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Blubbing bankers

Robert Peston | 10:21 UK time, Thursday, 29 January 2009

Want to wow friends and colleagues by pretending you've been hobnobbing with global business and political leaders in Davos over the past 24 hours? Here's what you need to know:

1) Prime Minister Putin was conciliatory towards the West in a speech devoid of specific commitments on anything of substance. There was an audible "phew" from the global uber-elite.

Wen Jiabao2) The Chinese Premier, Wen Jiabao, both reassured and humiliated the western bankers. He reassured them with his account of how the supply of credit is rising again in China, which gives him confidence that the Chinese economy will grow by a more-than-respectable 8% in 2009. He embarrassed them with this manifestation of the strength of Chinese banks compared with their US, UK and eurozone peers (a strength that is the direct consequence of Chinese government policy).

It's very irksome for the Americans in particular that the Chinese version of what they see as their business model is holding up so well. And as if to rub their noses in it, the Chinese premier confided that he re-read Adam Smith over the summer (note "re-read") to reassure himself that the founder of modern economics wasn't the dogmatic opponent of government intervention that liberal market ideologues contend.

3) As I write, the chief executives of many of the world's big banks are meeting in top-secret, private session - to discuss what to say in their also top-secret meeting with finance ministers on Saturday morning. Here's the scoop on what the bankers will say: "Help!!!!!" (roughly translated as "only the further generosity of taxpayers can prevent us falling over as a consequence of the big losses we're incurring on our imprudent lending").

4) The Mayor of London, Boris Johnson, had the depressed plutocrats in stitches at Barclays' swanky dinner last night. They loved Boris's refusal to acknowledge that the City is in something of a pickle. Meanwhile, at Standard Chartered's restrained celebration of the Chinese new year, hardened bankers were moist-eyed as the legendary Welsh bass-baritone, Bryn Terfel, led a sing-a-long of "You take the high road, and I'll take the low road". I guess for the first time in their careers the star bankers can empathise with the soon-to-be-executed tragic hero of Loch Lomond.

Comments

Page 1 of 3

  • Comment number 1.

    sounds like a sleeper to me
    got any good rumours about wild parties etc?

  • Comment number 2.

    Robert, re point # 3. Does this mean the banks will be asking for MORE money from taxpayers to bail them out, beyond the measures lready announced? Surely not.

    Also, what is different about Chinese banking policy that allows them to continue to be okay?

  • Comment number 3.

    What fun, what fun. Meanwhile it seems we peasants are not even drinking to drown our sorrows, and Threshers et al are looking to close 400 outlets.

    Thankfully it seems everyone drank their share at Davos ...

  • Comment number 4.

    "Here's the scoop on what the bankers will say: "Help!!!!!"

    and I thought we'd seen the bottom of the banking nonsense! I wonder if RP is including the UK banks in this group?

  • Comment number 5.

    Chinese economy may be doing very well, but at what cost to the people?

    Do we really want to aspire to their way of doing things in pursuit of growth like theirs?

    We may be furious at what's happening to us economically, but I REALLY don't want a regime like theirs. Baby milk scandal, bird flu, 1 child per couple, state housing, appalling wages, massive pollution, no freedom of speech.

    Come on Robert-8 percent growth-at what human cost?

    No thanks-bad as it is at the mo, rather be here.

  • Comment number 6.

    Boys Own analysis of the top 4 insider headlines:

    1. Without gas Russia does not have much of an economy.

    2. Socialism works; pity about the human rights impact.

    3. The world is run by an oligarchy.

    4. Boris has a day job as a stand-up comic.

    So Davos is as relevant today as it was last year and we can all sleep safe in the knowledge that democracy works and our elected representatives run the planet!
    (I am being ironic by the way)

  • Comment number 7.

    Also, how do you know these secret bank CEO's are meeting and the subject under discussion? I took their refusal to lend to each other to mean they weren't talking!

    Granted, however, given the timing of their withdrawal from Davis and the mewti g on Saturday, it does make one wonder...!

  • Comment number 8.

    CHEEKY !! Just because Paul Mason wasn't allowed to go, there is no need to rub it in - and his insightful analysis is hilarious, witty and with the painful sharp bite of truth...

    https://www.bbc.co.uk/blogs/newsnight/paulmason/2009/01/my_virtual_davos.html

    As for Boris - doesn't his auto/biography have him portrayed with a Nelson-style eye-patch ?

    "I see no ships..."

  • Comment number 9.

    OH, and Peston, see if you can't catch up with some of the Lloyds Banking Group guys who have been trying to squirrel a BIG PAY RISE scheme, just as the taxpayers' money starts rolling into their coffers, even though they have 'succeeded' in sending the share price not just onto the rocks, or into the ground, but positively subterranean...

    Payment by results ?

    I don't think so !!!

  • Comment number 10.

    An appropriate choice of song.

    It's about the Jacobite garrison of Carlisle.

    On their surrender half were hung and half were sent home.

  • Comment number 11.

    Ah, secrecy...

    "I'm bilderberg-ing a chinese wall, every day it's getting a higher, don't wanna end up another victim of love.."

    [Surely 'globalisation' ? Ed]

  • Comment number 12.

    Care to comment on this Robert?

    https://tinyurl.com/9zexjs

    Bankers!

  • Comment number 13.

    Robert/Bloggers a question please...

    If I understand this right an awful lot of the money we borrowed originated in China - we bought their goods, they paid their staff, they banked it, then is was lent back to us to buy more goods......

    If this is correct why aren't the Chinese Banks scurrying around trying to work out what their losses will be if and when the debts are in default!

    Is it because our Govs support of the banks is ensuring that this money is repaid to China?

    If we let a few of them go under will China's attitude change?

    Or did they manage to get their money back before all this started?

  • Comment number 14.

    Any yacht parties?

    Lectures in mortgage applications?

    Bit of a non even really

  • Comment number 15.

