大象传媒

"Voters want them to bash the bankers"

I think it would be more appropriate to state that voters can clearly see the unfairness of appeasing, nay colluding, with a financial sector that practically brought the country (and many others) to their knees.

This is not about punishing them, or retribution, but constructive measures for preventing this from happening again. Here are 3 big picture objectives for the G20:

- divide retail / investment banking
- regulate hedge funds
- rein in / regulate the use of exotic financial derivatives (e.g. Tobin Tax the socially useless activities, like High Frequency Trading)

End the shadow banking system that has a noose round our necks. Or do you Stephanie, like many others also suffer from Stockholm Syndrome:

/blogs/thereporters/robertpeston/2009/08/what_rbss_results_say_about_qe.html

This comment was removed because the moderators found it broke the house rules. Explain.

The compulsion to bail out the banks has in effect underwritten for the foreseeable future all significant risks for the bankers and therefore destroys any justification for their continued market independence. It is supervision not regulation that is needed preferably in a structure where the state and society owns at least some of the main players. The current position of the banking industry is ideal for having a genuine mixed economy in this strategic industrial and commercial function. Fiddling with interest rates is virtually irrelevant and demanding higher cash balances does not guarantee the robustness and quality of the transactions and in the absence of any serious risks to survival may simply encourage to go for high margin - lower volume?

"... hard for many ordinary observers to see what, exactly, has been achieved."

I'll go along with that bit.

Does anyone know anything concrete that contradicts my posting on Robert Peston's blog today?

"6. At 10:17am on 25 Sep 2009, I wrote:

There is no agreement on a number of issues at the G20:

1. What to do about regulation of financial institutions?

2. Who should pay for the rescue of international financial institutions when problems occur in a different country to the home country of the institution?

3. As Capitalism is regulated and the market mechanism prevented from operating (the too big to fail problem) what is to prevent every bank from being imprudent knowing that it cannot fail no matter how big and stupid its business model or bonuses.

3a to reiterate 3 above. 'the Banks have effectively subverted the state' and stolen it from the people.

I feel confident that none of these issues will be resolved. The result of this will be that those countries that are the home country of a bank will have to bail out all of its international liabilities (c.f. RBS) and, in effect, rescue the economies of every country in which the bank trades - this is unacceptable - and most unacceptable to the country with the biggest international banking sector, the UK, and the British people, both cannot afford to do i,t and will (eventually) not put up with it. Thus it is unacceptable the Gordon Brown (or his probable successor, David Cameron) to remain silent on the problem, for the Nation's good (and future tranquillity.)

It is also simply not an acceptable solution for Mervyn King to wring his hands and moan 'the banks are too big to fail' - to do so is yet another cause I have against the man as I believe everyone in the country will have if there is further costly financial stability. (Or as and when the true costs of the current situation become apparent.) Basically he let this situation happen. (This analysis, and these conclusions, apply to all other central bankers and regulators and their political bosses.)"

Apologies for reposting myself here, but the substance is more about economics than is well served by Pobert Pestons' blog given that he has already moved on to ITV!

There's only one big picture objective at the G20 as far as Gordon Brown's concerned - his unctuous, craven, pathetic trailing two paces behind President Obama hoping thereby to stage manage a puerile, useless photo opportunity proves that point.

ach its only the start of the New World Order

So...If it is to be "hard for many ordinary observers to see what, exactly, has been achieved" then presumably it will not be so hard for some extraordinary obesrvers to see what has been achieved.

I think it possible that this kind of argument was run by shamen Aztec priests whilst they were busy ripping peoples hearts out.

...And ye shall be judged by the company that you keep.

In principal, Stephanie, your thoughts are no doubt very sound.

However, what international leaders publicly agree, and what they implement in their own back yard could be poles apart.

World leaders primarily work for the good of their own electorate.
If an international finance policy is not in the best interests of the UK, Our Gordon will not implement it.
At least he'd better not try !

Of course a little national window dressing will been done so that we seem to be implementing aspects of national agreements, but in essence the UK, and every other G20 country, will continue to plough its own furrow in the best interests of that nation.

"As Larry Summers, President Obama's Chief Economic Advisor, told me yesterday, the US consumer "cannot, will not, should not" continue to be the engine of global demand. They're going to adjust. And if other countries don't want to suffer sub-par growth as a result, they're going to have to adjust too."

