28/08/2014 Newsnight

Tonight more trouble for the Tories over Europe. David Cameron loses an

MP to UKIP, forcing an unwelcome and dangerous by-election. I will ask

the granddaddy of Tory Euro-rebles if Douglas Carswell has done the

right thing. Douglas Carswell has gone from the party, the only party

that can deliver a referendum, that is a retrogade step. Do you speak

money? A world in which banks have haircuts. And some are zombies,

where you avoid a bear market and dead cats bouncing. Also tonight:

Where is my ice-cream? Sorry Ian. Ahhhh. You have got your own

freezer. Someone has taken it out of the freezer and it is all melted. It

was meltdown or was it baked Alaskagate. David Watters cruelly

binned from Bake Off last night after his ice-cream was left out of

the freezer. Tonight on Newsnight he resurrects his baking career.

Good evening it wasn't exactly the kind of surprise to bring a smile to

David Cameron's face, just as he was heading north to would Scotland --

woo Scotland for the union, looking for good headlines, the Tory Douglas

Carswell announced he was high tailing it to UKIP, and not that he

would sit in the Commons until after the election, he's forcing a

by-election in his seat where he turned a wafer thin majority into a

safe Conservative seat. His gripe, that David Cameron is not serious

enough about his plans to reform the European Union.

No-one was quite sure what UKIP were up to this morning, until they

caught sight of this MP. A Tory MP, that is, he was yesterday. I'm today

leaving the Conservative Party and joining UKIP. (Cheering) The problem

is that many of those at the top of the Conservative Party are simply

not on our side. They aren't serious about the change that Britain so

desperately needs. No-one cheered David Cameron's Bloomberg speech

more loudly than me when he promised to negotiate a fundamentally

different relationship with the EU, when he promised to put it to the

people in 2017, in or out. But there has been no detail since. That is

because there isn't any. They are not serious about it. They haven't

thought it through. I also want to say I think what you have just done

is without doubt the bravest, most honourable and noblist thing I have

seen in British politics in my lifetime. So all eyes move to

Carswell's constituency of clockeden to, where a bitter by-election will

now be fought. This morning in Westminster we thought we might be

seeing the beginnings of a purple plot, an orchestrated move by MPs to

defect to UKIP, perhaps as many as one MP per week, going over to the

party over the next month. In reality those MPs we know to be

sympathetic to Douglas Carswell were to be found in their polo shirts and

holiday shorts, hard leaved that they were prepared for this move --

evidence that they were prepared for this move against David Cameron.

Even so, this is hardly a coup but what happens here in clockeden to

will matter in Westminster. The local Tory MP learned of Carswell's

defection 20 seconds before the rest of u pitching him into a by-election

against his one-time friend. We will put up a Conservative candidate and

give him a good fight. How likely is it to be against someone with such

satture in the area, he's so well known? He has been such a good

constituency MP, but a lot of people will be very disappointed with him.

I have already had people saying, you know, a turn coat is never a

good thing. I will not criticise Douglas, I like him as a person and

he's a friend, I'm only disappointed that he has done this. Clockeden to

loves Carswell, at the last election he gained a 12,000-vote majority. In

total over half of those who voted in the seat voted for him. Here is

he COMPLANL how he galvanised clockeden to? We are doing it in

buildings like this and wondering why we are haemorrhaging membership

we are doing it 1950s style. He has been long denouncing some party

issues. He has a following and the seat of Clacton itself ready to

rebel? It is the most favourable seat for UKIP in the country. It is

full of older, white, working-class pensioners who feel left behind

economically, angry at Westminster, anxious over Europe, resentful

towards immigration. So in effect Douglas Carswell was already sitting

on the most UKIP-friendly seat in the entire country. I will still

vote for the Tories. You wouldn't would you. Your daughter has gone

UKIP. I can't help about that. What about you? Isn't UKIP for the

independence from Europe. It is wanting Britain out of Europe? It

wants Britain out of Europe, he wants Britain out of Europe, you are

an old veteran, what are you talking about, you are causing a divide.

