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Decision time?

Nick Robinson | 17:12 UK time, Tuesday, 7 October 2008

The markets, the public and Parliament are all waiting to see what emerges from the 5pm meeting of the PM, the chancellor, the governor of the Bank of England and the chair of the Financial Services Authority. How they must wish they lived before the age of globalisation, rolling news and the web.

Mervyn King outside 10 Downing StGordon Brown is fond of recalling the story (told to him originally by Ed Balls) of a similar momentous moment in British economic history - the decision to devalue the pound - to illustrate how the pressures on politicians have changed. The Brown/Balls account turns like this:

On 29 July 1949, the cabinet met to decide that devaluation was necessary but did not act straight away because the Chancellor, Stafford Cripps, was convalescing in a Swiss sanatorium. The then Prime Minister, Clement Attlee, wrote a letter to Cripps and asked Harold Wilson, who was going on holiday nearby, to deliver it. Cripps told Wilson that no decision should be made until he returned to London. On his return, he spent a few days arguing unsuccessfully for delay. The cabinet confirmed its original decision on 29th August. The devaluation was not actually enacted until 18th September.

So, the 1949 devaluation decision took nearly two months. The 1967 devaluation decision took around three days. The 1992 decision to exit the ERM took just hours. If, and it is still an if, today's meeting decides anything on the same scale, the government will, in theory, have until first thing tomorrow morning to announce it - that's when the London Stock Exchange re-opens - but they'll have just minutes if they don't want any delay to impact on Wall Street or the Asian markets.

I say "if" because Downing Street insists that this is not an emergency meeting and was scheduled some days ago. We'll see...


  • Comment number 1.

    The idea that this is not an emergency meeting is laughable. The trouble is the words 'urgent' and 'emergency' just add to the febrile atmosphere that already exists in the money markets, so no one is going to admit the state of panic and desperation that exists in government.

    You're right Nick, everyone is waiting with bated breath... and unless something reassuring comes out of this meeting, you can be sure that the downward pressure on shares will continue... a bottom point for the FTSE100 of around 3500 does not look unrealistic at present...

  • Comment number 2.

    why do lloyds tsb have money to buy out HBOS, yet need funding to continue their business?

    How can barclays find funding to buy up parts of lehman brothers, yet at the same time, need taxpayer help to keep their business going?

    why are some countries able to offer a 100% deposit guarentee yet others are not, as its against EU rules?

    three questions that highlight perhaps, how confusion is currently king and once again its the individual who pays the price?

  • Comment number 3.

    Neither Brown, Darling or Balls inspires confidence do they? No wonder the markets are jittery.

    Mervyn King I trust - but - he's the only one.

  • Comment number 4.

    So Nick guns his turbo-media engine.

    "War cabinet".



    Here's another one for you: "Calm".

    I suppose, it's too early to hear what plans Mandelson has for business but the sooner the "authorities" and "high attention earners" are pushed to the back page the more folks can focus on what's important.

    This comment brought to you by the letter "P" and "Patience".

  • Comment number 5.

    You and the press are not helping matters with this sort of commentary.

    Oh no I have agreed with no 4

    How did that happen,

  • Comment number 6.

    You and the press are not helping matters with this sort of commentary.

    Oh no I have agreed with no 4

    How did that happen,

    Yeah, we're a real Bert and Ernie.

    Or is that Hippo and Dog?

    A wim-a-weh, a wim-a-weh, a wim-a-weh...
  • Comment number 7.

    The cunning plan has gone Nick.
    Your patience is thin and gloomy.

    Let the tranquil serene goal of togetherness
    calm your mind.

    Peace be with all the troubled people........

  • Comment number 8.

    Brown and Darling are more interested in bottle banks.they can raise revenue from them.

  • Comment number 9.

    The trouble with getting into this blogging thing is that you end up (like me now) typing something in and publishing it to all and sundry even if you haven't got anything new or interesting to say.

    Going to try like mad to stop.

  • Comment number 10.


    I'd like to know that too.

    I keep hearing that the banks have money, it is just that they won't lend it to each others.

