主播大秀

It is difficult to see where Vickers is going to address this issue of domestic versus global finance focus. So the article which should have been written a long time ago argues that we have got very little out of being a banker to the world. In the past this dominance of finance capital made our currency very vulnerable to short term crises of confidence. So perhaps we should encourage the downsizing of our banking sector and book the 拢M bonus waving executives the next flight to Hong Kong or Beijing. Ironic that Vickers is a name we associate with the past glories of our now puny manufacturing sector.

Always seems to be that UK banks need something approaching a 30% ROC, which a well established manufacturing company might be able to generate once it has a few cash cow products, but for a start up they'll need to be prepared to hang around for a good few years before they get to that stage.

Add to that the dreadful salaries paid to development engineers in manufacturing and it all adds up to where we are today...

Time for finance to support manufacturing so that we can make goods the world wants. It's tough to pick winners but that's what banking should be about not inventing obscure financial "instruments". We should learn from Germany. In fact we would be better off as part of Germany. What has the UK government done for us?

Nothing is going to calm the public at the moment - they mistrust the government and the banking sector. Are we being told what they want us to believe rather than the full truth, if the public are told that the government is 鈥榗onfident鈥� it actually makes us more nervous according to psychoanalysts Ken Eisold:


They are 鈥榗onfident鈥� the Vickers commission will do everything it is suppose to do, but these changes are probably empty threats, as if they are implemented the banks will threaten to leave, and we can鈥檛 have that!

The banks go for high return high risk short term investment. What the economy needs is longer term, intelligent investment. It requires bankers to understand the UK economy & individual companies & be prepared to wait rather longer for probably lower returns. But in the long run that is better for the UK economy & for the banks. Compare the UK to Germany & you'll see where we've gone wrong. In their dash for short term profits, the banks have cut costs by getting rid of the people who understood UK businesses & took the time & had the patience, knowledge & understanding to know where to invest are where not - & the senisble amount to lend. much of this has been junked in favour of what can really only be described as glorified gambling. I think we should be using our massive stake in RBS to force a change of direction, rather than pussy-footing around & allowing essentially to do what they want.

Stephanie says that the UK financial system is much better at serving the needs of the global capital market than serving the needs of the average UK company.

Given that, then the BoE should not be the lender-of-last-resort for these 'universal' banks but rather some global financial institution should take on the responsibly (and oversight role).

As it happens, during the recent crisis, these universal banks e.g. HSBC, JP Morgan Chase etc. were not in difficulties but the point is valid.

Continued from Robert Peston's blog as it is relevant here.

The problem with the Vicker's report is that financial 'innovation' will simply circumvent the risk separation of the retail and investment banks.

Remember it was the CDO (Collateralized Debt Obligations) that did for Northern Rock - they allowed absurdly silly lending of daft mortgages of 125% and up to 16 times earnings. These CDOs crossed the border between the Retail and Investment banks and corrosively collapsed the markets.

Vickers MUST tackle 'financial innovation' at it source - the whole financial community must get prior approval for all 'products' - no sign of this in Vickers! Unless this happens the separation between Retail and Investment is just a joke!

Furthermore, this is something that has been brewing for some time now, that is, who will provide oversight of these multi-nationals?

Stephanie is discussing banks and their regulation but here is an example from another sphere:

The BP disaster in the Gulf of Mexico probably would not have happened in the Norwegian sector of the North Sea because the Norwegian Government mandated that a more reliable design of blow-out preventor must be install in the oil-fields in its sector.

If a 'world authority' with teeth had been in place to provide oversight of the oil industry then maybe that organisation would have mandated the more reliable design globally.

Likewise with the banking industry and its global players.

Indeed, Stephanie, and I'm glad to see this pointed out in print.
I used to say - only partly in jest - that the best thing for british industry would be if a rise in sea level flooded the city of london entirely. The UK is almost unique in having a financial centre that is essentially uninterested in financing that country's industry, despite this being what it is arguably for.

And yes, I know that the earnings from this lucrative trade help the 'balance of payments' (don't hear the phrase much now, but it was once a regular news item). But it is precisely these earnings that push the pound high and make manufacturing less competitive. So if we didn't have a casino banking sector, we wouldn't need one! Manufacturing would fill the gap.

A lot of the trouble goes back to when Fred and others like him took charge of our "big" banks. These guys were not bankers and had never been grounded in the principles of lending. They therefore struggled to gain respect and be "top dog" in their Bank. Some downgraded the status of their lenders and others sought new and quicker ways for their bank to make money and grow. Some just looked for taking over other banks. Fred appears to have done all three.

