China: still buying the world

China buying up assets around the world...

Is the US just going to sit back and watch?

US - China tensions to rise.

Imperialism is still going strong!

Inevitable really.

Remember when we feared the growth of Japan and the 'Rising Sun' new economy?

A huge power shift from the days when the USA was in this position.

A growing nation with financial clout will use its assets to secure as much access to as many resources and other assets as it needs to sustain growth.

The fact that the rest of the world is suffering is irrelevant.

I wonder how this will affect the future price of these resources here in the West, given the Chinalco-Rio tie-up and the desire for the current Rio board to demand as high a price as possible?

If they set the price too high, we in the West will consume less, if too low then Chinese home market could suffer from surges in demand from the West and a subsequent price increase in their domestic market, making the cost of producing goods in China for export to rise, thus increasing the cost we will have to pay to import. A fine balancing act indeed.

Or should we bring some manufacturing capacity back 'in-house' and trade for needed resources?

If the announcement today is correct, that AD and GB are proposing a massive increase and investment in carbon-neutral industry employing an extra one and half million or so in the 'renewables sector', I guess manufacturing will stay in China.

I dread the day when UK plc is converted to a 'solar powered' green leisure park, filled with farms, birds, wooden-eco-arks and lots of people on state benefits!

Utopia, anyone?

Robert,

You are partly responsible for the UK's current problems.

Back last Autumn (2008), you were busy blogging that immediate steps had to be taken to stop the banking system seizing up and collapsing, which was certainly correct. You painted a picture of no choice, which was not.

I commented early on a few of your blog entries back then that it was better to:

Allow the banks to go under last September, and thus the UK's foreign creditors to lose their money, which may have caused a short-term stop to imports as Britain could not pay its foreign debts, possible short-term riots and a general collapse followed by swift recovery and a strong Britain,

rather than:

A Government takeover of the bank's debt, thus paying off the foreigners in full who held the dodgy bank debt in their billions or possibly trillions (laughing all the way over their good fortune), and thus securing the short-term banking system, whilst indebting the UK taxpayer and his children (and grandchildren) to foreign interests for twenty to thirty years or more of slave like repayment of the foreign debt incurred.


You enthusiastically continued only to favour the latter option, and did not do (I believe) your journalistic duty of raising the possibility of the former option.
And so here we are today, with massive debt on every UK citizen to foreign interests, with Britain due to be sold piece by piece to foreign interests, and with slave-high levels of taxes soon to be imposed on every UK taxpayer for decades to repay the money the government has just spent on buying the banks' foreign debts !

And if you would have commented differently, instead of painting the Government's actions as a fait-accompli, things could have been so different and so much better (but worse in the very short-term).

Why didn't you listen ? Oh well !

#1 "China buying up assets around the world...

Is the US just going to sit back and watch?"

No, they'll rush in to be the first in the queue before their dollars devalue too far. After all, it is that very same dollars that the Chinese will be using to buy up the US assets. If the US does not start redeeming some of their debts, the Chinese will get rid of them some other way and the Yanks will wind up with a fistful of devalued dollars !! (with due apologies to Clint Eastwood)

So China like the UK is investing heavily in the future - spending its way out of the global recession. Perhaps China has moved on from grieving over the lost golden era of economic growth and is preparing for a new one. Yesterdays news begs the question - is 75 billion a price worth paying for a stable economy? In the last recession Norman Lamont said - If higher unemployment is the price we have to pay in order to bring inflation down, then it is a price worth paying. At least this time it is fiscal debt not human cost that is thought to be the price worth paying. Gordon Brown believes our future lies in low-carbon, high- technology manufacturing and services - That is why we reject the idea of cutting spending now, he says. Is he right? What does The Survivors Guide To The Credit Crunch blog have to say about this? Whatever the solution may be, the sooner we accept the circumstances of this recession, the sooner we can take control of them. We still have the ability to shape our future by the choices we make. For you, it could be the opportunity to do something you’ve always wanted to do. But that will require a different mindset. Now that would be a price worth paying.

At least China is buying up assets , unlike the Uk who are selling our assets.Abbey National and our airports to the Spanish, nuclear power to the French and so on.We are the fourth largest economy in the world, why do we let this happen? Why do we let our great icons like the concord rust in hangers and we roll over and let Jaguar Landrover pass meekly into foreign hands? How soon before Rolls Royce and British Airways become foreign owned? Let's get our greatness back and become buyers and investors again in all that once was British and great.My prediction is that by keeping our eyes closed London will no longer be the financial capital of the world.We can't allow this to happen.How much would it cost to modernize the concord, give research and development grants to our excellent engineering firms , or medical research or tourism? Answer - a lot less than the billions we threw at the inept banks!

Robert,

Are you trying to imply that the Chinese didn't want to invest in our banks and that's why they are in difficulty?

Any company that seeks to maintain it's vertical integrity is surely only looking after number one.

If the West has collectively bought all that "tat", it stands to reason that you would invest those capital returns in something slightly more substantial.

I think what would be more illuminating if you could tell us just how much added value the Chinese are adding to these products.

If they have also cornered the oil markets that would explain our governments current fetish with "Green Technology"

#3

Peston is responsible for the global recession because he didn't parrot your drivel about the uk defaulting on it's debts?

I think perhaps you need a good couple of whacks from the clue-bat...

#3 BasaltRocky
------
Robert,

You are partly responsible for the UK's current problems.

Back last Autumn (2008), you were busy blogging that immediate steps had to be taken to stop the banking system seizing up and collapsing, which was certainly correct. You painted a picture of no choice, which was not.

I commented early on a few of your blog entries back then that it was better to:

Allow the banks to go under last September, and thus the UK's foreign creditors to lose their money, which may have caused a short-term stop to imports as Britain could not pay its foreign debts, possible short-term riots and a general collapse followed by swift recovery and a strong Britain,
-------

You have got to be kidding! Last time I looked GB and AD were the PM and Chancellor not Robert Peston. I also have a sneaking suspicion that whatever Mr. Peston states as "the way forward" will be looked upon as the musings of an economics journalist and not advice to be taken literally. GB and AD will make their own mind up.

As for your assumption as to what would have happened if the banks had been allowed to collapse, it is just that, an assumption. In my opinion, which is just as valid and just as large an assumption: if the banks had been allowed to collapse then we would have seen massive job losses, far far more repossesions and a depression lasting for several years.

You forget one thing: whenever anybody defaults on a debt (even a bank) the investors claw back their investment from those people or institutions that owe the defaulters. That means that those foreign investors would have forced the sale of hordes of British homes and companies in order to pay for the debts of the defaulted banks that "owned" the mortgage/loans. The mortgage (a debt) simply transferred from the collapsed bank to the foreign investor and claimed immediately. There would no longer be a contract between the homeowner and the foreign investor they would then be in debt to to safeguard any forced sale of their home.

So China is determined to 'Go Global' and head straight off the cliff with the rest of us.

