The cost of bringing banks home

Quite tired of seeing unelected ministers brought in via peerage to do the job that the elected Labour MP's don't seem fit to do!

As I said already. A new sociopolitical shift is underway.

Yet more tax money being wasted. How are we to repay all this money with tax from an economy which is in free fall and future tax revenues of any kind are doubtful.

Hurrah, the cash strapped Royal Bank of Scotland has raised £1.6bn by selling shares in Bank of China.

Any idea what they paid for them in the first place?

It would be good to see a piece of real questions put to the politicians in real power.

Sky did this with AD on Monday night and most interesting it was.

Search for 'Randal grills the Chancellor'.

Sadly the BroonBC prevent urls being cut and pasted. I did try, honest guv!

Robert come on ask these questions.

Instead of these stupid appointments and daily umpteen announcements lets get real accountability. Fat chance of course but.....

We all know that people who seek elected to office are in politics because they are unsuited for real jobs and just want to be on the telly. So, unelected ministers brought in via peerage to do the jobs of the elected, seems to me to be a jolly good idea. At least we know that they can actually do the job.

Ahhhh. Political reward for the real architect of the bank bail-out.

Too bad that while he was making sure Standard Chartered didn't copy the mistakes of RBS and HBoS he didn't mention to the Maximum Leader or the FSA or the BoE or the electorate direct that he (Brown) was doing the same think to the entire UK economy.

And there really was no need to join the Labour Party. Unless it's a PR stunt as part of the ongoing misinformation blitz to claim that the banking crisis was 'solved' by Labour.

In any case, in return for his ermine I'm sure our noble Lord can be relied on to support the printing of hundreds of billions of pounds on the q.t.

Another carrot from the spin machine and while i do think it makes sense to have someone onboard who has an idea of what's going on, the problem that also has to be overcome is Gordon Brown.

Taxpayers have lost confidence in a man who claimed to be the Iron Chancellor, would not gamble with our futures who would ensure we could go through rough patches due to his prudence.

As all the dirty laundry comes out by the day, it's evident that the man and his party have squandered the UK coffers on countless ill planned and ill afforded projects, they have burdoned us with an EU Constitution which we were promised a referendum on, they have destroyed a generations retirement and now with all the extra borrowing they are even saddling our Children with a lifetime of tax debt.


For me, I will not be going back to a normal spending pattern until after the next general election as I simply do not trust the Labour government or Gordon Brown, a man that has ruined any chance I have of a decent retirement for 40 years hard work while he and his cronies walk off into the sunset with their cushy pensions.

I found the thought about a reversal of the 'globalisation' trend an interesting one. As well as being true of banks I am sure that it will be true of other companies whose overseas ventures are often capital-intensive to set up, with uncertain returns. Equally, it is likely I guess that individuals will travel less (particularly US citizens) and with so much financial trouble at home that our media will focus on domestic news to a greater extent. Perhaps all of these effects will cause us to be more inward looking.

'Globalisation' has had somewhat of a bad press I believe, leading many people to feel that they are flotsam (or even worse jetsam) on the international tides of commerce and politics. Whilst there is undoubtably some truth in this, I have long felt that the net effect is good and that increasing interconnectedness means we take more interest in the rest of the world and perhaps come to understand other people better. I hope that this is not in danger.

If you have any crazy ideas to make sure that people continue to look outwards you can comment on https://thedailycrazy.wordpress.com - it is just a blog...

Robert

Your last paragraph is the most interesting.

Removing 'invested' money from poor countries need make no difference - it is put there to make a profit not as a gift - if the original investors do not want that profit, then the (potential) profit is there for whoever wants to take it (even the locals).

Even with the removal of investment, they still have their resources and they still have their labour - they just need to continue to use them.

Money just represents 'owed labour' - it doesn't create anything, add anything or mean anything in itself.

Give a man a fish and you feed him for a day
Teach a man to fish and you feed him for life
Buy his fishing rights from him and all bets are off...

So here we have it, another appointment which indicates he has to promote from outside to get talent of any kind into his cabinet.

Is he going to be yet another headless chicken in the road outside No10?

How are 'small and medium sized businesses' defined?

Are these the same as an SME (small or medium sized enterprise - less than 250 employees) ?

Or, as I suspect, it is whitehall fudge and actually means 'quite large businesses'.

Borrowing NOW needs to be linked to the amount of TAX paid!

Only this will see sustainable growth with the government getting revenue to help in downturns. In the long term.

Flexible unlike the current interest rate Sledgehammer!


IE an individual or company paid 50k in tax and so a bank can lend say 250k total.

Etc etc etc

If we had this in the past then regardless of the global economy we in the UK would be in a strong financial position.

AND so would the government!

The problem Davies will encounter is one of credibility. I mean how could you have any confidence in someone that conciously joins the Labour Party.

Off the subject a tad, and I may be accused of harping on about the same issue again, but there are only 2 more days left to join the petition asking for Gordon Brown's resignation due to his miss-handling of the economy.

Only 945 people have signed it up to now. It is not enough.

You still have chance to join in by looking at the number10.gov website and trawling through to find the petition originated by Alex Wallace that expires on 15th Jan.
Alternatively, you will find the direct link by looking at post 198 on RP's blogg - Our Banks 'have to lend more'

Get signing, - now !!!!!

This helping business nonsense IS a JOKE!

By the time the business goes to the Obudsman hell he’s bangrupt!

All this fluffing around the real problems!

Typical of an out of touch government.

They we out of touch in 2007

They are still out of touch.

The basic requirments and fixes are so beyond their understanding it is a discrace!

So as businesses have been scared out of trading with each other, in case invoices aren't paid promptly or customers have been scared off spending to buy things, how on earth does the Government expect local trade, let alone global trade to resume?

Who is going to make the first move to say out loud, "its okay to buy, sell and trade"?
The Banks, the government or the media?

Trade will only return when business has confidence, not banks.
Who has killed business confidence? Media? Banking? Government?
The media can really help to repair things with responsible reporting.

