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An Orwellian episode

Paul Mason | 17:14 UK time, Thursday, 22 January 2009

Shortly after Labour's 2005 election win I was summoned to a speech by Tony Blair, hosted by the IPPR. It was entitled Risk and the State and naturally induced as much anticipation as a crown green bowling telethon.

However, halfway through I realised Blair had said something that sounded calculatedly outrageous: that the Financial Services Authority was "seen as hugely inhibiting of efficient business by perfectly respectable companies that have never defrauded anyone".

The implication was that finance was over-regulated, the FSA over-heavy, and that it should be essentially a policeman dealing with criminality, not a surveillance body dealing with systemic risk.

This is the same FSA that has, implicitly, been drubbed by its new boss, Adair Turner, for its failure to adequately monitor the financial system as it careered out of control in the first half of this decade.

At the time, the then boss of the FSA wrote a furious letter to Blair, accusing him of undermining the FSA's role. Had not the FSA been at the forefront of the drive for light-touch regulation in Europe, McCarthy complained, and now it was being dissed as heavy handed.

We don't know how the spat ended because Tony Blair's reply to this letter has been suppressed under the Freedom of Information laws. What we do know is that the FSA was under political pressure from the Labour government to be even more hands-off than it already was.

If this sounds a bit Orwellian then the whole current episode has the air of that famous moment in Nineteen Eighty Four where the enemy suddenly switches from Eastasia to Eurasia, without anybody daring to comment.

Let me quote extensively from Lord Turner's lecture (which I recommend you to read in full as its analysis is trenchant and heavily influenced by those economists who locate the savings glut in the malformed structure of the global economy):

"The FSA has been more open than I think any institution involved in this crisis in admitting that it made mistakes in the institution specific supervision of Northern Rock. But I think the best judgement is that better institution specific supervision of Northern Rock, would have made only a very small difference to the shape and impact of this global crisis.

"The far bigger failure - shared by bankers, regulators, central banks, finance ministers and academics across the world - was the failure to identify that the whole system was fraught with market wide, systemic risk. The key problem was not that the supervision of Northern Rock was insufficient, but that we failed to piece together the jigsaw puzzle of a large UK current account deficit, rapid credit extension and house price rises, the purchase of UK mortgage backed securities by institutions in the U.S. performing a new form of maturity transformation, and the potential for irrational exuberance in the market price of credit. We failed to realize that there was an increase in total system risk to which financial regulators overall - authorities, and central banks and in fiscal authorities - needed to respond."

Now, who is "we" in this "wea culpa"? Clearly Lord Turner's predecessors at the FSA, Calum McCarthy and John Tiner. In addition, Mervyn King the governor of the Bank of England. Also the people who designed the tri-partite regulatory system: Gordon Brown, Ed Balls and Gus O'Donnell. Once you put names to this "we" it reads as a very strong criticism of the Labour government and its chosen regulators.

Both the Bank of England and the FSA have the statutory responsibility to maintain financial stability. They failed. The statutory responsibility was conferred on them by the Treasury. It, by implication failed.

There is a legitimate question: why? I will answer it with another question. Is it because the whole world of banking regulation and supervision is in fact a closed club populated by former bankers? Is it because the politicians were too starry eyed about the bankers? After all the rise of global finance delivered seemingly endless growth, and lots of tax revenue to plough back into the lower reaches of society in the form of tax credits and benefits. Was this apparently win-win situation allowed to cloud the judgement of the politicians and regulators?

If, now we are in sackcloth and ashes phase, you came across a politician who made a speech saying the banking system was at the beginning of a "golden age", just months before the collapse, you would want that politician to answer some questions raised by Lord Turner's lecture. Not just for the sake of drawing a balance sheet but to make sure they had got the message that the whole deregulationist philosophy is over. The "golden age" epithet was, of course, uttered by Gordon Brown in his 2007 Mansion House speech.

I will leave you with the quote in full.

"So I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London....And I believe it will be said of this age, the first decades of the 21st century, that out of the greatest restructuring of the global economy, perhaps even greater than the industrial revolution, a new world order was created."

And another question: the government has just been hammered in the courts over the Equitable Life case, on the technicality that, for a few short months, it was the regulator (during the transition to the FSA). In the case of our financial meltdown, if it is now "official" that the regulatory authorities failed in their duties, both in detail over Northern Rock and systemically, does anybody who lost money have a legal redress?

Just a thought.

Comments

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  • Comment number 1.

    The lack of acceptance of responsibility by government ministers for the current mess is extremely irritating. I know that politicians are never good at accepting blame but I am becoming increasingly sick at hearing the same old mantra being trotted out by government ministers - the recession has been caused by a global crisis - as if the UK government is entirely blameless. The current mess could have been avoiuded or its impact lessened if (a) thwere had been better regulation/supervision of the banks; (b) interest rates had been kept higher; and (c) the public sector deficit had been kept under control. Somewhere in all of that the government must have a role.

  • Comment number 2.

    The regulators made the same mistake in the UK as they did in the United States, they failed to regulate risks taken by banks. This is because they studied at the same schools of thought whose dogma was that unrestricted markets work best. That school of thought forgot or falied to accept the lessons of the 1920s and 1930s where the same circumstances led to the same result. Only the details were different, the principle is exactly the same.

    What Alan Greenspan didn't understand about markets and what his model didn't take into account, is that in a free market, investors will try anything legal (and some things that are illegal) to get a maximum return on their money. Since their own personal compensation over the short term is dependent on their success at this, they can afford to disregard the long term risks they are taking with other people's money. Current financial dogma is focused on the short term, the bottom line results for this quarter. If one company has a strategy that appears to work better than anyone eles's for a while, the management of other companies will insist that its subordinates adopt the same strategies to get comparable results or they will be fired.

    In the United States, the removal of regulations on financial markets championed by conservates were abetted by liberals who would normally have taken a dim view of such recklessness. This was because they naively believed that somehow, people who were not qualified to borrow large sums of money to buy a house should be given that "right" anyway and somehow things would work out. In other words, this was their effort at social engineering on a reckless scale. The temporary success of this stragegy put people in homes they couldn't afford and profits on bottom lines that concealed the ludicrous risk they were obtained at. The ultimat failure was not merely possible or likely, it was inevitable. Had it not been Lehman Brothers that first went broke, it would have been one of the others like Morgan Stanley or Wachovia. It was bound to happen.

    But that was not the full extent of the problem. The risk was compounded many fold by a pyramid scheme of complex often incomprehensible financial instruments which depended on the majority of these mortgages being repaid. The higher up you went on the pyramid, the greater the consequences of ultimate failure. So while the mortgages themselves may have represented a risk of a few trillion dollars, the Credit Default Swaps amounted to 55 trillion of risk while the derivitives are somewhere in the order of 300 to 600 trillion dollars. Because many of these instruments are not regulated, even the amout of risk is not really known, we can only guess.

    It's small wonder that banks won't lend to each other even overnight. Each bank knows that its competitors do the same things they do and none of them knows which ones won't be around the next morning to pay them back.

    It's also not surprising that given that some of the largest economies in the world are embroiled in this, the disaster will wash out over the entire financial world like a tsunami. Even countries that have nothing to do with any of this directly such as Iran and Canada will be affected. There seems to be a surprise that the bailout of the banks has not only not worked but is failing so quickly. There also seems to be surprise that countries like China and India thought to be immune to the consequences of this are also caught up in it.

    About 28% of the world's economy is in the US's GDP. Two thirds of that is consumer driven, often paid by credit. That means that when the American consumer stops buying out of inability to get credit or fear of losing their jobs and income, about 1/5 of all of the spending in the world stops with it. And that is enough to turn the entire applecart of the world's financial markets upside down. How will it be righted again? Only one possible way. The US Treasury will have to create new money that is easy for Americans to obtain so that spending and borrowing can begin again. This will cause huge inflation but will allow for a writedown of prior debt at a managable level. Lenders may not like it but it's that or they get nothng back at all as all debtors including the largest of all, the US government itself runs out of money.

    BTW, an unregulated market is the most efficient kind. The problem is that the social consequences of periodic corrections is unacceptable. Since the economy exists for the betterment of society and not the other way around, re-regulation including regulating new complex intstruments created to avoid regulation and obfuscate risk will have to be instituted or the same thing will happen all over again.

  • Comment number 3.

    Up to the announcement of a weekend conference and the Monday datum, I have a lot of respect for how the P.M. handled the decisions made in the Government in respect of the crisis.

    And I really think that the Government has failed to put its case across in the manner befitting its accomplishments - "do nothing" jibes were not a fair response to an Opposition experimenting with a difficult crisis, as we all were, and will earn a harvest of vitriol now.

    And those jibes were not a good use of a very narrow window in time to explain the processes and countervailing forces underway. And justify the steps taken to shape those forces. Harsher truth was possible in the kinder glow of victory which shone then.

    Spin-doctoring is not public communication. Communication is complex thought argued well.

    I'd just like to preface my remarks with all those disclaimers and balancing remarks, before I let fly.

    Another question, Paul, what on earth did he think he was talking about even then?

    This is from the Trustee Knowledge Guide 2009, published this month in association with the Pensions Regulator:

    "For example, the average annual return for UK equities has been around 8.9pc over the last 20 years, but this does not tell the whole story. For the 10 years up to September 30, 1998, the average annual return was 14.3pc per annum, while for the later 10 years the average annual return was 3.7pc per annum. The last decade would have come as a bit of a shock to any investor expecting an annual return of 8pc to 9pc."

    Great journalism digging that up that quote, Paul. Wow, what a hostage to fortune.

    It might have been the cigars and brandy talking. Or a scamp in the script-room really setting the old fossil up... You know, they could do with better advisors in some departments (Not all, of course. Go PUT FAVOURITE DEPT. HERE). Who watches these people's backs? Seriously. Hire someone who isn't a facile-minded snot. Just as an experiment...

    Still, history is a big expanse. Time goes on. And they continue to have the opportunity to really surpass themselves in dedication and self-sacrifice.

    It will be fully communicated to posterity what they do now. And if they calmly accept the public duty before them, they should be prepared to accept our gratitude.

    We have always the accepted the flaws and errors of our Samsons and our Alfreds.

    And we will not forget the flawed men who took their last public energies to the public good.

    People shouldn't forget who Roosevelt hired to clean up Wall Street: J.P. Kennedy. Poacher-turned-gamekeeper. Kennedy's difference, of course, was that he got wise early and dropped out of the share-pumping scam. A man with his eye on the potential of the future and a regard for public opinion.

