The social media election that wasn't

So, this was the first social media election, the one where the likes of Twitter and Facebook would play a decisive part in deciding the outcome.

Was it heck.

If we learned one thing about social media during the General Election of 2015, it is that its status as a reflection of the world we live in needs a sizeable health warning.

All the major parties conducted formal and informal social media campaigns, ranging from targeted messages to reoccurring hashtags to Youtube videos.

Judging by the response on Twitter, some people took this very seriously indeed, acting as if their tweets were delivering decisive blows in an election ground-war.

The key phrase there was 'judging by the response'. Towards the end of the campaign, a bar chart appeared from the British Election Study (run by the universities of Nottingham, Manchester and Oxford) which suggested that those who believed Twitter was going to play a big part in the outcome might have got it wrong.

The BES chart showed the levels of social media activity of people who are actually committed to a particular political party - exactly the kind of people, you would have thought, who would be out there posting and tweeting until their fingers went numb. Yet the highest percentage of party supporters who were posting content on Twitter was 14% (for the Welsh nationalist party Plaid Cymru). For Labour, it was was just 5%, for the Tories a paltry 2%.

In other words, a seeming torrent of political activity on Twitter may well have been coming from a comparatively small number of people. It follows that anyone who thought it represented either widespread endorsement or a surge of support was likely to be mistaken.

There were other strange decisions, too. Ed Miliband's appearance in a Youtube video with the comedian and polemicist Russell Brand looked quite smart: he took on someone popular, held his own, and reached a potential audience of 1.4 million followers.

Yet on closer analysis this doesn't seem so clever. Brand is a divisive figure, who people love or loathe, and one with a chequered history. It's quite possible, too, that those who love him are more sympathetic to the left of the political spectrum anyway. And I'd wager that a fair chunk of the people who watch him on Youtube may well be below voting age.

In other words, Ed's Youtube play may not have achieved anything.

This was a difficult election for Labour, one which raises all sorts of questions about its relationship with the electorate. It appeared very active on social media, both officially through MPs and party officials, and unofficially through supporters in the media, the arts and third sector organisations. Did it assume that all this activity represented a level of support and endorsement which we now know wasn't there? In other words, was it talking to itself on social media?

The traditional media complained on more than one occasion that they were being sidelined. At my paper, the Nottingham Post, we endured a pointless encounter with David Cameron while he visited the marginal constituency of Sherwood. His communications team said we could ask him three questions as long as we told them in advance what they were. You just have to play the game in these situations, and make the most of an opportunity to get in front of top politicians. But our time was wasted: we were given enough time with Mr Cameron to ask only one question and his answer contained nothing new. Other regional newspapers up and down the country had similar experiences, and there were those wondering what on earth a party which was ignoring newspapers and doing little on social media was up to.

We have some sense of the answer now. It was fighting a very targeted campaign in particular marginal constituencies and contacting voters directly by phone.

It won. Social media didn't.

My Editor is very fond of telling reporters time and again that "Twitter is not the real world". It isn't irrelevant and can be a very effective way for specific sectors to put across specific messages in a quick and effective way. Business should not ignore it because it's a great amplifier.

But is it an accurate, distortion-free mirror of the lives led by ordinary people? Or a goldfish bowl where a particularly active group of people talk largely to each other?

This may well have been an election in which social media played a part. But one part is all it was, and it may not have been the part some people thought.

Where does Heseltine leave our LEP?