Stop navel gazing and report good things. With over 6 billion people on the planet someone must be buying and selling something somewhere.
We all ate yesterday didn't we?
It must have come from somewhere and invoved a chain of business suppliers?
Trade does go on and yes, if the banks had any courage, they'd see they could stimulate the markets by helping their customers to continue to trade, thereby earning themselves more fees in the long run.
Have journalists got it totally correct, are the banks really to blame?

The Master Plan the save the global banking industry was nothing more than an attempt to spike the guns of the High Street majors by saddling them with onerously high capital ratio requirements forcing them to take Government funds and thereby stopping them from paying a dividend. As we have now seen with HSBC you should be careful what you wish or indeed what you foist on others. It is just a matter of time before some bright spark will run his slide rule over SC and come up with some absurdly large sum of money needed from shareholders to bolster the CR . Is it coincidence that the saviours of UK banking are also big supporters of Basel II? Sure the banks have not covered themselves in glory but they haven't exactly been helped by some blinkered ill conceived and poltically inspired accounting nonsense. Scrap Basel II and lending will resume

'So what's in it for Davies?'

He will be well placed when the banks are fully nationalised.

Browns BELIEF IN DEMOCRACY???


ELECTION NOW THEN!!!

What we are seeing is a revrsal of globalisation. Yes Robert the good lord built the 5 contients of the world for a reason. And gordys global world is Dying fast. time for protectionism.


@5



But we dont elect them to do this job.



There should be an election now. I for one dont think we should be throwing money around willy ,nilly like this. i think it will make things worse in the long.

"It's a case of needs must - although it's a resonant manifestation of the utter collapse of Royal Bank's ambitions to rule the world (in a banking sense)".

Well if that means pocketing an eight hundred million dollar profit then good on them , they'll have HMG paid back in 2 years at this rate.

As usual very little detail about this guarantee stuff. I guess the dysfunctional loons that run the country now have spent most of their time working on the soundbites etc.

Are all loans covered?

Is it only loans for working capital? And what is the precise definition of this as it will mean different things in different sectors?

Are existing loans covered or is it only loans made from a certain date?

Does it cover only loans to a particular value?

What is this fee? Is the fee a flat sum or a percentage value of the loan?

If the borrower defaults and the guarantee is called in, can the bank's expect immediate reimbursement?

Who will administer this? Another quango to set up? If we are talking Whitehall, it will take months just to figure out the tea and biscuits budget.

What happens when the guarantee limit is about to be breached? I guess banks will become extra cautious again.

Oh, and has the original Autumn 2008 bail out money ACTUALLY been paid out to LTSBHBOS and RBS yet?

Why wasn't Davies parachuted into doing something useful like beong made Governor of the B of E? Perhaps Threadneedle Street should be renamed as Sesame Street!

#4 - organum - Good video - My respect for AD has gone up after this interview. Not for being chancellor, but for his ability to dodge questions, remain calm and appear superior to the interviewer. Even at his peak, teflon could not have done better.

"Well the day job is trying to promote trade and inward investment - which he sees as proper public service..."

He won't succeed. Basics: The UK trade gap is widening fast and will continue to do so. This means an ever heavier burden on internal money. That's a very finite bucket and the more the Govt spends or pledges from it the faster it will empty.

The redlight will come on within two months, and it will be the public sector that switches it on. There will be crisis meetings. At that time Plodder Brown will have to admit openly that the 'game is up'. The coalition that follows will fight to stop the the slide to Dickensian poverty but will, by that time, be almost irreversible.

This is coming, no amount of tinkering and gestures from Brown's Govt. can stop it now.

GC

10. At 09:17am on 14 Jan 2009, StrongholdBarricades wrote:

So here we have it, another appointment which indicates he has to promote from outside to get talent of any kind into his cabinet.

A very valid and good point, with all due respect, what are cabinet ministers doing in their jobs if Brown is having to recruit outside the party.

This highlights the inability of highly paid Labour MP's to do their jobs so what are they doing?

It really worries me the way the government seem to be focusing on saving businesses.

My theory is that in the long run, a recession in which many businesses fail is a thoroughly good thing for the economy. It's good old Darwinian natural selection at work: the badly run businesses will go out of business, but the good businesses will survive. Sure, people will lose jobs in the short term, but the remaining good businesses will be able to expand to fill the gaps in the market and some brand new good businesses will emerge, and people will get their jobs back, and probably happier jobs than they had before.

Just to give a little example of a company that deserves to be out of business: my central heating boiler, which is only a year old, has broken down and needs a new heat exchanger. The British Gas engineer who looked at it told me that my particular boiler is notoriously unreliable and the heat exchangers fail all the time. And guess who installed it? That's right, British Gas. And I have a maintenance contract, so they have to pay the considerable expense of fixing it. Now tell me, if they know this boiler is so unreliable, why did they recommend it in the first place, especially when they also know that they'll have to pay to fix it? Absolutely staggering incompetence.

So, I say please don't give a penny of help to businesses. If you want to help businesses, abolish some of the ludicrous red tape we have and maybe cut corporation tax, but please don't give money to businesses who can't make money all by themselves. Let the bad companies fail, and we'll all be better off in the long run.

"The-Real-Truth" wrote that removing invested money made no difference to the poorest of countries. I disagree. Yes they have resources and labour but often investment is needed to unlock this. To amend his/her adage of choice:

Give a man a fish and you feed him for a day
Teach a man to fish and you feed him for life
Lend him enough to buy a fishing rod and suddenly the teaching can be used...

You forget to add that the downside of all these wonderful cross border cash flows and investment deals also allowed the US (and to a lesser extent UK and Spanish) banking problems to spread through the whole world economy, turning what should have been a nasty US and UK recession into a global collapse. Alot of the money transferred in this way was not true wealth creation but transfer of illusory funds based upon a foundation of unsustainable house prices and unpayable mortgages.

