Vince Cable at the LibDem Conference"The Government must not compromise the independence of the Bank of England by telling it to slash interest rates and generate another dangerous inflationary ‘bubble'."Vince Cable on Sunday
"What is required is for the chancellor to write to the governor saying that on a temporary emergency basis the committee should assume a central role in countering the crisis with a large cut in interest rate."
Our grateful thanks to Danny Finkelstein for bringing this to our attention. Maybe now the media worship of Vince Cable will start to dissipate.
61 comments:
But Iain, every good narrative needs a hero and a villain. There's no doubt that the villains by populist media acclaim are bankers and The Republicans but heroes are thin on the ground so our media beatifies the nearest thing we have to a vaguely iconoclastic figure. Nothing to do with reality, everything to do with the media's natural desire to tell a simplified story...
On the other hand if he has only just started reading John Redwood's blog where he has been saying this for ages, & thus been convinced, it must have taken some some courage to so completely reverse himself.
Perhaps when the BBC next interview Vince for his words of wisdom they may thus get John's words, without the inconvenience of having to interview him.
Oops. Just goes to show that even grandpa Vince is wrong at least once. The question is, which time was he wrong?
About time! Cable-worshipping has been based on one joke last autumn - perhaps now the joke is on him.
He's not even that good an economist - when was the last time he had a job? (2 years at Shell and, er...that's it.)
"Maybe now the media worship of Vince Cable will start to dissipate." - not as long as the BBC sees him as a useful way to shut out Conservative spokesmen.
What dumb comments Iain. The North Norfolk debacle must still be hurting.
Cable's original comments were made on a day when businesses and individuals were crawiling over each other to spend money at any opportunity. He made clear that the second statement, agree with it or no, was in a completely different purely temporary situation when people will not even spend what the've got.
You attribute this to 'Mr consistency' SDP Finkelstein, a person for whom 'fink' is far too nice an abbreviation which also implies that he is a cocney with some brainpower.
U finkin what Fink's finking? Then you're Funk!
In fairness, the only reason the media are giving so much airtime to Vince is because he is actually the most TV friendly shadow chancellor. If George Osbourne managed to talk to the press without sounding so unsure of himself, they would go running to him instead.
George Osbourne may turn out to be a great chancellor given the chance, but the guy lacks personality, and the ability to confidently and coherently talk to the press.
Vince is more confident and articulate in his approach, and is thus more TV friendly.
Like I said, more flip flops than Bangkok...
I WONDER.
BET ALL THE MORONS WHO LOST THEIR SHIRTS IN ICESAVE PUT THEIR MONEY THERE BECAUSE ITS A TAX HAVEN FOR LARGE DEPOSIT SAVERS.
NOW THOSE SAME TORY TYPES WHO HARP ON ABOU TAX LEVELS ARE ABOUT TO HAVE THEIR SHIRTS SAVED BY ... YES THOSE NASTY TAXES THEY HATE SO MUCH... HOW VERY TORY
..And dont slag off Vince.. Vince makes Gideion look like what he really is .. another eton buffoon
A lots happened since the Lib Dem conference, and the meltdown we've witnessed in recent days.
Face it, more people trust and respect Vince Cable than pathetic George Osborne. Can anyone tell me what Cameron's ideas are for the present economic crisis?
To Niel Craig
If I were you, dont mention John redwood, rather keep mentioning him, he is a liability to the Tory cause
Vince or Gideon.
No contest..go Vince
wow.. looks like every bank in the country is about to have state intervention ( nanny state, as all tories claim ).
Well, heres to good old socialist nanny, who since she was young was lectured by the free market tossers that she was wrong.. yet here she is saving their skin
That's not completely fair. Take Sir Howard Davies' comments on the C4 news just now: events have moved incredibly fast and the near collapse of all the UK high street bank shares was just about beyond imagining even over the last fortnight. Vince explained on Sunday that on balance the cost of loss of credibility on the inflation front was worth paying given the wider picture. The position has changed and he has changed with it. I prefer that to dogmatic adherence to ideological shibboleths.