    (Mind you there are so many lies, and so much misinformation around - lies to improve 'confidence', which when found out do exactly the opposite...)

    However the examples you cite do suggest that there is money around... So forget about why they wont lend to each other... Why do they need to borrow at all?

  • Comment number 11.

    Regardless of how we'd like the markets to respond, we know that they will panic and crash lower unless Downing Street stops dithering and talking about acting, and actually takes some substantive action.

    Appeals for calm are about as effective as Gordo's appeals for "morals". Apparently he missed the first rule of capitalism: eat the weak.

    I note that Barclays came out of last night's not-a-panic meeting claiming that they didn't need money. Implicit in that is the plea: eat RBS and LloydsTSBHBOS first.

    Perhaps we'll go into this meeting with 4 major UK banks, and emerge with one. More likely we'll see another plan to hire some Old Boys who will come up with the real plan. Clever chap, Mandelson, keeping his head down so that they can't lump the blame on him straight away.

  • Comment number 12.

    "We'll do whatever takes"

    "Our economy is sound and better placed than the U.S. to withstand the credit crunch"

    "The U.S. problem was brought about by the problems in the sub-prime market, we don't have such problems so the impact of the credit crunch will not be so severe in Britain"

    Recognise any of these? All uttered by our illustrious P.M. within the last 4 weeks.

    Could you ever imagine two more incompetant souls than Brown and Darling and the helm of such a crisis?

    IMO Governments are powerless to stop this "depression", the more they throw at it the more they'll waste e.g $700 billion from that intellect Bush! Let the markets prevail, they will anyway, without wasting any taxpayers money on it, money this government just doesn't have.

  • Comment number 13.

    Yes, the time-scale for responding to events has been truncated by communication systems getting more sophisticated. But surely that just highlights the need for decisive action, taken as soon as is possible. We currently have dithering.

  • Comment number 14.

    I would like to know the decision is between the PM....And the rest of the party!

  • Comment number 15.

    Even on matters of less complexity than this current crisis, and with less at stake, our PM has a propensity to set himself adrift on sea of possibilities. Goodness knows how he is coping with this lot.

    It is a very tough assignment with no easy or safe answer but it requires decisiveness.

    To paraphrase one G Brown - this is no time for a ditherer

  • Comment number 16.

    I just a wim-a-weh.....from the truth....


  • Comment number 17.

    Tried all afternoon, but I really can't think of any 2 men more incompetant and dithering than Brown and Darling to try and deal with this.

  • Comment number 18.

    It is catch 22. The banks need money because they are essentially bankrupt. The size of their non-performing assets are so huge (tens of trillions of pounds?) that the government will have to print money on such a scale as to devalue the pound by a huge amount and if they do that the bank's' losses will be even bigger and hence the government will have to print even more money.......

    Hence nothing can be done except protect savers and depositors even though this will stretch the exchequer, but it is essential. The banks will just have to flounder as the hole that have dug is so gigantic as to make governments impotent in any form of rescue.

    This is all supposition - but if it were not the case the rescues would have already taken place wouldn't they? (Or are the Treasury, the FSA and the Bank of England just slow witted?)

  • Comment number 19.

    Dear Nick,

    This is more than an emergecy meeting, it is catastrohic,, there is no doubt now that this crisis is going to get ten times worse, as recession has been announced, The IMF says its going to be severe, The cbi and Unions predict hundreds of thousands of job losses, and The welsh assembly is going to use £200,00,000 of its reserves to maintain services.
    Politicians are causing mayhem, by their falling to grasp the problem, in its entirity, they are acting Nationally instead of multi nationally.
    It is time to batten down the hatches we are in the eye of the storm right now, and coming out of it over the next three years is going to be very painful, thats IF the politicians have found the cause, and rooted it bout, Because a terrorist act on national economies cannot beruled out.

  • Comment number 20.

    we await a decision from this group who to be honest make clowns look inteligent and thats saying something.
    this is a global crisis and the nation is in jepardy thus emergency powers should be enacted to nationalise inportant resources like power water banking transport etc, this foolish government should be disolved and an all party government placed in the nations interest as was enacted in 1939.
    a government to get us through these troubled times not as we have at the momentparties fighting for power, greed and overpayment, getting this little island of ours further into problems.
    brown and all this government should stand down with whatever dignity they have.

