Bolitics The New Condem Government

[snowychap]

In that analogy, it's the regulator who would be the policeman. The responsibility of government is to see that regulation happens, but also to do many other things like encouraging economic activity which as a side-effect, create opportunities for banks to do the wrong thing, or do things wrong. The regulatory job, like the police role, is far more limited and simpler.

It was you who suggested that it was a situation where a government and a policeman were analogous.

I took your initial analogy and suggested that if there were some complicity (either in the venture itself or the spirit in which the venture was undertaken) between the actor whom you appeared to exonerate and the person carrying out the crime then it's not unfair to suggest that the former bears some responsiblity for things he did not himself directly carry out.

If you now have a problem with the specifics of the relationship for the sake of analogies then you shouldn't have taken us down that road.

[blandy]

The Gov't(s) basically egged them on. It started with Thatcher and Reagan, went on through Clinton and blair/Brown and hasn't really abated much since. They wanted these bankers to do what they were doing. They liked the replacement of dirty old industries like making things and mining to be replaced by shiny new STeel and Glass offices full of people moving money about and making it appear from nowhere. They actively encoruaged it via tax breaks and all kinds.

Gov'ts stand in the dock with the bankers. The Gov'ts allowed the situation to develop, they didn't look too closely into the murky corners, because they didn't want to. They didn't give the various overseeing bodies the resources or the powers to do anything to reign it in. The US and UK Governments (successive ones, not just Brown and Blair) as the Gov'ts overseeing much of the financial world's powerhouses had (and still have) a responsibility to ensure that their beast didn't go rogue and trash the joint, and they failed. Unrestrained capitalism, with the risks underwritten, effectively, by the state, as it was and still is, is a dangerous thing and we got bitten. Gov't and regulation failed. Scorpion and frog. They didn't take the venom from the scorpion, and can't claim innocence when the sting came. They were complicit.

[peterms]

In that analogy, it's the regulator who would be the policeman. The responsibility of government is to see that regulation happens, but also to do many other things like encouraging economic activity which as a side-effect, create opportunities for banks to do the wrong thing, or do things wrong. The regulatory job, like the police role, is far more limited and simpler.

It was you who suggested that it was a situation where a government and a policeman were analogous.

I took your initial analogy and suggested that if there were some complicity (either in the venture itself or the spirit in which the venture was undertaken) between the actor whom you appeared to exonerate and the person carrying out the crime then it's not unfair to suggest that the former bears some responsiblity for things he did not himself directly carry out.

If you now have a problem with the specifics of the relationship for the sake of analogies then you shouldn't have taken us down that road.

I'm saying it was my analogy that was crap...

[snowychap]

I'm saying it was my analogy that was crap...

Ah, sorry.

Put that one down as me being the arse who got the wrong end of the stick, then. :oops:

Edit: Yes, I do realize that could be read wrongly. ;-)

[peterms]

Put that one down as me being the arse who got the wrong end of the stick, then. :oops:

Edit: Yes, I do realize that could be read wrongly. ;-)

It reads like a post from the e-coli cucumber thread. :winkold:

[peterms]

Well, that sounds rather more like the process I was describing, ie a sustained move towards international tax cooperation as part of a long established and ongoing procedure, than your "oh shit, Barack's upset, we'd better shape up sharpish" suggested by your post. I'm not aware of any big shift in policy as a result of anything Obama said, as to be honest the US doesn't make up that big a percentage of the Island's trade.

Well you're in a good position to know the level of interest within IoM about US initiatives. Much better than me.

Though I was interested to read about a conference on the IoM at the time of the passage of the US Stop Tax Haven Abuse Bill. The IoM Treasury Minister, Mr Bell, was reported as stating that policy needed to change because of the US Bill

...Mr Bell raised the spectre of the ‘Stop the Tax Haven Abuse Bill’ and reminded the audience, in case they needed it, that some people still look upon the IOM as a tax haven. Saying that the focus of the Bill was on ‘secrecy’, Mr Bell stated that the IOM must be more willing to open up - a view the Manx Herald strongly endorses - albeit he added that the IOM has never had banking secrecy...

He seems to give a very clear link between the Obama administration's legislation and the IoM being "more willing to open up".

[Risso]

....which as I've said at least twice now, is part of the ongoing process that has been well underway for years. There was absolutely "no shitting themselves" whatsoever. I know Alan Bell, and I know his successor Anne Craine as she lives about 200 yards from me, and the drive has been, and continues to be to push the Isle of Man as an open and well regulated place to do international business.

