28/09/2011 Newsnight


Similar Content

Browse content similar to 28/09/2011. Check below for episodes and series from the same categories and more!



You think the crisis in Europe doesn't matter to you? Think again,


if the eurozone collapsed, your savings, your job and your pension


could all be at risk. Whatever is going on in the European economy


now in terms of contraction, could easily turn into a depression and


widespread social unrest. On the day that the head honcho of


the European Commission described the crisis as a baptism of fire for


a whole generation, and the Bank of England warned banks here to


prepare for the worst, can or should the euro survive? The


schemes and scheming of the politicians are one thing, but as


Greece has discovered, when a currency fails, there are human


casualties. My outrage is on a daily basis, when I go out and I'm


very sad, and very gloomy. Does Germany have the will to pull


Europe back from the abyss. We're in Berlin, ahead of a crucial vote


tomorrow. What does Ed Miliband, the wonk who


got the leadership, really think about market forces. I'm in favour


of capitalism for the record, it is what kind of capitalism you have.


Good evening, as statements of the blindingly obvious go, it is a


record contender. The European Union is facing its greatest


challenge, according to no less an authority than Jose Manuel Barroso,


the capo di tutti capi, in the European Commission. It has turned


out that the so-called plans to save the euro are a lot less


substantial than they seemed to be a couple of days ago. The image


problem of this 17-headed Jedward, can be solved by much further


integration. Oh, and by the way, we need to levy a financial tax that


could clobber the City of London. Let's go through this mess, bit by


bit, about our economics editor, Paul Mason. Where are we up to so


far? It all reinvolves around the fate of the ESFF which is the


failout plan, if it is passed we get 440 billion euros, Europe gets


to spend it on bailing out countries and banks. The Fins


passed their bit today, we think the Germans will pass their bit of


it through the parliament tomorrow. Greece has done it by passing an


austerity plan, yet to implement it. That takes us back to 21st July,


three months ago. Since then, things have moved on, the economy


has flattened out, banks in a much worse situation than they were, the


Bank of England warning our banks to get ready for more stress in the


system. Really, the politicians, that generation going through this


baptism of fire is really struggling to catch up with where


we are. Where are we going? We have been


looking now at the senario force what could happen. If you expand


the 450 billion to 2 trillion, mooted at the weekend, or if you


don't. If you don't, what will happen if you get a chaotic slide


out of the euro by the Greeks. I have been discussing this with a


couple of experts, and got the Currency unions are always designed


as permanent, and forever, but in history, they don't usually last


much longer than a decent car. Greece joined the EC the same year


as the ill-fated Dell lorian was - DeLorean, which prompted the


question, what is the difference between the DeLorean and the euro,


one is a dodgy vehicle that fell victim to finance, and the DeLorean


is a Great Barr to go back to the futurement


Even the most realistic scenario has explicit dangers.


Last night Greece voted through the crucial tax rise that should see it


get the eight billion euros is needs to survive. Even now there


are stories of teachers and policemen not being paid, they are


cutting it fine. Meanwhile, the Fins today, voted


through the 440 billion euro plan for an expanded bailout plan. And


Germany probably will tomorrow. What's next? I hope they will try


and do a minimum of three things, get a default template for Greece


that could be used for other countries if necessary recapitalise


the banks so they can move on. And ensure the European Central Bank


stands ready to buy any amount of Spanish and Italian bonds providing


the liquidity that might be necessary.


At the weekend, the G20 mooted a plan to expand the eurobailout to


two trillion euros, by letting the European Central Bank print more


money and borrow a lot more money. They gave themselves until the G20


summit in November to make their minds up. But German politicians


have been quick to squash the idea, what happens if we get to November


and there is no stability. Italy's debt at 120% of GDP looks


unsustainable. There are fears that Italy and Spain could get dragged


into the danger zone. If there is no megaplan by the Cannes summit of


the G20, I think, not only will the markets be bitterly disappointed,


because we're not even back to plan A, there isn't a plan A, but I


think that we could seriously be in a mode in which we could encounter


bank runs, deposit runs, bank failures, and whatever is going on


in the European economy now in terms of contraction, could easily


turn into a depression and widespread social unrest.


