If you want to know what is going on in the world economy at the moment we recommend one source of analysis above all others: John Redwood's blog.
On a daily basis Mr Redwood is dispensing wisdom of the highest quality. Here's a selection of his posts from the last few days:
Saturday 15th March: "Listening to the deafening silence of the Chancellor this week, I was left asking myself “Doesn’t he know there is a credit crunch?”. Yes, he said he understood there were storms in the world economy, but then he raised a children’s umbrella and plodded on. He should show some urgency in tackling the overspending and overborrowing in the UK public sector. He should produce a statement on how the Bank of England’s powers in money markets will be urgently restored, learning the hard lessons of the combined failure to avert the Northern Rock crisis last summer. Behind the scenes, instead of playing silly politics with drink and green issues, he should be devoting his sole attention to international collaboration, to make sure the world authorities get ahead and remain ahead of the pack of bears seeking to make money out of bringing down other financial institutions and financial products."
Monday 17th March: "A quick haggle, a visit to the lawyers, and a bank is bought and rescued over a week-end in New York. That’s the way to do it. It makes the UK’s attempted private sector rescue of Northern Rock look ham fisted, long winded and ultimately unsuccessful in comparison. The US authorities have once again acted decisively, with vigour and purpose, to prevent the banking collapse getting out of control. This week we can expect further interest rate cuts in the US following on the 25pt reduction in the discount rate announced overnight."
Tuesday 18th March:
"Outside the cocoon of the Commons chamber fear continued to spook the
markets. Large sums of money were made available to the banks to ease
them through the persistent credit crunch and liquidity crisis. The US
were tidying up the loose ends of the rescue of America’s fifth largest
investment bank. The dollar and the pound were in freefall, bank shares
crashed, and the Chinese market fell as the authorities there
threatened higher interest rates to combat inflation. Inside
Parliament the government had decided the whole day could be given over
to debating climate change again. We have recently had a full day on
this topic as part of the so called EU scrutiny, and will have a second
reading soon of the government’s Climate Change Bill. Surely that would
be the appropriate time and place to discuss green taxes and
regulations, not the budget day debate that coincides with such
gripping and worrying events in financial markets?"
Also yesterday:
"The second big problem that the Bank of England has is that prior to
1997, it was the day-by-day banking supervisor of all commercial banks,
particularly the main credit-creating clearing banks that run our
system. The Bank could see all of that business, and knew about it day
by day, hour by hour and minute by minute. It had a close relationship
with those banks—the famous Governor’s eyebrows would rise wisely or
angrily if anything went wrong. The Bank knew whether they were liquid
enough, whether they had squared their positions early enough in the
day and whether they were taking a sensible position in the markets, so
the banking system worked well. That responsibility was lifted from
the Bank and given to the Financial Services Authority, and is now
handled through a tripartite arrangement with the Chancellor and the
Bank of England."
I agree.
I find the analysis on Redwood's blog better than anything I can find in a newspaper.
Posted by: Umbrella man | March 19, 2008 at 08:20
Me too
Posted by: Deborah | March 19, 2008 at 09:28
Unfortunately while Labour is playing silly politics, Brown is being ably assisted by the Conservative opposition who have failed to take the attack to him over the economy and public finances for several years now. This could be seen by the Conservative response to the budget, for as we have all come to expect from Labour budgets the real nasties are hidden and only get spotted days after. So the Conservatives needed to have kept the pressure on while the true effects of the budget were realised, regretfully the Conservatives went off the Gateshead to talk about families, no doubt much to the relief of Gordon Brown, Darling and the Labour Government.
Posted by: Iain | March 19, 2008 at 09:40
So the Tories will bring back the firm hand of the State to manage wayward financial institutions? In a pig's eye!
By all means, let's bring back the regulatory regime which oversaw the BCCI and Barings débacles, and the team that bought us Black Wednesday and 15% interest rates.
. Behind the scenes, instead of playing silly politics with drink and green issues, he should be devoting his sole attention to international collaboration, to make sure the world authorities get ahead and remain ahead of the pack of bears seeking to make money out of bringing down other financial institutions and financial products."