By far the biggest worry over here has been that the "zero ten" system of taxation (ie 0% corporation tax on everbody except banks who pay 10%) was going to be classed as harmful by the EU and the OECD, but those fears have been allayed by the ditching of the dividend regime which I mentioned earlier.

That's by far the closest the island has come to "shitting itself", and was nothing at all to do with Barack bleedin' Obama. Seeing as the state of Delaware is a far more secretive place to do business (which if you're a Villa fan you might want to look into) he should get his own house in order first, before looking for scapegoats for his own country's **** ups.

[peterms]

I'm not saying that Obama's support for that legislation is the starting point for IoM changing how it does things. It's just one example of external pressure going back years which have brought about change in this and other tax havens. There was action under the Bush administration, pressure from the UK and OECD, in fact a lot of international concern going back 15 years or more. That pressure is gradually having an effect, and it is demonstrably true that IoM is less attractive now to taxdodgers and other criminals than previously. Lets hope the pressure doesn't relent.

Fully agree that Obama needs to do something about Delaware. He might have an interesting discussion about that with his running mate Mr Biden, of, ahem, Delaware.

[Risso]

I'm not saying that Obama's support for that legislation is the starting point for IoM changing how it does things. It's just one example of external pressure going back years which have brought about change in this and other tax havens. There was action under the Bush administration, pressure from the UK and OECD, in fact a lot of international concern going back 15 years or more. That pressure is gradually having an effect, and it is demonstrably true that IoM is less attractive now to taxdodgers and other criminals than previously. Lets hope the pressure doesn't relent.

Fully agree that Obama needs to do something about Delaware. He might have an interesting discussion about that with his running mate Mr Biden, of, ahem, Delaware.

I agree with most of that Peter, but your original post did say:

"The IoM for example shat themselves when Obama and the OECD threatened to blacklist them, and they have done what was required to avoid that, and clearly without that imminent threat would have carried on as they were"

which is a completely different kettle of fish from your altogether more considered post above.

[peterms]

I agree with most of that Peter, but your original post did say:

"The IoM for example shat themselves when Obama and the OECD threatened to blacklist them, and they have done what was required to avoid that, and clearly without that imminent threat would have carried on as they were"

which is a completely different kettle of fish from your altogether more considered post above.

Maybe it's a difference of tone - I think the conclusion of my posts is much the same. :winkold:

I do think it's the case that the IoM feared the consequences of being blacklisted, and that as a consequence of this threat being made, introduced changes intended to avoid sanctions being imposed.

I read some of your comments as suggesting that IoM were well on the road to becoming an open and transparent administration, were unconcerned by threatened sanctions because they wouldn't have had much impact, and that actions by the OECD and the US were largely irrelevant to what the IoM would have done.

Things like this make me believe it was the external pressure which led to change:

Fears the Isle of Man could be targeted have been allayed by officials, finance minister Allan Bell has said.

The island was named on an OECD white list of responsible jurisdictions.

But Mr Bell told reporters: "I think had we been on the blacklist it would make it very difficult for our economy to be as successful as it has been."

"It may well have seen the departure of certain businesses from the island in the wake of that."

Maybe if I had said "feared the consequences of being blacklisted" instead of "shat themselves" we might have agreed? :winkold:

[peterms]

Gov'ts stand in the dock with the bankers.

And so it came to pass. Your prophetic ability is impressive - finding a politician on trial for this is not exactly a regular event.

Though I think a more plausible attribution of culpability is this examination of the decisions made by the Fed and the SEC, which were made at that cloudy level slightly below political oversight and slightly above existing delegated power. That realm where mandarins operate most comfortably.

[PIW]

I think the big issue here is that most people, including your struly, do not have a good enough grasp on economics, financial institutions, and banking to really understand all of what is going on. Yes we have our opinions but they are mostly ill-informed and mostly led by political affiliations and by what politicians want us to belive.

We know the banking crisis is global and we know that labour didn't bring the worlds to its knees. But its also true to say that Labour didn't regualte well enough, far enough, and let those institutions that were supposed to regulate it get away with doing nothing about it.

So there are fingers to point and people to blame everywhere. But its global so it appears that those responsible are not necessarily incompetent but merely they didn't have experience, or understand the system well enough that they were allowing to finance the country.

