I am an optimist by nature. I would like 2008 to be so much better than last year, as there is much we can achieve together. I hope you have all had a happy and relaxing Christmas

The government has lost its reputation for economic stability, and has seen a massive hole blown in its spin that it created an independent Bank of England, as a result of the convulsions in credit markets and the run on Northern Rock.

Ever since Gordon Brown took over as Prime Minister, things have gone badly awry in banking markets. We have lived through the end of the long financial bubble of easy credit he created as Chancellor by keeping interest rates too low and agreeing to the Basel rules for banking capital which encouraged banks to lend and lend through off balance sheet devices. The great army of regulators looked on approvingly, as all their boxes were being ticked.

This summer some in the City and I through my website, www.johnredwood.com, told the authorities that money was by then too tight. We urged them to lower interest rates and make more money available to the banking system. They ignored us, and told any bank in trouble that it served the bank right. The banks were on their own and had to sort out their own difficulties. The Chancellor was sending out this tough message on the eve of the run on Northern Rock.

Northern Rock changed all that. For the first time a UK government offered to stand behind all the bank deposits in the country if need arose. For the first time the taxpayer lent more than

In the last couple of weeks I have visited several sites that were badly affected by floods last summer. In several cases people did not have their homes back in use for Christmas, as builders scrambled to complete the new plastering ,wiring and other tasks to restore the properties.

Each location has a different version of the common problem. In some inadequate surface drainage led to sewers overflowing as well, in others proximity to a river or stream bursting its banks just engulfed the low lying areas in flood water. In each case there is an argument between the authorities over who is responsible for the maintenance and improvement of the drainage.

The Environment Agency, after a series of meetings, has accepted that it is responsible for the Emm and for the Loddon. However, responsibility does not mean that riparian owners, the Highways Authority and others are free of all duties. The Agency does seem to accept that too much water can try to come through the Emm brook, and spill over into homes at pinch points along the stream. They have suggested an improvement scheme to hold surplus water away from homes, releasing it at a manageable rate. I am keen they should press on with working this up into a firm proposal and putting it in their budgets.

Thames Water is still reluctant to commit to spending where its facilities have been overwhelmed by flood water, taking out pumps or exposing inadequate capacity in pipes and manholes. I do think that where foul water reaches into peoples homes they should move quickly to improve facilities to prevent that happening again. I will keep at the task of trying to persuade them to do something to sort it out.

In some places ditches, culverts and drains have not been kept clean. In other places they are simply not large enough. We seem to have plenty of lawyers, administrators, assessors and experts writing letters and arguing over liability. It is high time more of the budget was spent on some people to go out and scour the ditches and widen and deepen the watercourses so next time heavy rain hits people can be assured it will not come into their living rooms.

The Environment Agency itself did not maintain its systems to a sufficiently high standard, and had to admit as much in its annual report. It now has extra money from the government for anti flood investment for later years, but needs to get more out of its current

Today I heard on the radio that mortgage advances have fallen 44% compared with the same period last year. Its a fitting epitaph to this governments woeful misunderstanding of the housing market, and the folly of their current policy which will not succeed in tackling the problem of providing more people with better homes that they own.

The government have made access to home ownership in this country much more expensive by combining two policies:

1. Allowing a credit boom until last autumn, which drove house prices to new heights as banks and building societies took advantage of the low interest rates and easy money to lend more and more against individual properties. They also lent more and more as a proportion of peoples income.
2. Introducing Home Information Packs, which has deterred people from putting their homes on the market, reducing supply and delaying the price adjustment which would otherwise take place in response to the credit crunch.

The main reason for the current high property prices is the first one. The lurch from boom to bust conditions in UK money markets will put downward pressure on prices, as we are beginning to see, but the other two policies are delaying and reducing this adjustment.

The governments own analysis has been pathetic. They have said house prices are too high for first time buyers because too little housing is being built. They have steadfastly refused to answer my simple question,

2008 message

Today we are promised from Jack Straw that the government will do better in 2008, whilst the Prime Minister tells us he can carry through the changes the UK needs. Both senior politicians are long on words to meet the public mood, but short on ideas to sort out the mess Gordon Browns government has created.

This government is stuck in the mud of the old politics of the

As dusk fell on 29th December 1170 the four knights came into Canterbury Cathedral from the cloister. The monks had barred the doors against them,but Becket had them unlocked, with the words

I am glad there is to be a Parliamentary investigation into the state of our water supply and flood defences.