The big question about Lord Heseltine's report into regional growth yesterday is whether it will ever become government policy.
It is a proposal to spend money on a grand scale at the grassroots of the economy, and from some angles looks suspiciously like revisiting what organisations like emda and the Government Office for the East Midlands used to do.
Fair enough, it was a government-commissioned report and Lord Heseltine would not have attached his name to it without some commitment from David Cameron and George Osborne to do something with it.
What does George Osborne, the man who holds the purse strings, want to do? Study it in depth. That could mean working out how some of it could be done without it looking like a u-turn, or it could mean kicking it into the long grass.
A sceptical jury is out on which of the two it means.
There is a lot of simple common sense in 'No Stone Unturned', the name Heseltine gave his search for a way of unlocking regional economic growth. Spending money at the grassroots of the economy is best decided at the grassroots, he suggests. But rather than exhuming old quangos and giving them another name he suggests the work could be done by existing bodies - notably the Local Enterprise Partnerships like our own Derbyshire-Nottinghamshire D2N2, and the Chambers of Commerce (which happens to operate across the same turf up here).
More ambitiously, he also suggests councils should be restructured into two tiers (a sort of city and county arrangement), and that civil servants should be reorganised to serve the economy rather than their department. He's taking on vested interest and political turf here, much of which is quite happy to serve itself.
One way or another, our LEP is heading towards a turning point. There will be a review into its future in the spring and it can't come soon enough. With next-to-no budget and a resource of borrowed time, it has failed to make an impact. While Derby has shown signs of believing it could help their economic development efforts, Nottingham has been dismissive - with a £60 million City Deal under its belt, perhaps it feels it can afford to be.
This leaves us wandering into that miserable world of political rivalry between Derby and Nottingham, a sorry turf which acts as nothing more than another bad advert for politics. It surfaced yesterday in the cool reception given to the announcement that the new LEP chair was another Derby business figure, Peter Richardson.
Put to one side the fact that Richardson is a straight-talker who has considerable respect among business across both counties. Nottingham said nothing about his appointment officially, but it is unlikely to be seen as evidence that the LEP gives an equal proportion of its time to both cities. Whether that's a fair assessment or not, it is one Richardson will have to address.
The LEP is being given just enough money by government to establish a full-time secretariat, and it has a hand in one or two major projects. Will next year's review decide how to give it a real sense of purpose? Or will it wonder whether there's any point continuing? Where government goes with the Heseltine report could play a decisive role.

