Last night Vince Cable and former Blair economic adviser Scott were interviewed on Newsnight. Just as the interview was ending Derek said something intriguing. He said that Eddie George had gone to Tony Blair to point out the adverse consequences that might follow if regulation of the banks was taken away from the Bank of England and given to the FSA. When asked by Kirsty Wark what happened then and how did TB react, Scott replied:I would make another suggestion. Surely the person who can really enlighten us is Eddie George himself. What exactly did he warn, and what did Gordon Brown say?Gordon Brown got his way.
I think it is high time we heard the whole story of Bank of England independence. Who would like to tell us. Derek? Tony Blair? Gordon Brown?
I have never met Eddie George. But I believe he was always quite willing to talk to journalists. Perhaps one of them might like to give him a call. How about it Danny?
18 comments:
A similar point came up yesterday when Andy Marr spoke in Cambridge. Marr said that Eddie George had 'gone Trappist'. Don't hold your breath.
This is a huge story - and one that I fear we won't hear until we hold a public enquiry.
As Gordon Brown points out, to fix the current problem we have to understand the root causes. That is correct.
Unfortunately - Gordon wants us to examine fictitious root causes where blame starts and ends with the banks - ideally American ones.
Gordon Brown saw where his policies were heading, he was warned and did nothing.
When NR was on the brink, why didn't the govt say 'we guarantee all UK bank deposits'? Because they could see what was coming and dare not.
They knew, I'll stake my life on it.
I wonder if i will ever be vindicated?
I made this point on a reply I posted last night. I almost choked on my Horlicks when I hear the remark.
But if everybody cares to cast their minds back I believe that it was reported then that George nearly resigned over 'Bank of England Independence' - since, as ever with Browns' smoke and mirrors, it was nothing of the kind.
The BoE was being emasculated with banking supervision taken away and control over inflation merged with a Brown appointed committee.
I cannot remember what crumb it was prevented George's resignation but if he had resigned he would now be in line for the Nobel Prize for Economic Management.
This article is a laugh a minute
http://www.guardian.co.uk/politics/2007/mar/21/politicalcolumnists.uk
but it points out -- "He simultaneously showed his "ruthlessly Stalinist" style by floating the Financial Services Agency off the bank to regulate the City. Steady Eddie George nearly resigned as governor."
For those with short memories though the remark and the way it was made and the source will have come as a bombshell.
Basically this was the very first example of TDs First Law, "When Brown gets an idea - start worrying"
Come on Eddie, your Country needs you.
Careful boys, you might cause another body in the woods!
For Heavan's sake, don't you get it? The FSMA 2000 under which the whole Brownian regulatory non-system is constructed is entirely and absolutely flawed. The 'system' has absolutely bugger all to do with proper supervision of the free market - that is, for example, providing for the proper capital and liquidity requirements for banks - but all to do with Gordon Brown having control of all money and its distribution, manufacture and redistribution. It's a Gordon Brown control device. That's all it is. That's it. The tripartite bollocks was a deliberate divison of responsibilities and the dilution of the powers of the Bank of England. It's the Socialist dream of nationalisation of credit, and it has been achieved through this bonkers regulatory regime. It operates entirely as a nationalised industry would. The FSA rule book is prescriptive and manically detailed. Light touch it ain't.
I have run a business under it. Our business can only operate if we ignore 'compliance' and just try to do the right thing by the clients.
You really really have to listen - the FSA is fucked ('scuse me). It is a total disaster. It cannot be reformed. It has to be shut down, along with its partners in crime, the FSCS and the FOS.
Eddie George could see this. He's cleverer than me and I could bloody well see it, so he must have. And we are not alone. With the exception of the banks (at all levels) there isn't a financial services person that I know that does not have utter contempt for the FSA/FSCS/FOS etc. They are contemptuous because they can see how this structure has destroyed wealth for clients - NOT repeat NOT for themselves.
Me and my peer group have example upon example of regulatory stupidity all of which destroy wealth. Which is exactly as you'd exepct form a 'nationalised' industry.
End of rant.
This labour shower have, in all ways, created bodies between them and 'blame' Be it in Health, Education they have a creation which takes the flak.
Surely, the Conservatives can do us all a favour, and save a monumental amount of money, is to promise to close down all the Labour Governments Creations?
Yes he may have a smoken Gun - But Gordon is so at fault his guilt is all over the Treasury web pages:
http://www.hm-treasury.gov.uk/press_44_01.htm
Eddie George?
Oh you mean Baron Eddie George...
What smoking gun there may be could perhaps be the FSA's annual Financial Risk Outlook reports.
They do mention CDOs, the transfer of risks from banking to insurance, the breakneck growth of the funny financial products, the abnormal period of credit-based growth leading to none of these funny financial products having had to weather a downturn, the substantial growth in indebtedness, the complex and unstandardised legal loopholes, potential for disaster if oil prices should rocket, the institutional investors and investment banks muscling in on mortgages and a whole host of other known unknowns.
That is the major point - that they did not know how things would pan out. Presumably the 'light touch regulation' and 'no investigation without good cause' led them to believe that because they couldn't prove these things would be a disaster they couldn't legitimately stop it.(And consequently bring the growing economy to a halt.)
This has been the blind leading the impatient and they've all walked off a cliff.
Did El Gordo ever get these?
It was a sad day when they got rid of Eddie
The reason Brown gave for making the BOE so called independent was so it could work independently of government.
What he actually wanted was that labour could work independently of the BOE. as this is what has happened.
He did not want the BOE looking over his shoulder he wanted to distance himself from it.
He then made sure that his place men would be in the majority on the monetary committee, so he could pull any strings from a distance.
If you think this is not true then just look at the facts of what has happened.
He has been a law unto himself as I am sure Blair kept away from him.
He must carry the can for Britain being less prepared than any country for the current recession.
Forget Iraq. Blair's greatest blunder, the product essentially of indolence, was to let Brown bully his way to near absolute charge of domestic policy.
Needless to say, whatever he touched – which was more or less everything – was tainted and despoiled beyond repair.
I blame Blair.
Johnny Norfolk - seconded
@ Lola & Johnny Norfolk
Amen to all of that. It'll be interesting to see if Eddie George may be persuaded by events to make his earlier positions clear. I wonder how long it will be before Brown's stupidity and frantic blame-casting causes George to mount his defence.
The last time the Socialists were in power, they got us into this sort of mess..shades of 1979 now, except then we had Margaret Thatcher to pick up the pieces...
I shudder to think of the future...
Unsworth,
You might find this (pdf) interview with Baron George enlightening. I believe it dates from around August 2000.
It suggests to me that Baron George was irked by the rate of change not the change itself.
I agree entirely with Johnny Norfolk's comments regarding the "independence" of the BOE.
What I cannot fathom is why this charade was rarely exposed by the opposition or the media, which until recently continued to hail the exercise as a Labour triumph and a notable success. How Brown must have laughed!
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