13/09/2012 Newsnight

This trailer was barely noticed when it first appeared on YouTube,

now the American film, it seems, is creating turmoil across the Muslim

world. After the Libya killings, more

violent protests rock Egypt, Yemen, Tunisia and Bangladesh. Thousands

take to the streets to condemn its portrayal of Islam. We ask if the

Arab Spring has changed relations between the Middle East and the

west. Remember this, it is five years to the day since panic broke

out at Northern Rock, marking the start of five years of gloom.

quite sure in the 50s or 60s, if a Chancellor stood up and said your

money is safe, that would be the end of the conversation. Here in

2007, nobody believes the Chancellor. The Chancellor of the

time is with us here. We ask if he is convinced his decisions were the

right ones. We ask our panel what lesson it is taught us about crisis

management and fairness. The Hillsborough families waited 23

years for truth, has the day of reckoning come.

Serious questions have been asked today in Liverpool today, about a

role played by a man who is now one of the country's most senior police

chiefs. Good evening. When a 40-minute --

14-minute trailer of it was posted on YouTube in June, not many people

noticed. Now the Muslim world is in turmoil, over a film they believe

denigrates the Prophet Mohammed and Islam. In Cairo heavy clashes with

police, in Bangladesh, a thousand demonstrator gathered to burn the

American flag. If the Arab Spring looked like offering a chance for a

new kind of relationship between the Middle East and the west, the

events of the last week have underscored the complex reality of

what it has actually brought. Is this the thanks they get? The US

consulate in Benghazi, wrecked, a year after America and other

western nations did so much to help free Libya from dictatorship. The

ambassador, such an enthusiast for Arab democracy, and three other

diplomats, murdered. Today, the wave of anti-Americanism

rolled on through the region, in Yemen protestors tried to storm the

US embassy. In Iraq, they burned the stars and stripes, chanting "no

to America, no to Israel". Meanwhile, in Egypt, police fired

teargas at demonstrators on the third day of unrest. Apparently

sparked by an obscure, amateur American film, said to insult Islam.

Democracy in North Africa, supported by the space, gives space

to radical anti-western groups, that would have once been

suppressed by the ubiquitious security forces. Soon after last

year's uprising in Libya, Newsnight visit the liberated town of Derna,

famous and notorious for sending an unusually high number of Jihadis to

fight the Americans in Iraq. Intelligence sources believed some

such former Jihadis returned to the anti-American fight in their own

country last year. Joining the revolutionary militias, and keeping

the weapons, even after Gadaffi was overgrown. This reformed Libyan

Jihadi, once intimate with the Al- Qaeda leader, says he knows the

groups influenced by Al-Qaeda, were behind the attack on the US

consulate. Al-Qaeda is influencing them, it is, I can say I'm

comfortable to say, it is firsthand information, I obtained this

information from Al-Zawahiri himself. They believe Libya is

stragically can be the hub of a Jihadi struggle or conflict, --

can't be the hub of Jihadi struggle or conflict, but it should be used

as a back yard, or logistic space for a bigger Jihadi Islamic battle,

which is Egypt, Algeria or both of them. America can't reverse the

Arab Spring, but the question now for Washington is how to respond to

the dangers it throws up. Should it continue, as President Obama has,

to be wary of intervention. Should it avoid appearing to tread too

heavily in the region, for fear of exacerbating further resentment. Or

has it become, as many Republicans feel, too indecisive, and

apologetic. America, they feel, needs to make

clearer what it stands for. What the United States needs to do is

take the kind of leadership that will organise the international

community to address these crises, it doesn't appear that is happening

in the way that is productive and gets the results we want. Which are

basically not to have to enter at the military level. I think it

leads to others feeling the kind of power vacuum, and often those that

come to fill the power vacuum are radical Islamists.

But while America still has widespread support in Libya, shown

by today's pro-western demonstration in Benghazi, some

think it should help the Libyan Government to track down the

ambassador's killers, not try to launch its own strike against the

terrorists. If make now is involved again, based on this strategy on

tactics, it means all the work done by President Obama's administration,

it will disappear, and go like a waste of time, and assets as well.

