Mr. Bones 2: Back From The Past(2008)
At least Alistair Darling and other ministers at the summit conceded the scale of the problem. That admission may have armed their opponents with valuable ammo, but the backdrop made it nigh-on impossible to duck. The IMF puts the chances of a global recession at one in four, and estimates total losses from the sub-prime crisis at nearly $1tn (which is not the bleakest projection, not by a long way). Also on the bright side, the G7 ministers seem to have accepted that the way out of this mess is for governments to intervene more heavily in the banking system. Again, one could argue that that decision had already been made for them, once Northern Rock required nationalising and Wall Street giant Bear Stearns needed a mammoth underwriting by the US central bank. Nevertheless, Mr Darling and his colleagues have accepted suggestions made by many - including this paper - who believe financial markets need firmer supervision. Banks to keep more money by for rainy days? Check. Reform of the credit-ratings agencies? Yes. And perhaps the measure that will have most direct impact of all, banks will be pressured to come clean on the amount of toxic debt they hold. As Gordon Brown explained yesterday, that helps "reduce the uncertainty and risk they face and restore confidence back into the markets". Before all that, however, there will be the banking equivalent of an Arnold Wesker play: all emotion, shame and catharsis. The next step is to set the small print on who supervises this and what accounting standards they use.
Mr. Bones 2: Back from the Past(2008)
It could be said that these advances are in themselves remarkable. Mr Darling has spent most of his tenure as chancellor lurching from one panic to another, while his US counterpart, Hank Paulson, is a former Goldman Sachs banker. These are not natural radicals. Besides, governments around the world have spent most of the past three decades rolling back regulation; the tide has at last been stopped, and that is astonishing. There is something in this. But it is worth recalling the catch-all term being used for these proposals: re-regulation. That just illustrates how all that is being done is restoring the safeguards taken away for no other reason than blind dogma. These proposals do nothing to deal with the culture of reckless lending that has grown up in the era of deregulation. That issue has cropped up time and again in a series of comment pieces run in this paper over the past week (accessible on our Comment is Free website), and these proposals do nothing about the bonus system that encourages bankers to make short-term decisions. Nor do they put in place an official licensing system for new financial products, just as new pharmaceuticals are licensed by the drugs authorities. Even on the crucial question of international supervision of finance - the most globalised industry of all - the G7 ministers have suggestions rather than an action plan. 041b061a72