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The New Capitalism - in video

Robert Peston | 07:21 UK time, Sunday, 21 December 2008

Further to my New Capitalism note last week, here are two short films I've made for the News At Ten. And if you want some bedtime reading, you can download the full 3,000-word essay (oh yes) here [37Kb PDF].

Part One [Broadcast Thursday December 18th]:

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Part Two [Broadcast Friday December 19th]:

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  • Comment number 1.

    Hedonistic Consumerism: Patterns of Consumption in Contemporary Capitalism

    The post-Fordist accumulation regime has drifted toward hedonistic consumerism: a mix of highly unequal and bourgeoning consumption.

  • Comment number 2.

    The secret of good investing is handling bears.
    Anyone can ride a bull.

  • Comment number 3.


    Your essay makes the set of points that most reasoning commentators are making, it is just a great pity that you and others did not make these points more forthrightly over the last decade.

    One of the areas that you do not concentrate upon is the unsuitability, or otherwise, of the regualtors and the heads of the central banks to manage the future of the World's economy as they are proven incompetent managers of the last decade.

    Why will the media not work at forcing the resignation of the regualtors and reform of their structures - is it that as part of the system yourselves you are reluctant to see your friends out of a job? It cannot be a tenable situation for the Governor of the Bank of England or any of the MPC to retain their well paid posts as they are proven to be incompetent. Nor for the senior staff at the FSA or Her Majesty's Treasury - they must all go!

    The other matter that you only allude to in passing is the nature of this new economic World - I have been 'banging-on' about then need for a sound view of the nature of Money - that is that borrowers should expect to pay a fair cost for their borrowing and savers and investors should expect a fair return my guess is in the range of 6 to 8 percent. If this is not part of the environment then borrowers will expect that zero interest rates will last for ever and savers will fade away and the whole World's situation will be infinitely worse than it is now.

    I'll re-read your piece later - also the second video clip is not working.

  • Comment number 4.

    There is a difficulty, yes we need a new capitalism but this one works within our society as it has been evolved so far and would work an awful lot better if we could stand the pain of letting it free run, which we obviously can’t.

    So in order to create a new capitalism we have to change many beliefs and many cultural and social habits which may prove the sticking point if we do not address them at the same time. As a change management consultant I no change will fail when you don’t account for everything it will touch.

    Simply cooperation has to take over from conflict and the problem is in our lives our whole system even our democracy, our fiscal, our economic, our legal and our capitalism is built on adversary that has to change or we will just talk tinker and twiddle our way back to the same old problems

    [click on my blog name above to see previous comment on co-operation]

  • Comment number 5.

    The new Information society which we are developing is post-political dependent upon a large pool of people communicating with each other across national boundaries... except when it stops working like the link to this blog moderator.

  • Comment number 6.

    I think we ought to ditch the word Capitalism, which has some rather unpleasant connotations. Rich exploiting the poor etc., etc...

    I wouldn't want the existing system to change that much though. Essentially it should remain the same, but with all the obvious excesses and moral failings ironed out...

    It would have less borrowing/lending, simpler & more responsible financial behaviour, more regulation, greater fairness/equality, more even distribution of wealth...

    So what would I call this new system ?

    But I'm sure somebody somewhere with a vested interest in maintaining the status quo will pop-up now to say its socialism, or communism or some other 'ism' with equally unpleasant connotations...

    But Capitalism really has had its day. It has failed spectacularly this year, however vigorously its chief beneficiaries might try to claim otherwise.

    Clearly, we now need something better.

    Not least in order to help address all the other problems that the world has been talking about for decades, and that Capitalism has been completely unable, or totally unwilling, to solve...

  • Comment number 7.

    Introduction By Timothy Leary

    What do we call this new movement? Humanism? Libertarianism?
    The Golden Age of the Individual Gods? Well, who cares what we call it. Let's loosen up. Can't we get a bit semantically loose at this moment of realisation

  • Comment number 8.


    Well then "THERES A THOUGHT"

    How about paying for goods with





  • Comment number 9.

    Statements about personal reactions, however passionate, are always relative to the speaker's history and may have little general significance. Next comes the questions "Why" and "So what?

  • Comment number 10.

    Man it's been quiet in the Bronx since Kate Rich got killed
    I heard some kid wearin a mink
    fakin like he live in Brooklyn squealed
    We gon' need Johnny Cochran man, I'm tellin you
    Gotta get everybody out..

    Chill at home watchin the Mets
    I'ma tell Suge Knight to call Big Kap and Funkmaster Flex
    Tony Green is out of jail with a five billion dollar bail
    I'ma hire two men with machine guns to do retail
    Independent promotion, a couple of people got they legs broken
    Record exec found dead, body in Hoboken
    Autopsy explainin what parts remainin
    New York police department, the F.B.I.
    said this guy wasn't playin

  • Comment number 11.

    Conspiracies behind the Scene
    What you don't know won't hurt you

  • Comment number 12.

    One way of starting NEW

    capitalism,could be a JURY



    members of the public on two

    year rotation at 30 k pa.

  • Comment number 13.


    Order Order!!

  • Comment number 14.

    Shoes n suits! Shoes n suits!
    Supreme Court..

    Investigators ridin on my elevator for questionin
    I'm just a plain MC, why do y'all wanna see me
    I have no clue about what that person went through
    Is it true that y'all was gonna tell us
    who was gonna cut his hands off
    Look for my fingerprints, what did I do?
    Narrator of a true story
    To write somethin fake, would bore me

    The prosecutor says I'm innocent
    That's somebody else's glove by the steps
    Is it true, that part of your crew
    wanted to set this man on the couch,
    light a match, pour gasoline in his lap and set him on fire?

  • Comment number 15.

    Robert, I admire your style.
    Only at the BBC would you get away with writing this piece.
    I hope for your sake that the blue party does not get into power anytime soon.
    Your job would be toast.
    Messenger etc.

  • Comment number 16.


    A good analysis.

    However, I am not so optimistic that the new capitalism will be a fairer, gentler version.

    We have had the dot com boom followed by the house price boom. It may take some time before the next one materialises, but as soon as it does (the green boom?). it will be the same thing all over again. Unfortunately, greed is part of human nature.

  • Comment number 17.

    I enjoyed the two short films and will read the essay later today.

    London looks so civilised from Canary Wharf and the Millennium Bridge, but what's been going on inside those shiny offices has been utterly barbaric for too long. If there's going to be a new capitalism I hope that the bywords for it will be:


    That would be a start. The rules should be OUR rules because it is OUR wealth. True prosperity doesn't just disappear overnight!

  • Comment number 18.

    I've read all the blogs and I'm fed up with the constant " it's your own fault you borrowed too much " line

    I have been to coin the great leader, prudent.
    I'm not rich, I work hard and save what little I have left once the bills are paid.

    To see the financial sector now is sickening. The regulators were muted, because too many piggies have their snouts in the trough.

    What of Tony Blair, he got out of this just in time, your not telling me he didnt know what was going on. He must be smirking into his application for president of Europe.

    A lot of the wailing will do no good, the horse has bolted.

    What needs to happen is those responsible be taken to account, and where necessary, the monies taken from them and returned.

    Those who borrowed a lot to buy a house, just stay in it, you will have a house for life if you pay your mortgage.

    The money has to come from somewhere to fill the hole, it is me and many others like me that will be paying for it with the zero interest I get on my saving and my pension that keeps getting robbed.

    sort it out Brown and Co it's not hard, you take from my pension, so take back from the mega money that people in the city have made, encourage manufacturing in this country, you know that thing where we used to make actual things and sell it,

    Make new iron clad laws preventing the packing up of debts and selling them on ala mortgages etc

    Make a ceiling for directors wages, all this bleating of you have to pay them or they will move elsewhere, good , go , see if you can find a job now, there are plenty of people more than capable of doing it, lets face it how hard is it to walk into the directors job, lay off a few thousand staff, cut back on perks, make the balance sheet look good and move on to the next job and do the same, you do nothing of worth.

