Will patient bankers prevail?

Robert,

1. See the text of the front page of the report you cite....

"
Patience and Finance
Andrew G Haldane*
Executive Director
Financial Stability
Oxford China Business Forum, Beijing
9 September 2010
"

Note the date - apparently the speech has not yet been given?????

Also Andrew G Haldane states he is "Executive Director, Financial Stability, Oxford China Business Forum, Beijing"

Please can you clarify what this is all about. Quite clearly Andrew G Haldane does claim no association with the Bank of England - Is this the same Andrew G Haldane, or a Chinese copy!!!!???

2. However you go on to mention the HSBC threat/promise to leave the country. I am not sure that you correctly analyse the cost and benefits to the UK when(if) they leave. Is the threat/promise to leave a sign that the banks have sucked the UK dry and want to move onto a new victim? This is after all the usual reason for relocating an international wealth extraction business!

Another aspect of huge salaries that seems unwise to me is as follows:

If someone is raking in several million pounds per annum, it will only take a year or two until they have enough money in the bank that they don't need their job any more. Hence, they are not going to care if the company that they work for goes "belly-up". Is that wise? The rest of us DO need a job to get a steady income so the survival of the company is important.

Of course, some people may not be content with having, say, 10 million in the bank and always want more (and, hence, do care a bit more about the future of their company) but to be discontent with 10 million, you would have to be pretty greedy -then again, that would fit too.

Another banker bashing, socialist (communist) blog? Very popular these days, but of course utterly wrong. Bankers are employed by a private company so why should they disclose their salary? And if they have to, why should all other employees in other private companies be spared? This government (just as the previous one) is trying to get rid of financial sector - practically the only competitive sector in the UK. Complete non-sense.
Everyone these days talks about bankers causing financial crisis, when in fact they were only 1/3 of the problem. The other two parts are either sparsely reported on(government) or not reported on at all, even presented as victims - people taking mortgages and loans they could not possibly repay. When will we hear about these two, especially about the people taking excessive loans and not present them as victims but as causes, that they really are ???

"Either they must demonstrate to the rest of us that paying a few million squids each to their star performers is a sensible long-term way of generating incremental wealth for their institutions and for the economy"

... which of course they will be unable to do. Because it clearly isn't.

3. At 09:42am on 06 Sep 2010, vlasko :

Another 'equal rights for bankers' clown
When will you undestand that we will no longer tolerate these parasites or their apologists? Get informed.

"Either they must demonstrate to the rest of us that paying a few million squids each to their star performers is a sensible long-term way..."

No.

They must demonstrate that to their shareholders. Now admittedly in RBS Group and LLoyds that includes the govt (and therefore indirectly us) but in HSBC and Barclays case it does not.

As for John-from-Hendon
"However you go on to mention the HSBC threat/promise to leave the country. I am not sure that you correctly analyse the cost and benefits to the UK when(if) they leave. Is the threat/promise to leave a sign that the banks have sucked the UK dry and want to move onto a new victim? This is after all the usual reason for relocating an international wealth extraction business!"

What a silly comment not backed by any facts or analysis based on prejudice only.

Lets take a real example of business moving - insurance companies to Bermuda. They continue to operate in the UK but the movement was because the UK tax system meant it was wholly uneconomic to operate their HQ from here. Similarly a number of businesses have moved HQ from here to Ireland for simple reason corporation tax is 10% there and 28% (coming down to 27%) here.

Of course I could go on about the brain drain in the 1970s (income tax 83-98% depending on unearned supplement) on people leaving the country. In the vast majority of cases people and companies leave because of company action making it uncompetitive to continue to trade in UK. This is nothing to do with "sucking the UK dry". Trade is international and tax and govt action is a cost

3. At 09:42am on 06 Sep 2010, vlasko wrote:
Another banker bashing, socialist (communist) blog? Very popular these days, but of course utterly wrong. Bankers are employed by a private company so why should they disclose their salary? And if they have to, why should all other employees in other private companies be spared? This government (just as the previous one) is trying to get rid of financial sector - practically the only competitive sector in the UK. Complete non-sense.
Everyone these days talks about bankers causing financial crisis, when in fact they were only 1/3 of the problem. The other two parts are either sparsely reported on(government) or not reported on at all, even presented as victims - people taking mortgages and loans they could not possibly repay. When will we hear about these two, especially about the people taking excessive loans and not present them as victims but as causes, that they really are ???
>>>>>>

Vlasko,

I think the main issue in the above post is the moral hazard of being 'too big to fail' - the spliting of retail from investment banking is one way of addressing this - the investment side can be allowed to fail. I think the bankers are so against this because investment banking is a rollercoaster and the retail side produces nice safe earnings (as well as capital). Personally, I think it is only safe to do so simply to protect us in the future when we have properly recovered from the crash (and I mean dealing with the financial fallout to the public finances and establishing businesses that actually add value).

From this blog, it seems to me that the people who run the banks are in denial about their responsibility for the problems we now face. I know that we derive tax income from having them based in this country and we do need jobs, but in every walk of life we have to accept responsibility where it legitimately falls. As a tax payer, I would like to see the costs of the banking system bailout recovered [and then some more]. If they want to leave, let them. The sort of behind the scenes machinations spoken of in this blog should be seen for what they are – a pressure group wanting things to go their way. Nothing wrong with that as they have an avenue to make their views formally known to the Banking Commission. What I object to is the stick they seem to be trying to wield. To me, this is immoral in view of their role over the last few years.

I know the Treasury is likely to want to sell all the banknig assets it now has, but it must keep them as a means to provide a counter to this type of action by other banks. It gives us taxpayers a viable alternative home for our business.

HSBC customers – it is in your gift to write to your manager rejecting and abhorring the views expressed. You also have the ultimate sanction of taking your business elsewhere – you decide.

The problem with this analysis is that 1. HSBC are not threatening to leav - rather that they would withdraw their investment banking activity (and HQ) and go somewhere else where, suprise, they have limited retail presence. That's why the Aussies would be thrilled to have thousands of these jobs in Sydney - or the HK Govt would be equally so; 2.Stan Chart don't have a retail presence in the UK so the argument that their activities are 'bad' for the UK eceonomy is clearly incorrect; and 3. Barclays, like HSBC , could easily move to where there is no suggestion of a bank break-up - the US for example. Given that none of these 3 banks took public money it is not for the BBC to suggest that they should demonstrate anything other than value for their investors and that they pay necessary tax - note, not whatever the Govt of the day decides capriciously to levy. There is also a complete misunderstanding about how much these banks bring into the UK by way of export earnings from their activities - Stan Chart being a case in point. Why not write something objective to explain how these banks earn their money instead of bashing them?

Why do some people freak out if a bank says it is going to pack its bags and buy a one-way ticket to far away. Manufacturing and IT have not only threatened but have in substantial numbers put their business where workers are paid in pence rather than pounds. If the banks could make a killing by a move abroad they would do so. The long term question is should government do nothing about the slow but inexorable bleeding to death of British industry and commerce. Show me the benefits of 'free' international trade to the average UK citizen?

#7. At 10:08am on 06 Sep 2010, EmKay wrote:
"- the investment side can be allowed to fail. "

Yes, it would be nice to think so, but if it takes our pension investments with it, then what? Is the government going to be the final guarantor there too. Not this one I suspect.

If you mean investment on its own account, then I probably agree.

3. At 09:42am on 06 Sep 2010, vlasko wrote:
“When will we hear about these two, especially about the people taking excessive loans and not present them as victims but as causes, that they really are ???”

That’s because they are NOT a cause but a symptom!

My dear old dad (rest his soul) used to say “Clothes on your back, food in your belly and a roof over your head. If you have those three things then you’re ready for everything else.” For me that was good advice because having long-term possession to those three things means I’ve reduced my dependency on the short-term vagaries of other people who may not have my best interest at heart.

However owning your own home is the tricky one because of how expensive they are to buy.

I also don’t think I’m unusual in wanting to own the roof over my head and, to me, it’s perfectly understandable that some people, trying to plan for long-term stability in their home life, will over extend themselves in order to get the house they think they need tro meet their familial requirements.