Some say we need it to deal with the consequences of global warming. The predictions of climate change theorists tell us that we will need to store more water for drinking and other uses during the wet periods to cater with the drier periods. They also warn us about more floods, anticipating too much water in too short a time period.

I agree with those who say we need to manage the consequences of global warming, as the UK on her own will be unable to curb the worlds carbon output. The case for tackling our twin water problems is so much greater, because water shortage and too much flooding is directly linked to another contemporary phenomenon

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Unfortunately we are experiencing technical difficulties with the site at the moment, which means that many people are unable to leave comments and that some of the page links aren’t working. Please be assured that we are not trying to stop people commenting and hope to have everything back to normal as quickly as possible. Our technical team are working on this and we will post here again once the site is working properly.

Visiting local Post Offices before Christmas reminded me just what a mess this government has made of one of the few remaining nationalised industries. If anyone still thinks nationalisation is the answer, they would be well advised to study the Post office as an object lesson in how not to run a business. It is bad for the staff, for the customers and for taxpayers.

At a time when government worries about human carbon output, they switched the Post office from sending many of its letters and parcels by train to sending them by road. They were,apparently, unable to negotiate a contract that made sense for such a large users of the railways, with the railways where the track has recently been taken back into a form of public ownership!

Claiming to understand the importance of the large inherited network of small post offices, the government took away their main source of livelihood, the substantial counter business they used to transact for various government departments. Apparently, it is more efficient to transact these items through the for profit private banking sector, than through the nationalised postal counter network.

Their management style and the government business loss combined to create huge losses for the Post office. These were then reduced by a triple whammy for taxpayers customers and staff

We are witnessing one of those retail binges that characterise modern living.

The retailers play games with the public, deciding when to lower prices and offer knock out deals to attract people to the stores. The people play games with the retailers, playing hard to get until the deals on offer spawn exciting headlines.

More people now seem to leave buying what they really really want until after Christmas, reckoning they can buy it more cheaply.
Families that have lost the knack of self entertainment, bored by the vanilla viewing scheules for the holiday and by the endless repeats on TV, are inclined to venture out for some retail therapy, walking a little of the excess off around the shops.

It produces retail sales figures that become ever more difficult to interpret. Stores sales space has been expanded. The internet now takes a lot more shopping traffic. Individual sales days can see huge turnover and big footfall. Other weeks can seem poor. A few shops groups trade very wlel, others do badly.

The likelihood is that the retail sales will slow after the Christmas and January sales have seen a last consumer fling. People’s incomes are under pressure, as higher mortgage costs kick in for some, and higher taxes and higher petrol, heating and food bills for all. It is going to be more difficult arranging the personal loan or the bigger mortgage than it has been for decade.

The credit crunch has not gone away. The banks should be at their least helpful to customers wanting to borrow ahead of their year ends. When they relax a little it will still be at lower levels of advances that peolpe have been used to. Valuers will become much more cautious about the values of properties when assessing their worth to support loans.

This Christmas and New Year sees more people than ever taking a long break from the office. The economy may weaken over the turn of 2008, and we may find the going gets tougher in the new year.

It is traditional at this time of year for commentators to misrepseresent the Christmas story, urging more social housing to deal with the problem of homelessness.

If they read the bible story more carefully, they would see it was not a housing shortage but a hotel bedroom shortage that caused the trouble. This shortage had been brought on by a nasty government, forcing people to travel away from their homes to the large towns and cities to register and to pay a tax. It was some kind of combination of an an early forerunner of ID cards with a poll tax.

As far as we know Joseph had a home,and turned to a home in Nazareth after the stay in Egypt, where they successfully evaded the massacre of the innocents ordered by Herod.

The New testament story is interwoven with interesting questions of how Jesus should relate to the kings on earth. His advice of render unto Caesar what is Caesar’s was wise indeed. It recognised the brutal reality of Roman power, whilst reassuring people there were other values that the temporal power could not overcome in the free minds of men.

Happy Christmas to all my readers.
Politics and comment has been left aside for the day.

The message of Christmas, that love can conquer hatred and vengeance, is a powerful and attractive one to people of all creeds and of none. Fear comes of hatred and begets more hatred.

This UK government seems to be rooted in fear - fear of the reactions of people, fear of England, fear of the people they call middle Englanders, fear of terrorism, fear of being blamed, fear of the truth coming out when they make mistakes. It lashes out in a less brutal way than Herod, ordering more and more controls over the rest of us, and centralising more and more information about us in the hope they can use it to exert their will and protect themselves. It tries to terrify the rest of us into thinking we do need to surrender our freedoms because of some threat or other.

