universal characteristic of obdurate ignorance reinforced with knithoods and the thinking of the entitlement that bankers display is telling.

    In retrospect it looks as though the Devil himself has set out to claim "his "world through a system of levers in conjunction with the debasement of the currency via what Roubini has described as effectively infinite credit expansion,since the original capital has been completely wiped out through "asset" insolvency.

    Now that the public realies that the perpetual motion banking machine needs to consume exponential quantities of capital in order to stand still ,the QE'ers step up to run the show, ever ready to debase themselves and their banking friends with newly inflated digits[dyddle doe] to infinity and beyond and do so in order to sustain their corrupted AAA's holes and the profits derived from suposedly managing them, whilst paying out pensions from the inkome of the next genaration of optimistic fools who buy into their toxic waste repositories.

    Even the QE'ers will not be able to prolong he farce more than another three years.

  • Comment number 25.

    [Unsuitable/Broken URL removed by Moderator][Unsuitable/Broken URL removed by Moderator]This realisation that markets respond to the whims of people and not algorithmic programmes may seem like stating the obvious but at least it is a more useful economic mindset than those we have seen of late. Rebuilding relationships and restoring trust and confidence in financial institutions will require new mindsets, behaviours and values. To find out why relationships are like bank accounts, how to build trust and ways to create a brighter mindset see [Unsuitable/Broken URL removed by Moderator]

  • Comment number 26.

    "But the near total collapse of the financial system over the past 20 months,...."


    It is Prudent to Prepare for and to Suppose that the path to total collapse will continue and quicken pace to its catastrophic tipping point of anarchic revenge/rough justice on its leading Government Proponents/Supporters and Banks and Bank Chiefs themselves, [for it is Inevitable that such a situation will become so Effectively Personalised rather than just remain an Impotent and Anodyne Rage against the Machine Scenario], unless and until such times as the financial system, and particularly the old boy network, cosy closed shop Federal* Fractional Reserve Lending type Banking System, of which Henry Ford did advise .... "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." .... and as that particular Federal System now knows all too well today, is only one System of Financial Control and Power with there being any number of Alternative Overarching/Underground Shadows freely available to Competent Global Players and Angry Bullied and Selectively Sanctioned Governments, and which they are desperately trying to crush and/or Dominate and now Regulate with a Cynical Introduction of New Rules to Curb its Own Excesses with Morally Hazardous to the Point of being both Amoral and Decidedly Immoral Practices/Business Methodologies, for the Absolute Power which Corrupts Totally with the Delusional Madness of the Naive Fool with All the Savvy of a Village Idiot having Control in Chaos and Domination, through the Most Simply CompleXXXX Derivative Futures Instrument IT has yet Devised, for the Beta Management of Perception and Global Population and Economy Control ...... the Provision of Debt to be Collected and Repaid with Added Interest to Cripple and ever Deny Resolution instead of Providing the even Simpler Option of Delivering Credit to Product Manufacturers and Workers/Social Entrepreneurs and Business Leaders to be Freely Spent on and in Economies and Societies/Infrastructure Models which their Industry and Novel Ideas have Created/will Create by Intelligent Design, although it is the Contention here, Freely Shared for the BBC [Nation Shall Speak Peace unto Nation] to Wwwidely Share and Investigate Further "to inform, educate and entertain" in their Public Service Remit and Royal Charter Obligation ["to inform, educate and entertain" .... ] that Intelligent Design, and most definitely and most obviously as is evidenced here in the IT and Media Sector, has Morphed/Evolved/MetaDataMorphed into virtual Operating Systems of Controlling Power with CyberIntelAIgents ..... with AI and ITs QuITe** Universal Virtual Forces with Immaculately Resourced Assets.

    And in the Darkness of Continued Ignorance and Applied Suppression, does Dumb Arrogance and a Lack of Shared Future Intelligence wreck Havoc and Destruction of Blind and Blinkered Systems of Past Naked Short Selling/Naked Emperor Controls in the Longest of Long March Games.

    * .... a Private Club playing with Godlike/Devilish Controls which can very easily Transfer Virtual Credit/Perceived Wealth, [at the clock of a mouse, nowadays] to Numbered Personal Accounts [and all Accounts are Personal as even a Global Mega Business Account is administered and its Sum Total Contents enjoyed by Personal Management and/or Board Control] which can be Monetised/Converted into Currency for Public Consumption through Privatised Spend.

    ** Quantum InterNetworking Technologies ....... a NIRobotIQs thing presently tickling the Fancy of RBS Ulster Chiefs, Robert. And Insider Information maybe but never whenever one is reliably Source informed that it is also Probably and Reasonably Public Domain Property too.

    And should any reasonable investigation of any of the above receive a denial, then you are hereby informed that you are being lied to and the messenger and their controllers are therefore most definitely as scurvy knaves and cannot be trusted and would deceive for nefarious gain.

    And does anyone else think .... .... is just as the Band playing on, as the Deckchairs are rearranged on the Titanic?

    And. as far as ... "So here's the question: if the FSA had been operating under the presumption that the private sector can routinely go bananas, would it have prevented banks like HBOS and Royal Bank of Scotland from expanding too fast and lending too freely?


    That seems pretty far-fetched." concerned, it only seems far-fetched for it is so accurate as to be painfully obvious more a Yes than a No.

    What the FSA need then, of course, is someone/a team which understands and can handle those routinely going bananas ..... which would dictate not a Lead in Deep Darkness of Depression and in the Psychologically Flawed but a White Knight Hypermanic Approach with the Psychotic Control of a Sociopath .... which popularly, in fiction, and probably also in fact, would then be the Genius confronting the Maniac, with the Evil being on its Own and the World behind Good.

    Spookily enough, if fact and fiction are so very much alike, it does raise the Possibility and Very Real Probability that Truth presents us with a Virtual Reality in which Our Thoughts Exists and seem Real and are Given Substance and Body through Unconscious Reinforcement.

    I wonder what can be done with Novel Ideas, Consciously Positively Reinforced. The Creation of New Good Book to Follow which Leads into a Brighter NeuReal Future of Viable Constructive Imaginanations, MeThinks.

    Welcome to the Worlds of Merlin, the MetaPhysician and NIRobotIQs, and the NEUKlearer HyperRadioProActivity you may Wish to Believe in, for the Special Access to Power Programs with Controlling Mentored and Monitored Protocols, IT dDelivers.

    Should you Care 42 Dare Win Win ... RSVP.

  • Comment number 27.

    A great many of the problems we have had is in thinking that markets are rational, self-correcting mechanisms. Nothing could be further from the truth.

    First let’s look at markets. Ever since the demise of communism, and effectively socialism, the free market system has been the flavour of the times. Capitalism flourished to such an extent that the British Labour Party effectively ceased to be a party of socialism as ‘New Labour’, and moved to the right of the Tories. Regulations were scrapped at the behest of the free marketeers and regulating authorities were reined in or given a nudge and a wink to steer clear of something that was working well on the premise that you don’t mend what isn’t broken.

    But markets are manipulated by people, and very often they are not very honest or very nice people. The Romans understood that perfectly. More than two thousand years ago men known as the curules aediles, or market controllers, saw how unscrupulous traders were fleecing people by selling them goods that were partially, and sometimes completely, unfit for the purposes for which they had been sold. To remedy the situation these curules made legal actions available to aggrieved purchasers. They were known as the aedilitian actions and consisted of an actio redhibitoria (under which the purchaser of something quite unfit for the purpose for which it had been sold could reclaim his money by tendering the return of the thing) and an actio quanti minoris (under which the purchaser of something relatively unfit for the purpose for which it was sold, could claim a corresponding reduction in the purchase price). For centuries these remedies were part of the legal systems of Europe. In time they came to be regarded as 'superfluous' and ‘unsuited to the times’ and were systematically repealed as inconsistent with ‘modern requirements’. They survive to this day in the Roman Dutch law received into South Africa, but even there it is possible to contract out of their provisions.

