Richard Spring MP
Member of Parliament for West Suffolk

The headline yesterday in the Evening Standard was ‘Bank Crisis to Hit Taxpayers.’ Just about every day at the moment the news for the Government is bad.

By contrast last night there was a Conservative City Circle reception at which David Cameron spoke. There were 1250 acceptances and he was very enthusiastically received. As he observed, when Margaret Thatcher won in 1979, she had to fix the broken economy. Today our society is broken, with violence and dysfunctionality its hallmarks. That Eurostar advertisement of a yobbish looking man urinating is supposedly an amusing insight into contemporary Britain. Manneken Pis he is not.

David Cameron was mobbed after his speech. People present felt that they were in the presence of the next Prime Minister and dozens told me this afterwards. It cannot come too soon!   

President Kennedy’s father Joe was a hugely successful investor.He once observed that in getting in and out of the stock market the final 10% up or down should be left to somebody else.

Most press attention has been devoted to the soaring cost of property. The London stock market is now quite close, however, to its all time high, and New York is now well above its all time high. However these pale into insignificance compared with many other stock markets, notably China.

The world is awash with liquidity which has driven up property prices, stock markets, and the art market. A sale at Christies in New York last week of modern art yielded an astronomical $354.6 million, largely on the back of Russian buying. Significantly, auction prices were for the first time displayed in roubles, and no doubt will be in the Chinese yuan before long.

Anthony Bolton, London’s most successful investment fund manager, warned against all this excess in his retirement speech last week. The securitisation of borrowing means that the normal direct relationship between a lending institution and a borrower has been lost, and private equity deals can fuel the market without the normal restraints.

Growth in the British economy has been largely driven by the consumer, on the back of rising asset prices. Any reversal would create a significant problem for any Chancellor of the Exchequer in the future.