Britannia Radio

This sums it up and exposes Brown for the disastrous charlatan he 
is.  He is like the fireman who joins the brigade because he loves 
fires,  so for better enjoyment he starts a few!

He's a dangerous man right now because he's mortgaged our country's 
whole future to restore his reputation.  He took the only course 
offered to him - at least by his advisers - and now seeks the support 
of the people for saving them from the very catastrophe he created.   
Voices are already being raised to question the whole package which 
has been assembled.  Britain has lived off the preeminence of the 
City for many years.  That preeminence is in dire peril today .

Yesterday we had the highest inflation figures for a very long time 
and today we have -- "The number of people out of work in the UK rose 
by another 164,000 between June and August, to 1.79 million, 
according to government figures." (BBC today) .  There'll be more of 
those figures soon.

Brown has re-employed all the nasties who slid away from the Blair 
regime including the utterly vicious spin merchants.    The dirty 
tricks they tried on Osborne (which I sent out in the wee small 
hours! ) were  NOT about Osborne at all.  They were about Alastair 
Campbell, refreshed after a rest,  coming back and causing the usual 
nastinesses and the usual filth.

xxxxxxxxxxx cs
===========================
THE TIMES   15.10.08
1. If this is a triumph, I'd hate to see a disaster
Gordon Brown seeks to avoid blame for the bust. He can do that only 
if he admits that his boom was always an illusion
Daniel Finkelstein

I didn't make up what I am about to tell you. I promise you I didn't. 
I only provide you with this assurance because the comment I am about 
to report is so ridiculous, your first thought will be that I am 
having you on.

My first thought was different. It was that I could get a publishing 
deal for a book entitled 101 Shockingly Idiotic Comments. The only 
work now required is to find another 100 remarks that are anywhere 
near as idiotic.

On Saturday the results of an encounter between the journalist 
Allison Pearson and Gordon Brown were published. After a load of the 
usual stuff about eating cold lamb chops with his children and so 
forth, they finally get down to business. Pearson asks if the Prime 
Minister "if he has any regrets about his boast: 'No more boom and 
bust'".

And here is his priceless reply: "I actually said: 'No more Tory boom 
and bust'." Yes, that really was what he told her.

What is the best route to go down with this? One is the "how on earth 
does he think he can get away with such a barefaced lie" route. He 
repeatedly pledged that there would be no more boom and bust without 
mentioning the Tories. He did it all the time. And so did his mates.

The second route is the "excuse me while I fall about laughing" 
route. Mr Brown is the king of the cat ate my homework excuses but, 
even for him, this is risible. If he had said that he would do away 
with Tory boom and bust I think voters would have been entitled to 
conclude that he intended to do this by getting rid of boom and bust, 
rather than by retaining boom and bust and getting rid of the Tories.

I intend to go down the third route. Which is to take him seriously. 
Because I think that when you do that, the real truth of the events 
of the last month becomes clear. This has not been a triumph for Mr 
Brown, it has been a catastrophe. It is said that he is having a good 
war. I think this success is confined to the fluency of his signature 
on the surrender documents. He is having a good war, in the same way 
that the Kaiser had a good war. Some of his supporters argue that the 
last week has been his Falklands. True. And he is General Galtieri.

The serious argument that Mr Brown was trying to make is that the 
situation we are in is at variance with the economic cycles of the 
1980s and early 1990s. In other words, that the boom and bust we are 
in is not the "old" boom and bust. So, strictly speaking, we are not 
"returning" to the boom and bust "of the past". We have a new boom 
and bust.

The old boom and bust consisted of rapid fluctuations, with medium-
sized boom followed by medium-sized bust. This time we have had a 
long period of growth, followed by a bust so bad that it has almost 
destroyed the financial system. And if we accept this idea, it means 
looking at the past decade anew.

For the past ten years the Government has been boasting of the 
stability it has brought to the economy, of the growth it has seen on 
its watch, of low interest rates and of the money it has been able to 
spend on public services. And this narrative has, generally, been 
accepted. Yet now this record appears very different.

In his book The Black Swan, the financial analyst Nassim Nicholas 
Taleb provides a useful analogy. In the months before Thanksgiving, 
turkeys begin to build up a theory about mankind. Man is benevolent. 
Every day he appears with more food, and the turkey is allowed to get 
fatter and fatter. And then, about a week before Thanksgiving, the 
turkey will, as Taleb puts it, "incur a reversion of belief".

Our view of the Brown decade is like the turkey's view of mankind, 
utterly destroyed by what has now happened. The stability was a trick 
of the light, the lengthy period of growth was fuelled by house 
prices and debt, the low interest rates (of which Brown is still, 
amazingly, boasting) were an error. The length of the good years is 
being paid for by the severity of the crisis we now face.

As for the money spent on public services, Taleb has a story that is 
a useful analogy for that, too. He tells of his period working for 
the Bankers Trust and how every quarter they would boast of profits 
and of "how smart, profitable, conservative (and good looking) they 
were". Then Taleb adds: "It was obvious that their profits were 
simply cash borrowed from destiny with some random payback time."

And the same is true for the huge increase in spending on public 
services on which the Government embarked over the past ten years. 
Every quarter it boasted of how smart, profitable and conservative it 
was. But it was money borrowed against the future, on the assumption 
that a crash would never come. It was borrowed from destiny and the 
random payback time is now.

Gordon Brown is enjoying himself so much at the moment that it is 
sometimes hard to recall whether the aim of the exercise is for him 
to save the banks or vice versa. But to have to spend billions of 
pounds of taxpayers money to save the entire British banking system 
from collapse is an odd sort of triumph, I have to say. There appear 
to be some people who regard it as a victory that the Chancellor was 
sitting up until two in the morning hatching a desperate last-ditch 
plan to save the whole economy. But this description isn't one that 
flies to my lips.