    How about bringing back the medieval punishments for all those fraudsters who call themselves investment bankers? Such as the stocks and having to wear sackcloth in public (with appropriate wording).
    Given that even some of the swiss banks are in trouble because of very un-Swiss like behaviour by their managements I am sure that ordinary mortals will be only too pleased to demonstrate their opinion of said bankers by pelting them with rotten eggs and vegetables and worse! Then make the occupants of the stocks do compulsory community service for at least 10 years......in Africa

  • Comment number 16.

    In the past seven years, bankers have learned a neat trick......you don't have to MAKE big profits, you just have to PRETEND to make big profits.
    That way you can pay yourself a lottery jackpot every year, and by the time the peasants find out they've been had, you're stinking rich.
    A neat trick, which must never be allowed to happen again.
    Gordon is begging everyone for "confidence", but it has been lost.
    The financial industry is wrecked, and its chief architect was G. Brown.
    Remember those old boys with their bowler hats, moustaches and beards....they were the rock of stability and trust that the UK banking industry was built on.
    What have we got today?...a load of wide-boys with one philosophy....get in, grab what you can... then get out quick before it all blows up.
    Playing "pass the parcel" with dodgy mortgages...disastrous.

  • Comment number 17.

    Mystic Meg could have foreseen your prediction re: Bankers

  • Comment number 18.

    Could it be that the near systemic failure of the capitalist financial system signals something rotten in the state of banking, or is this simply the ways things are? This is not a new phenomenon. Greed has often put the system on the brink of collapse and the politicians and power brokers rush around all of a panic, media frenzies fill the air and yet they still sit in their luxury hotels and waffle about what is to be done. Eventually, whatever they do the system rights itself, even if it involves war. Then historians can debate whether things came right because of government intervention or despite government intervention. Nobody is sure. So next time it happens, they can all dance the same dance again. Meanwhile, the rest of us look on incredulous that we could have such a bunch of idiots looking after our affairs. But then again, maybe they're not idiots, maybe we are the idiots for simply watching from the sidelines.

  • Comment number 19.

    > the star bankers can empathise with the
    > soon-to-be-executed tragic hero of Loch Lomond.

    No-one is saying they must be executed! We are
    merely insisting that they return their ill-gotten
    gains to us and, and go away forever. Surely, after
    what they have done, that is the least we should expect?

  • Comment number 20.

    "Blubbing bankers"!!!!

    But why on earth haven't they been sacked - we are gutless wimps. Suck incompetence in any other field of life would have quite justifiably warranted instant dismissal and a lifetime ban of employment in the sector again.

    It speaks huge volumes about the conniving conspiratorial incompetence of their masters that they are still in their highly paid, highly pensioned jobs. We, the people, the investors, the savers and the borrowers deserve to see heads role.

    I would give them something to blub about!

  • Comment number 21.

    robert,
    Can anyone shed light why the UK does not want to join the US and many other countries in getting Tax Havens to be required to give full disclosure?

    Even the TUC are querying why UK banks have 1000 tax haven domiciled entities.

    It appears that these and possibly many other business entities and related party transactions are not shown in bank p/l's it is a disgrace especially as they have already received so much cash from the UK Taxpayer and are clamouring for more.

    It can only happen in Britain that the government say that banks are best 'managed and owned ' by the private sector then in the very next breathe say that the government is going to implement a toxic debt insurance scheme for upwards of £250 billion.

    As of today the private market is in a mess to price accurately these instruments yet have been trying for many months to do so and our self confessed incompetent bankig ignorant government is going to ensure the taxpayer is going to be protected by devising and implementing an accurate pricing scheme in a few days.

    It beggars belief.

    Surely the insurance industry requires greater knowledge and expertise than banking?

    Why can not lloyds and the rest of the UK insurance industry meke an efficient market in toxic debts.

    Could it be that they are in fact so toxic that they will not touch them with the proverbal bargepole?

    Let us not forget their first strategy of giving the banks £37 billion to increase their capital ratios and start lending has ended in disaster.

    (The FSA just a few days ago bizarrely decided, hey banks do not need the now higher and more safe capitol ratios, so much for tough regulation and getting the banks to behave prudently)

    Finally Barclay's have been resisting valueing their assets by the 'mark to market' valuation except where it results in 'profits', namely £1.7 billion in negative goodwill on Lehman Bros assets and, circa £2.9 billion because of the low current valuation to face value of their corporate debt.

    Doing something is billions of pounds different to doing the correct thing and being first is totally and utterly irrelevant.

    The UK, like everyone else, can spend it's borrowed billions only once, printing money to cover up ill judged attempts are going to land our children with rampant inflation, crippling taxes and a worthless currency

  • Comment number 22.

    Shades of Harry Potter, Dr Who, et al. How
    on earth do you do it Robert? Do you have an invisibility cloak? A sonic screw driver? Your
    personal teleport portal? Whatever. You enthrall
    us tyros with your daily disclosures ,
    explanations and forecasts of all things financial.
    We are extremely grateful to you." Knowledge is
    Power".





  • Comment number 23.

    Would China be in it's present position if it did not manipulate it's currency.Is it not also the case that the domestic supply side of goods and services are predominantly provided by state run companies and imports (with the exception of commodities and digital equipment) are severely depressed by the use of tarriffs, import duties, consumtion taxes and onerous certification?

  • Comment number 24.

    Still no sign yet of anyone in banking or government waking up to the reality then.

    You can't just shuffle money about here and there, you can't just magic up some new money and expect not to have to pay for it someday, and you can't just bail out your biggest friends in industry.

    The Dear Leader still hasn't got the guts to tell his public that the boom-party is over. Posters are now starting to tell how they are being affected at a personal level. Nothing Brown has done so far goes anywhere near to helping them.

    If you have just lost your job and fear for your home and your children, does 2.5% VAT reduction cut it? Does the chance of a new car at 0% finance cut it? Does interest on your savings at 1% give you a buffer? Does food inflation at 9% make you feel conforted? Nope, I don't think so.


    First you have to be honest. There is no recovery on the horizon.