Heseltine's wake-up call for LEPs

It only seems like yesterday that the East Midlands Development Agency closed its doors (only for a load of civil servants to walk in through the back and do something which bears a vague resemblance to some of its work).
Anyway, here we are four months on and Lord Heseltine is announcing proposals which also bear a startling resemblance to things regional development agencies used to do, putting tens of billions of government money in the hands of local organisations and devolving decision-making to local level.
What on earth is going on?
Well, some pigeons are coming home to roost for one thing. The coalition government's decision to scrap all of England's nine regional development agencies was the kind of one-size-fits-all politics which flew in the face of well-established regional variations in the economy.
It assumed, too, that all RDAs were an expensive waste of space. As Ken Clarke privately admitted even before the election, they were not. The RDAs in the north west, south and south west did not cover themselves in glory. Ours, however, grew into something professional and well-run. And the RDAs in Yorkshire and the North East made a vital contribution to their economies.
Whatever the government's numbers may tell us, it is questionable whether any money was really saved by closing them. Besides the costs of getting rid of people and unwinding contracts in some RDAs, these agencies contained valuable expertise about regional economies and an ability to get funding out into the economy (something this government has made a real horlicks of). This valuable asset was allowed to walk out of the door.
Government's theory was that local economies should be weaned off the state spoon and learn to stand on their own two feet. The first sign that this theory was wildly idealistic surfaced when Lord Heseltine (yes, him again) came up with the Regional Growth Fund, an acknowledgment that putting money into pump-priming business growth at regional level might not be such a daft idea after all.
We also had the emergence of Local Enterprise Partnerships, an attempt to encourage business to get involved in initiatives which might help develop their local economies.
And, of course, we've had a team of civil servants responsible for monitoring and advising on the implementation of government policy at regional level taking over the offices formerly occupied by emda.
Now, the eagle-eyed among you might just have spotted a bit of a theme here: organisations and initiatives involved in developing the economy at something other than a national level. We won't say regional because, of course, that has all stopped.
Sort of.
Let's stop being facetious for a minute. Lord Heseltine's announcement today is a big issue for Nottinghamshire and Derbyshire. The brutal truth is that its Local Enterprise Partnership. D2N2, has struggled to make any kind of meaningful impression where it counts. It isn't the go-to organisation for business, councils don't rate it, MPs never mention it and Whitehall wonders what's happened to it.
LEPs were always going to struggle to gain traction because they had a budget around about the size of a packet of KP ready-salted. Yet some have managed to persuade local authorities they were worth backing (Northants got its hands on £2 million). The view is that D2N2 and others have failed to establish any authority.
Lord Heseltine's proposals suggest this needs to happen fast. He has clearly identified these organisations as a route through which government money could be channelled into regional economies. This is a major opportunity, therefore, for a business-led organisation to be in the forefront of investment decisions about their own economies.
D2N2 now has to demonstrate that it can grasp this opportunity and work with city and county councils in Nottinghamshire and Derbyshire to get a fair share of the cash. This hasn't happened so far with the Regional Growth Fund (where the money the East Midlands got was way below other regions).
So D2N2 and our local politicians have some ground to make up.
Lord Heseltine's announcement suggests that government has effectively admitted that the work RDAs did was not a totally unaffordable waste of time, and that city regions can and should be real engines for growth.
Nottingham and Derby have an unfortunate and inglorious history of letting small-town political rivalry get in the way of grown-up cooperation. The view in business is that they need to get over themselves.
While Lord Heseltine's report represents a potentially big opportunity it is also a political headache. Coverage in the national newspapers today has offered an insight into the political nonsenses the report faces: not for the first time, the Guardian went into full-on 'challenge to the prime minister' mode, The Times - bizarrely - suggested the report's most significant finding was about Heathrow airport, the Telegraph reported the politics but not the detail.
Yet in doing so they more or less made Heseltine's point for him: an awful Westminster-centric myopia - there for all to see in the online era - has left political decision-making increasingly distant and increasingly irrelevant to regional priorities.
In other words, we have to grab what we can.

The Great, the Good and the Ghastly at an inquiry losing the plot

I don’t normally like writing about my trade. I’m a reporter and I’m not meant to be the story.
The past year has made that difficult, though. Reporting of the Leveson Inquiry into press standards is everywhere.
Personally, I’ve had enough of it – not the issues it raises, but the inquiry. Its grim relentlessness now has an almost medieval quality, with people and behaviour being pulled apart on a rack to no beneficial effect. Outside London medialand I think the rest of the country has probably had enough, too. I make no comment on the rights or wrongs. They are self-evident and were established months ago.
But the one thing you have to remember whenever you see the reporting of the Leveson inquiry is that not one of the national newspapers or broadcasting organisations continually putting it at the top of their news lists are disinterested parties.
Other national newspapers would love to see News International given a commercial caning because it opens the door for them. Some have behaved no better.
Some of the brickbats being hurled in the direction of NI and its employees past and present also have a political dimension. Murdoch & co clearly cosied up to the current government, so that relationship is also being used as a stick to beat a stumbling coalition.
It was at the insistence of a former Gordon Brown aide, Tom Watson MP, that stinging personal criticism of Rupert Murdoch was inserted into a Parliamentary report, transforming a rational judgement into cheap politicking.
The BBC, too, has given the inquiry a prominence which doesn’t always reflect levels of public interest. One of its main competitors is Sky, in which Murdoch-controlled News Corporation is the largest shareholder.
It isn’t bias. But it’s certainly navel-gazing, probably a bit self-satisfied. And it’s now tedious.
The Leveson Inquiry has properly dwelt on some shocking behaviour by newspapers. But nothing new is now emerging, and it rumbles on and on, day after day, with counsel cross-examining witnesses in a manner which has at times descended to the level of gruesome parody.
The giggles which greeted the ‘revelation’ that David Cameron signed off texts to an editor ‘LoL’ sit ill with the ghastly truth about the hacking of a murder victim’s phone. Has the inquiry lost the plot?
While ordinary people were genuinely shocked to hear about the hacking of Milly Dowler’s phone after she had gone missing, they are less concerned about politicians and celebrities (at least one of whom is now known to have made an error of fact while giving evidence to the inquiry).
Politicians have long felt they get a raw deal from national newspapers, who sit waiting for them to trip-up, demand instant results from policies just out of the oven, and make a three-course meal of minor problems.
The boot is now on the other foot and is being used to administer a good kicking. Which tells you that the two are, arguably, made for each other.
Similarly, celebrities who have benefited financially from fame driven at least partly by press publicity have decided they want the publicity strictly limited. Is that fair or is it hypocritical?
Celebrities are often very ordinary underneath. Ordinary people are fallible. Fallibility is part of everyday life. You can’t seal it off. But nor should you go looking for it with a zoom lens.
The press faces many problems. Frankly, its conduct is not the biggest challenge because outside the goldfish bowl of London most newspapers behave well and do a decent job.
Its biggest challenge is the disruptive change wrought by the internet, and the apparent belief that news costs nothing to produce.
That side of the industry is where do or die decisions will be made.
About that, the Great and the Good and the Ghastly who have paraded, performed and pronounced at the Leveson Inquiry have had nothing to say.

