In the dying moments of the Labour government, namely those heady days between the election and Gordon Brown’s departure from Downing Street, Bank of England governor Mervyn King was perhaps a bigger player than any of the accounts so far have revealed.
His name is of course well-known in political, media and financial circles, and the powers of his position have increased substantially since Labour came to power in 1997, and GB made the Bank independent in one of his first, and most important, moves.
Yet the Bank Governor could probably walk down most High Streets without being too troubled by passers-by, even though he wields a fair amount of influence on their lives.
In those post May 6 days, the sense I had, admittedly only listening to one side of a conversation, namely GB’s, was that King saw the instability of the political situation as an economic problem, and therefore hoped to see it sorted quickly. I also got the impression – and again I stress that the prism through which I was seeing and hearing this was GB’s – that he felt the Tories’ harder line on the deficit might be more in tune with his own approach.
At one point, GB seemed to think that between them, the Tories and powerful figures within the financial world were jointly seeking to create a sense of pending economic crisis unless GB walked and David Cameron came in.
Anyway, all history now, though the sense of pending economic crisis is never far away. What has been a bit remote from the economic debate is any realisitic assessment of how we got to the current position. The coalition has no real interest in a sensible assessment. They just want to blame Labour. It is a fairly obvious political thing to do, but it doesn’t neccessarily help them reach the right economic decisions.
As I said here yesterday, because of the Tories’ determination to blame everything on Labour, the banks have largely disappeared from the debate about what happened to bring about the crisis, and what we do now.
So it was good to see Mervyn King in New York yesterday suggesting that the government needed to do more to reform the banks and the banking system that did so much to fuel the crisis. He is absolutely right that the reforms proposed so far, including George Osborne’s £2.5billion bank levy (around a third of the additional welfare cuts announced last week, and around a third of the bankers’ bonuses last year btw) are not enough to deal with the problem of banks that are ‘too big to fail’ – those whose collapse would threaten the entire financial system.
Right too that other proposals, including new rules forcing the banks to hold more capital as a buffer against losses, were not a ‘silver bullet’ and that ‘other, more radical reforms’ should be considered, including forcing banks to hive off their ‘casino’ activities.
In his speech, he said the financial system was based on ‘alchemy’, adding ‘of all the many ways of organising banking, the worst is the one we have today.’
Some will ask where he has been in this debate before. But it is good that he is getting into it so vociferously now. And interesting that at yesterday’s CBI, the person who seemed to go down worst with the audience was not Cameron, nor Ed Miliband, but Bob Diamond of Barclays.
Of course Barclays oppose the reforms King is proposing because they fear they would force banks like them to hive off their highly profitable investment banking arms.
But as this debate develops, I for one was pleased to hear him say that ‘the real failure was a lapse into hubris … there was an inability to see through the veil of modern finance to the fact that the balance sheets of too many banks were an accident waiting to happen.’
It is about time the coalition, and not just Vince Cable, started to echo his views, rather than continuing to peddle the myth that somehow teachers with an ok pension are the problem for the economy, past, present and future, rather than the banks, hubristic and greedy back then, not lending enough now.
Nowhere has the coalition said that “teachers with an ok pension are the problem for the economy”; the laxness of bank supervision – GB removed supervision from the BoE – remains a problem and still needs to be addressed. And the large part played by the banks in the financial crisis is obvious – equally so is running a structural defecit of £50bn in “boom” years.
And finally, many banks did and do perform a valuable service to industry and the economy generally. So let us have a balanced view of the origins of this mess in order to restore fiscal sanity and economic growth.
Certainly glad the banks’ part in all this is beginning (by some people) to be highlighted for what it actually was. The coalition’s continual blaming the last government is indeed galling, and very hard for many people to swallow when they realise the extent to which the banks, essentially private business, was the cause of the country’s economic situation today.
I have tried myself to highlight on the Guardian’s comment facility, on one article about the banks being let off lightly, that the cost of stabilising the banks last year required an injection of £85.5 billion – when the entire MOD budget for the same period was just £44.6 billion. There were many other commenters defending the banks, and quick to point out that the money the banks had is simply a ‘loan’ which they are going to pay back, and does not form part of the deficit. Really? Is that correct? I don’t imagine Gordon went and got the £85.5 billion out of the safe in the corner of his office. Surely this must have been borrowed, and we are now paying interest on that money? I wish someone would make it clear – so that the ordinary person in the street like me can see clearly what the cost of the bank bail out is, rather than mixing up and obfuscating the details with the final message being that the entire economic ills of the country are the fault of the last government – Gordon Brown in particular – and the Public Sector workforce! That is so NOT true but please let’s have some more people standing up and making it MUCH CLEARER for everyone to see!
