Tuesday, January 20, 2009

Who Will Take Responsibility for Our National Humiliation?

I'm not going to even attempt to analyse the acres of newsprint to the unfolding (second) banking crisis, except to say that the claim by the Prime Minister to have saved the world with his first bank bailout sounds even more hubristic than it did at the time he made it.

In these situations it is easy to dish out blame. And it's right to do so because those responsible for bringing this country to the brink of economic ruin should accept their share of responsibility.

And then they should take Jeff Randall's advice in those trailers for his Sky News programme...

What should they do? If it was me, I'd resign.

But it's not just the bankers who are to blame, although they must certainly shoulder most of it. It's the tri-partite regulatory system which needs to be held accountable. Where are the political resignations? Where are the resignations from HM Treasury? Where are the resignations from the FSA, and lastly where are the resignations from the Bank of England? Clearly, we can whistle for them.

We really are now in uncharted waters. It's clear that neither the politicians in government nor Whitehall civil servants have anything resembling a strategy. They govern by events without being able to spot the next crisis about to hit them. They govern by soundbite and are obsessed by one thing - giving the appearance of activity. Any activity.

Incredibly, there is a real school of thought developing which truly believes this country is heading for national bankruptcy - and it's not just right wing doom mongers, who believe that. Our national humiliation has some way to go yet before we reach the economic or political nadir, I fear.

If things get really rocky and we have to go to the IMF for a bailout, there would have to be an election. And the way things are going, that might be sooner than later. I hope Messrs Osborne and Clarke are already composing their national rescue plan. It may be needed sooner than they think.


strapworld said...

Brown is now placing the blame on the bankers, as he tried to pin the blame on the Americans.

The bankers are to blame and I find it rather odd that Brown has not demanded heads in return for Taxpayers money!

But, that said, we cannot allow Brown to escape blame! He must not be allowed to try to con his way out of this almighty mess.

The Country cannot afford Brown anymore.

Hacked Off said...

You can bet that McBroon won't admit that any of it is his fault.

The Penguin

Twig said...

I'm afraid that messrs. Cameron and Osborne will find nothing left but scorched earth. However, Gordon on the other had will hade made some very rich, powerful and grateful friends in the finance industry.

Who are the losers?

Roger Thornhill said...

The "blame" has many dimensions.

The rating agencies who faked the AAA rating of toxic debt is probably at my top table.

The ability for people to cross-insure the toxic debt so making everyone liable should not have been permitted.

Capital adequacy and related should have been tighter.

Also, the core, the BoE should have been controlling Currency Inflation, NOT price inflation, which was worse than useless during the increase in cheap imports.

This, in a phase of bloated State spending on wages (900,000 extra salaried unemployed), not infrastructure such as Crossrail which had been delayed for decades.

Standard and Poors, Moody's for the rating agencies. For the rest of the issues, our very own Moody and Piss-Poor Gordon Brown.

Chris Paul said...

1. What would the Tories do different?

2. Where is the successful Tory-run economy globally that (a) escaped and/or (b) is recovering in a better way?

3. Aren't these bankers simply living the Tory dream of risk, profit, inequality, selfishness?

4. And hoping for the Tories to get in to restore volatility?

Brown has got several heads in the banking sector. Brown is well on the way to assembling a large national bank on the cheap. Brown is clearly way better than Osby-Cam on this stuff.

And of course Ken Clarke largely agrees, though he also tends to throw his hands up and speak of any and all measures as huge gembles etc etc.

Meanwhile Tories jeer from the sidelines, cheer every reverse, offer public spending cuts, drive saving behaviour ... basically so politically crap that it is almost incredible.

This is Thatcherism coming home to roost. Thatchers children in the city getting their fingers burnt off. Tory thinking bringing national and international grief for the real workers.

Sue said...

Brown will be the last one to take responsibility for this mess even though as ex Chancellor and now PM he is almost entirely responsible for allowing and/or bringing the country to it's knees.

Why won't he? I think he's seriously mentally ill, that's why!

Chris Paul said...

Gambles not gembles sorry

Gareth said...

Unfortunately Iain, you fail to see the bigger picture, and because of that you underestimate the true genius of Gordon Brown.

By selling the Bank of Scotland to Lloyds and nationalising the Royal Bank of Scotland, Gordon knows he can 'kill nationalism stone dead'.

