Tories to give sweeping new powers to Bank

Is this just an early sign of clear blue water between the Conservatives and Labour on key areas for the next elections.

Is Adair Turner's comments about being agnostic on the subject perhaps a feeler out to the tories to keep the job post election?

Isn't a more crucial business story the following

https://news.bbc.co.uk/1/hi/business/8116234.stm

Interesting to see that the OECD sees the UK as lagging behind the rest of the first world in recovery only starting growth in 2011 rather than 2010 for much of the rest of the OECD. So much for Gordon's comments about us being best positioned to ride out the recession!

If reform is needed of the tri-partite system because the orginal model failed that means the architect of that model is a failure!

Why is Crash Gordon still in Downing Street?

I think we should get Blair infront of the Iraq Enquiry for crimes committed and Brown infront of a new enquiry about his appauling mis-management of our economy and it's economic institutions.........this is just a big a crime and he should answer for it!

I'm interested to see how the tories translate this in to a palatable policy for the next election, where the electorate will be predominantly concerned with how much money they're going to keep in their back pockets.

Anything to do with reshuffling the banking system at such a level is merely a blur to the majority who blindly hold the current government / ALL banks responsible for the mess that they are in personally.
Any proposed change therefore will simply ring a bell with the disillusioned electorate and plant a vote in the blue box by default.

It's easy to be in opposition. It's less easy delivering on promises.

I'd expect a prompt response from Mr Darling that ultimately amounts to nothing.

The Bank of England doesn't need new powers. It needs emptiness and peace -

https://moneyistheway.blogspot.com/2009/06/emptiness-is-my-gift-to-you.html

Powers make you angry. Emptiness enlightens you.

I agree with Osborne that the distribution of responsibilities between the three institutions has become blurred and inefficient.

So, the only real answer to this is for the BoE to absorb the FSA and for the Treasury to be told to butt out.. In fact the Treasury should be moved to N Wales or somewhere nice and remote so that its pals in the City can't keep popping round to treat officials to lunch.

I would also ensure the MPC has some real world people on it and that it met in public at a range of sites all over the country having taken evidence from "locals" for at least a few days before the meeting....

That's all very well, but mainly speculation - however well founded.

Wouldn't it be better to wait to find out what the Conservatives actually have to say on the matter, rather than the endless trailing of what might be?

I understand the need to "scoop" the opposition media, but it would be nice to have news as new, rather than a re-hash of what someone's told you in confidence?

It's a bit like Ministers pre-announcing initiatives on the Today programme, rather than to Parliament. Is it too much to ask that news is just that - not conjecture?

Turner's volte-face...I wonder what changed his mind?

However...does this mean that Merv will get to be able do what he has mooted now for some time, namely to slice and dice the leviathan banks???

...and will Osborne's new Government enact a new UK version of the US's old (post Depression) Glass-Steagall Act in order to separate the retail banks from the casino investment banks???

This will be the real litmus test of how much the Tories are beholden to the City.

The problem for any banking regulator is that they are trying to manage the chief practitioners of the seven deadly sins now that the concept and practice of a "faithful steward" is in decline.

Bankers should have [unhedgable]pensions based on the average net value of banking shares when they retire ,to get them to take responsibility for banking culture ,they go to the same clubs and meet on the same yachts anyway.

Banking regulators need also to review the definition of what constitutes a "fit and proper person" allowed to run a bank .

It should mean more than belonging to backscratchers anonymous

The question how the supervisory and regulatory functions are distributed amongst the Bank of England , the Treasury and FSA is important, but this is not the whole story. What policies will these institutions enforce? Will they really reign in the 'big banks'?
Is there are gravy train running all through the major banks, pension funds, insurance companies, hedge funds and supervisory bodies which creates a situation where nobody wants to rock the boat and all benefit from not interfering with a system that rewards them well? A network of contacts and 'friendships' that serves those well who are part of the 'financial elite' and who keep quiet? The consequences of such behaviour corrupting all major financial centres in the Western world are serious and have just cost the world economy around 10 trillion US dollars. Who will change these structures of injustice? President Obama seems to be more determined than Prime Minister Brown to reform a morally corrupt global financial system. I hope he suceeds.
More information about the global consequences of morally corrupt financial institutions can be found here:
https://globalinsights.wordpress.com/

Strictest regulation, full transparency and limiting the size of global banks are necessary to reign in these financial factories of moral and political corruption. There is no other way.

Im not the biggest fan of the Tories, but halleluja to that.

The present system has obviously failed and has been a complete and utter disaster (no debate there) so why try to retain and protect it rather than reform it (unless GB and AD are trying to save face as they came up with it in the first place - which seems to be a typical labour response to most things at the moment).

Lets see what the meat of the proposal from GO now is......

Really?

Is this the same Tory party who fought against the independence of the BoE in the early days of the current Government?

I would send out a stark warning about the plan to let the BoE command any more authority than it's currently doing.

John Moulton (Alchemy) appeared on Channel 4 on a special programme into the financial crisis. In this program and more widely since he has stated that the BoE didn't understand what a CDO was and he even claimed he had to explain to the BoE what one was as late as 2008!

Is this really the body to check what banks are up to? How can the BoE watch the 'big picture' and yet still get into the nitty gritty of the fantastical instruments dreamed up by financial nerds to make money from thin air?

It's a plan doomed to fail. George Osborne is clearly a "Brown in Blue clothing" and I cannot see what he offers as chancellor that the last 6 chancellors haven't - except that he hasn't already messed up the job (like the last 6 have).

Any chancellor who's opening line ISN'T "We need to look hard at changing the Capitalist system which drives our Economies into Boom and Bust cycles is not a Chancellor worth listening to.

It's no good simply staing "We'll stop boom and bust" and then trot out a load of regulations or changes which are very similar to the last set (that clearly didn't work), and in fact very similar to the set we have been operating under for the last 100 years.

The public must not let themselves be fooled again.

Banking under Democracy is no more than a sophisticated methodology that induces participant compliance in order to convert substantial assets accrued over generations into promices backed by nothing other than the banking systems perpetual reamortization of liars promices to repay enabling the further concentration on those that can be fooled all of the time ,to sustain the steady stream of bonus income.

1 It would seem that the Tories are taking a tougher line on regulation and that the Brown crew seem inexplicably intoxicated with the spirit of laissez faire;

2 As indicated by the Bank's Chief Economist (Spencer Dale) relying on the bank rate is no longer adequate - at last some realistic thinking. Go one further and abolish the country's most unproductive quango - The MPC

They can regulate all they like, at the end of the day anything that has an impact on tax income in these proportions is a political decision.

So unless the regulator has the power and the courage to over ride that we will find ourselves in this position again. OR it has to be a legal requirement.

Personally I cant see either happening so we are doomed to a weak and ineffectual system - again

Remove the hype the complexity and in reality there are two compliance issues with financial institutions - operational and balance sheet with general corporate governance. They are quite different and is this not where clear separation lies. FSA should look after operational and Bank the balance sheet ratios etc and fit for purpose executives in the financial institutions of importance? Let me explain

There are two key aspects to auditing as far as operational compliance is concerned.