Let’s consider the credibility of apportioning blame when Labour were in power.
“It started in America…”
Possibly. Only the Obama-isation of British Politics and Brown desparation for some of that fairy dust to land on him stopped that defence. The truth is Clinton’s repeal of Glass-Stegall and institution of the Communities Reinvestment Act produced two major fiscal movements to seed this crisis. First, the amalgamation of investment and retail banking, second, this amalgamation expedited the creation of investment based CDOs to finance the later act which exported a invisible toxic debt to leech into the world’s banking system.
“It is the banker’s fault…”
No. That is like blaming footbally for playing to the offside rule. We are still awaiting charges for Enron like accounting fraud or other financial misdemeanours. The bankers were playing their game to the rules.
During the Bank of England Act 1997, Gordon Brown’s wunder-policy, the opposition warned of Brown tearing down the SIB regulatory structure and replacing it with the tri-partite arrangement. The Shadow Chancellor warned of problems with banking debt management and a lack of clear control as to who managed the banks – it was clear it was not the Bank of England.
Had the Bank of England had that power, the scale and extent of the crisis when it hit would have much reduced. The FSA had taken its eye off the ball for over 10 years.
That one fact in itself would shift the blame firmly into the territory of the Treasury and Brown, Cooper and Darling as much as the FSA for failing to define the processes for such a crisis. After all, this was 1997.
Combine these two fact together and the bankers are a convienient fall-guy for a total failure of policy, regulatory organisation and practice.
That is 100% the responsibility of government and its appointed agents.
Mervyn King would of course go to New York to argue for the reform of banking as combined with London this is the critical mass of the global financial services industry.
There is already structural reform in place under the aegis of BASEL III.
Still, why let that ruin a good story and also a flawed political point?
According to Nobel winner Christopher Pissarides George Osborne “exaggerated debt crisis risk”. He also thinks that the coalition´s cuts unnecessarily risk the recovery.
All talk that Britain was bankrupt is political spin. Only thing that is bankrupt is Mr Osborne´s ideology which has failed everywhere it has been tried.
The Tories want smaller state. And the cuts are not fair as IFS has said. End of story.
Who to blame for the “mess”? Messrs Cameron and Osborne blame it all on Labour for political reasons. They will not be given Nobel prize for their analysis.
But a man who has actually won the prize, Paul Krugman, says in NYT that Britain “came into the crisis with relatively low public debt”. It was, in fact, only 40% of GDP which is peanuts in historical comparison.
The national debt still lies in the middle of international average as a share of GDP. National debt has been higher for 200 of the last 250 years. Much of debt is owned by Britons, and there is plenty of time to pay it back.
But the Tories have sensed a once in a lifetime chance to shrink the state without getting blamed for it. In their ideological zeal they have thrown away all caution with the cuts.
As I have on numerous occasions proved with official figures, Labour did not overspend before the crisis. Debt was only 40% of GDP, and structural part only 1% of GDP. Labour ran small deficits on average of 2.5%. This is not overspending, as Lord Skidelsky has said.
What about deregulation of financial sector. This is one of the reasons for the “mess”. But there were huge crises also during the tighter regulation, as Niall Ferguson has stated. More regulation could not have prevented the financial crisis which started in the US with sub-prime crisis, and exploded when the US authorities let the Lehman Brothers to collapse.
All major parties in the US and Britain supported light regulation, so if it is Labour´s fault it is also the fault of the Tories.
Ed Miliband praised New Labour´s economics yesterday. New Labour managed to combine economic efficiency with social justice. Ed said that Labour is pro-business. But firmer regulation is needed and manufacturing must also be backed.
David Cameron does not have a proper plan for growth. Private sector will not invest enough. Britain needs a plan for growth.
The timing of the cuts is wrong. There is no economic theory to support the current austerity. It will not work.
