If you made a suggestion earlier that is not incorporated and you think it should have been, please leave a comment saying so. If you want a question inserted in the remit, please phrase it as a question. We will be posting CoffeeHousers’ own answers to these questions – your “evidence” will go on record as part of the inquiry – just in case we builders reject the cornerstone.
2. The Treasury
a. How did its approach to debt, and the accountancy of debt, change after 1997 – and was this an issue? Should more attention have been paid to household and corporate debt?
4. Where was the scrutiny?
a. What did the Treasury Select Committee miss? And is this because it is under-resourced, or the inevitable consequence of having the Whips fix its membership?
5. "Why did no one see this coming?" We will seek to answer the question the Queen put so well last November
a. Which MPs were asking the right questions, and when? Why did they think they were so alone?
The Banking Crisis
6) Credit rating agency fraud. It’s a big story in America: how far did it happen here? How important is it to the problem of misdiagnosing risk? How far did leveraged venture capital deals bump up the bubble?
7) Incentive culture: The government made several moves explicitly aimed at changing short-termism: did they fail? Or did they really try? If the City were put on medium and long-term incentives, like the venture capital industry, would that have helped?
8) The ‘universal’ bank Was it a mistake to allow the fusion of investment and retail banks? How far did the demutualisations contribute to the crisis?
9) Regulation Were the 125% mortgages – and lending at more than three times income - inherently risky? Because for a while, lenders were right to think that today’s 125% mortgage would become a 60% mortgage in about four years’ time. Should Britain have demanded compulsory insurance over 75% LTV, as Canada did?
The wider economy
10) Dutch disease It’s the name for allowing your economy to be dominated too much by one sector. Did we rely on finance to the exclusion of other industries?
11) What caused the housing boom? Shortage of supply, as Kate Barker’s review suggested? Simple asset bubble? Too many financial bonuses? Is it even possible to answer this question?
12) Tax Did the tax system encourage borrowing over saving, to an extent that significantly contributed to the debt bubble?
13) The deflationary shock How far did a wave of cheap immigrant labour and Chinese goods force a one-off downward shock on prices? How big a factor was China's currency value and/or it savings glut? Did this fool the MPC into keeping rates so low? Was this the causal event?
14) Was it inevitable? How much of this crunch is an inevitable consequence of Britain’s status as a world banking power? Could we have insulated ourselves against this without regulation that would have stymied the growth of the economy? If so, how?
15) Why did personal debt balloon in Britain? Was it a bling culture that needs to change, or just the inevitable consequence of excessively cheap money? Should we regret the loss of stigma that used to be attached to lending?
16) Intellectual foundations Is there a wider, philosophical root error? Faith in a rational market, or other such creeds (random walk, bachelier theory of randomness etc?) Is it inevitable that we’ll bounce back, as per the next upswing – or is this faith the boom-bust pendulum part of the failed thinking that got us into this mess?
We’ll do a final draft (or final-ish, our inquiry will evolve as we uncover info) and the next phase will be seeking expert witnesses. But for now, all comments on the above welcome.