First the checks that the salient/value creating processes are secure and auditable to ensure compliance and risk is correctly recorded at source. This requires a graphical depiction of the actual process something that auditors were doing 35 years ago - I know I was one! Remember this is about people where technology should sit and record where information is created, but failed to do so. I quote George Colony CEO and founder of Forrester Research If we dont get from IT to BT (Business Technology) were going to have more disasters like our present mortgage meltdown. Why? Because IT creates impenetrable systems that human beings cant manage. BT is about human beings back in control.

Second it is about real time tracking and reporting of such processes with full audit trail, who did what and when.

Take the US mortgage meltdown. The seller sells to a person with low income an initial low cost mortgage on a property that is at peak valuation with very little if any deposit - all risk factors. Add on the fact in the US the mortgage sticks with the property not the person = potential very high risk. But none of that was analysed at the front end or if it was it was not recorded in formal systems and any interest rate to reflect such high risk likely could not be sold. Too many vested interests not to do these deals so risk factors ignored never recorded with the resultant food chain ignorant of the real risks - and we now know the result.

Add to that the breaking of fundamental rules of borrowing short in a liquid market and lending long - a balance sheet issue and of course executives not really understanding their business?

Both compliance aspects failed resulting in the short term money on the markets withdrawing - it was a disaster waiting to happen?

The skill sets to monitor each are quite different but the operational compliance applies to all regulated bodies why duplicate that in the Bank?

#1 Ian_The_Chopper

The OECD story is another example of the lack of understanding all Economists have - for the last 12 months it's been...

The recession is slowing
The rate of decline is steadying
The bottom is near
We're nearly at the bottom
There are some green shoots in the economy
There are some little green men
There are signs of recovery in manufacturing / housing / the wider Economy
We are better placed than most
The figures were 'not as bad as expected'
The signs of the slowdown slowing are appearing
We can see the bottom now
I can see your bottom now
I am talking from my bottom
The upturn is coming
.
.
.
.
.
I could go on all day - can't you see the pattern?

THEY DON'T KNOW - UNTIL THE JOBS STOP BEING LOST THERE WILL NOT BE A BOTTOM.
....unless the Economists know how to produce without Capital with which to Employ a workforce (and I don't mean slavery)

Remember Baroness Vadera and her "Green shoots" that she could see in the Economy? - That was in January, we're now in June and the jobs are still being lost.

I had 'Green shoots' in my Garden in January - and now I am eating fully grown potatoes.

The whole predicting of the bottom of the recession is a stalling tactic to keep the daft public going on mis-guided hope of a recovery.

This also reflect the ethos of the Government and Economists as a whole - which is "You can lie yourself out of anything - simply keep lying until everyone stops bothering to point out you're lying - at that point your lie becomes true!"

#13 watriler

"It would seem that the Tories are taking a tougher line on regulation and that the Brown crew seem inexplicably intoxicated with the spirit of laissez faire"

THE TORIES INVENTED LAISSEZ FAIRE ECONOMICS - IT'S THEIR ECONOMIC PHILOSOPHY TO BE 'LIGHT TOUCH' AS DRIVEN BY THEIR DEDICATION TO FRIEDMAN.

As soon as they get in all this tighter controls nonsense will go straight out of the parlimentary window.

If you believe it then you are simply a mug.

My congratulations go to BankruptBritainRIP for his/her nickname of 'Crash' for Prime Minister Gordon Brown. My nickname for him until now was 'Stability Brown'. May I please use yours in future?

dudeKenny67

Whilst accepting the logic of having one body with overall responsibility for overseeing that the UK banking and finacial systems are being correctly managed is sound in principle, it is difficult to believe that the BOE posseses all the abilities and resources to be all things to all people when it comes to overseeing the regulation of the whole of the UK finacial industry.

Especially since we now know that some of the big independent UK banks are prone to borrowing money vast sums of money from overseas to serve the self interests even if such borrowings might not end up as being in the best interests of the UK economy or the UK taxpayers.

Until the UK has a much better planned economy (better than we have seen since WW2) then it is difficult to see how these markets can be better regulated to cope with the ideological swings that take place every time there is a change in government.

The plan for our economy needs to be more broadly based and reflect the Parliamentary consensus (not just the two main party's) of what is good for the country and its citizens. We need less party dogma.

If the old system failed so badly why would GB want to keep it? He is so out of touch. The Conservatives only need to say we'll change it to win votes. Why is GB not working harder for Labour?
Labour realise a lost cause. No one wants to challenge GB for leadership to be leader for 11 months. It is a major worry that we will need to suffer another 11 months of a government who will pass over a terrible state of affairs to the Conservative party. We need reform now or it will be harder and longer.

Excellent contribution No. 15 Consider "Add to that the breaking of fundamental rules of borrowing short in a liquid market and lending long - a balance sheet issue and of course executives not really understanding their business?" Quite so but does Mr £9.6M Hester possibly fit this descriptor?

#18 dudekenny67,

You are well behind on the Crash Gordon nickname, it's been used for months. But after the Labour wimps couldn't get rid of him, I think it's time for a new name. How about Rehash Gordon?

17. At 12:13pm on 24 Jun 2009, writingsonthewall wrote

THE TORIES INVENTED LAISSEZ FAIRE ECONOMICS - IT'S THEIR ECONOMIC PHILOSOPHY TO BE 'LIGHT TOUCH' AS DRIVEN BY THEIR DEDICATION TO FRIEDMAN.

Unfortunately you need to choose a party with the potential to govern. If you can't choose and hate them all you can always consider moving. Ley's not kid ourselves, taxes will be very high for many years, public spending will need to be cut and unemployment will remain stubbornly high. We are not in a 20 year growth economy anymore. We need to face the truth and get on with it. Make your choice.

Oh and all the wrongs of the past are quickly forgiven, just so they can go on to make more, blighting our children , childrens future!! Its true that the two CC are equally faulty products, aka CC = Capitalism / Communisim............... well at least under the latter you might end up in the GULAG / SALT MINES...............for misappropriation of funds

"In the City, bankers tell me that what they most want is an end to the bickering between the Bank of England, the FSA and the Treasury about who does what."
Is this really what they want most?I think larger bonuses might feature higher on the Christmas list.
Although the mismanagement and regulation-grey-areas of the current banking system are frankly laughable, doesn't their exploitation flaunting of these very systems mean that Britain's "City bankers" have lost the right to an input on how they should be run?

Or just merge the Bank of England with the FSA. I think Osbourne has it right - this current balance of power between the tripartite only confuses matters, besides who can fully trust the FSA to do their job now?


And as for a new nickname for our Prime Minister, I would have thought Trash Gordon would be more apt...