I believe America, to a certain extent, has been successful, it

managed to pull itself out of the "war against terror", that is very

important of the future for relations for America and the Arab

world. It is a balancing act, not just for America, but also new Arab

leader, like Egypt's Islamist, Mohammed Morsi, in Europe this week

to seek western financial help for his country. TRANSLATION: We never

accept, we can't agree, we stand against anyone who harbours these

false slogans or calls this hatred among the people, or insensitivites.

We cannot accept that there is such empty or aggression against

embassies, consulates, origins people, or the killing of anybody

no matter how. This evening clashing resumed in

Cairo, despite an attempt by Google to calm the anger by blocking

Egyptian access to the controversial film. Tomorrow, plans

for an even larger demonstration will further test the increasingly

ambiguous relations between America and the new Arab democracies.

Let's discuss this with the former British ambassador to the United

Nations, Sir Jeremy Greenstock, in the studio, and from Washington,

the former US secretary of defence, Paul Wolfowitz. Thank you very much

for joining me. Jeremy Greenstock, are you surprised by how much this

has spread, do you think the film itself had anything to do with it,

or is that symbolic of something else? The film is definitely the

immediate approximate cause, but there are people on a spring out

there, waiting to show their anger, or to express their resentment at

any insult they see coming their way. Remember, that the most

significant feature of the whole Arab Spring, country by country, it

is the same everywhere, and it goes beyond the Arab world, is that the

voice of the people is now more powerful political phenomenon. And

there are different parts of the voice of the people, they can

express themselves now. The security forces aren't able to deal

with all the emnations of that. you think it is spontaneous, and

one paper here in the UK is suggesting this was the result of a

serious security breach, and the whole thing was planned, and secure

documents have now gone missing from the embassy in Libya. Do you

know anything about that, would that surprise you? Look, I think

there is a lot we still don't know about who organised the

demonstration, how they happened. They are probably different in each

place. What took place in Benghazi was not a spontaneous outburst of

popular anger, it was a nightime attack, with mortars and heavy

machine guns, by probably a rather small armed group. I think There

are issues between the United States and the Arab world, and we

shouldn't expect them to be solved any time soon, this is a huge

upheaval. But what we are seeing, as much as anything, is a fight

within the Arab world, in July the Libyans had a remarkably peaceful

election, in which the Muslim Brotherhood came in a distant

second, and these extremists barely showed. The Libyan people really

voted for a very religiously conservative, but moderate approach

to politics. But the people with the guns have a different view of

things, this was done with guns. None the less, it was your

ambassador that was targeted o killed, it is the US embassies in

other cities that have been targeted, this is about making the

US the external enemy, once again, isn't it? Well, it's also about

terrorising people, about saying that if you stand up for reasonable

positions you can be killed. I think it's very important to stand

up to this kind of terror. It is, at least in the case of Libya, we

are really talking about armed extremists. Unfortunately, as much

as Libya owes its freedom to the United States and your country, and

France and others who came to their assistance, the people who did the

arming and training of the Libyan militias were very heavily

dominated by extremists, we are seeing one of the results of that.

It is very interesting, that line about owing your freedom, the sort

of Kalaban line comes in, you talk my language, and my prophet is, I

can curse you with it, as a paraphrase, a lot of people will

look at what happened in the Arab Spring and say, this is what you

get? I think when a space opens up, with a new political arrangement,

things can get worse before they get better. You can't look for a

steady graph of improvement, it is going to be a very jagged curve.

You could say things have got worse, in the sense that, this wouldn't

have happened under a Gadaffi, this wouldn't have happened under a

dictatorship? Yes, but this is a horrid period, and a horrid

incident against American diplomats and citizens. But, it's not going

to be the only thing that counts on the score of whether this was

worthwhile or not. It's going to be a long process. It will be a

generational process. Some bad things are going to happen.

