On Monday night I had the pleasure of listening to a thoughtful speech from Mayor of New York, Michael Bloomberg, on the current financial and economic crisis.
Mayor Bloomberg gave a powerful defence of both liberal economics and liberal politics: anti-protectionist, anti-heavy regulation, pro-immigration, pro-globalisation, pro-welfare both domestically and in terms of overseas aid to counter 9/11-type risks which stem from global poverty and the alientation of so many outside the developed world. In times of crisis the temptation to abandon this outlook increases, he said, but now is the very time to ride to its defence. I was with him on the economics at least.
He pointedly refused to engage in finger-pointing about how we got into the current mess and defended the Ratings Agencies, the provision of home loans to riskier (low income) households and the remuneration of bankers. There was, however, a passing reference to “abuses and excesses” building up over time and a call for greater transparency from the banks on the true picture of their assets and liabilities. He also called into question the role of the Risk Control Groups that are a feature of all banks and the importance of stronger managerial oversight as derivatives trades become ever more complex.
He defended the recent bail-outs of US financial institutions and said that Lehman Brothers should also have been rescued. This was not a question of bailing out the owners (shareholders have lost their equity) or senior management (they have all been fired) but of recognising the strategic importance of major financial firms where the economic cost for society of a bail-out is less than the damage done by the firm collapsing.
There were echoes of George Osborne from last week when he said that better times lie ahead – both for New York and for London. But, as with Darling’s speech to the House of Commons on Monday afternoon, it was not easy to see how we should navigate a path to these better times. Michael Bloomberg has been a hugely successful banker and global businessman and is a skilful Mayor seeking an unprecedented third term. But even he has no magic formula to offer.
He did, however, praise Boris Johnson for his recent actions over the leadership of the Met Police and said he deserves “high marks” for his first six months in office. But embedded in the praise was a gentle warning about where Boris will need to deliver in the months and years ahead. In describing London and New York’s race for competitive advantage in the battle of ‘world cities’, the two most important factors in winning he claimed will be to bring crime down and to raise standards in state schools.
Comment by markasol on October 10, 2008 at 10:34 pm
While I agree broadly there are 2 important points to make: 9/11 (I think being British can’t we call it 11/9 please?) was most definitely NOT caused by global poverty-its perpetrators were well-financed. Hungry people in the 3rd world do not have the time and energy to devote to such things. The plotters lived in European countries off social welfare benefits we foolishly provide to anyone who comes here without any qualification period or prior NI payments. This mistaken analysis is very dangerous and plays into the left’s hands.
Also why not point fingers? If we do not, the left will not hesitate to do so, indeed it has already started, with free markets and light regulation being blamed. If we are not careful our restraint will hand them an undeserved victory that will be terribly costly to undo as their viewpoint will become the only one out there.
This chaos was caused by the lending of too much money to too many people who should never have qualified for mortgages. It was done by bankers in the USA following Federal government diktat and arm-twisting for the usual reasons of ‘equality’ and to help the supposedly discriminated against. This was all done by the Clinton administration much against the bankers’ instincts. It is a crisis caused by the Left and their mania to interfere in free markets for their symbolic PC ends and we need to be aggressively explaining this when we argue against over-regulation as the supposed solution.