Hi,
Mark Elkins wrote:
> How is it that prior to the current economic problems they were not
> warning that things could badly go wrong and yet appear to be more
> than keen to believe that Fred Goodwin should have known? Politicians
> of all political parties have advisers so why didn't they know of the
> dangers and why were they not able to warn Fred Goodwin of the dangers
> of the actions RBS were taking?
As an aside I think there were columnists, pundits, and yes,
politicians, warning that interest rates were too low and bubbles caused
by cheap credit, e.g. the housing market, were getting out of hand.
Vince Cable was one IIRC. And Mervyn King made a few warning noises,
although in the measured tones of a BoE Governor. But after a while the
warnings seemed wrong as things were manipulated to keep on going
swimmingly, at least above water, and it's a rare politician that's
going to keep standing up and imply voters don't deserve their current
lifestyle, things are going to get worse, and a good thing too.
As for the banks, savers on forums like moneysavingexpert.com and
elsewhere were discussing whether Northern Rock was a safe place to
invest before Peston caused the run. They knew it was offering a good
deal but some of them would also cast an eye over its books and say it
was over stretched and could all end in tears. They weren't especially
insightful, rumours of NR having trouble kicked about for months
beforehand.
Ironically, investing with them was the right thing if you were under
the FSCS limit because you continued to get the good deal, e.g. 7% fixed
for the rest of the five year term, under the FSCS scheme whilst the
rest of the high street slashed the savings rates on offer.
> Interestingly for all the curtailment of Trade Union powers and
> reluctance to embrace provisions of the EU social chapter such as
> 'Worker board representatives' how come the UK economy is not stronger
> than the German or for that matter the French?
Germany has for a long time had an artificially low currency in the
Euro. This aids its exports although German ministers insist it doesn't
really as they export based on quality, e.g. engineering, and not price.
It can't hurt though. Its exporters are strong lobbyists within Germany
to stay in the Euro, even though it will probably cost more to keep
bailing out the PIGS than to cut and run now.
I didn't know the French economy was strong? It could be, you don't see
it written about much.
As for UK, there was an interesting snippet from Stephanie Flanders the
other day, daughter of Flanders of Flanders and Swann.
http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2010/12/if_germany_left_the_eurozone.html
It's interesting to compare these numbers with the massive positive
shift in the UK's balance sheet after the pound fell by 25%, on a
trade weighted basis, in 2008. By the end of 2008, net foreign
liabilities of £352bn had turned into net foreign assets of £92bn -
even though we ran a balance of payments deficit throughout and
exporters had not even begun to start taking advantage of the lower
pound. Amazing what a little - OK, a large - depreciation can do.
Cheers,
Ralph.
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