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Lord Rosebery's long shadow.

By

on September 10, 2009 9:24 AM | Permalink | Comments (0)

It's a source of some despair to me that an increasing proportion of our news is just rehashed anniversaries. Nevertheless, I do want to mark a barnstorming speech given 100 years ago today in Glasgow by Lord Rosebery, the former Liberal Prime Minister.

He addressed "the business men of the city", and I have a copy of the speech in pamphlet form. Apparently over 6,000 applied to attend, and he was warmly received. But they would say that, wouldn't they?

Rosebery had gradually become estranged from his former colleagues, and indeed told the assembled gathering: "I have long ceased to be in communion with the Liberal party".

This was no exaggeration - the purpose of his visit was a full-frontal assault on the "People's Budget" presented by his former colleague Lloyd George, and specifically a critique of the Land Value Tax and Inheritance Tax proposals contained in it.

His language is intemperate, even if Edwardian English sounds so polite, and his anger is clear. Land Value Tax is described as "the violent onslaught on land", presumably making income tax a violent onslaught on work, and so.

He also claims that "almost all the value of land comes from what the owner does or spends on it", which is misleading in the extreme. It's presumably no coincidence that the richest person ever to be Prime Minister, the owner of twelve homes, would find much here to dislike.

And this bitter assault was surely nothing more prinicipled than the resistance of a substantial landowner to anything approximating social justice in taxation. He talks about the "persecution of land", neatly conflating the owner and his property. Was the land itself really to be hunted and punished?

The Lords did vote the People's Budget down, leading to a constitutional crisis and an election at which Lloyd George was returned with a reduced majority. The Budget then went through, but without its land value tax element, and the powers of the House of Lords were trimmed by the first of the 20th century's Parliament Acts. Rosebery had done his bit, though, on land value tax.

A hundred years later and it's back on the agenda, with Compass and the IRRV both taking a look, although the Greens are now the only party to support a version of Lloyd George's proposals (with some notable exceptions, including Labour Land & Lib Dems ALTER). SNP MSP Rob Gibson is also a supporter.

Sooner or later, the shade of Rosebery and his peers will have to be lifted. It's hard, however, to take too vehement a personal dislike to a man who can send this self-deprecating telegram to the pamphlet's publisher.

Delusional and pathological.

By

on March 30, 2009 12:15 PM | Permalink | Comments (0)

The Sunday Herald had an advance on today's landmark report from the Sustainable Development Commission (press release), which describes Ministers' attempts to rebuild the same failed economic system, built on growth at all costs, as "delusional" and "pathological".

These are delusions and pathologies the SNP share with Westminster. The Nats describe their central purpose as "sustainable economic growth". Sustainable should mean "designed to work within our long-term ecological capacity", but here it's a proper weasel word, meaning something they would like to sustain.

In particular, they suffer from the delusion that they can engage on the biggest road-building and airport expansion programme Scotland has seen since the 1960s and still meet any kind of carbon emissions targets. New roads plus new public transport does not reduce emissions, and to think so displays a pathological misunderstanding of some pretty basic science and economics.

Although they're government-funded, the SDC have clearly had enough of being polite about abject government failures of this sort, both north and south of the border. In a quote that would fit well on the cover of a Green manifesto, Professor Jackson, the report's author, says:

"Prosperity for the few founded on ecological destruction and persistent social injustice is no foundation for a civilised society."

They're so on the same page as us that I even lifted their perfect image (above).

By coincidence, Holyrood debated the economy last Thursday. The patchy and limited understanding of sustainability across the chamber makes it pretty depressing fare - the usual exceptions apply. I fear we'll wait a long time before we have a Scottish Government which even understands the problems we face, let alone capable of pursuing constructive answers to them.

Not to encourage vandalism, but..

By

on March 25, 2009 5:27 PM | Permalink | Comments (0)

Today's reports that Not-Sir Fred Goodwin's house has been vandalised are upsetting.

No-one wants to see mob rule, except perhaps the mob. Personally, I prefer democracy.

