Tuesday, 30 September 2008

Did We Need To Nationalise Our Banks?

There hasn't been enough discussuion about whether the government really did the right thing in nationalising Bradford & Bingley as well as Northern Rock. Were there simpler ways out of the crisis? The Irish goverment has just offered to guarantee the deposits in all its main banks. That has much the same impact, but without all the drawbacks of nationalisations. Or the government could have just offered 25p a share for B&B stock in the market. That would have steadied the price. I have just been looking up the antics of some of the state-owned French banks for a column for Bloomberg. Credit Lyonnais ended up own the MGM film studio - fun for the bankers, but not muhc fun for the taxpayer. I suspect we are going to end up regretting this.

Wednesday, 24 September 2008

British banks

The Times are running my Bloomberg column this morning. Amid all the doom and gloom about the UK economy, it seems to be both Barclays and Llouds have done great deals for themselves. It won't be enough to save the British economy from recession - but at least the banking industry will be in good shape.

Sunday, 21 September 2008

Lloyds and HBOS

I wonder if the Lloyds-HBOS merger might not be Gordon Brown's legacy - it certainly looks to be the only thing of significance he has done so far as PM. But it won't be a happy one. In effect, he has allowed a private sector monopoly to be created. That's great news for Lloyds shareholders, but bad news for every one else. Brown clearly understand that competition is vital for a free market - so much for the great economist! Naturally, there were plenty of alternatives. The Treasury could have just said it would buy every HBOS share available at £2. That would have burnt the short-sellers and stabalised the share price. Instead, he panicked, and created a mess that will have to be unpicked another day. I don't think the public will buy into his 'I saved the economy routine.' In time, they will just notice that Lloyds-HBOS is acting a predatory monopolist and know who to blame.

Thursday, 18 September 2008

Short Selling

Listening to the BBC's coverage of the unfolding financial crisis, they appear to have become obsessed with short-selling. They are helped in that by idiots like Vince Cable, who is fast becoming the most over-rated politician since Gordon Brown (whom the BBC and much of the left also used to think knew something about finance - until they found out otherwise). But short-sellers are not creating the crisis. Indeed, anyone who was shorting HBOS as the price collapsed in the last couple of days will have taken a beating, as the shares are now above 200p again. No one at the BBC seems to understand this. As for calls to clamp down on short-selling, that isn't so much shooting the messeneger, as deciding to suffocate the messenger under lots of pointless red-tape. It is completely irrelevant.

Wednesday, 17 September 2008

The Taliban's Finances

It's surprising given that Britain is fighting a vicious war in Afghanistan that so little attention is paid to the Taliban, the enemy it is taking on, and where it gets its money from. There is an excellent piece in the Telegraph today discussing precisely that. The opium trade is keeping the Taiban rich, and that means they have plenty of weapons and plenty of troops. At some stage, the British are going to have to try to deal with that. Which is where the plot of Death Force starts...the attempt by the British to cut off the flow of money to the Taliban.

Monday, 15 September 2008

Gordon Brown's Cones Hotline

I suspect that his proposals on loft insulation may well have finished off Gordon Brown. He spent the whole summer briefing that he was going to re-launch in the autumn and then...well, he came up with a fiddly scheme to give people a discount on their lagging. It is hardly surprising that even his few remaining supporters lost the will to live. It is a rather like the cones hotline in the dying days of the Major administration - a decent enough, well-meaning idea, but completely devoid of the inspiration needed to save a government. In many ways it's a shame. I was looking forward to the beating Brown would take in an election campaign. But it's hard to see him surviving now - particularly when you think about how awful his conference speech will be.

Saturday, 13 September 2008

Stephen Green On Banker's Pay

The BBC is letting the Stephen Green get away with a little too much organised hypocrisy today. The HSBC chairman is complaining that extragant bankers pay may well have contributed to the current financial crisis. It is a fair point, if not a very original one. But hang on. Is this the same Stephen Green who allowed HSBC to go on a massive hiring spree to beef up its own not-very-good investment bank? That wouldn't have done anything to push up pay and bonuses would it?