Posts
Some of that money would be bloody useful right about now, for the public finances. Or my back pocket.
Bloody banks and their bloody bailout and who is it that pays the price? Damn straight
Showing posts with label banking. Show all posts
Showing posts with label banking. Show all posts
Thursday, 18 February 2010
Friday, 15 January 2010
UK anxiety over influence in Europe after crisis
It's odd, and I'm not sure national sovereignty is the issue. The UK government has been banging on about the need for regulation, yet when there is talk of regulation, the UK gov is the first to urge caution. Caution is fair enough, but (I think) it was the free market economic policies followed by us here that lead to a bubble and bust. So maybe a bit more regulation and direction (like Germany) would have done us good. The highs wouldn't have been so high, but the lows might not have been so low.
The intervention they finally got around to doing has saved us from being in a far, far worse mess (see Ireland).
But Mandy, Gordy etc. have been going on about the need for international regulation, so I hope they don't then come out and criticise said international regulation.
I don't know too much about French politics, but why would Sarkozy have an "arch-socialist" as a minister?
The intervention they finally got around to doing has saved us from being in a far, far worse mess (see Ireland).
But Mandy, Gordy etc. have been going on about the need for international regulation, so I hope they don't then come out and criticise said international regulation.
I don't know too much about French politics, but why would Sarkozy have an "arch-socialist" as a minister?
Monday, 21 December 2009
Capital flight
Capital flight is a very important issue for us on the left who have been known to advocate higher taxes, for whatever reason.
Since the introduction of the banker' bonus tax, bankers' representatives have been screaming blue murder and threatening to flee to every corner of the globe. So this is a live issue.
it is vital that any tax-rising lefties acknowledge this.
Now, i don't believe it's as big a threat as it's made out to be, partly because of the levels of infrastructure e.g. education which fundamentally underpin the ability of these people to make such amounts of money. There's a reason they do business here rather than Monaco.
Will Hutton, who may know even more than me about economics, has some level of agreement with me:
"No success story requires the estimated £850bn bailout. Bank lending is five times British GDP. If it carries on growing without substantial increases in the banks' capital base the next bailout would overwhelm the British economy and the British state. It is vital that banks build up their capital base, which has been declining proportionally for 30 years.This, along with very cheap money, is the chief reason for their very high margins – and extraordinary bonuses. The City is a national asset only if it is self-sustaining. Unless and until it operates with a great deal more capital to underwrite its lending it is a national liability."
Since the introduction of the banker' bonus tax, bankers' representatives have been screaming blue murder and threatening to flee to every corner of the globe. So this is a live issue.
it is vital that any tax-rising lefties acknowledge this.
Now, i don't believe it's as big a threat as it's made out to be, partly because of the levels of infrastructure e.g. education which fundamentally underpin the ability of these people to make such amounts of money. There's a reason they do business here rather than Monaco.
Will Hutton, who may know even more than me about economics, has some level of agreement with me:
"No success story requires the estimated £850bn bailout. Bank lending is five times British GDP. If it carries on growing without substantial increases in the banks' capital base the next bailout would overwhelm the British economy and the British state. It is vital that banks build up their capital base, which has been declining proportionally for 30 years.This, along with very cheap money, is the chief reason for their very high margins – and extraordinary bonuses. The City is a national asset only if it is self-sustaining. Unless and until it operates with a great deal more capital to underwrite its lending it is a national liability."
Monday, 7 December 2009
Banks criticise plans for windfall tax on bonuses
1) they would, wouldn't they?
2) who runs Britain? When the miners took on the government, many backed the government. When the bankers do the same, the rich are coming out in support of the bankers and their bonuses. This portrays a sad indictment of the state of power and equality in Britain.
The lefty rant is somewhat confused by Who supports the bankers over the government. What I mean is that many who supported the government over the miners now support the bankers over the government, which sucks.
There will be some good people who support the government against the bankers, though
2) who runs Britain? When the miners took on the government, many backed the government. When the bankers do the same, the rich are coming out in support of the bankers and their bonuses. This portrays a sad indictment of the state of power and equality in Britain.
