I have looked at what was announced yesterday with regard to the management of the government's investment in the UK banking system.
Let's summarise what we get. We will now have UK Financial Investments Ltd, owned by the government, taking passive stakes in UK banks with limited management agreements in place, but with the primary objective of making a financial return. The whole structure is headed by a former director of one of the failed banks. It will be dominated by private-sector directors even though it is using public sector money.
What is this in effect? It is the replication of the failed private equity model of loan backed finance intended to make a quick buck for the investor by selling on the investment stake at the first possible opportunity without ever having really impacted upon the fundamental business model of the investment target.
This is a staggering neglect of duty by Alistair Darling and Gordon Brown. It is absolutely apparent is that the business model of these banks (indeed of all banks with investment banking arms) has failed the world over but the Brown solution, trumpeted as the salvation of the world's financial crisis, is to do a little financial fiddling on the side whilst leaving the fundamental cause of the malaise in existence and in abeyance for a year or two until normal abuse can resume.
I am staggered by the incompetence of this approach. I am staggered by the dereliction of duty to manage taxpayer money that it represents. I'm staggered at the failure to grasp the opportunity to reform that this situation represented. I am staggered at the failure of leadership. But most of all I am staggered at the sheer economic incompetence of it. Instead of taking this as an opportunity to add value within our failed financial system we are instead being told that public money, provided at taxpayer risk, is to be used to support continuing private-sector abuse of the world's financial, regulatory and taxation systems at enormous long-term cost to us all.
Whatever happens in the USA tonight, I'm depressed at the prospects of Britain. Brown and Darling are bad, and the Tories are even worse. What did we do to deserve this?
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
perhaps you should emigrate?
Alastair
So you advocate the policy of rats?
Interesting
Richard
no, more that if you don’t like it then you don’t have to stay 🙄
Alastair
You really do not get it do you? Democrats fight to change systems from within. It is only accountants, bankers, and lawyers who quit to go to tax havens to fight systems from without
Richard
‘Democrats fight to change systems from within’. Unfortunately it isn’t just democrats who do this. Taking over a moribund organisation is a familiar enough practice for any organised group with their own agenda that can be as remote from democracy as the New Labour Project. What happened to us was the taking over first of a moribund Labour party and then, having achieved power democratically, a moribund constitution and system of government.
‘What did we do to deserve this?’ Nothing. There were too few within the Labour Movement sharp enough and informed enough to stop a determined use of its Rule Book, old-fashioned and unreformed union and co-operative structures, combined with, effectively, the dismantling of the post War agreements from Heath onwards, by both Conservative and Labour governments. Now the current Executive, which has steadily cut off all routes to control over its powers by the Legislature or the rule of law, is identifying with the State itself. You cannot be surprised that many now seek a reduction in the powers of the state and particularly the fundamental power to raise taxes.
Brown and Darling are indeed bad. And to pull down the ‘Labour’ state regime we must redesign the state itself, for as you say, the Conservatives ‘are even worse’; merely hoping and manoeuvering for a chance to take and use the same irresponsible state for themselves.
And as you know and show from all you write, a major way of denying capacity to a government (or in our case state regime) is to deny it tax.
Richard,
A legitimate tact: stop putting ones faith in government and politicians!
Come on Richard, you are around this ilk enough to know what type of stuff they are made of….
richard,
i hate to say it but the dereliction of duty angle just doesnt make sense,
in every single case the fraudulent and deceitful have been rewarded, the financial elite increased their power and share through the ‘crisis’
incompetence, deriliction of duty, accidental,
i think not
[…] then you’ll know why Gordon Brown is wrong to trust a banker to lead the bail out of banks in the […]
Hi Richard,
What did we do to deserve this? The answer is – we spent money we don’t have.
Borrowing thousands on credit cards, borrowing far too much to buy houses, etc, etc.
Yes, it was irresponsible of the banks to lend that money – but loan and credit card offers can be filed – in the nearest bin.
M
do democrats also believe in free speech?
Yes, I do Alastair
But I also believe in the rights of editors
And I’m the editor of this blog