Day One for the new Prime Minister and his team has been good!
Less than 24 hours ago, I mused that maybe David Cameron and Nick Clegg represented something that the UK badly needs – a real positive change in Governing the country.
Spring shoot 1
Matthew Parris
Matthew Parris is an experienced reporter, columnist and a one-time Conservative Member of Parliament. Here’s what he said to the BBC a short while ago (at the time of writing this Post).
“I ought to be cynical, I ought to be saying it’s all going to end in tears, but I just sense something good and genuine in the air and it just might work,”
“You almost have a sense of two men staging a coup against the British political system,”
Spring shoot 2
It’s almost unknown for the Governor of the Bank of England to comment on political matters. The current Governor, Mervyn King, was recorded saying this today.
… David Cameron and Nick Clegg represent real positive change for the UK.
Another amazing day for British politics as Gordon Brown tendered his resignation to Her Majesty Queen Elizabeth II and in less than an hour the Queen asked David Cameron if he would form a Government.
That wonderful unwritten constitution dealing with a change of Prime Minister in such a beautiful and dignified manner.
Nick Clegg
All I want to say is that these two men have my prayers and best wishes for delivering what so many millions want – a better and fairer way of running a modern democracy.
Here’s a novel idea, let the Public Sector live within its means!
BBC Business Editor, Robert Peston
Robert Peston is the BBC’s Business Editor. I’ve read his Blog and listened to him on the Beeb for many years now. His latest Blog article hits the bulls-eye.
The smart solution would be to somehow depoliticise what’s known as fiscal consolidation, or the process of cutting spending and raising taxes such that the public sector can again live within its means.
Precisely!
A public sector that seeks not to burden society but to benefit it should not be an issue of party politics.
There are so many excellent Blogs out there that it is difficult at times to keep track of key articles. But here’s one reproduced from Washington’s Blog. It was published on the 30th April and sets out some powerful reasons why the so-called Too Big To Fail banks should, and must, be broken up. It is reproduced with permission. Ed.
But the giant banks are not only dangerous because they skew the political system. There are five economic arguments against the mega-banks as well.
Impaired Competition
Fortune pointed out last February that the only reason that smaller banks haven’t been able to expand and thrive is that the too-big-to-fails have decreased competition:
Growth for the nation’s smaller banks represents a reversal of trends from the last twenty years, when the biggest banks got much bigger and many of the smallest players were gobbled up or driven under…
As big banks struggle to find a way forward and rising loan losses threaten to punish poorly run banks of all sizes, smaller but well capitalized institutions have a long-awaited chance to expand.
So the very size of the giants squashes competition.
Less Loans, More Bonuses
Small banks have been lending much more than the big boys.
The Bank for International Settlements (BIS) is often called the “central banks’ central bank”, as it coordinates transactions between central banks.
BIS points out in a new report that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:
The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.
In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don’t have, central banks have put their countries at risk from default.
By failing to break up the giant banks, the government is guaranteeing that they will take crazily risky bets again and again and again.
We are no longer wealthy enough to keep bailing out the bloated banks. We have serious debt problems. See this, this and this.
(Anyone who claims that Chris Dodd’s proposed “reform” legislation will prevent banks from getting bailed out again is wrong. If the giant banks aren’t broken up now – when they are threatening to take down the world economy – they won’t be broken up next time they become insolvent, either. And see this.)
Unfair Competition and Manipulation of Markets
Moreover, Richard Alford – former New York Fed economist, trading floor economist and strategist – recently showed that banks that get too big benefit from “information asymmetry” which disrupts the free market.
Nobel prize winning economist Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market:
“The main problem that Goldman raises is a question of size: ‘too big to fail.’ In some markets, they have a significant fraction of trades. Why is that important? They trade both on their proprietary desk and on behalf of customers. When you do that and you have a significant fraction of all trades, you have a lot of information.”
Further, he says, “That raises the potential of conflicts of interest, problems of front-running, using that inside information for your proprietary desk. And that’s why the Volcker report came out and said that we need to restrict the kinds of activity that these large institutions have. If you’re going to trade on behalf of others, if you’re going to be a commercial bank, you can’t engage in certain kinds of risk-taking behavior.”