16. At 12:07pm on 24 Jun 2009, writingsonthewall wrote:
'THEY DON'T KNOW - UNTIL THE JOBS STOP BEING LOST THERE WILL NOT BE A BOTTOM.
....unless the Economists know how to produce without Capital with which to Employ a workforce (and I don't mean slavery)

Remember Baroness Vadera and her "Green shoots" that she could see in the Economy? - That was in January, we're now in June and the jobs are still being lost'.

Unfortunately, to an Economist unemployment is not the big deal that we ordinary mortals assume it to be. Despite the fact there were at least 4 million unemployed in 1986/87,the UK technically was booming under the measuremant criteria used by Statisticians/Economists/Astrologers. A certain amount of unemployment is good because it keeps wage costs down and inflation is nipped in the bud (not my opinion you understand, this is Economic 'Theory'). However, there comes a point where high unemployment actually starts to have a negative impact on the economy (no s**t, sherlock)but to an Economist this wouldn't happen unless you were talking about 25 percent or so of the work force..

The OECD says that 'a disaster has been averted' whilst at the same time acknowledging that unemployment will be at least 10 percent in the UK, US and Eurozone in the forseeable future. So you can see that this level of unemployment is not a disaster, as it will not prevent either a return to growth (i.e consumer spending) in the 'real' western economies and rising commodity and house prices, which is all they are concerned about really.

Since the BoE kept the entire banking system afloat for 300 years quite successfully and the whole thing crashed ten years after it was moved elsewhere suggests to me that this is the only intelligent move that can be made.

The next intelligent move will be to separate retail from so-called investment banking. If I wanted to bet my savings I can do it myself and no need to sub-contract the task to some infant in the City.

No 5 Wee-Scamp: what have the north Welsh done to you (other than speak their mother-tongue in front of you and call you Saesan, but they do that to everyone)? I would send the Treasury to reside in a place like Oldham or Barnsley so they get to view the ruins they have caused and meet the people whose lives they have destroyed. Think of the money the taxpayer would save!

First odd thing: Traditionally, Labour has always provoked more industrial activity than the Tories, particularly in construction, and so has pleased the City and Commerce more than the Tories have. (Despite all political and other protestations to the contrary.) Of course, we paid for this indulgence later when boom turned to bust. So the City will know what they are getting whichever party comes to power next time. They've been there before.

Second odd thing. The B of E were allegedly given by Gordon independent powers to fix interest rates to control inflation. But they always knew they were subject to Gordon's tongue and the media if they did anything he disagreed with. Never understood why they accepted this - they were on a hiding to nothing. So if they are now to be given the total control over the banks, the B of E will not be much worse off than they are now.

Third odd thing. I was in Texas in 1963 and learned that in the case of banks, small was beautiful. They had to be independent of each other unless they were physically in contact. I remember being told that one bank which wanted to take over another had to build a tunnel under the road to connect the two 'branches'! Things have definitely changed since then - can't imagine anyone returning to that era - but it is a precedent!

"I would also ensure the MPC has some real world people on it and that it met in public at a range of sites all over the country having taken evidence from "locals" for at least a few days before the meeting.... "

you would be surprised how much local contact BofE staff have with local businesses. There are regional representatives who do nothing else but and all the sentiment is fed back to the MPC

Robert sneaked in an excellent insight at the end of the update: "micro-prudential issues dovetail with macro-prudential issues". If this is what George Osborne is proposing, I may agree with him for once. This will be a really critical part of the macroeconomic debate in the next few years:

https://www.knowingandmaking.com/2009/06/micro-and-macro-prudential.html

Of course there should be someone with clear responsibility for the financial system, and obviously it shouldn't be someone as incompetent Brown or Darling.
Hopefully resources (not necessarily the same failed personnel) will be reallocated from the FSA to the BoE under such plans.

but even when "independent"the BoE is subject to the constraints placed on its role and to political influence and therefore meddling resulting in an erosion of long term planning and stability for short term targets and sound bites.

After all the BoE's management of interest rates on the basis of growth and controlling inflation was at least in part to blame for encouraging the suicidal casino culture of the property price bubble.

How does regulating the risk translate when instruments are considered?

It seems half of the problem with regard to the toxic debts was that there were various instruments rated AAA that in fact were useless.

Will we see an end to offshore banks creating new dangerous instruments that give "cutting edge" banks a competitive advantage as the G20 talks seemed to imply?

In other words are the "yee hah" days really over?

People really do have to start understanding that this Govt is just not on our side but on the side of the big banks....

Why would any Govt stomp up 25m quid to pay for testing dozens of foreign made electric cars rather than put that money into developing a UK owned/built car we could export? It's the same with the recently announced offshore wind farm rules... Adding to our trade deficit, the banks will make a bucket full out of the loans they put up to enable companies to buy and install this hardware...

I can't make up my mind whether the Govt does this deliberately or it's just not bright enough to understand the consequences of its ill thought out actions.......

So Browns great tri-partite 'innovation' is about to come crashing down.
Unfortunately the language doesn't have a word to describe his years of failure, the scheming for a job he is patently unsuited for, the lies, the backstabbing and the eventual employment as a great guru at some foreign bank. No British institution Sould touch him with a barge pole, not if they want to keep my business anyway.
Osbourne cannot be worse, it's just not possible.

Who cares?

GB has already signed it all away to Brussels.

This may be one case where size does not matter. Northern Rock was not, by any stretch of the imagination a big bank but it got into a terrible mess. The basis of its failure, that is lending long and borrowing short and limited capitalisation applied elsewhere. The fact that it managed its transactions in the wholesale market through a subsidiary reduced transparency.

So, I repeat what I wrote on Stephanie Flander's 'a grownup debate' blog

"The second debate is about how we get the outputs we want from the financial sector.

This can be considered by considering the impact of failure on stakeholders. We now understand better the outputs associated with not managing these outputs properly.

This debate should consider the potential impact on domestic depositors, domestic borrowers, bond holders, shareholders, commercial depositers and borrowers, lenders of last resort.

I am fairly confident that we would find that most of the mechanisms for reducing the impact on all the stakeholders exist but that they were not applied nor the impact of failure made transparent.

That is, the procedures were in place but not in use.

So the debate needs to focus on proper implementation, transparency, monitoring and penalties for failure.

We could start the debate by considering the impact of SIVs and SPVs and whether shareholders have sufficient information regarding these vehicles to assess the impact of their 'investment'.

We could consider how we publicise the capitalisation of banks to the widest audience."

So, I'd suggest looking at what needs to be done before moving the pieces around.

For the avoidance of doubt, I do not suggest retaining the loony divisions of labour.

If I got three people to do the dusting, they'd get in one another's way and do a rotten job.

28
You are absolutely correct, the time has come for the retail and investment banks to be split up. My suggestion is that Lloyds and Natwest become retail banks and the Bank of Scotland and the RBS become investment banks (based in Edinburgh).
By doing so the Government could privatise the retail banks earlier than would otherwise be the case and the lender of last resort would not apply to investment banks.
I find it hard to understand why the British taxpayer is underwriting the losses incurred by the RBS on foreign loans in particular those written in the USA.

