tag:blogger.com,1999:blog-8764541874043694159.post8242215117834980177..comments2024-03-28T12:23:39.665+00:00Comments on Coppola Comment: Chinese banks and UK taxpayersFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-8764541874043694159.post-9687493900147218452013-10-23T23:19:39.504+01:002013-10-23T23:19:39.504+01:00"It's rare to find someone as consistentl..."It's rare to find someone as consistently wrong as Mr Hutton."<br /><br />Ah, but he has an answer for that. He once admitted that almost all of his predictions - mainly from The State We're In - have been incorrect, and then added "But the core analysis remains valid."<br /><br />My brain goes into spasm when I try to imagine how that could be.jon liveseynoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-43872687600045174382013-10-22T13:09:52.434+01:002013-10-22T13:09:52.434+01:00Then why introduce the "anti-terrorism" ...Then why introduce the "anti-terrorism" red herring?<br /><br />It leads the uninformed reader to assume that point is that there was some sort of abuse of legislation intended for a quite different purpose, when, as you say, the question is not whether the action was legitimate, but whether it was politically wise.Davidnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-5995735029835830842013-10-22T12:18:13.796+01:002013-10-22T12:18:13.796+01:00Yes, I'm afraid you are being pedantic. Really...Yes, I'm afraid you are being pedantic. Really it does not matter. The point was that the use of those powers caused a diplomatic incident. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-77135076847183054632013-10-22T12:16:01.541+01:002013-10-22T12:16:01.541+01:00"the British government used anti-terrorism l..."the British government used anti-terrorism legislation to freeze the remaining assets of Landsbanki in the UK"<br /><br />Sorry to be pedantic, but tho' this action was widely reported in these terms at the time (and ever since), it's a misleading characterisation.<br /><br />The British Government used its freezing powers, which, though they may be used against terrorism, have nothing to do with terrorism as such. The relevant part of the 2001 legislation doesn't even refer to terrorism explicitly: it refers to "the detriment of the United Kingdom’s economy" (hence the Landsbanki freeze) and "threat to life or property".<br /><br />These powers were date back to the Defence (General) Regulations of 1939, superseded by the Emergency Laws (Re-enactments and Repeals) Act of 1964.<br /><br />In 2008 confusion (in some cases, one suspects, wilful confusion) arose because the current incarnation of these powers (replacing the 1964 Act) is contained in the 2001 Anti-terrorism, Crime and Security Act. But as its title indicates this is not pure anti-terrorism legislation, it is also security and crime legislation. It may not be inaccurate in a narrow verbal sense to call it "anti-terrorism legislation" (much of it does relate to terrorism), but it's misleading in this instance, because the part relating to freezing powers is much broader.<br /><br />Davidnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-39976634225379779412013-10-21T20:59:23.177+01:002013-10-21T20:59:23.177+01:00I'm afraid the rest of Willy's piece was a...I'm afraid the rest of Willy's piece was as incoherent and ignorant as his usual tripe. It's rare to find someone as consistently wrong as Mr Hutton. <br /><br />Anonymous at 17.23 - the Chinese got away with covering up their bad debt problem at the end of the 90s (see Nicholas Lardy's book for the background) because their economy grew. Their bad debts didnt shrink, but the denominator grew massively. They have bad debts again and they are again engaging in sticking plasters. They'll be fine as long as the economy grows... growth slows and bad things could happen. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-32138454315813650022013-10-21T17:23:31.735+01:002013-10-21T17:23:31.735+01:00Since Communists are accustomed to just creating t...Since Communists are accustomed to just creating the money as necessary to roll over non-performing bank loan portfolios it can choose to rescue whatever it wants short of creating abnormal inflation and whether it makes any geo-political sense to damage the British economy. With the latter probably not right now but later maybe.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-56436021923193139072013-10-21T14:11:00.406+01:002013-10-21T14:11:00.406+01:00But it may be another fine mess in the making. In...But it may be another fine mess in the making. In general the more funny money there is rebounding round the worlds financial computers the greater and more unpredictable the risks.Demetriushttps://www.blogger.com/profile/17198549581667363991noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-10125780496257259732013-10-21T13:53:03.068+01:002013-10-21T13:53:03.068+01:00Ralph,
Sad to say it, but as usual you are missin...Ralph,<br /><br />Sad to say it, but as usual you are missing the point. <br /><br />The UK authorities have no jurisdiction over the capital levels of Chinese banks - that is a matter for their own regulators. Similarly, it is not up to the UK authorities to decide whether or not a Chinese bank should be bailed out - that is a matter for its own government. If the Chinese banks chose to operate in the UK through subsidiaries, then the fate of failing subsidiaries would rest with the UK regulators and/or government, and the failure of parent banks might not affect the UK subsidiaries. But Osborne's concession means that would not be the case. Therefore there would be a significant risk to the UK economy in the event of a Chinese bank failing, about which the UK authorities could do very little. That is the point I was making. <br /><br />I think you need to understand that the discussions about capital, liquidity etc. that we are having in the West simply don't apply to Chinese banks. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-10121724808070874442013-10-21T11:17:16.506+01:002013-10-21T11:17:16.506+01:00“But this should not bother a UK government that h...“But this should not bother a UK government that has made it clear that it will not rescue institutional investors that make unwise investments.” The problem with that idea is called “Lehmans”. That is, letting privately owned firms fail is basically a good idea, but in the case of large banks, the damage is so large that that “failure” policy is debatable.<br /><br />I think Laurence Kotlikoff in his book on Vickers said that Vickers wouldn’t come clean on whether the system Vickers advocated would let a Lehmans fail.<br /><br />My preferred option is a very large increase in bank capital: enough to make bank failure almost impossible, as advocated by Martin Wolf. Even better: as per Laurence Kotlikoff, make all bank creditors loss absorbers (i.e. quasi shareholders). That way, bank failure is totally impossible, though shareholders can lose heavily.<br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com