Wednesday morning catch-up

The usual story; too many open tabs and not enough time.

1. Christopher Booker explains why the BBC steadfastly avoided the facts about the wind farm scam in David Shukman's reports on energy policy for the BBC. Christopher Booker unveils the true lunacy of the Government's plans, plans idiotically pushed by Chris Huhne.

2. The Register report that coal power stations may be responsible for global cooling. When will scientists admit that even the most complex climate models can only approximate the Earth's true climate?


3. The Globe & Mail explain why gold coins are not an investment bubble.


4. The Standard reports the on the FSA report into the collapse of RBS and unlike the BBC actually reports what was said about the partial blame that was layable at the feet of Gordon Brown and Ed Balls.

What about Gordon? Shouldn't he shoulder some of the blame?

I must apologise for concentrating earlier on Ed Balls's inconsistent record when it comes to talking about 'light touch regulation' of The City and not mentioning Gordon Brown; mea culpa.

So from Gordon Brown's 2005 speech to the CBI:

"...no inspection without justification, no form filling without justification, and no information requirements without justification, not just a light touch but a limited touch."

And from The Telegraph reporting on Lord Turner's appearance before the Treasury select committee in February 2009 (my emphasis):

'Lord Turner told MPs: “All the pressure on the FSA was not to say why aren’t you looking at these business models, but why are you being so heavy and intrusive, can’t you make your regulation a bit more light touch?

“We were supervising people like HBOS within a particular philosophy of the way you do regulation, which I think in retrospect was wrong.

“It was not the function of the regulator to cast questions over overall business strategy of the institutions - you may find that surprising.”

He added: “I think (the FSA’s actions were) a competent execution of a style of regulation and a philosophy in regulation which was, in retrospect, mistaken.”

John McFall, the chairman of the committee, said the remarks had raised serious questions about the FSA’s independence.

Mr Brown and Ed Balls, previously his key adviser, had regularly boasted of the benefits of so-called “light touch” regulation. '

Do remind who took regulation away from the Bank of England and split its responsibilities in a tripartite system that spectacularly failed to do the job adequately? That would be Gordon Brown and his right hand man Ed Balls.

The last Labour government's culpability for the economic mess that the UK finds itself in is something that the Labour Party and its friends at the BBC have managed to gloss over for some time now; I call upon every Conservative spokesman in every TV, Radio and newspaper interview to make the point loud and clear -

"Gordon Brown and Ed Balls" were personally responsible for making decisions that helped to cause the economic crisis in the UK and should be held to account."

Now why would that be? The BBC protecting Ed Balls from scrutiny.

The BBC hide away on their Business Pages, with no link from the front news page, the news that:

'Timothy Geithner backs George Osborne's spending cuts'

Of course being the BBC, as well as not mentioning the news on the front page, they also run it as a very short story with no mention of some key facts. Thus this line:

'He said Mr Osborne had been handed "problems not created by this government".'

A fuller quotation would run:

'What he did was a very remarkable thing. At a time when it was easier to make tough choices quickly, because they were not problems created by this Government, he locked his coalition and the Government into a set of reforms that were very good.'

As The Telegraph report.

Likewise the BBC manage:

'...Mr Geithner said the "light-touch approach to financial regulation" which was "designed consciously to pull financial activity from New York, and from Frankfurt and Paris to London" was a "deeply costly strategy for financial regulation".'

Would the BBC care to explain who devised this 'light-touch regulation', who boasted of their 'light-touch regulation'?
Well here's Ed Balls from 2006, transcript on his website:

' In my first speech as City Minister at Bloomberg in London, I argued that London’s success has been based on three great strengths – the skills, expertise and flexibility of the workforce; a clear commitment to global, open and competitive markets; and light-touch principle-based regulation…

Most recently in this decade we have been determined to respond to events and new challenges and enhance London’s global standing and light touch regulation…

Today our system of light-touch and risk-based regulation is regularly cited – alongside the City’s internationalism and the skills of those who work here – as one of our chief attractions. It has provided us with a huge competitive advantage and is regarded as the best in the world…

The Government’s interest in this area is specific and clear: to safeguard the light touch and proportionate regulatory regime that has made London a magnet for international business…

We must ensure that all new regulations are implemented in a sensitive and light touch manner…

...