Tory Party ... the silent ones.
When Hilary was in the race, every tory blogger had their nasty knives out. They all cheered on McCain, especially when McCain spoke at Tory conference last year.
Now it looks pretty much certain that a democrat will be the next big fella...all the tory blogs have fallen silent over the presidential race.
Just like the silence over hedge fund short selling scum etal.
Cool - you've managed to get the trolls out. Are these Draper's lot (note: no slagging off of Darling), or is Clegg just killing time whilst he waits for his Occado shopping to arrive?
slagg off darling..
What the guy who nationalised Rail Track thus saving 100's of lives. Note how the death toll on our rail network has plummted since those private thacther lovers had their grubbly hand taken off the tiller.
Darling, about to save the entire banking system, again from those private thatcher lovers..
.... would you like me to go on
Tommorrow at approx 8:00am, any hint or trace of Thatcherism in the UK will finally die. Thank god
I've sadly given up wirth Vince.
At the start he made great sense, then when it went pear shaped he still made sense even though it was the reverse of his initial stuff.
Now he is talking total bollocks. Bloody shame as I had originally thought he had a wise head on his shoulders and not a pair of countrefeit flip flops.
Vince Cable has lost all cedibility recently. What has made him lose the plot?
Even my aged Aged told me that she had now lost all faith in Vince.
Iain,
This blog seems to be heavily infiltrated by Draper and his side kicks. Read the bile they pour out, one could see the action days of the Lord Sleaze himself.
Vince is an ex-Labour man and was an economist I guess to an oil industry where economic forces are different. Remembering that he is left to the Labour, despite Clegg's tax cut stunt. The LibDems are squeezed by Labour, their poll ratings have through t the floor, and Vince the Wizard dishes out his wise words hoping against hope.
Now, Draper, do not forget to take your tablets.
Labour have failed the country and made this problem more severe than it would otherwise have been. Indeed there are rumours in the blogosphere that Mandy & Ali. C have been undermining British banking to make a massive part nationalisation a fait de complete.
It is a sad state of affairs when a government has to stoop this low to try and get the news agenda back on a narrotive that suits gordons narrow interests.
Gordon created this problem over the last 11 years. Derek Draper's mob calling George Osbourne, the name gideon at every chance hardly emboldens there case!
Labour are doomed - DOOMED! The latest opinion poll shows a Tory lead of 15% - LOooooooooooooooOL The LD's are at 15% also! This can only mean one thing for Clegg - It is yellow Taxi time come the next election. Clegg and the LD's are doomed - DOOMED! No wonder Cable has had to flippity-flop on this issue as well as otheres! The LD's are like a fifty pence piece - Two faced and seven sided!
oh Martin. His real name is Gideon. He made George up, that isnt his name, nor is it a second name.
I wouldnt be so confident about a landslide Tory win.
Look forward to Obama at next years Labour confernce..are you lot gonna slag him off
This time next year a Democrat in the whitehouse
Inflation below 3%, Interset rates 3%. Housing market recovering. Unemployment peaked.
I would be so confident Martain. 4 weeks ago werent you 24% ahead in the polls !!!!!!
Correct me, wasnt Kinnock at one point double figures ahead in the polls
am i the only one who thinks the 'stalin to mr.bean' quip,which launched his new media career,was somewhat less than funny?accurate, perhaps,but not so funny that my head almost fell off,as blackadder once said.
The Conservatives have clearly shifted their position from free market laissez faire "you cannot buck the markets" to dave cameron's support for swedish capitalisation and in effect nationalisation of the markets -is this a sign of weakness or a recognition that the social democratic model proposed by GB is correct? consistency is not something that the Tories can claim to.
He told BBC1's Andrew Marr Show the sunday of tory conference: 'What you won't hear from me this week is the sort of easy cheap lines beating up on the market system, bashing financiers.