Not everyone can live in a one room bedsit – some of us with children (I have three) need that multi-room accommodation with ideally a bit of a garden and local amenities and, because family is very important to us, are prepared to push things to the limit to get what we need.

Certainly, as only a basic look at historic house and earnings ratios will tell you, if you can’t do it sooner then you’ll probably not be able to do it later because year on year price increases frequently far outstrips the year on year earnings increases.

This problem of chasing ever increasing property prices, as a number of other bloggers have stated, is the root cause for many of the problems in the UK of which personal debt is just one of those consequences.

The possible reason that bankers have no grasp of the real world is that the average wage for the population is around £25 000, so by my working out if you work 45 years comes to £1,125,000.
And some earn that in one year, making deals without risk and a payout if sacked?

Figures I know can be misleading as I have just proved here but then they now use threats even more and will take there bank elsewhere?
I am now even less trusting of the banks, bankers in particular and will now just use cash or barter just like the good old days.

And I will wave them off, just let me know if the go by plane or boat

Morning Robert,

A number of good points are made here, especially the sheep mentality about following the market. This has helped inflate a number of asset bubbles, which have then burst. This has happened before and will happen again. The recent crisis was no difference and policy makers need to continue to demonstrate sensible approaches to dealing with this, such as loose monetary policy (through low interest rates and QE) and tight fiscal policy.

I do worry if the banks start to move out of the UK. Many of you bloggers will welcome this, but they are short sighted and wrong. We have a world class banking industry that needs support. If we loose HSBC, we will be on a slippery slope to denigrating London as a Financial Centre. I hope we have sensible financial reform, not the idiotic changes that some are calling for.

Perhaps HSBC want to move due to the impending (or already here) revolution. Lindasy_from_Hendon remarked that we should all be building yurts and he/she was somewhat prophetic as the weekend newspaper carried an article entitled 'Don't Riot; build a yurt'. I suppose we should all be thankful that your regular bloggers have provided such forewarning of the revolution. The references to permaculture, organic communes and peak oil were interesting, but just showed that whilst some small group of people may try and change their own ways of life (good luck to them), the vast majority of the country are more interested in X factor.

The truth is, there is no revolution. We have a slow recovery and this may not take hold for 2 or 3 years. During which time we will have many false dawns predicting double dip recession and further financial trauma, but this won't happen. Luckily we have a fantastic BoE Governor who knows not to over react to the short termism that as your blog mentions, has caused so much pain.

From Stephanie Flanders' blog:

44. At 01:25am on 05 Sep 2010, zfvr wrote:
Debt, debt, debt. Debt is bad, mmkay? Whole world is drowning in debt. What is debt, exactly? Who is lending us all this money? Why not take few minutes to educate ourselves on these fundamental issues?

The Secret of Oz
https://www.youtube.com/watch?v=D22TlYA8F2E

---------------------------------------------------------

An excellent video well worth watching.

Sam_From_Hendon

you're missing the point of Robert's blog.

Which was that the big banks (in the shape of HSBC in this instance) are already starting bullying tactics over the proposed moves to greater transparency in bankers pay, before there's even something concrete to be concerned about.

And that fact neatly encapsulates the reasons why so many outside the banking bubble regard bankers with disdain.

#14. Sam_From_Hendon

Without doubt a wind up merchant.

Which of the following is more likely to appear on Roberts blog

A FRB [fractional reserve banking]

or

B Gottle of geer


I went down to paddypower and the odds on A were a million to one ,so being a sucker for an outside bet i placed a fiver on Robert saying FRB [THE WINNINGS WOULD GO SOMEWAY TO PAYING OFF MY MORTGAGE]

My brilliant reasoning is that Robert will have one free BBC Gottle of geer TO many and in a moment of passing [passing ] euphoriAAA he will let the cAAAt out of the bag with..


"FRB ha hahahahahahahah and hAAA"

Robert,
I think you did a similar analysis for the currency markets - what percentage of stock market trades are made to invest in a company (which is what these markets were invented for) and what percentage of trades are intra day / short term bets?
Could the FSA not just create 2 markets - one for long term investment - that is fully regulated where shares can not be sold for x amount of time after being bought/you would have to own the share that were traded etc... - this might have a better chance or flecting a companies true worth. The second market would be for casino type trades based on the values of the stock market..this could be have lighter regulation.
You could then also stipulate that any firm that is traded on the regulated market could not partake in the un-regulated market. ie banks could not bet in the casino

Robert - An interesting article, however I disagree with a number of points.

There seems to be a constant argument about the shortermism vs Long term investing. Whilst I'm a strong believer that 'it is time in the market' rather than 'timing the market' is the way to increasing returns; markets are made up of many differing opinions. If these different opinions could not participate effectively ( no matter what there effect)then the market as a whole is the poorer.


The greater the market, the more liquid it becomes. The second part I disagree with, is that liquidity is a double edge sword. I cant believe that any argument is forwarded by reducing liquidity which is a sign of a good health market. Liquidity reduces the cost of investing, which for the longterm investor is of the greatest concern.

The tax system has been messed around with over the last decade or so as to penalise longtermism. Removal of indexation, introducing taper relief, removing taper relief, lower the CGT rate, raising it, taxing long term pensions ( removing the tax credit on divis). It is no wonder now that up to 40% of the trades on the ft - SE are buy and sells where the holding period of the asset is less than 1/1000 th of a second!!!

15. At 11:15am on 06 Sep 2010, healthytoes
Watched it yesterday. It blew me away.

It argues that the money supply is essentially the other side of the public debt and there is no good reason for the Govt to borrow and have taxpayers pay interest on the borrowing.

All it has to do to is create the money supply, spend as it wishes as long as it controls the quantity in circulation.

It would of course have to take away the ability of banks to create money i.e. FRAC and suggests that banks should not be allowed to lend more than they have in actual deposits.

Unfortunately any senior politician who has introduced it or got close to introducing it on a national scale in the past appears to have been asassinated

I have always dealt with intimidation by fronting it up.

It is essential that retail banking is split off from the casinos and the taxpayer guarantee only applied to the retail banking that the taxpayer requires.

This is the banking reform I wish to see.

It removes moral hazard from the finance industry which they should welcome.

It also removes the taxpayer subsidy which the banking industry still says it requires even though they consider themselves exponents of the free market when it comes to their remuneration.

If the banking community then dislike this proposal and disappear elsewhere then they will be proven as people of little value. It is their choice and their choice alone.

I would however warn my many relatives in Australia who are both engineers and farmers that if a megabank settles there then they and their children will have a hopeless future guaranteed.

After a while it would be better if they came over to dear Old Blighty as by then we will have burgeoning agricultural and industrial sectors developing having been freed from the straight-jacket of a national economy geared to suit the banks and only the banks.

The issue of banking reform is fundamental to the future of this country. As in 1940, we must not allow ourselves to be bullied.

The market performance that justifies banksters pay is a fiction created by paid AAAcountants willful missinterpretation of the regurgulatory system .


Once a year, just before sunrise leads to vAAApourAyes the banksters get together with their AAAccountants and conclude we want £ xxxxxbillion.... so give us the facts and remember everything must be true ...except the facts .


haha!


This wAy of the world would not be possible if mankind were not 96% bAnAnA and the fact that their political represensitives couldn't dissearn between a peeled bAnAnA and a pound of flesh in their back pockets

If Robert had the choice between






A Gottle of geer

B FRB [fractional reserve banking]


Which would it be?

> bankers - such as Stuart Gulliver of HSBC - have been muttering that they
> and their institutions may have to relocate elsewhere

We can't base any part of our economy on unreliable businesses and people. To work in Britain, you have to have believe in our country and back it through thick and thin.

Stuart Gulliver doesn't match our expectations, and it is right for him to go now. Let's shut the door on toxic industries.

#21. At 11:53am on 06 Sep 2010, Alesha Soba wrote:

-----------

I haven't seen the video yet, but what you wrote sounds like Modern Monetary Theory.