This skillfully engineered financial crisis, conjured up from a 'golden age' of banking, almost by as if by magic, will suceed where devolution has failed.

Brown 1 : 0 Salmond.

Plato said...

Oh yawn Mr Paul.

No wonder most of your posts get no comments.

How long does Mr Brown have to be charge before it is anything to do with his administration?

Man in a Shed said...

Labour have no mandate for what they are now doing.

Its is ridiculous to say that the election of Blair in 2005 on a platform of seeing out a full term covers Brown for making debt salves of all of us and our children.

Cameron must demand an election - with every public statement he makes. If Brown won't provide one then he should go the palace and request of her Majesty that she dissolve Parliament and call new elections.

Man in a Shed said...

Chris Paul - are you aware how close the Labour party has been to big finance in London ?

Bob said...

Should the bankers at the top face jail time for such actions?

Jail vs the sack would create a more sencible approach to risk taking.....

Also should they be personally liable for the losses they oversee....

Cannot believe I voted for Thatcher yet hate the current system which looks like a total total mess.

Nigel said...

And Gordon Brown's latest scapegoat, Sir Fred Goodwin...
... 1999 appointed Chair of Treasury taskforce on credit unions; regular visitor to No 11 and advisor to the then Chancellor; 2004 knighted at the behest of the government; 2006 appointed to Gordon Brown's International Business Advisory Council.

Unsworth said...

Shades of Callaghan. But then the bail out was proportionately much smaller. We can expect several Winters of Discontent - if we survive.

It's patent that Darling simply doesn't have a clue where this might end. It's equally obvious that Brown and Darling are desperately blaming everyone else for their own misjudgments.

Things can only get worse.

seebag said...

Come on , Ian - resignations? You are harking back to a bygone age of honour and integrity. No-one does resignations anymore. Miscreants have to be dragged kicking and screaming from office, and then are likely to sue or be brought back undemocratically. Even if they go and stay gone, they usually get a gold plated pension for their troubles. Welcome to modern Britain.

Anonymous said...

What laughable deluded garbage from old Pauly.

We have had 11 years to identify and stop this - under Brown, under Browns warped flawed regulatory structure. A structure that Brown proudly boasted was light touch, was risk based.
Bankers? Government? Its hard to work out who was sucking on whose dick -- but both sides saw only £ signs in the arrangement.

Thatchers fault? Go jump in a lake Pauly - this would be the Thatcher lauded by Brown as soon as he became PM?

Thatcherism? The sub prime crisis has its causes back when Carter used Fanny Mae and Freddy Mack to force mortgages on blacks who could not afford them.
(The "Community Reinvestment Act,")
The legislation was taken up by Clinton and all banks forced to led to sub prime debtors. Watch this and weep

Guess what - Bush tried to stop it but the DEMOCRATS got in the way.

And guess what - this video will get NO publicity from the BBC on inauguration day, (Obama got more money from Fanny Mae than anyone)

Stick to LabourList Pauly I'm

Trend Shed said...

The inevitable enquiry into Iraq and the multi-billions Gordon Brown has lost are surely going to lead to some serious 'wing clipping' of Prime Ministerial powers in the near future.

Gordon has had plenty of opportunity to fess up to his mistakes and to be then seen to fix them. He hasn't taken that opportunity.

Gordon will, literally, have one eye on the history books. He is going to admit to nothing and will go to his grave blaming everyone else for the countries woes.

Brown is likely to end his days as a very bitter man.

Conand said...

'I hope Messers Osborne and Clarke are already composing their national rescue plan. It may be needed sooner than they think.'

It was needed like, yesterday dude.

We need to force an election somehow!



Not a sheep said...

This Country is nearing the end, no seriously, we are on the verge of bankruptcy. I have been predicting this for over 18 months now as have many in the blogosphere but when it is being openly discussed in offices and bars you know that it is over.

strapworld said...

This Chris Paul gets more comical. TEN YEARS of this ridiculously incompetent government. Ten years of the iron fist of Brown. Ten years of Blair/Brown and their ending of Boom and Bust and now we are heading, as Iain points out, to possiobly National Bankruptcy and whose fault is it? ChrisPaul pulls the usual rabbit of of the well used hat MARGARET THATCHER...