Ed Miliband said that Britain entered the global crisis with second lowest level of debt in G7. Economy was growing when Labour left the office. Deficit was £10bn lower than the forecast. Labour wants smaller and slower cuts. Labour wants also to protect the frontline services.
Governments are not like prudent households. Governments have the power of taxation. In recessions governments should compensate for the private sector.
According to IFS, Britain´s budget deficit was caused by bank bailouts and the recession – not by Labour overspending.
George Osborne has turned a crisis of private sector in autumn 2008 into a crisis of public sector in 2010. But Labour wants banks to pay more. And Labour´s alternative to the coalition should be modern activist state.
George Osborne has said that Britain should follow the example of Ireland. I prefer to listen to Nobel winners.
Erm I think someone’s completely missed the point here:
‘the real failure was a lapse into hubris … there was an inability to see through the veil of modern finance to the fact that the balance sheets of too many banks were an accident waiting to happen.’
Roughly translated “Some fool, I can’t remember who, kept saying no more boom and bust and everyone believed him from the banks on down and took on greater and greater risks”
Most people recognise the banks culpability but to suggest the previous Goverment can simply get away scot free is for the birds. For christ’s sake the liabilties of RBS was in the were one and half times the size of the UK economy! As someone said at the time “I didn’t think there were that many people in the world to lend that much money too.”
It’s no good saying it was global or maybe the regulators were asleep at the wheel. It’s like Andy Coulson saying “Sure I was the boss but totally unaware of the widespread malpractice and illegality going on right under my nose, besides everyone else was at it.” Sooner or later people are going to ask where were you while all this was happeneing and why didn’t you do anything to stop it?
It was Gordon Brown, or GB as you rather oddly like to keep calling him, whom Mervyn King was referring to last night. I think we can take it as read he doesn’t trust or think much of the bankers.
Re restoring “fiscal sanity” – as I posted elsewhere on AC’s site, Japanese expert Richard Koo was saying on Newsnight last night that with all Western countries falling for the daft pre-Keynesian notion of slashing their deficits (not Chris that this is a widespread problem, not the result of Labour profligacy) and hoping to devalue their way to an export-led recovery, they all cancel each other out. In effect he was saying that the present strategy of the Coalition is, to quote him, “wrong.”
I see from your post that you’ve fallen for the dumb argument from the right that in ‘boom’ years you pay off your debt. No, you keep investing in public services and in industry. This whole notion of countries hoarding wealth or keeping their books balanced is based on the totally fallacious idea that a nation state is the same as a business or a household. In 1997 my view was that it would take 15 years minimum for the country to recover from 17 years of Tory under-investment. We got 13 years, so naturally there was much investment/spending still required. Of course, with our ageing population, we actually need investment in services like health to be on-going. The Co’tion’s plan for NHS spending is actually a real cut in funding (see today’s Independent and poss. other papers) – exactly what we don’t need. So if we want a healthy nation (including a healthy, economically efficient work-force, you have to pay for it. This government has no intention of doing so.
I would agree that we under-regulated banks, of course. These people cannot remotely be trusted. Rule one of banking from the outside: stability. It’s exceptionally difficult to turn a major bank into a failing bank but the whole sector was going down and required the state to save them and the economy.
So, Chris, your attitude here of defending the bankers and the City is deeply, woefully misguided. They only care about £££. As much of it as they can get their hands on. To think otherwise is just naive.
Cracking post, L’Hayley.
Like you, I’d like to see it in confirmed that the deficit included the £85.5 bail out, because the scene over the past 5 months has been just surreal and remains so. I haven’t known of lying and propagandizing in this sinister way since the days of Bresznev. In these circs we need to keep being told by those on the right (morally and politically “correct”) side of the line that 2 and 2 still makes 5.
You can’t stand a balanced view can you?
Well, as you see from this BBC News clip, Osborne appears to have turned into a robot and his speech mechanism has got stuck in a loop, so we shouldn’t expect much from him. Uncanny how they let him in front of a camera! Play the interview!
The interest charge on the cost of the bank bail out is around £2.15bn p.a. out of the total £43bn the Government will pay in interest this year.