So, Gordon Brown takes a lot of flak for that. But if he is a "fucktard" was he isolated across party lines in his 'ineptitude'? Well, no. George Osborne criticised Brown's policies on regulation as going too far. He wanted the then govt. to allow the banking sector more freedom. Was is he not a "fucktard"? His party leader would have supported his then Shadow-Chancellor so is Cameron not a "fucktard"? it can be argued that only Vince cable argued for greater regulation but without having Hansard in front of me I cannot give an accout of too what length he foresaw what then happened and if he was the bright lone voice in a lost economic wilderness of those without understanding.

So, to those of us without great economic understanding this party ideological blaming of Labour is as naive, as it is nonsense, as it is puerile. Nobody saw it coming (save Vince maybe) and too pretend otherwise is laughable. To then keep talking the economy down (as Cameron et al constantly do by banging on about Greece, and being bankrupt) is surely counter-productive when we should be talking our economy up and inviting more investment?

[peterms]

Not aware that Cable said anything very specific about the impending crisis, other than echoing what many commentators were saying about the house price bubble and the level of private debt.

Some people did see it coming, mostly economists who aren't part of the neo-classical consensus.

Interestingly, what was then the G7 announced, ten years before the crash, several things which they saw as high priority action points.

4. We have developed proposals where there is now an emerging consensus for modifications to the architecture of the international financial system. There are important aspects of the issues discussed that require further work. Discussion within our countries, with emerging market countries and with the private sector will continue over the coming months. For now, having restated the importance of sound economic policies, we have identified the need for action in five key areas:

* enhanced transparency and data dissemination;

* helping countries prepare for integration into the global economy and for free global capital flows;

* strengthening national financial systems;

* ensuring that the private sector takes responsibility for its lending decisions;

* enhancing further the role of the International Financial Institutions and cooperation amongst them and with the international regulatory fora. We are considering ways, and ask the relevant institutions to develop proposals on ways, in which greater co-operation can be achieved including options for institutional reform.

I especially like the ones about transparency, strengthening national financial systems, and ensuring the private sector takes responsibility for its lending decisions. Not to mention enhancing co-operation with international regulatory fora. Good job they acted on all that, then.

On regulation more widely, yes it was lacking, yes there were some very specific decisions which greatly contributed to the problem (see especially the document I linked above), but there's also an important point that so much of the problem was to do with activities in the shadow banking sector, where regulation is even weaker or missing altogether.

The Basel III requirements (which the banks are even now lobbying to have watered down still further) don't solve this, as far as I'm aware.

[Risso]

I'm not an economics professor, but to say that nobody could see the financial crisis coming is laughable. As peter says, the housing bubble and debt levels were completely unsustainable. And as a matter of fact, I did quite nicely out of it. Sold my house when house prices were at their very highest, then rented for a while until prices and interest rates crashed.

[peterms]

I'm fascinated to see Cameron shafting Ken Clarke on the justice proposals. Especially since Ken could chew wee Dave into tiny pieces and spit him out with his cigar clippings.

I would imagine that when the tories come to knife Cameron, which won't be all that long, there will be an eager queue of people he has needlessly pissed off, passing the bloody knife among themselves.

Why does he do it? He must know this iron law of politics, that you don't needlessly alienate your own side by being seen to pull the rug from under them. Does he think that he is somehow immune, and that he can get away with it where far greater figures have failed? Or is he just as daft as he looks, the silly little prep school kid sauntering about Daddy's estate before the big kids do him over?

Either way, I would say he's done himself some real damage by his complete lack of loyalty to his ministers, and it's not the first time. He has a reputation for this.

[snowychap]

I'm fascinated to see Cameron shafting Ken Clarke on the justice proposals. Especially since Ken could chew wee Dave into tiny pieces and spit him out with his cigar clippings.

I would imagine that when the tories come to knife Cameron, which won't be all that long, there will be an eager queue of people he has needlessly pissed off, passing the bloody knife among themselves.

Why does he do it? He must know this iron law of politics, that you don't needlessly alienate your own side by being seen to pull the rug from under them. Does he think that he is somehow immune, and that he can get away with it where far greater figures have failed? Or is he just as daft as he looks, the silly little prep school kid sauntering about Daddy's estate before the big kids do him over?

Either way, I would say he's done himself some real damage by his complete lack of loyalty to his ministers, and it's not the first time. He has a reputation for this.

I thnk you're wrong on Ken.

