Financial Regime Change: the Dominos Keep Falling

Comrade Mason’s back blogging I see, and back on crackin’ form. He’s pushing the line that the crisis is now unfolding to the point where banks which were supposedly a (private) part of the ‘solution’ last autumn are now manifestly part of the problem. Just go look at Barclays. So, says Comrade Paul, there are four alternative potential solutions :

“a) In short order, a credit guarantee scheme for businesses to allow them to roll over their loans

b) A taxpayer funded cap on bank losses, so the banks can draw a line under the old crisis and start meeting the new (hopefully not with new excuses about why they cannot afford to lend)

c) If they can get away with it, and if the banks will stomach it, a TARP-style fund to buy up bad debts and put them into a "toxic" bank, owned by you and me.

d) And if this doesn't work, nationalisation. I mean real nationalisation.”

Peston focuses on government plans for plan b – he calls it ‘the mother-of-all bank insurance schemes’ - but Mason gives the impression of not thinking it will work. Peston is very sniffy about the prospects of a 'bad bank' being set up, but Mason takes the longer - and possibly the cooler-headed - view.

The old system of Anglo-American finance is dying and yet no-one seems to have a clear view of what to replace it with. The crisis is not over - the fat lady hasn't even got into the car to drive to the opera house let alone come on stage and began to sing....

Bank Nationalisation

Stumbling says,
"...if banks are failing so badly and need so much intervention, what is the point of keeping them in the private sector?
There’s one thing government can do much better than the private sector, especially in recession - raise finance cheaply. This means nationalized banks, operating with government guarantees, could raise money cheaper in wholesale markets. And it means governments find it cheaper than the private sector to inject capital (shareholders funds) into banks."

Ken says,
"At present in UK banking the conflict between the development of the economy and a fetish of safeguarding private ownership is not a long term or tangential one. It is an immediate issue of economic recovery."

So the longest suicide note in history comes into its own as a measure seen as technically necessary by practical types...

Due to End in Tears

Crickey. The Housing Association world is in trouble, basically because of the credit crunch's effect on their sales driven business models. So what are they doing? Well, they're replacing typically fairly conventional 30 year capital financing from banks with, ahem, 'sophisticated' 5 year 'lender option borrower options' between themselves.

"Alex Pilato, chief executive of Traderisks, said the deals were so complex that associations would find it impossible to work out the true cost. ‘When the only lending that takes place takes place in a non-transparent way you are missing the opportunity to get the market moving again.’"

Rearrange the following words to discover the deeper meaning of all this: Petrol/Flames/The/Thowing/On.

We Know Where You Live

Sometimes, just sometimes, people with whom you are in agreement do stuff which makes your blood run cold. I got that feeling about this map which shows the location of donors to the campaign behind Proposition 8 in California - the homophobic proposition which abolished same-sex marriage in the State. I'm trying to work out why this makes me feel a bit queasy, in the way that the escape of the BNP membership list didn't.

36,00 marriages were rendered subject to nullification by this evil little bit of reactionary bollox so its not as if I have any sympathy with the people outed as bigots on this map. I suspect what is nagging away at me is the sense that if 'my side' can do this, what on earth can the forces of the State do?

And it really does make campaigns like this look a little like shutting the stable door after the whole bloody herd has bolted.

Via CIF

Iceland's Economy: Still Fokked

Lest we forget: Iceland's still in deep doo-doo. The always readable Weather Report tells us,

"The news is pretty depressing - hospitals are closing, potentially 3,500 companies going bankrupt by the end of this year, hundreds of people lined up at the unemployment offices at the beginning of the month, etc"

So the mood is grim - hence the range of T-shirts etc she's selling, featuring the slogan of 2008 in Iceland. No prizes for guessing it basically means 'Goddam Fucking Fuck'. It was a slogan on a notorious sign used in demonstrations in Iceland after the economic implosion . The cultural supplement of the main paper is quoted as saying of the products,

“Behind them is a complex mood. No political demand is at the forefront, no technical implementation of the catastrophe, just a rank indignation: How could I stand by and just let the insanity happen?”

So why not buy one? & hope we won't need an version in English....

P.S. The Weather Report is also carrying news of regular demonstrations - and even some thing that sounds to me to be close to a sullen, unfocused mini-riot...

Harry Who?

The British Monarch ain't gonna fall because of a dumb younger son who embodies both the attitudes and the stupidities we lefties like to ascribe to his entire class.
One of those comes along every generation.

Naw. What we need is more people who take time off from solving the problems of the entire world to just concentrate on some business we as a people should have sorted out 200 years ago. So join republic, buy their pretty cool promo material - and if you work in education get them to visit your school.

A Stray Thought on Politics and Management

I do like Simon Caulkin, the Observer's Management writer. He is bright, committed, well-read in his subject and almost totally impervious to the beguiling sirens of management bullshit. This week, however, he makes an explicitly political judgment :

"As a class, ever since the separation of ownership and management in the 19th century, managers have always occupied a neutral position at the heart of the enterprise - neither labour nor capital, but charged with combining the two for the benefit of both the company and society itself.

Everything changed in the 1980s, however, with the advent of Reagan, Thatcher and Chicago School economists who preached the alignment of management with shareholders in the name of "efficiency". In effect, "efficiency" came to mean short-term earnings to the detriment of long-term organisation-building; what was touted as "wealth creation" was actually "wealth capture", from suppliers, clients and employees as well as competitors, on the grandest scale since the robber barons. Its purest expression was private equity."

It would be all too easy to rip into the assumption that management is somehow ‘neutral’ in the struggle between labour and capital. Of course it isn’t – if it was management wouldn’t measure success by profits and dividends.

But let’s not get hung up on the terminology intrinsic to different world views because, stripped of this default assumption, there is something in the idea behind his phraseology. I do think ‘organisationally based’ representatives of capital can often be more attentive to the social ecology necessary to ensure long term business growth than the disembodied concerns of pure finance capital. & that social ecology undoubtedly includes both suppliers, customers, regulators and even employees. This, surely, is another way of thinking about the debate around 'embeddedness' which the economic sociologists are so keen on.

There's an intellectual space here which a wise and forward thinking political left might seek to colonise. A space where concepts of social solidarity - remember Orwell said the basic purpose of socialism was 'human brotherhood' (sic) -could be intertwined with alternative notions of 'efficiency'; a space where at least some of the holders of the technical skills necessary to co-ordinating complex organisations might even be partially won over to the idea of greater workplace democracy. A space, if you like, where the idea of socialism might once again attempt to start being about the future and not the past.

The trick, however, would be to find this space without succumbing to the illusions of 40 years ago and the potential for the 'white hot heat of the technological revolution'.