Clacton peer won't be good for Tories Dragooned into fighting the

by-election, and the Prime Minister might feel under pressure to tighten

up his European referendum pledge. It used to be until recently that

Douglas Carswell was supportive of David Cameron's European referendum

pledge, but not any more. And now the party will have to fight tooth

and claw to make sure it is not defeated on this most sensitive of

issues. It is deeply regrettable when things happen like this and

people behave in this way. But it is also, in my view,

counter-productive. If you want a referendum on Britain's future in

the EU, whether we should stay or go, the only way to get that is to

have a Conservative Government. Tonight there is speculation of

perhaps one more Tory defection to UKIP. But for now, in a by-election

the Prime Minister today suggested will be moved sooner rather than

later, Douglas Carswell is UKIP's best chance, a very good chance.

A little earlier I spoke to a man who knows a thing or two about

rebelling over Europe, cabinet minister, Iain Duncan Smith. I began

by asking him whether he cared that Mr Carswell has left the Tory ranks

for UKIP? I do, I think anybody in the Conservative Party would care

that any MP elected on a Conservative manifesto decides to go

and join another party. I know Douglas quite well really. He is

that classic figure who is never really seeking front bench

appointment but really agitates from the backbenches, it is a traditional

historic place to be here. You would call it the grit in the oyster is

really his role. I regret he's gone, you think he has made a big mistake,

even by his own words. He welcomed David Cameron's commitment to a

referendum on the EU, what has changed. Doesn't it show that you

can't keep giving to the euro-sceptics because they are never

satisfied? Not really, I think the problem is this is very much a

Douglas Carswell moment, in other words he is very much an individual

who would make this kind of decision. And I think I have no

reason to... So you weren't surprised? We were all surprised but

not necessarily surprised in a funny sort of way. Douglas Carswell has

always been a little bit of a loner on the backbench, he makes his own

decisions for himself. What I'm puzzled and perplexed about is to

why all of a sudden he having gone into the summer break, apparently

quite content, he suddenly decided he isn't. There is a perplexing

moment to this. This is the wrong move to make. What does it say that

David Cameron can't even persuade one of his own backbenchers that

he's serious about European reform, why should the public believe him? I

have to say that in the course of the next few weeks and months we

will have to step up the gas and make sure the public understands

this. The reality is that there is only one party that is promising

that referendum. It is not a competition on this. We have to make

sure we get this out there. The point I come back to again and again

is the simple point, I trust the British people to make that

decision, I will make my mind up enI see what the Prime Minister blings

-- when I see what the Prime Minister brings back, and thenally

make up my mind. Isn't Douglas Carswell's position very clear when

you look at a commitment that you have made that net immigration will

fall to under 100,000 before the next election and the new figures

are an upward trajectory to 243,000, you are never going to make your

target by the election? I still feel we will. But the key thing of course

is the problem in terms of those not in the EU, we have reduced it

dramatically. But you have a free movement of people in Europe and you

can't do anything about that, and you will never take 143,000 off

before next year? My point is that the European Union needs to

understand and it will understand that this negotiation is serious.

That if Britain doesn't get what it wants what will happen is the Prime

Minister will come back and the British public will choose not to

stay in. And he will campaign for a no vote in that case? He has to make

his decision. When the Prime Minister comes back, this is the

point that is really clear, when the Prime Minister comes back, having

had that negotiation, he will have to decide himself what he campaigns

for. Because he will decide whether or not he has brought back what he

thinks is sufficient. The key thing is the British people will make that

decision, that is the point. They will make it, not me. I will just be

one vote and one voice, so will the Prime Minister. The truth is Douglas

Carswell wanted that. Now he has got it. That is what I wanted, I wanted

the British people to have a referendum, I have wanted it since I

rebelled en mass tricked and I have got it under -- Maastricht, and I

have got it under this Conservative Government and that is what we

should hold on to. So ironic talking about Maastricht, you were the

architect of exactly this kind of rebellion, you rebelled over and

over and over. In fact you even. Indeed and rather proud of it. You

voted with Labour 11 times. You were one in the cabinet that John Major

called the "bastards" who were knifing him. Douglas Carswell has

learned at the feet of the master. He's rebelling over Europe just as

you did. Many people do, and my point here is that I feel very

strongly and passionately about making sure that our relationship

with Europe is the right one, I believe it isn't. Hold on, I have

called for a referendum for many years now and we have now, this is

the irony, this Prime Minister, David Cameron, has agreed if we get

re-elected, if the public says, yes, we want a Conservative Government,

he has agreed to grant that referendum. He will renegotiate and

he will come back, if he can, with something that he says, if he thinks

that is the case he wants to stay in with. I'm simply saying he has

trusted the British people, like no other Prime Minister, has trusted

the British people since Harold Wilson came back with a referendum.