    The gutter and the stars... It's a matter of viewpoint. And the choices before us.

    I like to act early and hit hard, but that's just me.

  • Comment number 4.

    perhaps because editors perceived it as 'boring' there was also a lack of journalists who understood finance enough to ask the right questions?

    i remember even on NN Flanders getting 'looks' for daring to put up 'another' chart?

    so only the financially illiterate thought finance was 'boring'.

    i see steffi is now back?

  • Comment number 5.

    Great work, Columbo, only a matter of time before you get as much attention as Robert Peston...

  • Comment number 6.

    The City has always been a small world. It used to be inordinately proud of being the 'square mile' which ruled the world of finance. Even though it has now physically expanded to take in Canary Wharf, it is still a different world from that in which the rest of us live; indeed it almost lives on a different planet. It has its own culture and history; and its inhabitants only talk to their fellow denizens.

    The result is that a culture of something like groupthink (described in the 1970s by Irving Janis about the Bay of Pigs) captured the soul of the place. After all Keynes did describe its essence as animal spirits.

    In terms of regulation the problem was that the regulators lived in the same world. They shared the same culture and the same dreams. They were just as much exposed to the groupthink as any banker. And groupthink does not allow you the luxury of challenging the comfortable world you live in - even if you are supposed to. Now that the emperor has been shown to have no clothes, however, let us hope the regulators recognise this fact; even if the bankers still are hypnotized by the trappings of wealth.

  • Comment number 7.

    regulatory authorities failed in their duties

    Let's be clear, it is Government that creates the mood: and the Blair/Brown regime was engaged in a regulatory race-to-the-bottom, (as your quotations show all too clearly) to undercut New York, Chicago and Frankfurt.

    Same with the DTI as-was: instructed by Brown to follow a blind laissez-faire approach with all the ignorance and enthusiasm of the new convert. Contrast this with Tory actions when in government - as in this case - which show a proper understanding of the limtations of markets.

    The blame for the hands-off approach lies squarely with Gordon "it started in America" Brown.

  • Comment number 8.

    WHERE DO PRIME MINISTERS COME FROM MUMMY?

    Poor James Brown who tellingly 'denies' the name that one, or both, parents intended he should be known by.
    Poor James Brown, brought up in the intense atmosphere of a Scottish Manse.
    Poor James Brown, either very academically bright - a marker for mental stress - or obsessively driven - a symptom of the same.
    Poor James Brown whose signature shows him to be the little Wizard of Oz - a pretender.
    Poor James Brown, unable even in late fifties to give up obsessive fingernail biting.
    Poor James Brown still unable to say: "Mr Speaker" without a stutter.
    Poor James Brown, convinced he has the politician's trick of portraying false emotions, but looking foolish in his delusion.
    Poor James Brown, when Tony did it - it looked so easy.
    Poor James Brown, no one warned him he might get what he wished (screamed) for.

    Poor Britain: yet another PM full of childhood angst and imperatives, only half in control of himself and without the required attributes to rationally control a nation.

    We really should take a hard look at 'where Prime Ministers come from'.

  • Comment number 9.

    "Is it because the whole world of banking regulation and supervision is in fact a closed club populated by former bankers? Is it because the politicians were too starry eyed about the bankers?"

    Well yes, and yes. It's also because of an academic system which rather than training economists to be "systems engineers" (ie able to design an economic system which was robust against the problems we have been seeing) trained them to be speculators, finding jobs in the City searching out loopholes that would allow their employers to make money. And it's not really a case of poacher turned gamekeeper, the two skills really are quite different, and we have gone for one maybe two generations without training our ecomonists how to *design* a market economy.

    You need to bring in specialist systems designers to sort this problem out, not these so-called bankers.

  • Comment number 10.

    Congratulations on a most enlightening blog. I would respectfully request please that this is brought to the attention of BBC hierarchy as I truly believes it warrants its own investigative documentary. In light of the mood of the public (you only have to read BBC blogs, specifically RP) it would definitely be in the interest of the wider general public. It goes some way to explain why there is non disclosure on behalf of the government in terms of the depth of this crisis and goes a long way to clarify just where blame lies. Thank you for the chink of light amidst the darkness of spin.

  • Comment number 11.

    Paul,

    Very interesting blog, and some great quotes.

    My own view is that the regulatory failure is very easy to explain. Financial services firms were, until the collapse in 2008, paying 25% of all Corporation Tax in the UK, with RBoS the largest contributor. The employee bonuses that everyone now denounces as adding to the systemic risk Turner alluded to, were actually being split 60/40 with the Treasury via Income Tax.

    Put simply, there has been a huge conflict of interest between regulators, regulated, and the Treasury (to whom the regulator reports). Unfortunately, it's not an easy conflict to remove or even manage.

  • Comment number 12.

    Thank you for writing a decent, well written, thoughtful piece.

    You ask, does any one who lost money have legal redress. I was mulling over this question when cooking the dinner. The cost of such action is what would deter anyone but those with the longest pockets and there are fewer of those.

    Nevertheless, it is not difficult to see actions which if not illegal are seriously unethical. For example, using as your auditors the past employers of your chief executive. Or letting an SPV set up to raise wholesale funds have support from the holding companies auditors.

    Of course, some of the biggest losers were part of the game... funds set up with borrowed funds from investors that borrowed the funds. These bigger players are not likely to take action because action could be taken against them.

    Anyway, the club is still working... on peston's blog, Adair Turner is identified as one of Merrill Lynch's european vice chairman from 2000-2006.

  • Comment number 13.

    'FREEDOM'

    People seem to forget that what Thatcher and Reagan unleashed in the early 80s was Austrian/Chicago School anarcho-capitalism. One can legislate for anarchism. That's all we've seen for nearly 30 years on both sides of the Atlantic. It's also why so much attention was given to the Criminal Justice System (with a sop to Education which won't make any difference except to those that make money out of educational services). Ask Civil Servants who have been around throught this debacle.

    They were having to take the state apart and leave it to 'market forces' (aka the Private Sector, and most recently, 'The Third Sector'). Essentially, asset stripping what had been built up in the decades to 1980.

  • Comment number 14.

    What is it that the pied piper of Sedgfield doent want us to know?

    I smell a rat, lots of them .

    The FSA is getting the blame for lax regulation yet cannot publicly defend itself by public airing of TB's letter .

    How much unrecoverable debt was accumulated by banks now supported by taxipayerrs since that letter .

    TB seems to be avoiding the press and being questioned about his roll in the creation of the biggest ponzi in human history ..if so Why?

    Why does Morgan Stanley now employ him ?

    Whatever regulation was applied to Rock would be applied to other banks as well

    Once again how much money collectively has been thrown down the drain by all banks which had to compete in the market place with Naut earnRock since Blairs outburst?

    Banks are greedy and so they should be to conserve tier one capital,but they also have to compete in the market place according to regulatory rules .

    Where is LORD Turners evidence that the FSA intervention was Nautearn Rock specific?

    Many suspect the most incredible decepts and accountancy practices were used to prevent the colapse of ponziland for seven years making both the colapse and cost to the taxipayerr and economy hugely greater .

    We need an investigation ,not a cover up with the viagraaa.of freshly printed fig leaf money which cannot hide inflationary forces used to get The Rock back up

  • Comment number 15.

    Because the regulators need to live in the same world as the groupies who live in the square mile (in order to know and understand what is going on), surely they can only ever see things the way the rest of the pack do. The question is how do we get informed regulators of calibre but also able to see the wider picture, think outside the box, and how to we ensure they have the clout to override a future government who is carried away by the euphoria of a so called successful city.

    A few years after this crisis is over, as it will be as sure as day follows night, it will again be just as difficult to get a chart published. The great British public find, and have always found, maths and stats boring, incomprehensible and for nerds. The cool crowd go for the arts and media causing a blight in our education system and a dearth of talent in our science and engineering community, a community which is sorely needed for the real and lasting prosperity of this country.

  • Comment number 16.

    What's wrong with a crown green bowling telethon??

    Oh, and sue the government? Forget it, they're worth nowt.

  • Comment number 17.

    ''After all the rise of global finance delivered seemingly endless growth, and lots of tax revenue to plough back into the lower reaches of society in the form of tax credits and benefits. Was this apparently win-win situation allowed to cloud the judgement of the politicians and regulators?''


    Yes I think you are on the right track there. As I have posted in Nicks political blog, the underlying cause was, strangely, Labours failure to be labour.

    Nu labour abondoned some of its socialist principles, something it felt it had to do in order to get elected. In so selling their principles the system became horribly imbalanced.

    Socialism on steriods, i.e. socialism fed by pure capitalism. The result being the worst of both worlds.

    Government too big and full of 'non' jobs and red tape.

    Basic grass roots industry allowed to deplete.

    A massive debt and credit bubble allowed to develop through unbridled capitalism.

    You add all that up and it is actually quite frightening, it equals a nation of bankrupt over regulated softies with nothing 'real' to sell to get them out of hole and a hugely damaged reputation in services industry.

    Root cause? Labour selling its principles down the river for power.

    I have great faith in this nations people and resourcefulness, but make no mistake, we will need to re-invent ourselves like never before to recover from this. We need someone to bring us togetyher along those lines. I can not see it in anyone currently in the Houses of parliament.

    Jericoa.

  • Comment number 18.

    So GORDY sees nothing??


    THIS JUST CONFIRMS THE BLAME LIES

    IN DOWNING STREET!

  • Comment number 19.

    ALL ABOUT A BOY (#15)

    When Blair bounced, windbaggily, onto the stage, those of us with a grounding in human psychology shrank back. But Charisma talks direct to the animal in ALL, and unless the animal is under firm, cerebral control it is Pied Piper time.

    But Little Boy Blair was all about himself; so great was his needy pain, and it is no accident that Britain was sacrificed on the altar of Terrorwar, to buy him a place in Americanheaven - where he now tries desperately (no less desperate than he ever was) to find the 'right' side of his god, where he might rest.

    Blair was the archetypal 'bad boy' who learned the trick of having Proxy Campbell do the overt bad stuff. When challenged he would say: "Oh Alastair's Alastair!" Sufficient unto the day . . .

    Little Boy Blair, like so many tragi-heroes before him, was trying to cure his pain with money ,possessions and fame; he already had (shallow) attractiveness. These are Oliver James's four attributes of 'Afflenza' - LBB was, and is, sick.

