Clegg and Cable – the two gaffers

Mrt Clegg will become famous for thinking the basic pension is just £30 a week. He can’t have been doing the shopping recently.

It is also time people realised that Mr Cable made an equally serious gaffe, showing he has little understanding of financial markets. He told us that Hedge Fund managers have made money out of shorting bank shares (probably true), made easier for them by the fact that taxpayers and governments underwrite the banks!

Could someone explain to Mr Cable that the last thing someone short of bank shares wants to happen is an announcement of official support for that bank. That puts the price of the shares up which means the Hedge Fund Managers shorting the shares lose money.

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19 Comments

  1. Guido Fawkes
    Posted September 18, 2008 at 10:32 am | Permalink

    I saw that and thought "twat". He really is over-rated.

    • Henry Schnarr
      Posted September 18, 2008 at 12:57 pm | Permalink

      Quite true! It reminded me of the reaction of one of my corporals many years ago, after a similar caliber speech by the Battery Commander, "Pigs greased, Sir, ready to fly"!

    • mikestallard
      Posted September 18, 2008 at 5:46 pm | Permalink

      Blimey – we really are moving up a class of blogg Artist here aren't we! Wow!

  2. Letters From A Tory
    Posted September 18, 2008 at 11:00 am | Permalink

    Oh dear, Mr Cable. Once you're out of your Commons comfort zone, you look a little shaky don't you!
    http://lettersfromatory.wordpress.com

  3. Eddie Allen
    Posted September 18, 2008 at 11:04 am | Permalink

    Well spotted Mr Redwood.

    We need the media to expose these people who has difficulty in understanding the difference between their rears and their elbows when it comes to such an important thing as our economy.

    I see Clegg heaped praise on him too or was he just reading the autocue ?

    Someone should give them both a nudge as you say or else give a sharp bang to the top of that autocue which is obviously flawed and making them both speak drivel unfortunately !

  4. Stuart Fairney
    Posted September 18, 2008 at 11:10 am | Permalink

    For someone who apparently "hates" Cameron, I could not understand why Cleggover was at such pains to impersonate him down to the carefully rehearsed impromptu speech and non-threatening gesture?

    As for the ludicrous Cable, after making such a fool of himself on Northern Rock, you would hope he would check the basic correctness of his assertions. We are at least spared any possibility of him getting his hands on the levers of power.

    As for the banks, if they really have taken stupid speculative risks, then they should fail. Making the wider system more liquid at this time is probably sensible (along with rates cuts that I know you support), but I really can’t see any case for taxpayer support of poorly run business that took stupid risk.

    Reply: The solutions I recommend are usually private sector, and of course entail poor businesses paying for their failure

  5. Ken
    Posted September 18, 2008 at 11:21 am | Permalink

    Cable has form. The LibDems kept insisting that hedge fund managers paid less tax than their cleaners. It was of course the private equity people. CGT/taper relief meant some rich money managers paid less tax. No one bothered correcting them then either.
    I suspect that Cable has some vague memory of speculative attacks on fixed exchange rates in mind, when he attacks hedge fund shorting. Here it is the taxpayer defending a narrow exchange rate band, with lots of potential losses if the fix goes, and no upside if the fix stays. He is a bit of a dummy.
    I suppose he might mean that shorters cause bankruptcies paid for by taxpayers, but that need not be the case and surely then it is the regulators who didnt regulate a bank properly that are to blame.

  6. Mark Wadsworth
    Posted September 18, 2008 at 12:49 pm | Permalink

    The £30 State Pension was a classic. Good spot on Cable.

  7. adam
    Posted September 18, 2008 at 2:12 pm | Permalink

    Cable, has also stood up in the commons and welcomed sky high oil prices then urged them to go higher still.

    Ian dale reports Clegg has called the credit crunch "this great, big intangible thing"

    and claimed he has never heard of Lehman Bros. or Bear Stearns.

