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Saturday, 6 August 2011

This time, let the banks fail

This time, let's not make the same mistakes that Brown and Balls did - an ineptitude that will cost a generation to repair. No bank is too big to fail. 
"The UK has been hit hard because the banks took on enormously large liabilities in foreign currencies. Should the British taxpayers have to lower their standard of living for 20 years to pay off mistakes that benefited a small elite?" he said. "There is an argument for letting the banks go bust. It may cause turmoil but it will be a cheaper way to deal with this in the end. The British Parliament never offered a blanket guarantee for all liabilities and derivative positions of these banks" - Joseph Stiglitz, 2009, Telegraph
Failing banks should be allowed to go under and asking the taxpayer to prop them up shows capitalism has 'gone wrong', according to the Bank of England deputy governor. In the bad times, banks' losses should be absorbed by their creditors and investors, not by the taxpayer, Paul Tucker has told the BBC. Tucker said that banks had to incur the losses when things went wrong. Paul Tucker 2011
Economic conditions may turn out to be far worse than in previous recessions, including the Great Depression at the beginning of the 1930s. Everybody seems to think that, thanks to the government's monetary and fiscal interventions, this recession will come nowhere near the 1930s slump. However, I think it might be far worse – and precisely because of the interventions. Marc Faber 2009
Two powerful Republicans on Sunday called on Barack Obama, US president, to let some big banks fail instead of propping them up with public money. Richard Shelby, the top Republican on the Senate banking committee, warned that the US would end up following the same path as Japan, which suffered a lost decade of economic growth by tackling its banking crisis too slowly, unless some big institutions were allowed to fail. "Close them down, get them out of business. If they're dead, they ought to be buried," Mr Shelby told ABC News. "We bury the small banks. We've got to bury some big ones and send a strong message to the market." FT, 2009
Iceland President Olafur R. Grimsson, in an interview with Bloomberg, said his country was much better off because it refused to bail out the banks and allowed them fail. "The difference is that in Iceland we allowed the banks to fail," Grimsson said. "These were private banks and we didn't pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks." LaRouche 2010
And here's Barclays' £6.5m bonus boy Bob Diamond:
On too big to fail:“It’s very important that we allow banks to fail. It’s very important that no taxpayer money is ever again used to bailout banks that have failed. And that’s why we are working on how we can ensure that banks are able to fail and are able to be wound down.”
On whether he would ever accept a government bailout:“No I think that’s exactly the plan we are working on. Is how do we create a capital structure, and how do we provide a resolution and recovery plan that is credible with our regulators so if the worst happened, they are comfortable that they can wind down the institution.” Wall St Pit 2011

Friday, 5 August 2011

Don't worry: It's just us

Don't get worried about global financial Armageddon; it's just us. We can safely let the banks fail - within hours the People's Bank of Guangzhou will have taken over the Barclay's branches and cash machines, and life will go on as normal. As Al Jazeera reports;
Perhaps for the first time in modern history, the future of the global economy lies in the hands of poor countries. The United States and Europe struggle on as wounded giants, casualties of their financial excesses and political paralysis. They seem condemned by their heavy debt burdens to years of stagnation or slow growth, widening inequality, and possible social strife.
Much of the rest of the world, meanwhile, is brimming with energy and hope. Policymakers in China, Brazil, India, and Turkey worry about too much growth, rather than too little. By some measures, China is already the world’s largest economy, and emerging-market and developing countries account for more than half of the world’s output.

Thursday, 4 August 2011


Goodbye-ee, goodbye-ee,
Wipe the tear, baby dear, from your eye-ee,
Tho' it's hard to part I know,
I'll be tickled to death to go.
Don't cry-ee, dont sigh-ee,
there's a silver lining in the sky-ee,
Bonsoir, old thing, cheer-i-o, chin, chin,
Nah-poo, toodle-oo, Goodbye-ee!

ACPO police bosses arrests

ACPO members Sean Price and Derek Bonnard, Chief Constable and Deputy Chief Constable of Cleveland, have been arrested after an investigation into endemic and widespread financial corruption at the most senior levels of the force. This, I suspect, is just the tip of the iceberg nationally. Ever since the 1964 Police Act, which not only abolished local police forces but severely constrained oversight and scrutiny of police bosses, this class of 'untouchables' has grown in the chutzpah with which they flaunt an institutionalised corruption. 