    There was another very interesting market-related law in Roman times. It was known as laesio enormis, and gave an action to anyone sold something at more than twice its real value on the market. It allowed the excess to be recovered or the contract to be set aside. It was judged unsuitable for freedom of contract as long ago as 1948 in South Africa and was given the chop.

    There was a third idea, central to the Roman Law of Obligations, and it grew out of recognition of the fact that very often the aggrieved person did not him or herself contract with the villain, but was a victim of the villainy down the line. Sensible people that the Romans were, they gave an action to such people in what is now called tort in English and American law, which allowed victims to sue all the authors of their economic woes if there were more than one, and it decreed that those authors were jointly and severally liable for the loss, the one paying, the other to be absolved. In other words, if there were 7 villains and one of them was at a fairly remote distance, but very rich, you could sue all seven and claim your money from the one with the deepest pockets. Or you could be vindictive and decide to make each of the villains pay something. Let us take an example. If a financial adviser were to advise you to buy toxic assets, and he should happen to be employed by a banker, who had bought the toxic assets from Mr Big in New York, your aggrieved innocent could claim his money jointly and severally from all the villainous intermediaries from the financial adviser right up to Mr Big. And all would be liable to pay!

    Now let's think of these parcels of toxic debt sold to banks and financial institutions over the past few years in this wonderfully 'free market' that needs no regulation, and let’s think of all the phoney derivative instruments marketed as though they meant something and weren't just gambling debts. The sellers’ eyes would be smarting if the aedilitian actions and laesio enormis still exited, wouldn’t they? What is more the golden parachutes of bankers would be useless to them if those actions existed and if they could not contract out of them, wouldn’t they? And why? Because they would be personally liable for their trickery and irresponsible actions. Perhaps even Bill Clinton could be relieved of some of his latter day gains.

    That markets require regulation admits of no doubt. But what is essential is to avoid the Scylla of communist (and socialist) regulation, and the Charybdis of the free (or, more accurately, free-for-all) market. Essentially that means we must stop thinking in the terms in which we are accustomed to think. We need fewer laws, not more of them. We need laws that are simple, go to the root cause of the problem, and provide effective remedies. What we do not need are layer upon layer of regulating authorities and huge compendia of regulations. We need to make the people responsible for the problems pick up the consequences. The three laws already mentioned would do most of the job, but they would need to be amended for a few technical reasons (the aedilitian actions and laesio enormis gave no right to consequential damages, for example, and would need to do so). Or we could say they need no amendment and leave the aggrieved person to pick up part of his own loss because, very often the loss is a result of personal greed, or inaction, or rushing in like a fool where angels fear to tread. The man in the street has much to answer for. In the present catastrophe his or her own perilous circumstances have very often been brought on by plunging up to the gills in debt, and revelling in it while the good times lasted.

  • Comment number 28.

    Hi Robert, I'm not sure if you've been watching the Cramer vs Jon Stewart battle on air, but their recent interview on the Daily Show made me appreciate your reporting. Thanks for your illumination Robert, and for calling "snake oil" just that. The ordinary Joe blogs of the world (like me), is so much more appreciative of your thoughts, and perspective and cutting out the jargon and going around the answers to build a picture out of the jigsaw pieces. Thank-you, and keep up the outstanding effort Robert!

  • Comment number 29.

    It is not only the Regulators who have been no good to us, but the politicians as well. I have already commented on regulation in #27.

    As for the politicians, the least said the soonest mended. Please tell me when it was, (before the proverbial hit the fan) that Gordon Brown or any of the other minnows on the British Government Front Bench came on Television to tell us the banks and financial institutions were buying up huge quantities of toxic assets and that they must stop it immediately? Did he once tell us we were in peril of losing our money, or jobs, our hard-earned savings, or our pensions? Did he speak to us from the Cabinet room at No 10 Downing Street telling us gravely that insanity had gripped the financial markets and that he was working with the US Government to stop it forthwith? Did he announce simple but effective measures that would have put the assets of irresponsible banks and bankers on the line to bail out investors who lost money by their devious schemes? Not at all; he was the friend of these bankers and the politicians who supported them. If he didn’t know what was going on, he is useless to us. If he knew and just did not tell us, there is every bit as much blood on his hands as there is on the hands of the disreputable bankers who gave us the toxic instruments. Either way we dare not trust him any longer. He is part and parcel of the problem. We need someone untainted by this catastrophe and able to think outside the box.

    Were the Tories any better? No, much too busy playing politics to study economics and finance and know what was going on.

    Today Vince Cable of the LibDems is flavour of the month. He gave a lukewarm caution and then backed off completely. The facts, as they mounted, should have been consistently and dramatically portrayed to us as a disaster in the making.

  • Comment number 30.

    Now let us look at money in the market place. Money is to the body politic what blood is to the physical body. The market is the heart and the economy is the circulatory system. Is that how we have viewed money and the market place? It is decidedly not. We have elevated money to the level of a God, and it has become the be-all and end-all of our existence.

    Many people probably regard the Bible as some sort of religious document bereft of any modern significance. That is because what is not generally understood is that the Bible is in fact a document on the psychology of man. When the Bible tells us that God says we must not have any other gods before him, he is not proclaiming a mere article of faith or exhibiting the vanity of a prima donna. He is saying that there is a higher and more important level of life than where we are, intimately associated with our life, and to which we are subordinate, and if we put anything before that idea we are missing the mark and will pay dearly for it. It is not a threat, and he is not going to visit holy fury on us if we ignore it. He is stating a psychological fact, something about the way in which life is organised, part of that ‘law of nature’ much beloved of Darwinists - something as simple as ‘when it rains the pavements get wet.’

    When the circulatory system is filled with toxins they find their way into the arteries and cause atheroscleroma, the forerunner of serious cardiac consequences from which as individuals we may die. In economics the matter is no different. If the economic system is befouled with toxins the market (the heart) cannot work properly and the money (blood) ceases to flow through the system bringing its societal and political nourishment to the body politic. The result is the equivalent of a heart attack. We need to realise the gravity of the situation, and there are precious few who do. The patient is in ICU. There is no guarantee there will not be other heart attacks. The toxins are still there and the body politic is still being poisoned. Understand this clearly, we face nothing less catastrophic than the death of the body politic i.e. the political and economic system of thousands of years. And if that happens, we will have no need to worry about global warming. Or rather, the planet will have no need to worry about our use of carbon dioxide, for we will be beyond using it.

    We are, politically and economically, like a patient etherised upon a table and awaiting the surgeon’s knife. If the surgeon is skilful, and we are resilient enough, we will pull through. If not, write now “The end of it all.” If we do survive we will have to make a new way of living, a new civilisation, or even a new model of the universe. The old ways will not do.

  • Comment number 31.

    Dear Robert,

    Back and not much improvement. Could you please make an effort and adress the real issues?

    1) The comments of the FSA are pointless:
    light touch, "hard" a matter of fact they do not have the skills (people) to understand what is going on and to regulate!
    2) APS...we had problems with structured products (CDO, CLO...) and guess what the governement is creating? The biggest CDO (even CDO square) ever! Genius. Would it be worth looking at the RBS and Lloyds deals? All smoke and mirror...the valuation and structure do not add-up and even worse encourage these banks not to care about the risk: the governement will pick up the bill, without speaking about creating competitive disadvantage for the banks not using the scheme and looking after their risks.
    3) You might have hurdle mentality but more important you need to understand correlation, this was one of the main driver of the crisis.