Suggest you read 'Seven Deadly innocent frauds by Warren Mosler for more info Its downloadable for free at
https://www.warrenmosler.com/book
The introduction by Galbraith is worth it by itself

Another place to look is 'BillyBlog' - comes up on google
THe archive is at https://bilbo.economicoutlook.net/blog/?page_id=1667
scroll down to debriefing 101 and start with the Deficits and Fiscal Sustainability items

Hope they help.

#6. Justin150 wrote:

"(ambivalent about HSBC's threat)...comment not backed by any facts or analysis based on prejudice only"

OK, let us look at banking and resident countries. Whilst you are right that banks (and I include all financial service companies) will move to the most beneficial tax regime you also need to looks at the ability and potential willingness of the resident to bail out the bank.

HSBC is obviously scared to have made the remake about leaving. What are they actually scared of? Might is be the the UK no longer has the money or willingness to bail it out should its activities go the way of RBS? Further for it to have this 'fear' on the basis of no smoke without fire might the accounts of HSBC in fact contain substantially more risk that they 'have' to report? Or is it that they just don't know, but are frightened?

Why did HSBC decide to break ranks with Barclays? There will be a reason and it will be financial and it is highly improbable that it is just the one given?

The fact is that the it is highly probable that the present government would not be willing to bail out the remaining mega banks, as the previous one did. If they can't find the money to bail out the school building program the probability is that the banks will be let high and dry and allowed to go bust if they found themselves in financial problems.

From another direction: Is HSBC actually scared of being broken up inside the UK? - no not really is my guess. What they are scared of is that the UK would seek to break up their global business as their head office is here. Banks avoid paying corporation tax on a gigantic scale anyway and I don;'t see that that would change so what is HSBC's problem?

I am left to return to my first point above - that there are things in their balance sheet that may not turn out as rosy as they first thought and this is/should be far more worrying for all of us as the present government is far less likely to bail them out that the previous one (if one goes by the rhetoric!)

There is no legislation planned so far as I am aware so to 'strike' early must in fact be about something else! Perhaps they know/fear that the secured loans to the private sector on their balance sheet are insufficiently provided for in the short/medium term under the influence of the present government cuts, for example? - There must be something we don't know about for HSBC to break ranks in the way that it has! Why hasn't Barclays joined in?

21. At 11:53am on 06 Sep 2010, Alesha Soba wrote:
15. At 11:15am on 06 Sep 2010, healthytoes
Watched it yesterday. It blew me away.

It argues that the money supply is essentially the other side of the public debt and there is no good reason for the Govt to borrow and have taxpayers pay interest on the borrowing.

All it has to do to is create the money supply, spend as it wishes as long as it controls the quantity in circulation.

...................
Not seen it but sounds very much like this https://www.bankofenglandact.co.uk/
Having a debt based monetary supply is unsustainable, as we are discovering, and must be removed, as it requires the money supply to expand perpetually and exponentially which ultimately leads to its collapse. The banks may not like the idea of monetary reform but the change will come eventually whether or not they like it because the current system has an achillese heal. The idea of reform is nothing new and was raised during the great recession;
"Any intelligent novice, first introduced to the workings of the money system, must find the pyramiding of money on the fractional-reserve base incredible. A few of the nation’s foremost economists, led by Henry C Simons and Irvine Fisher, were of the same mind at the depth of the depression when they urgently advocated abolishing the system. The idea was simply to require 100 % reserves for all checking account deposits, so that all true money was government money. Instituting that system would have been little more than a bookkeeping entry, but after it was done all the evils of the fractional-reserve system would disappear. The idea was called the only fundamental creative idea to come out of the depression. But the idea passed into limbo. The best economic minds were in favour of it, but the commercial bankers could be counted on to resist to the bitter end the loss of their money machine, and the people and the legislators probably did not understand what it was all about. Little was heard of the idea in later decades except occasional, and rather inaudible, reminders by a few economists. This complacency would no doubt persist until still another series of disasters came to pass with the substantial aid and comfort of the fractional-reserve system.” (The Dying of Money Jens O Parsson 1974)

The purpose of QE redistribution is to make sure that there are enough seats /deck chairs on the titanic for the polititians and banksters

After all it would be a pitty when their final finest hour comes and they are inclined at 45 degrees ready to sing AAAbide with me for the last time ,that they should be squabbling due to a shortage of AAAvailable seats.

22. At 12:00pm on 06 Sep 2010, stanilic wrote:
I have always dealt with intimidation by fronting it up.

It is essential that retail banking is split off from the casinos and the taxpayer guarantee only applied to the retail banking that the taxpayer requires.

........
In the 1930s they introduced an Act that prevented Investment Banks borrowing from commercial banks (which of course create money out of thin air). This was a major factor in the crisis of the 1930s. The Clinton administration threw that out in the 90s. The chaos that followed was inevitable. In my view though banking reform is a waste of time, only monetary reform can fix the system, by removal of fractional reserve banking system, and removal of our debt backed money supply, thereby removing the need for it to expand perpetually; its fundamental flaw https://www.bankofenglandact.co.uk/ and https://www.prosperityuk.com/prosperity/prosperity.html

3. At 09:42am on 06 Sep 2010, vlasko wrote:

"Another banker bashing, socialist (communist) blog?"

Here we go - another banking apologist trying to defend their Ponzi driven world...

"Very popular these days, but of course utterly wrong."

...as wrong as running a system doomed to fail?

"Bankers are employed by a private company so why should they disclose their salary?"

Which ones? RBS? Lloyds? - or maybe the other banks who are only still in business because those others were bailed out
If bankers don't want to disclose their salary then that's fine - but then they can't expect to keep their jobs when their little Ponzi scheme blows up!

"and if they have to, why should all other employees in other private companies be spared?"

....maybe they shouldn't - but isn't that a bit.....errr....Communist?

"This government (just as the previous one) is trying to get rid of financial sector - practically the only competitive sector in the UK. Complete non-sense."

Competitive? - maybe, productive? - certainly not. How many vehicles do you have at home which are highly tuned racing machines, but have no wheels and therefore cannot move?
This is what the financial 'industry' has become.

"Everyone these days talks about bankers causing financial crisis, when in fact they were only 1/3 of the problem. The other two parts are either sparsely reported on(government) or not reported on at all , even presented as victims - people taking mortgages and loans they could not possibly repay. When will we hear about these two, especially about the people taking excessive loans and not present them as victims but as causes, that they really are ??? "

Really? all the Capitalists seem to report on the Government (their number 1 target for blame)....and the other causes are often reported on, but you Capitalists can't make up your mind who to blame.

You see this is what desperate people sound like - blame everyone and everything except themselves. What you don't realise is that your system doesn't work
I don't know, maybe the memo never reached you, but the system of Capitalism has been doomed for years - Governments just keep it going by throwing more and more wealth at it - but it's only to put of 'total collapse' - it's not actually solving anything.

I'd like to replay this little line:

"When will we hear about these two, especially about the people taking excessive loans and not present them as victims but as causes, that they really are ??? "

...do you mean like the excessive loans the head of AIB took?

https://www.belfasttelegraph.co.uk/business/business-news/anglo-irish-bank-chiefs-quits-after-hiding-pound87m-loans-14114216.html

....or maybe the excessive loans of the private equity industry when Terra Firma took over EMI?

https://www.efinancialnews.com/story/2010-03-22/emi-buyout-insights-into-controversial-deal

...or maybe it was property 'experts' who borrowed excessively...

https://www.dailymail.co.uk/news/article-1147582/Location-Location-host-Phil-Spencers-property-firm-goes-bust.html

....maybe you refer to the public sector private companies?

https://www.guardian.co.uk/commentisfree/2009/dec/18/tube-ppp-upgrade-london-underground

...or companies directed by Ex-Tory mayoral candidates?

https://www.telegraph.co.uk/finance/2901216/Jarvis-could-go-bust-next-month.html

You really need to be more specific - I mean it's not all about the desperate poor who borrowed in order to buy a new sofa.

It seems to me the most amount of reckless borrowing was done by the same private sector Capitalists who are now complaining about the borrowing.

What a contradiction - still, that's what Capitalism is riddled with.

