House of Lords
My Lords, I would like to follow the structure of the speech of the noble Lord, Lord Lawson, although my arguments and conclusions will be a little different from his: how we got to where we are and what should be done about it. On how we got to where we are, as I understand it, the noble Lord, Lord Lawson, chiefly blames the failure of banking supervision, which enabled the banks to lend recklessly. Of course, that is a large part of the issue. The whole world became vastly over-leveraged. Ten years ago the world stock of financial assets, stocks, bonds, loans and mortgages was equal to the total of world GDP. When the crisis hit last year it was four times as much and financial derivatives, which are claims on financial assets, were 10Continue reading...
I, too, am grateful to the noble Lord, Lord Bilimoria, for initiating this debate on international financial institutions in the middle of the biggest financial meltdown since the war.
I shall concentrate my brief remarks on the IMF. Unlike the noble Lord, Lord Desai, with whom I rarely disagree, I do not want to abolish the IMF—his suggestion that distressed borrowers come to private banks for loans is a remarkable expression of confidence in the private banking system at this moment of its performance—I want to reform it.
My reform would be based on reminding us of what it stood for: to promote a stable system of exchange rates by preventing countries from manipulating their currencies to get unfair trade advantages. Various things
My Lords, I was not a member of the House of Lords foreign affairs sub-committee, and I think that I am the first speaker today who was not a member, but I commended its report at the time as a sensible contribution to Europe-Russia relations, which mapped out the areas of possible co-operation between the EU and Russia. It highlighted challenging conflicts, which needed to be negotiated. I was particularly pleased that the noble Lord, Lord Roper, pointed out the crucial aspects of Russian psychology that influence the country’s behaviour. The feeling of resentment that it had lost out and that it is now in a position to get some of its own back has dominated its recent actions.
Since then, events have taken place. I shall not go into
My Lords, I, too, express my appreciation to the noble Lord, Lord Wakeham, for the invariably good-tempered way in which he conducted the inquiry, and to the Clerk of the Committee, Robert Graham-Harrison, for his expert support. I concur with what previous speakers have said about the Government’s limp response.
A key issue with which we as Members of the Committee wrestled was the aims of economic sanctions. Some of us started with the view that the main aim was to get the sanctioned regime to change its behaviour or, at the limit, to overthrow it, but that was far too simple-minded. As the report states in paragraph 7:
“Sanctions can be applied for a variety of reasons, including to punish or weaken a target, to signal
May I add my name to those who have already congratulated Lord Peston and his colleagues on the Select Committee on the MPC for the admirable Report we are discussing this afternoon. It is an intellectual treat, a store of practical wisdom, and a notable contribution to economic education. It is also an example of the sort of thing your lordships house does superbly well.
We are constitutionally debarred from voting Supply. We do though have an opportunity to influence the principles of economic policy. I hope the two reports produced by Lord Peston and his committee will embolden us to seize this opportunity more confidently than we have in the past.
We are now almost at the point of having a critical mass of economists