    The (personal wealth) boom was fueled by first easy credit card terms and increasing credit limits.

    Then easy terms on unsecured loans came in, for holidays, cars, conservatories........

    Then equity-release on your easy mortgage.

    Then house values increased, 5 times income came in and a second chunk at equity release if you wanted it.

    It was ALL, repeat ALL, smoke and mirrors. If we get back to normal, it won't feel like the normal we have got used to.


    All those who are going to lose their jobs are going to need new, sunrise employment. The car industry is not going to be the same. It has to break up into small, dynamic and flexible units.
    The retail sector ('discretionary purchase' outlets -good call moraymint or Tigerjayj) is going to have to transform itself.
    The public sector has to divest itself of 30% of its workforce, where are they going to go?
    The energy sector is going to have to do the same. If it takes 15 years to get new large-scale power-generation installations into production, you need some small-scale local generators that can be brought on-stream in 5 years.

    ooh a hundred things have to be done differently. I don't want to have to emigrate; we may be a basket-case, but we have the best potential but the worst leadership.

    (I know -all that needs happen, for useless and dangerous government to prevail, is that good men do nothing). Yep well we'll just have to learn that lesson again.

    Regards,




  • Comment number 25.

    What a jolly wheeze! Meanwhile, back in the real world.......

  • Comment number 26.

    Not worried about the bankers and their tears. Even if they did change their ways and produce a new system it will be far too late to change the mayhem that is going to happen.

    Far more worrying is what Putin and Wen Jiabao said - or more worryingly did not say. Neither of them committed themselves or their countries to any action that would help the Western economies. In differing ways I suspect that we will see both Russia and China flexing their muscles in the very near future.

    Nobody yet has talked about the specter of war but we should be aware that both of these countries may use military options to get their way.

    dangerous times

  • Comment number 27.

    Whether the Chinese have the answer or not the function of the banking and finance system is to serve the real economy where people are clothed, housed, eat, move and enjoy themselves etc.

    G Brown would do us all a favour (apart from the terminal career option) if he would support a new world order where banks and the finance sector in general are not just regulated but are controlled by national and supra-national organisations.

    I agree with Paul and Robert Davos should never be taken seriously but with the appearance of Boris the signs are they are not taking themselves seriously!

  • Comment number 28.

    why is Chinese strenght a direct consequence of their policy - I would say our weakness is a direct consequence of our stupidity, greed and belief that the world owes us a living and we deserve the best without having to work for it

    I am amazed that China, India, Al Kaida et al are not falling about in the aisles laughing at the total mess we have landed ourselves in

    it is a pity that many in what we used to call the third world will probably have to suffer even more as a result of this as I expect they will come a poor second to the banks with their begging bowls

    it is a desperate time to call an election but I feel that everything GB does has the election in view and until that is over we won't get any sensible policy in this country and much more of his insufferable pontificating about how wonderfully he is managing everything - and to think I've been a labour supporter all my life

  • Comment number 29.

    Great news! I have spotted a genuine green shoot. My junk mail from banks, building societies, credit card companies, sub prime lenders all offering cheap loans and fresh plastic has now dropped to an absolute zero.

  • Comment number 30.

    re: 16 stevewo.

    I think you'll find that Bankers shed their Bowlers and Trust a long time before 1997.

    If you're going to blame politicians - then Thatcher and Major need to be included . . .

  • Comment number 31.

    Why would bankers be blubbing ,did they bite off more a la carte Moby Dick than they could chew at Davos, forgetting that its supposed to be the other way round for these Joanahs .

    Whale hunting is illegal except for scientific purposes and your whealth is at risk if you attempt to seccuritize a whole whale at one sitting

  • Comment number 32.

    My point is more to do with the government propping up the UK banks. This was never going to work because the banks still have control. Many comments have been noted from small business that the government don't have a clue and I totally agree that there seems little comprehension of what is really happening at street level. To have given the banks literally £10k per head of our population has been and will continue to be a farce. The government need to get talking at street level. A better option would have been for the government to hand out £10k in vouchers for tax paying families to spend on the high street/ selected purchases. An incentive to those in jobs to keep the economy running and keep others in jobs by boosting industry and retail. Our chance of this happening is zero of course, but it would have worked! Until our government can think in such radical terms is only when we can start pulling ourselves out from this mess - we are in their very incapable hands though.

  • Comment number 33.

    2

    I suspect if Chinese bankers had achieved what the Western bankers have, heads would roll.

    Literally.

  • Comment number 34.

    Is it a coincidence that Davos and Davros, Dr Who's arch-enemy and creator of the Daleks, are separated by only a single letter? Because Davos is evil, isn't it? All these rich masters of universe coming together once a year to reinforce their shared dogma about how to rule the world, while the poor saps who have to suffer their decisions are excluded.

    Climate change means the end to 'growth' as the dominant mantra of the age. Where is the new, radical thinking about realistic alternatives? Not at Davros - oops, Davos.

  • Comment number 35.

    bankers....dont you just love them! they bring their banks to the brink, ask for and receive billions of taxpayers hard earned money....then take off, all expenses paid, on a jolly to Davos! who is fooling who?

    i say not a penny more.........in fact safeguard the deposits and let them all go to the wall......HSBC and Standard Chartered will pick off the best bits and the rest can join the ranks of the unemployable.....

  • Comment number 36.

    30
    They have had 12 years to change.

    When do you stop blaming your predecessor?

    In my line you had a few months grace to identify the problems.

    You had to put plans in place to resolve the problems and then it was down to you.

    Next annual appraisal, what have you achieved?

    No way you could say it was all my predecessors fault.

    Perhaps that is the REAL problem here, always blaming the past.

  • Comment number 37.

    As I understand this, the banks have been forced to double the amount of capital they hold in the form of actual bank notes, which because of Fractional Reserve Banking means that they can, in total, only support about half the sum in loans that they could before, which means that the overall money supply of all types should decrease by 50%, causing a deflation of 50%. So wouldn't that mean that the government can print money to the extent of doubling the sum of notes and coins without actually causing inflation...?