Fear leads to authoritarian responses. It leads to the wish to micromanage and control everyone and everything. The government pursues secrecy, coming to regard public information as it own bank account, to be spent only when it sees fit in ways it wishes to. Otherwise it is a miser with public information, hoarding it in case it falls into the “wrong hands”. Paradoxically, its incompetence at times means the legitimately private part of this information does spill into the wrong hands on a regular but unpredictable basis.

Better government trusts people more. It lets them make more decisions for themselves. It does not constantly challenge their lifestyles and hector them to change the way they eat, look, live or think. It tries to do a sensible number of things well, sets out what it is doing, and is honest and apologetic when it makes a mistake. It leads by example and incentive, more than by additional regulation and penal tax.

It is difficult to govern well if you do not like many of the people you are governing, or think them wrong about many of the issues that matter. This government is learning the hard way, that if you take on the Briths people and try to make them something they do not want to be, you just antagonise them. Try liking them, warts and all, and you might find there is less to fear.

Today we learn that various NHS trusts have lost data concerning their patients.

We seem to be living in a surreal world, where the government spins out the stories about data loss, to try to drive the stories about house price collapses, mortgage shortages, the credit crunch, the black hole of Northern Rock, overborrowing and the balance of payments off the front pages.

Or maybe, for once, they have just lost control of the media. Harriet Harman’s attempt to get a debate going over cash for sex may have been their last counter spin ploy, to change the media weather. It is unusual - but not suprising with this government - to see a very senior member debating an issue in a “personal capacity” to avoid committing the government she is meant to represent and defend.

It is not surpising that the NHS like much of the rest of the public sector under Labour has been casual with our data. The whole government is casual or mismanaged from the top.

When we are allowed to cross examine them, Ministers are on the whole poorly briefed, and lack detailed control over their policies and their departments.

This is a government which never prepared itself to run anything properly. It was born of spin and will die from spin. In opposition they honed their skills at generating stories . They were an effective, hard hitting opposition, always willing to blame the government for anything that went wrong, and always able to put the worst construction on events.

In government they have carried on in a similar way, seeing their role as being to expose and destroy Conservative policy, ideas and party management as if they were still the opposition. They spend too much time on this, and too little time discharging the responsibilities of high office.

When I was sent by mistake a copy of a Cabinet Minister’s diary I could not help but notice when I was trying to find out whose it was and where to send it back to how little there was in it. There were the usual political and constituency meetings you would expect, but there was no morning to night bookings for meetings with officials to review and improve administration of the departments policies, and no rash of meetings with users of their services and those affected by their regulation to see if it was working properly. I remember as a Minister these dominated in my diary.

Too many of these ministers define their jobs in relation to media interviews and the opposition. They should start defining their jobs in relation to the public. It is not easy providing a good service with the large empires they have built up. All of them should spend more time with their departments getting things right. They should start by sending a clear message from the top,that the public matters and their data is important. They then have to have endless meetings to ensure that message is taken to every part of their empires, and reflected in operating procedures that will keep the data safe and lead to the public being better served.

Until they do so, the public will conclude that we do not matter to this government. We are necessary as a source of money to pay for the poor performance. We are the people they intend to regulate out of freedom. We are not valued customers of the state, so keeping our data secure is not a high priority.

The EU Constitution
ID cards
My personal subscription as a taxpayer to their badly handled Save Northern Rock campaign
The South East England Development Agency
The South East Regional Assembly
Half their consultancy contracts telling them how to do things

A couple of days into the new Lib Dem leadership, and the press who once thought him media savvy are nostalgic for the golden age of Vince Cable as acting Leader.

It is not surpising. The only thing he seems to believe in apart from the power of spin is the move towards a centralised EU with big government in Brussels. He will discover the hard way this is a very unpopular position with most British voters.

It is symptomatic that one of the first deeds of the Lib Dems as his leadership began was to vote against a referendum on the Constitutional treaty in the Edinburgh Parliament, at a time when the Conservatives and SNP were united in their wish for one and even Labour had the decency to abstain. That shows real determination to break promises and take the unpopular line.

It is difficult to see how Mr Clegg thinks he can break with present politics, as he says he wants to do, by beginning his leadership pledged to deny the referendum they promsied in the General Election, on the specious grounds that the Treaty is not the old Constitution rehashed.