    So could we talk about some of the real issues?

  • Comment number 32.

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

  • Comment number 33.

    Of course markets are not rational. The lessons are there for anyone to see -black tulips, south sea bubbles and so on.

    Regulators and Bankers (who are supposed to be experts) ignored this in favour of big bonuses and self perpetuating salary inflation for the big bosses.

  • Comment number 34.

    Surely the underlying issue is almost-universal greed. If you didn't join it you were left behind.

  • Comment number 35.

    29. newProtectorCromwell

    Bang on there mate!

  • Comment number 36.


    Yes - the co-op bank ( and its internet sister, smile )

  • Comment number 37.

    Of course the markets are not rational, they wouldn't be needed if they were, computer software could do the job.

    They are all about confidence (lack of), and confidence trickery (abundance of). People.

  • Comment number 38.

    There is everything wrong with an unregulated market. Greed, heard mentality and lies take easily over when human beings can make vast amounts of money by selling questionable products without being held accountable for the consequences. The average banker joe will take the money and run. The market is always shaped by the decisions of human beings: greedy and sinful human beings to be precise. Why have politicians such a difficult time to understand this and then take the necessary steps to control and regulate the vital financial sytems of our society to protect citizens form being mislead, lied to and taken for an expensive ride? We need strict global banking regulation. You can read more about the dangers of tax havens, offshore banking and the shadow banking system here:

  • Comment number 39.

    The shareholder governance model certainly has taken a huge knock. It may be a stretch for shareholders to influence detailed business strategies, but they have completely failed in a much simpler task, that of reining in excessive remuneration.

    But as regards banks specifically, right now both market disciplines and shareholder inputs are being over-ridden by direct government meddling and bullying. This will have even worse results (if that's possible)

  • Comment number 40.


    The more we - as the working class -uncover in this financial crisis the more we can see just how corrupt the system is.

    All one has to do is look at some of this mornings headlines:

    "Bailout money is flowing abroad"

    "Credit Card Cancer Spreading Through the Economy "

    "Eureka! Creative Accounting Solves Banking Crisis!"

    I viewed a excellent 25min video by Max Keiser yesterday called
    which he made back in 2007. It exposes some of these issues which helps answer how we really got to this point in the first place.

    Please have a look:

  • Comment number 41.

    What a load of cobblers.

    The root causes of the 'global financial system meltdown' include the policies of idiot politicians and central bankers like Clinton and Greensapn in the early days, and latterly the likes of Gordon Brown here in the UK, which deliberately de-regulated the system and let rip the money supply in order to make everyone feel like they were getting rich quick, without effort or risk.

    It worked a treat until about a year ago until the true, underlying effects of these madcap banking system and monetary policies came home to roost

    The markets were neither rational nor irrational: they just did what they are supposed to do which is allocate capital to where money can be made. Nothing wrong with that. Don't forget, there are people out there now making shedloads of money out of this mess and will certainly do so from here on.

    The banks and the markets responded to appallingly weak and, indeed, cynical regulatory environments and national monetary policies which allowed greed at every level to run amok. Why are the politicians now so surprised?

    Don't blame the bankers or the markets as such. Blame the politicians for chasing votes by creating national monetary frameworks and systems that allowed fantasy economics to flourish.

    Now it's payback time; that's normal. Here in the UK, Brown's payback will be consigment to the dustibin of history as probably one of the worst (unelected) Prime Ministers this nation has ever seen. His hallmark as Chancellor was little more than one almighty thieving confidence trick perpetrated on the British people.

    Regulate the financial system and the markets by all means; but, by and large, let the markets do their work; nobody has come up with anything better yet.

    Meantime, thanks to Gordon Brown's screaming incompetence, you and I (taxpayers) will be now be footing the bill for a generation or two. That has little to do with market rationality as the root cause; it's all about the shocking behaviour of our political elite. God knows how we change their behaviour?

  • Comment number 42.

    "financial markets are not rational, but rather that they are a behavioural system built around personal aspirations"

    Reminds me of a question I need to ask on this blog that gets answered ! Yes, I know that's not how it works, or at least not up until now.

    You write your blog Robert and then we add our comments. The thing is the questions people ask you are never answered. People say you don't read the comments
    Robert but I'm writing this now on the hope that you do. Or if you don't, that a moderator or some other nice person will inform you that you have 1 message waiting.

    It seems to me, more and more people are talking about fractional reserve banking. (Your blog is about the rationality of
    markets so this is the perfect moment to talk about the lack of rationality in the whole system)
    It's not a coincidence that the subject keeps being mentioned by people here in their comments. They want you to talk about it.
    After all, the whole banking system and everything that is effected by it rests on that system and you are the BBC business correspondent, are you not ? This topic definately falls within your domain.

    What we want to know for starters is what do you think about it ? We want you to stop sitting on the fence and tell us like it is. Well, to tell the rest of the BBC like it is becuase the explanations concerning this system of banking have been woefully inadequate and misleading. I'm going to assume it's because the people that have explained it haven't understood it themselves but as you're an intelligent man you will get down to the facts.

    We know you have connections and it might be difficult for you to do this, but if ever there were a time to tell the truth it is now.

    The fact that it results in continuous inflation, and it needn't be that way.
    The fact that it always depends on enslaving us in debt, and that it needn't be that way.
    The fact that it redistributes wealth into the hands of a few, and it needn't be that way.
    The fact that actually it is a corrupt way of controlling the money supply.

    If you were to explain this, and make your position clear then maybe other people at the BBC would wake up and question the system too.

    Of course, I'm not suggesting you compromise your own principles and logic. If you think it's a great system and that we need it then say so, but please tell us why and tell us honestly.

    I really do think you should do this now becuase pretending it's not an issue is no longer an option.
    Everything we hear and see, all the arguments that are made become meaningless if the key way of distributing money is not considered. To many of us its a deliberate distraction from the real problem
    and or an attempt to keep a corrupt system in place.

    PS. Looking forward to your blog on this subject.

  • Comment number 43.

    Nice post Robert. Quite shocking that we should expect these heads of banks etc. to actually know something about banking, what ever next: heads of large manufacturing and service companies having to know something about their companies. Maybe this is the start of the end (let's hope so) of the cult of the manager. At the heart of this current crisis is the 'economistic assumption', the assumption that we can, or ought to, understand 'society' in its broadest sense through economic indicators and 'drives' alone. We can't, as I'm sure you're fully aware, economics in the past was often a far broader discipline than it is now, encompassing social, cultural and political themes. Perhaps we'll turn to these broader themes to better understand how we ought to respond to similar crises emerging in the future. Perhaps then we'll think more critically about the way the 'herd' mentality is more than simply an expression of 'economic rationalism', and is an expression of often specific cultural/political 'factors' dominant in some countries.

  • Comment number 44.

    "However, recruiting such highly-skilled individuals, with relevant experience and no competing commitments, is easier said than done."

    Let's be clear, how can you hope to recruit the right people when the whole industry's professional development is unregulated and unmanaged? (E.g. Sir F's qualifications were just what exactly?)

    If financiers and bankers had to meet continuous professional standards of development like, for example teachers or social workers, then you probably would be able to find someone suitable.

    What banking and finance needs is an equivalent of the GSCC to set standards of professional development and performance throughout the industry. That would be a better way of assessing bankers and others than just "did s/he make loads of dosh?" (in the short term!)

