The all encompassing BNP thread - keep all crap in here.

[Dolph]

Whatever Brown's flaws, you look foolish if you are blaming the banking crisis and recession on him, when it originated in America and is very much a worldwide phenomenon!

Don't forget 'Dave' Cameron was calling for less regulation of the banking system!

I'm not blaming the recession on him, I'm blaming the massive amounts of state debt that will have to be paid back (if the country doesn't end up going cap in hand to the IMF) on him. Big difference.

As for the banking regulation, less regulation would have worked better, as would more regulation. The problem with the system put in place is that it was too restrictive to ensure market regulation worked correctly (although a big part of this problem comes from international accounting rules requiring the use of a cabal of credit rating agencies which destroyed their role in the market), and way too free to replace the natural market controls they had neutralised. They created a market failure due to the moral hazard that certain groups no longer had to compete for business and therefore their accuracy no longer mattered, and the implication that the governments approved of these groups and their practices.

 

[dirtydog]

I'm not blaming the recession on him, I'm blaming the massive amounts of state debt that will have to be paid back (if the country doesn't end up going cap in hand to the IMF) on him. Big difference.

As for the banking regulation, less regulation would have worked better, as would more regulation. The problem with the system put in place is that it was too restrictive to ensure market regulation worked correctly (although a big part of this problem comes from international accounting rules requiring the use of a cabal of credit rating agencies which destroyed their role in the market), and way too free to replace the natural market controls they had neutralised. They created a market failure due to the moral hazard that certain groups no longer had to compete for business and therefore their accuracy no longer mattered, and the implication that the governments approved of these groups and their practices.

Ah so the banking failure isn't the fault of the incompetent and/or greedy banks but of incorrect government regulation?

 

[RDM]

Ah so the banking failure isn't the fault of the incompetent and/or greedy banks but of incorrect government regulation?

Both to be honest. But quite a bit of that was US regulation we had no control over. The real blame to lay on Brown though is the state of the national finances to deal with the crisis. With massive spending and running up deficit during the boom years so when the crisis hit we had much less flexibility. When the credit agencies are looking to possibly reduce the UK credit rating then something has gone very badly wrong.

 

[Dolph]

Ah so the banking failure isn't the fault of the incompetent and/or greedy banks but of incorrect government regulation?

It's the fault of both, have I said otherwise?

The problem with the government creating a moral hazard is that it makes it much easier to think being greedy is a good idea, as the hazard created hides the risk of the activity.

That's why you either need regulation to prevent them taking advantage of the moral hazard (assuming you can recognise it, the problem with moral hazards is that while they are obvious in hindsight, up front they tend to seem like a good regulatory idea at the time, like regulating credit agencies and only allowing certain ones to be used did), or you need to back out and let the market do it's job, which it can't do when it's being interfered with.

The US and UK governments backed the regulators off without closing off the hazard, that, combined with greed from bankers, is the primary cause of the problems.

 

[dirtydog]

Both to be honest. But quite a bit of that was US regulation we had no control over. The real blame to lay on Brown though is the state of the national finances to deal with the crisis. With massive spending and running up deficit during the boom years so when the crisis hit we had much less flexibility. When the credit agencies are looking to possibly reduce the UK credit rating then something has gone very badly wrong.

HAVE they reduced it?

Honestly, the notion that the Tories are the answer to our prayers is laughable. They ballsed things up 74-79 under Heath (3-day week, rubbish in the streets etc) and in the last years of their reign up to 97, hence the Labour landslide in 97. Dolph thinks the Tories are so much better, why did they lose power then. Thatcher was mostly hated (not always fairly but still) and Major & Lamont ballsed up the economy and sent it into a deep, long-lasting recession in the early 90s. Not Labour, not Gordon Brown... the Conservative party. Dolph's white knight. I almost want them to win next time so he can get a reality check when things don't change.

 

[ShaolinDreams]

i think that a lot of people dont just vote for the party but also who the leader is. True is doesnt matter as its the party in power, but to be frank i dont think Brown would have got in any other way. Just look at him lol

 

[RDM]

HAVE they reduced it?

No, but the fact that they have given warning is enough of a worry.