The last uncontrolled default was ten years ago in Argentina, this is


what it looked like. The banks closed, the President left by


helicopter, but the country eventually recovered. So what's


wrong with doing an Argentina. think we should be sceptical about


the claims that Argentina had such a good time with default and


devaluation. It was a dramatic time, the middle-class was wiped out.


They were rescued not by default and devaluation, but a commodity


boom which was great for their trade and exports, up until today.


Things might have looked different if you hadn't the commodity boom,


there is no similar boom in sight for any eurozone country.


Right now the politicians are discussing everything behind closed


doors. But one thing they are open about is that nobody should leave


the euro. If you fast rewind back to the 130s you can see why.


A - 1930s. A euro exit for Greece could be contagious. In the 1930s,


once one company left the gold standard, others followed, Germany,


Britain, Japan. This is what happened to growth in the 1930, the


countries that left growth and pursued protectionist and


expansionist policies recovered first. America and France who clung


to the currency peg, recovered last. The problem with any repeat of that,


a chaotic break up of a currency peg is this, it could collapse


Europe's banks. At UBS we have tried to quantify


the impact on countries like Greece and Germany of a euro failure, it


is a huge quantity of GDP, in Greece's case it could be as much


as 60-80% of GDP. In Germany's case it could be between 30-40%. This is


just guess work. Right now, the future for Europe looks random, and


depends on forces moving beyond the control of Governments. The whole


arrangement looks simultaneously, futuristic and archaic.


With us to discuss the eurozone we have Amadeu Altafaj Tardio, a


spokesman for the European Commission, he joins us from the


continent. Johanna Kyrklund, a fund manager with Schroder Investment


Management, Peter Oborne, a journalist with the Telegraph, and


Richard Lambert, as well as an ex- head of the CBI, once edited the


Financial Times. Looking from Brussels, would you like to


apologise, Amadeu Altafaj Tardio, for the lack of European leadership


on this crisis? I don't think we have to apologise, but we have to


call for a strong political will, and a strong political response


from European leaders, to prevail over all these market fears, and


over the narrow minded nationalisms. This is the risk we have to avoid.


We have to have a strong European response to a problem that has an


impact on all European citizens, from Athens to London, from Madrid


to Helsinki. You believe Europe's leaders are in control of events,


do you? Yes, I think so. European political leaders are taking very


difficult decisions. It is very hard, for instance, to confront the


public opinion with measures of austerity. Politicians usually


don't like to do that. They know that this has a political course


for them, but still, they are responsible enough to tell their


citizens that come accumulating debt and risks is the most anti-


social behaviour. They are ready to take the criticism and ready to


discuss with their European partners. Why don't the markets


believe you? Because there is something more than market logic


here at stake. This is a political construction. We have kept the


solidarity since the end of the Second World War. This is a


political project. We believe this is the best way to ensure


prosperity for our citizens, to maintain welfare systems that have


no comparisons all over the world. There is a strong political will to


keep these objectives, and therefore, markets should believe


that we will not let Greece down. We will not, and we cannot avoid a


default by Greece, for instance. Because the implications of such a


development would be brutal for our citizens. The British Foreign


Secretary, William Hague, has described the euro as a burning


building with no exits. I fully disagree. I think that


there is a strong commitment by European leaders, in the eurozone


and outside the eurozone, and even elsewhere, for instance, we were in


Washington in the IMF annual meetings a few days ago, even


politicians from the US, from China, from the emerging economies, were


encouraging the euro to take decisions and to provide a strong


European response. I don't understand why Mr Hague will be


less convinced than, for instance, Mr Timothy Geithner in the United


States. Why don't the markets take the same view of things? I think


the concern markets are expressing is there the institutional


framework in Europe, whether it is designed to make quick decisions.


