Commentariat

You are browsing the archives of 2008 October.

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The global financial crisis has led to a stark reappraisal of risk. Markets had ignored any chance of default for so long that their U-turn now looks more like a…

Compounding the challenges facing the next US president is the transition from the old administration to the new. This is no small matter. American handover…

It looks about as sensitive as marketing sunglasses on Noah’s ark. While economies round the world feel the waters of recession rising and consumers rein in spending,…

The global financial crisis has led to a stark reappraisal of risk. Markets had ignored any chance of default for so long that their U-turn now looks more like a…

Compounding the challenges facing the next US president is the transition from the old administration to the new. This is no small matter. American handover…

My sister and I use the same car. We don’t fill it up just for the other to get the benefit

Claiming that the stock market is efficient is by far the most sensible way for an investor to look at the world, writes Tim Harford

My sister and I use the same car. We don’t fill it up just for the other to get the benefit

Letter: Don’t label all German achievements made between 1933 and 1945 ‘Nazi’

Letters: Denial of the right to die is sheer religious primitivism

Letters: Postcode-based funding can distribute money to the most needy

Letters: Russell Brand should be the new Doctor Who, with Georgina Baillie as his assistant

Today’s corrections

Today’s corrections

Letter: Gordon Coates referred to the ‘holy grail’ of film collecting as a ‘rumoured 289-minute version of Francis Coppola’s 1979 film Apocalypse Now’

Rosemary Roach: East Yorkshire

Letters: Wagner’s Ring cycle, or indeed any of his operas, would be ideal candidates for the Twenty20 format

Editorial: The US stands on the threshold of the new era it needs. Americans should elect Barack Obama as their president

Editorial: The judges are right: parliament, not the courts, should clarify the law on assisted suicide

Dr Judith Maltby: Barack Obama may be able to repair the damage done by the US Christian right

So who’s in charge here - the government lending £37bn to bail out badly run banks or the bankers that caused the crisis? The chancellor is attempting to crack the whip and toughen the voluntary code on lending to small business. The banks veer between protesting that they are lending just as much as in 2007 to suggesting it’s none of the government’s business. Darling has his ambiguities, anxious not to micromanage banks even when we, the people, are the biggest shareholders. The European Investment Bank tries to ensure the £4bn promised this week is lent at fair rates, but the government has yet to persuade every bank to use it for easier lending.

The two sides have been locked in talks all week; the government promising an agency to manage its banking investments and a forum where small businesses can meet banks to complain. Observers say the banks’ gratitude at being saved was shortlived: now they negotiate ferociously. Barclays preferring to be beholden to Qatari and Abu Dhabi potentates, rather than submit to British (Labour) government regulation, says it all. It would rather keep paying big bonuses - £20m to its top man - and now its shares have tumbled. All banks shudder in ideological horror at the idea of being partly nationalised.

Here is how things look from one of the great glass towers of banking (a bank that only let me in on condition of anonymity). The man in charge of lending to small business is going through a sheaf of loan applications. A restaurant wants to increase its overdraft, pleading to be helped until the good times roll again. “But that would do no favours to him or us. His problem is not lack of credit, it’s lack of customers. Lending more won’t bring them back through his door. Better to call it a day now.” So it’s a no.

How about the golf club that borrowed last year to diversify into paint-balling? Business was disappointing this summer, but they are sure it will pick up. No, says the bank, it won’t, so retrench back to your core golfing and lay off staff. It’s no to the small property developer wanting to buy a bargain to convert it into four flats. “Last year no problem, but those days are gone.” A nursing home waiting for delayed local council bills is a sound bet: it gets its credit. A high-quality butcher staggering when a celebrity chef went bust leaving a £50,000 debt gets his money because the queues round the block show business holding up. Management consultants, lawyers and accountants who thrive whatever the climate get the OK.

This bank says it is approving 10% fewer loans than last year: insolvencies are up by 5%. It swears its lending criteria remain unaltered but says the risk out there has changed. It swears its interest rates are, as ever, 2% above interbanking lending rates, their usual profit margin: it’s not their fault London interbank offer rates rose so high. A senior manager here, involved in the negotiations with government, is holding his ground. “It’s dangerous to force us to take on more risk. They keep promising ‘a bail-out for small business’, but what does that mean?” He has an air of determined defiance - and maybe an undertow of contempt for politicians (Labour especially?) who are not bankers.

