28/08/2014 Newsnight


In-depth investigation and analysis of the stories behind the day's headlines with Kirsty Wark.

Similar Content

Browse content similar to 28/08/2014. Check below for episodes and series from the same categories and more!



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


Download Subtitles