'It might get you some easy headlines, but it is not going to save a single job'
By Tuesday he told conference that bankers would face "a day of reckoning".
osborne said:
"I will not tax the family earning 20,000 pounds to carry on paying the bonuses of the banker earning 2 million pounds,"
He is now supporting the nationalisation of banks.
The Tories are stuck in the smelly stuff. If you want to work with the Government in a tri partisan way stop this silly personalisation.
Martin Day said...
"Indeed there are rumours in the blogosphere that Mandy & Ali. C have been undermining British banking.."
Bloody hell.
Undermining British banking all by themselves?
Cleverer than we all thought obviously!
You can tell us, now it's out in the open, how they did it then - after you've had your tablets and a little rest.
To those who said the Tories were on 24% and now the Tories on 15%.
It is strange what you percieve to be good! The 24% lead would mean a Tory government with national government sized majorities. Instead Labour are looking at a rump of 165 seats like the Tories in 1997 &2001. Labour have caused the economy to deteriorate further by diethering for a year on this Financial Service Issue, Labour have also dithered on the Nuclear issue, taxation, welfare reform and the like. No body takes Labour seriously anymore - they just like the easy option and government are floating the long-term interests of this country up a creak with a high proponderence of excrement in it.
With reference to the name Gideon, I don't think it is funny or wise to give someone a load of grief for something they had no choice in! Gideon is a dreadful name and it is the male version of gertrude for providing children and Low IQ adults a stick to beat people with!
anon October 07, 2008 9:36 PM
Press releases and spin - simply to undermine confidence in something - the financial system. I suppose they just looked at what Labour had done to it's self for the last year and extrapolated the methodology to financial services.
Markets run on confidence - Labour have simply deployed incomptence and vague statements over the past 4 days, which have fundamentally weakened these institions. It is not called been clever but dumb! Unintended consequences and all that.
Apprently its all Gordons fault
I know he is a powerful man, but its seems he is so powerful that he influences US, German, Spain, Icelandic etc etc banks.
How amusing to see Gideon and Dave advocating intervention after 3 years of their nanny state retoric
Martin Day said...
anon October 07, 2008 9:36 PM
Point us in the direction of the websites where you've obtained the information relating to this devious plan, then to where we can read these press releases made by these two men that have undermined British banking.
anon: October 07, 2008 9:54 PM
Try robert peston for staters on the BBC. He seems to be in the loop - obviously there is not a tanable press release but the Mandy/Campbell axis don't tend to work like that - they get their cyphers to give special access to people like Peston and divulge information.
This information then creates uncertainty in the markets. Now given that Mandy and Ali C. are pro's at the forefront of the governments communication and economic strategy - do they allow information to accidently leak?
NO, NO, NO!
Labour are playing politics with the banking system and ultimatly peoples lives. If they could push a man to sucide, then financial institution instability is a breeze.
Remember the fun you had regarding Northern Rock - Gideon made hay
errrr now he supports the action taken.
Remember the fun you had regarding worldwide banking crisis.
errrrr now you want partisan co-operation.
Remember when you supported BoE independance
errrrr now you want that taken away
Remember when you demanded spending billions on cutting fuel tax, would have reduced petrol by 2-3p.
errrrr widely predicted that petrol will be 70-80p a ltr within months, without the tresury spending billions
flip flop flip..Martin
Do the Tories actually have a front bench
BBC Question time - Hezza
Newsnight last night - Lamont
Newsnight tonight - Ken Clarke
The Tory party - the silent ones
I honestly cannot for the life of me understand the almost fanatical hero worship of Vince Cable. Okay, so he and his wife do ballroom dancing, he called the P.M mister Bean and he was better than Menzies Campbell at PMQs but this hardly qualifies him as some sort of Messiah. The truth is that the example Danny Finkelstein has provided of his inconsistencies is typical. The bloke is good at presenting a point of view as if it is one of his long held convictions, however if you put it under scrutiny it is usually the case that it contradicts things he has done or said in the past. An example is the time he dramatically boycotted the King of Saudi Arabia in spite of spending a lot of his working life in a senior position at Shell.
