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Will Hutton

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I guess he was always Blair's man?

Curb the greedy global financiers

While obeisant governments bail out dodgy plutocrats, it's ordinary people who foot the bill

Will Hutton

Sunday August 26, 2007

The Observer

One of the most inequitable and amoral acts in modern times is happening in front of our eyes and in Britain there is hardly a murmur of protest. The multi-billion dollar bail-out of global finance after one of the most reckless periods of lending and deal-making since the late 1920s is extraordinarily one-sided.

Little people's taxes are underwriting the mistakes of big people, who in the process have made riches beyond the dreams of avarice. Globalisation, it is now clear, is run in the interests of a global financial class which has Western governments in its thrall. This class does not give a fig for the interests of savers, clients or wider workforces.

Article continues

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The rules of the game are set up solely to benefit the financiers whether in London, New York or Hong Kong. The nonsense at the heart of the crisis - lending 100 per cent mortgages to borrowers with no income, employment or assets, packaging up the resulting debt and selling it to banks around the globe while taking a handsome fee on every transaction - can be launched with impunity. Financial regulation, we are told, hinders the efficiency of financial markets.

But now that it has become obvious that the mainly American borrowers have neither the capacity nor intent to repay any of the mortgages in an era of higher interest rates and stagnating house prices, there is justified panic at the wider consequence of the global system holding trillions of dollars of valueless debt.

The last few days have seen some recovery in the financial markets and some hopes for a return to normality, but what does normal mean? The system that has delivered hundreds of billions of dollars of written-off loans with a global impact can hardly carry on as if nothing has happened. The banks at the epicentre of the crisis should go bust and heads should roll. The hedge funds which bought the debt, traded it and sold it on to banks globally should also be allowed to go bust and be subjected to much closer surveillance and regulation.

Interpol should make arrests in New York, London, Tokyo, Beijing, Frankfurt and Paris, starting with all the executives in the credit-rating agencies who blithely ranked the debt as creditworthy in exchange for fat fees and freebies from the very banks who were making the absurd loans. Governments should bring suits against the executives involved, the repositories of vast personal wealth, to help repair the hole in private and public balance sheets.

Instead, most central banks and governments across the West are straining every muscle to limit the fall-out, assure banks and hedge funds that there is limitless public money on tap and that governments' first aim is to get back to 'normal'. The explanation is obvious. The Western financial system is too important to be allowed to implode; credit is any economic system's life-blood and if the supply lines get gummed up because of a collapse of confidence and severely punctured balance sheets, everybody suffers. Quite right, but at least we can be careful in future about the terms on which supportive cash and potential bail-outs are made, as well as drawing larger conclusions about the nature of the implicit contract between finance and society.

Unbelievably, the European Central Bank has made hundreds of billions of euros available to allcomers within the European financial system at no penalty for the privilege, while the Federal Reserve Bank in the US has lowered the interest rate at which it supports distressed banks. It is as though Europe and America had announced an amnesty to the world's criminal gangs after they had gone on a killing spree because they feared the killing would get worse .

The Bank of England alone has held the line, insisting that anybody turning to it for cash as a last resort will have to pay at a rate of interest that will hurt the borrower. Good for the bank, except its stance is undermined because outside the euro-zone it cannot insist the European Central Bank follows its stance. It is also undermined by a British government that on these matters is the most craven in the West.

For as the German and French governments along with senior American Democrats argue, the whole affair raises fundamental questions. It cannot be right that finance insists on freedoms and lack of regulation to indulge in anti-social recklessness in order to make personal mega-fortunes, but when things go wrong to ask for government bail-outs with no questions asked.

Thus Chancellor Angela Merkel and President Sarkozy have called for more transparency and regulation of hedge funds; thus in Brussels and Washington, there are to be investigations into what the executives at the credit-rating agencies have been up to. But from the British government there has not been a peep, not a hint that the contract between finance and society needs to be reassessed both at home and abroad. That would be - heaven forfend - 'anti-business'.

But the West's economies and societies cannot be constructed as if their sole raison d'etre is to ensure that there is a steady flow of deals for investment banks, private equity houses and hedge funds, along with an abundant flow of credit, and the moment there is any interruption governments bail them out. Finance is hardly poor. In Richistan, his revelatory book about today's mega-rich, Robert Frank shows how closely enmeshed instantaneous wealth and the financial markets have become.

