Why is Gord fighting for the interest rate gamblers?
October 10th, 2008
They placed a bet, they lost and should be hung out to dry?
One thing that nobody seems to be saying about the Icelandic saving bank situation is that those who invested with the banks were either stupid or greedy or both.
Didn’t any of the individual or institutional investors stop to think and ask why the banks were ready and willing to pay interests rates that were way ahead of anything else that was available in the UK? Didn’t they consider just for one moment that this might have meant that their investments were more risky?
Those who handed over their cash to these banks were not normal savers but gamblers who were getting odds of up to 2/7 that their money would be safe. Alas they lost so if it had been Ladbrokes and not Kaupthing it would have been tough shit.
Surely Darling and Brown have got to think of those who were not seduced by the amazing returns that were being offered who now through their taxes and the costs of the industry bail out scheme will be forced to fork out to help cover the losses of the interest rate gamblers who were stupid enough, in many cases, to put their life savings on.
I’m a gambler but this was too risky a bet for me. Late last year I took early retirement so I could work full-time on PB and now look partly to the interest from my pension lump sum to live on. I checked out the 7% with Kaupthing which simply did not make sense compared with the 5% that was available from HSBC. The result was a big cut in my possible income but a much safer bet.
But those who took the Icelandic gamble have been enjoying the vastly inflated returns and now, thanks to Brown and Darling, could get most of their money back.
There’s something wrong somewhere and what an appalling example.
Mike Smithson
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Errr I believe there were those on this site who said the government was wrong to ban short selling, look how right they were, they took the ban off in the US, it had no affect at all, we should follow suit.
There were also those who were convinced that oil would soon be $200.0 dollars a barrel, right again!
Oh! As the US government seems to have gorn’ to sleep, would someone have a word with the Japs, get ‘em to attack Pearl Harbour, it woke ‘em last time!
Apparently you have to offer higher interest rates if you are a crap risk. Doh. no bailout for these clowns
Apparently you have to offer higher interest rates if you are a crap risk. Doh. no bailout for these clowns
Mike
I’m glad you said that. I keep meeting people who made the same decision as you for exactly the same reasons. It was well known that the Icelandic economy was running 15% inflation with alot of debt. It is not even as if Iceland was even in the EU and that does make a difference to the risk in investing there. Would people expect a bail out with the collapse of a South Korean, Malaysian or Indian savings bank?
“I checked out the 7% with Kaupthing which simply did not make sense compared with the 5% that was available from HSBC. The result was a big cut in my possible income but a much safer bet.”
I am much younger than yourself Mike, and therefore still saving for retirement rather than reaping the harvest, but I made a similar choice about 3 years ago. It seems (seemed?) to be the common wisdom that young people (under 35ish) should be investing their pension money almost 100% in equities. I had been doing so, but began to form the opinion that equities were becoming far too risky.
Thanks to the constant nagging about the benefits of gold and the idiocy of the equity markets from Scottish libertarian blogger David Farrer…
http://freedomandwhisky.blogspot.com/
… I started looking at gold, and put a significant chunk of my pension into it. So, I just want to say: thanks David!!
But the thing is, I took a big risk with that decision, because I was foregoing a potential big increase in my possible income. You pays your money and you takes your choice.
I will be looking at small, boring, conservative, local institutions like the Airdrie Savings Bank, Dunfermline BS and Scottish BS for building up small, dispersed pots of savings. Spread the risk.
Incidentally, I consider it a disgrace that the UK government is using/abusing anti-terrorist legislation to target a NATO ally. Does the UK now consider Iceland to be a terrorist state?
5 I am sure many people have money in ICICI who offer huge rates ….. do any councils have money in this Indian bank?
5 I am sure many people have money in ICICI who offer huge rates ….. do any councils have money in this Indian bank?
Actually Mike there is yet another scandal emerging here.
Local authorities are often legally obliged to deposit at the highest rate available on the market, and therefore a large ammount of local authority money is tied up on deposit in Icesave.
The fact that Kaupthing had over 4 billion in UK deposits has rather fallen trhough the cracks- not covered by iceland or the Uk- and anyway the smallest local authority deposit is 5 million.
Is there a list of which local authorities have invested what in the Icelandic Banks?
“Those who handed over their cash to these banks were … gamblers who were getting odds of up to 2/7 that their money would be safe.”
How do you conjure up those odds? Have I missed something? My mind always boggles at anything financial, so perhaps I have misunderstood something.
Why should Kaupthing be excused from honouring their side of a contract?
The banks aren’t going to excuse us from paying off our mortgages, are they?
Contracts have to be enforced, otherwise the whole system really does fall apart.
The bookmaker analogy is a poor one, IMO - whether Obama or McCain wins, you expect the bookies to pay out, don’t you, Mike?
As I understand it, the situation with Kaupthing Edge is actually very different from that with Landsbanki/Heritable.
Kaupthing Edge is UK-incorporated, guaranteed by the UK’s Financial Services Compensation Scheme, and so retail depositors are covered by the FSA up to £50,000. This is not the case with Landsbanki’s Icesave, where the first EUR 20,000 is protected only by the Icelandic Government.
Non-retail investors and organizations like councils are not protected.
That’s my understanding, but I may be out of date or indeed totally wrong. Anyone know otherwise?
10. Just found one.
http://www.thesun.co.uk/sol/homepage/news/money/article1791374.ece
I think this is too simplistic - it’s so easy with the benefit of hindsight to criticise. An waful lot of afe bets have gone belly up. I also find GB’s bullying tone with the Iceland govt. totally unedifying and only serves to hihlight British weakness. Is hr gonna make the same noises to protect investors in Lehman’s, etc, etc.
Plain fact is we’re all in the sh** now & one way of another we’re all gonna pay.
11. John, I think the 2/7 comes from comparing the 7% offered by Kaupthing against the 5% offered by others.
I work in Oslo, and a workmate was complaining how he couldn’t get his money, savings for his wedding, out of an Icelandic bank yesterday.
Twenty-twenty hindsight.
These banks were respected and recognised by independent financial advisers, senior CIPFA professionals, CLG…
I can and do reproach myself for buying a house in 2006. But for following the best advice I could get on where to invest my ISA? No.
Interestingly enough, ALL my clients have also lost money. It provides some reassurance that I’m working with these authorities to show them how to spend significantly less on service delivery. But I’m definitely exposed to Icelandic bank losses in more ways than I could have expected, even last Thursday.
re 11. John - The 2/7 is based on the extra interest that the Icelandic banks were paying in order to get deposits. HSBC = 5%: Icelandic banks = 7%.
It is just my gamblers mind trying to express this in betting terms.
Any reply from YouGov yet Mike?
‘Gordon Brown never blinked as fists flew and tables smashed
- … World Cup qualifier is the biggest Scotland game since last year’s climactic Euro 2008 visit by Italy, which attracted both the Prime Minister and the First Minister’
At the VIP reception afterwards, a tabloid hack got into an argument with a Scottish comic actor. One let the other have it over the skull with a champagne bottle and was treated to a Glasgow kiss in return, while the table between the pair collapsed amidst splintering wine glasses.
Only a few feet from the scene, the Chancellor [Gordon Brown], corralled against a wall by admiring females, blinked not an eye as the brawling pair were hustled away. It was a performance fully worthy of that heartfelt cry of approbation commonly heard in the PM’s Fife constituency.
“Yahoorsir!”
http://www.telegraph.co.uk/sport/football/international/scotland/3168497/Gordon-Brown-never-blinked-as-fists-flew-and-tables-smashed-Football.html
Am I alone in thinking that the words “Gordon Brown” and “admiring females” do not belong together in the same sentence?
9. Cicero, I think this is wrong. Locally authorities are required to maximise yields as their third priority. Security and liquidity are first and second responsibilities.
Fuller list of banks which have lost money can be found here: http://news.bbc.co.uk/1/hi/uk/7660741.stm
17
the BCCI scandal proved: If it looks to good to be true.
Well done Mike.
As for professional advice, see the FSA…
Sums it up.
When has the FSA said : run away : too risky.
They would rather institutions go bust and let savers lose all than be accused of causing a collapse. So in effect their approval is worth nothing.
Anyone who trusts the FSA or most professional advisers is … misguided.
How many advisers foretold this market crash.. or told their clients to sell last week?
18. So if bookmakers offer different odds, is the difference an expression of the risk of them not paying out?
Watching the talking heads on the business shows this morning - yesterday and today is all about Lehman’s. Institutions on the wrong end of the CDS’s have been selling equities (because it is the only source of liquidity left). Today sees the auction of the Lehman’s CDS’s.
re 12. Bookies go out of business too - which is one reason why I only hand over my cash to the big and well-established firms like Ladbrokes and William Hill.
21
too good to be true.
My wife and I recently put money into Landsbanki and Kaupthing Edge. We calculated that up to £35k each for each bank there was only a limited risk that the British Government would go broke. Do you think that was a bad bet?
21. “How many advisers foretold this market crash.. or told their clients to sell last week?”
Certainly a lot fewer than those who this week are coming out of the woodwork to announce their earlier wisdom.
A big pat on the back to go with your generous dose of self-congratulation.
The continual No more boom and bust mantra from Brown seduced people into believing they didn’t need to be careful anymore.
To answer Mike’s question - why not let these people get hung out to dry:
The banking system is an enormous confidence trick. Banks promise that they’ll give you your money whenever you want it, but they haven’t got enough to do that if more than a small proportion of their customers try to do it at the same time. If savers see other savers losing their deposits they may stop believing in the confidence trick and decide to take out their money. Nearly everybody loses their life savings, nearly everybody’s loans get called in, nearly everybody loses their jobs and millions of people starve to death. This series of events would risk having a negative impact on Labour’s reputation for competence in managing the economy.
If the current mess were being portrayed in Blackadder, we could all have a good laugh.
“You see, Baldrick, the banks were lending money that didn’t exist to other banks who lent it to people who couldn’t afford to pay it back so that they could buy assets at inflated prices. Then it all went wrong.”
“Mr Blackadder, I have a cunning plan. Let’s lend more money that doesn’t exist to the banks so that they can lend it other banks….”
“I think, Baldrick, I can already spot a tiny flaw in your plan..”
Except, of course, it isn’t a comedy. Millions of ordinary people are going to get seriously hurt. It will end in tears. Brown can make jokes about it - but then he’s protected by taxpayers’ money.
How depressing.
re 22. If a bookie is consistently getting the pricing wrong then the chances of it failing are that much greater.
Quite often Ladbrokes and William Hill will not be offering the best odds but I prefer to stick with them - particularly for long-term political bets.
I think your premise is more than a little wrong. Whilst the interest rates may have been at the very top end of the range, they were not all that out of line with other financial institutions the government are now offering to provide support. For example we have money in a well known local UK brand at 7.11% aer.
And these banks are supposedly regulate by the FSA. Either the FSA should have the role of regulator and then be held to account for its failings. Or we should drop the pretence that such banks are being regulated and get rid of large chunks of the FSA.
Whilst not quite a widows and orphans fund, I am involved in the management of funds for a members organisation. The position is actually much, much more complicated than you simplisticly suggest. And the consequences of failure to reimburse regulated aacounts will be far wider than local authorities.
FTSE will hit sub-4000 today.
re 19. Yes - Peter Kellner tells me that the YouGov polls were carried out in exactly the same way with the SNP option presented in the same form as the other main parties in Scotland.
31. Russia has suspended one of its markets this morning. Maybe we could do the same to the FTSE and open it again in 12 months time!
32. Thanks Mike.
I wonder why YouGov did not publish an SNP figure in that case? They simply gave Con, Lab, LD, Other - which is ridiculous for Scotland where the SNP voting intention figures are currently approximately three times the size of the Lib Dem figures. They have never done that before.
#23 Mike - on that point:
Small/mid-caps with potential refinancing risk are Cattles,
Independent News & Media, JD Wetherspoon, Ladbrokes, Punch Taverns, Rank, Taylor Wimpey, Yell, and William Hill.
See http://ftalphaville.ft.com/blog/2008/10/07/16749/markets-live/
16. 18. Can you explain the explanation?
Odds of 2/7 actually means a fraction of 77.8% (or 128.6% if you put it the other way round); 5% compared with 7% is 71.4% (or 140%). Did you mean 2/5 rather than 2/7?
Absolutely right, Mike.
They should no more be reimbursed their losses than I should for the loser I backed at Wincanton yesterday.
Betfair is significantly safer than Ladbrokes and William Hill, because both sides are required to put their money up front.
Once the Lehmann issue shakes out over the next couple of days the stock markets will almost certainly rebound significantly
Heaven’s above! OK, it is through gritted teeth, but Alan Cochrane agrees with Alex Salmond about something. Wonders will never cease.
… I do believe that the Nats still occupy, if not the high moral ground, then at least the parliamentary high ground on their plans to restrict the selling of alcohol.
… it is difficult not to sympathise with the First Minister’s frustration that the opposition parties at Holyrood appear to know what they’re against on this matter but don’t know what they’re for.
He got quite het up on the subject, too, railing that it was one thing for Labour, Tories and Liberal Democrats to disagree with “some aspects” of his administration’s programme but adding: “For goodness understand that this country has a real crisis with alcohol. Not just affecting young people , but generally through the population.”
Quite right, too.
http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/10/10/do1006.xml
The point about deposits with Icelandic banks applies just as much to Northern Rock and other depositors.
Depositors should have a liability if their bank fails: it would be a restraint on bank risk-taking. That said, for this crisis, the damage is done (though clearly not yet worked out).
I wonder now if people might become more favourably disposed to a new gold standard?
Like the rest of this crisis, it is about helping people who don’t deserve to be helped, in order to help yourself
Take the West Oxofordshire DistrictCouncil in Witney. It has £9m in Icelandic banks. In all, interest earned is nearly £500k per year. The turnover of the Council is circa £13m. If, as is being said, Councils could receive about 20p in the £ compensation, it is pretty obvious how the gap in funding will have to be be met.
That this particular council has a funding problems of its own making on top, doesn’t help
17. Clearly not twenty-twenty foresight though, in the case of people like Mike and Stuart. The risk was certainly forseeable and I suspect that those who don’t admit it do so in no small part because they want to absolve themselves of any blame.
The same is true of the something-for-nothing buy-to-let market latecomers. I see no moral reason why the government should be propping up the housing market (though obviously there are good political ones, so it probably will). In some ways, I’m very risk averse. I paid my mortgage off a few years ago, way ahead of time, because I did not like carrying the debt. If I’d wanted to, I could have got into buy-to-let quite easily but chose not to because I’d recognised more than two years ago that property was overvalued (which implies prices there still have some way to fall).
To answer Mike’s question though, the answer is the number of swing voters who might be affected (although if that is the line of reasoning, he might be well advised to consider the impact on Council Tax and local services that not at least partly bailing out councils who invested in Icland would have).
A couple of other points. I’d appeal again to our elected representatives to think about the government’s usage of legislation originally passed to counter a terrorist threat. Apart from it being a shameful and cowardly act (would Darling or Brown sanction the same towards Pakistan were a bank there to go bust, never mind one in the USA?), it again demostrates that ministers assurances at the time legislation is being voted upon are as near to meaningless as makes no difference; all that matters is what the Bill contains. Ministers and administrations come and go (and even when they stay the same, they can change their minds). The words in the Act remain - as do the powers that go with them.
Finally, it will be the Lord Mayor’s banquet soon. With the possibility that there is still to be £3bn+ in bonuses paid out in the City, perhaps now is the time for Gordon to don lounge suit and read the riot act. My guess is that the majority of the public will neither accept nor understand that kind of reward for traders in a system that has failed. That they are to some extent innocent in the process - you can’t blame people for taking advantage of a lax regulatory regime, or for accepting generous bonus schemes offered to them - is beside the point.
‘BA should call itself London Airways in wake of job cuts’
http://www.theherald.co.uk/news/other/display.var.2459308.0.BA_should_call_itself_London_Airways_in_wake_of_job_cuts.php
Good question Mike. I don’t know. If someone’s offering 2% more than everyone else there’s usually a risk attached-and that’s as it should be.
I think this financial crisis will damage Brown and Labour in the short term even though the consensus is that he’s doing OK. It’s not the sort of crisis that gets people rallying behind the leader. Infact the contrary.
Though when the history of this greedy malaise comes to be written I’m pretty sure it’s roots will be traced to Thatcher and she’ll go down in history somewhere close to Chamberlain. Deservedly so in my opinion.
On various forums, savers are praising Brown for getting their money back from the evil Icelandic government. The same people who were castigating him for letting the economy fail are now singing his praises. Maybe Brown saw it as an easy vote winner?
36. The calculation is actually a lot more complex than that and ought to take into account all sorts of things, but on a superficial level, yes, it should be 2/5, not 2/7 (although if expressed as two-sevenths, rather than seven-to-two-on, it would be right!).
Apprehension… with the FTSE expected to open sharply down in a few minutes, it feels rather like being winched up the hill at the star of a big rollercoaster, knowing that there’s a fixed point beyond which the only way is down — for a while at least…
45. Conclusion leading the argument, perhaps?
The failure in the system has been one of inadequate regulation. Once again, Conservatives - including Thatcher - do not support the absolutely free market, not least because it tends to monopoly if left entirely alone. Conservatives believe in a lightly, but adequately, regulated market. I would anticipate Cameron and Osborne making this point fairly forcefully throughout 2009 and 2010, and asking the public who was in charge of the regulation throughout the Labour term of office.
As an aside, and to anticipate a point from Coldstone, Conservatism is at its very deepest level a social, not an economic ideology, with its core objective being the minimising of the risk of social unrest. In that, it differs fundamentally from socialism, which is at its core an economic ideology. As such, it’s entirely consistent with Conservatism to oppose free markets as and when necessary, if failing to do so materially increases the chances of unrest or social breakdown - although that would usually be a short-term policy.
Before we get into the daily updates of the stock markets from around Europe and the States, could I point out that of at least as much significance is the decline in the value of the pound, which seems to have gone almost unnoticed.
FTSE off nearly 400 btw.
45. Roger - “I think this financial crisis will damage Brown and Labour in the short term even though the consensus is that he’s doing OK.”
Agreed.
I simply do not understand why on earth Brown is grinning like a Cheshire cat. I am beginning to think that the man really is a loony.
50. I should say, that figure was from a verbal report on Sky. It seems that not all the stocks are open for trading yet, so it might not be wholly accurate.
Dax down 10%
17
The FSA ’s remit is to protect the stability of Financial markets.
It is NOT to prevent individuals losing money.
So for anyone to quote FSA approval as a means of vetting investments is : wrong.
I recently had an opportunity to put a pile of spare cash in a Far Eastern bank which was offering 18% interest rates. I wouldnt normally touch it but I knew a lot of people who had money with these people and for many years - It all sounded too good to be true. I put in 5k for 1 year - so good so far, then my wife persuaded me to increase it to 10k - she actually wanted to put in 20k but I didnt like the sound of it. Sure enough 6 months later the scheme has gone bust and we are fighting to get our cash back - we will probably get most of our original capital back but have lost opportunities to gain more modest returns elsewhere.