What is it about the lure of capitalism that makes intelligent men believe that they can tame the beast.
It all starts nice and rosy, some people get richer, some poorer until the imbalance is so great that it needs to be reset.

Capitalism ultimately leads to War, always has and always will as that is the reset required when the imbalances become too great and too global.

The League of Nations, UN, World bank, IMF etc were set up to take the pressure off these imbalances and try to arbitrate in local economic disputes and imbalances and to a certain extent they seemed to have worked.
The reality is that they have been putting off reset day with the result that this reset will be bigger, deeper and longer lasting than in history.

Welcome China, to the Global Economic Express, hope you enjoy the ride.

China buying assets around the world?

Does this also apply to government bonds?

And what of the strength of the yen?

With exchange rates changing as rapidly as they have been, it's not just 'tat' that is imported and becoming more expensive.

The machines and media that we use all seem to be made in china. In the last 3 months our suppliers have seen their costs rise anywhere between 35 and 140 percent. As we passed on the VAT reduction to our customers we will soon have to increase our prices as our profit margin is reducing rapidly. We use a lot of environmentally friendly products but these remain more expensive than the standard ones. Again, these are made in China.

The Yen needs to be revalued to correct it's exchange rate.

I wonder if the Yen will replace the Greenback as the currency standard?

Disturbing thoughts......

#3 BasaltRocky

Of course letting the world (and the people of the UK) know that if you are in trouble the solution is to default, will have no implications in the Global market

The most ridiculous thing I've ever read on here

@3

You are obviously a genius. Collapse of the government, infrastructure, rioting and a complete destruction of our economy would make Britain a stronger nation? Worked well for Zimbabwe didn't it...why didn't anyone listen to your advice - I fancy a doing a spot of looting and fighting my neighbour for the last bit of bread in the shops...

Do you know why Mr Xiong who is 53 despite the pressure of running a big company look 33? The secret is bird nest soup and other health food that only the very rish can afford on a daily basis.
Women in the west should take more notice on bird nest soup rather than cosmetic surgery.

This comment was removed because the moderators found it broke the house rules. Explain.

What precisely is wrong with the Chinese buying up assets around the world?

Rather they acquire them that way, recycling money into other economies - than doing it at the end of a gun barrel.

The wealth of their nation will see their currency appreciate. Chinese products will become more expensive and a trade will become more equitable. There must be some reward for all of the hard work of their citizens over the last few years. I'd quite happily say "welcome to the club".

Otherwise to actively prevent 20% of the World's population from trading as they see fit and prospering as a result seems to me to be very strange.

The fixing of the Remnimbi / Yen to the dollar has been transitory phase, which the Chinese will abandon. If not - we can always take our ball home and not play the game.

Will the transition to such a state of affairs as I have mentioned be easy? Unfortunately most likely not - we're feeling the first of possibly many earthquake like shocks in a transitory phase.

If only some of the Chinese peoples hard earned dollars now spent on African ore deposits, are well spent on the African people - the world would definitely be a better place. No more Western aid required for Africa. Will this happen? Well maybe if you still believe in the tooth fairy

All I can say is that for those readers of Nostradamus, this is another step closer to Chinese world domination. Those who know, and who have read knows what follows.

17. At 09:52am on 06 Mar 2009, PrisonerNumber6 wrote:

"Nostradamus"

Add that to believing in the tooth fairy

#3.

You are right about one thing and one thing only nobody is listening not to each other not to supporters, not to dissenters, not to the wise, not to the experienced.

Everyone is talking but no one is listening government’s media commerce, all those who have never been there our leaders especially, yet some how believe they have an answer.

Tosh the lot it is babble.

The fact is solutions are found by entering a debate with your eyes and your ears not your mouth

Meantime, over here, we have Lord Mandelsson with egg custard all over his face.

Whatever your view of him, he actually took it rather well.

I know that China has a new regime but I wonder what would happen if a protester in Beijing delivered a similar message to a government official.

Why has there been virtually no mention by the BBC of the large contracts secured by Land Rover and Rolls Royce?
Isn't good news reported on anymore?

Oh, silly me! Most of you will hate any reportage which doesn't give an opportunity to moan about Gordon Brown.

11,

Surely you mean the Yuan?

17,

Enlighten me,


what follows ?

To BasaltRocky:

I agree wholeheartedly with the ultimate outcome in your comment – although it’s quite a stretch to label Robert Peston as responsible!

Throughout 2008, we were consistently - and in my opinion incorrectly – informed that these institutions were "Too big to fail". This is, and remains, total poppycock. The precedent has now been set and as sure as God made little apples, we will be put in this position again. There are other global industries and market sectors that are massive in scale and scope, so corporate economic blackmail is now firmly on our agenda for the future.

The actions of a small number of people set our course. It could be that, over 20 years or so, as few as 30 CEO’s and 30 politicians took us in to this situation and they have singularly failed to tidy up their own mess - we’re left with the detritus. Firms that took the biggest and most foolish risks deserved to collapse. Who was it that came to the conclusion that the banks were too big to fail? YES, most of those same 30 CEO’s and 30 politicians! Thanks guys.


To mar39241:

“Whenever anybody defaults on a debt (even a bank) the investors claw back their investment from those people or institutions that owe the defaulters. That means that those foreign investors would have forced the sale of hordes of British homes and companies in order to pay for the debts of the defaulted banks that "owned" the mortgage/loans. The mortgage (a debt) simply transferred from the collapsed bank to the foreign investor and claimed immediately”.

Really? So in effect what you’re saying is that the purchasers of collapsed banks would ‘Claw’ back the owed monies from debtors (UK homeowners), when the banks THEMSELVES didn’t do that exact thing to avoid collapse in the first place? You can’t have it both ways, so how does that work? Other than the sad human factor, did we hear horror stories of the economic fallout from the Lehman Brothers collapse? I don’t recall hearing a single one. Parts of the company were bought up and business went on. I know HBOS is bigger but if it fell, the parts would have been picked up by another plc and the toxicity would have gone with them. If those parts were that bad and no other firm wanted them, THEN the taxpayer could step in – but ONLY then.

Besides, if we’d let the banks collapse then Goodwin (and others) would have been fired ignominiously for gross negligence or gross incompetence – which is exactly what you or I would expect in our own workplaces.

So, we made the wrong choices and it’s too late to make amends. Corporate land has not been made to feel NEARLY enough pain for its folly and we WILL suffer again as a result.

This is great news!

Chinese asset purchases - along with two other factors that hardly anyone is reporting - are supporting the world economy. Indeed they are probably the difference between a depression and a quick recovery from recession. This article explains:

https://www.knowingandmaking.com/2009/03/automatic-stimulus.html

RagJunkie69 do you really think that just letting the banks collapse was an option? Have you any idea of the knock on consequences that would have? The 'strong' banks would have been dragged down in that collapse. How do you think you would survive? Who would pay your wages? Remember that the company you work for would no longer have a bank to pay through and you would have no bank to receive money into. When you go to the shop how would you pay - all of these systems are linked to the banks - the shops would have no banks behind them so they couldn't accept any form of payment. Like it or not we all need these banks to survive - not just for lending money or engaging in high finance but for money to exist as a concept at all!