I'm simply saying this is what we wanted. Douglas Carswell wanted it

and I'm impress bid the Prime Minister having done it. You were

one of the ones that actually started the image of the party

divided over Europe and that image has never changed. It has simply

intensified. In a sense you rebelled endlessly over Maastricht and

Carswell is not happy with the direction and feels he can make

change and he's off to UKIP, it was the most honest thing to do wasn't

it? No, the reason I rebelled against Maastricht is I believed it

was going in the wrong direction, I believe I was right, not with

standing anything else, the point here and the question is this,

Douglas Carswell has gone from the party, the only party that can

deliver a referendum, that is therefore a retrogade step. He won't

trust the British people because he won't deliver it through UKIP. I

want to deliver a referendum, that is why I trust the Prime Minister, a

Conservative Government is the only Government to deliver a referendum

after the next election. It is a simple question really. Thank you.

I'm joined now to discuss the ramifications of Douglas Carswell's

defection by the UKIP MEP Patrick O'Flynn and a pair of peer, Danny

Finkelstein who advises William Hague, and the associate editor of

the Times and Sally Morgan who worked for Tony Blair. How angry do

you think that David Cameron will be by this defection and the time of

it? I'm sure he won't be very happy, it is profoundly unhelpful. The

Conservative strategy has to focus on the choice between Ed Miliband

and David Cameron. It will give UKIP momentum in a period when the

Conservative Party was hoping it wouldn't have momentum and it would

be able to focus the battle on that choice. And now it will be robbed of

that opportunity, certainly for a period, it is profoundly unhelpful.

Let's look at the splash tomorrow morning on the Mail, Patrick

O'Flynn, eight more Tories in UKIP talks and apparently a series of

lunches? Did you know about these? I think Stuart Wheeler's lunches date

back some time. I am' sure there are talking going on between UKIP and

other political parties all the time. Is the Mail overplaying this

or are there eight more Tories in UKIP talks? What I'm focussed on

tonight is Douglas Carswell has made a magnificent gesture, I would say

has made an irresistable pitch to his voters in Clacton, and it is

UKIP at the collapsibility to help him deliver the victory he deserves.