You mean, like having discussions yesterday and over the weekend with US Treasury Secretary Henry Paulson, Bank of England Governor Mervyn King and FSA chairman Callum McCarthythe, and seeing the IMF MD today?
http://www.forbes.com/markets/feeds/afx/2008/03/18/afx4786594.html
As for the laughable idea that we such look to the Americans for advice on financial rectitude, perhaps he should consider how the banks started falling apart in the first place? American sub-prime loans permitted by an extraordinarily lax regulatory regime.
Still, I'd rather hear his ignorant opinions about economics than his ignorant opinions about rape. The former is laughable, the latter, dispicable.
Posted by: passing leftie | March 19, 2008 at 10:11
Spot on Iain. The stealth taxes - this time the raising of the upper earnings limit of NI contribution - are completely missed by our front bench. Cameron and the front bench may be basking in the glow of healthy (but fickle) poll lead but have failed to score any direct hits on the cumulative waste of tax payers money over the last 10 years, the build up of public debt which will hinder any tax, burying billions of liability under the PFI schemes and destroying the higher education system.
We need to drive the point home very hard and also the mess created by the immigration and assylum system, law and order and Europe.
All that NuLab needs is some kind of accidental recovery and the voters will easily forget the mess we are in - all becasue our front bench is talking touchy feely tosh.
Posted by: Yogi | March 19, 2008 at 10:16
The great thing about the diary is that one never knows what is going to be the subject matter of the day but one can guarantee that its going to be a very interesting read. I always feel that I learn something when I read the diary. It is a place of instruction, written by a man who knows about life and who has a CV to match anyones. I look forward to seeing John Redwood playing a big role in the next Conservative government.
Posted by: Tony Makara | March 19, 2008 at 10:40
"A quick haggle, a visit to the lawyers, and a bank is bought and rescued over a week-end in New York. That’s the way to do it.
Well, no. The bank has not yet been bought, and it's by no means a done deal, and the Fed has had to guarantee it to the tune of $30bn. The Fed has also added the unbelieveable sum of 1 trillion dollars to the banking system. Give me cautious appraisal any day over Black Wednesday.
The tax payer's money in Northern Rock will be recovered over the next few years, while Redwood is still flapping around like a headless chicken.
Posted by: passing leftie | March 19, 2008 at 10:59
I don't think anyone can be bothered to rise to your bait today Passing Leftie. 'Give me cautious appraisal....' - yeah right!
Posted by: Malcolm Dunn | March 19, 2008 at 11:11
I don't think anyone can be bothered to rise to your bait today Passing Leftie. 'Give me cautious appraisal....' - yeah right!
Perhaps it's that the bait is too hard to swallow?
I think Redwoods remarks are pure political expediency - the Tories offered no solution to Northern Rock at all. The lack of comments suggests that they didn't find him inspiring, either, but this is a man with less charisma than Michael Howard.
That said, if "yeah, right" is the scope of your response, I'd best go back to my Stalinist bunker.
Posted by: passing leftie | March 19, 2008 at 11:35
The tax payer's money in Northern Rock will be recovered over the next few years
In your dreams.
Redwood has always been a star performer intellectually. Indeed, it was his Conservative 2000 Foundation that first attracted me into mainstream Conservative politics. Trouble is, I'm sure the leadership still think that he has the capacity to frighten the horses if given too prominent a role. (Unfortunately, they're probably right.)
Posted by: Richard Weatherill | March 19, 2008 at 11:40
I would recommend that all Conservatives also take at the blog of Derek Wyatt MP (Labour, Sittingbourne and Sheppey). Mr Wyatt has a majority of 79 in a seat we should never have lost.
www.derekwyatt.co.uk
It is quite the best on the Labour side. Setting aside the obvious partisanship and digs about the 'Boy David', it gives a really interesting insight into the mindset and political vacuum that Labour MPs now exist in. The Budget is therefore dismissed in one line, and Labour ministers are always felt to be doing well against their Tory opponents, even when all public evidence points to the contrary.
It reminds me of how many of our own MPs acted and spoke between 1992-1997, and we all know what happened next.
Posted by: London Tory | March 19, 2008 at 11:59
John Redwood keeps on hitting the nails on the head.
Gordon Brown fiddles while Alistair Darling bores.
Unfortunately, David Cameron and George Osborne do not appear to have full realized the full extent of the global economic crisis and how vulnerable and guilty our Labour Government is after practically 11 years of reckless over-spending and over taxation.