    That is new capitalism, this thing you mention on your oscar piece , is nothing more than smoke and mirrors to make us forget it ever happened

    New Labour, New Capitalism, New Debt, New World Order, they are running out of news
    try some old fashioned business it worked for a long time.
    oh and get some money off the Yanks whilst we are at it, they owe us a few bob for being their poodle

  • Comment number 19.

    #4 hack-round makes a very good point, unless our culture changes we wil slip back into the same old ways after a year or so.

    Remember the greenwash everything took after the green party did well in the elections one year. That didn't last long.

    We have to be told in no uncertain terms that we have lived beyond our means and now it is payback time. Everyone who has benefitted from the "Economic Miracle" of the post war years will have to pay back something to society and the future of the species.

    Once the current crisis is over we need to punish those who caused this depression, wherethere is any sniff of illegality assets must be siezed and where there incompetence jobs must be lost.

    If we have to progress to a higher level of banking reserves then we must all say goodbye to free banking, but with it might go the financial rubbish we have all been sold over the years.

    On a personal level we must be prepared to pay more for goods made within this country and make do with less. I am a hypocrite, this morning I spend £11 on cr*p from poundland and let my Grandaugther pickout several items at Primark.

    On the plus side I did contributre to a busker and charity collections. After Christmas I am going to donate £100 to various charities , I read in the Times that charities are really suffering in this crisis.

    Perhaps if we all gave back a little, those with money and no time give money and those with no money give time, we could rebuold our society. Since I started helping out at a local school I have found it very rewarding, it is hard on top of a full time job but worth it.

    Finally, it is good to see that the need for radical change is being discussed, we must support it by voting for it and supporting change with our wallets.

    more later....

  • Comment number 20.

    Excellent reports fom R. Peston.
    Keep them coming.
    A fairer, more stable type of capitalism?
    You mean one that's based on common sense.
    If the gov want to know how to do it all properly, just ask Vince Cable, who has been a much-admired beacon of good sense for years in this awful mess.

  • Comment number 21.

    #19 scargillwasright

    Just how far, wide and back do you want to trawl for ill gotten gains?

    Council house sell offs? Utility company sell offs?
    All sell offs?
    Employees of PFIs?

    The list is endless and getting longer by the minute.
    Is this what we are now?
    Inhabitants of one big Ponzi scheme.

  • Comment number 22.


    When (or if) I reach 65 in 2027 the demographics of this country will be such that there just won't be enough young people working to support me through taxation. My own pension will probably not have recovered from the kicking it has taken over the last 10 years. So what will I do ?

    Certainly I won't be able to live in the style which today's pensioners have lived. My Parents live on a final salary pension and my Grandparents wanted for nothing (Council housing, free travel, heating allowance, rent rebates, council tax rebates)

    It has often been said that we shouldn't save for ourselves because it will all be taken away to pay for our care in old age whilst those who have nothing get everything paid for. But we have no choice, while we want to pretend we are civilised then the rich must help the poor and the strong musty not take advantage of the weak. On the other side the poor must not sit back and demand more and the weak must respect and support the strong. Each must find some way to continue to contribute to society.

    The old will have to help the young in order to help themselves.

  • Comment number 23.

    Meet the new capitalism. Run by the same crooks who brought you old capitalism.

  • Comment number 24.

    It's all very well claiming that now taxpayers are substantial owners of the banks, etc, that those companies will be forced to listen to taxpayer needs, but I can't see the mechanism by which this control will be exerted. I doubt that one could show up to the AGM claiming to represent "a taxpayer" and get admission, let alone a vote on substantive issues.

    Without a formal mechanism for exerting influence, the taxpayer will remain as powerless as before. If the government is considering fielding a "taxpayer's representative" at the AGM, or indeed on the boards of these publically-funded private corporations, how will that representative decide between the competing needs of various groups of taxpayers?

    If multiple advocacy groups are to be permitted, how many will be allowed, and who decides which of them actually get a vote?

    It seems that the democratisation of ownership is what is being implied, yet there is no process or mechanism to facilitate this.

    Until there is, surely claims that taxpayers now "control" these companies are at best, fantasy, and at worst, deceit.

  • Comment number 25.

    Why the obsession with reinventing the wheel instead of recognising it is all part of evolution ? need to blame? Changing the name of capitalism is just another excuse to waste time and resources much like a corporate re-branding exercise. Just discussing it is already a distractions. For example concerning businesses how about just focus on making the company truly accountable to shareholders, ensure the board earn their keep through having to compete for available funds, on a level playing field, through traditional virtues such as trust, using proven techniques to provide visibility for all. This could be through enforcing responsibility of directorship and re-instating the original boring, pedantic, uncorruptible, accountant?
    All of these processes already exists ? they have just been conveniently overlooked ? encouraged by political convenience and good appearance sake rather than for the original objectives for the long term benefit of staff and investors.
    Ensure a true balance sheet, enforce the law, and you will in turn ensure motivation and accountability backed by appropriately severe deterrents? Granted this maybe what Greenspan thought was ultimately underpinning de-regulation, however it all seems to have been conveniently assumed rather than closely monitored & enforced.
    By all means pursue free market economics but dont just expect people to play by the rules - a British old fashioned trait and regular failing leading to periodic large scale disappointments in otherwise intelligent plans.
    Keep it open, honest and accountable. Punish the the Directors and those empowered to a fuller extent and just perhaps they will be respectful of their responsibility to others, it might just save throwing away a century of industrial gain where all are punished because of the few that were not. Duty can conquer greed.

  • Comment number 26.

    Yo whats up I got a pocket full of stinky's
    (Dirty money, dirty money)

    {* cash register ringing up a sale *}
    Got a bank account {*cha-ching*} with a large amount

  • Comment number 27.


    Enough has been said on previous blogs about peak oil and the run down of resorces. I think the important thing is to decide what we are going to do in reponse to this diminishing resorce.

    All of our problems ultimately stem from the massive population which we have inflicted on the planet. All of our efforts to reduce consumption will come to nothing unless we take steps to stabilise the population. Leaving aside the problems of achiving population control in the third world we have the propect of persuading the catholic church and the pro-lifers.

    The problems of this country regarding demographics will be magnified is we reduce the birth rate, but what is the alternative increase the death rate ?

    As a country we have to become more self sufficient, particularly in food and energy. Again a drastic reduction in population is indicated, perhaps by severe limitation on immigration. This would be a political hot potato.

    Finally we will have to confront out attitudes towards those with poor genetic health, for example should we allow those with genetic diseases (or the potential for genetic diseases) to risk passing those on and weakening the gene pool.

    My view is that unless we address these and other issues in a non-emotional way - and soon - it will be too late and we will have "the devil take the hindmost".

  • Comment number 28.

    We are certainly going to enter a brave new world, but I think your prognosis of a sort of compassionate capitalism i.e. with little fuss, is wishful thinking.

    There is the little matter of a massive debt problem that is nigh on impossible for us to resolve for we would have to generate a net surplus in growth over spending for decades to come and being that we have failed to do so during the supposed golden years - what chance do we have during the coming decades of contraction?

    Also, you are significantly ignoring the fact that it is now abundantly clear that it was the debt bubble itself, which sustained the whole world economy - i.e. Germany, Japan, China and India produced (and saved) and we, i.e. America and UK spent - and without it there is no world economy.

