13/09/2012 Newsnight


The YouTube film that's bringing violent protest to the Muslim world. The Northern rock rescue 5 years on. And police re-open the Hillsborough files.

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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


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