Finally, Robert

this might be a banking story that matters or even a political story that matters but really, is this really a 'business story that matters'?

How about telling us about the first A320 that was produced by the Chinese or something about the impact of Setanta Sports GB failure and its impact on sports funding, advertising and the consumer or how British firms such as Stagecoach and Firstgroup are delivering services in North America.

You could do a piece on Worcester Boilers or Everest Windows and see how they are weathering the recession.

Or how about talking to some cleaning companies or window cleaners, painters or decorators.

Perhaps even a little trip to a high street outside London might be enlightening.

Unless you can tell us who lent what to whom, lets give the banking sector a rest.

Enough, already.

Enough, already

This is the best news for a while IMO. The BOE should have an overview of the whole economy and be able to see if any sectors are becoming top-heavy or too big etc. The FSA can deal with the day-to-day minutiae which is what they seem to be doing at the moment. It's also very good news if the large insurers are also brought into the "big-picture" as some of their practices may also be a little dubious and they are responsible for a large amount of our collective wealth in their pension funds.

I had the dubious pleasure of working for one of these companies mentioned by Robert in their pension review in the late 90s and was not over-impressed by their morals. So it's probably about time they also received a little scrutiny.

As long as the Treasury keep their noses out and do their job of raising taxes and deciding how the money should be spent it should work fine. They also need to spend a little time working out how to repay our debts. That should keep them busy for a while!

Basically everyone involved needs to be clear as to their roles and responsibilities with proper accountability and no scope for passing the buck.

The sooner the better.

This would stop governments interfering for their own political purposes

Many must be concerned that rather than emphasis being put on the health of businesses that will eventually pull us out of recession this government seems determined to print money to keep the housing bubble afloat.

This may be acceptable to banks who have huge assets in the housing market but does nothing for those invested in the commercial property market as businesses are failing right left and centre.

It is bad polital manouvering in the short term for without employers and jobs the collapse of the housing market is inevitable anyway.

It is only prolonging the agony and will cost the taxpayer a fortune in the long run. Not all of them can afford to be homeowners especially the younger ones who will end up having to pay back the bulk of it.

It is gross mis-management of an economy that relies on spending money they don't have. Sensible borrowing is fine but overborrowing is fatal and damages your health.

Perhaps that's why our PM looked in distress at PM questions today. He must have just seen the OECD report.

Poats 16 & 27 my point was that the OECD article was the big story not the non stoery of what the Tories may or may not say in two weeks time.

At present it is all conjecture re what the Tories may or may not do.

The strident nature of your responses supports my view that the OECD is the bigger story.

My view is that no one really knows for certain how and when the recovery will come as most reports like the OECD one are merely opinions or the amalgamation of a number of often non linked surveys all of which generally were undertaken some months previously.

My two pennyworth is that at present the financial situation is not getting any worse and despite huge amounts of money being pumped in isn't getting any better quickly.

I feel that unemployment will continue to rise as companies have held off making key staff redundant as long as they can in the hope that things will get better. I believe many more companies will have to let staff go.

I am a subscriber to the view that the recovery when it comes will be weak and slow to take off in the UK as those still in jobs fear both redundancy and have huge debts to pay down so have little free cash to spend.

Sooner or later with inflation ex interest rates stubbornly holding above 2% import led inflation (see Ford's decision to raise prices again) will force the BofE to raise interest rates.

It would appear rational to those with free money to pay down debts whilst interest rates are being maintained artificially low to try to stimulate the economy and try to save the Labour government (not necessarily in that order).

I await your reponse on what I believe is the bigger of todays business stories.

#4 MichaelFowke - read the ditty... is the Master a Scout Master? Why is he asking the little lad what he feels, what's he doing? is the boy dead? Shame..

Checked some of your other blogs... you are dead right - emptyness is your gift.... ta very much....

I also notice you are a man of the future - if so, what are next weeks lottery numbers please?

178,478 visits to your web site since Feb 2007.... I know one is me, I guess the other 178,477 are you.....

This is supposed to be the news today?. https://news.bbc.co.uk/1/hi/business/8116234.stm. I don't think so.

First nobody saw it coming, now they are falling over each other to declare how big it is and how fast it is running. And if you don't like what the OECD are saying today, just come back and ask the next week. If we believed their predictions a year ago we all would have sold up and drank ourselves to the next life.

Eddie George or another Governor might have got more power to regulate the banks but not this present governor. The man does not radiate any amount of confidence or knowledge. He seems to be more keen on taking on Darling and Brown than tackling the issues that matter. Mervyn sometimes appeara more politicised than Darling and Brown combined.

Is there nothing for folk like me? Having lost my capital with the B&B affair I have now lost the income. Meanwhile Santander soak up the gravy. At 81 on a VERY small pension, I now get almost nothing on my savings.
All this with the approval of the Government. My generation have now had it all - 1930s, war, shortages and low wages. Few opportunities for pensionable employ.
and having to scrape in order to savefor old age. Now lost.

it may be too late to give the old lady of threadneedle street more powers over lesser banks due inpart to so many being owned overseas and thus we here have no control over them.
british banks should be british owned full stop.
as with companies any claiming to be british need to be british owned.
who ever the next government is their hands will be tied due to overseas ownerships, massive debt and raising unemployment.

23 Laissee faire would actualy work providing banks were not allowed to become to big to fail.

The occasional bankruptcy would focus the attention on the parties involved in the fraud/failure and on examination destroy the reputations of those concerned whilst delivering a moral lesson to those onlookers concidering a life of crime or profligacy.

The question is why the banks were allowed to become to large to fail, which brings us to the connivance of polititians who want an appearance of something to boast about and bankster robbers who would prefer to walk out the banks front doors in broad daylight after having transfered vast sums to tax havens electronicaly.

Large banks propped up by corrupt political authorities use fresh fiat currency input to purchase and inflate by leverage stocks and derrivatives in order to disguise the pile up of the seven deadly sins by masquerading them as pension funds, which inturn allows ponzi trading with the suckers saving for a rainy day to continue until the rains come and all cosyncronous with real wealth being offshored with the full knowledge of the Guardians.

Robert, Robert, Robert.....

"it's down to feedback received by George Osborne's team from City firms"

Thanks - so now it's confirmed the next Governments Economic and Regulatory policy will be driven by City firms - just like the last one, and just like the one before that....

No chance of history repeating itself then? Why do you let them get away with this? You're an intelligent man - can't you see the hypocrisy?

#23 eatingantonyo

You may be happy with a choice between dirt and dust for your Government, however I am not.
It's reasoning like yours which is why things never change - and why should I move? and where to?
Do you mean out of the country where I was born and bred? or just out of my constituency where my choices are limited?

I don't understand what you mean by 'make your choice ' either - from what you say the choices were already made and have mapped out the next 10 years - and I was not involved in any of those choices.