Sadly Mr Davies probably won't make a jot of difference.
What will is possibly this. Has Lord Mandelson possibly made a mistake in his recent announcement?
Guaranteed business loans via the Banks may genuinely help many small businesses, but NO business will survive, guaranteed loan or not, if they have NO CUSTOMERS.
The government has bailed the Banks, Building Societies, some business sectors, but what about the CONSUMERS that drive the real economy? Not Joe Bloggs either.
Where are the real consumers? Where are the B2B trades?
How is Lord Mandelson going to stimulate trade between business and countries?
What incentive can possibly be brought to bear on international trade?
None, unless international traders, banks, investment houses want to trade.
They won't because they are too scared, especially when their respective Governments or regulators are breathing down their necks as well.
Mr Davies I'm sure will be happy his own private investments are secure and will grow in his trust over time.
I'm sure many of us would like to take a year's sabbatical and dabble in the Cabinet Office instead of having to hold down something called real work!
Why not withdraw Gordon Brown and Alistair Darlings salaries and put them on dole money. Trying to make ends meet would surely focus their supposedly talented minds and skills quite quickly!

#26 "badly run businesses will go out of business, but the good businesses will survive"

That is such a simplistic generalisation, it's insulting. I'm in business. If you weren't so widely published here I'd ignore it.

Try applying it to a 'good' business like say, JCB. From this site: 'The company said its total business was down 75% on the same period last year'.

Fact: collapse the economic infrastructure and no business can survive. This is where we are.


GC

Robert,

Anychance of an interview with someone from the treasury that will answer questions

Then you can task him about detail and costs etc

#26 -DisgustedOfMitcham2 - Hmmmm. Now about the gov lending to biz. It goes like this. Take JCB which makes or made construction machines. No construction equals no demand equals no jobs equals biz lost equals skills lost. However, when construction picks up it will need machines but as UK is out of the JCB biz so we will need to go abroad for them which equals lower GDP which equals people saying why did the gov not lend JCB the money to get over the rough times. QED.

Building a Rocket Ship does not always mean you will reach mars. If you make any errors calculating the correct flight path by even a few degrees you end up missing your target by a zillion miles.

The day Gordon Brown becomes a democrat pigs will fly over Whitehall.

That aside, there is a muddle at the heart of his policy responses that confuses the picture.
We have borrowed too much, but he wants us to keep borrowing more.
House prices were unsustainable, but he wants to prop them up with more credit.
The banks put too much faith in unreliable credit markets, but he now discourages the savings that are a stable source of funding.
He wants the banks to have stronger capital and carry enormous liquid reserves, but also expects them to carry on lending as before...

A 'bad bank' would have been a fairly straightforward way of putting many of the mistakes of the past on one side, and would allow the banks to go forward with a responsible, but sympathetic, lending to their more viable customers.
Hey ho - Gordon knows best ....

I'd be grateful if the right wing loonies on this blog would keep to the point and stop calling for the government to resign, have an election now etc every single day. It becoming v boring, it convinces nobody (which is why less than 1,000 people out of 60,000,000 sign useless petitions calling for Brown to go) and just takes up space for no good reason. Perhaps they could just have their own blog to vent their spleen and repeat the same points again and again.

There are some interesting points about globalisation - The UK has been one of the main players and advocates of globalisation and a retrenchment into 'little Englander' mentality especially if this means an increase in protectionism would be a disaster for the Country which is one the the major trading countries of the world.

#5 peterbaldwin

If elected officials aren't competent to do the job, then what makes them competent to appoint the right people to do the job for them?

The fact he has decided to actually join the labour party puts his judgement seriously in question.

And if the man is doing it unsalaried but 'for love' then what accountability does he have? You have no sanction against him - you can't even cut his 'bonus' etc...

Watch out for any seniour labourites buying houses they shouldn't be able to afford...

We did a reckon up on TAX REVENUE

For 2009/2010/2011


LOOKS LIKE A 20% to 25% year on

year???


THE BIG BUST THEN THE IMF.


THERES NO PAYBACK VEHICLE............


FOR ALL THIS GOVT BORROW

BORROW.

#30

Could not agree more.

You always get people like 26 who are clueless.

He can't even buy a boiler without getting it wrong, did he not wonder why it was the cheapest in the shop?

25. At 09:39am on 14 Jan 2009, UK-SILENT-MAJORITY wrote:


" ... with all due respect, what are cabinet ministers doing in their jobs if Brown is having to recruit outside the party.

This highlights the inability of highly paid Labour MP's to do their jobs so what are they doing?"


Ultimately the electorate were seduced in to electing the MPs - the majority of MPs from all parties could not not hold down a real job. A very well paid meal ticket while you are a MP and for 5 years after !!

I have no doubt whatsoever that Mr.Davies is a highly competent technocrat that knows the financial industry very well indeed.

Unfortunately it was letting technocrats have the run of the place that caused our economic difficutlies in the first place.

The argument that our country is in deep trouble which is getting worse by the day and so we need our best brains on the case is valid.

However, it is also becoming more apparent by the day that the government has additional agendas to resolving the economic crisis. These other agendas are undermining their ability to properly address the issue of the collapsing economy.

Consequently what support there is in the country for the government is diminishing rapidly. It is losing legitimacy and no amount technocrats are going to solve anything.

We need a new consensus which means either a general election or the resignation of this government and its substitution by a coalition government. There are good arguments for a coalition and good arguments for an election.

Either way we cannot continue the way we are any longer. Time for change!

Guycroft

Youve hit it on the HEAD.


Problem is that manufacturing is NOW

SO WEAK that they dont stand a

chance.


It would be more or less impossible to

set up my manufacturing business in

the UK as there is a ZERO SKILL

BASE.

JUST AS A STARTER WE RECKON THE

YEARLY LOSS TO THE UK BY MY

OPERATION ALONE IS CIRCA

100,000,000 Sterling per annum.

