Archive 2
Vision and Commentary
The following postings are from Margaret's thoughts on the progress of the global financial crisis and anything affecting it. Most will have updates on her commentary and vision, which is often prescient and indicates an ability to keep in touch with the economic times.
3rd October 2010
Your headline (George Osborne needs to 'go positive' for business') expresses it very well, Kamal. We need an impetus to build on this, especially for small and medium-sized business. The argument on deficit reduction seems to have been generally won and will soon begin; so growth should now have its turn. We have a start with the Banking Taskforce Report coming out soon, (early October, not seen when), the small business lending bank proposed for early next year and the White Paper on growth later this Autumn. Your suggestion, inspired by Joseph Stiglitz, on tax incentives could also be considered. America got its small business lending bill through and signed. I'm still with the optimists. Let's get positive on growth.
21st September 2010
I imagine the Banking Taskforce Report in about ten days will provide answers on increased lending through eased criteria, allocated funding etc. It's what people will be expecting and there is considerable focus on banking at present,with the IBC officially starting off on Friday. The former Chancellor recently said he was not sure his levy had worked, but it was decided and it was done, which is the thing that mattered. America is leading the way on this issue and hopefully we will follow.
31st August 2010
Thank you for giving prominence to this article in the FT (Cheer up Britain in the Periscope Post). Confidence is so important when facing uncertainty. It can make all the difference, as can those whose decisions have the ability to alter things for the better. One area in which positive action can raise confidence levels, is that of job creation. This highlights two events pending: in about four weeks, perhaps there will be earlier indications, the financial task force set up in the UK will report on, amongst other things, the recommendations relating to liquidity and funding to business finance (SMEs); and next month, in the USA, the already funded small business package will hopefully come through to the legislature. Both are potential confident boosters and very important nationally.
On the 4th September Bloomberg reports Presidet Obama is to roll out 'new ideas for boosting growth and hiring' week commencing the 6th, including tax breaks for small business, new spending on infrastructure and again 'urged Congress to pass legislation to help small businesses'.
24th August 2010
A very interesting article from Ambrose Evans Pritchardin the Telegraph. It seems to me, looking in from the outside, that when you are restructuring a country's economic basis to reduce a significant deficit, perhaps by going from state consumption to private sector production, it needs a strong element of balance: cuts and growth, reduction and stimulus. On one side, smoother and less business regulation, infrastructure projects on line, QE available, free flow of credit to SMEs, stimulation of housing and construction etc; the bigger pie as one commentator said (Niki); and on the other, workable fiscal tightening, and the streamlining and efficiency, advocated by other posters. Both theories seem valid and should find a way of working together.
On the 27th August, Michael Casey said in The Wall Street Journal that 'they make it near impossible for the Obama administration to carry out the nuanced policy stance demanded of it, one with which it should administer more short-term stimulus but also implement fiscal reforms that bring down long-term future deficits.'
21st August 2010
Back in June, Alex Spillius and Bruno Waterfield reported that the core members of the eurozone were working on a plan for the whole system. Already commentators are referring to 'peripheral' members, so it's extremely interesting, and as I suggested ideas for restructuring and devaluation in May, I'm a keen observer. Telegraph article.
10th August 2010
Very interesting and informative comments on Jeremy Warner's valuable article. Am I right in thinking the agreed QE has now been used; or is the £l.5 billion referred to still remaining? If it is, or a further amount can be made available, this would be an apt time for a concrete sign of movement towards funding viable SMEs. The Banking Task Force has been set up formally now and it will be working with the Bank of England and others, and reporting officially in early October, so why not an immediate sign of the effectiveness of this highly important initiative. A funding mechanism for viable SMEs provided by the BoE and the Banking Task Force equally, with a workable agreement on criteria. It would be a most positive indicator of cohesive intervention for growth and provid vevy useful data for the report. Telegraph article.