Grow up you stupid, stupid boy!

It takes a man to admit their faults. That is why Brown will never say sorry!

Kevin Davis said...

The IMF do not have enough money to bail us out this time.

Colin said...

Argentina here we come!

Next stop; confiscation of wealth. After that, who knows? Certainly not brown and his comrades.

Nikostratos said...

What ian you mean to say Osborne and Clarke Haven't got a plan. All the time this has been going on and they don't yet know what to do.

Not very reassuring Ian is it..still perhaps they could say 'sound money'
or 'saving to fix the roof'.

where's the Beef Ian where's the Beef

Unsworth said...

@ Chris Paul

So it takes a decade of NuLab Rule for Thatcher's 'mistakes' to filter through the economy? Yet it take just a few weeks for this 'global problem' to tear down our banks? How remarkably prescient.

You seriously believe that your position of blaming politicians who have not even been running the economy for more than ten years is a) logical and b) believable?

You say that Brown is on his way to assembling a large national bank. Really? What chance is there of that? Is this something to be applauded? If he does it will be because he has run out of scapegoats and options. And, if he does, what happens when he has to go cap in hand to the IMF - because that is exactly where we are headed?

Labour have repeatedly shown themselves to be absolutely incapable of running any economy. History repeats itself. Do you seriously suggest that somehow the Tory Party can make changes to Government policy decisions whilst they are in Opposition? How?

As to a Tory Government running an economy - I'm not aware of there being a Tory Party elswhere in the world. Where would you suggest? In any event, it's clear that we won't have a Tory Government until the next General Election. Bring it on right now, I say.

With Nulab things can only get worse.

p smith said...

Yes Iain, you are right. But do you also accept that the only criticism of the tripartite regulatory structure heard from the Conservatives over a period od 10 years was that there was too much regulation not too little. Of course the government must take responsibility but let us not pretend for a second that the situation would have been any different if the Tories had had their way.

This is no less evident from Osbourne's execrable performance as Shadow Chancellor. His strategy appears to be to say nothing about what should be done until he has waited to see what has or hasn't worked. That is called followership and is no doubt why Cameron has brought in Clarke to explain economics to him. To understand this is to understand why the British public may hate this government but they have no love for or trust in the Conservative Party.

It also underscores the self evident truth that very few politicians on either side of the Atlantic have the remotest clue what to do about this other than to wait for the economy to right itself in two years time. The only person who can claim any credit over the past year has been the de facto leader of the Lib Dems, Vince Cable.

Anonymous said...

A new attack line for the Tories in the making here. Labour = The "ACHIEVE NOTHING" Party.

Old Holborn said...

WE are to blame.

Labour realised that all they had to do was keep throwing money at bread and circuses for the unwashed and they could have power forever.

We currently pay 4 million people to sit on their arses all day, so that's exactly what they do. While the country is flooded by those willing to do the jobs the Stella belching underclass can't be bothered/are paid not to do.

HUGE amounts of unelected quangos greedily gorge at public funds (the British Potato Council?), minorities scream for their slice of the never ending cake and no one has the balls to ask who the hell is paying for all this?

Of course we are bankrupt. ALL socialist countries go bankrupt. Spending is all they can do.

If you have savings, turn them into something tangible. If you have debts, simply don't pay them. If you have a job you don't like, simply tell the boss he is an arse and get fired. Then sit at home, mortgage being paid for two years by Gordon and relax. No one can touch you. Take a break. Do as the underclass does. Let someone else pay all the bills.

CROWN said...

If lenders in the UK and US had checked the income of borrowers and required a deposit, then there would have been no huge sub prime defaults (which have not started here yet), which would not have caused the insurance to default, which would not have caused the shut down of the credit markets.

There would not have been a 10 year housing bubble (which is a good thing), housing would have remained affordable and Labour would not have been re-elected in 2005.

This is what happens when you put a bunch of socialists in charge of capitalist banks. Or in the case of the US a plank like Bush and an old duffer like Greenspan in charge.

Boo said...

Talk about responiblity, no resignations and the guy with most of the blame gets a promotion. Is it any wonder we are in trouble?

JuliaM said...

"Brown is likely to end his days as a very bitter man."

Given that's how he started them, it seems appropriate...

Andrew said...

