... sponsor on-line debates of such seriousness in this country? Can't be expensive. Not on-line. Come to think of it, will anyone sponsor a website on which such debates can be conducted? Because, you see, the present tumult and shouting will die (I am still voting present on what to do about the economic mess beyond saying tentatively, get rid of all politicians) but the need to understand politics at its widest will remain. The Right in Britain should be thinking about this but is not. The euro-weenies have partially retreated from the abyss, voting to phase in the ETS auctioning system for energy-intensive sectors. Instead of 100 percent in 2013, the "compromise" is that they will pay 15 percent for their EU carbon allowances, rising to 100 percent in 2020.Tuesday, October 07, 2008
The truth will out … but not here
In what will most probably be highly disputed testimony, Martin Sullivan (pictured), former chief executive of AIG, the collapsed insurance giant that had to be rescued by the US government, is saying that, "above all … mark-to-market accounting played a central role in the company's rapid deterioration."
That is according to The Financial Times which records written testimony released by Sullivan which we was set to deliver to a Congressional inquiry on the collapse.
Whatever comes out of the inquiry, the very fact of Sullivan's testimony adds to the growing weight of evidence that the mark-to-market rule has added significantly to the depth of the current crisis. And, since it also applies in equal measure here, it cannot be said that the UK or other European financial institutions have escaped the problem.
That the British media has almost entirely skirted the issue, leaving the public entirely uninformed, is an indictment of that industry. If the financial services industry had behaved as badly, we would have all been bankrupt years ago.
What is also so very instructive is that, while the Americans have gone about suspending mark to market after a massive public and media discussion, and via an instruction from Congress after a heated debate, we see the same action being taken in the EU by a committee in Luxembourg behind closed doors, with no public debate and without the issue even being put on the published agenda.
And when the decision is made, it is scarcely reported by the same media which could not even be bothered to find out that it was on the agenda in the first place. Is it a good move? We thought so but others may disagree. But no one here has been given a serious chance to debate it and it has not even been discussed on parliament.
It is all very well complaining about the encroaching rule of Brussels but, when our own media – to say nothing of our chatterati can only focus on our own domestic issues – and insist on seeing everything through the prism of domestic politics, it is hardly surprising that the "colleagues" get away with it. And when our own MPs are not even involved in what may be a crucial decision, it says everything of the state of our democracy.
In that context, we see Conservative Home at last taking an interest in the financial crisis. What is disturbing though, is that suggested actions – including those in the comments - is framed entirely in the domestic actions, around familiar UK politicians. Nowhere is there any recognition that much of the action today took place not in London but in Luxembourg. It seems that it is not only the politicians who cannot see the elephant in the room.
And will the finmin meeting be raised by the leader of the oppostion at PMQs tomorrow? I very much doubt it.
COMMENT THREADExcept …
They've done it! The Guardian reports, "EU says to relax mark-to-market accounting rules."
Banks in the European Union "will be allowed" to skirt an accounting rule blamed by critics for exacerbating the impact of the credit crunch and triggering fire sales of assets, EU president France said on Tuesday, the report reads.
"EU finance ministers agreed to change how the mark-to-market rule is applied in the third quarter so that European banks are treated in the same way as their U.S. competitors in the face of the worst financial crisis in 80 years."
The US authorities, adds The Guardian, "formally encouraged this last week to ease the pain on banks facing an uphill task to recapitalise." Encouraged?
Anyhow, this paper is the only one of the mainstream UK papers reporting the development. Forbes just mentions it but that's all you get. It remains to be seen whether the others even realise what is going on.
And whatever happened to Mr Cameron's idea that "Regulators should work with their European counterparts to address this difficult issue"? But then, I suppose, if he had written that the "EU finance ministers must consider it at their next meeting", that would have given the game away. And that would never do.
We're in Europe but not ruled by Europe, doncha know!
COMMENT THREADGroping …
That has all sorts of connotations, but that was how The Guardian describes the actions of the finance ministers in Luxembourg today, "groping for a confidence-boosting response" to the financial crisis.
