Brown's spend, spend, spend during his Chancellor's days has brought us into the current economy we are facing today. His appeal at a Downing Street meeting for the lenders to pass on cuts appeared to fall on deaf ears with HBOS, which owns the Halifax, increasing its rate on some mortgages from 6.09 to 6.59 per cent. Borrowers taking out this type of deal will now pay 46 more a month. On a two-year tracker, the rate will increase from 1.49 points above base rate to 1.99 points, giving a current rate of 6.99 per cent.

Other lenders are expected to follow Halifaxs lead.

If the Government wants the banks to lower mortgage rates to home owners - why not just offer them through Northern Rock? Everyone would rush to the Rock to get the loans forcing banks to match the rates or lose the business? Or maybe the government would then run into bigger credit crunch?

This government has been in charge for the last ten years and has saved nothing for a rainy day. This government and this PM has done this. I am not disputing the greed of the banks and the live today and stuff tomorrow attitude. This government has played its full part in promoting this attitude and cosyed up to the mega rich. Now the climate has changed, they are scrambling for cover. It wasn,t our fault , not me mister. Its pathetic. They have made a laughing stock of us all. Leaving this man and his cronies in charge is like telling a demolition expert to build a house.

As to what is to be done. Well for sure there are no quick fixes. Reduce public sector spending to an affordable level with politicians leading from the front by cutting their wages and allowances. However, after making vast savings, I would pay nurses more and the people that are doing the real jobs. Too many time and motion and target setting bodies and quangos around. Banks must be regulated to ensure that business is done on plausible basis. Pay people regular salaries and get rid of the commission culture in finance. I could go on from bringing back capital punishment for murder and drug barrons but I would be spitting into the wind.

Whoever has to sort this mess out will find that tax cuts may not be possible for a few years without the uk's debt burden getting worse. It is time to let someone with more creditability try and we can certainly do without Gordon Brown's so called experience.

"Reduce public sector spending to an affordable level with politicians leading from the front by cutting their wages and allowances. "

I hope the Tories make this their motto for the next election. I am sure it will help them.

Another point about this suggestion is that (from memory) Roosevelt did the opposite to get America out of their recession.

I think I would agree with the reduction of quangos, but this would raise the unemployment levels.

I think that there are savings which can be made in public services (PFIs especially) , but I don't think that taxes will be reduced for a decent "caring" society. Redistribution of taxes is more likely.

I would be interested in the name of the politician you think who is more able than Brown at the present time.

Perhaps, you are thinking of the spiv Cameron. I think of him capable of spin, rhetoric with little or no substance. I have yet to read about one constructive policy he has mentioned. Isn't he quiet on the recent failure of capitalism.

As I say spitting into the wind. You asked for suggestions. I said previously that that Straw should be given a chance. You seem obsessed. There are good Labour people and there are good Tories. There is no magic wand. Brown has been tried and tested and has failed.

Small point, but worth mentioning.........

The culture of commission pay in finance industries is because the FSA made it almost impossible to sack someone in the industry for non-performance (ie low production), so how can the industry ensure it rewards those that work hard and gets rid of the lazy chancers?
Second point is that when the FSA cap commissions (as they did with pensions and ISAS) the average Joe cannot get quality advice as the only IFA's prepared to advise on small scale pensions and ISAs are the worse ones. The better ones command a high fee that Joe cannot afford, or advise only on larger investments for higher commission.
The real answer is to reduce regulation at the sharp end and increase it at policy design level. That would give quality products that cannot shaft anyone and ensure better quality advisors, who could not sell any bad products anyway, as they would not be available.

almost sounded plausable



ALMOST BUT NOT QUITE

Gus, I don't think so. Just fed up with the blame game, media spin and a lack of reality.
There aren't easy solutions to the present economic problems and destroying personalities does not improve the situation. Changing teams in the middle of a acute problem is not usually useful.

Sack them after the problem is over when the problem can be reviewed appropriately.

Well Fred we shall see. You are of the opinion that Brown will be leader at next General Election. I think he will be replaced and, if so, I would bet on Jack Straw, after all he is not a novice. I think he is biding his time as damage limitation is important as far as Labour is concerned. I would like to see the Tories win at next General Election but, I do not want to see a landslide. Totally dominant Governments are not good since all Governments should face a strong opposition to keep them on their metal. We await Glenrothes which will be interesting.