But out there, far beyond this great glass palace, the Federation of Small Businesses declares this bank and the rest are lying through their teeth: its claims the figures to prove it. Half their members find it hard to get credit, even small regular sums for day-to-day transactions in solid firms. They say what bank head offices tell the press and government bears no resemblance to what local bank managers do, accusing them of sending coded messages to their branches rewarding them for cutting back debt. The FSB says: “It is time to tear up the rulebook to save millions of small businesses that drive our economy and employ 60% of the workforce.”

It has no shortage of cases. I talked yesterday to a Welsh scaffolder who cannot get a promised £3,000 overdraft from his bank to get his second lorry on the road and hire another man to fulfil work he’s having to pass on to other companies. Or there is the technology public relations firm owner showing me the standard letter sent out by his bank - which happens to be the very one I spent time with - telling him without notice in September his interest rate “will be changing from 6.87% to 10.87% above base rate. Please may I reassure you that our commitment to your business hasn’t changed.”

What is the truth of this? I asked two bankers involved in the negotiations if the government has demanded details of how they lend now compared with last year. No, they said, they haven’t had to provide those accounts. Labour needs to clear a quick path through this thicket to make sure the funds made available really do reach businesses in need. Naturally, the government is no keener than banks to throw money at doomed businesses, so it hesitates to second-guess “the experts”. But this must be a good time to face down the myth that bankers always know best.

One irony is that Labour will win scant gratitude for championing small business. They will probably stay Tory, despite George Osborne’s error yesterday in opposing borrowing, even to ease the pain for small business. The British Chambers of Commerce still flaunts its absurd Burdens Barometer, claiming that this year Labour’s extra regulations have cost business £65bn since 1997. The “burdens” include such frivolities as maternity leave, stakeholder pensions and the control of pesticides and asbestos. Will Labour battling with the bankers on their behalf turn them into Labour supporters? Don’t count on it.

The government’s £37bn doesn’t start to flow until January, so there is still time to nail down a cast-iron method of forcing banks to lend and not hoard the cash. Yet some lending still gushes forth. A virtually penniless client of HBOS sends this offer she just received from her bank: “£10,000 is reserved and waiting for you! As a valued customer we’ve reserved you a personal loan at a rate of just 8.8%. If you wish you can apply for more …” After writing last week about bankruptcies due to personal debt, many others with no money have showered me with similarly irresponsible offers. So the idea that banks always know best should have Alistair Darling at least raising one of his famous eyebrows.

polly.toynbee@guardian.co.uk

guardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds

How are you enjoying the BBC witch trials, in which the Daily Mail has so brilliantly inhabited the Joseph McCarthy role? Naturally, were it all to stop now, the paper could take a curtain call, and bouquets, and offers of guest spots at the Salem Temperance Festival. Yet one can’t help feeling the past week is just the start of a play in three acts, which begins with something genuinely nasty happening in the woods, but quickly subsumes all manner of innocents. Oh, for an Ed Murrow to lay bare the hypocrisies, contradictions and self-interest that lie beneath the witchfinder general’s demented pursuit.

By now, it should hopefully go without saying that Russell Brand and Jonathan Ross were appallingly out of line, arrogant and way too late with their displays of contrition. Also, really unfunny. They deserve their punishments.

But who will be next to have the finger pointed at them? In her excellent Newsnight interview with BBC director general Mark Thompson on Thursday, Emily Maitlis indicated other targets might fairly easily be found, noting that this week, some comedian on a Mock the Week repeat had been asked to imagine something the Queen wouldn’t say in her Christmas speech, and had offered the line “I’m so old my pussy’s haunted”. After Maitlis had repeated it, I toyed with the idea of ringing in to make an ironic complaint, amused that in an atmosphere this febrile it might actually be taken seriously. Too late. Yesterday morning, David Davies, the Tory MP for Monmouth, issued the first frothing call-to-arms about this 18-month-old repeat, and there will be armies of Fleet Street’s paid puritans scouring iPlayer for other lost pussies. I hope Molly Sugden is already in a priest-hole, because Mrs Slocombe has a lot of explaining to do.