#20

Are you saying the difference between western and Chinese freedom is that you can threw an egg at your senior officials and get away of it? How funny!

I think every government has to find a way to beat the ressession. UK chooses to save the banks, while China chooses to invest more. It is hard to tell which one is better at the moment, give it a year or two, and then we will see a clearer picture.

Robert - you were 30 floors up on a Chinese high rise block. Have you gone completely mad?

Some interesting insights, though, into the approaching buying spree from the folks who, not so long ago, snapped up a heap of Barclays shares ay seven quid a go.

Did they pass on any tips?

Had Sir Fred Goodwin done to a large Chinese enterprise what he did to RBS he would not have needed a pension.

While I would not favour executions 'pour encourager les autres' perhaps suing for compensation in cases of incompetence or negligence may have the right effect!

Robert

I trust that when Mr Xiong mentioned 'world class' aspirations for Chinalco you drew his attention to the record of UK bankers with similar goals, notably Sir Fred Goodwin

Robert,

Goldman Sachs has been reported to have said that in Jan 2008 there were 64,000 Triple AAA rated ABS' and the like, but there were only 12 similarly rated industrial companies!

If, as we have been informed yesterday that the BOE is going to 'electronically print' £150 Billion and then spend £50 Billion of that on 'Corporate Debt' am I being overly critical to believe that much of this debt will be rated as more risky and liable to default than UK Government Gilts (and they are rated more risky than McDonald's debt!)?

No wonder you have not been interviewing major Chinese investors in UK plc or is the answer self evident and re-affirms Jim Rogers statement that the UK unfortunately has nothing left to sell?

The only strategy that has made any difference to-date is the Government's 'protectionist' strategy of devaluation of the pound.

This is a strategy they do not even own up to as it is just 'a beggar my neighbours' ploy and hardly fosters 'a world solution to a world crisis' that Brown trumpets.

31 posts by 11.30? Thsi China trip isn't setting the world alight, but I'm sure you're enjoying yourself!

Mandelson - Green Custard - Hilarious!

#26 Horned-Devil - You write a lot of words without explicitly stating that you are a communist. Not to worry we can work it out.

Like a lot of communists you are in danger of getting ahead of yourself. Despìte the late but complete embracing of communism (but only for the rich) by the UK and US the banks have not been saved. There is an ongoing attempt to save them - but its success is far from assured.

The coming months will reveal whether or not any options actually exist. Too big to fail or too big to save, that is the question, and it is the single question being repetititively asked by the markets.

Maybe its too late for communism, or any other -ism except cataclysm.

Interesting to read today's comments.

Is the Return of the Yellow Peril cause for alarm ?

Or is it just remodelled in plastics (polymer or explosive) ?

Would YOU like to live in China Mr P ?

Robert,

I quote from this person's predecessor

" Under the care of the Central Party and the State Council and with the support of ministries, local government and party committees, Chinalco has deepened corporate reform in recent years. By improving its internal management and technology level, Chinalco has become much stronger in its competitiveness."

We can learn a lot from these very well educated and able Chinese. I hesitate to call them businessmen because they are part of a State machine. They should be encouraged to fully open their markets so that their global opportunities can be matched by ours in China.

In spite of all the criticism being levelled at China's autocratic leaders it none the less is a good example of how an autocratic government, as opposed to democraticaly elected government, is better able to ensure that the private sector culture(enterprise and reward) is made to work more closely with the public sector culture (service and bureaucracy) for the longer term good of the economy and overall benefit of the people of China.

Right now the Chinese people might not enjoy the same living standards and working conditions as we in the west do but over the next decade or so conditions will get better over there.

Not so long ago I went to see the Terracotta army exhibition at the British museum and when I was there I found myself chatting to a young couple from China. And during our conversation they told me how impressed they were with the UK and more especially with the living standards and working conditions enjoyed by ordinary people here compared to those of the ordinary people in China.

Then I went on to explain that it was not so long ago (when the UK was at the same stage in the industrial revolution cycle that China is now at) that the living and working conditions for many ordinary citizens of this country were just as appalling and difficult as they are in China right now. When they found that hard to believe, I told them to read some of the accounts about what life was like for ordinary working people in early Victorian Britain and how we are now enjoying the fruits of their hard work under similar harsh conditions.

Robert,
Glad to see you being banished to the wilds of hina. The BBC has finally cottoned on to the fact that to talk as though an expert on econimics and business when really you are just looking to promote you own self-worth - nothing you have said in this whole episode has been relevant - it's been overblown and exegerated. How many times have we had 'breathtaking', 'overwhelming', 'jaw-dropping' when we needed sober reporting of facts not speculation and poor assessment. It all started with your precipitve reporting of Northern Rock - it started a run ont he bank which was totally out all proportion to the problem in hand. Please don't come back.

#3 and 9

3 is spot on ,

9 yeah we would have has 2-3years hard time , not 20-30 years of a hard time for our children and grand children.

Galaticous Brown has certianly devoured this country. That the only "super hero" he can be compared to , we jsut need the silver surfer to get rid of him

and we will be doomed if we do not, as UK will the not be a magnet to draw people to perhaps then we will go back to a sustainable population soon and a much better way of life, maybe it will be good to be an economic backwater

Just to clarify (and thanks for the earlier comments from all sides):

1) Letting the banks go under last Autumn (2008) was certainly necessary. The banks will go under anyway (you have to be no student of history to see that within ten years maximum - and probably much, much sooner - the banks from 2008 will be gone with certainty anyway).

So the argument is not as portrayed by some ignorants above, that we had to save the banks. The argument is do we let the banks go under in Autumn 2008, with the debt owed to foreigners by the Banks (not the Government) lost to those foreigners,
or
do we let the banks go under gradually, after getting the UK taxpayers to free the foreigners of their worthless debt, and saddling the UK taxpayers with slave level debts for decades to come.

Those who look at the situation now and say we have saved the banks are unfortunately deluded (or very rich, and glad they persuaded the UK to allow them to take their then worthless money out of the UK's banks at UK taxpayer's expense in time).

2) Letting the banks go bust last Autumn 2008 would have affected Britain's ability to import, but this would have been resolved in two or three months, and life would have then got slowly stronger and Britain greater. Remember, it would be selected banks going under, not the UK Government, and the UK Government would have borrowed its way out within a couple of months without having to pay the Trillions first in redeeming the foreigners' dodgy bank debt. Now we have to seriously worry about the UK Government going bust !

3) Yes, letting the banks go bust last Autumn 2008 would have led to short term civil unrest (disastrous), but it would have been minimised and short term disaster.
The country would have grown strong thereafter. We now face the strong possibility (probability) of a much worse civil unrest scenario not too far down the road.

4) As #24 pointed out (thanks), foreign owners of debt could not have foreclosed any more effectively on the UK's mortgage holders than the UK banks themselves - so this argument is a red herring and fallacious.