Right now we need serious public expenditure and tax cuts which will stimulate the real economy far more effectively than marginal changes in interest rates.
And we need a new and unified and well-resourced system of banking and financial regulation.
Posted by: David Giles | March 19, 2008 at 13:16
I have risen to the bait of Passing Leftie (Passing Wind is more appropriate), chewed, sucked, found I couldn’t swallow it, was sick and was relieved by a loud burp.
“So the Tories will bring back the firm hand of the State to manage wayward financial institutions? In a pig's eye!
By all means, let's bring back the regulatory regime which oversaw the BCCI and Barings debacles, and the team that bought us Black Wednesday and 15% interest rates”
The BoE closed BCCI, originally founded in Pakistan, down – (that is what I call regulation). So, PL, tell us some more about BCCI and its connection with Cameron? And then I shall tell you about the connection of Brown’s Revenge for Thatcher/ Culloden & Polygamy Support Party with the debacle of Northern Rock (and I’ll throw in the details of the Winter of Discontent at no extra cost) The debacle of Barings was caused by a rogue trader and, unless someone is continually looking over the shoulders of bank employees, it can be hard to detect (but it wasn’t all bad – the man responsible is now some sort of celebrity) It is a bit like having someone continually looking over the shoulder of Hain and Conway whilst they fill in donation and expenses forms – not easy.
As I recall, the great majority of Brown’s R for T/C Party (the Polygamy section was not then founded) greatly supported joining the MFI (sorry- that is the furniture group come to think of it, but they might just as well have) which led to the outcome of Black Wednesday. And do you know what? Even the Lib/Dhimmies supported joining the MFI (or whoever it was), which led to the 15% interest rates. But, you forgot to mention that, after Lamont came out of the lavatory at about 6 pm on Brown Wednesday, he announced that we were leaving MFI and the interests rate was back to where it was before Lamont had the runs an had to go to the Lav.
Redwood is quite right to point out that the sale of Bears Sterns has been dealt with most expeditiously (come back and crow if the sale doesn’t take place). It is pleasing to see that the heads of financial institutions are now talking to each other – better late tan ever.
Passing Leftie : as far as I am concerned most of what the Left has been passing is what we flush down the toilet. The Left has been systematically for cynical, self-serving politics been destroying the cohesion and fabric of our society. But be of good cheer: I view the Conservatives as being oddly and whimsically named - except for some like Redwood. It was his idea (not Osborne’s), which will lead to IHT threshold being greatly raised, and which will be adopted by Brown’s Revenge for T/C and Polygamy Support Party at the next election. I expect when you come to sell your house it will be appreciated by someone, although I suspect that, like the champagne socialist Meacher, you probably own several - having avoided investing in Northern Rock and not sold your gold like "prudent" Brown
Posted by: Dontmakemelaugh | March 19, 2008 at 14:06
Why is this man not Shadow Chancellor?
Posted by: Ash Faulkner | March 19, 2008 at 14:50
The BoE closed BCCI, originally founded in Pakistan, down – (that is what I call regulation). So, PL, tell us some more about BCCI and its connection with Cameron?>
I think "yeah, right" and "dream on" were more coherent and cogent that this rant.
There is no connection whatsoever as far as I know between Cameron and BCCI. I was merely commenting on Redwood's idea that the failure of Northern Rock would somehow have been less traumatic under previous banking regimes.
Your post does obliquely recognise that Cameron was there when Lamont destroyed the unfounded Tory reputation for economic competence. I can't really make much sense of the rest of your post, I'm afraid, unless it's some kind of homophobic rant against civil partnerships.
Posted by: passing leftie | March 19, 2008 at 15:55
Passing Wind @ March 19, 2008 at 15:55
Do not put words into my mouth, there is absolutely no references to civil partnerships in my comment, but if you want my opinion on that, I believe it is wrong to put civil partnerships on par with marriage. Of course you cannot understand my comment - you are a "passing leftie" otherwise you wouldn't be a passing leftie.
However, you are right about Northern Rock and Redwood got it wrong: we have been told by Brown, leader of the Revenge for Thatcher/ Culloden and Polygamy Support Party that the days of boom and bust under the Tories are over - because he is in charge.