The reality is what we have seen over the last few years there isn't


a framework for fast decision making. That is what you need in


these markets. What they don't like, is this is a political project more


than anything else? The fact it is a political project. That is fine,


and I don't think the markets are necessarily questioning that. But a


political project does need to be supported by institution that is


can cope with whatever the world economy throws at them. The reality


is those institutions haven't been apparent. Particularly, so far all


we have had is a case of European leaders saying don't worry, it will


be all right, we won't let Greece go, without detail on how they are


going to do that. What did you make of what we heard from Brussels


there? Mad, it is really weird, he doesn't know what he's talking


about. The idea this is a political problem. Excuse me mate, it is an


economic problem. The euro is collapsing under the weight of its


own contradictions, and the idea that political will can solve an


economic problem runs against the basic insight of none other than


Karl Marx, that economics in the end trumps politics. These guys are


in total and utter denial. It is terribly frightening listening to


that idiot in Brussels. Mr Idiot in Brussels, would you like to


respond? No, I think that these words speak for themselves. Just


one thing, this is not about being outside or inside the euroarea. The


UK in 2010 had the deficit that was the same as Greece, it is not the


euro that is the problem. The euro is, in fact, a shield that has


protected many of our economies, and it is a factor of stability and


prosperity. We went through the most difficult crisis since the end


of the Second World War, all countries have experienced that.


Richard Lambert, you wanted us to join the euro at one point? Yeah,


we felt back in the 1990s that the euro would happen whether Britain


was part of it or not, and these were our major trading partners,


and it was better to be in than out. You were wrong? Things changed, the


rules weren't obeyed, France and Germany broke the rules. The banks


were undercapitalised, massive instability across the area, and


when the biggest financial crisis came along that was it. You were


editor of the Financial Times during this period, it was


predicted very, very clearly by a large number of people. Margaret


Thatcher, William Hague, the Tory leader, who the FT sneered at day


in day out. The FT didn't give this story proper economic analysis. It


took the line of that idiot in Brussels that it is a political


project. Even though you were a financial newspaper, you didn't


apply economic analysis. You took the political view. By the way, I


have a book, I bought a present for you when I heard you were coming on


the programme, guilty men, you are one of them, I suggest you read it.


It analyses the performance of the Financial Times. "guilty men" was a


phrase used by Michael Foot about the Nazis, are Angela Merkel and


President Barroso the equivalent of the Nazi party? What utter nonsense.


You were one of a group of people, had you had your way, we would be


in the position of Greece, taking orders from the EU and the IMF,


Britain's economic security would have been destroyed, our political


independence would no longer exist, if the Financial Times had its way.


Shall we talk about this for more or talk about what is happening.


you think it is likely Greece will fall out of the euro? Personally I


feel the numbers now are impossible to manage. It seems to me there are


a number of scenarios, on the one hand, the extreme position, namely


a collapse of the euro, is very unlikely, because the economic and


political consequences would be a disaster, a fiscal union is


unlikely. The question is, is it possible to get an orderly way of


getting Germany and Greece to withdraw from the eurozone. Is it


possible? I think it might be. It is something that might happen.


Germany to withdraw from the eurozone? Getting Germany to


support Greece in withdrawal. They would need massive liquidity,


massive support for their banks. What is the perceived wisdom, I


know it is changing day-to-day in the markets. What is it now about


Greece's future? If Greece was actually to withdraw from the euro


that would be potentially extremely destablising because of the impact


on the Greek banking system. There is a need to restructure the debt,


our hope would be without having to leave the euro. That would really


massively increase the chances of contagion to Europe. Unless it was


possible for the ECB and Germany to provide liquidity and support.


would help if they were restructuring their debt. I don't


think they can help offset the consequences of Greece leaving the


euro that, that fire might be too big. You think they will fall out?


It is inevitable and it is enor newsly in their interest to get out


of the euro. The moment it does it will be competitive. One of the


points nobody has quite made, is the total inhumanity of the euro,


it is destroying the livelihoods of millions of Greek businesses and


people. We will hear a bit from Greece and the human consequences.


The euroelite. Will you stop referring to them as "this idiot",


you may think that he's out of contact with reality, he's now


walking out of the studio in Brussels, well done, we can't even


hold him to account now. Because you have just been grattuously


offensive to him. Unfortunately, listening to this man, talking such


nonsense over a matter of such importance that affects the lives


of millions and millions of people, listening to that nonsense, it is


offensive to decent people that want jobs. What about the


proposition we heard earlier today from Mr Barroso, who presumably is


the boss of our friend in Brussels, who has just walked out of the


studio. He clearly believes there is a solution, and the solution is,


stronger political union, and fiscal union? Is that even a


starter given what's happened to the euro? I think it is unlikely.