American Embassy was attacked under Gadaffi, to be clear, except we

knew who was behind it. It was very clear then. What we reasonably know

now, it is very important to say this, is this is not a popular move

by the Libyan people. The Libyan people, are, for the most part, I

believe, we haven't taken opinion poll, shocked and disgusted by what

was done to somebody who was deeply committed to the future of their

country. And they know it. Now the question is, can that sentiment be

mobilised to an effective reaction against these extremists, and to

talk about some obscure film is a distraction in that case. What

would you make of Mitt Romney today, when he said American leadership is

still sorely needed, and American leadership is made necessary by

this. Do you agree with this, or is it time to take a back seat?

think the back seat is part of the reason we got into this situation

in Lybia, where the people with guns are not connected to the

United States. We would have been in a stronger position if they had

been armed and trained by the United States and the NATO allies.

The strategic point here, is you have 1.5 million people in the

Muslim world -- 1.5 billion world, I would say the high end of it, 10-

20% share these views. The other 80% are in danger of being

terrorised it into silence or some kind of complicity. It depends on

how you define leadership. Those people hope for the United States

to be there to help them, not just the United States, but Europe as

well. What do you make of this idea that they should have been armed?

The diplomats should have been armed? No, when he was talking

about part of that uprising and the intervention? The fact that arms

are awash amongst the people is extremely serious. It makes it that

much more difficult to defend yourselves. You need, against this

potential disaster, a day you can't predict, you need very large

security forces around an embassy then. This idea of leadingship,

that you can go in and change the character of what's happening in

the Arab Spring, is misplaced, in my view. It is the people who are

speaking, and it is going to go wrong in certain aspects. But we

can't intervene from outside. It is not taste of the leadership of

outside people. Last word to you, Paul Wolfowitz? The people weren't

speak anything Benghazi, it was a handful of harmed extremists, we

were told if we arm the Libyan opposition, then the country would

be awash in weapons, so we didn't arm them, it is awash in weapons,

but they are weapons in the hands of people that are not particularly

friendly to us, and are not friendly to the majority of the

Libyan people. I think that point, look maybe leadership is the wrong

word, but very strong supportership, the people in Libya who are

embattled now, need our help. agree. Five years ago today, the

BBC learned of a crisis at Northern Rock bank, what happened that

evening, and over the days to come, signalled the start of the worst

credit crisis this country has ever seen. The run on Northern Rock, the

eventual nationalisation of it and other banks, was something no-one

saw coming. We revisit the decisions made during that crucial

period, and ask if they were the right ones, and what precedent they

set to deal with economic crisis in the future. At the moment we speak

to the architect of the bank bail outs, former Chancellor, Alistair

Darling. First, Paul Mason's reflections.