I suppose we (the electorate) were at fault for the Iraq war as we voted in the Government - although I have scowered the manifesto and I cannot find any reference to starting a war in the middle east.

...and all of this simply goes to prove my point, I think we agree Laisse Faire Economics got us into this mess - but you find me a party who does not follow this philosphy - exactly what I mean - NO CHOICE. the Tories are sadly not the answer to Labours inability to Govern.

#27 I agree with you analysis CityGambler - however your final statement about unemployment not being a problem as it's so low doesn't take into account the downward spiral of employment.
I loose my job, I stop spending, the local shopkeeper looses his shop - he stops spending, his suppliers loose their business, they stop spending...etc

Most consumers rely on their wages to buy goods and service - without wages there is no consumption. Added into this particular mix is the fact that most of these consumers have already spent next years wages on their credit card - further impacting the reduction in spending. With the added incentive of interest rates about to start rising again (as the Governmet floods the market with gilts) I think we have all the ingredients for a further spiral downwards.

Round and round it goes and naturally consumer spending falls with it - the only solution is re-inflation by keeping base rates low - and we all know where that takes us.....Wiemar republic and wheelbarrows!

Let's hope that the Tories don't spend their time in power telling Robert Peston their policy plans before they tell my MP in Parliament.

#43 - sorry, mis-understood what you were saying.

I agree the OECD story is a bigger one than 'what the opposition is saying to get into Government' - but Robert isn't allowed to report on these stories as he already got his fingers burned by (dare I say it) - revealing the truth about Northern Rock.

However I take all the Economists predicitons with a pinch of "salt mine" as I have read the JK Galbraith book (the Great Crash) and it's all in there - chapter and verse - and what happened next? A bigger and more protracted fall which was more damaging than the initial 'Great crash' of 1929.

#46 JESSUSHER

And you were asleep during all the boom years, and you missed the sixties and you didn't have an endowment that paid off your mortgage AND gave you a nice lump sum, or a pension fund that delivered 8% growth compounded like millions did for decades, while the cost of consumer goods fell, and the Ten grand house you bought didn't turn into a Quarter Million Pound paid for asset like millions of others.

You really were unlucky or just another terminal whinger. Cheer up ,you'll be dead soon.

#48 sparticusmartyr

"23 Laissee faire would actualy work providing banks were not allowed to become to big to fail."

Nice try sparticusmartyr - you made me smile today.....

Unfortunately this is a contradiction in terms - Laissez-faire is a policy which "allows events to run their own course" and to "not allow banks to become to big to fail" would in fact not be a Laissez-faire policy in itself.
This is why a Laissez-faire can never work, because under that system Northern Rock should have been allowed to fail - savers would have lost money - then you, me and everyone else in the country would be queueing outside their own bank to get it all out (because I know I wouldn't be taking the risk!) - and as we know fractional reserve lending ensures they would not be able to pay everyone - chaos and riots ensue - the country collapses.

Ian_the_Chopper

You really are "Mr influential blogger 2009" - have you noticed the OECD story has moved up 'headline status' in the business news section from it's earlier placing at number 3 or 4 this morning?

What else can you get done? How about getting Mr Peston to start investigating the 'moving US Bonds' story...

https://news.bbc.co.uk/1/hi/business/8113642.stm

I am so impressed.

"Mr King may not, therefore, be completely thrilled by the Tory plans - because supervising banks has the potential to do more damage to the reputation of his venerable institution than anything else a central bank can conceivably engage itself in.

In practice, it may be seen to suit the Bank that when there's a public outcry about the unholy mess at a Northern Rock, or an HBOS or a Royal Bank of Scotland, the Bank is well clear of the line of fire, as the smelly stuff coats the FSA."


Welcome to 21st Century Great Britain. Who's to blame? "Not me, Guv."

It may seem to suit a lot of people to have less responsibility in their jobs Mr Peston. But if that's what suits them, then they get the hell out of the job.
If our police, firefighters, paramedics etc. ducked the nasty stuff IN CASE the outcome were to go bad, you and I would have more pressing worries.

How very annoying! The Tories have got this one right!

Post 56 thanks for the compliment. If only I had that power!

I imagine the jumping up the list is down to people like you and I realising that often the big story isn't the one being pushed but the one ignored.

The OECD report, and it is only a report, as per any OECD report should be taken with a hefty pinch of salt. It does however make for bad reading for Gordon and Labour. The logic behind their views seems sound though to me.

The decision Gordon has to make re the next election is does he go in the Autumn whilst everyone is still struggling or does he risk waiting till next summer hoping for a recovery if as the OECD suggest other countries will be coming out of the recession and looking good and we won't be?

Surely the plan to hold on till the last minute rather depends on recovery in the UK starting well before then ideally by at least three months so people can see some improvement.

Gordon seems to be playing a game of double or quits.

Perhaps the Tories views re giving the Bank of England more powers and the following story might be linked?

https://news.bbc.co.uk/1/hi/business/8117388.stm

#59 Ian_the_chopper

"Gordon seems to be playing a game of double or quits"

....or maybe a game of boom or bust?

On 28

I agree with the separation of banks as you describe, provided that the bankrupt Bank of Scotland is wholly funded by the Government as architects of the disastrous Lloyds/HBOS merger, or perhaps by the Scottish bankers who wanted to buy HBOS before the Lloyds deal was finalised. Or perhaps even better the Scottish devolved Government, who do what they usually do and simply ask London for an increase in their funding to cover the losses they would inherit.

On 3 "It's easy to be in opposition. It's less easy to deliver on promises".

I agree. It usually takes at least twelve years and I suspect most people on here could come up with a long list of undelivered promises since 1997?

On 29 "They've been there before"

I dont think the past will be any guide to how we will be governed in future. Leaving aside Europe, we have a totally new set of voters who only know what Gordon and Tony have delivered, and for whom Margaret is just a subject for study in a history lesson. We have a "puddle" of politicians who could belong to any of the three parties, and who all sit to the right of centre. The left, and with it the working class and trade unions, have all been abandoned. New Labour was a new con, and New Con will be just the same given time. No wonder people on here seem so disenchanted.

Ambition and greed.

Mervyn wants to build his empire. Obviously he will reckon on being able to do others jobs better than they can.
Then there is Osborne. He just wants to get his name in the papers.

And the greed?
The bankers just want to get on with their game. They want us to think that they are regulated. They want everybody to think that there is scientific knowledge behind their actions.
But deep deep down they know that the ultimate keeper of the countrys purse is the government of the day. They will rip us off whether the red party or the blue party is in "power".
They know there is no moral hazard any more.
Just business as usual.

No government would dare to stand up against them. What to do with all the unemployed bankers that would result?
Best just get on with re-arranging the deck chairs and let rip for a while more.

All sounds eminently sensible to me and a return to the pre-1971 situation where the Bank has control for the really big firms whose failure threatens the payments system (which is what the Bank ultimately cares about) and the FSA can look after all the small fry and the spivs, just like the Board of Trade did in the 60s.