  8. Odeston
    Posted September 18, 2008 at 3:18 pm | Permalink

    In the matter of the takeover, not once did radio 4 news at One today refer to the 'competence' of the EU. Theirs is the decision, not Brown's nor Darling's. Our 'domestic' government has irrevocably surrendered control of our destiny to those wretched European Federalists. Both these governments are our enemies nowadays.

  9. APL
    Posted September 18, 2008 at 3:39 pm | Permalink

    JR: "Could someone explain to Mr Cable that the last thing someone short of bank shares wants to happen is an announcement of official support for that bank."

    In the case of Fannie & Freddie, the common shareholder was wiped out, similar has happened with AIG. Thus the government support does not raise the stock price, rather it destroys it.

    Official financial support is designed to allow the bank to carry on trading without the taxpayer taking the equity – that is what Mr Cable was referring to. It lifts the stock price.

    • APL
      Posted September 18, 2008 at 3:01 pm | Permalink

      “Official financial support is designed ”

      But it doesn’t necessarily have the intended effect. Ultimately, if an organisation was sound say, turning in vigourous earnings, it would be very difficult to successfully short the stock.

      Perhaps the government loans ought to be used by the company to permit it to buy its stock off the market at the depressed price, essentially go private. That would insulate the company from hedge/shorting pressure and give it time to reorganise its affairs.

      The government could recoup its ‘investment’ by recieving interest, and repayment of capital should the company successfully re-float.

      • APL
        Posted September 18, 2008 at 10:34 pm | Permalink

        Having thought about it a little more, I realise, Mr Cable and I are both wrong. Hmmm, cold Crow, delicious.

  10. Cllr David Burbage
    Posted September 18, 2008 at 4:22 pm | Permalink

    Vince calls which way the Fed will go on Lehman Bros
    Posted by davidburbage on September 17, 2008

    http://news.bbc.co.uk/today/hi/today/newsid_7616000/7616089.stm

    Stourton : They’re not going to be allowed to go bust, you say, but they have gone bust!

    Vince : Well indeed but [ .. ] probably along the lines of Bear Stearns, the US Treasury will step in here.

    I’m not sure this has happened … and Hank Paulson, who should know whether the US Treasury should/would/could act, rather has a different view to Vince

    Paulson said the situation with Lehman was ‘very, very different’ from the one facing regulators earlier this year, when the Federal Reserve helped JP Morgan Chase (nyse: JPM – news – people ) buy Bear Stearns.

    and

    Paulson said he ‘never once considered that it was appropriate to put taxpayer money on the line’ for Lehman.

  11. mikestallard
    Posted September 18, 2008 at 4:45 pm | Permalink

    I very much want the Lib Dems to take over from the ghastly Labour as the party of opposition. Now that they have their Tony Blair (Clegg) in charge – a man of Conservative Principles (well, almost!), I think this makes it more likely and I welcome that.
    Vince Cable is so telegenic and he gives a patina of leftie Wit to the dear old Green BBC. Remember the Mr Benn gag? I think he is an asset not an ass – well, perhaps, thinking about it….

    • Eddie Allen
      Posted September 18, 2008 at 7:09 pm | Permalink

      They would at least provide a more honest opposition without so much spin, which is a thing to feel comfortable about if progressing politics in the way we need it to progress.

      I believe they have their hearts in the right place even though they're lacking on the old European front, but a believable opposition which looks for things which are good for the country and can agree with decent policies yet argue their case openly without so many soundbites ( ? ) is what's needed.

  12. Dirty Euro
    Posted September 19, 2008 at 11:35 am | Permalink

    No because then the share traders have made money from buying shares and then sell them for a profit if the government supports them.

  13. Autoversicherung
    Posted September 21, 2008 at 9:40 am | Permalink

    Excelent comment. My favorit Blog. Thanks and best regards from Autoversicherung

  14. Andy Strang
    Posted September 22, 2008 at 3:39 pm | Permalink

    Looks like the Hedgies weren’t shorting the banks to any significant extent though..

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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