To be honest, if he had ever become Leader of the Liberal Democrats on a permanent basis the media's whole approach to him would have probably been different. He would have been put under a lot more scrutiny and his inconsistencies would have become public knowledge. Also, as far as looks and image are concerned he would hardly have been an improvement on previous leaders. Eventually his image would have led to him being lampooned as mercilessly as Menzies Campbell. However, having another national joke as leader would have probably been better for the Lib Dems than Nick Clegg who seems to provoke no public interest whatever.
And only in the past hour Martin, Gideon asking for pay restraint in the city
hahhhahahahahahahahhhahahahah Im wetting myself
Flip flop flip
Iain, You're wrong on this one......Vince Cable is one of the few politicians whose comments resonate truth.
I agree with Vince that this whole thing has been badly handled but he is a great master of timing and just manages to come out with soundbytes of this kind in time to suit the mood of the media. His inconsistency is evidence of his skill as a politician rather than his financial competence. In all instances, his advice was given at points where it was obvious to all what needed to be done - i.e. just before the action was actually taken. It certainly wasn't predictive, rather carefully timed in the knowledge he would never be called to account - or to actually do anything.
So now we have the London Mayor who doesnt support city pay restraint in his city, while his party have fliped to regs and restraint
you couldnt make it up
anon 7pm and 7.02. Vince is old enough to remember the Great Depression so how can you possibly say he is more media friendly than Gorgeous George.
What you forget is that if we cut the interest rates that will drive inflation and it will all become an unholy spiral of inflation and more debt. Unfortunately we need stronger and more unpalatable medicine that this.
The Bank of England should have been left to be independent. Cable surely knew this when he suggested cutting the interest rates. To cut the interest rates will not make much difference as it will only feed spending on the high street not rectify the root cause of the problem. Inflation may grow at that point thus aggravating the situation.
Conclustion: Vince is into gesture politics just as much as Gordon.
This is a re-run of his attitude on Northern Rock. If he is so smart, why didn't he come up with the solution that the Irish did which was breathtakingly simply, timely and effective.
Cable is a prat. How one can support an independent Bank in the good times, but call for t to be brought to heel as soon as the outlook darkens is quite beyond me?
Does he not understand the over-riding importance of credibility in monetary policy?
Cable is the archetypal LibDem - perpetually free from the constraints of government and therefore able to spout populist guff that would be disastrous if ever implemented by party of government.
God how the trolls twist words. Boris was merely pointing out that it would be unwise to regulate a free market, for that is what financial services is. How otherwise do you incentivise people? Osborne and Boris are both in agreement: don't over regulate but also don't allow obscene bonuses for short-termism. You trolls simply don't understand economics do you.
What planet are you on dangermouse.. To say it was unwise to reg and restraint - means you are against it
Let me advise you Danngermouse.
The irish solution was the worse solution, everyone excepts this.
Ireland ( I have lived there ) is prodably the most right wing country in the EU. No NHS, No social services, virtually no accountabiliity in any government organisation.
In Ireland voters have a similar 3 way party system
But the two main parties are centre right and barking right. Guess which country went into recession first. In the late 90's Ireland was growing at a ridiculous rate, some years it was double figures.
Why do you think nutcase Guido lives there. In fact that nutcase is a Irish man
Anon. 9.51
The point about the nature of the current difficulties is simple. The situation in the US is not nearly as bad as it is in the UK. Gordon had a chance to mend the roof while the sun shined and failed to do it. This was even reported by an early bird on the Beeb at 6am this morning if you know when that is.
Oh Townrat you poor blue nose
Qouting Gideon sound bites " mend the roof while the sun shone.
In 1997 we didnt even have a feckin roof
anon: In 1997 we didnt even have a feckin roof.
Yes Labour have done a good job, we don't even have a house now on that anology, indeed it is a whole in the ground!!!!