    Again - again - again, I plead from my lofty pinnacle of impotence: why must we tolerate a system of governance - party politics - that INEXORABLY elevates the disturbed, beset, deluded gottabes, to where they can operate levers of unimaginable power with all the aptitude of a Skinner Pigeon (as they seek analogous basic rewards)?

    Limply: SPOIL PARTY GAMES.

    PS And now we have Brown . . .

  • Comment number 20.

    Has everyone noted how dominant females have become in the news these days? They have greater (mean) verbal fluency and usually afford better eye-candy, but may their lower mean spatial ability account to some extent for that greater fluency, and may that be a function of a lesser awareness of the messy constraints of truth/reality? If so, be afraid of females bearing news and analysis, unless it's *just* as presenters.

  • Comment number 21.

    17. Jericoa:

    "Nu labour abondoned some of its socialist principles, something it felt it had to do in order to get elected. In so selling their principles the system became horribly imbalanced".

    Absolutely right. In my opinion, Labour has always had two political strands, linked by ambition, but one of those strands - plus ambition - is now totally on top.

    The first strand is (or was) a genuine desire to improve the lot of working people. I would stress 'working', because Labour was founded by unions representing working people (not representing spin-doctors, benefits recipients or bureaucrats); yet working people have been the principal victims of recent economic events.

    But the second strand is a belief in corporatism, big government, bureaucracy, interference and social engineering. That strand - with an admixture of control-freakery, spin and spurious moralism - has almost completely dwarfed any lingering desire to help working people. The markers for this include: (a) bureaucracy outgrowing the front-line public sector workforce; (b) a profusion of PC interference, regulation, pettiness and spin; (c) a profusion of bans (hunting, smoking - even lightbulbs!); (d) systemic denial and duplicity.

    Labour needs to remember that its name - deliberately chosen by its founders - means "work", and start rooting for (rather than taxing and control-freaking) people who actually work. Yes, put workers before bureaucrats; put workers before benefit recipients; put workers before fat cats; put workers' interests before their own ambitions.

    Somehow I can't see this happening......

  • Comment number 22.

    # 19 barriesingleton:

    "Again - again - again, I plead from my lofty pinnacle of impotence.."


    Do not worry. They have found that it is not hereditary.

  • Comment number 23.

    Perhaps this was the draft that should have been turned into the Panorama programme, instead of Pesto's 'A Life in the day'

    Still time to make it I would say, might start to restore Panorama's shrunken reputation.

  • Comment number 24.

    Excellent blog Paul, any chance of the BBC running with it?
    Today's "interview" with a deranged individual this morning was interesting. It reminded me of a tutors definition of a conversation "I talk you listen".

  • Comment number 25.

    Economics is more powerful than politics......

    Economics created the Italian Renaissance, the Industrial Revolution, and helped determine the outome of countless wars, etc.

    People forget too easily that asset prices always boom and bust, because they trade for values far in excess of their intrinsic value.

    The trick is to set aside plenty of real reserves when the times are good, and then you can fall back on them when times are hard.

    "It's not what you make, it's what you keep".

    Unfortunately, in both the UK and the US, consumers, government, banks, businesses all forgot to set aside reserves in the good times.

    Instead, they built up huge debts, trying to lever their way to the next tranche of economic miracle growth.

    Now that asset prices have collapsed, there is no fall back position. We are retreating in disarray.

    The British government forgot to hedge against the risk of a downturn.....

  • Comment number 26.

    What's clear is that the Brown/Blair governments have had more in common with right wing US republicanism than old style social democracy. Brown’s mechanism for raising families out of poverty and extending public services are based on a modified version of the trickle down theory which relies on letting the rich get extraordinarily richer and distributing a few baubles of increased tax revenues.

    Is it any wonder that London became populated by huge numbers of dodgy shady characters, home grown and imported. They could do what they liked and the government would make sure that no-one was going to sniff around very much.

    Brown was on this morning saying it was all the USA’s fault and that there could be no blame placed on the UK government for a completely new phenomena. This means that I must know more about economic history than he does and I would never for a moment think I am qualified to be Chancellor.

    Plenty of economists have warned of the consequences of the ‘credit boom’ and you don’t have to be very well read to understand that it has to go bust eventually. If we don’t actually make anything and all our ‘wealth’ consists of paper that we are selling to each other it is unsustainable as Larry Elliot described in Fantasy Island nearly 2 years ago. (sorry I can’t be bothered to read ‘real’ economic books).

    While the electorate have been bought off with knick knacks, foreign holidays and houses that lay fantasy eggs the rich have made an absolute mint. I don’t expect Joe and Jean Bloggs to work out the consequences of their new Audi and house in Spain bought because they are able to remortgage another 50 grand on their semi in Rotherham. But I know that top politicians understand the consequences of letting the financial markets rip. Even if they were just starstruck, as in Paul’s example of the Mansion House speech they are guilty of lies and deceit now.

    And when are they going to nationalize the bloody banks!! Every extra day that the real amount of toxic debt remains hidden by the banks gets us further in the mire. The future for the UK is being written in Iceland and Ireland. Luckily Alex Salmond hasn’t had it all his own way or Scotland would be in the same state. It’s bad enough that we are paying more taxes for the banker’s maseratis. If the IMF come in we will fund their lifestyle with REAL pay cuts and extortionate interest rates.

    Keep digging and exposing Paul. It’s going to get very bad and we are in for masses of social strife. The more people who know the facts the better. ‘Live Working Die Fighting’ mark 2 will have new chapters on the street battles in Britain in the early 20th century.

  • Comment number 27.

    STREET BATTLES? SURELY NOT. (#26)

    Isn't Britain a successful civilised democracy?
    Why would people fight? Indeed, who would fight whom; and what would they find, on the streets, to inflame them?

    Lulled by alcohol and mixing multiculturally and harmoniously with their ethnic equals, why would the young men or, indeed, their (genitally deficient) other 'equals', resort to fighting?

    Drowning in debt, without a job while being undercut in the labour market is no excuse for a bad attitude. In a democracy, redress comes through the ballot box - it is what we fought two world wars for . . . The British fighting person is the best in the world.

  • Comment number 28.

    Paul,

    It's quite energising to find that good journalism is alive and well (albeit obscurely) within the BBC.

    One of the most pressing matters in understanding the present crisis is to tease apart the apparent failure of regulation in the UK.

    In these days of global markets, had the FSA been given it's teeth by it's political creators and masters, it couldn't have been expected to have prevented some of the worst excesses from happening - those markets would simply have relocated elsewhere.

    Therefore we can expect that there was some manipulation of the regulatory regime to keep trading within our shores, on the basis that our economy would benefit from our hospitality.

    The pieces of the jig-saw are emerging, but a deeper story lies in the motivations of the key players.

    Keep it coming.

  • Comment number 29.

    Fascinating blog and nearer the truth. What we desperately need is rottweiler reporters (of either sex) that ask the uncomfortable questions and persist until they get the bottom line answer.

    That didn't happen this morning with Crash, maybe hands were tied, but keep digging out the truth Paul Mason, as only the truth will get us through.

  • Comment number 30.

    You have hit the nail square on the head.

  • Comment number 31.

    #21 friendlycard

    It is avery sad state of affairs, those whom could have curbed the bankers and injected a bit of counterbalance back into the system were marginalised by labour and left to feel the sting of the Government whip on the back benches and grumble in the background.

    The traditional counterbalance to the excesses of the Tories was lost from the system. The result was 30 Years of unchecked greed in the city of London and the biggest combined debt and assest bubble in history.

    The greed worked well for a while and fed labours, as you rightly say' 'other ambitions' of a large state and lots of social benefits among other things so it gave the illusion to Labour of working to meet at least a part of thier sociaist agenda. I guess it felt like an acceptable compromise for them...Nu labour..Except it is fundamentally flawed as we now know.

    The illusion has now been dispelled and it leaves us with a kind of paralysis in the political system.

    The re-balancing required is left wing in financial services and right wing for the civil service. Nationalising the banks ( too far gone for anything else now) regulating them properly etc on the one hand and slashing all the 'non' government jobs and overregulation on the other.

    That re-balancing process will be hugely painfull now with 30 years of momentum behind what created it to correct.

    We need a leader that captures the imagination to take us through this or we are in serious trouble here as a nation.

    Facinating and yet scary stuff at the same time.

    Jericoa

  • Comment number 32.

    There is a third major party and Emily seems to have forgotten, in her preview of last night programme, to mention it.

  • Comment number 33.

    31. Jericoa:

    "The re-balancing required is left wing in financial services and right wing for the civil service. Nationalising the banks ( too far gone for anything else now) regulating them properly etc on the one hand and slashing all the 'non' government jobs and overregulation on the other."

    An astute post, as usual. I'm particularly taken with your insight into both the left- and the right-wing requirements in the future. I was listening to Eric Pickles the other day, and thought that he sounded more like a Labour politician (of the old school) than anyone on Labour's own front bench. The LibDems, too, often sound like old-style Labour. On the other hand, Blair used to strike me as being 'more Thatcherite than Thatcher'!

  • Comment number 34.

    Excellent piece !

    I'm not convinced by Lord Turners jigsaw analogy - all the pieces were in place a long time before he made the Gestalt switch between the image he wanted to see and the one he sees now !

    Similarly we may be ready to make a perceptive switch between G Brown as saviour of the economy and G.Brown as co-architect of economic demise.

    (In some ways it's a pity Blair isn't in the hot seat to face the music, rather than doing some light penance as 'Peace Envoy' in recompense for his earlier war mongering.)

    Please can we find out some putative figures for the 'toxic waste' that taxpayers will be saddled with. We shouldn't be fobbed off with the platitude that it can't be known or calculated.

    Take the analogy of a racecourse bookmaker - at the start of the race he knows how much liability is at stake on each horse. In this was he can guage the possible outcomes between a range of figures depending on whether the favourite or a rank outsider wins.

    The bank's situation is more complex by many orders of magnitude , but remains calculable within parameters.


    Of course the information is highly sensitive ! It could spell the end of credibilty in both the banks and the government.

    However without this empirical evidence we can place no faith in Gordon Brown's policies.

  • Comment number 35.

    I'm impressed. A truly non-partisan piece if investigative journalism. I didn't expect to find that on the BBC.

    If Panorama don't want it, take it to C4. They'll do it.

    As for the thesis, as is invariably the case, follow the money.

    New Labour were elected on the back of a Third Way (i.e. neither Old Labour nor Tory) that was long on rhetoric and short on detailed policy (and in the end promised much but delivered little).

    Blair knew he couldn't fund massive welfare state liabilites without significantly increased tax revenue, but also knew he couldn't simply increase taxes if he wanted a second term. Unlike Thatcher, he didn't have the luxury of massive oil revenues.