The lefty rant is somewhat confused by Who supports the bankers over the government. What I mean is that many who supported the government over the miners now support the bankers over the government, which sucks.
There will be some good people who support the government against the bankers, though
Tuesday, 17 November 2009
Lib Dems urge 10% bank profit tax
"Banks should pay a new 10% tax on their profits in return for the support they received from the taxpayer, according to the Liberal Democrats."
Cool, let's have some of that.
"The tax would raise some £2bn a year".
Yeah, i'm in.
Capital flight? Bugger em.
Cool, let's have some of that.
"The tax would raise some £2bn a year".
Yeah, i'm in.
Capital flight? Bugger em.
Tuesday, 10 November 2009
Gordy and a Tobin Tax
"A study by the Austrian government showed that a 0.05% tax imposed on UK financial trades would raise about £100bn a year. That spells a near end to the debt problem caused by the banks and/or cash for climate change action in poor countries. Now, Brown says, the risks fall on the taxpayer, the rewards on the banks; but a new system must insure against future risk and yield a fair levy to society."
That'd be lovely.
"But that remarkable £100bn is the sum the Treasury would reap even if a transaction tax were to lead to a highly unlikely two-thirds drop in UK transactions"
that's a pretty conservative estimate, so a 0.05% tax WITHOUT a drop would probably wipe out our deficit. And there's also the possibility that some people might be willing to pay for a decent service.
"Brown needed a public reckoning, a time to say: "The world has changed and so have I. Like other leaders and most economists in the boom years I got things wrong. I should have regulated more, not less. Our new industrial policy acknowledges that I relied too much on the financial sector. When the facts change, I change my mind. As everyone should, I learn from experience, and now I see what must be done. Not only was the whole economy unbalanced by the dominance of finance, but the rewards were too unfairly shared in the boom years; we must ensure the pain of these hard times is born by the broadest shoulders.""
Agreed.
That'd be lovely.
"But that remarkable £100bn is the sum the Treasury would reap even if a transaction tax were to lead to a highly unlikely two-thirds drop in UK transactions"
that's a pretty conservative estimate, so a 0.05% tax WITHOUT a drop would probably wipe out our deficit. And there's also the possibility that some people might be willing to pay for a decent service.
"Brown needed a public reckoning, a time to say: "The world has changed and so have I. Like other leaders and most economists in the boom years I got things wrong. I should have regulated more, not less. Our new industrial policy acknowledges that I relied too much on the financial sector. When the facts change, I change my mind. As everyone should, I learn from experience, and now I see what must be done. Not only was the whole economy unbalanced by the dominance of finance, but the rewards were too unfairly shared in the boom years; we must ensure the pain of these hard times is born by the broadest shoulders.""
Agreed.
Monday, 9 November 2009
Borrowing
Problem: too much borrowing.
Solution? Too much borrowing?
Well kinda. The government can get away with borrowing lots, especially at the moment.
Is it a good idea?
Not great, but it'll have to do.
Solution? Too much borrowing?
Well kinda. The government can get away with borrowing lots, especially at the moment.
Is it a good idea?
Not great, but it'll have to do.
Quantitive Easing
"The more money they create, the more the Bank of England's policy makers must wish they had better things to spend it on than government debt"
I was thinking about this the other day, as you do.
I was wondering what would happen if the bank put the same amount of money into the bank accounts of British citizens rather than into the high-up financial markets. The financiers wouldn't make so much money, but the money would make it to the front line where it's needed. Not all of it would be spent, but the money that wasn't could be stuck in the bank and it would still help those most in need.
Having experienced unemployment (i'm still on the dole) i would much prefer the money was put into the pockets of those people whose jobs are ended or hanging by a thread rather than being handled by the rich and powerful.
It may be radical, but it may be a good idea.
I was thinking about this the other day, as you do.
I was wondering what would happen if the bank put the same amount of money into the bank accounts of British citizens rather than into the high-up financial markets. The financiers wouldn't make so much money, but the money would make it to the front line where it's needed. Not all of it would be spent, but the money that wasn't could be stuck in the bank and it would still help those most in need.
Having experienced unemployment (i'm still on the dole) i would much prefer the money was put into the pockets of those people whose jobs are ended or hanging by a thread rather than being handled by the rich and powerful.
