Comments on: When will the banks work again?

By: Amanda

Amanda — Mon, 10 Nov 2008 09:32:46 +0000

John

My MP is Labour who cares nothing for ‘the likes of me’, he’d much rather serve his ‘public’. I am helping my local conservative PPC, and I write comments on blogs all the time and constantly complain about the BBC. But the media, in the main, are corrupt as far as I can see.

I also take every opportunity to discuss politics with people I meet, even now in business which would have been a definite faux pas in days gone by.

And I take time out to help and encourage young people to upskill, be self reliant, and get out of the country if they can.

However, none of this seems to help very much.

Reply: Even in this damaged democracy of ours public opinion does matter and we need to keep wooing it.

By: Amanda

Amanda — Mon, 10 Nov 2008 08:47:25 +0000

This is one of my main sources of economic analysis, so thank you for providing it.

I am with Lola, I am more worried than I have ever been. The more I look at what Brown and Co are doing the more I can see it is the wrong thing to be doing. Re-election is the only think they care about – but for what purpose when the country will be ‘fit for nothing’, one can only wonder. Maybe a complete sell out to the EU and a place on the gravy train!!

However, if we are to stop this, what can we do? What actions do I, as a family woman and small business owner, do to help my country? Apart from not voting Labour – but then I never have. The Conservatives offer me no hope and I, like I’m sure many others, feel very alone and angry.

Reply: Changing government will be necessary. In the mentime let your MP and the media know of your worries.

By: anonymous

anonymous — Sat, 08 Nov 2008 01:29:27 +0000

I believe you and your comrades in Westminster recently received copies of a certain dystopian novel for your reading pleasure.

May I ask you opinion of that?

Reply: Need more detail to be able to answer.

By: mikestallard

mikestallard — Fri, 07 Nov 2008 15:59:12 +0000

ERRATA:
line 2: the government OR the Bank of England.
line 8: pair of hands.
Sorry!

By: mikestallard

mikestallard — Fri, 07 Nov 2008 15:56:21 +0000

I am in total agreement with all that you say except for just one thing. In 2 and 3 above, is it to be the government of the Bank of England which does the sorting out?
This government is motivated by just one thing: re election. North British banks – the ones that have the most government now in their internal workings – are affecting the votes. They are affecting the voters who have mortgages and who need money for their businesses. The government is, therefore, very willing to intervene here. Yvette Cooper has made appearances on TV already. Glenrothes was important to the Prime Minister for a number of reasons. He likes, apparently, to be seen as a reliable paid of hands – it gets votes.
The Bank of England, on the other hand, is motivated by money. This demands expert knowledge, instant reaction to change, sufficient tools to deal with crises and a free hand to deal with whatever is thrown at it. The Bank has been around for centuries and, unlike this government, has a wealth of experience to draw on in finance.
That is why I should like the Bank manager to be – the Bank Manager! Instead, of course, we get the politicians and the FSA taking the decisions and all falling over each other.
I very much enjoyed your lucid exposition of a hugely difficult subject: thank you!

By: David Belchamber

David Belchamber — Fri, 07 Nov 2008 15:40:13 +0000

The example of Spanish banks must surely point the way forward for the regulatory system that will eventually emerge from our present mess. I believe that dodgy things like SIVs and CDOs are not permitted but the example of Santander surely demonstrates that prudent, tradtional banking does not inhibit expansion.
Do you think that pre-1997 when the BoE had total oversight over the banking system, failures such as Northern Rock, Bradford & Bingley etc would still have occurred or do you think that an alert BoE would have nipped them in the bud without media publicity and also great cost to the taxpayer?

Reply: Receiving £18 billion cash from British taxpayers has also helped Santander! The pace of their acquisitions is breathtaking and they need to consolidate them.

By: m wood

m wood — Fri, 07 Nov 2008 13:00:06 +0000

Very much agree with your analysis and solutions 2 or 3. It has occurred to me that most people have overlooked the fundemental reasons for this financial crash. For years people have been collectively ‘inventing’ money by overvalueing assets such as houses, loans etc. There comes a time when someone says, the emperor has no clothes, in this case, there isn’t enough real money to match debts. The result is a random process that destroys the ‘make-believe’ money, either by writing off loans or devaluing currencies (another name for inflation). Many people/businesses get hurt in this process of adjustment that the market has to make, who it is is not a logical choice, the market system is too complex for Governments to control

The real culprites are not the Banks, – they are just mechanics in the system – but those that failed to regulate the invention of make-believe money – mostly Brown and Clinton.