I can announce today, following discussions with the Governor of

the Bank of England, and the chairman of the FSA, should it be

necessary, we, and the Bank of England, would put in place

arrangements that would guarantee all the existing deposits in the

Northern Rock bank. Of this the day Alistair Darling finally guaranteed

the deposits of Northern Rock savers, outside a Northern Rock

branch in Golders Green, it was the day a decade of political spin

collided with Labour's reputation on economic management. I'm quite

sure in the 50s or the 60s, if Chancellor stood up and said, "your

money is safe", that woobt end of the conversation. Here, in 2007,

nobody believes the Chancellor. not? Because Mr Blair has told too

many lies. If you look at the cuttings from 2007, not many

predicted there would be a crash. Now who wrote that? Well, me. So,

why, six months later, was I surprised when Northern Rock went

bust? I covered the dotcom boom in the 1990s, I became convinced the

technology-driven upsurge it provided was real. And banks are

opaque, you are not supposed to know bank is going bust until it

does. The FSA said its supervision of Northern Rock was, basically, a

fiasco. It involved, "a level of engagment and oversight by

supervisory line management below the standard we would expect for a

high-impact firm". By the time RBS was going bust, one

year later, things had become more fluid. I was getting calls three

days before the event, saying RBS can't meet its overnight

commitments, but you can't report rumour, and they were

unsubstantiated. Even a year later, when Lehman Brothers went burst, if

I think back to what was in my head, I did not grasp the catastrophe

that was to come. By August 2008, I had people telling me a major bank

was going bust. I blogged this was being rumoured, and was greeted

with a storm of amuse, told to repeat fact not comment. In they

arey, the loss of Lehmans, on top of Meryl, and on top of fanny and

Freddie, and bail outs there, should provide the basis of

recapitalising the banking system, and in one or two years, the easing

of credit crunch. That is the they arey, we don't know how many big

nasty possibilities there are out there. Why, on the day Lehman

Brothers went bust, did I think we would avoid the crash? Thinking

back, because the experts tell you there is a technical fix that won't

stop a investigation, but will stop a crash, you tend to assume the

politicians and the regulators will do it. But they didn't.

We know a lot more now than then about the structural problems we

face. But for me, the past five years have come to seem less like a

deep crisis of capitalism, more like a fiasco of politics and

regulation. That's what the people outside

Northern Rock were worried about on that fateful day, and they might

have been right. The former Chancellor, Alistair

Darling, once described his life as a couple of decades in politics,

followed by four years as bank management. He oversaw the Northern

Rock crisis and he's with me now. When you revisit and see the queues

outside Northern Rock, the branches on Friday morning, that would have

been tomorrow morning, five years ago, it must have been a heart-

stopping moment for you and the Government. It was, you see these

scenes in different parts of the world, you think, someone should do

something about T I suddenly thought, that's me, I have to do

something about this, because we don't stop this then people will

rapidly lose faith in the Government, they will start to

panic. People honestly believed they ought to get their money out.

And the days when a politician can stand up and say, I'm a politician,

trust me, your money is safe, I think, are gone. We had the 24-hour

televise, which compounds the problem, people see the same thing

coming up on the screen, and think there are more and more people

queuing up, even though it might not necessarily be the case. We had

to stop it. In some ways it had to run its course, but on the Monday

we stopped it, when we had to guarantee every penny in Northern

Rock. Something unthinkable a few days earlier. Did the enormity of

what was happening then get to you at the time? No, that became more

apparent in the following year, 20008. You have to remember that

Northern Rock was a symptom of what was going very wrongment here you

had had a small bank that got above itself, you had had a very

aggressive policy for expanding market share. There wasn't enough

savers' money to lend to people taking out loan, what did they do?

They went to the American wholesale markets, largely funded by dodgy

financial instruments at that time. When people panicked in the summer

of 2007, Northern Rock ran out of money, and it was the first symptom

of a much larger problem that hit, not just us, but other countries,

the following year. The decisions that you made at that moment, that

you made the Bank of England the lender of last resort, it stepped

in. That moment set a precedent, a proto-type for what would happen

from there on? The Bank of England has always been the lender of last

resort, this was the first time announcing that the Bank of England

would step in, far from reassuring people, provoked sheer panic. What

it did do, and I have said this before, it made Gordon Brown and

myself determined it would never happened again, so when, 12 months

later, I was rung up by RBS and told they had two or three hours

worth of money left before they had to shut the doors, we had a plan.

Keith to it, we did far more than people expected and more quickly.