Gordon Brown runs a government that is essentially conservative over business opposed by an opposition yet more conservative, with the Lib Dems terrified to rock the conservative consensus. Over the last few years, there has been a firesale of British assets to foreigners, together with ever-closer entanglement with the American debt markets to sustain the bonuses of the financial community. It would not surprise me if, before the story is over, at least a couple of household British financial names have to be offered a lifeline.

Somebody, somewhere must start blowing the whistle. The Americans at least take capitalism so seriously they challenge, monitor and regulate it. No such culture exists in degenerate Britain. We need a party which will speak for an interest other than self-interested, amoral plutocrats. None exists.

one or two interesting comments too...

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Guest DissipatedYouthIsValuable
He is really getting the boot in. Would be nice if they would run a dumbed down story like this in the Sun or Mirror to wake up some of the sheeple.

I doubt that any of the staff of the Sun or the Mirror are bright enough to understand what's going on.

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He is really getting the boot in. Would be nice if they would run a dumbed down story like this in the Sun or Mirror to wake up some of the sheeple.

The sheeple will only wake up when their asset is valued 40% less than what they paid for.

Interpol should make arrests in New York, London, Tokyo, Beijing, Frankfurt and Paris, starting with all the executives in the credit-rating agencies who blithely ranked the debt as creditworthy in exchange for fat fees and freebies from the very banks who were making the absurd loans. Governments should bring suits against the executives involved, the repositories of vast personal wealth, to help repair the hole in private and public balance sheets.

well said, couldn't agree more.

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The sheeple will only wake up when their asset is valued 40% less than what they paid for.

well said, couldn't agree more.

The Americans at least take capitalism so seriously they challenge, monitor and regulate it.

:lol: He should have an end of the pier show or a regular spot at the comedy store with gags like that.

Well I suppose there is some regulation in the US, unlike the UK.

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great article from Hutton.

sadly I remember articles like that - almost word for word - being written in the aftermath of the stock market collapse in 2000 and the accountancy scandals of 2002.

then there was a war and the stock market took off and everyone was too busy talking about the war to remember there ever was a financial crisis.

guess what folks ? the exact same thing will happen again,

there will be another war and this will all be forgotten and Hutton et al will be talking about the war and will have forgotten all about sub-prime,.

I have seen it happen so many times in my short life that I could write the script.

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Guest DissipatedYouthIsValuable
great article from Hutton.

sadly I remember articles like that - almost word for word - being written in the aftermath of the stock market collapse in 2000 and the accountancy scandals of 2002.

then there was a war and the stock market took off and everyone was too busy talking about the war to remember there ever was a financial crisis.

guess what folks ? the exact same thing will happen again,

there will be another war and this will all be forgotten and Hutton et al will be talking about the war and will have forgotten all about sub-prime,.

I have seen it happen so many times in my short life that I could write the script.

And the war will be in Afghanistan. September. Lots of troop deployment around that time. I expect the ***** at the Daily Mail have already written the front pages.

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And the war will be in Afghanistan. September. Lots of troop deployment around that time. I expect the ***** at the Daily Mail have already written the front pages.

maybe Afghanistan maybe Iran. but why pick on the Daily Mail ? Whenever I have read it it has been stridently opposed to the mess in Iraq. The strongest advocates for war have been the pro-Labour Times , Guardian and Sun,

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Instead of moaning about it, why don't we all write to our MP's and ask if tax payers money (or indirectly devaluing the pound) will be used to bail out wealthy bankers at the expense of joe public?

If they got enough letters like that it would really put the wind up em.

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In the 30s the Greenshirts (who grew out of an oddball offshoot of Scouting called the Kibbo Kift which advocated world peace and a return to the great outdoors and adpoted a strange mix of Native American and Olde English rites) used to put green-coloured bricks through banks' windows and when they disbanded, their parting shot was to fire a green arrow into the door of Number 10.

As Hutton suggests in this piece, there should be massive protests and outcry every week at the way the financial elite hoovers up the wealth of the people then makes the people pay up when the elite poops its own playpen.