    The only possible solution to keep some semblance of a capitalist system and to repay the debt would be for America and the UK to produce and the other countries to buy, but I can't see that happening.

    Ultimately, I do agree that the world will need to change, and ultimately it could be a better world, but I do not think it will be evolutionary in the way you suggest, since society - government, the financial system, business and individuals - is wedded to the consumptive model.

    It is clear that most of us have still not grasped what we are heading for. Happy new year.

  • Comment number 29.

    Going off topic but william hague quoted gordy from 1996 on the andrew marr show today.
    "A weak currency stems from a weak government."
    Did he really say this and if so is there any footage.

  • Comment number 30.

    Well, yes, most things you say in the essay (sic) are fine, as far as they go, although the feeling that your grandmother still has not yet learned to suck eggs is getting stronger.
    Why do we need a new capitalism when real capitalism has not been tried yet? Any true free-market system will have numerous feedback loops which will provide an inherent stabilisation, provided (and this is important) that no-one, including the BOE and the state in general, fiddles about with the system every 6 months (or even more frequently).
    There are supposedly other design engineers posting on here, as well as myself, who will tell you that NFB loops require the damping to be optimised to ensure that the continual corrections that the feedback produces is properly damped, to ensure that the output does not become unstable. It IS the job of the BOE etc: to attempt to perform this damping, but not to keep changing the system set-point all the time. The time-constants for economic systems are in the order of many months to years, so it is easy to understand why governments like to tweak things, to show that they are doing something (!!), but really, a true free-market system doesn't need this.

    Give 'Austrian Economics' a try. Sadly our political leaders seem to have zero understanding of system control theory, (if indeed they are not sadly inumerate), but surely there are economic advisers to the treasury who could attempt to get some sense into that dense Pictish block that appears to be the head of Gordon Brown.

  • Comment number 31.

    The idea that a Government which presided over the last ten years shouldbnow help itself to all our savings - which is effectively what RP is suggesting - and 'invest' these in what it believes are the future industrial winners, is simply breathtaking. I would challenge anyone to produce a single example of any UK Government investing in a profitable business proposition (excepting the creation of the anglo-Iranian Oil Company, now BP, which was really a no brainer). It is simply not what they are there for.

  • Comment number 32.

    #30 Mr_Gladstones_bag

    The economomic model is flawed.
    There are too many outside influences.
    Basically there is no model.
    With no model you cannot determine the lag.
    There is therfore no point in trying to aim for steady state.
    Bang bang control is as good as any.
    At least some folk will be happy, albeit fleetingly.

  • Comment number 33.

    There is of course one step which if taken would reduce Govt spending (by a considerable amount). As an added bonus it would greatly increase personal savings (thro` Insurance etc)
    Dismantle the NHS

  • Comment number 34.

    Ill lend to you, what youve already lent to me,
    then Ill package it up and sell it on for a fee,
    Ill bundle together, all the debt thats owed,
    sell it for a profit, till this sucker blows.

  • Comment number 35.


    I agree it's time for change, time to change our unsustainable model predicated on continual growth.

    I agree we need to become sustainable with regards to energy and food.

    I agree we need to stabilise population but you worry me when you talk about the weakening of the genetic pool. Sounds like eugenics to me.

    I believe we can all live on this planet if we change the model. Work hard, consume less, think local, provide as much as you can for yourself and your family, contribute to your local community and don't look to government for the answers.

    Remember dig for victory (we achieved home production of the majority of food in little over 12 months), we got through a world war, this is no different, it's an economic war, same war, same problems but no bombs (at least not yet).

    This could be a positive thing that is happening if we first accept it and then start thinking about what we can do to help ourselves.

  • Comment number 36.

    Sorry #26 should have read #27!

  • Comment number 37.

    Well anyway I said that's no burglar thats my butler hahaha
    Mr. Rockafella let me in on the gossip
    I heard you and Mr. Getty are getting into rap music or something
    Yes we have this thing we do with our voices
    We sing like authentic rappers

    Well if you're blind as Helen Keller
    You could see I'm David Rockafella
    So much cash up in my bathroom is a ready teller
    like me got stocks bonds and securites
    No impurities, straight anglo saxon
    Make the army go to war for Exxon
    Long as the money flow, I be making dough

    John Paul, why don't you entertain us with something as well?
    Well, what should I do?
    Why don't you rap for us?
    No, I...
    Come on old boy I did mine

  • Comment number 38.

    Tut Tut , Mr_Gladstones_bag.

    'into that dense Pictish block that appears to be the head of Gordon Brown'

    I don't see what Gordon Browns ethinicity has to do with your argument.

    You wouldn't replace Pictish with Pakistani or African would you?!

    Keep to economics!

  • Comment number 39.

    Its dead and gone.
    The dream that people naturally do better in their own (morgaged) homes, and the financial markets do best when not regulated.
    This dream has bust the banks, and has heaped misery on millions.
    I dare to hope that we will do better next time, that greed -the driver of all this mess-will be contained, and that Premiership footballers will get what they are worth-nothing!

    A brave new world indeed.

  • Comment number 40.

    interesting videos and comments but still more visionary than substance; what will it mean, what will evolve?

    Moreover the view point is still very much "mature economies centred", i.e the traditional cradle of capitalism and it seems to assume that the relationship and balance of power between us (US, Canada, Europe including UK. Japan and maybe Korea) and "them" , the newly capitalist and developed countries (I wont even begin to talk about developing countries) will remain unchanged and these will "follow our lead and vision" of new capitalism. If that is not the case, wither the old world, its economy and its market structures, ethics and safety nets.

    In a global world with financial and economic power already shifting centre of gravity, a successful "new capitalism" can only arise and succeed on a global scale.
    And I see little sign nor appetite for that outside the current triumvirate (North America, Europe and japan/Korea) at present as yet...

  • Comment number 41.

    I saw nothing in either the pdf or the videos to convince me that a "kinder, gentler" capitalism is on the way. In any competitive system, the likelihood is that "the scum rises to the top" - that is, those who reach the top are greedy, selfish, dishonest and ruthless. That description certainly seems to fit our current elite, both economic and political. Are these people going to tamely surrender any part of their power and wealth? Is the Pope an atheist? Do bears have flush toilets installed in their caves?

  • Comment number 42.

    #41 Nick-Gotts

    In a strange way I do not actually mind the competitive system.

    At least you know where you stand and can take decisions accordingly.
    The big problem I see coming is quasi competition where the state selectively finances companies and institutions.
    And just how do we all apply to the state for financing?

  • Comment number 43.

    I agree with post 41.

    The financial system and indeed society as a whole will forever be undermined by the selfish, ruthless, arrogant, narcissistic types that tend to rise to the top in so many organisations, be it banks, governments, business....

    Given the prevelance of such disordered personalities at the top of organisations, it really is no surprise that we end up in a mess.

    If anyone doubts the impact such people have, I’d suggest they read Andrew Gower’s account of the personalities and power struggles at the top of Lehman Brothers, as serialised in the Sunday Times (part 2 in today’s edition).

  • Comment number 44.

    The main issue is that credit was fuelling spending.

    Now that credit is much harder to come by banks will be looking for yield off their reduced lending capabilities, meaning that once things settle down, lending will be something that is done for essential purchases - but the era of buying goods / holidays on CCs is over as it will be too expensive.

    What this will do to the high-street no one knows - but there is no doubt that the explosion in the retail sector was directly linked to the rise of credit...

  • Comment number 45.