Something that today's European people should understand. From that

point you had decided that banks couldn't fail, because there

couldn't be a survival of the fitness strategy, you had to be

there, and prop up and intervene? The idea in the time of a panic,

that you can let any bank fail, even a small bank, and another, was

small in the international scheme of things. That was no longer

possible. Even a small bank going down, the contagion would have

spread. Even today, in the eurozone, where you are seeing the precise

opposite, where they are not doing what is necessary, you are getting

that panic. The only way to stop it, as I say, is learn the lessons of

what happened in 2008, theing year with RBS and HBOS, you do more than

people were expecting and immediately. I want to bring you

back to some of the comments, Mervyn King in 2008 said, he didn't

believe in a year's time people will look back and say there was

lasting damage to the banking system! I'm sure lots of people

said things at the time that doesn't look so great five years

later. The banking system...They Have a lot of power now, they have

been invested with more power, not less? There were mistakes made at

Government, regulatory level, the Bank of England was slow off the

mark, and yet 12 months later it had recovered slightly. I think the

idea that simply replacing the present system and putting the Bank

of England in charge, will automatically mean everything will

be fine, that is fanciful. I just hope that regulators have learned

their lesson, unfortunately, if you look athe channel, there is not too

much evidence they have. -- If you look across the channel, there is

not much evidence that they have. What about now, George Osborne

could break your rule on GDP to ratio, will he break the rules

there? Does he ring you up for advice? He said his current rules

are a golden standard of fiscal rules, that is something people

jump on and off for the last few years. The real problem in the

country, it isn't just banking crisis s you have to look at the

other side of things, we have a real problem in relation to the

economy, austerity alone won't work, it is not working in Spain or here.

What the Government announced in the autumn won't work. Isn't it

lack of trust for people in banks, institutions and politicians, that

is very prevalent now? Yeah, there is a problem in relation to that.

It is also, if you look here and other parts of the world, what is

really lacking is confidence. You can't be surprised that an

individual looking at today's landscape, or someone in business,

says I won't spend my money, I won't invest, because I actually

think the economy isn't going to recover. And the problem is, the

longer you leave this, the more you have to do. Frankly, I don't

believe that building conservatories is the road to

salvation of the economy of this country. The Chancellor will have

to announce something significant f he's going to put a firewall under

the problem that is growing now. You are seeing growth beginning to

evaporate, the borrowing rising and maybe the debt too. Before you go,

top job at the Bank of England, we will know tomorrow, who would you

put in the job? I think there are some good UK candidates. I would

ask the Government to make sure they look around the world. This is

a very big job. It will require someone with superhuman abilities.

Someone from outside the UK? Yes, people have been mentioned in other

parts of the world. I know there are good candidates in other parts

of the world. We need the very best. Because, frankly, there will be a

huge job, not just here, but if you look at what's going on with the

new European banking system, this will require something of a

superhuman, I'm not sure we have that many in this country.

We discuss this further with Claire Perry, adviser to George Osborne,

Shadow Chancellor at the time of the Northern Rock crisis. Nigel

Wolf is a member of the Vickers Commission on banking, Johanna

Kyrklund, and Giles Fraser, a parish priest in south London and

former canon at St Paul's. Martin, five years on, we're fighting the

same battle and we are not sure what we have cured, are we? I think

what's become very obvious in the passage of five years, is a crisis

was a symptom of something deeper, which was, in essence, that the

whole western world, we were part of that, went on a huge debt binge.

The financial sector grew enormously as part of that. There

was a colossal increase in debt in households in particular, we are

now on the other side of this hill. It is going down. Every year credit

shrinks, the economy, as a result, the private sector economy is

essentially flat, as Alistair Darling described T the same is

happening in the US, there is no demand growth. That is the core of

it. This is the process we have seen in Japan, if you don't stop

that, that can go on for decades. If you put that as a morality issue,

do you think we have learned anything from it t do you think?

The main thing everybody has learned is we should have never let

it happen in the first place. That is irrelevant, it did. This is not

something we will do for decades, we have learned our lesson.

Unfortunately it has left us with an enormous headache, which is how

do you get the private sector really growing again, spending,

when the banks don't want to lend, and lots of people don't want to

borrow, and don't dare to borrow. You see this, it is not just

Britain, basically, the lending machine of the western financial

system has frozen. Giles Fraser, what was led to the Occupy movement,

in your back yard at St Paul's. Do you think the banks have a social

conscience about any of this? think they got caught up in this,

particularly Northern Rock, got caught up tpwh this hugely

overoptimistic -- in this hugely overoptimistic, you have

demutualising the same team that D- reamis singing about things getting

better. Things will always get better, and you can borrow off the

future because things will be bigger. The idea is the hub bris

that is there, it got us into a huge amount of trouble, where the

bank became so big, so arrogant, a small bank on the wholesale markets,

hugely overleveraged itself. Then it was too big to fail. What

happens when it fails, it is welfare state for the rich, they

make their profits if they are private, and then the public

responsibility. �21 billion we are left with. You are nodeing to the

idea of hubris -- nodding along to the idea of hubris, just after

George Osborne went on to the Conservative Party Conference and

talked about inheritance tax. He completely failed to recognise the

crisis? I was a banker many years ago, I was sanatised by motherhood.