I totally disagree with Fred who is so sympathetic with Gordon and I also laughed when Bush came on TV this morning saying that the economy is in a disaster state now. All this is self-induced!

Hyl, You like the blame game, media spin and the lack of reality.

Good for you!



8-)

'Sack them after the problem is over when the problem can be reviewed appropriately'

Isn't that why people are sacked in the first place? They fail to identify the problem initially, let matters get worse, have no solution and therefore are rightly judged as incapable.

GB is actually worse than incapable, he has such a high opinion of himself, it's taken months for him to even begin to admit mistakes have been made. Sooner he's gone the better for both Labour and the UK.

spot on pth---some very deep and painful cuts lie ahead if we are to even begin to get out of this. Get rid of all the blood sucking quangos, don't hand out free theatre tickets to put bums on seats, stop handing out money to be wasted--we all know how! Cut fuel duty and increase pensions a bit more instead that might buy him a bit of time but basically it's time they all collected their gold plated pensions!! The next lot in will spend many unpopular years wrestling with this mess
no wonder the tories are in no hurry.

PT, Which pundit/s is/are giving a correct analysis of the problem and how many of them have a pertinent solution?

Just heard Rowan Williams's equating the "market" to a "god" or belief. Which can be seen as an attempting to give a reality and substance to an unreality.

4 years ago, I suggested that the housing prices rises and general debts were unsustainable and may lead to problems in the future financing.

But, when it seemed that selling a heap of bricks and mortar and people were lauded for devising slicker and slicker ways to make money, could you imagine the uproar that would have occurred, if the government at the time, had tried to tie up or supervise the financial services more appropriately.

However, I still think the overall initiation of the problem was the Yen low lending rate which led to high borrowing and its inflationary effects.



As far as sacking is concerned, it seems to me that the call for someone else to lose their jobs for an action, which one may have carried out oneself in a similar situation, is usually unrewarding and scapegoating. Retrospective analysis is useful but should not be a method for excusing one's own actions at the time.

Fred the chancellor could have introduced measures to slow the housing/debt bubble but the fact is the stamp duty money was piling in and the gov. was spending it hand over fist! likewise the taxes from all the overpaid wiz kids in the city---it wasn't a tap the gov. wished to turn off but I bet they now wish they had!

Money, What measures could have been brought in to quell the housing bubble and would they have been passed through parliament? Can you imagine the Tory party and Tory press outcries at the time when it was necessary and may have been effective?

Measures to prevent self certification on mortgage applications, better checks before loaning large amounts of money. The gov was carried away on a tidal wave and believed it's own promise of no boom and bust----bust always follows like night and day! I don't think the Tories wanted to stop it--they would be cashing in on all the increased pay, generous allowances, extra houses and city directorships just l;ike all the other honourable gentlemen! The gravy train has come to a grinding halt and I just think the Tories have more idea how to sort things out than the high spending lot we have in now. trouble is it's going to be really painful!!

Fred, I am sure some pundits are giving a correct analysis of the problem, but of course they all have the benefit of hindsight, few of foresight. Whether I would have done the same as Tony Blair or Gordon Bown in their position of PM is immaterial, the fact is that they held the ultimate office and that is where the buck stops. The electorate voted in favour of Labour to look after the country and ultimately they have failed to do so. In any endavour whether it be politics, business or sport, the person in charge must accept responsibility for their actions good or bad (you can be sure that all will accept the plaudits when things are going well). I'm afraid your 'excusing one's own actions' is an old chestnut that you have trotted out many times before on a variety of threads and it still does not hold water. Personally, I'm not looking to blame Labour or the ministers in charge for the difficulties we are now experiencing, but I do exepct them to hold their hands up and accept some responsibility. As far as GB is concerned he was the Chancellor for many years and now the PM presiding over this mess whilst doing nothing about it. Quite a few of the more experienced traders on this board have been saying for a long time that a crunch was coming because of the over-lending in the financial markets, how did GB miss the warning signals?

FWIW Fred I doubt we will ever agree on this (if anything) our views are poles apart, however, I don't hold the view that the Govt is to blame for all our ills, but it has certainly played a part and should be accountable.