1st August 2010
It's always good to hear both sides of a debate and Barclay's lending approvals on larger businesses, probably typical, as the article says, seem very acceptable. However, it is plain, from reading The Telegraph viewpoint column today, that lending to small and medium non financial businesses fell by a considerable amount (£7.7billion) in June, which I find confusing. On the one hand, we have small and mid-sized businesses saying they can't borrow and on the other, banks claiming they are failing to come forward; and I can only ask whether the criteria for successful applications have increased and gone outside the usual parameters, compared with previous years, and thus created a strong filtering process. Naturally, banks have to ascertain that they are lending to viable companies, that's a given, but in the understandable anxiety over the financial crisis and new regulation, have the criteria strengthened so much that they are threatening the growth we so badly need, especially come next year, when as Kamal says, all sorts of difficult things are going to happen? Is there the opportunity for a compromise here? Perhaps the criteria on small and medium sized business loans could be loosened to a workable and safe level and be paid for (capital adequacy regulation taken into account) by reducing bonuses etc correspondingly. It would be hugely popular to see the banking system joining in with the immense effort the country is going to have to make. Otherwise the 'perfect storm' is on the horizon, but there may well be action before it comes too much closer.
On the 9th August, James Hall reported in the Telegraph that Banks chief was setting up a task force to examine lack of lending.
26th July 2010
I tend to agree with robertcookson's comment and take a more positive view. Roger Bootle is right, the test is coming - he is a major economist - but there are alternatives which could affect negative forecasts. VAT may be absorbed by retailers etc, or partially so, and by January, the country may be engaged and maintain purchasing levels; and the reduction in the public sector will be handled astutely. Ideas and proposals are teeming outside finance; so nothing is settled yet. I'm with the optimists - you have to create the playing field to ameleliorate difficulties, encourage business and make good things happen.
26th July 2010
The Scouts Entrepreneurs Badge seems an inspirational idea by Richard Harpin, which hopefully will spread into education, as Kamal suggests. When I read his article, it made me wonder whether the Badge could be seen as a forerunner and symbol of a rapprochment between society and the financial/business sector. I can feel the times changing as I interact with local authorities, government agencies, entrepreneurs, large companies, and listen to what ministers are saying. If we are going to have a powerful partnership between Government and Society, and I think we are, then referring to Kamal's articles of the 2nd and 15th of this month, it would be good for the financial and business sectors to be on board and in return, as is happening with increased growth, the UK being a very good place for business. Originally an email.
Positive feedback in several areas with this posting.The increased growth forecast was included before the official figures came out, but the size of the growth was surprising.
23rd May 2010
Jeff Randall's article caused a lot of thought and hundreds of comments. Perhaps the eurozone may adjust its structure as he suggests in response to the present situation. One possibility could be a modified system, a new capability; a central core perhaps with an outer ring to which member states in difficulties could withdraw so that they might restructure and devalue in good order with the agreement and support of the majority; and be the first in line to re-enter the inner core when they conform to the necessary critera.
On the 16th June 2010, the Telegraph had an article by Alex Spillius and Bruno Waterfield saying 'Gemany and France are examining ways of creating a "two tier" euro system to separate stronger northern european countries from weaker southern states.'
28th February 2010
It was heartening to read in Bruno Waterfield's article that Michel Barnier says he is no threat to the City and according to his aide, does not see the need for a single European regulator. Consultation and co-operation is only way forward in this particular financial situation. We are a separate currency and not part of the Eurozone and therefore, not obliged to support regulation being drawn up for submission to the G20 unless we agree to it.
This commentary was posted on an article by Bruno Warerfield. On 1st March 2019 Tim Geithner, US Treasury Secretary expressed his concern to the European Commision about its proposed regulation. Source Financial Times.