Posts 59 & 61 how about the Robert Kilroy Silk quiz show where he used the phrase

"Do you share or do you shaft!".

New powers to a failed institution!!!!!! T

ypical Tories..... (no more than I would have expected - they really don't get it!)

MMG Mervyn Must Go.....

The institution must be reconstituted first!

Sensible stuff from the Tories.
But we should all listen to Mervyn King.
He seems to be more awake and alert than anyone else in high office at the moment.
Why?...because he has been handed the entire "wreck".
New Labour would rather not be reminded of what they have done.
The bankers are happy to pass the problem to someone else and carry on filling their pockets.
The population want to continue as normal, as far as possible.
So where did that almighty financial wreck go?
It's sitting in the Bank of England, and will be screaming "pay me" at the governor for the next 20 years.
Allegedly the BOE is thinking of re-printing all 20-pound notes with the words....
"I promise to pay the bearer on demand the sum of 20 pounds, providing that the bearer understands that this will cost him 30 quid in taxes".
And on the other side the BOE is allegedly thinking of printing "Don't blame us".

I agree with John_from_Hendon

The BofE with its current incumbent, is a failed institution. The inflation is yet to come, as is more printing ;-)

Re #54 Moncursalion-Occamist
I know that some of your posts are meant to be provocative, but that was just spiteful and vindictive. I am not sure what the gentleman (who is 81 for god's sake) meant exactly by losing his savings through Bradford and Bingley's demise as deposits up to 50,000 pounds were guaranteed..However, he is in the same position as many many other people in this country who have NEVER aspired to own their own home therefore your blase assessment of the riches accrued from endowment mortgages and rising house prices is irrelevant. He was born in 1928, how easy do you think it was to organise a private pension in the late forties or early fifties for people without substantial disposable income and the right 'contacts'?

All he has done is fight for his country and pay 45 years worth of pension and national insurance contributions which have turned out to be worthless, I think he has a right to moan, just like the millions of other people who didn't 'play the system' but naively thought that in a 20th century liberal democracy they would not be practically destitute in retirement..

The lunatics are in charge of the asylum or, to use an even more appropriate analogy, the thieves are in charge of the bank. It does not much matter whether the FSA or the BOE regulate the banks. The FSA is staffed by ex-bank employees and the BOE by current bank employees. The Glass Steagall Act, Roosevelt's response to the 1930s crash, demonstrated that lessons had been learned from the last big crash. The important lesson was that commercial banks should be separated from retail banks, so that ordinary people could be confident that their savings would still be there when needed. The regulators should he independent - not bank employees, ex bank employees or even, in my view politicians. Politicians are too close to the banks,due to the revolving door system by which ex-politicians are employed by the major financial institutions (Major and Blair to give but 2 examples). Shorting should be banned - its only purpose is to enrich hedge funds and destabilise the finances of ordinary working people,in order to pass their wealth on to wealthy non-working people.

writingsonthewall has reminded me that, before the expenses scandal hit the streets, the big question was the suitability of the capitalist system as a whole.

There were, at the begining of the year, serious consideration as to whether capitalism can provide a fix for this recession. Even Roert Peston was considering what the new capitalism would look like? That's probably as revolutionary as RP gets.

It's interesting how the expenses "scandal", has managed to take our minds off what has happened. What, just a few months ago, we thought had caused it. That was, a market so free to do what it liked, that it invented pay structures that said, bonuses before proof of success.

I would agree with writingsonthewall that the economic system needs radical overhaul. Thinking of pay and tax structures, which on the face of it will be unrecognisable, but with careful thought, will make sense.

If we don't do it now, we will go into another cycle of gradual improvement followed by a period of stability, followed by total collapse. That will happen whether Gordon Brown continues, which given the alternative, I hope he does, or David Cameron convinces enough of the electorate.

The task is to convince the lower paid that the have a real interest in getting involved in politics and taking responsibility for their jobs and their place in society. As well as convincing them that their boss is no some superman/woman, they are just ordinary people who have the ability to see situations and develop them. For that, they deserve a premium, we all need people to look up to and give guidance, but if you are on min. wage then their premium should not be millions of pounds a year. Those millions that we hear about are creamed off of everyone's wages, each individual puts that amount into the pot, and they take from us.

So, far from the usual belief that the worker needs a rich man to give him a job, it is the rich man who needs a thousand workers to be daft enough to give him his wealth.

#71 economaniac and #28 stanilic great posts!

Unfortunately #71 is probably 100% true regarding the cabal of men in the FSA, BoE and those that have headed successive governments.

It's why it makes no difference who you vote for...democracy is just a $cam!

Those who believe that the BOE has been a failure are right.
It has been a failure because Brown removed its' power.
He gave the job of policing the banks to....the banks.
No wonder there was a financial disaster.
No wonder there are tens of thousands of multi-millionaire bank staff.
No wonder property and loan debt has become so dangerous.
No wonder the national debt is so obscene.
The foolishness of what Brown did is now apparent

It's happened before. Financial regulation by the Bank of England failed badly before, and when BICC suddenly went down. The Tories were in government then and Prime Minister Major simply said that depositors and others should take more care. Depositors lost parts of their savings and employees lost both their jobs and unpaid wages.
That collapse was avoidable and shook confidence; that mustn't happen again.
Other financial institutions such as Equitable Life were permitted to make claims that more knowledgeable people could see were absurd, and the Tory Government let them. Now they demand following governments should clear up their mess. Let's not forget the awful mess of the mis-selling of Personal Pensions and Life Assurance linked Mortgages. That's the regulation that was so sorely lacking in the Thatcher years. We all learn from experience and more learning is needed now too.
So the UK record of financial supervision's not good. Nor is the Federal Reserve's: Greenspan saw that the yield curve was inverted and "never thought" it would lead Bankers to lend outrageously. Conclusion: Nobody's perfect anywhere. We must all try harder!
What we don't need is the multiplicity of institutions the US has - with most States having different rules for their own Banks - nor that multiplicity that we had here and before Labour came to power. In the '80s and early '90s we learnt that self-regulation by the financial industry doesn't work. Amalgamating seven regulators into the FSA was a good move then. Three Government Institutions are sufficient, with some re-distribution of powers & greater responsibilities between them to reflect our recent experiences. That would be a more interventionist FSA, BoE and HM Treasury.
They will co-operate because staff should move between them as they progress their careers and share knowledge and tasks. They should be sufficiently resourced to ensure they don't develop a dependency on industry sources of knowledge and thereby some regulatory capture by industry insiders. FSA people should share joint bodies with the others.
What's not needed is a policy of compulsory down-sizing of Banks. All banks are 'too big' to fail because every depositor is entitled to believe that government insurance will ensure most of their savings are safe. That's the justification for tight regulation of all finacial institutions: citizens savings and careers are at risk. Each depositor is important and warrants protection.
Northern Rock shareholders, and their like, should all be aware that they're carrying the risk, and that they can lose their share values if they invest in risky ventures. [That comment doesn't imply any prior judgement about their current legal arguments].
We also need much more international co-operation to ensure all banks are similarily regulated and supervised and that bad risks are less likely to be exported. That may be the most important development of all.