Even now, Richard Littlejohn might be preparing to shriek “I saw Goody Maitlis saying pussy on Newsnight!”, before collapsing in a mock convulsive fit, until Emily herself is carted away to the ducking stool.

And so to Littlejohn, who led yesterday’s Daily Mail triumphalism with yet another piece unloading all over the “nationalised industry” that is the BBC. “They think our job is to pay, theirs is to spend,” he thundered. “No questions asked or tolerated.”

What nonsense. Is there a single institution in the UK that is more responsive to public opinion than the BBC? It is perhaps the only area of public life where people have a real-time sense of their own power. You can’t stop a war, no matter how many of you march. You may as well howl at the moon as to wonder how the chief executive of Lloyds TSB can dare to say bonuses will be paid, despite the fact his bank has had to be bailed out by an emergency part-nationalisation. But complain about the BBC, and you can be fairly sure someone will be sacked within the week. I truly suspect that some people complain just to feel part of it all. Perhaps Ofcom should start issuing commemorative badges, so complainants will have souvenirs, and tell their grandchildren what they did in the Great Manuel wars.

Unsurprisingly, given his own awful forays into the medium, Littlejohn knows nothing about television, and there isn’t room to expose all the glaring idiocies in his and the Mail’s arguments for the dismantlement of the BBC. Most crucially, they don’t understand that British people like having the best free-to-air television in the world - and that they have this only because of the BBC licence fee, which means broadcasters can’t compete for funding; they have to compete for quality. “What is it that BBC1 does that the independent sector can’t do just as well?” asks Littlejohn. “Do I hear Little Dorrit and the Blue Planet? … I’m sure a privatised Channel 4 in partnership with Discovery or Disney would be happy to pick up the ball.”

Wrong. Where is America’s Blue Planet? Advertising revenues could never support such expensive shows. But, as Littlejohn knows, people want to see them. In fact, a report commissioned by our BBC-loathing government found that people would actually pay an average of £31 a year more for the licence fee than they do now. People cherish the BBC, and that is a big part of why they care when Ross gets it so wrong.

There has been much talk recently of a change in the zeitgeist. Yet remind ourselves what caused that change and we’ll see the frenzied pursuit of this row for what it is: a useful piece of misdirection.

Where is Littlejohn’s righteous anger on that other obscenely arrogant “nationalised industry”, the British banking system? Why, in weeks of financial meltdown, has he not once found himself able to summon even a hundredth of this level of ire to rail against the people who caused the mess, and the misery that will befall his readers as a result? After the Lloyds boss made the bonus announcement, Littlejohn led his column with some anecdote about a scaffolder who’d apparently been unfairly threatened with a £300 fine.

Why so silent? Why does the Mail not have snappers on the Lloyd’s chief executive’s doorstep, instead of those of Mock the Week comedians? It must be because it is content to faff in the shallows. And if its relentless campaign to kill the country’s one remaining great institution eventually succeeds, saving households just under £140, then it can congratulate itself on a job well done, even if a significant portion of those people won’t actually have their own homes to watch telly in any more. This is the pathetic scale of the Mail’s ambitions, and it’s nothing more than fiddling while their readers’ money burns.

marina.hyde@guardian.co.uk

guardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds

How are you enjoying the BBC witch trials, in which the Daily Mail has so brilliantly inhabited the Joseph McCarthy role? Naturally, were it all to stop now, the paper could take a curtain call, and bouquets, and offers of guest spots at the Salem Temperance Festival. Yet one can’t help feeling the past week is just the start of a play in three acts, which begins with something genuinely nasty happening in the woods, but quickly subsumes all manner of innocents. Oh, for an Ed Murrow to lay bare the hypocrisies, contradictions and self-interest that lie beneath the witchfinder general’s demented pursuit.

By now, it should hopefully go without saying that Russell Brand and Jonathan Ross were appallingly out of line, arrogant and way too late with their displays of contrition. Also, really unfunny. They deserve their punishments.