Sorry RP but if you are going to end what was quite a good report imo, with a pop at how much top earners who are employed by banking companies earn, maybe you should disclose how much you receive buy a public corporation to continually pander to the green eyed monster brigade.

6. At 10:06am on 06 Sep 2010, Justin150

Interesting analysis on relocation - but not quite complete me thinks....

In your example where you show companies moving abroad to be more tax efficient follows some form of free market theory - but what about the consequences of that move?

What about when the call centre can no longer handle your call because it's cheaper to move operations to outer Mongolia (where their understanding of English and insurance is not so good) - who pays for that?
...the customer - that is correct.

...and when a company realises that it can operate in a tin-pot dictatorship, emply near slave labour and pay almost no taxes (just a contribution to the despot's lifestyle) - who's paying then?

...of course you answer will be "well customers are free to move" - as they are in such a free market.

...but to make that decision they would need to know that this is going on - and how many customers of firms are fully aware of the practices world wide of that firm?

Should that be Caveat Empour? - should we all know what all companies are doing at all times?

...that would be a perfect market - and sadly free market theory doesn't stretch that far. It's a 'make do' theory which doesn't even do that.

Every free market theory falls flat on it's face when it's mixed into a world where we don't like to treat our fellow man badly. In the boom times nobody cares it fails because everyone thinks they're getting richer.

.....but now we know that was all fake - we're back to 2003 and moving fast towards 2001 - and now those questions are being belatedly asked......and of course the free market has no sensible answers.

Robert, you delude yourself with regards to what banks will do and how they operate. With regards to HSBC whilst there is clearly now a base camp of real capital in Far Eastern Sovereign wealth funds Sydney is not the place to rebase, beautiful city that it is.
London for all its demented bureaucracy will still reign supreme solely because you cant reinvent the wheel however big HSBC feel they are.
Whilst the UK seeks to preserve laissez faire all other countries see national legislation as all enforcing and wouldn't drean of letting say Citibank or Goldman Sachs relocate to anywhere outside the USA, Just as Deutche or BNP Paribas let alone Bank fof Tokyo would be forbidden to entertain the idea.
This HSBC stance is all bluster just as Buffoon Boris got lost in the value to the UK of losing bankers to Switzerland, so they are now trying to go for George Osborne and David Cameron.
It won't happen and lets face it HSBC doesn't rank in any league tables to make the slightest difference.
The real problem is that senior bankers believe they own the bank when they only work for it, and they like you have lost the perspective of who is doing what.
They could all be replaced at a quarter of the cost or less but remain because they are in an operatimg system which see's no wrong in milking its customers with no regards to underlying performance.
Some years back it didn't matter what department made money everything was pooled and only once the bottom line was drawn was it decided what bonuses to pay. Now through self centres remuneration committes and agents the game has changed and all at the expense of the shareholder and customer.
If Osborne and Cameron give in to these shallow threats then they will have shown a singular level of weakness that will make their term of office a once only event.
For the life this government and beyond the banks will never be forgiven nor will the regulators who also are grossly overpaid and singularly incompetent. It's all too cosy and no one is raising the net to stop it continuing believeing that we can't afford to lose them.
It's the docile nature of the British which allows the abuse, like lining up where others couldn't give a damn or saying sorry when there's nothing to be sorry for.
Your own recent commentary of the trillions of dollars of trade in derivitives and currency show that its all got out of hand.
The UK wins primarily because of its geographic position and the fact that everyone wants to speak english plus the infrastructure is in place which is far supoerior to anywhere else. So please cut this garbage by trying to suggest provincial markets elsewhere make the difference when they don't.
HSBC is wrong and if they choose to go they will regret it and everyone realises that. New York is the only other place to max out against the UK but until the government there becomes more international and not so insular it won't happen.
As for Barclays not needing government bailouts thats not true, the UK Government was there to underwrite their fundraising and that was the only reason the middle east put up the money when UK institutions failed to do and it must not be forgollen the middle east have divested themselves to a great degree.
So Robert please write with all the facts included, and don't assume because you have had a chat with a CEO you are getting the full story. You to date only got Northern Rock right, but that won't give you credibility in perpetuity.

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

8. At 10:16am on 06 Sep 2010, SleepyDormouse wrote:

"From this blog, it seems to me that the people who run the banks are in denial about their responsibility for the problems we now face."

It's not denial - they are caught up in their own contradictory system.

They know that if they admit liability for the collapse - then we will question their value - and as they are a non-productive industry which is merely skimming true wealth from the Economy - they cannot justify their existence - let alone their bonuses.

Clearly the desire born out of self interest to keep one's bonus is greater than the further development of mankind and it's Economic system to the average banker.

I think that shows a lot about a person, some selfish people only put their families and friends after their own self interests - well bankers have gone much further than that and put everyones welfare behind their own greed and gluttony.

Innocent they are not - greedy and selff interested - well it's a qualification of the job - remember "kill or be killed" - or "greed is good"? - well these phrases weren't born in the Pharmecutical industry - and for good reason.

One of your bloggers is giving a plug for tax havens! No wonder we had this bust. And it demonstrates how pernicious they are. The last refuge of tax avoiding scoundrels. If the international community ever gets around to protecting the worlds' taxpayers from these places then maybe the ordinary citizen won't have to bail out 'too big to be allowed to fail' banks.
Regards, etc. RWWCardiff.

9. At 10:17am on 06 Sep 2010, Peter Bench wrote:

"Why not write something objective to explain how these banks earn their money instead of bashing them?"

I agree - I mean if someone can also write a piece about "how pigs fly" and "how the Sun spins around the Earth" - then I shall be most interested.

Peter, the reason nobody has written it is because banks to do not earn money - they merely extract it from productive forces within the Economy through the restrictive issuance of accumulated Capital.

...in other words - blackmail. You want to build a house, you have to go to the bank to lend you wealth they have accumulated (through previous exploits) in order to do so - oh and you'll need to pay them back more than they lent to you (which is how they accumulate more Capital strengthening their position for next time)

Now I've been on here 2 years asking for someone to simply demonstrate how bankers generate wealth - and apart from a lot of shouting and abuse - not one banker is man enough to step forward and explain how wealth is generated from his or her own job.

I can however aptly demonstrate how this is an extraction process and not a creative one (as I have done above)

"There has also been another recent manifestation of bankers' impatience: they hoped that the new coalition government would drop the commitment of the previous government to force the publication by banks of statistics showing how many of their respective executives earn between £1m and £2.5m, how many earn between £2.5m and £5m, and how many earn more than that (in bands of £5m)."
Why would that annoy them, unless that requirement explicitly included shares and bonuses? Would it not perhaps highlight the discrepancies (if any) regarding that pay which is fed through PAYE and that which winds up going through Jersey or British Virgin Islands? Surely the banks could stick two fingers up at the government and claim commercial confidentiality anyway, as obviously they need to attract and retain "the best".
I would be interested in having the banks disclose their earnings so I could at least judge that against the outgoing chairman of Network Rail, a public utility (or is it?), which I'm not even sure is on the government's balance sheets. There may well be an inquiry into how the money was spent within it and what exactly it has done for the high hiedyins of Network Rail to earn such fantastic sums.
What about the CDC as well...? A Private Eye special investigation revealed some interesting points. ~£390,000 buyout for a company now worth, what, £20M?
When corruption seems apparent in government bodies it's understandable that the bankers would throw their toys out the pram. Ah well, when in Rome...

@29. At 12:48pm on 06 Sep 2010, Rita-R-Dius wrote:
"The purpose of QE redistribution is to make sure that there are enough seats /deck chairs on the titanic for the polititians and banksters"

I thought it was to provide lead-lined and concrete-filled lifebelts for the steerage class. The bankers and politicians have their seats in the lifeboats guaranteed. Crank up the ragtime tunes, sit back and sup a little more brandy.

14. At 11:02am on 06 Sep 2010, Sam_From_Hendon wrote:

"The recent crisis was no difference and policy makers need to continue to demonstrate sensible approaches to dealing with this, such as loose monetary policy (through low interest rates and QE) and tight fiscal policy."

