Morning:
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Vince Cable, the LibDems' Treasury spokesman, describes the latest raft of measures aimed at freeing up the supply of credit as being like "giving the kiss of life to a corpse". He's right: the British banking system is floating face down in a pool of its own illiquidity and it's pointless us chucking it another lifeline. The problem with the Government's bail-out last October is that while it may have stopped the patient flat-lining, it left him on taxpayers' life support, in a persistent vegetative state.
If you think back to the Northern Rock fiasco, there was much talk at that time about the notion of "moral hazard", the mad idea that those in positions of power and responsibility should be held accountable for their actions. Strangely enough, as it became apparent that it wasn't simply a few dodgy directors but entire tiers of senior management who had been involved in ramping up toxic debt, the M-word began to be heard less and less.
The Government - so one imagines - found itself in a similar position to the Allies when they defeated the Nazis, or, for that matter, the Americans after they'd toppled Saddam Hussein. Should they adopt the former's course, and keep the Nazis on to run the new administration, or should they go the latter's way, and de-Ba'athify with all their might? Unfortunately - to pursue the analogy - having adopted the former course, Gordon Brown neglected to ensure the bankers really understood that the war, for them, was definitively over.
Now the Prime Minister strikes the board and cries "I'm angry" but really his ire should have been stoked up months ago, because all this time the banks have been playing a weird game of poker: refusing to lend to each other, because they all knew how bad the debts they're holding are. Now RBS, which is effectively in public ownership already, has had to come clean - a bit - and, surprise, surprise, everybody's share prices have started to yo-yo.
The only solution is to take the principle clearing banks into public ownership right away, and decouple them from their investment divisions. This is the only measure that will allow the full extent of the banks' liabilities to be known. Brown has persisted in believing that the kind of financial freebooting that got us into this mess would somehow get us out - hence the mad relaxation of the moratorium of short-selling; but it won't. There may indeed be a terrible capital flight from the City if the Government nationalises - but just think how bad it's going to be when - not if - one of the big five goes under.
Boys, boys – this is all pants
It's not so much a hissy-fit as the whooshing cacophony of two Zeppelins colliding — those titans of male fashion, Dolce & Gabbana and Giorgio Armani, have gone empty head to empty head over the vexed question of plagiarism. The shmatte in question is quilted trousers. Sixteen such seminal artworks were paraded on the catwalk at Dolce & Gabbana's Milan show, to the outrage of Armani, who had shown a pair in his collection last year. I think I know what all three fashionistas are aiming at. If you take said quilted trousers, slit them up the inside seam, sew the legs and the ankles together, hey presto! You've got a sleeping bag — just what a style victim's going to need when his house is repossessed.
Food for thought in Panton Street
We've been without a car for a year now, so a weekend treat consists of renting a Streetcar and tooling around town. This Saturday we took a wrong turn, and ended up on the boulevard of broken dreams.
First stop was Exmouth Market, where in the Ambassador Café — normally a hive of activity — the busy staff bees outnumbered the afternoon drones. Then I went to Brindisa, suppliers of my favourite cheese, only to discover that this branch of the deli was flogging off its stock prior to shutting for good. Next stop should have been a furniture shop on New North Road but that had already closed down, as had the vintage clothes shop opposite Spitalfields.
All in all, a depressing, credit-crunchy day — only redeemed by a visit to the Stockpot Restaurant in Panton Street. Ah! The Stockpot — a London institution if ever there was one. It's still offering a three-course meal, with waitress service, in the heart of the West End, for £8.95. With prices that reasonable they could outride all Four Horsemen of the Apocalypse — let alone survive a measly recession.
Reader views (3)
The regulators (and the hence the Government) have always known exactly what assets the banks have in their portfolios. The banks have to report everything, every quarter, in detail, and do stress testing. The problem is we are living in a once in a lifetime circumstance which happens so very rarely that, in normal times, it would not make sense to provide for it.
- Tim, Hong Kong, 22/01/2009 10:17
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Totally agree with Will about the Stockpot. I used to work in St. Martins Lane and went for lunch there at least twice a week during the 70's.The food was good, staff friendly and prices a bargain.
- Robert May, SouthWest France, 22/01/2009 09:24
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The Swedish Model for British banking, so to speak
- John Bloomfield, Twickenham, 21/01/2009 13:54
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