Hutton has changed his tune. It was not so long ago he was broadly supportive of the top-down gloablisation experiment. Perhaps he's only saying that a global supranational government should be set up to monitor global finance? Such a government could be just as easily bought by the moneymen and could even make their work even easier.

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Guest DissipatedYouthIsValuable
Good idea. www.theyworkforyou.com makes it a breeze. Tap in your postcode and you're off.

Done.

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In the 30s the Greenshirts (who grew out of an oddball offshoot of Scouting called the Kibbo Kift which advocated world peace and a return to the great outdoors and adpoted a strange mix of Native American and Olde English rites) used to put green-coloured bricks through banks' windows and when they disbanded, their parting shot was to fire a green arrow into the door of Number 10.

I love that. Massive social disobedience! I might superglue myself to the outside of the Bank of America HQ tomorrow. Yesterday I had to make do with booting the door of a Mercedes car belonging to one of the big banks in Canary Wharf :P

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Hutton is a cretin. He was comprehensively demolished by the Telegraph some time ago-

"Will Hutton, Britain's foremost critic of capitalism and an outspoken advocate for affordable social housing, is married to a property developer who has made a fortune out of selling and renting inner-city properties, often at rates which local council housing officers describe as exorbitant."

Telegraph story

I love socialists. :lol:

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Similar Rant form NYT, no socialism mentioned though :P

http://www.nytimes.com/2007/08/26/opinion/26grant.html?hp

The Fed’s Subprime Solution

THE subprime mortgage crisis of 2007 is, in fact, a credit crisis — a worldwide disruption in lending and borrowing. It is only the latest in a long succession of such disturbances. Who’s to blame? The human race, first and foremost. Well-intended public policy, second. And Wall Street, third — if only for taking what generations of policy makers have so unwisely handed it.

Possibly, one lender and one borrower could do business together without harm to themselves or to the economy around them. But masses of lenders and borrowers invariably seem to come to grief, as they have today — not only in mortgages but also in a variety of other debt instruments. First, they overdo it until the signs of excess become too obvious to ignore. Then, with contrite and fearful hearts, they proceed to underdo it. Such is the “credit cycle,” the eternal migration of lenders and borrowers between the extreme points of accommodation and stringency.

Significantly, such cycles have occurred in every institutional, monetary and regulatory setting. No need for a central bank, or for newfangled mortgage securities, or for the proliferation of hedge funds to foment a panic — there have been plenty of dislocations without any of the modern-day improvements.

Late in the 1880s, long before the institution of the Federal Reserve, Eastern savers and Western borrowers teamed up to inflate the value of cropland in the Great Plains. Gimmicky mortgages — pay interest and only interest for the first two years! — and loose talk of a new era in rainfall beguiled the borrowers. High yields on Western mortgages enticed the lenders. But the climate of Kansas and Nebraska reverted to parched, and the drought-stricken debtors trudged back East or to the West Coast in wagons emblazoned, “In God we trusted, in Kansas we busted.” To the creditors went the farms.

Every crackup is the same, yet every one is different. Today’s troubles are unusual not because the losses have been felt so far from the corner of Broad and Wall, or because our lenders are unprecedentedly reckless. The panics of the second half of the 19th century were trans-Atlantic affairs, while the debt abuses of the 1920s anticipated the most dubious lending practices of 2006. Our crisis will go down in history for different reasons.

One is the sheer size of the debt in which people have belatedly lost faith. The issuance of one kind of mortgage-backed structure — collateralized debt obligations — alone runs to $1 trillion. The shocking fragility of recently issued debt is another singular feature of the 2007 downturn — alarming numbers of defaults despite high employment and reasonably strong economic growth. Hundreds of billions of dollars of mortgage-backed securities would, by now, have had to be recalled if Wall Street did business as Detroit does....

What a difference a century makes.

Edited by alabala

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Hutton is a cretin. He was comprehensively demolished by the Telegraph some time ago-

"Will Hutton, Britain's foremost critic of capitalism and an outspoken advocate for affordable social housing, is married to a property developer who has made a fortune out of selling and renting inner-city properties, often at rates which local council housing officers describe as exorbitant."

Telegraph story

I love socialists. :lol:

Yes. He's clearly got nothing to contribute to journalism following that hack job. Some of us remember when The Telegraph was a newspaper of note.