It was also indicative of how he is not serious that his first appointment was of Mr Brian Eno as a senior adviser, before he even got round to finding a job for Mr Huhne or Mr Cable. I recommend websites and press articles about Mr Eno to anyone with curiosity about the kind of advice the new Leader may be getting from this man. Indeed, it would be a good pre Christmas game for surfers to come up with the best quotes and highlights from Mr Eno’s life that could help Mr Clegg in his current quandary.

His casual mistakes about his taste in music, and his clumsy announcement of his atheism pale into insiginificance compared to the Lib Dems flip flop over a vote on the Constitutional treaty. I could forgive them a lot if they join us in the lobbies to vote for a referendum on the Treaty, but it looks as if Clegg has no wish to do the decent and honest thing. That would mean jeopardising an important part of his credo. He is truly Euro Clegg.

The press has turned on Browns economic stewardship with a vengeance. For ten years I have tried to point out that Brown did not make the Bank of England independent, and that he had weakened it in a way which made it likely a future financial crisis would be handled badly. I lost the battle beneath the weight of Browns spin and the readiness of so many to believe him. For ten years I have pointed out that Browns preference for higher tax income and higher spending was bound to create an inefficient public sector, and weaken the overall performance of the UK economy. Many commentators turned a blind eye to this, because inflation and interest rates were low compared to the 1970s and the ERM period.

Now the press can find little good in Browns economic stewardship, seeing that the UK has suffered from higher interest rates, higher inflation and slower growth than the successful Anglosphere economies, and seeing that the UK economy is now unbalanced, with huge public sector and balance of payments deficits.

Browns period in charge of the UK economy as Chancellor and now as PM divides into three periods. In the first, 1997-2000, he carried on with Conservative spending plans, he repaid public debt, and continued the impressive recovery that started soon after we exited the ERM under the Conservatives. He was married to Prudence, and all went well.

In the second period, 2000-2006, Brown went on a huge spending spree, hurling money at the NHS, at education and many other areas of government. He and his colleagues just wanted to boast about record levels of spending. They did not seem to pause to ask what they were buying with all the money. They bloated the budgets for external advice and consultancy, they pushed up public sector pay more rapidly than private sector pay, set up many new quangoes, and recruited large numbers of extra people into the civil service. They did recruit some more nurses, teachers and doctors, just as previous governments did. They did rebuild some schools and hospitals that needed modernising, but there was overall too little to show for the vast increase in spending. Public sector efficiency fell in some areas, and performed very badly overall. Public debt started to build up, and Brown encouraged his own sub prime financing for government, creating a large number of off balance sheet ways of swelling public borrowing.

In the third period we are witnessing efforts to bring public spending growth under control. This is a very necessary task. Stupid mistakes like the meanness over the police pay settlement show a lack of political touch and a lack of understanding of the significant numbers. Worrying about

There is something I want for Christmas.

It is a government which understands that people have seen through spin and are sick and tired of silly media games played by senior politicians.

We are fed up with consultations that are bogus, with promises that are not kept, with side stories that try to distract from the bigger issues and with Ministers who think legislation is just another press release to capture a headline.

We would like Ministers to spend more time in their offices sorting out the problems, and less time on the media telling us they are sorted, or trying to get us to look elsewhere when a disaster is all around them.

We would like Ministers to concentrate on the things where they can make a difference. We would like them to spend taxpayers money as carefully as they do their own. We would like them to find out what they can buy with extra cash before they put out a press release saying they are going to spend it.

We would like Ministers that had some commonsense. It seems stupid to penny pinch

I hear that synthetic anger and misrepresentation of my views is being encouraged on another site, following a Labour Minister with nothing better to do with his time than misrepresent my website. In view of this I will not be posting any more on this.

The choices for handling Northern Rock have been narrowed to three by the spinners for the government and the Lib Dems.

The first is sale of the bank to a third party who could repay some of the government loans immediately, and take care of Northern’s financing needs thereafter. The best chance of doing this was the Lloyds expression of interest before the crisis became acute. The authorities failed to respond positively.

Since then we have not been told of any large organisation emerging as a bidder which has the balance sheet strength to take it on and solve the problem itself. The two preferred? bidders need access to substantial market funding, and one only wishes to buy a minority stake. Even Lloyds needed financial help from government and the markets, as Northern is big even for a bank the size of Lloyds. Anyone needing access to substantial market funding will face the same kind of difficulties that caused the problem in the first place the drying up of credit in markets.

