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Paul you might want to check out who is making risk free profits dealing with the BOE bond auctions [GEMMs]. its a bit obscene [because of the volume] and its the public who are paying.

also has the ecb decided the credit cycle is over and ended easing?

yes re the inaction its total weakness by the govt. have they been nobbled or distracted by the expenses story? there is nothing to stop the whole thing happening again.

Gutless cowards.

If the slaves want change they MUST take it.

If not they can get back to watching Big Brother.

Can somebody tell me exactly what all this so called 'Top Talent' actually do ?

Is there some magic formula that only they know or is it just their collection of contacts (people they went to Oxbridge with ?) that allow them to grease the wheels.

The human equivalent of lube.

But does it matter, could things go belly up again before the next election? seems to me Labour havent got a cat in hells chance of hanging on to power. Is it known what "Dave" is going to do apart from give Mervyn a Louis Vuitton regulation handbag job? Brown is going the wacko way, no one believes anything any more.


Do let us know if when "eyebrows at dawn" moves to "handbags at close quarters"

PUBLIC UNWITTINGLY FUND PREDATORS?

Watching Newsnight last night the message appeared to be that it's back to business as usual. The City/Financial Service sector fought its corner and won, and it now has public funding to do so.

As I see it, several banks have now been bailed out with large loans at near zero rates of interest where the government (public) has borrowed money to do so secured against future taxes from progeny of the public.

The banks can pretty much lend this money to whomever they please, so long as they get a good return on it. For this good return (high interest rate) they can pay themselves obscene bonuses for making profits to please their shareholders, as this will raise their share prices (and restore their suspended dividends?).

Not only that, but the rate of interest on loans/credit issued by the banks being much higher than the rates they have to pay their creditors (the government, aka the public) means that where 'the public' get loans, they're paying twice, first in high interest rates on the loans now and second, in taxes to pay for those loans in the future and/or with major cuts in public services in the future.

The public don't see this because of the long delay, but it's a double whammy. In the meantime, Financial Service Sector continue to live as Masters of the Universe.

Much of the borrowed money which funds the loans to banks will go on PFI projects and other loans to allow Private Sector predators to asset strip Public Services which Mr Brown says are 'inefficient' or 'not essential'.

All round, as I see it, the public gets to fund having their assets ripped off by predators. They won't even necessarily be British predators either.

The above needs tidying up, criticising, explicating - anyone like to do so?

".....Adair Turner has called for a "radical change" in regulation."

Blimey old chap, next we'll be thinking of the highway code as "radical"......Remind me why we need speed limits on our roads, MoT testing, driving tests, etc?

Empirical evidence: when Barings went bust it didn't really matter, because it didn't affect retail deposits, because it didn't have any; Barings was a merchant bank and not a retail bank.......The British economy remained intact.
Conclusion: keep merchant banks (now called investment banks in today's American english) separate from retail commercial banks.

There we are, all explained with minimum effort in under 3 minutes......

MrTweedy (#6) "Conclusion: keep merchant banks (now called investment banks in today's American english) separate from retail commercial banks."

Which would require repealing the 1999 US and 2000 UK legislation would it not? We were told (Lord Myners...grrrr) on Newsnight last night that this is not on the cards.

Consensus last night: We've been soft-soaped and shafted.

You start to get the impression that all of this debate is underpinned by the need to maintain our banks as global players. If US banks are not treated equally, our sector could get rolled over. Capital regulations are merely trying to save banks from themselves. They dont protect us from their stupidity. This is where we are now being asked to let the Bank of England and some advisory international bodies patrol the bigger picture. Ways are being found to allow banks to die - splitting, for example to protect depositors. This is missing the point : leverage was the determining factor and the bank funding models. The reason why HM Govt could not let these banks fail was because of the effect on UK Plc of global UK banks failing to meet their loan obligations. Government gilts would have become unsaleable. So, HM Government's debts were linked to those of the banks in credibility terms.

If leverage is not addressed its all a fudge - not a Green Paper, but a Yellow one!

My answer would be to grade banks in a global sense. Let all global players answer to a supra national lender of last resort co-funded by home countries/banks. If there is a failure, the bail-out or termination regime would be supra national.

Post script: I refuse to do that Twitter thing. It may be good enough for Channel 4 News, but I'm not interested in encouraging the "celebrity" of news presenters. I don't need to know what you had for breakfast......

EXTREME MAKEOVER

For an edgy perspective, Newsnight should invite the Monty Slater household on to give their views on the White/Green Paper and credit. Consumers don't 'choose' to get into crippling debt, they are lured/conditioned into this.

