Under fairly probing questioning on Channel 4 news tonight, the FSA's newly-appointed CEO Hector Sants made it abundantly clear they have only been in belated, reactive mode on Northern Rock's case - possibly only for a matter of days. Jon Snow even asked the question we were posing below - why, given the relative novelty of NR's business model wasn't the FSA all over them pre-emptively? (does C4 read CU?)
Sants' newness in rôle (July '07) doesn't get him off the hook: he was an internal appointment and had been an MD at the FSA since 2004.
ND
32 comments:
here is George Osborne for tihs open goal?
I can't believe the Fed cut 50 basis points today. this has gotten well out of control now.
The Authorities are coming out of this very badly overall in the US and UK. basically they are just saying banks are to be allowed to get away with whatever they like!
Thanks for the post..my new job requires several pounds of flesh at the moment as well as baby not sleeping!
I'm so old that I object to the notion of MD as a plural. The answer to "Who's in charge here?" should be in the singular.
While the CU's away ... good luck with both ! Thanks to these assorted regulatory delinquents there's plenty to keep the blog occupied
dearime - know what you mean but the horse has long since bolted - even in the '70s everyone who worked for a US bank in a customer-facing role was a VP
'Director' used to mean something, too
Splitting the FSA from the Bank of England was a sly measure of continuing to control all of the economy when Brown made the Bank 'independent' in preparation for re- entry into the ERM and eventually qualifying to join the Euro in 1997.
In effect the Bank has always been under his control as the absolute Northern Rock untouchability because it is a Labour front redistribution system run with remarkable insouciance, has underlined.
Why Mervyn King continues is a puzzle.
"The Authorities are coming out of this very badly overall in the US and UK. "
I'm afraid what is being signalled here is that the Fed now realises just how desperate the situation is. Hank Paulson was over to have a little chat with the BoE yesterday, so I'm guessing that the BoE and the EU will be cutting interest rates in a co-ordinated manner to try and minimise the impact to the dollar.
I don't see this working, personally. A 0.5% interest rate cut is going to be too little too late for homeowners in the sub-prime sector facing mortgage rate resets in October. And I don't really seeing it resolving the problems of the credit crunch, which relates to a lack of risk transparency between banks. So that would probably mean that in October we will see that the 0.5% cut will have had no effect on the problems, people will think "shit, the Fed can't solve this for us this time!" and then the stock market will collapse, the dollar will plummet, inflation will rise, and the economy will grind to a halt. Bernanke will then come to realise what the Japanese have realised - a failed economy doesn't respond to resuscitation by injections of debt (even with interest rates at 0.5% as they are in Japan). His solution of reflating the economy will not save the US from depression - it will just trash the dollar as the world's reserve currency. Keep an eye on gold prices.....
HG - Northern Rock untouchability because it is a Labour front redistribution system - that is a corker ! are you going to post on that ?
Scope for some investigative journalism here
Northern Rock down another 16% today. Thats 80% down from the peak last Spring. If a BoE bail-out can't save them and a government guarantee can't save them and no-one wants to buy them, then I think we can safely say they are toast. Alliance and Leicester seem like they are going to follow them - their share price is down too today.
Today's FT says the board was prepared to accept an offer of 300p per share at the beginning of this month so what value would you put on it now?
Another update on HG's insight above, this time from Guido:
NR is a big donor to ... yes, you guessed, the IPPR, McBroon's long-time front
http://www.order-order.com/2007/09/source-ippr-think-tank-received-massive.html
ND, read the Northern Rock Foundation literature, admire their 'projects', note the siphoning-off of pre tax Northern Rock bank profits, and the share that goes to the Foundation on any sale of the 'bank'. As you note, Guido has lots on this lot, but as they revel in what they are it isn't hard, once you get past the distaste, to marvel at the notion that anyone other than a subprime borrower had anything to do with them.
I do wonder how much their book is really worth, that the Bank of England had to step in rather than normal money raising procedures be used. Willem Buiter on Maverecon describes the oddness in not being able to use normal support channels.
I can't see rate cuts doing their job - people are now rattled so money they save on their mortgage won't go into new spending or housing it will go into their savings.
I know Hatfield Girl has an constant obsession about Gordon Brown being a Stalinist/Fascist/totalitarian (which in general just advertises her lack of understanding about both Gordon Brown and Stalinism etc) hence her statement about splitting the FSA from the Bank of England so that Gordon Brown could control the whole economy - which conveniently ignores the fact that the many other regulators who joined the FSA were never part of the Bank and the powers of independence given to both the BAnk and FSA.
In fact, i suspect that the more serious criticism of Brown is that he has allowed the FSA and the Bank too much independence - and that he needs to be more of a social democrat and realise that there is a need for properly targeted regulation and intervention in markets in order to improve their financial efficency. It is interesting that Kenneth Clarke, who really comes from a Christian Democract position rather than jingoistic/marketing coalition that now counts for Conservative thought in the UK, appears to share a similar position.