  • Comment number 21.

    12 Branditony

    The answer to your question in Para 5 is Cameron and Osbourne, by a country mile.

    Can you imagine the impact on our banks 12 months a go if we had followed that pair's response to Northern Rock

  • Comment number 22.

    " It's not an emergency meeting " Sounds a bit like Harold Wilson"s " This will not affect the pound in your pocket ." Why can't they for once tell it how it is? It might inspire a wee bit of confidence in someone. It's hard to believe that this nation's future is in the hands of this bunch of incompetents. They seem to be incapable of making any decision without the approval of Sarkozy and the wee German woman. If they have to bale out the banks, why dont they say so? All this uncertainty is making the situation worse as can be seen from the assualt on the RBS today caused because they were one of the banks asking Brown and Darling to do something; anything, but something. Brown seems to think that if he says nothing definite and stays out of sight, like Adolf in his bunker, when he gets up in the morning, all will be well.

  • Comment number 23.

    6. Charles_E_Hardwidge

    LOL ..... very witty.

    We can be Hippo and dog tonight.

    Back to Bert and Earnie tomorrow.

  • Comment number 24.

    Dithering or Considered

    Decisive or knee-jerk

    Whatever decision is taken people will spin it how they wish. We all know the ones on here who will select their anverbs according to their politics, including myself.

    Some just can't admit it.

  • Comment number 25.


    now it is Prime Ministers Questions tomorrow. Bet Gordon will really look forward to that. probably a government announcement just as the market opens, then to every question from Dave Cameron he will say and what would you have done.

    In the meantime some of us have known for ages that it will have to be some sort of debt for equity, but then what, government appointees on all the boards deciding remuneration and dividend policy, and pensions.

    I wonder if somebody would explain that this is nationalisation without compensation. This is just so not fair, if a bank has run itself well and kept remuneration within certain limits why should they have to compete against those banks which have been profligate. This will be seen to be a disaster, I will not have anybody saying in a few years time that you are talkig with the benefit of hindsight, the policy which I think this parliament will allow to go through will be an unmitigated disaster.

    Furthermore, where were the experts saying that the banks were following an atrocious policy, these people are not experts, they really don't have a clue. Why aren't the accountants being taken to task, what were they being paid for, to do nothing and just sign off the accounts and valuations.

    In the meantime don't forget Iraq and Afghanistan, I will not let them disappear off the agenda.

  • Comment number 26.

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

  • Comment number 27.

    16. derekbarker wrote:

    Lord knows what.


    Try typing slower and try to
    include all of the words that
    the temporal area in your
    cerebral cortex is thinking of at the same time and in the correct order.

    It Helps a lot in here

  • Comment number 28.

    Devaluation would reduce the Debts (all debts) by the same % and would make our exports cheaper = less unemployment.

    Sterling would also be cheaper to buy and when the BOE reduces interest rates on Thursday by say .50 % points it would not scare investors away from Sterling as it would be cheaper to buy anyway.

    We shall see Nick.

  • Comment number 29.

    Come on moderators wake up, or do you not want anything on here before the official announcement, must let the Beeb have their exclusives mustn't we.

  • Comment number 30.

    # 3

    Au contraire. As long as the United States, begetter of this disaster, remains rudderless, Brown and Darling can make all the running.

    And to all the fusspots who were getting their knickers in a twist whilst the meeting was still going on, would you calm down.

    We now have white smoke - and its not going to help any of us to panic and take swipes at the government just for the sake of it.

  • Comment number 31.

    No12 Asks if we can imagine any two more incompetents than the current Prime Minister and Chancellor to be dealing with the crises.
    No problem, how about the two overgrown schoolboys Cameron and Osbourne, or perhaps Boris and Lord Archer.
    The list is endless, Derek Conway and Lord Black, Neil Hamilton and David Mellor, Lamont and Aitken just to name a few.

  • Comment number 32.

