Sunday, 18 January 2009

Sunday news comments

1. Saving the (banking) world. Again.
As always, the news is full of another set of initiatives to help the banks lend. And, as always, the BBC's Robert Peston seems to be fully briefed by the Treasury in advance about what is going to happen. This must be news management: it obviously can't be a leak otherwise the Met would have arrested him for endangering the security of the country.

I don't like to comment on anything without seeing the details but it does look as though this will be yet another largely ineffective but complex initiative. It does not seem to tackle the main problem - making the banking system free of doubt. This can only happen if the bad assets are removed, and in a way which is not up to the banks to fudge. This might wipe out bank's existing capital - which would punish shareholders rather than taxpayers - but what remains will be good enough to enable new capital to be raised and would leave a banking system invetors can be confident in. Why hasn't it already happened? I would guess a combination of bank lobbying and Gordon Brown not wanting to admit that his Autumn exercise was a waste of time.

One part of the initiative, reducing the cost of the capital already injected will be helpful - but only by making what had previously been done effective. As always, too little too late.



2. Ken Clark.
Its very tedious to read about "senior conservative activists" objecting to Ken Clark's return. He may be lazy - Tebbit's view - but he's also credible, smart, a proven effective chancellor who bequeathed a good economy to Brown in 1997 and most of all someone who can relate to people. Who cares if he wants to join the Euro or sign up to a European constitution? Most people don't want to and the Tories won't follow that approach.



It can't be right to lock out good people simply because they occasionally say something embarassing or have different views.

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