The giants (especially Goldman Sachs) have also used high-frequency program trading which not only distorted the markets – making up more than 70% of stock trades – but which also let the program trading giants take a sneak peak at what the real (aka “human”) traders are buying and selling, and then trade on the insider information. See this, this, this, this and this. (This is frontrunning, which is illegal; but it is a lot bigger than garden variety frontrunning, because the program traders are not only trading based on inside knowledge of what their own clients are doing, they are also trading based on knowledge of what all other traders are doing).
Goldman also admitted that its proprietary trading program can “manipulate the markets in unfair ways”. The giant banks have also allegedly used their Counterparty Risk Management Policy Group (CRMPG) to exchange secret information and formulate coordinated mutually beneficial actions, all with the government’s blessings.
Again, size matters. If a bunch of small banks did this, manipulation by numerous small players would tend to cancel each other out. But with a handful of giants doing it, it can manipulate the entire economy in ways which are not good for the American citizen.
No bloated hyperbole about past achievements! No slagging off of the opposition! No daft prognostications. No ludicrous excuses. No pretentious blather. No lies! No wild scare-mongering!! No spin-ridden soundbites! Yup, deciding whether Britain staggers back to its feet again or sinks ever-deeper into irrelevant, bureaucratic and debt-ridden mediocrity is pretty important, but you also have to see the funny side of things.
Just recently Peter Hain said:
I think it’s important for people to act intelligently in this election.
This is brilliant advice, suggesting of course that once the election is over we can all happily go back to being stupid.
It is so useful to get really good advice from our prospective leaders. Thanks Peter.
I will try to act intelligently, but it’s never been a real strong point. Got any hints?
Would voting Labour be intelligent, perhaps? Or indeed the opposite? I am a bit confused ….. which is sad, as the future of my country is at stake.
Without intelligence we are done for. Such a shame it has been so lacking in government for the last 13 years of course.
Uncontrolled borders and Washington’s lack of self-control
[This article appeared in the online version of the Wall Street Journal on May 1st. Copyright exists with the WSJ and it is reproduced below without permission. However, it seems to me to be such an insightful commentary on present conditions that the decision was taken to publish it on Learning from Dogs. Ed.]
By Peggy Noonan
Peggy Noonan
We are at a remarkable moment. We have an open, 2,000-mile border to our south, and the entity with the power to enforce the law and impose safety and order will not do it. Wall Street collapsed, taking Main Street’s money with it, and the government can’t really figure out what to do about it because the government itself was deeply implicated in the crash, and both political parties are full of people whose political careers have been made possible by Wall Street contributions. Meanwhile we pass huge laws, bills so comprehensive, omnibus and transformative that no one knows what’s in them and no one—literally, no one—knows how exactly they will be executed or interpreted. Citizens search for new laws online, pore over them at night, and come away knowing no more than they did before they typed “dot-gov.”
It is not that no one’s in control. Washington is full of people who insist they’re in control and who go to great lengths to display their power. It’s that no one takes responsibility and authority. Washington daily delivers to the people two stark and utterly conflicting messages: “We control everything” and “You’re on your own.”
All this contributes to a deep and growing alienation between the people of America and the government of America in Washington.
This is not the old, conservative and long-lampooned “I don’t trust gummint” attitude of the 1950s, ’60s and ’70s. It’s something new, or rather something so much more broadly and fully evolved that it constitutes something new. The right never trusted the government, but now the middle doesn’t. I asked a campaigner for Hillary Clinton recently where her sturdy, pantsuited supporters had gone. They didn’t seem part of the Obama brigades. “Some of them are at the tea party,” she said.
None of this happened overnight. It is, most recently, the result of two wars that were supposed to be cakewalks, Katrina, the crash, and the phenomenon of a federal government that seemed less and less competent attempting to do more and more by passing bigger and bigger laws.
Add to this states on the verge of bankruptcy, the looming debt crisis of the federal government, the likelihood of ever-rising taxes. Shake it all together, and you have the makings of the big alienation. Alienation is often followed by full-blown antagonism, and antagonism by breakage.