Communique from the Department of the Bleeding Obvious !! With $5 trillion of debt hanging over their collective heads, this should have been obvious to any with eyes to see.

Recent 大象传媒 new articles have the Taiwanese and the South Koreans actively pushing into Africa. Wherever they went, the Chinese were there first. These and others like them have been diversifying their trading pattern for ages.

The question now is "How much pain and inflation is the US willing to put up with in order to reduce their imports ?" A second question is "Will they accept that they have to pay 3-4x more for the same goods than their Canadian cousins ?"

"That well-known economist, John Humphrys, grasped the basic problem when we spoke on Today this morning: there's no easy way to persuade German or Chinese consumers to spend more if they don't want to."

As someone reported from a Davos meeting not so long ago, when the Americans pressured the Chinese delegate to get their government to make their citizens spend more, his reply was a classic !! In effect he said that this would be a difficult task because "the Chinese like to save today's spending for tomorrow whereas the Americans like to spend tomorrow's savings today !!" I think this statement rather explains the true conflict of philosophies !!

Until the "Anglo-American backers" of this new policy can rein in their own people from their conspicuous consumption spree, they should not try to impose restrictions on others.

"They're not going to make the mistake of letting technocrats make decisions in closed rooms in Basel that end up putting taxpayers on the hook for billions of dollars."

Interesting concept since it was the very civilians and unknowledgeable political masters who allowed/created this situation in the first case. So it's going to be business as usual. Same-same. Just a different set of pigs at the same trough !!

"But all that said, the absence of hard numbers will make it hard for many ordinary observers to see what, exactly, has been achieved."

Who needs numbers ?? It's just a glorious photo-opportunity for all concerned !! The *REAL* work is done by those same despised technocrats behind the scenes !!

Stephanie says that: "The Anglo-American backers of the new framework say it will be worth the paper it's printed on ... ". Erm, isn't that saying that it's only worth just about a penny more than "NOT worth the paper it's printed on"?

No 1 "- rein in / regulate the use of exotic financial derivatives (e.g. Tobin Tax the socially useless activities, like High Frequency Trading)"

Exactly how do you regulate them when they are OTC (over-the-counter), or "should that be down a dark alley" ?? How do you regulate person-to-person transactions ??

Chinese have a high savings ratio as there is no free health care system equivalent to UK's NHS. If there was free health care in China consumer consumption within China would rise significantly.

So far there has been little return on the investment made in this meeting at Pittsburgh. So for the moment we will just have to class it as work in progress.

The absence to date of any prospect for a division between retail banking and investment banking continues to disappoint.

So the G20 will prevent future crises?

And their crisis theory is what exactly?

Perhaps some variations of 'animal spirits' distorting equilibrium, resulting in imbalances, such as the US budget/trade deficit and the Chinese surpluses which can't be sustained resulting in demand deficiency, to which governments then step in to fill this demand deficiency and correct 'wrong' exchanges rates to get us all back into equilibrium?

No place then for the fact that capital accumulation itself puts downward pressure on the rate of profit.
That is economic growth itself sows the seeds of the crisis.
No understanding that financial crises are expressions of the crisis in profitability in production.

They're deluded in their self importance and unable to see their own impotency.

Well all I can say is that the writing's been on the wall for so bloody long now that the pace of development is becoming both frustrating and dull.

I wish they'd just get on with it and establish the world government, dismantle the IMF/World Bank, sign the central banks and governments up to SDR-based global fiat currency, and make technology-for-all the #1 world priority (aka poverty elimination).

Wake me up in 5 years.

The fact that Larry Summers looks so dreadfully uncomfortable does give me some hope.

Oh, of course, his words have no actual meaning (any more than they did when he famously proclaimed, while President of Harvard, that women "can't really do science as well as men because their brains are not as developed in that area"): "You can't expect Americans to consume as much for the benefit of other countries" is in fact a very strange way of saying: "You should see how lucky you are that we took all your money from you so you have nothing left to spend! This will actually now force those other countries you never liked to have a higher standard of living than you will."

Truthfully now, No One can tell Anyone how to consume, where to shop, how much to spend.

And the notion that somehow the financiers can "engineer" a more "balanced" distribution of assets & consumption habits is a joke. All their tinkering has brought us to this pretty pass in the first place!