So is this an admission that markets don't work - I mean if we have to manage them - what's the point of them being in existence?
Surely it's better to have a fully managed system than one which is only managed every time it falls over?

"We have a world class banking industry that needs support."

Now there's a contradiction in terms for you - those who ardently support Capitalism are very good at 'living with contradictions' - the rest of us do find it hard.

"If we loose HSBC, we will be on a slippery slope to denigrating London as a Financial Centre. I hope we have sensible financial reform, not the idiotic changes that some are calling for."

Idiotic? - I would have thought trading instruments which you have no idea what the underlying debt risk is idiotic - not regulations to stop that happening.

"Perhaps HSBC want to move due to the impending (or already here) revolution. Lindasy_from_Hendon remarked that we should all be building yurts and he/she was somewhat prophetic as the weekend newspaper carried an article entitled 'Don't Riot; build a yurt'. I suppose we should all be thankful that your regular bloggers have provided such forewarning of the revolution. The references to permaculture, organic communes and peak oil were interesting, but just showed that whilst some small group of people may try and change their own ways of life (good luck to them), the vast majority of the country are more interested in X factor."

...for someone who stated last week adamantly that "there won't be a revolution" - you do seem to bring it up a lot.
I don't believe in God, so I don't mention it a lot - you seem to bring revolution up every single post. Very odd behaviour - maybe it's the first signs of fear from the Capitalist classes (assuming you are, and not just think you are)

"The truth is, there is no revolution."

...and there you go again, who are you trying to convince, us - or yourself?

"We have a slow recovery and this may not take hold for 2 or 3 years."

Recovery? - do you mean the signs of GDP expansion following massive Government stimuli?
Well my dear, this is what happens when simulus is removed...

https://www.bbc.co.uk/news/business-11198016

....and of course the housing market - unstimulated and now falling.
(p.s. if you want an eye opener you will find that a large proportion of consumer spending since 2001 has come from debt - remortgaged from property - so how's the high street recovery going to come when the source of that income is in rapid decline? - even if you have equity in your property - you try finding a bank which is willing (or able) to advance it to you)

"During which time we will have many false dawns predicting double dip recession and further financial trauma, but this won't happen."

This is getting saved so I can replay it to you in the future (if you're still around that is)

"Luckily we have a fantastic BoE Governor who knows not to over react to the short termism that as your blog mentions, has caused so much pain."

Ha ha ha ha - short termism? - so that's why he's taking the long term view of destroying sterling's future with record low interest rates just to bail out some bad borrowers and idiot bankers.

I can almost visualise your mortgage statement...

Strange that HSBC should be citing Australia as the place to go.

Funnily enough when last on a visit there I just happened to bump into a party of bank executives who told me Australia would escape the major economic problems because they had fought hard against some of the extremities of the global banking system.

That was in Decmber 2007 and strangely enough wasn't it Australia who escaped the worst of the world recession?

The government have to carry out these measures and although financial institutions may hate it in the short term they will always come back to where they know there is safety and stability.

17. At 11:39am on 06 Sep 2010, NorthSeaHalibut wrote:

"#14. Sam_From_Hendon

Without doubt a wind up merchant."

Yep, first of all winding up the business, then winding up all the lights at home because of energy price inflation makes electricity unaffordable and finally winding up with an IVA because Merv the swerve had to raise rates eventually!

Excellent opinion from Prof Tim Williams on this:

https://regenwilliams.wordpress.com/2010/09/05/high-financier-gets-it-right/

Banks, and the Bank of England as their overseer, will never live in the 'real' world whilst they are governed by bankers and finance academics. A broader view of the economy is surely needed at the top - then the worldliness of the rest of the economy will percolate through.

21. At 11:53am on 06 Sep 2010, Alesha Soba wrote:

"Unfortunately any senior politician who has introduced it or got close to introducing it on a national scale in the past appears to have been asassinated "


..which is why it's down to us - the people - we cannot rely on politicians. Even good honest ones are prevented from actually saving the people frometernal debt slavery.

@28. At 12:42pm on 06 Sep 2010, Averagejoe wrote:
"Not seen it but sounds very much like this" https://www.bankofenglandact.co.uk/
"Having a debt based monetary supply is unsustainable, as we are discovering, and must be removed, as it requires the money supply to expand perpetually and exponentially which ultimately leads to its collapse."
I much preferred the original vid called "The Money Masters", should still be available on Google Videos (about 3 hours long). Made by the same guy I believe. Well worth a watch and really ought to be broadcast by the BBC at some point if it hasn't already.
The problem is ensuring that other people will actually watch it, it's pretty heavy going. And might upset the City.

@ 3. At 09:42am on 06 Sep 2010, vlasko wrote:

> Bankers are employed by a private company so why
> should they disclose their salary?

Because they destroyed the world's economy through greed? Is that a good enough reason!?!

30. At 12:50pm on 06 Sep 2010, Averagejoe wrote:

'In the 1930s they introduced an Act that prevented Investment Banks borrowing from commercial banks (which of course create money out of thin air). This was a major factor in the crisis of the 1930s. The Clinton administration threw that out in the 90s. The chaos that followed was inevitable. In my view though banking reform is a waste of time, only monetary reform can fix the system, by removal of fractional reserve banking system, and removal of our debt backed money supply, thereby removing the need for it to expand perpetually; its fundamental flaw https://www.bankofenglandact.co.uk/ and https://www.prosperityuk.com/prosperity/prosperity.html


Seconded

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

30 Averagejoe

I get the point you are making, but let us put forward a banking reform which is easy to understand, which we have had in the past and which we know works. Then there is absolutely no reason why it should not happen.

There is a beauty in simplicity. It also means that our learned friends will not need to visit their tailor too often.

I also think the Governor of the Bank of England should invest in a bottle of brown sherry so that he can interview in comfort those financial people who are frightening the horses in the manner of yesteryear.

Forward to the past!

We might even then get Labour leaders who have actually done work...or am I am dreaming again.

It does seem a bit strange to me that even those who ran their banks properly and did not require financil assistance from the government are to be tarred with the 'fred the shread' brush.

Why are we selecting just one sub-set of people and breaching their rights to privicy and especially their personal financial details?

The problem does not just sit with the bankers, the governemnts set the rules, relaxed the tier one capital requirements to stave off a recession for their own personal political gains, then stole our money, and not one went to prison.

There is also the small matter of the greedy members of the public who borrowed monies that they knew they could not afford to pay back unless their house value continued to rise year on year, something which even the most stupid of people could not ever had though possible.

Seems to me that with your assistance its back to bashing one set of people for everyones mistakes, and as usual you refuse to take on the politicians for their role, worried you may not make a honours list in the future?

Meanwhile - in the ridiculous and contradictory world of Capitalism....

We have 'taught' the rest of the world how Capitalism 'works'
https://www.bbc.co.uk/news/business-11199609

We also didn't tell you everything about banking - it's all in the small print CAVEAT EMPOUR

https://www.mirror.co.uk/news/top-stories/2010/09/05/banks-taking-money-out-of-accounts-without-permission-warns-charity-115875-22538562/

...and hillariously (if you actually believe these nonsense polls) - the public agrees the debt should be tackled - but don't want anything to be cut in the process.

https://www.bbc.co.uk/news/business-11181833

...seems the people are not so dumb, they pay politicans to 'find a way' - so they had better get their act together. Maybe the public is indicating that politicans should put their hands in their pockets and reduce the deficit!

Banks - who need them? HSBC, Barclays, Lloyds, RBS - they can all go elswhere for all I care - they produce nothing and they contribute nothing.

I'd like to see how many multi-billion pound bank bailouts the Bahamas could handle.

It's all a bluff folks - they're not going anywhere.....and bedsides - when all the wealth is transferred to the Bahamas (or somwhere similar) - then I shall gather about 300 men and annex these islands and keep all that wealth.

.....or did the banks forget about the security they enjoy in this country - I don't mean to do the Bahamaian army a dis-service, but they don't even have a Trident!

Bluff, bluff, bluff - it's what gamblers do - and banks are showing it's all they can do.

Fortunately their 'tell' is soooooo obvious I can see it from here.