19th February 2010
Read the comments with interest, including your own. Your latest subject for debate seems rather frightening, Kamal. Well, it frightened me. Considering the borrowing figures last month, and the fact the euro situation hasn't unfolded properly yet, and the rating setters are watching, it would be most unwise not to use the opportunity to set out the broad picture of the cuts in the budget. It is not really significant to the immediate situation that there might be another budget in June 2010. We need confirmation next month that we have sound proposals for dealing with the deficit. As to when the cuts start, how deep, how long, etc, all the subject of even more intense scrutiny today, the 19th Feb, both sides are right. The economic situation will write this story. Say the 20% VAT is decided on, as seems likely, then it could be given an Autumn benchmark for its commencement,but as has been done before, it could be moved back to January or forward to June, as the economic situation demands. But the ability to do this would be in place and signals given in the right quarters, 12 billion or so in a year. Similarly, public sector cuts which have already started, could be more broadly delineated e.g. over a period of a parliament, there will be reductions of say, 17-20% in the following departments, 50% in quangos and streamlining of protected departments, without realtime rises, starting towards the end of 2010-11. We have to have a plan as everyone is saying; both for reduction and job surge, to which end, infrastructure should be kept on line, regulation should be smoothed (started today in housing), house building encouraged to advance, companies should get their financing, banks should be formally instructed to make this happen, interest rates should be kept as low as possible and QE should not be closed. Procrastination is not the answer.
Ian McCafferty of CBI, said on the 19th February at 3.35pm, 'The government must set out a clear, robust path that will return the budget to balance by 2015-16......... This is more important than a debate about the precise timing of spending cuts, which will depend on the strength of the recovery. '
12th February 2010
As the Eurozone say, it is their responsibility to deal with this issue. It does, however, have potential significant ramifications outside the zone and it was a little surprising that they did not ask the IMF to transfer from advising Greece to an official Eurozone monitoring role on the situation, or consider bringing forward some of the structural funding as a first measure. It would not be as large a commitment as bailing out and yet would indicate definite action, which the markets seem to be seeking. Then the situation could be watched carefully by Eurozone and IMF and taken from there; which hopefully, would provide a breathing space for the other countries with similar, but not quite as urgent issues.
The EU, European Bank and IMF monitors were working together in Greece from 22 - 25th February 2010 (AFP).
30th January 2010
Whilst it is always wise to consider new concepts carefully, countries should draw up regulation and fiscal proposals according to their particular situations; some will find common ground, others take another route, but all will conform to the same principles embodied in the G20 agreement on global regulation.(17th March 2009 in response to Andrew Lilico) Similarly, interest rates in stable times may well be subject to guidelines whereas in extraordinary times, they may well be responsive to the prevailing situation, since each month requires individual scrutiny. We have our proposals and they are appropriate to where we are and what we have already done; stability in the markets is essential and concentration on recovery and paying down the deficit.
This posting was in response to Louise Armistead's article on American bank reforms. On 29th January, after the Davos meeting, Deutche Bank AG CEO Josef Accermann said 'on many aspects we found common ground' and Larry Summers, director of The White House National Economic Council, said 'although there are global rules we followed what we percived to be the best approach, other countries have different approaches.
11th January 2010
Roger Bootle has made a significant point. The country's wellbeing is closely tied to coming to coming out od recession, hopefully attained, staying out of recession and moving firmly and confidentally into recovery and growth. It is so important to keep unemployment as low as possible, interest rates low, infrastructure projects on line and to encourage growth in small and medium companies, new start-ups and enterprise in general; and to consider tapering in bringing in cuts and taking out stimulus measures. Cuts and tax rises are equally as important as securing recovery, but they are not quite as immediate. They should be laid out soon and will be, but they should be near future committments. The first three quarters of 2010 should be protected from decisive action in reduction; and all of the year, if economic circumstances allow, but cuts should be ready to be brought forward if necessary in October and the economy should watched as closely as it was and is with QE. VAT going up to 20% and appropriate departmental cuts, 17-20% as have been suggested, should be on the table along with other radical proposals for the public sector. When the idea for the protected departments was first raised, I imagined that schools, policing and health would have no cuts, but would be streamlined, gaining the advantage there. Perhaps departments that are going to bear the brunt of the cuts should be permitted to suggest one or two important, but comparitively low cost projects or programmes that could be allowed to go forward; the funding could come from part of the bonus tax and would be very supportive and appreciated.
This commentary was written in response to an article by Roger Bootle, who is Managing Director of Capital Economics, Economic Adviser to Deloitte and Specialist Adviser to the House of Commons Treasury Committee. On January 19th, Mervyn King, BoE Govenor said there is 'perfectly sensible debate' on when emergency help for the economy should end and on tackling public finances (the deficit) ' the Chancellor has made it clear that the Spring Budget provides the opportunity to do precisely that.' Unemployment figures fell on the 20th January 2010.