    So New Labour's new friends in the City whispered in Brown's ear, "You scratch our back, and we'll scratch yours."

    How do you raise more tax without increasing the tax rate?

    Simple, you increase the gross revenue. Let the City loose and we'll make so much profit, you won't know how to spend the taxes (unless you go to war, of course).

    But what happens when the music stops?

    Well then you bail us out and we start again.

  • Comment number 36.

    Hi friendlycard and fellow migrants.

    I have been letting off steam big time on the blog, like most of the posters.

    My mood swings between Schadenfreude and deep concern for what is happening to our economy. The economy is our system of value creation and distribution not a mere abstract. It services our most basic needs and enables 60 million people to live in a highly complex society on a limited piece of island real estate.

    What I read above is in most part absolutely right. The analysis is spot on.

    Brown and Co are are politically doomed. The forces which have been unleashed in this meltdown are too great to be easily and rapidly brought under control. In order to see a way ahead, you must understand what has happened and why. Cool heads and decisive action have now to struggle to wrest back some kind of control over the meltdown.

    You can't hope to confront the issue without insight.

    It's going to be messy.

  • Comment number 37.

    36. blefuscu wrote:

    "Hi friendlycard and fellow migrants".

    Hi blefuscu, and yes, this is a good blog, isn't it? A brilliant, incisive analysis by Paul Mason.

    "My mood swings between Schadenfreude and deep concern for what is happening to our economy".

    Exactly, my sentiments too. My thinking combines empathy for the victims of all this; sadness for what is happening to our country; and anger at those who, having caused this mess, cannot own up to it. Just a simple apology, a mea culpa, from some of our so-called 'leaders' would go a long way.

  • Comment number 38.

    Yes, obangobang,

    Like atomic power in the 50's --- the promise of electricity too cheap to meter. And so bright and shiney!.

    I believe that the aim was to fund what we should call the "welfare state", or effect a redistribution without throttling what was believed the goose that laid the golden egg. An element also of out-doing the by then still perceived 'natural party of power' and demonstrate fitness to govern after the humiliation of the Thatcher revolution.

    But we know that education and health were to be 'multipliers' for the economy. Britain's 'backwardness' in those areas was a source of weakness. Britain was to 'punch above its weight'.

    So they accepted the Faustian contract.



  • Comment number 39.

    Superb article. Please, please, please can we have more of this - intelligent, independent, investigative, important journalism.

  • Comment number 40.

    Dear Paul,

    An excellent piece, so objective and factual that you have now received review and comments from several of the long term and regular "Peston Bloggers" as RP is getting a bit big for his boots and plays the drama queen disaster a little too much.

    Several of us on these Blogs, who read and contribute often, have asked repeatedly for the BBC to consider a ten man/woman citizen Round Table, chaired by someone mature and objective who is not in Politics or part of the London Elite, to consider ourselves "The Future of Britain and its Values" We are Entrepreneurs, business people, lawyers, civil servants, bankers and simple workers, most with intelligence, experience and qualifications.

    However, we put honesty and integrity first with our families, friends, employees and Britain itself and have no voice. We have scathing contemt for most Politicians, particularly those in power and have lost trust in our Banks. We know this is a very dangerous period in our History with sterling falling like a stone against the Yen and the US$ dollar in the past several months. We need a robust honest televised debate of the "Bloggers" not a silly question time, or set piece. Unless you can get the ten of us together with Brown and Darling, then we would really give you a show, with millions watching!!

    Believe me, they would not filibuster, nor bully the Bloggers, nor be allowed to sidestep legitimate questions as they normally are allowed by the BBC. Let the Public loose on this Government but only ten of us, not some massive studio audience. You could run it live on BBC and also blog it as you go.

    The RP Bloggers come from all walks of life but we are all patriots and care for our country I am sure, particularly those such as pensioners and savers, relying on their interest on cash savings to live. I built a small business from a log cabin in my garden to a $10 Million turnover in ten years employing twenty people. What work or business has Brown or Darling ever done? What are their CVs and real qualifications to spend Billions of our money without debate?

    Kind Regards and Well Done

  • Comment number 41.

    @40
    I second your comments. Have been watching Mr Mason's segments on Newsnight for some time and admire the clarity of his reporting.

    However, would disagree on one point - Mr Peston. Admittedly, it feels sometimes like he isn't on track with the headlines but I bet my bottom dollar that he is working on something in between his blogs and will come up with something brilliant shortly. He has the contacts and certainly gets the scoops. If you look at his record, every so often there is a blog that is quite a revelation. So in terms of RP - watch this space.

    A storm is brewing!

  • Comment number 42.

    But isnt the media a similar little 'closed shop', just bouncing off each other with what is 'news', flitting around the light of the agenda that Bill and Ben politicians delineate, too gutless to grasp, run with, and expose, the real issues?

    Well, we wouldnt want anything expected would we, like real information, or meaningful popular political action as a result of people being informed.

    No - bums stuck to sofas watching you expound, sounding clever - that's how you like it.

  • Comment number 43.

    The banks are insolvent and (with moral hazard now suspended) their share values would now actually be zero but for the injections of public money which has given them option value which (in relation to the real systemic challenge) the short-sellers inevitably plying their rather questionable trade, are a side issue. One bank, of course, is dependent on another source of "public money" in the form of Gulf Sovereigns whose definition of public money differs from ours.

    The banks are exposed to unquantifiable liabilities due to their self-inflicted exposure to instruments which clearly the boards, in their collected wisdom, did not understand, or did not want to understand. If something is too good to be true, it probably isn't true. But the herd is moving. The key was in mathematics elites hired by the global players (average age 24) who came up with a set of formulas of which one will be notorious in years to come. I shall call this the Masters Formula to calculate the PV (ie to price) counterparty risk to reduce risk to almost zero. (99.85%). It passed every test by peers against historical market data.

    In essence it suggested that default insurance could be sold but that there would be no cash lost on insurable events. Free money. The risk was to be spread so far through the system that it would just vanish. Tradeable instruments in an over the counter trade among the banks in an unregulated environment would spread risk and make the cash flow.

    Are you following me? I am breathless!

    The Credit Default Swap was born in 1998 in the offices of JPMorganChase in New York.

    To find out more (or beat yourself up) go to Wiki. Its all there including the systemic risk warnings and the backdoor route to the greenlight to exempt from SEC regulation.

    I was going to give you some numbers of the value of this clearly toxic market but because of the consent I had to give to get into the site of Depository Trust and Clearing Corporation I would not want to publish on a BBC blog.They expressly forbid any publication without prior consent.

    The size of the market is well, make your own mind up!

    [Unsuitable/Broken URL removed by Moderator]

    Make sure you have a stiff drink to hand.










  • Comment number 44.

    To be fair, those in the know tend to watch the news for fodder, watch political programmes for slightly more, albeit censored, information and soak up the blogs for the real news. I find the depth of knowledge, and personal experiences in the RP posts and PM posts fascinating and informative.

    The government are intent on keeping the masses in the dark. The Weapons of Mass Destruction furore between Govt and BBC appears to have changed the depth of publication of investigative journalism within the BBC but one is always optimistic that journalists such as RP, PM and a few others will hold to their principles in the belief that it is the taxpayers that fund the BBC and that we have a right to be informed in full.

  • Comment number 45.

    Paul

    An interesting/ nice piece of repeat jigsaw puzzle material from R. Peston's blogs - although I think you're introducing too many issues for most bloggers to have a good run and get really deep into or have a central issue and see original consensus/perpective developing.

  • Comment number 46.

    Sadly with the benefit of hindsight, is there not a hint of connection between Tony Blair/FSA 2005, easing lending even more and Nought in Rock? If NR spoke to local MP TB no surprise FSA suppressed correspondence. TB's AC lived for toxic copy. Remember AC's demand to be interviewed on C4 News in progress?
    Elsewhere today someone noted that a fish rots from its head down!

  • Comment number 47.

    #33 friendlycard

    Its the political paralysis, an extension of the nature of the problem and its solution that is most worrying.

    Noboddy wants to make the call that it will likely mean significant changes in the lives of a significant chunk of the population. They all seem to have the same line of 'we will patch it up, sort out labours mess then carry on, pretty much as before. That is what they think they need to say to get into power, I am not convinced that will be the case.

    Political paralysis at a time we can not afford it.

    12 months or more to an election is a very very long time in the current climate.

    I saw a youngish guy in the supermarket today, he did not have enough money for the goods he had (basic stuff, bread and milk and the like) it was clearly something he could not comprehend, the fact that he was in the supermarket and he could not afford these basic items. I got the sense that this was a situation he had never comprehended could happen to him, he got quite agitated and security was called and he was led away.

    Apart from that episode he looked like a pretty normal guy and would probably respond positively if someone told him how it was going to be and gave him a bit of a positive vision, something worthwhile to work for that would make the changes he was having to endure seem worth while.

    12 months or more to an election is a very very long time in the current climate.


    Jericoa













  • Comment number 48.

    "THE PRESENCE OF ALASTAIR CAMPBELL!" (From another thread) Ref: #46

    What a heavy scent of doom that simple phrase carries. It could have been penned by Tolkien. It reflects back onto Blair, illuminating his dark psyche. From there it reflects onto our political system that gave us Blair (now Brown) flawed, needy and 'happy' to live in 'The Presence of Campbell' (unelected) who displayed a frightening, absolute allegiance to New Labour and disturbing adoration of Tony Blair.

  • Comment number 49.

    @47.

    You are so right. 12 months is a long time. The worrying thing about the young man you mentioned is that there are going to be more and more incidences, families with children. The public need to be prepared for the worst. Information is vital. The six P's (Preparation Prevents Piss Poor Performance) comes to mind. The government, in their efforts to clam up and rely on sound bytes, are wasting opportunities to tell everyone frankly just how it is going to be. The reality is they are not in touch with ground level nor do they want to be. This was clearly evidenced by Brown's performance in PMQ on Wednesday and again this morning on R4. This cannot continue.

  • Comment number 50.

    Wisdomdog says:

    The government seems to be more interested in its own survival than doing the right thing unaware that the former depends on the latter...

    1. Identify the problem;
    2. Take a deep breath;
    3. Consider the alternatives and their consenquences;
    4. Decide, take action and follow your plan;
    5. If you realise you are wrong go back to step (1).

    We got lost at (1) in this CREDIT CRUNCH. Problem is too many civil servants , too many bankers, too many traders... not enough worker ants making useful things to sell, providing useful services.

