at the NEC Birmingham. The NEC is brash and utterly without soul – the architectural equivalent of Tony Blair.
I am happy we are going to get to vote on the coalition, but rather flummoxed that the debate is to be in closed session – I should have thought this historic decision needed a damn good airing. Liberal Democrats having secret policy debates? As I observed a few days ago, somebody needs to explain the meaning of the words in the party title to the party hierarchy.
It’s been a horrible couple of days, making up three years of formal accounts to take to the auditors. Being just me, I never felt the need to have myself audited before. But now family circumstances give me the urge to buy a house, So I have to take out a new mortgage.
I expected no problems – I have a 25% deposit and was looking for a mortgage from my own bank of thirty years, who tell me my credit rating with them is 1, the best category. But they also tell me that new government regulations for mortgages say that self-employed people must have audited accounts.
Why? I keep a record of income and expenditure, and keep receipts, to fill in my tax returns. But that is much less complex than formal accounts. Now every jobbing plumber and window cleaner needs an accountant if he wants a mortgage.
The daft thing is, my bank can see my income going into the account and the expenditure going out. They wish to lend to me. But they are not allowed to. Yet the banking crisis was not caused by self-employed writers, actors or artists. This is all a great boon to accountants. I am going to be paying several thousand quid to ne now.
And perversely it is going to cost the Inland Revenue more than that – the accountant tells me I have been failing to claim all sorts of stuff and paying far too much tax, and I should turn myself into a service company and be VAT registered.
You may recall that Goldman Sachs deliberately lent mortgages to people who couldn’t pay, then massively hedged so they made more money if the mortgages defaulted than if they paid. I recount in the Catholic Orangemen of Togo how Ashanti Gold hedged their production until their gold mines made more money if the price of gold fell than they did if it rose. That is a good symbol for the preference of casino gambling on future prices over concentrating on real world production. That was the actual cause of the banking collapse.
In basic retail banking transactions like mortgages, there is a perfectly good free market governing mechanism. Banks should make good credit risk assessments of individual customers. If they make too many bad judgements, the bank should go bust and the bankers with poor judgement lose their jobs. That will encourage other bankers to have good judgement.
The solution is not to throw taxpayer money at the useless bankers to keep them in their jobs, then centrally impose ridiculous bureaucratic regulation about who they can lend to.
Retail banking is susceptible to free market rigour. It needs to be split from casino banking, and casino banking needs to be controlled.
Next week, the EU Council of Ministers plans to adopt strict regulations enforcing transparency on hedge funds and private equity firms and limiting their leverage, ie how much they can gamble. NuLabour resisted these very sensible Franco-German proposals, because NuLabour was 100% bought by the City. The Tory right wants to oppose the plans because they are European regulations. Already we are hearing bleats that hedge fund managers will move abroad. Good. The attitude to these proposals will be an imprtant early indication of whether this government is more progressive than NuLabour.