    And that would be no more and no less than part of the serious and radical changes so clearly overdue in the industry.

  • Comment number 45.

    Regulation is not difficult, just make it illegal to lend money that is not covered by deposits, is this too hard for the government to get it's head round ? The bank deposits belong to the public and must not be put at risk. If a bank does not have the capital to cover deposits, then it must not be allowed to lend. Sadly this incompetent government cannot be regulated in this way , it has now put Britain in debt for the next fifty years.

  • Comment number 46.

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

  • Comment number 47.


    Will you please stop contributing to the myth that we are "saving" when we try to make provisions for our old age. Saving is deferred spending only; so keeping it in you pocket or under the bed is saving it. When you make contributions to a pension plan you are buy something - a pension plan. The company you buy from has probably told you it has the best investment team in the world. This is investing, not saving, and investing is gambling under another name.

    Even if you put it into a bank in an interest bearing account it is still investing and you can lose your money, as many investers in banks would have found out if this government hadn't bailed them out.

    So, Bob, please stop colluding with crooked politicians who want to con us into private pension plans to help them out by not having to ask us to contribute more to state pension plans. I know the word "saving" sound virtuous, that is why these politicians keep using it, but it's really a mug's game; anyone putting into a private pension plan for the past 25 years will get no more this year than the extra they could have got from the government on top of their state pension.

    Remember folks, anytime have been told you will be getting more money back than you have put in, then you are investing (gambling), if your money is in you pocket or you can get it anytime you want, that is saving.

    Please get this straight, and perhaps we will not hear these terrible failing pension stories.

    I will be drawing a private pension this year - thank god I didn't have to pay any contributions to it.

  • Comment number 48.


    Like others on here, Robert, I am concerned that you have had your wings clipped....a grilling by our Lords and Masters (show trial?), a trip to China, and wishy washy 'non blogs' since you got back!

    6 months ago when all the rotten stuff exploded in the world's faces, your blogs were informative, hard-hitting, first-class pieces of journalism.

    Now, more than ever, we need that approach from you. The nuggets of information you collect, the discussions on serious problems-where are they now?

    We knew the skeletons in the cupboard would come out one by one. And so they are.

    As for this woffle from the FSA-as banks apparently cannot be allowed to fail, whilst the architects of their demise remain in control nothing substantial will change.

    To really make a difference, the boards of directors should, at the very least, comprise of people who have risen up the ranks from the retail side with people who have run successful businesses.

    Add to that a reasonable basic salary with no bonus (increases of this basic tied to profitability and stability).

    Top it off with a statutory requirement to have banking exams (with a condition for non banking execs/directors to pass them within 6 months) and and personal guarantees.

    That should make any greedy individual think twice about becoming a banking exec for personal gain.

    In short, take out the possibility for greed and replace it with honesty and integrity.

    The people needed for these institutions would then be working for the good of the business and not themselves.

    Perhaps the same could be said for any senior power-wielding position?

    Holding any post of this ilk should be seen as a privilege, and as a service to the country, not a way of feathering one's own nest.

  • Comment number 49.

    Maybe a part of the problem is that institutional shareholders are indeed regarded as "the owners". And that a large amount of voting power and influence is granted to the single guy running the institutional fund.

    Institutions buy these shares with other peoples money - yours and mine, and are morally at least only custodians of the shares. Yet the people whose cash pays for the shares, and therefore the massive cumulative influence, don't get a say or a vote at all.

    I can't help but suspect that the executive, non-executive and institutional control of the FTSE finance companies is a bit of a cozy clique. So no pension fund manager in his right mind is going to tread on the toes of the board of, say, the Royal Bank of Bankrupt, as their CEO sits on his companies remuneration panel as a non-exec.

    Everyone gets paid more if a blind eye is turned to the excesses, and you only really need 2 or 3 years in the job to be set for life, especially if your golden parachute is packed for emergencies.

  • Comment number 50.


    Regarding the Sants coments re : market discipline I have noticed a tendency on the part of the national regulators in the firing line to resort to simple assertions to draw attention away from the specific areas of fault which might land up on their doorstep : Bernanke majors on capital imbalances, King majors on a global shock no-one foresaw and now Sants blaming market indiscipline. If a market is regulated in the public interest, who is responsible for indiscipline of participants.

    The BoE mandate on Financial Stability required it to consider not only most likely vulnerabilities to the system but also major downside risks. The 'indisciplines' were known. The BoE operated on the basis of two conclusions they had reached : capital buffers were high and adequate because of high profitability, in their view [ a source of national pride,in their view] ; risk had been spread, covered and diversified ; their stress testing pointed to resilience to systemic failure.

    Read their Financial Stability Report of July 2006. It contains a useful guide to Official Sector versus Private Sector intitiatives to improve risk management.

    Official ones were:-

    1. Completion Basel 11 framework
    2. BoE money market reform
    3. Stress testing initiatives
    4. New framework for IMF surveillance
    5. Revision of Tripartite Memorandum of Understanding, galvanising BoE FSA and Treasury to protect us [ the taxpayer]
    6. Financial crisis management processes
    7. Business continuity exercises
    8. OTC derivatives post-trade processing initiatives

    - an army of bureacrats deployed.

    Private ones were :-

    1. Counterparty Risk Management Policy Group 11 report
    2. Stress testing initiatives
    3. Business continuity exercises
    4. OTC derivatives post-trade processing initiatives

    The Gamekeepers were [ and should have been] more proactive than the Poachers.

    I agree that ownership and corporate governance must accept their part of the blame. That doesnt just include pension funds and non-execs. What about auditors, share-issue underwriters, lawyers, credit reference agencies, valuers and credit committees within banks. How are pension funds and non executives to patrol these armies? If they were, the costs of our pensions would bear an enormous surcharge.

    Lets not dumb-down the debate.If we do, it will distract from the real balance of accountability.

    Cheers !

  • Comment number 51.

    What we have is all talk no action when what we need is negligible talk and massive action.

    Every one of the creepy talking heads is feathering their own nests and furthering their own careers. Nothing more nothing less.

    To get on in the UK you need connections and an ability to spraff.

    Look at the careers of ALL the senior FSA people since it was created. Great yackers one and all.

    The whole edifice was built on hot air and so it continues.

    Public service? HA HA HA

  • Comment number 52.

    There is only one way to resolve this global dilemma. Attitudes are all wrong; it’s all about making personal fortunes by dealing out misfortune to others. People are losing their jobs and, in many cases, it’s not because their employer is in trouble and losing lots of money, but simply because they are not making the massive profits they made in past years. Indeed in some cases they are just taking advantage of the circumstances.

    Well here’s one for you, “it’s not about the money stupid, it’s about the people”. Companies do not need to make massive fortunes to survive they just need to ensure they are not losing it. Money is like alcohol, cigarettes and chocolate; it’s addictive. Why on earth does anyone need to have a personal fortune of billions? Surely a few million is enough for anyone to be comfortable!

    Money surely is the root of all evil! When the people in power, the entrepreneurs, the masters of the financial institutions and the kings of industry realise this then the world will become a better place for all. It should not be about making lots of money but about bettering the human race. Greed is an illness which brings false satisfaction to one, and happiness to none. It is generosity that brings true satisfaction to one, and happiness to all.

    But who am I to preach? I do not have the right degree to run the world and I have not made enough money, even to have a say!

  • Comment number 53.

    Surely the problem was that there was no effective "stop" mechanism as all those in "the system" were guaranteed to do rather well out of it if they didn't ask too many questions.