Because for two reasons, one is the time it would take a treaty


revision, political drama, two, is it wouldn't address the fundamental


problem, which has emerged, which is the southern European countries


are a lot less competitive than the northern European countries. Were


they to be locked into a fiscal union, they would face years of


austerity, and of the only way to get a competitive place is if their


prices go year after year after year. Is he in fantasy land there?


I think that actually the issue is, you can't keep imposing austerity


on the southern European economies, that won't sort out their debt


problems. They have to grow. will have a bigger impact on the


GDP than the debt. Germany has to step in and bail out its neighbours


and ultimately money will go from northern Europe to southern Europe.


It is Greece that has brought the eurozone to meltdown. There are


plenty of people saying after the event, saying they should never be


allowed in by the wise-afer-the- event. Now they have to pay the


price of earlier lies and fecklessness, politicians lives and


hubris have consequenced for people. There are human casualties.


This summer, Syntagma Square became a theatre of economic war.


Now, with the stones of Syntagma permanently scarred, the worry is,


so is Greek society. The danger for Greece, just right now, is that


Greeks will feel alone and totally hopeless. They are going to abandon


any pretence, and not go out rioting, but stop conforming to any


sort of rules. Among politicians, sociolologists, protestors, one


word keeps coming up when they try to describe what might be happening


to Greek society, anomie, absence of law. It is not the overthrow of


Government people are worried about, it is the gradual dissolution of


all the bonds that tie society together.


From - From the ages of 15-30, young people in Greece expect


nothing from society, from the political system, even from their


elders. Their hope resides in their family, and their friends. Once


more, is that going to be enough? It might be yes, might be no. If it


is a no, if it is a resolute no, then this sort of explosion is


going to make the rioting of last month to seem almost a joke.


When Greek teenagers went back to school this month, they found a


shortage of everything. In a society that values education


highly, it isth has become a symbol of malaise. They didn't give us


books, they gave us a CD. But someone who hasn't a CD can't read.


We want to bring us books, no CDs, no nothing, only books.


People say there is no money to pay for the books, there is no money to


pay for the things you want? There is money. But they give them to the


companies. They give the money to the companies to survive from the


crisis and we have to pay them. Why we? We don't make the crisis.


Their parents are facing lay-offs, reduced hours, unpaid bills, and


there is a sense that the basic social contract, pay tax, and get


an education, is breaking down. They returned their CDs to


parliament with a defiance that has become routine.


But the majority of Greeks have not been on the demonstrations. In this


quiet suburb of Athens, there is frugstraigs of a different kind. -


frustration of a different kind. Mary a freelance teacher and


Demetrios an estate agent. They are part of a private sector feeling


the real austerity, tax rises and business downturn has halved their


income in two years. The money started to decrease, we realised


that we weren't able to buy the things that we used to buy before.


So now we only buy the basics. And now a few days lately we aren't


able to buy even those. Most people would look at your home and think


of you as middle-class? We are middle-class, actually. We were


used to a Come To Me High standard of life, let - to a very high


standard of life. We used to go out with friends often, we invited


friends over to have dinner and barbecues. Now I have to invite a


friend for a year, what do you think? Yes. For a year, because I


can't afford it. Have either of you been on a demonstration? No. I


haven't. And I won't. Because I think it is vain. My outrage is on


a daily basis when I go out and I'm very sad and gloomy, because I see


the future is quiet pessimistic, let's say. I don't know what's


going to happen to my kids. I can't find an outlet.


In the next phase of the crisis, what matters is the way people


react in places like this, the quiet suburbs. Because we don't


really understand what happens if the middle-class of a developed


country just switch off from politics, and lose hope.


The figures tell their own story, suicide is up 40% in a year, thefts


and break-ins have double in two years. There is open hostility to


migrants, and vagrancy has become a major problem. And, the open


lawlessness goes beyond Syntagma Square.


