Allister Heath

A predictable guru

The Storm, by Vince Cable

issue 25 April 2009

There is only one politician who has emerged from the recession with his reputation enhanced. Yes, you’ve guessed right: I’m referring to Vince Cable, the ubiquitous grey-haired, sober-suited deputy leader of the Liberal Democrats. Even many Tories would feel reassured were Cable, who exudes reasonableness, to become Chancellor; broadcasters with little understanding of finance defer to him, with the BBC treating him as a cross between a living saint and a Nobel laureate in economics.

A former chief economist at Shell, he is always at the other end of a mobile phone; journalists know they can count on better copy talking to him than anything on offer from the Tories. Yet as his disappointing new book reveals, his analysis of the crisis and policy recommendations are mundane at best and dangerous at worst. There is little in The Storm that couldn’t have been found in the columns of the Guardian over the past year; it is little more than a regurgitation of the new left-liberal economic consensus.

It is absurd to compare Bob Diamond, boss of Barclays’ investment banking unit, to Arthur Scargill, and to claim that both posed an equivalent threat to stability. In fact, Barclays has successfully avoided taking government money and its shares have jumped more than 200 per cent since their trough. Cable is right to criticise the incompetence of other bankers but misses the biggest story, which is that many of Britain’s banks, including HSBC, Standard Chartered, the old Lloyds TSB and Barclays, were in relatively good shape. It was the Scottish banks and some of the smaller ex-building societies that behaved disastrously; British banks were a tale of two halves.

Far worse is Cable’s misunderstanding of the origins of US sub-prime lending.

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