    1. Reduce INCOME TAX !!! no brainer; sack some civil servants
    2. Increase interest rates - encourage savings and yes allow the government to borrow;
    3. Increase asset transfer tax - will reduce property prices and make banks feel comfotable enough to lend again;
    4. Stop interfering - the banks can survive but they know how; guarantee retail deposits to a high level not the banks; do one and the other may not be required;
    5. Change company law to make directors more accountable and pay subject to shareholder sanction.
    6. Give tax breaks to mutual societies, building societies and mutual insurers.
    Too few have had too much for too long. There is no credible government even in the wings; people must take action at a grass routes level; set up your own mutual society, forget about the banks and HM Govt, they are not fit for purpose and will not be for some time... TAKE ACTION... Opportunity exists all around, the dawn of a new age is here....

  • Comment number 51.

    #50

    Some very good points here and a good logic. However, we do need some kind of Platform if anyone from "The Masses" or the
    "Blogging Community" is to be able to influence anything.

    Politicians and the Elite will always play the Old Boy Network and divide and conquer the Masses. That is today us, the powerless, ignored, qualified, intelligent. law abiding, tax paying citizens

    We need first to have a voice, we have none at Parliament except possibly Vince Cable, but he after all is still a politician and trained in that language.

    We need a fresh taste to our language and debate, we need real people to test these politicians, take them on directly, but on territory where real time millions can see the battle. I am old enough now and scarred from my mistakes in life to know that Brown and Darling are "scared little boys" playing in a mans world today. We are at War, economic War, right now, where millions of vunerable people in our Country can quickly have insufficent money to pay for the basic of life. Sterling has dropped further in three/four months aginst the Euroe/Dollar and the Yen, than ever before in my lifetime. I experienced the quadrupling of Oil in the early seventies and its consequences as well as the 1987 crash, which cost me dear. This crisis is a Pearl Harbour ( Warren Buffets words) and is not going to go away.

    Our way of life, standard of living, what we do about exports to pay for our basic needs, are all at risk. Brown and his Government are not up to this task, we need real people, who have created real companies, real jobs, to think this through.

    The UK population seems to be in a state of denial right now, caught in the headlines of an oncoming train. We know the train is coming down on us, but we stand still, blinking and worried at the thunder of its sound.

    This Crisis needs a "Passive Revolution" to start in the UK, the massive peace loving, law abiding Silent Majority needs to be heard across your Media. You are only talking to your own Elite, going round in circles. All of you have index linked pensions and "safe jobs" You,( The Political and Media Elite) cannot comprehend the terror and insecurity so many millions of decent British People are presently feeling..... we the bloggers do.... because thats all we are ourselves.

    Glad that you got one of the Dragons on your programme of Newsnight, at last, a real person. The Banking Lady from the BOE monetory committee was very sweet and intelligent, but not on the same Planet as me and millions like me.

    What are you going to chat about when sterling falls another 25% against a basket of currencies over the next three to six months? We have about 100 days in my view, to really get hold of this situation and create a sence of National confidence, that some way through this Tsunami is planned or the Government will be forced to call in the IMF. UK PLC will then really be in the firing line

  • Comment number 52.

    On Bob Peston's blog entry 16.1.09 on the subject of Sir Philip Hampton, I pointed out the peculiarity that his "safe pair of hands", whose 2004 Report on the Regulation system would be used to justify the Regulatory Sanctions and Enforcement Act 2008, Part 4 of which slipped the Regulators a Mickey Finn, that this safe pair of hands should firstly become Chairman of UK Financial Investments Limited, the lifeboat meant for the banks, before also becoming Chairman of RBS, in otherwords chief beneficiary of his own largesse.

    It now transpires that there was an interesting overlap of dates. GB had already ordered the chloroform BEFORE TB put the FSA on warning in the 2005 IPPR Risk and the State lecture. This therefore completes the proof that this deregulation was not reactive, but PREMEDITATED.

    In other words, this Government is 100% responsible for the chaos with premeditation - the only remaining question is whether it has a defence under diminished responsibility. OK, the Regulators are a chocolate teapot and deserve to be dismissed for serious misconduct, but we now know exactly where the fault lies.

    This becomes highly relevant when we consider the statements made by the Junior Minister in the Justice Department, Michael Mills, in a speech made at the National Elections Conference this Monday:


      We expect to complete the remaining Commons stages of the Political Parties and Elections Bill by the end of next month, after which it will be considered by the Lords. We are hopeful that the Bill will receive Royal Assent in the early summer.

      I know that there are elements in the Bill that will interest you particularly as they affect the management of the electoral process. There's provision for canvass forms received back to be treated as rolling registration forms where an election is called during the canvass period. This responds to issues raised by speculation of a general election in autumn 2007 when it was questioned what would happen if people thought they had changed their registration details by returning a canvass form. Clearly that would be unhelpful and confusing for electors and potentially cause more work at a time when your teams can least accommodate it. This provision would go towards addressing that and avoiding any need to send out rolling registration forms where a canvass form reflected changes – as is the guidance from the Commission under current legislation.
      ...
      Whilst the Bill is unlikely to be in place in sufficient time for the [4th - Rahere] June elections (and conscious of what the Gould report said), for the purpose of the European elections this year, we have dealt with the issue for England and Scotland in other legislation.

      Of course, constituencies will have to be the basis for the next general election - whenever that is - and Ministry of Justice officials are working to reduce the risk of postal vote checking issues where it cannot be avoided.
      ...
      We have worked to complete regulations as early as possible with an aim to meet the six-month deadline - we have narrowly missed that but I understand that the regulations should be debated and pass into law towards the end of this month, and they have benefited from the input of administrators as we have developed them.

      Many of you will also be aware that we are looking to a new system for the funding of elections, where they are funded from the consolidated fund. The aim of this is to gain a more effective view of the cost of elections and to ensure that you are provided with the flexibility to manage the budget appropriately.
      ...
      The European elections in June won't be the only thing you are thinking about for the future - we do not know when the Prime Minister may choose to call a general election and that is another challenge for which we need to prepare. As you know, all elections require significant planning and preparation.


    Examination of the "Impact assessment - reform of the Electoral Commission" reveals "It is intended that the Commission should focus on its regulatory role ". This, we know from the above, has been dismounted, however.

    Examination of the "Impact Assessment - Transparency of donations" reveals "we have revised the proposals in the Bill from option 2 [sources of donations over £200 to be declared - Rahere] to option 3 [sources of donations of over £5000 to registered parties and over £1000 to accounting units of registered parties, ie local parties, to be declared. No limit on donations to candidates - Rahere], as this will ensure that a more appropriate balance is struck between transparency and bureaucratic burden ." Once again we see the laws on financing a General Election is being whittled down by the Hampton criteria.

    Now, that reference to the Gould Report's interesting. The Scottish Parliamentary elections in 2007 saw 140000 ballot papers rejected because the voters were confused by the ballot papers which were for two different votes. Gould Report recommended two separate elections should not henceforth be held simultaneously. Therefore, decoding Mr Mills' somewhat opaque comments suggests what he would have said if he dared is, "Although the reformed Election Act will just miss the European Elections on 4th June, it should be enacted in time for the next elections shortly afterwards."

    I wonder what he means?

    As a further enhancement on my point about the interesting juxtaposition between Will Straw, a member of the team who prepared the Hampton Report, and Jack Straw, the Cabinet Office Ministerial Responsibilities list has the said Secretary of State as being responsible for overall strategy, constitutional renewal and party funding. He shares responsibility for constitutional reform and party funding with Mr Wills, so one can hardly think this was a slip of the tongue.
  • Comment number 53.

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

  • Comment number 54.

    NOT THE LABOUR PARTY

    rahere (#52) "this will ensure that a more appropriate balance is struck between transparency and bureaucratic burden"

    There's been an awful lot of windows-dressing legislation over the years. At the same time, some rather odd things have happened to recruitment, retention and promotion within the Public Sector whilst great efforts have been made to make it more 'efficient' and less 'bureaucratic' through PPP and encouragement of 'The Third Sector' (see what happened to the Home Office, and especially Probation) has just further destabilised the Civil Service making it easier to Balkanize Britain in favour of Lisbon-friendly EU NUTS (Regional Assemblies/Development Agencies) 'statelets' and ultimately, corporatization of public services.

    This is the last leg of selling off the UK's 'family silver'.

  • Comment number 55.

    NUTS

    It's worth a thought or two if one isn't persuaded by the use of terms like 'anarcho-capitalism' and 'Trotskyism' (The New Left).

  • Comment number 56.

    Re my #53
    When a set of quotes from a Government Minister's speech at the National Elections Conference (linked to in the previous post) on the Justice Ministry site is moderated, it's something to do with the speech, which is an odd way of moderating. For those of you wishing to see the text, please refer to my #350 on Bob Peston's The Long and Short of Banks 23.1.09 08:46.

  • Comment number 57.

    rahere (#56) Or perhaps the *amount* of text quoted and copyright? I've yet to work out this part of Blogdog's brief.

  • Comment number 58.

    #50 and 51 wisdom dog and johnny zero 66

    We are on the same wavelength I think. The political system has become too 'institutionalised' and is populated by career politicians rather than 'real people' who turned to politics ( ex union leaders or the privaledged of some description) in the past.

    I actually like David Cameron, but you look at his background, privaliged, Eton, Tory think tank, tory candidate, MOP, party leader / PM in waiting.

    It is not surprising he is smooth, a good speaker and rhetoritician, can handle himself in the verbal bear pit of parliament and he is good on camera he has trained all his life to be just that. But does that qualify him to capture the nations imagination and lead us through some pretty fundamental structural changes to come?

    I think not.

    Imagine a parliament populated with succesful buisinessmen, scientists, doctors, engineers and teachers (but not lawyers) who have lived a little and are not interested in politics for the power or as a career or the thrill of debate for its own sake, they are interested in politics because they think it will be a worth while thing to do.

    This is the only outlet I have at the moment, beard 1 alledgedly set up a 'peston corner' forum on delphi forums but i could not find it.

    For now I propose to post more on pauls blog, I think i have it nailed now, Robert Peston gets the scoops and the glory, paul mason does the analysis and digging on a more fundamental level.

    Respect to them both, both are necesarry but I belong here so i am moving house. I will still post on roberts but not so much now.



    Jericoa









  • Comment number 59.

    Tony Blair had a team of 'professional' advisers, in the Treasury, Bank of England and the FSA. He was also, like most Prime Ministers, sat upon by all of the vested interests. I recall it was said of John Major that he too would reflect the views of the last person who sat upon him.