Would the UK ever allow Americans to tell the Crown how to spend? Or the Treasury what to do with your tax revenues?

Why should Russia, China, Argentina, Brazil 鈥�- or any other nation -- ever agree to the kind of "global integration" in which a Portuguese "expert" who has never been to Australia and struggles with their idioms would be in a position of authority, telling them how to run their exchequer?

No, we are never going to have that kind of a "united planetary world government." Such a suggestion is patent nonsense. Even New York is not advised by California. Michael Bloomberg does not take instructions from Arnold Schwarzenegger, nor even from George Shultz.

Every nation shall continue to administer its own resources. Every family shall follow its own preferences for dispensing with its own discretionary income.

What we can have is better education -- and all around the world, greater efforts to assist those with limited income, or unemployed, to begin entrepreneurial activities or training in new skills that can help them increase income

The demographic realities of the world today, for example, make it necessary for more people to become carers -- for the elderly, the sick, children, disabled persons. This is very hard work, and necessary work. This work cannot be done by anyone for 40 hours per week, because it is too difficult. The most a normal carer can manage is 25 hours of focused attention on a person who is in considerable distress.

Similarly, cleaning up the environment takes effort, energy and even physical toil.

So there are indeed employment opportunities. Many of the recently unemployed, for example in America, are not keen on taking these kinds of jobs. But on the other hand, they need income, and the jobs also need to be performed. By incorporating a genuinely vigorous job training and placement component into their current plans, the G20 will do much more to help quickly move us out of global economic crisis, than by seeking intricate architectures for regulation or "recalibration" of assets.

This is in many ways an unemployment crisis. inevitably, it becomes also an opportunity for increased employment in law enforcement, data mining and data processing, security services -- and education.

All our plans will require trainers, PROPER (not bogus) linguists, teachers, mentors, motivational experts.

That is how this current crisis ought to be approached: by practical, targeted problems solving, rather than fanciful flow charts and commissions' agendas to advance (or moot) new theories or test schemes.

All that talk, verbiage and tinkering created the problem in the first place. Work shall solve it.

No 16 "Wake me up in 5 years."

That's what happens when you listen to too many political debates - the world's best substitute for sleeping pills !! :-)

No 17 "All our plans will require trainers, PROPER (not bogus) linguists, teachers, mentors, motivational experts."

I am very multi-lingual !! I speak perfect Double-Dutch and fluent Goobledegook after my tenth pint !! Will that do ?? :-)

One obvious step not considered is to get the Chinese to float their currency. This would mean they could not dictate low interest rates to the rest of the world.

Interest rates need to have a minimum value above inflation to prevent excess future wealth being pulled into the present.

I'm glad to see that Larry Summers now thinks that the US can't keep spending. Some would say that it was a shame he didn't realise that when he was at Harvard.

"Harvard鈥檚 soaring endowment was the key to Summers鈥檚 blueprint for the future. Instead of promoting fiscal restraint, he argued, Harvard should loosen its purse strings. The endowment should be used for 鈥減riorities of transcendent importance,鈥� he proclaimed to The New York Times in 2008, after resigning as Harvard鈥檚 27th president. 鈥淭here is a temptation to go for what is comfortable,鈥� he added, 鈥渂ut this would be a mistake. The universities have matchless resources that demand that they seize the moment.鈥�"


This article about Harvard sums up the last 8-9 years

No 21 "Harvard鈥檚 soaring endowment was the key to Summers鈥檚 blueprint for the future. Instead of promoting fiscal restraint, he argued, Harvard should loosen its purse strings. The endowment should be used for 鈥減riorities of transcendent importance,鈥� he proclaimed to The New York Times in 2008, after resigning as Harvard鈥檚 27th president. 鈥淭here is a temptation to go for what is comfortable,鈥� he added, 鈥渂ut this would be a mistake. The universities have matchless resources that demand that they seize the moment.鈥�"

Is it not interesting that such people are described using words like "proclaimed" and "seize the moment" ?? One can just visualise them in a toga standing arrogantly in the senate making pompous "proclamations" about "seizing this and that" !! I wonder if he will also follow that other famous Roman practice of *falling on his sword* when his "proclamations" fail to come to fruition !!

No 20 "One obvious step not considered is to get the Chinese to float their currency."

The Chinese *WILL* float their currency in the near future. They are making sure that they have all the right conditions in place before they do. They don't want to rush things simply because others try to pressurise them.