I'm waiting for Brown to come out with the phrase used by failed CEO's in the last few years---"The easy thing to do is to resign, but I'm resolved to stay and bring us back to better times".
In Brown's case of course he would feel the need to add "Global crisis, started in America,etc, etc."

Anonymous said...

Dear dear dear me, p.smith.

In fact Osborne's performance has been very good. He single handedly scuppered Brown's pre election bubble 12 months ago.

Condemning Civil Service Red tape is not the same as ignoring the disastrous housing bubble - which the Tories did condemn.

Meantime George Soros, remember him he was the labour supporting Democrat speculator who bet against the pound? That George Soros?

Well this is what he says (or rather his business partner) "Jim Rogers, the co-founder of Quantum fund with George Soros, today told Bloomberg News that “I would urge you to sell any sterling you might have.” " -- See The Telegraph.

Hacked Off said...

I'm just glad that there's no more Boom and Bust or we could be in trouble.

The Penguin

Guthrum said...

This is Thatcherism coming home to roost. Thatchers children in the city getting their fingers burnt off. Tory thinking bringing national and international grief for the real workers.

Dear oh Lord, Are there still people going around wibbling like this ?

Nobody is going to resign, that require a modicum of honour.

We should not bail out RBS we should let it go, they have no idea of how deep a hole they are in, nor has Brown.

If we have to give guarantees, much against my principles, let it be to a new entity with a positive balance sheet and get it start lending to productive industries, break up the Megabanks that have failed into Regional Banks.

Lastly find somebody who can lead HM Opposition to oppose and bring this 'Government ' down.

Man in a Shed said...

Kevin Davis - your right about the IMF not having enough money.

At the start of this crisis Brown did two things:

1) Went begging toi Saudi to give more money to the IMF.
2) Recognised Chinese authority in Tibet - selling out the people there. Maybe the Chinese will lend the IMF more.

This implies he knows that the UK economy is going to need to life boats quite some time ago.

In the mean time he can destroy the Tory voting middle class by destroying their savings, pensions and livelihoods. Then Socialism will be complete !!

Its time to start talking about potential criminal charges being brought against thoise involved in the current misadministration.

Old Holborn said...

Imagine if you can.....

A cold Scottish house, a clock ticking in the background, rain pouring onto the windows.

In the corner of the dimly lit room, sits a grey broken man, frail and scared.

A telephone that never rings sits on the table.

The lonely man has not had a visitor in years, no mail, no contact to his ex wife or children. His only friend is an old radio crackling it's way through Woman's Hour in the dark kitchen.

He knows he is dying. He knows no one will come to mop his brow or hear his last words. He doesn't know when it will happen, so he stays firmly glued to his chair in case the grim reaper would mock him by grasping him on the loo, or naked in the bath. He knows he will not be discovered by family or friends, he knows his corpse will rot, glass eye shining in the putrid flesh where it falls to eventually be discovered by a TV licence inspector calling to find out why he has not renewed.

He waits for death, frightened and totally alone. For ever.

His tight lips muttering "no more boom and bust....."

Hugh said...

Remember the "Board of Banking Supervision", abolished round 2004 when Brown abolished boom and bust.

Somehow the neutering and then abolition of that body says it all about who was really responsible for our woes.

Bankers are there to make money and if the politicians loosen the leash the bankers will stretch the boundaries.

Somehow Brown just does not understand that he, personally, stretched the regulatory boundaries, and that he therefore bears much of the responsibility, not just because he was the man in charge but because he dismantled the control systems as part of a deliberate, if ignorant, policy.

Anoneumouse said...

The IMF haven't got enough money to cover the UK requirment

The IMF Total quotas at end-August 2008 were SDR 217.4 billion (about $341 billion).

That will only bail out 21 countries equal to that what was required by Ukraine

so far since the begining of December the following countries have put out their begging bowl to the IMF

El Salvador
Central Africa Republic

Hacked Off said...

Oooooh, Mr Holborn, nobody does it better!!!

Seriously nice comment, though, and hopefully will come to pass.

Unless the people rise up and do the Despencer upon him, which would be even better. As an encouragement and example!

The Penguin

DespairingLiberal said...

I agree Iain, but what on earth is to be done? Nobody seems to have a proper clue and the government are lashing out in all directions, but some of the finance bloggers seem to be down on the idea of sackings for fear they will just further depress the markets.