I'm focussing on the person with integrity coming over. Are there

more Tories ready to make the leap, is this story actually wrong? I'm

sure there are Conservative MPs who think about these things. I don't

know whether or where the Daily Mail gets their figure of eight? When

Allegra says there might be one more, is that on the right side of

one more, eight more or how many more, is this a rolling programme? I

don't have perfect information and no-one does. One can only imagine

what is in the mind of Conservative MPs. Clearly Douglas Carswell did

not find David Cameron's pitch convincing and there may well be

other Conservative MPs in that position. Is this a flash in the

pan. Is it just going to be Carswell or more? A lot depends. One does not

make a summer? A lot depends on the result of the by-election, doesn't

it. It is UKIP's profound responsibility to back Douglas

Carswell in the magnificent step he has taken. You had candidate and you

didn't do him the curtesy of telling him that Douglas Carswell was about

to move, he's very angry and upset and will be taking you to task? Look

the nature of these things has to be, there has to be a certain amount

of secrecy around it. And one regrets that. But I can't think of

any way around choreographic these things to the benefit of the party

without a degree of secrecy. I have to say to Danny Finkelstein, we

heard from Allegra there, there is a likelihood of an earlier rather than

later by-election, which will be a problem for the conference season

and everything else. If, as is likely, he would have a very good

fight and by the looks of what we are saying Clacton is a UKIP area

will it bring the others out? Not all areas are Clacton, and they

don't all have Douglas Carswell's attitude. He's forcing other people

to think could they win their constituency, he could win Clacton

because of the constituency seat. He will have encouraged some people by

what he has done, but because he has done it in the way he has done it,

it will discourage them. He has a good chance of winning it. Clacton,

this was a safe Labour seat in 2005, and here we have it, a constituency

which has flipped. You have just given up on this one presumably? I

don't think Labour has given up on any of these seats. But it is clear

that there is a series of these seaside seats. It is isn't that it

did flip back? It was a marginal, these are all marginal seats, they

were Tory-Labour marginals right round the coast actually and they

have similar characteristics. It was a Labour seat and you held it? We

did hold it seats like Clacton. We won them in 1997. The reason I

mention this of course because much like the Daily Mail story, Nigel

Farage, he's talking to everybody clearly, he says he's talking to

Labour MPs, is that beyond the bounds of possibility? I find that

considerably less likely than Tory MPs. This is a serious blow for

David Cameron this tonight. It is a serious blow. I don't think very

likely for Labour MPs, there is a Labour element to it, the reason why

Clacton is appealing to UKIP is because of its appeal to a certain

part of Labour's base vote. That is the theory that these academics have

advanced, it is compelling. It does kind of show that once you give one

thing away they will come back for more, and in fact, you heard Iain

Duncan Smith already moving there, saying we have to strengthen our

resolve, we have to move on this, that is driving the agenda. I know

all the concentration is on Europe, I actually think recall is a bigger

issue for Douglas Carswell. So Douglas Carswell as well as being

interested in Europe has a lot of theories, many very interesting

about how politics works, you have had him on Newsnight doing. That I

think that was very much in his mind actually, not just Europe. On Europe

he can't really be saying David Cameron hasn't got a specific enough

programme on negotiations because he's not in favour of remaining in

the European Union. He said he doesn't trust David Cameron, and

that is a real problem. And today every media outlet. According to

Fraser Nelson, he tweeted that actually he had audio of Douglas

Carswell being fulsome about David Cameron? And then you have a series,

the media today is full of every euro-sceptic, that is the problem.

You are a UK MEP, Douglas Carswell who has never particularly wanted

glory is suddenly about to have glory as the first UKIP MP, that is

a bit of glory, isn't it? To be glory as the first UKIP MP, that is

first directly elected UKIP MP would be an historic breakthrough. I have

had the benefit of some conversations with Douglas in recent

days and I agree with Danny that the dilution almost to the point of

extinction of right of recall was a major point for him of becoming

disillusioned with the direction of the Tory leadership. So recently he

was being very praising of David Cameron. This is simply something

that was not on the agenda six months ago? Somebody I think has

said something to him that makes him no longer trust Cameron. I think he

has had conversations with certain people around David Cameron, which

has led him to question the sincerity of the Cameron leadership

of the Conservative Party. The timing in another way is very

tricky, here is David Cameron in Scotland trying to absolutely make

sure that he has the CBI dinner tonight, that he's promoting the no

vote very heavily, and one of the issues, one of the fault lines is

that people in Scotland by and large appear to be less euro-sceptic than

anywhere else in the country. To think that actually we are going to

see a series of MPs pushing the Conservatives even further in the

direction of an exit door to Europe may have an impact on wavering

voters? He will be thinking about the impact on the general election

campaign primarily. It will have an effect? No individual political

event has as much impact as it does on the day. But it will have some

impact. Douglas Carswell is not immune, by the way, to political

glory year, he's somebody who is very strong-headed and he has a lot

of political ideas. One of the interesting things is how he shifts

UKIP. It is quite an earthquake, you will have a potential member of

parliament and a leader of the party, and actually the tone of

Nigel Farage and Douglas Carswell, both intelligent and able people,

but it is quite different and it was quite noticeable on Douglas's

performance. I think it will be an interesting thing to watch UKIP. It

might not have it all his own way? It will be interesting to watch UKIP

as it tries to absorb Douglas, which the Conservative Party frankly found

quite hard. Another one within the month then? I wouldn't put deadlines

and time limits on it. My absolute focus is Douglas Carswell has done a

magnificent thing and UKIP must now deliver him the result he deserves

and help him do that. Thank you three.