Buddy, I can still spare a dime

I’ve puzzled for a few days how to wrap up the first year of this blog.
The answer's easy, though.
With a thank-you, of course, because 4,880 of you have taken a peek and had a read (or a laugh) at what I’ve had to say.
The biggest audience by far has been in the UK, with useful chunks coming from the USA, Germany and France. So the transatlantic alliance is alive and well and relations with Europe weren’t completely trashed by the Cameron V Sarko bust-up.
I’d also like to say thank you to some regular readers in Russia, India, Hungary and Singapore, and some welcome attention from Brazil and Canada.
What have you been reading? The single most-visited post was ‘Champagne, Chips and property development’, some thoughts about the Invest in Nottingham Club’s London day (and the champagne and chips I had at St Pancras).
But even that was dwarfed by the three posts which followed Westfield’s bombshell decision to sell Nottingham’s Broadmarsh shopping centre on the eve of a planned £450 million redevelopment. I’ll have a few more snippets on that in January.
Various observations on the economy, notably about oil prices, inflation, employment trends and public sector job losses, also appeared to go down well.
Well, I hope they did anyway. I’ve tried to shed light on a mix of major business-related issues in Nottingham and get underneath what seem to me some misleading analyses of where our economy is at.
Once again, I’ll have more to say on that shortly and it won’t all be depressing.
One of the lessons I’ve learned over the years in business journalism is that people who own and run businesses can get really fed-up of clichéd representations of what they do, and don’t regard one set of bad numbers as reason to give up and go home.
So ‘leaps’ in this number or ‘plunges’ in that might make today’s headlines but they tell you little about economic reality. Rifling through the Office for National Statistics website, you soon discover that some of these leaps and plunges aren’t leaps and plunges at all.
Similarly, the biggest beef for me at the moment is the lack of long-term perspective in some reporting of our economic predicament. Yes, we are going through an unprecedented economic crisis, but we are doing so during a period of unprecedented wealth and health. So, buddy, I can still spare you several dimes.
Whether its Christmas, the holidays, Hanukkah or just another day at the office, have a good one.

Regional Growth Fund: Has the East Midlands been short-changed again?