Everyone agrees the sale to a third party who could solve the financing problem would be ideal, although there remains scope for disagreement about how to value the existing shareholder interest in such circumstances, and scope for disagreement about how much money taxpayers should expect to get back immediately, and for how long the remaining money could be lent to the new owners.

The second is nationalisation, the Lib Dem’s recommended solution?. The new Lib Dem leader showed his folly by rushing in to back this irresponsible proposal as one of his first acts, after appointing a pop star as an adviser! He clearly does not want to be taken seriously and does not think things through before issuing the press release.

Taking on over ??100 billion of risk in a single mortgage bank at a time of falling house prices and credit crunch is too big a bet for taxpayers. Many of us think taking on ??25 billion of risk is dangerous, but quadrupling that is absurd. The government itself has stupidly increased our risk by an amount the Chancellor told us on December 19th he could not quantify! It shows they are being far too cavalier with our money.

As the Lib Dems themselves admit, the government would not bring any especial expertise to running a mortgage bank and would need to seek professional management from the City. They say it would be temporary, leading to a sale at a later date. They forget that nationalising would mean the taxpayer had to pay for any one off losses or write downs that may be necessary on inspecting the books, and for any running losses the bank might incur under nationalised management.

If it turns out the bank cannot sustain its current level of employment, the taxpayer will have to pay for the redundancies. If the bank needs to expand its branch network or invest in new computers, the taxpayer will have to make a judgement about that use of public money as opposed to school and hospital spending. Given the scale of Northern Rock total liabilities bigger than the health budget any government would be mad to take on those risks. Just losing 1% of the assets costs more than ??1000 million.

The third is Administration. The government could demand repayment of its loans (subject to any legal promises it has made about their duration, which the government refuses to tell taxpayers and Parliament) which could trigger administration in current circumstances as there is no lender prepared to replace the taxpayer at the moment. That too would be a foolish policy. Shareholders would be aggrieved, as they have been told by the authorities that their bank is solvent and been led to believe taxpayer funding will see it over a difficult period. There is no good market in mortgages and the other principal assets Northern Rock owns, so any fire sale at these levels would guarantee the taxpayer lost money. The Administrator is no more likely to find a big buyer for the whole bank than the current auction team. There cannot be any potentially interested party in the world who is unaware of the sale process. If the government favoured this route it should have refused to lend the bank any money in the first place so no public money was at risk.

There is a fourth option which needs proper discussion. I call it the tough bank manager? approach.

The option starts from where the government has got us from the position where taxpayers have lent money and guaranteed loans but do not own the mortgage bank. It recognises that when you are in a hole you should stop digging. We have to accept that the Treasury/Bank of England combination are the principal bankers to Northern Rock. It is high time they started acting as a bank manager faced with an over borrowed client who cannot repay in a timely way.

They need to:

1. Explain the limits of their funding to Northern.
2. Set out the interest rate and interest payment dates for the loans.
3. Set out a schedule for capital repayments.
4. Take all the asset cover there is left in Northern to secure their huge loans.
5. Insist on daily cash and profit monitoring.
6. Place a cash sweep on the business that returns surplus cash to the taxpayer at regular intervals.
7. Insist on approving all increased spending of any kind on capital and revenue account.

The repayment schedule should not expect repayments currently, whilst the main banks are trying to arrange their own affairs to show strong balance sheets for the year end. It should start phased capital repayments later in 2008. It would be up to Northern’s management to decide whether these repayments could be met from trading profits and cash generated within the business, or from refinancing in commercial markets, or from selling assets. Where assets are sold, the government team needs to insist on a minimum price to protect its asset cover position.

The extraordinary thing is that apparently many of these basics of banking have not been observed by the nation’s top financial team. The Chancellor on December 19th in the news conference once again told us little. I hope they are doing more than they are saying, but there is no evidence that they done a good job on securing the taxpayers position, either by means of securing full specific asset cover or by means of repayment schedules that are tough but achievable. It’s high time they started. We are told they have asset cover for the loans, but specific questions have not been answered about how the protection works. There has been no hint of any repayment schedule.

It appears they hoped the Branson bid, and then the nationalisation idea, would reassure depositors, reducing the pressure for taxpayers to put up more money to replace lost deposits. The best way to secure the deposit base is to take strong and sensible action, so it looks as if the government as bank manager has a professional grip on its over borrowed customer, and will stand behind them until it is sorted out. If a buyer emerges who can raise the necessary money then all well and good the bank manager can agree to the sale if that is what shareholders want to do, having secured the taxpayers’ interests.