It may be radical, but it may be a good idea.
Monday, 2 November 2009
When in doubt, tax stuff
Compass want a windfall tax on banks.
Sure, let's have some of that. They have money, let's take it off them! wooo
Sure, let's have some of that. They have money, let's take it off them! wooo
Sunday, 1 November 2009
Alistair Darling to unveil plans to break up Lloyds and TSB
Darling is following up his pledge to break up the major state-funded banks.
"Alistair Darling is expected to confirm over the next few days that assets belonging to the two banks, which are majority-owned by the taxpayer, will be sold off to boost competition. Ministers say the move will fulfil Gordon Brown's promise to taxpayers that they would get "payback" for the multibillion-pound bailout of the sector last year."
Good work. The issue of 'too big to fail' is very serious, as shown by the state of the finances at the moment.
"Alistair Darling is expected to confirm over the next few days that assets belonging to the two banks, which are majority-owned by the taxpayer, will be sold off to boost competition. Ministers say the move will fulfil Gordon Brown's promise to taxpayers that they would get "payback" for the multibillion-pound bailout of the sector last year."
Good work. The issue of 'too big to fail' is very serious, as shown by the state of the finances at the moment.
Tuesday, 27 October 2009
Bank windfall tax
Yeah!! Windfall tax!! TAX!!!!
" Two-thirds in favour of bank windfall tax
A new ComRes poll for the Independent shows overwhelming public support for a windfall tax on the banks. As the chart below shows 66 per cent agreed that a “windfall tax should be imposed on the banks,” 25 per cent disagreed, and 9 per cent do not know.
“66% of all voters, including 68% of Conservatives and 76% of Labour supporters agreed that a Windfall Tax should be imposed on banks. Only 25% disagreed.”"
YEAH
" Two-thirds in favour of bank windfall tax
A new ComRes poll for the Independent shows overwhelming public support for a windfall tax on the banks. As the chart below shows 66 per cent agreed that a “windfall tax should be imposed on the banks,” 25 per cent disagreed, and 9 per cent do not know.
“66% of all voters, including 68% of Conservatives and 76% of Labour supporters agreed that a Windfall Tax should be imposed on banks. Only 25% disagreed.”"
YEAH
FT on George Osborne
I did a little bit on Georgie Boy yesterday, but now the FT comes out against him:
"if he wants to be a successful chancellor, Mr Osborne will need to rein in his well-honed instincts on positioning and headline-grabbing in favour of greater focus on policy"
"if weak lending is the problem, Mr Osborne could simply have specified how much new lending he expected from the banks in return for public support. There was no need to appease the bonus-bashing mob and inflame anti-City sentiment further. Mr Osborne would have won fewer headlines for such an announcement, but he would have been advocating the sort of policy that separates a chancellor-in-waiting from a shadow chancellor."
I almost get the feeling the FT might come out in favour of Labour by the election. Will Osborne REALLY turn things round for himself in their eyes? I doubt it.
He's a politician, strategist and spin doctor. That in itself does not qualify him to handle the purse strings
"if he wants to be a successful chancellor, Mr Osborne will need to rein in his well-honed instincts on positioning and headline-grabbing in favour of greater focus on policy"
"if weak lending is the problem, Mr Osborne could simply have specified how much new lending he expected from the banks in return for public support. There was no need to appease the bonus-bashing mob and inflame anti-City sentiment further. Mr Osborne would have won fewer headlines for such an announcement, but he would have been advocating the sort of policy that separates a chancellor-in-waiting from a shadow chancellor."
I almost get the feeling the FT might come out in favour of Labour by the election. Will Osborne REALLY turn things round for himself in their eyes? I doubt it.
He's a politician, strategist and spin doctor. That in itself does not qualify him to handle the purse strings
Monday, 26 October 2009
George Osborne on bank bonuses
"High Street banks should be banned from paying bonuses above about £2,000 in cash, the Conservatives have said."
So Georgie Boy jumps on the bandwagon, i assume part of the Tories' 'party of the poor' comedy routine.
But he seems to have learnt something from Gordy: the devil in the detail.