It's also absurd to blame one man, no matter how grasping, for the massive systemic problems supported and facilitated by Governments of all colours, north and south of the border.

Having said that, if one absolutely had to suggest a form of vandalism for his house, wouldn't Rory McInnes's approach have been a better idea? Or something similar?

(note: I am also not encouraging vandalism of the Cerne Abbas Giant)

It's all about the Benjamins.

By

on March 13, 2009 12:16 AM | Permalink | Comments (0)

Writing about the diminished number of billionaires yesterday took me into the realm of trillions of dollars - the remaining 793 of them being worth a collective $2.4tn. A trillion bucks is such a mind-bending sum of money: thank goodness someone's illustrated what it looks like in c-notes.

That final image is two pallets high. If the billionaires pooled their wealth, you'd need to go almost five pallets high.

For contrast, here's a trillion pennies stacked up. (via MetaFilter)

Sharing the pain.

By

on March 11, 2009 10:49 PM | Permalink | Comments (0)

Forbes reports that this year there are just 793 people on its rich list, down from 1,125 last year. That's almost 30% fewer billionaires, and many of those that remain have taken a substantial financial hit from the global meltdown.

Warren Buffett, for instance, is down from $62bn to $37bn, not even the annual GDP of Uruguay.

Between them the remaining billionaires are now worth just $2.4tn, which is a bit more than Britain's annual GDP but a chunk less than Germany's (those last three links all to a GDP table).

At least the suffering is being spread as equally as the gains once were.

Radical failure.

By

on February 15, 2009 2:23 PM | Permalink | Comments (2)

I listened to Jim Murphy on the Politics Show today, a painful experience as usual, but one which set me thinking about the bank bailouts again. I still believe the Brown/Darling plan, which is simply to keep giving our money to banks and bankers until there's nothing left to give, will fail to meet its stated objective: to refloat the economic system which continues to teeter on the verge of complete collapse.

Jim's view is that we need to keep on forking out, even at the price of almost any other government spending, and whatever the public reservations about the approach. However gross the failure, the Chancellor should simply roll over on our behalf and have his tummy tickled by the bankers who fill every review and quango going. I think the problem is deeper than he realises, though.

Even if the give-away succeeds, in Labour's own terms, we'd be left with the same flawed system which has led to the current dismal economic, environmental and social circumstances. Surely a time like this should be an opportunity to take one more step back and ask what the banking system should be designed to deliver?

Such a question may be more complicated, for sure, but the outlines seem clear. Banks should provide a safe place for depositors to put their money, and that act should be rewarded. The first of those objectives has only been met over the last year because of government intervention, and the latter is hardly true now interest rates have nearly reached Japanese-style rock bottom.

They should also lend to responsible businesses, enabling them to provide appropriate jobs, products and services, and to responsible individuals, helping them manage their lives better. Instead they used over-leveraged deposits to buy, repackage and resell speculative absurdities, and now they're hardly lending to anyone despite the massive brown envelopes they've received on a regular basis since September 2007.

Clearly, these simple objectives are not met by the existing system, despite the public props under it. Nor were they even properly met in the pre-crash supposedly happy days when only the prescient (yes, Nouriel Roubini has a blog), the permanently pessimistic and the ideologically opposed foresaw any problems coming.

So what should we do instead? The clearest progressive alternative would instead see Government backing individuals, not the banks they've borrowed from, taking shares in people's houses to protect them from repossession and so on. The Treasury should be directly reducing the risks to sensible customers, not hoping the bailout will trickle down to borrowers and depositors.

The rest of the next multi-billion tranche of money destined for the bottomless pit in the city could then be diverted to capitalising a series of new regional banks, and perhaps other specialist financial institutions. Their constitutions could resemble those of the old trustee savings banks, the loss of which has been bemoaned here before. Others could be set up as mutuals, credit unions, et cetera.

These new institutions could be established to put their communities' interests first, be required to lend with a due diligence eye on the long term, to focus on true sustainability, and they could be obliged to account for themselves transparently. Bonuses could be paid for genuine successes and responsible innovations, rather than automatically to the boards who oversee failure.