There are three morals here for any investor/gambler (same thing)
1. If it looks to good to be true it probably is.
2. Dont invest money you cant afford to lose
3. Dont put all of your eggs in one basket
45. Change the record. You can’t blame everything on Thatcher. If Michael Foot had got in we wouldn’t be here now.
54 - To be fair, if FSA approval doesn’t mean anything then they shouldn’t be offering it. Most ordinary people looking to put their money somewhere really can’t be expected to appreciate the nuances of who is to be trusted and who isn’t.
55 - I’m really not sure you can compare a 7% rate to an 18% one!
Despite GBs posturing that the world should follow his lead - where to? £ is tanking FTSe is tanking and he is squealing about Iceland!!
McBean is only interested in how secure he is as leader of the Zanus. He’s had a great boost on that score in the last week or so. That’s why he’s grinning like a mong.
50. I should say, that figure was from a verbal report on Sky. It seems that not all the stocks are open for trading yet, so it might not be wholly accurate.
IG Index’s front page shows it down 400 or so - still around 100 points above 3817.9, a closing value below which would mean the index had had its worst five-day fall in percentage terms ever.
FTSE down 10%.
49. David. The public see what’s happening as a chronic lack of regulation by the authorities (see Mirtios’s uncharacteristically excellent post at 28). An international crisis but not one we didn’t have a hand in.
Unfortunately for the Tories-in particular Osborne and Cameron-there is abundant footage of bankers institutes and party conferences where these two implore the Chancellor (Brown) to free business of the shackles of red-tape.
Quite right Roger. Thatcher saved the UK economy and McIdiot has destroyed it. Vote Labour!
ftse below 4000, this is huge!
Hmmm,its that weasel word “guaranteed”. I have always adopted the maxim in private life of avoiding financial products where the returns are “guaranteed”.
With a day to reflect, the present fiduciary rules for public authorities were designed to avoid another BCCI. And they have done that by dividing risk. If they were not in place there would be just about the same amount of public revenue at risk but it would be concentrated in perhaps half a dozen councils, some of whom would be up sh** creek with no-one but the Treasury and the Daily Mail there saying, “I told you so”. Well, actually they didn’t, either of them.
Infinitely more seriously, with a couple of days to reflect, I am becoming increasingly concerned that many of the clunking fist measures put in place on Monday can only be futile attempts to pi** in the wind. I am concerned that they add to our national debt and will make it more difficult to crawl out of the debris when the hurricane has passed in perhaps six months.
If we had massive gold stocks then a proportion could have been sold on Monday to increase liquidity. Oh, shome mishtake surely …
How do you avoid the perils of boom-and-bust, maintain an average growth rate of 8% p.a. over 55 years, and avoid the disaster of the current financial crisis? By planning your country’s economy and building infrastructure, instead of gambling with trillions of dollars of non-existent money.
http://www.youtube.com/watch?v=PqUNd82pYCI
65. Someone asked (on Monday?) if the FTSe would hit below 4000 by Christmas - I thought it would happen by the end of the week but considered it too pessimistic to say so. It’s outrageous!
17 No, Mike has got this one right. The evidence was out there that the Icelandic investments carried a surprisingly high risk from the time they became available in this country.
What is very disturbing about this situation is that financial ‘experts’ were giving these investments high ratings until very recently. I’m sure it would be incorrect to say that these folk are corrupt, but they were either insufficiently skilled or seduced by the hype from such banks. Just shows how deep-seated the problems of the credit crunch are.
66, hey did you forget what the Supreme Leader said when asked by Boulton about this?
Under the Evil Tories we had too much gold, and needed to diversify so we had some assets that were worth less money. It’s obvious really.
I hesitate to ask…. but what’s the current level of the FTSE?
Where are Barclays shares Roger? Any other good tips……
68 - One wonders what more the authorities can do to stabilise the market.
70. I hesitate to ask…. but what’s the current level of the FTSE?
About 3970.
66 - The critical thing to look at is what is guaranteed.
About 40 years ago, a family friend who owns a shop, and who is notoriously careful with his money, saw an advert in a magazine which ran as follows: “Fly killer: 100% guaranteed effectiveness or your money back, £5″ (older PB contributors can reminisce at this point about the time when £5 was really worth something). So he sent off his money.
A couple of weeks later, he got a big parcel in the post. He opened it up to find two bricks, one with a painted A and one with a painted B, and a set of instructions, which ran as follows:
“Place brick A on the ground. Place fly on top of brick A. Bring brick B down on brick A. Your fly is now 100% guaranteed to be dead.”
70 - Last I saw it was 3986.65….
One thing that nobody seems to be saying about the Icelandic saving bank situation is that those who invested with the banks were either stupid or greedy or both.
Or they were trying to spread out their investments among lots of different bank accounts - on the advice of the… er… government, and er… (continued on page 94)
Madasafish - “we’re all Doooooomed” - is the new Ave It!
Top tipster….sadly.
Extraordinary stuff on the stock market. The whizz kids who have been running away with themselves with fancy investment vehicles are now strangling themselves with the same vehicles like credit default contracts which have become so ubiquitious its like some old geezer going into a bookies and backing nags all day because he just likes their names.
The problem is that they will take the economy much further down with them. Forget the fears of recession talk, this just doesnt account for such massive falls. What does contribute just as much is that theres an awful lot of people who deal in computer money who have now realised that its real and are in trouble.
Time to take the markets, suspend trading and tell a slice of the financial ibstitutions that from here on there is nothong new being added beyond measures in place. Any other solutions required is up to them.
73, bugger.
Brown will strain his face his grin will be so wide.
Right, well I’m going to bed.
Try not to let the world end whilst I’m sleeping
72 Stabilise markets? Could follow Russia’s example - and close them….. Get them to put a brown papepr bag on their head and get their breathing under control.
When markets fall 10% financial journalists are allowed by their employers to use the word “crash”
Sorry Mike disagree with your article. For a start its not a direct analogy with betting at all. This was a well recognised regulated bank incorporated in the UK. Of course there is a level of risk in choosing an account but very few people in the UK would see their relationship with their banks as akin to a day at the races.
71. Yes Kas. Keep buying Barclays. They’ll come good. You might have to show uncharacteristic patience though for a Thatcher disciple where ‘get rich quick’ is all that matters.
69 - who was the evidence available to, and was it widely published? Remember that the average punter is not an economist, or a financial whizz - they just look at the best buy tables and follow their nose (and in any case Icesave and others were not always top of these tables). Average Punter didn’t expect that just around the corner was a cataclysmic chain reaction set off by the failing of a significant number of banks.
Average Punter had a lot of trust that banking really was safe as houses. But then it turned out that houses weren’t safe, and so neither were banks. They were wrong in the end, but it was an error in good faith. Of course there are no risk-free investments, but, let’s face it, savings bonds and deposit accounts are widely thought of as the closest we can get to it.
Now that confidence has been shaken. It will take a very long time for banking to be seen as trustworthy again.
IMF: global situation “dangerous”.
Cheers, guys….
84. hahaha
As Camilla Cavendish points out in the Times , the “Financial Services Compensation Scheme which, until last week, stated prominently on its website that Icelandic banks were regulated by the Financial Services Authority (FSA) and that all British money in Iceland was “protected”.
That applies to private investors rather than corporate/local authorities but this is a wider failure than just the investor, the FSA failed again to properly regulate, the credit rating agencies to highlight risk and the British and Icelandic Governments to have proper regulation. The were plenty of signs but even after Northern Rock failed what did the FSA do as regards Icelandic Bank operations in the UK?
63 Roger. Do you really not know the difference between proper regulation and red tape? Is it possible for anybody(even a moron) to be that stupid?
81 - The LIBOR is still spiking no-one is lending anything to anyone. The international authorities need to stem the bleeding somehow.
There are no gainers on the FTSE 100 or FTSE250… eep
88. Nothing, of course. Brown’s FSA is probably the most useless organisation ever created in the financial world.
90 So you’re telling me we just invested £500 billion - and the patient got worse?
79 - I’m not so sure. If this financial crisis, as looks very possible, gets still more protracted, then any ‘bounce’ from Wednesday’s package could turn sour quickly. I’m not predicting that: I haven’t a clue what the immediate political consequences will be - the next few polls will make fascinating reading.
Iagree with Roger for once. I have consistently been astonished that Labourites are spinning this crisis as being a boost for Brown.
Yes he has solidified his position with Labour (which DC will be delighted about) and energised the core but he is still a landslide behind Cameron and it is all downhill for him from here as the recession bites in the “real” world.
Roger - So when should I stop buying? 1.00?
92 FSA = f**king say anything…..(as it was affectionately known in the City)
93 - Pretty much.
63. Not all red tape is the same, and while some areas have been underregulated (those which the government / authorities didn’t really understand?), others have been subject to an excess of paperwork and rules. The distinction is particularly acute between small businesses and large city institutions.
Even so, I take your point that it won’t be difficult for the Labour Party to find some choice quotes that could be taken out of their full context and which Cameron and Osborne could find difficult to explain away. That’s if anyone is prepared to listen to what Labour has to say, and indeed, if it has any money with which to say it.
Morning all
Should be an interesting day once again. I imagine we will mark time until Wall Street opens and let’s see how the session runs from there. The pundits are still frantically saying what a good time it is to buy but no one seems to be listening….
The ideological struggle on the Right goes on as well. On Fox News last night, I watched some GOP congressman in Florida claiming America was now a socialist state and the general tone was that the Government interventions had only made things worse.
You can see the pragmatists lining up against the fundamentalists on the economic right on this one. It’s much less vocal on here but there is an undercurrent that the Government intervention here is somehow “wrong” and that the markets should have been allowed to sort this out via their own more Darwinian mechanisms.
As for the Councils and the Icelandic banks, I commend Kent County Council’s Budget Book to you - Kent spends approximately £2 BILLION per year so £ 50 million isn’t as bad as that. The level of County Council spend is quite diverse - Surrey is around £1 billion while Cornwall is about £350 million. A lot depends on whether larger towns and cities are unitary authorities or not.
Counties like Kent and Surrey have very large education and social service portfolios which bump up the spend. It’s also instructive to see just how little some of these southern shire counties get from the Government nowadays.
It may well be the smaller district councils who will be worst affected.
It’s a sad world when so many people know what “unwinding credit default swaps” means.
The banks and other institutions are not playing their part here. The short term loans are simply being used to circulate money back and forth, not around the system.
“Gordon: not Flash. Just Crash.”
Coming to a poster site near you.
Interesting that even the pink and fluffy creatures of BBC Breakfast were playing the huge losses story together with the clip of Brown’s failing bank “quip”. Utterly toxic…
Total panic, chaos and capitulation today. Lehman’s debt insurance falls due ($450bn) — will anyone have the cash to pay?http://www.ft.com/cms/s/0/fb0866d2-9693-11dd-94fa-000077b07658.html
Capitalists have become capitulists! Perhaps full nationalisation of most banks will be the only way to get money moving in the real economy again. Is this why Gordon is smiling so much?
Look at the end, John Cleese is standing in front of the Kaupthing logo.
Wanna know why? John Cleese did their adverts!
http://uk.youtube.com/watch?v=RKOnYjwNUKg
http://uk.youtube.com/watch?v=sCvIsZ6fHaY
http://uk.youtube.com/watch?v=nc1eRmk7ijc
10% fall in a day is considered a crash, is that right?
I take it that’s only monitored at the close of play?
Unless the US has large falls on opening, I think the FTSE will end up somewhere between 5% & 7% down today.
As might have been expected, the FYSE has bounced back from the opening lows. I may be way off but I seem to remember the FTSE at or around 3500 in the days after Sept 11th 2001 but apart from that I can’t remember it being below 4000 until this morning.
Currently just back over 4000…
At 92, Runnymede said “Brown’s FSA is probably the most useless organisation ever created in the financial world.”
He was wrong to use the word “financial” in that sentence.
95. JH - “I have consistently been astonished that Labourites are spinning this crisis as being a boost for Brown.
Yes he has solidified his position with Labour (which DC will be delighted about) and energised the core but he is still a landslide behind Cameron and it is all downhill for him from here… “
Agreed. This is the beginning of the end of the Brown Tragedy.
109. Yes - I flattered them, I fear.
105 - I doubt it, I think what is needed is co-ordinated efforts from the G7. It may even need another co-ordinated interest rate cut.
105 You are onto something for a title there: “The Unstoppable Rise of Capitualism”
Deep rumbling belly-laughs heard emanating from Highgate Cemetery…
99. David - “That’s if anyone is prepared to listen to what Labour has to say, and indeed, if it has any money with which to say it.”
Nail. Hit. Head.
112. ZIRP all round, please. My bets are on…
Armed Forces details have been lost on a disk… Good grief!
83. Oh I see… is that why I had to have the analogy explained twice?
Brown’s bail out has failed.
I’m still up. How many of you lot are still up, and how many are already up? I’m going up (to bed). It is odd that “getting up” actually means coming down(stairs).
118, I don’t know, maybe it’s too soon to say. I hope so. The alternative is simply unspeakably awful.
not much room for rates to be cut further. its like pushing on a piece of string.
118 - No it hasn’t, but we need co-ordinated effort from everyone else. It is far too early for it to have fully worked.
alex @ 38 Betfair safer because punters post their cash up front?
That might depend on where Betfair deposits these stakes.
121 - UK rates are at 4.5% now so there is plenty of room. US rates are at 1.5% so still wiggle room. Other rates can fall.
119. I suppose it’s about as odd as the odds which say “X/Y” when they actually mean “Y/(X+Y)”.
but everyone’s economies are differently structured. cuts in one place aren’t suitable elsewhere. plus it smacks of panic.
126 - I agree in part but it is one of the few co-oridantable policy tools.
Meanwhile after a brief period of apparently trying to actually tackle the nation’s problems, Labour reverts to type by briefing against the Bank of England…
http://business.timesonline.co.uk/tol/business/economics/article4916708.ece
That’s the way to boost market confidence, eh? What a pathetic bunch of morons.
How long before the Life Insurers become insolvent? That was the worry a few years ago when the markets went sub 4000.
45. Roger - “I think this financial crisis will damage Brown and Labour.. even though the consensus is that he’s doing OK.”
For once I agree with Rogerdamus. I think Brown is getting a very short term boost from Der Kredit Gotterdamerung simply because he looks brooding and pensive and sticks his bottom lip out as if he’s working on a sum.
This affect will wear off. As the recession kicks in (and it’s gonna be a biggie), people will recall what a twat Gordon is, and as they stand in the monsoon of disaster they will remember how he promised an end to rain and drizzle.
Yes, Labour will have a minor poll-boost for a few months. But we are in a phoney war period, like October 1939. Hostilities have been declared, yet life goes on as normal.
But the bombers are on their way, and the incendiaries are being primed. By the depths of winter we will be in the Blitz. That’s when Labour will suffer: because, whatever they say, they ARE partly to blame for the fact that Britain is gonna suffer worse than most other countries.
During the Age of Irresponsibility, Gordon Brown was the Sun King.
101. Its like when every football fan became an expert on the metatarsal, following David Beckhams unfortunate accident.
I broadly agree with Mr Smithson with some reservations
My wife, hardly a finance guru, said to me yesterday something along the lines of “these Icelandic banks were alwyas top of the best rate sleague tables, clear as day there was something dodgy there”
If she can see it, then I would have thought professional advisers could have done as well.
A difficult one though, hard to just see everyone lose everything.
Maybe they could get back their capital with no interest, since it was really the interest which was the gamble, and the capital was reasonably assumed safe?
Off topic (slightly) Where are the tories? Why is Brown getting a free ride?
HEY TORIES - WHY IS YOUR LEADER NOT LAYING INTO BROWN? HE IS THE MAIN CAUSE OF THIS MESS IN THE UK!
The govt’s attempts to bail out the banking sector are doomed to fail, because the potential liabilities of the banks, because of their derivatives exposures, are astronomical.
Barclays’ derivatives liabilities alone are at least £29 trillion.
http://brontecapital.blogspot.com/2008/06/barclays-strange-stranger-and-truly.html
There are huge credit default swap hits coming through following the failure of Lehmans, the Icelandic banks, and others already.
There may be worse to come should the likes of (say) GM or Ford go down.
http://globaleconomicanalysis.blogspot.com/2008/10/you-cannot-patch-busted-dam-with-water.html
Taxpayers cannot be made to underwrite these derivatives: the derivatives’ owners must take the hit and fail. Liquidating the derivatives market must be a first step to stability.
132 - Timing. Not wise until the package was announced. But the gloves should now be off.
134, next PMQs will be very interesting. I hope Cameron hammers Brown.
130. SeanT - “But we are in a phoney war period, like October 1939… By the depths of winter we will be in the Blitz.”
So, the June 2009 Euro/council Elections are going to be Operation Overlord? Then the long march to Berlin begins…
45.”Though when the history of this greedy malaise comes to be written I’m pretty sure it’s roots will be traced to Thatcher and she’ll go down in history somewhere close to Chamberlain. Deservedly so in my opinion.”
Really Roger? She has been out or power for nearly 20 years, and Brown has now been running the economy from No11&No10 for longer than she was ever PM. As others have mentioned up thread, what about the FSA set up by one Gordon Brown, how much does it cost to run it and have we had value for money out of it?
Luckily, there are a few people on here who do remember what the country was like pre 79′. As I said on the previous thread, Labour don’t do government accountability after 1997.
59.”Despite GBs posturing that the world should follow his lead”
Someone linked to his article in the Times, and then I saw the front page, frigging unbelievable! No wait, bigging up his own myth has been Gordon’s modus operandi for years.
the fall in the value of sterling is beginning to manifest itself. we can sell “short” with impunity!
63.”Unfortunately for the Tories-in particular Osborne and Cameron-there is abundant footage of bankers institutes and party conferences where these two implore the Chancellor (Brown) to free business of the shackles of red-tape”
Roger, Roger, who took the job away from the BoE and gave it too the FSA? Reading Tom Bower’s book, I was fascinated by what when on behind the scenes between Gordon Brown and Eddie George back in 97′.
Branson on the telly last night arguing that the Government should guarantee all bank deposits. Leaks that Bush is thinking the same. Ireland has done it, Germany may have. What did our lot do. Spoke about raising the limit from £35k to £50k or even £100k some 12 months ago. BUT DID NOTHING until last week. That is part of the reason we are in a mess.
Err where are the Tories. The Tories best friends are bankers you must give them some time to come to terms with fact that their friends have caused this mess. That and they haven’t got aclue what to do.
The answer is forget about banks they are, or should be, only a lubricant for the economy. The real worry is jobs and businesses - we need to cut interest rates, cut taxes, start building council house now.
137
‘The Thatcher Revolution is now eating its own children’
How Gordon must be ruing not going ahead with Operation Sealion last autumn…thwarted by those plucky boys from the Eton Heir Force.
I actually see Gordon more as Dick Dastardly, forever thwarted in his schemes to get over the winning line. Darling is Muttley, thenot-quite-so loyal side-kick, forever muttering “rassen-frassen-sassen-markets”. Their oh-so-clever schemes invariably end up with Gordon wearing an anvil on his head.
