Saturday, September 20, 2008

The Logic of Labour's Argument

Listening to Shaun Woodward on ANY QUESTIONS I was struck by several things. Firstly, he seemed to acknowledge that this credit crisis had happened on Gordon Brown's watch and he should therefore apologise. I suspect it will be a cold day in hell before that happens. But apologise for what?

According to Woodward and his Cabinet colleagues, the banking crisis is almost entirely down to the effects of globalisation and the US sub prime mortgage market. I completely acknowledge that this is at least in part an entirely reasonable argument.

But if you don't acknowledge the failures in regulation and in public policy in this country and place the whole blame on external issues, you are implicitly, or tacitly acknowledging that if you were powerless to stop it, you are powerless to solve it. In short, you hold up your hand and say 'there' nothing we can do'. That is, of course, patently ridiculous.

The moment a government surrenders to external forces and says it can do nothing is the moment it also surrenders the right to be called a government.

33 comments:

John Moss said...

Errr?

Perhaps he could apologise for spending £200bn+ more than he took in in taxes, pushing the national debt to £650bn+ even without taking account of unfunded public sector pension liabilities and PFI - Off-Balance Sheet - liabilities.

Anonymous said...

Iain, the US sub prime loans were just the weakest link - they came down first. It's an excuse by politicians to blame this on financial meltdown.

We haven't seen anything yet - Alt-A, ARMs, jumbo's and prime in the US. Sub-prime, self-cert and fast track to follow in the UK. Not forgetting Credit Card, Auto Loans, commercial paper and others.

See Peter Schieff and Nouriel Roubini - the only 2 economists who saw this coming and wrote the script 2 yeasr ago.

Lola said...

Yes, and. Externalising the problem is the technique beloved by all dodgy political philosophies, Nazis - it's the Jews, Stalin - it's the intellectuals. Blame an indentifiable sub group and using the Goebbels Big Lie technique - off you go.

It's not for nothing Labour's soubriquet is Zanu Labour. Mugabe blames past imperialsim for his woes, so New Labour blames the pre-ceding Tory governments and when that wears thin has the good fortune to have American sub-prime crisis to hand.

Luckily they've done this once too often and they are being rumbled by even the meanest intelligence, let alone the average Voter who now gets it in spades.

That's why their poll rating reflects just their dyed in the wool core vote.

Anonymous said...

Oh, and PS, there is nothing they can do. The only thing that can possibly heal these gaping wounds is to let nature take it's course.

Do you seriously think this government has the capacity to do anything other than **** things up further. If you do, you must be nearly as deranged as them!

Anonymous said...

You write "The moment a government surrenders to external forces and says it can do nothing is the moment it also surrenders the right to be called a government."

This surely has already happened through the transfer of law making powers to the European Union. When will Britain wake up and see it no longer controls its own destiny?

Martin Day said...

I agree!

Labour have raped the economy through ill- thought out regulatory frameworks, high taxes and government crowding out the private sector.

The LD's have been the junoir party in this rape of the national fiances. They have watched whilst the Labour party has been engaged in this assualt on the British Economy.

Labour and the LD's are two cheeks of the same bottom and both need a jolly good thrashing in electoral terms.

patently said...

Good point. The phrase "In office, but not in power" springs to mind.

patently said...

More pertinently, control of the markets was apparently within his power in 1997 when we were promised an end to boom and bust.

Now, apparently, other factors causes busts, but credit for the booms still belongs entirely to Gordon. Apparently.

Daniel said...

Iain - you write
"The moment a government surrenders to external forces and says it can do nothing is the moment it also surrenders the right to be called a government."

Which Government has said that?. It is patently absurd to suggest that is the case. The evidence is somewhat more complex than your analysis suggests:


The Government have to shoulder some of the responsibility - for allowing a light touch regulatory regime and for permitting the banks to lend to customers who could not afford to repay. This was a policy largely shared by the Conservatives.


However that approach to regulation applies to goverments across the Capitalist World - and the US is the primary culprit for much of this excess. The sub prime crisis is not a particular issue in the UK - yet we are suffering from the irresponsible and under regulated US financial markets.

It is slightly ironic that we have a US Republican President using socialist soutions to this problem - the nationalisation of AIG and the buying out of bank's toxic debts is a state handout and public ownership.