But who will be next to have the finger pointed at them? In her excellent Newsnight interview with BBC director general Mark Thompson on Thursday, Emily Maitlis indicated other targets might fairly easily be found, noting that this week, some comedian on a Mock the Week repeat had been asked to imagine something the Queen wouldn’t say in her Christmas speech, and had offered the line “I’m so old my pussy’s haunted”. After Maitlis had repeated it, I toyed with the idea of ringing in to make an ironic complaint, amused that in an atmosphere this febrile it might actually be taken seriously. Too late. Yesterday morning, David Davies, the Tory MP for Monmouth, issued the first frothing call-to-arms about this 18-month-old repeat, and there will be armies of Fleet Street’s paid puritans scouring iPlayer for other lost pussies. I hope Molly Sugden is already in a priest-hole, because Mrs Slocombe has a lot of explaining to do.

Even now, Richard Littlejohn might be preparing to shriek “I saw Goody Maitlis saying pussy on Newsnight!”, before collapsing in a mock convulsive fit, until Emily herself is carted away to the ducking stool.

And so to Littlejohn, who led yesterday’s Daily Mail triumphalism with yet another piece unloading all over the “nationalised industry” that is the BBC. “They think our job is to pay, theirs is to spend,” he thundered. “No questions asked or tolerated.”

What nonsense. Is there a single institution in the UK that is more responsive to public opinion than the BBC? It is perhaps the only area of public life where people have a real-time sense of their own power. You can’t stop a war, no matter how many of you march. You may as well howl at the moon as to wonder how the chief executive of Lloyds TSB can dare to say bonuses will be paid, despite the fact his bank has had to be bailed out by an emergency part-nationalisation. But complain about the BBC, and you can be fairly sure someone will be sacked within the week. I truly suspect that some people complain just to feel part of it all. Perhaps Ofcom should start issuing commemorative badges, so complainants will have souvenirs, and tell their grandchildren what they did in the Great Manuel wars.

Unsurprisingly, given his own awful forays into the medium, Littlejohn knows nothing about television, and there isn’t room to expose all the glaring idiocies in his and the Mail’s arguments for the dismantlement of the BBC. Most crucially, they don’t understand that British people like having the best free-to-air television in the world - and that they have this only because of the BBC licence fee, which means broadcasters can’t compete for funding; they have to compete for quality. “What is it that BBC1 does that the independent sector can’t do just as well?” asks Littlejohn. “Do I hear Little Dorrit and the Blue Planet? … I’m sure a privatised Channel 4 in partnership with Discovery or Disney would be happy to pick up the ball.”

Wrong. Where is America’s Blue Planet? Advertising revenues could never support such expensive shows. But, as Littlejohn knows, people want to see them. In fact, a report commissioned by our BBC-loathing government found that people would actually pay an average of £31 a year more for the licence fee than they do now. People cherish the BBC, and that is a big part of why they care when Ross gets it so wrong.

There has been much talk recently of a change in the zeitgeist. Yet remind ourselves what caused that change and we’ll see the frenzied pursuit of this row for what it is: a useful piece of misdirection.

Where is Littlejohn’s righteous anger on that other obscenely arrogant “nationalised industry”, the British banking system? Why, in weeks of financial meltdown, has he not once found himself able to summon even a hundredth of this level of ire to rail against the people who caused the mess, and the misery that will befall his readers as a result? After the Lloyds boss made the bonus announcement, Littlejohn led his column with some anecdote about a scaffolder who’d apparently been unfairly threatened with a £300 fine.

Why so silent? Why does the Mail not have snappers on the Lloyd’s chief executive’s doorstep, instead of those of Mock the Week comedians? It must be because it is content to faff in the shallows. And if its relentless campaign to kill the country’s one remaining great institution eventually succeeds, saving households just under £140, then it can congratulate itself on a job well done, even if a significant portion of those people won’t actually have their own homes to watch telly in any more. This is the pathetic scale of the Mail’s ambitions, and it’s nothing more than fiddling while their readers’ money burns.

marina.hyde@guardian.co.uk

guardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds

Harold Evans: The US media have been captivated by Obama, at the expense of their curiosity and scepticism