5th January 2010
I'm more hopeful than Damian Reece; I think in due course, there will be specific proposals for dealing with the deficit; and if one party provides them, the others will follow.
After the 6th January Lord Mandleson and Alister Darling both said there would be cuts to reduce the deficit. This commentary was moderated.
27th December 2009
Dr Nazir-Ali's article was very thought-provoking and the comments as interesting. I feel we are approaching an ethical election campaign, led by the examination and debate of policies and principles. We have been through too difficult a time for it to be otherwise. We are about to enter a less selfish and more hopeful era, after leaving a decade of excess, and a series of radical transformations is on the horizon, not least in the relationship between governance and people.
14th December 2009
I found your article very informative and reassuring that there is someone else and an important someone at that, who is not overwhelmed. I too believe that with determination and direction we can get through this and build for a better future. The City is and will remain a global centre. Perhaps it might be appropriate to confirm that the windfall tax is a one off. It's an interim measure before FSB global regulations come in, to mark where people feel the responsibility lies for the financial crisis, apart from the human tendency to excess; and it also shows the depth of intent to prevent it recurring. The banks are very resilient; already they are coming to terms with this; and I feel sure that Europe in addition to France, will work towards uniformity; and perhaps America too. It's happened, so hopefully we will have a level playing field. For the rest, let's hope we go for growth as New Year recovery takes off. There are things in place, construction for one is about move even more. And yes, our services are needed globally and we do have a flexible workforce as you say. Perhaps a budget at the end of March, which sets out the cuts, difficult politically, of course, but it would reassure rating setters. Even if government changes in May or June, the present government could say that they didn't flinch under what has been a terrible responsibility.
This commentary was in response to Roger Bootle's article in The Telegraph of the above date. Roger Bootle is Managing Director of Capital Economics and Economic Adviser to Deloitte. On the same day, Lord Myners, City Minister, confirmed that the bonus tax was a one off and that the Government was committed to London retaining its Global Financial Centre status. On the 16th December, France joined the bonus tax and on the 18th December, Deutsche Bank, Germany's largest bank, said that its employees globally would share the 50% tax. In his New Year's message, Gordon Brown said 'our strategy is to go for growth.' and believed there would be a Spring budget. Alister Darling also said there would be a (March) budget a few days later. On 14th January, President Obama issued proposals for a Financial Crisis Responsibility Fee.
10th December 2009From a general viewpoint, perhaps the banks should absorb this one off tax. It would show solidarity with the country which is going to be asked to shoulder a great deal. And the level playing field may well be there. This has the potential to spread. There is symbolism in it and other zones may seek to make this gesture. So perhaps the banks will show stoicism and be calm; and as we go into recovery, business will receive that extra confidence it needs.The PBR was sensible. We should be aiming for stability for the first half of this coming year. Cutbacks and other measures can wait a while; we know they need to be deep and we know they are coming, so we should be stronger to face them.
This commentary was entered on Kamal Ahmed's Thursday debate site. Kamal Ahmed is the business editor of The Sunday Telegraph. After Kamal Ahmed put up his question for debate that afternoon, PWC made a very interesting response, it encouraged me, for one, to reply and 40 minutes later Goldman Sachs issued a statement, saying their Board and high flyers would be deferring their bonuses. On the 9th December Kamal Ahmed had an exclusive interview with Barclays on similar subjects and in a similar vein, which was a front page column a few days later.
4th December 2009
Yes, this does need dealing with quickly. Like a lot of people, I've read some of the Wall Street blogs, and in this position, I would look for a compromise. It's possible to see both sides, but above all, the importance of the City comes first - we're going to need it. But doing nothing would lead to even more contention. So, one idea could be to work out by what percentage, RSB failed to meet the targets set out for lending to business. Say it is twenty percent,then, having agreed the general size of the bonus pot with them, perhaps dividing it into general bonus and highflyers bonus; and allowing in the latter case for a figure that a twenty percentage reduction doesn't make too small, then perhaps that twenty percent, or whatever figure it proves to be, could be deducted from those who are at a certain level, not medium level dealers. Sanctions would be seen to have been applied which is only right with a company in over eighty percent public ownership and the whole thing could move on. If the board and those they have to consult at a high level were not agreeable to this or some other suitable compromise, then regrettfully,they might feel they would have to do what they have said. This would send messages of both sorts, good and bad and is better not attempted.