140 - Agree but everyone knows that the guarantee would be torn up and extended in the event that it would kick in.
135.Good Morning. We can’t wait untill PMQ’s to arrive Cameron and Co., should be on every TV screen hammering this big puffed-up, grinning effigy of Brown. Now.
132. Because they - the Tories - are seen as the party of capitalism. So they are nervous of attacking what is seen as a failure of capitalism, as well as a failure of governance.
I agree though. In the end the opposition’s job is to oppose, and there is plenty to oppose. Labour have been in power eleven years, during which time they totally re-regulated the City, allowed in millions of migrants which overly boosted property prices, encouraged an obscene culture of corporate greed (Blair loved billionaires much more than Major or Thatcher), and generally let things rip.
The government is, therefore, partly to blame for our present cslamity. The Tories should be kicking them in the goolies. But for that to work they need a smart proletarian bruiser like David Davis to do the thumping. Not a posho trust-funder like Osborne: no matter how clever he is - angry words about bankers sound wrong in a public school accent.
Cameron should bring Davis back and make him Treasury shadow, or something - then set him on Brown and Darling. The chuckling PM is the Neville Chamberlain of this war. He is ripe for a caning.
keep thrashing around in the dirt………. leftie twat
O/T
“John McCain is the hands-down preference for president among chief corporate executives, according to a recent survey by Chief Executive magazine. Democratic hopeful Barack Obama fared miserably in the survey which showed a 4 to 1 preference for the Arizona senator.
In fact, 74 percent of the 751 CEOs surveyed believed Obama would be a disaster for the country.”
Sounds as if it is in the bag for Obama!
141, yawn. No banker ever given cash to Labour then?
Neither the Tories nor the Lib Dems presided over the weakening of the Bank of England’s regulatory role, the sale of gold at the bottom of the market (pre-announced to maximise losses) and ballooning public sector debt during a prolonged period of growth.
Anyone who thinks that the responsibility for this crisis is somehow going to be linked to the current Conservative leadership or any previous Conservative administration is clutching at some very big straws. If the government tried such a tactic it would look very foolish.
Agreed that the derivatives issue has the potential to wipe everyone out.
that was obviously aimed at coldstone. after 11 years of socialist govt we have a country that is broke, where society is crushed and where the poor are screwed. you must be so proud..
146
Hmmm a Libertarian calling for more regulations, well, well, well!
Now that oil has slumped from $147 to $80, I am awaiting the announcement, from the privitized (the Jewel in Mrs T’s crown) energy companies, that they will be immediately reducing all energy prices by 35%: can’t wait!
Footsy coming back a little, only down 5.96%. Yikes!!!! who would have thought we would saying this a couple of week’s ago.
It’s our Great Leaders idioting GRIN that finally did it.
143. Brilliant.
Austrian stockmarket suspended…
Gordon Galtieri sails his armada towards a small Atlantic Island trying to divert attention from his disasterous domestic policy.
Look over there - a country in slightly deeper sh*t than us ! Aren’t they naughty stealing hard working families and pensioners money - thats my job !
146. Good idea to promote Justine Greening to top spokesperson on the crises. Now there’s a bruiser!!
88.”As Camilla Cavendish points out in the Times , the “Financial Services Compensation Scheme which, until last week, stated prominently on its website that Icelandic banks were regulated by the Financial Services Authority (FSA) and that all British money in Iceland was “protected”.
That applies to private investors rather than corporate/local authorities but this is a wider failure than just the investor, the FSA failed again to properly regulate, the credit rating agencies to highlight risk and the British and Icelandic Governments to have proper regulation. The were plenty of signs but even after Northern Rock failed what did the FSA do as regards Icelandic Bank operations in the UK?”
I would like to know what actions the FSA took to tighten things up following Northern Rock.
146: makes sense. Ken Clarke was pretty good last night on QT as well.
Every time brown pathetically claims “this problem came from America” and words to that effect, and makes like we are wholly innocent victims who did nothing wrong, had no dodgy lending, no lax oversight, no debt bubble of our own making, no huge government overspending, I wonder again, where are the tories to nail this lie?
If they are not careful, people will start to believe Brown.
145. Where is Cameron in all this? Nowhere. We are now living in an utterly changed world where the old certainties count for nothing. GB seems to have grasped this with more alacrity than DC. The entire global financial system is collapsing so how exactly is DC going to ‘hammer’ GB at PMQ? What can he possibly say that will mean anything or even resonate? (Inb4 you’re a Draper-bot)
154.
4000 is the botttom. Buy now lads and lassies. Also, buy gold and silver, did I mention that?
I am executing some extremely large buy orders and hopefully the worst is over……………..until Monday
143.
I used to love Dastardly and Muttley.
158
She is an extremely able politician. I wouldnt be dissing her just yet….
151: Lehman CDS auction today. Could be seriously nasty.
152
Is that the ‘Socialism’ that Dave and his pals are so keen to adopt.
This government will be forever damned for not reversing the policies of the previous Conservative government.
The banks have already been Nationalised, (supported by Dave) energy next!
84
I agree I AM going to buy Barclays..
Either Monday or Tuesday.. at around 170p.
seanT @ 146. Boris was decrying banking regulations just a couple of weeks ago at the Conservative Party conference.
Surely Cameron’s best strategy is to keep shtum till we see where things land, and only then try to pin the blame on Brown.
Keep spinning for labour old chap……..nobody is listening.
Keep spinning for labour old chap……..nobody is listening.
Sorry folks but Osborne and Cameron look like bankers talk like bankers. They will have a hard job convincing the voters that they are not bankers who have happened to get into politics.
I would imagine that the trend in the Conservative vote share in the next opinion polls will resemble the FTSE!
How were last night’s by-elections - did the Tories win everything in sight?
Meanwhile Election USA
From Bloomberg
Obama 52% Victory Forecast by Yale Professor’s Economy Model
By Matthew Benjamin
Oct. 10 (Bloomberg) — With 25 days before Election Day, a forecasting model that has called the top vote-getter in the last three presidential races predicts a solid victory for Barack Obama.
The Democratic presidential candidate will get about 52 percent of the popular vote on Nov. 4, according to an economic model developed by Yale University Professor Ray Fair.
“The model has predicted all along that the Democrat will get the majority of the two-party vote, and it’s still saying that,” Fair, who has been forecasting a Democratic victory since November 2006, said in a telephone interview from New Haven, Connecticut.
Fair cautions, though, that his algorithm doesn’t measure the effects of race, age or foreign policy, all of which may play an outsize role this election, the first in which a black candidate is a major-party nominee. “All the political stuff isn’t accounted for,” said Fair.
The only economic data that Fair’s vote equation uses that are still unknown are third-quarter gross domestic product growth and inflation. Assuming a 0.2 percent decline in GDP this quarter, the median of a recent Bloomberg survey of 52 economists, and 3 percent inflation, the model forecasts Republican John McCain will receive 48 percent of the vote.
The margin of error of 2.5 percentage points means some probability remains that McCain will win. Fair said the chances that his model will incorrectly predict the election result are roughly 20 percent to 25 percent.
Madas afish - the whole of Barclays for £1.70?
I think Cameron should be holding some sort of daily conference to maintain a Conservative presence. It doesn’t matter if he has nothing to say, as long as he is being seen. For me, even as a Tory, this is awfully reminiscent of the floods when he vanished to Rwanda.
161, for racking up enromous public debt so the finances were messed up even before this? For changing the regulatory system to make it uniquely useless? For claiming we’d never see recession again? (Actually, that may be true, we could have a depression instead).
“these new times require new ideas. The old solutions of yesterday will not serve us well for the challenges of today and tomorrow.” - G. Brown, The Times 10 October 2008
174
Gordon is holding on my his fingertips, I dont think its a good idea just now to tread on them to make him fall down the well, however tempting it might be. There is plenty of time for reckoning before the GE.. (unless Gordo calls one in the next few weeks…)!!
154 I think the issue is that a lot of Lehman positions expire today and nobody really knows what effect that will have on counterparties. This is what has spooked the markets.
171
So after 11 years of this government, everything has fallen apart, and it is the tories who will suffer? If they do, they have only themselves to blame.
They need only tell the truth with conviction, and Labour will be exposed as culpable, since that is exactly what they are. But where are they??!
Brown has thrown moral hazard out of the window while he goes on an unprecedented and reckless spending spree which will debauch the currency and bankrupt the country. Many people were worried about a scorched earth policy during his last two years in power but this surpasses everyones worst fears.
John Lewis sales level with last year (-0.5%) and with 2006 also ie no growth over two years despite new stores. (over last 10 weeks +0.8%). Waitrose up 1.9% (+1.6% last 10 weeks).
Icelandic Banks
Further to my prior comments.. Todays DT has an artcile - which I cnanot access on line yet..
Moddy’s CUT ratings on all Icelandic banks in February
S&P downrated Glitnir to BBB+ in April and did not rate the rest.
Fitch cut ratings of Glitnir and Kaupthing in May.
On that basis ANY and I mean ANY financial adiviser or Finance Department that advised anyone to use those banks after May or to retain deposits in them is at the best guilty of gross negligence..
The article details LAs who stopped using Icelandic banks after warnings…
The front cover of The Economist says it all:
http://malcintheburgh.blogspot.com/2008/10/economist-says-what-were-all-thinking.html
Absolutely. We are well down the road to ruin.
SeanT is correct. The main thrust of Tory thought for two decades, so long it is locked in to the electorates psyche, is that the Tories are the Party of free eneterprise, and that the Government regulates too much. Now suddenly, free enterprise was not regulated enough
Cameron looked so false banging on about bonuses, it lacked credibility. Brown consequently nailed him.
It does not matter whether that perception is accurate or not - its there.
They are hunkering down wile the s**t hits the proverbial - the correct strategy for an Opposition. When the aftershocks come in terms of unemployment in particular, Cameron will pop his head above the parapet and smuggly say “I told you so”, even though he never did”.
Like others on here who think a little (so that excludes Runnymede, Weathercock and Kaz for starters) I reckon a brief benefit for Labour followed by deep pooh
175. That’s totally missing the point and engaging the debate on pre-crisis terms which are now utterly without meaning or heft. People are now getting very worried are not concerned about a sh!t slinging match about the 2005 public expenditure round. They are more interested in seeing a future direction out of this mess being articulated in a convincing way. GB obviously has the advantageous platform of incumbency to do this but Cameron is lost and is offering nothing in terms of alternate policy or a rational critique of the government’s current actions. If he can’t do either of those things then what is he for?
182. Very good - supports my comments from yesterday. If even the politicised, tortoise-like ratings agencies were concerned, there was obviously a problem.
It was indeed negligence/incompetence on the part of local authorities, although the FSA deserves another bucket of sh*t pouring over its unworthy head as well.
146. A perceptive post from seanT. About as rare as a Labour supporting poster on here.
174
It doesn’t matter if he has nothing to say, well nothing new there then!
Cameron and Osborne, have been exposed as a pair of, ‘Parade ground Soldiers’ Ok at polishing their buttons and shining their boots, but when the s**t hits the fan, they cower in the bottom of the trench.
I now see why Cameron is MP for Witney, he’s got more flannel than a factory full of blankets.
Meanwhile on ebay
http://tinyurl.com/4wmbbl
I suppose Gordon Brown is also personally responsible for the fact that the Nikkei fell 9.6% overnight as well…
O/T entirely, how do I place a bet on Hull City being relegated next season
BBC reporting that computer data records of half our armed forces have gone missing.
Is there anyone left whose data records haven’t been lost?
Roger 188 - we may not be posting, but have you noticed the change in the tenor of the Tory posters.
Yes, still mindlessly slagging people off, but rather quiet about their own side.
147.
“keep thrashing around in the dirt………. leftie twat”
That must have stretched you kas!
PS. Who was it addressed to?
171. Who the cares what the Cameron and Osborne look and sound like. They have had zero influence on anything in the past 11 years. Labour have had majorities of 180, 179 and 66. They have totally, completetly and utterly dominated the political and economic landscape for over a decade, which means the buck for this disaster will inevitably stop with them!
Cameron and Osbornes time to be accountable will come AFTER the election when they are actually taking decisions that effect peoples lives. In the meantime Brown has been running the economy for a decade and if its gone down the pan on his watch then thats Labours problem to deal with, not Cameron and Osbornes.
196
twas me, I wear it as a badge of honour!!
195
It is entirely sensible for the Oppostion to be quiet for a few days.
186. [sigh] one does one’s best to spread a little financial info on here from day to day only to receive childish sideswipes from Labour spinners…must be doing something right then.
146 Cameron simply can’t move Osbourne. Do you really think Osbourne will take kindly to being put on the subs bench? He’s the brains of the outfit, but not without an ego. If there is a change Clarke’s your man, but I doubt it will happen.
Anyway, you’re probably overreacting, we haven’t seen a poll yet.
190 Coldstone - sadly Early’s balnket factory in Witney closed some time ago,it is now an estate for the aspirational executive class. So no blankets made here in Witney. Last time I heard several of the workers now work for a business that makes personalised dog carriers for cars
Plus ca Change
187. Not exactly. Somebody still needs to articulate Brown’s role in creating this problem. If he is responsible then he cannot be trusted to clean the mess up. That shouldn’t be too hard to convey once the gloves come off.
no repeat of mistakes?
an end to boom and bust?
won’t let house prices threaten stability?
answer these charges Mr Brown.
192 Brown is largely responsible for the dire situation here in the UK which, as one of the most indebted countries in the industrialised world, will suffer far more than almost any other when the financial crisis now ensuing hits the real economy in the months and years ahead. His current behaviour in chucking borrowed money at everything that moves will make things considerably worse for all of us in the medium to long term, as if it wasn’t going to be bad enough already.
As for the Tories, it’s time for the phoney peace to end. Cameron and Osborne must start speaking out against this grinning madman who is determined to take us all down with him.
Mike is right, it is the issue of moral hazard. If local authorities were guided by Govt advice or Govt instruction to risk the Iceland banks then they have a claim, otherwise they do not.
What worries me more is what Lord (David) James said on this morning’s R4 Today programme. He said that providing the banks with cash is only a solution if the banks actually lend it, rather than sit on it.
How do Brown/Darling propose to ensure that happens? Duh.
201- Was that in today’s script from Dolly?
http://www.rgemonitor.com/roubini-monitor/253973/the_world_is_at_severe_risk_of_a_global_systemic_financial_meltdown_and_a_severe_global_depression
The world is at severe risk of a global systemic financial meltdown and a severe global depression
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Delicious Digg Facebook reddit Technorati Nouriel Roubini | Oct 9, 2008
The US and advanced economies’ financial system is now headed towards a near-term systemic financial meltdown as day after day stock markets are in free fall, money markets have shut down while their spreads are skyrocketing, and credit spreads are surging through the roof. There is now the beginning of a generalized run on the banking system of these economies; a collapse of the shadow banking system, i.e. those non-banks (broker dealers, non-bank mortgage lenders, SIV and conduits, hedge funds, money market funds, private equity firms) that, like banks, borrow short and liquid, are highly leveraged and lend and invest long and illiquid and are thus at risk of a run on their short-term liabilities; and now a roll-off of the short term liabilities of the corporate sectors that may lead to widespread bankruptcies of solvent but illiquid financial and non-financial firms.
On the real economic side all the advanced economies representing 55% of global GDP (US, Eurozone, UK, other smaller European countries, Canada, Japan, Australia, New Zealand, Japan) entered a recession even before the massive financial shocks that started in the late summer made the liquidity and credit crunch even more virulent and will thus cause an even more severe recession than the one that started in the spring. So we have a severe recession, a severe financial crisis and a severe banking crisis in advanced economies.
There was no decoupling among advanced economies and there is no decoupling but rather recoupling of the emerging market economies with the severe crisis of the advanced economies. By the third quarter of this year global economic growth will be in negative territory signaling a global recession. The recoupling of emerging markets was initially limited to stock markets that fell even more than those of advanced economies as foreign investors pulled out of these markets; but then it spread to credit markets and money markets and currency markets bringing to the surface the vulnerabilities of many financial systems and corporate sectors that had experienced credit booms and that had borrowed short and in foreign currencies. Countries with large current account deficit and/or large fiscal deficits and with large short term foreign currency liabilities and borrowings have been the most fragile. But even the better performing ones – like the BRICs club of Brazil, Russia, India and China – are now at risk of a hard landing. Trade and financial and currency and confidence channels are now leading to a massive slowdown of growth in emerging markets with many of them now at risk not only of a recession but also of a severe financial crisis.
The crisis was caused by the largest leveraged asset bubble and credit bubble in the history of humanity were excessive leveraging and bubbles were not limited to housing in the US but also to housing in many other countries and excessive borrowing by financial institutions and some segments of the corporate sector and of the public sector in many and different economies: an housing bubble, a mortgage bubble, an equity bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble, a hedge funds bubble are all now bursting at once in the biggest real sector and financial sector deleveraging since the Great Depression.
At this point the recession train has left the station; the financial and banking crisis train has left the station. The delusion that the US and advanced economies contraction would be short and shallow – a V-shaped six month recession – has been replaced by the certainty that this will be a long and protracted U-shaped recession that may last at least two years in the US and close to two years in most of the rest of the world. And given the rising risk of a global systemic financial meltdown the probability that the outcome could become a decade long L-shaped recession – like the one experienced by Japan after the bursting of its real estate and equity bubble – cannot be ruled out.
And in a world where there is a glut and excess capacity of goods while aggregate demand is falling soon enough we will start to worry about deflation, debt deflation, liquidity traps and what monetary policy makers should do to fight deflation when policy rates get dangerously close to zero.
At this point the risk of an imminent stock market crash – like the one-day collapse of 20% plus in US stock prices in 1987 – cannot be ruled out as the financial system is breaking down, panic and lack of confidence in any counterparty is sharply rising and the investors have totally lost faith in the ability of policy authorities to control this meltdown.
This disconnect between more and more aggressive policy actions and easings and greater and greater strains in financial market is scary. When Bear Stearns’ creditors were bailed out to the tune of $30 bn in March the rally in equity, money and credit markets lasted eight weeks; when in July the US Treasury announced legislation to bail out the mortgage giants Fannie and Freddie the rally lasted four weeks; when the actual $200 billion rescue of these firms was undertaken and their $6 trillion liabilities taken over by the US government the rally lasted one day and by the next day the panic has moved to Lehman’s collapse; when AIG was bailed out to the tune of $85 billion the market did not even rally for a day and instead fell 5%. Next when the $700 billion US rescue package was passed by the US Senate and House markets fell another 7% in two days as there was no confidence in this flawed plan and the authorities. Next as authorities in the US and abroad took even more radical policy actions between October 6th and October 9th (payment of interest on reserves, doubling of the liquidity support of banks, extension of credit to the seized corporate sector, guarantees of bank deposits, plans to recapitalize banks, coordinated monetary policy easing, etc.) the stock markets and the credit markets and the money markets fell further and further and at an accelerated rates day after day all week including another 7% fall in U.S. equities today.
