ICELAND has – to use the technical term employed by trained economists – gone tits up, and such staid bodies as Tonbridge and Malling Borough Council and West Yorkshire Police Authority are suffering the collateral damage.
Incredibly, Gordon Brown has responded by invoking anti-terrorism legislation, although rumours that he has asked his friend Dubya to add the Reykjavik pariah regime to the Axis of Evil remain unconfirmed.
Perhaps the prime minister is simply a bit spooked that his Icelandic counterpart is called Geir Haarde; when you think about it, that is probably pronounced not dissimilarly to Keir Hardie, and names just don’t get any more Old Labour than that.
Strange, too, that the government feels able to guarantee the deposits of individual British savers exposed by the Icelandic banking crisis, yet cannot extend such largesse when public sector money is at stake.
After all, the total sum at risk is less than a measly billion quid. To put it another way, that represents less than one quarter of one percent of potential expenditure on this week’s bank bailout.
For some reason, this morning’s newspapers are full of outcry about what UK councils are doing investing in Iceland anyway. The answer to that seems quite simple; they were seeking the best returns for the council tax payer, which is exactly what they should be doing. Remember, Iceland’s leading banks offered high rates of interest and enjoyed AAA credit ratings. Sounds fair enough to me.
Are the critics seriously maintaining that those good folk who cheerfully pay whatever shocking sum Ceredigion demands for a Band D semi would have been better off if their dosh had been in the safekeeping of Northern Rock or Bradford & Bingley?
Is the argument here that if a local authority is going to put its nest egg in a bank that is fated to go bust, it might as well patronise a British bank that is fated to go bust, if only on patriotic grounds?
Mind you, I suppose it’s a good job that Town Halls are nowadays largely populated by apolitical drongos rather than the much more ideologically-driven men and women that held such office once upon a time.
Circa 1983, Lambeth would have converted whatever cash it was able to get its hands on into Banco de Nicaragua Solidarity Campaign high income bonds, and try to pass this off as being in the best interest of its impoverished electorate.
Westminster and Wandsworth would likewise have opened up secret police supersaver accounts in Santiago, in a concrete expression of solidarity with the monetarist torture merchants that were running the show in Chile back then.
Come to think of it, when Militant Tendency was running Liverpool City Council back in the 1980s, didn’t it cook up some half-arsed scheme that ransomed every parking meter in Scouseland to Union Bank of Switzerland, in exchange for a £30m loan at an extortionate rate of interest? Still, if I remember rightly, at least Team Degsie repaired council houses with the money.
The question – then as now – is what degree of risk local authorities should be allowed to take. On balance, I think it is preferable that they should be permitted to act responsibly, both when investing and when borrowing, rather than forced to stick everything in a piggy bank.
Even seemingly responsible actions can blow up in people’s faces, of course. But at least councillors can be replaced at the ballot box if the voters decide that they are incompetent pillocks. That’s more than can be said about investment bankers.
Posted at 14:26, 10 October 2008
Comments (11)
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I would think Geir Haardie and Kier Hardie are the same name. Except one is Old Norse, the otehr is Scottish.
More and more the articles here by Dave remind me of the pronouncements of those underemployed comedians you have never heard of, paid to deliver sarcastic witticisms (sic), which reflect very badly on them - not the subject, to fill out those interminable '100 best floor cleaning product ads' programmes that pollute the higher numbered channels on your TV. Cynicism is the handmaiden of capitalist bound politics.
"Still, if I remember rightly, at least Team Degsie repaired council houses with the money." is a good example.
Maybe Dave could take a trip to Bootle or Aigburth sometime (a little like Boris Johnson) and have a quick chortle in front of some muppet who actually thought getting a council house was a good thing.
There is how ever a truth contained within - the supposed Trots running Liverpool were no different to the Bennites running councils elsewhere - neither of them could resist the offensive of the state when it turned on them.
But then none of them actually ran Liverpool or Lambeth, or anywhere else. The Chief Executive and the Borough Treasurer always did.
Local government will do what local government does. It's not for socialists to advise them on whether they should go for high risk,high return or low risk low return with their cash.
