Wednesday 22 September 2010

Vince Cable Howls at the Moon

The thorn in the coalition's side is Vince Cable. A left-wing socialist is never going to co-exist easily with a Conservative Government.

But The Limp Dims have decided they need to throw some red meat to their activists at their party conference and with Nick Clegg away, Vince has seen his chance.

I note that his PR's took the chance to point out to the media the worst of his comments - such as capitalism destroying competition. It is hilarious that a Business Secretary would see fit to attack his constituents thus. Together with these nice general attacks, he continues the theme of attacking bankers blaming them for everything.

The first point is very badly made. Vince here is trying to suggest that he is against monopolies - in this case no doubt he means Rupert Murdoch buying Sky. Whilst it is of course correct that markets need regulation to keep them fair and open, to suggest that competition is a failure of capitalism is just nonsense. Vince clearly misses his own point here, as per usual. What is the alternative to competition? Our fantastically run schools, NHS and immigration services..

The second point on Bankers should have been jumped on by Downing Street. Yes bankers are to blame, no one likes seeing the 'bad' guys win. But others who failed are still around, Ed Balls, Mervyn King, Ben Bernanke - a whole list of the guilty. The fact that Adair Turner of all people, head of the hapless FSA who totally failed to regulate the UK mortgage market, should now be coming out in defence of bankers is hysterical.

The Government should really try and switch the narrative from blaming the banks, it shifts the true responsibility away from the last Government whose engineered credit boom won them an extra term in power to do damage.

That the Government is easy with Vince Cable coming out with this socialist much reflects badly on them and he should be slapped down or the text heavily edited before he reads it out this afternoon. If Vince can't lie with that then he should resign. Politicallym he can do damage from the back benches, but at the moment he is actually in charge of a department and there cannot be much faith that he is doing a good job.


James S said...

I really wish we could get the narrative to move away from 'free markets' vs 'government control'.

And towards super strong regulation aimed solely at creating EFFICIENT markets.

Because then you have language to actually consider useful points - what is the purpose of banks in the wider economy? Are they performing that purpose efficiently or not? How do we increase competition and thus efficiency.

Steven_L said...

Maybe it's not socialism Vince want, but now he's top dog at BIS has seen the light of the lobby and wants more corporatism?

He used to want to scrap BIS of course, but the EU doesn't work like this. The regulated (well the cream of the regulated) have very much taken over the job of regulating.

It's the big multi-nationals that support the EU status quo, the same big multi-nationals that push for subsidies and want to build monopolies.

How come the EU didn't block the Orange/T Mobile merger? The French and German vote was in the bag all along.

Newsed1 said...


When will somebody stand up and point out that the great collapse was caused mostly by the US property market caving in, the ability for many American homeowners to default on their mortgages, too low interest rates after 2001 and the Obama/Clinton-backed ACORN lobby, which forced banks to allow people with no credit rating to buy houses?

Oh, and the FSA's complete negligence when some UK banks went bananas on the international mortgage markets?

Governments meddling too much and not meddling at all were the root causes.

Sebastian Weetabix said...

@Newsed1 - with you there. They of course went one better than being simply negligent by then propping up failed banks with my money, instead of just protecting deposits and letting the incompetents go to the wall.

So, not only can you crazy city types have fun at the casino with my pension fund, when you lose it the government just prints (beg pardon, "quantitatively eases") a load of money to tide you over. Isn't life grand? Whatever it is, it isn't really capitalism, is it? Perhaps we need to coin a new word... corporatism? Favouritism? The end of moral hazard?

Meanwhile, in normal business world, when we screw up that badly we just go bankrupt and lose everything. So if you will forgive me for saying so, Mr Cable's complaints about the failure of capitalism and what we laughingly call down our way "wanker bankers" do tend to find a more sympathetic hearing outside the square mile, even among non-socialists such as myself.

Perhaps we can say that capitalism can't really be said to have failed, since - like Christianity - we don't seem to actually practise it in the EU these days.

James Higham said...

The second point on Bankers should have been jumped on by Downing Street.

Difficult when the ECB, BIS and BofE dictate to Downing Street.

CityUnslicker said...

SW - Much sympathy with your point of view here. The systemic issue inthe UK was caused by bailing out N Wreck - nothing to do but save HBOS & RBS as would have been catastrophic.

Who designed a system that allowed the banks to beahve this way....the banks loobied for it, but Labour and the FSA gave in. Austrlia and Canada had no banking crisis, despite many similar structural issues.

Hairy Arsed Bloke said...

The government had only a short window in which it could firmly pin the true blame on the Labour regime for the dire financial situation the UK is in. It chose not to do it. It has lost that chance forever.

The penalty for that mistake is that both coalition parties will be trashed at the next general election and Labour will be back.

Steven_L said...

We didn't really need to save HBOS and RBS pref/bond holders though did we?

That's where the systemic mess is, the busted banks can carry on borrowing cheap short term wholesale money thanks to the credit guarantee scheme etc.

The sensible institutions that only lent out deposits have to compete with zombie banks on government life support.

In hindsight they should have wiped out HBOS and RBS shareholders, then gone through the pecking order with debt for equity swaps until they were solvent again.

These should have been no CGS to subsidise the band banks that were dependent on wholesale finance.

We're even stuck owning the zombie banks, the whole thing does stink.

CityUnslicker said...

Steven - very sensible suggestion. The issue was purely one of time. The banks went under over a weekend and thus a very messy compromise was found. I totally agree re shareholders, should have been wiped out, after all the banks were bust.

HAB - You may well be right, I don't get this failure to pin everything on Labour. I can only see it is bounre out of the ideological confusion of the Coalition.

Budgie said...

One of the main contributing factors to the bank failures in the UK was the too low interest rates set by the Brown staffed BoE MPC.

Brown instructed the MPC to set interest rates to follow the Chinese Prices Index. The CPI did not even include housing costs. This was Brown's only control of mortgage borrowing/house prices. No wonder dim Brown got boom and bust.

Steven_L said...

Hindisght is a wonderful thing CU, back then you and I would have called it a '1983 manifesto ambition' 'socialism' etc.

That old addage about people getting the governments they deserve springs to mind!

CityUnslicker said...

Chinese Price Index - love it Budgie and very apt too!

SL - My posts are there for posterity - I was against all the bailouts until it hit RBS and HBOS - they had to be saved. I made a load of money out of the false market in bank shares buying at the bottom.

Anonymous said...

At the risk of being boring let me say I vote tory and believe in capitalism over socialism.

But really get a life - get out more.

Just what have TESCOs been doing all these years if not destroying their competition?

And thats just one example. Remember all those nice banks run by the likes of Capt Mainwaring? Gordon Brown rode roughshod over his own anti monopoly policy to destroy competition and create the Lloyds Group. But anyone seeking to defend capitalism had better steer away from the banks - eh?

BAE? Remember all those jolly defence and aircraft companies? Vickers Supermarine Handley Page?
Now BAE takes taxpayers for a ride.

We have anti trust and anti monopoly laws to protect us from the ultimate expression of capitalism.

But you seek stupidly to deny the truth for the sake of cheap politics. I may be a capitalist - but I'm not stupid.