3. vlasko - I agree. There should be a mechanism for the banks to go bust. No bail-out. All staff and directors employment contracts would be null and void and they could queue up for anything more than the minimum legal redundancy payment with the other creditors. If they are lucky they may get some pence in the pound but it will be many years later. Been there and done it so I know how lucky bankers have been. Unfortunately they still don't get it.

Powerful article.

People who
- rip off the public,
- cripple industry,
- don't pay their taxes, and
- issue threats
are not welcome as far as I am concerned.

Has the City bought enough political influence to save itself from public opinion?

A large corporation, with a household name known to all of us, has decided for political expediency to relocate some major divisions away from its London base despite it being a centre of excellence.
They probably have the same problem as the banks in that most run of the mill staff will not feel able to relocate.

Here's the root of the problem.

If this is a democracy, then why are the banks permitted to lobby? They do not meet the criteria for voting so you have to ask yourself why anyone in government is wasting time listening to their demands.

Anything the banks want is irrelevant, or it should be.

Why are they still operating in the UK anyway? Hasn't the entire population closed their accounts moved off to more ethical institutions yet?

Why has Dawkins not included a study of the fractional reserve banking in his televised study of strange beliefs, after it is not dissimilar to homoeopathy which also dilutes the real [money]with liquidity and FRB like Homoeopathy is also now proven to have no effect in producing overall growth apAAArt from its plAAAcebo effect ?


I would like to see Dawkins challenge the irrational beliefs of the planetAAArium of the AAApes well housed in the square mile.


But I do not expect to see it happen.


The AAApes will carry on their one upman ship until there is no slippery slope left... on the titanic.



Their final words


AAA glug BIDE glUg glug WITH glug glug glug ME glug glug glug glug glug glug glug glug ...........................oo ooo oo oo iou oo oo

On HSBC

Remember the only reason the HSBC moved to London was that the Government insisted that they did in order to take over Midland Bank.

They never wanted to be here and this seems a good excuse for them to leave without breaking the terms of their agreement with the Government.

So they were always intending to leave anyway!

1. At 09:22am on 06 Sep 2010, John_from_Hendon wrote:
Robert,
. . . . . . However you go on to mention the HSBC threat/promise to leave the country. I am not sure that you correctly analyse the cost and benefits to the UK when(if) they leave. Is the threat/promise to leave a sign that the banks have sucked the UK dry and want to move onto a new victim? This is after all the usual reason for relocating an international wealth extraction business!

In a free market a multinational corporation will site itself where it benefits the most. Our UK gov, Labour as well as Condems, have consistently caned the banks over the past couple of years when all but one familiar high street name have successfully come through this recession and are perfectly successful businesses. A bit stupid if you ask me. Sure, the politicians have whipped up a kind of frenzied hatred for banks but that's mainly to divert the blame from themselves.

Why doesn't the gov hit out at the mining companies, the motor industry, the utility corporations, all of whom are making good profits. Indeed, the Australians tried whacking BHP Billiton and Rio because of their success and these corporations indicated their intention to slow down their operations.

So let's not hit out at HSBC shall we? It always was a prudent bank, good capital/assets ratio, successful. Why should it be punished for being good at what it does?

@ 41. At 1:38pm on 06 Sep 2010, writingsonthewall

Hahaha excellent. Your/our job would be so much easier if kids didnt have access to the web to make silly posts but the put-downs are always fun to read. If only they provided more of a challenge though...

@ 14. At 11:02am on 06 Sep 2010, Sam_From_Hendon

Interesting that you call for continued low interest rates...didn't see that one coming if I'm honest.

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

32. At 1:07pm on 06 Sep 2010, Kudospeter wrote:

"Sorry RP but if you are going to end what was quite a good report imo, with a pop at how much top earners who are employed by banking companies earn, maybe you should disclose how much you receive buy a public corporation to continually pander to the green eyed monster brigade. "


Mmmmm - green eyed monsters calling green eyed monsters green eyed! - gosh what a contradictory mess - how we going to sort this one out?

TOTAL AND ABSOLUTE DISCLOSURE OF ALL SALARIES.

Must be the answer, politicans, bankers, cleaners, business editors....

...then the fun will begin as the huge numbers of underpaid realise they are underpaid more than they thought, the bourgoisie realise they are not actually 'well paid' but are in fact merely slightly better paid than the poor masses - and of course the elite who pay themselves huge sums are there for all to see.

I suspect whilst you might think business editors for public corporations are on some huge fat wedge of public money - I suspect it's not the case. Maybe the CEO of the Beeb is well paid, a few stars, and the board - but just like every other industry the majority of the workers are not well paid.

I include moderators in that - boy are they going to be peeved when they find out that their annual wages can be 'earnt' in less than 40 minutes 'work' for a banker.

38. At 1:26pm on 06 Sep 2010, writingsonthewall wrote:

Now I've been on here 2 years asking for someone to simply demonstrate how bankers generate wealth - and apart from a lot of shouting and abuse - not one banker is man enough to step forward and explain how wealth is generated from his or her own job.

I doubt a banker would ever be seen on a left wing blog.

Please copy and paste this and be prepared to spend some time to watch, its not difficult but important that your informed :-

Fractional Reserve Banking explained :-

1 - https://www.youtube.com/user/YIRMASTER#p/f/13/vVkFb26u9g8

2 - https://www.youtube.com/user/YIRMASTER#p/f/12/sanOXoWl0kc

3 - https://www.youtube.com/user/YIRMASTER#p/f/11/kTv1fo6sKmo

4 - https://www.youtube.com/user/YIRMASTER#p/f/10/3qicabStQkc

5 - https://www.youtube.com/user/YIRMASTER#p/f/9/7kpSbkaD4tM

Derivatives - CDS's and CDO's explained :-

https://marketplace.publicradio.org/display/web/2008/10/08/whiteboard_untangling_credit_default_swaps/

https://marketplace.publicradio.org/display/web/2008/10/03/whiteboard_crisis_explainer_uncorking_cdos/

A view from Argentina :-

https://www.youtube.com/watch?v=UlDNMB6wYmI

https://www.youtube.com/watch?v=78ddURofMWs&feature=related

@ 6. At 10:06am on 06 Sep 2010, Justin150 wrote:

>> Either they must demonstrate to the rest of us that paying
>> a few million squids each to their star performers is a sensible long-term way...


> They must demonstrate that to their shareholders.

You're going nowhere fast, Justin150. The idea that there are no other stakeholders beyond the shareholders was blown away in the credit crunch.

Didn't you even notice it going? Please try to stay current.

@ 51. At 2:07pm on 06 Sep 2010, Lorne2 wrote:

> (all) to be tarred with the 'fred the shread' brush. Why are we selecting just
> one sub-set of people and breaching their rights to privicy
> and especially their personal financial details?

Because they destroyed the world's money system! Did you forget???

#50. stanilic wrote:

"I also think the Governor of the Bank of England should invest in a bottle of brown sherry so that he can interview in comfort those financial people who are frightening the horses in the manner of yesteryear."

Perhaps brown trousers too.

And 'correspondents shoes' as it seems reasonable to describe what the banks have done to the country as rape!

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

@ 42. At 1:40pm on 06 Sep 2010, virtualsilverlady wrote:

> Strange that HSBC should be citing Australia as the place to go.

Oh, I don't know - it's quite a good place to transport crooks! Let's hope they don't make their way back here ....

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

#51

There is also the small matter of the greedy members of the public who borrowed monies that they knew they could not afford to pay back unless their house value continued to rise year on year, something which even the most stupid of people could not ever had though possible.
----------------------------------------------------------------------
Not that those clever people in banking would think it possible? After all they were lending on the same premise......