The government may face accusations that it has turned its own philosophy on its head with the results of the second round of bidding for the Regional Growth Fund.
This, if you remember, was the £1.4 billion pot of money designed to cushion the blow of the loss of regional development budgets.
The East Midlands didn’t do well in the first round of bidding. In Notts, only one small project was approved, cash which will help a science company expand.
But local politicians – and, significantly, the Derbyshire-Nottinghamshire Local Enterprise Partnership – comforted themselves that the lion’s share of the money, some £900m, was going to be handed out in the second round.
All sorts of local projects submitted bids, a number of them related to small business growth. In Notts, only one bid succeeded again, cash for the Worksop wire rope manufacturer Brunton Shaw..
The decisions released today suggest that the dead hand of national politics has played a part. Derby will, quite rightly, be celebrating the success of the £50m Derby City bid. But it’s difficult not to wonder whether the Bombardier fiasco was in the back of the minds of ministers signing off these decisions.
Giving Derby a second kick in the teeth would have been a political disaster. So good luck to Derby - £50m represents a massive opportunity to make up ground lost through a series of big business setbacks.
Yet it also appears to fly in the face of Conservative philosophy, which suggests the best way to grow a sustainable economy is to avoid an over-dependence on public money.
There was bound to be disappointment in this exercise. While £900m was on offer, the value of the 492 bids nationally totalled more than £3.3 billion.
The point has also been made before that the East Midlands isn’t viewed as a weak economy, so more money is likely to go further north (indeed, nearly 40% of the bids came from the North East and North West).
Yet the East Midlands does appear to have come off badly from this exercise. One of the key measures is the number of direct and indirect jobs which successful bids will support. In the East Midlands it’s 1,400 direct jobs, 7.800 indirect. This is smaller than any other region, including the booming South East.
Three other questions are raised by the RGF result in the East Midlands. One is where this leaves the LEP, which needed a big project to give it some purpose – does the Derby City bid provide that or not?
The second revolves around Boots and its enterprise zone. The company is thought to have put in a bid for £200m. It got nothing, so where does that leave plans for a zone launched personally by David Cameron and Nick Clegg?
It certainly raises the stakes on the fight to win government funding for the dualling of the A453, which Boots views as crucial to the future of its Nottingham site.
The final question is one which seems to have dogged so many civil service business decisions, most notably Bombardier: did it enforce the rules around RGF decision-making literally, or did it interpret them in a way which ensured a desirable result?

Welcome to the affluent south!