"stop retail banks - in other words the banks that lend directly to businesses and families - paying out profits in significant cash bonuses"
Interestingly, the retail banks aren't the ones paying the huge bonuses, nor, really, the ones who brought about the problems in the first place.
"It would only apply to High Street retail banks, which means investment banks would be exempt."
I'm glad he's finally coming round to the idea of getting money out there: ""We need to take emergency steps to support bank lending and move the economy forward this winter. The banks have to understand that we are all in this together.""
but he seems to think that all banks' money goes to the same place (he may be right) and therefore it's that easy to move money around the banking system and get lending out there. Though that is not necessarily the best way to go and can lead to long-term unsustainable debt (sounds familiar)
So that's me confused. Tough choices, wish it was me making them
Vince Cable shows it's easier to be critical than correct and agrees with me:
""They have not given full backing to [Bank of England governor] Mervyn King's proposals on splitting up the banks and these bonus proposals are short-term, stop-gap solutions designed to stem public anger but which fail to get to the heart of the problem." "
So Georgie Boy jumps on the bandwagon, i assume part of the Tories' 'party of the poor' comedy routine.
But he seems to have learnt something from Gordy: the devil in the detail.
"stop retail banks - in other words the banks that lend directly to businesses and families - paying out profits in significant cash bonuses"
Interestingly, the retail banks aren't the ones paying the huge bonuses, nor, really, the ones who brought about the problems in the first place.
"It would only apply to High Street retail banks, which means investment banks would be exempt."
I'm glad he's finally coming round to the idea of getting money out there: ""We need to take emergency steps to support bank lending and move the economy forward this winter. The banks have to understand that we are all in this together.""
but he seems to think that all banks' money goes to the same place (he may be right) and therefore it's that easy to move money around the banking system and get lending out there. Though that is not necessarily the best way to go and can lead to long-term unsustainable debt (sounds familiar)
So that's me confused. Tough choices, wish it was me making them
Vince Cable shows it's easier to be critical than correct and agrees with me:
""They have not given full backing to [Bank of England governor] Mervyn King's proposals on splitting up the banks and these bonus proposals are short-term, stop-gap solutions designed to stem public anger but which fail to get to the heart of the problem." "
Wednesday, 21 October 2009
Merv King on the banks
I'm with Merv on breaking up the banks.
I agree with him that they should not be too big to fail, but i thought his statement that such institutions should not be in the private sector was very interesting. Not the sort of thing he'd be expected to say i'd think.
I take issue with George Osborne jumping on the bandwagon though:
"George Osborne, the shadow chancellor, said: "Mervyn King's speech is powerful and persuasive. His analysis of how the government's system for regulating banks failed and how there has been 'little real reform' since is one I share.""
Osborne is effectively saying 'told you so' even though King does (and consistantly has) disagreed with him. The important thing is the solution, the way forwards, not just criticising.
"Excluding the cost of bank bailouts, net debt was considerably lower at £682.8bn, or 49% of GDP, not high by international standards but well above the government's self-imposed limit of 40%."
Not too bad, the 40% would be nice but is largely meaningless, and not as bad as most (if not all) alternatives.
"The governor is aware, though, that cutting public spending and raising taxes too early could threaten the nascent economic recovery that is likely to be confirmed by growth data for the third quarter due to be released on Friday."
Agreed.
"The Conservatives seized on the borrowing figures, saying they showed the extent of the debt crisis under the present government.
"A responsible government would act immediately to start reducing public spending and bring Britain's deficit down," said Philip Hammond, shadow chief secretary to the Treasury.
"Failure to act will risk interest rate rises, causing the recovery to falter and putting jobs at risk.""
Not so. Far from it. The point is to invest what is needed, where and when it is needed. Just tackling the deficit will open a large trap door under our economy. I personally don't think the Tories would do what they're talking about, they are just grandstanding from the sidelines, which is what being in opposition allows you to do.
I agree with him that they should not be too big to fail, but i thought his statement that such institutions should not be in the private sector was very interesting. Not the sort of thing he'd be expected to say i'd think.