It was this sense that common sense went out the window. At the time

you were an advise Tory George Osborne, was there a sense that the

Conservatives had completely -- adviser to George Osborne, was

there a service that the Conservatives had completely got it

wrong? The regulatory regime was put in place to make sure this sort

of thing happened. Northern Rock was too good to be true, it was a

small constitution that -- institution that grew rapidly, it

had a business model that should have been flagged up as risky.

Alistair Darling, one of the few members of the last Government to

come out with reputation intact, when the crisis hit nobody knew who

was going to be in rpblg cha, there is criticism of that. One of the

things we have said is banking is an important thing, there is still

a huge need for banking services across the world, it is a very

important industry for Britain t has to be regulated better. There

has to be somebody in charge who is prepared to stand up and take

responsibility. We think it should be the Bank of England. That will

be done relatively soon when the legislation changes. Have we seen

that? This sense of better regulation for the banks, I know

your bank wasn't one that was bailed out, do you think there has

been a structural change for banks? Schroders is an Asset Management

bank, we invest money for a long- term pension scheme. From our

perspective, regulation is to be welcomed. Ultimately we want

sustainable growth. That works for people who are trying to allocate

capital over the long-term. If I pull you away, not just about your

own investment house itself, but this idea, as we heard from

Alistair Darling, that actually, there was no question, the banks

would be bailed out by the Government. At some point the City

has to decide whether the Government is a help or hindrance.

Whether they like having the Government on their back or not,

right? From our perspective, we think that there should have been

greater regulation, particularly it wasn't just a matter of

overoptimisim. The problem was that this classic problem of greed was

combined with the modern problem of excessive leverage and complexty.

The problem started in the United States. You had the repackaging of

mortgage debt into mortgage-backed securities. The complexity of the

system increased significantly, what seemed like a small change in

the default rate on mortgage debt in the United States, mult mitly

had catastrophic consequences. All the areas should have been done,

and we would prefer a smaller system. Do you think things have

fundamentally changed? We wouldn't have made a difference to Northern

Rock. Banks could fail in many ways, there was clear compensatory

failure. I don't think it was a structural system, it was an

intellectual point, we thought banks were safe and they couldn't,

and they couldn't manage themselves. It was a fundamental mistake. We

think some of the problems with the big universal banks, it is a fact

that RBS went down. That a bank of that stage goes down, Citigroup,

monstrous banks went down. Those were the real threat. Northern Rock

was quite manageable by comparison. We think we have a way of reducing

that problem significantly, and by the way the Government agrees with

us. The collapse of the rock has had a profound impact on the north-

east of England and the people who live there. We will talk to the

panel a little further about the psychological impact it had, we

went to listen to their stories. Newcastle as many symbols of which

it is very proud, including its Football Club and its brown ale,

Northern Rock was also one of the symbols. That is why most of the

queues outside branches to get money, were not to be found this in

Newcastle. In short, Northern Rock, was more than just a bank.

Susan Tron took out one of Northern Rock's infamous 125% "together"

mortgage, it seems almost laughable now that someone will be offered a

lon worth way more than the home they wished to bie. But financial

logic was a -- wished today buy. But financial logic was very

different now. It was Pennies From Heaven, it was a mortgage, with

pennies to buy things and pay your debts off. Once I got it I realised

it wasn't wonderful, receipt payments were massive. Like many in

the north-east, her inskrutable appearance belies a warm humanty.