So, the race is on for Nottinghamshire and Derbyshire to get their snouts into a £950m pot of government money intended to help the economy grow.
We’ll need to do a whole lot better than we did in the first round of bids for this Regional Growth Fund.
The Local Enterprise Partnership put together 38 applications worth a total of £112m. And we ended up with next to nothing.
There was much soul-searching at the LEP afterwards, which has sought to understand why some pretty professional applications fully backed by the relevant local authorities got nowhere.
And their conclusion? We need to be a bit further north.
Okay, so that was only one of the conclusions. On a more pragmatic level, the real clue as to why the LEP’s efforts drew a blank is contained in the area’s one successful bid: Molecular Profiles, a Nottingham science business, was awarded £1.6m to support a wider investment programme which will create new, high-quality jobs fairly quickly.
It applied to the Regional Growth Fund itself – and bids direct from business is what the government was really looking for.
There remains an irony here. The government appears to have put itself in a position where it prefers bids from companies, not from LEPs – organisations which IT set up. LEPs are still struggling to establish their relevance to business and this hasn’t helped.
But back to us being in the wrong place. I went to a meeting of the local LEP the other day and heard Richard Williams, director of regeneration at Derby City Council and a LEP board member, say, with tongue-in-cheek: “We are now part of the affluent south, not part of impoverished middle England or the north.”
What he was getting at was a set of government metrics which classify the English regions according to their economic strength. All other things being equal, it appears these classifications have a significant impact on where government money goes.
There is some logic in this. If a regional economy is heavily dependent on the public sector – and those further north are – it makes sense to concentrate support there.
However, judged by where the RGF funds have gone so far, the impoverished north appears to have flexible boundaries, taking in parts of those well-known geographic outposts the West Midlands and the North West (home, of course, to such poverty-stricken sink estates as Birmingham and Manchester).
These classifications are also based on averages, ignoring economic variations within regions. In our case, while Derby has some very powerful and successful global manufacturers like Rolls-Royce, Bombardier and Toyota, Nottingham depends more on services and the public sector.
Neither Nottingham nor Derby are basket cases. Nottingham is on the verge of some substantial investment in retail and transport infrastructure, and the supply chains around Derby are among the best in the world.
But neither are Birmingham nor Manchester. Sure, parts of the regions around them struggle, but so do North Derbyshire and North Nottinghamshire – former coalfield areas which still contain pockets of poverty. So the government has some explaining to do here.
It was pretty obvious from the LEP meeting that it still has some explaining to do with the new Enterprise Zones, too. David Cameron and Nick Clegg came to Nottingham to personally announce that a part of the sprawling Alliance Boots campus was going to become one of the first of these zones, but detail on how it will work remains unclear more than a month after their announcement.
There were vague suggestions that it might be home to a mix of commercial and residential development, while Boots exec Patrick Dunne mentioned the possibility of bringing partners form the health and beauty industry on to the site.
The government is clearly looking for quick progress with Enterprise Zones, which are a key part of its growth agenda. But it may have shot itself in the foot by ripping up the existing government presence at regional level at the same time, thus removing some of the capacity to grab hold of a flagship project at grassroots level, make sense of it and identify the way forward.
Enterprise Zones would have been put in the hands of the East Midlands Development Agency, the Government Office for the East Midlands and UK Trade & Investment. One is going, the other is gone, while UKTI is transferring to a new consultancy.
Among the speakers at the LEP meeting was Maria Lyle, the new assistant director for the government’s Department for Business Innovation & Skills in the East Midlands & South East Midlands. She will be working with Rowena Limb, who has overall charge of BIS’s presence across this ‘region’, and looks likely to be the lead contact around Nottingham.
Her in-tray looks like it’s full of an Enterprise Zone-shaped folder already.

What a week for Nottingham

What a week for Nottingham. £500m and 5,000 jobs from the massive expansion of Broadmarsh, £240m and 2,000 jobs from the extension of the Victoria Centre, final sign-off from government for the construction of lines two and three of the tram…and now an Enterprise Zone at Lenton which could create anywhere between 5,000 and 10,000 jobs.
Normally, you’d be lucky if you got one scheme a year of this magnitude. To have four in the space of one week is well into all our Christmases coming at the same time.
These are only plans, of course. In this kind of economic climate – one clearly exposed to the impact of global economic events we cannot control – they could change, stall, perhaps be pushed on to the back-burner.
The likelihood is that at least three of them will go-ahead. Together, they could have a significant impact on the Nottingham economy for years to come, adding economic multipliers to local business and the local economy during and after construction.
It’s been obvious for a while that the unused parts of the sprawling Boots site were in pole position to become an Enterprise Zone – especially after the Treasury contacted Nottingham City Council and asked them to put more work into a draft proposal for it.
It was finally confirmed this morning by that well-known political double-act, David Cameron and Nick Clegg (who, incidentally, took over an announcement which was originally scheduled to be delivered by Vince Cable).
Alongside Boots and just across the road from QMC and the university hospital, and the international research giant that is University of Nottingham, it ticks all the boxes the government is looking for with the new generation Enterprise Zones.
The hope is that it could attract national and international businesses of size or standing, probably in technology or knowledge-related industries – while also being a great opportunity to nurture promising spin-outs from university research.
We’re told there is the potential for around 200,000 square metres of commercial business space for all sorts of industry sectors. So together with the 7,000-odd people who work at Boots, that could put up to 17,000 people working at the campus in the coming years.
Which begs one final question. While the expansion of the tram will assist with transport, this surely puts further pressure on government to make the dualling of the A453 a priority.
May be I’m expecting too much…