On banking’s responsiblity or not for the problem:
You can’t twist the facts like this. The banking system buckled because of its own ineptitude and lack of foresight and lack of skill and efficiency. Or, if you like, it’s race for cash profits was wildly optimistic. (The City wanted its independence to operate as it sees fit too, by the way). You’re right that the FSA’s lack of ooomph was the fault of Brown, but the historical fact is, if we look at this in a linear way – and we should – that the banking sector went bust, not because of bad luck, nor because of unfavourable economic conditions, but because it lost billions through creating bad debt to make themselves profits. Therefore, we cannot have this any other way that the fault of this, essentially, is that of the banking sector’s spectacular failure or want of expertise. Furthermore, given the inevitable fall out, to have taken those risks, knowing that the State would bail them out because they can’t be allowed to fail, this failure was and remains, totally unacceptable.
So to say that banks are just “a convenient fall-guy” is either you being knowingly disingenuous or you being wrong. I pick the former explanation, obviously. And to say that it was all the government’s fault for not stopping the banks is like the kid who pushes another kid in front of the bus with his mother at home saying, ‘Mummy, it’s your fault, you didn’t stop me.’ Banks wanted, if not demanded freedom to create financial instruments as their right in a free market. You know fine, or should do, that they egged Brown on, and threatened goodness knows what – leaving the UK? – to have their way. Much as I wanted Brown to regulate the City much more tightly as a Labour voter, I can see that he was under some political and economic pressure not to do so.
And it must be recognised that despite what you say, the collapse would have happened under a Conservative government. I hope you won’t deny this, Mike, because only a rabid Tory on a one-eyed propaganda bender would do otherwise.
PS I’m sure I read today that King said that Basel III will change absolutely nothing. In the Independent he was quoted, I think.
Agreed. Only today Barclays tried twice to sell me a product when I phoned to make a transaction. I had to point out that the call was at my expense and it was therefore something of a cheek. Their greed is boundless. No-one will ever get anything out of these people unless their balls are put in a vice.
AC you just don’t want to listen to any view that says the deficit and public expenditure has to come down and down quickly.
Your blog was posted at 11.10 am,some considerable time after U.K GDP figs showed the economy has grown by more than your blog subject ( Mervyn King ) thought and more then every economist in sight…its however very early days and I certainly would not suggest this is great news…its still low…BUT it is growth and should be out there as much as possible to bring confidence to every part of the economy.
Your comments re GB and some banking mafia on May 6th forcing his hand is wrong….the ratings agencies were all ready to fire the bullet and kill us stone dead as our AAA rating would be cut and interest rates rise at the worst possible time.
Shame on you for not getting this important news in the blog….also for failing to mention that 1 rating agency ( key to our level of borrowing ) has remove the UK from negative to stable outlook….
With regard to banks – I understand a review,and a thorough review at that is under way on TBTF banks….all Merv’s issues will be considered and I think that the banks will be surprised at the recommendations and the effects on their business – there is a real possibility the old investment banking model will change forever.As someone who works in the industry the banks bonus payment levels are way off being decided yet and your figure of £7bln is highly optimistic…profits being reported are mostly on lower loan provisons not on trading profits,therefore bonus payments you are speaking of are very speculative.
Also can I just mention the trick you try to play in singling out an individual teacher etc and the plight of a public sector worker is so infantile.GB lead all the public sector to believe that the GOVT had a never ending pot of money to keep inflating the public sector and jobs/pensions for life….with no accountability to the taxpayer.I still maintain that the culture for debt was nurtured under GB – he did not once step in,for example,and say to a firm like Northern Rock,your lending recklessly STOP ! Or address the simply massive levels of personal debt.
The run on Northern Rock got the crisis on the front page at the start,the rest is history….I blame the Chancellor and the Treasury at the time for that…not what they did at that particular time but what they didn’t do before.All were in denial re debt and lending.
The Coalition to their very great credit are saying the Govt is spending to much money – its not a hard statement to understand,in fact just say AC you don’t understand economics !
Well the Bank of England is doing QE to help pay for the bailout plus basically a debt for equity swap in a few banks and issuing loads of gilts….its not the deficit dude….come on its been in the papers for the last year and a half…where have you been ??
I don’t get the whole vitriol being expended at Barclays!?
Were they bailed out by the taxpayers? No. Private capital from the Middle East assisted them instead of the state, yet they out of all the banks get in the ear the most.
Your average Brit,my Finnish friend,does not give a fat man’s derriere about the writings of a Nobel prize winner…they see all around them wasted public sector spending.Benefit cheats , TV programmes every week about them.