  • Comment number 38.

    If America just defaulted on it's debt to China, we could all follow suit, write off our debts and start again..That would be the easiest way out of this mess wouldn't it?
    Ultimately that is the way we are heading. Western governments are consolidating their debts by using the tax payers as guarantee. Once the taxpayers refuse to pay the imminent massive tax hikes, the governments will blame the people for forcing them to not be able to pay the government debt. Great! We, the taxpayers will be blamed for upsetting China. Time to buy "defense" stocks.
    The obvious way out is to get the bankers' bonuses paid back...but oh no....they would rather see us go to war than lose their mumsie way of life. These office pansies are pathetic.

  • Comment number 39.

    I think it is time to let the banks go. When they shout "Help!!!!!" cock a def'an and look the other way. Otherwise my six year old will still be paying when he is my age.

    I know all you banking people will think I am terrible but you've had your chance, ney chances, and you have blown them.

    Well because of you my business will fail and guess what I can't hear you shouting to save me.

    Lets get it over with after all who if the banks fail, who are the big creditors, Johnny foreigner, well hard luck.

  • Comment number 40.

    Is it not obvious that to sort out what has become a global economic crisis, it would help if we had some sort of world government, responsible directly to all of us? Davos and the G20 are the virtually useless because each national leader is pursuing his or her own narrow national interest and is mainly concerned to get something that can be spun so as to cheer us up at home.

    They will claim that they are going to cooperate for the common good, but when they return home they will pursue national interests, like the UK's policy of allowing the pound to depreciate, even though they know that these are not in the best interest of the world as a whole, because other countries will simply use them as an excuse for retaliation.

    A world currency would also be a good thing. But this and a directly elected world government will not happen in the near future, because most of us still have an irrational belief in the importance of national sovereignty, in spite of all the grief that nationalism has brought in the past and the obvious impact of global factors, which no national government can control, on all of our lives.

  • Comment number 41.

    #30 robrob2002

    Blamed for what?

    Allowing the Banks to run riot after they left office?

    For standing by for years doing nothing - then doing something when it’s too late and achieving nothing?

    For thinking we are best placed to weather the storm, when we are worst placed?

    For thinking the boom time through your period in office was down to you, but the crisis is someone else's fault?

    For getting rid of the slight Boom and Busts of the past and replacing them with the mother of all Boom and Busts

    For idly watching the people of you country struggle under a mountain of debt and think the solution is to get them to spend more and free up lending?

    Never forget Browns Phd is in Political History, not Finance – this man is a Career Politician, be very afraid when he starts moving his lips!

    This is not down to previous Conservative Governments, you’d have to presume legislation was put in place and then they would stand back and fail to control it, if and when it got out of control............ that was this Party, the one that does think money grows on trees

  • Comment number 42.

    If Banks are levered 30 to 1, then a mere 20%decline in fully mortgaged asset values would wipe out 5 times their base capital [and thats a big gosh].

    This observation was prompted by the report that bankerrs laughed uproariously at Boris insistence that the City has no problems .


    And explains why Soros sugested that one good bank should be created rather than a super toxic one

    Presumably Cash rich Soros types dont know where to put their sterling cash safely




    Although the BOE might proffer a sugestion


    What are we not being told ?

  • Comment number 43.

    They should all be worrying as one day the Bolsheviks will be back.

    Why should the taxpayers be expected to fund this conspiracy against their own interests?

  • Comment number 44.

    Re 30 robrob2002.

    Yes I agree the industry has been going downhill for decades, and Maggie and John didn't exactly help.
    Perhaps Brown is just the final nail in the coffin.

    And the Davos crowd?
    Well, they may be Roberts' global uber-elite, but they dont know how to value a house or find someone who can afford to pay for it.

  • Comment number 45.

    #26 Thanks for letting us all know that Russia and China both resort to military options to get their way.

    I suppose that Chinese and Russian military aggression are so well known that you feel no need to actually provide any evidence to support these claims.

    Perhaps you have in mind the Chinese invasions of Vietnam, Grenada, Iraq and Afghanistan. Or maybe you are referring to the Chinese support for the Nicaraguan Contras or the Chinese plot to assasinate Hugo Chavez, or the habitual Chinese threats to Iran.

    As for Russia I presume you are referring to their unprovoked invasion of the peace loving Nazis.

  • Comment number 46.

    surely the biggest growth point in the Chinese economy is derived from the massive exports they make. Huge swathes of their population live near or below a poverty line, the rest are made up of those that work to manufacture goods to ship overseas, and the super rich.

    if the rest of the world is no longer buying Chinese goods because our economies are in meltdown, and most of China can't afford (and probably don't want) those goods, surely it's only a matter of time before the Chinese economy collapses as well.

    Growth of 8% this year ? I suspect Wen Jiabao went to the same school of economics as Gordon !

  • Comment number 47.

    "Blubbing bankers".

    I can think of a word that rhymes with 'Banker' that would better describe the majority of the attendees.

  • Comment number 48.

    I can not understand why there is not OUTRAGE at the BANKERS living it up on future tax payers money.

    They are all going to be as waelthy as ever may be thinking about another yacht and a couple of new mistress' while the mass' will not be able to find work anywhere other than at ASDA and those that manage to keep their jobs will be taxed to the hilt.

    ITS TIME FOR A SERIOUS DISCUSSION ABOUT JUSTICE, PUNISHMENTS AND CONFICASTING SOME OF THIS FRUADALENT WEALTH THAT HAS BEEN STOLEN FROM THE TAX PAYERS.

  • Comment number 49.

    #38 - Oh yes, I'm sure that would work just fine.

    If it was as easy as just writing off debt to China, don't you think more countries would do it?

    What do you think that would lead to in terms of a Country's credit rating? Which foreign investors would ever.... EVER... put money into that country again?

    And in respect of China, a nuclear power, it wouldn't exactly lead to get relations would it - if you catch my drift.

  • Comment number 50.

