Banking regulation

I was quite interested in the reports of the Mansion house speeches by Mervin King, the Governor of the Bank of England, and Alistair Darling the alleged Chancellor of the Exchequer.

The bottom line appears to be this:

Alistair says that his predecessor is not the bringer of doom, and there is nothing wrong with the current regime, though obviously the Bank of England has to take responsibility to make the system stable.

Mervin says that's all well and good, but if you want us to make the system stable, is there any chance we could have the powers back that the bringer of doom took away from us when he created the ridiculous tri partite system back in 1997.

Needless to say Alistair is in a difficult position, because his boss is Gordon Brown, the bringer of doom.

The BBC has this as a report and this from Robert Peston.

US President to get our Queen to D Day celebrations?

I do not intend and unkind tone towards our American friends, or their President, Barack Obama. In fact well done the Americans for trying to do the right thing. The shame is that they have to.

However, why was there any question of us as a country not remembering D Day? Which historically ignorant tit decided we would not turn up?

Gordon Brown.

Then he decided after pressure he could go.

This is seriously dangerous as everything he touches goes horribly wrong. Besides which our Queen served during the war and was the only head of state alive at the time.

How can Labour be just so out of touch? Then they seem to want to blame it on the Palace.

Michael Savage and the banned list

Apparently Jacqui Smith, the alleged Home Secretary has published a list of people who are banned from coming to this country, including Michael Savage, the American "shock jock".

It has to be said that under the provisions of the 1971 Immigration act as originally passed into law does allow the Home Secretary to ban people from this country (though it makes no comment on one so hopeless as Jacqui Smith) on the basis that the Home Secretary feels their presence is not conducive to the public good.

So all's well then?

No.

Firstly its a publicity stunt by the government because it can't get hold of the news agenda, though to be fair it has backfired in spectacular fashion.

Secondly, we have never before felt the need to ban people from coming here who do not appear to have any current plans to come here.

Thirdly, this is not exactly an exhaustive list is it? It does not include, by way of glaring example, Osama Bin Laden, nor Sheik Hassan Nassralla. Nor indeed Avigdor Lieberman.

In short, it is a pointless publicity stunt by the person who wishes she could be Home Secretary, but alas is not now, nor ever was up to the job, Jacqui Smith.

The BBC has this and this on Michael Savage suing.

The Pension of Sir Fred the Shred Goodwin

Firstly the idea that the man who drove a well respected and solid bank straight into the ground should walk away with anything is obviously wrong. It seems reward for failure at almost its most grotesque. It seems that he gets to retire early on £693,000 per year. His pension pot is reputed to be worth £16 million though I have heard some say it may be worth as much as £24 million as it is both indexed linked and presumably would benefit his widow.

Now, as I said it is very very wrong that he should have been given this pension, or quite possibly given a contract of employment that would give rise to such a pension even if he trashed the bank.

Thing is though, he was and he has. However wrong that is, that is it.

Harriet Harman has made much of how wrong it is, and implied that it is wrong in the court of public opinion, as if that counts over the rule of law.

It does not. That was lies mob rule and a very dark place where paediatricians get their homes burnt down because some mobs are to thick to understand the difference.

What is more, parliament could not pass a law to now strip him of his pension no matter how much people hate it, nor should parliament do so. What would you call such a bill? The ¨we all hate Sir Fred bill¨? Or perhaps the ¨removal of unjust rewards bill¨? If the latter who decides what an unjust reward is?

Even if parliament did pass such an act then it would be remarkable if it was retrospectively active as in affect past deeds. Obviously it would have to be so, which is very very rare indeed. Then of course such a law would get thrown out as being incompatible with the Human Rights act, as an unjustified interference with property.

This all goes to show just how ridiculous Labour´s and in particular Harriet Harman´s position is.

So who is to blame? Well clearly if there was any legal discretion in the award the people who failed to exercise it including government ministers and board members of RBS and the UK investment authority. If there was none, then we have to blame those who drew up Sir Fred Goodwin´s original contract.

The BBC has this.

Benefit Madness!