To me it would be a vast improvement if positions such as trade minister even chancellor etc, were filled by people with proven track records to understand and address the issues of commerce and the economy rather than elected mps whoes skills and ambition is to play politics. Of course ultimate leadership would need to be elected but if positions were ever non political biased it may help in consitancy of policy rather than positioning to win an immenent election.

In terms of protectionism the idea that the uk is its own soverign state died a long time ago. The possibly long term and deep recession in the uk was brought about by world wide institutions. the best solution is for a true world wide coordinated effort to trade and invest.

it is also morally wrong to forget the uk is miles away from the hardship of much of the developing world

#4

https://news.sky.com/skynews/Home/Business/Sky-News-Presenter-Jeff-Randall-Grills-Chancellor-Alistair-Darling-At-Number-11-Downing-Street/Article/200901215202005?f=rss

31. At 09:52am on 14 Jan 2009, StrongholdBarricades wrote:

Robert,

Anychance of an interview with someone from the treasury that will answer questions


31, Why are you asking such valid silly questions?

No one is accountable in this governemt and no one is wrong.

You are part of the electorate and have no right to ask awkward questions even if the government is in the process of bankrupting the country.

Remember this is the Labour Machine in office, the one that announced a "new beginning" on the morning after the 1997 election.

To defend GB, I think the use of industry experts in government has a lot of merit.

I've always wondered why professional politicians believe they are qualified to run a country with little relevant experience and a degree in law.

However, I do wish GB would look outside the financial industry for talent. As talented as I am sure Mr. Davies is, surely he is going to take a financial industry bias.

We’ve witnessed the effect of successive governments being focused on the growth of the financial industry for the last 20+ years. What we need is a similar focus on industry and product development. Who knows, with a proper strategy we could finally have a really strong balanced economy.

Wouldn’t it be nice, if when asked, to be able to immediately list 10 global world-class British non-financial companies (e.g. Microsoft, Nokia, Siemens, etc)? Personally, I struggle after naming Rolls Royce and Vodafone.

RBS spent fortunes last year sponsoring Williams F1 to flaunt their global credentials.

It will be interesting to see if their logo appears this year, using taxpayers money!

As to Mr Davies, surely we need industry people, not bankers to sort out this mess?

Davies has a good record because under his stewardship Standard Chartered retrenched back to old lines of business and avoided the problems that the more 'Exciting ' banks became involved in.
Can he make a difference? At least he does know the business.

Democratic is hardly a word I would use to describe G Brown and the current Labour party. The individual has lost more rights and had more laws pushed through parliment to curtail our personal freedom over the past 11yrs. No. Democratic is not a word that springs to mind when you utter G Browns name. He will continue to appoint those he wants and push it through in whatever way he can. We no longer live in a democracy.

I am not sure I like the line that he, Davies, can help 'as more imaginaive uses of tax payers money are found to reverse the crippling contraction of credit........' Isent that how we got into this mess? Being imaginative and creative, lacking in substance. I could go on but it gets boring.

Labour have never and never will accept any responsibility for any part of the recession we are now in, so how can they get us through it? Lessons are being learned, they continualy say, actually no. they are not. The first part of learning is to look at your part in a situation and moving from there.

I dispair at the legacy of debt we leave our grandchildren thanks to G Brown. He is a meddler and this mess is in a large part his and Labours. IT is not all the fault of the Americans, WE HAVE NOTING IN THE KITTY BECAUSE HE SPENT IT. For years he told us how wonderful he was and that he was responsible for how well it was all going. But now the clouds are here he not only has no brolly, but he is not responsible! Lesson one, try some humility.

re 3

https://www.guardian.co.uk/business/2005/aug/18/china.internationalnews

good starting point

If the banks won't lend why do we bail them out ?

Let the banks and their 'assets' fail.

We made the mess, we need to take the poison to save the future.

Interesting quote from the FT on the German stimulus package:

"Germany will change its constitution to ban excessive public borrowing and impose strict new rules to ensure the extra debt created by its latest fiscal stimulus package is paid off as soon as possible, Angela Merkel said yesterday.

Underlining Berlin's concern about the erosion of fiscal discipline in Europe, the chancellor said she was determined to balance public sector budgets in the medium term. "We will have to borrow more," she said. "But we must also be credible vis-à-vis future generations when we say we intend to repay this debt.""

What has a banker ever built?

(apart from mountains of debt that is).

ANSWERS on a post card to:

Mr Gordon Brown
10 Downing Street
London
SW1A 2AA

Sadly this government has still not learnt the realities of life. Ten years ago when buying life insurance one of the standard questions on the proposal was "have you had a test for HIV?". To answer yes normally meant instant declineature. The same is true of Government bailouts ~ as soon as you ask for government aid your business becomes instantly toxic and hence the governments impotence when it comes to sorting out the mess...

Off topic slightly but does make you wonder why Merkel et al seemed so against Browns stimulus...


Jan 13: Germany's second stimulus package amounts to €50 bn (about 2% of GDP) and follows the first package announced in 2008. Measures include: Investment measures (about €8 bn); income tax cuts (about €18 bn); incentives to buy energy efficient cars; lower health insurance contribution; increase support for families with children
The second bailout package would include a €100bn “Germany fund” that would issue credit guarantees to help cash-starved businesses raise debt as necessary because the government does not want healthy companies to fail for lack of credit. However: how to decide which companies are worthy of credit and which should disappear?

I know this is slightly off topic, and I have asked this before, but it seems critical - is the government really going to be able to borrow a net GBP 118bn (maybe a lot more) this year, with the currency and the trade balance disintegrating, and with interest rates that a far lower than are on offer from other countries?

Is anyone really going to lend this bunch that kind of money?

If yes, from where can these huge funds be borrowed? And what are the implications for gilts and for market interest rates?

If no, what happens next? IMF, anyone?

I would agree with #40 stanilic #42 kudospeter and many others on here this morning in saying that whilst Mr Davies may be a talented financial whiz, all these appointments are the result of off-the-record discussions between the people who got the world economy into this mess

Can the same people get us out of it? I have my doubts for several reasons: they are old dogs who are unlikely to learn new tricks and are clearly prone to suffering group-think. These people will put at least half their efforts into trying to rewrite recent financial history to make themselves look good.