5) My children and grandchildren are now set to be fiscal (and thus real) slaves to overseas interests for decades to come. This should not have been allowed to happened !!!!

BasaltRocky

Forget about China, Robert, mate. We need to know more about the future of capitalism in general.

https://moneyistheway.blogspot.com/2009/03/future-of-capitalism.html

Agree with BasaltRocky and most of the others who have been critical of Robert Peston. Unfortunately for license payers many critical posts are probably removed.

I'm not isolating the criticism to Robert and BBC, as all other media companies are equally to blame in exaserbating economic woes in the battle for the most sensational 'scoop'. Whilst the country is undergoing reforms and regulation in the banking world, I think this should be extended to the media 'profession' (I use the term 'profession' in its widest sense). Whilst we clearly don't want to be censoring the media there should be a 'duty of care' responsibility they have to the public, given that many people's key decisions are influenced by the media.

Banking as an industry has received and unprescedented level of criticism (rightly or wrongly) for their actions over the last few years. This in turn should bring tighter controls on the industry for the benefit of the consumers. However this will never happen in the media as there will never be a wide spread campaign that is critical of their own industry. As a result journalists such as Robert Peston can simply ride bandwagons through their career to reap personal rewards.

RagJunkie69 do you really think that just letting the banks collapse was an option? Have you any idea of the knock on consequences that would have? The 'strong' banks would have been dragged down in that collapse. How do you think you would survive? Who would pay your wages? Remember that the company you work for would no longer have a bank to pay through and you would have no bank to receive money into. When you go to the shop how would you pay - all of these systems are linked to the banks - the shops would have no banks behind them so they couldn't accept any form of payment. Like it or not we all need these banks to survive - not just for lending money or engaging in high finance but for money to exist as a concept at all!

Hello Horned_Devil (26),
Thanks for entering into a discussion. I'm not saying it would be easy but you make it sound terrifying for us to even CONTEMPLATE finding out - Its comments like yours that feed the hysteria.

To answer your questions/reply to your comments:

1. Yes, it WAS an option.
2. Yes, I have an idea of the consequences. I dont think they’ll be nearly as bad as you and others think. If I did, I wouldnt make my comment would I.
3. How would I survive? I dont believe I would stop breathing, or be short of food/water etc.
4. Who would pay my salary? The company wages clerk – as usual.
5. WHY would my firm have no bank? Will they ALL collapse. Barclays, HSBC, all the building societies etc – I don’t think so.
6. How would I buy goods? I would pay as I usually do. Cash, credit card etc.
7. Yes they are linked but you seem to think that if 2 or 3 banks collapse, the whole system crashes – it wouldnt.

Why are you so convinced that the world will eat itself because we let A FEW financial institutions fail? What have you been reading to be so sure that Armageddon would follow?

I also disagree that we need banks so that money can survive. They’re just middle men that have gotten used to doing something with the TOKENS while in the middle. Sure it has made it easier for us for the last few hundred years but at what cost eh. What do you think they did in ancient Egypt, ancient Rome, the early renaissance – or any other time BEFORE banks?

I am not, and never have said it would be easy. But what I am saying is that it would have been the right thing to do on many counts. It’s a mess and was always going to be a big problem to sort out – bail out or collapse – but we might as well have started afresh while we had the chance. Our leaders are so intent on recreating the status quo. THIS WILL HAPPEN ALL OVER AGAIN.

Robert

If we have a law obliging companies with capitalisation above a certain threshold to have a "supervisory board of (non-executive) directors to ensure proper behaviour of the executive board of directors, wouldn't it help to avoid the now common snouts in the trough culture.

The supervisory board would control and be responsible for directors salaries, bonuses and other benefits and general good governance.

Relative to the t/o the additional cost could be minimal but the benefits to shareholders, the public and the workforce would be gigantic.

Whats the problem ?

Andrew Dickson

No. 10 Bobrocket

Bob,
You stand to look ridiculous if you persist with this bandwagon of yours about capitalism leading to war. This is ill thought out scaremongering that would be more suited to a teenage discussion group than a blog that's aimed to attract intelligent comment.

Think this through! This is not 1914 or 1939 and even if we are entering a period of wealth destruction....life will go on.

I sympathise with everybody out there who is going through the mill over this......but speaking as someone who has been through a bankruptcy I feel justified in saying that there is a way through this....there really is.

Peston.

Good to see that pin striped overcoat on the news report last night. Almost makes the lack of tie and pink shirt forgiveable.

I notice though the alarming use of estuary english in your reports. Words such as "splurge" and "stuff" have no place in the business world.

Don't you know that using long words and doublespeak is the only way we can look clever enough to justify our excessive pension plans ?

Time to "utilise" more of that business vocabulary...

Re: 37 Windwatcher

Good to see the 'stick your head in the sand and it will all go away' brigade are still alive and kicking.

Let us suppose no-one breathed a word of the problems at Northern Rock, Bradford and Bingley, RBS,HBOS, Lehman Brothers, Bear Stearns, AIG etc.etc. What would have happened? Er, they would have either gone bust or had to ask the Goverment for a bail out.. in what way is that different to what actually happened? The only difference with NR is that someone actually reported what was happenning so that ordinary punters could make their own minds up about what they wanted to do with their own money.

It is scarcely credible that people STILL believe this depression is a media created event..

Once again articles such as this provoke the inevitable outcry about how our historic brands and utilities are being bought up wholesale by Johnny foreigner etc etc. Although no economist, I suspect the answer has something to do with efficient use of capital. The French, for example, will expend any amount of cash in defense of their own - in many cases highly inefficient - flagship manufacturers. The British, however, have a far more global outlook: if your invested Pound is going to earn you a 200% return invested in an Indian Software manufacturer, as opposed to maybe only15-20% with a UK elctricity generator, you go with the former. Moreover, this does not necessarily entail a loss of jobs here in the UK. It just means we may have a greater percentage of people employed in the financial sector as opposed to manufacturing.

Businesses, indeed whole industries rise and then fall; 19C cotton manufacturing, Cornish tin production, large scale coal and steel production. It was the rational use of capital that helped to build these industries up ( as well as the contribution of the people that worked in them ) and when circumstances changed the understanding that money must be used efficiently dictated that it be directed towards the next new growth industry, wherever that may be. And identifying what that is - and where it is -- is something we do pretty well.

Good luck to China, sensible pragmatic GENUINLY prudent leadership.

Anybody fancy getting on their high horse and pointing out a poor human rights record and corruption to them?

Ermm...excuse me...

Guantanomo Bay.

Torture flights

Torture

The 20 minute weapons of mass destruction claim

All of which we were complicit in.

Police raids on the houses of parliament without a warrant.

BAE systems alleged corruption with the Saudis...

Cash for honours


Cash for questions

Bernie ecclestone formulae 1 and the mysterious diapearance of the ban on cigarette advertising following a Labour party donation..

Sadly I could go on.


The bottom line is the Chinese know you have to be tough (make tough decisions, not neccesarily popular ones), commited and diciplined (prudent) and smart with a strong sense of common purpose to get anywhere in the world.