    PestonfreudeNoun (circa early c21)

    1. Irrational sense of joy at massive economic collapse even though oneself might suffer the consequences.

    2. Rage at beneficiaries of boom times (esp Bankers) still profiting despite the rest of the population suffering economic downturn.

    From Peston + Schadenfreude

    Robert Peston was famous as the Blogger of the Great Fall of '09.

    Some historical sources now attribute the entire crisis to his panic laden diatribes and assert that the World Economy of the time was fundamentally sound. However, most would say he so accurately reflected the sense of the times that his blog is now required reading for History students at all levels.

    A number of movies about Peston were made, one of which went on to box office success ...

  • Comment number 51.

    These Bankers were warned at Davos in

    2005

    https://news.bbc.co.uk/1/hi/business/4209527.stm

  • Comment number 52.

    We definitely need to emulate the Chinese system, but where to we find one billion people willing to work for $1 a day?

  • Comment number 53.

    ...talking of our beloved banker friends and the very interesting comment #9 above, does anyone know when Lloyds Banking Group will be announcing the expected job losses post the HBOS merger? It seems to me the HBOS guys in the Corporate side are still happily employed whislt many of their colleagues in other firms have already fallen...

  • Comment number 54.

    re: 36 sosraboc

    I don't think that Labour would have been either elected or retained power if it had proposed changing the market reforms brought in by Thatcher in the 80s.

    Can you imagine any UK politician getting elected on policies to reduce house prices and limit borrowing?

    They should have done - but since when have politicians ever looked further than the next election?

    We need to look further than the current government for the causes of this crisis - and I also suspect that we as individuals with our desire to recklessly borrow and spend have played a significant part . . .

  • Comment number 55.

    Message for Robert Peston

    Robert, In the midst of this banking debacle, I am surprised that no-one seems to be making the point that the reason consumers, taxpayers, small companies are all suffering at this time is beacuse the retail (high street) banks have been allowed to stray into the riskier areas of investment banking. This didn't used to be the case years ago - and the investment banks (merchant banks as they were then called) took their own risks and suffered their own pain, if they got it wrong. By allowing high street banks to buy their way into these riskier investment banking activities - we have created a problem on the high street - and for consumers and those small businesses that rely on them for funding. Why don't we legislate in such a way that high street banks remain seperate from investment banks - and make their returns from serving consumers & small businesses? i.e. you are a duck and I am cat - and we shall remain different creatures doing different things!

  • Comment number 56.

    #20 has it spot on. My bank has suggested a vlaue of my house that is worth 35% less than last year yet properties are going for more than I paid now.

    This is a ruse to get me on a SVR paying the wrong price.

    When Wall Street bankers complain of low bonuses, treat them as they treat their clients and tell them to get a life or get lost.

    Bankers today dont need help or secret meetings. They do however ned reality checks and that wont happen whilst we have weak kneed politicians still believeing Bankers know more than my little finger.

    The sooner we have real political leadership that stops dithering the better.

    Unfortunately for Labour only a new broom will sweep clean, so go now and put your Country first for once.

  • Comment number 57.

    I agree with #8 lordbedd... that Paul Mason's take on Davos is much more amusing; it's on his newsnight blog from 2 or 3 days ago

    Aside from Paul Mason everyone who is getting tired of Peston's approach and is noticing the declining quality of this blog should have a look at Stephanomics, which is Stephanie Flanders Newsnight economics blog; nice to see that she is finally getting highlighted on the main newsbbc webpage too

    She has posted several excellent reports from Davos this week; they tend to be well-researched and insightful, and occasionally humourous too; she even includes interesting graphs!

    have a look at this one:

    https://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/01/the_ifs_spells_out_the_bad_new.html

    I'm coming to the conclusion that the effort put in by the Newsnight team on their blogs is also reflected by posters making more of an effort in their replies

    And the number of posts over there is slowly going up, whilst it would appear that the number here is slowly going down - I guess that would be market forces at work

  • Comment number 58.

    The dollar value of mortgages that actually will go into default changes as the value of homes drops. It also increases with the unemployment rate and the interest-rate the willingness or unwillingness of banks to lend. Some of these variables are within the control of the banks collectively. The less willing the banks are to lend the more home foreclosures there are in the lower the House prices get.

    The same logic applies to other loans based upon the use of the asset being purchased as collateral.

    If we could act in our collective interest, as opposed to the short run interests of an individual bank, we could break the cycle of declining house and asset prices.

    No matter how much money the government gives the banks or how financially viable way become a bank acting in its own interests would never undertake actions that presumed other banks would act in the collective interests, including their own. The government must compel this lending. Either that, or the government must do the lending itself and put the banks out of business.

    The failure to respond with adequate resources and in a timely manner only makes the problem worse. The fact that an initial $750 billion subprime mortgage problem in the United States context has now become a problem possibly involving (at least insuring trillions) of dollars of bad loans illustrates this fact well.

  • Comment number 59.

    Is there any reason why we should not just let the whole system shake itself down without any more government intervention at all. After all there firms out there that are thriving due to good management practices during the good times.

    Is there a case for doing nothing (much)?

    Hundreds of economists in America think so.

    https://www.politico.com/news/stories/0109/18068.html

  • Comment number 60.

    # 36 Sosraboc

    Didn't you know Flash Gordon is never wrong. He has always done everything right. Even when the evidence proves otherwise, he is still right.

    I once heard a conundrum about a man that always told lies and one that always told the truth. I forget exactly how it goes but if you assume Flash is the man that always tells lies you get somewhere near the truth.

  • Comment number 61.