Honestly, the notion that the Tories are the answer to our prayers is laughable. They ballsed things up 74-79 under Heath (3-day week, rubbish in the streets etc)

I would check your dates again as to who was in power between '74 and 79...

and in the last years of their reign up to 97, hence the Labour landslide in 97. Dolph thinks the Tories are so much better, why did they lose power then.

Sexual scandal and losing touch with the electorate seems to be the major reasons, rather than the economy.

 

[MaX_PoWah]

Ah so the banking failure isn't the fault of the incompetent and/or greedy banks but of incorrect government regulation?

The Financial Services Authority (FSA) that Gordon created was responsible for whistle blowing on potentially damaging transactions happening within the UK economy.

The FSA’s main argument as to why it did not blow the whistle on what was happening goes along the line of the mortgage backed credit derivatives been a “bespoke” financial product, which is rubbish... the US investment banks knew there was a lot of risk associated with them simply due to the lack of information about them which they subsequently priced into the deals and took insurance out against (hence AIG taking a hammering).

The warning signs were there, the evidence of them been risky was there, and the FSA knew UK institutions were gaining a larger and larger exposure to them but yet did nothing.

....but I suppose when you have a pm who actually believes he has beaten boom and bust *rolleyes* it would be hard not to become complacent.

 

[dirtydog]

I would check your dates again as to who was in power between '74 and 79...

Ha I meant 70-74. The rest of my post was true though - those things happened during Heath's reign although often wrongly attributed to Labour.

 

[Dolph]

HAVE they reduced it?

No, but they've never downgraded the outlook before either, which is what they have done now. Downgrading the outlook is the warning shot that our finances are screwed and we need to sort them out sharpish.

Honestly, the notion that the Tories are the answer to our prayers is laughable. They ballsed things up 74-79 under Heath (3-day week, rubbish in the streets etc) and in the last years of their reign up to 97, hence the Labour landslide in 97. Dolph thinks the Tories are so much better, why did they lose power then. Thatcher was mostly hated (not always fairly but still) and Major & Lamont ballsed up the economy and sent it into a deep, long-lasting recession in the early 90s. Not Labour, not Gordon Brown... the Conservative party. Dolph's white knight. I almost want them to win next time so he can get a reality check when things don't change.

For me, the conservative party are the lesser of the evils, not the white knight, but let's look at your analysis for a moment. Labour got kicked out in 79, plunged to their lowest point ever (at that time) in the poles and remained unelectable for nearly 20 years. Since they have returned to power, they have hamstrung the country with debt and significant unnecessary overheads, allowed violent crime to increase dramatically, and carried us to the worst recession since world war two, and currently their popularity is even lower than it was in the 1980s. I can accept that the Tories may not be the right answer, but Labour are certainly an even worse answer to anything, as their history since the 50's shows.

Thatcher was hated because she had to make hard decisions for the good of the country. Chances are the next PM is going to be hated for similar reasons when they start sacking all the pointless and unnecessary public servents and so on employed under labour (much like Maggie was hated for doing the same to the nationalised industries).

 

[dirtydog]

The Financial Services Authority (FSA) that Gordon created

It was created in 1985, under the Tories... doh!

 

[RDM]

Ha I meant 70-74. The rest of my post was true though - those things happened during Heath's reign although often wrongly attributed to Labour.

Probably because what happened in 1978/9 was so much worse. And to be honest the fault of both can be layed quite squarely on the unions. For all the evil that Thatcher is percieved to have done breaking the back of the unions was probably her most important act as Prime Minister. So important in fact that even after 3 Labour terms they haven't had their power given back to them.

 

[dirtydog]

No, but they've never downgraded the outlook before either, which is what they have done now. Downgrading the outlook is the warning shot that our finances are screwed and we need to sort them out sharpish.



For me, the conservative party are the lesser of the evils, not the white knight, but let's look at your analysis for a moment. Labour got kicked out in 79, plunged to their lowest point ever (at that time) in the poles and remained unelectable for nearly 20 years. Since they have returned to power, they have hamstrung the country with debt and significant unnecessary overheads, allowed violent crime to increase dramatically, and carried us to the worst recession since world war two, and currently their popularity is even lower than it was in the 1980s. I can accept that the Tories may not be the right answer, but Labour are certainly an even worse answer to anything, as their history since the 50's shows.