When in markets that are clearly way oversold even the most radical policy actions don’t provide rallies or relief to market participants you know that you are one step away from a market crack and a systemic financial sector and corporate sector collapse. A vicious circle of deleveraging, asset collapses, margin calls, cascading falls in asset prices well below falling fundamentals and panic is now underway.
At this point severe damage is done and one cannot rule out a systemic collapse and a global depression. It will take a significant change in leadership of economic policy and very radical, coordinated policy actions among all advanced and emerging market economies to avoid this economic and financial disaster. Urgent and immediate necessary actions that need to be done globally (with some variants across countries depending on the severity of the problem and the overall resources available to the sovereigns) include…
continued in link above..
Runnymede language @ 200. I refer you to Blackadder 4 and General Melchetts comments about spies
Ours = heroes, Germans = swines
So
A Tory comments but a Labour supporter spins
Get some new cliches please
Yay! Another pig ignorant rant from Coldstone about the energy industry! One big difference between banking and energy: the banking industry has clearly failed while the energy industry is succeeding. The lights are still on. There is still petrol in the forecourts, noticeably cheaper than at the peak as well. Wholesale energy prices will come down if the oil remains at this level for long enough ($80/bbl is still historically very high). Will tax on energy do the same I wonder?
Nationalisation of a successful sector is a guaranteed way to destroy the economy and to put an end to reliable energy supplies. The government is loaded up with debt and obligations. Where is it going to get the money to build new nuclear power stations or develop new marginal fields?
205 “Brown is largely responsible for the dire situation here in the UK”
You may think that, but I am not sure many people agree with you. At the moment the crisis is demonstrably and obviously global, with clear origins in the US. As a result, the current focus on Brown is not blame, but looking for answers to get us out of this mess.
This may change, but for now it is the banks that are getting the blame.
Ted’s Simple Theory of Everything - this recession has its roots in the collapse of a Property Bubble and a spike in commodity prices. Property Bubble was result of an era of cheap credit which enabled Banks to to take greater risks in lending. Cheap credit in US was result of the low rates brought in to recover from dotcom bust being kept low too long as cheap Chinese imports kept CPI inflation low, in the UK because the adoption of CPI as inflation target meant BoE committee wasn’t concerned with house price inflation (BoE itself was) and again cheap imports.
Property Bubbles burst but Governments and Regulators didn’t seem to take the likely risk into account - warnings that prices were unsustainable and multiples of income too high ignored “as low interest rates mean they can be afforded”, talk of a soft landing but no-one planned for a hard one. Commodity price spike drives up inflation, interest rates increase.
Pop!
Then we find that the risks have been bundled and sold across the globe in financial products and instruments so opaque that no-one knows who is going to be hit. Regulators and Governments are shown to be completely at sea as regards understanding what makes finance markets tick and slow to respond. Panic. Too little, too late.
In US Paulson decides to let Lehman Bros fail rather than arrange a rescue. More panic. Paulson apparently unaware that up to $400bn of Lehmans debts are insured through various ways on other banks, insurance companies. Mass Panic.
Fall in property prices creates a huge hole on one side of the global balance sheet, assets have gone, disappeared. Probably trillions of dollars gone, getting the balance back will mean some turbulence, governments taking on huge debts, years of subdued growth.
197. I would imaging that the millions of people who may vote for DC and GO may care what they look and sound like. If the Conservative party are working on the assumption that Labour will be automatically punished at the ballot box for the unfolding economic apocalypse then they are sleepwalking into a 4th Labour term. Which is unfortunate because a 4th incarnation of the New Labour project in such an adverse economic climate will probably resemble “V for Vendetta”.
John Major didn’t lose the election directly after the early 90s recession nor did Thatch after the early ’80s. Why will Gordenron be punished for this one?
209, As in Yes Minister: “I give confidential briefings, you leak,
he is being prosecuted under Section 2(a) of the Official Secrets Act”.
209. If you spin lines, you’re a spinner. Pretty straightforward in my book, obviously not so in yours.
211. The media narrative is switching away from banking now towards the ‘real economy’. That spells trouble for Brown.
201 Lol Osborne “the brains of the outfit”. Didn’t someone once say something similar about Tony and Gordon.
Good to see Chris Huhne holding his own on Q/T last night. Now there’s a combative politician. The Tories are losing this by default.
When will people realise that banks provide a service and just like any other service provider, they can get things wrong and waste / lose your money? I cannot believe the ignorance and expectations of salvation that are flowing around the government and indeed many voters at the moment. You don’t have to put money in banks, there is no legal requirement to use a bank, you do it because they offer a service that you like i.e. looking after your money.
http://lettersfromatory.wordpress.com
217 Don’t underestimate George Osborne.
203 But it is not credible for Brown to be held personally responsible for this worldwide crisis. Of course he cannot entirely escape blame, but one of the ironies of his position is that the bigger and more global the crisis gets the more likely Brown and Labour are to escape blame.
Re: 197 - Unfortunately, it’s not as simple as that. Voters have a right to ask what a Conservative Government would do or will do to improve the economy. Of course, Labour has been in power since 1997 and much of what has gone wrong is down to them.
This may be more fundamental than that, however. IF we are looking at a serious upheaval of the global financial system then the model of capitalism on which we have lived (arguably) since 1981 and has been widely preached on the right since the mid-70s may also no longer be valid.
This is the point about the ideological struggle on the Right. The pragmatists who recognise the necessity of Government intervention are squaring off the fundamentalists who argue against any Government intervention and say the markets should be left to resolve things. When a GOP congressman throws the word “socialist” around against his fellow GOP respresentatives and the Bush Administration, you know there is a schism out there.
I suspect Cameron and Osborne, as free marketeers, privately detest the whole concept of Government intervention and State bailing-out of banks but they cannot offer a practical and viable alternative as the wholesale collapse of parts of the banking system would be socially and politically unsupportable. The guaranteeing of deposits up to £35k or £50k has prevented what I think would have been wholesale panic but that is interventionist as well.
When Oppositions go quiet it usually means that they have no practical alternative solution to offer so we are all stuck with the Brown/Darling bailout and further interest rate cuts.
The worry now must be if we can do anything now to avoid a long and damaging deflationary recession which won’t just blight the dying days of Brown/Darling but will severely hinder and restrict the freedom of action for Cameron/Osborne.
221. Never build stategies on ironies.
221. Never build strategies on ironies.
202
Still not a bad line to use! Sorry about the blankets, they were a mark of quality, the Duvet did for ‘em I suppose.
220. there has obviously been a delay in issuing the latest “lines to take” document to all of the blue harpies, so we are stuck with repeating cliches from months ago.
218 That’s a little unrealistic. Very hard to get paid without a bank account. A bank account is more or less de facto obligatory in the C21.
Nobel Peace Price, Martti Ahtisaari!
222 So Cameron or Osborne jumping up and down with a new theory on how to proceed would help how, exactly? The last thing most voters want to hear at the moment would be competing idealogical discourses on the future of captialism!
211. Bullsh1t.
Brown said “we are better placed to weather the financial storm than other advanced countries”.
This is just a complete fiction, and Brown must surely know it. According to the IMF - just yesterday - the UK is likely to experience a MORE severe recession than ANY OTHER large industrialised country.
Whose fault is that? Should we blame Dubya? Iceland? Chuckling TV chef Ainsley Harriot?
Or Gordon Brown, who has been chancellor or prime minister for the last eleven years?
Brown is just a liar. Whether he is a delusional liar or a deliberate liar, or (as I suspect) a bit of both, is neither here nor there. He is not competent to run the country; he is culpable in the severity of the downturn we are about to experience.
He didn’t just fail to fix the roof when the sun was shining, he nicked the remaining roofslates, and used them to make a nice fireplace to impress his friends.
And now it’s raining.
227 Damn, another year passes without recognition. You’ll get there one day James.
229 No-one listening to this stuff right now Seant. Get a new record.
230 - Meh, who says I’m interested in Peace?
What we should do right now, is restore short selling as recommended, by the Right-Wing Libertarians, look what a success its been in the US!
229
When in doubt, blame the Yanks it never fails, and this time there’s lots of truth in it.
213. Both examples you cite are not relevent here.
1. In the early 80’s the the countries economy had been in a mess for well over a decade. People knew Thatchers reforms were not going to be painless but stuck with it, and in any case by 1983 the economic reforms were working and the economy was beginning to turn around.
2. The 92 example is unique because Labour had a leader that was virtually unelectable while the Tories managed to find a leader that was actually well liked and at least in 1992 a relatively fresh face. If anything the situation is the total reverse of 92, with the government having the leader that unelectable and the opposition having the fresh faced, well liked leader.
The situation now is that we have someone in office thats been at the heart of every single economic and political decision taken since 1997. I feel like I’m living in some weird paralel universe where somehow we’ve scrubbed the decade that Brown has quite happily been sitting back and allowing a huge boom to develop, whilst promising an end to boom and bust!
I’m not, BTW, suggesting Cameron sits back and waits for the election to fall in his lap. At some point he’s got to set put an alternative agenda, but this idea that somehow the Tories are going to come out of this crisis in a worse position than Labour, even though Labour have been in power for 11 years, is to my mind completely ludicrous! If this was a first term Labour government, and the Tories had had a hand in the debt fueled boom thats gone on, then maybe the Tories would have some responsbility, but as it happens the Tories haven’t had a sniff of power since 1997. Hard luck Labour.
Sterling is also tanking this morning.
Every time it drops by a cent I make about $1000. Likewise the euro. But it also means my charity youth work in Bangkok - i.e. my work with http://www.save-the-really-hot-ones.com - becomes 2% more expensive, per “outreach”.
Swings and roundabouts, swings and roundabouts.
231. Didn’t realise you decided that kind of thing Jonathan.
221. As Jeffrey Sachs noted yesterday, this isn’t about ideology, it’s about practicality. Major public sector interventions are necessary to preserve the integrity of the financial system and prevent a massive recession. Everyone but a few loons agrees on that.
This isn’t good news for Labour. On the practical front, they have already shown themselves to be weak, having responded slowly and chaotically to the unfolding crisis while retaining a damaging obsession with spin. And as you rightly note, the pain for the real economy is only just beginning and will hit Labour hard.
Your final point is right, too - even in 2010 things are going to be tough for the Tories. But that was true in 1979 as well - I suspect they will need a similar period in office to that which began then to finish the job.
Labour was asleep at the wheel for 10 years. We’re now seeing the consequences. The City of London has a special place in the financial system and it hasnt been watched over carefully at all. We are now watching a disaster of historic proportions. Even worse than the death of Princess Diana!
99.”63. Not all red tape is the same, and while some areas have been underregulated (those which the government / authorities didn’t really understand?), others have been subject to an excess of paperwork and rules. The distinction is particularly acute between small businesses and large city institutions.”
All too often Brown hammered ordinary taxpayers with stealth taxes, he moved the goal posts for small investors in company share schemes by reducing the amount they could invest while at the same time increasing period they had to keep the money tied up to enjoy any tax free benefits.
At the same time, he did the opposite for the big players in the Financial sector, the ordinary voters are not stupid, and they can see the glaring discrepancy between Browns words and his deeds.
I said yesterday that Brown’s intention of leaving local authorities among others to whistle for their lost money not 24 hours after trying to sell a mouth watering rescue package using tax payers money, was, and will prove to be a political blunder in the longer term. Hope that the government did not have an eye on this current situation improving their showing at next years local elections. That kind of cynical short term tactics for political gain would be abhorrent.
And these local authorities work for the taxpayer, that same taxpayer who is expected to bail out the big banks this week…
100.Stodge, thanks for the figures on Kent council, it puts it into perspective.
143.MM, that was brilliant and made me LOL.
219.”217 Don’t underestimate George Osborne.”
You know that the old team are back and working hard, the smearing and briefing against Osborne has intensified this week.
134. TPS. Derivatives. Yes, Barclays has £29 billion RBS something bigger. But the problem is that they can’t just close out their positions. Thanks to BIS II and VaR modelling, the banks bought derivatives to “hedge” their positions. Their total risk shouldnt be anything like as much as £29 billion, because everything is meant to cancel out.
Why isnt it working? Because Lehman, WaMu and lots of failed hedge funds sold some of the derivatives or were the target of the derivatives. Now everyone is worried that a bank exposed to the Lehman failure will fail and pass on the loss to someone else. Pass the parcel, no one knows where it will stop.
You cant just sell this stuff, you need to unwind it carefully. Buffett called them financial WMDs.
Overall the panic is overdone. The actual direct losses from the US are on the order of US$1.5 trillion. The global system can absorb these losses. But at the moment everyone is paralysed by fear that they will be overly exposed to the guy who is holding the parcel when the music stops. Ergo no interbank even with the guarantees.
211, 229 The line taken by the Daily Mail - at the moment - is that the bankers have more to answer for the Brown. And they are right to take this line - it chimes in with the vox pops that, so far, are all we have to go on as “measures” of public opinion.
Although Brown (along with the entire political/media establishment) was dazzled by the city when he was chancellor his political background and personal style, along with Labour’s socialist roots, will make it easier for him to distance himself from them than Blair (let alone the Toreis) could do.
234. Now you’re getting it. This is a total reboot of the political environment and we’re now at year zero. Nothing that happened before 1st October 2008 will have the slightest impact on the outcome of the next General Election. GB gets this, DC doesn’t.
231. But he is right, colourful hyperbole aside.
231. lol. Whether you like it or not, Brown is a liar - or an idiot. He claimed we were “best placed” to weather the downturn, turns out we’re probably worst placed.
How can that be?! Anything to do with….. Gordon Brown, d’ya think? Who has been RUNNING THE ECONOMY FOR ELEVEN YEARS???
Nobody could possibly underestimate George Osborne, Jonathan.
[120] - There was an article I read once that suggested moving your bedrooms to the ground floor, and living room/kitchen to the upper floor. The argument being that the upper part of a house was likely to get more light during the day, being less obscured by trees and other houses, and so it made more sense to be in that part of the house during the day.
From this thread, it seems like Gordon Brown has it in the bag. Buy Labour!
235. me too - great isn’t it.
whatsmore, if the markets really do collapse, it will be hugely to the advantage of young guys with ability and earning potential, at the expense of baby boomers with BTL portfolios. a bit of redistribution, if you like.
i can’t say i’m too displeased.
The “bet” isn’t quite in the terms Mike states though. Icesave were offering 6.1% - so marginally better than other rates but not in the “too good to be true category”.
There website also stated “Under EU law compensation for any losses incurred due to the failure of a bank should generally be paid within three months - regardless of whether it is through a passport scheme or the UK Financial Services Compensation Scheme.”
The risk therefore seemed to me to be one against an effective default by the Icelandic government. Which seemed unlikely at the time!
242. And your evidence is…..?
ANyone who blames Brown for all our economic woes is not being merely partisan: they are so ridiculous that they ensure anything else sensible they may say is going to be lost..
I am sure when unemployment rises over 2.5 million next year Cameron and Osbourne are going to rightly share the blame .
After all they have stopped quoting what they would do. So Gordon can’t copy it.
So it IS all the Conservative’s fault.
Well I have my currrent account, mortgage and a chunk of savings with various BS because I wanted to play safe.
At the same time I think councils have been put in a difficult position. they have been given very strong guidance that they need to maximise the return on their funds and these Icelandic banks had good ratings.
242. Hyperbolic rubbish.
242 Good post. I suspect you’re right to an extent. But things like Iraq, ID cards, Climate Change, Crime etc etc will still motivate many to vote (or not)
Looks like the Tories are finished then. All this is our fault and thank God we have Gordon Brown the arsonist to put the fire out.
250. I offer no evidence, only opinion. And it’s worth exactly what you paid for it.
237. the worry is, if their response really was so slow and chaotic - howcome the official opposition were so much slower and more chaotic that their best suggestion has been to say “yeah, we agree with that and will support it”?!
253 Ironic statement of all time.
231 But they will be - Godon Brown is overselling himself today as the man to save the world. Its not a miracle cure that he’s provided but an expensive drug to treat the one of the complications, the disesae itself has still to run through its cycle. Hopefully, and it is a hope not a definite, the complication will be relieved and as result the illness less severe.
But the UK will suffer more than it should have because it isn’t just a US disease, its also a disease of the UK economy, high personal and public debt built up under lax fiscal and regulatory policy over the last decade, no longer supported by assets. Its infecting other countries badly who have had same loose policies but others are not badly hurt. Spain has survived a huge property crash but its banks seem relatively unaffected possibly because its regulator has harder rules on capitalisation. French banks don’t seem badly affected, Germany had a failure of one institution that was wholly dependent on wholesale markets but others seem to be coping.
256 - Thank you for your opinion. So its good to see the country is fully behind our blameless, Great Leader, and we shall now go from strength to strength.
260 Be fair he didn’t say that, he just said that things have changed. And surely he is right to an extent.
Even if the theory that politics has had a year zero moment is true and I doubt it, the next election will see a significant movement to kick the government. In most democracies when the economy tanks the government gets booted out, the only time I can identify in living memory when this didn’t hold was in the UK inn 1992 and that was because the opposition was implausible. The opposition won’t be implausible at the next election the likelihood has to be that the government will suffer!
The Sun are reporting it was Prescott who instructed Councils to deposit with these Icelandic banks. Why doesn’t that surprise me. That would have been in the days when Labour controlled Councils.
It’s the Tories fault the money was lost though!!
242. Think that’s more your opinion, and highly unlikely to boot. People’s opinions take time to create and change, however once they don’t like you your stuffed. The general public don’t like Brown, they may prefer him slightly during the first few months of this crisis, but as time goes on the old dislike of him will reassert itself. Some people on here are thinking that because of this crisis things will suddenly change, that labour are out of jail. They may be saved for a while, but the election isn’t for 18 months (probably). During that time as the economy slumps, unemployment rises and borrowing increase people will become more unhappy. Brown has shown that only during a crisis can he do anything, the rest of the time he dithers, this will manifest itself again and again as the recession bites.
258. Thankyou. I do my best.
BTW Panurge’s remarks are ridiculous because he is claiming that people’s brains are just gonna be somehow politically wiped by the credit crunch; this is daft, and demonstrably so.
What will will happen, as always happens in savage crises, is that it will reinforce people’s prejudices - those that wanna blame migrants will blame migrants even more, those that dislike bankers will hate bankers, those that wanna kick out the government will wanna kick out the government then stamp on Gordon Brown’s cullions. People swing to certainties and extremes in situations like this.
I think that’s why the Lib Dems are being squeezed. People of a leftish disposition are drifting back to Gordo; those that have had enough of Labour are sticking firmly with the Tories.
I note that the Dax is down another 8% this morning. These drops are just huge - and they are happening day after day. Incroyable.
263 So what was Prescott getting out of it?!? Memo to self - check whether they make pies in Iceland…..
253
I’m sorry to disagree with you seant (as if) but there’s an element of truth.
This is year, ‘Zero’ the politics of the 21st Century have just started. 2008 will probably be looked back on in the same way as 1922 was in the 20th.