    # 21 relevanceman

    the reason that the British govt are not signing up to the int'l attempts to reign in tax havens etc is that the City of London have been increasingly operating as an unaccountable offshore market

    thanks to the so-called 'light-touch' regulation and other moves by Tories and Labour alike to aid and abett the Masters of the Universe

    why do you think London remains the favourite destination for Russian oligarchs and tax evaders - yet another one - the mobile phone network chap - arrived here earlier this week, just escaping an arrest warrant in Moscow

    Brown, Cameron etc do not want the City to have their hands tied and continue to pour funds and help into their City friends;even now that the new US administration is starting to distance themselves from these types of people

    Have a look at the Simon Jenkins oped piece in yesterday's Guardian; it sums up the bankers and their friends in government, as well as the harm being done to the general economy by putting all the support into the City and nowhere else:

    https://www.guardian.co.uk/commentisfree/2009/jan/28/credit-crunch-comment

  • Comment number 62.

    So it all comes back to how countries run their affairs.

    Weren't we discussing this at the start of the financial crisis last year sometime?

    To compete in the future world wages will have to be cut by approx 75% all health and safety legislation will have to be abolished. Human rights legislation will have to be scrapped.

    Certainly no room for political correctness.

    Unions all abolished.

    Equality legislation will be a thing of the past. Benefit system scrapped. No work no pay.

    Self suffiency and export don't import.

    All these things that have made China the wealthy superpower it now is.

    We will never be able to compete against a vast regime such as this so the only alternative is that if China wants to trade with the rest of the world it will have to adapt and compete on the same level playing field.

    If these changes do not happen the rest of the world will be end up being so poor it will automatically follow China's path.

  • Comment number 63.

    Hi Robert,
    Did Putin and Wen say anything about the blubbing bankers at Lloyds planning to swap their pref shares for ordinary ones? Y'know, like you said last Monday that they were going to do......

    I bet those people who sold their Lloyds shares last week after reading your scoop are kicking themselves now eh?

  • Comment number 64.

    Blubbing bankers, eh?
    Somewhere in the Pacific you'll find a very small island - that's where the people who care live.

    As you reap, so you shall show etc. Unfortunately it's the little people who end up taking it in the shorts.

    Lock the lot of 'em up in a PMITA prison for malfeasance or whatever, then they'll *really* have something to blub about.

  • Comment number 65.

    I just watched Evan Davies episode from last night on iplayer

    Looks like he got the better gig Robert,

    Maybe you could ask all those bankers why they feel they got it all wrong?

    Maybe you could ask them if they're jobs should be at risk for being in charge and yet seemingly not accepting the responsibility?

    Maybe you could get one or two of them to query why they pay money into the FSA when efforts at regulation are so easily avoided?

    Then you could maybe ask Mandy about his car loan scheme?

    About mortgage applications?

    About the treasury's role in supporting the salary of an envoy in the Middle East with so little political capital?

  • Comment number 66.

    Robert

    The debt figures being thrown around at the moment, whether they are mega-billions or megatrillions, have reached a scale where it is becoming difficult, if not impossible, to relate them to the real world, (which most human beings still live in).

    When this sort of thing happens, we try to create comparisons which allow us to put things in context. However, I think most of the comparisons used so far, such as per capita taxpayer debt, do little to make things ant clearer.

    I would like to suggest a new measure for the impact of all this debt on human beings, one which reflects the cost over time taht it all entails. In exactly the same way that we do when distances become too astronomical to appreciate, and we begin to measure those distances in time, ie light-years, why don't we start to measure the present unprecedented levels of debt in debt-years, ie the time it will take for the taxpayers of the world to pay it all off? That way we would have a more scientific measure by which all so-called solutions could be measured, ie do they increase or decrease the debt-year burden of the world's taxpayers?

  • Comment number 67.

    What recession?

    "
    "Despite crippling losses, multibillion-dollar bailouts and the passing of some of the most prominent names in the business, employees at financial companies in New York, the now-diminished world capital of capital, collected an estimated $18.4 billion in bonuses for the year.

    That was the sixth-largest haul on record, according to a report released Wednesday by the New York State comptroller.

    While the payouts paled next to the riches of recent years, Wall Street workers still took home about as much as they did in 2004, when the Dow Jones industrial average was flying above 10,000, on its way to a record high.

    Some bankers took home millions last year even as their employers lost billions....""
    So, what else is new?And how has the former Poodle fared, I wonder....

    Peace and fair shares
    ed
  • Comment number 68.

    51

    Roach for Chancellor?

    One aspect of nay sayers is that they are right eventually.

    When bomb plots failed I believe the IRA used to say you need to be lucky every time, we need to be lucky once.

  • Comment number 69.

    54

    Perhaps that is why what we truly need is leaders and not politicians.

    I agree with your sentiments but not the logic, all politicians are a product of the previous regime.

    Where do you want to start the blame game and how far back is acceptable?

    All politicians will tell you they go into it for public service and the common good.

    Words and figures differ, methinks.

  • Comment number 70.

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

  • Comment number 71.

    Is the insurance scheme for new debts only? Or would it apply to loans, credit cards and mortgages that are already in the market and very likely to go sour? So many of us are overstretched and faced with unemployment.

    THE BANKS/BANKERS CANNOT BE TRUSTED TO HELP THE INDIVIDUAL! Why hasn't Crash Gordon Clown realised this yet?

    Help people to repay debts to the banks!

    IVA'S and bankrupcies have been increasing steadily for the last few years already, they will skyrocket over the next two years if people have no means of paying anything back!

  • Comment number 72.

    The main theme that is repeated over and over again in these blogs is peoples anger. Seriously people are fuming. Posters keep asking over and over again why are we not doing something and I agree - but what to do?
    Organize mass strikes like in France? Riot? Stop paying our taxes?
    Something needs to be done but it is hard to know what or how to organize it. I watched the BBC news late last night and it was the American report (cannot remember the anchors name but he is good) and he said basically that he feels sooner rather than later things are going to kick off as people are getting increasingly angry. He then asked the guy he was interviewing (who again I cannot remember his name!) why people were not.
    The answer was people are too scared right now so are not doing anything - they are scared they will lose the money in their bank if they rock the boat - and there is the rub.

  • Comment number 73.

    #5 I thinks thats the kind of UK that Mr Communism himself (GB) would like to see here in the UK, with himself as the new world order dictator.