Thatcher was hated because she had to make hard decisions for the good of the country. Chances are the next PM is going to be hated for similar reasons when they start sacking all the pointless and unnecessary public servents and so on employed under labour (much like Maggie was hated for doing the same to the nationalised industries).

But Labour didn't carry us to this recession, they just happened to be in power during it... it originated in the US. If the Tories had been in power at the time then the same thing would have happened.

I am all for criticising people or political parties where it is due, but to criticise Brown or Labour for this recession is deeply foolish.

 

[Dolph]

The Financial Services Authority (FSA) that Gordon created was responsible for whistle blowing on potentially damaging transactions happening within the UK economy.

The FSA’s main argument as to why it did not blow the whistle on what was happening goes along the line of the mortgage backed credit derivatives been a “bespoke” financial product, which is rubbish... the US investment banks knew there was a lot of risk associated with them simply due to the lack of information about them which they subsequently priced into the deals and took insurance out against (hence AIG taking a hammering).

The warning signs were there, the evidence of them been risky was there, and the FSA knew UK institutions were gaining a larger and larger exposure to them but yet did nothing.

....but I suppose when you have a pm who actually believes he has beaten boom and bust *rolleyes* it would be hard not to become complacent.

Which was in turn due to the incorrect ratings given by the CRAs, who no longer had any incentive to be conservative once their business was handed to them on a place by the regulations.

In a functioning market, the credit rating agencies lived and died by their accuracy and reputation, but when the international agreement came to essentially create an ogliopoly of the three main agencies, and require all stocks to be rated by at least two of them, that functioning market was destroyed.

 

[dirtydog]

So important in fact that even after 3 Labour terms they haven't had their power given back to them.

Indeed, despite the scaremongering of the Tories beforehand that a Labour government would give power back to the unions eh?

 

[Dolph]

But Labour didn't carry us to this recession, they just happened to be in power during it... it originated in the US. If the Tories had been in power at the time then the same thing would have happened.

I am all for criticising people or political parties where it is due, but to criticise Brown or Labour for this recession is deeply foolish.

And once again, I haven't criticised them for causing the recession (beyond their role in the bad regulation fiasco), but for their responses to it, and the spending plans before and after it that will be a deadweight on our economy for a generation.

 

[MaX_PoWah]

The Financial Services Authority (FSA) that Gordon created"

It became an entierly different beast under his leadership

"FSA head: Gordon Brown helped fuel banking crisis
Gordon Brown helped fuel Britain’s banking crisis by pressuring the City regulator not to intervene and stop reckless lending, Lord Turner, the head of the Financial Services Authority, said."

http://www.telegraph.co.uk/finance/...-Gordon-Brown-helped-fuel-banking-crisis.html

"The FSA has been on the attack of late. First they warned bankers that heavy regulation was in the offing. Now they are directly accusing Gordon Brown, former Chancellor of the Exchequer and now Prime Minister, of aiding and abetting a bubble."

http://www.creditwritedowns.com/2009/03/fsa-gordon-brown-complicit-in-credit-bust.htm

 

[Dolph]

It was created in 1985, under the Tories... doh!

history lesson time... Their role was completely redefined by the financial services and markets act 2000.

http://en.wikipedia.org/wiki/Financial_Services_Authority
http://en.wikipedia.org/wiki/Financial_Services_and_Markets_Act_2000

Prior to the mid 90's, the markets were self regulating, a kneejerk reaction by the tories to the Bearings back problems changed that, and Labour added to it with the new regulatory regieme.

 

[RDM]

It was created in 1985, under the Tories... doh!

Securities and Investments Board was created in 1985 but with a much narrower remit. It was pretty much the Financial Services and Remit Act 2000 that created the FSA in it's current "Regulator of Regulators" form. Prior to 1998 it was the Bank of England that had regulatory authority over banks.

I just happened to be working in the Financial Services Industry at the time of the transistion.

 

[dirtydog]

And once again, I haven't criticised them for causing the recession (beyond their role in the bad regulation fiasco), but for their responses to it, and the spending plans before and after it that will be a deadweight on our economy for a generation.

Even though the IMF have praised the UK for its response to the recession...