Once this storm is over, we’ll be operating in a totally different political environment, we have no idea yet were we are going.
262. if the election was soon and the overriding issue was the present economic crisis, the opposition _would_ be fairly implausible on that. unless you mean the LDs.
that could easily change, of course.
242.”234. Now you’re getting it. This is a total reboot of the political environment and we’re now at year zero. Nothing that happened before 1st October 2008 will have the slightest impact on the outcome of the next General Election. GB gets this, DC doesn’t.”
Right, so the whole nation is going to erase the last 11 years of Labour government and they will leave a blank space in history between 1997-2008?
I think its something to do with the onset of Autumn that brings out this mind boggling complacency in Labour supporters and the Gordon Brown and his cabal. A sniff of a coup, GE victory or a poll bounce and suddenly you just run away with yourselves. Just check back to the threads for the last three years.
Mike ran an article not long ago about the dangers of complacency and over confidence from Cameron’s team, I think its time for something similar for the government.
wonder if we’re going to find out what “whatever’s necessary” means? or was “whatever’s necessary” bolt shot on Wednesday? seems like it .
A recent exchange on the BBC Today Programme is worth re-airing. Economics editor Evan Davis started by giving both Alistair Darling and George Osbourne a dressing down over their economic failures, telling them: “You both represent this part of the very same system of deregulated capitalism that has got us into this.”
Then Mr Davis turned directly to George Osbourne:
“Vince Cable was against demutualising the building societies back in the 1990s when your government was doing that. Vince Cable was sending me, as an economics editor, emails every three weeks about the levels of debt through the last five years and he has been instrumental in saying that the taxpayer needs to be protected…. ”
“Why, if I am angry, would I vote for you over him?”
Osbourne had no response, except to make snide remarks about looking forward to Vince supporting a Conservative budget proposal. Evan Davis, sensing a back foot move when he saw one, went for the jugular:
“Do you know as much about economics as Vince Cable, George?”
The surprise and stuttering in Osbourne’s voice could not have been greater if Davis has produced his famed intimate jewelery and dropped it on the table at a family dinner party. Osbournes response was to him was similar to that from a hostwhen a most unpleasant remark had been made by an outsider at an upper class dinner party:
“Well, er…, I…., er…, oh…, er …”
“He was the Chief Economist at Shell!” offered Davis, helpfully.
“I was not Chief Economist at Shell, but, er… um….. I do spend a lot of time talking to people across the economy.” said Osbourne.
Even over the airwaves you could sense him looking around for his press aide, hoping to be told that his time was up and he needed to go and discuss fashion trends for Autumn with Lorraine Kelly.
Weekly UK Economic Activity Report has just dropped into my inbox and it is ALL job losses. Anybody who thinks the real recession, not this banking melodrama, isn’t going to fatally injure the government is very naive.
265 The falls are amazing. Good to be reminded of it. It’s interesting how quickly people get blasé about these things. I guess it’s because the indexes are relatively abstract concepts compared to something like petrol prices.
264 And that is just YOUR opinion. Truth is, now more than ever, we haven’t got a clue how things are going to turn out or what the political result of all this will be.
Returning to the politics…
Might the news that ACORN-gate registration fraud seems to have spread outside of Nevada make it harder to claim this was one/a few rogues?
Could be a story that gets some legs over the coming weeks - which would be a good thing given that US elections are pretty ropey on the fraud front. If part of your polling day organisation involves consideration of where you deploy your lawyers then something is badly wrong.
http://edition.cnn.com/2008/POLITICS/10/09/acorn.fraud.claims/index.html?eref=rss_politics
On Iceland FT Alphaville has a piece on Brown’s clunking fist diplomacy.
http://ftalphaville.ft.com/blog/2008/10/10/16900/who-wills-stand-up-for-iceland-we-will/
If it was Malawi Gordon would be pouring cash in, calling on the IMF to provide special measures, but its a tiny bankrupt island in the North Atlantic so lets use terrorism acts against it, grab their assets and help them sink.
Re: 259 - I’ve argued on here many times that Brown’s massive infusion of money into the public sector after 1999 was a massive error. Akin to forcefeeding a starving man a banquet, the emaciated infrastructure of the public sector couldn’t spend the money properly.
As for personal debt, that’s a different story. I do think personal debt was a problem in the 1980s on the back of looser credit control and rising property values. Banks lending too much money to people who couldn’t pay it back didn’t begin in 1997 - it had been going on since the 80s.
What we are seeing isn’t just the destruction of Brown’s policy toward the public finances but the end of a system of personal debt mismanagement that has been in place for a generation. Banks, Governments and individuals all need to take a share of the blame for this - as to what the future will be, I don’t know but I suspect the days of easy credit may well be over.
People were happy putting their money in unheard-of Icelandic banks because it didn’t occur to them that banks can fail. We hadn’t had a bank failure in ages.
In all the coverage of the credit crunch I still wonder if the man on the street knows the basic principle of a bank. Banks don’t actually have people’s savings sitting in a vault ready to give back to them at any time. The authorities require a minimum proportion kept like this, to cover likely day to day withdrawals, but the rest of the deposits the bank is busily lending out to anyone it can. If the bank goes bust, then the money simply isn’t there to give back.
Hearing the calls for a rate cut from business groups and Vince Cable (overrated) has reminded me how refreshing it’s been since 1997 not to have this monthly squabble. The last thing we want is monetary policy decided by who shouts loudest. It’s just a shame the Bank wasn’t asked to take house prices into account…
I’m one of those hoping Cameron will get well and truly stuck into Labour over this mess. No more playing along. It’s a disgrace that we’re in for £500bn without even a vote in the commons. MPs were on holiday until only last week. What must the US think of our ‘democracy’?
275. I think it shows real ‘courage’ myself. The sort you get from playground bullies.
262 - at some point, all this has to settle down and normality will resume. History certainly does show that after a major crisis of confidence economically, people really are fed up and just want a change for change’s sake (ref: Carter to Reagan in 1980, Thatcher in 1979, Blair in 1997, Obama in 2008? Cameron in 2010?)
Worth pointing out in the “real world” nobody is really interested in what Cameron is saying, or even Brown to an extent. Nobody listened to Labour’s comments in 1993 over the ERM.
267. Yes, the globe-altering year of 1922. Famous for, erm, the formation of a Tory committee? The last sniffle of the flu epidemic?
Idiot.
“…now through their taxes and the costs of the industry bail out scheme will be forced to fork out..”
Mike, your argument would be strengthened by sticking to the facts.
On Wednesday last Kaupthing Edge was unilaterally taken into administration by the FSA using anti-terrorism legislation (according to the Icelandic government). All depositors accounts were transferred to the Dutch bank ING with no cost to the tax payer or the industry bailout scheme. This was done to “protect the interests of British savers” we are told.
As I saver in K.E. I had no reason to doubt the message on their website that said the bank’s holding company Kaupthing Singer & Friedlander was registered in the UK and was fully covered by the Financial Services Compensation Scheme. So where was the risk??
To argue that this is gambling is absurd to say the least. Any risk seems to come from our government who are flailing about in an attempt to bolster their flagging political credibility.
270 Darling: “We will do - er - whatever’s left that we haven’t tried. And that doesn’t cost very much.”
Try investing forty quid in a payer mat, Alistair. It may be all you have.
Tricky choice if you are Abu Dhabi - you can either buy the UK economy lock stock and barrel - or wait for the transfer window and buy half a dozen players for Man City. Tough call….
268 - I don’t think that is true per se. Crises like this are easier for governments than oppositions because oppositions don’t have access to the same degree of information as governments. Consequently governments can utilise that gap. I think if an election were held now the government would suffer for cutting and running etc. In 2010 when the election will likely occur the country will have been, if not still will be, in the midst of a recession. This will hit the government in the worst places.
266. Prescott was just being the short sighted idiot that he’s always been.
280 The Liberal party died that year.
229.
SeanT is quite right. The only thing he misses out is that Chamereon crew would have done just the same only more so to pump up the bubble, as they would indeed have backed Bush even stronger than Blair did on Iraq and would probably be backing 90 days rather than 42.
283.
Was that his excuse for the Wandering Hand Trouble?
269. I’m no Labour supporter; I’ve been a member of the Conservative Party for many years. Admittedly, it has lately just become a rich source of extra-marital encounters rather than a means to change the world but I will still vote for them out of tribal loyalty. So I take no pleasure in the thought of The Great Helmsman and his baggy ginger wife gurning across our telescreens for a further half-decade. I’m just offering my analysis and prognostication on current events. Which is why we’re all here.
269 When people vote they are taking a forward-looking decision - what does the future hold and who can best deal with it?
A few months ago a future of sharing the proceeds of growth, tax cuts and further deregulation looked pretty attractive.
Now the future looks more like unemployment, poverty and depression. People don’t generally look to the Tories to protect them against those things.
285 Bollox! Which party had a PPB warning of the perils of too much personal debt? A couple of years back? Clue: it wasn’t Labour or the LibDems.
FTSE resumes its death spiral, back down below 4,000
285 - Yes the Conservatives supported 90 days as I seem to not remember.
Mike,
Surely you mean 2/5 (71%) rather than 2/7 (77%)? Are you a regular gambler? If so, understanding percentages is worthwhile.
market heading towards 400 down again
288. Then why did they vote for them in 1979?
285 proof? “would have” isn’t the same as did.
287 SeanT has, on the basis of your comment, just got off the fence and filled out the Tory membership form.
He’s had a little known soft spot for John Gummer for years. The time has come…
I would like to know what actions the FSA took to tighten things up following Northern Rock.
by ChristinaD October 10th, 2008 at 9:22 am
Christina, according to their new chairman they ‘analysed’ the situation.
Encouraging, isn’t it?
If they had done their job we might still have been in the do-do but to a far lesser extent with more sound banks with less toxic waste.
If they had done their job the Icelandic bank would have likely been sorted out as used to happen when the Bank of England had the job. Sorted well before defaulting.
287. The ‘I’m no Labour supporter’ is straight out of the Dolly Draper handbook of political trolling, although to be fair you’re doing much better than TPS and JC.
282. that’s why i qualified the statement on both counts.
however, the crisis is definitely much better for Lab politically than a slow descent into recession, which is what was happening before. they are back in charge of events for the first time in months.
This crisis will muddy the waters for a while, however certain things won’t change. In 1992 despite an economy crash the tories were still seen as more trustworthy than labour because they’d changed leader to someone unknown and labour were useless. This time round the government are led by the former chancellor, have a cabinet packed with old faces and an opposition (despite what some people claim) much better thought of than the government.
I’d have expressed the additional risk [for savings over £35k) as 1/50 (per year) - i.e. the additional interest is 2%, and the bet is 100% of the additional saving.
I agree it’s disgraceful that the government has bailed individual savers out beyond the FSCS limit. As for local authorities etc., I understand many of them were “compelled” by central government guidance to make these investments so the situation actually seems more unfair on them.
275 see 158 - its all a deflection strategy.
I’t wisnae me it was the eskimo bankers.
Where’s Labour’s in-house FTSE correspondent, Gabble?
FTSE 3975…
300 Respect due to the phonetic scots.
287.Well its not often I am at a loss for words as the other half will agree, but, well done Panurge.
297. “Labour are back in charge of events for the first time in months”.
If anyone can find a more fatuous statement made on an English-speaking blog in the last two weeks I’ll give them a plastic haddock.
Lovely time here trading the FTSE. ANYONE SEEN GABBLE, NO? WONDER WHY???????
Prescott ‘told councils to invest for high interest’
Paul Waugh, Deputy Political Editor
10.10.08
Tory councils are blaming John Prescott for encouraging them to invest in Icelandic banks with high rates of interest.
Official guidance sent out by the office of the then deputy prime minister in 2004 stated that councils should “seek the highest rate of return”.
FTSE bottom Monday .
DOW Bottom either tonight or Tuesday first thing.
So say my charts.
MAJOR economic news US over weekend holiday.
I will be buying banks..
280
Errr it was a little bit more than that seant. 1922 was the year that the Conservatives withdrew from the coalition, Lloyd George resigned (Over the Chanak Crisis) the Liberal Party started its collapse, and the Labour Party was on its way to be the main party of opposition.
All in all, a pretty momentous year, 2008 may be something similar, who knows?
304 “Cameron should bring Davis back and make him Treasury shadow, or something” Seant
I claim my Haddock
292 Because in 1979 the Labour future looked like strikes, excessive union power and high inflation.
The Tory future was mainly lower taxes and reduced union power.
It’s all about culture and behaviours. David Cameron is seeking to change the social culture and influence personal behaviours but though he can put a supportive legislative framework in place, it is ultimately up to the individual to decide to eat better or to the community to deal with anti-social behaviour.
The same challenge now exists on the economy. We have enjoyed a generation of unfettered consumption, fuelled by cheap easy credit. Indebtedness, once a social stigma, became the norm for many and, fuelled by advertising, normal behaviour became to buy something if you wanted it whether it was the newest mobile phone or other gadget.
That behaviour now faces a rude interruption and it will be fascianting to see how we all adapt.
307. it isn’t the year i would have picked as being “momentous” in the early 20th century - you must be really really into the historical minutiae of party politics to think 1922 was special.
I expect commods to rally first, I have just bought some
RIO cfd’s at 2400.
Labour aren’t in control of the narrative, they’re riding it like a bucking bronko. Banks collapse, stock markets collapse, and they sit in the middle going on about the great job they’re doing. However as time goes on and people begin to feel the pinch, who will they blame? They’ll want to see tax cuts to help them through, and guess what, we can’t afford it.
296. Google my contributions to this site over the past two years. If you still think I am a NuLab astroturfer then you are completely imprisoned by your own febrile paranoia.
309 - What is the future labour will be offering in 2010?
311 In political terms it was pretty big. The split and death of the old Liberal party is quite a big deal even to this day.
314 - I just think your analysis is barmy and downright wrong.
[197, and much of every thread for the past couple of weeks] - It’s all a bit like Black Wednesday really. Tory posters on here have often pointed out that membership of the ERM was also Labour party policy, yet the event trashed most voters’ confidence in the Tories on the economy for nearly 15 years.
Likewise, even though the Tories have opposed any suggestion of increasing or improving regulation of the City since the year dot, with wails that the all-important financial industry would be driven to Frankfurt or Ireland, it is Labour who will carry the can since it is their hands on the tiller [or in the till..].
The question now is: What do we do about it?
I agree completely with Icarus at [142]. We need to stop being paralysed by the bloodbath on the stock market and worry about the real economy. The government can no longer act at one remove by hoping to get the banking industry working as it previously was. It should intervene directly.
310. A period of quiet followed by a return to previous habits, as after all financial crisis over the centuries.
1922 was also the year that hyperinflation took off in Germany…..
Brown in control? He calls for international co-operation and for people to follow his example whilst seizing all Iceland’s assets in the UK, using anti -terrorist legislation, basically declaring economic war. What an example to follow! Expect more bad news.
315 Events are moving so fast it’s hard to say where we’ll be in 2010 but were there to be an election now it would be something on the lines of throwing a public sector lifeline to keep the economy going and doing everything possible to save people’s jobs. Keynesian solution.
Not sure what the Tory future would be.
317. Then I salute you for your perspicacity. I don’t at all mind being branded barmy and wrong. What I won’t accept is the implication that I am a member of Draper’s Cybernetic Schutzstaffel.
213
‘Why will Gordenron be punished for this one?’
He has been responsible for the economy for the past 11 years?
He was responsible for the regulatory system that has failed so badly?
He allowed the housing bubble to get out of hand?
He allowed UK consumers to rack up 60% of the total EU credit card debt.
He racked up massive public debt levels so there is no spare cash available to help ‘hard working’ families get through the recession
He told us there would be no more ‘boom or bust’?
308. “304 “Cameron should bring Davis back and make him Treasury shadow, or something” Seant”
With all due respect, this doesn’t really compare to ed’s claim that “Labour are back in charge of events for the first time in months”.
Basically the entire country, Labour included, is sealed in a big barrel which is just about to go over Victoria Falls. But Labour are “back in charge of events” because, in an unseemly struggle inside the barrel, they’ve momentarily grabbed the carkeys for the Mondeo we parked at Heathrow.
288.”269 When people vote they are taking a forward-looking decision - what does the future hold and who can best deal with it?”
And what evidence do they look to when reaching that decision about their future? How often is Thatcher offered up on here as a reason for never voting Tory?
“Now the future looks more like unemployment, poverty and depression. People don’t generally look to the Tories to protect them against those things.”
Conservative government from 1979-1997?
The voters look to the Conservatives when the harsh tasting medicine needs to be administered, they know that a Labour nanny cannot be trusted to give it to them when there are complaints from their charges.
And they will always vote Labour when the tough times are over and they need that spoonful of sugar that a spending spree can give. Only this time the bellyache of over indulgence is going to be with us for a very long time.
322 - And that is it? Poor labour.
Panurge is partly right in October 2008 being a watershed after which all those earlier events will pale into less significance than the Second Great Depression.
Everyone will remember when it started.
Everyone will remember that was the day the Labour party went into an ecstatic frenzy which led them into intensive care from which they were moved to cryogenic life support.
Tory future? This Tory’s personal future may be to emigrate somewhere nice and warm and leave the mess for Brown and Co to stew in.
Pound at 5 year low against the Dollar. Anything to do with Brown?
320
We haven’t lost a major war: yet!
330 - Nothing. Brown and labour are forward looking and blameless. This will ensure a huge victory in 2010.
267 Coldstone Sean T etc. Modern politics dates from 1922. The 1918 election was tainted by the coupon, missing voters and the existence of the Coalition.
In 1922, Labour lept to a clear 2nd place. We have been in that model ever since - with a few minor deviations like the SDP surge and the Lib Dem surge.
1922 was based on demographicd (new voters male and female).
On that basis I don’t see this as a change in epoch. That will come when labour collapse after the next election…..or maybe not
325 And yet you think David Davis can somehow save the day by being “Treasury shadow or something”.
Hand over my Haddock. I am sure Mike will facilitate the exchange.
I think that Brown has really gained a new dose of life - he is enjoying himself and that confidence shows - helped along by the soft balls sent his way by Nick Robinson. This has to be good for Labour - a confident Gordon and a news cycle locked on the govt.
What I dont understand about this, is that normally in these crises, the leaders (and their underlings) usually end up looking like cr@p. The pressure to make difficult decisions, the awareness of all that can go wrong is terrible. Even with the present UK banking bailout, things could go horribly wrong - it could be one of the UK banks that has a lot of the residual risk from one of the recent failures. The sheer size of the losses, and these will run into £10s of billions initially before we get to the point when we can hope for a bit of a gain on the capital injections, is sufficient to make any finance minister go white or lose their hair. (Yes, I know Darling already has white hair and it is receding).
So why isnt Brown more worried? Because he had his back to the wall before so that anything, even a crisis is better than before? Because he has just ignored the downside? Because he really does know better? (And no, the last one is a joke. None of us can be certain in this scenario, that’s why interbank is still locked down.)