Unless we are going to restructure our banks to train and resource fully qualified business lenders at all levels of business (from start ups to global players) and at the same time sell off their Market trading ( some call it gambling) divisions we shall always remain at risk of another big hit coming. Can a leopard change it's spots ?

The reason banks go for short term high risk returns is because that is what their shareholders want. Who are they, in the main pension funds, why do they need this, well they have an aging population & increasing liabilities to meet, plus of course there was the huge 'robbery' of the pension funds by a certain Mr Brown. Even after that he continued to spend more than UK earned so piling up UK Gov debt (don't forget that is still going on just that UK Gov is slowing down the amount it borrows each year it is not reducing it any time soon). Of course if that strategy is good for the gov then it must be good for us too. So borrow, borrow, borrow & don't worry about paying it back. Against that backdrop what chance does industry have ?

This plan will be about as effective as rearranging the deckchairs on the Titanic.

The best solution to the problem I have heard is a 4-fold Monetary Reform Act

Policy 1: Pay off the national debt over a period of 1 year with debt-free notes (fiat currency legal tender). On its own this would cause inflation which is why we need the next policy鈥�
Policy 2: Abolish Fractional Reserve Banking (the biggest Ponzi scam ever) by phasing it out over 1 year. As debt is paid off, the reserve requirements of all banks and financial institutions would be raised (by decree of law) proportionally (from 3% to 100% full reserve) at the same rate as Policy 1 to absorb the creation of the new notes in order to keep the quantity of money stable. In other words the National debt would be paid off without raising inflation.
Policy 3: Repeal all necessary regulations that originally gave power to private banks to create their own money by allowing it to be borrowed into existence (thereby creating a debt). Only central government would be allowed to produce new money where it could control the quantity and set inflation to a stable low level
Policy 4: Withdraw the UK from the central world banks such as the IMF and Basel rules who have a monopoly of control and hold entire countries to ransom with the credit ratings agencies. It鈥檚 just one big cartel.

The above is the most important thing that any government can do. Everything else is just so much window dressing.

It would mean inflation could be set to a sensible low level, e.g. 1%, There would be no more recessions or depressions. Taxes could be lowered (some estimates say we would be 12% richer as a nation! Remember all the fuss in the 2005 general election when the Lib Dems wanted to increase taxation by 1%?). We wouldn鈥檛 need to grow unsustainably to service the debt (what is GDP really measuring anyway? It isn鈥檛 necessarily how beneficial the economic activity is). Our economy would function in a similar manner to the ones that Guernsey and North Dakota currently enjoy. It鈥檚 the Holy Grail of all politics and yet no mainstream party has cottoned on to this (not even the Green Party who seem to think they can regulate the banks and solve the world鈥檚 problems with windmills and love 鈥� good luck with that then!).

The good thing about the 2010 hung parliament was that I realised there was very little difference between the 3 main parties. They鈥檙e all neoliberals (Thatcher Lite). Are they all unaware of the above information or are they complicit with the private banks due to vested interests? Either way they are not fit to govern.

Don鈥檛 Vote. Don鈥檛 encourage these people. The only party in the UK I would vote for was one that offered genuine Money Reform.

We don鈥檛 need to pay for the banksters greed through cuts, taxation or inflation. It鈥檚 a con and I find it unbelievable that people in this country are meekly accepting what has happened and the proposed 鈥渟olutions鈥� to these problems which are simply nationalizing the losses. People need to wake up and act. It is urgent. It is now.

For further information on intelligent and relatively easy solutions to our debt problems try:

The Secret of Oz on Youtube
The Money Masters (watch the last half hour)
PositiveMoney.org
Steadystate.org

"It's a depressingly old problem - both the MacMillan Committee of 1931 and
the Wilson Committee of 1976 were set up in response to more or less the
same concerns."

That banks only lend you money if you can prove that you don't need it!!...

Same as it ever was...

What do you have in the way of collateral as I am not allowed by law to take your first born son, said the Banker. The pauper reached into his pocket and pulled out a shiny new penny and placed it on the counter. This is all that I need said the pauper with a big cheesy smile on his face as I will invest this penny today and tomorrow I shall have sixpence and in 500 years from today I will have enough money to buy a big stately home with all of the trimmings. The Banker raised his brow and sternly said five hundred years, but you will not live to see that day and for the sum you have asked me for is totally out of the question? What about Inflation said the Pauper with a fix annual rate of growth as my penny in 500 hundred years time will be worth a king鈥檚 ransom or do you not know how to treasure my money, my dear Banker?