Will patient bankers pervail?
Not necessarily.
Patient bankers who have split investment banking from mom & pop banking, who are adequately capitalized, and transparent will survive and be good for our economies.
Andy Haldane, Bank of England, gave a compelling talk that especially dealt with what it means to regulate or tax markets. He referred to the banking industry is also a "pollutant" with "systemic risk as a noxious by-product". True!
Banking benefits those producing and consuming financial services – the private benefits for bank employees, depositors, borrowers and investors. But it also risks endangering innocent bystanders (like you and me) i.e. the social costs to the general public from banking crises. Public policy has long-recognized the costs of systemic risk, but little has been done about it. The cost of systemic risk actualized is not trivial; in can be anywhere between one and five times annual GDP. If you transfer this to $$$$$, this is tantamount to an output loss equivalent to between $60 trillion and $200 trillion for the world economy (between £1.8 trillion and £7.4 trillion for the UK).
It's clear that banks do not and would not have the capital to survive. So, what do we do - bail them out again and again and again and again... Assuming that if the system is not changed, an economic crisis will occur about every 25 years, the $$$$$ needed to recoup these costs would be in excess of $1.5 trillion/year.
Here's the point: The total market capitalization of the largest global banks is currently only around $1.2 trillion. Banks would fall like leaves in autumn, and for those that do not apply regulation, do not seperate investment banking from mom& pop banking, I say let them fall.
AS the debate over how to prevent another economic crisis has developed, a number of economists note that the problem isn't so much what the banks are doing or with whom they were doing it as with the fact that they have left themselves undercapitalized.
I disagree.
Some investment banks have speculated, gambled, traded in derivatives and default swaps, and engaged on other risky behavior. Do you think these banks do not know the risk?
To allow these risk-takers to operate, Governments must insist on additional capitalization. Some economists will say: the problem with this is that in order to firm up their capital positions banks have to lend less, and if they're lending less then they're undermining economic growth. Excuse me, but banks are not lending now, especially to small businesses who need the money!
Jean Pisani-Ferry, the director of Bruegel, an economic think tank, writes:
Andrew Haldane has estimated that the present value of all output losses could easily reach 100% of world GDP (meaning that the crisis could be equivalent to the evaporation of one year of world production and income).
Concerning the timing of the introduction of these changes, Avinash Persaud says:
The biggest constraint to banks lending more is the scarce supply of bank equity capital and this is scarce because equity investors are uncertain as to what the regulatory and fiscal landscape holds.
The Banking Commission has a year to make recommendations on how to improve the stability and security of the banking system.
One year!
So why is HSBC and some other banks been muttering that they and their institutions may have to relocate elsewhere if the commission comes up with recommendations they don't like (such as that they must formally separate their investment banking operations from retail banking), which I support. We have got to separate the speculation and the gambling from mom & pop banking.
Lastly, I would like to add (again) that there must be a sort of Tobin Tax on all foreign exchange transactions both to provide an audit trail that can trail speculation and gambling (and pershaps identify criminal activity) and to provide money for social programs since it was the financial institutions that took this money away from the society in the first place.

Nicole M Foss interviewed by James Puplava :-

https://www.financialsense.com/financial-sense-newshour/big-picture/2010/09/04/02/nicole-foss-jack-spirko/preparing-%2526-learning-to-survive-coming-perfect-storm

But even before the commission has published the scope of its enquiry,

...

in other words there is no sensible starting point ... at the position of standing back and considering what is the appropriate relationship between the financial sector and the public, employees, depositors, customers and the relationship between the financial sector and e.g. the political class(es) ... in terms of the vital aspect in all of this ... the constitutional questions relating to rights and privileges of the financial sector regarding e.g what is in the 'national interest' ( if anyone actually knows what that is supposed to mean by the over-used but vague term 'national interest').

In other words the enquiry is going to be another rich boys vested interest meandering useless waste of time and money fiasco as merrily dodging the main isuses and vital issues and questions ... which have never been properly addressed in the entire history of the UK.

We need more representation in this enquiry for e.g. consumer groups, citizens advice, employee liaison over fair bonuses i.e STAKEHOLDER'S ... this enquiry is shaping up to become a complete farce before it has even happened.

When are the Stakeholders going to be involved and have their say as including the millions of ordinary taxpayers. The issues need a national referendum and a proper Independent Enquiry on the Constitutional Issues of Rights -v- Privileges.

It's time to end the 'golden troughs' and 'bent accounting' and other banking sleeze ... enough is enough

28. At 12:42pm on 06 Sep 2010, Averagejoe wrote:

"Having a debt based monetary supply is unsustainable, as we are discovering, and must be removed, as it requires the money supply to expand perpetually and exponentially which ultimately leads to its collapse."

When I saw "Money as Debt" (which makes the same argument) I too was convinced that our monetary system required exponential growth and must therefore fail. But then I spent several months thinking hard about it, and realised that in fact it's not unsustainable and it doesn't require an exponential increase in money. It's only unsustainable if the banks accumulate their profits in the bank in perpetuity. If they do buy something with their profits (or give it to their shareholders as dividends), it puts the money into the economy which is exactly the amount needed to pay the interest. Competition between lenders ensures that it is in their interests to spend their profits instead of holding on to them in perpetuity. A monopoly provider of credit, on the other hand, could benefit from waiting until everyone else is bankrupt.

I've seen the 'FRB is a scam' argument so many times that I'm beginning to wonder whether someone is deliberately trying to deceive us. That's why I started writing my Wheatonomics blogspot blog at https://wheatonomics.blogspot.com/ - (a work in progress).

I'm a little confused regarding bankers suddenly being required to reveal their earnings and that this is somehow seen as a terrible invasion of privacy. Aren't we all required to reveal our earnings to the Inland Revenue already - so that we can pay the "right" amount of tax? So is there a suggestion that bankers are not currently revealing their true earnings and therefore not fulfilling their tax obligations? If so, shouldn't prosecutions be in order?

52. At 2:09pm on 06 Sep 2010, writingsonthewall wrote:
.....or did the banks forget about the security they enjoy in this country - I don't mean to do the Bahamaian army a dis-service, but they don't even have a Trident!

WOTW, it isn't often you miss a trick. Mercenaries abound and since some countries see the arms industry as a means of fixing the economy...
Jeremy knows all about them and tells you all here! https://www.youtube.com/watch?v=nqM4tKPDlR8

54. At 2:15pm on 06 Sep 2010, PacketRat wrote:
Powerful article.

People who
- rip off the public,
- cripple industry,
- don't pay their taxes, and
- issue threats
are not welcome as far as I am concerned.

Has the City bought enough political influence to save itself from public opinion?

Well said.

@ 60. At 2:58pm on 06 Sep 2010, Hugh_Janus wrote:

>> @ 14. At 11:02am on 06 Sep 2010, Sam_From_Hendon

> Interesting that you call for continued low interest
> rates...didn't see that one coming if I'm honest.

Of course; debt hogs like to be bailed out by the rest of us. They are addicted to greed, but now they are having trouble holding on.

I'd be much harsher with them than Swerver has been.

No 62 WOTW

yep i agree with you, maybe tax paid UK and abroad could be added to the list

With regards to "I include moderators in that - boy are they going to be peeved when they find out that their annual wages can be 'earnt' in less than 40 minutes 'work' for a banker." - maybe they might start allowing us to read you call it as it is!

62. At 3:01pm on 06 Sep 2010, writingsonthewall wrote

...then the fun will begin as the huge numbers of underpaid realise they are underpaid more than they thought, the bourgoisie realise they are not actually 'well paid' but are in fact merely slightly better paid than the poor masses - and of course the elite who pay themselves huge sums are there for all to see.

Funnily enough most people get paid an average wage, an elite get paid a lot. How do you class being under paid? A cleaner will always get paid less than a banker.

I'm sure it would work both ways, I've seen stockbrokers leave their jobs to become better paid teachers. If workers don't feel that they are paid well enough they leave to get a job at the level they deserve. People are paid what they feel they are worth.

16. At 11:30am on 06 Sep 2010, Brian_NE37 wrote:
Sam_From_Hendon

you're missing the point of Robert's blog.

Which was that the big banks (in the shape of HSBC in this instance) are already starting bullying tactics over the proposed moves to greater transparency in bankers pay, before there's even something concrete to be concerned about.

And that fact neatly encapsulates the reasons why so many outside the banking bubble regard bankers with disdain.

= = = =

Wha-a-a-at?

