Look at the cover picture, does the whole black roll-neck thing remind you of another political wife’s post-husband -leaving-office autobiography?
You don’t think Cherie is going to copy Hilary and try running for office as well? She really does hate Gordon*…
*You can see what she thinks of Gordon on GuyNews.TV.
- The Treasury’s primary spin-line is that it is all because of the sub-prime crisis in America and that no one could predict it coming.
- The second line of spin is that it is the Bank of England’s fault for not flooding the market with liquidity when trouble came.
King thought not on September 12, yet under pressure from Alastair Darling, the very next day he supported the bail-out of the Northern Rock management. There was no systemic risk to the financial system which could justify such a move. Now with the Treasury promising to guarantee all bank deposits, the British banking industry has become Moral Hazard central. The news that King has been forced to effectively reverse a sound policy means all risks have been transferred to the taxpayer. So if today an RBS trader “did a Leeson” the Treasury would end up picking up the tab.
The second line of Treasury spin is that the Bank of England should have flooded the markets with liquidity. That is never generally a good idea for an institution obliged to fight inflation. Market participants were in any event able to borrow from the bank window at penalty rates (and some did). Northern Rock could not do it because they did not have the necessary collateral.
The blame lies not with Mervyn King but squarely with Northern Rock’s management. The Northern Rock board took the risk in their dash for profit growth, a risk that should have been spotted at board level by their risk management committee chaired by Sir Derek Wanless.
Wanless should resign immediately and be stripped of any bonuses and performance related payments.
IPPR has yet to get back to Guido, so am as yet unable to confirm that they received hundreds of thousands of pounds in donations from Northern Rock. Reminds Guido of how generous Enron was with political donations before the end…
UPDATE : Northern Rock promised £191,018 to IPPR in May 2006 alone. Still awaiting total amount to be confirmed.
UPDATE II : Another £180,000 spotted in the 2003 IPPR accounts. Source says it will total over half-a-million.
Hat-tip :Ben Brogan
Now hackers have figured out how to unlock the phone and connect it to any network without the high-priced monthly charges. Apple have put their U.S. lawyers on the case, trying to enforce some kind of corporate communism. You buy the phone, but it is not your property to do with as you please if Apple get their way. (The big pharmaceutical companies try to do the same with their products, stopping you importing them from cheaper markets.)
Big business uses lobbyists to get politicians to pass laws that favour their clients rather than the common good. It is special pleading and protectionism of the worst kind. In the coming months Guido will be on the look out for examples of lobbyists using MPs to further private corporate interests at the expense of consumers. It is a murky world that people in Westminster are reluctant to talk about. Full of ex-MPs, ex-SpAds and on-the-make spivs. They like to do business behind closed doors, but you’ll catch rare sight of them in the open at the party conferences. Lavishing food and drink on anyone they think useful to their client’s interests…
Email Guido with any examples of lobbyists trying to screw the public for their clients.
Will Derek Wanless, the chair of Northern Rock’s audit and risk committees, show his face in public? Or will he go missing, like Gordon?
The open ended government guarantee promise is unprecedented. It could prove to be insane. If the housing market drops dramatically, mortgage repossessions could become even more endemic than they already are, with the result that the government could be left losing tens of billions of taxpayers funds. Bear in mind that Greenspan expects double digit percentage falls in house prices. Of course all we know of the terms is that Alastair Darling says “his word is his bond”. (He also said last week there was no problem with Northern Rock.) Equitable Life’s unfunded pensioners know the value of the government’s implicit rather than explicit guarantees. Zilch…
The LibDems Vince Cable has just let rip at Gordon;
“The British economy may have been reasonably successful but it is also highly fallible. The house that Gordon Built may not be built on sand but it has certainly been built on a floodplain. It has yet to be fully tested against rising economic sea levels, though the events of the last week suggest that it may be very soon… This current boom does not depend on long term investment or on exports or on the cultivation of a more educated, skilled, labour force. It is powered by debt financed consumer spending, some reckless lending and the optimism generated by a house price boom. The water is now pouring through the defences after the near collapse of Northern Rock; a product of greed and reckless gambling by overpaid executives; lax, indulgent bank regulation; and a complacent government. I warned Gordon Brown of a looming debt crisis four years ago.”
Sir Derek sits, like so many other of New Labour’s great and the good, on various government quangos; the Statistics Commission and the National Endowment for Science, Technology and the Arts.
More importantly he chairs Northern Rock’s Risk and Audit committees. If anyone should have known what was coming, it was Gordon’s favourite banker. He had to sign off on all strategic risk management issues. When Northern Rock realised the game was up, do you think it might have been Derek who was deputised to call his old political ally, Gordon Brown, for the bail-out?