    If you recall the impact on the distribution model that the petrol strikes of 2003 had, you can see a parallel on our current strife.
    Globalisation whilst benefitting in reduced cost to consumers has had the downside of reducing margins for corporations.
    Each of these companies that are in financial strife now, or have laid staff off because of a market downturn, have failed to build any reserves to assist them to survive with less income.
    It is now so bad we are actually questioning the viability of businesses incapable of surviving a decline in demand for their business or product.

    From a personal viewpoint, the very same is occuring in my industry. Previously to be a computer analyst programmer required extensive experience not just in technology but also in theory and practice. These are now redundant as irrespective of skills base or proficiency, jobs are winging their way to the sub-continent as quickly as businesses can. Cost over quality is the only issue.

    What really concerns me though through all of this is that there are the seeds of political or civil unrest. When the very fabric of governance is shown to have failed, you have to question how why people should accept that governance again?
    The most extreme version of this is a scenario that I believe will not be unlikely. Imagine an American who has lost his job. He has lost his house due to foreclosure. He has no prospect of further work. All his investments have been wiped out. He has nothing and can see no personal blame for his predicament. The one thing he does have left is the one thing he is constitutionally entitled to have, his gun.

    Consider (no xenophobia here) France or Spain. Consider how their nations will cope with a depression. Both have demonstrated a long history of militant action.

    Politicians the World over, and some senior business leaders will be very nervous at the moment. The seeds of rebellion have been sewn on far less fertile soil than we have in the World today. If it worsens, then all bets are off as to how our World and societies will look when it finally improves.

  • Comment number 46.


    On what do you base your optimism?

    While it's sweet to think that the current system will be replaced by something fairer, the simple truth is that for all the rhetoric, the government has been extremely soft on:

    a) Identifying and punishing the individuals who allowed this situation to arise in the first place.

    b) Strengthening the regulation that would prevent this situation re-occurring in the future.

    The fact is that money will always talk and corruption is so endemic in the British political system that it would take a complete removal of the current political system to bring about a return to ethical government.

    How do you see this happening?

  • Comment number 47.

    It's nice to know even the swindlers can be swindled.

    "Personally, the one lesson I will draw from all this is never to assume again that very rich people must be cannier about money than the rest of us. The victims aren't always the biggest suckers.

    Having allegedly only swindled investors out of $600,000, charges against a New York stockbroker called Michael Axel went barely noticed in September. I had assumed there was nobody left on the planet who would fall for those Nigerian-based emails that announce, in bad English, that you have inherited $8·75 million from a distant relative and need to pay money up front for legal fees. I was wrong. Axel did exactly as he was asked and obediently wired all his ill-gotten gains to Lagos. "

  • Comment number 48.

    I cannot understand the folk on this blog who continually remind us 'credit is hard to obtain'.

    Really? Last time I checked with my bank (last week) they were desparate to sell me a loan.

  • Comment number 49.

    While the robber barons still sit in their Ivory towers pulling the strings of the puppet poloticians, who in turn mute the the regulators nothing will change. We are just lambs to the slaughter, look at history, as it always seems to repeat itself. Look and see the millions slaughtered in the first World War at the whim of the ruling classes. The great depression of the 30`s, and the rise of Nazi Germany. 20th century history, we are now living what will be 21st century history, what do we see. War all over the world, global terror, financial melt down, global warming. We have replaced the dictators and greed driven rulers of the 20th century with exactly the same thing for the 21st century, they are just dressed in more stylish clothes and have better PR and spin, but they all spin the same thing, what else do we have to replace the best of a bad lot. I do not know the answer nor do I believe does any one else.

    If it were obvious we would all be fighting for it instead of fighting for control of oil at the whim of our rulers now. It takes a revolution or revelation to ignite real change, and real change for the good is very painful. Untill that revolution or revelation comes along then we just have to patch up the cr*p we have now.

  • Comment number 50.

    #21 prudeboy.

    Well, much as I would like to, one can't go back and reclaim anything which was legally disposed of. However, we should take a dim view of people who have privatised an industry only to join the board of directors six months (or whatrever the minimum period is) later.

    I would try to find a way of re-nationalising the essential utilities in order to force the investment and public service element back into them.

    Regarding Ponzi, since the essential element is a pyramid then the welfare state has always been a Ponzi scheme, relying on current contributions to pay for the benefits.

    You could argue that the real problem is that it is no longer a Ponzi scheme in that we are borrowing from the future to fund current revenue.

  • Comment number 51.

    48 Javaman

    Think its the old bit about if you dont need it you can have it.

  • Comment number 52.

    #30 Mr_Gladsones_Bag

    I agree that a good automatic control system would styabilise the economy but my limited understanding of Austran Economics is that the business cycle is assumed inherent in the system, this smacks of either instability or at least limit cycle operation.

    In order to control effectively the system has to be controllable and the control system adequate. It is also important that the system does not continually change, part of the current problem is the fact that the single control system (interest rates) has proved to have been disconnected from the system under control.

    I also believe the human cost of the Austrian solution would be too high.

  • Comment number 53.

    #32 prudeboy.

    A far better way of putting it than my 52

  • Comment number 54.

    The disadvantage of our new drama is that in your role you do not know what you can believe and what you cannot

  • Comment number 55.

    Excellent work Robert.

    If every BBC worker was as hard working and politically unbiased as you, there would be hardly any complaints about the license fee. You present the facts in a lucid manner and allow many viewpoints on the issue - not just Prime Minister Mandelson's!

    I am glad you always emphasise the recession has a true cause debt and is not a crisis of confidence as Brown implies.

    Your new Capitalism is not new though. It 1970's State Intervention again and doomed to fail again.

    The Capitalists look upon the caring, predictable Government of the "New Capitalism" as a soft touch (TATA and Jaguar, for example). The requirement is tougher regulation with real punishment of wrong doing such as huge fines and lengthy imprisonments.

    Spare the rod, spoil the Capitalist.

  • Comment number 56.

    #35 wakeubritain.

    Yes it is getting close to eugenics and I have to stress that I am not avocating any action of this kind. But it is something we have to be free to discuss dispassionately.

    The fact remains that our technology has enabled many people to have children who nature would not have - either they would have died before having children or they could not have children naturally.

    I am not an expert in genetics but the anecdotal evidence of a genetic link to many diseases leads me to ask the question.

  • Comment number 57.

    We need a political zeitgeist


    You have 2 cows.
    You give one to your neighbour.


    You have 2 cows.
    The State takes both and gives you some milk.


    You have 2 cows.
    The State takes both and sells you some milk.


    You have 2 cows.
    The State takes both and shoots you.


    You have 2 cows.
    The State takes both, shoots one, milks the other, and then throws the milk away...


    You have two cows.
    You sell one and buy a bull.
    Your herd multiplies, and the economy grows.
    You sell them and retire on the income.


    You have two giraffes.
    The government requires you to take harmonica lessons.


    You have two cows.
    You sell one, and force the other to produce the milk of four cows.
    Later, you hire a consultant to analyse why the cow has dropped dead.


    You have two cows.
    You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.

    The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.

    The annual report says the company owns eight cows, with an option on one more.
    You sell one cow to buy a new president of the United States, leaving you with nine cows.
    No balance sheet provided with the release.
    The public then buys your bull.


    You have two cows.
    You go on strike, organise a riot, and block the roads, because you want three cows.


    You have two cows.
    You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.
    You then create a clever cow cartoon image called 'Cowkimon' and market it worldwide.


    You have two cows.
    You re-engineer them so they live for 100 years, eat once a month, and milk themselves.


    You have two cows, but you don't know where they are.
    You decide to have coffee.


    You have two cows.
    You count them and learn you have five cows.
    You count them again and learn you have 42 cows.
    You count them again and learn you have 2 cows.
    You stop counting cows and open another bottle of vodka.


