Article Updated: 11th February 2009 at 0600 GMT
Having contacted the Author Mark Jago, he has given me permission to post his article.
In the financial world they have saying that a rising tide lifts all ships. US and UK government policies by deregulating financial industries and neglecting to provide responsible oversight, combined with Fed Chairman Greenspan's low interest rate policy has brought about an over stimulation of the world economy and the creation of market bubbles. In hind sight it's easy to see why this happened, the 2001 technology bubble should have been a wake-up call to US and UK policy makers. However, as we now know they did not heed the warnings.
Mortgage companies made money by selling large mortgages at low "teaser rates" without regard to the fact that their clients would not be able to make the monthly payments at normal interest rates. Banks made high profits by leveraging up their subprime mortgage loan portfolio and packaging them with high quality debt that was sold on as high quality debt into world debt investment markets.
US Federal Chairman Greenspan retired and was replaced by Dr Bernanke. Dr Bernanke immediately instituted a policy of interest rate hikes that led to the collapse of the US housing market bubble. This exposed the fraudulent excesses of the US and UK financial systems which in turn led to a rapid stock market crash and the freezing of global banking market liquidity.
Subsequent government bailouts of the banking system have been little more than a band-aid solution that have addressed some of the crisis symptoms but have done nothing to mitigate the consequences. The UK government bank bailout was a reactive response and a measure of last resort in an attempt to stave off a financial catastrophe. The US decision to bailout the banks rather than buying the toxic assets came about because there was no understanding about the size of the toxic lone problem.
The tide of global financial liquidity has disappeared the consequences of government's management of the UK economy has now been laid bare for all to see. The symbiotic relationship between the government and the City of London that allowed for the parasitic siphoning of wealth into the hands of a few is broken. However, old habits die hard and it's not surprising that it's been reported the Royal Bank of Scotland now owned by taxpayers intends to hand out a 1 billion pounds in staff bonuses. While at the same time they are calling in business loans, forcing companies into bankruptcy protection, destroying tax revenue and adding to UK workforce un-employment.
The North Sea oil Company Oilexco is an example of the damage being done by the UK banks and by the UK Government's failure ensure the integrity of the banking system. It was one of the UK's most active developers of UK oil and gas has been forced into bankruptcy protection after RBS withdrew its banking line of credit. The New technology that this Canadian oil company had been using had the potential of revitalizing North Sea energy production and providing the UK economy with much needed revenue.
What was initially primarily a US, UK financial crisis has now become a rapidly deepening global crisis. The UK has become an unreliable partner that can't be relied upon to do its part to support foreign investment and investments in the future of its own economy. The party is over in Britain, there is a limit to the number of times investors will accept being burnt. The world now understands clearly how things are in the UK and unless there is significant change in UK policy it is at risk of be viewed in the same way it views a certain failed African state.
The time for talk by the UK Prime Minister is over immediate government action is required NOW. It's clear that are funds available for bank bonuses, then funds MUST be made available to support companies like Oilexco and by doing so to support the UK economy and energy industry. The UK Government and banking industry track record is such that they clearly are un-qualified to make the judgement call on what merits an appropriate investment.
M.J
Related Posts:
5th January 2009:
Banks Risk Scottish North Sea Oil industry and Britain's Energy Future
7th January 2009:
Oilexco In Adminstration - Will other Dominos Fall
If you found this article interesting then the Idle Man recommends the following blogs:
BBC Blog: - Stephanomics - Stephanie Flanders, the BBC's economics editor
BBC Blog: - Peston's Picks - Robert Peston BBC Business Editor
BBC Blog: - Nick Robinson's Newslog - BBC Political Editor
Having contacted the Author Mark Jago, he has given me permission to post his article.
In the financial world they have saying that a rising tide lifts all ships. US and UK government policies by deregulating financial industries and neglecting to provide responsible oversight, combined with Fed Chairman Greenspan's low interest rate policy has brought about an over stimulation of the world economy and the creation of market bubbles. In hind sight it's easy to see why this happened, the 2001 technology bubble should have been a wake-up call to US and UK policy makers. However, as we now know they did not heed the warnings.
Mortgage companies made money by selling large mortgages at low "teaser rates" without regard to the fact that their clients would not be able to make the monthly payments at normal interest rates. Banks made high profits by leveraging up their subprime mortgage loan portfolio and packaging them with high quality debt that was sold on as high quality debt into world debt investment markets.
US Federal Chairman Greenspan retired and was replaced by Dr Bernanke. Dr Bernanke immediately instituted a policy of interest rate hikes that led to the collapse of the US housing market bubble. This exposed the fraudulent excesses of the US and UK financial systems which in turn led to a rapid stock market crash and the freezing of global banking market liquidity.
Subsequent government bailouts of the banking system have been little more than a band-aid solution that have addressed some of the crisis symptoms but have done nothing to mitigate the consequences. The UK government bank bailout was a reactive response and a measure of last resort in an attempt to stave off a financial catastrophe. The US decision to bailout the banks rather than buying the toxic assets came about because there was no understanding about the size of the toxic lone problem.
The tide of global financial liquidity has disappeared the consequences of government's management of the UK economy has now been laid bare for all to see. The symbiotic relationship between the government and the City of London that allowed for the parasitic siphoning of wealth into the hands of a few is broken. However, old habits die hard and it's not surprising that it's been reported the Royal Bank of Scotland now owned by taxpayers intends to hand out a 1 billion pounds in staff bonuses. While at the same time they are calling in business loans, forcing companies into bankruptcy protection, destroying tax revenue and adding to UK workforce un-employment.
The North Sea oil Company Oilexco is an example of the damage being done by the UK banks and by the UK Government's failure ensure the integrity of the banking system. It was one of the UK's most active developers of UK oil and gas has been forced into bankruptcy protection after RBS withdrew its banking line of credit. The New technology that this Canadian oil company had been using had the potential of revitalizing North Sea energy production and providing the UK economy with much needed revenue.
What was initially primarily a US, UK financial crisis has now become a rapidly deepening global crisis. The UK has become an unreliable partner that can't be relied upon to do its part to support foreign investment and investments in the future of its own economy. The party is over in Britain, there is a limit to the number of times investors will accept being burnt. The world now understands clearly how things are in the UK and unless there is significant change in UK policy it is at risk of be viewed in the same way it views a certain failed African state.
The time for talk by the UK Prime Minister is over immediate government action is required NOW. It's clear that are funds available for bank bonuses, then funds MUST be made available to support companies like Oilexco and by doing so to support the UK economy and energy industry. The UK Government and banking industry track record is such that they clearly are un-qualified to make the judgement call on what merits an appropriate investment.
M.J
Related Posts:
5th January 2009:
Banks Risk Scottish North Sea Oil industry and Britain's Energy Future
7th January 2009:
Oilexco In Adminstration - Will other Dominos Fall
If you found this article interesting then the Idle Man recommends the following blogs:
BBC Blog: - Stephanomics - Stephanie Flanders, the BBC's economics editor
BBC Blog: - Peston's Picks - Robert Peston BBC Business Editor
BBC Blog: - Nick Robinson's Newslog - BBC Political Editor
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