Prof

Ref your last post, on the whole banks and fin servs have stayed within the law and regulatory frameworks with a couple of exceptions. Financial services is one of the most heavily regulated industries we have. The credit crunch was not caused by breaking the law, it was caused by excess borrowing/lending, which whilst being irresponsible on the part of both the lenders and borrowers, on the whole was largely legal. Lending self certified mortgages, lending 125% ltv mortgages, securitising loan books and selling them on, all were legal and in fact in some cases (high ltv for example) were activity encouraged by legislators keen to help people get a "foot on the poperty ladder". RBS was legally but badly run, as was Northern Rock, effectively through a mismatch of funding and liabilities. If US house prices has not turned down, there is a good chance that both of those businesses would still be operating today.

And before we hear the PPI scandal etc get raised again, these recent offences have not played a part in the current financial downturn.

Our current slow growth is principally a hangover after the debt fuelled party of the noughties. Collectively as individuals, companies and government we lived beyond our means, convinced that growth in asset prices (otherwise known as inflation) would help us all pay off our liabilities in the end. We were wrong and now collectively we must endure some more restrained spending patterns to re-balance the books.

Some interesting analysis from Jim O'Neill yesterday suggested that UK growth is actually ahead if where we were in previous recessions, principally due to the relatively limited increase in unemployment and that we can expect to see a slow but sustained return to decent growth by end of the year. Might well coincide nicely with a fall in imported inflation. Problem is thats not news as far as the media is concerned and bad news sells much more......

Prof


Nobody here supports fraud and misrepresentation. But labelling all the service sector as dishonest is both incorrect and unhelpful. We all know that elements are in need of reform. We read the papers, watch the news and most certainly you have told us.

Bank bashing has become boring. It is time to be constructive.

It's irrelevant how the economy is balanced.

What is more important is the ** chronic ** trade deficits as these indicate we cannot spend within our means.

The economy should be managed in order to run a trade surplus - then it would balance itself accordingly.

This would mean taking a long term view which is something this country seems incapable of doing.

The discussion so far is a nicely documented in "Fantasy Island" by Elliot and Atkinson (http://www.amazon.co.uk/Fantasy-Island-Larry-Elliott/dp/1845296052/ref=sr_1_5?ie=UTF8&qid=1311964481&sr=8-5)

The thesis they make is that most things in the knowledge and service economy can be summarized by "Bullsh&t Britain" and involve circulating money as quickly as possible for the sole intention of generating tax revenue - and not wealth.

The sequel book "The Gods That Failed" explains in greater depth how UK Plc has arrived at where we are now and what the policy choices should be.

Anonymous 1 needed this 'Off the Record'

Still on life support, Jeremy and all.
To-day's Citywire-Smash the banks : the Vince Cable solution to too big to fail, by Victoria Bishop.
Please read timothy burtons response under the above, he has probably said things better than I could.
As such Jeremy you can understand that I am a little sceptical of promotional type material such as produced by City UK.

Prof Eman

Anonymous 1 needed this 'Off the Record'

Dear all
At the risk of being boring, please have a look at Graham Walkers contribution under-MPs tell HMRC :'you're an embarassment, sort it out' by Citywire Victoria Bischoff.

Prof Eman