#73 stevewo

We have had finacial disasters before, when the BoE was in charge, when the Chancellor was in charge and now with the FSA.

It maybe that it is capitalism that is at fault. People trading in and profiting from other people's work.

Brown, Gideon, it may not matter, because these recessions create opportunities for people who don't want to work for a living, they want us to work for their living.

How they must laugh as we blame the incumbant politician. They laugh because while we blame brown, we not looking at them.

Well said Citygambler about 54 (which was about 46).

I am 72, and it is good to have a mixture of people on these boards. I suspect that when 54 gets to 81 like 46 (if he is that lucky) he will be a gibbering wreck.

The point about blogging, which I find highly stimulating, is that you can learn a lot by reading other people's blogs. For instance, you can learn that two people (who you would judge to be intelligent from the power of their argument and their clarity of thought) can come to totally different, indeed opposite views on a subject. All very confusing, except you need a compass - in my case I chose Peter Drucker, and it worked like a charm (run with success, feed your opportunities and starve your failures or words to that effect).

If only I could stop blogging about Lloyds and the disastrous and crazy takeover of HBOS by Sir Victor and his mate Eric I would probably become a much more rounded person. I hope 54 doesnt attack me for that.

The Bank isn't equiped to do this - its now an Economic Institute populated solely by economists. They got rid of all their staff with practical Banking/trading experience some time ago. All that would happen is that it would take on the FSA's staff in the same way the FSA took on the Banks so you'd have the same people doing the same job using a different email address. Not sure that would help much.

"...Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism..."

Karl Marx, Das Kapital, 1867

#78 Iknew

The grea thing about predictions is they very rarely come with a timescale. So, we shall have to wait and see.

One problem appears to be that we are so convinced that capitalism, is the only economic system that provides us all with the chance to become rich, that we daren't risk changing it. Even when times like this causes so much misery.

A co-operative society would be a step in the right direction, as with-in it there are limits on how much anyone can take out of the pot. Those limits will be decided upon by all of us.

One thing we can agree on is that Labour have ruined the country over the last 10 years. On top of knackering the economy they have also taken us into an illegal war, compromised our position on torture, taken away our civil liberties and allowed uncontrolled immigration.

The only credible opposition are the Tories. While I know they are not everyone's cup of tea, I believe Osborne is making the right noises regarding regulation and the need to cut the massive national debt. I also believe they will reverse the decline in individual liberties and help us to regain some moral authority.

I do suspect that the problems in the city run deeper than just regulation. This is evidenced by the fact that Goldman Sachs still seem to think it is acceptable for them to pay out massive bonuses this year. I believe that ultimately the whole structure of money and banking needs to change, and this will not happen unless we get a complete melt-down in the financial markets.

Re:28 Stanilic
I would seriously question your comment that the BOE succesfully kept the entire banking system afloat for more than 300 years. Events such as the South Sea Bubble, BCCI and Barings bank, to name but a few, suggests that the BOE for all it's wealth and glory is just as prone to misreading the situation as any other regulatory body. Although I too am a fan of Mervyn King I doubt very much if the BOE is properly staffed or equipped to perform this role. More especially because the city likes to remain largely unregulated and the financial markets are now totally global.

The problem with the BOE is that most of the people working there are by nature people of integrity and are used to working in an environment that is well rehearsed and operates along well defined guidelines. That suggests these people might not be able to think outside the box in which they operate when it comes to evaluating the risk taking techniques that city banks are constantly devising in order to maximise their profits.

City bankers on the other hand are basically clever opportunists who lack some of the integrity and disciplines as their counterparts at the BOE. These clever opportunists frequently think outside the box when it comes to taking advantage of the lax rules and regulations (that city bankers like to operate under) to devise risk taking scams as a way to maximise their bonus payments.


Re: 54 Moncursalion- Occamist
What a self centred and repugnat person you are

#80 wykhamist

I don't think I can agree that Labour have ruined the country. It was the capitalist system that knackered the economy, through a philosophy that anything is acceptable if it delivers a short-term profit.

The war in Iraq still has questions but I don't think they are just ones that will prove it to have been illegal. I may be completely wrong but I think it was a way of focussing the war on al qeada in one place, and that has been fairly successful.

I'm not sure why you say civil liberties have been taken away. In what way? As far as immigration is concerned, this really only becomes a problem when jobs are the issue. It wasn't much of an issue when there were trendies complaining they couldn't get a plummer and when they could they charged the earth. Enter the Polish plummer, builder, tradesmen of all kinds. Cheaper and willing to work for longer hours, and live in digs with up to 15 in a three bedroom house, they were great for all those people who earned well enough to spend on tradesmen, but wanted them as cheap as possible.

The cost was to our own tradesmen, who found they can't compete with these people who don't have the same living costs. But, no one was complaining all the time they got cheap labour.

The Tories are not a credible alternative until they show their hands on issues such as their stance on Europe, which they are studiously avoiding for as long as possible, minimum wage, will they maintain it's annual increases? tax credits, winter fuel allowances, sure start, reductions in child poverty, what are their projections for unemployment? Until they set out their proposals on these issues, they have no credibility at all.

I would agree with you that the problems in the city do run deeper than regulation. The problem is that these people trade in the proceeds of other people's work. That is what is wrong. The dismantling of the stock markets, and a move towards one common currency is the next move.

Unfortunately, I would agree that the necessary changes will only come when this system collapses. Revolutionary change usually only happens when we have no choise. Unfortunately, again, Gordon Brown has done too good a job in managing the crisis, so the opportunity may slip by again. As it did in the thirties. If the city really wants a to avoid a call for real change in markets, they may wish that Gordon stays in place as Gideon Osborn is totally unconvincing.

I wait for you interview with GO (and whoever is speaking for the Government).

Here are some questions to ask from the minutiae to the macro.

Will the regulatory practice (essentially 'health checks') be the same of different?
Will there be explicit measures of risk?
Who will do it, a new team or the FSA team simply moved to the Bank or will it be outsourced?

How will regulatory capture be avoided?
Will reports be published?
What sanctions are available?

To paraphrase your final paragraphs... how will the proposed system not become a set of secret deals between government (macro economic policy and industrial policy) and the Bank and financial regulation. Can it avoid being politicised?

and on industrial policy

How is the desire for a strong UK Financial Services Industry ....30% of the Capital's economy .... to be balanced with control of risk?

I look forward to the answers.

( It's nice to see a real discussion here

I fully agree with with post# 40 I hope the BBC can find someone to blog on the 'real economy' as well the the Financial Services industry)

re. 18
I thought it was Incapability Brown, or has that been said already?

Regards,

@79

Co-operativism is a capital system; one which works. The mutual building societies worked until our government let them play at being banks.

