Tag Archives: Banks

Carney declares Mission Accomplished on banks

Last month Mark Carney, head of the Financial Stability Board as well as governor of the Bank of England, told us that the problem of banks being ‘too big to fail’ had been solved.   If only.   He wants systematically important banks such as HSBC to hold more equity and debt, enough to absorb losses when they come under pressure.   He is pinning his hopes on the new concept of ‘total loss-absorbing capacity’ (TLAC),  which he reckons should be worth between a fifth and a quarter of risk-weighted assets, as sufficient to prevent a taxpayer bail-out at the next financial crisis.   He described this as a “watershed in ending too big to fail”.   However this is declaring Mission Accomplished a bit too soon.   There are grave doubts whether his ‘solution’ is anywhere near adequate.
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Strip the private banks of the power of money creation

The House of Commons held a very important debate this last week on the creation of money, a process which the Big 4 banks have monopolised and thus privatised the money supply.   The abuse of this power over the last 3 decades has been enormous, and I used this debate to propose an entirely different system which would remove this power from the present banking cartel in order to ensure that what was maximised was the national interest, not the banks’ own selfish interests.   I said this:

“On lending to businesses, the experience that we have had in the past half-decade has been very unsatisfactory. Under a Sovereign Monetary System, however, the central bank would be empowered to create money for the express purpose of that funding role. The money would be lent to banks with the requirement that the funds were used for productive purposes, whereas lending for speculative purposes—for example, to purchase pre-existing assets, either financial or property—would not be allowed. The central bank could also create and lend funds to other intermediaries—the hon. Member for Wycombe referred to this—such as regional or publicly owned business banks, which would ensure that a floor could be placed under the level of lending to businesses, which would be a great relief to British business, guaranteeing support for the real economy.


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Labour needs to get rough with the Tories & take them on

The difference between the two main parties has often been remarked upon.   The Tories’ Achilles heel is their Bullingdon Club overweening self-confidence and insufferable arrogance, and Labour’s is its self-effacing humility and timidity.   The two party conferences just past illustrate this clearly.   The bluster and downright lying by both Osborne and Cameron takes one’s breath away.   Osborne boasts of the ‘fastest growing, job creating and deficit cutting recovery’ in modern times.   All untrue: growth in the US, and for that matter in Ireland too, is much faster, the jobs created are so miserly that government tax receipts are actually now falling, and the deficit is actually now growing.   Cameron has the gall to project a £7bn giveaway backed by no new sources of funding which, if proposed by Labour, Osborne would pounce on as irresponsible profligacy and which Cameron himself denounced in 2008 with the words “You cannot talk about tax reduction unless you can show how it is paid for, the public are not stupid”.   Obviously he now thinks they are.
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The poor in Britain are among worst-off in Western Europe

Osborne’s austerity is not only unnecessary, gratuitously cruel in punishing the poor for the sins of ultra-rich bankers, but it has now emerged has hit the poorest in Britain far harder than in any comparable State in the EU.   What has now been revealed from OECD data is that poor people in the UK are now suffering enforced deprivation  not only harsher than in Germany, France, Netherlands, Sweden, Norway, Finland and Denmark but, shockingly, on a par with poverty in the former eastern bloc.   The truth is life is much worse here than it is for the poorest fifth in virtually every other north-western European country.   These facts put into perspective not only the experience in Britain of Osborne’s austerity, but the unique imposition of the bedroom tax, the near-million persons who have been deprived of all benefits in the last year as a result of DWP sanctioning, and the further million persons who have been shamefully taken off incapacity benefit and put on JSA at £71 a week on the utterly spurious pretence that they are able to work.
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How to tackle UKIP

UKIP is the Teflon party in these European elections.   However disorganised and anarchic they are, with no policies except a visceral hatred of the EU and immigrants, however vile the racist and sexist views of so many of its representatives, a significant section of the British electorate are quite prepared to ignore all that because they are not voting for UKIP but rather against the political Establishment which they perceive as having utterly failed them.   Indeed the more the three main political parties gang up together in attacking UKIP, the more Farage revels in it as confirming his status as the anti-Establishment candidate.   The way to destroy UKIP is for a political party to respond effectively and positively to the prevailing political mood sweeping Britain which, more than anything else, is anti-austerity.   That is only reinforced by the fact that the elections in a week’s time highlight the perception of the EU under Merkel’s hegemony as burying the whole European region in austerity.
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Fundamental flaw in post-crash business model is bankers’ complacency & hostility to even slightest regulation