    Just think of Baby P and forced adoption and the Family Courts,

    That process has already started

  • Comment number 74.

    I'm so glad you used the word blubbing, rather than wailing...

    The BBC might have had to moderate the blog title, if you'd done that....

  • Comment number 75.

    "Here's the scoop on what the bankers will say: "Help!!!!!" (roughly translated as "only the further generosity of taxpayers can prevent us falling over as a consequence of the big losses we're incurring on our imprudent lending")."

    We need to apply Bagehot's Principles, which include onerous terms for being bailed out. At the very least, these bankers need to be chucked. As well, their retention is a drag on trust. Keeping proven buffoons on the job doesn't inspire confidence.

    "And as if to rub their noses in it, the Chinese premier confided that he re-read Adam Smith over the summer (note "re-read") to reassure himself that the founder of modern economics wasn't the dogmatic opponent of government intervention that liberal market ideologues contend."

    He's correct. I'd like to recommend the following blog:

    https://adamsmithslostlegacy.com/BlogBlog.htm

  • Comment number 76.

    Bryn was actually singing

    "I'll take the high growth and you'll take the low growth"

    As for the Chinese Premier - I didn't understand a ruddy word he was saying, sorry. Presumably when he was reassuring he handed out flowers and when he was humiliating he waved an AK47?

    China the new engine of growth. That has me reaching for my Smith and Wesson.


    GC

  • Comment number 77.

    It appears that we, the UK taxpayers have become so lenient that it is becoming ridiculous.
    In fact Crash et alii have nothing to fear and will disastrously handle this crisis for time to come.
    I am concern that my kids and grand kids strangled by an immoral tax load will one day ask:” What did you do in 2007/8 to influence Crash et alii for becoming responsible?”

  • Comment number 78.

    #5 Tigerjayj

    I think you had better get used to the idea Tiger.

    The Robber Brown and his cronies are taking us halfway back to the Dark Ages - fast!

    Our only way to survive is to accept it and adjust our lifestyle accordingly, or better still, pro-actively sieze the initiative.

    Having lost our "golden age" (Brown's words) position in the of financial business world Premier Division, we will have to resort to subsistence living with what scraps of manufacturing we can garner.

    To do this I suggest we will have to:
    Scrap the minimum wage.
    Cut wages to sustainable levels.
    Pay senior managers on results only.
    Reduce Social Security benefits to force people into whatever work they can get.
    Scrap Employment protection legislation to give employers much more flexibility.
    Restrict any Trade Union rights and practices that hinder employment (i.e. business success).
    Scrap redundancy payments. They only lead to more redundancies to pay the cost of the payments and so on....
    Scrap all public spending on everything that doesn't add financial value.
    Scrap those so-called universities that merely turn semi-literate young people into semi-literate slightly older people.
    Teach those young people to lay roads, lay railways, lay bricks etc.
    Pray for a plague or third world war to wipe out half the population.

    That's where the Socialists are taking us Tiger. Better get used to it.


  • Comment number 79.

    So the fantastic bankers haven't read or understood Adam Smith? Wow, who'd have guessed.......

    Quick, get them all a copy and get them reading asap - along with a tutor to help with comprehension skills.

    Or are they still convinced they can bluff.

    I see the beginnings a training scheme aimed at reskilling the unemployed or convicted bankers/conmen, on offer of course at the local Job Centre Plus and HM Prisons, right where they should all be heading.

  • Comment number 80.

    Blubbing banks hmm. the choice of music seems somewhat odd for a bank run out Singapore - why Scottish - out of respect for HBOS and RBS both banks they tried to "rescue" with their cunning plan crafted for Number10? HSBC and SC would along with the shorties have loved to see their competition nationalised I am sure. Thank goodness the Govt appears to have turned away from that particularly disastrous piece of advice. You have to hand it to the hedgies they all appear to have dropped their shorts at 0405pm on Friday. Did they know something normal folks didn't? surely not. In any event we can be sure the FSA is looking in to it.

  • Comment number 81.

    ~57 somali_pirate_SP500 re: "Stephanie Flanders Newsnight economics blog; nice to see that she is finally getting highlighted on the main newsbbc webpage too"

    You posted much there? Moderators ther are completely barking. I wouldn't bother again.

    Make that SF 'showcased'. That could be the new face of blogs here, I think they're using her as a test because of all the flak the Guvt gets here on good old Rp's site. If true goodbye unbiased lenient moderation like here.

    GC


  • Comment number 82.

    These fat cat bankers happily invested in dodgy bundles of assets, providing them with fantastic returns before the bubble burst, when suddenly these 'investments' had little value. How could they have been allowed to make such unwise investments? The FSA must pick up much of the blame, as do the banks' auditors.

    What is the chance of the bonuses being reclaimed from the bankers - nil.

    So effectively, the tax payers will be asked to fund the bonuses the bankers earnt when the times were good.

    I think the average man on the street has every right to feel some vitriol towards these guys.

  • Comment number 83.

    Does this mean that world (financial) hegemony has de facto passed from the US to China?

  • Comment number 84.

    Oh my, oh my, how to stir the banking pot once again !

    His one trick pony approach re-surfaces once again after a ome day holiday.

    Does the treasury know about this secret meeting ? Perhaps he can be specific and answer that.



  • Comment number 85.

    Just followed the link to Rahere's letter to the telegraph in yesterdays blog, he now owes me a new keyboard as mine is covered in coffee, brilliant.
    Please come back


    2. At 10:47am on 29 Jan 2009, Bell_4_Goalie wrote:

    'Also, what is different about Chinese banking policy that allows them to continue to be okay? '

    The fact that noone can contradict what they say (it's not known for free speech is it), they say that their banking system and economy are ok, they aren't, they are in the denial stage, when the slump in the rest of the global economy that started in the west catches up with them they will realise that they are in fact in the same boat as us and have been all along.


    24. At 11:33am on 29 Jan 2009, allmyfault wrote:

    '(I know -all that needs happen, for useless and dangerous government to prevail, is that good men do nothing). Yep well we'll just have to learn that lesson again.'

    in spades mate.