Before anyone suggests this is mere nationalisation fervour, it would also allow a proper application of market principles. Shares in these new banks could be given per-capita to local residents, a minority stake initially, then the rest could be issued on the same basis. Some of the old banks would be likely to fail, just as they are already, but their staff and their customers would have alternatives to turn to for work, for loans, and for savings accounts.

The primary losers would be the existing banks' shareholders, and there would be pain to get through, but at least it would ensure that that suffering was for a purpose. The bailout is hardly meeting their needs right now anyway, given that we appear to be trying to pour water into a series of sieves to fill them up.

We need a financial system, true, but it doesn't have to be a replica of the irresponsible system praised by all the other parties in the good times. With this much capital being expended, we could instead lay the ground for a new set of players. Good banks, in short. Doesn't that sound better than taxpayers paying for a "bad bank" and assuming the risk that properly belongs to shareholders?

In short, if the question is stupid, the answer will be too. Even if Brown/Darling/Murphy etc meet their own objectives, it's absolutely certain they will fail to usher in anything more responsible and imaginative. They have missed their chance to be remembered as the midwives to a new system designed to meet the needs of the country rather than the interests of the bankers. Failure is guaranteed.

Watching the egregious Mr Murphy also reminded me of a story from his first days in Westminster in 1997. On arrival he found the place a bit stuffy and rule-bound. After all, until 1998 anyone wishing to raise a point of order had to wear a top hat to do so, and collapsible headgear was laid on just in case.

So Oor Jim took the initiative, and wrote to his 658 colleagues to suggest that he chair a committee to review procedures. Tam Dalyell, who'd been there for thirty-five years, was apparently heard to guffaw at his impertinence. Still, Murphy has learnt how to play the game now, and his properly refined New Labour talking points have replaced his youthful enthusiasm for change.

What kind of investment will the public back?

By

on January 9, 2009 9:46 AM | Permalink | Comments (2)

With Keynesian economists urging Governments to increase their spending during a downturn, Ministers north and south have rubbed their hands and brandished their favourite existing projects.

In many cases, schemes we'd been told were vital to support booming economic growth were rebranded as vital to get us out of recession. The Fourth Forth Crossing is one such.

Massive spending, which must always be badged as "investment" however vain and irrelevant the project, is the third leg of intervention this time round, alongside massive bailouts and massive money-printing, known delightfully as "quantitative easing".

Like every other party, we also have a list of projects we believed were sensible five years ago, and which we're promoting now with extra vigour. However, US polling shows the particular popularity of measures to reduce dependence on fossil fuels - 66% believe they would be a very or fairly effective response to the downturn, second only to better enforcement of regulations on the finance sector.

As Nate at 538 writes:

"The long-run benefits of the alternative energy programs, on the other hand, are far more intuitively appealing. If the central critique of the stimulus is that the debt we're creating will be burdensome to future generations, that concern could be mitigated if the spending in question is portrayed as a down payment made on behalf of those future generations toward cleaning up the environment and mitigating dependence on fossil fuels. It also provides for some sense of purpose to the stimulus: we'll come out of this, Obama can say, with the greenest, most energy-independent major industrial economy in the world, etc. etc."

The same logic applies here. As support spreads for our free insulation proposals, I think people are seeing how it fits together. Reduce our long term need for new power stations. Cut people's bills for the long term. Keep our carbon emissions low for the long term. Create the kind of jobs in construction we need for the long term.

As the Times today says, if we succeed with this campaign it would be "a watershed moment in terms of policy achievement by the Greens in Scotland - or anywhere else in the UK". It could also be a turning point in terms of the investment Government pursues, the first phase of a truly Green New Deal.

Today's financial news in brief.