We desperately need some new people and ideas from outside the club!

So advice to HMG has to be 'when in a hole stop digging!'

If they are determined to continue deepening the huge hole they have got us all into, then the least they could do is answer #32 peterbaldwin's request and help JCB by buying a load of their diggers.

Good points #9, #30, #40, #41.

Agreed "regime change" is well overdue but ask yourselves this question.

Who or what parties/countries have an interest in weakening the UK's ability to survive independently?

Is this then the real core of the problem?
National and/or international players do not want the UK to exist independently, of say Europe, any longer?
As you imply, with the skills base appallingly low, manufacturing has been reduced to the point of possible extinction in some sectors, especially in global trade terms.
The future looks bleak though, even with "regime change".
So who will benefit when UK PLC ends up as a (financially crippled) 'service sector' holiday park?
Perhaps the retired classes, politicians and the environmentalists?
Everyone else will be in sweat shops/call centres/retail distribution to pay taxes.
Lord Stern quoted the crippling cost to the 'global economy' of doing nothing to avoid Climate Change.
Little did he realise then just how much greater economic damage we managed in the UK, all by ourselves!

41
AC...

YOUR COUNTRY NEEDS YOU!

Put your money where your mouth is by helping your country and not running it down all the time.

Zero skillbase....train 'em!

LESS POO-POO
MORE DO-DO!

LESS TAKE,
MORE GIVE!

Stop moaning, start helping!

WHAT ARE YOU GONNA DO WITH ALL THAT CASH?
What is it for?
What is your life all about?

If this is the best Brown can do 16 months after Northern Wreck and 18 months after it all kicked off in earnest, it is feeble in the extreme. Reactive, panic-stricken, and so so late.

How long before we follow Ireland into sovereign downgrade territory ?

Spot on #32

Credit insurance is the real business killer. Any large business will insure it's debt and if it cannot do so, it wll die alongside it's customers.

JCB is a good example, although the economy is shrinking, it would not normally expect to lose 75% of it's business in such a short period of time. This is where the government needs to use it's financial toolkit, not on a VAT rate cut.

Although as usual short on details and six month too late, this is the sort of action that ensures a softer landing for UK business and allows them to manage themselves through this economic mess.

All political parties lack business nous, so I welcome the appointment of Mervyn Davies. As for the criticism of unelected people being welcomed into government, do me a favour! If you gave the public a choice, 99% wouldn't know any of our talented business people because they haven't appeared on X-Factor or Big Brother!

#46

You've just brought up one of the many reasons I detest RBS.

As someone who has put his own hard earned cash into sponsoring his son's racing mainly in Scotland and perhaps no more than 20 miles from RBS's Edinburgh HQ, it infuriates the heck out of me that RBS has steadfastly refused to provide even a small chunk of sponsorship for Scottish racing.

Frienlycard post 54

TOTAL COLLAPSE ENTER: I M F

Banks all over europe are reporting big losses for Q4 of 2008. citi bank is going to take an hammering tomorrow on the stock market, a masive down sizeing of the biggest banks in the world is starting to happen. And more importantly some of these banks have not had a bail yet.

Hopefully Mr Davies will be able to acquiaint Brown and Co. about the brutal truth of the private banking and finance sector and save them from their worship of all things private.

Government focus is on supply side but where is the demand B2B and C2B to resuscitate SME's

It wont be coming from the 7000 local government workers made redundant by the public sector or the thousands shaken out by the banking sector.

Changing paymasters from the local council to the DWP is the economics of the Marquis de Sade

#14 Thanks! Just signed it.

Re the skills base it's instructive to look at what's happened to "A" level maths. About three years ago they abolished the higher tier of GCSE to make the A,A* grades more "accessible". Result, it's worth no more than a grade 1 CSE used to be. They introduced a "further maths" GCSE which is about the same standard as the "O" level I took in 1971.

Now, at "A" level, you need to do 6 units. It used to be 3 pure maths and three applied. Now, because so much of the old GCSE has been abolished they need to do 4 pure units at "A" level. and only two applied. These are usually 1 very simple statistics unit and one very simple mechanics unit. 15 years ago, most would do some applied maths to a reasonably high level. Now they do almost nothing worth doing and science education is suffering too. This has a knock-on effect on science/engineering at university. This "accessibility" fetish is damaging future generations of British technical skills. I am all for accessability - but by helping and encouraging more young people to raise their game, not by dumbing down and giving them an A* for it. This too is debased currency.

Sorry for the long post.

44. At 10:10am on 14 Jan 2009, UK-SILENT-MAJORITY

You can always hope for some balance in reporting

Without the detail how on earth will we recognise it as the lifeboat it purports to be.

No point in being able to see the rescue party if you can't reach it and their rules of engagement mean they can't approach you.

No.54
As I've mentioned before, the British government won't be able to borrow all the money it needs for its spending plans. The USA will have first call on investors' cash, as US Treasuries are still seen as a "safe" haven in times of trouble.
Having said that, even the USA won't be able to borrow as much as it wants, as there simply aren't enough cash rich investors in the world.
Hence all that talk about "quantitative easing" - which just amounts to printing money.

No.53
A German colleague tells me the Bundesbank has lost control of the German economy twice in the past. Hence, the Bundesbank is ultra cautious and does not like large amounts of debt within the economy.

#4 organum

Did the link you use contain an ampersand (&amp). The BBC blog has issues with them in hyperlinks.

We've had a largely similar scheme whereby the government guarantee loans to business for years, in the form of the SFLGS, which the banks have been notoriously reticent to lend under.
What's the difference here, other than the guaranteed %age being different?
I will guarantee that they will still be reticent to lend.

If you think my last post is important, I urge you to sign the number 10 e-petition on science exam standards, sponsored by the Royal Society of Chemistry.