I don't agree that on the whole our businesses should require more credit than they can currently get. I would argue that this reliance on credit for investment is part of our current debt problem. The chinese don't borrow heavily to invest they start small, see if something works and reinvest the profits. This is also what the Germans largely do. They do not rely on banks to lend large sums for their investment in R&D.

In the modern world most products and services need to make money very quickly or they won't make any at all due to dynamism of most sectors now and often over-competition. This fact makes a lender very reluctant to lend to a business that he does not understand the ins and outs of and is therefore not suitable to single figure interest loans as a sensible return on investment.

I would suggest that this is why property has become the favoured investment vehicle for most banks. It's understood and still long term stable whereas anything designed and manufactured is just the opposite on both criteria.

No I'm afraid businesses have to provide their own finance and if they can't justify a speedy return on investment then they should think very carefully about making the investment of time and money in the first place.

This is the way modern successful countries do it (China, Germany) they do not rely on inexpert bankers to provide unjustifiably cheap loans to fund their business developments.

Those of us who have started our own business will recognise that Banks do not finance business.

They instead loan money against existing, recognisable assets, with relatively large premiums compared to the loan a salaried individual would get.

So most small start ups, already self finance, through personal loans against the owners property. This is the way it has always been.

As you grow, the bank does not change it's approach, certainly up to a few million turnover.

So any move to promote manufacturing really can remove banks from the picture, and concentrate on cashflow, employment, business education and tax initiatives - all really within a governments power.

At an SME level, I really don't think our banks have done anything a leasing company couldn't have done better: at least the leasing company understands other assets than houses!

#10 >>Unless we are going to restructure our banks to train and resource fully qualified business lenders at all levels of business (from start ups to global players) and at the same time sell off their Market trading ( some call it gambling) divisions we shall always remain at risk of another big hit coming.

Eons ago, we had local bank that actually knew his customers and their circumstances and can make or withhold loans based on this knowledge. Nowadays, bank managers are no more than glorified salesmen trying to sell as many "services" to the customer as possible and they have little or no knowledge of their customers' circumstance and, quite probably, don't bother to know !!

Oh, the joys of CRM and "personalised service" as dictated to a computer program by some person who probably knows little or nothing about the needs of local banking !!

In this context, a quick plug for "Business Link", the governments business resource information service.

Extremely helpful, and accessible information on most things business related. It does seem that the govn. could do something right to help business.

Unsuprisingly, that the local offices have just had the plug pulled out as part of the cuts...

#15 Strange as it may seen, what you have described is know as "organic growth" and is widely used in properly-run family concerns. Unfortunately, most companies have the dream of conquering the world in one year !! They have no thought of slow but steady, multi-generational growth !!

I'll shut up in a minute, but I'm on a roll...

Some of the problems we face are to do with the perceived power of money. Just look at Dragons Den for example.

They are only interested in you if you:
* have a unique idea
* have developed it, and proved it in the market
* have protected it at your cost from any competition

And then, they will offer you a ridiculously low sum of money for half your company, that you have created and sustained from nothing!

But it seems that magic money is the God, just having it is more important, more valuable than any idea, and labour you have invested.

It used to be in any venture deal,the equity was split 3 equal ways: money, product & management each being worth the same value. Now it seems money is worth far more than the other real parts of the business.

Until this is rebalanced, and money looses it's power and importance, then nothing will really change will it?

"The interim thoughts of the Vickers Commission have been well-trailed - and generally well-received."

Er only by the sorry crew who rule us who got it wrong last time...

As a systems engineer, it is really the 'systems' aspect that interest me.

So it is interesting to read that Gordon Brown has recently said at Bretton Woods that a really big mistake was made when he and Ed Balls set up the FSA.

In his speech, Brown often uses a clumsy word 'entanglement' and states that we did not realise how entangled these banks were and we treated them as individual institutions.

Brown means that the banks turned out to be heavily interconnected, and as such, the risk of systemic failure via financial contagion was very high and indeed, eventually occured in the crisis of 2008.

Global problems do require global solutions, especially in the world of banking.