I have this vague memory that was how the British Empire was built...

Something we have forgotton and they have not.

Good on you China..take your chance you earned it, we thre ours away in a fit of greed and arrogance after WW2.


Jericoa

Whilst I am sure that Robert Peston is doing a great job reporting from China, I am concerned that, since his appearance before the Commons committee just a few weeks ago, he has been "removed" from being able to report freely his thoughts about the financial crisis in the UK.

I do not believe that Robert is responsible for our current crisis, rather that this has been brought about by greedy Western governments who chose to ignore the growing need for proper financial regulation during the boom years, while the money just kept on rolling in.

All that Robert has done is to report the situation very ably like the good journalist that he is.

Chief amongst the offenders is the current UK government in which Gordon Brown has held the two most key positions throughout the whole of the current boom and bust cycle, i.e for at least 12 years; - longer than any other comparable western leader!

To the BBC: We need Robert Peston back in the UK please so that we can have more transparent reporting on the new banking act which allows the government to do too much in secret.

We also need his views on the Bank of England's new plan to print money (sorry - I meant quantitative easing!) and how this might affect us all.

At least Robert tells it as it is. And surely the good journalism that results from freedom of speech will always be preferable to the alternative.

"It will all happen again"

Never a true word spoken in jest. Panarama this week illustrated that RBS has substancial business interests in the USA with a part finished HQ building in Kenneticut I believe

A Class action is being planned now in the USA which will bep layed out in the federal Court system( all of which is live on the Web Pacer Federal System), against the Bank RBS, Fred the Shred and others, jointly and severally, I understand.

I also understand that at least 1/2 Billion is being claimed, which would bankrupt Fred if he shares a substancial amount of the Jury's decision on payment, should it go against the Bank.

Americans sue "jointly and severally" in such big civil actions and Fred will find his life turned upsaide down. They will want EVERTHING which involved the rights issue, where US Investors were encouraged to participate by Fred and his Chairmain. Tens of witnesses will be supenaoed and possibly forced to give deopostions in the USA or the UK if the Federal Judge allows the Plaintiffs jursdiction.

Fred Goodwin sadly, is going forward with no corporate shiled or Directors Lliability insurance as RBS presumably will look after their own legal costs and not Sir Freds. ( unless that is another part of his pay off deal) I doubt that Fred thought of future civil actions outside of the UK but he is going to find out very quickly now.

He is likely to be on his own, no RBS support nor Government support but as an individual where his legal costs could run to at least $1 Million annually to the trail which could last months or years. I pity the man as he does not know what is coming at him, every email will be forced to be produced, all minutes and memos, his private computor and all work computors, his ket staff too who worked on the Dutch Bank Deal and all his phone calls including his home and mobiles.

American Litigation is like "losing complete control of your life" whilst you are being financially and repuation raped. it is not a nice experience, I know. Fred's pension will fade into insignificance against a full blown USA Class Action Case for misrepresentation or a conspiracy to mislead investors in the RBS call for funds last year. If they bought that Dutch Bank WITHOUT fully documented numbers and due diligence all signed off by the experts, then Fred is in real doodoo as are other RBS major Players, including the past Chairman.

So much for the US neocons Project for a New American Century (PNAC). Their disastrous policies have handed the new century to Asia.

Robert,

I know that you're busy with all things Chinese at the moment, but is it possible for you to shed some light on the Vauxhall/Opel thingy?

If GM has to go into bankruptcy, is this an opportunity to set up a truely European Car manufacturer? Or is it going to close?

#24 and #42 ragjunkie69

I have to agree with you pretty much 100%; the banks were and are not 'too big to fail' but have used that scare tactic, along with their friends and contacts in govt, to hoover up all the taxpayers funds available for intervention and more

Even if one or more banks had failed messily, it would not have caused more damage than we have suffered; govt would have had no choice but to intervene and clear up the mess through temporary nationalisation etc and it all would have happened quicker so that we could move on

Instead we have the current mess of ongoing failure at zombie banks and the biggest zombie of all: AIG; nothing has been resolved at all but trillions of $ shovelled into the Wall St and City of London furnaces

And GM are now only the most prominent of a long list of other multinationals also joining the 'too big to fail' brigade and trying to extract $bns per month from various govts

Pre-packaged receivership, Chapt 11 bankruptcy, temporary nationalisation - these are all available and better approaches in many countries; if only our political leaders could escape from their severely-limited imaginations

I'm a very agreeable Pirate today

I also agree with #44 icelandexpress that the talk of war, especially with China, is most unlikely. And the more int'l assets the Chinese buy the more likely that they will become engaged in many of the same concerns as we have, eventually including the most important one of all: acting to limit climate change through int'l agreement; the planet didn't do very well during the last 20 years when the US was the only superpower so going back to having 2 might be a good thing!

And I agree with #46 citygambler that anyone still going on about how the media have caused the economic crisis needs to go and get their head examined

Dear Mr Barricades

You still seem to be penetrating the moderating stronghold. Well done.

I like you am somewhat interested in the Vauxhall/Opel thingy.

I think there are opportunities for Europe not threats.

When I was last in the US, two contractors (builders) said to me that it wasn't any surprise to them that the domestic motor vehicle industry was in trouble. They said - look we just aren't going to pay $40,000 (averageish annual salary) for a truck that's going to get beat up in weeks. They said, look they just aren't focussed on what the customer actually wants and will pay for

Cheers

#44 Iceland_Express. Let´s take your advice and think think things through.

Let us for example think of Algeria - 250,000 dead and counting. Would you go for a night on the town in Algiers?

How about Afghanistan? - should be OK if you avoid local weddings.

Moving through the alphabet to Zaire (or as it has been rebranded the DRC) - 5 million dead and counting.

Put off by UK house prices? - try Gaza City, or maybe Mogadishu.

Pat Robertson (former US presidential candidate) has a dream that God wants him to organise the assasination of Hugo Chavez.

Who knows what the House of Saud dreams off - but its unlikely to result in any kind of munificence toward you.

Only yesterday the DPRK say they cannot guarantee the safety of South Korean commercial ailiners. You think the Great Leader thinks anything like you?

Here´s an idea let´s all threaten Russia (support for Georgian atrocities and "missile defence" in Poland and the Czech Republic) -there is a long history of the Russians backing down, and failing to defend themselves.

What about Iran and Syria? George Bush said that Iran is trying to develop nuclear weapons which they will be prepared to use. Sounds pretty bad to me. Maybe Bush was wrong. If he was wrong then maybe he and his mates are also wrong to steal from ordinary citizens in order to give the money to rich people. Maybe ordinary people won´t be too happy when they realise what is going on. Who to blame? Not themselves surely, some foreign body is much more likely.

OK I´ve thought things through - how about you?

Dear ricblogger

have a look at the Stephanomics blogs

QE and QE2 over there

Regards

mrsbloggs13c2

A guy on here says capitalism inevitably leads to war, another guy says ‘no it does not’.