Labour are a joke of a party, your childish name calling is the fig that hides your shrivaled poll rating!
LABOUR are doomed - DOOMED!
Labour have raped the taxpayer and destabilised the economy. No amount of sneaky twisty, spinning and oiled words can remoce the fact that Labour have failed.
Labour have failed to keep a stable economy, failed to end boom and bust, failed to end spin (Brown's only USP - shattered by Mandelson and Ali c's return), failed to make society fairer, failed to improve public services, failed to make the streets safe, failed to improve the care patients recieve in hospitals.
Labour + LD = LOooooooooooOL
anon 11.09
You have misquoted what I wrote and then followed it up with an illogical point.
The issue, in case you didn;t understand it the first time, is the degree of regulation and restraint. By definition, financial markets are based on risk - a degree of risk. They are a form of socially acceptable betting in effect.
Labour Labour Labour - Out Out Out!
Labour are a vile bunch of feathernesting parasites who need the electoral exterminators round.
Anon 11.16 - get an education will you or at least learn to spell correctly - you are living proof of David Cameron's critique of our education system, run by Labour for the last 10 years.
The Irish solution was effective - that's plain for all to see. Why didn't Cable recommend it here. It would have been cheaper, quicker and more effective than the dithering and leaking of the government - something Cable has chosen to ignore. I wonder why?
In summary, Cable has been thoroughly Finked and the dolly trolleys are really really upset by the populus poll.
OT - but the Chinese have juststrated permitting short selling for their stockmarket to help local stockbrokers compete in these difficult times. Obviously they have concluded that Gordon's previous best 'Big Idea' was a further opportunity for them. Another case of unintended consequences? As you will notice Iaian you are back permitted in China - though I note that Guido is not!
Three weeks ago the FTSE was at 5200. Three weeks ago RBS's market capitalisation was double what it is now. Three weeks ago Ireland and Germany hadn't unilaterally made moves to guarantee saver's deposits. Three weeks ago Iceland hadn't enacted legislation to prevent the country from going bankrupt. Three weeks ago HBOS hadn't announced merger talks with Lloyds. Three weeks ago ... well Danny you get my point. I'm a regular reader of your blog but the pro-Tory, anti everyone else sniping (the Mandelson-Osborne piece - why if George Osborne can't respect privacy did you bother to keep his identity private?) is starting to get a little wearisome.
Vince Cable has called the correct moves in this crisis almost without fail and in every case weeks or months before the Conservatives or Labour. He made the statements at the time of the conference based on the situation at that time. Events change on a daily basis and at the present moment liquidity is the problem. Lowering interest rates, even if temporarily, could encourage LIBOR to fall and banks to lend to each other. What's the alternative. Guaranteeing deposits worth 3x our GDP... sharing the proceeds of growth?
Mous 7.36 said
"If I were you, dont mention John redwood, rather keep mentioning him, he is a liability to the Tory cause"
Clearly if you actually believed that you wouldn't say it.
In any case you do not address the point I made about Vince having reversed himself to say what jihn said all along. (Nor my second point about BBC partiality in whom they do & do not talk to.)
Also you spelled my name wrong:-)
"When the facts change, I change my mind. What do you do, sir?"
The most obvious fact that has changed is the LIBOR spread, which was around 87bps on the 15th when he made his conference speech, and has gone up to nearly 300bps at the time of his second quote. So an economy teetering on recession has just been given a 2% rise in real-world interest rates.
While I'd broadly support the idea that the underlying economy doesn't want interest rates "slashing" (although even there a downwards ratchet of 25 or 50bps probably wouldn't hurt) - and note that even at the conference Vince didn't rule out a downward bias to rates - I think you could justify something dramatic like Australia have just done in an attempt to keep real-world interest rates from rising as much as they have done recently. Needn't be forever, just for as long as the LIBOR spread is over 100bps say.
