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Here is something that did not surprise me at all today.

The UK government, it appears, knew perfectly well that the Icelandic banking system was heading for a meltdown – as recently as March 08. But it did nothing to help out some of the UK savers.

Back then, the Icelandic government was seeking help for its banking system as the confidence was starting to collapse and it needed money. Mervyn King, the governor of the Bank of England, commissioned several reports to assess the state of the Icelandic banking sector, and refused to help out when the results that came back were – predictably – not very reassuring.

Failure to act: Discussions earlier on in 2008 on the possibility of turning UK operations of Landbanksi, the now-collapsed bank, into a UK subsidiary, did not reach any conclusions. This means that whilst the UK government was aware of the impending danger to Landbankski’s UK savers, it failed to negotiate a status change for this branch which would have meant savers would have been covered by the UK deposit protection scheme when the collapse inevitably happened. It failed to act to aleviate the inevitable fallout.

Liberal Democrat treasury Vince Cable is now calling for an inquiry to understand the extent of UK government’s knowledge about the forthcoming crisis.

The government has recently confirmed that it will back private investors’ money, but this leaves charities and local councils at risk of losing all their money.

The savings debacle: Now, a huge amount of charities and public sector bodies have their money locked in collapsed Icelandic banks. Here is the quick list of councils that caught out in the meltdown.

Some councils have been warned: It appears that many did have a prior warning about the impending danger. Landsbanki, Glitnir and Kaupthing bank were all downgraded in Feb – March 2008 by credit rating agencies. The confidential advice to move savings elsewhere was passed to many councils by their advisor, Sector Treasury Services.

Some acted on this advice and moved the investments; some could not, as money was locked in long term deposits. Others – and this is the shocking bit – continued ignoring financial advice and even increased deposits made. This, unfortunately, just confirms some council’s incompetence in financial management.

Read more details here.

So, tell me something I did not know? The UK government that is wilfully closing its eyes to the inevitable and refusing to act early, and UK councils that do not competently manage their money. What a shambles.

 

Copyright 2008 by CuriouslyInspired

In this morning’s speech, David Cameron laid blame for the current state of the UK economy at Gordon Brown’s feet.

Labour a failure: Cameron stated that the Labour government was responsible for the “complete and utter failure” of economic policy and that it has been an “irresponsible government” presiding over a period of “irresponsible capitalism”.

The implication is that the nation is now reaping the results of this policy as we slide into a recession, our financial sectors in tatters – and that this could have been prevented.

Cease support: In the recent days, Conservatives have been seemingly supporting Labour especially in the latter’s bid to work out a bailout package. So much so that one was wondering if the Conversatives have had any of their own thoughts about the economic policy. And, whilst Cameron is now effectlively making a statement that he is ending Conversatives’ support of the current government’s economic measures, one still wonders what exactly is he going to propose that amounts to a solid economic platform that is actually different from the current course.

General noises are being made about tougher regulations, “new measures to rebalance the economy”, and changes to laws. Whilst this is all good and fine, none of these appear novel measures that have not been mentioned before by someone else.

Are Conservatives still struggling to pull it together? On the evidence I see (or shall I say, do not see) today – yes. But so is Labour, really, although at least they have some sort of action plan for now.

Silly Political games: What seems to be happening on both sides is a lot of posturing. Whilst Gordon Brown is savouring the role of the saviour of the world’s financial system, his opponent David Cameron is the homegrown oracle who had seen it all coming and can see right through the incompetencies of the present government – yeah, right. How easy is it to throw stones about, say “I told you so” and then duck for cover – as really you have nothing new to say, Mr Cameron. Come up with some really smart proposal that will tell you apart from other government policymakers, then maybe we’ll put more trust in the Conservatives.

Until then – the usual charade of ceremonial policital repartee continues. Yawn…  

 

Copyright 2008 by CuriouslyInspired

Today I feel like I am reaching my own personal point of saturation with bad news relating to the Big Financial Meltdown.

Not that I am about to panic, no way. It’s just that there is so much of it, and it is coming through so fast, that I feel that the initial “edge” has been taken off it. It does not seem quite so appalling anymore. I am coming to terms with it.

I am familiar with this feeling. A long time ago the country I have strong ties with started opening up its archives and started sharing details of its horrible past with its citizens. And we gorged ourselves on the gory details of mass murders, betrayals, poverty and the limitless lust for power of our leaders until we could take no more bad news. We felt low and worthless as a people, and every trouble that was coming to us was just and fair because we deserved no better. People competed in painting their own nation in the blackest colours possible – this became a sick national obsession for a while. Then the information we learnt about our past became part of the everyday life and either faded away, or caused a backlash in aggressive patriotic feeling which is still rife.

So, the Credit Crunch. The Big Meltdown. It’s easy to get obsessive with it. It’s easy to look for someone to take the blame and then kick them. I’ll offer this thought for your consideration: we are all responsible to some extent. Sure enough, many of our governments fanned the fires of irresponsible lending with abandon. Bankers greedily chased quick profits and drove their own employers’ firms into the ground in the process – and I would love to see them in court and their assets confiscated. And regulators failed miserably to spot the rot. Sure, the trust in “government bodies” has gone and might not return for a long time, if ever.

But we all gorged ourselves on consumer credit, plunged our money into investments that were bound to go up-up-up and never-ever stop, buy ever bigger houses etc. We all lost our heads. And no-one really thought that it looked too good to be true and would end. Perhaps we should have. We might all have been, to some extent, part of the problem.

We are where we are and life carries on. So however the meltdown crisis impacts us personally, and I am sure it can be bad and it might get worse, we need to accept it, get on with it and make do as best we can. I’ve read some wonderful thoughts in other blogs putting the current calamity in perspective by considering how people survived the Great Depression. Something similar might yet come – but people lived to tell the tale. We will as well.

And one day future students will be tasked to write an essay “The 2008 Global Financial Meltdown. Discuss the relative merit of available solutions in 2000 words“.

 

Copyright 2008 by CuriouslyInspired

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