Rightly, I think, we've focused heavily on the role of the regulators in this financial crisis, pointing to their considerable failures.
An unlikely ally now comes in the form of Kenneth Clarke MP who, in the Independent on Sunday
today has harsh words for the tripartite system of regulation between the Bank of England, the Treasury and the Financial Services Authority, which took away the Bank's supervisory powers. View full article hereAnother day, another admission
Typically, the journos miss the point, although this article is by Richard Spencer - a China hack, not a financial specialist. However, because Howard Davies, former head of the Financial Services Authority, is speaking in Peking – no doubt after flying out first class and being put up in a five star hotel – his views are reported by Spencer, who focuses on Davies's comments about Iceland.View full article hereTotally unaccountable
Rather than taking the responsibility of commanding a ship, clearly it is better to be an anonymous banker on an international committee making the rules if you mess up. That way, not a hair on your head is disturbed and you glide effortlessly on, safe in your anonymity as your monthly salary cheques continue to flow.
And there is not a single politician , journalist or commentator prepared to do a thing about it. Thus are we betrayed.View full article hereSomething of an enigma
Members of Parliament are often referred to by the generic name "lawmakers", especially by news agencies such as Reuters
. You would have thought, therefore, that they and the political classes would be interested in how the laws of this land were made.
You might also think, with some justice, that they would be interested in the philosophy of regulation, and whether their laws actually work. Since, in theory at least, they make the laws, they do have a professional interest in the subject. Strangely, though, this does not seem to be the case. View full article hereWe need an inquiry
Six days ago, I wrote on this blog these words:
The financial crisis in which we are presently engulfed was a "disaster waiting to happen". This is the final chapter in an inevitable, but wholly avoidable disaster that involves primarily a complete breakdown in the structure of our law, and its enforcement. In short, what we are experiencing is a major regulatory failure, possibly the most serious and expensive in the history of mankind.View full article hereAn "Enron" speech
Mr David Cameron has delivered a speech, heralding "The Conservative plan for a responsible economy". Parts of it are good – some of it is very good, very good indeed. However, good or bad, in 4,956 words, there are two words missing: "European Union". Nowhere in this wide-ranging speech can those two words be found.View full article hereThe man who knows?
Normally, after "deep immersion" in a controversial subject, some clarity begins to emerge and the arguments begin to settle. However, several weeks into the deep crisis phase of this financial nightmare, the issues are no clearer. If anything, they seem even more obscure, with crucial aspects entirely unresolved.
In many respects, this should not be surprising. Not only are we reaching into the depths of banking theory which, frankly, very few people understand – or ever will - we have the overlay of highly complex regulatory systems framed at national, regional and global levels, together with national and international politics and, of course, the drama of the events themselves.View full article hereCracks beginning to show?
Headline reports from the Paris "summit" – this one of the 15 eurozone members plus Gordon Brown and "hangers on" like Barroso – speak of "a plan to confront the financial crisis which will involve hundreds of billions of dollars of new initiatives to head off a feared 'meltdown'".
Thus we hear of Sarkozy saying that governments would "buy into banks to boost their finances and guarantee inter-bank lending." "The EU,” we are also told, "will ask the United States to help organise an international summit to reform the global finance system."View full article hereThey’ve known it all along!
As we previewed last night, we have discovered cast iron evidence that the EU commission has known for at least a year that there have been disastrous "shortcomings" in its system of financial regulation. This system include the measures for the application of the "mark to market" rules which lie at the heart of the current banking crisis.
The commission has also known that changes to the system were urgently needed to prevent a repeat of the "market turmoil" of the summer of 2007. Yet, despite a massive effort to produce new rules, it has only just been able to deliver drafts of these vitally needed changes.View full article hereThe blind will not see
You really have to give it to Charles Moore in his column today. He has really excelled himself – in his blind, vapid, malign stupidity. It transcends all his previous efforts and stands as a towering monument to the blindness of our political classes (of which he is a fully paid-up member).View full article hereSmoking gun II
This blog has discovered incontrovertible evidence that the EU commission has known for at least a year that there have been disastrous "shortcomings" in its system of financial regulation. These include the measures for the application of the "mark to market" rules which lie at the heart of the current banking crisis.
The commission has also known that changes to the system were urgently needed to prevent a repeat of the "market turmoil" of the summer of 2007. Yet, despite a massive effort to produce new rules, it has only just been able to deliver drafts of these vitally needed changes.View full article hereThe driver quits the train
The real experts in the business seem to be saying that the thing to watch as this crisis unfolds is the inter-bank lending. It is, after all, the seizure of the credit market that is at the heart of the problem.
In this context, an index that, if we were honest, very few of us knew much about even a few days ago, suddenly assumes crucial importance – that is the Libor (London interbank offered rate).View full article hereHic sunt dracones
This is not good. In fact, it is double-plus ungood. The situation is seriously unravelling. Little Gordie's EU-approved rescue plan is about to come unstuck.
This might explain why he has written to "EU leaders" to urge them to follow Britain in guaranteeing inter-bank loans, proposing a "European-wide funding plan" to help ease the financial crisis.View full article hereChildren at play
A day after
the government had announced its bank rescue plan, the Taxpayers' Alliance (TPA) has come up with a report, trailed on its website, telling it what it should have done.
Rightly – although a bit late coming after the event – the Alliance suggests as its very first item that the government should consider, "Suspending mark to market rules that cannot function effectively in the absence of a liquid market for many key assets." Helpfully, it also supports its argument by telling us that had these rules been in place during the 1980s, all ten of the largest US banks would have become insolvent.View full article hereA fascinating insight
Jon Moulton, managing partner of Alchemy - the private equity company – has written a piece for The Daily Telegraph
on the financial crisis. His opening thesis is that the banking rescue package "seems to be probably too little and very definitely too late", but the fascinating part of his article is where he asks, in respect of the banking crisis: "Who was guilty of inaction?"View full article hereIt ain't working … yet
If the point of yesterday’s "rescue" was to ease liquidity in the banking sector, it has not had any discernible effect on the all-important Libor (London inter-bank offered rate). According to Bloomberg, the Libor dollar rate has jumped to the highest level in the year and the credit is staying frozen.View full article hereThe politics of denial
An overnight communication from a trusted source - very close to the "horse's mouth" – put the final pieces into place.
It confirmed beyond any doubt that the UK's bank rescue plan was not a unilateral action but – as we had suspected – part of a carefully structured and co-ordinated plan devised at Ecofin, building on the foundations laid at the "summit" in Paris on Saturday.View full article hereGod help us!
No wonder we are in such trouble. It is more than a week since David Cameron stood in front of his audience in Birmingham and declared that one of the main problems in the financial crisis was "a new international accounting regulation called 'marking to market' [which] automatically downgrades the value of banks."View full article hereOh shit!
"We face extreme danger. Unless there is immediate intervention on every front by all the major powers acting in concert, we risk a disintegration of global finance within days. Nobody will be spared, unless they own gold bars."View full article hereThe story so far ...
In what has been a roller-coaster and exhausting week, we've got to a position where we've got part of the story – not the whole story, which is far more complicated – but enough of it to make sense.
Through this blog, in no less than 20 posts since Saturday week last – listed here
(with links in chronological order), when we cranked up our coverage of the financial crisis, some of the story gradually emerged.
Now ...View full article here