Monday, December 15, 2008

Dave speaks on the economy...

Your humble Devil was invited to attend a Reuters event, at which Spam is speaking on Tory economic policy. Unfortunately, I was unable to attend (holidays and 'flu have ensured that there are only two of us in the office today), but Reuters are running a live webcast of the event (which is about to start) here [requires Windows Media Player or Flash].

I haven't got sound as yet, but the picture is pretty clear (update: sound is on). So, time to sit back and see what Call Me Dave has to say.

And you can find more information at Thomson Reuters' website...

LIVEBLOG: Dave says that the recapitalisation has not worked, and so Dave thinks that there should be government-guaranteed loans for businesses.

Dave maintains that the problems are caused by the government; they borrowed irresponsibly, and encouraged others to borrow, and put in place the failed regulatory framework.

Dave believes that the financial system is great and that he would like to stop this happening again. Dave maintains that there would "be a reckoning" and he believes that bankers who took massive bonuses and who are now being bailed out by the taxpayer should be "held to account to the taxpayer".

Dave wants to show that there is not "one rule for the rich and another rule for everyone else" in this country.

Although many people in banking are honest, those who are responsible should be brought to book. This is, Dave maintains, happening in the US, where many investigations are already ongoing. The FBI has 177 agents investigating frauds; some directors of Bear Stearns are already being sued for fraud, as are others.

Dave wonders why we are not doing the same here. "Doctors who behave irresponsibly get struck off. Bankers who behave irresponsibly should face professional consequences."

Dave knows that frauds happened here. "We know that there is mortgage fraud."

Dave is pointing out – quoting someone else – that the FSA is treating as regulatory issues, actions which are quite clearly criminal issues.

This is a moral issue and one that Dave does not want his party "to duck." The Conservatives made insider trading illegal.

Dave wants to see more personal responsibility; "we should treat the rich in our society just as we would anyone else."

"We need to introduce a culture of responsibility" and that is why Dave has asked Sir Dave Sassoon to provide a report on the tripartite regulatory system.

Dave proposes a new system of regulation. Dave believes that bonuses based on equity, rather than assets led to the reckless gambling and lending.

Dave wants higher bank capitalisation for those involved in riskier lending. He also wants to give the FSA much better teeth. He welcomes the FSA's internal review.

But what of the government?

Dave points out that Gordon may "be angry that we did not know what was going on behind the scenes"; and yet it was Gordo that set up the FSA and the tripartite system.

Dave wants to ensure that those who do commit criminal acts should be punished; just as you would lock up a thug for mugging, you should also lock up the highest bank executive for any criminal acts that he undertakes.

According to Dave, people in the financial industry only really take notice when people are jailed, e.g. Nick Leeson.

The FSA has only brought four cases to court this year. Dave points out – quite rightly – that there is not a need for new laws, only the enforcement of those that exist. [DK applauds.]

The Americans have rooted out the wrongdoers, and brought them to account. But we have not done the same here.

"If we are to build a strong society, people must take responsibility for their actions."

CONCLUSION: I can't be bothered to blog the questions. However, the general tenor of Dave's speech is that those who commit criminal acts should be punished through prosecution, and everyone – no matter how rich or poor – should be treated equally under the law.

Your humble Devil thought that it was a good speech, actually, if a little repetitive.

UPDATE: in a response to a question, Dave points out that the Germans, unlike Gordon, "did fix the roof while the sun was shining."

Dave maintains that the big problem is that small businesses are losing their overdrafts, can't get loans, etc. and so Dave's National Loan Guarantee Scheme is big and is the right thing to do.

If you adopt this, the loans are not so risky and so that banks are not so exposed if the loans go bad.

UPDATE 2: what Dave learned from his time as an advisor in the Treasury during the ERM debacle was that fixing your interest rate to other countries' was barking and that the only thing stupider than being involved in something like the ERM was joining a single currency as it is like the ERM but in perpetuity.

I paraphrase, but you get the idea.

UPDATE 3: someone from Bloomberg asks, if bankers are to be punished, should those who lied on self-cert mortgage applications should also be punished.

Dave says, yes, if they can be shown to have lied, then they should, of course.

WOO! It's Polly! The miserable, sour, old bag is asking about Cameron's policy of spending cuts – where else are you going to cut money?

Dave: "First of all, great to have you here – the spiritual grandmother of the modern Conservative Party.

"And it's not spending cuts: it is a cut in the growth of spending.

"There is, of course, waste in government. But I don't put too much emphasis on waste because that's the easy way out."

Dave thinks that the best way to cut government spending is to stop family and social breakdown.

"We don't believe in big top-down government." All these databases are not good. We are "more Mac users than big mainframe users. Without wanting to offend Microsoft in any way, of course."

9 comments:

Letters From A Tory said...

"Dave maintains that the problems are caused by the government; they borrowed irresponsibly, and encouraged others to borrow, and put in place the failed regulatory framework."

And he's right on all three counts. Terrifying as government-backed loans might sound, if banks do not start lending soon we are all seriously screwed. Thanks to Labour's incompetence, we are living on the brink.

John B said...

That'd be the same Labour incompetence as, err, pretty much every other government in the world, then?

Mark Wadsworth said...

I was going to say something mildly positive about your update 2, but I must now take issue with John B.

Over the last ten or fifteen years there were two types of economy - the property price bubble economies (USA, UK, Ireland, ANZ i.e. the Anglophone countries, plus, funnily enough, Spain, which is about as Anglophobe as you can get) and the productive economies (China, Japan, Germany etc). Labour, wrongly to my mind, chose the former model.

I strongly suspect that the Tories would have chosen the property bubble model as well (like they did in the early 1970s and late 1980s), except probably with a lot less public sector waste & borrowing, but that in no way excuses Nulab, does it?

Anonymous said...

tough on crime, tough on the causes of crime. I always thought that the bankers were the causes of crime and Blair was going to do something about them.

Gareth said...

When the fella who presided over the exam fiasco is revealed to be getting 7 times what his predecessor got, for doing a poorer job, there is ample room for cuts. Aimed squarely at the highest paid in Government, quangos and public sector charities.

Barnsley Bill said...

"The Americans have rooted out the wrongdoers, and brought them to account. But we have not done the same here."

Bullshit. Those fannie mae and freddie mac fucks are all troughing in Obamas white house team.

Henry Crun said...

Can we also prosecute those who mismanage the economy and fiddle the balance sheets so that the true level of debt is hidden?

CityUnslicker said...

I detect a sneaking regard for spam in your report. to be applauded.

muddypaws said...

yes i agree, a few bankers ought to go to jail.

I also believe a few accountants and auditors ought to go to jail and/or be sued by shareholders for misrepresenting the true state of the institutions that they are paid ( by the shareholders) to audit.