What happens if something bad happens in the UK - a major UK bank turns out to have a lot of Lehman losses. I suspect that Gordon’s happiness goes into retreat. Also as the grind of the real economy strikes and we move away from the financial crisis, Gordon will again have problems.
To deny Gordon’s strength at the moment is mistake, but to overestimate the staying power is also a mistake. And I do wonder about why he is so happy.
A lot of misconceptions from Mike S and others above.
1. Brown should be fighting hard to protect UK depositors in Iceland owned banks because if he did not they would rapidly move a lot of money out of other banks which would compound the UK’s current problems.
2. A lot of savers did take the view that the FSA/Government was there to protect them and would not have licensed banks trading in the UK if there was a perceived risk of defaults. Given the general assurances given by Darling to depositors generally at the time of the Northern Rock fiasco and subsequent assurances to depositors from both Brown and Darling one can understand why many unsofisticated savers did not see investing in Icelandic banks as gambing.
3. If Cameron is seen to be too critical Brown at present that would cause even more downward movement in the markets and reduce our prospects for turning things round.
4. Once the crises is over Cameron will have even more ammo to criticise Brown and I am confident he will use it well.
310 IMHO, the period 1990-2000 was quite sober financially (unlike 1982-1990) or the subsequent period. Banks weren’t throwing money around willy nilly, because they’d got their fingers badly burned, and remembered it. Lots of debt was repaid in the first half of the decade, and from about 1992-99, growth wasn’t led by consumption, or debt based on soaring property values.
But over the past few years, I’ve lost count of the number of letters I’ve received offering me credit cards, or unsecured loans. I don’t doubt I could have borrowed £100,000 from various organisations, without their bothering to carry out any sensible checks.
330. Doing well against the Australian $ though…!
337 … Which you took of course, gambled on Obama at 50:1, which is why your joining us from your bejewelled yacht moored off of Monte Carlo.
326
They didn’t vote Tory in ‘74 when things looked pretty bad, although the country was pretty evenly split, vote wise.
The country voted against Labour in ‘79 when it couldn’t hold the unions back.
Will the country see the ‘Cityspivs’ in the same way as the country saw the Union Barons in the 70’80’s? If so who will profit politically? The Daily Mail seems to be going for the, ‘Cityspivs’ big time, could be the, ‘Shape of things to come’
On topic I agree with moral hazard but who here knew that Icelandic banks were different (i.e. not included in the £35,000, now £50,000 guarantee) I certainly didn’t, and can only think this was a common misconception.
I have a current account that pays about 5% does that mean it is 50 times riskier than my old natwest 0.1% - no it does not.
I would also add that the sometimes things that seem to good to be true, but you just get a good deal, right place right time. Hindsight is a wonderful thing.
336. Precisely. Having retired solicitors running around the TV and radio news bewailing having lost their savings is bad for sentiment.
I kind of agree that bailing out depositors is bad. I do at least hope that no interest will be paid. Seizing assets was sensible given that Iceland intended clearly to refuse to pay for Icesave. Far better to seize assets upfront than to get into the queue for unsecured creditors in 3 months.
335 - he’s happy because he’s got to be Prime Minister at a genuinely important juncture in the post-war history of the country. Even if he can’t fix it he’s got a more reasonable write-up (in terms of significance, if not necessarily competence) in the textbooks of the future.
Three months ago it didn’t look like he’d necessarily even make it to an election, and even if he had got that far it was looking like his PM’ship would be a historical amusement.
Glad the US$1000 left over from my holiday is still in my wallet
Brown looking very happy in Swindon.
We are looking at the FTSE going under 4000 in the next few minutes, if it hasn’t already done so.
We have anti-terror laws being (ab)used against Iceland (great bit of diplomacy there - declare a European ally a terrorist state…)
We have all major international commentators saying that the British recession will be deeper and longer than any other major economy
Brown is now on our screens explaining it all to ‘real people’ in Swindon. I wonder if it will be real people or just people selected to meet him.
Anyway, he has no political or economic capital left. He has lost the right to lead.
We are just stuck with him.
And that makes me feel ill
341 - the Icelandic banks were covered by the FSCS; some were covered by the defunct-looking Icelandic scheme as well.
Max Hastings in the Mail, wants the, ‘CitySpivs’ banged up.
http://www.dailymail.co.uk/news/article-1076097/The-guilty-named-shamed.html
343 - Does he really want to be the modern equivalent of Herbert Hoover?
345 - Its lovely to see our Great Leader looking so smug and happy in these difficult times (which he is blameless of any involvment, in fact he is the only person in the world who is doing anything postive to combat the crisis).
343. He could go down as the Prime Minister that left the UK with a £50 billion loss if one of the banks has too much exposure to a failed institution. He should be more worried. Normal rational people would be. BTW this is one reason why the pound is falling.
The Dax fall is now over 10%. An official CRASH.
I rarely disagree with Sean Fear but I was catching up with his contributions on this blog last night, and I thought he was being overly blase about the looming downturn. The thrust of his thesis was that we’re just looking at a recession, a Depression is impossible, we surely can’t see 25% unemployment etc etc.
I disagree. I don’t think anyone knows how bad this can get. Maybe Sean F’s job as a solicitor, and his income from conveyancing, is making him a little too optimistic….
Yes, we have much more sophisticated bankers these days, we have experts and computers and software models and historically-informed politicians who have learned from 1929. Asia and the developing world are also a plus: a locomotive to pull the West out of its slump.
But we also have a globalised economy with instantaneous communications via the Internet and TV: which means we have Engines of Panic undreamt of in the 1930s. Put it metaphorically: the world economic forest is much bigger and mightier than it was sixty years ago, but the wind that can drive any flames through the brush is also much hotter and faster.
This could get very very nasty indeed. There is no way we can say we will definitely avoid Depression.
Summary of last night’s local election results
Comfortable LibDem holds in Haringey and Southwark
Consertvative ho;d in Isle of Wight
LibDem gain from Labour in Bristol
The above were posted last noght
West Lindsey Middle Rasen Consertvative gain from LibDem who did not put in nomination papers on time
Con 400 UKIP 125
2007 result LibDem 534 Con 425 UKIP 111
East Hants DC Holybourne/Froyle Conservative hold
Con 424 LibDem 352
2007 result Con 632 LibDem 220 Ind 74
Another poor Conservative performance in Hants
Kent CC Herbe Bay Conservative hold
Con 2474 LibDem 1524 Lab 537 BNP 399 UKIP 252
2007 result Con 5189/5189 LibDem 4530/3928 Lab 3207/2879 UKIP 938
Knutsford results on Cheshire CC to come .
Nicky Campbell said on Radio5 this morning that Brown had begun to look happy in his skin again - problem is he is all happy and smily at the wrong time politically - no empathy again.
I actually feel sorry for Brown, he clearly wants to help the poorest in society, but his demeanor shows nothing of this.
Good Morning fellow PBers !!
Meanwhile ….
Latest Zogby tracker :
McCain 43.4% .. Obama 47.6%
Note - Yesterday - M-44.2/O-47.8.
http://zogby.com/news/ReadNews.dbm?ID=1580
Brown looks completely delusional . People in our office are commenting on this. the grin now looks rictus. No one is re-assured. People are losing money and firms are going bust left right and centre.
I don’t want Brown out and about ‘explaining’ things to people round the country. I want him in Downing Street trying to work out why things are getting worse with every passing hour and what to do now that his plan has failed.
The one thing I want him to explain is why - when he was calling for co-ordinated international action - he chose to go it alone and time his announcements to coincide with PMQs.
This smacks of someone acting in a highly political and partisan way with his focus being on his own future rather than that of the 60 million residents of the UK
326 Voters don’t vote for harsh medicine - that was not what Thatcher offered in 1979 - “harsh medicine” is an analysis made with the benefit of hindsight. Thatcher came to power on a promise, amongst other things, to REDUCE unemployment.
In 1979 the social and industrial strife was clearly a British problem which related clearly to union power, and unions were much closer to Labour then than they are now. We now have a global problem which is not obviously related to any one party or government and anecdotal evidence suggests that people are mopre disposed to blame bankers than politicians.
349 / 351 - He’d probably rather be Herbert Hoover than William Henry Harrison, I reckon… (not re dying, but re being a historical curiosity!)
348 About as effectual as Duff-Cooper wanting to lock up people who spread bad news in June 1940, IMHO.
354 Right I have to ask, why Nemtynakh?. Random letters of something more. Keep thinking of the ex Israeli PM.
352. SeanT. The depression was a result of really bad policy mistakes - mainly monetary but also fiscal. Economists have learnt those lessons, we are never going to end back in the insane situation where the newly created Federal Reserve kept trying to make money stable by shrinking the money supply to match output.
We will end up with a stinker of a recession though, lots of bankruptcies and unemployment. Maybe a bit of inflation as well. This presupposes that we stabilise the global financial system, which means weathering these wretched derivatives - we just dont know who is going to end up with the losses.
337 - I agree Sean F. Clark & Brown in his initial incarnation were fairly sober
Brown’s desire to mend our public services by the infusion of large amounts of cash has been his error, but it was a noble and well intentioned mistake - seeking to benefit all our Society (not just the middle classes - see Thatcher passim)
353 West Lindsey Middle Rasen Consertvative gain from LibDem who did not put in nomination papers on time.
Says it all, doesn’t it?
New Strategic Vision polls for :
Florida
McCain 44% .. Obama 52%
Ohio
McCain 46% .. Obama 48%
http://strategicvision.biz/political/florida_poll_101008.htm
http://strategicvision.biz/political/ohio_poll_101008.htm
Speaking of which. It’s amazing and sad to think Ariel Sharon is still with us albeit in a coma.
353. Swing from Labour to Con of 10% in Kent, that ought to make the whole county blue again.
360. Quite - Hastings really is an idiot, isn’t he?
352 Unfortunately, there isn’t much conveyancing income right now. I think that Ken’s analysis is correct.
357. Spot on. That is the real problem - all Brown’s decisions are made in his own perceived political interest. He has lost sight of the big picture.
352 - just seen round the Hermitage in St Petersburg and I return to this for a quick 15 minutes - wow wow wow wow wow!!! I’ve been predicting an economic meltdown for sometime but I never thought I would see anything on this scale - have a seat at the biggest financial crisis of all time - truly amazing!
Look forward to getting back to Britain - I feel that I’m going to find a very different place on my return after 3 weeks away!
O/T - Has anyone seen the multiple restarts of the Stephane Dion interview? Will it harm his chances?
Ken there seem to be some people who still see the Euro as a safe haven from the dollar and certainly from the pound.
The UK trade balance is still, last month, over 8 billion. The overall trade gap was unchanged. I had assumed that might shrink soon on the back of the financials, but will financial services income decline faster than imports?
I think that might well happen and another tightening screw will add to our misery.
Some of the gains from falling commodity prices have been wiped out by the pound’s plummet.
229: SeanT
Spot on. Britain is in a much worse situation than any other country.
Every country will be affected, no matter how well governed they were. It is not 100% Brown’s fault. But
* We have the largest house price bubble
* We have the largest credit card debt
* We have one of the largest deficits as a %age of GDP (EVERY YEAR!)
* We have one of the laregst balance of trade deficits in the world
* We have the economy most dependent on financial services
Responsibility in large part for all of these falls to Brown.
In short, we are about as “well placed” as Wily Coyote just after he’s run over the edge of a cliff and is paused in mid-air cartoon style.
Looks like we’ve just begun to fall.
From a UK perspective the political analysis of the last 2 weeks is simple…
Brown’s 11 tenure at the head of the economy has ended in financial and economic meltdown, the public finances in a perilous state and recession. Brown is guilty either by association or because it is actually his fault..all the rest of the spin from the lefties on here is delsuional nonsense.
Once the crisis is past..and it will be.. DC and Clegg will remind the voters of these simple facts about Brown every single day until the early summer of 2010.
There is no scenario in which this plays well for Brown in the medium term.
Crawl back to you hovels Labourtites and prepare for opposition.
369 A solicitor friend of mine told me has just had to lay off half her conveyancing department - no work coming in.
364 Yes these things happen to all parties from time to time . In 2006 the Conservatives failed to do so in half of all Newcatle wards . The interesting thing is that the LibDem voters stayed at home and did not rush out vote Conservative ( or UKIP ) .
361 - Someone complained ChrisP and ChrisD were too similar - someone else suggested Nemtynakth as it was the enemy of his name something egyptian - it seemed to me the type of name that no-one else would have.
Labour’s anthem has changed from ‘Things can only get better’ to ‘It wasn’t me’
Why the concerted attack on Osborne? If he’s rubbish why bother?
We are not alone timothy:
Sam Britain in the FT
http://tinyurl.com/42ll7e
He concludes with:
“The Bank’s internationally co-ordinated half a percentage point bank rate cut needs to be the first of many – and these must come quickly. It will probably need to be supplemented by a fiscal stimulus. Most of the academic objections to this would be overcome by a temporary indirect tax cut which the UK chancellor of the exchequer can announce any time under “regulator” powers.”
362. “This presupposes that we stabilise the global financial system, which means weathering these wretched derivatives - we just dont know who is going to end up with the losses.”
But, as you say yourself, that’s another imponderable, isn’t it? What if the whole edifice of derivatives just collapses? I don’t pretend to understand these arcane financial instruments, but I can spot a casino built on a meringue when I see it: and that’s what modern banking looks like right now, to me.
If the western banking system fails then I don’t see how we could avoid something like the Great Depression - with double digit unemployment, massive bankruptcies, hard-right governments and widespread protectionism etc.
God help us it won’t happen. But it’s not impossible.
For all you financial wizards out there, is Guido correct in arguing that the Lehman’s Credit Default Swaps today will be absolutely critical for the markets? When will this action happen? At Wall Street’s opening?
373. I dont think the euro is going to be a safe haven* - but then again we are in the everyone looks bad stage. The Yen looks good at the moment.
*Economic slowdown, fiscal policy problems, lots of european banks are in trouble.
Brown is telling OPEC they must not cut oil production.
Does he really think they’ll take a blind bit of notice of him. Also denying this has anything to do with Britian, all from America. Shocking
382 - It is important as it could leave a lot of Lehman counterparties with significant losses. If those losses are big enough it could blow one or more of them completely out of the water.
304.”If anyone can find a more fatuous statement made on an English-speaking blog in the last two weeks I’ll give them a plastic haddock.”
Seant, cod would be more appropriate today.
322.”315 Events are moving so fast it’s hard to say where we’ll be in 2010 but were there to be an election now it would be something on the lines of throwing a public sector lifeline to keep the economy going and doing everything possible to save people’s jobs. Keynesian solution.
Not sure what the Tory future would be”
A GE now, you are joking? Last week it was hold off till 2010 for political expedience, but Labour cannot help themselves, and this time there is only a whiff of a possible poll bounce on the back of some of the bleakest economic news I can remember since being old enough to vote. And yes, I think we have already passed Black Wednesday territory now, its will be drowned out by Black October.
380 “The Bank’s internationally co-ordinated half a percentage point bank rate cut needs to be the first of many”
Question: did the BoE’s Monetary Policy Committee actually meet on Wednesday to agree the 0.5% cut? Or were they just told - this is the way it is. And will they get a say in any future cuts? Has the much vaunted BoE independence been a casualty of the recent chaos?
382. Lehman CDS etc is where the music stops and we find out whether anyone is left with a big parcel of losses. Not sure when. If everyone is balanced the losses spread through the system and everyone takes a small hit. If someone fouled up, they get a big parcel. The oustanding is some very large number, but much of it should net out. So Guido is right. This is a big moment.
All these financial products remind me of the long johns - their sketch about the credit crunch last year was available on youtube and is a bit of death row humour.
385 Paulson’s major error was letting Lehman Bros go bust (would he have let Goldman Sachs I wonder) - the consequences have been dire.
I think some tories aren’t getting this. SeanT and a few others seem to be.
Imagine: it’s 1989 and Thatcher is deeply deeply unpopular. However industrial relations start to sour, suddenly there’s a massive strike among the public sector, teachers walk out, NHS support staff stop doing their jobs, the Tube is closed for weeks on end. So in PMQs Kinnock steps up to the dispatch box and asks Thatcher why she hasn’t been tougher on the Unions and he bangs in about greedy union bosses. He’d be laughed out of the house. However unfairly Labour will always get the blame for what the unions do, the Tories will get the blame for what the city does.
The obvious flaw with my example is that Thatcher was already a lot tougher on the unions than Brown has been on the city and the Labour party are not as identified with socialism as much as they used to be, but I think my point still stands. We’ve seen a bit of a swing back to left wing parties around the globe, the SDP in germany are doing better than they were, the Democrats in the US are heading for a massive victory and gains in the house and senate and Labour have improved their standing. Rightly or wrongly people have begun to blame capitalism. I don’t know whether this will last in the long term.
384. Blaming the yanks will have a backlash though, can’t see many american institutions tkaing too kindly to Brown’s slating of them, nor the american politicians.
388 Question to anyone who knows: could the world Govt’s just say that they were going to pass laws which effectively made these CDS’s unenforceable? Who would that hit most?
385, 388, - Thanks. So if all goes well (sighs of relief all round), then Guido is presumably near the mark in also forecasting a hefty short term rally?
387 It was reported that BoE didn’t tell the treasury until 15 minutes before the cut (and PMQs). Bo E afraid Treasury would leak it. usually they advise Treasury at same time as public but didn’t want Brown embarrassed at PMQs if asked before he had been told.
391 - Economic shocks do not figure on the left-right continuum but the incumbency continuum. Labour have been in office for 11 years. This ain’t going to help them.
381. For the banking system to fail would require a further loss of confidence amongst the public and a couple of really bad policy mistakes. The authorities in all the countries where something bad could happen are aware - and everyone knows what has to be done. I still rate it as a very low probability event.
Nemtynakht I think you might find the name is used by several bloggers as Google will identify.
I did that out of interest and found the story with the name in it, who is a man on a river bank, is here.
http://books.google.com/books?id=5wYyHlqABRcC&pg=PA170&lpg=PA170&dq=Nemtynakht&source=web&ots=CBtw5l_Oda&sig=JRfhg7-8xrN32CjTqcCe1cDfV3k&hl=en&sa=X&oi=book_result&resnum=8&ct=result
Everyone is to blame, but the FSA were the real numpties according to this:
http://eureferendum.blogspot.com/2008/10/fascinating-insight.html
Brown always acts in a partisan way - that is why his PMQ’s performance and the announcements made within them were so dreadful. Brown just makes bigger and bigger mistakes and impoverishes us all by slow decision making, which then is undermined by his partisan presentation. Brown does not act like a statesman but a child. Brown’s stock has fallen further in my opinion in the last few days - indeed he can be personified as a ‘TOXIC DEBT’ on the nation.
I think the Icelandic compensation scheme is absurd, the only way it can possibly be defended is if frozen Icelandic assets are sold and it meets the difference between the upper threshold of the FSCS - £50,000 and the savings people have lost. Indeed I should imagine that the local authorities and charities should be paid out first rether than individual investors of £50,000 plus.