Well, that is the headline in the Express and the Daily Mail carries a similar story with the headline "boom-time on benefits".

What the article in the Mail highlights is that about 140,000 families get more than £20,000 a year in benefits. The numbers in the Express are 20,000 households claiming more that £30,000 with a further 12,000 claiming more than £20,000 which does not seem to make a lot of sense.

The reports stem from parliamentary questions asked by Chris Grayling, the Conservative party's Work and Pensions shadow minister.

So there are a lot of people living on benefits that are better off than people on the average wage. The average wage being £25,000 a year, and curiously you would have to earn £27,000 before tax to get £20,000 in take home pay.

James Purnell's response? Well he and his department claim that a lot of these families are on benefits for disability. Really? How many? Does he know? Karen Mathews was on £400 a week in benefits, which amounts to just over £20,000 a year and I do not recall any of her children suffering from a disability (other than her mother that is).

This is clearly a patently ridiculous situation which seriously demoralises those of us who do work, have families and pay our own way on less.

The other bit of drivel that James Purnell came up with is that we do not 100% support the governments welfare reform plans. Specifically we don't think it is a great idea to start lone mothers training for work as soon as there children are 1 year old. No of course we don't that is nuts. We also don't support removing benefits from drug addicts if they are not attending treatment. I see. I wonder what they would do if they were not attending treatment and did not get benefits? Answer; crime. So James Purnell is clearly a bit of a pratt.

German finance minister shoots Gordon Brown's fox!

For a long while Gordon Brown has been able to get away with the lie that everyone else is planning some huge "fiscal stimulus" and everyone the whole world over agrees apart from the Conservative party.

Well Germany's Social Democrat Finance minister, Peer Steinbrück has truly burst his bubble in this interview with Newsweek.

Here is a key quote:

The speed at which proposals are put together under pressure that don't even pass an economic test is breathtaking and depressing. Our British friends are now cutting their value-added tax. We have no idea how much of that stores will pass on to customers. Are you really going to buy a DVD player because it now costs £39.10 instead of £39.90? All this will do is raise Britain's debt to a level that will take a whole generation to work off. The same people who would never touch deficit spending are now tossing around billions. The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking.

Ouch. It appears that not everyone agrees that Gordon Brown has saved the World!

Mandelson to wring blood from a stone!

Apparently Lord Peter Mandelson will be meeting with bank executives on Monday to try and get the banks to lend.

Well, this will be like wringing blood from a stone. They have no money to lend. Our banks have lent £700 billion more than they have on deposit since 2001, and that money has been borrowed short. As I pointed out in my articles on Bank of England interest rate cuts, banks are trying to buy money from consumers at as much as 6%.

Clearly the government are in cloud cuckoo land and may even let the presses roll.

Andrew Rawnsley has this in the Observer.

Why did the police investigate this leak?

I, as Iain Dale also did, listened to The Week in politics on Radio 4 earlier.

Lord Butler was being asked about leaks. He was of course a permanent secretary. He said they often had leaks and looked for the moles though their own internal inquiries seldom found the moles.

The police had better resources for the job.

The thing is that most of the time the police when asked to investigate refused to do so on the grounds that the offence complained about was simply not serious enough.


So why now? We already know that national security was not involved because Jacqui Smith has said as much in Parliament. She said that they feared they might become involved at some future date!

That is the nub of the question that Iain asks.

The answer is of course this:

Sir David Normington will be on the panel that does initial vetting of candidates for the job of Chief Constable of the Metropolitan police. So if you can't get passed him you can't get the job. he is also of course permanent secretary of the Home Office and the person who made the original complaint to the police.

Let the presses roll!

I have been hearing many people talking about "quantitative easing" including on Newnight last night. It appears that the government and treasury are considering it and indeed modeling it.

Of course "quantitative easing" is a nice bit of jargon, but what it actually means is printing money. It is as simple as that. On the upside at least there will be no chance of deflation, on the downside, the value of the cash and savings you have will fall through the floor.