By

on December 17, 2008 7:49 AM | Permalink | Comments (0)

It's alright 'cos the historical pattern has shown

how the economical cycle tends to revolve

in a round of decades three stages stand out in a loop

a slump and war then peel back to square one and back for more

bigger slump and bigger wars and a smaller recovery

huger slump and greater wars and a shallower recovery

you see the recovery always comes 'round again

there's nothing to worry for things will look after themselves

it's alright recovery always comes 'round again

there's nothing to worry if things can only get better

This seemed particularly timely last night. Stereolab are absolutely magnificent live - go see them if you ever get the opportunity. Also, you could buy something, perhaps the classic Mars Audiac Quintet or the new Chemical Chords, direct from the band.

VAT boost in Parliament canteen.

By

on December 1, 2008 12:57 PM | Permalink | Comments (0)

Thumbnail image for BeetrootPotatoSalad.jpg

Last week, a wee bowl of side salad cost 65p in the Holyrood canteen. Then the Chancellor cut VAT, which means the price was slashed. To 64p.

Obviously I should do my patriotic duty and help Britain eat its way out of recession, but there's only so much salad I can get through. This change is generating work already, though.

Every item needs a new label with the new price, you see. The staff were less than pleased at having to do it, but Keynes would recognise it as a variant on his old idea: paying people to dig a hole, then paying them to fill it in again.

Also, because there's hardly ever an opportunity to link to her magnificent food blog, here's my friend Pille's Estonian beetroot and potato salad recipe.

Pollyanna.

By

on November 26, 2008 2:22 PM | Permalink | Comments (0)

Polly Toynbee thinks the Pre-Budget Report shows the era of New Labour is over, and social democracy is back (and as vague a term as ever). She finds the evidence that Darling's massive borrowing has worked in an unusual place: the FTSE100.

"No one alive has ever lived through such a crisis or faced the danger of a slump so deep, so if enough people say that the right thing was done yesterday, then it was. The stock market rewarded Alistair Darling with the biggest ever one-day rise - so for now, it worked."

Right. So the logic is that if the City's happy with the Chancellor, we can tell Labour's back to being a social democratic party? What utter nonsense.

It's not even as if she likes the VAT cut. The only part of the PBR she appears to support is the higher rate of tax for the wealthy, which is fine, but shouldn't it be for a better purpose?

In a stunning piece of cognitive dissonance, the truth about Labour is buried elsewhere in her piece.

"Here is a reminder of the shape of national incomes now: only 10% of people earn more than £40,000, to reach the top tax bracket. Half the working population earns under £23,000. A couple need £11,000 to rise above the poverty threshold - and over a fifth of people fall below, with a third of children born poor."

This is Labour's record now. They've failed to tackle the inequalities the Tories left behind, and failed absolutely as a social project. They're not social democrats, they're just about where the Tory wets were in the early 1980s. Trimming VAT for 13 months won't change that, and Polly knows it.

Inviting the catastrophe.

By

on November 25, 2008 7:27 AM | Permalink | Comments (0)

The Chancellor on the radio this morning tried to persuade me that the "credit crunch" is a random global event, something Britain is best placed to deal with.

It's unpredictable, like a lightning strike. It's incomprehensible and scary, like finding piranhas in your toilet bowl.

The British Government wasn't involved. Perhaps not even there when it happened. And it's hitting every country around the world equally.

No. Pure hand-waving. Factually inaccurate. This crisis was spawned by three overlapping problems, two of which the UK Government actually promoted, and the third they merely failed to tackle.

First, it's a housing bubble, and not just a US subprime bubble but a UK one too, egged on by the former Iron Chancellor. Second, and intertwined with that, it's a consequence of irresponsible market deregulation, backed by the same man. Third, it's a resource crunch, which triggered a summer oil price spike, which Brown singularly failed to prepare for by starting to decarbonise our economy.

Also, we're simply not best placed to deal with it. Darling claimed the Government has the lowest debt in the world. I make that the 4th highest in the OECD.

The genesis of the crisis is not a spooky mystery or something that puzzles economists. It was grimly inevitable, given Labour's policies. Their fingerprints are all over this fiasco as it affects us, and the best they can credibly claim is that it might have been worse if the Tories had been in charge.