The short and long of a Big Society

One of the immediate causes of the banking industry collapse was its long-established practice of borrowing short to lend long – agreeing a 25-year mortgage with a customer but financing it by borrowing money from wholesale markets which would have to be repaid every few months and then borrowing again.
What are wholesale money markets? They don’t exist in a physical sense, but they are well-developed financial arrangements where major businesses, organisations and institutions who routinely hold large amounts of money can lend some of it out to earn interest. Banks, pension funds, multinationals, national and local government all put money through wholesale markets, sometimes on terms lasting a few years, sometimes for as little as a few days.
Wholesale cash can be used to smooth out gaps in capital outflows and inflows and for conventional borrowing products like mortgages and bank loans. Banks routinely use significant proportions of wholesale cash to fund loans, and it’s standard practice to refinance every 30, 60 or 90 days.
‘Rotating’ the money underneath a loan has been the norm for a long time. It’s one of the ways modern-day finance has allowed economies to expand faster, using and reusing capital on short-term inter-bank deals to help generate an increased level of economic activity. Granted, there’s a lot of plate-spinning in there, but financial and accounting software packages can keep this show on the road quite comfortably…as long as the money is available.
The crunch showed that the short-long principle has one potentially fatal flaw: if wholesale funding markets closed, banks would be left holding ‘rotating’ loans which their own reserves were far too small to refinance.
This is why Northern Rock, whose entire business was built on borrowing short to lend long, had to go running to the Bank of England. It had a book full of loans it could not refinance and cash in its own reserves which wouldn’t have come within a country mile of covering them. Arguably, it was insolvent.
Northern Rock was also a major player in the securitisation market – agreeing mortgages with homebuyers but selling the mortgages on in packages to investors. Again, fine in theory but a huge problem if the market for buying securities dried up – which, of course, it did, leaving Northern Rock with a book full of assets whose loan-to-value ratios were crumbling by the day.
Wouldn’t it be safer to abandon these practices altogether? While banker-bashing has become a popular political sport, few people fully understand the consequences of stopping financial institutions engaging in what seems like complex and risky behaviour with our money.
Put simply, our economy would be far smaller, with fewer businesses, fewer jobs, fewer luxuries and far slower growth if we banned practices like short-for-long lending. So let’s put the issue another way: would you still agree with banning complex financial instruments if it meant you couldn’t move house, buy a better car or take out a loan to buy new equipment for your business?
Not if you wanted the economy to grow again.
So, what regulators have been focusing on instead is forcing banks to hold more cash in reserve and to build more stress-tests and warning signs into the relationships between complex financial instruments and the markets which fund them. Banks themselves have already started pricing risk into their loans and avoiding some of the riskier lending altogether.
That in itself has already slowed the global economy.
In the end, there is only so far a set of rules can go. On a very basic level it makes no sense whatsoever to borrow more than you can afford to pay back. But huge numbers of people did just that during an era when there seemed to be an expectation that if the State didn’t provide then your credit card would.
We’ve just lived through what some commentators have already dubbed the Age of Entitlement, when conspicuous wealth and consumption almost encouraged people to think they were only a credit card swipe away from that celebrity lifestyle.
It’s been popular to scoff at David Cameron’s Big Society initiative because it coincides with a period when some charities are seeing government funding dwindle (and because the slogan seems all-too reminiscent of some of the wearying initiativitis beloved of governments past).
It’s not for me to make a judgement on the politics of it (other than to say that the current government sometimes seems as cack-handed as its predecessor). But after 10 years of easy money at least one of part of the implications behind Big Society – that charity begins at home – may take a while to sink in.
But it’s an important implication, and begs a question about a different kind of short-for-long: whether short-term volunteering can make up for a long-term hole in the economy. If few people knew what a rotating loan was, I bet even fewer could imagine the credit crunch coming back round as do-it-yourself society.