I take issue with George Osborne jumping on the bandwagon though:
"George Osborne, the shadow chancellor, said: "Mervyn King's speech is powerful and persuasive. His analysis of how the government's system for regulating banks failed and how there has been 'little real reform' since is one I share.""
Osborne is effectively saying 'told you so' even though King does (and consistantly has) disagreed with him. The important thing is the solution, the way forwards, not just criticising.
"Excluding the cost of bank bailouts, net debt was considerably lower at £682.8bn, or 49% of GDP, not high by international standards but well above the government's self-imposed limit of 40%."
Not too bad, the 40% would be nice but is largely meaningless, and not as bad as most (if not all) alternatives.
"The governor is aware, though, that cutting public spending and raising taxes too early could threaten the nascent economic recovery that is likely to be confirmed by growth data for the third quarter due to be released on Friday."
Agreed.
"The Conservatives seized on the borrowing figures, saying they showed the extent of the debt crisis under the present government.
"A responsible government would act immediately to start reducing public spending and bring Britain's deficit down," said Philip Hammond, shadow chief secretary to the Treasury.
"Failure to act will risk interest rate rises, causing the recovery to falter and putting jobs at risk.""
Not so. Far from it. The point is to invest what is needed, where and when it is needed. Just tackling the deficit will open a large trap door under our economy. I personally don't think the Tories would do what they're talking about, they are just grandstanding from the sidelines, which is what being in opposition allows you to do.
On banking
More to come on this later, but a little bit from PMQs on Merv King's comments:
"12.14pm: Brown says the reforms being introduced wil introduce more competition into banking. Northern Rock was a retail bank and it collapsed. Lehman Brothers was an investment bank and it collapsed. So it is not the case that the problems were caused by banks trying to perform both functions. (Good point.)"
"12.14pm: Brown says the reforms being introduced wil introduce more competition into banking. Northern Rock was a retail bank and it collapsed. Lehman Brothers was an investment bank and it collapsed. So it is not the case that the problems were caused by banks trying to perform both functions. (Good point.)"
Wednesday, 14 October 2009
JP Morgan's profits
In case anyone wondered who was in control of this world we all live in,
"JP Morgan smashes expectations with $3.6bn profit...in the last quarter"
"JP Morgan received $25bn from the US Treasury in October 2008 as part of America's bailout of the banking sector, and was one of the most eager to repay the money as conditions improved this year."
I'd imagine the that taxpayers would like some of their money back please, thank you.
SO, banks run into difficulty, get HUGE government bailouts, then make HUGE profits. Who suffers? The poor, the public sector, those on benefits.
Where is the news? MPs expenses. I think people are missing the point
"JP Morgan smashes expectations with $3.6bn profit...in the last quarter"
"JP Morgan received $25bn from the US Treasury in October 2008 as part of America's bailout of the banking sector, and was one of the most eager to repay the money as conditions improved this year."
I'd imagine the that taxpayers would like some of their money back please, thank you.
SO, banks run into difficulty, get HUGE government bailouts, then make HUGE profits. Who suffers? The poor, the public sector, those on benefits.
Where is the news? MPs expenses. I think people are missing the point
Tuesday, 1 September 2009
Brown calls for bank bonus reform
So Gordy has now spoken about this, finally. My one criticism would be that it’s a bit late.
“He said that the culture of bank bonuses should be geared towards long-term success and that banks should be able to "claw back" bonuses if the bank later performed poorly.”
Fair enough for me, that rewards should be linked more closely to performance as too often it seems that the two are not linked, at the higher levels at least.
“He called for international co-ordination on the issue, but said he was not in favour of French proposals for a mandatory cap on banker pay.”
International co-ordination is vital, and a failure to do so would undermine the whole exercise. As usual, all eyes will be on America.
I’m not mad keen on the mandatory cap on bankers pay, for a start it’s not right to single out one group over any others. Secondly, how would the cap be decided and enforced?
“While he said the City had "overheated", he declined to support the words of the head of UK watchdog the Financial Services Authority (FSA), Lord Turner, who said in an interview published last week that the financial services sector had "grown beyond a socially reasonable size". Mr Brown said it was important to protect London's status as a world financial hub.”