Two articles of faith in the banking class is that regulation always undermines growth and that financial crises are inevitable.   Both these claims are wrong and cannot be supported by the evidence of the last 70 years.   On the first, it was the absence of regulation which precipitated the epic 2008-9 breakdown.   Starting from 1971 when Nixon scrapped the US dollar’s link to gold, deregulation rapidly gathered pace with the removal of currency and interest rate controls.   Banking crises, absent in the previous era, quickly returned with the collapse of the Herstatt bank in Germany in 1974, the demise of the Mafia-linked Franklin National bank in the US, and the fringe banking crisis in the UK in the mid-1970s.   By the 1980s all the dodgy denizens in the financial zoo had been uncaged and roamed free into any financial niche that took their fancy.   Various financial catastrophes followed, peaking in the enormous credit crunch and global collapse in 2008-9.   So why are the government, let alone the banks, so anxious to resurrect a system that is a sure-fire loser?
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Tory lies: why no Labour rebuttal?

One of the few good things that Blair did as party leader was to set up a prompt, robust and effective rebuttal machine to counter lying Tory propaganda.   It worked.   Within hours of false, misleading or selective Tory claims being aired, a strong Labour rebuttal was in place in the media.    It is worrying that such a mechanism seems to have been dropped since the last few days and weeks have seen a veritable cascade of Tory folderol which not only demands instant repudiation but offers the opportunity for a stinging counter-blast, ending along the lines of “I’ll stop telling the truth about you if you stop telling lies about me”.   But alas it hasn’t happened.   The Tories are being allowed to get away with outrage after outrage.

The defenestration of Miller has taken place without scarcely a word from Labour, even when the Standards Committee made the unconscionable decision to reduce her payback by 90%, when you might expect Labour to be demanding her head from the start.   Cameron has the gall to claim the NHS has been performing better than ever before when in fact he has nearly brought it to breakdown because of remorselessly rising pressures and mounting debts and when patients now have to wait up to 4 weeks to see their doctor and then far, far more than the 18 week limit achieved by Labour to see a hospital specialist for an operation.   But the opportunity for a powerful rebuttal was missed.   Osborne makes the risible claim that he’s aiming for full employment when he himself is responsible for holding the level of unemployment at the highest level for 30 years – a golden opportunity to throw back in his face that not only has he kept joblessness stuck at 2.4 million or more for 4 years, yet at the same time he has hardly reduced the deficit at all (it’s still stuck at £111bn).
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Why are poor sanctioned for tiny infringements while bank tax avoiders steal millions with impunity?

The latest figures collected by Oxfam indicate nearly a million persons have been ‘sanctioned’ (i.e. deprived of all benefits for a month for the first infringement, often trivial, for 3 months for the second, and 3 years for the third) in the last 15 months and that the numbers using foodbanks are now well over half a million.   Yet bankers are still leading the life of Riley at the public expense without any being brought to book.   Barclays under the so-called Jenkins ‘clean-up’ act has just stunned even the City by increasing bonuses by by 10% despite profits collapsing by 32%.   All the Big 4 – HSBC, Barclays, RBS and Lloyds – have shown contempt for restraint by circumventing the new EU rule limiting bonuses to 200% of salary by paying a totally artificial ‘allowance’ far exceeding this limit.   HSBC have thus paid their chief executive an ‘allowance’ worth £32,000 a week on top of his £1.6m salary.   Barclays is the bank which took the lead in rigging Libor and HSBC was arraigned for money-laundering on behalf of drug cartels, terrorists and pariah states.   Despite this background of big-time criminal activity amid soaraway boardroom greed, not one of the miscreants at the top of these organisations has been collared.
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The ultra-rich hold the nation to ransom again

Greed is good, or at least that’s what the bankers and CEOs of the biggest companies think.   What is surprising is not their avaricious self-interest and total indifference to everyone else, but the blatancy with which they flaunt it.   As their leader so movingly put it, they’re all in it together – the CEOs of Ocado and Kingfisher, those Labour sell-outs Lord (Digby) Jones and Lord Myners (both worth a bob or two in the City), and inevitably Boris Johnson.   The only omission was Blair, but no doubt it would have been too much of an embarrassment even for him now that he’s reputed to be worth £40 million.   The cacophony of financial selfie that Balls’ modest proposal has elicited is extremely revealing.   It shows what a tin ear they have to the tightening squeeze being imposed on 90% of the population, where 60% of voters sampled in a poll approved of Labour’s move, even including Conservatives.   It shows what arrogance they have about their own self-importance, as though a small increase in tax for those on more than £3,000 a week is going to ‘threaten the recovery and cost jobs’.   It shows their utter coldness towards any idea of fairness – that in austerity a decade long the richest 1% should contribute a tiny amount to assist those who are struggling or jobless or destitute.
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