I give you a vainglorious Brown, from his 2005 Labour conference speech:

"Why has it been that at every point since 1997 faced with the Asian crisis, the IT collapse, a stock exchange crash, an American recession, last year a house price bubble, this year rising world oil prices, why has it been that at every point since 1997 Britain uniquely has continued to grow?

"In any other decade, a house price bubble would have pushed Britain from boom to bust.

"In any other decade, a doubling of oil prices would have put Britain first in last out and worst hit by a world downturn.

"I tell you, it is because with Bank of England independence, cutting debt, fiscal discipline and the New Deal this Labour government has shown the strength to take the tough long-term decisions, that inflation is low, interest rates are low, growth has been sustained in every year, and we are closer than ever to the goal which drives us forward: the goal of full employment for our generation. Labour, the natural party for economic strength in our country today."

Given that Labour was at that exact time actually working to reinforce the instabilities in our economic system, this speech should be understood as the equivalent of standing on the top of a mountain in the middle of an electrical storm, holding a sword over your head and shouting "all gods are bastards".

All in.

By

on November 23, 2008 4:03 PM | Permalink | Comments (1)

Michael Lewis, author of Liar's Poker, the accidentally timely tale of 1980s' Wall St excess, has written a fascinating article following up the story.

I know by now we all know our credit default swaps from our collateralised debt obligations, but this is still worth a read if you're curious about how it all came about.

The overwhelming irony of the piece for me is that the people who recognised the screwed nature of the market bet against it, and thus supported it. Extraordinary. (illustration above by Ji Lee parodies this)

I'm the economy.

By

on November 1, 2008 4:49 PM | Permalink | Comments (3)

Herewith a belated Halloween cartoon - Nightmare on Wall St is mostly about tricks and provides very little in the way of treats.

From cat and girl, via get rich slowly.

Compulsory reading.

By

on October 17, 2008 12:28 PM | Permalink | Comments (0)

There are people who don't like Simon Jenkins, but I am not one of them. Even where I disagree with him, I always love his writing.

Today's Guardian features a classic Jenkins rant about the miscellaneous silver linings to the financial crisis. Here are a couple of clips to seal the deal.

"Carbon-crazy plans for totemic City skyscrapers modelled on cheese-graters, testicles and mobile phones are being torn up."

"While it may be too early for a bull market in gaiety, we can surely start investing in sanity and pragmatism."

Now go read it, please.

Not quite.

By

on October 17, 2008 1:43 AM | Permalink | Comments (0)

Thumbnail image for helicopter-line.jpg

On Tuesday I went in Robin's place to a lunch organised by the Chamber of Commerce, addressed by Hector Sant of the Financial Services Authority. Oddly, given the interest you might have expected from the political parties, or even the Scottish Government, there was no-one else there from politics.

Mr Sant was an interesting speaker, although constrained as a regulator and unable to give very frank answers to many of the questions. In the case of a question about the need for HBOS to merge with Lloyds, the Scotsman reports him saying that:

..it was obvious the authority was "content with the capital being raised by HBOS".

Yes, he did say that, but then he went on to explain the circumstances under which that assessment had been made, i.e. on the assumption that the proposed merger would go ahead.

I'm not taking a view on the merits of the tie-up, but the fact is there'll be annoyance at the FSA at how he's been misrepresented. Peter Jones has it more accurately in the Times - see the second last paragraph - but that made for a far less newsworthy story.

It's not my usual crowd, bankers. Outside Prestonfield there was an ostentatious helicopter on the lawn (not Hector's, but we couldn't find out whose), and inside a man remarked to me how he felt left behind at a recent Bentley owners' club bash for not himself having a helicopter. I did feel very sorry to hear that someone might have to cope with such an extraordinary level of poverty.

Pleasingly, I also found myself sat next to a resident of Forth Ward, and gave her what I think was a well-received pitch for a vote for Kate Joester (informed by Kate's passionate address to the local party a couple of weeks ago).

Give us the money, or your pensions get it.