GB let a debt culture nurture in the UK and at the wrong time it got to its worst – Banks needed bailing out….jobs in the North-East relied a lot on Northern Rock so he did nothing to stop that firm lending so recklessly and then forked about £50 bln for our pleasure on it.
Have you read a credit rating report from Moodys or S&P recently on the UK?These agencies are not best placed to quote given their record on rating AAA on subprime mortgage bonds but they have a much better reputation on Country ratings and rightly or wrongly they move rates at which Countrys borrow at.They all agree our deficit has to be addressed in a credible way and soon….a Nobel prize winner does not affect interest rates in the UK but credit ratings do.
Sorry Chris, yours is not a balanced view. You have repeatedly berrated Gordon Brown for running an excessive structural deficit prior to the banking crisis.
An IFS report from 2008 found that ‘If we compare the structural budget deficits in the years immediately before the latest two recessions started, then Labour and the Conservatives faced the downturn in similar fiscal positions – with a deficit of 2.6% of national income in 1989–90 compared to 2.7% of national income in 2007–08.’ The report also stated ‘But we should note that Labour has used more of its
borrowing to finance capital investment rather than current spending
than the Conservatives did.’
On this basis any fault you find with Labour’s handling of the economy prior to the recession must also be applied to the last Conservative government. More so, in fact, bacause they were not addressing the long term capital investment the country so desperately needed.
Do you think this might find its way onto ‘Have I Got News for You’? I’m not sure Hislop (obviously a Tory) is comfortable making fun of the coalition.
You’re completely wrong. Completely. He was talking about the banks.
“Since 2008, National Debt has increased sharply because of:
•Economics Recession (lower tax receipts, higher spending on unemployment benefits)
•Financial bailout of Northern Rock, RBS and other banks.
Although 64% of GDP is a lot it is worth bearing in mind, that other countries have a much bigger problem. Japan for example have a National debt of 194%, Italy is over 100%. The US national debt is close to 71% of GDP. [See other countries Debt]. Also the UK has had much higher National Debt. e.g. after the second world war it was over 180% of GDP.”
It cost over £80 billion to bail out the banks. I doubt that the interest on the borrowing is as low as £2.15 billion. Gimme your source.
Try around 2.5% – actually sovereign debt usually betters that but I’m being generous – on £83bn p.a.
So, just under 10% of the total then. That sounds quite a lot to me.
No, poor maths; £2.15bn on £43bn is exactly 5%.
Ah, OK – that is just over 5% of the total actually. A considerable amount still, in the grand scheme of things.
I do indeed find fault with the last Conservative government running a defecit but we’re here now and dealing with this one. The central point is that running defecits in boom times is plain stupid and leads to a bigger, longer bust. Some people seem to think nations’ finances do not obey straightforward economic rules that apply elsewhere. We cannot keep on borrowing from foreign banks and governments – 1976 proved that when Healey had to go to the IMF.
So, yes, I berate any UK government that persistently runs a defecit – its just that Brown created the largest bust since the 1920’s doing it.
Let me tell you what the Bank of England used to do managing a bank’s debt prior to the creation of the FSA.
If it did not like the portfolio of risk, the collateralisation of assets or deposits on hand at a bank, the BoE would tell the bank very plainly to undertake actions to protect itself from excessive risk. It could demand assets to be lodged with the BoE to capitalise the risk position.
End of story.
It’s called risk management and it was a key failure of the FSA under the Parliamentary investigations, Adair Turner’s mea culpa admitted as much. The FSA did not exercise the same constraints on the banks at all.
That prima facie regulatory failure.
Next, the trading of CDOs and mortgage backed derivatives.
The trading of these was banned in Canada, Spain and Sweden as their regulators deemed them to be too risky (see risk management above). When the bad debt poisoned the system, these banks were largely completely unaffected. You might have noticed Santander hoovering up large sections of the retail banks in the UK. They could because they have a largely clean balance sheet.
The only UK bank largely unaffected was HSBC because it chose unilaterally not to trade in this instruments.
The FSA did not see this risk in the same way the regulators in Canada, Spain and Sweden did.
These regulators speak to each other.
Lastly, BASEL III contains very clear and understand capitalisation and lending ratios for banks, these are the key instruments to allow banks to lend without ‘going bankrupt’..
So I think you might need to consult a better source of information.