Shows, I think, that Gordy is still in thrall to the City and is more scared of it than it is of him, which for a Labour prime minister strikes me as the wrong way round.
It’s good to know that at least some progress is being made on this and the sort of externalities which proved problematic are at least being addressed in thought, though perhaps not yet by deed.
“In August, the FSA unveiled a new code that stated bonuses should not be guaranteed for more than a year.
Senior employees should have their bonuses spread over three years under the code, which is due to take effect from January 2010.
The new rules, to link pay more closely with the long-term profitability of banks, are designed to address concerns that big bonuses led to excessive risk-taking at banks which contributed to the financial crisis.”
Sounds very promising, unfortunately it seems that legislation is required to make a more sustainable financial sector, so let’s hope that it runs well and the considerable ability in that sector is not just geared towards getting round the laws.
interesting that the FT editorial is called "Too much of a very good thing". Post on that in due course
“He said that the culture of bank bonuses should be geared towards long-term success and that banks should be able to "claw back" bonuses if the bank later performed poorly.”
Fair enough for me, that rewards should be linked more closely to performance as too often it seems that the two are not linked, at the higher levels at least.
“He called for international co-ordination on the issue, but said he was not in favour of French proposals for a mandatory cap on banker pay.”
International co-ordination is vital, and a failure to do so would undermine the whole exercise. As usual, all eyes will be on America.
I’m not mad keen on the mandatory cap on bankers pay, for a start it’s not right to single out one group over any others. Secondly, how would the cap be decided and enforced?
“While he said the City had "overheated", he declined to support the words of the head of UK watchdog the Financial Services Authority (FSA), Lord Turner, who said in an interview published last week that the financial services sector had "grown beyond a socially reasonable size". Mr Brown said it was important to protect London's status as a world financial hub.”
Shows, I think, that Gordy is still in thrall to the City and is more scared of it than it is of him, which for a Labour prime minister strikes me as the wrong way round.
It’s good to know that at least some progress is being made on this and the sort of externalities which proved problematic are at least being addressed in thought, though perhaps not yet by deed.
“In August, the FSA unveiled a new code that stated bonuses should not be guaranteed for more than a year.
Senior employees should have their bonuses spread over three years under the code, which is due to take effect from January 2010.
The new rules, to link pay more closely with the long-term profitability of banks, are designed to address concerns that big bonuses led to excessive risk-taking at banks which contributed to the financial crisis.”
Sounds very promising, unfortunately it seems that legislation is required to make a more sustainable financial sector, so let’s hope that it runs well and the considerable ability in that sector is not just geared towards getting round the laws.
interesting that the FT editorial is called "Too much of a very good thing". Post on that in due course
Friday, 3 July 2009
Banks: have they learnt nothing?
Walked past a copy of City AM today, the headline told me that "City bankers cheer as bonuses return".
"the City is set for a return to the champagne-soaked days of old after it emerged yesterday that bankers at Goldman Sachs and Morgan Stanley are on track for bumper full-year bonuses to rival those from the pre-credit crunch (sic) compensation heyday". (City AM, Friday 3 July 2009).
Great news everyone, they have learnt nothing. The people who set the pay have learnt nothing. Or have they? Have they in fact learnt that they can get away with the huge bonuses and nothing and no-one has any power to stop them?
Next we'll hear that sub-prime mortages are the new way to a quick fortune and consumer borrowing can finance a self-sustaining boom that will last for ever. Doesn't seem to be covered in most of the papers.
"the City is set for a return to the champagne-soaked days of old after it emerged yesterday that bankers at Goldman Sachs and Morgan Stanley are on track for bumper full-year bonuses to rival those from the pre-credit crunch (sic) compensation heyday". (City AM, Friday 3 July 2009).
Great news everyone, they have learnt nothing. The people who set the pay have learnt nothing. Or have they? Have they in fact learnt that they can get away with the huge bonuses and nothing and no-one has any power to stop them?
Next we'll hear that sub-prime mortages are the new way to a quick fortune and consumer borrowing can finance a self-sustaining boom that will last for ever. Doesn't seem to be covered in most of the papers.
Subscribe to:
Posts (Atom)