Question,


What would happen if Russia stopped supplying Europe with gas (or even cheap gas) ?

I await your response with interest, especially given that in the UK (esp) there is NO contingency plan for a lack of energy or food.

Generally directors and officers liability insurance will provide cover into the future for actions taken as a director or officer whether you are still one or not.

Don't bother waiting for Gordon Brown to make an apology - create your own now at www.sorryfromgordon.com and send it to 4 of your friends

#48 jericoa

that's a good list of infamy there!

#50 johnnyzero66

your description of what could await Fred the Shred in a US court will cheer a lot of people up; you are right that the US courts can be very aggressive towards white-collar crime, unlike the 'light-touch' here

so his pension money could all go on legal fees; if things become tricky, he might want to try the Ernest Saunder's Guinness 4 defence, though American judges may be less easily won over......

------------
Mr Saunders, 62, chief executive of Guinness at the time of its takeover of Distillers, was jailed for five years in false accounting, theft and conspiracy. The sentence was halved after an earlier appeal and he was released from open prison after serving only 10 months when doctors decided he was suffering from dementia.
Now a company consultant, he says the diagnosis of his condition was mistaken. It is frequently asserted that Saunders procured his early release by pretending to have Alzheimer's, otherwise he is the only known person alive to recover from the disease.
--------------------

if that doesn't work, Fred might be relieved to hear that Conrad Black says his US white-collar prison is quite pleasant!

#31 "This is a strategy they do not even own up to as it is just 'a beggar my neighbours' ploy and hardly fosters 'a world solution to a world crisis' that Brown trumpets."

Perhaps it was after listening to such illuminating pearls of wisdom that Obama's hair went white !!

The world financial system requires a major overhaul. And the fact that no one can agree on how it really works has left humanity in an unprecedented mess.

The 21st century world economic meltdown is a lesson in systems design. The world financial infrastructure affects everyone on the planet, big time. Yet it has evolved as a patchwork, with new money instruments and practices emerging continuously without the slightest process for assessment of consequences or agreement on changes. One country's bad decisions and greedy practices can render the entire system unstable, and dump millions of people into uncertainty, poverty and despair.

The entire comment can be read at: https://www.socialfarts.com/commpost/SFfartview1.asp?doc_id=42

It is supposed to be. Cautious China has been preparing deliberately, and waiting for this golden chance, and now on no account must it let the opportunity slip through its fingers. China just catches the rest of world off its guard.


Do any state-owned entreprises in the west receive such a warming care like Chinalco from the Party, and council, which signposts the interpretation of materialism deeply rooted.


Along with bureaucratism, the "inner machine" is always running with very logical procedures, which can be roughly defined as the strategy.


Reflecting on details deeper, what is it that makes CNA fight its way to the global market? Will it, not for long, be stuck with its cheap human resorces as it win significantly adquate over the moment's world's collapse, as the prices of its products begin to rise?

@MrsBloggs

I like Stephanie's blog too, although I do tend to find it is the stuff that she leaves out and the assumptions that are made in her writings that are quite frustrating.

She fails to properly acknowledge all the variables in the models that she uses, and that is presumably OK in theory, but I'm afraid I'm with Von Moltke "no battle plan survives contact with the enemy"

I have a £1 in my pocket if Vauxhall would like to enter talks...hopefully some of the power rubs off from the non-moderation

I don't want to pretend to be a philosopher here but just express my point that capitalism is not necessarily leading to the war even if it does has its own systemic defects, and so does other forms. The crisis is cyclical to alert, not to ruin.

I believe I may just have witnessed the first signs of a lack of confidence in our esteemed Prime Minister.

In his address to the faithfull in Dundee there were a number of strategic pauses for "spontaneous" applause from the assembled masses.

The silence was, as they say, deafening.

Having abandoned Prudence, its clear that his new best friend is called Platitude.

Dundee - the home of comics - you've got to laugh.

#59 Unless, of course, the insurer itself have gone bust !! I hope they were not insured with AIG !!

It would be fun watching the US courts trying to get money out of Sir Fred and RBS, only for them to be point onwards to AIG for their claim !! Oops !!

#65 I'll see you and raise you 2 quid !! I'll buy that hideous thing in Luton, blow it up and build a very tall tower there just to block off the flight path to that strip of mouldering concrete known as Luton Airport.

@42

My comments were based on the fact that almost the whole of civilisation has embraced money as a means of trade. The collapse of one bank can and possibly will bring down the whole house of cards (especially in the UK) given the inter-reliance on each other. The flow of money and the large sums they trade between each other means that the falling down of one will inevitably do the same to others. By allowing Lehman to fall, the US government hastened the crisis that we are now in (but don't get me wrong, I'm not saying that they caused it - these blogs have picked up on the various factors behind that!)

I look at money as the lifeblood of our present set up economy and way of life. That makes the banks (unfortunately) the heart of it. If for example we let HBOS collapse like other firms have the result would be disastrous. Whilst people point to the government guarantee scheme for depositors how do you think that would work in reality. If 10,000 savers (guess number) suddenly had to make claims to the government for their money (a la some of the Icelandic banks) do you really think that they would get anywhere near a quick response to get their funds? What would they do in the short-term (say 2-3 months whilst the claims were addressed).

You state that you would be paid as normal but how would you if the mechanism for these payments disappeared (eg your bank was one that was allowed to go under) - your company couldn't give you cash, they wont be set up to do that. If the shop you wanted to buy their food from had the bank collapse they would not be able to trade - they wouldn't be able to take credit/debit cards as their whole back end infrastructure would have collapsed. I believe that the SYSTEMS that these banks represent are too important to fall, not the individual banks themselves. The complexity of just the normal banking system and its integration into almost every aspect of our lives is massively important and THAT is what cannot be allowed to fail.

I don't necessarily agree with the governments overall approach (and certainly not the bankers approach!) but if it is true that some of these banks were hours away from shutting up shop then they HAD to be saved - to preserve the whole systems and structures that they represent

This comment was removed because the moderators found it broke the house rules. Explain.

#56, #58
Wars happen for a variety of reasons. But to say that capitalism always ends in war is just unfounded.......I would be more inclined to agree with the notion that LACK of capitalism leads to war.

Anyway to get back to the subject which is how to manage the deflationary slump that faces us.

I do believe that working through the G20 is the best plan of attack. I also believe that there should be some reward for the bailers and some hurt for the bailed.

China is a net bailer as is USA, UK.......time old Sarko put his hand in his pocket methinks, and what about Merkel? The bailed (Ireland, Spain, Greece etc) should have to put up collateral to the bailers....beef, fish, holiday resorts.....these guys have stuff we want...there's deals to be done here.

Meanwhile, back in the Middle Empire, perhaps Robert could check out some of the goings-on in Beijing.

"Answering a question on whether China can rule out the possibility of depreciating the yuan to support economic growth, he (central bank governor Zhou Xiaochuan) said, "The question should be raised to some countries where the financial crisis originated from: what's going to happen eventually on your side?" In other words, "over to you, matey" !!