397 Ted, that’s interesting, given that 15 minutes later Brown was telling Parliament it was part of a co-ordinated worldwide cut. So it was all co-ordinated in that 15 minutes? Something doesn’t stack up there….
William Hills are offerning 1.66 on the Dems in Nevada (can hedge with Ladbrokes at 3.0 on the Reuplicans)
They are also offering 1.57 on the Dems in Virginia.
[381] - “If the western banking system fails then..” .. the government has to build a new one - and quickly.
If businesses that are basically sound can no longer get credit from a dysfunctional or collapsed banking system then government has to find a way to get them that credit.
We shouldn’t let the failure of the unregulated banking industry from trashing the rest of the economy. If the banking industry can’t be fixed soon enough - as appears to be the case - then it needs to be bypassed.
387. BoE was in session already on Weds, as part of normal 2-day meeting. They brought the decision forward to coordinate with the other central banks.
The BoE isn’t dancing to the government’s tune - rather the reverse as the frustrated and idiotic briefings against the BoE from No.10 kiddies show.
390. It was indeed a very bad decision (not that I appreciated that at the time, but then, I’m not paid to).
Scary stuff…
“As operator of the gold website http://www.hartgeld.com today I received several messages that the European Union now wants to go after gold. They fear that a massive run into gold cannot be controlled in any other way.
There are several rumors in banker circles:
Rumor 1 (from a high-ranking banker in Germany)
If the current last ditch system rescue fails and there is a massive stock market crash happens tomorrow Friday, severe limitations will be implemented EU-wide over the weekend:
* the sale and ownership of gold will be prohibited
* withdrawals from accounts will be limited, companies will need to prove the purpose of transfers
* even if this doesn’t happen now, planning is underway
Rumor 2 (a former banker with excellent contacts:
http://www.mmnews.de/index.php/20081009125…sverkauft.html) - There is a directive to banks to not any longer sell gold to the public
- Also there are efforts to reduce the amount of gold and silver which goes into the retail market to lessen the strain on the 400oz bullion bar market in London - this one determines the price. In this way they decouple demand from the price finding mechanism.
The system is now on its last legs on both sides of the Atlantic. More desperate measures are on the way as it looks. But according to Richard Russell: inflate or die. If rumor 1 becomes reality next week, it will be definitely “die” for the elites, because there will be a general uprising.
There is almost no gold available here in Europe. In Germany now banks decline sales (because they have no supply or because of this directive, I don’t know). But here in Austria, gold is still available from some banks, although the quantities are limited. There is also a massive run on banks for cash everywhere, even central bankers admit it.
Probably this is of interest to your readers of Midas.
Best Regards from Vienna, Austria
Walter K. Eichelburg “
393. No. You cant do that. The CDS are hedging instruments, if you simply made them unenforeable loads of people would go bust.
Bottom line there is upwards of $1 trillion of losses.
The derivatives make us uncertain where it ends up - which is bad.
Cancel the derivatives and we still are uncertain, except they are no longer with the sellers of insurance.
We need to let the CDS and other derivatives unwind slowly and the governments need to make sure that big players dont default.
yes guido is correct.
and the derivatives stuff is true as well.
sad, but true.
358.We hit the winter of discontent, and I think that the country finally had enough.
AP reports on McCain losing traction with working class white voters :
http://hosted.ap.org/dynamic/stories/W/WORKING_CLASS_VOTERS?SITE=MITRA&SECTION=HOME&TEMPLATE=DEFAULT
391, 396 There’ve been recent election results where the voters have shifted rightwards, although I suspect that future shifts will benefit the authoritarian right, rather than the liberal right.
Widespread economic hardship certainly makes voters more hostile to liberal capitalism, but at the same time, more hostile to what they see as wasteful forms of public exenditure, immigration, and so on.
FTSE seems to be losing its grip on 4,000 - now down 350 points at 3954.
Dow futures down 283, so perhaps another round of mayhem when it opens at 2.30 pm.
At what point do the buyers reappear? There has to be some undue discounting of quality shares now, but currently baby going out with bath-water.
More attacks on the, ‘Cityspivs’
http://www.guardian.co.uk/commentisfree/2008/oct/10/banking-executivesalaries
If it carries on like this, Lombard Street will look like the last scene of Spartacus!
405. Yes, I think it will go down as one of the big policy errors which magnified this crisis.
The story is that Brown wasn’t told about the half percent cut until just before he went into the chamber.
If you read the press release the MPC is still fighting inflation as the number one enemy.
Fromthe press release:
“The Committee remains focussed on setting Bank Rate in order to meet the 2% inflation target. In doing so it continues to balance two risks. On the downside, there is a risk that a sharp slowdown in the economy, associated with weak real income growth and the tightening in the supply of credit, pulls inflation materially below the target. On the upside, there is a risk that above-target inflation this year and next raises inflation expectations so that inflation persists above the target for a sustained period. During the past month, the balance of those risks to inflation in the medium term has shifted decisively to the downside. In the light of that outlook, the Committee judged at its October meeting that an immediate reduction in Bank Rate of 0.5 percentage points to 4.5% was necessary to meet the 2% target for CPI inflation in the medium term.”
We cut our interest rates by 10% the US by 25%. We need to cut again and again. Fed rate is now 1.5% the Euro 3.75% and ours is 4.5% -why??
LIBOR climbing even further…
361.”354 Right I have to ask, why Nemtynakh?. Random letters of something more. Keep thinking of the ex Israeli PM.”
Jonathan, you complained that all the Chris’s on here were confusing you, so we all changed our name tags.
412. Buyers? Where will they get their funding from?
406, You forgot to mention the lizards…
379.”Labour’s anthem has changed from ‘Things can only get better’ to ‘It wasn’t me’”
Or they could try the Wombats “Lets Dance to Joy Division”, the PLP could sing along to the chorus at PMQ’s.
403. Yes, so we are going to bypass the banking system. With what? Banks employ hundreds of thousands, have expensive computer systems, long term knowledge of their borrowers, have systems for collecting money. You cant just “bypass” it - you have to fix it. And it isnt unregulated. No unregulated system would ever have gotten into such a mess*. There would also be a lot less credit around (which is why we tolerate regulation with all its faults.)
*19th C. US banking is pretty unregulated, it comes with bank runs, but minor ones. No derivatives. No outrageous lending. But also far, far less credit.
390, 405 Correct. This panic started when Lehman collapsed. That decision was not taken by Brown or Labour. That is why it is not credible for Tories here to see the current situation simply as an opportunity to lay blame for everything at Brown’s door. And Cameron’s response shows that he realises that, even if most of his party doesn’t.
391. Well, er, thanks for the namecheck but if you read my posts I still think Gordon and Labour are gonna get whacked by the voters for this disaster - eventually. I just think they are enjoying a temporary reprieve - for the reasons agreed.
I also note that in times of severe crisis people tend to drift to the right: to patriotism, to militarism, to duty and country and family and an attitude of F*** everyone else especially immigrants, etc etc. Taken to extremes this can mean Fascism or Hitlerism.
Either way bad times usually mean rightwing governments. Another reason why I believe the Tories will, eventually, “benefit” from this horrible mess.
But there might be a small bathroom window of opportunity in the next few months through which Brown could crawl, electorally, if he has the nads - and maybe scrape a hung parliament. Don’t think he will do it though.
420 Good call:
Let’s dance to Joy Division,
And celebrate the irony,
Everything is going wrong,
But we’re so happy,
Let’s dance to Joy Division,
And raise our glass to the ceiling,
‘Cos this could all go so wrong,
But we’re so happy,
Yeah we’re so happy.
401 415 Apparently time line was as follows (according to the TIMES)
http://business.timesonline.co.uk/tol/business/columnists/article4910531.ece
422. It’s what the public thinks that matters. And they will blame Labour for the fallout from all this - job losses, reposessions. Labour will be acutely vulnerable because the state of the public finances will sharply curb their ability to cushion the downturn. Unemployment out next week, could be the start of this miserable narrative…
392
Don’t underestimate the British, ‘taste’ for a bit of Yank Bashing! Left and Right are prone to it.
I would say Palin is toast.
Sarah Palin’s husband campaigned for years to help get his former brother-in-law kicked off the state police force, newly released affidavits show.
The documents were released as part of the so-called Troopergate Scandal, in which it is alleged the Republican vice presidential nominee abused her position as Governor of Alaska to settle a long-standing family feud
Walter Monegan, Alaska’s public safety commissioner, says he was dismissed by Mrs Palin, after refusing to fire Mike Wooten, a trooper involved in a bitter divorce and child custody battle with her sister.
The 52-page document reveals the extraordinary level of access Todd Palin, nicknamed the ‘First Dude of Alaska ‘ , had to top state officials, more than a dozen of whom he contacted directly to complain about the trooper.
From the Times.
406 - I wonder if this this article an attempt to manipulate the gold market?
240.Ken - er, trillions, not billions!
Yes, in theory the derivatives net out to zero, globally, but given the failures and inadequate capitalisation of important counter-parties it is likely that financial institutions will be taking possibly very large net hits, potentially exceeding the losses from sub-prime, etc, which is, I guess the $1.5 trillion you refer to.
Hence, as you say, no interbank even with guarantees.
It is hard to see why the taxpayer should underwrite the holders of these toxic assets: if they are financial WMD their holders need to separate themselves from the rest of us while bomb disposal perform a controlled explosion.
Very suprised by Mike’s thread and his comments.
He might know about these things but believe me many do not. The ignorance on savings and investments is mind boggling, even amongst the chattering classes and those with degrees. They get conned left right and centre. What he knows or thinks they would not and there are more of them than there are of Mike.
Mike is not putting himself in their shoes and seeing things from others point of view. Thought better of Liberals than that.
As Jane Austin puts it, “Not well done Mike”
Rentoul says it is Game Over for Gordon…
http://blogs.independent.co.uk/openhouse/2008/10/by-john-rentoul.html
399: FSA to blame? Yes in part. Asleep on the job.
Who created the FSA again, remind me?
stpe forward Mr Gordon Brown
425 I know the MPC was having a scheduled meeting anyway - but that does suggest that the decsion was taken regardless of their determination and they were merely a rubber stamp. So my point stands - it appears the MPC is not currently in control of interest rate decisions.
390
‘We should celebrate every bankrupcy, for it proves the worth of the free market system, by weeding out the incompetent and the inefficient’
F. Von Hayek
‘Government can’t solve the problem, because government is the problem’
R.Regan.
412.
Every time the FTSE dips below 4,000 I pile on in!
How much longer can I keep on supporting it I know not!
429. The original losses are the sub-prime ones. Assuming that these are the only losses (and yes there will be some small extra losses along the way, but for our purposes, we can assume that these wont add more than another few hundred billion), the overall losses wont be much larger. Some counterparties will go bust, but hopefully not too many.
We have ended up guaranteeing them, because otherwise things would be worse. But I still dont understand why Gordon isnt more worried - I would be, given how much cash he has put on the line into what can only be described as the bad debt version of pass the parcel.
On the matter of the Icelandic banks, I think customers do have a reasonable expectation that they are not being lied to. Icesave was meant to be guaranteed up to 35k (albeit with the first 20k in euros from Iceland).
What has of course happened is that UK depositor’s money has been used to guarantee Icelandic savers 100 per cent by Landbanski — whilst Iceland wishes to renege on their guarantees to UK and Dutch savers. I agree with Darling & Brown that that is unacceptable. This is the act of a Robber State.
Under such circumstances, the response to freeze Icelandic assets in the UK seems proportionate to me.
——
413, I totally agree with that article, and am pleased to see it names Fred Goodwin as one the principal architects of the debacle in teh UK. Despite endless puffing about RBS from Stuart and Easterross, the bank has been very badly run and Fred should go.
426 Of course what the public thinks matters. But most of the public does not see this entirely in party political terms. And Brown’s handling of the crisis is rated positively so far.
I don’t think this means he will become an instant winner, but the terms of the debate have changed for good. As someone said further up this thread, the system has been rebooted and everything that happened before this week has become much, much less significant.
True, the government cannot solve economic problems they can only provide the environment for success.
In that Brown has failed. Short term boom based on bullshit credit leading to spectacular bust: a spectacular aerial roll powered by hot air followed by a superb swallow dive into the abyss when his means of propulsion was revealed.
355. Given that Zogby probably has a margin of error of 3 per cent, why bother with the decimal points? It’s a weird old poll that one.
RIO 2418 I am killing this market………again.
PA reports:Labour lost a council seat to Liberal Democrats in the latest council by-elections but there were signs from overall voting figures that the party was holding its own amid the financial crisis.
Liberal Democrats’ Tony Potter gained at St George West, Bristol City Council.
But they surrendered a seat to Tories’ Geoff Wiseman after failing to field a candidate at Middle Rasen, West Lindsey District, Lincolnshire.
Conservatives also recovered the Isle of Wight Council’s Mount Joy seat after the the previous councillor quit the party’s group.
Analysis of seven comparable results gives a projected nationwide three-party line-up of C 41.0%, Lab 30.5%, Lib Dem 21.4%. The figures for the Cheshire and East Cheshire results, fought on the same ward boundary, were averaged in the calculations.
The Tory margin is well down on the 20% lead given in a BBC survey at May’s main polls.
RESULTS:
Bristol City - St George West: Lib Dem 923, Lab 816, C 509, Ind 257, Green 116, English Democrats 93. (May 2007 - Lab 1118, C 1077, Lib Dem 729). Lib Dem gain from Lab. Swing 8.5% Lab to Lib Dem.
Cheshire County - Knutsford: C 1647, Lib Dem 818, Lab 342. (May 2005 - C 3229, Lib Dem 2127, Lab 1478). C hold. Swing 6.6% Lib Dem to C.
East Cheshire Council - Knutsford: C 1679, Lib Dem 817, Lab 318. (May 2008 - Three seats C 2396, 2352, 2328, Lib Dem 1000, 922, 904, Lab 769). C hold. Swing 2.1% C to Lib Dem.
East Hampshire District - Holybourne and Froyle: C 424, Lib Dem 352. (May 2007 - C 632, Lib Dem 220, Lab 74). C hold. Swing 17.6% C to Lib Dem.
Haringey London Borough - Alexandra: Lib Dem 1460, Lab 772, C 443, Green 221, BNP 27. (May 2006 - Three seats Lib Dem 1966, 1937, 1914, Lab 720, 680, 661, Green 521, 500, 404, C 310, 286, 270). Lib Dem hold. Swing 6.6% Lib Dem to Lab.
Kent County - Herne Bay: C 2474, Lib Dem 1524, Lab 537, BNP 399, Ukip 252. (May 2005 - Two seats C 5189, 5189, Lib Dem 4530, 3928, Lab 3207, 2879, Ukip 938). C hold. Swing 5.6% Lib Dem to C.
Isle of Wight Council - Mount Joy: C 286, Lib Dem 155, No description 150, Lab 38. (May 2005 - C 565, Lib Dem 356, Lab 221, Liberal Party 30). C gain from Ind. Swing 1.5% Lib Dem to C.
439, for goodness sake give it a rest. Anybody would think that Gordon Brown was personally going around flogging credit cards.
Blame him for macroeconomic policy if you will, but there is very little he could do to stop private citizens accruing debt that wouldn’t have been condemned as an unacceptable curtailment of the free market.
433 no MM - this was a co-ordinated response by central bankers. The MPC will have been aware of Eddie’s discussions, including I have no doubt pleas from Darling and Brown, but the wording on their statement is echoed in those other Central Banks issued.
Brown used the 15 minutes warning he was given to claim credit whereas it he had little directly to do with it.
The MPC isn’t, I agree, a really independent organ as it is appointed by the CoE, but that might not be a weakness when there needs to be co-ordination of Government and Central Bank initiatives.
439
This government has been very remiss in not realising the enormous damage done to our economy and society, by the, ‘Thatcher Revolution which is now eating its own children’.
Just watched Brown being interviewed from Swindon
He really didn’t say anything - again
We don’t want to hear the usual platitudes - we want an honest assessment of where we are, what the worst case scenario is and how much it will all cost.
Then we can get on with debating it all
Ken one thing puzzles me. If the total risk from these derivatives are known why do we not also know who owns them? Surely the total quoted has to be based on the holdings of all institutions, or is it a guess?
And if it is a guess, how good a guess is it?
By the way as someone in the Euro Pound nutcracker sweating on a final payment on a six figure Euro deal next Friday, I have to agree with you about the Euro.
440. only thing i will say for zogby is it does show a 1% movement on these polls can be the difference between 43.4% and 43.6%, which just emphasises why margins of error should not be ignored !
438. You can keep on spinning this line as long as you want, that won’t make it true.
The wind was sown in eighties, remember!
For they have sown the wind, and they shall reap the whirlwind: it hath no stalk; the bud shall yield no meal: if so be it yield, the strangers shall swallow it up.
we will find out who owns them eventually - the market will out them.
396. 411. 423. Yes I agree with all of you. What I love so much about politics is that nothing exists in a vacuum, everything effects everything else.
Drew Western in his book the political brain cites an experiment where young iranian students were shown two clips one full of happy things, the other full of death and horrible things. They were then given a questionnaire about political viewpoints, the one shown the horrible clips were much more rightwing and traditionalist than the happy group. They thought that violence to promote religion was justified etc. Because in times of trouble people will ‘cling’ to the traditional ‘values’ of the state and ideas such as religion and the nation. This will be one pull on the voting public along with the incumbency factor.
Also Labour have only had a boost from an extraordinarily low base, so they’re still doing badly. Because of all the other factors but it’s easy to understand why some people have been turned off the conservatives in the circumstances.
Brown has presided over a huge credit boom. he will get blamed.
446 Actually I think cost is not that relevant at this stage. The cost of not saving the financial system far exceeds the cost of saving it, whatever that is. It’s a bit like a war situation - nobody thought about the cost of the war in 1940 - any cost was better than defeat. The same applies at the moment.
440/448 benbobjim/Dan S. Also note that Zogby has a party id of only +2 Dem and also undersamples AA’s by 2 points.
Better to read the real thing rather than rely on a Guido rehash.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aX_FLjiKfbic&refer=home
452. To clarify: two groups of students where shown different clips.
Timeline for the Lehman auctions as follows, according to JPMorgan.
9:45 a.m.-10 a.m. Auction participants will submit bids and offers for the debt backing the credit default swaps, which will be used to determine the initial recovery rate of the swaps.
10:30 a.m. Auction administrators Creditex and Markit will publish the initial recovery price and the open interest for the contracts will be published. The open interest reflects the amount of bids and offers that have been made, and will show if there are more buyers than sellers, or vice versa.
12:45 p.m. -1 p.m. Participating dealers will submit limit orders for the debt on behalf of themselves and their clients to fill the open interest
2 p.m. The final price of the auction will be published.
444.”Brown used the 15 minutes warning he was given to claim credit whereas it he had little directly to do with it.2
Fraser Nelson on Coffee House Blog asks Is Brown’s plan to rescue the world’s financial system really his?.