I have been trying this morning to see where the "Britain is bankrupt" originated. I am fairly sure it's tripe - even at the worst, our debts amount to only a third or less of our foreign assets - so it would be interesting to know where it started. As far as I can tell, it originated in the Murdoch empire with Sky and the Times. Could it be that there is a Sterling shorting operation going on, with Murdoch or his people involved?

One piece of good news - the ridiculous Anatoly Kaletsky has admitted to the BBC today that he had no idea this recession was going to come. Another one to add to the pile of Kaletsky snafus.

Iain Dale said...

Despairing Liberal, you ask what is to be done? I'm no economic expert so I am not going to presume to suggest a solution, but one thing I do know is that an economy's prospects are based on the international markets having confidence in it. And you only get confidence by pursuing policies of sound money. That's certainly not happening at the moment.

Oldrightie said...

It really is looking dire, isn't it. Unpopular decisions must be made asap and by a Government that puts Governing before party, people before politics. Ergo, not this lot of pathetic incompetents.

Lola said...

For God's Mr Paul!

The UK component of this crisis has its roots in unsound money and very bad regulation. Both of which are entirely down to Gordon Brown.

Freedom and markets will always work. What you are seeing now is markets (in their most general sense) passing judgement on the total (and I say moral) failure of Brown's policies.

Money supply expansion - as far as I can establish it - has run at an annual real rate of about 10% since 1997. In other words the pound in your pocket is worth 35% of what is was worth in 1997. This unsupportable situation is now being unwound.

Brown supplied this vast quantity of money to the system at a price that was far too low.

Meanwhile the proper supervision of banking capital ratios was abandoned, in part by adopting the Basel rules, and by Brown's own disfunctional regulatory 'system'.

The banks - which are now and always have been very dangerous institutions, being as how they are a cartel supplier of a monopoly product - were regulated out of making money on traditional services and looked for new ways to do so. Given a whole shed load of underpriced money they went adventuring, as you would if you were them. And given that their regulatory capital requirements were cut by 75%, they ballooned their balance sheets. This lead to an asset price boom in property.

Brown then failed to address this boom, content as he was to tax this expanded 'capital' (e.g.stamp duty) and spend it.

My analogy is of the narcotics market.

Brown is the Columbian Cartel. The Menendez Brothers of the UK. He makes lots of drugs, aka money. Then he sees that as a monopoly supplier he can cut the drug with something by 65% and still get the same price. So that's what he does and then eggs on his pushers to sell it on. The pushers being the banks. The pushers need more addicts so they also cut the price of the drug on the street and more addicts come on board. Sooner or later another supplier comes into the market with better drugs or, as in this case, the crop fails and the whole Ponzi scheme goes up in smoke.

Thatcher was a sound money leader. You may not like what she did to industry and other things but on monetary policy - apart for a couple of abberations - she was sound. The Tories nowadays tend to sound money.

Would the Tories have done better since 1997? Well, they could hardly have done worse could they?

Regulation. Regulation was brought in by Thatcher after breaking down the old protectionist practices and state monopolies to prevent the new privatised industries simply practising their old monopolistic tendencies when privatised until new markets entrants had time to establish themselves and 'regulate' the market with competition. But like all these things regulation has been taken on by lefties and morphed into nationalisation lite. FS regulation is in particular appallingly prescriptive. This is why it is useless.

Part of the answer to this situation is less regulation but better supervision.

Overall the UK will not get out of this mess until the management is changed. Brown has been shown to be totally clueless. he is the classic clever idiot. I feel rather sorry for darling who I think under it all is a decent bloke, but completely out of his depth. You can see in his face that he knows the game is up and that he and his party have visited ruination on nthw whole country.

Be very clear that socialism is very good at one thing and one thing only. That is the total destruction of wealth.

Unknown said...

Surely, the main reason for banks to refuse loans is that they do not believe that, in the present circumstances and under this government, those businesses will be able to thrive and repay.
Change the government to one less likely to bankrupt us all, stimulate businesses by cutting or cancelling employers NI, invest in infrastructure rather than gimmicks, and confidence will return - in the banks, in the city and in the currency markets.

Anonymous said...

Unsworth said; "As to a Tory Government running an economy - I'm not aware of there being a Tory Party elsewhere in the world. Where would you suggest?"