If the Chief Executive of Suffolk Council takes industry freebies, flights to Florida, junkets and gifts as well as racking up charges to the ratepayer for toenail manicures, chauffeured cars and the rest, they will be held to account. Eventually. It may take some time, but with FOI and a single determined local journalist, the truth will out. But whilst our concentration has been on corrupt politicians and civil servants, police bosses have so far escaped the depth of scrutiny that has been turned on the others. All this is now changing. Peter Clarke, Andy Hayman, Paul Stephenson and John Yates' resignations for corruption, and the arrests of Price and Bonnard, are just the start.   

Police bosses must now be prepared for every pay-off, gift, inducement or reward from business or the media, every freebie from Serco or G4S, or even their US or EU counterparts, every 'free' Gourmet dinner paid for by criminals, every favour done for friends or family in perversion of the course of Justice, every publicly owned asset including information that has been sold for private gain and every 'free' villa, hire car and flight to come out into the cold light of day. 

No wonder they want to create a national police force free of democratic control and scrutiny - the bent buggers have been on a roll. Well, their day is coming.  

Wednesday, 3 August 2011

London 30º Italy 7% Spain 7%

As London bakes in the August heat, bond yields in Italy and Spain are fast approaching the 7% trigger for a Summer melt down of the Euro; 7% was the bail-out level for Greece, Ireland and Portugal. The problem is, there's just not enough money in reserve in the entire Eurozone to bail-out Spain and Italy. 

There are only three ways to get rid of debt; pay it down, default or inflate it away. Paying it off takes money out of the real economy, slows growth, costs jobs and has a high human cost. Inflating it away is only painless if earnings rise with prices - which isn't happening. The sensible option - to let the banks holding the junk fail, collapse and disappear, taking all their worthless derivatives with them, seems beyond the ken of our weak as dishwater dribbly political class. So as the banks get incrementally healthier we've exchanged a bank debt crisis for a sovereign debt crisis; the blood donor is collapsing from anemia. Insanity. 

Greeks know all about starvation. When the Germans took the country's food production, over 300,000 died of starvation in Athens alone; today they're queuing at the food kitchens again to stay alive. Whilst Britain's banks distributed a bonus pot of £14 billion last year. Insanity.  

Tuesday, 2 August 2011

Like all politicians, even Eric isn't honest

Eric Pickles is one of the stars of the coalition; his Question Time car-crash during the expenses scandal when he attempted to explain that MPs were special and quite unlike ordinary people, and therefore needed shedloads more money and perks, has been all but forgotten. And whenever the coalition has struggled (which has been frequently) Eric has always come up with a press-hugging soundbite and austerity measure to shift the focus. And he's done it again today, with an announcement that councils must cut £500m annually from council tax benefits by targeting fraud and getting claimants back into work. Cue cheering etc.

But either Eric isn't being quite honest, or the MSM doesn't know anything about the system. Or a combination of both. For a start, the changes come into effect in 2013, when the current benefits system will be replaced by Universal Credit. HB / CTB is currently administered by councils which reclaim the amounts paid from central government; what Eric's proposing is that when HB is rolled-up into UC from 2013, leaving just CTB to be administered locally, rather than councils reclaiming actual CTB paid, they'll be given a block grant instead. And what about that £500m cut so lauded by readers of the Mail? Uhm, by coincidence it's exactly (£500,700,000) the annual amount paid to councils up until the 2013 switch for administering HB/CTB. 

So the real announcement is far less sexy - that with effect from 2013 councils must find the costs of administering CTB either from within the block grant or from other revenue resources. But hey, why waste an opportunity for mendacity? 

Monday, 1 August 2011

Stupidity or Naivety?

The Royal Parks Agency aren't the first organisation to try to ask the public 'please take your litter home with you'; those infuriatingly moronic station platform drones that warn you that your luggage may be damaged or destroyed by the security service also ask the same thing. The result is invariably similar, as anyone with an ounce of nous could predict; people are reminded to jettison immediately whatever rubbish they have around their person. 

Look, the deal is simple. When we're out, we'll buy ice creams and burgers from your astonishingly overpriced franchises; we'll spend a fortune on cardboard containers that purport to contain coffee, we'll buy newspapers and magazines from your concession stands. All we ask in return is that you provide a sufficient number of large capacity rubbish receptacles around the place for us to dump the waste in. You must be either stupid or naive in the extreme to imagine that we're going to cart a festering putrescent burger wrapper all the way home to dispose of in our own over-regulated, prodnose monitored wheely bin.  

