Cable Talks Nonsense

Vince Cable was interviewed by Jeff Randall on the latter's show this evening about Cable's announcement concerning the business bank Cable had announced this afternoon during his LibDem Conference speech. Anyone with only a modicum of knowledge about how banks work would have been astonished by Cable's complete lack of knowledge of the subject as became evident by Randall's questioning. Cable defended his idea by saying business banks were something that other countries relied on including the German banks but obviously didn't know that the German banks still have undisclosed losses from the sub-prime debts they bought in the USA. Cable did not seem to know either who would end up carrying the can if the business bank he wants to set up with a £1 bn of taxpayers money were to make losses until at Randall's prodding he finally realised it would be the taxpayers. He also mentioned government guarantees but it was difficult to tell whether these would be in addition to the £1 bn or whether the bank's capital would be made up of a £1 bn guarantee. From the vague way he talked about guarantees it seem the bank will be capitalised with both cash and a government guarantee since he he said that if there were losses this could result in a diminution of the bank's capital and the call on the government guarantee. If true one wonders what the amount of the guarantee would be and under what circumstances a call could be made against it. Cable did say that the Government would not be assessing risk but this would be done by other banks. One question Randall didn't ask in exactly this form is what makes Cable think that another bank, if it's not risking its own money, will be as cautious in assessing risk as it would be if it were the lender. Cable's response was that banks were not lending to SMEs and the business bank would do so. He failed to mention that one reason banks are reluctant to lend, apart from credit worthiness issues, is because the capital requirement for banks has been strengthened resulting in banks having less money to lend. Altogether Cable was unimpressive. How he or the third rate Ed Davey can be thought of as replacements for the awful Clegg it is beyond me. Truly the LibDems lack any politician of any stature and deserve to be routed in the next election. It is not surprising to see that they are behind UKIP in today's poll.