438 “…the system has rebooted…” Is this the Labour line? So that Brown can say “Yes, I pissed all your tax money against the wall, landed you with a crippling national debt, but let’s forget all that - oh, and ignore the coming depression, with repossessions and unemployment, we’ll draw a line under it and learn lessons - so vote for me for a glorious future because those lessons will obviously mean no more boom and bust, because this time we really know how to do it.”
cue wild applause, cries of “Gordon’s our saviour!”
In your dreams.
why not help out individuals rather than banks. you’ve just bought the line that we have to help them. we don’t . individuals and companies should be helped directly. i sure could do with £50k off my mortgage.
why not help out individuals rather than banks. you’ve just bought the line that we have to help them. we don’t . individuals and companies should be helped directly. i sure could do with £50k off my mortgage.
450 So why are those countries that followed a different economic model facing the same financial problems?
Further to my report yesterday that Obama had bought 30 minutes primetime on CBS on Thursday 29th October at 8.00pm, it now appears that Obama is also doing the same on NBC and Fox !!
because all economies are affected by ones that are doing badly.
the heart of the financial crisis specifically the UK and USA though. this is where most of the toxic waste was originated and generated from .
463. There’s no financial crisis in North Korea. The people are eating grass, but there’s no bank crisis, at least.
464 - I know you are a senior but 29th October is a Wednesday!
A new thread on electoral college vote betting will be published at 1.30pm. I’m off to Bedford’s beer festival to do my own on the ground survey of how the crisis is impacting on real ale lovers. I’m sure they’ll be talking about nothing else!
Re; 461 & 462 - This is the kind of “backlash” we saw in the US against the Paulson plan. GOP representatives fed that anger back into Congress by voting against the plan (as did s number of Dems).
Over here, I’ve yet to see a politician articulate the sense of anger among many that the bailout is saving the banks and the bankers rather then the individual and that means the taxpayer has to pay.
464
Obama times it nicely for THE market bottom the day before? Or at least a double bottom?
GOP out of power for 15 years is my view.
460 But the point is that the national debt was not crippling under Gordon - it was actually lower than the US, Germany or France. And another point is that we have just increased the national debt by at least £50bn and perhaps as much as £500bn with all party agreement. The Tories cannot attack the level of debt unless they say how they would reduce it and why, in current circumstances, it is desirable to do so (given that reducing debt is deflationary).
463
I’ve passed beyond the logical I’m into the mystical looking for reasons now sean, Mrs T was really Morgana Le Fey, Tebbit, Mordred, and they were sent by Satan to destroy Camelot. They planted the, ’seeds of destruction’ which have now germinated and come to fruit.
Any minute now Og and Magog will arrive, so I hope all you lot are members of the, ‘elect’ ‘cos Palin was right its, ‘Rapture Time’
Now where did I put those, ‘Sackcloth and Ashes’
Flagellation Anyone?
465 Thats really a very smart move by Obama. He puts McCain in a real bind. Does he match it and cut funding focused on state campaigns to pay for it or does he ignore it and let Obama have a free run thats cost him states that he thought were untouchable by the Dems.
468. But is that really a representative sample Mike?
466 John Loony will be pleased.
466. Yup, they’ve got it sussed - they print their own US dollar bills.
Maybe we should try it, only with a harder currency.
According to Gordon who was speaking from his home in La-La land (Swindon)
Translation. I’m about to try and bribe the voters but I’ve just found out I left my wallet at home so you’ll have to wait a few days. After Saving the world from Financial Meltdown, I am now sorting out the final problem of Oil Prices over which I have no control
Politics Home
238. I think it is crass to compare this to Diana, that one accidental death bears no resemblance whatsoever to this disaster.
Unbelievable that anyone could possibly equate them in any way shape or form.
474) Who cares if the Beer’s good.
468 Mike S. It my indeed end up as an “on the ground survey” !!
Apparently the Nigerian Government has warned its citizens that if they receive any emails from Irish, UK or US banks, promising government-backed deposit security and seeking bank account details, its a scam….
477 someone doesnt have a sense of humour
477
If Capitalism suffers the same fate as Diana, It’ll need a f***ing big wall to put all the flowers against!
467 James. Oooppps. It’s the 30th.
477 Spectator has this as Gordon’s Canute moment.
http://www.spectator.co.uk/coffeehouse/2211386/browns-canute-moment.thtml
480 -
What today’s Sun editorial says.
“And talking of cowboys, who was responsible for councils hurling their cash at Iceland in the first place?
It turns out that idiotic John Prescott issued the instructions to councils to seek the best interest rate regardless of where they were sticking taxpayers’ money. ”
http://tinyurl.com/32mhab
455. Why underpoll these groups? I just cannot understand it. Is it that Dems and AAs are less likely to turnout?
477. Quite right. The trauma of the last few days is infinitely worse than the death of Diana. The comparison is odious.
The absolute shock and horror of what we are seeing now, affecting millions across the globe, can, I think, only be compared to the assassination of Jill Dando.
http://www.dailykos.com/dailypoll/2008/10/10
New Dkos/Research 2000 tracker
Obama 52 (+1) McCain 40 (-1)
This equals Obama’s biggest lead. Yesterday’s results were Obama 53 McCain 39, the biggest ever lead he has had.
Last three days of polling: Obama +8, +12 and +14
Latest Research 2000/DKos tracker :
McCain 40% .. Obama 52%
Note - Yesterday - M-41/O-51.
Crosstabs to follow.
476. At present the pound is around 1.25 euros - are we heading for parity with euro? Iceland could be a good place to go for a cheap holiday now - at present you will get about 260 krona for £1 compared with 160 about 2 weeks ago!
489. there’s actually potential for that lead to increase even more tomorrow when the +8 day has dropped off
432. At last a political commentator talking sense. Give that man a clap.
Current Dow Futures -168. If that happens expect a rocky last couple of hours trading on the FTSE.
Just had a call from a trader in Paris, he has lost everything and is going to jump off a bridge, I think he is going in Seine.
489. That coupled with today’s Florida poll marks a big fat ouch for Macca.
Dow showing down 2% on spreadfair but FTSE down 7% Think FTSE is allowing for what it thinks the DOW will do.
What actually happens however…..
495. EDW - did he use to work for Lehming Bros?
494.
Yes,except that Dow futures were -230 a little while ago
464.
“Obama had bought 30 minutes primetime on CBS ”
He wants to tell the world that Iain Dale is backing him in the Telegraph!
Ian Dale come out for Obama;
http://www.iaindale.blogspot.com/
I’m sure the Obama camp will be jubilent to have the endorsement of Ian Dales Diary!
BBC News now saying that the fear that the UK Govt will get involved in banks is driving down their share price.
490/489 Wow! JackW beaten to the draw.
Tho Old Timer is slowing down.
502. Yep, any bank that even looks slightly shaky will see their share price fall. The rest will probably see a slight rise.
501.I don’t know about the Obama camp, but I can think of a Jacobite poster who might enjoy his endorsement of Obama.
503 PtP. I had a late night !!
I thought the following quote was worth thinking about Browns expensive rescue plan:
“Governments tend not to solve problems, only to rearrange them”
Reagan….
Haven’t had time to read whole thread but the odds of 2/7 are wrong.
You were risking your whole capital (say £100) to get interest of 7% (ie £7).
So if you invest £100, the correct comparison is you are comparing getting back £107 in the Iceland bank to getting £105 back in the “safe bank”.
So assumning the safe bank was 100% safe, the implied odds of the Iceland bank being safe was 2/105.
ie you were risking getting back a certain £105 to gain a further £2.
447. Witan. The industry bodies (ISDA etc) collects total figures and they can be collected from individual institution reports. We know roughly the size of all derivatives. We know roughly the losses from sub prime etc. What we dont know is who owns what.
The “what” is as important as the “who”. We dont know the terms of the CDS on Lehman, or how much per institution (its now weeks after Lehman folded and we know it is supposedly 400 billion - but I have no idea what it looks like for Morgan Stanley for example). We dont know who owns it, or who sold it.
Now if everyone was solvent and could back it up, then it wouldnt matter. But with everyone now operating on the edge, small miscalculations could mean a major financial institution fighting bankruptcy.
As I keep saying BIS II and VaR were really F&^%ing crappy ways of regulating risk.
Brown’s behaviour is becoming increasingly bizarre. Today he seems to be presenting himself as the saviour of the world.
The worse the financial crisis gets, the more he struts around like a little bantam cock. The psychological explanation for such behaviour is too awful to contemplate.
509. I think they might go down in history as perhaps the worst ever examples of regulatory capture.
267.So what calamity happened in 1922 dopehead?
505 ChristinaD. I thought Mrs Dale had come out of the dairy a long time ago ?!?!
510. Thing is while he struts and goes on about himself, the economy still drops. I can’t see the public being thrilled as the PM goes on about how great he’s doing but we’re in a recession.
510. This is what I meant upthread. Normal people who have just bet tens of billions of pounds of other people’s money are nerve wracked and afraid. Even if you know it is the right thing to do and have balls of steel, such a bet normally makes people sweat.
510.Its been a surreal sight to watch in the last 48 hours.
Can anybody tell me what the Libor rate is now, please
I do wonder if Brown is simply delusional.
I know, I am commenting on his state of mind, but that is reasonable as we m]need a steady hand in command and I am beginning to worry about the skipper in this mother of all finanacial storms.
The man should be under a lot of stress having just gambled our home, future and kitchen sink on a bail out. But he is laughing, laughing, laughing. The rest of us are worry, worrying, worrying.
Surely his advisors including TPOD are telling him to look concerned but confident.
Then he reinforces the dissonant impression by telling us that the Bank of England are not on the ball, that the world must follow his example. And then he tells the oil producers they will bring their prices down and then tells the refiners and retailers to pass it all on to consumers at the pumps.
Now even his greatest fan has to wonder, just a touch, about a giggling smirking man under stress who is giving instruction which no-one else expects to have any effect.
504 The shareholders of any bank that accepts UK Government capital will have their shareholdings diluted and first in line for dividends will be the Government. Not a preferred investment, so of course share prices will fall. But the Government policy is to ignore shareholders, then wonder why there’s no private capital available for rights issues/re-capitalisation.
The SEC is set to extend it short selling ban in an emergency order, according to rumours hitting the European market. There are few details available currently, with the talk emanating from a Bloomberg News headline. The SEC’s official website is yet to feature any fresh development, which may dampen market reaction.
Mike,
Like many others, I disagree with the premise of your main article. I have no savings whatsoever, but assuming I had….
Until the collapse of Northern Rock, like most people I would simply have put my savings in whatever bank account was paying the best interest rate. NR changed everything, but until that point, I don’t think it’s fair to assume that we should have been making such decisions on the basis of risk.
Rob
511. ah you mean BIS. Yes, I can see that.
Just checked the BBC politics page, apparently the Supreme Leader is calling for lower oil prices and for reduced costs to be passed on at the petrol stations.
I wonder if anyone’s told him 70% of petrol’s cost is tax?
497 There is obviously panic selling going on. But I suspect there are many large investors on the sidelines waiting to pile in. Who can call the bottom? If you believe in “anchoring” i.e calling a number that has no rational basis but provides a common point of reference in a totally uncertain world, I would call 3500 for the FT and 7700 for the Dow. My basis is that this is about 5% above the lows in 2002/03 after the dotcom collapse. It about 10-15% lower than now and could be reached in days. I have already picked my stocks and have finance ready. The bounce last time was very steep and easily missed.
523 - Brown never listens - so what is the point of telling him?
Ken thanks, but I understand the who and what bit now, and that was very helpful. But I have a but …. if this data was all collected from institutions then we should know who holds how much even if we do not know how messy that holding is?
I think Intrade odds will soon reach parity with Betfair odds - Obama 79/80 ish at present and needs to get to 83.3 to be the same as 6.0 on Betfair.
522. Indeed.
517 - US Libor is at 4.82% for 3 month lending. I think GBP 3-month Libor is 6.28%
521 - it’s a sad day if putting money into a bank that was regulated is considered a “risk”.
Why should it be? Any consumer putting their money into a bank is entitled to expect a safety net, even if it’s offering a higher-than-usual interest rate.
Didn’t like the tone of Mike’s article, especially as I have a four figure sum in Icesave
481. Glad to hear you are sane and that it was meant as humour.
This bank was regulated and licenced by the FSA and fully signed up to the UK FSCS. Thus any investment up to £35k was not a gamble Mike.
526. No, we know that RBS owns contracts on $30 billion of CDS and have written $25billion (say), but we dont know who they bought it from (eg the counterparty might fail) or what they wrote it on (guaranteeing HSBC would be OK, having guaranteed Lehman isnt.) Round and round the parcel goes.
At least there’s no more “Boom and Bust” thanks to our esteemed leader
Paul Krugman in the NY Times being very positive about Brown’s plan here:
What should be done? The United States and Europe should just say “Yes, prime minister.” The British plan isn’t perfect, but there’s widespread agreement among economists that it offers by far the best available template for a broader rescue effort.
And the time to act is now. You may think that things can’t get any worse — but they can, and if nothing is done in the next few days, they will.
http://www.nytimes.com/2008/10/10/opinion/10krugman.html
Maybe Brown’s looking perky because he thinks he’s about to be responsible for saving the world economy. If so, let’s hope he’s right…
Ken, thanks, light dawns.
Brown’s increasing amusement and enjoyment of the situation is not going down well with most people I know..However, if he is anything like the other Labourites here, he is under some delusion that his incompetence has been forgotten and his rabbit in the headlights reaction to this is going down well in the country as a whole…
Reality check for the lefties..this is Brown’s Black Wednesday..not Cameron’s Alamo..
Outside the Labour core no one is falling for the Draper spin and unlike Sean T and others I simply have no expectation of any additional bounce for Labour in the polls above 30/31%.
Only a retard would fall for the spin that Brown isn’t at least partly to blame for this and is the right man for the crisis.
Still its well known that 1 in 4 of the population are retards..speaking of which what do we all think is an the actual level of the Labour core vote?
Icesave etc.
Anyone stupid enough to send their money to a small island with no assets except fish deserves all they get.
535. Even if he is right, FGS he’s bet the farm. Normal people falter in such situations. Even strong political leaders, and Brown isnt a strong leader.
The Financial crises and the political turbulence ensuing could see this as a fin de siecle period. I hope I am wrong, but as Fangorn said,”Time are changing, I can smell it in the air, I can taste it in the water, and the earth tells me so”.
by weathercock October 9th, 2008 at 10:30 pm
I wrote the above yesterday. Chris(from Bethesda) said the quote was from Galadriel not Fangorn. I looked it up in LOTR and found that I was correct. So there!!!!!!
The fin de siecle remnark looks all to realistic to me though.
537. I think that is a little unfair. Gordon smiling and looking confident is going to play well. It should help confidence - both in the UK, and in the Labour party. OK some people might be turned off, but others will take heart from it.
But, I just cant understand the confidence.
518 I know I said earlier that a psychological explanation for Browns behaviour is too awful to contemplate but I can’t help myself:
There was speculation on here a while back that Brown was somewhere along the autistic spectrum, perhaps borderline Aspergers.
I don’t agree with that at all. To my mind, and based on some experience of the subject, I would have him down as a personality disorder, a sociopath, which research shows are far more common than most people suppose. One in twenty five people, or closely thereabouts.
529 Thanx James the UK Libor changed today at midday, so your figures may not be right.
544. I really doubt that, when your company is in financial trouble the last thing you want to see is the guy in charge grinning and not looking worried.
547 Better than seeing him panic-stricken.
Italy bans all shorting….
http://www.guardian.co.uk/business/feedarticle/7848084
544 Confident but serious is what is wanted, not exuberant jocularity.
Evening Standard “Earlier in the week it seemed that the political position of the Prime Minister had been transformed. Muscular government intervention is what Mr Brown likes and these are circumstances in which it was called for. … Credit for making a necessary intervention may be forgotten as the consequences of a severe downturn begin to hit us.
While Mr Brown likes to castigate the “irresponsible” policies of cheap and easy credit that led to the crisis, it was an era that he presided over. Indeed, the regulatory system that was found wanting in supervising the banks and monitoring debt levels was brought in by him in 1997, despite the warnings of the then Bank of England governor. Markets are still bigger than governments and they are not convinced that politicians have the answers.”
ISDA Lehman auction starts soon in the US according to R4.
ISDA man saying everything will be OK. Net amount of risk transferred is nowhere near the $400 billion that are reported, ISDA man claims net risk transfer is only 2% of total. His claim is that materiality is limited. Let’s hope he is right.
I’m no admirer of Brown but he gives the impression of handling this crisis rather well. Some of the attacks on this thread by (I presume) Tories are well wide of the mark. Cameron and Osbourne are laying off which I think speaks for itself.
(Unfortunately) I expect Brown and Labour to come out of this with an enhanced reputation. Whether this is deserved is not particuarly relevant. If Labour can somehow win Glenrothes (which is looking more likely than a couple of weeks ago) then things will start to get interesting. It could burst the SNP bubble (I say this as an SNP voter) and will certainly give Labour a decent boost in national polls.
So this is what Our Great Leader’s been doing.
http://news.bbc.co.uk/1/hi/world/europe/7662908.stm
Fancy dressing in drag an pretending to be Norwegian. He must resign after this.
548. But best of all would be to see the back of his head as he leaves Downing Street
545 - Gordon strutting around, grinning like a ‘w@nking Jap’ does not inspire confidence, nor does it play well with someone who has just lost their savings or job. He really should be better advised.
New thread is now up.
Just watching the Fox News morning show. All pretence at even-handedness long gone. It’s an unremitting series of snide attacks on Obama’s “character” from a pro-McCain panel.
The scent of desperation hanging in the air…
I would love to see the betting odds on American Media covering Troopergate when the reports hit this morning - not heard a word so far today …. they are talking about the World Markets, and Acorn - don’t seem to mention Republican voter suppression tactics - thank goodness for my daily diet of news and blogs on the web
There’s alot of ‘energy’ on here today - welcome back SeanT.
We were ahead of the game on here. There has been much talk of Gordon looking happy and enjoying himself which is being viewed by the media as postive.
The woman on the Daily Politics said, ‘Isn’t it just lovely to see him so happy!’ in an orr bless him kind of way. Silly cow.
Not sure thats the right tone. Its not one Major would have struck - I know he got booted out, but that was not for looking serious and earnest. That was one of the things people liked about him.
Its bizarre that we have this supposedly serious politician dealing with a very serious crisis and he’s chuffed to bits.
Its as if he has invented a cure for cancer and we are not going to be ill anymore.
Except we are.
The best bit of the Daily Politics was the body language expert on Gordon.
What a hoot.
Local authorities are often legally obliged to deposit at the highest rate available on the market, and therefore a large ammount of local authority money is tied up on deposit in Icesave.
–
Not strictly true as stated by a message from Newcastle City Council’s Treasurer I have just read.
‘The last report in March 2008 included a selected list of UK based building societies, major clearing banks and three Irish banks that the Council would use to spread its investments. As part of our active risk management approach the Treasury Management team decided not to include Icelandic or other foreign banks on our approved list.’