´óÏó´«Ã½

Tragic .... i have no direct shares but a pension fund and an ISA .... i still dont care, when will there be a scandinavian type day zero for the rest of the Western financial world. Or even a move to Sharia law style finances, god knows we bend over backwards for them in every other way each day.

Why do people not vote Lib? Has anyone asked?

Mugabe is a year older than Thatcher, says it all really!

So we have all got it wrong according to Margaret Beckett OBN. Labour will lose the election because a few MP's dare to say what the whole country and many labour Party members are saying or thinking.

Nothing to do with policy, economics or the way Brown is leading us.
Incidentally has anyone seen him today?
MacCavity has disappeared again.

I'll be looking in to see what your panel of experts make of the banking crisis.

I don't think the crucial question is 'who' next but rather 'what' next because we are now moving into corporate debt territory and the enormous potential problem presented by the unregulated credit default swap market.

Tips from the panel as to how we rebalance our economy after the crunch also welcome - no rush now ...

#2 mullerman

Intelligent people don't vote Lib-Dem because their local authorities are the first in the queue to adopt Corporate Nazi policies like Bin Tax and introduce Gestapo style snoopers to fine you for stepping on the cracks in the pavement.

They talk of tax cuts for the " low paid " but are expected to introduce alleged " green " taxes and increase road fuel prices which will eclipse any income tax gains.

They also support Spy in the Sky road charging despite it being as potentially greater threat to civil liberties than any " not compulsory to carry " ID card scheme which they theoretically oppose on civil liberties grounds.

I can't wait to hear Murdoch mouthpiece Steltzer tell us that all will be well due to the magic of the free market.

You have invited Rupert's spokesman I trust?

6- Brossen99:

'Intelligent people don't vote lib dem'

Vince Cable, Nick Clegg, Chris Huhne, Simon Hughes- all unintelligent? Not only do they vote lib dem, they are at the top of the party.

And how is road charging a greater threat to civil liberties than an unnecessary database of every civilian's biometric data?

And have we been reading a little too much Richard Littlejohn? 'Fine you for stepping on cracks in the pavement'?! What a load of nonsense.

The demise of Lehmann is, in the short term, very bad news for the financial markets. BUT Lehmann was a stand alone investment bank and therefore, unlike commerical banks (such as Citigroup or RBS, Barclays over here) did not have access to retial deposits as a source of capital.

It is therefore different and it is unlikely that such commercial banks will fail over here- Northern Rock was heavily depednant on the wholesale capital markets for financing its lending practice.

The interest rates in the developed world were kept too artificially low for too long; banks, under a duty to maximise shareholder value, were always likely to undertake ever more risky income producing activities.

That is the fundamantal cause of today's woes.

Happily we still have growing emerging economies and the issue ois one of confidence in the financial system.

The history of capital markets is excess followed by contraction- feats and famine are not only biblical epithets.

the Fed and Treasury in the US have shown resolve and courage in executing monetary policy and once the current turbulance has settled- we will have an environment that will allow the US economy to be the engine of innovation and growth for the world.

At the same time there is a need for greater transparency for financial instituions in terms of their asset positons and perhaps a requirment for greater regulatory capital.

But this desire for greater regulation we hear today must not be morphed into overly heavy state intervention- such moves are likely to stultify further growth in the future.

Human actors- perhaps particularly in the financial markets- are driven by greed and fear. We will undouibetdly see the current fear abate

It should be noted that one of the longer term methods to ensure that the cause of the current financial turmoil (interest rates too low for too long) is is not repeeated to the same extent- encourage uk citiziens to save a greater proprtion of their net income.

The US for example is a borrower from the savings of far east and chinese savers- a slow and general encouragment to save more is olikely to reduce the insatiable and uncontorlled rush for credit we have seen over the past 6 years

Brilliant Jeremy tonight - particularly with Nick Clegg, who kept refusing to state what his policies would be (he hadn't thought of anything!). Jeremy summed it up beautifully "It’s a totally worthless promise, isn’t it?"
Excellent panel on the Lehman Brothers collapse (Anatole Kaletsky, Robert Reich et al).

Excellent discussion on the financial crisis and perhaps regulation needs to start with the suspension of the global futures markets. It would mean mass slaughter of stock market parasites jobs, but that's preferable to damaging the real sustainable world economy in the longer term ?