She has dedicated her entire life to Stepney Banks stables, it

supports disadvantaged children in the area. It comes from the

Northern Rock Foundation. Since the demise of the bank, the charity has

scaled back dramatically. Susan has been told she's being made

redundant. I haven't come to terms with it, it is like bereavement,

you are in complete shock, I feel flat, I haven't really thought

through what the future holds. I'm sure I will feel cross, excited

about new doors opening. But mostly, I just feel incredibly sad. Despite

facing her own jobless future, Susan's thoughts turn to those in

the I can't remember less well off than her? I get a sense of people -

- in the area less well off than her? I get a sense of people

desperately trying to reinvent themselves and fight back. I do

feel there is a sense of incredible sadness, many talent, skills, staff,

volunteer, lost forever. A few miles way in leafier parts,

Silva Murphy enjoys her retirement on the golf course. She wanted more

money to spend in her dotage, and she would have had, because of the

speed of Northern Rock's collapse. I couldn't believe it was going to

collapse. Susan got a thousand shares from Northern Rock, when it

transformed from a boring building society into bank. The shares, once

valued at �12,500, are now worthless, she blames the former

Prime Minister and his Chancellor. Richard branson put an offer in for

the bank before it was nationalised. Really Gordon Brown and Alistair

Darling stole my shares. There's a big gap, and areas of

immense despair, immense isolation from the national economy, really.

Before being the Bishop of Durham, justice used to be a derivatives

trader, he will need both skills for the new parliamentary Select

Committee on banking scandal. banks were a new thing, I

associated them with the United States, but we are seeing

significant demand on food banks all over my diocese, all over this

area. Particularly in the last 18 months with a sharp increase for

foodbanks. One of the things we are increasingly seeing is demand from

people who are working, but not earning enough to actually feetd

the family right the way through -- feed the family, right the way

through the month. We are back with the panel again.

If I can start with you, Giles Fraser, the phrase "financial

logic" it was daven country, the days where you borrowed seven-times

your salary with nothing to show for it. This idea of progress that

our children would be better off than we are, doesn't exist any more,

for a lot of both people? No, and yet people are still, I still think

that optimisim, and that sort of rather gung ho thing is still about

in the City. I think that is a dangerous thing. When I was asked

to come on the programme, it was five years ago, I said is it really

five years it happened, it seemed so recent, because the problems

seem exactly the same. I think the problems are, this is as a non-

economist, I'm not a specialist. But for people like me, we want the

banks rooted in some practical reality, Northern Rock was rooted

in the north-east, a building site mutual, you understood T then it

becomes something virtual, part of the reason there were so many

queues outside Northern Rock s there weren't many branches. There

wasn't much bricks and mortar to it. This idea of progress, does your

Government recognise that the next generation will be worse off?

are important policy choices we have to make. Going back to

Northern Rock, where was the common sense in the Government and

regulators that said mortgages of 125% of somebody's asset are not

sensible. How did the policies fit with what is the reality now?

Listening to Mr Darling talking about the fact that wouldn't it be

lovely if we spent more money on fiscal stimulus, where does the

money come from. Martin is going to disagree, he always does. Is it

right to burden this generation with the last generation's mess.

Because Because of the policy decisions of Gordon Brown and

Alistair Darling, because the coffers were empty. We have to make

sure the banking industry is safe and regulated, and those who have

mis-sold pensions or fiddled the Libor rate, which can't happen in

the current system, that would be of benefit to us. We could be

sitting here in five years time and say we are only half way through?

We can grow again, underlying technology should allow to us to

grow again. I don't believe this generation is definitely going to

be poorer than the last one. It might, but that will be the result

of mistake policy conditions. Very bad mistakes! My view, very

strongly, is one of the mistake, in this situation, when it was clear

that the private sector of going to retrench, is the public sector

doesn't. Where will the money come from, the Government can borrow at

the lowest rates of the entire history of the UK, and you are

telling me it cannot borrow, it is completely mad. You would borrow to

invest in productive assets. I would borrow to show more.