    You have 5000 cows. None of them belong to you.
    You charge the owners for storing them.


    You have two cows.
    You have 300 people milking them.
    You claim that you have full employment, and high bovine productivity.
    You arrest the newsman who reported the real situation.


    You have two cows.
    You worship them.


    You have two cows.
    Both are mad.


    You have two cows.
    Business seems pretty good.
    You close the office and go for a few beers to celebrate.


    You have two cows.
    The one on the left looks very attractive...

    Seasonal blessings to the (unknown) author of this*****

  • Comment number 58.


    Sorry, I should have added thatb I agree about dig for victory, etc. We need to get the same kind of urgency and suspension of self interest that we got duuring wartime

  • Comment number 59.

    Spot on.
    Culture change takes structure, clarity and immense strength of purpose - linked with a forensic eye to detail and supreme leadership skills.
    CVs please

  • Comment number 60.

    "Last time I checked with my bank (last week) they were desparate to sell me a loan." - JavaMan1984

    Ah, but I assume you don't need one!

  • Comment number 61.

    "I am not an expert in genetics" - scargillwasright

    Nor am I, but I do know we all carry multiple dangerous recessive genes (i.e., genes that only get expressed if you have two copies, one from each parent). This, thankfully, makes eugenics pointless from the point of view of "improving the gene pool" - I say thankfully because it is, as we have seen, liable to lead to forced sterilisation or worse.

    I wouldn't worry about the gene-pool anyway. If - and it's a big if - our civilisation survives at all, there's little doubt we will be able to repair genetic errors within the next century or two - which is a very short period in evolutionary terms. If our civilisation does not survive, those with expressed genetic problems will cease to survive to reproduce.

  • Comment number 62.

    In post #52, it was said:

    part of the current problem is the fact that the single control system (interest rates) has proved to have been disconnected from the system under control.

    Very true, but it need not have been. The BoE interest rate should have been much higher during the boom period, but the government was frightened of putting it up that much.

    I wonder why we need a defined BoE rate. Is it not possible for the various lending and savings institutions etc: to set whatever rate they feel is relevant at the time?

  • Comment number 63.


    Subject: The faster you go the safer you are

  • Comment number 64.

    Re 57) mouzel1

    Thanks for that - it is one of the most amusing blog entries i have seen on here in a long time.

    To all the contributors on Roberts blog and Robert himself thankyou for an amusing, Educational and worrying last 3 months.

    Have a good Xmas all.

  • Comment number 65.

    "Last time I checked with my bank (last week) they were desparate to sell me a loan." - JavaMan1984

    They did not tell you they were desperate to sell you a loan but actualy had no money to lend you, so If you would buy a loan at reasonable interest rates like 0%, but you will not actualy receive the money but pay them a large amount of money back, if you do not make repayments on time and do not read the small print with an electron microscope you will be charged an excesive and unbelevable amount of money in penalty charges and interest wich is in breach of all known consumer regulations. If you agree to all the above and more, that are not obvious even with the use of an electron microscope, and that they might vary said conditions without notice and when they can think of something that will be to their benefit and not yours, they may concider you for a loan. This is a new type of loan and it is called THE VIRTUAL REALITY LOAN.

    Have you tried to get a loan?. They are all bankrupt, but like woollies they keep plodding along until they have paid out all the tax payers money to Exec pay and bonus, and shareholder premiums, and then good bye and ha ha ha.

  • Comment number 66.


    There are a couple of interesting examples of modern genetic selection for improved health

  • Comment number 67.

    "New Captialism"? One aspect which hasn't really been touched on is whether the "popular capitalism" developed over the past 30 years is now dead.

    By that I mean the various initiatives over that period by the government and elsewhere, designed to encourage widespread involvement in the stock market and property investment, from utility privatisation to to share options to money purchase pension schemes to buy-to-let. The conscious idea of all these initiatives was to make everyone think they were a capitalist, rejoicing as asset markets climbed upwards.

    This was to encourage acceptance of the idea of the owners of capital and land getting a larger and larger slice of the cake (which certainly happened); and also to remove the us-and-them attitudes of the 70s and earlier. Of course these schemes (stock market and housing/land) were effectively pyramid schemes - those who already owned land/shares cashed in as demand for those assets increased dramatically, but eventually the bubbles were doomed to burst and those that piled in last would suffer the brunt of the losses.

    But having got their fingers burnt, will those on low/middle incomes want to get involved in these get-rich-quick schemes again? Or wil they be wanting safe, reliable savings and safe, reliable pensions?

    So perhaps we need to think again about how to manage the key issues of classical ecomonics - ie how much wealth do we produce, and how are the procedes of that production divided between those who provide the labour, and those who own the capital and land. Instead of pretending to be encouraging wider capital ownership, we need to accept that there needs to be a concerted effort to redistribute wealth and income through the taxation system. Only when we accept that redistribution is a core requirement will we design an economic system that really works.

  • Comment number 68.

    In a sound economy a promise made is a promise kept. In a rubbish economy it isn't worth the paper it's written on. Mr. Cable, again, put his finger on it. The liars, cheats and breakers of their word have been rewarded, the honest and trustworthy have been punished. Forget economists, read Darwin if you want to know where survival of the shittiest will lead to in the long run. If there is to be a new capitalism, it will be one where breaking promises will really hurt the breakers with no old boy network or limited liability company law or get out of jail free tax payer subsidies to save them from facing up to the consequences of their actions,

    Yours Aye,


  • Comment number 69.


    I have now read the essay for a second time and it really is excellent. But (you would expect a but)....I find your rationale for finding the banks and bankers to be most at fault rather poor.

    You argued that the bankers were paid rather a lot of money to assess the risk of lending and therefore failed since too much was lent.

    I don't think this is reasonable since banks are supposed to be competing and bankers are expected to act on a individual basis.

    Assessing the risk of lending to the economy rather than on a case by case basis would need a mechanism and structure to act on a concerted basis. There is one - but the lending banks don't run it.

    The responsibility lay elsewhere, within the regulation and government to measure this, and so its not surprising to find that banks acted individually and not in concert. Some lent too much and some didn't. If the authorities had explicitly placed the responsibility with the banks to decide what was an appropriate level of lending for the economy together with some form of banking structure that could decide this then fine. But overall there was encouragement in the form of monetary policy from the government and regulators so it's hard to understand how individual bankers and banks can be most to blame whilst the music of monetary policy played on?

    Yes the banks and bankers all strove to lend us more, as we all (again a generalisation I think) apparently heroically borrowed more. It does seem to me that we've been surprisingly ready to believe the culpability of the banks and I think we ought to be looking a little bit more closely at the role of the authorities who had banished boom and bust and set their policies to match their arrogance.



  • Comment number 70.

    #61 Nick Gotts

    Good point about the self correcting nature if society packs in but I'm not convinced that we will be able to continue to afford the gene therapy to fix genetic diseases if society does survive.

    My concerns about genetic health were linked to the fact that I believe that the population has to fall and the general standard of living reduce.

    when I was reading the links I posted in #66 I came across Tay-Sachs disease. Apparently genetic testing is practiced to identify carriers of this recessive gene and marriage matches are broken off if both partners are carriers.
    The problem here is that the gene pool is limited and about 1 in 20 of the population are carriers.

  • Comment number 71.

    The signs of a species preparing to mutate to a higher intelligence

  • Comment number 72.

    #62: Mr_Gladstones_Bag

    Do you know how artificially low interest rates decoupled the BoE base rate from the bank lending ?
    I feel that the fact that the majority of the banks money came from interbank lending at LIBOR has something to do with it.

  • Comment number 73.


  • Comment number 74.

    There is only one fair way. A world wide wealth tax.