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I guess he was always Blair's man?

Curb the greedy global financiers

While obeisant governments bail out dodgy plutocrats, it's ordinary people who foot the bill

Will Hutton

Sunday August 26, 2007

The Observer

One of the most inequitable and amoral acts in modern times is happening in front of our eyes and in Britain there is hardly a murmur of protest. The multi-billion dollar bail-out of global finance after one of the most reckless periods of lending and deal-making since the late 1920s is extraordinarily one-sided.

Little people's taxes are underwriting the mistakes of big people, who in the process have made riches beyond the dreams of avarice. Globalisation, it is now clear, is run in the interests of a global financial class which has Western governments in its thrall. This class does not give a fig for the interests of savers, clients or wider workforces.

Article continues

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

The rules of the game are set up solely to benefit the financiers whether in London, New York or Hong Kong. The nonsense at the heart of the crisis - lending 100 per cent mortgages to borrowers with no income, employment or assets, packaging up the resulting debt and selling it to banks around the globe while taking a handsome fee on every transaction - can be launched with impunity. Financial regulation, we are told, hinders the efficiency of financial markets.

But now that it has become obvious that the mainly American borrowers have neither the capacity nor intent to repay any of the mortgages in an era of higher interest rates and stagnating house prices, there is justified panic at the wider consequence of the global system holding trillions of dollars of valueless debt.

The last few days have seen some recovery in the financial markets and some hopes for a return to normality, but what does normal mean? The system that has delivered hundreds of billions of dollars of written-off loans with a global impact can hardly carry on as if nothing has happened. The banks at the epicentre of the crisis should go bust and heads should roll. The hedge funds which bought the debt, traded it and sold it on to banks globally should also be allowed to go bust and be subjected to much closer surveillance and regulation.

Interpol should make arrests in New York, London, Tokyo, Beijing, Frankfurt and Paris, starting with all the executives in the credit-rating agencies who blithely ranked the debt as creditworthy in exchange for fat fees and freebies from the very banks who were making the absurd loans. Governments should bring suits against the executives involved, the repositories of vast personal wealth, to help repair the hole in private and public balance sheets.

Instead, most central banks and governments across the West are straining every muscle to limit the fall-out, assure banks and hedge funds that there is limitless public money on tap and that governments' first aim is to get back to 'normal'. The explanation is obvious. The Western financial system is too important to be allowed to implode; credit is any economic system's life-blood and if the supply lines get gummed up because of a collapse of confidence and severely punctured balance sheets, everybody suffers. Quite right, but at least we can be careful in future about the terms on which supportive cash and potential bail-outs are made, as well as drawing larger conclusions about the nature of the implicit contract between finance and society.

Unbelievably, the European Central Bank has made hundreds of billions of euros available to allcomers within the European financial system at no penalty for the privilege, while the Federal Reserve Bank in the US has lowered the interest rate at which it supports distressed banks. It is as though Europe and America had announced an amnesty to the world's criminal gangs after they had gone on a killing spree because they feared the killing would get worse .

The Bank of England alone has held the line, insisting that anybody turning to it for cash as a last resort will have to pay at a rate of interest that will hurt the borrower. Good for the bank, except its stance is undermined because outside the euro-zone it cannot insist the European Central Bank follows its stance. It is also undermined by a British government that on these matters is the most craven in the West.

For as the German and French governments along with senior American Democrats argue, the whole affair raises fundamental questions. It cannot be right that finance insists on freedoms and lack of regulation to indulge in anti-social recklessness in order to make personal mega-fortunes, but when things go wrong to ask for government bail-outs with no questions asked.

Thus Chancellor Angela Merkel and President Sarkozy have called for more transparency and regulation of hedge funds; thus in Brussels and Washington, there are to be investigations into what the executives at the credit-rating agencies have been up to. But from the British government there has not been a peep, not a hint that the contract between finance and society needs to be reassessed both at home and abroad. That would be - heaven forfend - 'anti-business'.

But the West's economies and societies cannot be constructed as if their sole raison d'etre is to ensure that there is a steady flow of deals for investment banks, private equity houses and hedge funds, along with an abundant flow of credit, and the moment there is any interruption governments bail them out. Finance is hardly poor. In Richistan, his revelatory book about today's mega-rich, Robert Frank shows how closely enmeshed instantaneous wealth and the financial markets have become.