The UN Security Council is in an emergency session today discussing

the crisis in Ukraine. But they are all in accord, Vladimir Putin is

escalating the crisis in the country. NATO says 20,000 Russian

troops are had he border in Ukraine and 1,000 inside. Russia denies the

incursion claiming the soldiers in Ukraine are there in their own time

and not part of the Russian military. According to Ukraine's

President they helped the rebels capture a key coastal town. As often

the question has to be what is in the Russian President's game and who

is he trying to promote. This is the view of the Ukrainian Prime

Minister. We can confirm that Russian military boots are on

Ukrainian ground. Ukrainian forces are capable to tackle and to cope

with the Russian-led guerrillas. But this is quite difficult for us to

fight with Russia. Well, our diplomatic editor is here. What is

the actual hard and fast evidence that Russian troops are operating

inside Ukraine? Well, things have clearly changed a lot in the past

week. NATO said this morning they thought more than 1,000 Russian army

soldiers were in the south-east of Ukraine. I'm told there are

classified assessments that put the figure considerably higher than that

for battalion tactical groups, they are thought to be there in NATO

which would come close Tory 5,000. One of the separatist leaders

earlier this week, interestingly, talked about 3,000-4,000 Russians

being there as toll tears to help out. As you said earlier Russia is

not officially acknowledging this, NATO has producing satellite

imagery, saying they have located units like a self-propelled

artillery battery inside Ukraine. It is a gun line, not the sort of thing

that separatist who hit the bottle could put together. It is a proper

military formation. That is the message they are sending. The really

interesting evidence is the human level. We saw a few days back

Ukraine showing those paratroopers from a specific Russian army

airborne regiment that they captured. We have heard about

casualties going back to hospitals in St Petersburg, and burials in

places. Also groups of mothers. This lady says her son is one of the

captured soldiers. Getting organised, they are talking about

400 soldiers killed or wounded. Now the fascinating thing here is that

the percolation of the knowledge through the military, we haven't

seen it before, it seems definite evidence that the units have gone in

some or another. What is behind it? If we look at the last few weeks,

the Ukrainian President has been pushing the antiterrorist operation,

the offensive against the separatist. In some ways some would

say he hasn't given enough emphasis to negotiation. He has tried to seek

a military solution, there has been heavy fighting and considerable

gains for the Ukrainian forces. If we look at a map we can see in

particular the Donetsk pocket has been cut off and the Luhansk one

squeezed. Many speculated that President Putin would not allow

those pockets of separatist to fall. He has sent in troops, that is the

belief in NATO, nah the south they have -- and in the south they have

pushed towards Mariupol and some suspect they might open a corridor

to Crimea. They have pushed towards Donetsk to reopen land communication

with that enclave, and pushed down towards Luhansk. Is this what we are

seeing here, an incursion, an invasion what is it? Is it just

about semantics or does it matter very much what language is used?

When you talk to people in NATO, there is absolutely no doubt that,

pardon my language, one said to me tonight, it is a "bloody invasion",

there is no word for it. But politicians are choosing their words

so carefully. Even the President in Ukraine seemed reluctant to use that

word. The Ukrainians might say if it is one and it is a war, why aren't

we hitting Russia, because he knows what might come back in the other

direction. And the American President too? Fascinatingly

tonight, we heard President Obama would make a statement on Iraq,

inevitably he would be asked about this, he would not use the word

invasion. Russia is responsible for the violence in eastern Ukraine. The

violence is encouraged by Russia, the separatist are trained by

Russia. They are armed by Russia. They are funded by Russia. Russia

has deliberately and repeatedly violated the sovereignty and

territorial integrity of Ukraine. There are others using much more

explicit language like the President of Lithuania today who called the

Security Council session. They will have to put those delivering views

together to thrash them out at the NATO summit next week and to find a

response to this. I'm joined now by the Ukrainian

ambassador to the UK. Good evening. What is this, is this an invasion of

Ukraine, is it an incursion, what is it? It is definitely the Russian

troops at the Ukrainian territory fighting against the regular

Ukrainian army. It has its term. But it is not calling it an invasion?