Brown's banning of short selling, the buy out of Northern Rock and his personal involvement in saving HBOS from ruin - will be seen as more a more measured mainstream social democratic response to the mess of laissez faire conservative policies. And certainly not a case of "surrenderingto external forces"

And where are the Tories? Osborne is clearly out of his depth - refusing to ban short selling - even for a short time and having NO proposals other than to blame Brown. Cameron is worse - he has dissapeared from sight and left George to take the heat. The relations between Osborne and Cameron are reported to be "very tense".

I was at an awards ceremony for investment bankers Thursday and people were mocking the Tories non response. How ironic if this crisis started in the US by a Republican could be saviour of this labour government.

Darrell G said...

Well, i can agree there is patently a need for more regulation as you state here and it is this lack of regulation that has led to this pickle...

It follows this is the result of years of thinking the market is capable and should be allowed to regulate itself does it not??

Anonymous said...

Of course - sitting back and fiddling while N Rock was blowing out to a Loan - Deposit ratio of 600%, that was the current administration; no?

What blew up HBOS was a Loan Deposit ratio of 177% - that could have been prevented by regulation. As could the housing market bubble.

The reason that a few countries are so deeply in the mire is because those same few countries allowed lending standards to lapse and a credit bubble to appear. Britain so happens to be one of those countries - by no stretch of the imagination is it an innocent victim.

The bankers, The Bank, the regulators and the government all have their dabs all over this bust.

beachhutman in Beijing said...

Well, listening I thought he was a Weasel with a PhD in weaseling, he did not concede a single element of guilt or responsibility, just that "Gordon fully recognizes it has happened on his watch". Yeah. We've noticed too. And the previous 10 years?

Anonymous said...

And where are the Tories? Osborne is clearly out of his depth - refusing to ban short selling
...........................................

Psst - the Tories aren't actually in government.

Yet.

The Hidden Paw said...

You can get a similar thing direct from McCavity himself in this interview on Sky :

http://news.sky.com/skynews/Home/video/sky-news-video/Video/200809315102688

Explicitly mentions that it's bad to have billions in off-balance-sheet liabilities - if you're a company. Then despite Jeff Randall's best efforts, he does the whole "not me guv" routine.

And he was looking seriously rough - someone should tell him to get some kip.

Democratic-Centre said...

Thatcherite policy coming back to bite both New Labour and very much the Tories on the bum; moral high ground or perhaps clear ground rests with the Lib Dems, the Tories have been told that Thatcherite isn't right and Brown in power is culpable for not having enough socialist muscle to finesse ethical banking standards.

He removed housing costs from inflation and it skewed social justice benchmarking - Labour needs to come clean by letting Brown 'fix' this he must stand down and let a new leader lead reform under fairness - as Brown has had Thatcher round too much and is tarred with her.

But guess what the Tories are more damaged ideological by this shift as your party championed this and not only have the markets ruined it for the people but it has bucked out the very financiers in it.

If someone could give the Lib Dems a big steroidal shot in the arm Cameron would be finished.

Man in a Shed said...

Good point.

The Half-Blood Welshman said...

He could apologise for not having foreseen it and taken the necessary precautions.

Makes you wonder though whether Woodward will be the one to knife Brown - after all, he's always been less interested in scruples than in power.

Anonymous said...

Ha!

I thought this was the laissez faire argument in a nutshell? Are you saying on the one hand that this Government CAN do something about the banking crisis, but then when there is a Tory Government, the Government SHOULD NOT do anything?

The alternative is a repudiation of Thatcherism, and when I see Iain Dale do that, well, hell and freezing over once more spring to mind!

Anonymous said...

So? the answer from the conservatives in their economic competitiveness is less regulation, not more.

There is an inescapable fallacy to conservative policy in this area - the tools they suggest would have made the situation worse.

Fact.

Newmania said...

Democratic Centre that is incomprehensible gibberish and the Liberal party are following after the Conservative Party like a lost dog on tax , Europe , immigration and just about everything else.

Newmania said...

I think the main point is that Brown spent ten years telling us that he had invented perpetual boom

Martin Day said...

moral high ground or perhaps clear ground rests with the Lib Dems:

LOooooooooooooooooooooooooOL

The LD's are a joke party, they have been Labour stooges for the last 11 years. Indeed, the Labour party has treated the LD's like their private parts, exciting them with a dance of the severn vails around election time and then renouncing them afterwards. The LD's have much to be blamed for supporting higher taxes and actively advocating increases. LD's are split from top to bottom on this issue and many LD activists look likely to sit on their hands as the LD's will lose 2/3rds of their seats according to a LD seminar this week.

