Capitalism
Rock blew whistle on economic flop
1) In 2004 and subsequently, the Treasury - under the then Chancellor, Gordon Brown - didn’t appreciate that banks were taking on dangerous risks by becoming dependent for funds on wholesale markets, and didn’t see the urgency of making adequate preparations for the possible collapse of those banks (even though it recognised that it didn’t have an adequate system for dealing with such crises);
2) In the autumn of 2007, the Treasury - under the current Chancellor, Alistair Darling - didn’t expect house prices to fall by more than a few percentage points and didn’t believe the UK would suffer a recession;
3) Until far too late, all the authorities - the Treasury and the Financial Services Authority in particular - had a hopelessly naïve view that Northern Rock was not taking excessive risks by providing 100% mortgages at the top of the housing market.
Read more at www.bbc.co.uk
1) I spent most of 2002 and 2003 arguing with my fried Dani - I held the view that the banking system was hopelessly overextended and that capitalism without serious regulation was doomed to fail.
2) I sold my house in 2001 expecting the housing market to fall dramatically. I was a little premature in my estimates, but I suspect the fall will end up being greater than even I anticipated. 1992 levels are likely, I suspect.
3) The BBC and others were highlighting the fraudulent practices being used to secure people mortgages so they could buy houses at ridiculously inflated prices back at the beginning of the millenium, so it is surprising nobody realised the risks…
The whole system has been based on fraud and dishonesty for so long, it is hardly surprising that it is ‘re-adjusting’. The failure of the ‘authorities’ to see it was going to happen is merely an indication of the problems inherent in political and business practices. Power and money are used to run things, and the whole thing is based on greed. We still have a system where the city doesn’t like investing in things which can produce income in a sustainable way, desiring, instead to believe in the fiction of sustainable growth.
Vive la revolution.