    That includes bankers in all countries; politicians everywhere; regulators etc etc. Their motto could have been "keep quiet; let the little man do all the work and laugh all the way to the bank". T'was ever thus but it's just been done on a larger scale. If you spoke up because you could see the bigger picture of how unsustainable it all was then you were quickly side-lined.

    Greed is the over-riding emotion and an attitude of "I'm alright Jack". Politicians are the most dishonest in this respect as they also largely took this position whilst simultaneously feigning concern for those less fortunate than themselves. At least bankers were honest in this regard.

  • Comment number 54.

    Robert, you have missed the blindingly obvious!!

    If like-minded institutional shareholders don't like what a company is doing (e.g operations incomprehensible or too risky) and sell their shares in that company the share price will fall.

    If nobody wants to invest in that company its share price will collapse, forcing the management to buck their ideas up or, indeed, forcing the management out.

    On the other hand if the selling institutions are replaced by investors that want to buy into incomprehensible or risky operations (gamblers) the share price will be maintained and the management will be allowed to continue what they are doing.

    All the recent debacle serves to prove is that either the institutional shareholders did not trouble themselves to find out what actually lay behind their investments, or having done so were happy to stay invested.

  • Comment number 55.

    #45. "make it illegal to lend money that is not covered by deposits"

    That translates to - make banking illegal.

    What you would forbid is what banks do, it's what they've been doing for centuries, it's what they are meant to do, it's what they are for!

    If an organisation can only lend to the extent of its capital, then it will simply lend the capital. Why on earth would you accept deposits, pay depositors interest and incur the costs of administering those deposits. Just lend your own capital, and then you don't need to share the profit with those pesky depositors. There are plenty of businesses that do this (pawnbrokers, finance companies etc.) but they certainly aren't banks. This sort of unconsidered knee-jerk reaction actually damages the perception of the valid case for more prudent capital ratios

  • Comment number 56.

    Markets are not infallible because the efficiency conditions of a Free Market never happens. The signs were there when the banks got too big that they created a moral hazard that forced Governments to convene. The key to this problem is allowing banks and insurance companies to create money through fractional reserve banking. This should be stopped!

    I have nothing against investment banks taking a punt on higher risk investments for a greater return but depositors at these institutions should take the risk not the public.

    My solution is to take away the power to create money and lodge that with a Nationalised Bank that works on very conservative rules. Other financial services may borrow from the National Bank and charge a premium for services such as running current accounts, providing credit etc. This is the model that money lenders work on so why not extend that to commercial banks?

    Any profits made by the National Bank could be thyen used to offset taxation.

    We have the moral hazard so why not let us have the benefits?

  • Comment number 57.

    Market not rational?

    G20 is coming and IMF wants more money.

    It is rational to get money from tax havens and those, individuals and companies, who have paid very little tax over the years. If the Pope is right, then there must be a few $trillion if it is back dated 10 years. IMF problem solved in one stroke without asking more money from the victims and those already in debt.

    Very rational.

  • Comment number 58.

    The problem is that the "herd mentality" is generally a good way to make money in a market place, and therefore is a dominant feature of all financial markets.

    If you can determine what everybody else is doing and do the same, you will buy as the price rises and sell as it falls. It is rather like an informal "concert party".

    This is perhaps why liquid lunches in bars around any stock exchange were traditionally so popular. Nowadays, traders are glued to their computer screens, intent on detecting any movements of the herd as soon as possible.

    Of course this system will eventually go wrong and, like most gambling systems, when it does, the effect is really catastrophic, as we have seen in recent months.

  • Comment number 59.

    Markets are "irrational" because the West has become "property dependant".
    When property is booming, everything is fine.
    But when property fails, all is lost.
    We have priced ourselves out of manufacturing, we want £20 an hour, the Far-East will make it for £1 an hour.
    So what else is there?
    We have all seen how uncontrolled property speculation causes personal and national disaster... we can no longer drive our economies on property booms.
    Property must be kept in line with wage inflation, nothing more.
    300% rise in 7 years was a disaster both here and in the USA.
    Of course markets don't know where to turn.
    Gordon, Tony and Mervyn and their ilk are not in touch at street level.
    They didn't feel the huge rise in property asset values or hopeless personal debt levels.
    They don't move in that world.
    Derivatives? Leverage? etc.....forget all that...just look at reality.
    The man in the street suspected a crash was coming long before all these "high-office" people woke up to it.
    The G20 meeting in Sussex needs to find something for economies to run on other than property speculation.

  • Comment number 60.

    A free market is inherently unstable and will always boom and collapse; it's a mathematical inevitability.

    Economists make a fortune every year selling the fantasy that this is not true and every couple of decades or so reality arrives and proves them wrong. Again.

    Then they all stand around and point fingers at each other saying "If HE hadn't interfered it would all be fine". Which is true: if no one was actually involved in the market then it would be stable in the sense that, without any players, the market would not exist.

    It's amazing, when you sit down and look at it, how much Economics depends on the purely imaginary. The LSE is just a pretentious version of Disneyland, at the end of the day.

  • Comment number 61.

    The market will never work whilst it is operated by greedy, self centred, industrially treacherous City types.

    They cannot possibly be trusted to do the right thing.

  • Comment number 62.

    I agree that even a reformed regulator would not have intervened to prevent the calamitous excesses of Northern Rock, HBOS and RBS.

    So the system must be changed. Separate retail banking from risky and speculative investment banking.

    Let the state stand behind a new retail banking sector that is low risk and highly regulated in terms of what it can and cannot do. Ensure that they have minimal exposure to the investment banks, so that an investment bank can be allowed to fail without impacting the retail banking sector.

    Let the hived off investment banks stand or fall by themselves with the government making it absolutely clear that it will not bail them out under any circumstances.

  • Comment number 63.

    (1) Humankind once used an `unregulated market' system. It was when caveman bob gave firewood to cavewoman alice in return for some wild boar. Since then the idea of property, money, and legislation to back those things up was invented.

    (2) If you want those notions, and no other regulation, then the system will fail. Consider the following example. Indium tin oxide, which is used to make touch screens, won't last for more than a few decades at the current rate of consumption. People will compete to sell it, it will then be used, perhaps for unimportant things, and end up dispersed in landfill. Then in a thousand years time if someone finds a use for it in say, a medical application, then it won't be accessible. Fine, as the ore runs out it will become more expensive, and so you might argue that the market is `correcting itself', but in the time it takes to correct itself a potentially valuable resource might be lost.

    (3) Conclusion: Free market libertarians: our standard of living depends on natural resources and the laws of physics. Your foolish `free market' system simply cannot take those things into account, as it relies on agents making decisions based on `individual' rather than `global' considerations.

  • Comment number 64.

    brown isnt rational either but we have to live with this bloke running(or wrecking) the country for the next 443 days.

  • Comment number 65.


    It is time for you to recognise that the crisis has occurred NOT because banks have lent too freely NOR because they have funded themselves from the sale of mortgage-backed securities. The problem has arisen because of their inappropriate investments in such and similar products with the result that they are now having to write-down these assets on their balance sheets.


  • Comment number 66.

    number 26, amanfromMars, is surely on some heavy duty narcotics?

  • Comment number 67.

    #66 takes 1 to know 1.

  • Comment number 68.

    If the market does not do what Hector Sants thinks it should do then the problem is with Hector Sants, not the market.

    My position remains that the people who caused or regulated the collapse are unfit to fix the problem and should be sacked - these remarks by Hector Sants reinforce my argument.

    Along with the foolish (being polite) actions of the Bank of England, its Governor and the MPC along with the Permanent Secretary at the Treasury, as well as the FSA - they should all go!