Which brings us to Arizona and its much-criticized attempt to institute a law aimed at controlling its own border with Mexico. It is doing this because the federal
The US-Mexico border
government won’t, and because Arizonans have a crisis on their hands, areas on the border where criminal behavior flourishes, where there have been kidnappings, murders and gang violence. If the law is abusive, it will be determined quickly enough, in the courts. In keeping with recent tradition, they were reading parts of the law aloud on cable the other night, with bright and sincere people completely disagreeing on the meaning of the words they were reading. No one knows how the law will be executed or interpreted.
Every state and region has its own facts and experience. In New York, legal and illegal immigrants keep the city running: They work hard jobs with brutal hours, rip off no one on Wall Street, and do not crash the economy. They are generally considered among the good guys. I’m not sure New Yorkers can fairly judge the situation in Arizona, nor Arizonans the situation in New York.
But the larger point is that Arizona is moving forward because the government in Washington has completely abdicated its responsibility. For 10 years—at least—through two administrations, Washington deliberately did nothing to ease the crisis on the borders because politicians calculated that an air of mounting crisis would spur mounting support for what Washington thought was appropriate reform—i.e., reform that would help the Democratic and Republican parties.
Both parties resemble Gordon Brown, who is about to lose the prime ministership of Britain. On the campaign trail this week, he was famously questioned by a party voter about his stand on immigration. He gave her the verbal runaround, all boilerplate and shrugs, and later complained to an aide, on an open mic, that he’d been forced into conversation with that “bigoted woman.”
He really thought she was a bigot. Because she asked about immigration. Which is, to him, a sign of at least latent racism.
The establishments of the American political parties, and the media, are full of people who think concern about illegal immigration is a mark of racism. If you were Freud you might say, “How odd that’s where their minds so quickly go, how strange they’re so eager to point an accusing finger. Could they be projecting onto others their own, heavily defended-against inner emotions?” But let’s not do Freud, he’s too interesting. Maybe they’re just smug and sanctimonious.
The American president has the power to control America’s borders if he wants to, but George W. Bush and Barack Obama did not and do not want to, and for the same reason, and we all know what it is. The fastest-growing demographic in America is the Hispanic vote, and if either party cracks down on illegal immigration, it risks losing that vote for generations.
But while the Democrats worry about the prospects of the Democrats and the Republicans about the well-being of the Republicans, who worries about America?
No one. Which the American people have noticed, and which adds to the dangerous alienation—actually it’s at the heart of the alienation—of the age.
In the past four years, I have argued in this space that nothing can or should be done, no new federal law passed, until the border itself is secure. That is the predicate, the commonsense first step. Once existing laws are enforced and the border made peaceful, everyone in the country will be able to breathe easier and consider, without an air of clamor and crisis, what should be done next. What might that be? How about relax, see where we are, and absorb. Pass a small, clear law—say, one granting citizenship to all who serve two years in the armed forces—and then go have a Coke. Not everything has to be settled right away. Only controlling the border has to be settled right away.
Instead, our national establishments deliberately allow the crisis to grow and fester, ignoring public unrest and amusing themselves by damning anyone’s attempt to deal with the problem they fear to address.
Why does the federal government do this? Because so many within it are stupid and unimaginative and don’t trust the American people. Which of course the American people have noticed.
If the federal government and our political parties were imaginative, they would understand that it is actually in their interests to restore peace and order to the border. It would be a way of demonstrating that our government is still capable of functioning, that it is still to some degree connected to the people’s will, that it has the broader interests of the country in mind.
The American people fear they are losing their place and authority in the daily, unwinding drama of American history. They feel increasingly alienated from their government. And alienation, again, is often followed by deep animosity, and animosity by the breaking up of things. If our leaders were farsighted not only for themselves but for the country, they would fix the border.
Peggy Noonan is a columnist for The Wall Street Journal whose work appears weekly in the Journal’s Weekend Edition and on OpinionJournal.com.
She is the author of eight books on American politics and culture. The most recent, “Patriotic Grace,” was published in October 2008. Her first book, the bestseller “What I Saw at the Revolution: A Political Life in the Reagan Era,” was published in 1990.