Well Guido has noticed an odd clause in the banking bill before parliament. It removes a clause from the 1844 Bank Charter act. That clause requires the Bank of England to tell government how much money it has printed, and also to publish that information. It makes the Bank of England transparent.

The only reason I can see for removing that clause is so that the Bank of England can let the presses roll and try to print our way out of this economic hole.

It won't work, it will be dire. What is more, the mere fact that that clause will be removed will damage confidence in the pound even if the Bank does not print any new notes.

The Bank of England's pointless interest rate cut

Many people have been calling for the Bank of England to cut interest rates, even after last months massive shocker of a 1.5% cut which I said was pointless when it happened.

Well, they have done it again, and cut interest rates by 1% to an all time low of 2% which has not been seen for 57 years. If it goes any lower it will be lower than since the creation of the bank.

It seems some people think that what the Bank of England does on interest rates is relevant.

It isn't. Not even a little bit.

If you don't believe me try lending money to a bank, offering good terms for how long they keep it, and see how much they are prepared to pay. You will find that it is considerably more than 2%, or even 3%. In fact it is more likely to be at the range of 4.5% to 6%.

It is also clear that the Bank of England has absolutely no intention of lending money to banks at 2% either, so where is this money going to come from?

It should be noted that UK lending institutions have since 2001 lent £700 billion more than they have in domestic deposits. Non domestic lenders must think we are mad if we think they are going to buy a rapidly devaluing pound with high inflation to lend at a very low rate which will see their original capital devalued. In essence we are asking for people to give us money on a non commercial basis.

What is more savers are being savaged.

Here is a thought, going against just about every other commentator.

Put interest rates up, so that people are prepared to lend to inflation + 1%.

I know lots of people will howl, but the problem we have right now is less that banks are charging lots for money, and far more that they just do not have the money to lend, especially as lenders can get a far better rate lending to our government which is about to swallow a massive amount of cash.

The BBC has this.

Bank of England's pointless interest rate cut of 1.5%

The Bank of England has cut interest rates by 1.5% to 3.0% which is below the Eurozone interest rate which has also dropped today to 3.25%.

This cut is pointless. British banks for the most part don't have enough deposits to cover there lending by a gap of some £700 billion. They have to borrow from the Libor markets which ultimately means from people who do not care what the Bank of England base rate is.

The net effect of course is that banks who have to honour tracker deals will have less money available to lend on new deals.

In other words Gordon Brown has lost complete control of Tue economy, unless he can replace the £700 billion the banks have got from overseas.

The BBC has this and this.

Bank Bailout looks OK so far.

Markets around the world look very positive over the frankly massive bank bailouts world wide.

However we have two issues.

The first is excessive debt in the west, particularly in the USA and UK, and excessive savings in places like China all leading to massive trade deficits funded by fiddling currency rates and the savers lending us the money to buy what they produce.

Expect tight times ahead.

The BBC has this.

Government dithering smashes housing market

Government dithering over stamp duty is set to cause an even worse crash than we were headed for.

The problem is this: Some journalists got the idea that Alistair Darling was going to introduce a stamp duty holiday in a similar way to that introduced by the Conservative government in the last housing crash.

The problem is that now we have uncertainty. Buyers who have to pay the tax may wait until they know because there could be a few thousand pounds in it.

This could all be a story cooked up by the media but the problem with that thesis is that we know that this Labour government (including the Tony Blair years) likes to manage news. Whereas in years gone by if a budget measure was in the press before it was announced to parliament, the chancellor resigned New Labour's news management has gone to such levels that we know about most of the budget from well briefed journalists long before hand. In other words this government has form for this sort of thing.

However no actual announcement has been made so the housing market is in limbo. The Conservative party have rightly asked for an end to the uncertainty and rightly so. We can stymie the housing market until October's pre budget report.

This is of course the problem with Labour and indeed its news management. It has no idea why things are as they are so sees no reason not to change. It sees no boundaries in common conventions. Frankly they have not got a clue and never had one either.

The BBC has this and the Daily Mail has this.

I have just bought £130 of Northern Rock Shares!

I know, I know, you must think I am mad, and I have to say I see your point, but I have just bought £130 of Northern Rock shares anyway.