From what Newsnight was reporting, Cameron's choices were taken off a 'Clarke menu (costed, &c.)'.

Cameron's binning of Ken's proposal may risk alienating Ken (though as above it might be a bit of cost-led politik) but it does play to the numpties on the backbenches like Phil Davies.

I don't think that it is a huge gamble to bin Ken Clarke's justice proposals. I can't believe he's ever going to bin Ken (well not bury him) and Ken is not the kind of person to get the hump and say that he has been binned.

[peterms]

I thnk you're wrong on Ken.

From what Newsnight was reporting, Cameron's choices were taken off a 'Clarke menu (costed, &c.)'.

Cameron's binning of Ken's proposal may risk alienating Ken (though as above it might be a bit of cost-led politik) but it does play to the numpties on the backbenches like Phil Davies.

I don't think that it is a huge gamble to bin Ken Clarke's justice proposals. I can't believe he's ever going to bin Ken (well not bury him) and Ken is not the kind of person to get the hump and say that he has binned.

It sounds like the sentencing proposal was cost-led, certainly. There is now a question about who pays the extra cost of funding the extra jail places, and the Guardian is reporting that the Treasury is trying to leave the cost with Clarke's department, having previously agreed otherwise. But I don't think the sentencing proposals in themselves are that important one way or the other. What I think matters more is what it says about how ministers work together.

For Cameron, I think the problem he is creating is that it's not the first time a minister has presented an agreed policy, and in the face of public opposition to the policy Cameron has come in and changed the line. It's undermining, it looks like a public put-down, it creates resentment on the part of the minister concerned, and it creates a perception that Cameron is disloyal and will sell you out if the going gets even slightly rough.

In a situation where you are trying to push through many very unpopular measures, the last thing you need is ministers looking over their shoulder and thinking the PM will cut them loose if it gets difficult. And yet this seems to be the reputation the boy David is creating for himself. It's foolish, and it will come back to bite him.

[PIW]

Back to the economy although I note that there were some economists who did see it it comes across as people saying that the current trend of high wages being paid to footballers and vasts amounts at the top being unsustainable, how does that turn into policy? especially on a political level? Who would have the political will to adopt policies in good times that curtail prosperity? However false it may be?

Name one politician who spelled it out, recognised not only the effects of what was to come - or could come - and what should be done in terms of sound financial policy. How do you tell a populace/an electorate that you're going to take the money out of their pockets and start tightening belts? No party would do it and that's why no party suggested it. You could say that they are all economic fucktards but its easier to make political distinctions.

It shows a bigger problem that when we elect our representatives, because of the complexity of areas such as economics, there is an argument that we should elect the person and not the party. If at the last General Election there was a vote between Darling/Osborne/Cable based solely on their economic ability, understanding of the financial institutions and how to try and best run it, then its likely Vince Cable would have been returned and he is probably is the most qualified. As it is we have Osborne who has as little credibility as any of the other 'fucktards' offered.

But, in a pluralist system we get anyone that the party deems fit to put into any position. However, important the position. Don't like them and there can be a re-shuffle and an other Joe Bloggs can get in.

My point is that politically they are mostly all culpable. The Tories are lying to us that they would have been better/different to Labour and this is their fault. Yes, it happened on Labour's watch but unless the Tories can point to what they wanted to do as an alternative then stop lying to us about the causes of all of this.

What we need is something that isn't driven on political lines because it wasn't political lines that got us here. (It was rampant capitalism but that's a different argument). And until then we will have the same tit-for-tat politics of 'yah, boo, sucks' hoping one side messes up as it helps your side, and decisions taken subsequently are and have been taken purely on ideological grounds.

The electorate are being lied to. Constantly. By both all sides. Its time that we stopped accepting it and tried to get the new type of politics that we were promised before the election. What we have is the same old same old and once again we pay.

[peterms]

I can't believe he's ever going to bin Ken (well not bury him)

I see there's a considered discussion of Ken's political future here.

[blandy]

a load of eminently sensible and enlightened stuff.

Top post. I wholly concur.Now is the moment, if there is ever going to be one, where a "Stop right there, we're doing it all wrong and need to completely change our ways and our system" would have the best chance of getting listened to and adopted, but ALL the politicians have bottled it, and most of the arguments are about whether we should put up taxes, cut services, do a bit of each...or whatever.

There's nothing being put in place that changes the system and the underlying faults.