    26. At 11:37am on 29 Jan 2009, foredeckdave wrote:

    'dangerous times'

    I'm not old enough to remember the 30's (not quite) but I'm pretty sure that everyone new that war was coming for a long time before it all kicked off. In those days the pace of life (and as such life changing events) was much slower than the breakneck pace of events today. I can only hope that this time we are wrong.

    43. At 12:40pm on 29 Jan 2009, stanilic wrote:

    'They should all be worrying as one day the Bolsheviks will be back.'

    They never really went away.

    50. At 1:04pm on 29 Jan 2009, gruad999 wrote:

    'However, most would say he so accurately reflected the sense of the times that his blog is now required reading for History students at all levels.'

    His blog and the user postings will be required reading for social history scholars assuming that there are any.


  • Comment number 86.

    67

    Some time ago when examining pay roll at a major banking group it was clear that 98 per cent of the bonus was going to 2 per cent of the employees.

    Also, any newly recruited traders were usually guaranteed bonuses for at least two years to encourage them to join.

    These people have the loyalty of Benedict Arnold and Burgess and McClean and I suspect the bonuses being paid are on the back of earlier guarantees.

    All this vitriol at bankers should be at senior management and the traders.

    The poor saps at the branches and in the back offices get sweet Fanny Adams.

  • Comment number 87.

    #72 - the most effective non violent action would be for all employers to refuse to pay over their PAYE/NI, Corporation Tax, VAT until the action that is being taken was explained clearly and a proper strategy was in the public domain & probably an election had taken place with various strategies to choose from.

    At the moment we are all paying taxes into the government that are being funnelled towards specific sectors that would not be the ones we would all select.

    Of course this is the job of governments and we must remember this - but as all the politicians keep banging on about 'these are unprecedented times' - lets have some clear policy statements, some open debate and an election.

  • Comment number 88.

    I think it is quite healthy for the Russians and Chinese to be challenging American hegemony in the economic world.

    There is nothing like a bit of serious competition to keep you on your toes.

    Putin, for example, is probably the most astute politician on the planet at present.

    The Chinese are upping the ante too, even some of their motorcycles are starting to show signs of real quality - watch out Japan or the Chinese will do to you what you did to us, with respect to the motorcycle industry.

    America will still have a stunning military capability - even now, I'm not sure that most ordinary folk have any sort of idea just how far the US military tenacles reach into virtually every significant country on the planet.

    At this point, somebody is bound to point out the guy-is-still-in-his-cave, but in a way that is the point, he is in a cave and the asymmetrical warfare between Islamo-Fascists and the USA is extremely one-sided.

    Back to work.

  • Comment number 89.

  • Comment number 90.

    Can we look forward to the do nothing novice leading the Tories informing the new US President that he is wrong to adopt the same policies as the British PM in order to solve the global crises at the forthcoming world economic summit in London?

  • Comment number 91.

    '''''''''''''Can we look forward to the do nothing novice leading the Tories informing the new US President that he is wrong to adopt the same policies as the British PM in order to solve the global crises at the forthcoming world economic summit in London?'''''''''''''



    No chance as Obama will of course be listening to GB as we are after all the best placed economy to benefit from the upturn when it happens, the IMF are a bunch odiots for saying otherwise, 1.5 million manufacturing jobs havnt dissapeared under labour, 1 million new non productive public service jobs havnt been created the national debt isnt double what the official figures state making us the most indebted of all advanced nations

    All hail Gordon Brown the saviour of the universe

  • Comment number 92.

    Direct action

    Ho ho ho

    The legislation is all in place to stamp down on everyone hard.

    They can use terrorist legislation against one old man heckling, one old woman reading a list of the dead British soldiers in Iraq/Afghanistan and against a NATO ally and with internet, phone and cctv monitoring what chance do you think you have.

    We have all failed to react and now it may be too late.

    I suspect that short of anarchy/civil war/military coup we are all in this for the duration.

  • Comment number 93.

    #90 and can we expect our pm to admit what a complete mess hes making of and has made of running uks economy?.. the problem with brown is that everything he does is wrong...therefore I deduce that by doing nothing its an improvement.

  • Comment number 94.

    all hail gordon brown the saviour of the conservative party.

  • Comment number 95.

    No93rvpis
    Only fools think politicians run free- market economies. Try and have a word with Lord Black, Mr Madoff, or the ex CEO of Lehman Brothers. They will help you to clarify your thinking.

  • Comment number 96.

    "Subway to create 7,000 new jobs", says link on BBC News front page....
    Infrastructure improvements I thought. Err, no = sandwich bar franchises !??

  • Comment number 97.

    I think everyone needs to read post 78, if this guy didn't exist you couldn't make him up!

  • Comment number 98.

    At least Wen Jiabao read Adam Smith the first time, much less the second.

    The 'geniuses' who run the US and UK systems spent their student days reading comic books, judging by the results they have obtained as adults.

  • Comment number 99.

    #45. armagediontimes

    Go back and read my post #26. I said that Russia and China were likely to flex their muscles. I did not say that they would resort to the military option.

    Russia already knows that it has most of Europe by the short and curlys when it comes to gas. China is not unaware that that it has the USA in its grasp should it demand repayment of its dollar holdings.

    The Great Depression led to the rise of fascism and hence WW2. History could easily repeat itself.

  • Comment number 100.

    Gordon Brown refuses to admit that he personally has made some political decisions that have turned out very badly indeed - for the rest of us.

    However, anybody who has read the Tom Bowers unauthorised biography of Brown will know that non-admission of guilt is a Brown 'feature'.

    Those of us who take a passing interest in politics understand that any admission of mistakes will be mercilessly pounced upon by political opponents, hence politicians reflex denial of issues.

    So the skill of the politician is in 'fessing up' in such a way that the public can swallow it without allowing political opponents to crucify you for the admission.

    Tricky business, politics.

 

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