We all believe what Brown tells us don't we?
Well don't we ?
Posted by: Dontmakemelaugh | March 20, 2008 at 11:11
However, you are right about Northern Rock and Redwood got it wrong: we have been told by Brown, leader of the Revenge for Thatcher/ Culloden and Polygamy Support Party that the days of boom and bust under the Tories are over - because he is in charge.
Still no idea, I'm afraid. Polygamy Support Party? Are you completely barking?
I think I'll have to disabuse you of the notion that it's only left wingers who don't understand you. I don't see many others rushing to your support.
Just guessing, and correct me if I'm wrong, you:
1. Are against abortion.
2. Are Pro capital punishment.
3. Are in favour of the UK leaving the EU.
5. Are against further immigration, and think that "the indigenous population" - by which you mean white people - are somehow hard done by.
6. Think that there should be an English parliament, and that Scotland has got an amazing deal at the expense of the English.
7. Think homosexuality is morally wrong
8. Think that the broad scientific consensus on climate change is a big conspiracy to deprive you of your 4x4
9. Think that the problem of racism is hugey overexagerrated
10. Are really a UKIPer.
Posted by: passing leftie | March 20, 2008 at 11:51
Passing leftie might be interested in this article if he thinks more government regulation of the economy is the solution to the subprime situation:
http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/03/09/how_government_makes_things_worse/
Posted by: James Hickling | March 20, 2008 at 12:08
Apologies, that link doesn't seem to work, just type 'jeff jacoby subprime' into google and click on the top link.
Posted by: James Hickling | March 20, 2008 at 12:10
What was your Point 4 'passing leftie'? Obviously something too horribly right-wing to be mentioned in public. (Or is it just a nod of acknowledgement to Monty Python?)
Posted by: Richard Weatherill | March 20, 2008 at 13:49
Richard, if we are thinking of the same Python sketch then I believe his Point 7 - "No Poofters" covers Point 4 as well.
G'day
Professor Bruce
Philosophy Department of the University of Woolamaloo
Posted by: Geoff | March 20, 2008 at 14:05
On reflection, Geoff, I suspect 'passing leftie' is demonstrating his/her NuLab credentials by having ditched Clause 4. (Which rule was the: "There is no Rule #" in the sketch?)
I assume PL would view anyone who subscribed to any of the 9 articles of faith as morally repugnant.
Posted by: Richard Weatherill | March 20, 2008 at 14:36
Richard:
I'll just remind you of the faculty rules: Rule one - no pooftahs. Rule two, no member of the faculty is to maltreat the Abbos in any way whatsoever - if there's anybody watching. Rule three - no pooftahs. Rule four - I don't want to catch anyone not drinking in their room after lights out. Rule five - no pooftahs. Rule six - there is no rule six! Rule seven - no pooftahs. That concludes the reading of the rules.
Classic comedy.
Posted by: Geoff | March 20, 2008 at 14:42
Thanks Geoff - much appreciated. I'll have to get you started on The Spanish Inquisition next (however unexpected!).
Posted by: Richard Weatherill | March 20, 2008 at 14:53
Point 4 was the funniest joke in the world, but I didn't want to risk it.
I read that article, and it didn't ring true at all. The banks don't need new branches that much. It was a lack of regulation which allowed banks to lend money in these circumstances. They front load the interest horribly, and they are miss-sold to people who could otherwise afford a normal loan:
http://www.thetwoheadedquarter.com/downloads/subprime_mortgage_oped.pdf
There are plenty of ways the State can help people get housing without resorting to these kind of tactics. See:
http://www.civilrights.org/press_room/buzz_clips/civilrightsorg-stories/op-ed-the-subprime-scandal.html
Bush's intervention actively prevented the State from dealing with these issues, and fueled the crisis. You have to read it to believe it:
http://www.opednews.com/articles/opedne_eliot_sp_080314_spitzer_on_bush_s_ro.htm
Posted by: passing leftie | March 20, 2008 at 15:24
Change the name of the Conservative Party. Involve /Include England /English in the title and watch the votes come in. After all 60/70 % of the people on the British Isles are Englishmen and they need better and fairer representation. Let the Scots run their own country. We want ours back!
Posted by: P Habgood | January 10, 2009 at 15:08