Politics

Cogito Ergosum

I used to think that Mrs. Thatcher put right a lot of wrongs in the private sector, and that the next Conservative government will have to right a lot of wrongs in the public sector.

It now looks much more serious than that. One senses that Cameron does recognise how serious things are, but not everybody is convinced that he has the answer. So it is hoped that he can put a team together which will have the depth and forcefulness to achieve something.

Are we there yet?

hadrian

If they ignore John Redwood, then they are blatantly deceiving themsleves on the harsh realites all true leaders help their often reluctant underlings to face. Broon conspicuously and spectatcularly failed to halt the greed/credit overdrive culture because in a generation of prodigals, thrift would be entirely unpopular. Churchill and Thatcher in their own circumstances saw the need for hard decisions and pursued them. Blair and the Bungler refused to see them.

George Rumens

Some months ago I wrote to many newspapers warning about the collapse of the American mortgage markets (I lived there 17 years) I predicted that British house prices will fall forty percent, and in some areas of the UK the fall will be seventy percent. I predicted that unemployment will rise to three to four million, and that the Govt will print money and the inflation rate 2010-2012 will rise to nineteen percent. I suggested that it was a money-supply problem in disguise, in which the over-valued assets of property AND pension funds, all contribute to an economic collapse. The answer, I suggested, was to reduce that notional money-supply by deliberately reducing house prices to 1990 levels by enacting a tax of five thousand a year on second and subsequent homes. (People can buy abroad if they want a second home)That would release a large number of houses (about two million) that would bring down prices rapidly. And the second proposal would be to redirect pension funds abroad. So, that's the problem... Excessive money-supply in asset-form (property and pensions) But I warned that the Parliamentary policy of encouraging MPs to buy second homes means that it is impossible to bring down property prices by enacting the £5000 a year tax. Therefore the recession may last five to eight years with a very slow recovery. Those who are seriously over-extended in lower house values could be helped.
The lesson of this crash is not to mistake assets for money. The billions in floating pension funds amounts to a seriously inflationary pressure, as do soaring house prices.
The house price problem stems from the mistake in treating a finite resource (Property) as if it will respond to market forces. It cannot. Therefore property prices have to have a degree of control.

Robert in Palm Harbor, Florida

Excuse me your Lordship, may I have a sidebar?

While you are digging up dead dogs, and beating live ones, don't forget to note MPs, including Tory MPs, were gloriously bedazzled by the profits from creative banking schemes, excessive lending against assets with depreciation potential, and American style bonuses being paid to guys like Goodwin while they trashed your economy. (Goodwin may be sorry, but how much money did he give back to your government?)

Also, like the Brits, the Americans, were living high on the hog and now wonder why they have trichinosis.

Meanwhile, your government and ours continue to shovel boatloads of cash into the hands of bankers who have devastated our economies. Are we capitalists or not? Are we funding the risks of captitalism with public money? In short, is this any way to run governments? Either you regulate up front and consistently, or you let these curs rest in their graves, rather than propping them up and pretending they are breathing. In short, your government and ours are run by idiots with a very short attention span, and a bad case of myopia. May I suggest that you not only investigate who is at fault, but that you suggest a steady and rational course of political behavior? For a change, I'd like to see leadership from the Brits rather than from Washington. Trust me, everything great does not originate on the Potomac River! Yours is the land of Newton, Shakespeare, Darwin, even Elton John. If you lead, instead of being the lap poodle of America (sorry, but I must bash Tony Blair at some point, or my comments wouldn't be taken seriously), America may well follow.

So, will the Tories push for stricter regulation of markets? Will Labour leave dead dogs to some peace? No, but the pigs have stopped flying....

-Robert in Palm Harbor, where it is 68 degrees F!

R.McGeddon

Remember the years in the run-up to the 1997 election, how New Labour fawned all over the City in their 'Prawn Cocktail Offensive' ? They fell over themselves to tell stockbrokers, insurers and senior bankers that New Labour would be pro-business ?
That kind of obsequious attitude plus Gordon Brown's 'light touch regulation' were taken by the 'spiv' element in the City as the signal that anything goes.
As events have subsequently proven many things did go: the Bank of England's traditional oversight roles, sound management, boardroom responsibility, prudence,honesty and common decency. They were replaced by Gordon Brown's discredited tripartite 'system', the bonus culture, greed, dishonesty, creative accounting and chicanery. Shame the list is so long or it might be a fitting epitaph to the Blair/Brown era

Joe Aston

There is surely a multi-layered nature in this global crisis, but it seems to me Fraser Darling is still failing to grasp its breadth by a long shot. I find it odd that last year's oil-price spike gets so little mention, also the ecological/climate crisis, not to mention the spiritual and emotional disintegration that's going on in the background of it all.