This is kind of an invasion. This is undeclared, shameful war, started by

the Russian federation. Which is the a hybrid war. Once you start to use

the word "invasion" it is loaded and demands a particular response, and

maybe you might ask for a particular response from NATO? We are

responding by our own, and we are seeking

responding by our own, and we are for such a response. We are

trying to have a specific Bartter inship with NATO and certain

assistance to receive which we need now. We will come on that

assistance, was it right for your President to say it had to be a

military solution. You know no matter how hard Ukrainians fight,

Russia is a superior fire power and Russia would Winter trees within

Ukraine? We are not closing the door for diplomatic solution. It was the

attempt to find one in Minsk and the Russians refused to do that. . Once

you now have Russian prisoners and there are casualties and civilian

casualties and a number of apparent deaths among the military, then

there is an escalation. What do you actually want NATO to do? First of

all, we would like the community to do, this is not just about Ukraine

but security in the world. We need to stop the agressor by any possible

means. It means the sanctions should be much harder, the co-operation

with the agressor should be cut, especially at the military and

technical field, especially in the most sensitive field of energy for

Russia, for energy supply and the banking sectors. New technologies

also. You know this is very difficult for particular countries

in Europe who are, by necessity, doing a lot of business with Russia,

though sanctions will only go so far? The Ukraine has the economy

which was very interconnected with the Russian ones, and we cut all the

ties and all the co-operation in this field. And I think that to lose

certain profits for the western companies in western countries will

be much better for the soldiers later on if the conflict will not

stop at this stage. In the end if it is a diplomatic solution are you

prepared to have a situation like Crimea but negotiate areas you might

have to lose in the country? We have a certain red line which we could

never cross and the loss of territory and the territorial

disintegration of Ukraine is definitely the red line we cannot

cross anyhow. Thank you. You may have heard about how the European

Central Bank is holding back in quantitative easing but has launched

a programme of targeted long-term refinancing operations which has

helped to flatten European yield curves. Still with me? I'm not. Ever

since the financial crisis we have been bombarded with impenetrable

language to explain why things went so catastrophically wrong and what

we need to do to fix it. Why can't the money people, economists and

politicians speak plain English, even films entitled Margin Call and

Arbitrage, in his new book How To Speak Money, Lanchester tries to

decode the language. We will be talking to him and Baroness Patience

Wheatcroft, first here is the Knowledge. One of humanity's most

remarkable inventions is money. It is fundamental to modern society. So

why is it that the language used to talk about money is so be a secure,

so alien, that it seems to belong in a very different world to the one

you actually inhabit. A world in which banks have "haircuts" and some

are "zombies" where you better avoid a "bear" market and "dead cats

bouncing". Where QE's effect isn't a crazy way to trample. And trading is

done at high frequency and you better hope you don't get a margin

call. And a big McIndex measures a country, and fat fingers make

mistakes. You have to wonder whether this world has been constructed by

the money world. To deliberately exclude us. We have all heard of

hedged funds, but what do the Bond-style people have to do with

hedge funds. The word "hedge" began its life as a term for setting

limits to a bet, just as a hedge sets an area of land and demarcates

it. You make a bet and on the same side you make a bet on the other

side of the outcome, there by guarnteeing a profit whatever

happens. You hope. The idea is you cannot lose. Any financial structure

in which you can make a profit and a guaranteed profit not to lose money

is going to have many ardent fans. But once adopted in the world of

finance, this technique has become more sophisticated with hedge funds

employing complex mathematical analysis to bet on prices going both

up and down. There will always be a secret source of some kind, owned by

the hedge fund, usually a complicated set of mathematical

techniques. One such fund was set up by a man nicknamed "choc finger",