    Charles, are you a satirist? I have been following your comments after the reshuffle and around the present economic crisis and can only assume that you are making a social comment on the blind devotion of Labour supporters.

    I mean really to think that now is a time to stand behind Gordon Brown (a man who is running away from personal accountability for this situation) and to show patience is crazy.

    We are experiencing the worst economic crisis certainly of my generation and definitely of this century. Decisiveness and speed are the priority now, not dithering long windedness.

    Inaction has led to problems on both sides of the Atlantic.

  • Comment number 33.

    Not sure if the mods have gone out in sympathy with the Scottish signalmen.

    It's hard to make a transition from one NR blog to the latest edition. They do tend to encourage a lot of fairly random stuff, anyway.

    "I just a wim-a-weh.....from the truth...."

    That's a transition from the previous blog.

    Why don't we just pop back to the asylum for a nice cup of tea.

  • Comment number 34.

    Having watched the coverage on both BBC and ITN at 10, I must say I have no confidence whatsoever in Brown, Darling, the FSA fella or the Bank of England.

    Brown has huge bags under his eyes, and Darling's face was a picture of weariness. The FSA chappie babbled on about something. All totally inadequate and uninspiring. Pity help us, a bunch of ditherers without equal.

    Richard Branson was the only one to say anything useful... "All deposits with UK banks should be fully guaranteed... now!"

  • Comment number 35.

    I can only judge the ability of British banking by the service I receive at a personal level. I'm not an economist, nor a businessman, so can simply assess whether an institution is efficent and functioning by what I experience at a personal level.
    Today I visited the building society where I have had a deposit account for several years. On Thursday last, I notified them that I wanted to withdraw £2,000 and would be in on the Saturday. Unfortunately, on Saturday, I had an accident and could not travel . It is impossible to phone the Building Society, since they keep their phone number secret, and so I couldn't get there. Today, Monday, I went in early in the morning to collect the money, and was told I was too late, and must reapply to withdraw my own money! I asked the clerk to speak to her manager, which she did. I am an elderly person, and still recovering from my accident and of course there was no seating available. The clerk returned and said "Manager says no." I then told her I would immediately close the account, which I did. I received a cheque for the monies due to me, but no attempt was made to persuade me to remain a customer. The manager stayed hidden from view, and there was complete indifference that a customer had been lost.
    I wonder whether this is the attitude of banks and financial institutes in general. If they lose customers, lose profits, do they expect the government and ultimately us, the citizens to bail them out?

  • Comment number 36.

    The longest suicide note or the longest notice of a manifesto commitment 1983-2008 – Long Live Clause 4 - I am glad Tony Benn saw it in his life time.

  • Comment number 37.

    its a question that provokes labour supporters to vent fury, but what would have happened if the government had not propped up northern rock with taxpayers money?

    i ask as all around blogs and "expert" comments at the time suggested that it would perhaps have been better to let the bank fall.

    with the benfit of hindsight, would it have been worth taking a short term "hit" and big bust in one go, or have we fared better by dragging out the inevitable?

    i can see both sides of the argument to be fair, but it must be a case of "lesson learned" or we could face this situation again in the future.
    personally i would prefer the FSA to be gone, leaving discussions and decision making down to the Bank of England and the government.

  • Comment number 38.

    #12 - branditony - "Let the markets prevail, they will anyway, without wasting any taxpayers money on it, money this government just doesn't have."

    I sympathise with this comment, but I can just hear the Labourites crying "callous, uncaring Thatcherite" to suggest such a thing!

    All the boasting, bragging and bluster of New Labour over the last decade would not have been possible, were it not for the 18 years of economic recovery (despite the problems) under the Conservatives. Where would all the money have come from for Blair and Brown's social programme if their administration had immediately followed Callaghan's in 1979?

    That is the serious question all you New Labour devotees HAVE TO answer, if you want to pursue a credible case against Conservative thinking.

    Common sense tells us that the market is the engine which drives the economy. Therefore the state sector is dependent on the market. It has to be. And one of the characteristics of the market is to readjust itself and achieve equilibrium in order to ensure that the economy is functioning within its means.