She was a special assistant to the president in the White House of Ronald Reagan. Before that she was a producer at CBS News in New York. In 1978 and 1979 she was an adjunct professor of journalism at New York University.
The art of saying something and meaning something totally different.
I must confess to being a bit fed up with Greece.
In Anglo-Saxon language their attitude used to be called “taking the piss“. Today’s “funny” (or if preferred take your pick from: tragic, surreal, ludicrous, ridiculous,bizarre, insane or indeed all of these at once) is something the Greek Prime Minister said. Admittedly he said it in February and I’ve only just picked up on it.
‘We are a country which cannot alone deal with the speculation. So this has become a European problem, because if we do have a major problem, this could create a contagion for other countries too who are not to blame.’
Brilliant and I especially love the use of the word “speculation”.
This makes it seem as if it isn’t Greece’s fault at all; it’s all down to those nasty fat people in suits and sunglasses, the evil international financial mafia seeking to destabilize his country.
Then there is the “if” word. Now normally this is associated with a condition, but anyone who even in February thought that there was any conditionality involved in Greece’s meltdown must have been looney, or perhaps the Head of the International Monetary Fund (IMF) who said this on March 8th:
Greece will be able to deal with its own financial problems without needing a bailout, the head of the International Monetary Fund said today.
IMF managing director Dominique Strauss-Kahn said that Greece’s debt mountain is unlikely to spread to other eurozone countries with high levels of public debt.
And Mr Strauss-Kahn dismissed market speculation of potential default by other heavily indebted eurozone countries such as Portugal, Spain or Ireland as scare-mongering.
IMF Director Dominique Strauss-Kahn answers questions on a panel with Bob Geldof in Nairobi yesterday. Mr Strauss-Kahn has said he believes Greece will not need an IMF bailout .
Yes, this is the same DSK who is paid a vast salary and expenses and could be the next President of the EU.Of course he could have been lying to try to restore “confidence”. However, lying is lying, for whatever reason. Or he could have just been humungously wrong.
That’s the trouble with our leaders and financial experts these days; you never know whether they’re lying or just stupid; it’s usually one or the other and sometimes of course both.
And Papandreou’s quote continues: ” a contagion for other countries“. Indeed, Mr P. And what do we do with a “contagion” in the body? We destroy it and get rid of it …. and finally we have “other countries too who are not to blame“.
AHA! At last! Proof that my old Mum in the UK on her measly pension is not to blame. Thanks Mr P. At last some recognition fo the truth. Let’s have a bit more of that ….
As for the merits of Greece’s plea for funds, you only have to read this devastating article to feel your flabber gasting to breaking point.
No wonder the Germans are increasingly threatening to dump Greece, and so they should. Not the German government (all governments seem currently to lack the guts to do anything really necessary or serious).
No, this time it’s an economics professor threatening to take the EU to court if they allow this blatantly EU-illegal bailout, and public opinion is increasingly on his side.
It is a horrendous mess, but the only solution is for Greece to leave the euro. Bailing them out is a black hole. Does anyone in their right mind think the Greeks can really change their traditional practices and suddenly become honest, thrifty and hard-working?
Well, the answer is probably “Yes”, but then cloud-cuckoo land is becoming seriously over-populated.
Which reminds me, I must get back to the British General Election Campaign ……
Such a shame that British electioneering couldn’t be honest.
Well, the British General Election Campaign meanders along towards the final week before we are put out of our misery on May 6th.
Sadly, the main topic of interest has been the success of Nick Clegg in the Leaders’ TV debates. The new young face on
Nick Clegg
the block has proved once and for all the huge power of television. Not one single Lib-Dem policy or personnel changed during the debate, yet the mere appearance on the telly of a new, personable kid on the block has rocketed his party up the ratings.
Well, not exactly rocket science, but sobering all the same. However, more importantly, most policy discussion seems mired in a series of scare-mongering ploys along the lines of, “Don’t vote for that lot or this terrible thing will happen.”
Yes, perhaps this is the stuff of all elections, but this one should have been a bit different since
A) it comes after a long period of power held by the Labour Party and whichever way it goes will mark a historic change and,
B) the stakes are so high as Britain hovers on the edge of joining the economically-challenged PIIGS [Portugal, Italy, Ireland, Greece, Spain, Ed.] of Europe.