The electorate has had enough of duplicitous politicians and instead of the yellow Card - Nick Clegg will get the Yellow taxi come the next election! The BBC will in all likelyhood commision a video and the section dealing with the LD's will be phrased: Up for Clegg? As Nick Clegg succombs to the Tory surge!

The LD's are doomed - DOOMED!

Nick Clegg is like Neil Kinnock as well!

Jonny Mac said...

Ah, butler boy, one of the most despised men in the Palace of Westminster.

Democratic-Centre said...

@The LD's are doomed - DOOMED!

Really, I can see no difference with Lib Dems and Tories except that the credibility gap with the Lib Dems is less so than with the Tories.

Cameron and Clegg - it really is that one big steroidal shot that will make the difference, who will provide it - the efforts of the party machines will see to that.

But there is now that baggage, the flotsam of the notion of those very free market principles.

Martin Day said...

Democratic-Centre

Actually the Tories have been the most consistent in terms of ideology and Economics. It is Labour and the LD's who have behaved like a tacking yacht!

I must say i am looking forward to the defeat of many LD MP's, I will enjoy that more than Labour MP's being defeated for some perverse reason.

Anonymous said...

Banks are being nationalised and rescued in Britain and the US only, thanks to Brown's weedy Financial Services authority, which couldn't say boo to a goose. I'm not seeing French, German, even Italian banks having to be nationalised. Even the Spanish banks are hit by a property collapse but well beyond the institutional weakness seen in Britain.

So blame the ill wind from the US but funny how we have a hurricane the rest of the world is just getting a gust.

Lola said...

I work with financial regulation every day and I know that the current system is useless. It prescriptive, box ticking, responsibility killing and acts as nationalisation lite. The problem is too much of the wrong sort of regulation.

Regulators were set up by the Tories to ensure competition in privatised state industries. Over time the regulator mandate morphed into setting out how these industries should be run. THis is manner to socialists who want to control everything and on coming to power this is exactly what they did. The FSMA 2000 established a prescriptve system of FS regulation that tried to set out rules for the whole of the industry should work. To put it bluntly that was effing stupid.

Banks (in particular) established compliance departments which effectively ended up running the business. If a product or marketing idea passed compliance it was OK. Bugger common sense. The compliance tick boxers rated it as OK so that was OK then. The regulatory system increased risk by killing common sense and responsibility.

Now we do need decent and effective 'regulation' but structured more as informed and effective supervision that does not stifle innovation but encourages responsibility in the innovator. QED we need LESS regulation.

Socialism just does not work. This regulatory system is socialism lite. It has failed as socialism has always failed.

Mike Law said...

Spot on Iain.

Twig said...

It's a bit like musical chairs, the music has stopped, and some of the players can't find a chair.

The cause of sub prime mortgages was exposed back in March on Iain Dale's blog Here

So they ban short selling, that'll do it - right? So when a trader sees a grossly overvalued business there is now nothing they can do to correct it.

Does the Great Tulip Bubble ring any bells?

The bubble can now resume it's expansion and no one can pop it.

Brit_in_Aussie said...

Really, Ian?

Whatever happened to "You can't buck the markets" (c) M Thatcher c.1988 ?

Anonymous said...

Lola said...

"Banks (in particular) established compliance departments which effectively ended up running the business.

...

The regulatory system increased risk by killing common sense and responsibility.

...

Socialism just does not work."

Alternatively, the twat tory thickos who run banks only employ twat tory thickos.

Lola said...

Anon 3.07 21/09/08 - posted the quote with comment -

"Banks (in particular) established compliance departments which effectively ended up running the business.

...

The regulatory system increased risk by killing common sense and responsibility.

...

Socialism just does not work."

Alternatively, the twat tory thickos who run banks only employ twat tory thickos.

Now Now. Think. That's not a relevant or logical comment. It's pure prejudice. A lot of the bankers/complianec people may have been NL voters for all you know.

So have a go at my analysis by all means but resorting to childish name calling is not going to help your argument is it?

(Why do lefties behave like spoilt children when the argument is going against them?)

Anonymous said...

Lola said...

"Why do lefties behave like spoilt children when the argument is going against them?"

Says the Guido hypocrite.