If yesterday was about vindication for the Hillsborough families,

today marked the fresh start in the hunt for criminal justice. The

Chief Constable of South Yorkshire Police told Newsnight last night

that prosecutions would happen if allegations were proven. One of the

sources behind the Sun's ill-judged coverage said he was Sorosy, Peter

marshall, who was in Liverpool at the time of the tragedy sent this

report. Now the world knows the truth, the families renew their

quest for justice. Margaret Aspinall was 18, James Roberts just

six years older. His sister and Jamesd's mum help run the bereaved

Families Support Group, they are pressing for new inquests, and they

are convinced there must be criminal prosecution over the

allegations. If you look, everything that went against them

yesterday, it was perverting the course of justice, for a start. We

could never get all that evidence, it was withheld. To actually get

them to change their statement, it is an absolute disgrace. The South

Yorkshire force altered 115 of their own officers' statements,

deleting the mismanagement of the crowd. This passage, was removed

Amid all the anger over the altered statements and elaborate cover-up,

questions are being asked about the role of one of the country's most

senior police chiefs. He's now Chief Constable of West Yorkshire,

23 years ago, Sir Norman Bettison, was a Chief Inspector, rise to go

superintendant of the south force. He was a key member of the unit set

up by the force, to handle the bills ror row fall-out. Sir Norman

Bettison said his duties never involved taking or opening

statements, Newsnight has no reason to doubt that. We found some

statements did pass through his hands at some point. Here are his

initials confirming that, there was notes suggesting he was in receipt

of statement. First Norman Bettison further angered Hillsborough

families, with his comments in a statement of his own, issued this

Norman Bettison, we just can't believe what he's come out with and

said today. Totally gone against what it said in the report

yesterday. Why is he still trying to justify himself. Why can't he

just apologise. We want his resignation, now.

But Norman Bettison has faced doin calls from the families to re--

down calls from the families to step down, he left south Yorkshire

and had got an and promotion on this occasion. He had become Chief

Constable of Merseyside. Today the families say they know Norman

Bettison, and he just doesn't get it. He doesn't get it at all, he

played he only played a peripheral road, he didn't give any order for

any statements to be ordered, then in that case, why were they altered,

he must have seen when they were looking at them that they had been

altered in some shape, way or form. Whilst Sir Norman Bettison is

adamant he did not wrong and has nothing to hide. A former

Conservative MP tonight issued a statement, apologising to the

bereaved, for adding to their pain and suffering. Sir Patrick pat was

revealed yesterday to be a key source behind newspaper -- Sir

Irvine Patnick revealed yesterday to be a key source behind the

newspaper. He says he wants to put on record how appalled and shocked

he was, to discover the extent of the cover-up. He says he accepts

responsibility of passing on such information, without asking further

questions. The Hillsborough families plan to meet this weekend

to discuss legal advice on their next steps. They want fresh

inquests and they want prosecutions. Now the front pages of tomorrow's

Apology for the loss of subtitles for 57 seconds

That's all from Newsnight tonight, Gavin is back in the chair tomorrow.

Gavin is back in the chair tomorrow. Hello, getting quite windy

overnight tonight, it means it won't be anything like as cold

first thing in the morning. It won't feel all that ples qant with

the strong winds, -- pleasant winds blowing lively gusts across

Scotland and England. The winds slowing down over the afternoon,

looking pleasant then, sunny spells, it will feel fresh in the breeze,

but temperatures getting up to 19- 20. It will brighten up after a

grey start across south-west England, sunny spells here for the

afternoon, the same goes across much of Wales. Maybe one or two

scattered showers across North Wales early in the day. Overall dry

and bright, don't forget about the wind. The wind will be particularly

lively across northern England and Scotland, also for Northern Ireland,

gusty conditions, especially early in the day. The strongest winds

across North West Scotland, 60 miles an hour here. That is mostly

by the morning, it is still a blustery day. For Saturday the

winds are lighter, although there will be lots of cloud in western

areas, generally it is dry and fine with sunny spells. Further south

there will be sunny spells across the east, more cloud at times