"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Monday, November 24, 2008

Lessons on stimulating the economy from the Dutch Government for Gordon and Alastair - and David and George

Some people might think that the Dutch scheme announced on Friday to stimulate their economy might possibly of interest to the double firsts in the Treasury, Bank of England and even the less well educated - ie those educated at Scottish Universities.

The Dutch government announced a €6 Bn. package of measures : Prime Minister Jan Peter Balkenende said that it is ‘all hands on deck’ as the country moves into a difficult economic period. the Netherlands has the lowest jobless rate in the European Union.

1. This would put a smile on every industrialists face and massively improve compamy liquidity without the need to extend borrowing unduly. The most significant measure in the package is the re-introduction of accelerated write-offs on investments for businesses, which is expected to generate €2 Bn. tax benefits for companies.

2. Ditto : Firms that have to lay-off workers or introduce shorter working hours as a result of the credit crisis to use the unemployment benefit fund to pay employees for up to 24 weeks. Some €200 Mn. is available for this.

3. The government will also make sure that it pays its bills to businesses on time.

4. In an effort to stimulate consumer spending, the lock-up on employees' tax-free savings schemes will be lifted. Under current regulations money invested in this scheme cannot be accessed for four years. You see, all those years of thrift pay off at times like this.

5. Speeding up building procedures to help the construction sector and bringing investments in infrastructure projects forward, this would include the new Delta flood control works.

6. Introducing regional mobility centers to help prevent imminent layoffs.

This aid package is the equivalent of around 1 % of the gross national product and pre-empts a rescue plan currently being prepared by the European Union for all member states.


Anonymous said...

The president of the Dutch Central Bank (De Nederlandsche Bank, DNB) is the present Chairman of the Basel Committee on Banking Supervision.

The Basel II accord (initially published in June 2004) was supposed to create an international regulation standard about how much capital banks needed to put aside to guard against the financial and operational risks banks face.

In the UK, parliament was told on 16/10/08 that the FSA is responsible for implementing the Capital Requirements Directive/Basel II directive in the UK.

Now it seems that Mervyn King expects 'tearing up [of] the international Basel II capital requirements for banks'.

As a commentor the Wiki talk pages asks:

Global financial crisis

The global financial crisis has been in full swing for more than a year now. Hundreds of banks have collapsed worldwide, thousands more need shoring up, governments are putting at risk trillions in taxpayer money, and I find nothing in the article to address how Basel II relates. Specifically,

How is it possible that banks could circumvent the safeguards implemented under Basel II that were designed to reduce risk.

Why did regulators allow banks to set up "conduits" (special purpose investment vehicles) off the balance sheets that were undercapitalized and put the banks, investors, creditors, employees, and communities at risk.

Was circumvention legal or not. If legal, is Basel II a "paper tiger", and what are the responses to address this

Anonymous said...

John Redwood said in his blog that when historians look back at this economic disaster, it will be described as the Basle II disaster. (I can supply a link if interested).

(C) Very Seriously Disorganised Criminals 2002/3/4/5/6/7/8/9 - copy anything you wish