We just need to get rid of the crooks, go back to co-operatives, and enjoy the benefits of capitalism.

Regulation of banks would be a good idea as well.

#85 hodgeey

I agree with you, co-operatives require capital, the difference is they are capitalised from within, even if that means borrowing, which is what any normal business does, it also is competative, but the advantage is that people who have no input into the value added part, i.e. the work done cannot trade on the profits.

The difficulty is persuading more employees to see that there is nothing magical about business, we all conduct it when we offer our labour in return for a wage. The downside of that is the trade is one-sided and your employer creams off a percentage of the balue you add through your work.

Now is the time for the co-operative movement to become more pro-active in selling the model to a wider audience.

@82 wykhamist

What country do you live in?

This government we suffer under has ruined just about every tradition, institution and value that we cherish.

It wasn't the capitalist system that knackered the economy, it was the crooks who exploited it and the crooks who failed to regulate it.

The war in Iraq was completely illegal. "focussing the war on al qeada in one place"? Al queda had no presence in Iraq under Saddam.

Civil liberties? There are hardly any left now; cameras everywhere, proof of identity needed by every jobsworth, databases with all our details on them, all our comunications monitored.

As for immigrants, EU nationals have the same rights as us. We agreed to that when our sovereignty was surrendered. If your living costs are too high then move to a hut in Romania or suchlike so you can compete.

The Tories are certainly not a credible alternative; they are just more of the same; half of a duopoly which looks after itself and stuffs the rest of us, crooks.

"The problem is that these people trade in the proceeds of other people's work" That is capitalism, our system and way of life.

"The dismantling of the stock markets"? Are you a communist?

"Unfortunately, I would agree that the necessary changes will only come when this system collapses." In case you haven't noticed, it has collapsed.

"Gordon Brown has done too good a job in managing the crisis"?

You jest! He's fixed the problem of too much credit by generating more credit, which is more of the same and what has been happening for decades. He's given the junkies another shot to keep them hooked, and they need more now. Things will definitely get your worse and your dream of dismantling of the stock markets and total collapse of our system will come true if we don't get that criminal Brown and his gang out of power.

80

You suggest that the Tories should show their hands on issues such as their stance on Europe. So far it has cost them three elections by the bogey man tactics of Labour. Not any more, since the theft of the 2005 election on (among other things not carried out in the Government's manifesto) a promise of a referendum on the treaty. We were supposed to swallow a change in its title as a change in its substance but the British electorate is too sophisticated for that. A significant majority of our people either want out or at least a renegotiation of terms.

Mrs Thatcher delivered a 2bn rebate by being tough in Europe, which meant we had paid £2bn too much for years before. If she had not got the rebate we would have paid into Europe 40-50bn more of taxpayers money in the period since that negotiation. I want a strong government that keeps us in Europe, but at the right price and on the issues on which we should go along with our partners. Leave out the shape of bananas and stop people like Lord Snooty using it as a springboard to get into the House of Lords (which should have been abolished on another manifesto promise) and from there back into the centre of our Government.

On the Tories projection for unemployment, we all know that under Labour it is going well north of 3m plus all those who are not counted. Probably closer to 4m? Experian reported recently that there will be 300,000 jobs going in manufacturing between now and 2010. There aren't many people in manufacturing these days, so 300,000 must be a huge percentage. The Tories will inherit those figures so anything they say now is largely irrelevant - except they want to get it down....

Incidentally, you talk about immigration. I agree with you that when we needed people to do the jobs our own people wouldnt do it was OK. Now that unemployment is so high we sing off a different hymn sheet. I dont think we can have it both ways, but here is a little anecdote. I live in a small village in Surrey, and since I was paralysed I have to go out at 5am to get some work into my legs. I regularly see small clusters of men (upwards of ten) in two or three different locations hanging around waiting for transport who werent there ten years ago. Are we building up further trouble down the line particularly when the racists can argue that if we were out of the EU we could legally stop them coming in?

The trouble we have is that no matter which party is in charge
They wind up putting the same top 10% of people in to over see these banks
These people have a vested interest in keeping the system as near to it as it all ways been

They will not bit the bullet and come down hard on the banks as it is not their interest

I agree with George Osborne.The Bank of England did an excellent job as regulator previously.Gordon Brown's decision to place it in the hands of the FSA was unwise. If only we had known it was a benchmark.

#87 hodgeey

At your post #85 I thought there might not be much difference between us, then you go off on one.

I thought I've made it clear I associate myself with the co-operative movement, someone who is usually refered to as a co-operator.

Am I, or have I ever been a communist. I stand bythe 5th amendment. If that means I don't work again, well that's result of the fear that capitalism generates.

Co-operativism is more that your consumer co-op, it is more than your Mutual Building Society, it is more than a Credit Union, it is even more than a worker owned co-operative. It is a way of organising society so everyone has the chance to succeed and everyone has a value.

There are those who will not like it. The "get-rich-quick" merchants, those who want to take more from the system than they put in. Those that wish to profit from other's work, (the capitalist). You are right though, co-operativism is a capital based system, the difference is that the capital comes from the people who work in the enterprise and noy from outside sources.

A conflict of interest rates...
The FSAs responsibilities include prudential regulation. That is ensuring that banks and other financial firms behave in a prudent manner in relation to the risks they take. The Bank of England is responsible for monetary policy. That is using interest rates (and now quantitative easing) to control inflation.

It is important to note that there is no one prevailing regulatory structure anywhere in the world was successful in weathering the results of the credit crunch. Therefore, whether we regulate through the FSA or not is not the deciding factor. What did make a difference, and will make a difference going forward is the quality of the analysis and policies REGARDLESS OF REGULATORY STRUCTURE.

With the failure of the current tripartite system showed that it was not properly prepared to work under pressure. But this can be fixed with little disruption allowing us all to focus on the most important thing, that is changing financial firms behaviour so that banks and others will not be costing us trillions in future.

If Osbornes suggestion of wrapping up the FSA with the Bank of England is actioned, there would clearly be an inherent conflict between implementing monetary policy and managing the financial sectors prudential regulation. If the Bank of England is to be seen as truly independent in its interest rate setting as well as managing banks prudentially, Osborne leaves the bank open to the charge that interest rates are set not necessarily for the good of the whole economy, but rather for the good of the financial sector for which it has responsibility - thus undermining the independence of the UKs central bank.

Osborne is putting much of his energy into rebuking and attacking the FSA when the real problem is the behaviour of the financial markets (e.g. lending to those who couldnt afford to pay!). This seems like a real case of ignoring the elephant in the room and instead deciding to attack the fly on its back! One of the most worrying features is that in the context of the credit crunch and ensuing financial crisis the Shadow Chancellor believes that addressing regulatory structure is the best contribution a potential government can offer. In doing so, he demonstrates his complete lack of understanding or appreciation of the way financial markets work, and the consequences of firms behaviour vs. the role and abilities of regulators to change them.