"This would mean they could not dictate low interest rates to the rest of the world."

I just don't understand how floating their currency has anything to do with their dictating anyone's interest rate. Interest rates are set by the local Central Bank and has nothing whatsoever to do with whether a currency is floating or fixed !! The 拢 is a floating currency and yet the interest rate is at an all-time low simply because the BoE said so !!

"Interest rates need to have a minimum value above inflation to prevent excess future wealth being pulled into the present."

If what you say is true, then the British interest rate should be at least 5% !! Currently it is 0.5% !! The Chinese interest rate is significantly higher than that !! In fact, most countries' interest rates are significantly higher than that !! So who is "dictating low interest rate" to whom ??

"It does not compute, Captain !!" as Mr. Spock was alleged to have said to Captain Kirk !!

Addendum to No 23 -

I'm sure he knows something of what he's talking about.

How to create more unemployment for no good reason, NuLabour style !! So, the NuLabour Paedophile Gestapo will enforce utterly unreasonable, petty rules and force these mothers from productive employment simple because they can't look after each others' kids !! And it will *NOT* just be them that will be forced out of employment. There are probably hundreds of thousands of others in the same boat and that will push Britain's unemployment to unprecedented heights !!

First they blather on about getting mums back to work and now they have this imbecilic regulation to put them out of work again. Does NuLabour actually know what they are doing ?? Or are they just lying about their intentions ??

If they can't even sort out simple things like these, how can they stand on their hind legs at the G20 meeting and claim "World Leadership" ??

#23. ishkandar wrote:

"If what you say is true, then the British interest rate should be at least 5% !! Currently it is 0.5% !!!"

Correct, and that succinctly describes the current errors! Unless and until rates get back to an appropriate level there can be no real recovery!

No 26 "Correct, and that succinctly describes the current errors! Unless and until rates get back to an appropriate level there can be no real recovery!"

Aah !! But thee and me have no say as to what the appropriate level is !!

"Shouldn't they be talking up the recovery..."

That is exactly the kind of attitude that we need to get rid of. Trust me, working up the economy is the only way and people like you must not be listened too any more. Not even in the UK...

They think the next year is going to be bumpy? Ha ha!

Stephanie, they, you and almost everyone in a position of responsibility are way behind the curve. Please please read Steve Keen so that you are clued up on the deflationary tsunami headed our way once the current unprecedented fiscal stimulus is removed (and it can't be held in place forever).

Capitalism SHOULD work by rewarding the efficient use of capital and punishing the rest (natural selection). So, to sort out the appalling mis-allocation of capital over the past few decades there will need to be:

1. Savage cuts in govt spending including welfare - introduce soup kitchens if necessary,
2. A move to eliminate ALL tax avoidance. Even now I know of well paid people paying almost no tax by using e.g. Isle of Man intermediaries,
3. A mass cheap house building program,
4. Mass bankruptcies,
5. Liquidation of all insolvent banks, wiping out bondholders where necessary,
6. The creation of new banks, seeded with public money if necessary,
7. Restoration of Glass-Steagall or similar, plus counter-cyclical capital requirements, etc, etc,
8. A recognition that the ruling economists have had things WRONG for the past 50 years ... Steve Keen's model should be adopted going forward.

It's no good ducking the deflation scenario we're in. Just take the medicine and be done with it. It will hurt like hell, but ONLY because the idiots in charge have ducked it for so many years now.

The alternative is to punish the prudent/wise in favour of the numpties, which is anti-capitalist and an extension of the moral vacuum endemic in our culture these past few decades.

No, it's high time for stiff upper lips now. New businesses will be reborn to replace the old, it won't be Armageddon.

Re: 29 loafatot.

If "Only".
It will be the Bankers, The Politicans, and those the many of old who kept telling us all that for our tomorrows we could look forward to taking life easy.

However, then again the only possitive thing for sure is that it WON'T be these same Bankers, Politicans or the other former self-styled Elite who will fill any real pain.

Sure they will lose a bit on the Stock-Market and Wall Street, while the ordinary Man and Woman living down your Street will either be out of Work Unemployed, and perhap Homeless, or both.

Now, I wonder who will Vote for more of the same from Nu-Lab, The Cons, or The Demo Parties at the next General Election, to ensure that we all find our way and be confined to the Scrap Heap?