  • Comment number 75.

    Capitalism has an insatiable desire for profit! The uncontrolled drive for profit can damage the real economy and people. Democracy was design to moderate that desire. Politicians have stood back while capitalism has run wild, because they didn’t want to stop the party. Good times mean they get re-elected.

    Capitalism is design to deliver profits now. So if one way to deliver those profits is to extend credit to people on their future earnings – in salaries or equity growth – so that shareholders get their expected returns – so what? If we all can be winners what’s the problem?

    Well someone has to pay sooner or later. It turns out it’s sooner than later and it turn’s out we all have to pay. There’s no more money for commodities until the debt burden is reduced that means there no more profit.

    The bail out of the banks and the bail out of companies are not to save the economy it is to save capitalism. But capitalism has failed again to produce stability! So Peter’s new capitalism is not the answer, it’s just trying to extend the problem. It will lead to state capitalism or fascism, but not the remedy that we need now.

    The remedy will be forced on us anyway, the collapse of the global economy and the impoverishment of all those that produce the wealth until either the economy recovers or the people that produce the wealth decide that enough is enough and take the future into their own hands. Why are we going thorough this pain when we don’t need to? All because we run a system that’s designed to cause us hurt when we work hard! Something is very wrong!”

    It’s not the time to be nice, it’s the time to angry, and it’s the time to demand a better future!

  • Comment number 76.

    mouzel 1

    Absolutely brilliant global analysis of 2 cows!

    Also a perfect explanation of how all our economies are so different that a 'one size fits all' solution CANNOT exist! Take note Gordon brown!

    The great British sense of humour always surfaces in times of crisis!

    Alexander C, get me on a bank board now-I'd do it for nothing if it meant we finally get answers and proper, decent banking behaiour for the people!

    Robert-your essay is good, but needs to be more demanding on the consequences for the architects of our country's collapse.

    We, the people will only begin to trust when the rotten apples have been removed and prevented from doing further damage.

    Banks can change their business models in a heartbeat. They need to do it now.

    LIBOR rate needs a proper funeral and concrete wellies to stop it ever surfacing again.

    We MUST have a new government NOW-revolution is a breath away.

    Anyone see the interview with dear Dominique?UK government bonds cost more to insure against bankruptcy than BP and Macdonalds! Not difficult to work out which 'asset' is seen as the greatest risk for failure by insurance markets.

    Everything that we buy should be factored in to the B of E inflation calculations. Removing house prices from the equation, plus selling our gold reserves were 2 of the biggest ever mistakes this government ever made.

    Put interest rates up immediately, by a substantial amount, make decent tax cuts to put real money back in our personal and business pockets, bring in the fraud squad, get rid of the FSA, ban credit cards from levying interest of more than 8 percent on current balances, ban them altogether would be good.

    No good pussy-footing around-nasty medicine is needed, but give it to those who deserve it. Seize their assets and stop their criminal practices immediately.

    Strong leadership for the people is needed, NOW. Not leadership for banks.

    For once, it is imperative that government MUST act for the people.

    We have been meek far too long-the bullies need bashing.

    I wouldn't stand for bullying in school, will not have it in my companies, and I don't see why economic thugs should be allowed to get away with it!

    I suppose I could always start a securityxompany-I expect the demand for bodyguards among politicians and bankers is greater than celebrities right now!

    Oh, and a bed and breakfast, and long term storage facility for those being repossessed. Wonder what the current figure is?

    Come on Robert, write an addedum to your essay-go for the repective jugulars of the bad guys. You may lose some friends but the amount of respect you would get is immeasurable!

  • Comment number 77.


    This new capitalism you go on about is called Communism. -

    More than half the working population are now employed by the state or privatised but still paid from public funds.

    A third of UK households are workless and dependent on state benefits. Even those in work depend on tax credits and are beholden to vote for whoever promises them more handouts.

    The banks are nationalised and dependent on state funding which is either being printed by the treasury or is borrowed money.

    The government via bank nationalisation already owns half the housing in the country which have outstanding mortgages, and already we see that they will not evict those falling into negative equity and unable to pay their mortgage.

    The government is planning rescue of major companies via loans and soon to be further nationilisation subsidising production of goods that people cannot afford to purchase that will just be stockpiled.

    In the EU where 80% of our laws are now decided, we vote for EU candidates but cannot change an EU government just as in the Soviet Union all elected candidates were in the Communist party.

    The socialists have socially engineered the majority electorate with borrowed funds to be dependent on the state so that by necessity they are the ones elected to power as full blown Communism. Either that or they are debt serfs.

    Soon all the government printed money to counter falling tax revenues will create hyperinflation that will destroy all wealth and savings from those prudent enough to have saved.

    To cap it all we now live in a survailance big brother society that is increasingly becoming totalitarian.

  • Comment number 78.

    I saw the video; excellent work....and I learned a lot of important information!

    Also, I saw the TEXT of your report...And, I am very glad, that you made it available.

  • Comment number 79.

    Post 57 Socialism ,you have two cows you give one to your neighbour ,he then steals the other one ,accuses you of capitaslistic greed and shoots you .

    The difference between capitalism and communism

    capitalism ...mans exploitation by man .

    communism ...the other way round

    Without labels human history is mostly about the pair bonding mating type game between greed and stupidity ,banks and pollytitians and ostriches [with their heads in the sand]and peacocks

  • Comment number 80.

    (I'll be quick because it's late, i had written a lengthy blog but the website crashed just as i was about to submit, thanx for that)

    Great article Robert but I disagree when you say....

    "the economic contraction is highly likely to be more severe in the UK than almost anywhere else."

    This seems to be a common view mainly because of the fact that the UK has such a high debt burden of appx 300% of GDP.

    I just want to say that I think that many commentators and the wider public, don't seem to remember or appreciate what happenned in the early 1990's!.

    When the UK was at the end of the 80's boom, we had a 'crash' , after years or ballooning asset, property, share prices and a 'strong' pound. Same as now.

    Then, as now, when the crash came, and the pain was felt, we dropped out of the ERM (except now the pound is 'allowed' to fall in a freely floating exchange rate system, thankfully). Making UK exports much more competitive.

    Then, as now, interest rates were dropped greatly (except then it was because we did not have to 'defend' the pound anymore when dropping out of the ERM in 1992) and now not much of the rate drops are being passed on to borrowers, but it helps.

    Then, an now, public spending was boosted (much due to the rising cost of unemployment benefit to many thrown out of work). But much, as now, was for other investments to boost aggregate demand. (Mr Lamont then Mr Clarke did this once they were freed for the ERM budget rules).

    I point is that I think that despite the UK's high debt burden, and our 'hit' from jobs lost in financial services and credit restriction in general.

    I still argue that the UK will NOT be the worst affected, when all is said and done, as long as the 'normal' adjustments of currencies, and other prices, is allowed to happen, this will lay the foundations of the UK's recovery, in say 2 years?

    Can't be sure of course. But I would put a small wager (if I still have a wage at the end of the month!)...that the UK will, despite taking a big initial 'hit' will actually recover FASTER that many other countries!

    I say this mainly because we are not constrained by being in the, hate to say this, but the EURO. Unlike eurozone countries, we can slash interest rates more than the euro area can, we are allowed to spend more to boost aggregate demand in this crisis more that they are 'allowed to' (with EURO budget rules) and the Pound can 'weaken' against other currencies, so giving a much needed boost to exports.

    All this, I think, will mean the UK will recover faster, and start to pay off its debt burden sooner than other countries, even with a higher debt burden!

    Thats how we 'got out of trouble' last time (in the early 1990's) and that's how we will this time. (well help MASSIVELY anyway) ..This is textbook stuff.