There is room for plenty of argument about whether the crisis could 
have been averted by better management. But this is almost beside the 
point. What matters is not whether the bust was avoidable. It is that 
the preceding boom was illusory.

The idea that boom and bust had been abolished was not a small claim 
among many. It was the central claim of this Government. It was the 
boast of boasts - the boast upon which all other boasts were built. 
And now it has been revealed as totally empty. Not triumph, then. 
Disaster. Not victory.

Total, utter, dreadful defeat.
===================AND ---->
2. How they managed to botch the bailout
The Bank of England has a lot to answer for. The competitiveness of 
British banks has been ruined
Tim Congdon

Is the Government's rescue programme beast or beauty for Britain's 
banks? The leap in share prices has been beautiful for short-term 
investors in the stock market. But a strong case can be made that the 
Government has been beastly to the banks, with dangerous long-term 
consequences for our financial sector.

What effect will the Government's actions have on the structure of 
the British financial system and, in particular, on the international 
competitiveness of the City of London? In a recent speech Paul 
Tucker, an executive director of the Bank of England, referred to a 
"social contract" between the Bank and Britain's commercial banks.

The heart of that contract used to be the lender-of-last-resort 
function. When a solvent and profitable British bank had difficulty 
funding its assets, the Bank of England was supposed to lend freely 
to that institution at a penal rate. The rate was to be high enough 
to encourage early repayment, but it was not to involve any attack on 
shareholders' rights.

Britain's bankers have been greedy, naughty and irresponsible in the 
past few years. Well, bankers are greedy, naughty and irresponsible 
everywhere and at all times. For all their faults Britain's banks are 
not insolvent or unprofitable. At the end of June this year the book 
value of the much maligned Royal Bank of Scotland's equity was more 
than £60 billion, while the total profits in 2007 of the eight 
institutions negotiating with the Treasury last Tuesday night was 
about £40 billion.

When the Northern Rock crisis broke last August, the Financial 
Services Authority responded appropriately. It tried to marry 
Northern Rock, which could not fund itself in the wholesale markets, 
with Lloyds TSB, which had a strong network of retail branches. But 
Lloyds TSB was worried that even the retail network might not be able 
to raise enough money, and sought to borrow from the Bank of England.

This would have been a classic lender-of-last-resort arrangement of a 
kind that the Bank of England had undertaken before. Alistair Darling 
is said to have vetoed the facility on advice from Mervyn King, the 
Governor of the Bank of England.

Since then King has insisted that it is not the Bank's job to provide 
long-term finance to Britain's banks. He seems to have repudiated the 
lender-of-last-resort role.

The damage to confidence has been done. The world believes that 
Britain's banks are bust or semi-bust, whether at the last reporting 
date (end-June 2008) they had shareholders' funds of £200 billion or 
not. The British Government seems to agree with the world that 
organisations with capital about three months ago of £200 billion may 
be bust, and has decided that these organisations must raise more 
capital if they want to access the Bank's facilities.

Potential private investors cannot overlook that this year the 
British State has nationalised two banks (Northern Rock and Bradford 
& Bingley) without their shareholders' consent. If the British State 
can bully banks to take actions that neither their management nor 
shareholders approve, isn't it understandable that the capital 
markets are reluctant to put more money in?

Banks are forced into the hands of the State. Superficially the 
"preferred capital" made available last week was rather like a long-
term lender-of-last-resort loan, and optimists might say that the 
Treasury was performing a role that used to be the Bank of England's. 
The trouble is that the preferred capital was also poisoned capital.

The banks could access it only if they also handed over to the 
Government chunks of their equity, the £200 billion or so that 
belongs to their shareholders. As with Northern Rock and Bradford & 
Bingley, the Government is determined to drive a hard bargain. Its 
rhetoric is that the bankers must compensate the taxpayers for any 
rescue funds.

The trouble here is that British banks compete head-on with banks 
from other countries, where the governments are being more lenient. 
In the US the Bush Administration is avoiding nationalisation. A fair 
bet is that the nine banks identified as beneficiaries of yesterday's 
American package will be set softer terms than their British 
counterparts. In sharp contrast to the Bank of England, the Federal 
Reserve is lending on a massive scale for periods that may extend 
into a few years. It is acting as a lender-of-last-resort 
aggressively supporting America's banks.

Two conclusions cannot be avoided. The first is that it would have 
been better if the Bank of England had reacted to the recent troubles 
in the same way that it did, so brilliantly and effectively, in past 
crises. The support should have been pre-emptive and low-key, and it 
should have come as a traditional lender-of-last-resort loan. It 
ought to have been unnecessary for the Treasury to offer the strange 
mishmash of "money" that is now available on semi-confiscatory terms.

Secondly, the international competitiveness of Britain's banking 
industry is being destroyed. Nationalisation will cause undue caution 
and rigidity in banks' operations, while talented and experienced 
bank executives will seek to work elsewhere. In many cases they will 
emigrate.

New investors in British banking will be reluctant to come forward 
when the Government tries to privatise the assets it has taken from 
banks' existing shareholders. In the past 20 years Britain's economy 
has led the world in one, and only one, activity: international 
financial services. That leadership - and with it the prosperity of 
the City of London - is now in extreme peril.
-----------------------------------------------

Tim Congdon is an economist. He was a member of the Treasury Panel 
(the so-called "wise men") that advised the last Conservative 
Government.