The Royal Parks Agency may be 'disgusted' that park users didn't take their rubbish home at the weekend. Park users, I suspect, are equally disgusted that the RPA didn't provide skips at all the park entrances for them to leave their rubbish in. As usual, it all comes down to the EU and their myopic and counterfactual policy on landfill. The answer to both the Royal Parks and rail companies fiscal costs is the withdrawal of the UK from the EU, not to transfer the costs of refuse disposal to householders and councils.   

Chartered Institute of Police

The virtual abolition of ACPO is coming about through a concatenation of changes; firstly, the distinctly dodgy and possibly downright illegal activities of ACPO's State Surveillance / agent provocateur branch are about to be catalogued in a report from HMI, creating a potentially massive legal liability for damages for the secretive and non-public organisation. Secondly, the government have brought ACPO within the bounds of the Freedom of Information Act, and from October the organisation can no longer keep secret its activities. Thirdly, spending cuts have forced Chief Constables and Police Authorities to slash their wanton chucking of our taxes at ACPO and its agencies; the NPIA alone - a secret and private body - benefited from £20m annually of tax income. But if you imagined this would stop Hugh Orde and his chums from seeking to establish an unaccountable national police force free of democratic control, think again. ACPO's death-ploy is to transform itself into a Chartered Institute with sweeping powers.

Earlier this year, the Home Affairs Committee extracted painfully from both Hugh Orde and from Peter Neyroud some intelligence on just what ACPO is trying to do. For a start, they want to be independent of government - still taking £5m a year of government money, you understand, but also charging every constable in the UK £35 a year for compulsory membership, and selling the services of 'retired' officers (often no older than 49 years). Neyroud was cornered by Alun Michael MP at the Committee, on the wide divergence between the stated aims of government - to return us to Peel's principles of policing, and those of ACPO, which seeks to create a body above democracy and outside of the people:-
Q57 Alun Michael: The Police Minister has been very clear about taking us back to the key purposes set out by Sir Robert Peel of reducing crime.
Peter Neyroud: Yes.
Q58 Alun Michael: It doesn’t seem to come out of the way that you have framed your report. There is an awful lot of stuff, an awful lot of detail.
Peter Neyroud: Yes, I was asked to deal with a lot of detail.
Q59 Alun Michael: A lot of woolliness, I would suggest.
Peter Neyroud: Okay, I am not sure I quite accept woolliness, but I wasn’t asked to describe the purpose of the police in the report. I was asked to try and find a way for the police to be able to be more purposive.
Q60 Alun Michael: But isn’t that why we end up with people moving away from a clarity of purpose-that it is not constantly restated and people are not constantly reminded? Isn’t it, as with other professions like medicine, very important that it is right at the heart of professionalism?
Peter Neyroud: I agree with that. Again, in trying to describe the type of professionalism that I think should be in place, a proper set of values and ethics that will necessarily encompass what the purposes of the police service are, yes, definitely.
Q61 Chair: So you would say this is something that you would expect the Government to commission?
Peter Neyroud: I think it is the first-
Q62 Chair: Absolutely the most important? Before any other reports are written about the new landscape of policing, it is essential to know what the purpose is?
Peter Neyroud: Yes. I think the purpose of policing is always going to be complicated, but yes.
If you've never seen a senior plod wriggling like a maggot on the hook to deny every single precept set out by Peel without actually admitting it, then Neyroud's weasel words to the Committee will prove illuminating. 

Neyroud and Orde's proposals are dangerous in the extreme. They aim to have under their control the appointment and promotion of every single policeman in the UK; no longer will training and appointment, and subsequent promotion and posting, be down to the 43 Chief Constables, but decided by the Chartered Institute. Once they have control of national police professional qualifications, no Constable can rise to Sergeant and no Sergeant to Inspector without a certificate from Orde's organisation. Without that body's endorsement, no officer will be able to move into detective, terrorist, firearms or other specialist branches. 

This is one area in which MPs on the Home Affairs Committee are asking all the right questions, even under the unlikely Chairmanship of Keith Vaz. One to keep watching. 

Sunday, 31 July 2011

MPs escape Paul Staines' hanging campaign ... for now

MPs can perhaps consider themselves lucky to have escaped the noose that hard right-wing blogger Paul Staines, a.k.a.Guido Fawkes, would like to put around the necks of child and cop-killers - or perhaps he's just planning an incremental campaign? Or, given that Staines' political targets are frequently depicted on the blog at the centre of  rifle-sight cross hairs, perhaps 'hangings too good for them'?