It can be found HERE

Without protecting and promoting science education, we really will decline into the third world. A banana republic without the bananas!

This appointment tells us one thing and one thing only.

The Labour Government dont have the skills themselves to get us out of the crisis they have a large part in creating.

This leaves us with one conclusion.

The queen should disolve parliament and force a general election then each party can put up candidates in their safer seats who are capable of resolving the problems.

We the people can make our clear choice between Borrow more pay debt or bankruptcy later, or tighten belts and save now and possibly have money to spend to grow at the end of the crisis.

I know what my choice is. I started the belt tightening process 18 months ago, to the point now where my fammily has more disposable income than at any point in the last 20 years.
That said we're not spending a penny of it just in case Labour stay in power, we'll need the money to pay for thier borrowing of future taxes.

@59 Geoff
"This is where the government needs to use it's financial toolkit,"

They dont have one. Gordon spent the money that could have been used.

onward ho post 57

I ve done manufacturing in the UK

It became a one man crusade low

quality low output despite all the

training. TOTAL RESENTMENT by the

majority of the workforce so out

went 1150 or so jobs which left

256 who wanted to WORK.

Regretfully we no longer manufacture

here except samples. . .

we've moaned about Labour being clueless about the economy and that, as a party, they're doing a great job at convincing us they have absolutely no idea about running business.

Appointing this gentleman seems to me to be either a huge public relations move or an attempt to get real sense linked to the government.

If his track record is as good as Robert says, I'm surprised he wasn't asked to apply for Head of Financial Stability!

Well maybe this guy can do some good. I'm not a fan of this 'bring em in from the outside' culture, but if he's proved that he has avoided the mistakes of others in his position then he must have his head screwed on straight. Whether this'll eliminate the 'climate of fear' out there is another thing altogether. With regard to this loan guarantee stuff, well, who knows how the dominant banks'll handle this. I suspect where they're required they'll do as they're urged, but it'll have an impact in other loan areas. The point is they don't want to lend too much and that's not going away even with all this government intervention.

What is interesting about all of this is the realisation that those in charge of our economy are as blind to the consequences of their actions as the rest of us. Perhaps we'll never again be fooled into thinking that economics is anything like a 'science' or that the crude use of parametric statistics within these financial models somehow allow us to manage better the 'information' out there in the 'market'. These models seem to have made the financial sector 'lazy' they have allowed banks etc. to make vast transactions based on crude assumptions. When you consider the sheer complexity of market information out there is any wonder these 'assumptions' driving these models of the 'market' have proved inadequate? Hopefully the 'quants have had their day.

The truth about how and who amongst the bankers and city financiers caused the debacle that we are in is yet to be told. However, business also has to take some of the responsibility. The accountants were complicit in racking up the levels of debt that are now crippling business. They really did live up to their reputation of knowing the cost of everything and the value of nothing.

Their combined mismanagement forced the spread of globalisation, egged-on by politicians. They pressured well managed companies th change their strategies. What happened to Weinstock's empire after the forced opening of the 'war chest'. The City hated the idea that Pilkington dedicated a percentage of their turnover to R&D. How many firms were forced to pay increasing dividends when internally they were crying out for investment.

I have noted a small but growing number of posters postulating that this slump has been manufactured by a small group of macro-global enterprises. To my mind this is nonsense. The whole thing is far too messy for that and will last for far too long

"war against the credit crunch"??

I just hope this new war will be somewhat more succesful than the last big "war" we are all involved in: the "war against terror":

- after proclaimed victory, the war has continued for another 7 years...

- in order to fight this war, major players simply "overlook" civil rights (eg Guantanamo)

- this war has led us to comply with an unprecedented amount of surveillance and intrusion into privacy

- torture is a favourite means for conducting this war

- I don't even want to start thinking about the costs of this war

- the umbrella of this war has legitimised any number of other, non- or marginally related involvements and policies...

- As the actual enemy is difficult to pinpoint, everyone who remotely resembles a possible enemy is under suspicion

Etc. ... Please, not another euphemistic "war"!

Post 34 . I couldn't agree more with your comments. I think the phrase is "if you are in a hole stop digging".

Post 46 an interesting point re RBS and Williams Formula 1. I object to my money subsidising Newcastle United via the Northern Wreck shirt sponsorship.

I imagine that for both there may be a long term deal in place that prevents RBS & NR suddenly pulling the plug. RBS are still shown on the Williams F1 website so I imagine it will be continuing.

@53 Cool
"Off topic slightly but does make you wonder why Merkel et al seemed so against Browns stimulus..."

Its because they along with the rest of the G20 said you should only attempt this IF YOU CAN AFFORD IT, and we cant.

You'll also note instead of a pathetic badly thought out VAT drop with added rises later, they have planned cuts in income tax putting money in peoples pockets some of which will get spent. Also their credit guarantee scheme is 5 times the size of ours.
They have achieved this because they were more prudent during the boom and they have thought about what they are going to do and introduced it all together instead of the drip drip of poorly thought out solutions that we have had.

Robert,

Whilst I can see how the banks in which the Government have an equity stake can be pushed towards extending their credit lines as the Government wish, why should those who stayed free such as Barclays. In fact, Barclays dont want to be directed toward expansion of UK lending, rather use their discretion toward emerging markets.

Given that the small print of the announcement today makes clear that the Government will charge an unspecified premium to the Banks for the Working Capital Scheme guarantee with pricing to reflect risk and a mandatory condition that they expand new credit from their freed up capital ( presumably only to UK business?)how will we know what real difference this will make until these details are tabled and the Banks do their numbers. Also, this might be termed a State Aid to the Banks and target businesses and blocked by the EU which the headlines have missed - what's the chance of this?

Peter Mandelson appears to hope and rely on the fact that the Banks will expand credit because they will profit from the prospective new lending. Is this more hope than expectation in this severe recession?