We've now seem Crash Gordon's response - the printing press !! What's America's response and that of the rest of Europe ??

Will Britain end up a country of peons after all the best brains have been drained to pastures new ?? Will conscriptions through the courts be re-instituted to reduce pressure on the prisons ?? Transportation is out of the question since Oz is quite loathed to take on more British criminals when they have enough home-grown ones !! They are still trying to track down the evil sods who deliberately started bush fires that killed so many people !!

To #42,

There was no reason, according to your argument, not to let any individual bank go bust, and immediately nationalise it, so carrying on its day to day function.

The creditors of the nationalised bank would have been wiped out (as stated earlier), but the day to day functions of the newly nationalised bank would have carried on unchanged.

And such an act may have brought other banks down (they were creditors, after all, to some extent), so a chain reaction of nationalisation would have been necessary for quite a few banks. Short term problems would have occurred with paying for imports, but after a month or two the new Government would start to restore Britain.

Your argument that banking in the UK would stop just does not hold water - the bankruptcy laws and limited liability invented in the 19th century take care of that.
The only thing that would have stopped would have been the Government's reputation, and the wealth of the Creditors.

To save these two, we and our children and grandchildren are now fiscally enslaved (and so literally too) for decades to come.

Thanks Robert for not protesting last Autumn.

Sorry - not # 42, I mean to #70:

To #70,

There was no reason, according to your argument, not to let any individual bank go bust, and immediately nationalise it, so carrying on its day to day function.

The creditors of the nationalised bank would have been wiped out (as stated earlier), but the day to day functions of the newly nationalised bank would have carried on unchanged.

And such an act may have brought other banks down (they were creditors, after all, to some extent), so a chain reaction of nationalisation would have been necessary for quite a few banks. Short term problems would have occurred with paying for imports, but after a month or two the new Government would start to restore Britain.

Your argument that banking in the UK would stop just does not hold water - the bankruptcy laws and limited liability invented in the 19th century take care of that.
The only thing that would have stopped would have been the Government's reputation, and the wealth of the Creditors.

To save these two, we and our children and grandchildren are now fiscally enslaved (and so literally too) for decades to come.

Thanks Robert for not protesting last Autumn.

This comment was removed because the moderators found it broke the house rules. Explain.

@69

that's a bit rich for me, I might consider putting in a sniper bid just seconds before the end of the auction once I've raided the change jar

When Crash Gordon said "financial stimulus" he means chucking wads of cash at the banks.

When the Chinese said the same thing they mean this - https://www.chinadaily.com.cn/china/2009-03/06/content_7549048.htm - the fastest operational railway in the world. The 320kph railway mentioned is the French TGV, which is a excellent system to ride on (having used it several times in the last couple of years) !! The Chinese one will run at 350 kph !!

When will Brown get it through his armour-plated skull that we need more of this and less of chucking wads of cash at the banks ??

#68

yes indeed

but AIG would defend the claim under the D&O liability insurance

they would appoint lawyers to handle the case

I wonder how good they are at doing this and whether its cheaper to settle than fight.

#77 Watch it !! I have my reserves. A whole coffee jar full of old silver sixpences !! God bless grandma and her thrifty ways !!

"26. At 10:54am on 06 Mar 2009, Horned_Devil wrote:

Like it or not we all need these banks to survive - not just for lending money or engaging in high finance but for money to exist as a concept at all!"

So what you are saying is that banks are too important to fail.

That pretty much means that they are a guaranteed money making machine when in private hands.

You have just made a very good argument for the nationalisation of all banking activities. Or fundamental reform of the banking system.

#76 DeniseCullum222

I do not wish to sound pedantic or critical, but a few more full stops and capital letters would make your contribution to the blog easier to digest.
LOL

#77 and #69

between us we might raise a fiver

This comment was removed because the moderators found it broke the house rules. Explain.

@80

silver sixpences? I fear you'll have to visit the BoE before you can bid again and leave the field wide open

I must get to work on my contract remuneration and pension details

There may be a position of lowly flunky, but I'd have to advertise it to be legal

Why such anger for a post saying that capitalism leads to war?

Wars are fought over resources. In a capitalist world resources are NOT shared for the good of humanity but fought over and rationed out etc for profit. Therefore when crises happen (which will always happen in capitalism as they are inherent to the system) then that system COULD lead to war.

Not necessarily WILL but most certainly could. The main wars fought have always been after economic collapses (go read the history of it all.)

As one poster said - what if Russia turns off the gas to Europe - quite.
Some commentators are already asking what is America going to do about the European arm of GM as 300thousand European jobs are threatened. Now I doubt we are going to go to war over a car company but imagine all these little tensions escalated ten fold if this crisis continues for a year or two longer.

Imagine the crisis that could unfold if China and other countries stop lending to the US etc. To say that capitalism always leads to war may be scary stuff and a bit over the top but to deny that it ever does so... plain dumb.

Check this out re what could be going to unfold /www.resist.org.uk/?q=node/837

@mrsbloggs

Would the insurance still be valid, however, when the policy holder has knowingly violated the terms of the contract?

After all if you leave your keys in the car and its stolen they don't tend to pay out

They might also argue that they have to defend the integrity of the bank and they have already remunerated Sir Fred for his failures in office

If effectively the bank can be seen to be bankrupt before the government took over then all losses fall on the individuals responsible to the shareholders. The whole ponzi scheme might then be exposed and we'd have abrogated responsibility for the investigation to a foreign power instead of doing it ourselves.

On top of that I thought that it was Crash and Darling the boy wonder who turned around to the banks and make their rights issues when they first went to try to shore up their balances to the BoE, and those documents wouldn't ordinarily be seen for 30 years

This comment was removed because the moderators found it broke the house rules. Explain.

39#
"ignorant is an adjective not a noun so what does that make you?
But to go with your phraseology, you are the one that is deludering himself!

I suggest anyone who thinks it was best to allow the banks to fail is either

a) Someone who has no money and is filled with envy for those that have.

or

b) Someone who has money who completely lacks vision.

For anyone who lacks vision, I propose the following. Send me a cheque for £50k. After three months I will toss a coin. If it's heads you get it back. Tails I get to keep it. If you disagree with the odds talk to some Equitable Life pension holders. Hopefully this experiment will allow you to gain some empathy, and understand that a million people feeling like this is not in any way good.

The governments failing was not in rescuing the banks, but allowing them to get to the position where they needed saving in the first place.

#81true_liberal

I believe you may have misinterpreted the sentiment of Horned_Devil's posting.

My own take on it was that he was arguing that we could not afford the loss of the banking SYSTEM, not the loss of individual banks.

I agree, without reservation, with your last sentence.

No. 74. BasaltRocky wrote:
"There was no reason not to let any individual bank go bust, and immediately nationalise it, so carrying on its day to day function. The creditors of the nationalised bank would have been wiped out (as stated earlier), but the day to day functions of the newly nationalised bank would have carried on unchanged."