    This is what Prime Minsters are about. They are amateurs who have the bravery or cheek, depending on you view, to make firm pronouncements and decide upon policy, mostly they get it wrong and sometimes badly wrong - see the Poll Tax etc.

    Should we be castigating them for the lack of perfection, or should we considering the role of their advisers - I wonder why none have lost their jobs... yet!

  • Comment number 60.

    brilliant post and excellent comments.

    I've read the post several times-so much info contained within it, without the sensationalism elsewhere on others.

    We need a leader who captures the nation-someone we can believe in-someone who is humble, cares about this country, honest, courageous and straight talking. A true leading light. Not sure I've seen one yet.

    Spin, cover up, rhetoric-none of it of any use nor convincing.

    As a nation, we are far more intelligent than we are being given credit for (Johnny Zero). We have a pretty good idea of what the truth is, but it's highly unlikely we are going to get it. After a while, the lies get so big, the ones telling them are too scared to admit them!

    A piece like this takes great courage to present-the more journalists that do this, the more chance we have of forcing the governments hand.

    As none of us have a cat in hell's chance of getting anywhere in politics cos we're intelligent, hard working apolitical patriots in the main, we need the media to be more like this and less sensationalist.

    The facts speak for themselves.

    Now the media needs to speak for the people of this country.

    Protectionism seems to be used as an insult-surely this is patriotism? Surely we have to look to our own country first, or a least make UK damage control our first priority, then contribute to global issues?

    I have the most appalling sense of impending doom rattling towards us at breakneck speed. There is much that can be done, but isn't.

    To all politicians I say this:

    What point is there in 'saving' your political career when your country is crashing about your ears? Forget ambition-remember who you represent before it's too late.

    This blog is a fantastic start-let's have more honest facts like this please. Expose the whole sorry mess, then we can start rebuilding our battered nation.

    We cannot wait 12 months for an election-look what's happened in the last 3 months.

    We need an election now.

    Let's start the search for a visionary leader now. Reform of our election process needs to me top priority so we can vote in the right person when we find them.

  • Comment number 61.

    The letter below will be sent to my local MP and copied to Sir Victor Blank (non exec direct Lloyds TSB) and J Eric Daniels..exec Director lloyds TSB.

    Dear moderator please note all personal details have been removed so there should be no reason to pull this post.

    Dear (my local MP),

    I have a current account with Lloyds TSB which is at this point in time is 40% government owned (i.e. owned by the people of this country). I recently strayed over my overdraft limit due to the vagueries and spontaneity of Christmas expenditure, I am a normal Human being.

    lloyds TSB informed me by letter that punitive charges of £15 PER DAY, would be applied to my account with a further £20 for every returned direct debit until such time as the situation is resolved due to my oversight. I estimate this will cost me approx £120 this month for exceeding my limit by approx £30.

    As a member of the public and therefore shareholder in LLyods TSB via the government I kindly request that you take this matter up directly with the board of Lloyds TSB on my behalf as my local MP. I would like the following points addressed by the board to its major shareholder (the people of this country).

    Please note I will be happy to pay reasonable administrative charges and interest for my Christmas festivities induced oversight.

    1) How does the banks policy of punitive charges align itself with its major shareholders aims as represented by the government of 'assisting hard working families and getting money into the 'real' economy'?


    2) I see my oversight as being extremely small compared to the oversight of the banks and their management. I would like to know what financial punitive action will be applied to the executives of the banks for thier own huge (economy wrecking) oversights. Note I would expect it to be in proportion to the punishment they dish out on their customers and must therefor be considered fair and reasonable by the directors themselves (1:4 ratio in my case of the value of the oversight to the punishment applied).

    It would appear that it is acceptable in the 21st century for the public to both prop up financial institutions to stop them from collapsing due to thier incompetance while simultaneously being robbed blind by punitive bank charges to line the pockets of their executives.

    Given the obvious gross injustice of this in protest I have transferred my salary as of this week to an alternative, non government owned yet more ethicaly run bank.

    I refuse to pay any interest or punitive charges until such time as my points are addressed as above as a matter of principle. Once we have agreed fair and reasonable charges and interest in the context of a bank owned largely by the people I will happily make those payments ( assuming I manage to hang onto my job that is!).

    I suggest the following action:

    1) All banks where government is the major shareholder should suspend all punitive bank charges immediately. Only reasonable administration charges should apply.

    2) All banks which are substantially government owned should refund all punitive charges immediately backdated to the point when government became the majority shareholder.

    3) I further suggest that the renumeration packages of chief executives of those banks are reviewed in the context of thier extremely poor judgement and performance as noted above and offset to achieve reduced interest payments to those whom are required to pay interest rates above 10% on loans of any kind at a time when the base rate is 1.5%.

    Under the current economic circumstances I believe the above action to be both fair, reasonable and in the public interest during these difficult times and will in some small part assist in increasing cofidence and cash into the real economy.

    I look forward to hearing from you soon.


    Jericoa

    CC
    Executive and non exec directors Lloyds TSB

    Gordon Brown

















  • Comment number 62.

    Democracy comes with responsibility.

    Lots of bloggers are calling for election now.

    Let me share a though expresses by eight years old nephew.

    We have the right to drive a car when over 18 years old and gaining a driver licence, how comes to elected some one to represented us in government and or parliament; we must have 18 years old and nothing more???

    Maybe a more responsible electoral population would be able to elect “descent” politicians as our representatives if we also gain an electoral card to access the right to vote

    Sound right to me that there should be human rights and human obligations.

  • Comment number 63.

    glowingHorizon (#62) That used to be the case when Parliamentary Democracy was first established. Originally one had to be a male land/property owner (which was presumed to demonstrate a degree of competence/responsibility. Over the centuries, more and more were emancipated (especially in the C19th until in the C20th women and young men were given the vote. Cynics point out that the less competent the electorate is the easier it is to hoodwink. The greatest con of all was to get them to believe that they were all equals. It pandered to their vanity/stupidity.

  • Comment number 64.

    INCUMBENTS OUT UNITY - IOU (#62)

    I recently posted regarding the idea of uniting the seething masses in the intent to kick out the incumbent - willy-nilly - at the next election, which should be backed up by returning as many independents as possible. Even as simple intent, this should sow seeds of panic in Westminster. Remember when the Greens started to rise -how all the parties took on a distinct tinge? To this end, I preface my usual cry of SPOIL PARTY GAMES with VOTE OUT THE INCUMBENT.

  • Comment number 65.

    BUT THE BANKS WERE WARNED IN 2003!

    [And #45, #46] What happened as a consequence in 2003?

    Answer: Nothing.

  • Comment number 66.

    Wisdomdog says:

    1. The political establishment will take many years to change; for now inovation must come from a grass roots level and government needs to be bypassed;

    2. Mutual societies like building societies, mutual insurers, co-operatives, the likes of John Lewis are the way forward - support these - the demise of these due to greed lead to the HOUSE PRICE BUBBLE...

    3. [please do not censor BBC] barter with your neighbours i.e. I grow carrots so have some of these for your services cleaning my windows (as you are a window cleaner) - like I'll share my bone with you for a share of your biscuits - Until the HM Govt learns to behave responsibly don't let them have your tax revenue; many civil servants would not hold down a job in the private sector and know this.. this all worked well in Eastern Europe for many years.

    4. We need massive cuts to government spending and I mean dismissing the many suplus to requirements civil servants.

    5. Northern Rock bonuses SHAMEFUL and DISGRACEFUL while NR has hiked its SVR to such an extent that those that cannot re-mortgage face repossession. At the same time NR has offered very high rates of interest to get funds in with a view to HM Govt smelling of roses on repaying all. This has diverted funds from the other banks..

  • Comment number 67.

    Paul

    Jericoa is right in that RP has the Father, background, London based and is a BBC Elite member, like Dimbleby, socialists who went to Oxbridge and have families with lots of dosh, security, safe jobs and index linked pensions.

    Paul has an accent, so not quite so acceptable. ( but a great piece of work here)

    Tigerjayj mentioned that the British are a highly intelligent country and population and I would heartedly agree. However, politically, we are still enslaved to the history and mythas of serfdo. The French would never tolerate Brown and Darling running wild with our country without clear political and economic backing.

    As individuals today in Britain, we are the voting flotsam and jotsam of the Political Elite. They have no respect for us. We are or have been successful business people, or work for ourselves, or are employed in decent professions, or just simply work hard, but we are ignored, treated in contempt, we have no power to change events right now.

    Except if we can get on a BBC Live Bloggers Show on the State of the Nation. I can already feel the rumblings in the Economy, people are worried and getting very scared, pensioners, retired people, young granduates without work, savers particularly are all being hammered, losing hope in some cases, becoming resigned to the barrange of bad News.

    Yet, this is a time of opportunity too, to change things. Only the BBC or the Media can give ordinary people like me any chance to have a real say in what happens next. My pension fund has been smashed up, my sterling savings are next to worthless, in terms of income today and tommorrow, I cannot sell my house to move my wife to a quieter life after serious illness and feel helpless and frustrated

    I know that the Government/BOE and the FSA plus the major Banks, all live in cuckoo land and will protect themselves, whilst we suffer the real damage. However, if the BBC starts engaging with more ordinary people, who are both intelligent, experienced and qualified to speak about the State of our Nation, economically, politically and socially, so many others like us bloggers, would join in.

    I agree too with other bloggers, that you present a more honest and clear case here Paul and wish you well, I shall be watching this space. As a child born in the War, suffering rationing, few possessions in the fifties, with a Military Father abroad, I have seen tough times. The times ahead I feel are going to be pretty rough for anyone under fifty or so in this Country, it feels like a Nation of Zombies walking in the night, as our currency falls, week by week.

    I noticed a report today that the exchange Bank, www.zopa.com is doing well, it offers a very interesting concept for Savers

  • Comment number 68.

    what's happened to the moderators? Is there anyone there?

  • Comment number 69.

    #67

    Didn't NR have the highest rate of repossessions? Repaying the government early?
    Bonuses for early settlement?

    Blood money more like!

    Would have been better to pay some mortgage payments to help avoid repossession!

    Totally appalling. I wouldn't have taken it. The recipients of that bonus have at least got a job and a home still. Unlike the repossessed dispossessed.

    I'm furious at the duplicity the government shows-heaven only knows what a repossessed family must feel like-2000 pounds would be a fortune to them.

  • Comment number 70.

    moderation taking over an hour ?

