We covered earlier Nick Clegg’s reaction to today’s shock news that the UK is back in recession — here’s an excerpt from his speech today to the Institute of Directors where he urges the banks t play their part, and start lending to businesses:
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11 Comments
“Shock news”? Ed Balls has predicted this since the first Coalition budget, Vince Cable predicted it before the election when Osborne presented his ideas.
It’s not a shock, it was predicted, but the Coalition have either stymied internal dissent or sought to rubbish Balls constantly.
It is not yet a catastrophe, there is time for a plan B, steal Ed Balls economic plans, or, if that’s too unpalatable, Alistair Darlings.
g, the Lib Dems could even steal Vince Cable’s economic plans! You know, the ones the party went to the country in 2010 with.
Vince is the best qualified man in the country to be Chancellor of the Exchequer: let him take control. He does have a PhD in Economics, after all.
I can’t imagine this having any effect at all on bankers. Nothing is being announced that will change their perceptions of risk, so it won’t change the way they assess loan applications.
PhD’s are not always the best leaders. Often they spend three or so years becoming specialists in a very narrow part of a much wider subject area. They are then good technicians in that specialist area, and can be used as such to good effect. But to lead us out of recession, we probably need someone with a much wider appreciation, not only of economic trickery, but of the complexities and interactions in socities and cultuares as well. Vince may have some of that from his time in the oil industry, perhaps, but that industry is also rather a special place.
@Richard Dean
You’re completely missing the point of a PhD (and all degrees in general). They’re not vocational qualifications; they don’t teach you to do a certain technical thing, specialised or not. They teach you to research; to think critically and analytically at the highest level. In the case of Cable, his research training is also backed up by his education in economics and his experience as an economist in the private sector. I find it extremely odd and depressing that anyone thinks we need less of such people making important decisions. Sadly, you’re not alone.
@Richard
In other words, Richard, you think George Osborne is a better economist than Vince Cable?
Because, let’s be clear, by following Osborne’s economic plan, not Cable’s, that’s what the party is saying.
But didn’t the Government set targets for bank lending which they claim they are meeting? Or perhaps they set the wrong targets?
@Chris. My thinking is that we don’t need accountants for this problem, we need people with wider vision.
@toryboysnevergrowup. Are targets relevant? A bank takes dcisions, including loan decisions, very much on the basis of an assessment of risk. Indeed, it would be severely criticised by its shareholders and depositors if it made inaccurate assessments, and examples of such criticisms (though about wider risks than loan risks) include those made against the directors of Northern Roack and RBS.
Change will come if and when banks see that the risks have changed: one way to do this might be for the government to provide guarantees. For example, if a company wants to borrow $1million, the government might guarantee half – this might reduce the bank’s risk sufficiently that it would be able to make the loan. There are of course complications, but in principle a way could be found to do this that would not end up with the government getting skewered by unscrupulous borrowers.
Christian de feo,
“Vince is the best qualified man in the country to be Chancellor of the Exchequer: let him take control. He does have a PhD in Economics, after all.”
Looks like Danny Blanchflower might agree with you The Chancellor received plenty of warning
“The Coalition still has no plan for growth. At the very least, it is time for a new Chancellor who has some clue about economics.”
@Steve. I have a PhD. And I’ve supervised Ph.D students. PhS’s do provide a discipline in research, yes, but the knowledge involved is almost invariably of only a small part of a big picture. Vince will no doubt have expanded his intellect greatly once he’d finished his PhD and took on the teaching post at Glasgow. The present problem does not seem to be one of accountancy, nor even solely of economics, though both those disciplines might certainly play important parts in solving it.
It seems to me the major problem is the absurd prejudice against the public sector by the Government. They simply do not seem to understand that by cutting public sector real wages they have choked off demand at PRECISELY the time when the private sector just isn’t in a position to pick up the slack.
FDR and Keynes must be turning their graves!