By

on October 10, 2008 2:34 PM | Permalink | Comments (0)

The Prime Minister and the Chancellor announced their bailout before the markets opened on Wednesday, and if equity prices are any guide, the results so far are not looking promising (and yes, I also hate graphs like this where the x axis isn't zero).

What I'm now worried about is that the influential City people will say to Gordon "Oh, see your bailout, it wasn't enough: can we have some more money, please? If not, it'll be everyone's pension funds that suffer", as per the classic Bird and Fortune sketch.

Any further reach into taxpayers' pockets won't be any more successful at stabilising the markets, and will just leave the Government with more debts to service while tax receipts drop. Also, as many have noted, the Daily Mash is spot on with this: "The government is to invest £500bn of your money in British banks so they can lend it back to you with interest."

Surely the response should instead be driven by the actual public good? Policymakers should be looking first to protect the people with mortgages they can't pay, the councils who put it all on black in Iceland, the small businesses who can't borrow to tide themselves over, and the others who are suffering outside the Square Mile.

If that requires market intervention (which would look very different to the existing plans), so be it. Perhaps HMG should start taking equity shares in property in exchange for state-backed mortgage guarantees. Perhaps they should be using the already-nationalised banks to lend to good businesses directly, not the seized-up banks. One of the few things Vince Cable's got right about all this is when he compared lending to banks with pushing on a piece of string.

Some of the mortgage-holders (and all of the councils) have simply done the wrong thing and taken too much risk. The next step should be to ensure that these same mistakes can't be made again: no more taking our Council Tax and stashing it with the buccaneer capitalists ever again.

However, I worry that Labour will simply be terrified of the City's threats, and that they'll go ahead and shovel more money into the fire. I do hope I'm wrong.

Bugs in the system.

By

on October 9, 2008 9:43 AM | Permalink | Comments (0)

The millennium bug never materialised, nor did the gigaburger bug, both of which were based on limited numberspaces running out.

The US debt clock has had a real problem of this sort, though. As the BBC report it, the board was put up in 1989 to highlight the federal government's debt reaching a then-shocking $2.7 trillion.

They're upgrading the clock now the total is over $10 trillion, but are thinking ahead and adding two more zeros in case they ever find themselves a quadrillion dollars in the hole. It's a pretty prudent course of action. After all, McCain might still win.

(image from the often-wonderful Pundit Kitchen)

A position of utter ignorance.

By

on October 8, 2008 2:03 PM | Permalink | Comments (1)

The cliches and metaphors burgeon around us as the markets collapse, and hacks breathlessly trade roller-coasters for dominoes, or offer injections in the heart of the whirlwind.

Much of this verbiage is produced because no-one really knows what is going to happen, but they certainly know it's dramatic.

For example, the Newsnight panel last night was 100% journalists and politicians, all without the faintest idea of what the bailout might deliver, let alone where the markets might take us next. Newsnight Scotland went one better, relying on vox pops before running a journalist-only panel (including Douglas Fraser's new incarnation as Economic Disaster Correspondent for the BBC). They didn't know how it would turn out either, it turns out.

No offence to either panel, but the producers might have been better off pulling in some serious economists, historians, and even economic historians. The comparisons might have been more rigorous, and the options set out more clearly.

Economists are famous for their widely diverging opinions: this would be an asset. It would have been more enlightening to have had debate with a Friedmanite, a Keynesian, a Marxist, a Green, plus someone from the soggy New Labour/New Conservative managerial centre. Constructive disagreement would be better, given the gravity of the situation, than the usual synchronised hand-wringing.

In these circumstances, with fear and uncertainty dominant, George Osborne has done the tactically correct thing - supporting the package in principle, but with some caveats. He has no idea whether it'll work, but opposing it now would expose him on the upside if the £500bn bailout does deliver for the markets and for Labour. If it doesn't work the Tories benefit anyway, politically, and the caveats will cover him. Nick Clegg did much the same, although he chose to support the proposals while comparing Brown to the captain of the Titanic.