The village of Keratea became a no- go area for police, after locals


rejected the siting of a rubbish dump.


When, in your neighbourhood, you have the feeling that it has been


taken over by unrulyness, you don't have the re - reaction of even


controlling your own behaviour. Life in the city, not only in at


then, but all around Greece, comes crumbling down. Normal life gets


more and more difficult. These little things happening every day,


are far more important than the overall deficit situation, or the


banking crisis. It's like a low- intensity conflict, and it is


happening in the strangest of places.


I was told to turn up at a courthouse, there was sob an


auction of repossessed homes. But the Can't Pay, Won't Pay


campaign got there first. The campaign started with the non-


payment of road tolls, their aim now is to prevent the payment of


the two billion emergency tax passed last week.


I am a advertising company. It is unusual to see company advertising


people protesting in a court. Why? The Greek people have lost, we have


lost our lives. We have lost our lives. Everything. These protestors


are drawn from the very classes that frequent the cafes around


Syntagma, professionals, small business owners, the unlikeliest of


rebels. You are not worried that creating


this you create some social breakdown, where the whole bonds of


Greek society start falling apart? I don't believe that this situation


is anarchy. We pay those taxes we owe. Not the illegal taxes, not the


taxes that came from an order somewhere else outside Greece.


Greeks know, whoever they vote for, that the euro, and their own debt


dictates what happens next. There is a sense of listlessness, and


among political scientists, fear of the unknown. If we face a system of


potential collapse, how far away from that are we? It might come


very sudden. It might come in a flash.


Because the sense of helplessness is very intense, just right now.


When the issue was economics and the protests were led by the


traditional left, the dynamics were, at least, predictable.


This new problem of anomie, low- level conflict, and quiet


dispassion injects uncertainty. And you can see it on the faces of


nearly every social group. We have been joined now in the studio by


Katinka Barysch, from the centre for European reform. Do you get the


feeling that European leaders are quite aware of what some of the


social consequences of this may be? I believe so. Because it has been


reported enough. The discussions at the moment are more about Greece


being put on a long-term reform plan. This isn't only about Greece


trying to squeeze another euro or five out of its budget, but is this


country on course to have a viable economic model. Or does it need to


be propped up in perpetuity. saw there in a country, that some


people who sounded absolutely at the end of their tether. This is


clearly, potentially, a place of social breakdown? Yes. That is a


price worth risking is it? No, I definitely wouldn't say so. At the


moment the idea that the euro can be rescued by imposing austerity on


all European countries at the same time is clearly crazy. What Greece


needs to do first and for most is restructure its debt, and cup up


with a long-term plan of restruck - come up with a long-term plan of


restructuring. And moving to an economic model that means there are


things people want to buy. In the meantime, there are really serious


risks of social breakdown? I saw that in the shocking report. Yes.


It is the IMF and the ECB and the European Commission negotiating


with the Greek Government at the moment about what needs to be done.


There is a second bailout just going through the system for Greece,


and I don't know where the balance will be struck in the end. In the


end whether the euro and indeed the dreams of Europe's political elite,


lives or dies, is a matter in the hands, or the bank account of the


German people. The parliament in Berlin meets to decide whether it


likes the idea of increasing the bailout fund.


What do you think is going to happen? It is confidently expected


that parliament will approve the bailout fund tomorrow. The question


is, will Angela Merkel get sufficient support from her own


centre right coalition to pass it, or will she face such a rebellion


from her own supporters, so disgusted are many of them at the


Greek bailout and the apparently profligate Greek, that she will


have to rely on the opposition. That would be hugely embarrassing


for Chancellor Merkel, and undermine the stability of the


ruling coalition. At the moment it is very much in the balance. It


needs 1 rebels to force her into a corner. At the moment it looks like


there could well be 19 rebels. What is your feeling about whether


the Germans are likely to batch the much bigger bailout being talked


about as being - to back the much bigger bailout being talked about


is being the main thing? That is not being talked about tomorrow,


because on the table they are looking backwards at a measure that


they supposedly approved two months ago. That's on the face of it.