All this assumes Northern is a solvent business which we know it has to be as the regulators are letting it trade. Assuming they are right there is no need for taxpayers to lose a penny so why won’t the Prime Minister repeat his promise about that? His hesitation damages confidence. If they nationalise it the taxpayer is likely to end up with a huge bill given the past track record with nationalised businesses, as well as legal actions from unhappy shareholders assuming they offer little or no compensation to them.

I naturally wish those trying to sell Northern every success in finding a good answer, but I do want the government to protect the taxpayers’ money fully in those negotiations.

Today, at last, on the Jeremy Vine show, I was allowed to explain how the government should deal with Northern Rock, and set about getting our money back from the ailing mortgage bank. I was also allowed to debate why nationalisation would be too expensive and too risky for taxpayers with Vince Cable.

I trust also it was good radio for them. It was certainly more balanced and more lively than the Today programme’s fawning interviews with the Lib Dems, with no-one allowed to challenge their nostra.

Readers of this site know that I have always thought Clegg would win, and never thought it made much difference whether he or Huhne did. They both believe in massive transfers of power to the EU, and both want to deny us the promised referendum on the constitutional treaty.

Mr Clegg should be given no honeymoon, as his leadership begins by denying the referendum his party promised in the last election. He and his party misled the public, and he cannot claim to be a new honest face when his first important deed will be to instruct Lib Dem MPs to vote against our referendum amendment to the European Treaty Bill. His silly rejoinder that he wants an In-Out referendum just increases people’s cycnicism about politics, as Labour has clearly ruled such a vote out, and never promsied one of those in the first place. We should expect rebels of conscience on the Labour side over a Treaty referendum, but they are not in the same embarrassing position over an In-Out vote.

Mr Clegg’s very poor margin of victory will mean he has to get on with Mr Huhne, and will doutbless tack a little more to the “left” or bigger state side of the argument, as that is clearly what his party membership wants. Mr Clegg has no decisive mandate for change, and will need to be careful. Lib Dems turn nasty if they do not win by-elections. Mr Clegg will have to watch his back if the third party squeeze continues.

The government’s bodged sale/reorganisation of Northern Rock has a new complication today.

We learn that one mortgage bank is interested in buying the mortgages. Maybe others would be too. The response depends on the price they are prepared to offer, and on whether there will be a successful new owner/lead shareholder or not.

My advice is to say to anyone interested in buying the mortgages that there will be a competition to sell some of them if after a suitable period there is no successful bidder for the whole business. This is a decision which has to be taken by the Northern Rock board, but one which should be influenced by the Bank of England telling them they want some of the taxpayers money back soon.

It would be quite wrong to enter discussions with just one buyer of mortgages, without allowing others to bid. It would be wrong to force the sale of good mortgages at a large discount under the pressure of circumstance. There should be a reserve price which protects the taxpayers’ interest. That is why we need a timetable for repayment which allows this immediate market crisis to pass, and allows some sense to return to the market in second hand mortgages, so the shareholders and taxpayers get proper value for their asset and their security.

At a time when even the Bank of England acknowledges there is insufficient market liquidity, it must be obvious to the authorities they will not get a good price for anything being sold in distressed conditions. First sort out the worst of the credit crunch, by making markets more liquid, and getting banks through their year end book squaring, then see what can be realised to cut the debt mountain at Northern Rock.

Meanwhile the ECB is upping its intervention in markets substantially, as it sees how serious the squeeze has become. The Fed is taking all sorts of action ,trying to repackage off balance sheet debts, cutting interest rates and making cash available. It is still the Bank of England that is doing too little very late, as it still seems to be in denial over how dramatic this year end credit crunch is.

We will not know until the new year whether the banks will feel able to lend a bit more once their year ends are out of the way, or whether their balance sheet stretch is such that current restricted lending is the new norm. Some people say that of course there must be a long period of much restricted lending, as the west has overblown the credit for too long.

Whilst agreeing that money was far too loose, and agreeing that the Basel rules encouraged all sorts of off balance sheet lending that the regulators allowed to happen on too large a scale, I do not agree that we want to live through a long period of little new credit being advanced.

I want to live in a country where young people have a chance of raising a mortgage on their incomes to be able to buy a house. I want new businesses starting up and existing businesses wanting to expand to be able to borrow money to grow and create jobs. It is not evil to lend and to borrow. It is crucial to a successful enterprise ecomnomy, and it is beneficial both to those of us with savings in our pensions or elsewhere to lend, and those in need of borrowings to get started.