his hedge fund specialised in chocolate, in the peak of his

activities, his firm owned a remarkable 15% of the world's supply

of cocoa. At one point the fund took physical delivery of 241,000

metricen tonnes of beans, enough to give everybody in the world three

bars of chocolate each. In 2012 the fund was thought to be valued

between $200-$300 million. The price of cocoa spiked upwards in 2013

because of the weather, good news for the hedge fund. Well at the end

of 2013 the fund was sold for, guess what? Dollar 1. 90% of all hedge

funds that have existed have closed or gone broke. A hedge is a physical

ING this, it turned into a metaphor, then a technique, then the technique

was adopted in the world of high finance and became more and more

sophisticated and complicated, and finally turned into something that

can't be understood by the ordinary reference of ordinary language. So

why does it matter if this language is so baffling to us and we don't

really understand it? Because incomprehension is a form of

consent. It is true that over the last two decades economic growth has

meant that the proportion of the planet's population living in

absolute poverty has halved. That is an extraordinary achievement and

unprecedented. It is also unprecedented that levels of

inequality are rising everywhere, This country and globally. The gap

between countries is narrowing but the gap inside the countries are

growing eyeder. The EOCD in its predictions over the next five

decades for the economy, it says countries in the developed world

will rise by a further 30%, there is a widening chasam in our societies

between the top and the bottom. We will be living in countries strictly

divided between the rich and poor, winners and losers with nobody

inbetween. If we want to stop that from happening we all need to join

the economic conversation, the one that the rich and the powerful have

among themselves and in private. We need to learn the language of money

and fast. With me now is the author of that

film, John Lanchester and Baroness Patience Wheatcroft former Editor in

Chief he at the Wall Street Europe, and now a life peer and board member

of Fiat. To answer your question you pose, is it deliberate, is the

obfuscation deliberate? I don't think it matters, if you are talking

about RMBS made into synthetic EBOs and then folded into something else.

It doesn't matter if they are trying to bamboozle you or not, it matters

that it is hard to follow in real time. Is bamboozling language?

Sometimes. Having an understanding of the fact that hedge funds aren't

always hedged or what CDOs are won't do anything to stop the inequalities

in the world. It is far more basic, the need for financial literacy is

far more about households looking after their own budget, not

necessarily understanding the more complicated goings on. Something

that is not complicated but something not as clear as John said

is not clear. What is an investment bank? I think the term investment

bank is a wonderful misnomer, it is a complete contradiction in terms.

Again I don't think that really changes inequalities in the world.

As I understand if you go to some advisory and say I think you should

use this investment bank, I mean what should he say, use this

gambling institution? But the point is that an individual wouldn't be in

that position. And often terms that are used in common language do

emerge in totally different forms. You know if you think about the word

"gay" is no longer means what it used to mean. The term "investment

bank" started off referring to a merchant bank and a merchant bank

with a sensible institution that raised funds to help businesses

grow. Surely the man and woman in the street should know. For example

"naked shorting" what is that? Straight forwardly betting against,

wanting something to go down and not hedging on it going up. An example

of a term, I slightly disagree, I think the language does matter at a

personal level. Quantitative easing, that sounds like a brand of

laxative, I mean the term is totally opaque, it doesn't tell you what it

is about. And QE? The equivalent of a third of British GDP is printed,

effectively the Government has printed money without admitting it

has printed money. That your children and grandchildren will be

paying that debt off. If you have been caught up in the sub-prime

mortgage, you should know what happened and what it is? If people

want to understand that it doesn't take great deal of effort to do so.

I actually don't think people are interested. That's major failing.