Here's a counter-prediction. It won't work. None of the strands of the Brown/Darling bailout affect the core problems - those worthless debts and opaque derivatives, the housing bubbles here and abroad, and the wider systemic failures of regulation and oversight. Sure, they can cut interest rates and try to reflate the bubble, but wouldn't it be better to rebuild our economy on a somewhat more substantial basis, one that could be literally sustainable?

Agreeing with the Republican right.

By

on September 28, 2008 10:23 AM | Permalink | Comments (2)

I don't think I've ever done that before. Let's see: war, homophobia, racism, climate change denial, fraud, hypocrisy. Nope, never agreed with them on any of that. Yet the $700bn plan to nationalise US banking losses put Obama on the wrong side, backing Bush despite the cost to his own plans, while the only congressional opposition came from the Republicans, specifically Senator Shelby, who said:

"What troubles me most is that we have been given no credible assurances that this plan will work. We could very well spend $700 billion or $1 trillion and not resolve the crisis. Before I sign off on something of this magnitude, I would want to know that we have exhausted all reasonable alternatives. But I don't believe we can do that in a weekend."

Now, they've got absolutely the wrong end of the stick about the plan. Republican Senator Jim Bunning said the plan was "financial socialism, and it's un-American". I always thought socialism was about giving money from the rich to the poor, not the other way round as per the Bush/Paulson/Bernanke plan, but perhaps I misread Uncle Karl. While their specific concerns are not the same as mine - 180 degrees away, in fact, given my sympathies are with this lot - the conclusion was the same. This plan is bonkers and it won't work.

But now even the Republican opposition has collapsed - presumably they finally worked out that the plan was a massive give-away to their pals - and it'll all go through. Will the credit ratings agencies now do what they'd do to anyone else picking up these toxic debts, and mark down the US Government for the first time from AAA? If you're looking for signs of the impending end of the American imperial phase, that would be a pretty clear one.

Incidentally, over here, the New Labour response is as weak and captured by the markets as the Obama response. Will Hutton wrote today, backing the scheme, that "Once again, the left is coming to capitalism's rescue". Is this a model of capitalism the left should really want to rescue, even with his sea of caveats?

Brown's response was also a mass of absurdities and inconsistencies. He decried the "age of irresponsibility" which he himself has sponsored, then in the next breath said:

"I have told President Bush today that facing global turbulence Britain supports the US plan. Whatever the details of it, it is the right thing to do."

Isn't it irresponsible to support a plan like this irrespective of the details? It's the classic failed politician's response, and it goes like this. Something must be done, and this is something, therefore this must be done. We should perhaps be grateful that this time he's not recommending wasting our money. Nevertheless, this whole scenario feels as though the Joker or the KLF have been put in charge of the global banking system.

Internet and real life converge.

By

on September 25, 2008 10:25 AM | Permalink | Comments (2)

The debate about the demise of capitalism banking crisis now plays out partly online, as one would expect, given the scale of the problems. The $700bn US bailout plan may unravel, and the Wall St Journal claims 'Wall Street' no longer exists (fancy a namechange then?). As Joe Stiglitz put it to the Today programme earlier this week, "they've now found a sucker, the American taxpayer, to take [these debts] off their balance sheet". The Lloyds TSB acquisition of HBOS may now face opposition too, although the scandal is less obvious and the opposition more muted.

People get bored by the technicalities of banking and finance - I know I do. But these deals have one thing in common: the bankers get let off the hook, and the public loses out. In the first case, the US Government's "bad bank" would use taxpayers' money to pay off Wall Street's gambling debts (as MacWhirter noted), and in the second case Lloyds gets to waive competition law to snap up HBOS.

In the face of all this turmoil, the Americans have at least got their internet-related satire working much more effectively than us. First, in the spirit of the FAILblog, I give you Henry Paulson and Ben Bernanke giving evidence on their massive gift to the rich prudent measures to restore confidence in the banking system:

Next, here's some pseudo-spam that's been going round. Thanks to Aaron for the spot.

From: Minister of the Treasury Paulson

Subject: REQUEST FOR URGENT CONFIDENTIAL BUSINESS RELATIONSHIP

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

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