Personally I find the discussions of the Spartacist League about whether they think it is permissable for communists to run for executive (e.g. mayoral) office or legislative (e.g. MP) office interesting http://www.icl-fi.org/english/esp/60/executive.html. (although I fear the piece will read like it is written in ancient Martian to all the lovers of Leftlite who leave comments at this blog).
I don't necessarily with their conclusion here but do (generally) with them when they state revolutionaries shouldn't attempt to run local councils (incidentally it will be interesting to see what the BNP do if they ever take control of a council e.g. LB Barking & Dagenham - will they have the resolve to e.g. allocate houses to whites only and thus act illegally - I suspect they will crumble),
Because as the Spartacists write "administering local councils has historically been used as a mechanism by which the bourgeoisie has co-opted reformist parties into the capitalist order, as was the case with the post-WWII Communist Party in Italy."
The *Sparts* discussing whether or not it is permissible to run for elected office? That has an air of abstraction about it, to put it mildly.
I would think Geir Haardie and Kier Hardie are the same name. Except one is Old Norse, the otehr is Scottish.
I presumed one of them was baptised by Keith Harris and Orville.
Come to think of it, when Militant Tendency was running Liverpool City Council back in the 1980s, didn’t it cook up some half-arsed scheme that ransomed every parking meter in Scouseland to Union Bank of Switzerland, in exchange for a £30m loan at an extortionate rate of interest?
Isn't that kind of thing these days known as a "sale-and-lease-back" scheme (in "German" it is anyway, in bog-standard-UK-English it's probably just "PFI"). The trams in Zürich for example (many of them are very, very old things the kind of which are only otherwise seen in ex-Soviet Central Asia, Romania, or Pyongyang) all contain signs (in English) stating they belong to some "Delaware Corporation" and are only being let-back to the local authority.
And: SPP - in Barking and Dagenham, as far as I know, the council does indeed still own a high percentage of the estates. But as the waiting lists are incredibly long for a house (or indeed, a flat), and the period on the list plays a significant role in the number of points you get, I suspect most of those who get the privilege of a council property to live in are white anyway (Dagenham at least having been a white ghetto until around a decade ago)... It's the private properties (or ex-council houses being let out for ridiculous sums by buy-to-let scum) where the "newcomers" live.
the council does indeed still own a high percentage of the estates
I meant to write: "the council (as opposed to housing associations etc.) does indeed still own a relatively-high percentage of rented accommodation on the estates"
The outrage, as I am sure you are away Mr Part, is because the problems with Icelandic banks were known about.It wasn't a bolt from the blue. Its like Bradford and Bingley,RBS,Alliance and Leicester have all been on the top of the 'next to fall' financial lists since Northern Rock.
Our own blog mentioned the Icelanders buying up the British High Street with UK depositors money on several occasions.
It would be likely that UK depositors might be unaware of the situation, but £150,000 Pa Finance Directors might have been expected to at least turn the pages of the odd financial journal. Maybe listen to BBC's moneybox once in a while? read the odd economic blog now and then? Look at the investors chronicle?
And the charities. While any city type could tell you that the charities have millions of millions of pounds that they cannot possibly spend,invested in stocks/shares/companies/savings the public were largely unaware. The outrage is that the old granny gives money she cannot really afford to groups who cannot spend it.
How do you vote off the finance dept of a large charity?
Money, root of..etc
One of my dad's golfing (yes even the Scots' working class play this horrid game) mates was in charge of Suffolk Council funds. His big 'joke' was how he whipped it and out of various banks' investment funds and so on and so forth.
I note that we here in Ipswich have around million frozen in this debacle.
As the bloke (above) was a total tosser I can't imagine having the confidence in local councils Dave has.
Though I do have a soft spot for Iceland: all those thermal massages and Trolls.
"Iceland’s leading banks ... enjoyed AAA credit ratings. Sounds fair enough to me."
That's another thing emerging from this mess: a need for better regulation of credit ratings agencies.
Scott, congratulations - a comment with content in!
Strange, too, that the government feels able to guarantee the deposits of individual British savers exposed by the Icelandic banking crisis, yet cannot extend such largesse when public sector money is at stake.
This par might have gone over better if it hadn't been directly beneath one whingeing that Brown seized Landsbanki UK's assets in order to do just that.