[The Labour government] will outlaw the imposition of any rules that might endanger the light touch, risk based regulatory regime that underpins London’s success.'

Would the BBC not like to inform its paying customers who was in proudly in favour of 'light touch regulations'?

Oddly bearing in mind the 2006 speech quoted from above, during Conference Season 2008 Martin Kettle in The Guardian still managed to report with a straight face that:

'He is also driving the dominant Brownite line of the week – that you have to be tough to tame the financial markets. But while Brown hesitates to abandon his own long familiar commitment to light-touch regulation, and Alistair Darling in his conference speech argued for neither light nor heavy but effective regulation, Balls was reliably reported to have told friends on Sunday night that "I have never believed in light touch regulation." It's a very significant shift of pitch, and it tells you the sort of stance that Balls might adopt in a contest with the – on this issue – more cautious Miliband.'

So if Martin Kettle is correct, then in 2008 Ed Balls was claiming "I have never believed in light touch regulation", whilst in 2006 he was stating his support for "a clear commitment... light-touch principle-based regulation". Which statement is true Ed Balls? Maybe George Osborne could ask him at the next Treasury Questions, I am sure Ed Balls will want to set the record straight.

Gordon Brown's replacement of the Bank of England with a tripartite regulatory system

The narrative that the Labour/BBC alliance still tell is one of Gordon Brown setting up his new system, which for all the faults that people have pointed out post the 'crash' were unforeseen when it was set-up. A Conservatives Blog points out that the official record shows this to be yet another Labour lie:

'Gordon Brown was warned that the changes to the banking system he was bringing in, in particular removing the role of bank regulator from the Bank of England and putting it into the hands of the FSA would lead to a systemic banking failure.

When discussing the bill that passed the changes to the banking system the Conservative Shadow Chancellor, Peter Lilley said:

With the removal of banking control to the Financial Services Authority--the "super-SIB"--it is difficult to see how and whether the Bank remains, as it surely must, responsible for ensuring the liquidity of the banking system and preventing systemic collapse.

And further:

We have no objection to the objective of trying to bring greater simplicity and one-stop shopping to the business of financial regulation, but we fear that the Government may, almost casually, have bitten off more than they can chew. The process of setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day. We shall observe closely what is going on in the development of the proposed legislation.'

Now Peter Lilley was particularly hated by the BBC for his Thatcherite roots and in those heady post champagne drinking days at the BBC, no opposition to the New Labour machine was allowed or even contemplated. Those were the days when 'things could only get better' and the hated Tories were irrelevant.

Maybe now that more and more people are realising that Gordon Brown was never an economic genius but a fool with a plan, the press might publicise that yet another foundation of Gordon Brown's reputation for economic competence was foolishness and was seen as such by the Conservatives at the time.

What's missing from this news report?

The BBC finally get around to reporting the House of Lords' Economic Affairs Committee report on the banking crisis. The BBC report that:

"There has been fresh criticism of the way banks were supervised by the Treasury, Bank of England and Financial Services Authority (FSA).

The House of Lords Economic Affairs Committee said the so-called tripartite system had failed and must be reformed.

Its defects were highlighted by the failure of Northern Rock.

The report said the problem was that it was not clear who would be in charge in a crisis. It said the Bank of England should get a clear executive role.

The Lords' findings mirror the report of the House of Commons Treasury Committee, which said that the tripartite financial authorities had been insufficiently prepared to deal with Northern Rock's difficulties and needed to communicate better with each other.

"Without a clear executive role, the Bank can do no more than talk about financial stability. This exposes it to reputational risk without generating any clear benefit," the Lords' report said.

Financial stability

It recommended taking the responsibility for supervising the banking system as a whole away from the FSA and giving it to the Bank of England.

The committee's chairman, Lord Vallance of Tummell, told the BBC that the new powers that the Bank of England has been given by the Banking Act 2009 do not go far enough.

The report criticised the FSA for concentrating on its consumer protection role at the expense of its responsibility for maintaining financial stability.

The Lords also called for the authorities to be given more power over foreign banks operating in the UK.

"The degree of control that our supervisors and regulators here in the UK have over bank branches of foreign banks is very limited," Lord Vallance said.