David L Nilsson

It's clear to me that ultimately none of this mess could have happened unless a lot of people wanted things they need not have and could not afford.

People who have replaced the worship of God and the conception of life as a matter of honour and duty, to be judged by your Maker, rather than self-gratification on credit followed by eternal oblivion.

It's also clear that those of us who continued to live the old-fashioned way are to be punished by the majority for our quaint adherence to that creed-- while the feckless, the dim, the improvident and the greedy are featherbedded until the rest of us run out of money.

It's called "secular democracy", I believe.

Mark Solomon

A worthy campaign for worthy motives but if you are not going to waste too much time on Gordon Brown then you are going to be wasting much of yours and missing the main culprit!

Gordon was the one who grovelled to the city. Gordon was the one who took the Bank of England out of government control, gave it the wrong goalposts, designed the regulatory regime and disastrously reduced the liquidity requirement for banks at the same time, thereby ensuring that market rumours and bad results when translated to a run on a bank like Northern Rock could lead to its failure. I am British but have lived in Spain for 10 years and can tell you straight out that it is these liquidity requirements that mark the difference between the two countries. How can you not blame the man that reduced the UK ones?

Also, last year there was a general election here in Spain where BOTH parties were arguing about how much money they were going to give away in tax cuts to stimulate the economy and help hard-pressed voters. They could do that because during the good years Spain ran a surplus and put money aside.

Can you or anyone else see that happening in the UK? How can you not blame the man who went on the biggest spending spree in UK history without putting money aside for the inevitable downturn?

And lastly, take a long hard look at Bill Clinton and his Administration's obsessions with political correctness in the housing market effectively forcing US banks to lend to people who were never going to be able to afford mortgages - there were economic not racial reasons why they did not have them - and then lend to them again on the back of booming houseprices. The Left in the USA and UK as they don't tend to work in business and finance, are easily fooled by the money they can generate without seeing the pitfalls and Brown and Clinton were a combination of Bambi and Cruella de Ville.

Have fun!

Joseph V.Tabone

The Spectator's inquiry into the recession and its causes is a brave and eminently worthy initiative. The continued perpetration of deception by this government coupled with its bumbling and stumbling efforts at remedies are merely serving to exacerbate the crisis.
Getting to the cause of our global crisis is critical for an effective recovery. As it is, there is no hint of an acknowledgement by Gordon Brown and his governemnt on its portion of the blame for emasculating the regulatory set-up, for indebting the country, plundering its assets, promoting irrresponsible spending, destroying a cherished value system - and blaming it all on America.
This is gross and irresponsible behaviour coming from a country that we saw as the beacon of ethics and good governance. Its daily nauseating pronouncements are an affront to enlightened British citizens first and foremost and offensive to a broader global citizenry al of whom are bearing the brunt of such colosal mismanagement.
In short don't just blame the bankers and American sub-prime, but blame the appalling, incompetent and deceitful government which has bankrupted the country with little by way of assets left to salvage.

Ian D Livingstone

I refer to your investigation into the causes of the current recession .As a chartered accountant ( albeit now retired )one of the questions which has intrigued me is "what were all the auditors of all these failed institutions doing
to earn their fees whilst all this manic irresponsibility was going on all around them ? " How was it that , so far as I can
ascertain not one auditor in any of the failed institutions was able to see , and prepared to
report that the way in which the institution was valuing its assets was,to put it no higher,
open to question .Remember it was public knowledge ,never mind available to the auditors
on enquiry, that mortgages of 125% of property values were being routinely offerred in some cases and that mortgagees were being allowed to certify their own ability to repay . A
commonsensical layman ,let alone
a financial professional would know that the reliable value of debts created in such ways had to be heavily discounted.Again ,a test analysis of a sample of the
contrived securities for property
and other derivitives in which the banks were trading would surely have shown that their full recorded value was, again to put it no higher ,difficult to subststantiate . In these and other similar circumstances how can the accounts of major institutions be signed off without even a note on the accounts drawing the attention of interested parties to the uncertainties present.
We all remember what happened to Arthur Andersen after the Enron debacle .I wonder how long it will be before somebody
begins to ask if the auditors made a contribution to this latest awful experience . After all it was reported that even HM The Queen herself asked the very obvious question "If this thing was so big how is it nobody saw it coming ".And who was better placed to do so than the auditors ?
Sometimes one wonders if the very large accounting firms have become very large businesses rather than professional concerns and so more occupied with market share
rather than traditional consideraions . For example ,when was the last time one of the major firms qualified the accounts of a Government corporation as I believe the then Cooper Brothers did with the Colonial Food Corporation in the fifties over the problems with the infamous groundnut scheme in East Africa .Perhaps those were "the
good old days " !