    Oh come ON! This is ridiculous!

  • Comment number 71.

    #67johnnyzero66

    Your integrity shines out of your post. What a contrast to what has become the ruling elite.

    The very best of British to you.


    Jericoa

  • Comment number 72.

    21 Friendly card

    Margaret Thatcher realised the working man was highly intelligent and went all out for support via a home owners charter.

    Tony Blair saw what happened and deliberately skewed old Labour to be attractive again.

    Gordon Brown realised NuLab would be found out and deliberately set about creating a huge state dependent group in the hope they could stay in power on its back. The bursting of the credit bubble has meant they might not stay in power. But it is a big maybe. The state dependents and the natural electoral advantage in the current constituencies may play into NuLabs hands.

    The pain that will need to be inflicted and the manifesto requirements to explain this might frighten sufficient voters, and with voter apathy GB and the Lib/Dems might, just might, gain coalition powers and then heaven help us all.

    Incompetence and sleaze may have been the straws that broke the Conservatives but even John Major got in once more against the odds.

    Be warned

  • Comment number 73.

    sosraboc (#72) "Margaret Thatcher realised the working man was highly intelligent and went all out for support via a home owners charter."

    Nonsense. All the research shows that there is a positive correlation between class and IQ, and that IQ drives SES because it's genetic. Thatcher and Joseph were Hayekian anarchists interested in deconsrtructiing the Welfare State, i.e asset stripping. By flattering the working classes into believing they didn't need a nanny state which had already been paid for through taxes they indebted more people, and got more workers out spending money (especially women). The same thing was done with the Means of Production, it was sold off. The Financial Sector and canny entrepreneurs benefitted through deregulated usury which New Labour continued until the bubble-economy finally burst and everyone saw what a White Collar Crime it all was. All talk of 'meritocracy' was nonsense, it just increased the divide as even Young warned it would!

  • Comment number 74.

    THATCHER STRATEGY (#72)

    I have always assumed that 'right to buy' your council house at a silly price, was a Thatcher trick to lumber union members with mortgages owed to hard-nosed building societies (as opposed to rent owed to paternal councils). A mortgage is the best union buster ever.

  • Comment number 75.


    Looks like you are an adherent of Hans Eysenck and possibly an incorrigible snob.

    The jury is still out on his conclusions.

    Intelligence is NOT merely a matter of IQ and I know I would much rather be on my desert island with what you clearly regard as lower class artisans than a bunch of other worldly high IQ academics.

    Whilst I accept adding “highly” to my sentence was probably incorrect, I stand by my analysis.

  • Comment number 76.

    sosraboc (#75) This has nothing to do with personal beliefs or preferences - it's a well estabished statistical fact. You would be wise to spend some time reading 'The Bell Curve' (1994) to start with, and you should not post factually erroneous personal views expecting them to be respected if they are false. If someone posted a personal view that the earth was flat or that the moon was made of green cheese and then argued when corrected, abusing their critic, they should expect severe criticism. You've got off lightly. Consider this a benevolent public service.

  • Comment number 77.

    THE TRUE COLOURS OF POLITICAL CORRECTNESS

    sosraboc (#75) Go and look at who the sub-prime mortgage sharks essentially preyed upon, and give some serious thought as to why the facile, totally untrue, notion that all classes/races are equal in intellligence/ability has been such an egregious, expolitational, lie, which has so severely damaged Atlantic, Liberal-Democractic, economies.

  • Comment number 78.

    sosraboc (#75) "I know I would much rather be on my desert island with.."

    How would you get there? Furthermore, consider what enables you to upload your posts here. Would you be happy for 'artisans' to take your gall bladder out, fill our teeth....

    Given time, and the way our demographics are going through high differential fertility, low indiegneous TFRs and lots of low ability immigration, you may not have to get to a desert island, we'll have an 'Idiocracy' here before too long - some (e.g. Barrie) seem to think it's here already.

  • Comment number 79.

    77

    BNP?
    National socialist?

    It is fascists that are the great danger.

    You should study your statistics and not be over dependent on the bell curve.

    Read Talebs works; if he is not the wrong race of course.

  • Comment number 80.

    If not too deep for you do a little study on this,
    https://www.riskmetrics.com/

  • Comment number 81.

    sosraboc (#80) You presume too much, and have learned too little. You should learn to recognise when to benefit from correction by those who know better than you do.

  • Comment number 82.

    IMHO everyone has intelligence in one way or another-not necessarily academic.

    The onus is on the individual to use it not just for themselves, and on companies to see that intelligence and put people in positions to UAE their strengths for the good of everone in the company.

    Using intelligence for personal gain will ultimately leave such a person isolated by the very nature of our society being based on social behaviour.

    Sort-I'm too philosophical on a Sunday pm!

  • Comment number 83.

    Tigerjayj (#82) "IMHO everyone has intelligence in one way or another-not necessarily academic."

    Well, it's not just your HO - as IQ is normally (Gaussian distributed with a mean of 100 and SD of 15), what you say is universally true. Only those with avove average intelligence are ever referred to as 'academic' these days, 30 yers ago, it would be only those with an IQ of at least one Standard Deviation above the mean, and before than getting on for 2 (either way, it was a much smaller proportion of the population which was deemed 'academic'). There are not, despite popular fads spread by some psychologists who really should know better, 'types of intelligence' or 'muliple intelligences' (other than sub-factors which together account for 'g'). Such talk goes some way towards sustaining the anarchistic equalitarianism which has been largely at the root of the problems which this thread indirectly addresses and which those who have been looking at the demographics for some time now, have warned would lead to socio-economic disaster. ETS in Feb 2007 was just publicly stating what many people working in this field have been saying amongst the cognosecenti (in books and articles) for many (as some readers of the NN blog may now know).

    Those who think that they know better/otherwise simply don't understand what they are being told, abd won't be told either - they simply don't know the data on both sides of the Atlantic. Those who attibute this attempt to wake more people up to this as it being just a personal, idiocyncractic, political agena, are being naively taken in by what has amounted to systematic censorship, as this work is politically incorrect simply because it threatens the economic interests/policies of those who have been busily making money through taking advantage of human diversity, vanity and naivety.

  • Comment number 84.

    83

    I started to open your link.
    My firewall allerted:

    warning: the web page which you are about to visit may attempt to request your personal information (such as passwords, credit card numbers and social security numbers) for unauthorized use or may otherwise attempt to harm your computer.

    Malicious web sites can use this type of address in order to disguise themselves. The destination may appear to be:

    %20http

    but the actual destination is:

    %20http

    Any explanation?

  • Comment number 85.

    THE MISSING LINK (#84)

    Google hints it is an ETS page; perhaps 'Perfect Storm' often linked by JJ?

    I note both academics and artisans get an airing above. I fall roughly half-and-half, hence my self applied 'Smartart' as a nom de blog. (It makes me wonderfully - almost a saint - impartial.)

    Please keep the dialogue going, I still have not made up my mind.

  • Comment number 86.

    sosraboc (#84)

    This has happnened a couple of times recently when I've posted a link. A space (you have highlighted it) has found it's way into the URL at he beginning. I'm not sure how this has happened. Here is the paragraph again. Look up 'America's perfect Storm' and be sure to look at the Newsroom tab. This is the largest educational testting/research body in the world.

    //
    Such talk goes some way towards sustaining the anarchistic equalitarianism which has been largely at the root of the problems which this thread indirectly addresses and which those who have been looking at the demographics for some time now, have warned would lead to socio-economic disaster.
    //

    This trend was discussed at the end of 'The Bell Curve' in 1994, the syllogism having been commented upon in teh early 70s by Herrnstein, who was not the first to cmment. It goes way back to te 1930s in the UK. Since TBC it has been the focus of much research by others who have made concerted efforts to warn governments on both side sof th Atlantic (which is why some of the policies on social welfare were implemented under Reagan - see 'Losing Ground').

    These measures of individual differences are constructed to partition the population along a Gaussian continuum. It has nothing to do with race per se, it is more about gene barriers (highlighted by race and sex), classes of behaviours, the fact that behaviour is an expression of genes with phenotypes becoming more and less frequent in the population as a function of differential fertility rates.

    I suggest that those interested in the details click on the username and use a skip of 10 in the header to look back through archived posts as I am repeating myself (again).

  • Comment number 87.

    barrie (#85) You, etter than most perhaps, should appreciate by now that your or my personal positions in this are not a basis upon which to make any rational decision. The facts of the matter are independent. It worries me that so few who post here explictly take that as read. Maybe this is not the case amongst the non-posters, but I fear it may be. It's a very sad sign of our 'I want it now - me generation' (which could also be called the 'arrested development', 'narcissistic' or 'dumbed down' (dysgenic) generation that this disposition is expressed so much without shame/embarrassment, but that itself is one of the ugly, incorrigible features of narcissisim (which is more frequent in dysfunction families, of which we now have a surfeit). The fact that it is incorrigible makes me think that it must be genetic, and that this is spreading in the gene pool.

  • Comment number 88.

    REPETITION HESITATION DEVIATION (#86)

    "I am repeating myself (again)."


    Hey JJ! Repetition has strong historic precedent - we are all goose-steppers! I have never known you to hesitate; and as for deviation (as Einstein so rightly put it) it is referenced to one's point of reference i.e. self. As Fiona Bruce says, in that infantile BBC-speak: "Where YOU are!"

  • Comment number 89.

    Paul

    I think the elephant in the room is the unsustainable nature of economic growth in itself as a means of creating prosperity, and what is prosperity?

    This crash is asking us this question.

    What ever China does with exchange rates or other such measures it will make no difference.

    For arguments sake lets say we now only need to expend about 8% of human labour in feeding ourselves, lets say 15% to include energy needs and lets up that to a huge 50% to include clothes and general infrastructure ( water, sewage, transport, education, defense, justice, healthcare etc).

    The remaining 50% (say) of human labour is largely involved with producing things we do not really need for our day to day survival and comfort, often at the expense of the environment.

    On top of that, all the time we are producing the things we dont need and the stuff we do need ever more efficiently on a continual basis. Economics demands that in order to generate profits / plough some of it back into innovation /more efficiencies etc

    Here is the rub.

    The planet does not have enough resources to keep on producing 'non essential stuff' exponentially in order to keep everybody in work to balance the continued improvements and efficiencies the current economic model demands.

    The job of the current economic model has been completed. It created innovation and efficiency by harnessing the power of human greed. The point has now been reached when human greed has taken over the system to keep it functioning and the system is breaking down because of it and has become horribly imbalanced.

