A dramatic, historic, unprecedented press conference at Downing Street this morning, at which Gordon Brown and Alistair Darling outlined the Government's semi-nationalisation of the banks. Interestingly, the Prime Minister fielded most of the questions, only referring the odd one to his Chancellor. The two men looked calm enough, given the enormity of their announcement, which I suppose was the point of the exercise - even if recent events have shown that the financial markets have a mind of their own and won't necessarily be assured by a solid performance by politicians.
Brown was at pains to insist that the £50bn of taxpayers' money for the banks' bail out would come with "strings attached" - notably on executive pay. I'm not sure that will settle the nerves of ordinary taxpayers, but never mind. Clearly, something had to be done. Brown and Darling did their best to answer the charge that they had been "dithering." They are both livid that leaks about the bail out forced them to announce their scheme a day or so early, and that they have looked at the mercy of events at a time when they were desperate to be seen to be in control of them.
The only time the PM was a little lost for words during the 40-minute presser came when he was asked "how far through the crisis" we now are. His pregnant pause was as revealing as many of his answers. Eventually, he said: "We know it is a long haul." In other words, he hasn't got a clue how long this will last, or what will happen next. Chilling.
Watch the press conference:
UPDATE: Brown swatted away David Cameron at the first session of Prime Minister's Questions since the Commons summer break. The Tory leader had a difficult balancing act to perform: he wanted to ask (wholly legitimate) questions about the bail out, but couldn't be too critical after promising a bipartisan approach to the crisis at last week's Tory conference. It proved impossible. Brown looked comfortable on his natural subject. Cameron did not. For a moment, it was as though the past year hadn't happened: Brown was a strong, authoritative Prime Minister against an inexperienced Opposition Leader. Brown 2, Cameron 0.
Brown can do nothing about executive pay, this is a sop to the gallery.
Of much greater interest now is the future of that busted flash, a.k.a. the European Union. Joke!
Barroso is apparently is worried that banks might be nationalised. What an excellent idea. Your resignation would make it two good ideas in the same week, which must be some kind of record.
Posted by: Tom MacFarlane | Wednesday, 08 October 2008 at 01:36 PM
I recall being told in the Eighties that the nation harboured an "enemy within" that sought to undermine our democratic values, undermine the capitalist system and hold governments to ransom.
Posted by: Jim Coffey | Wednesday, 08 October 2008 at 01:50 PM
Part of the deal would not be an undertaking to make life difficult for bank customers in ways that encourage us to abandon our stupidity and to realise the "benefits" of identity cards, would it? Watch what happens in the next couple of years.
Posted by: D.L. Stephens | Wednesday, 08 October 2008 at 02:40 PM
The government's rescue of the banks may stabilise the global financial crisis temporarily, but where the far bigger problem of economic stagnation and decline lies firmly upon the horizon now. The reason, with the US's total debt when all is taken into account at the end of 2007 was $51.1 trillion (projected to increase to around $53 trillion by the end of this year), sheer interest payments estimated at over $2 trillion a year, estimated toxic debts of financial institutions of over $4.1 trillion and total global debt exceeding $100 trillion (approx. 2-years of total global GDP output), no amount of capital injection will save the global economic system from eventual collapse as it is being pursued today. I give it no more than 18 months to fail.
The only situation that could bring global stability to the economic system is the influence of China and its direct intervention. Unfortunately pride by Western politicians will not allow this to happen, but where eventually they may have no other option but to take this decision to save the world economy from decades of economic stagnation. That is what we risk now with uncoordinated political indecisiveness in the West. These are plain truths and no more.
Dr David Hill
World Innovation Foundation Charity (WIFC)
Bern, Switzerland
Posted by: dr david hill | Wednesday, 08 October 2008 at 02:50 PM
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Posted by: That's Bremmy | Wednesday, 08 October 2008 at 06:20 PM
THE FAILURE OF CAPITALISM
Money is the lifeblood of capitalism and banks are the heart through which money circulates. Failure of the banking system on the current scale reflects a massive and systemic failure of capitalism and demands an international system of regulation of the financial sector.
Capitalism is a Darwinian drive for survival of the fittest as defined in western culture as the ability to create personal wealth. Some call it greed but it is really no more than an atavistic drive for security. We would all be greedy given half the chance.
Laissez faire economics as practiced by the west for over two decades has provided an environment in which greed was allowed to manifest itself through the formation of a tiny superclass which came to control our economies. This class operates internationally thereby making control by individual states impossible. This globalisation also enables the superclass to secretes their gains in tax havens. The superclass is so powerful that it influences politicians and regulators to perpetuate policies favourable to themselves and indeed expand them.
The final irony is when the system collapses the superclass is not called on to contribute to its repair, it is the rest of us in the midst of the turmoil they have created that have to pay the price. Most of the lawmakers and regulators whose blindness and ineptitude permitted this catastrophe remain in post as do most of the superclass ready to perpetuate the next scam.
It is time for an international system of regulation and taxation to bring down this morbid and amoral elite if another meltdown is to be avoided.
Posted by: Nidri | Wednesday, 08 October 2008 at 09:22 PM
Nidri
Spot on !
Posted by: dr david hill | Wednesday, 08 October 2008 at 10:20 PM