There are also plenty of other ways of ensuring that there is a moral hazard for wayward institutions than allowing them to collapse and then bring the rest of the market down like a pack of cards. A quietly arranged takeover, with senior management losing their positions, has been the usual way in the past - and the more serious question is why this didn't happen a few weeks ago (the signs are that the FSA wanted this but not the Bank)
Tory Boys Never...you really don't like HG do you? What is it with you? There are plenty of commentators you could pick on but you just love to have a go at HG! Don't you like bright, articulate women?
"A quietly arranged takeover, with senior management losing their positions, has been the usual way in the past - and the more serious question is why this didn't happen a few weeks ago (the signs are that the FSA wanted this but not the Bank)"
Er, nobody wanted to take NR over, but you go ahead and ask your "more serious question" sweetie...
TB - HG can look after herself (she's buying a gun, apparently) but there is no doubt whatsoever Brown has the Stalinist pathology, manifest to the extent it could be in millennial Britain
Everyone who has ever had working contact with him has described the traits in identical terms, and they add up to only one thing
If we thought Blair was a control-freak, we are already learning that he was a rank amateur compared to Brown
Of course HG can look after herself. I am banking on her looking after me too, when the shit hits the fan..Malicious stalkers piss me off though.
Lilith - not getting at you ! (I'd posted before I saw yours)
My gun licence application progress report needs updating, though the only problem remains what would I shoot at if the application is successful; mmmm.
Yes indeed, a target-rich environment, as they say.
Per Hatfield Girl
"Mervyn King was savagely over-ruled by the Westminster prime minister and First Lord of the Treasury Brown in the current systemic crisis whose iceberg -tip is Northern Rock."
Well er no - and whose word do we have for that well Mervyn King's
Per Lilith
"Er, nobody wanted to take NR over"
Well er yes they did - Lloyds TSB made an offer and also rumoured that HBOS did as well and it didn't go through because the BAnk wouldn't provide the guarantees Lloyds were looking for. Don't believe me check Peston's blog for a start - but several other sources as well.
Per Nick Drew
"Brown has the Stalinist pathology, manifest to the extent it could be in millennial Britain
Everyone who has ever had working contact with him has described the traits in identical terms, and they add up to only one thing"
Everyone?
Ed Balls, Yvette Cooper, Charlie Whelan, several other people who I know personally don't - but do we count as people in your eyes?
But more seriously you clearly know very little about Stalinist pathology. Even allowing for your rider re millenial Britain. What is the modern equivalent of the Gulag and the show trials, the spreading of fear among the general public of the knock at the door. Where is the cult of the personality and the anti-intellectualism from Gordon Brown? Just because someone doesn't suffer fools gladly and he falls out with a senior civil servant (who serves to the end of his time) doesn't make someone a Stalinist. It would be very easy (and just as idiotic) to call Margaret Thatcher a Stalinist/Fascist etc. by using selective references. I can only suggest that you and HG read a little bit about Stalin (Volkogonov is excellent by the way)before making such silly references.
Why do I find these Gordon is a Stalinist remarks so offensive - well I clearly support the LAbour Party (i'm probably more of Blairite than a Brownite - but the underlying political philosophy is similar and its social democracy not Stalism) but I also lost relatives to Stalin and perhaps have a little more inkling of what Stalinism means and how offensive such comments really are.
And yes Lilith I love bright and articulate women especially my wife
and daughters - one quality they (and bright and articulate men have)is that they know how to change their position when the facts don't stack up. And if you look around i have plenty of arguments with other right wing commentators (and those on the left under a differnt alias) - I actually believe that it is a good thing to engage with those whom you disagree (or is it rude/malicious to have such discussions if people leave their blogs open for comment)
TB - let's look at your arguments:
(1) Brown has some long-time supporters / underlings who don't criticize their boss & patron
You must accept that just on a point of logic, this does not add up to much of a refutation. Stalin lui-même had just such a retinue.
(2) What is the modern equivalent of the Gulag / show trials / fear among the general public of the knock at the door
This, TB, is the point. You say there are no such parallels: we say there are exactly these parallels, in the GB of 2007 (pun intended). Need I remind you of extraordinary rendition ? the advocacy of 90 days without charges ? And a host more parallels of a less dramatic nature, covered by my qualifying rider.
Think about this, TB: we mean our critique literally.
(3) Where is the cult of the personality
Please, don't make us laugh: any credibility for your position goes out the window if you are blind to what Brown carefully promotes in this regard.
(4) remarks so offensive
Well then, take them in context, you've already observed my rider. This is 2007, not (yet) the age of the dictators, and Brown is betraying Stalin-like tendencies in this context. Again, think on (2) carefully: I am not to be embarrassed by accusations of casual hyperbole, I am making a measured observation.
(And we haven't even touched yet on his monstrous personal cowardice.)
As Krushchev said in 1956
“Comrades! In 1922 Lenin wrote: After taking over the position of general secretary, comrade Stalin accumulated immeasurable power in his hands and I am not certain whether he will always be able to use this power with the required care…
"Comrades! As later events have proven, Lenin’s anxiety was justified. Stalin, who absolutely did not tolerate collegiality in leadership and in work, acted not through persuasion but by imposing his concepts and demanding absolute submission to his opinion … Where were the members of the politburo? Why did they not assert themselves in time?”