We now learn that the hike to the deposit guarantee scheme was it, bringing it up from €20,000 to €50,000 but, it seems, even that was not achieved without a certain amount of discord.
The meeting, apparently, began with a figure of €100,000 on the table but some ministers demurred, arguing that such a figure was too high. The Swedish minister may have been one. His country has only just upped its limit to €40,000 and was not inclined to support another hike so soon after it had already made a declaration.
As to the rest of the "confidence-boosting” all we can rely in is a statement declaring: "The liquidity of the financial system shall be ensured by all authorities in order to preserve confidence and stability."
"Groping" may indeed be the right word. It goes along with that oft' observed phenomenon in what were once the corridors of power – group bondage, the thing that happens behind closed doors when, as they tell us, their "hands are tied".
But why anyone should think that this dysfunction group (pictured) could "boost confidence" is beyond imagining. Noting, however, that the Council'smain page on its website proudly announces the "European year of combating poverty," perhaps the only really constructive thing they can do is delete the word "combating".
At least then we will know where we stand.
COMMENT THREADWho will ...
Some sense
The MEPs have obviously come under heavy pressure, especially from Germany. Avril Doyle, the rapporteur admits, "The clear political message from us to the commission is we want these energy-intensive industries looked after."
However, this is not so much Armageddon averted as Armageddon postponed. The greenies are not going to give up that easily. Climate Change Derangement Syndrome (CCDS) is still rampant, not least in the UK.
COMMENT THREAD"Practically irrelevant"
We learn from the BBC that the finance ministers of the EU member states have agreed to raise the minimum level of compensation under the deposit guarantee scheme from €20,000 where it stands at the moment to €50,000.
That brought a comment from Robert Peston, the BBC's destroyer of banks and one-man rumour mill, that it was "practically irrelevant". He didn't mean it in a broader sense, but he is effectively describing the whole EU institution. Events have moved on so quickly that the EU is left floundering in their wake – as we see from the Icelandic situation where, as we have heard, thousands of British customers have had their online accounts frozen.
Actually, the BBC is being premature. The finmins haven't "decided" anything. The EU compensation scheme is set out in our old friend Directive 97/9/EC which means that all they can do is ask the EU commission to amend it.
No doubt the commission will oblige but, as a single market measure, it is co-decision, so the EU parliament must approve any changes, as indeed must the Council. How long that will take is anyone's guess. Perhaps even they can take short-cuts, as rules do tend to be flying out of the window these days.
You can get a sense of the disarray in the Council from what is described on the website as a briefing document issued by the Council presidency. If nothing else, it is a masterpiece of concision. You have to open up the document (it is only one page) to see the joke.
The picture shows Ms Christine Lagarde, French Minister for economic affairs, industry and employment – and also president of the finance minister's council. You can see that there is a fair amount of press interest but, apart from providing photo-opportunities, have the ministers anything else to offer?
COMMENT THREADAnother one behind
While the euro-weenies play their destructive little games in Brussels today, Tony Lodge writes in The Yorkshire Post reminding us of the forthcoming energy crisis.
If Britain's energy minister was a poker player, Lodge writes, he would look tired, worn out and increasingly desperate. His hand of cards would be dismal and though his excuse would be that he had been dealt a very bad hand, much of the blame would undoubtedly be his for not paying more attention to the game and being better prepared.
But Britain's energy predicament is certainly not a game, observes Lodge. It is, he declares, "potentially a national disaster with far-reaching consequences which could have been avoided with sufficient forward planning and investment years ago."
Read the rest of what Lodge has to say. He is, of course, dead right. But the trouble is that we do not have an energy minister anymore. We have a secretary of state for energy and climate change – where the greenie zealots coming over from Defra are going to swamp the energy wonks from BERR.
Given also that the Tory shadow Greg Clarke is not much better - his chief advisor being climate change evangelist Peter Franklin – we are in pretty dire straits. And then there is the malign presence of Zac Goldsmith hovering in the background.
This is a bit like busses really. If we ever get out of this financial crisis, there will be another crisis not far behind.
COMMENT THREAD
Tuesday, 7 October 2008
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