Banks Sorted - Move Along, Nothing More To See

A simple podcast and bit of TV interviewing and finally Gordon Brown and Alistair Darling have brought the banking crisis to its conclusion.

The final solution is the FSA will be given the authority to tear up bankers' contracts if they feel they are excessive or reward high risk activities. Makes you wonder why the FSA would do that after sitting by and watching the last crisis unfold last time and doing not a sausage about it - in fact, receiving bonuses themselves for their good work at the time. Indeed, to a person, the same staff exist at the FSA so we can expect this new, draconian behaviour to really work. Sure.

Along with a few gems on higher capital to be kept by banks, Gordon Brown confidently announced in his podcast that "We will ensure that the banking crisis we have experienced over the last two years should never again come at a cost to the taxpayer".

The finality was awesome - the banking crisis as we experienced it will never happen like that again but if it does we will never have to pay for it the way we did before. Of course, if you believe that then you will believe anything and vote for a landslide Labour win at the next election.

Much more to the point, long before we look at why Brown's comments are not true, we should be asking why did the last crisis cost so much. Brown tries to tell us that as recessions go we have not fared badly on unemployment and repossessions. I think sometimes he must be reading different reports than the rest of us as unemployment is now higher than at any point in the last 12 years and if you add those who have been on long term benefits for whatever reason, then Britain is at its worst in terms of Welfare strain for a long, long time. As for repossessions, when those who have opted for the deferred payment schemes and when the interest rates start to pick with those in negative equity, it is arguable that we have yet to see the full effects of the housing crash.

As before, Brown seems to think the financial situation in Britain is far better than it really is.

The stark facts are there to see. We have spent £1.4 trillion on saving the financial system and to this day we have no idea whether that is too little, too great or enough. The bankers remain unscathed by our generosity and the best we can do is to threaten their bonuses in the future while at right now headhunting, sign on fees and massive profiteering on written down debts are bolstering earnings greatly. Under our noses, the very machinations that brought about our ruin are going on and the best our ministers can do is to write a few rules that banks and their lawyers are adept are getting around.

The actions by Darling and Brown are superficial and treat only the symptoms of a flawed banking system that is working in exactly the same way as it did before. We have printed £200bn of new money and given it to the banks to shore up their finances and play the markets - none of it has got into the real economy whereas the exact same QE in the US was put into the asset backed securities markets and guess what? They emerged from recession and we didn't.

At every turn and juncture this Government has got the financial calls wrong. We have spent far too much money rescuing a system that did us no good to act the same way again. None of what these two goons have done or said will make an iota of difference and at every point they called the situation wrong and estimated its extent wrongly too. It has been a process of escalation all along of reacting to the crisis, trying numbers and then spending much more as the guesses made were never right. How much we could have avoided paying, we will never know.

If you believe this cod's wallop they have spouted this week, you may as well believe pigs can fly.

Podcasting Our Way Out Of Recession

In the face of the heinous postal strike, our glorious leader has embraced modern technology and launched his latest piece of 'reassurance propaganda' on YouTube to show that, contrary to all indicators, the economy is behaving exactly as it should and he's on top of the situation.

Rather like the superb 'legal' promise that he and his team would halve debt by 2015, he has now pledged that Britain will have an upturn by the turn of the year. No, he was specific, he did mention 2010 for those sceptics amongst you. He got right to the point. Part of the deal was that he would reform banking and make those suddenly, vilified types embrace the kinds of values that we all share - 'hard work, responsibility, integrity and fairness'.

Of course, it does make you wonder why he tolerated such people who earned millions and did not adhere to those values beforehand, but hindsight is always 20:20, is it not? The hollow words of Lord Mandelson must chime in his ears of how Labour did not mind people making loads of money under their regime. How that has come back to haunt them all.

Another piece of late hindsight is that he will clamp down on lending sharp practice like credit card people and those who raise interest on loan repayments putting people into difficulties. He must not use a credit card himself as interest rates on such instruments have always been at least 10 times that of base rate interest, and some are multiples of that again. It is again, one of those stark moments of realisation for the poor PM where he finds out what is going on in the financial world. There is a good reason why the financial industry is almost without exception very well off and that is because they have carte blanche to do exactly as they like. It's nice of him to change this now but, to be frank, if he ever gave a damn other than saving his political neck, he would have stepped in long ago. It is not as if this is an issue that has arisen recently - it has gone on for years.

Just like the whole banking bubble which is busy re-inflating as we speak.

The final call to arms was that he was working with an international melee of leaders to ward off a Second Great Depression. I should imagine he has missed a few headlines as most other countries, including Italy, have returned to growth while Britain languishes bottom of the league table for economic dunces. He pleads that 'It would be suicidal to put recovery at risk by suddenly cutting off the funding and investment that is supporting young people, families and businesses'.

The funding and investment he talks about is pretty pathetic. While VAT is reckoned to have had a £12bn stimulus to the economy, profiling how it helps us is in real terms would be an interesting exercise. You see, even in modern monthly bills, power, fuel, insurance, food and school things are high on the agenda which are not affected by the VAT decrease. Meanwhile, consumer items are and that was the aim, to keep the High St going. It wasn't to help families and young people.

Over 1m of the unemployment number are now young people - this whole recession and crisis has affected them worse - so where is this mythical help he is giving to them? As for support to businesses, apart from copying the Continental scrappage scheme on a minor scale, he has done little beyond complex loan guarantee schemes to help business and overall business lending is down by nearly £15bn.

The vast majority of any stimulus money went into saving the very industry he now vilifies - how clever was that?

Perhaps he should have thought of that before he gave them a blank cheque to save their businesses, decrease the value of toxic debts so that they are now bargains again and allowed the banks to rekindle their feeding frenzy at the trough of easy money. Not one single, stupid bank was allowed to fail, sending the one message they all wanted to hear to them - 'If the brown stuff hits the fan, then we will get bailed out. So let's party like there's no tomorrow, we have zero liabilities'.

Perhaps, podcast rhetoric would have been unnecessary had the PM thought of all this before he handed out our hard earned cash to save those greedy bankers and gave the proceeds of all those who earned their money through, 'hard work, responsibility, integrity and fairness' to them to help them preserve their current millions and earn more millions again.

It's like Communism in reverse.

What a fitting epitaph for the biggest failure of a PM we have had, perhaps ever.