The transaction was easy and fairly painless as far as I was concerned. I did not have to sign any papers, call any stock brokers or anything like that.

In fact coming to think about it, I wasn't even asked. Someone just dipped their hands in my pocket, just took the money and bought the shares.

Still the paper work is easy. No share certificates or anything like that.

On the upside its not like there will be any profits to pay tax on, on the downside I will not be able to write my losses of against the already murderous tax I pay.

The BBC has this.

Government lose yet more information shocker!

Well, OK, it is not shock at all is it?

This time the missing information was on a computer stolen from Hazel Blears constituency office in Salford. Thing is though that the information on terrorism and extremists should never have been on that computer in the first place as it should not have left her ministry.

So this ridiculously lax attitude to sensitive data goes right to the top. Fantastic. ID cards anyone?

The BBC has this.

Government lose more papers shocker!

Well, I suppose I am not shocked.

There is something entirely useless and moribund in this government and it clearly is infecting the civil service also.

Two sets of important papers lost in a week? (Actually on the same day)

They should not have been out of the office let alone left on a train!

You could not make it up!

The BBC has this.

How Much?

Apparently we are now all going to bail out the banks to the tune of £50 billion, or possibly double if this story from the Times is correct.

What is more the scheme as laid out gives a helping hand to the irresponsible banks whilst at the same time being about as popular as a bucket of cold sick.

Well done.

The BBC also has this.

10p tax rate abolition: Will it be Gordon Brown's last stand?

Many people commented on the abolition of the 10 tax rate when it wasn't announced by Gordon Brown last year, but was hidden in the budget detail.

Many, including me, thought it was a case of robbing the poor to pay the rich. We still do. The finance bill which contained it passed without much revolt at the time because Labour MP's either were too scared of their soon to be new Supreme Leader or because they thought they could get away with it.

Well, the truth is coming home to roost now. That cut is unpopular. No one bar the most sycophantic minister will appear to defend it. The wagons are circled around Downing Street. There will be no giving in apparently.

The only problem is that up to 75 Labour MP's have smelt the coffee, and will rebel when an amendment is voted on for this years finance bill.

We have to be clear on this. It would be a huge smack in the face of this government and Gordon Brown in particular to lose a vote on a finance bill. It is the sort of thing you expect to bring down governments.

So if Gordon loses, will he call a general election or try hand over to Ed Balls who will guarantee a Conservative victory of massive proportions?

Who knows. I would not want to be in Labour now though.

The BBC has this.

House Price Slump Shocker! Cut interest rates now! Don't panic!

There has been a 2.5% drop in house prices, according to the Halifax since last month. This is not good new for people who bought houses last month. However it is better news for first time buyers.

Thing is times are tough. For years people, like me, have been saying that house prices are out of control and that will cause a problem, for first time buyers if no one else. We have also been saying that there is a problem with the way the economy has grown on debt alone.

The banks (or rather the mortgage lenders) are saying "cut interest rates now!".

I would love to think that would help, it would if the money that the banks needed to borrow was lent by British savers. The problem is that with the lowest savings ratio for nearly 50 years, the banks are borrowing money from overseas, sovereign wealth funds, and the like. They see no need to pay attention to our central bank rates and will demand, and incidentally get, what ever interest rate they like. After all they could invest their money somewhere where property prices are on the up.

Gordon Brown says "Don't panic!"

He is right in that, after all there will be a Conservative government along in a while, who will sort out the massive mess an ignorant Labour government has created.

Northern Rock to be nationalised!

The Northern Wreck is to be nationalised. Apparently the two bids left on the table, by Richard Branson's Virgin group and the management did not guarantee enough of our tax payers money.

This does rather beg the question though, why did we pour such a large amount of money into a bottomless pit in the first place and why did Gordon Brown remove the power the Bank of England hand to restructure a failing bank quickly as it did do to Johnson Matthey Bank. Labour complained at the time, but the action was swift and effective. (See here).

So now we are into the Northern Rock for at least £60 billion.

Labour isn't working.

The BBC has this.