    The facts are that the market caused these problems. However it is a huge mistake to assume that the market was very 'free' in the first place. There are huge barriers to entry. There was a time not so long ago that if anyone wanted to set up a bank all they had to do was potter along to the Bank of England every month dressed in white shirt, wing collar, top hat and tails. The free market ceased when the regulator started insisting on banks meeting or exceeding revolutionary hurdles.

    So it is reasonable to dismiss the idea that there is anything like a 'free market' operating in banking and there hasn't been for several decades. The collapse is thus caused by wrong regulation (hence the men should be fired!) as they caused the problem by not understanding their role.

    What the regulators did was to remove competition and create a small cartel of banks and financial services companies free from any competition or restraint - this has had catastrophic consequences.

    I reiterate my perception that we are in for a long recession similar in nature to that of the Long Depression of the 1870s - it lasted 23 years in the UK. To have any hope of getting out of it we must first start by returning to sound policies. Interest rates must go up to 4 or 5 percent to restore the nature of money and value to assets. This is a prerequisite. Until this happens the problem will get worse and we will suffer a deeper recession.

  • Comment number 69.

    Stable doors and horses anyone?

    Once things are blindingly obvious Hector thinks he can ride to the rescue. What were he and his colleagues doing when it was going wrong?. The point of a police force is that it actually catches some wrong doers and deters some.

    Best thing we can do is save on his salary and expenses as quickly as possible.

  • Comment number 70.

    The managers of the future must acknowledge and fight against 'the herd mentality'... The recognition that financial markets are not rational, but rather that they are a behavioural system built around personal aspirations, is critical to us effectively changing this time round".

    Let's say the key bit again.....

    'The managers of the future must acknowledge and fight against 'the herd mentality'.


    Isn't that the most ridiculous thing you've ever heard in your life.....?

    The idea that somehow, a group of human beings can adopt a behaviour pattern that is not human at all? That, as an animal, a human being can stop itself acting in a 'herd mentality'?!

    I think pigs will fly over a frozen hell before this happens!!!!

    If the future of the world financial system is predicated on a construct that assumes people don't behave like people..... then as Fraser might say "we're all doomed".

    No... Human beings simply cannot stop being human beings.....!

    The best assumption to make in designing a new financial system is that it will always be this way. We will always be tempted to behave like herds.

    We must just make it even easier than ever it has been to challenge the herd.

    And there is absolutely only one direction to go to do this.... it means we need greater disclosure, greater transparency, i.e. to force all players who deal only in 'money' of some sort (whether banks, merchant banks, hedge funds, insurance companies, investment funds, gambling/spread bet indexes etc etc etc) to disclose a huge amount more information into the public domain.

    If the positions and contract details that a lot of these merchant banks and insurance outfits (.... e.g. those that have already absorbed massive amounts of state support in the US and UK) were running were in the public domain, the market would have reversed (... much more gently) years ago.... making the down turn much less severe.

    Tell me.... what downside is there in forcing all the banks, insurance companies, hedge funds, private equity outfits, financial intermediaries etc etc to disclose a huge amount more about their dealings/details and their positions?

    Perhaps a mild loss of rent/profit to the individual.....

    But at what massive gain to the market and the public good.....!!!!

  • Comment number 71.

    Re comment 42.
    I totally agree with the sentiments expressed about Fractional Reserve Banking. It seems to me that there is nothing wrong with the concept in principle, provided its practicioners remain relatively conservative about ratios of lending to deposits. Where it all went wrong was when the banks decided to see what they could get away with and let ratios rise from, say, 4:1 to outrageous figures in excess of 30:1. As the saying goes, Give them an inch, and they will steal a mile! It must surely have been obvious to all but the the most short sighted optimist that the chances of defaults on loans based on virtually no reserve is a recipe for disaster.
    What, if any, were the rules and who was supposed to prevent them from being disregarded?
    Maybe we don't need to employ top bankers to run the banks. Perhaps we should bring in retired successful bookmakers who at least have an understanding of risk.

  • Comment number 72.

    Mr Peston,

    Unless you address the issue in comment 42.
    ie the corrupt fractional reserve banking system, your whole blog is just pointless.
    Can you and the BBC not see that ?

    ps could someone also explain to me exactly why we even need to borrow money anyway or why it is lent ?

  • Comment number 73.

    *53 janchild wrote:
    "Surely the problem was that there was no effective "stop" mechanism as all those in "the system" were guaranteed to do rather well out of it if they didn't ask too many questions."

    This hits the nail on the head I think! There's no point in designing a car if it has no brakes, given the nature of travelling on four wheels on an open road. In the same way, what's the point of a financial system that cannot be stopped from falling off a cliff?

    Is it too ridiculous to suggest that markets should be shut down when there's turmoil of this nature? Or that banks should be limited in size so that any damage they may cause through criminal behaviour can be dealt with by freezing assets until the culprits are found? Is this possible?

    Recently all that seems to have happened is that short sellers were making hay out of the credit crunch, and our bailout money was disappearing into a black hole somewhere outside our jurisdiction.

  • Comment number 74.

    Markets are rational...
    what goes up... comes down, it's called Gravity.
    It's human greed, incompetence, lack of effective global regulation, bad management, the lemming factor, that all combined have allowed the global economic system to wobble... that's not rational.

    Trade has moved on a bit from... "swop you my banana for your gun".

    Solution - it has to be one global regulation system agreed by all, to bring law and order to a now very complicated invention of man in order to trade with one another... money.

  • Comment number 75.

    You have to recognise that the owners of the pension funds (you and me) have very little say in the way those funds are managed. If we had some influence over them, then we'd have some say and control over their (it would appear) rather laid-back approach to 'owning' those companies whose shares they hold.

    Also, if bankers (and other directors) are allowed to set their own (fat) pay and bonus conditions, they will continue to be paid inappropriately well. The real problem is that pension companies and directors have (and continue to be) very well paid irrespective of their performance and unless this link is reestablished they will continue to care less well than they should about the end-investor.

  • Comment number 76.

    Another question.

    Is not economic growth the last thing we need ?
    Unless we want to cull the population through the depletion of natural resources and environmental catastrophe. Beware of the NWO and do some research folks.

  • Comment number 77.

    "Herd mentality"

    That's nothing new. It's been there with every bubble: dot com, property, etc.
    You also saw the same in China.
    When the market, or better said the "marketeers" loose sight of the fundamentals underpinning the price, a load of new phrases are created to justify the continuation of the upward movement.
    The switch over has taken place; its thrilling; lets keep betting on the upward movement.

    Oh dear; the banks.
    All those dark suits and serious faces.
    All those accounting systems "Creative?"
    All those disclosure policies.
    All those rating systems, private or corporate.

    A free market, or so I was taught must be based upon transparency.

    Blame the FSA? Yes but then the Treasury, the Bank of England and certainly the politicians; have we ever had a politician go out on a wing and predict something?
    Oh no hindsight is the watchword.

    In the summer of 2006, I think the Daily Mail quoted Alan Greenspan's predecessor as saying the job of a central banker was.

    "To take punch bowl away just as the party gets going."

    So Robert what's new?

    It was thrilling on the way up, and it's a real feeding frenzy for the media on the way down.

    By the way who was our central banker in 2006?

  • Comment number 78.

    If you want a well-run, (reasonably) honestly managed financial industry, be that banks, insurance, hedge funds or whatever, then you need to manage both the regulation of it, i.e. the FSA end and the training and development of the people within the industry.

    You don't just need to set the standards by regulation, you need to train the people to work by the standards an to understand and comply with both the letter and the spirit of them.