It used to be called usury and deemed a bad thing, today it's had a makeover as 'good for the economy'. But whose?

No.7. JadedJean

Hedge your position accordingly. Be aware of the current stealth bull market.....

If you recognise the game, and play within its rules, you can protect yourself against its negative affects.

The Germans seem to know the real score!...
...it was 4-0 the last time I looked.

Germans accuse Brown of dragging his feet over the economy


Now...I wonder why Steinbruek might say that???

This is worth a read :



"requiring the banking system to hold more capital on average will not improve the resilience of the financial system if we do not also better match risk-taking to risk-capacity"

Still bemused how conditions are too bad right now to sell off assets like the Post Office, but it's imperative that we flog off Northern Rock to Tesco before the election. I can't possibly think what the reasoning is here.... :-)))

What happened to all this regulation we were promised in return for all our cash then? Watching Newsnight last night it became pretty clear that the new rules that will apply to the financial sector are all but toothless. The bottom line is, the banks now know that whatever mistakes they make in the future it will all be underwriten by us, period!
What do we get in return? A vague list of watered down regulations so full of holes you could drive a bus through them! Still just so long as its business as usual eh!

I'm with Tweedy on this one: separate retail banking from the funny stuff.

If I want to put my savings on a nag at Newmarket I can do it myself. I do not need some childish fantasist to do it for me.

THE TRUTH ABOUT 'DEVOLUTION'

It should be far more obvious to many more than it currently is, that most politicians these days can actually do very little of substance because power has been devolved to the people, meaning, to the markets.

What we hear is largely just a clever play on words whereby politicians make themselves as unaccountable as possible, whilst benefitting themseves as best they can, whilst they can.

Devolution is just abrogration i.e. anarchism.

We ran-out of solvent customers to hook, then we ran-out of sub-primers, but now we (?) don't even need depositors - we have TAXPAYERS MONEY to generate profits and bonuses! What a treat! Let QE roll, we are too big to fail.

Unless you split High Street banking from Investment Banking (a la Glass-Steagall act) then surely no amount of capital reserves will be sufficient to ensure the government does not have to do another bailout sometime in the future.

Investment banking trades in unregulated derivatives markets (described by Warren Buffet as Financial Weapons of Mass Destruction). The total liability on the derivatives market is more than the entire global wealth of the planet. No amount of capital reserves can protect the taxpayer from that liability!

Surely it is time to tell the banks that if they want backing up by the taxpayer then they only deal in ordinary banking in the UK. This is all that can be regulated anyway. If you don't have 100% regulation of everything a bank does then you may as well not have any, because the 1% you don't regulate could potentially bring the whole bank down.

I think taxpayers need assurance that they will not be made to pay for more bailouts and depositors need to be sure their deposits are safe. Without a Glass-Steagall like spit, this simply does not seem possible. The government is being most disingenuous on this, and journalist are giving them far too an easy time over it.

FREEDOM FROM GOVERNMENT

simonmw3 (#18) "Surely it is time to tell the banks that if they want backing up by the taxpayer then they only deal in ordinary banking in the UK."

Sadly, it seems that the fact is that Liberal-Democratic governments don't have the 'resources' to enforce such regulation. If they say they'll legislate to regulate they'll be told that the banks will move elsewhere where conditions are more favourable. Note the ever growing pressure on customers/investors to do everything online or via call centres? This is why the end of the Cold War never portended any good. Note how the Axis of Evil are anti-usury? Note how the West goes gunning for them and tries to impose Liberal-Demcoracy everywhere? This is why :-(

#18 simonmw3

Agree with you 100%

...but you know...this Government has made more laws than any other government in history. And they have all been made purely for the purpose of increasing the tax-take from the plebs.

Therefore, on this basis, you can bet your cajones that that they won't make an equivalent G-S law!

BankSlickerminustheR (#20) "And they have all been made purely for the purpose of increasing the tax-take from the plebs."

And to criminalise these cash-cows they import/breed which are rather prone to getting uppity when they're not getting themselves into debt.
People don't see the half of it.

#19 JadedJean:
Maybe the banks would threaten to pull out of the UK, but we could also ask whether it is worth a trillion pounds to keep them here!?

The banks are a major contributor to the UK treasury ... or should that be "were". Personally, I believe the real case is that the banks tell the government what to do and not the other way round. The politicians talk tough to try and mislead the public, but as of yet they have done nothing to act tough.

simonmw3 (#22) With 70-80% of the economy being Service Sector and a good part of GDP coming from Financial Services etc, they have a lot of clout alas. This is why, in the past, such firm measures have been taken to prevent them getting this power in the first place. Those working in these services are caught up in the system. In the end, you have to ask, what would take their place? ;-(

simonmw3 (#22) "The politicians talk tough to try and mislead the public, but as of yet they have done nothing to act tough."