Some more important questions :-

1. What are "ordinary-risk businesses" that shall qualify for the Working Capital Scheme?
2. What criteria are to be used by the Banks in chosing target companies for their WCS portfolios?
3. Which companies get the new loans freed up by the WCS guarantee?
4. What are "smaller credit-worthy" companies which can get the Enterprise Finance Guarantee and who decides which of these might otherwise fail without EFG support? Who decides which of these benefit from EFG and on what terms can they convert overdrafts to EFG loans as well to create fresh unused overdraft facilities?
5. Which companies can attract Government/Bank equity finance under the Capital for Enterpise Fund? What's in it for the Banks?
6. Will foreign companies benefit?
7. Will overgeared private equity companies of the like your book describe benefit by the taxpayer lifeboat?


Let's have the facts, please....this is taxpayers' money on the line.

#10 StrongholdBarricades

"So here we have it, another appointment which indicates he has to promote from outside to get talent of any kind into his cabinet."


Perhaps he had to do it.

There is no training to be an MP nor any kind of qualification required.

They could have dyslexia, discalculia or both. I do not wish to be cruel but they can also be blind.

Politicians have the habit of introducing spin and PR at times to cover up some really atrocious news. Did you notice, did you see the really bad trade figures or were all our eyes on what the government would do. UK's goods trade gap with the rest of the world reached record levels in November. Sterling drops 30 percent and instead of export picking up it drops 6 percent while we pretty much kept importing stuff with imports only down 2 percent. This is an imbalance that cannot be maintained and the only solution would appear to be further significant falls in sterling until the balance between imports and exports starts to match. 10 pounds per loaf of bread coming to a store near you. Fortunately shipping costs suggest imports will have fallen rapidly since November.

So lets actually look at what Robert has chosen to talk about or perhaps has been deliberately played to talk about. Namely the shrinkage of financial globalisation and how some foreign players have withdrawn from UK markets while UK banks withdraw from Asian and Chinese markets. An Analysts report out today I think from Morgan Stanley suggests HSBC will need some 30 billion of extra capital. This being mainly due to severe losses that they seem likely to chalk up in the US and Asian markets. Losses on UK lending don’t even get a mention namely because the pale into insignificance when compared to US problems. This suggests to me that to compete with US banks our UK banks had to ignore their risk models. Robert is right that a long halt to the process of distributing capital will severely damage some weakers economies, hence the threatened ratings downgrades on Ireland, Spain, Italy, Greece and Portugal. Emerging market countries seem likely to suffer the most while those that instigated the mess will tend to escape.

The government plan makes reasonable sense in terms of size and who it is targeted at although I would have preferred an element of price capping (to stop extreme pricing) for loans and insurance to have been included as well, its just I feel cross at the deliberate manipulations of electorate sentiment by politicians. Just like big business the government seem determined to make things opaque and to nanny everyone into a conforming view. More choice please and less reporting influenced by government actions please.

"the growth of cross-border flows of capital, generated huge incremental increases in the wealth of most of the world." - Hmm...

We should think of wealth not just as bits of paper (money) but as real goods and services produced, and perhaps even more importantly as the investment in infrastructure, education etc in each country to allow goods and services to be created in the future.

Certainly there has been investment in some of the poorer countries like China/India (though those countries have made a lot of the longer term invesrments themselves). Meanwhile investment in richer countries like the UK has fallen and perfectly good factories get closed down. Is this an efficient long term use of resources? - I'm not convinced.

Most importantly, the globalised financial system has proved to be inherently unstable. It has allowed trade imbalances to build up to a far greater extent than was healthy. It has led to a situation where individual countries have no real control over their own economies. And in the end it is a house of cards - remove one card and the whole lot falls down (banking fails everywhere, demand falls everywhere, etc, etc)

I'm not sure that globalisation has led to huge improvements in living standards for most people. It has certainly led to greatly increased disparities between rich and poor in each country though.

"Lord Stern quoted the crippling cost to the 'global economy' of doing nothing to avoid Climate Change.
Little did he realise then just how much greater economic damage we managed in the UK, all by ourselves!"

And we have barely begun to add on the cost burden of trying to stop 4 billion years of the climate doing what it has always done.

'Stop Climate Change' has got to be the single most stupid political statement of all time.

They may as well say stop earth rotating.

I am still mystified as to how the Govt. can use Taxpayers money to 'fund' Failing companies, when there is still no prospect of recovery in the Economy for the forseeable future.
Surely guarantees of this nature can only be promised when a recovery begins - because it is only then that we will see which companies are 'fundamentally sound' as their productivity increases.

Providing guaranteed loans to ailing companies now is lunacy - remember we are at the beginning of a recession unlike any other before it, and no economist or politician can predict when and how the economy will recover. So how long will the loans last? What happens when there is no recovery, do we continue guaranteeing further loans to prop up non performing enterprises?

The truth is in this Country, and I think the populus are beginning to accept it but the leaders have yet to, is that we all have to downsize and reduce our expectations. This applies to everything - Our Government, our Business', our salaries and probably our standard of living. My business will probably still be here when recovery comes, but it will be smaller.
We will survive because we have not over-borrowed or taken vast personal sums out of the company to finance Range Rovers or any other self indulgences. We have also invested in our Staff and facilities. I hope those competitors of ours who have acted irresponsibly are not provided with too much assistance, because if this is the case then we will be the fools for running a 'tight ship' for the last 15 years.

The private sector, as we know it, could be about to change because the rules of competition appear to be being re-written, in the favour of the non-prudent.

Mervyn Davies is another of the ones the rules do not apply to.

His move from CEO to Chairman of SCB was in direct contravention of good corporate governance as recommended by Higgs.

He'll fit in well with Mandleson, another one the rules do not apply to.

If he can help sort this out - great
I still feel deeply uncomfortable that he will become a peer and is completely unelected - but if it works - again - great

But the real point of this article is at the end - there is absolutely no doubt that for all its excesses the global financial system and trade has generated prosperity and wealth outside the financial sectors because of its global reach.