I've no particular love of the LibDems, but I'd say Cable's comments were not unreasonable in the circumstances in which both quotes were made. To be honest, the people who criticise the "flip-floppiness" are showing up their lack of understanding of what's going on at the moment, how much things have changed in the last 4 weeks.
So, Iain - what would you do in response to the current seizure in the interbank market? Or would you just sit on the sidelines, sniping at people who have constructive things to say?
Have just heard BBC Radio interviewing Vince on how right he is to have endorsed the ideas about interest rate cuts that John Redwood had been saying for months. Not obviously exactly how either the BBC or Mr Cable said it.
The irony of my post #2 here yesterday predicting exactly that is clear. The chance to choose only to talk to people, or about ideas, they want to support, which I have experienced before, is clearly on show again. They did interview Labour backbencher, John MacDonald giving the alternate "socialist view".
neil craig :
I've no idea of what's going on inside Cable's head, but reading what he's said I think his position is fundamentally different from Redwood's.
As you say, Redwood has been "saying this for ages", as a response to the wider crisis. Whereas my impression is that Cable didn't think a "big" cut (which might well cause a run on the pound) was necessary four weeks ago. Whereas now he is calling for a cut of up to 2% "on a temporary emergency basis" as a specific response to real-world interest rates going up 2% in a month, despite base rates staying the same. I'd guess that if LIBOR spreads went back down below 100bps, Cable would revert to his old position that rates were about right (or perhaps could stand a 50bps cut from where we were a month ago, which is exactly what we got today).
I'd suggest that to say "Cable has been convinced by Redwood's stance on interest rates" just reflects your natural desire to tell a simplified story, in fact the two are still some way apart.... :-)))
Well John's point was that since long range inflation estimates showed it coming dowm next year, raising interest rates on the basis that the current inflation rate be fought was merely damaging the economy. He never proposed that a lower interest rate be forever.
Cable's change is certainly very recent & I will accept involves less thought about the long term. However I doubt if he knows any better than the rest of us when this "temporary emergency" will be over - such tend to last longer than predicted so it cannot be said, purely on that basis, when either of them will call for another change.
Well personally, I think it's a brave man who makes any kind of forecast on a 12-month view at the moment, working out where we'll be in a week's time is hard enough! And just as Cable has changed his mind in response to events post-Lehman, I wonder if the long-term inflation outlook is looking any better given the events of the last few weeks.
In particular the way the pound has crashed against the dollar has some implications on our trade deficit. Not least because our collapsing oil production means that we are suddenly having to import lots of $90 oil at $1.70 - the currency effect means that oil has got much more expensive in sterling terms than the mere leap from $70 to $90 would suggest. So while I'm not hugely optimistic about growth, I think inflation will not drop that much - certianly not to 2%. So put me in the stagflation camp I guess. :-) I wouldn't argue with a downward bias to base rates (and I'm not sure who would dispute that at the moment), but I am genuinely uncertain how aggressive that move should be. Just trying to keep LIBOR steady seems a good place to start.
On the other hand, we now have to find someone to buy $50bn of gilts from us in the next 6 months - and why would anyone buy those rather than deposit cash with one of the banks that now have the same risk of default as the UK government but pay higher rates than gilts? A run on the pound just seems increasingly likely, which again will be bad for inflation in imported goods. Combined with our sudden lack of invisible earnings, and things don't look so good.
As for the temporary emergency - any sensible businessman would play it by ear, and try to pragmatically adjust to changing circumstances. Which is very different to the political world, hence you get articles such as this one from a politician opining on something based on the real world. But I'd say that as far as the bank crisis is concerned (as opposed to our balance of payments crisis, energy crisis, recession etc) then Libor spreads of >100bps is a pretty good working definition of "bank crisis". Get ourselves through that, and we can see where we are. I just don't think that there's much visibility beyond a few months other than it will be "bad". But the policy response will be different for different sorts of "bad", and I don't think anyone can really predict what form the "badness" will take - other than sterling is in for a battering.
cable has been all over the place, very inconsistent and really just chasing headlines.
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