"If there is a crisis then the money tends to rush back to the home of the bank itself leaving the problem with the UK taxpayer." "

In the whole of that report there is not a single mention of who set-up the tripartite regulatory arrangements, that's odd. Back in 1998 the BBC reported the Queens Speech thus:

"The Financial Services Authority, the financial markets' new super regulator, will be given greater power, to create a safer environment for investors and tackle market abuse... The United Kingdom's financial markets are currently regulated by a number of separate organisations, among them the Building Societies Commission, the Insurance Directorate, the Investment Management Regulatory Organisation, the Personal Investment Authority and the Securities and Futures Authority.

But the distinctions between these markets have become blurred, and mergers have led to one company operating in many areas.

Therefore the government has been searching for a new approach to financial regulation.

In May 1997 the Chancellor of the Exchequer, Gordon Brown, announced he wanted to change the whole system, merging all regulators under the roof of a single body, the Financial Services Authority (FSA).

The FSA was launched in October 1997 - in fact emerging from the Securities and Investments Board, and this summer it was given the responsibility for banking supervision.

The new legislation will give it the powers necessary to do the whole job, and create a single regulator.

The FSA is expected to be fully operational in Autumn 1999."

Ah that's who set-up the tripartite system, Gordon Brown. Now why do you think the BBC are so coy about reminding people of that fact in 2009?

Gordon Brown's interviews Sunday and today

Gordon Brown seems to be trying very hard to push the idea that he is the best man to sort out Britain's problems as he is working hard to do so.

"People know... that I'm determined... I work hard... and I get on with the job"

What utter rubbish, just because Gordon Brown is the main architect of the UK's economic and social destruction does not mean that he's the right person to set it right. In fact the opposite is more likely the case; by being in charge of the economy and much of home policy during the last 13 years, Gordon Brown is almost certainly the wrong person to be in charge because he didn't understand or deal with any of the causes of the problems that we're suffering from. In fact by his deliberate ignoring of professional advice he all but destroyed the UK's private pension schemes, the regulation of the banks and many other aspects.

Is Gordon Brown a hypocrite?

The BBC report that:

"Gordon Brown has called for a more responsible banking system, in which banks are the "servants of the economy and society and never its master".

The prime minister said the Financial Services Authority was looking at how new mortgages of more than 100% should be controlled in the future.

Writing in The Observer, he called for a return of "prudent", old-fashioned high street banks.

He also said banks should have a focus on making loans to UK businesses. "

If Gordon Brown's comments weren't so delusional and misleading it'd be funny. Gordon Brown stoked up the house-price bubble as a way of keeping people voting Labour. He supported light-touch bank regulation, was openly critical of other European banking systems for their strict regulation and inflexibility.

Remind me, who set up the City regulatory framework

Lord Turner, the head of the FSA has called for major changes to the way Banks operate. Giving the Economist lecture he said that parts of the regulatory system were "seriously deficient" and he recommended that banks should be forced to build up capital during good times, so they could more easily weather an economic downturn.

Sounds like good advice, it's certainly advice that Gordon Brown could usefully have followed by setting aside money during the recent engineered boom. Hold on haven't the Conservatives been making this point for some weeks now and been derided for it by Gordon Brown and the BBC?


One further point, if the FSA "failed to piece together the jigsaw puzzle" of risks which included a large UK current account deficit, rapid credit extension and house price rises, then shouldn't some of the blame lie at the feet of the man who designed the tripartite City regulatory system, Mr Gordon Brown. He swept away the old system that worked and replaced it with something modern and shiny and not fit for purpose.

Another regulatory failure

What a surprise, the US Securities and Exchange Commission are reported to have received warnings about Bernard Madoff's activities as far back as 1999 but did not act appropriately. A failure of a banking regulatory authority, how surprising. The SEC and the FSA are overstaffed bureaucratic bodies without the expertise to properly regulate the investment companies that they are meant to police.

FSA to ban short-selling of financial stocks

It is being reported that the short-selling of financial stocks is to be banned in the United Kingdom from midnight tonight under new rules drawn up by the Financial Services Authority (FSA). The ban will prevent investors from creating or adding to short positions in all publicly quoted financial companies. The ban will remain in force until January 16 2009 when the FSA will publish a comprehensive review of short-selling rules.

Interesting, very interesting and not good news for hedge-funds or spread betting, I wonder what Mike Smithson will make of this development.