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Bill D'arblay

Must See For Hpcers - Lord Turner Blames Fiscal Policy For Inequality, Debt, Low Productivity & Btl Excesses

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Here Lord Turner, member of the UK's Financial Policy Committee and was Chairman of the Financial Services Authority, is interviewed on Hard Talk.

http://www.bbc.co.uk/iplayer/episode/b06wdcx9/hardtalk-17122015

Here, he launches a wide ranging and scathing attack where he sees the Banking Crisis of 2007 as an inevitable symptom of failed fiscal policies rather than a cause in itself.

He finds that inequality and debt are built in to the policies of the West and rails against productivity sucking excesses such as buy to let.

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I happened to catch part of that on TV the other night and was pretty surprised to hear him talking sense given what he did (or rather didn't do) whilst actually in a position to do something about it.

The fact that he's making sense now that he's out of the game shows that he knew full well how wrong the policies he was pushing were. Yet he still went ahead with them .... but then, you've got to make hay while the sun shines and positions of political power can be fleeting. Got to feather the nest whilst you still can.

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The trouble is once an economy has matured, manufacturing presents limited returns. The quick easy profits are in *leveraged* asset speculation and this becomes the driving force.

They only appear quick + easy cos the leverage is not being accounted for and priced correctly.

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The fact that he's making sense now that he's out of the game shows that he knew full well how wrong the policies he was pushing were. Yet he still went ahead with them .... but then, you've got to make hay while the sun shines and positions of political power can be fleeting. Got to feather the nest whilst you still can.

True. Although it is helpful to have ones suspicions and observations confirmed by a once insider - even if it is retrospective.

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It seems to confirm that even the top jobs are in reality only middle management. Making little or no change to outcomes - just tools.

That would maybe also help to explain why so little of what they say makes sense and why they constantly contradict themselves day to day - it explains it but doesn't excuse it.

Edited by billybong

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His assessment of the past policies makes a lot of sense - now. It's all in his new book :lol:

Curtail debt. So Turner's solution is to just print more money - but not to add it to the debt.

Isn't that Corbyn's proposal.

Edited by billybong

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To be fair he admitted that he would have made the same mistakes as anyone else and emphasised that you can only do what your environment allows (even central bank governor can't rewrite their own remit).

It's entirely plausible for the financial system to be populated by many intelligent, informed people who are aware of real problems with the system in which they operate, but can only mitigate them to the extent they feel their power allows. I think the same goes for many walks of life.

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He says there are rules and a "script" that the central bankers have to abide by (within their own scope of influence) as if the ZIRP/QE policy is applied via some preformed rules - so he would have had to follow those rules if he had been governor.

That's not so convincing and sounds a bit of a cop out to try to justify why he just went along with it all at the time.

Edited by billybong

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The other thing that becomes quite evident is how very clearly they all see the entire house price scam - and how it's all related to wealth, inequality and the economy etc.

Edited by billybong

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I happened to catch part of that on TV the other night and was pretty surprised to hear him talking sense given what he did (or rather didn't do) whilst actually in a position to do something about it.

The fact that he's making sense now that he's out of the game shows that he knew full well how wrong the policies he was pushing were. Yet he still went ahead with them .... but then, you've got to make hay while the sun shines and positions of political power can be fleeting. Got to feather the nest whilst you still can.

For what it is worth, I disagree very strongly with the line of argument you are making. Turner left Merrill Lynch in 2006, before the crisis, and took the FSA job after the crisis, leading the FSA from 2008-2013

The MMR has his fingerprints all over it.

Mortgages and loans should only be advanced where there is a reasonable expectation that the customer can repay without relying on uncertain future house price rises.

That's the first bullet point in the Foreword to FSA CP11/31 in December 2011.

If you want to find somebody to thank for the fact that the banks are no longer offering high LTV interest-only and self-certified to owner-occupiers, Turner is your man.

As buy-to-let never fell under the FSA's remit, there was bugger all he could do about that, (and you can probably 'thank' Gordon Brown and Alistair Darling for that).

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Very interesting. At 4 mins in he starts putting the boot into easy credit and buy-to-let.

The interview is a pretty good overview of the position Turner maps out in his book, Debt and the Devil. I thought the book was excellent, and he does, in passing, flag UK BTL as exactly the kind of shite lending banks should be prevented from doing.

The BCBS risk-weight consultation is on the same page. You really appear to have an enormous shift in what passes as sound thinking about banks and money amongst the policy elite, (though it does appear that Stephen Sackur has been falling behind on his reading and missed this, pedalling the same old BS fairy tale about productive industries being starved of credit because Nationwide aren't allowed to lend billions to Bos Reck and pals :rolleyes: ).

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