We desperately need a government that can take us safely away from that particular event horizon, but to choose one rationally, we need the “truth” about what really needs to be done to reduce debt.
But sadly, we seem infected by the Greek syndrome, an ability to see the bleedin’ obvious, which is that nobody can live beyond their means for ever, much as they might like to.
So, we’re having to look for “the truth” further afield, to the Institute for Fiscal Studies (IFS), for example. According to them, the cuts in public costs will have to be as deep as any made since World War II. (Oh, and thank you to Labour and the banks for jointly getting us into this sorry mess.)
They may disagree in public, but privately they couldn’t agree more. On the single most important issue facing the country after this election, our politicians think it’s better to keep us in the dark.
WHERE is the party explaining this clearly and unambiguously to the people? In other words, TELLING THE TRUTH?
I don’t see it. Neither of the big, old dinosaur parties are being straight with us. The Tories are proposing to spend even MORE on the NHS, (National Health Service) that sacred cow that nobody dare speak any ill of, while Labour seem to be promising to spend more on just about everything despite our £163 billion borrowing this year.
Why is this? It can – I submit – only be because they don’t think the public will understand and accept “the truth”.
If party A tells the truth and admits the cuts in public services will be deep and involve some pain and party B LIES and says it will “preserve frontline services” (the Labour line) then they (Party A) fears the public will not buy their version and opt for whoever promises them a fantasy instead, or in other words a gradual recovery without too much pain and in particular for themselves.
So, there is deep cynicism and an extreme economy with the truth from all parties who fear a voter backlash if they tell it. This is rather a sad reflection on the Labour Party’s proud boast of “education, education, education” of 1997.
Apparently, the British public is so stupid that they can’t be trusted to believe the truth when they get it. Of course, this could possibly be because they are so UNUSED to getting it and moreover because this policy of spinning smoke and mirrors worked so well in previous Labour victories.
One of the fascinating aspects of my new American life is seeing how loud the volume of dissent is from the American
Bill Moyers
people about the shenanigans on Wall Street and the Too Big To Fail banks. There is an intensity and passion that I can’t see happening on the other side of the Pond. Maybe this is the cultural legacy of a people that just a short time ago, relatively speaking, were opening up this giant country seeking a better way of life than the ‘old countries’.
This intensity and passion is why, in the end, I believe that the solution to the huge crisis that still awaits us will start from this side of the Atlantic. But it will get a whole lot worse before it gets better, such is the complexity and depth of the fraud that is being visited on decent, ordinary folks in this and many other fine countries.
Bill Moyers of the Bill Moyers Journal on PBS is retiring. He’s approaching 76 and that’s a grand age to be dealing with the workload and stress of a weekly television presentation. His last Journal was broadcast on the 23rd April, a week ago today airing two really important topics. My only regret is that I haven’t been here sufficiently long to view many more of his Journals.
William K Black
In that last broadcast on the 23rd, Bill had two key interviews. In this Post, I want to bring to your attention his first report, which was an interview with William K Black, now an academic but, just as importantly, a former bank regulator. William Black really understands what is going on in banking.
The interview is both fascinating and captivating because, well to me anyway, it explains in terms that us laymen can understand, exactly what is going on and why it is so terribly important that legislation and regulations are brought into force to stop this fraud ever happening again.
This interview has not yet made it’s way onto YouTube so I can only post the link to the Bill Moyers website.
But, please, if you care about what is happening to us in whatever country you live in, click on this link and watch the interview.
And if you want to watch the earlier interview that Bill Moyers had with William Black then here it is.
German Chancellor Angela Merkel has questioned whether Greece should have been allowed into the eurozone in the first place.
She said the decision “may not have been scrutinised closely enough”.
Indeed, Angela. Indeed it may not, especially as Goldman Sachs organised some “credit swaps” (now illegal) that helped Greece disguise the size of its deficit.
Perhaps something is lost in translation, but why the “may”? Why can’t people bring themselves to call a spade a spade? The “may” is totally misplaced, isn’t it? So why say it?
Learning from Dogs 