It is not a need to more or less regulation, it is the need for the right regulation. The SIBs framework was not perfect but the collapse of BCCI, Johnson Matthey and ING did not precipitate a run on the banks nor people queuing up to get their money.
Labour sought a fall guy and got one. If you want to apportion blame…
1. Blame the last government
2. Blame the FSA
3. Blame those banks that traded in these obfuscated and complex instruments.
4. Blame the public for happily borrowing the money.
Singling one group of workers, which incidentally contributes over 50% GDP and the last government was happy to milk for billions in tax revenue is wrong.
Many thanks for a clear, rational and obviously informed view.
Just completely? Not totally and utterly? There’s no way Mervyn King could have been having a sly dig at Gordon Brown at the previous government? You know, the guys who changed the inflation measure from RPI to CPI and gave most of B of E’s regulatory powers away to the FSA? Not a single cat’s snowball’s chance in hell? Yes well you’ve certainly got me convinced now. I must have been brainwashed by all the nasty Tory propaganda….
Meanwhile back in the real world I do have some sympathy for Labour’s position but they also have to recognise that because the financial crisis happened while they were in power they are going to suffer from a lack of trust more than the other parties. You can’t have an economic crisis this big without serious political consequences. It’s just not possible as we’ve seen around the Europe.
As others have noted here and elsewhere the Tories lost their reputation for economic competence on Black Wednesday. It didn’t matter that the late John Smith, Gordon Brown and Labour were as big an advocate of membership of the ERM as John Major. No one blamed George Soros and the Bundesbank for the Conservative’s cataclysmic economic policy. You can only vote out the Goverment, not the bankers or the markets. It’s harsh but politics at this level can be cruel, unfair and unforgiving.
Ed Miliband and Alan Johnson need to find some language that ackowledges mistakes were made but that the banks were also guilty and should shoulder the burden of getting us through. To be fair I think the new Labour leader recognised this a while ago, hence the appointment of Balls to the Home Office. Balls position on the deficit while having a lot of merit just looks and sounds too confrontational and shows a distinct lack of contrition.
Most middle of the road voters know there is a balance. I’m not sure what that language is either. It’s going to be tough and not many people want to hear it.Not right now anyway. But by all means carry on blaming the bankers. Personally I think it makes Labour look weasley, like they weren’t in charge and happy to take the coin while the good times were rolling. Come to think of it, a bit like Andy Coulson! But hey what do I know? As according to RRR I’m completely wrong.
“Your average Brit…does not give a fat man’s derriere about the writings of a Nobel prize winner.”
Irrevelant to the argument here, but a salutary reminder who unleashed the culture of greed: Thatcher. With help from the Tory press, of course. And of course, this gave rise to the Big Bang and de-regulated markets, which New Labour kept with, disastrously.
I’m ashamed, also, as a Brit, that you try to patronise Olli like this.
Your denigration of Krugman, a transparent rhetorical device to help you in trying to win an un-winnable argument also reminds me of another piece of Thatcher damage: the dengration of the expert. Krugman keeps saying, most tellingly, that the austerians’ arguments and predictions have no basis in observable fact in economies of the world, present and past.
Which takes us to you: it’s certain that Darling’s debt reduction plan, too fast for Krugman, would have given us the same interest rating that Osborne got on Monday. So stop your blether.
My postings here are to attack the incorrect argument that the deficit was caused by a bloated state and bloated public sector, and to make it clear that the banks should take most of the blame for the banking collapse. I don’t want to let Gordon Brown off the hook once the cretinous arguments of a couple of people here have been dealt with.
I agree with you that Brown’s system of protective regulation was wholly inadequate, in which case he must take some of the blame. As a Labour voter, his facilitation of the bankers’ proft garnering and subsequent collapse through rotten practices is shameful to me.
Careful, though. Presenting a government as some Shylock-esque figure is naive or disingenuousness. Taxes on profits from land over the centuries and from entrepreneurial activities in more recent times have been considered essential to keep the masses out of poverty and early death. A consensus built up in the time of Disraeli over the moral imperiative of improving the lot of the poor, never mind the economic and military imperatives, and has been with us ever since.
