Wednesday, 24 September 2008

Gordon and the money men

I was thinking of writing all sorts of stuff about the financial crisis, but others have said everything there is to be said. Here is Richard Ingrams in Now we all have to pay for the banks' mistakes:

At the root of the current crisis there is a simple and quite easily grasped fact, namely that banks were lending large sums of money to people who they knew where unlikely to be able to pay it back.

(.....) When you look back to find out how this sad situation arose, you find the trail leads, as so often, to Margaret Thatcher. Because it was her government that did away with the sensible restrictions on the amount of money that banks could lend to house buyers.

Another of her bright ideas, you will remember, was to sell off all the council houses. So that now when a couple default on their mortgage payments and have their houses repossessed, the state is in no position to help them.
And here is Henry Porter in The City's greatest lie was to convince us we were all rich:
The well-being felt in the boom years was an illusion (.....) The many have paid for the obscene enrichment of a few and will be doing so for years to come. 
However much Harriet Harman rails against city bonuses now, Labour cannot escape the reality that the government presided over the widening gap between rich and poor while helping bankers by deregulating and hedge fund managers with the special non-dom tax status. In terms of policy there is not a lot to separate Labour from the Republican Neocons.
The assumptions of recent decades, against which some of us have been raging for longer than we care to remember  --  that we must be "relaxed about people getting filthy rich" (i.e. greed is good), and that market forces will solve all problems -- are at last being called into question. What is really encouraging me at the moment is that this questioning now goes far beyond the traditional left. Here is Katharine Whitehorn in the BBC online magazine:
"How many economists does it take to change a light bulb? None; the market will take care of it." The only trouble is, it won't.

It's not just the markets as such, though that make me grind my teeth; market forces may be fine when they apply only to the markets. It's the conviction that commercial principles are always the most efficient; that anything done for private profit and in competition must always be better and more effective than anything done for any other fudsy old reason such as the common good.

Sometimes I feel as if I'd spent the first half of my life being told, without any obvious evidence, that anything run publicly, by government or the council or whatever, had to be better than anything run commercially; and the second half being told, equally without any evidence, that anything run for private profit must be better - and evidence of the fallacy of this pious belief piles up all the time.

This summer we've had, for example, the complete failure of the outsourced firm that was marking the exams of our schoolchildren. The latest Home Office loss was achieved by a private company that misplaced a memory stick.

And in the past there was the now widely mocked Internal Market at the BBC, and the privatisation of the railways, which even those who believe in the principle think was done the wrong way. 
I detect a new, strong mood in the country of outrage against bankers, speculators and fatcats with their obscene bonuses. This outrage clearly now embraces Middle England as well as the usual suspects. I hope Gordon Brown will seize upon this moment to do what he only half hinted at in his big speech yesterday -- to move decisively against the City crooks and shysters and to work much more transparently for a genuinely fairer and more equal society. He must stop kowtowing to the markets, which are nothing more than a huge casino in which greedy people gamble with other people's money.

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