It is funny, (were it not so serious) Now finally we get these high fuluting financial experts saying that the main cause of all this trouble has been too low interest rates for way too long. Now this idiot here, me, has been saying this for ages, on boards and the like when it comes up. Yet then the talk was and still is all striving to lower interest rates all the time, particularly the ´óÏó´«Ã½ 'mood' or bias, is pro lower rates all the time.

Rates now are not high they are low. We want them higher not lower. With that goes the house prices they should be pushed Much lower and that would be Good.

We should end the easy way outs of debts too. You borrow it you owe it until it is paid back with the interest, and no you have no 'entitlement to any life' until it is done.

#10

"encourage uk citiziens to save a greater proprtion of their net income."

I agree with you , but without higher interest rates how can you do this ?


#11

"Brilliant Jeremy tonight - particularly with Nick Clegg"

Agreed !

Nick Clegg mentioned further cuts to the Defence budget.

What programs would he cut ?

Do the Lib Dem's think the European or World security climate is right for further Defence Cuts ?

#13

I agree and some kind of control on housing demand, maybe include house price inflation in the BofE inflation figures, as they use to be.

The Economy -

Maybe someone could help me out, I have often wondered why UK exporter business have to pay the same rate of interest as me, a private consumer that has credit cards, loans for holidays , loans for new cars,loans for swimming pool etc (all stuff that generally does not help our balance of trade figures) ?

Why not have two(or even more) different interest rates ?

This would allow the BofE to strangle dangerous growth(debt) in the private consumer market , but leave our exporting business to borrow at world competitive interest rates for investment reasons ?


Maybe I am overlooking something fundamental and showing some ignorance of these matters ?

JamesStGeorge says experts are now saying "the main cause of all this trouble has been too low interest rates for way too long" but the message doesn´t seem to have got through to Jeremy Paxman. When the Lombard Research woman stated as much he literally laughed in her face muttering "unbelievable". He looked at her as if she was some kind of simpleton - "It´s a point of view" he sneered. Credit to the next guy to speak who backed her up but I was shocked that someone as supposedly well-informed as Paxman got it so wrong. This is so much more fundamental than the fall-out from greedy, casino bank deals gone wrong which just needs a bit of regulation to put right. The root of the problem does indeed go bank to the Tsunami of liquidity released by central banks in the aftermath of the dotcom (more properly telecom). The central banks drove a wagon load of firewater onto the Indian reservation and we are now seeing the results - Lehman and Merrils won´t be the last scalps.

I totally agree with brossen99. I too would like to see the ending of futures markets, especially on Energy and Food. Financial speculators have grown used to employing their wealth of capital to bet on large volumes of these commodities contracts, and making profits at the expense of the rest of us. For some of us, the impact may be tolerable, but what about the people in developing countries, whose family budgets depend on the prices of food to remain stable and affordable? My point is that not every market should be treated like the housing market, when too much speculation-driven demand simply drives prices through the roof without apparent economic rationale. People should not be automatically signed in at the casino if they don’t wish to gamble. However, in the current setting, they don’t have this choice. And when the big banks falter, everyone is on the sinking boat.

PAXMAN STUDIES (all too believable)

Bakeja99 - keep watching Paxo. The scales are clearly falling from your eyes.

the depth of denial was shown in the Lehman bosses turning down the rescue offer. They would rather go bust [put people out of work etc] than be regarded as 'cheap'. Was it petulance?

as they say in rehab the first step is admitting you have a problem. In this case a humility problem. which is the hardest problem to have. Alex Ferguson tells his players to play every game with humility. Its keeps the focus on what is real.

meanwhile short sellers are leaping from chart to chart shouting 'who's next' ! which becomes a self fulfilling prophecy.

can you investigate the bbc weather team. By the evidence of an endless stream of women waving their bellies at us they are bonking like rabbits. No other show has as many. Is thinking about the weather responsible?

bakeja99,

It is in effect a religion of belief that the object should always be to try to lower interest rates. This probably explains that Paxman reaction. Heresy! For decades the only people that matter have been those who get themselves into debt, and every chance possible is taken to penalise savers, for the wickedness of not spending every penny as soon as it comes in and adding on tomorrow's income by debt as well to boost a frothy god 'growth'.

The idea low returns on savings by low interest rates are good has to end. They should never be lower than 5% that should be thought of as a base line in the worst of times, aiming higher in boom periods. Also if deposit savings are taxed at all, the inflation equivalent portion should be deducted from the amount due to tax first.