The answer, Unsworth, is Canada.

Canada has a minority conservative government under Stephen Harper. Harper replaced the Liberal government which had run surpluses for a decade and got the country's finances into very good order. They tightly controlled Canadian banks so there is now no banking crisis in Canada.

But Harper's government raised spending and is now forecasting a deficit.

The new Liberal opposition leader, Michael Ignatieff, can be seen here describing Harper's disastrous Conservative financial management.

Conservatives do not always get it right. In Canada they blew it very quickly.

Britain's problem is that Cameron did not oppose Brown and Blair - they are all Thatcher's children, after all.

Where is Cameron and Osborne's crafty plan?


Pogo said...

Chris Paul... All Thatcher's fault eh?

Are you sure that Macmillan or Churchill aren't to blame as well?

Unsworth said...

@ Faustus

Since when have we voted in Canadian Elections?

Good Grief!

You're saying Conservatives are the same, the world over? OK, how about 'Socialists', then? Any similarities between this government and Russia or Cuba or any other 'socialist' government? That is your position - isn't it?

John Pickworth said...

Iain Dale said...

"... an economy's prospects are based on the international markets having confidence in it."

And here's what one of those international market chaps is saying in today's Guardian

Jim Rogers, the veteran US investor, claimed the UK economy was "finished"!

"I would urge you to sell any sterling you might have,"
Rogers told Bloomberg. "It's finished. I hate to say it, but I would not put any money in the UK."

We have an idiot in control of the nation's purse. We knew it and now so does the rest of the World.

Anonymous said...

" His tight lips muttering "no more boom and bust....." "

Brown's "Rosebud"

Nikostratos said...


"Part of the answer to this situation is less regulation but better supervision."

i believe that's called controls with no controls..

"I have long been convinced that the only successful basis for the conduct of economic policy is to seek the greatest practicable degree of market freedom within an over-arching framework of financial discipline"

Lawson (Nigel)
Economy: Resignation speech


And that from a man "who was flying by the seat of his pants"

Laughed so much fell out of me chair..

DespairingLiberal said...

John Pickworth, has it occured to you that Rogers might say that because he has short positions on sterling?

I think news that the UK is done for may be a little premature. Our overseas assets for example are ranked fourth in the world, only Japan, the US, Saudi Arabia and Kuwait control more.

DespairingLiberal said...

Faustus, don't we count the ruling German CDU as a conservative party?

Puzzled if not, because Iain does, although not on Europe apparently, which means that the British Tories cannot ally with them in Europe. Even though they are right now the most important political party in the said Europe and Obama has invited Angela Merkel to meet him before G Brown esq.

Hope that's all clear and coherant.

Roger Thornhill said...

OH: "Imagine if you can....."

Nice imagery, but I cannot, for I see Gordon in a cosy sinecure somewhere in the EU/ECB/IMF or World Bank, the reward for tearing apart the UK then England. He will be above the law and protected by thugs who are themselves above the law.

This is why he does it. His future is "certain".

He thinks.

Problem is, Cameron will clap him out. Cameron will accept the yoke of the EU and become Das Englander Gaulieter.

John Pickworth said...

DespairingLiberal said...

"John Pickworth, has it occured to you that Rogers might say that because he has short positions on sterling?"

It did, yes.

Problem isn't so much the one saying it, but the herd that's listening.

Good point though about overseas assets. I wonder how much they're worth right now?

DespairingLiberal said...

John, as the £ lowers, the overseas assets become worth more, not less.

John Pickworth said...

Ermmm not necessarily... your 100 Million Dollar chip fabrication plant, Chinese textiles workshop or oil rig might now only be worth 50 Million Dollars?

Also these assets, assuming they haven't lost any value in their domiciled territory, might not be so easily liquidated? I seem to recall several countries out East discovered this during the Asian Crisis.

Alex said...

This is who is responsible


Peter the Lawyer said...

Australia had a Tory Government for 11 years until 2007. That Goivernment left the country in brilliant economic shape. It took a Labo(u)r administration 1 year to stuff it up. Their reponse to the financial crisis has been absolutely woeful.

It all goes to prove the old adage that lefties can talk about Government but they can't actually govern.

Wyrdtimes said...

English taxes for England
English law for England
Home rule for England