Comments on: The government faces both ways on small business borrowing

By: StevenL

StevenL — Sat, 25 Oct 2008 02:28:31 +0000

Fox is very entertaining, especially Bill O'Reilly, as long as you treat it as deep satirical comedy.

As for th yacht thing, no one I know seems to care whether there was any money involved, it's more a case of making leud defamatory jokes about what they were all getting up.

I think some well known people (names supplied)have managed between them to make sure they are the butt of a lot of crude humour of late.

By: Stuart Fairney

Stuart Fairney — Fri, 24 Oct 2008 07:56:10 +0000

I was with you until the "get married" bit. If you'd have said go to Hawaii with various offspring and latest transient 'boyfriend' funded by some benefit or other ~ fine, but married? ~ it just pushed the boundaries too far. Although, the way Sterling is heading South, maybe the Sovereigns will turn out to be unconscious smart investments.

By: Stuart Fairney

Stuart Fairney — Fri, 24 Oct 2008 07:48:59 +0000

Oh dear, more 19th century thinking, let's build cars blah, blah. No matter how much the government 'help' manufacturing it's never going to be enough to compete with Chinese or Indian workers, thus we should not waste taxpayer money in trying. Instead culling unnecessary government jobs and regulations (more or less all of it, let's be honest) become a genuine low-tax economy* to attract industry and commerce and while we are at it, we could make the UK a tad more civilised by jailing people for much longer tarriffs (No, Jackie Smith, if people are caught with knives they need rather more than to be "brought before a court" and no doubt scolded before being released to sign on, procreate, buy Donitz's plasma TV's and then stab someone). Cut taxes and enforce laws and we can again become the 'Dubai' of Europe attracting companies and successful people, but continue down the road we are on, and national bankruptcy beckons in an anarchic chaos of violent crime. *If public spending had only grown in line with inflation since 1997, we could have abolished income tax, corporation tax, capital gains tax and inheritance tax, leaving the taxpayer £200 billion better off. Source ASI http://www.adamsmith.org/tax-freedom-day/

By: Donitz

Donitz — Thu, 23 Oct 2008 18:51:37 +0000

If the sacred single Mum with her bairn are ejected into the snow, who will buy huge plasma screens, sovereign rings and get married in Hawai?

By: mikestallard

mikestallard — Thu, 23 Oct 2008 17:00:37 +0000

At the moment, the Labour Party are limiting themselves to pious statements about naughty bankers being nice and kind at all times to poor people. Meanwhile Northern Rock has just about doubled its repossessions. How long this tension can continue is anyone's guess. I am waiting, myself, for the sacred single Mum with her bairn being ejected into the snow. Picture, natch, on the front page of every newspaper.
As to the decision whether or not to clean up the debts quickly or more slowly, the government must, surely, opt for the long term?
Otherwise, how will they win the next election?
AND there will be no long term if their debts stand at £2 trillion – and rising. (Including all those pensions and PFIs and Bank failures).

By: mikestallard

mikestallard — Thu, 23 Oct 2008 16:43:21 +0000

Why?
The taxation system takes 43% of anything you earn. People who are successful (except those in government) are called names (Fat Cats) and hated. You cannot even go on their yachts!
Every effort you make is blocked by some eejit with a clipboard and a sheaf of regulations.
The dear old Comprehensive system provides more eejits with rights, but they cannot either read or write! And it pays them to lie in bed.
The days when Watt marvelled at the kettle and went out to build a steam engine have long gone.
And then there's the EU…….

By: figurewizard

figurewizard — Thu, 23 Oct 2008 16:38:20 +0000

On the matter of banking lending to small and medium sized businesses there are two issues that will preclude any satisfactory solution to the problems of high interest rates and reducing loan levels for these. The first is that many such facilities are covered by personal guarantees, which usually means the family home. The family home however is a depreciating asset today and is likely to continue to be so for some time. Therefore the 'gearing' of the business becomes less attractive meaning that less and not more support can be justified. The second factor is that of judgement, or rather lack of it. Until the 1980s the business bank manager knew a great deal about his cutomers and their trade and was able to exercise discretion based upon this knowledge. Now however this function is largely carried out elsewhere in the bank, using systems that take little account of whether or not a particular company is likely to come through a bad time if their support were to be forthcoming. What Gordon Brown should be preaching at the moment therefore is for a return to a sound banking culture of the past but as he has never been exposed to business in his working life, this is unlikely to happen.

By: michael, islington

michael, islington — Thu, 23 Oct 2008 13:40:51 +0000

Suggest you take a look at the FT's Alphaville which reports on a blog called "Infectious Greed" which reports from Bloomberg which believes that most US and UK banks will end up owned by the state.

The reason? Never mind the securitised debt, it's all the home and commercial loans waiting in the wings and maturing to a stonking rancid state as we head into negative growth which the banks are going to find overwhelming.

By: not an economist

not an economist — Thu, 23 Oct 2008 13:35:54 +0000

I'd rather the BBC than the preposterous approach of Fox News in America. Their pro Bush stance on the economy is reaching ridiculous levels. I don't rate Obama on the economy either but to insist the economy is on the up despite the spate of bailouts, nationalisations and plummeting Wall Street shares seems daft to me. Wait till all that hits main street!

Yes thay are prepared to interview true mavericks like Ron Paul and Peter D Schiff, but the reception they get is terrible at times: Schiff is often shouted down (although he holds his own). Admittedly they are more respectful of Paul these days.

The closest to Fox News that we have in this country is Paxman. He has increasingly become a charicature of his old self. Quite why Heseletine didn't get up and thump him one last night when they were talking about the Osborne issue I dont know. Apparrently – accoridng to Paxman – George's error of judgement now is that he went on a rich man's yacht when others in the ocuntry are losing their jobs. Pardon me but wasn't Mandelson there? And I think Iain Dale said on his blog that Mr Brown has been on the same yacht at some point. And Rothy is a friend of Blair's. Pardon me (again) but have I just teleported into the middle of the Twilight Zone????? What is going on here????

By: not an economist

not an economist — Thu, 23 Oct 2008 13:24:41 +0000

Cheap money got us into these difficulties. A doubling of the money supply in just 5 years (based on M4) without the corresponding doubling of economic growth. That money had to go somewhere and there is very little evidence that there were offsetting movements on the demand side (for money).

Bankers played their role in this by developing dodgy financial packages – e.g. asset backed securities as a means of minimising risk. But that was a product of the excessively low interest rates which inturn fuelled the demand and supply for such products. What banks will put together loan products that emphasise prudence and caution when their competitors are providing cheaper souces of funds? Likewise adverse incentives for borrowers.

The market can work to our benefit if the right institutional arrangements are in place. And that doesn't mean excessive regualtion and state ownership. Rather a sound monetary policy that does not treat interest rates as the principle means of electoral bribery and which isn't narrowly focused on inappropriate targets (e.g., CPI) to the exclusion of more pertinent ones (e.g., asset prices).

I now see a Labour govt that is in its element. The "big excuse" they have yearned for has finally come: justification for the reversal of the pro-market reforms of the Thatcher era and advance beyond that aswell. The unrestrained glee on the faces of Labour MP's as they cheer Brown's nationalalisation plans to the rafters is evidence of that. The bullying of the banks is yet another step in that direction. Hayek's road to serfdom is quickly becoming a quick walk down a country lane. No thanks.