Your comment is a bit rich too, seeing as you’ve just attacked Brown for allowing the banks to brings its own industry to the point of destruction, and the whole economy with it. You can’t have it both ways. Brown allowed corrupt practices and dirty profits and towering salaries and bonuses. You are obviously too intelligent, Mike, surely, to want to dispute the ultimate uselessness of greed, and the pointlessness of massive salaries. Blair and Brown, following Thatch and Major, have allowed the implicit philosophical acceptance of vast wealth being perfectly fine in and of itself. Happy with, for me, the flawed idea that government needs to keep the City sweet to create wealth. For me, I’d tax them to buggery and if they all want to fuck off abroad, good. I’d accept a lower standard of living to rid the country of this sick, morally bankrupt culture we have now, which has concommitantly brought about the TV reality show and myth than anyone can be famous. Free market capitalism has weakened the ties that bind us in our communities. Care for our fellow human is trying to fight back, but it’s a hard struggle.
I suspect that if a number of banking and finance companies fuck off abroad, the vacuum will be filled with enterprising firms both inside and outside the UK who would be able to make profits in a new controlled, regulated world. Intuition and the absence of facts to the contrary tell me that the idea that we need these greed-freaks who almost destroyed the capitalism they espouse is a myth.
Prove me wrong if you can be bothered.
Yeah, I agree with that, totally. Cnuts, the lot of them, and they can all fluck off to Geneva or the South Pole for all I care – I think we can survive without them (see post above to Mike Thomas).
Job done Mike…well done
I’m glad you have criticised S Chapman for his targeting of Olli. I’m angry and embarrassed by it, but given Chapman’s political view of the world it’s not really a surprise.
I also agree with your comments about Thatcher being the instigator of much that has damaged our society. The current problems of insufficient social housing and soaring housing benefit, paid into the hands of private landlords, can also be traced to 1980’s Thacherite ideology. The sale of council houses at knock down prices started the rot, and it was almost impossible for Labour to put that genie back in the bottle.
So this is all Thatcher’s fault?
That says it all really for the depth of the intellectual constructs held by the political left.
To suggest that in mitigation that Blair and Brown were so weak minded and of such poor intellect and intelligence to blithely follow it shows the state of denial that the left is in. It was the main plank of the ‘Third Way’.
13 years of government, 11 years of economic ‘reform’ that leaves the country with the worst economic situation since WW2.
It might have escaped your attention but the previous government was running 6% deficits even before the banking crisis hit. It had such a weakness of mind to ignore the warnings of the IMF and OECD not to run such a slack monetary policy. After all, who are they to tell Brown what to do?
To combine a such a slack monetary policy with an inadequate fiscal policy is criminal.
If you would accept a lower standard of living (beyond that creates by Mssrs Brown and Blair) don’t drag the rest of the country into your fetid, sixth-form Trot wet dreams. Tell me, where would these new enterprises get their world-class funding from? Green Shield Stamps? Two cows for a sheep?
I’m sure such a paradise such as Pyongyang beckons and you would be welcome to starve with the rest of the population in this anti-captialist idyll of socialist solidarity.
You were, about King and the banks.
Point of history: Black Wednesday was not caused by UK being in the ERM. It was caused by the Major government going in with far too high an exchange rate against the Deutschmark, the Tories going in with the jingoistic/nationalist big dick approach and coming a total cropper bec. the markets weren’t having it. Neither were they having the UK gov’s attempt to buoy up the currency (which was plunging drastically) by buying up £££ on the currency markets.
Interest rates dropped from 15% to 3% and we had an export-led recovery that the Tories, lying, cheating bstards that they are, crowed was down to their brilliance.
Sometimes it helps to be older and have lived through horrific experiences like that which sear the brain. I haven’t forgotten their lies, their contempt for the concept of honesty and fair play. In fact, they caused the current cynicism re. politicians that Alastair has to face every day of his life, now. “No one” believes a word he says, just because the Tory goons constantly labelled him ‘liar’ because he was so good at his job, and non-activist lefties too, of course.
Yeah, thanks, that was funny. Cool.
And I was twanging your wire a little too hard there, I admit.
Brown and Blair were of course culpable of craven cowardice in the face of the City of London – but they took a bet on needing their support because every previous Labour government came into power to face a run on the pound. They needn’t have been as cowardly, for sure, and worryingly, they may have believed in their light touch policy re regulation.
6% deficit – not a problem so long as the banks don’t go and set fire to their own house. You cannot blame this all on the FSA’s/Lab Gov’s inability to regulate.