Steve-London

I think a way to effect the two interest rates you rightly suggest is to tax borrowing. Interest 5%+tax extra 2% variable as seen the need to stop house price rises or over booming consumerism. Then using all the gains to give a negative tax rate on personal deposits savings. This would leave business out of the equation to use the international rates of the markets.

LOW INTEREST RATES -> MORAL HAZARD?

bakeja99 (#16) Wasn't Paxman's remark really in response to her assertion that low interest rates have led banks to inevitably fall foul of 'moral hazard'? I didn't see him so much disagreeing with her point that low interest rates are to blame for this crisis, it was just an exclamation about the Kafkaesque (yet paradoxically, all too real) idea that banks just can't help themselves under such conditions. I took her analysis to be that under low-interest rates, banks are inevitably tempted to expand and take risks, to be what Paxman ws referring to whne he laughed and said her analysis was 'a point of view' (i.e he was simultaneously complimenting her and aghast at the apparent chutzpah of banks).

The issue throughout, as I see it, has long been 'moral hazard' and the awesome power of the banks when .

# 20

I like your solution JamesStGeorge , the variable rate of Loan to Saver moderator tax sounds good.

I am doubtful it could moderate the Housing Market solely on it's own, as social demands for housing is seen as right (A Britons home is her or his Castle etc).Other levers of power would have to used to aid the cooling down of the housing market to a sustainable level.

But insane consumerism (debt) would be curbed without it negatively effecting exporting companies investment plans (their borrowing rate) and offer some stability to Sterlings international value, which is another plus .

Going a bit further into the current problem with banks and other institutions buying bad debt or dealing in it, I think shareholders need more oversight over these institutions, specially being informed of the risks. I know in business you have to take risks at times , but there is difference between insane (gambling) risk and a calculated risk.The shareholders should be able to set a limit of risk their bank or institution should be allowed to deal in.


Anyway thanks for replying JamesStGeorge, you brought some clarity to the problem.

BROKERS AT ARMS LENGTH: SEE NO EVIL, HEAR NO EVIL?

What Diana Choyleva (about 6.30 mins into the above) was that because the central banks (Fed, ECD and BoE who have control of the economy in Liberal Democracies) have provided liquidity at such very low policy/interest rates, this has driven the recipients to irresponsibly create markets. These are, as I understand it, either the sub-prime mortgagees, the loans to bank/supermarket (you name it) customers with minimal checks on their abilty to repay, and especially in the USA, the encouragement of remortgaging of owned property at teaser interest rates which then rocketed as a means of making profits which in turn make the lending companies' shares rise (whilst the unsecured loans are 'cut' like drugs, i.e. sliced and diced, so that nobody knows for sure what they're buying when said debt is passed on. If the central banks hadn't made so much money so cheaply available, the argument goes, there wouldn't have been so much incentive for the peddlers to go irresponsibly 'debt poaching/creating'. This is the price of deregulated, 'at arms length', brokers, where those who benefitted were rewarded for not asking awkward questions which might have crippled the cash cows and their farmers.

Hence lots of immigration of low-skilled people and the high differential fertility in the sector least able/discerning, i.e. easiest to indebt. If they can't repay it, that didn't matter too much to brokers and those who sold on their risky 'cut' debt to others. It was just 'pass the parcel' to them, and well, caveat emptor all round...and as to the analysts who gave the credit ratings....they were as bad a the peddlers.

In a word - usury.

JadedJean - I´m sure you´re right to some extent. JP´s expressions of incredulity were perhaps directed at the thought that the big banks could somehow be excused their excesses because of the extremely lax monetary regime of the last few years. Just because money was cheap doesn´t absolve banks from blame for the recklessness in the subprime markets and the dangerous expansion of the credit derivative markets for example. But what´s the big story here? Western governments and their central banks have caused a massive boom and now bust OR some banks have got carried away in a boom (they always do)? I still don´t think JP and a lot of other commentators are seeing the wood for the trees. Enough dodgy analogies from me.

INCREDULITY

bakeja99 (#24) 'incredulity' - that's the word I should have used.

Over on Paul Mason's blog, one contributor queried on the morality of short-selling and Paul responded.

He didn't say it himself, but morality (alas) has nothing to do with any of this as 'all's fair in business and finance' so to speak so long as it's covered by the and therefore doesn't break any laws/contracts (or goes unchecked by what to some appears, almost by design ).

But that's the 'wisdom' of free-market de-regulated anarcho-capitalism...