Evening Stephanie,
the Vickers report has some positives. First of all it puts to bed the myth that losing bankers abroad will hurt our economy (please try again for another excuse bankers).
Secondly it recognises the huge global nature of our 5 biggest banks and understands that to split them up would be nigh-on impossible.
The ring-fence idea is not a new one and at least it is a step in the right direction.
The real problems of too big to fail have not of course been addressed because the banking fraternity prefer the status quo of the taxpayer underwriting everything that they do in pursuit of profit and bonuses.
Even if the Vickers report was 100% sound, if the bankers didn't like any of the proposals then they would never make it into law (see the gutting of the Dodd-Franks bill in the USA).
So the solution is to encorage the bankers to change their behavior which cannot be done by force of law (you cannot legislate for greed which is what happened).
Some positive suggestions.
All banks in receipt of a direct or indirect tax-payer subsidy are to terminate the contracts of all the so-called high flyers and offer them the opportunity to re-apply for their jobs under new conditions of contract which only allow bonuses on a discretionary basis (which is the case in most private companies). This bonus can be withdrawn at any time at the discretion of Der Management.
All executives with day-to-day responsibilities Must possess a recognised banking qualification. All major loans (amount to be determined) are to be signed-off by three executives who will be jointly and severally liable for fraud in the case of any errors of fact of the loan purpose and due-dilligance.
The Government (tax-payers) are to provide a guarantee to underwrite banks losses on any loan to a UK plc company if the loan is for continued business or expansion involving more (genuine) employment. Loans provided for genuine staff training will be tax deductable and VAT free at source.
Personal guarantees for SME loans will not be required anymore and credit scoring will be applied instead. New employers will be guaranteed by Government for the first two published company accounts for the purposes of credit guarantees (or for three years if shorter).
Sorry Stephanie, I'm just dreaming again, carry on chaps, as-you-were!

As the very lovely Gillian Tett pointed out this evening on Newsnight, banks may threaten to relocate away from London to another jurisdiction but would the recipient jurisdiction be that keen on having them if they subsquently had to pick up a very big tab upon bank failure?

19. Ishkandar, absolutely correct. The way Asian families run their businesses and personal finances is a lesson in what works for SME's and we need more of it.

''As we know, the crisis has highlighted the enormous downside of having a financial system that 'punches above its weight'; when things go wrong, all of us had to make up the difference between the banks' punches and their underlying strength.''

What do you do if the boxer is brain damaged then.

''As Lord Turner, the head of the FSA, has pointed out, lending by the UK financial system roughly trebled in the decade before the crisis, but all of that new lending went to just one sector - commercial real estate. Total lending to manufacturing companies was actually slightly lower in 2007 - the peak of the credit boom - than it was in 1997.''

In other words the main activity of the financial sector could reasonably be described as manipulation of the commercial property market for speculation.

''It does not address the other potential downside of playing home to a "world-beating" financial centre''

Nor does it address the problem of global regulation which requires cross-national policy.

I have never understood this current British obsession with credit. Why are companies borrowing from the banks and paying dividends at the same time? In effect they are paying dividends out of borrowed money. Would it not be more efficient to pay down the debt before declaring any dividends? Once the debt was paid off, the shareholders would get much higher dividends.

This is the crux of the matter. Surely a company's working capital should come from its shareholders? If a company has a great money-making idea, and needs some capital, then it should issue some shares. If the idea is sound, there will be plenty of takers.

Of course part of the problem is that the directors of our large companies do not want to involve the shareholders at all, since that would cramp their style. In fact they would rather not have shareholders at all, and view the company as their own, despite their statutory duty to serve the interests of the shareholders. So they pay the banks a fortune for finance, while ignoring a far cheaper form of capital.

We really need to look to Germany, to see how to run industrial companies properly. That does not involve paying egomaniacs a fortune to squander the company's potential profits on loan interest. No wonder banking is such an easy number in this country.

I think a similar point but more forcefully has been made at the recent Bretton Woods conference by Lawrence Summers (see Brad DeLong blog April 11 2011 'Against Cutting Government Spending Now' for the full quotation):

"I am too soon out of government to use a word like "nuts" [of the Brito-European austerity policy.] I find the idea of expansionary fiscal contraction in the context of the world in which we now live today to be every bit as oxymoronic as it sounds. I think the consequences are likely to be very serious for the countries involved.
I think it is important to distinguish between countries that are not borrowing [and spending] because they cannot borrow, where there is a question as to how large a subsidy they should be given from the outside when they have worked themselves into a situation in which they are no longer able to borrow. That involves one set of issues.
A very different set of issues is raised by those with very little scope to expand monetary policy with the capacity to borrow who choose not to borrow based on the conclusion that improved fiscal hygiene will make everyone so much better that the economy will recover. This seems to me to be a very high-order gamble. It is not one I would be prepared to bet on."