Everybody suspects that this is a Trojan horse measure. Behind that,


there will be a lot of undeclared baggage and further billions going


to help the Greeks. People don't necessarily like that. We have been


in Wolfsburg today, where VW have their headquarters. It is a place


that has done very well out of the euro, based on exports and profited


from the euro. Even there people are suspicious of pouring good


money after bad, as they see it, they are worried about the


accountability of it all. They are not too happy at all, desspite the


assurances from the German Finance Minister that there is no more


money to go after tomorrow's round. Do you think that Angela Merkel is


strong enough, politically, to save the euro? Not singlehandedly,


surely not. No European leader would be able to do that. It is, of


course, true that everybody at the moment is looking towards Berlin,


and what the Germans are going to decide. Although she can't do it


singlehandedly, a German veto frustrates any plan. The Finance


Minister, has already said this much bigger fund is out of the


question? He has to say that at the moment, because otherwise the vote


tomorrow won't go through. shouldn't take his words at face


value? Of course it is not the last word. They have said before the


German politicians, the first Greek bailout will be a one-off, the


European Financial Stability Facility would be a temporary thing,


now it is permanent. The ECB would never buy bonds, it is buying bonds


now. This is not the last word from the German Government, but they


have to take it step by step, and once they have the new rules on the


bailout fund in place, they will take the next step. It must be very


interesting. All this stuff is being said to placate the markets.


But the markets are canny enough, presumably, to see through it,


aren't they? You were asking the question, can Angela Merkel save


Europe? Ultimately it does come down to Germany saving Europe,


unfortunately yes other countries like France can contribution to the


FSF, if you want to expand that it will be Germany footing the bill,


not France, or Finland or the other Triple A companies, it will be


Germany. They must be discounting any


reassurances from European politicians? Certainly we have


learned to disregard statements, because we have seen a lot of


promises and not many facts, yet. There has been a bit of hope, just


over the last couple of days, there is a feeling maybe there is


something come uting out of the G20. This dishonesty on the part of


politicians is a great part of the problem, isn't it? The language


used there is why, essentially, they have been consistently behind


the curve over the last month. Action they took in July, had they


taken that at the beginning of the year, that might be a firebreak.


They are always behind because they have to assure the domestic


constituencies. Like the G20 back in 2008, there was a central


initiative and drive to get stuff done, that seems to have dissipated.


That is what is worrying, the interplay between markets and


politics, in theory, a stitch in time saves nine f they had put the


measures in place we wouldn't get into the mess. Political


instability is something you can't price, you can do economics but


politics? Politically, I'm not trying to defend the European


leadership here, politically surely it is much more difficult to make


these huge steps up front, and try to convince your voters, OK, the


situation doesn't look very serious, we will just make two-and-a-half


trillion euros available. Or the situation we are in now, where


Europe is burning, and then you go to the voters and say we have no


choice but to make this money available. Politically it is much


easier to be behind the curve, which is probably why we are there.


Can I raise another point. What happens if the euro turns out knob


to be as robust as these rather disconnected politicians seem to


think. What happens if the euro does fall apart? I think the


possibility of that is so serious I think you can discount it it is not


completely impossible, - discount it. It is not completely impossible.


If we saw it, it would spread depression across the world in way


we haven't seen since the war. And we would see a political glue that


has held Europe together since the war desapatient. That is why I


don't think it will happen, they will go for big sticking plasters,


the bigger the better. It is a risk. What do you think? I think


unfortunately the consequences of such a break up would be so serious,


ultimately they will step back from the brink. Reality is what you will


see as a collapse in the currencies, the peripheral economies, the


banking systems collapsing. This is a project conceived in political


hubris, perpetuated by political dishonesty, they are now completely


unsure about what they should do, apart from accruing more powers to


themselves? I think ultimately they know what to do, but they have to


get the electorate on board, that is part of the problem they are


facing. Behind closed doors they understand the commitments they


need to make. And the markets believe that's what's going to


happen? I'm asking you to generalise in a ridiculous way, but


that is what you think to be the case? We think that ultimately we


will get a package in place but the risks are significant at this point.


