Looking forward.....

On the last day of 2010 I'm thinking about what 2011 might hold for us and Radio4 this morning gave me plenty of food for thought. The Today programme had a guest editor, Dame Clara Furse, who was, from 2001 to 2009, Chief Exec of the London Stock Exchange. Dame Clara engaged in an interesting discussion on the state of the economy (remember that?) and, whilst I don't deny that I'm cherry-picking the discusion, her guests made some interesting comments:

Sir Howard Davies (Director of the LSE) proposed that the financial crisis was a function of global imbalances, loose liquidity and weak monetary policies meeting a wave of financial inovation surrouded by weak risk management. This produced an unpleasant mixture of banks taking risks that they didn't understand, able to do so because money was easily avaulable and credit was cheap.

Avinash Persaud (Chair of the UN task force  on Financial Reform) suggested that bankers are an easy target because of a decade of egregious overpayment perhaps over influence on regulation and bankers turning out to be not half as clever as they thought they were. The reason for regulation is that if bankers are allowed to pursue their narrow interest there are wider problems. Persaud would give a more frontline role to regulation. Everything that happened in the banking crisis was incentivised to happen. Financial regulation incentivised bankers to shift loans 'off balance sheet' (creating an unrealistic picture of their financial situation).

Gillian Tett (US Managing Editor, the FT) observed that the agencies that failed were not just the banks but the politicians, the consumers, the rating agencies. The only problem is that only one of that group (the Bankers) has walked away with massive payouts and the big political question is that the population is being asked to take a lot of pain (cuts in public services, increased taxation) at a time when the financial industry is seen to be doing rather nicely.

This piece was followed by an equaly interesting interview with Boris Johnson discussing London, its position in the UK and internationally and its future challenges.

These two pieces, taken together, reinforced my own belief that without London and its financial centre, Britain is a dead duck. In stark contrast to those stupid Germans and French, and largely thanks to Mrs Thatcher, the UK has very little manufacturing which is controlled within its own borders. For the UK to attract finance from abroad, we must support a state within a state and so, whilst the City of London flourishes, the rest of the country will steadily and gently decline.

We, the taxpayers, have bailed out the mess that the unregulated financial institutions got us into and now we, the taxpayer, are facing swingeing cuts in public services as the government cuts debt and reflates its reserves not from the profits of the banks, but from us, the taxpayers. Kutter Ken Maddock and his chums at County Hall are just a reflection of that government policy and they will get away with it if we, the taxpayers, sit back and allow ourselves to be reamed. They care not one jot for Somerset or its population. Their only care is for the orders that they receive from Osborne. And he only cares about the interests of his fellow millionaires in the cabinet and their friends in the City.

I do agree with David Cameron on one thing - there are hard times ahead.

Till next year, I'm Niall Connolly