I would like the bad banks to go away and stop asking the taxpayer for money.
However, before deciding to allow them to go bust we would first need to understand exactly who their creditors are and what would occur if the banks defaulted on their obligations.

For instance:
My company has X million pounds deposited with a UK commercial bank. Therefore, my company is one of the bank's creditors.
My pension fund provider has X trillion pounds deposited with a UK commercial bank. Therefore it is one of the bank's creditors.
Other important institutions have money deposited with the bank, and are therefore among the bank's creditors.
The British government needs to sell gilts to Japanese investors, and these investors have money on deposit with their broker, who has the money deposited in a UK commercial bank. Therefore, the Japanese investor is one of the bank's creditors.

I suspect the list would go on and on, with each creditor turning out to be essential for the running of the economy. When Lehman Bros was left to go bust, the chain reaction of default caused the credit crunch to turn into a full blown economic crisis/ depression.

#3 and #39 BasaltRocky

I agree that the banks should have been let go at the start, but you are talking about the Reykjavic on Thames scenario here.

What happened in Iceland was that the people came out on the streets with their saucepans and banged them until the government resigned (that was about the limit of the civil unrest). So Gordon was never going to let that happen here - much better to waste huge amounts of borrowed tax money propping things up to stay in power a bit longer.

Some of the banks will probably collapse eventually, as you say. It looks like somebody in the government realises there is a fair chance of this, which is why they are being careful not to nationalise them. Then, if things get worse, they can cut the banks adrift and avoid the UK going down with them. That would leave the taxpayer with only the eye-watering, but finite, debts taken on so far, rather than a potentially limitless liability if they were nationalised.

The disruption foreseen by horned_devil at #13 and #26 sounds like scaremongering - the banks would continue to operate perfectly well with an administration team replacing the top management until the working parts were sold. Probably better in fact.

In respect to the comments on Wars ;

- I doubt the current situation will lead to
war. However what might do is when the oil production can no longer support he worlds ever increasing demand for it ; don't be fooled into thinking that as the oil price has decreased it won't be climbing its way up to $200 and beyond when the world economy returns to growth again...

In respect of the comments on capitalism etc;

- The capitalist system is still an effective method of production but it needs targeted intelligent regulation and monitoring. Each country has to encourage fee-trade but at the same time ensure that companies that have significance influence/control over money supply, energy, communication networks, medical treatment/drugs, food, water and transport are run in a sustainable way and in also in the interests of the country,

and not ;

- have airports takeover by hugely indebted foreign corporations
- allow foreign energy companies to charge UK residents at higher rates so they can subsidise residents of other countries
- allow banks with huge capital bases / asset books to become over exposed to one particular sector or country etc

#72 Iceland_Express: OK to be accurate each crisis in capitalism has ordinarily been resolved (or postponed) through the mechanism of war. Further the resource exploitation that is a pre-requisite requirement of capitalism has ordinarily been abetted through the threat of or, when necessary, recourse to organised violence.

Now let us take a look at the G20, your preferred mechanism for dealing with the deflationary slump that faces us.

What exactly is the role envisioned for Russia? Could it by any chance be limited to their continuing to supply cheap gas to Western Europe? What happens if, for whatever reason the Russians decline to play ball?

Who exactly is the UK baling out? Perhaps Iceland - oh no ZaNu Labour threatened Iceland with anti terrror legislation.

Maybe the UK is simply baling out a bunch of rapacious banks who have previously bought access to the highest echelons of the political establishment.

Now you suggest that the French should somehow be dragooned into meeting the cost of baling out British incompetents. Exactly why would they find that an attractive notion?

Don´t you see you are already making subjective judgements between the deserving and the undeserving, and begining to demand things from those you consider undeserving. QED a crisis in capitalism is ordinarily resolved (or postponed) through recourse to war.

@90

I would only disagree in so far as it is an accepted point of the capitalist system that entities will occasionally fail

If the banks had gone to the wall then someone would have stepped in to pick up the "nice" assets...see Barclays buyout of a bit of Lehman.

All bad debt is thus eradicated from the business, encapsulated in a separate entity and the released body can continue to operate

The scandal of Standard Life should have been the warning bell from the FSA, but still the government prevaricates.

As they are so often subject of criticism I would like to complement the moderators on their current speed of response.

Horned Devil (70)

I really do understand your concerns and I appreciate the reasoned debate but I just don’t subscribe to the same line of thought. You are of course correct in saying that the current financial set-up is extremely inter-dependent, but I cannot agree that if one goes, they all go. I would admit that if one went another MIGHT and I have tried to imagine that the domino effect would come into force but after much deliberation, I really cant see that it would actually happen.

If our financial institutions have created systems that are so entwined, so complex and with such vast amounts of money, then in my mind it is just another crime they are guilty of.

Yes money, cash, tokens etc ARE the lifeblood and the banks ARE at the heart of it – but that’s only because THEY put themselves there, with THEIR systems and THEIR management. Both have proved to be inadequate and nowhere near fit for purpose. You hit the nail on the head with the HBOS example of 2-3 months of uncertainty and real, actual pain for many people. I have never denied that this wouldn’t be the case and it might even be 6months or more, but I do think that it would be better than the 1-3 years of a long, drawn out drip-drip of calamity, misery and gloom that we now face – plus the debt riddled future now carved in stone for our children to enjoy as they grow old.

I bank with Lloyds and I also have two building society accounts. If the Lloyds collapsed I would have my salary paid into one of the other accounts. The only way that I wouldn’t get paid at all is if the IT infrastructure collapsed and that isn’t the issue were talking about. The same applies to the retail and service trade. Just think of the hurdles commerce and enterprise has had to traverse over the last 400 years…don’t think for one minute they couldn’t overcome this hurdle also – and very quickly too. Capitalism doesn’t like being kept waiting!

Yes, the systems are wrong. They are all-encompassing, far-reaching and are controlled by a select few. But, because we have saved it – were now stuck with it. If we had let it collapse, we would have sent a clear message to the corporate world and in the case of our financial systems, they might have been encouraged to make proper, long-term and sustainable improvements. Correct me if I’m wrong but I understand that Fractional Reserve Banking ratios have been reduced from 40:1 to 20:1. This wont touch the sides of any future similar problem. All it means is that the huge losses were currently seeing would be roughly halved – now that just isnt good enough for me.

The system is indeed broken. We are simply patching it up and sending it back on its merry way. Be prepared for this whole sorry saga to draw on and on and on.

Horned Devil and BasaltRocky, Im about to leave work and I wont see any reply tonight. However, I have enjoyed having this chat and I will return to RP’s blog on Monday. Im often about so I will look out for a reply. Have a good weekend both.

#96

Did you mean Equitable rather that Standard?

Re 96

I'm not sure capitalism allows the neat packaging of worthy creditors and unworthy ones. Surely they all have an equal claim.

Despite the numbers of people who gleefully rub their hands as the markets rise, its clear that the public at large have no stomach for unconstrained capitalism and it is a fallacy to assume that our current system is truly capitalist, any more than the old Soviet system was truly communist.