    If the people entrusted with billions of pounds worth of milions of people's money were selected with the same levels of public accountability, evidenced track records, proven professional qualifications, checked criminal backgrounds and the like that we demand in other spheres of life, e.g. child protection, then considerably fewer of those people would do so much damage to our livelihoods.

    And there is a comparison here. Those who have led us into this financial crisis/meltdown have done huge socio-economic damage to many families that will impinge upon the lives of many children too. So perhaps we should select financiers with the same rigours we would expect public services to select doctors, nurses, social workers and the like.

    (At minimum, the now public owned banks should do this).

    Let's face it, just about any Jo Bloggs can set up as a financial advisor or work - even at a middle to senior level - in (some) financial institutions. In the main, the selection processes seem more biased to 'who you know' than 'what you know'.

    How can that state of affairs really lead to a prudent and responsible financial industry, even if that industry was regulated tightly?

  • Comment number 79.

    Any system in which the tie between the physical reality and the financial actions is broken will lead to the kind of crisis we are currently experiencing.

    The the world of collateral debt obligations was far removed from the physical reality of a house, a homeowner with a mortgage and a lender.

    The current system rewards management for short-term performance and penalizes it for poor performance over the short-term. A company making an investment that hinders its profits in the short term is penalized, without regard to whether or not the investment will produce good long-term returns.

    Companies make acquisitions at the height of a bull market and shareholders cheer even adds to earnings in the short-term, but penalize the company the acquisition reduces earnings in the near term. Companies who attempt to do the same thing in the depths of a recession/depression find their managements replaced as well as having their stock price penalized.

    A mutual fund manager who underperforms the market for one or two years is fired. No wonder they have a herd mentality.

    Shareholders judge the performance of their portfolio based on its performance over the last few months or perhaps the year.

    Taxpayers cheer when spending on needed infrastructure is cut to allow tax cuts, even if that spending actually saves money or creates wealth over the longer term.

    Through our short-term thinking we are mortgaging the future. We need to start thinking about real net value creation over the long term.

    How we get from here to there is the important question, but nothing less than a large-scale cultural change will work.

  • Comment number 80.

    Of course this is really a crisis of ownership with City Institutions acting as a poor substitute for real owners and those real owners being effectively disenfanchised. Regulators are a poor substitute and should really only protect the state not the owners. Effectively the question being posed is "Should the Regulator be a substitute for owners?" to which I have to say "No" but have I a realistic alternative also "No"!!!

  • Comment number 81.

    *29 newProtectorCromwell
    "If he didn?t know what was going on, he is useless to us. If he knew and just did not tell us, there is every bit as much blood on his hands as there is on the hands of the disreputable bankers who gave us the toxic instruments."

    There was at least one person who knew what dangers there were in the system, and who spoke out about it, four years ago, and that was Paul Moore at HBOS.

    It would be extremely satisfying to set up a Whistleblower's Academy and fund it so that people who witness foul play at work could report it without the danger of being dismissed and never working again.

    GB hasn't got that worry since he'll find some niche somewhere after the next election. Not a single excuse has he for his sonambulism.

  • Comment number 82.

    Well well well.
    It would appear that tripartite regulation is catching on.
    And very apposite too.
    Humph is to be replaced by a trio of presenters. One at a time they will regulate Mornington Crescent.

    Everybody will of course realise that the rules are exactly the same as those that apply to the economy.

  • Comment number 83.

    Watching the banks during 73/5 and during the sovereign debt crisis I concluded that banking was a fashion business. I can't see that anything has changed over 35 years. So I find it extraordinary that anyone, let alone a regulator, could expect markets to act rationally at all times, particularly when there is an abundance of credit.
    You ask whether any regulator would stand up to the banks in full flood. It's a good question. It could only happen if politicians stood behind the regulator. Isn't that the fundamental problem here that politicians didn't do what we elected them to do in managing the economy for the country's long-term benefit.

  • Comment number 84.

    Re 72. Another blast of common sense.
    Robert, It is not entirely clear where you stand on assertion that continuously rising GDP is something we should aspire to. If you are in favour, can you please write a piece which explains how this illusion could ever come to pass in a finite world when we have substantially used up a huge proportion of the natural resources which we inherited? The best that future generations can hope for is that we learn to live in equilibrium with nature. The sooner we do this the better will be the chances of having any quality of life. The longer we carry on kidding ourselves that there is a future golden age just around the corner, if only we throw a bit more debt into the pot, the more we will be condemning out descendents to a miserable fight for survival. For sure, it will become a dog eat dog fight on a global scale.
    Please feel free to enlist the best economic brains in the G20 to explain why the notion of perpetual growth can be anything other than a mindless pipe dream.

  • Comment number 85.

    Prudence has been ravished by the(W)Bankers and their associated idiots. In China they would be shot in a public square. What a thought!

  • Comment number 86.

    "You write your blog Robert and then we add our comments. The thing is the questions people ask you are never answered. People say you don't read the comments Robert but I'm writing this now on the hope that you do. Or if you don't, that a moderator or some other nice person will inform you that you have 1 message waiting." ..... #42.


    The comments are noted and sentiments and ideas which may work, to established practice and incumbent player advantage are "stolen" and then floated as their own, which is of course akin to plagiarism and a Phorm spin off too, whereby rather than delivering you what you want, your Intellectual Property is used to prop up their Lack of Intelligence.

    Of course, whenever you are in a position of wielding power without the necessary Intellectual Property and without the Ability to Generate it, as you may imagine the Present Melting Down Capitalist Systems and dependent Puppet Governments are, is it only a matter of pretty quick time in this new age of Instant global communications, that the Bankruptcy of Thought and Desperate Round Table Closed Door Summit calls to try and hide the Fact that they are in Danger of being Discovered to be Running a Global Criminal Conspiracy and Giant Ponzi in the Management of Perception with Media, begin to unravel their plans and extraordinarily render them vulnerable to personal responsibility for third party actions ... which they not wish to be associated with, given that some may not have known what they were dealing with in their Ignorance. And hiding the truth of what you may have discovered, leaves you dangerously exposed to being tarred with the same brush as those who would deserve what is prepared for them by the Natural Justice System which always accompanies revolutionary action .... which always changes incompetent elite behaviour from anyone ..... "Meantime, thanks to Gordon Brown's screaming incompetence, you and I (taxpayers) will be now be footing the bill for a generation or two. That has little to do with market rationality as the root cause; it's all about the shocking behaviour of our political elite. God knows how we change their behaviour?" .... #41

    And although the following reference is Virtual IT based in Cloud Technology ...... "Land of the Free? Hmmm .... We shall very soon See about that." ... Posted Saturday 14th March 2009 10:50 GMT .... IT does Offer a Simply CompleXXXX Solution on which Anything and Everything for Lasting Value can be Built and which will Survive and Prosper without any Conflict or Penalty.

    It does though require that you do not have a Closed Mind and I certainly would not expect all here to understand all of it, for it is a very Special Field of Virtualisation for Global Control Systems of which the Various Forms of Banking and Finance and the Markets, are, and which are now most certainly being Mercilessly Attacked and/or Mercifully BetaTested for Vulnerabilities which can Destroy them because of Systemic Flaws and Endemic Weaknesses. The Choice of which Test the System wishes to Embrace and Support is something which they are Dithering and Slithering over, such is their Arrogant State of Hubris and Denial in Blissful Ignorance or Continuing Conspiracy.

    Re #66 .... Would you like to bet £7,777,777 on that speculation and be proved wrong. And Which is peanuts nowadays for a clean programmer who knows how to prevent Bank collapse and which, on a whim, could very well be better offered for a perverse £88,888,888, such is the Nature of the System to be Protected and Cleaned and Restreamed for Future Fitness of Creative Purpose.