The reality is that the only time that politicians can ever get tough is when they have a strong army behind them to enforce what they have to say. That's now called 'totalitarianism' which is of course very politically incorrect here. Not only that, but conveniently, we have an army which a) is very busy abroad b) has been oddly emasculated by recent legislation, and c) has also been cut dramatically in size. To top it all, most of our powers have been transferred to the EU!

Stop press : In answer to whether spending c. 100 billion central bank reserves is having the desired effect in reversing the fall in the growth rate of GDP Tim Besley of the MPC says

'' It is difficult to assess whether QE is working in this regard given the usual long and
variable lags in the transmission process. Moreover, it is extremely difficult to know
the counterfactual path of money growth and nominal GDP had the MPC not
introduced its program of asset purchases. Thus, we will not know for sure whether
QE has been directly effective in supporting nominal demand growth for some time
and a definitive assessment right now would certainly be premature.''

uhh,umm,ugh,ahem,yeeah,ok,grrrreat said an enthralled audience at the LSE

shireblogger (#25) To reiterate the obvious bias: No (bad) news before the election if it's bad for the incumbents as their interests must come first, not the electorate's?

JadedJean

Relax, Tim is an All Souls guy, winner of Yrjo Jahnsson prize in 2005, Kuwait Professor for Economic and Political Science, member of the illustrious Econometric Society, research interests in Development Economics, Public Economics, Political Economy to name but a few of his credits. For the Suntory Toyota International Centres for Economics and Related Disciplines he specialised in, inter alia, Household External Finance and Consumption and Making Autocracy Work - he's been on the MPC since September 2006 - sleep easy!

Take a look at his research : Working or Shirking? A Closer Look at MPs Expenses and Parliamentary Attendance 18 November 2005 - didnt see this published in The Telegraph.....

22. At 8:11pm on 03 Jul 2009, simonmw3 wrote:

"The banks are a major contributor to the UK treasury"

I'm not so sure that the banks even were a substantial contributor to the Treasury:

/blogs/thereporters/stephanieflanders/2009/07/is_double-dipping_the_new_green_shoots.html

Sure they kept people employed, and help drive the "consumption" economy (not the "knowledge economy" as it is often referred to), but in terms of lining the Treasury pockets, they were decidely absent.

(Note the figures above relate to direct taxation - which is about half the Treasury income. Even if we could allocate indirect tax (wages) to each sector, I doubt the balance would be re-dressed.)

Now, forgive my naivety in the matter, but here is a working proposal:

- The service sector is not VAT rated (i.e. it does not "Add Value"? discuss)
- Financial transactions (derivatives, swaps, share dealings etc.) do not incur tax in themselves - only the profit taken by the bank in their annual accounts (connected with the above point)

So unlike a manufacturer, a bank can whirl its production of financial products around and around without the taxman meddling - so if as a bank I have moved a certain amount of money around 50 times, have I actually worked 50 times harder, have I "made" 50 times more productive output?

In a way, from a VAT point of view the answer is NO. So finance can't be on the one hand exempt from a "Value Adding" tax perspective, and yet also be "a major contributor to our economy". So either:

a) they quite rightly should not be VATable (as they do not really make anything), but then we should accept that they are not a major contributor to the economy, or
b) they are indeed a pillar of economic productivity, and therefore the taxation of financial transactions is imperative (not least to recoup the phenomenal national debt we are in)

Hawkeye_Pierce (#28) Good post. A quick look at the HMRC Tax breakdown by income, corporation suffices to make you point, and although tax on salaries contributes of course, the point about banks avoiding tax was brought up again and again in Treasury Sslect Committee 'evdience sessions'. But so was the venality of credit (see 2003 case of Monty Slater, a canine sent a credit card).

The bottom line is that politicians and the Civil Servants are run rings round. The latter used to, (like many teachers and academics still) have a naive belief in truth and honour amongst the educated. I keep picturing some of these people (e.g. Lord Myners) being held by two guards before a People's Court as they do in the PRC. The only way to get a grip on this is a large 'party' which keeps a close eye on those who work for the state on behalf of the people. In the end, as Stalin saw in the 1930s (see 'Mastering Bolshevism' (look up the Russian title and translation!....), the line between wreckers/opportunists, and plain incompetents is an extremely fine one which tests good social systems to destruction.

"The problem is we already know that any recovery is going to be highly inflationary;"

So little likelihood of inflation then.