By: figurewizard

figurewizard — Fri, 07 Nov 2008 11:45:01 +0000

At last someone is suggesting that weak banks should be allowed to go bust. Administration followed by receivership would give the relatively strong banks to become stronger still, which; despite the widespread scorn with which they are currently regarded remains the essential point. This after all is what happened in 1866 when Overend Gurney collapsed after the Bank of England refused to lend support. A small but well run bank by the name of Barclays picked up the pieces then. Given Barclays recent debt free takeover of the US operations of Lehman Bros, it seems that history really could repeat itself if only the governments allowed it to.

By: Bazman

Bazman — Fri, 07 Nov 2008 11:07:57 +0000

I would not be surprised if they announced record profits.

By: Kit

Kit — Fri, 07 Nov 2008 10:38:57 +0000

“The experience with Lehmans has spooked both markets and authorities, leading most of us to rule out this approach.”

Yes, nobody knows which banks would be bailed-out or forced into bankruptcy. The authorities are leaping from one knee-jerk reaction to another without consideration to the consequences. (150bp – I wouldn’t be surprised if a provider of tracker mortgages gets into trouble.)

The authorities seem determined to spook the market. And if the authorities are spooked it is by their own actions.

By: Andrew S

Andrew S — Fri, 07 Nov 2008 10:29:12 +0000

For banks to spend less they would have to stop doing all the fancy stuff and return to traditional lending against deposits and backing good businesses. They would not need to get into the spiral of paying high wages to financial wizzos.
But that does mean the UK financial services sector would reduce. Some other country would no doubt want to fill the void so we would have to be ready for that.
Also do we really want banks and other businesses to continue sending jobs overseas just to cut costs. What real jobs are we going to be doing in this country? Real jobs includes the backoffice work all businesses need to get done.

By: Lola

Lola — Fri, 07 Nov 2008 10:22:18 +0000

Mr Redwood – I agree with both your cure and with the ‘do it now’ bit. But how are you going to get Brown Darling to go with this? It would mean them admitting they were wrong. It’s just not going to happen is it? Every day’s delay will cost us dear.

IMHO Brown thinks he has go this sorted. I don’t mean sorted for the country but sorted for him politically. It has been dealt with. He has achieved his aim of boosting his public image. The matter will now rest until he can either see more political advantage or until we get such a massive crisis (a visit to the IMF?) that he is forced to confront his failures at the ballot box.

Never in all my life have I been so worried about our country and economy. I am 56 and first voted for Ian McLeod in 1970. I remember Wilson and Callaghan and Heath and all of them. I remember the 1976 ish secondary banking crisis. I remember the three day week, the winter of discontent, the early 80’s recession. I remember the Cuban Missile Crisis and the assassination of President Kennedy . All of those ‘crises’ were minor in comparison to this one. Somehow we knew what to do and what our values were and we knew that we would win this because we could see the results of not doing so and where we would end up.

Now we have a new world where there is no visible alternative. The victory of liberal capitalism is complete so the residual lefties have to rely on deceit and obfuscation and well, bribes, to gain and keep power. Liberal capitalism is in many ways counter intuitive, yet its success cannot be denied. To counter this the residual lefties are resorting to ever more control and deceit. Appealing to a badly educated electorate with shallow promises (not bread and circuses – but Big Macs and Big Brother) which the bureaucrats do actually deliver.

And to be clear I am no raving righty looking to hang people for parking in the wrong place. And I am driven in my ire by the knowledge that leftyness destroys wealth for everyone. Especially the less well off.

So how does one counter the 1984 style newspeak and deceit of the current government? How do we get ‘change’ that will take us to where we can actually create real wealth by trade and pay our way in the world again?

Reply: The more of us who want change for the better, the more pressure we can exert to achieve it. You are right to be worried.

By: Letters From A Tory

Letters From A Tory — Fri, 07 Nov 2008 09:47:36 +0000

It’s the failure to sort out the balance sheets that worries me. All the problems that helped to start this crisis such as hidden debts appear to have slipped through the legislatory net – for now, at least.

http://lettersfromatory.wordpress.com