We need to make the Bank of England more independent by giving members seven year non renewable terms who can only be appointed after vetting by the Treasury select committee and a vote in a reformed House of Lords . That would ensure the best people got into the MPC and that it was less open to political meddling as has happened under Labor . RPI-x is a far more reliable inflation measure – HCIP was just a fix because they use it in the Euro-zone . As we will be keeping the £ why bother with a false inflation measure ?

The Bank of England must be empowered to help failing banks and to boost liquidity and it should regain debt management powers too with a view to stopping anymore Northern Rock style mess ups . The tripartite system is too complex & unwieldy and no one seemed to know what was going on prior to Northern Rock and how to respond . Surely the end of the FSA and a clear demarcation of Treasury & Central Bank responsibility over who does what might simplify things somewhat ?

Inflation must be tamed to stop it ruining livelihoods and stopping business investment – a stable economic framework is vital for a lasting recovery . Setting a two year inflation target of 2% for the MPC to aim for every month would help stop future price spirals .

Fighting inflation is a wise idea – but as conditions point towards deflation gathering pace in 2009 lower interest rates now might not be a bad idea . Falling base rates on the back of diminishing inflationary pressures could be what the Doctor ordered as far as the economy is concerned as businesses go to the wall , unemployment rises , the housing market falls apart , the economy shrinks , disposable incomes fall and manufacturing industry & business investment decline . Even the service sector is going to the wall – we need lower interest rates now !

Would the MPC care to talk to Sir Stuart Rose about how the retail sector needs a boost ? Food sales falling by 7% and GM sales 6.5% down in the UK’s favorite store shows that action is needed now !

Labour’s rush to introduce nationalisation is perhaps symptomatic of their contempt and cynicism for the free market. Furthermore, this might have been partly to appease the more leftist elements.

I have great faith in the tenacity of the free market system, and have no doubt that in time, with minimal government intervention, that stability and vibrancy will return.

What is operating in the West is not proper capitalism – it is a perverted, “controlled”, semi-free enterprise model. Straps instead of shackles. Casting the banks loose and letting free market forces operate is the best solution. You would be surprised how quickly the pieces can reassemble and recover.

It is better to whip off the plaster with one big scream, than a long series of whimpers.

The Moral Hazard implicit in this is staggering.

Come on boys and girls, stop worrying and wasting money by leaving your life savings in nice safe HSBC stuff the lot on line with (badbank-ed) and everyone else will bail you out if they go belly-up.

Truly, Truly astonishing incompetence.

http://www.forbes.com/opinions/2008/07/18/fannie-freddie-regulation-oped-cx_yb_0718brook.html

(You may need to skip past the welcome screen)

The way I see it, clever people thinking up ‘better’ and ‘better’ packages has a lot to do with why we are in this mess in the first place.

I’m told (via the media) that Congressmen were lobbied 100 or 200 to one against the bailout.

I’m not surprised – after WMD Bush is the boy who cried ‘wolf’. Congressmen and found it easy to accuse him and his crowd of scaremongering. There are also a lot of questions that no-one has been able to answer, fuelled by a lot of rumours.

For example can a mortgage only be in one CDO at once? I heard someone say that some mortgages have found their way into more than one CDO. I asked him if he was thinking about CDO squared, and we just ended up confusing each other. Neither of us knew what we meant, but we managed to agree that if we were going to buy them we’d sure as hell want to know.

If we (taxpayers) buy the CDO’s do we set the collections policy for the underpinning loans and decide when to persue legal actions and ultimately reposession?

If you own a CDO and a mortgage that is connected to it defaults do you get the rights to all the money raised from reposession? How much does the originator of the loan take as commission for doing this if not?

If a mortgage payer defaults and their mortgage has been packaged into a CDO, does the CDO holder have the right to demand that the house is surrendered to him (i.e. the taxpayer) after repossession as opposed to auctioned off in a fire sale?

How on Earth do these ‘Synthetic’ CDO’s work, the idea seems to be that the ‘trustee’ holds onto the ‘high quality capital’ and earns interest on it in order to pay for the defaults when they arise. How does the trustee earn interest exactly? Did they by any chance buy more CDO’s with it?

What if, after buying the CDO’s, the originator breaches their contract by not collecting the money correctly, what if they go bankrupt? Can the new owner of the CDO’s take on the collections responsibility? If so how, and how quickly?

If politicans actually focussed on trying to explain things properley, instead of trying to bully, intimidate and scaremonger us into making a rash decision, surely this would be better than simply thinking up a better ‘package’.

It didn’t work with the EU Constitution (thanks to the Irish) and I hope Congress don’t let it work with the dodgy mortgages until someone can set up a website to tell Joe Taxpayer exactly where he stands!

I sit here with my head in my hands as I consider what a poor decision this is, pandering to greed and encouraging the very moral hazard that the “end of blah blah” was suppose to have stopped.

The nearly bust Icelandic banks are now going to be able to hoover up £3.5bn+ of internet rate tarts money, guaranteed and insured by ordinary “safe” retail depositors and “safe” banks and building societies, just so they can keep some bunch of Russian mafia crooks going for an extra 2 weeks.

Cry my beloved country,

-and start panic buying in Salisbury’s.

You have got to get back on the Tory front bench John. This situation is now so serious that we have to have the wise old heads back in charge. The guys that have the knowledge and experience of life, the universe and everything. The guys who have been there, done that and bought the T shirt.

The French and the Irish have today introduced 100% cover on bank savings, the UK should do the same. This is vital for our million plus small to medium enterprises. These are the foundation of our economy, they should not have to be worrying about the security of there capital reserves at this time. We need them to keep doing what they are doing; making and selling goods and services; employing and developing our trade skills base. They desperately need help to do this.

We need to free up are Universities to develop the science. We need our technologists to develop that science. We need engineers to turn the technology into products. We need to develop a much higher skills based workforce.

I think we are all agreed on this site that there is too much government. We need to get the “socialised economy” back to about 33% – from the present 47% – of the GNI. We need to move at least a million public sector employees out of the socialised economy into the non-socialised economy (i.e. the private sector) where they can make a start at generating real world wealth.

since we all know pushy middle class parents always claim dyslexia to get little johnies exam marks bumped up (and they always seem to have a hamster die around exam time for the same reason) can the conservative party not see how silly this looks?

working class parents hardly ever appeal exam decisions, never claim dyslexia (cos its a fantsy condition?), and expect their little johnny to get on with life when their hamster dies

given that we have people dying of cancer for the want of simple treatment i really dont think the conservatives should be promising to throw money at poor old dyslexia suffers which even the medics dont agree is a genuine condition

and we sure dont want the middle class manipulation of the system spreading wider!

come on conservatives look harder at how this stuff looks to a typical working class person!

The president should draft another memo requsting funds to insure the deposits of creditors but not to prop up Wall Street institutions that created the mess.

Frankly, if you lend that badly, you deserve everything you get. The company is not competent and should fail, because the capital is had *should to be better spent for the greater good of us all*.

The number of jobs in an economy is *directly* related to the amount of capital available. The more capital you have, the more jobs you have, because capital does not sit idle – it is put to work and it causes jobs to exist.

When organisations which handle large volumes of capital use it so very poorly – basically throwing it away – they are doing us all a disservice. And then we pay through the nose in tax to rescue them.

I would also like a bit more honesty about why over generous mortgages were made availabel to poor African Americans in the first place. It was not greed on the part of the banks, but political correctness: the money men were accused of discrimination in not enabling African Americans to get on to the housing ladder as easily as those of European descent. Naturally this stung them into devising a clever method whereby they could do that and get share the risk invisibly with everyone else.