    I personally think this may have been Mr Browns cause for a little optimism this week in the news, when he was saying how the UK may just recover quicker from this crises than many expect.

    Not to play down the severity of the crisis, no at all, but Mr Brown, may, just may have been taking a little bit of hope, from the dusted off pages of his old 'economics 101' textbook? Which is still relevant even in these extraordinary times! We all need a bit of hope at the moment!!

    Merry Xmas and a (try to be happy) 2009 everyone

  • Comment number 81.

    #6: Great idea!
    When the regime stops working let's not worry about replacing it - let's just find a new name for it!
    'Capitalism' is a very broad term. We've tried several different sorts of it over the years and the most recent one is seriously flawed. It's going to change anyway, whatever we do.
    Do we know what changes we could make? Or should make?
    Don't see much evidence of that. My guess is that whatever lessons we think we draw from this crisis, we are still riding the economic wave . . . No, hang on! Surely wWe've fallen off the wave and are being dragged along by the wrist strap? We aren't sure where we are, which direction we're facing, or which direction we're being pulled. And as for our chances of getting back on the surfboard, well . . .

  • Comment number 82.

    Robert, this is so much rubish!

    You must get out more, currently you are stuck in your economists thought prison and you take no account of external influences.

    Example: you say 'we will get through it ... new capitalism, ... etc'
    The Energy Crisis will stop any attempt at recovery as soon as it starts. Oil production is set to start declining from 2009 onwards, no known combination of other energy sources is anywhere near cabaable of replacing the rducing il supply, populations are rising towards utterly unsustainable 9bl.

    No, the fundumental change is that we have just arrived at the Enf of Growth.

    We have just completed the Century of Growth and from 2009 we enter the Century of Decline.

    Growth is fundumentally dependent on the availability of cheap energy. As energy becomes scarce and expensive, so growth will no longer be possible.

    REad more about it at

  • Comment number 83.

    Robert, this is so much rubbish!

    You must get out more, currently you are stuck in your economists thought prison and you take no account of external influences.

    Example: you say 'we will get through it ... new capitalism, ... etc'
    The Energy Crisis will stop any attempt at recovery as soon as it starts. Oil production is set to start declining from 2009 onwards, no known combination of other energy sources is anywhere near capable of replacing the reducing oil supply, populations are rising towards utterly unsustainable 9bl.

    No, the fundamental change is that we have just arrived at the End of Growth.

    We have just completed the Century of Growth and from 2009 we enter the Century of Decline.

    Growth is fundamentally dependent on the availability of cheap energy. As energy becomes scarce and expensive, so growth will no longer be possible.

    Read more about it at

  • Comment number 84.

    If we have a New Capitalism, we need to have a New Consumerism too?

    Just 25 - 30 years ago:

    - Most families had only one house
    - Most families had only one car
    - Most families had only one TV
    - Most families had 2 parents
    - Most families took one holiday per year, usually in Uk
    - Most families knew their neighbours
    - Most families grew their own fruit and veg
    - Most families shopped locally, before Tesco was dominant

    How quickly we have messed it all up??

  • Comment number 85.

    Robert, this is so much rubbish!

    You must get out more, currently you are stuck in your economists thought prison and you take no account of external influences.

    Example: you say 'we will get through it ... new capitalism, ... etc'
    The Energy Crisis will stop any attempt at recovery as soon as it starts. Oil production is set to start declining from 2009 onwards, no known combination of other energy sources is anywhere near capable of replacing the reducing oil supply, populations are rising towards utterly unsustainable 9bl.

    No, the fundamental change is that we have just arrived at the End of Growth.

    We have just completed the Century of Growth and from 2009 we enter the Century of Decline.

    Growth is fundamentally dependent on the availability of cheap energy. As energy becomes scarce and expensive, so growth will no longer be possible.

    Read more about it at

  • Comment number 86.

    I think that the government is underestimating the severity of the financial downturn.
    What happens next year when large numbers of companies go bust and the jobless nubers rocket.
    Its obvious that the revenue from income tax and NI will diminish.
    Where will the treasury get the money to service the bail debt used for the banks( and possibly other industries)
    Britain will effectively go bust.
    Why do you think peole at now dumping sterling.

  • Comment number 87.

    Off Topic?

    I missed RP on News at Ten and due to my slow internet connection can't really watch the videos on my PC in streaming mode.

    Why haven't the Beeb put these out on iPlayer? They are a lot more interesting/relevant than most of the cr@p that is available to the viewing public...

  • Comment number 88.

    Shops and Banks are deliberately causing an economy by false reporting.

    We have all seen in recent days shops sold out sold out of wanted items. Today I deceided to test my belief so I went to Tesco who had sold out of Euro's and offer ed to buy £100 in euro's. They wanted 114e, I offered them 110e they refused. This was a 4% profit that they turned down. They also now having Euros could have sold them for another 6% profit.
    The chance to make 10% profit turned down.

    I then tried the same offer in several Banks again to be turned down.

    Businesses need to be told that we are not going to continue to support them in cigars and Taxis

  • Comment number 89.

    Fairer capitalism? I doubt it.

    There are three types of people who wield power:

    1. The winners

    2. The losers who have lost so much that they have everyone else by the short and curlys (e.g. banks).

    3. Politicians (who like riding on the gravy train)

    I can't see anyone in that group willing to give up their power, can you?

  • Comment number 90.

    revealing ,Always well presented and punchy and loved all the city pictures.
    Reflective of the importance of personalities as well as Anglo american debt trend
    but don't forget big government crowding out wealth creation .We now have to find a way to pay our way and big kindly soft cuddly governement ain't going to do it!

  • Comment number 91.

    I don't really understand how to reconcile the conflicting messages we're getting from on high.
    Consume less and save humankind ( the planet will continue without us ) or consume more and save the economy?

    I'll just have to muddle through 'til they make their minds up I suppose.

  • Comment number 92.

    mandelson is a snake and has made sheds loads of money doing no much but spending tax payers money in th europe, he needs hanging trying to blame banks it's the government at fault, but they get funding from these big buinesss and banks, so herein lies the deciece, and they think w are all idiots that, need rules to build house on our own bits of land and a licence to do anything, the little man/lady has had enough, watch out for riots next year and deep unrest.

  • Comment number 93.

    The money lost by the banks didn't just disappear. A very few people are now very very rich. If we want democracy to continue then we must tax these billionaires now. We cannot allow so few people to have so much money and power!
    We need a world wide wealth tax.

  • Comment number 94.

    Linny Skinny. Foget Mandelson, Everyone is blaming the banks because they are the ones at fault! They threw away vast sums of money and then grovelled to the government to get bailed out. How is that Mandelson's fault?
    You should be blaming 1) the banks and 2) the people who made all the money out of the scams!
    We now have billionaires walking around who made fortunes by selling complicated products to gullible (and greedy) bank managers and short selling on the stock marget.
    Basically they are walking around with OUR money whilst we are all in debt!!!

  • Comment number 95.

    Hi again,

    more thoughts continuing from my previous comment (80)..... (warning; I go on a bit!!!)

    Robert, also when u say.....

    "As for alleviating the burden of all that debt, history would suggest that’ll necessitate the printing of money on a colossal scale, a revival of inflation, to reduce the realvalue of the debt"

    I understand you say that is not really an option because of the consequences for savers, inflation and risk to government etc...

    Again though, no mention of the role of currencies in all this? Apart from a brief mention pointing to

    "the extraordinary volatility we've experienced in the price of sterling" along with other prices and assets etc, being 'bad' for businesses in their ability to plan etc.