Nick
This is just plain silly - you cannot say a person is Stalinist because they did a small number of things (and even that isn't clear in GB's case except through collective responsibility) which you might label as Stalinist (and even there it might be possible to argue that the circumstances are difficult. Using such a logic you could argue that someone was like Mussolini becasue they want to run the trains on time.
The reality is that you have to make any comparisions in the round. The facts are that Brown's perspectives on economics (was Stalin a Keynesian?), nationalism, religion, the devolution of power (e.g to Scotland/Wales, Health Trusts, Bank of England, the FSA etc.)internationalism, tolerance of minorities are all fundamentally different from those of Stalin (or Mussolini/Hitler), even reflecting the change in times. If you want to argue that this is not the case, I would suggest that you need to do a lot more reading about Stalin and Brown before recommencing your argument.
As for the cult of personality point - if you think that any serious politician can ignore their image in the current age you really are out of touch, much as I would like it to be otherwise. However, all the signs are that this is something which Brown comes to with a great degree of reluctance - he is clearly a fairly shy and self effacing individual - and whatever you might say this was definitely not the case with Stalin. I also doubt Brown is into all night drinking sessions.
BTW the collegiate point is usually made by people who are not in Brown's college. In fact he has a reputation of being very loyal and looking after his own supporters - which was most definitely not the case with Stalin.
Masterly ND, but quite frightening. Lenin was no scaredy cat when it came to grasping power yet even he issued such a serious warning about the threat that a flawed obsessive personality could be to everyone if power was not held in many different hands.
Since the judges chickened out on preventing the abolition of the Lord Chancellorship (not quite the same as apointing a new minister of education or even Home Secretary, more like abolishing a third of our tri-partite constitution) the country has been run by whoever controls an undemocratically constructed political party.
It's best if I don't comment on other's blogs as I can't shoot people who are self-declared non-grown-ups.
HG - well, your choice but always welcome here !
TB - silly is not the word: in the context of 2007 British politics it is deadly serious with a number of fundamental freedoms at issue.
I don't have time right now to fisk your response above: but I can't resist a hollow laugh at your mention of 'devolution of power'. Ask Labour Party conference-goers; ask regional assembly-members; ask any of his ministerial 'colleagues'; ask Mervyn King !
On Brown the Stalinist, I'm with HG (and Lilith's repudiation of Tory Boy's squits). Check this article in yesterday's Indy. Specifically the last two paras.
http://news.independent.co.uk/uk/politics/article2979925.ece
I quote
"Mr Brown was accused yesterday of "control freakery" after it emerged that large numbers of motions submitted to the conference have been ruled out of order. Of 120 contemporary resolutions submitted by constituency parties and unions, 96 were ruled out of order by the Conference Arrangements Committee. They include motions on Iraq and the Trident nuclear weapons system.
John McDonnell, the Labour MP for Hayes and Harlington, said: "This closing down of debate within the Labour Party by Brown's imposition of such centralised control is cutting him off from the debates of party members and the concerns of the population at large."
Presumably the diktat of the commissariat chucked them out? Brown is a scary naty disfunctional Cunt. Bliar a horrid narcissist, but as his prediliction was to prance on the world stage as if he were the Mick Jagger of politics (Hey guys...), all he's done is help Bush destroy the lives of millions of innocent Iraqis.
The insidiousness of moving into an authoritarian regime is one of its most worrying characteristics. As Elby shows the 'Labour' party conference is to be as tightly controlled in what will be allowed in discussion as any Soviet Union party congress. The capacity for Conference to set or alter policy was removed over a decade ago and now even the trades unions cannot force policy discussions onto the agenda.
My problem with taking Tory Boys Never seriously lies not only in his theories but in his incredible rudeness, especially to HG on HG's own blog. He devalues his arguments by patronising and spitting bile, and that is really not the way to debate.
Nick you may want to fisk what I have said - but don't bother. My central argument is that you can only make meaningful comparisions between Brown and Stalin in the round, rather than a piecemeal dissection - and what is fisking other than that.
The fact that you thought that Lenin's views on Stalin were so revealing actually says a lot. Lenin's views on Stalin are known by anyone with the most basis knowledge of Soviet history and probably by nearly all Russians (at least those over the age of 30). You need to understand a lot more about Stalin before you start opining on his similarity to Stalin - just read some Solzhenitsyn, a man who probably has a similar political stance to your own, and then ask yourself the question whether this man would make such a wild comparison.
Re the contemporary resolutions - the whittling down by Conference Arrangements Committee has been going on for donkey's years. Perhaps someone could explain how the Labour Party was going to debate 120 contemporary resolutions (together with any emergency resolutions) - I suppose those who want to see anarchy at the Labour Conference will see anything as control freakery. BTW perhaps someone could explain how the process for contemporary resolutions at the Tory Conference is so much more democratic (or even just resolutions!)
As for the other comments just because someone disagree with you it is no reason to descend to abuse. If I have I apologise.
Even if you don't want to listen to what I'm saying you might want to ask Tom Paine or JAmes Higham on their blogs why they don't compare Gordon Brown to Stalin.
Then let's stick to discussing hedge funds, hmm ?!
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