This commentary was entered on Kamal Ahmed's Thursday debate page of the above date. On the 7th December, the Treasury issued a statement which said that RBS hasd agreed with H M Treausury the structure and principles applicable to the 2009 bonuses. Other reports suggest that there will be a significant reduction in the bonus pool.
29th November 2009
A very absorbing article by Matthew d'Ancona. As a community lobbyist, I shall be interested to read the ideas and concepts expounded by ResPublica. I also think community should be important to policy makers and I'll be interested to see where people like myself and Phillip Blond part company e.g. I also have trouble with some of his ideas on capitalism. Although not an academic, and there were points about thinkers and doers in the comments, I have been working for years in some parts of the field Phillip Blond is anticipating. I was recently in London lobbying for a major community project and taking the opportunity to exchange views on some aspects of the neurobiology of the dealing room with an eminent and very helpful expert on the subject, which was fascinating and aided my ideas on the bonus culture. Yes, this is a hugely important time, both for academics and those putting ideas into effect. It's a watershed and perhaps the twenty first century will be for the people.
This posting on Matthew d'Ancona's article had a heated response from a fellow poster.
29th November 2009
This posting which was entered on James Kirkup's Telegraph site, concerned the new financial EU Commissioner, Michel Barnier, and concerns about the City. This posting was moderated and will appear at a later date.
28th November 2009
This posting on Gill Hornby's Telegraph site hoped America would intervene in the case of Gary McKinnon. Posted at 2.49pm. On the night of the 29th November, Nick Clegg sent a letter expressing the same sentiments to the US Attorney General, Eric Holder. Posting to be entered later.
12th November 2009
The PBR will probably be structured,innovative and have a radical outlook, whilst acknowledging that recovery will need nurturing all through 2010. Departments will be streamlined, the first cutbacks will be indicated - the months to the Budget will make this clearer - and tax increases will be anticipated, probably for 2011. In return for working through this degree of austerity, people will expect the banking sector to be on board. The G20 has laid down the global ground rules for bonuses and the running of the financial sector and surely, banks won't see their dealers and other employees turning their shares into cash within two or three months, when they could wait a respectable twelve and show solidarity with their country. Should there be attempts to circumvent areas of the general agreement, then taxation should be applied.
This commentary was entered on Kamal Ahmed's site. Kamal Ahmed is the Business Editor of the Sunday Telegraph. The Pre Budget Report is due on 9th December. Kamal Ahmed was given an exclusive interview with Alistair Darling and published 15th November. In Gordon Brown's New Year message he said that the recovery needed to be nurtured.
1st November 2009
I enjoyed Janet Daley's article marking the twenty year anniversary of the tearing down of the Berlin Wall and agree with her that capitalism has not collapsed, saying so on the 17th March 2009 - 'Capitalism isn't dead; it's experiencing a huge correction.' A correction that is now enabling a more responsible form of capitalism, that takes account of the human tendency to excess, to emerge from the recent trauma. Like Janet Daley, I think capitalism 'was badly served' and the UK was greatly affected because the crisis is mainly financial. The UK is a global financial centre and because of this, had the initiative and ability to trust capitalism and sign post the way out of the crisis. In light of these circumstances, it doesn't seem surprising that we appear to have been overtaken in the recovery process, but we will recover soon and a major dispute, like Royal Mail, must be settled before it affects the confidence that makes recovery more certain.
This posting was entered on Janet Daley's site. An interim agreement was reached in the Royal Mail dispute on the 5th November 2009.
11th October 2009
I believed global regulation would ensure that no one set of regulations, whilst taking into account an economy's circumstances and needs, would advantage, or disadvantage an individual financial area. But it now seems that the draft directive, AIFM, is seeking to put into effect rules that would cause disadvantage to certain areas, notably the City. Let us hope that this is caused by the understandable need to get this much required regulation generally in place and that this draft directive will be reworked.