    We have, as human beings, become too efficient and automated for the existing economic model to ever work long term to keep everybody employed.

    This is increasingly being expressed as an ever volatile underclass on subsistance benefits (the people who used to plough the fields) and an upper class who, for example, own a farm capable of producing enough food to feed 1,000 people but only employs 20.

    It does not work.

    It is not balanced.

    For example.

    The guy who owns the farm is incredibly rich.

    His 20 employees are relatively wealthy.

    The 979 people his farm feeds live a subsitence existence.

    The efficiencies in production are ever more generating wealth for a 'super rich elite' but that does not generate work for grass roots people to do, sidelined to live a subsistence life on benefits with eyes fixed on the super rich, a position they can, by the very nature of an ever efficient system, never obtain.

    In the future, increasingly, everybody will have to do less. In years gone by it took up almost all human labour just to feed ourselves, now it is a tiny proportion of our activities.

    Providing some cross cultural and religious consensus is reached to control global population we should all be able to work less, enjoy our families and friends more and the things that really matter in a sustainable way..sounds quite nice.

    The worlds is not built to function that way at the moment. There will have to be a global consensus accross nations and a desire to make the world a sustainable place for all to live.

    That will need religious compromise (population control) and political and cultural compromise such that there is a general acceptance that we all need to find a way to be happy with less ' stuff' and in return we will all have more time with our friends and families.

    The grand opportunity before us is to invest the last of the existing global economic models power to create that world.

    That means huge investment in sustainable energy production, food and basic needs (sustainable transport, clean water, functioning sewage systems) and education ( particularly basic hygene and population control) on a global scale. Everybody needs to sign up to this.

    The current economic model has created the efficiencies and the technology and the knowledge such that there is no longer any reason to fight for resources or see children starving to death or drinking filthy water or adults murdering each other.

    That does not have to mean we will live in a bland world either, prosperity and recognition will be measured in terms of creativity resting on an understanding of what we are and how the world works, not money in itself.

    The wealthy should be those who create something of real value. I have no problem with Bill Gates wealth, I have a big problem with Richard F Fuld jnrs wealth.

    Money was created to oil the wheels of a mechanism to enable us to become more efficient and create a world where all our basic needs can be met. That job of work is done, now it only feeds that which has an unending appetite. Human greed.

    This crash was ineviatable. You could even argue it is fortunate it has occured as soon as it has.

    The sooner the world understands its root causes and starts to make decisions accordingly the better.

    We need to preserve our core science and engineering skills at all levels through this turmoil to do it.

    I am going to make a cup of tea now.


    Jericoa





  • Comment number 90.

    BARRIE (#88) "as Einstein so rightly put it) it is referenced to one's point of reference i.e. self."

    Actually, that isn't true. Relativity Theory is somewhat badly named as it is really all about INVARIANCE. Relativism is a nonsense as Hilbert Space is really all about a search through N-dimensional vector space for invariance, as is the search for scientific functional relations (laws) which are invariant as we change parameters or reference points (variables). In the analyses above, the N dimensions tend to be in multiple/logistic regressions, discriminant function, or factor, spaces, but it's the same basic idea - it's just that the measurements are much more difficult for all sorts of reasons, some technical, some political, in behavioural-genetics.

    The bottom line (which I think you now appreciate), is that the conventional, popular, 'wisdom' is as wrong as the notion of the geo-centric solar system once was,a dn it as political as it is the death knell of Lysenkoism and 'environmentalism' in the nurture sense (bar Child Protection and related efforts). This terrifies many Liberal-Democratic politicians (which does not single out the Lib-Dems I hasten to add).

  • Comment number 91.

    Jericoa (#89) It would be good if you abandoned the 'current economic model' altogether as some of the Austrian/Chicago Schools premises are now known to be empircally false. That's why Simon and more recently Kahneman got their Nobels, although I think both really owe what they did to others behind Behavioyral Economics which is essentially Skinnerian/Herrnsteinian/Chungian. This is what I am tacitly referring to in these posts. Most universities in the USA and UK have long been dominated by anarcho-capitalist economists over the years, just as our schools are currently dominated by unwitting Marxists, and they are now being induced to take on 'Future Leaders' (Little Red Guards/Commissars) loyal to New Labour's Lysenkoist vision of education. If you re-read your post, look carefully for the tacit assumptions - we now know these (equalitarian/aspirational) premises to be false. The Neoconservative incumbents don't like this as they will be out of a job once this is more fully appreciated. It will require revolutionary change which will de-skill and disempower them.

    Take on board the attrition rate in the European population through chronically low TFRs, female-emancipation/education and the booming birth rates in Non European dominated countries (excluding the similarly blighted East Asian Liberal-Democracies which had this dysgenic curse thrust upon the after WWII) and note a) the high inverse correlation between mean IQ and TFR and b) the high correlation between mean IQand GDP.

    It is time to ditch the conventional model.

  • Comment number 92.

    CHASTENED INFORMED BUT NO WISER

    Dear JJ, you should remember my limitations and ignore me when I am being capricious.

    Your dedication and scholarship are not in doubt; self-constraint just might be. (:o)

  • Comment number 93.

    barrie (#92) My syntax errors/typos are appalling though ;-)

  • Comment number 94.

    For once Kaletsky is spot on today with his piece in the Times, which shows exactly where all this new money came from.

    His example shows how £1M becomes £6M in a single transaction.

    However I was confused to see that according to his table, 'financial services' accounted for about a third of GDP when I'm sure I read recently that it was only about 8%.

    Maybe somebody can clear that one up.

    Politicians, apart from maybe Ken Clarke and Vince Cable, know nothing about finance, as Justin Urquhart Smith bluntly pointed out in a recent TMF podcast.

    Their 'skill' is in convincing us that they do and it is amazing how long they can keep up the pretence for, and then of course, they are rumbled by some fiscal crisis and then they are 'out' of Government and the other shower are 'in' and the grotesque charade continues.

    There must be a better way.

  • Comment number 95.

    #91

    Thank you for such a comprehensive response, I am an economic and socio-political analyst of the armchair type, my day job has nothing to do with these things but I am facinated by them.

    I tend to simply 'say what I see' from my perspective and knowledge, consequently you will need to help me out alittle here, I need a couple of gaps in my knowledge filling in.

    TFR? (google search came up with TFR racing and Traffic Film Remover!!)neither of which seemed to fit the bill!

    Lysenkoist vision?

    Thanks


    Jericoa

  • Comment number 96.

    Great post Paul; this really should be investigated further.

  • Comment number 97.

    As Jericoa (post 61) seems to be repeating their bank charge spat on every blog they can find I feel inclined to repeat my original comment and advice from another blog it was posted on.

    Why is it that banking is the only one where customers feel they have the right to remove move than they are entitled to without recourse - and yet still claim Banks are and have acted improperly.

    I suggest all their blog comments are viewed with an eye on their jaundiced perspective

    My original reply said.........................

    I have read your previous comments in other blogs and had already put your views about banks and Banking very much down to a bad personal experience.

    So thank you for now confirming my earlier thoughts with your recent gripe

    Unfortunately, just at the moment it is open season for any one with any semblance of a gripe, whether that be left wing politicians, customers or journo's to have a pop and sully the public view even further. It is their opportunity to finally have "a go" when they are in a weaker position.

    OK ... if your expenditure had been maintained within your income and you had not overspent then you would not be in this position in the first place. The responsibilty is Yours not the Bank's, in the first instance

    If there was a risk you were going to overspend, inadvertantly or not, after all you knew Christmas was coming 12 months ago, a quick phone call would providing your credit rating is good have secured a ?50 higher overdraft (if you had one) thus avoiding the prospect of all those charges.

    If on receipt of the letter advising you of YOUR oversight/error you returned your account to order you would have suffered no further charges, as I understand the way the system works.

    But no you choose to ignore all the earlier letters and confirmation notes that the bank no doubt had sent you advising you of the terms and conditions of your account and the penalities, take it upon yourself to take money that was not there for you and then have the temerity to complain.

    Personal responsibility for their actions is what you have been demanding of the bankers - how about taking the same approach yourself.

    They may be servants of the public and need to act fairly, there is a banking code etc to see to that and time will tell on the level of charges issue, so we will have to wait for that.

    However, you would'nt expect to go into a supermarket pay for 1 bag of turnips and walk out with three - the consequence of your actions there would be a prosecution for theft and a fine.... even if the turnips were only a quid a bag - but it seems to you Bank's are "fair game" for that sort of activity

    Just a view from the ranks of the unemployed.

  • Comment number 98.

    Jericoa (#95)

    TFR = Total Fertility Rate (the mean number of offspring per females 15-45 for a population). The UKs is abput 1.8 - most of Eastern Europe is between 1.1 and 1.3, S Asian countries can be as high as 5. A TFR of 2.1 is what's required for a population to replace itself. A TFR of 1.1 means a population can halve in a generation (30 years), 1.3 in 60.

    Lysenkoist vision = in education, the (Marxist) idea that teachers can raise attainment or reduce/remove attainment gaps between ethnic groups (or the sexes in some subjects) through enrichment/improved teaching more money. The evidence is that this is not possible as ability appears to be largely (up to 80%) genetic, and that the remainder is attributable to physical damage, reducing ability. In the 1930s, the USSR banned genetics and testing. In the West, it is often tacit in the education and helping professions that behaviour can be changed by environmental interventions - there is little or no evidence that this is in fact true.

  • Comment number 99.

    #97 wholistens

    Crikey I'm being stalked!

    I made a silly mistake, I get hammered, that is not in the same ball park as the systemic corporate greed among banks keeping the overstretched in society subdued.

    As a little background evidence lets not forget their illegal money laundering activities as exposed in the USA recently The Knights of the realm in the boardroom dont have much of a corporate social responsibility track record in line with their titles do they?

    I think to compare my mistake to a'theft' and subsequent fine in a supermarket is ridiculous. You do not get arrested and heavily fined for making an honest mistake in the real world...only banks get away with that....for now.

    You also make alot of assumptions about what I did in your post, which is not the case but the details are for me to know only.

    I hope things get better for you soon, we are never going to agree on this I can see but we are all in this mess together at the end of the day. In truth the banks are just reflecting what society allows them to get away with, they are money making busineses after all. However I have to go through the banks in order to dig at my deeper concerns. Please try to see my postings as part of that bigger picture also.

    all the best

    Jericoa









  • Comment number 100.

    #98

    Thanks for that, will study a little more and come back to you on it. Fascinating stuff.

    Jericoa

 

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