They should be interested. Isn't that a contradiction, we have a

responsibility to know what is going on but people aren't interested, how

do you get them interested? I think you have to teach people when they

are at school that they need to be interested. I think you need to

actually keep doing things the way you do on Newsnight which is to make

it very clear what you are talking about. I don't think the BBC uses

boom boozeling language, it talks about the economy in very clears

terms, but actually the majority of people don't want to know. Do you

think the BBC is always clear in its language the way it discusses the

economic language? Not just saying it because I'm here, I think they

have done a brilliant job on this. The frame is often about the news

and the stories sometimes take longer to follow, you don't always

have enough time to explain the complicated things. You don't think

there is an element of mystery that is attractive to people in the City,

it goes back to the Masters of the Universe, they know anything we

don't? You see it in the axe know him ins. -- Axe him ins. Give us an

example? PIG S, for Portugal, Italy and Spain, that is derrogatory or

other ones. Everything has its own acronym, it is a mystery to

outsiders, I went on one board and spent a long time going through the

glossary of terms so I could understand what the various acronyms

meant. There was one that puzzled me that wasn't in the glossary, it was

STP, I worked hard to try to figure out what STP could be, it was

"short-term plan". The more worrisome thing is, do you think if

people actually understood a lot of this terminology and they wouldn't

be prepared to take any risking at all? It is a moot point. One of the

brilliant things that happened in the financial services industry,

there used to be this thing called debt that we were brought up to be

scared of. The upper-classes didn't mind it but the lower and

middle-classes were, they changed it to credit, and now we think it is

great thing, and we have 572% of our GDP which is debt, because it is not

debt it is credit. Thank you for being so clear. Thank you. Last

night more than 8. 5 million people watched, many of them probably from

behind their pinni serbses the Great British Bake Off in meltdown. It was

a show-stopper, but not what anyone had expected. The challenge, baked

Alaska, but David Watters was horrified to find out his ice-cream

had been taken out of the freezer by another contestant, Diana Beard. 15

minutes. Where is my ice-cream? It is here, sorry Ian. Ahhhhh. Well you

have your own freezer. Someone has taken it out of the freezer and it

is all melted. Why would you take the ice-cream out of the freezer.

What's wrong? How is it looking? Look. It is soup. The only reason

why it has stayed there is because I put the tin round to hold the

caramel in. Let's think about how we will present that. That's not

working. I have a serving suggestion. , no, no, no. You can't.

Ian you have to present it. Look at it, how can you present it. He threw

it in the bin. He didn't? Gutting, well now the BBC has said that

Diane's subsequent departure from the show was nothing to do with the

incident but due to illness, there was no way back for Ian. We have

scooped him up, 8. 5 million people watched it. Have you any idea what

the reaction would be? I knew it would be big, because it is a big

thing that happened in the show. But it has gone nuts today, the reaction

from the media is crazy. What has happened today? There has been a lot

of comments on Twitter, I think it built up last night after the show.

When you did that, that was in the heat of the kitchen. Do you regret

that, were you angry? I was more frustrated and it was just the heat

of the moment, and you are in the zone the last half hour of the show,

and I think it is very tense. You had gone through all the thing, you

naked your sponge and then you had your ice-cream in the freezer and

Diane took your ice-cream out of the freezer, was it her freezer? A group

of freezers we were all using. You had no idea it was dumped out of the

freezer, Diane has subsequently left the show and that was nothing to do

with that, she wasn't well. But the tension in these things is

phenomenal? You have been in the tent yourself, the pressure in the

tent is huge, it is very different from baking at home. I don't hold a

grudge against Diane it was done in the heat of the moment. But your

ice-cream was destroyed, but you couldn't put it back, they were

saying you should have made a fist of it and stayed and popped the egg

white on top and blow torched it? Tried to do something with with it.

Did you flounce off? You say the state of it, it went. To try to get

meringue on to that I didn't think it was doable. Are you a novice

baker or a good one? I'm a keen baker, I don't know about a good

one. You have brought something, what is this? This is the cake I

baked for the first audition for the show. It must be good, can I have

some? It is a courgette lemon and poppy seed cake. This was good

enough to get Mary Berry excited, and if you had actually held your

nerve you might have gone all the way with this? But you didn't

unfortunately. What do you think about this the "bring Ian back"?

Campaign. It has been crazy, it has built, it is nice to have the

support. It is built up overnight. Do you think you might get brought

back. You have to watch next week. Courgette, this is a lemon drizzle

cake but you have put something special in it? It is greated

courgettes, it is like a carrot cake it is moist, and poppy seeds for

texture and ground almonds to keep it moist. It is a signature dish? It

is. What do you think you are going to be doing, the day job going, you

are a site manager on a building site, are they all behind you? They

are all behind me, I have a lot of support. I get a lot of ribbing at

work as well. They ares This is something for you -- this is

something to put up, the Sun headline, it says this. You have

spoken to her since? I spoke to her this morning. She's fine. Thank you

very much indeed for coming on and congratulations for creating such a

stir. The recipe for the courgette and lemon drizzle cake will be on

the Newsnight website in time for the weekend and all the baking you

will do. That's it for tonight, we leave you with pictures from the

south coast today after scores of people descended on Folkestone beach

to dig for gold after a German artist announced he buried 30 bars

of gold worth ?10,000. It is part of an art festival that promotes public

arts installations across the town. Good night.

A mild but fairly breezy night tonight will be followed by a rather

blustery day tomorrow, the winds particularly strong across Northern

Ireland, Scotland and northern parts of England. Further south and east

you go the better the chance of staying dry, but here too you will

notice the breeze blowing through. But with these areas of rain coming

along with the brisk