    But no real mention, as I tried to point out in my first comment, about the role of a 'weakening' pound and how it could help? There may be no need to print money on a collosal scale. as you suggest? Devaluation of Sterling may help massively instead?

    In particular, no mention regarding the 'role' a falling pound (now at near parity with the euro) has in boosting the UK economy, by helping UK exporters with a much needed 'shot in the arm'?

    This, despite UK exports not being what they used to be in the old days, would still have a massive boost to the wider economy too, with the incomes from this being spent in the wider economy, having a classic Keynesian multiplier effect?

    I know that in normal circumstances that a 'weakening' pound, puts off inward investment, if foreign investors believe the 'value' of any UK investment made in pounds, risks being diminished by a falling Pound.

    But it will be worse if the UK economy sinks further that it 'should' if the UK was in a 'fixed' exchange rate mechanism, or the in the EURO and gave no relief to exporters. Then inward investors would 'take fight' much more.

    And, in normal times, the imported inflation from dearer imports relative to exports, is seen generally as a 'bad thing'. But as we all know, these are not normal times.

    Indeed, a falling pound would 'import' some inflation (via dearer imports) which would shoo away the 'bogey man' of deflation which is, if I'm not mistaken, what governments around the world are trying to prevent?

    Isn't a freely floating currency is a perfectly valid 'adjustment mechanism' which can act as an economic 'safety valve'? both, when economies 'overheat' (currency rises) and when the economy 'cools down' too much (currency drops).

    I'm not saying that it is a 'panacea' for the crisis, not at all, all I'm saying, as touched on in my first comment (80)

    All i'm saying is that the UK is lucky enough at the moment to have a freely floating Pound, (as I said earlier has already dropped significant amount, especially relative to the euro) and I argue that it is this fact that will mean the UK will recover sooner and more vigorously than our European friends especially. But not for , say 2 years or so.

    Isn't it possible that despite the UK's high debt burden of 300% of GDP, we will be able to recover sooner than the rest of the EU?

    A high debt burden is only really a total disaster (not saying it's not a big problem for the UK) ...but only a complete disaster for a country if the economy cannot adjust normally via exchange rate movements, interest rates and public spending too.

    Remember, the EURO are countries cannot 'devalue' (to boost exports).

    Cannot cut interest rates to suit each country (only have a euro rate that may not be low enough for all members).

    And each country in the euro is still constrained by EU budget limit rules (max 3% GDP for each member state).

    Already we see in the papers (all the broadsheets) about how, especially France, Spain and Germany and screaming now!

    They are really hurting badly, much worse than the UK already, with higher unemployment (especially France), collapsing property markets (especially Spain) and dying exporters (especially Germany).

    I'm not saying the UK doesn't have any of these problems, all I'm saying is that in the EURO countries the situation is much WORSE, than the UK!!!

    And will continue to be much worse as long as they are totally hamstrung by the EURO!!!

    All the talk I've heard from EU ministers saying they are better off 'together' in a 'strong' euro, able to support each other, and no currency speculators able to inflict a 'run' on any one EU currency, because they are all in the euro, is I'm afraid all rubbish.

    I think they just wish they could have a devaluing Euro or floating currencies right now!! They just cannot say it!!

    There are limits on the how far the ECB and other EURO members can help each other, fiscal packages work only if they are accompanied by currency adjustments. And interest rate changes suitable for each individual countries economy.

    I go even further, then, and will put a bet on this crisis being the undoing of the EURO eventually. When the full consequences and full pain is felt by each EURO member, the super high unemployment, social unrest, political turmoil and pressure to leave the constraints of the EURO, will become too much for them to bare.

    I also think I have answered my own question about why this is not talked about much by leading commentators, it's just a wild guess but in much the same way EU leaders 'cannot be seen' (by the media /public) to 'talk down' their currency, it;s the same in the UK.

    Only recently a certain politician (in the opposition) was totally castigated from all fronts, when he even talked about the pound and risks to it.

    Same with any leading commentator like Robert Peston, he get loads of flack all the time, (accused of 'causing' a run on a bank) ever since he broke the story on Northern RocK (I saw Panorama today).

    God forbid if Robert started talking about how useful a falling pound would actually be? He'd be hounded and screamed at for 'talking down the pound'.

    Yes, after watching Panorama, I believe he would get allot of fallout, he has become that influential it seems!!

    I'm probably totally wrong, he maybe has talked about it in other articles/blogs and I just haven't seen them.? Or he does not think currencies have such a big role?

    Or thinks the weakening pound is too damaging? Maybe it creates too many problems for government to raise finances/sell government bonds to foreign investors?

    Please, I would love some reactions to my comments!!

    (If I havent bored you all to death by now?)

    That's all for now, thank Christ (well I did say at the beginning that I will go on a bit!!)

  • Comment number 96.

    One key moment in the film is when Lord Mandelson admits that they achieved the state where they actually believed the rubbish that they were expounding to the population. They actually felt that the use of debt raised on what were appreciating assets, i.e houses could be used to fund purchases of depreciating assets, i.e. expensive cars and that this was sustainable.
    How was it that apart from USA & UK the rest of EU did not follow this example, as they could probably see the inherent dangers? It's hardly surprising that the German Finance Minister and the Archbishop of Canterbury are pointing out the current administrations lack of credibility.
    At least some of the bankers are admitting that they got it wrong.
    GB is a bit unseasonal with his performance as Pontius Pilate, surely he should save this for Easter?

  • Comment number 97.

    living it large is over.
    we as a family have no debt and own our own home, but still my husband and children will have to pay in taxes to straigten this mess out, i agree these 5% of the population that own 90% of the wealth should dip in too.
    free we are all slaves

  • Comment number 98.

    BREAKING NEWS FLASH FLASH BREAKING NEWS.....................................
    Solution tio Save the UK and the world. ITS HERE - REMEDY is HERE

    All Savers should get an interest rate of 20%
    ( there are more savers than borrowers by 7 - 1 )
    Borrowers rate stays the same. 2-3% They may get jealous but they will be no worse off.

    The money to pay the savers will come from the government. They will need to print money any day now so why not give it to those who have been prudent and have been fighting the good fight. JUST THINK IF WE HAD NO SAVERS AT ALL - WHERE WOULD WE BE NOW

    The savers will be incentivised to spend.
    The savers spend will signal to business - hey people are buying. The business borrow under very tight conditions.

    Moral of this.
    The greedy borrowers who got us into this (many words come to mind ) will be given a Godly and biblical message about being in debt.

    Alternativley the Government may print money and funnel this through the public sector for public projects and we all know which sector of the Uk working population are "job secure and smug at the moment" with feather bed pensions and an ability to be more apathetic and singularly un dynamic then my my shoelaces.

    The Hedgemaster

  • Comment number 99.

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

  • Comment number 100.

    The attitude of historical monarchical taxation is bogus regarding the growing abstruse reconditism in man that started with General Roberts’ rules and then keeping his head. Therefore, Peston’s views of only taxpayers’ money footing the bill is a bit of British kingly rubbish, I say. We must look at the larger picture not being portrayed here. The markets have been warning about this “adjustment” for quite sometime. We, in America, did not want our gas to go to the European prices they have had over a decade. The Americans got their wish with this banking “deflation.” The lowering of prices was inevitable because no one wished to perceive hyperinflation again with head of lettuce costing a million pounds. It is a matter of sophistication in not becoming a third world country seeing denominations of bank notes at 10,000 whatevers and buying nothing with it. Also, further naiveté regarding the international bankruptcy at the 1930 Geneva Convention elevates Pestion’s countryman Lord Keynes regarding his grand genius of “deficit spending.” How soon we forget what has been going on for so long. Hasn’t anyone heard the term “quadrillion” before?


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