As you were saying, Richard, the problem is with political risk it


is very hard to make sensible forecasts. We're much more used to


analysing the economic environment. This is why it is difficult for


investors to place any kind of money into the market in a serious


sense. Ultimately we are reliant on what the politicians come up with,


that is very hard to forecast. While the rest of Britain and much


of the rest of the world has been worrying about whether the euro is


going to implode, and if so, how much of the international trading


system could fall apart, whether it is the end of life as we know it.


The Labour Party has been digesting their leader's speech. The Labour


Party Conference in Liverpool continues to resound to Ed


Miliband's words of yesterday. That wasn't enough for Kirsty, she


wanted to hear from the Labour leader, personally.


Miliband, this is all about creating yourself as your own mand.


Your close friend and adviser, Mr Wood said we are in the death


throws of neo-liberalism? It is a good job I didn't use the phrase,


because it is incomprehensible. It is the idea. The idea that there


are certain ways of running our economy, based on a certain set of


values, short-term, fast buck, in it for grurself, take what you can,


which I don't think are the values of the British people. We have to


find a different set of values. Those values infected, not just our


economy, but the society as well. That means the era of light-touch


regulation is not only over for the banks, it is also over for business


big and small, that actually the Government will pay a more active


role if you are in charge? Government needs to play a more


active role. For example, I think, a proper industrial policy, where


you build British strength, work with the private sector, across the


economy. Particularly in sectors where we can succeed. That is what


business wants. You have to be careful in relation to regulation,


you don't want to overregulate. I made the distinction between


predators and producers, we may come on to that, it is about


business practice and the rules the system encourages. Are they rules


that encourage long-term wealth for the economy, or does it encourage


practices, which, if you like, gauge short-term practices. We will


come on to the rules in a moment. Adam Smith, Gordon Brown's


favourite philosopher, said it is not from the man nef lens from the


butcher or baker, but with regard to their own self-interest we can


expect our dinner. He's not wrong about the self-interest. The


Government always sets rules. The free market has a certain variety


of rules. Do they encourage people to do the right or wrong thing.


Capitalism is not always pretty, but it often delivers? I'm in


careful of capitalism, it is what kind of capitalism you have. On the


point of changing the system and having as a different set of values.


Neo-liberalism isn't exactly out of vogue in Europe were are the Social


Democrats, apart from in Denmark, they are dead in the water. Part of


the problem for Social Democrats is that there was an old way of doing


things, which was, as you say, we run the economy in a pretty much


unchanged way, let's use the prordz of growth to invest in public


services, - proceeds of growth to invest in public services. It had


advantages and disadvantages. The disadvantages were it didn't change


the way our economy worked enough, we had higher inequality rather


than lower. For the next ten years there won't be money around. That


route to social justice is not open to us in the way it was before.


your world, who desides who are the predator companies and which are


the producer companies? It is less about right and wrong companies, it


is about the right and wrongs practices. If you think about the


Vickers changes, that John Vickers is putting in place, or recommended


for the banks. That is about encouraging the banks to think in a


different way, and work in a different way, to avoid a financial


crisis. Why do I want more competition in the banks, so we get


a better deal for the small businesses. It is about creating an


economy, that encourages and rewards those who do the right


thing, not the wrong thing. praised Sir John Rose for his work


as Rolls-Royce. He has gone to work in bank. I knew you would say it.


Did you not do your research. Why didn't you say he could be Co Still


be a good guy, although Rothschild is a good bank and all about


acquisitions? I did say in the speech it is not about targeting


one industry, and financial services have to be part of the


solution not the problem. It is the practices we see in certain


businesses. Let's say financial services delivers ideal in growth,


and Britain is desperate growth, is that bad? You said that growth


built on stand from predatory activity is growth we don't want.