    #67 Thanks, rvpisneverinjureds, that's exactly what I was thinking ..... and I thought it a bit rich too, given that the whole sector are probably hopelessly addicted cokeheads and thus is the sector decline guaranteed to continue and leave them in ruin.

    "GB hasn't got that worry since he'll find some niche somewhere after the next election. Not a single excuse has he for his sonambulism." .... #81 There's a empty foxhole in Iraq which is perfectly suited for him, only one previous owner. Or if he thinks that is too hot, there's bound to be a Scottish village needing his idiot vision?

    "It would be extremely satisfying to set up a Whistleblower's Academy" ... starry-tigger, it does get any simpler than sharing what you know about dodgy deeds on the Internet, does it, for once shared it soon finds it way to where it needs to be for maximum effect, and hey, you can even use an anonymous pseudonym, starry-tigger. :-)

  • Comment number 87.


    Once, a year or so ago, I founded and ran a succesful small company and enterprise which had customers worldwide.

    Many people asked me what was my secret, the unique ingredient of success, how much capital did I need to expand etc etc

    I have always felt that the unique selling point and the primary assets/capital of any business are its people and only its people

    Good, qualified, motivated, dedicated staff can get you through anything, coupled to loyal customers who are well serviced.

    My biggest bugbear and problem was red tape , taxes and interference from Regulators and Others. Trust people, give them real authority and power over their own lives and decisions and you will collectively succeed. Greed and fear have to be contained of course, but leading a company is leading a team of real people, not a lump of simple capital, cash or assets

    Real Vaue in any company is its people first, its business model and technolgy plus its rating by its customers

    This GB Government has the lowest ratings since the 2nd World War for trust and competance and so do these Regulators and BOE. How can they possibly contain the people to see us through this catastrophe? We need either an election, a Military Government or a peaceful Revolution to make the changes needed now.

  • Comment number 88.

    I think the issue here is that the rational thing to do in a market is to act irrationally.

    The winners in a rising market sell just before the top if the market, for example, their irrational action perhaps triggering other action that is irrational.

    Rationally, transferring governance to an independent body of bodies (the FSA and BoE) was a rational thing to do, and cam just a few months after the Independent Insurance company failed. "It'll not happen again" we were told. This was a an insurance company that failed through all tehthings that have happened since - only more so.

    Irrationally the right thing to do now is to stop bailing things out and ride the consequences. I still think one major player in every global market will fail before we can come through this. The reduced capacity and changes in behaviour will stabilise the markets (but - once stabilised the irrational thing to do is to destabilise them). However, if the rational thing to do is irrational, then irrationality becomes rational.

    It's a version of catch 22.

  • Comment number 89.

    "Would it really have risked being chastised by shareholders, the business establishment, politicians and media for being Neanderthal opponents of entrepreneurism and wealth-creation?"

    Perhaps we need these very same "Neanderthal opponents of entrepreneurism and wealth-creation" to hold back the encroaching nightmare of more "Madoffs" happening !!

    IMHO, those bankers who screamed about too much regulations deserve every penny that was swindled from them by Madoff and his ilk !!

    You can't have your cake and eat it too !!

  • Comment number 90.

    Some people say don't blame the bankers, it is the incompetent politicians.

    Well, we all know 90% of the politicians (and nearly 100% of the ones at the top) are ill-informed, incompetent and a bit thick.
    Their yes men cannot be trusted and they do not have the time or sense of public duty to do the research.

    But, whether they realise it or not, they are really just pawns in a game (Dylan).

    The game is controlled by the bankers or rather, the Elite powers behind the scenes, the people who the politicians report to.

  • Comment number 91.

    #84 "Please feel free to enlist the best economic brains in the G20 to explain why the notion of perpetual growth can be anything other than a mindless pipe dream."

    Perpetual Growth is the younger brother of Perpetual Motion and has been around for a while now !! Just as charlatans in ages past have "convinced" many people about the validity of Perpetual Motion, Ponzi and his successors have "convinced" many of the validity of Perpetual Growth !! Hence the derivative name "con" game !!

  • Comment number 92.

    27. At 07:20am on 14 Mar 2009, newProtectorCromwell wrote:

    What he wrote was a succinct statement of the root of our problems - poor and obtuse law that permits the looters to evade all responsibility.

    What we need is not more regulation, devised by bureaucrats with small understanding of the practices which they seek to circumscribe, but a return to the basic principles of Justinian. Three or four laws, each on a single sheet of paper, is all that is needed to control markets adequately.

    Mr. Sants has now distinguished himself by announcing his belated recognition of a fact that has been obvious to most for a very long time. I can only hope that before long Messrs. Brown et al will recognise the equally established fact that deflation is the natural and only way out of the current situation. Long and painful as that may be, the current experiment with "Quantitative Easing" carries the very real threat of hyperinflation. Be warned, hyperinflation is the deadliest disease known to man. Once contracted it has no cure. Its associated death rate is terrifying.

  • Comment number 93.




    I cant tell you how relieved I am that they have put their combined weight behind restoring the unsustainable current economic model back to its former glory.

    Does that mean I can start buying aromotherapy towel heaters (and the like) from China again then throwing them away 6 months later into a landfill when they break / start to look tarnished etc and buy something else to replace it on my credit card?

    An aromatherapy towel heater with built in blu ray player perhaps...Once they get the banks lending again I may be able to afford it!!!




  • Comment number 94.

    My wife was at his speech at the NAPF and his attitude was very similar in tone to the current PM. Arrogant and unapologetic.

    In fact, one of the managers who called him to task on one of his statements got far louder applause than the speaker.

    It really is time that the entire discredited board of the FSA resigns in shame. This is the organisation that viewed insider trading as more serious a crime than what we have today. This is the organisation the allowed and encouraged finance firms to offer 125% mortgages.

    No Mr Sants needs to go. He is thoroughly discredited and can not offer any shred of moral authority when dealing with Finance companies.

  • Comment number 95.

    The real problem with the regulator stems from the way the FSA was set up originally. Too many self interested regimes trying to be top dog.

    Hence heavy handed regulation for the Adviser market and No regulation for the Banks. Even this week the FSA is to take no action against the misselling and misrepresenting of so called guaranteed bonds.

    Shame on you Sants!

  • Comment number 96.

    If markets were rational they would always reflect true value and there would never be any bubbles created.

    If this was the case then the people who really run the markets would not make as much money as they do by pumping up these huge bubbles and leaving others to pay the bills once they have secured their profits

  • Comment number 97.

    26. amanfromMars

    Succinct and to the point. I couldn't have put it better myself. Wish all posts were as clear as yours.

  • Comment number 98.


    ....Not so sure about your 86, though.

  • Comment number 99.

    Apologies to Mr Sants, but about the only thing we can say with certainty is that Mr Sants' regulator was asleep at the wheel and completely failed to understand or act on the disaster that was in the making.

    In the old days, the Bank of England would have had a quiet word and used its influence to calm things down. But Mr Brown emasculated the BoE and created a politicised and neutered regulator, the FSA, to take some of its powers and role.

    We can waffle all we like, but the tri-partite system of regulation introduced by Mr Brown has been a disaster.

  • Comment number 100.

    "Markets have shown not to be rational; excesses have not been corrected by market discipline". - Hector Sants

    How disingenuous of him. Markets correct excesses by insolvency and liquidation. As a matter of government policy, this remedy has been prevented. Markets are perfectly rational. It is just what they have on offer is unwelcome to some.


Page 1 of 2

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.