The Spectator's Notes
It is a fascinating feature of this great financial disaster that everyone — or at least everyone sensible — is confused.
It is a fascinating feature of this great financial disaster that everyone — or at least everyone sensible — is confused. I do not mean the basic, widespread confusion about terms and processes — about what is short-selling or a derivative, what are monolines, HELOCS, etc. I mean confusion about what is good news and what is bad. Has America nationalised its banks, and if it has, is that good or bad? Was it good to allow Lloyds to swallow HBOS, because it saved the latter, or bad, because it overthrew competition requirements and created moral hazard? Was it good that Gordon Brown met Sir Victor Blank at a party and told him he could push through the Lloyds deal in defiance of competition law, because that showed masterful crisis management, or bad, because it was cronyism? Why was it clever to save AIG but good to let Lehman Brothers go? Is it good to turn Morgan Stanley and Goldman Sachs into ordinary commercial banks, because now they can no longer behave in their former racy way, or bad, because they have now been officially placed in the ‘too big to fail’ category, and are therefore protected from their own folly? Behind all these questions is an even bigger one. Why is it that government, which we generally, rightly, consider more inefficient than business, is nevertheless the authority to which we look to save us in such a crisis?
The Labour party conference’s response to these problems has been to expend emotional energy on attacking something of which we shall now see very little for a year or two — the City bonus. This has allowed the government to distract attention from the painful things which it is doing — enormously increasing its borrowing — and which it is about to do — putting up taxes. The fact that Gordon Brown had to devote his speech to winning over the people in the hall rather than the people in the country was his tacit acknowledgment that what is happening economically is so big that normal politics is irrelevant to it. He can — and must — still fight for his position within his party, but what he has to say now makes almost no difference to the rest of us. His credit has been crunched.
More articles from: Charles Moore | this section
Post this entry to: del.icio.us | Digg | Newsvine | NowPublic | Reddit
Advertisement
A child of our time
From the economic and psychological bedlam of the global downturn has emerged a particularly dangerous false dichotomy: namely, that there is somehow a choice for ministers over the next few years between economic reconstruction and the repair of Britain’s broken society, and that the government (whether Labour or Conservative) must prioritise the former at the expense of the latter.
Diary
Anne RobinsonThe daughter and I spent the last few days before the American election in Arizona.
Politics
Fraser NelsonFraser Nelson reviews the week in politics
The Spectator's Notes
Charles Moore‘A money-financed tax cut is essentially equivalent to Milton Friedman’s famous “helicopter drop” of money.’ So said Ben Bernanke, now the chairman of the Fed, in a speech about how to ward off the ‘extremely small’ chance of deflation, which he delivered in 2002.
Diary of a Notting Hill Nobody
Tamzin LightwaterTamzin Lightwater's unique take on the week
Latest blog posts
sponsored links
Free Sky Digital Offer - Order Now
Subscribe to Sky from £16 a month. Get free equipment and free broadband - Join Now. Sky HD - be amongst the first to have it - order now.
Free Sky Digital Offer - Order Now
Subscribe to Sky from £16 a month. Get free equipment and free broadband - Join Now. Sky HD - be...
ROME CENTRE
PORTA METRONIA, ROME Standing high on the top of one of the seven hills of Rome- the Coelian- this unique
City Breaks. ROME and PARIS
ROME and PARIS: over 350 holiday rentals apartments listed: visit www.romanreference.com and www.parisreference.com or call +39 0648 903612.
Jewellery. RUFFS (Estd. 1904).
Goldsmiths by Design Welcome to Ruffs! You have found a company of Goldsmiths that specialises in the manufacture, amongst other
Spectator Business | Apollo Magazine
Corporate | Advertising | Privacy | Terms
Spectator, 22 Old Queen Street, London, SW1H 9HP
All Articles and Content Copyright ©2008 by The Spectator | All Rights Reserved
Ian Rogers
September 25th, 2008 1:58pmI'm not very confused about the current situation and I don't think I'm "not sensible" for seeing it clearly.
A. There will be something of a global recession now, anyway.
B. But if the global banking system goes tits up, it could become a Depression, which is infinitely more serious.
C. Fiscal intervention of some kind is inevitable (because of B).
D. But Hank won't get a blank cheque.
I think that about covers it.
Cogito Ergosum
September 25th, 2008 10:52pmA recent Matt cartoon (in the telegraph) showed a man opening the window of a skyscraper and dislodging his colleague standing outside. Oops!