I think the 主播大秀 should stop representing City opinion on the macroeconomic crisis and represent City and mainstream academic opinion, as the two are certainly very different at the moment.

#27. Arthur Daley wrote:

"...the main activity of the financial sector could reasonably be described as manipulation of the commercial property market for speculation."

Why just commercial? The biggest gambling dice are in the non-commercial sector.

My rational explanation of why asset price inflation is seen as a very good thing and essential to the country:-

In my opinion this must be caused by an attitude to assets in theoretical economics and government. Assets (like the natural or built environment for example) are see as being able to be converted to revenue (i.e. income) today WITHOUT any cognisance of the short, medium or long term loss or damage done. And what is more assets are ONLY seen as in any way valuable in that they can be converted into short term GDP. This all can be traced to the way that assets are accounted for in govenrment which is exemplified by the concentration of annual changes in GDP.

Business does not see assets like this - for example, in the oil industry they take a hit for each barrel of oil they extract by reducing their known reserves and the financial markets remain interested in this figure because it denotes the long term ability to continue to extract oil and so work the capital of bound up in the asset.

This attitude to assets I have just described allows flogging off of the Nation's gold reserves or, off of the Nation's forests to generate immediate income (and boost to annual GDP) without any financial understanding of the hit taken to the future prospects, or asset base, of the country.

What this means for inflation of assets is that inflation is seen as a universally good thing - this ignores the hit taken to the asset base of the country by being in hock to lenders, or by the twin effect of currency depreciation. Basically balmy economics caused by a fundamental error in the teaching of economics.

Why has economics made such a fundamental error? Is it because the study and teaching of economics is in the hands of the money lenders and short term speculators? That seems a reasonable answer to me.....

We urgently need a new economics!

SF: 'As we know, the crisis has highlighted the enormous downside of having a financial system that 'punches above its weight'; when things go wrong, all of us had to make up the difference between the banks' punches and their underlying strength. It may or may not end up solving it, but the Vickers Commission addresses that issue directly.'
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Yes but, no but. That wasn't the real problem and Vickers doesn't address it.

What we faced, specifically in 2009, was a collapse of the money transmission system and the locking of customers' cash within banks of uncertain legal operational validity.

It's nothing to do with lending Hilda Bloggs life savings of 拢7,450 to dodgy, over-borrowed property developers whose debt was bundled into CDOs and CDSs and traded around the world by wide-boy dealers.

I haven't read 'Vickers' but the media have not mentioned at all whether this real nub of the problem has been addressed. There was a possibility in 2009, that does not occur to the usual bully-poster who wants to string bully-bankers from lamposts - or they cannot get the simple fact in their heads - that we could have seen actual major economic meltdown and a reversion to a near prehistoric society with almost nothing of the modern world able to function, at least for many days, possibly a few weeks.

How many posters here have enough cash in their houses to finance themselves for a month?

How many posters here have enough food in their cupboards for a week?

How many posters here have a means of travel that does not rely on fuel?

Think on't lads and lasses. Think on't!

'Vickers' is really only related to a small part of a very big picture.

[Apologies for getting so stroppy with this Blog and it's posters. It's really the fault of the numpties posting on Pesto's Blog! Grrrrrr!]

Stephanie,

I watched the presentation and the questions, your collegues Peston and later Mason, both used the 'bottled out' accusation of the Interim Report in respect of the relationship between the high st and city slicking operations in the present mode of UK banking.

In the competition element of the presentation there was a suggestion we examine the traditional high st building society social concept, ie, Mr Jones can borrow money to buy a property providing there are sufficient saving Mr Smith's to lend him the money.

This concept may be 'old-hat' for the nations modern international economists and financial progressives but I believe what served us well in the past should be seriously considered for the present crisis and our future. Must everything financial in the UK be centralised and controlled with a global profit motive?

That leads on to the yet unaddressed critical issue in the final Report of how to attract savers, small and large, back into high st investment cycle. The nations building societies, with a few exceptions, have been blasted off our high streets by the big banks with mergers and unscupulous competition supported by global funding, and there is that big bank dilemma yet again.

We must not be led to believe that the concept of Mssrs Jones and Smith having individual needs that can be satisfied by mutual cooperation is out of date, it's rebirth will enhance competition on the high street, exactly what the big banks have wilfully destroyed in the past 15 years.

I do hope Mssrs Peston and Mason's, and perhaps your own initial reactions to the Interim Report stimulates a more radical posture in the final version.

