Blog 2023 Malcolm Blair-Robinson

Timothy Geithner made a good point to Evan Davis on the BBC Today programme this morning. Comparing the economic position of the U.S. with that in the U.K., he pointed out that the light touch regulation, which began with Thatcher and continued under Brown, both as Chancellor and PM, sucked banking activity to the U.K. from the U.S., where the regime was tougher. This meant that in London under-capitalised banks represented a much larger and riskier proportion of our GDP. Described by Brown as a ‘goldenage for the City’ (that surely ranks with the unsinkable Titanic for calamitous declarations) the relaxation begun with Big Bang produced the biggest financial crash in modern history.

What is significant is that the U.S. is already ahead on its banking reforms, creating a much tougher set of capital rules and separating propriety trading from main street banking. Our government is still talking tough and doing little. There is fear we will drive the bankers away. That is the whole idea. Dangerous banks are worse than no banks. What we need is more and smaller banks, with regional connections and specialist know how. None should be too big to fail. Fear of failure is the most powerful regulator of all.

When the governance of a country implodes, diplomats have to tread with care, not least because it is hard to identify who has power. In Libya Col. Gaddafi is still there, but how much he controls and who accepts his orders is far from clear.  What is clear is that his country is a major producer of oil, without the flow of which the shortages and price hikes would risk a double dip recession. Everywhere the eyes of the world are turned anxiously to that convulsed country to see what will happen next.

Everyone hopes, especially Libyans hope, for an outcome of liberation. Meanwhile there is terrible bloodshed. Many of the innocent have died. Many more are willing to give their lives to end a tyrannical form of government entrenched for nearly half a century. It is hard nowadays to recall that Gaddafi came to power as a socialist liberator.This time round the international community must act together to ensure that in the various revolutions now sweeping the Arab world, one form of despotism is not replaced with another.