    The problem is that, for electoral reasons, politicians for years have promised beyond the economy's means to deliver. There is a difference between a culture of "aspiration" and one of "expectation". "Aspiration" is to do with achieving a result with the resources you have to hand. It requires wisdom, ingenuity and discipline to work within limits. "Expectation" involves a belief that you have a right to benefits without proper reference to the resources which are available.

    I am afraid that years of a certain kind of thinking in this country, most characterised by socialism, has created a "culture of expectation" rather than "aspiration". This has produced a surly ungrateful culture of disrespect and irresponsibility, where the state is seen as "God", and "perish the thought that we should ever have to suffer a lowering of our collective standard of living". Anybody who points this out is then accused of sanctimonious moralising. But it is true. Undoubtedly we are being buffeted by global forces, but there is no excuse for the Labour government to have weakened our economic immune system by presiding over this credit-fuelled culture of reckless consumption, and by inflating an unsustainable state bureaucracy.

    So when the market overheats, what we do not need is excessive state intervention (I am not against some form of intervention), which is simply draining public funds from the "real economy" (wealth creating people), in order to maintain this fantasy that the engine must keep running at the same frantic rate, so that politicians can persist in their promise of ever increasing prosperity. We need to accept that there is an economic cycle and live within our means. So the engine has to be allowed to cool down. Unfortunately this means that many people - vulnerable people - will suffer, and it is for them alone that the state should intervene (a legitimate form of socialism limited to "social justice" for the most needy and nothing more than that).

    Of course, there is an alternative, which could happen if the whole system crashes.

    The state buys up the whole market.

    And then we have communism and slavery.

  • Comment number 39.

    #38 logica_sine_vanitate

    Those of you who assign "good" to your preferred party and "evil" to your opponent, really shouldn't claim "logic" in your user name!

    I think all of you Lab/Con partisans should read Robert Reich's book "Supercapitalism" which suggests that the trite arguments about this fail to understand that we are all to blame!

    As consumers we want the lowest possible prices. The big retailers do this for us by forcing down supplier costs.

    As investors (including anyone with a pension plan etc) we want the best return on our money. The fund managers do this by moving cash to the firms with the lowest costs and best profits, thus pressuring CEOs to do anything to increase profits.

    As citizens we may care about the effects of this (funds moving cash from firm to firm instantly as share price moves; or the low wages at Asda) but we can't affect this ourselves. It needs regulation, and that's something only Government can do.

    Since the 1970's Governments throughout the world have pandered to our demands as consumers and investors, and deregulated to the disadvantage of us as citizens. They did what we wanted. We need to blame ourselves as much as them.

  • Comment number 40.

    I'll give you calm!
    Some people might be relieved by present measures but my sister will most certainly not be one of them. She had £150,000 sitting in icesave after her husband's life policy was deposited there as a result of his untimely death. She has 4 children to support. Although The Government was boasting that only 2% of depositors would be affected by what is going on there are many cases cropping up of people possibly losing out heavily e.g.
    1. Those who have just deposited their final pension payment.
    2. Those who are in between having sold a house and buying a new one and have the proceeds in their account.
    3. Families who have just received inheritances from deceased parents.

    I wish the government would stop dithering, pull their collective fingers out and guarantee that all our savings accounts will be protected to the tune of 100%.

  • Comment number 41.

    The current international financial crisis gives the lie to the neo-liberal's claims that capitalism can be managed by the state.
    Marx correctly concluded 150 or so years ago that boom and bust was in the nature of the beast. Only an internationally planned economy based on social need and not profit can stop these fiascos. We used to call it socialism

  • Comment number 42.

    #39 - oldnat - "Those of you who assign "good" to your preferred party and "evil" to your opponent, really shouldn't claim "logic" in your user name!"

    oldnat: I am not aware from my earlier comment (#38) that I was taking a view as polarised as you are suggesting. I did acknowledge in passing that there were problems with the 18 years of Conservative government, and also that there needs to be some degree of regulation of the market. Furthermore I acknowledged that there is, in my view, a legitimate form of "socialism".

    So I would be grateful if you would not read into my comments ideas that are not there.


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