Gordon Brown runs a government that is essentially conservative over business opposed by an opposition yet more conservative, with the Lib Dems terrified to rock the conservative consensus. Over the last few years, there has been a firesale of British assets to foreigners, together with ever-closer entanglement with the American debt markets to sustain the bonuses of the financial community. It would not surprise me if, before the story is over, at least a couple of household British financial names have to be offered a lifeline.

Somebody, somewhere must start blowing the whistle. The Americans at least take capitalism so seriously they challenge, monitor and regulate it. No such culture exists in degenerate Britain. We need a party which will speak for an interest other than self-interested, amoral plutocrats. None exists.

one or two interesting comments too...

All too true --- but why has it taken so long for journalists to twig that the sub-prime/"self-cert" scandal is the BIGGEST scandal of them all --the World's Biggest Ever Pyramid Selling Scam - as I have been saying for years.

UK Sub-Prime/"SelfCert" -- Biggest Financial Fraud in History.

"Mortgage customers 'urged to lie'"

http://news.bbc.co.uk/1/hi/business/3222053.stm

- and you know the UK has a far worse SUB-PRIME problem than any VI wants to admit.... Click on Watch & Listen top right - just a clip of EAs & Mortgage Brokers commiting fraud - see how this has been and still is done - it's been going on for for years all over the UK!!!...

And see here for a good summary of ENDEMIC UK MORTGAGE FRAUD: -

http://www.bbc.co.uk/pressoffice/pressrele..._mortgage.shtml

Edited by eric pebble

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maybe Afghanistan maybe Iran.

It will be with whoever they decide has been funding the other side. Who's been buying the "bad guys" eh? It ain't cheap. It's perfect. A war that can't be won only sustained, the most profitable type. This was the purpose of Vietnam, it was never meant to be won. You only need to take a look at the rules of engagement to see that.

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Yes. He's clearly got nothing to contribute to journalism following that hack job. Some of us remember when The Telegraph was a newspaper of note.

Well, he's a monumental hypocrite so journalism is probably the ideal profession for him.

"Much of the criticism Mr Hutton makes against other property developers could also be levelled against his wife's firm, in which she is a 25 per cent shareholder. First Premise has repossessed properties from commercial tenants and lobbied council officials into relaxing building standards on accommodation, and charges rents substantially higher than in the affordable social-market of which her husband so approves."

Link

:lol:

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Well, he's a monumental hypocrite so journalism is probably the ideal profession for him.

"Much of the criticism Mr Hutton makes against other property developers could also be levelled against his wife's firm, in which she is a 25 per cent shareholder. First Premise has repossessed properties from commercial tenants and lobbied council officials into relaxing building standards on accommodation, and charges rents substantially higher than in the affordable social-market of which her husband so approves."

Link

:lol:

Some of us are old enough to remember the collapse of Burmah Oil and how its directors (including Denis Thatcher) went cap in hand to a Labour government for state handouts to bail them out.

At the same time Denis' wife was trousering the cash from this little escapade she was preaching free-market non-interventionism for the rest of us whilst killing manufacturing in the UK under the guise of making it lean and competitive.

If Hutton's a hypocrite there are greater precedents in politics - perhaps a career with Burmah Oil beckons.

Edited by happy?

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Some of us are old enough to remember the collapse of Burmah Oil and how its directors (including Denis Thatcher) went cap in hand to a Labour government for state handouts to bail them out.

At the same time Denis' wife was trousering the cash from this little escapade she was preaching free-market non-interventionism for the rest of us whilst killing manufacturing in the UK under the guise of making it lean and competitive.

If Hutton's a hypocrite there are greater precedents in politics - perhaps a career with Burmah Oil beckons.

Oh, I see...it's fine for Hutton to be a hypocrite because some people from the other side of the political spectrum are also hypocrites. Peachy.

:rolleyes:

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I always think of Will Hutton as Polly Toynbee in drag. :D

Ha! see what you mean...

Private Eye have been needling her over her campaign against high pay- repeatedly asking her to reveal her own earnings (she refuses obviously). Also they've published her editor's pay package at the Guardian, which was naturally well into the levels that she is campaigning against.

Oh the irony.

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