Are we in a position to be picky? We are if it turns out it is not


sustainable. What happened in the banking system was we thought lots


of wealth had been created, we thought this would be good for


Britain, it turned out to be an incredibly shaky and unstable set


of foundations. Let's talk about the other end, you talk about the


upper echelons. Allocating social housing you said do we treat the


person who contributes to their community, the same as the person


who doesn't. Is this the deserving and undeserving poor? No I don't


think it is. Is that the way it sounds? I hope it doesn't. Let me


explain what I think, I see need as important. William Beveridge's


vision for the welfare state, in 1940, was about a welfare state


that reflected contribution as well. I say, as Manchester City Council


is doing, it is right to say if you work, if you volunteer, that should


be rewarded. Some people can't work? Of course. There are no jobs


in Of course you have to take account of that. The system, in


relation to bankers or those on benefits, it sends signal about


what kind of behaviour we want to encourage. Why does this matter so


much? Let me make this point, it matters so much because the British


people, people going out working hard, sloging their guts out, think,


well hang on a minute. If people get social housing and at the top


of society, I want it based on a deal and a bargain, as I said


yesterday. You want people to have extra points on the housing list.


For doing good deeds. Is there a tick list, or is it arbitary?


way the housing decisions are made is by local authority, it is not Ed


Miliband sitting in Whitehall deciding about Mr Jones or Mr Smith


about getting help. Sadiq Khan says it is either about being a school


governor, or volunteering in your charge, this is very arbitary?


proposal is this, which is councils reflect, not just need, in their


decisions on housing allocations, but contribution as well. Of course


it is for local authorities to make their own decision about how they


reflect that. If you go to Manchester and the City Council and


see what they are doing, that is precisely what they are doing.


say the man from the local Government is looking at what


people do when unemployed? That is what they do at the moment. They


don't look at whether they cut old people's grass every week. You set


up a system that actually ends up leading to some corruption because


it is about personal decisions? That is a recipe for pessimism.


Come on, Manchester City Council are doing t other councils are


trying to do it, it is the basis of the original Beveridge principle.


Maurice Glasman, to whom you gave a peerage and look to for ideas, has


said at the conference this week that you are a socialist and


intellectual with an angry insurgent side. Is your problem


he's right? I don't know what it means. You don't know what a


socialist and an intellectual is? I'm someone who wants to change


Britain, I'm a democratic socialist, I am somebody who made an argument


yesterday, one of the reasons people have found it difficult to


adjust to my speech is it was an argument. It was an argument about


Britain. It was an argument that said, we have to change the ways we


do things, business as usual isn't working. It is about saying the way


we have run our country for a decade, has to change.


Tomorrow morning's front pages now, the Times has news of an on going


crisis in the adoption service and the picture of a gorgeous pouting,


part-time teacher in a punt in That's all from Newsnight tonight,


we are used enough to shows of pet lance from childish and fabulously


wealthy footballers. The latest displayers when Carlos Tevez


refused to take the pitch despite being paid �200,000 a week. What a


compromise in the 1966 Carling Cup, the goalkeeper played on even when


he had broken his neck. Watch this Carlos, you so-called striker.


Trout plan pounces like a cat. He tells the trainer he's already, but


the crowd can see his neck is hurting badly. Troutman is game as


of. Injured or not, he's determined to pull his weight. United hold the


championship, and now City have the cup. Once again, the experts have


been proved wrong, and splendid team work and the extra ounce of


stamina have beaten the favourites Pinch yourself it is the end of


September, a remarkably hot and sunny day on the cards across large


swathes of the UK. Particularly England and Wales. This is where


the best of the sunshine will be, this is where the highest of


temperatures will be as well. Every bit as hot as it was on


Wednesdayful one or two places getting up into the - Wednesday.


One or two places getting up to the high 20s. One or two exceptions,


along the coasts of south Devon and Cornwall, a bit of mist coming in


on the breeze. Making it a bit cooler. Most of South-West England


will have a glorious day, across the bulk of Wales. Western coastal


areas might be cloudy as times but it will stay dry. For Northern


Ireland starting off damp in some places, the rain drying away, but


cloudy. Limited brightness, the same applying to much of Scotland.


The rain will fade away. Cloudy, in any brightness. Temperatures doing


pretty well. Looking to Friday, signs of outbreaks of rain pushing


to Northern Ireland, western Scotland in particular. The best of


the temperatures, once more, as we end the month, will be across the


more southern and eastern areas. We could be breaking records as we go


Download Subtitles