If as a result of this fincial crisis banks all retreat into national instritutions then we'll all be the poorer for it

56 sanity4all:

"Agreed "regime change" is well overdue but ask yourselves this question.

Who or what parties/countries have an interest in weakening the UK's ability to survive independently?"

It is so true that we need "regime change" of some sort, but I do not really think that we can look elsewhere for the cause of our problems.

Successive UK governments have thought short-term - "max out our oil and gas reserves in the shortest possible time, borrow wherever we can, save nothing. pursue our domestic PC agendas, build up bureaucracy, discourage manufacturing, increase financial services, sell gold, sell Westinghouse, privatise everything".... it has all been so narrow-minded, self-serving and short-term.

Even now, the solution to a borrowing-induced crisis is presented as more borrowing!

I am totally fed up with hearing Gordon and crew blaming world events - how many times can that man get the word "global" into any answer on our crumbling economy? - and disowning any culpability.

We may not manufacture much in the UK these days, but we are pretty good at creating economic crises.

24,
Thanks for cheering me up :-0

On the bright side, we should see an end to half ton man / mum / son programmes. Obesity will almost certainly disappear to be replaced by an epidemic of national anorexia. Also property snake programmes will become the norm, showing individuals how to make a fire basket capable of providing enough heat and hot water to keep your tent warm at night.

ah,


'The Banker as God in Modern Society', now that would have been a prescient work...

GC

If this guy is one of the few 'credible'bankers left we be delighted that he is prepared to offer some help.

Meanwhile, in the light of the gargantuan hole we are in why does GB not call on our only credible politician;
VINCE CABLE ?

If this were a war, we would immediately set up a coalition government using the best across the board.

Forget party politics, Bring in the brains and worry about the personalities later.

An economic disaster team should be set up without delay.

"The internationalisation of banking, the growth of cross-border flows of capital, generated huge incremental increases in the wealth of most of the world."

Maybe it wasn’t as wealthy as it appeared Rob!

Making ridiculous amounts of borrowed money available so we can outbid each other and give the appearance that asset values are growing is not REAL growth!!!

I've never heard of Mervyn Davies did he ever play any rugby?

[I make big money i drive big cars everybody know me,i make big money i drive big cars everybody know me,i make big money i drive big cars everybody know me, cause ima superstar]

For anyone who saw Mandy on "BBC Breakfast" this morning, what does, "additionalise" mean?

Any chance that some of your post might end with the good and start with the bad Mr. Peston?

The same routine of lifting us up with the good then bring us back down with a bump is getting tiresome!

msg 34 molieres

Thanks for saying this for me.

Those of us who have stuck through the many and varied explanations surrounding the big CC are left with the illogical logic that we caused it in the frist place therefore we must refurbish the banks who will have nothing more to do with us and the only way to cure the problem is for us to spend, spend, spend or, better still, get back unto debt as quickly as possible only don't look to the banks for any help.

I think that's what I mean.

The Scottish philosopher Adam Smith described a nation’s economy as the product of innumerable self-interested decisions to trade which, as though guided by an invisible hand, proved overall beneficial. Last year’s banking crisis caused debtors to realise that they could not continue to shop as though in possession of (as the Rt. Revd. Peter Selby put it) a ‘credit card with no limit to their credit and no date by which repayment will have to be made’. Wisely, Britons have self-interestedly decided to pay-off their debts. Thus, business people and politicians must recognise a paradigm change in the nation’s psyche: confidence to repay (sometime) has ebbed away. The issue is not availability of credit but confidence. Meantime, there's no point making things for which there is no demand. Stock unsold only ties up capital.

As usual, no comment from me of any real signifcance. Just sentences... sometimes without verbs...and with poor grammar.

My USP is my stupidity. My 2nd USP (!) is my pedantry.

A BEAUTIFULLY WRITTEN blog today Sir : flowing words used with almost poetic economy.

Just one, miserable, tiny comment to make on your use of English punctuation.

LAST paragraph about capital flowing 'where ITS needed'...tush and tut. What were you sub-editors doing ? Or are you your own sub-editor ?

72 AC
Well at least you tried.
But what happened to the good ones, were they not salvageable?

Maybe the British negativity on this website ,mostly anti-Labour , is reflected by the negativity in the workplace, mostly anti-Capital, and in the boardroom , often anti-worker.

And yet, on a one-to-one basis most Brits are fine and reasonable.

It is the collective psyche....I have lived and worked overseas too and find that people let you get on and do things more, they are less class-bound, less xenophobic , more likely to stand-up and start again.They are less role-restricted, less up themselves .

There must be something that can be done to cheer UK up and get it back on its feet....I think Labour are really trying ,but they are up against massive resentment and it is difficult to appear as a new approach. But I simply do not trust the Tories as they polarised Britain more than anyone.

Post 64 - Sashaclarkson

Thanks for signing and joining in, however, Alexander Curzon has stated on another blogg that we all need to sign in order to be noticed. He is right, and we will all need to continue some sort of effort to remove this government.

For the rest of you, see post 14.

JOIN IN - NOW !!!!!!!

#58 and #81
> How long before we follow Ireland into sovereign downgrade territory ?

Erm, Ireland's sovereign debt has not been downgraded.

Here's a basic lesson on the Irish economy for the 2 of you.
Ireland's 2 biggest export earning industries are Software and Pharmaceuticals. Unlike the UK's Financial Service industry which has been decimated by the recent downturn both Software and Pharm are relatively unscathed.
People still need their viagra as much as their software services.
Indeed my own software company has just been taken over by MasterCard for over 100 million USD.
Which was nice for us option holders.
I know several software companies here that are still hiring. And guess what - you still can't get good developers.
Of course there was an unsustainable building industry boom.
So what ?
Government is going to slash public services and numerous builders (many foreign nationals who will return home) are on the dole.
But guess what - eventually Ireland will have a sustainable building industry.

Apart from those in the building industry, the only tangible effects for many people here has been a reduction in house prices and in mortgage repayments.
This so-called downturn is a god send for the real economy.