This commentary, which appears on the Telegraph's Ditch The Directive site, is only part of the commentary in response to Karmal Ahmed's Sunday Telegraph article of the above date. The general concept of the whole commentary is similar to that expressed in the European Parliment's report on the subject on the 6th November 2009.
23rd September 2009
An interesting article by Mary Riddell and a lot of reaction. The G20 starts soon. It's at the beginning of the conference season, which this year is being played out in the context of the recession. I think the climate deal will make progress and the global compact will yield good results. The markets with their talented dealers have a born to win ethos. It's their nature; and this highly important G20 will create the global regulation, which will not hamper progress, but make it more effective by enabling sustainability in the financial world. The city shouldn't be too strictly confined, or any other financial system. Enforceable global regulation will give protection to economies and within these parameters, the financial sector should be allowed to work and make money. We're going to need it as much as we are going to need courage to differentiate between what is expendable and what is necessary. Health care, education and national security seem necessary and should be streamlined and efficent,but the the magnifying glass will come out for the rest in 2010-11 and departments will be looking for spending we can manage without. There's going to be an important opportunity for restructuring, for new ways of thinking and individual responsibility. We will have to be bouncing with ideas so that cuts can be ameliorated through efficency and parties may have to reconsider long held beliefs.
29th August 2009
Most commentators are saying that the bonus culture needs discipline; some are suggesting capping, deferring, freezing out, shares, automatic subjection to scrutiny, or any combination of these; the financial experts would have to work it out, but I don’t think further taxing would help. I’d like to see some form of global ‘traffic light’ system like the one we have for the roads. Green would be for general dealing and decisions, for the majority reliable and productive process; amber, for the gifted dealers, those whose track record inspires confidence that flair is coupled with responsibility; and red, well, ideally,there wouldn’t be any red in this arrangement, but the line denoting it would be very apparent. The overarching rules for the global economy, hopefully being drawn up by the FSB and about to be discussed, could contain this concept as an enforceable central plank. Under this concept, there would reasonable competition but no biding wars for talent, because the limits would be there and packages would have to be creative, using the above options, with no huge amounts greatly disproportionate to salary, immediately on the table. The financial sector would be protected, economies would be protected from excessive risk taking and the ethos of the finance industries would be one which uses sustainable means to make profit and tax revenue.
Responsibility for drawing up the framework of the Global financial regulations was given to the FSB by the Financial G20. This posting was moderated for several days.
25th June 2009 A very interesting and instructive article. It seems clear the future will have to hold a great deal of creative thinking and adaptability. Cut backs are not the issue. In whatever form, whether in the most likely area of reduced spending, with certain areas ring-fenced, freezing thresholds, or tax rises themselves, risky but possible after 2011, they are out there on the horizon. They have to be if this downturn is to be contained and put right. Everywhere people are expecting retrenchment and whoever wins next May, this will be their main focus. Handling it is the issue at present. We know some form of twenty-first century austerity and excess clipping is coming, and not only in the private sector. But through this strong, streamlined future of 2010 and beyond, should run the effective initiatives and large projects already started, whether in housing, job creation, community and educational development, transport etc. They are the good of the excitable era we are just leaving. They will give encouragement as we cut back and put right the past. As 2010 onwards unfolds, it will not contain as many new initiatives of this sort, but it will contain innovative thinking on how to save money without causing damage to the social fabric. It can be done; projects and systems with potential should be expedited ; those costing huge amounts with disappointing records and weak outcomes should be amended or closed. This new era will be a time of great responsibility, but around us we could have the potential to see practical signs of a fairer, more effective, more balanced recovery.
This posting was written in response to an article by Eamonn Butler called Government debt: that'll be £2.2 trillion, please. Eamonn Butlet is the director of the Adam Smith Institute. On the 29th June, the Prime Minister issued a document called 'Building Britain's Future', which contained among other good initiatives, the allocation of £1.5 billion to HCA for delivering new housing. We attend HCA's meetings as well as lobbying on housing and look forward to the coming new initiatives.