Fred, it is not only me who is blaming Gordon. All these financial crises is the spawn of his policies when he was the Chancellor of the Exchequer - SPEND, SPEND SPEND. Of course, it is not his money. Also with UK being the blind poodle joining the US making war in Afghanistan and Iraq. Does that not cost the taxpayers' money? And also lives!!!

And just few weeks ago, Darling came out warning that the economy is in bad shape. Later, he was warned by Brown that this is not the case. This is all just a big cover-up by Gordon. Please admit failure.

Fred, you are just one of the blind Gordon's supporters!

Don't forget the damage Gordon did to all of our pensions when he cut tax relief on pension funds.

Well said, Haystack. If he stays in power, he will probably make us work until we are 80!

Slave Labour!

Paulson cannot be allowed a blank cheque
By George Soros

September 24 2008 20:28

Hank Paulsons $700bn rescue package has run into difficulty on Capitol Hill. Rightly so: it was ill-conceived. Congress would be abdicating its responsibility if it gave the Treasury secretary a blank cheque. The bill submitted to Congress even had language in it that would exempt the secretarys decisions from review by any court or administrative agency the ultimate fulfillment of the Bush administrations dream of a unitary executive.

Mr Paulsons record does not inspire the confidence necessary to give him discretion over $700bn. His actions last week brought on the crisis that makes rescue necessary. On Monday he allowed Lehman Brothers to fail and refused to make government funds available to save AIG. By Tuesday he had to reverse himself and provide an $85bn loan to AIG on punitive terms. The demise of Lehman disrupted the commercial paper market. A large money market fund broke the buck and investment banks that relied on the commercial paper market had difficulty financing their operations. By Thursday a run on money market funds was in full swing and we came as close to a meltdown as at any time since the 1930s. Mr Paulson reversed again and proposed a systemic rescue.

Mr Paulson had got a blank cheque from Congress once before. That was to deal with Fannie Mae and Freddie Mac. His solution landed the housing market in the worst of all worlds: their managements knew that if the blank cheques were filled out they would lose their jobs, so they retrenched and made mortgages more expensive and less available. Within a few weeks the market forced Mr Paulsons hand and he had to take them over.

Mr Paulsons proposal to purchase distressed mortgage-related securities poses a classic problem of asymmetric information. The securities are hard to value but the sellers know more about them than the buyer: in any auction process the Treasury would end up with the dregs. The proposal is also rife with latent conflict of interest issues. Unless the Treasury overpays for the securities, the scheme would not bring relief. But if the scheme is used to bail out insolvent banks, what will the taxpayers get in return?

Barack Obama has outlined four conditions that ought to be imposed: an upside for the taxpayers as well as a downside; a bipartisan board to oversee the process; help for the homeowners as well as the holders of the mortgages; and some limits on the compensation of those who benefit from taxpayers money. These are the right principles. They could be applied more effectively by capitalising the institutions that are burdened by distressed securities directly rather than by relieving them of the distressed securities.

The injection of government funds would be much less problematic if it were applied to the equity rather than the balance sheet. $700bn in preferred stock with warrants may be sufficient to make up the hole created by the bursting of the housing bubble. By contrast, the addition of $700bn on the demand side of an $11,000bn market may not be sufficient to arrest the decline of housing prices.

Something also needs to be done on the supply side. To prevent housing prices from overshooting on the downside, the number of foreclosures has to be kept to a minimum. The terms of mortgages need to be adjusted to the homeowners ability to pay.

The rescue package leaves this task undone. Making the necessary modifications is a delicate task rendered more difficult by the fact that many mortgages have been sliced up and repackaged in the form of collateralised debt obligations. The holders of the various slices have conflicting interests. It would take too long to work out the conflicts to include a mortgage modification scheme in the rescue package. The package can, however, prepare the ground by modifying bankruptcy law as it relates to principal residences.

Now that the crisis has been unleashed a large-scale rescue package is probably indispensable to bring it under control. Rebuilding the depleted balance sheets of the banking system is the right way to go. Not every bank deserves to be saved, but the experts at the Federal Reserve, with proper supervision, can be counted on to make the right judgments. Managements that are reluctant to accept the consequences of past mistakes could be penalised by depriving them of the Feds credit facilities. Making government funds available should also encourage the private sector to participate in recapitalising the banking sector and bringing the financial crisis to a close.