Re the vacuum. Hahahahaha – are you seriously telling me that as companies leave, there aren’t start-up opportunities for firms, and for existing firms to come into the market? Or are you saying that capitalism is so fcuked that entry into financial markets is impossible?
So far from a Trot wet dream, I’m suggesting that this market is not so flawed and that hugely profitable financial institutions bleating about leaving the UK are just trying to hold a gun to the head of the UK gov.
Finally, you’re not seriously going to throw the IMF and OECD at me, are you? Full of Keynesians, centrists and lefties, that mob, not remotely full of nutjob free marketeers, no….
Would you like to hold his willy while he goes to the toilet as well, while you’re about it?
Job done, Mike, well done, thanks for confirming RRR’s view of rightwingers as being as dim as fkuc. And I have to say, S, Mike is doing a really good job for a right wing muppet. You may have noticed that the evidence he cites to support his admirably vehement opinions is Swiss cheese. IMF, bunch of arch-rich boy capitalists posing as sages.
You and Mike too might like to notice that Labour usually only screws up when it tries to behave like Tories and is too scared to take on vested interests.
Meanwhile, the near future is going to be much fun, as your dipshite Coalition policies takes us to another recession.
Better start working out your excuses now, boys.
Does it ever cross your mind for second that you may be wrong about this? Seriously? I was going to ignore the patronising comment about age but ask yourself how you would feel if I said sometimes it helps being younger, your brain isn’t addled by age as everyone knows older people have trouble remembering events?
I don’t want to go into the minutiae of the causes of Black Wednesday and the risk of the Major government’s interest rate policy. I actually agree with you on that but others will argue the toss all day and forever. My point was a general one about how the government of the day loses out more than the Opposition following a major economic crisis and recession. Whether it is fair or not. I don’t think even you would disagree with that. Although to say it had nothing to do with membership of the ERM is slightly absurd.
As for poor Alastair, I think he’s big enough and tough enough to look after himself. That’s what made me so incredulous about his original post. King was clearly taking a broadside at Gordon Brown. Everyone who isn’t so tribal, who – dare I say it – hasn’t had their brains seared by horrific experiences, can see it mile away. Just google Mervyn King and Gordon Brown and look at the first ten results. There’s clearly no love lost between them. I daresay Brown’s upcoming book will allude to mistakes made by the Governor and the MPC in keeping rates too high for too long before the recent slowdown (Blanchflower excluded of course). Just in case you’re too busy I’ve done the hard work for you and selected the most relevant results. Of course they were garnered mostly from the nasty right wing press but the quotes are real.
“The Governor of the Bank of England yesterday embarrassed Gordon Brown by saying his idea for solving the worldwide banking crisis was ‘bottom of the list’ of options. Questioned by the Treasury select committee, he said: ‘Unless we actually think about the deep structural issues that have led us to where we are, we will simply be doomed to repeat the crisis again on an even bigger scale.’ ”
“THE Bank of England is trying to push through reforms to the banking system to prevent another Northern Rock crisis but is being frustrated by a prime minister and a chancellor who are said to be too demoralised to take action. City sources say Mervyn King, governor of the Bank, would like to introduce fundamental reforms but believes that recent political setbacks have left Gordon Brown and Alistair Darling distracted.”
and finally and most pertinently
“Mr Brown told MPs that “the difference between having a retail and investment bank is not the cause of the problem”. The Prime Minister added that “the cause of the problem is that banks have been insufficiently regulated at a global level.” Mr Brown was responding to Mr King’s fiercest attack yet on big banking in a speech he gave in Edinburgh last night. Mr King indicated the country’s high street banks should be separated from their risky investment banking arms. “It’s clear King’s not happy with where we are now,” Colin Ellis, an economist at Daiwa Securities told Bloomberg. “He said the regulatory structure was inadequate, and coming from the governor of the Bank of England that’s as damming as it could be.”
What more evidence do you need RRR? A picture of Brown’s face on dartboard in King’s office? A voodoo doll of the former Labour Prime Minister on King’s desk? I can assure you it gets much much worse as you go back with one sketch writer suggesting Brown simply hates King. Alastair and yourself have clearly got the wrong end of the stick and ran a half marathon with it. What’s funny is that in doing so you’ve allied yourselves with someone who clearly not batting for your team.