12 Sage_against_the_machine

You are not wrong. In the 1940s/50s over 50% of the money supply creation was by the state. Now it is less than 3% with 97% of all of the money supply created by private banks and lent out as long term debts for UK citizens.

Growth was higher during the period in which the bankers could not create so much debt.

Now household debt is at 160% of household income. The Austerity measures raise it to 175% by 2015.

At this point if the economy takes off the banks will start creating more creidt and lending it out. By defenition this leads to an even bigger increase in household debt. How can this posibly work?

We need a rethink as buisness as usual will not work anymore.

Your view accrods directly with people like Jamie Galbraith and other MMT people.

Surely a part of the solution must be to devise a special form of bankruptcy or administration for banks that looks like a bailout to depositors and other "real economy" customers, but like normal bankruptcy to shareholders and employees? Such a simple legal innovation would restore moral hazard and also make bailouts more acceptable to taxpayers.

I realise that this is by no means a complete solution to the problems, but it seems like an "easy win" with few real down-sides or costs compared to other solutions on offer.

Inflation figures are just out - and a real surprise - for a change!

The reasons given are not those in my experience. The 主播大秀 WATO News cited falling bread prices. In my regular supermarket they - and other food prices - have gone up. It is true that there are lots of B2GOF and other 'special' offers but these tend to squeeze supplier margins rather than reflect real falls in costs and prices.

Hmmnnn. Very interesting.

Stephanie,

Good point about the diversion of financial and human resources into Real Estate.

No wonder we have so many TV programs about property.

You also make the point that this isn't the first time this has happened. 1931 and 1976. We can and should learn from Historical parallels.

So should there be alarm bells ringing that - as the problem was not solved in 1931 or 1976, there is little chance of any small tweaks in the financial system to make it work this time round?

Isn't the problem that the Trend in the money supply heading towards total debt created money by private Banks? In 1963 - 21% of the money supply was created by the Government. therefore they (we) had 21% control over the money supply?
today that figure is only 3%, leaving 97% created by Banks. Remembering that if a Bank decides on Who to give money to and for what, this gives the Banks a near monopoly on where finance is directed in society.

They chose Property as it - allegedly - always goes up in price and if the debtor defaults, they take the property. With a Business, if the Business fails, there is no collateral as the Business as well as the staff - are the collateral.

One other point. If 97% of the money supply is debt based (created by Banks when someone takes out a loan) how can all businesses rely on a steady stream of income when inorder for customers to buy there goods or services they must also really on a healthy economy as that is generally the only environment in which people feel confident to take out debt to buy non-essential goods and services.

As mortgage debt makes up the biggest slice of all loans - approximately 60 to 70 percent, it therefore is reasonable to assume that a Housing Collapse would also lead to a money supply collapse.

Therefore, the Government cannot afford to allow House Prices to fall as the money supply will dry up casuing complete havoc in the economy.

Would it not be more sensible - and far cheaper - to allow the Government to create the money instead? Why not let the MPC regulate the money supply under the scrutiny of a Parliamentary Committee?

Banks could then manage a money supply that they wouldn't have to create themselves.

SF: 'As Lord Turner, the head of the FSA, has pointed out, lending by the UK financial system roughly trebled in the decade before the crisis, but all of that new lending went to just one sector - commercial real estate. Total lending to manufacturing companies was actually slightly lower in 2007 - the peak of the credit boom - than it was in 1997.'
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Just reading your Blog more carefully, Stephanie, and this para seems a bit strange.

All the extra lending went to commercial real estate? So where did the domestic property boom get funded? And how do you explain the increase in consumer spending debt in the same period. That must have been funded from somewhere and appear in the total.

Something does not add up there!

Timely piece!

The UK govt must intervene as 'laissez faire' is killing our domestic economy.

This means strategic resource planning on e.g. direction of UK capital and legislation and taxes and penalties ... big carrots and big sticks ... rebalancing ... pain for banks and bankers that do not comply. This means the UK having a hybrid or part command planned mixed economy.

Oh I'm forgetting the EU straightjacket prevents most of this from happening ... except we can all vote for AV as a first step in shaking up the political systems that prevent the UK economy representing the will of the silent majority.

Tax the spivving developers out of existence ... build only in absolute necessity ... and as taxed on local built density and not out of greed.

The opportunity cost to the UK economy of commercial real estate lending ... is why the UK is now in a big mess (as much residential property, arguably, is a fundamental social need) ... the opportunity cost of excess real estate ... has been the difference between real estate loss and the cost of not having that investment in new UK productive technology and UK production processes.