I've heard it all now. It has nothing to do with bullying tactics. Look, a multinational will site itself where it can do business the best. The last thing a multinational bank wants is interference from a national government, especially an incompetent one. If HSBC leaves the UK, it's because the UK no longer gives it a business advantage over somewhere else. We forget that about 25 years ago, HSBC was entrenched in Hong Kong and Shanghai. Supposedly because China was about to reclaim Hong Kong in 1997, HSBC registered itself in London.

Now it has a choice to make: kowtow to these idiotic wailings of the Banking Commission and politicians - or move somewhere more amenable. HSBC's CEO has already left the UK.

It's a gross invasion of privacy to single out bankers to declare their salaries. It's idiotic. It'll merely fire up further hysteria against the financial world among those who know nothing about it (except what the media tell them - and in this field a little knowledge is dangerous indeed). By all means declare every salary so (as another poster said) the middle classes can see that they aren't so much better off than the working class after all.

And if HSBC moves away from the UK it'll be the beginning of the end for the finance industry here.

Learn that in the global system, a national government cannot win.

Good alert by Peston about the Bank of England's Andy Haldane paper! Why?

It tells you what's going on at the Bank of England, and research papers are good at entertaining and distracting people who haven't got enough to do.

Very worrying indeed to learn that THE EXECUTIVE DIRECTOR FOR FINANCIAL STABILITY, Mr Andrew Haldane, is navel-gazing over the Balance between Patience and Impatience, Long-termism and Short-termism! How very Yin and Yang, just perfect for a speech in Beijing, where the audience will dutifully pretend to be impressed by His wisdom, while disguising their contempt for the Bank of England.

Why would anyone hold the Bank of England in contempt for this?

Because, as everyone knows, when institutions become run by academics, they lose the power of pragmatism. If there is one thing that Chinese people favour just as much as, or even more than, Wisdom, it is pragmatism.

It is not necessary for the Bank of England to do its job by having the philosophical discussion about Impatience and Patience. Banking has existed for CENTURIES, and the rules of its functionality and operation were established CENTURIES ago. The Bank of England has a flood of pragmatic indicators on what Regulations are necessary to be imposed upon Banks. These indicators should have been acted upon years ago, and should be acted upon without much further delay. Acts of pragmatism are more essential to Central Banks than Acts of Patience by navel-gazing academics.

What ever happened to the people who used to run the Bank of England, and how did they get pushed aside by theorists, day-dreamers, and experimentalists?

9. At 10:17am on 06 Sep 2010, Peter Bench wrote:

Why not write something objective to explain how these banks earn their money instead of bashing them?

-----------

Excellent point, because despite all the talk over the last few years about bankers' pay I still don't understand exactly what it is that they do to earn the £million bonuses. I'm not being facetious or taking a swipe at them, I honestly don't get it.

I have a decent grasp of what most jobs involve, what skills the practioners have and how they "earn" their salary. We can argue about e.g. whether a footballer is worth £100K pw whilst a fireman is worth £20K pa, but at least we know what it is they do and can then argue the merits or otherwise of their salaries. But I can't do that for bankers because I don't know what their job involves.

What is it that they do in a typical day, from the moment they get into the office until they leave at the end of the day, what is it that they ACTUALLY do? What unique skills do they possess, what tasks do they perform, and in what way do these enable their employers to make such huge profits? This is a serious question and hopefully one of the many highly knowledgable regular contributors to this blog can help us out with this one.

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

Short-term-ism is a direct result of the bonus pay culture. There is no responsibility to ensure long term growth in any area; just get the most you can while you can and devil take the hindmost.
That goes as much for those who inflated their income to get bigger mortgages as for the pen pushers who dreamed up new ways to screw commission out of the punters.
It's fine so long as you only deal in "funny money" but eventually the crunch comes. It's surprising that all these so called clever regulators have taken so long to figure it out.
If banks want to pay staff commission they should call themselves insurance companies. Just pay a decent basic wage and expect a decent service to the public.

Jim Rickards interview :-

https://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/9/4_Jim_Rickards.html

51. At 2:07pm on 06 Sep 2010, Lorne2 wrote:

"It does seem a bit strange to me that even those who ran their banks properly and did not require financil assistance from the government are to be tarred with the 'fred the shread' brush."

Well they shared in the same financial profits didn't they? - Do tell us why HSBC and others are different to Lloyds and RBS - as opposed to just lucky? What business practices have HSBC and Barclays employed which helped them avoid the financial crisis?
...and best of all - tell us how HSBC (and others) would be managing now if RBS, Lloyds, Northern Rock, AIG, Lehmans, Bear Stearns, Merril Lynch, Bradford and Bingley, Abbey national....(the list goes on)....had all been allowed to fail?
Do you really think that these 'safe' banks were only invested in rocks and salt? - if you do then you had better order a copy of their accounts.

"Why are we selecting just one sub-set of people and breaching their rights to privicy and especially their personal financial details?"

Those with nothing to hide - do not need their privacy protecting. If you are paid your worth - then you do not care who knows. I openly talk about my salary at work (even though it's strictly not permitted) - simply because if someone thinks they can do it for less - then I'm happy to stand aside and get back to my allotment!

"The problem does not just sit with the bankers, the governemnts set the rules, relaxed the tier one capital requirements to stave off a recession for their own personal political gains, then stole our money, and not one went to prison."

Oh so the criminals in the street aren't at fault - it's the Government who set the rules saying burgulary is wrong - they are at fault.
Seriously - blame anyone but yourselves...

"There is also the small matter of the greedy members of the public who borrowed monies that they knew they could not afford to pay back unless their house value continued to rise year on year, something which even the most stupid of people could not ever had though possible."

See my post at 31 for a list of those 'stupid people'

"Seems to me that with your assistance its back to bashing one set of people for everyones mistakes, and as usual you refuse to take on the politicians for their role, worried you may not make a honours list in the future?"

Honours list? - surely thats the reserve of failed bankers like Sir Fred - not for business reporters for the BBC - I mean after all - they are accountable to the trust - what are the other 'honourables' accountable to?

Sleepy Dormouse, Writing's on the Wall et al

You seem obsessed with the lack of wealth creation that bankers generate. Given the number of blogs you've managed today may I just say that people in glass houses shouldn't throw stones. Not alot of wealth generated my you two today I'll hazard. However, one thing one of you said was interesting, just the one mind. That is:

"Clearly the desire born out of self interest to keep one's bonus is greater than the further development of mankind and it's Economic system to the average banker."

That's right Sherlock. And, in case you hadn't noticed, those ex-bastions of Communism, Russia and China, now have quite alot of citizens who feel the same way and will be more than happy to eat the breakfast, lunch and dinner of bed-wetting liberals like you. It is a dog eat dog world (to use another phrase I'm sure makes you shudder) and it isn't about to change.

For the record I think HSBC are probably fairly ambivalent about having their HQ in the UK so if their bluff is called I wouldn't be suprised if they left. Not reason in itself to not push through with the measures, I would agree that lessons have still to be learnt, but afraid it is not that the world doesn't need banks. That is sub-6th form nonsense.

Which is why Haldane concludes that it's quite possible to have too much of a good thing, in the form of information and easy ability to trade.


too much of a good thing, in the form of information
Now that is a really disturbing use of words.

What could Haldane possibly mean?
And what is his solution?

59. At 2:52pm on 06 Sep 2010, doctor bob wrote:

"So let's not hit out at HSBC shall we? It always was a prudent bank, good capital/assets ratio, successful. Why should it be punished for being good at what it does?"

DoctorBob - do you know what 'days from financial armageddon' implies?

Unless Hank Paulson was 'egging it up' - it wouldn't have mattered how deep the pockets of HSBC were - it woulbdn't be there

Has this become the HSBC fan club or something? Why are so many claiming HSBC was well run when not even their shareholders have a clue who or what HSBC was invested in - in 2007?

60. At 2:58pm on 06 Sep 2010, Hugh_Janus wrote:

"@ 14. At 11:02am on 06 Sep 2010, Sam_From_Hendon

Interesting that you call for continued low interest rates...didn't see that one coming if I'm honest."

How about this?

Sam_from_Hendon - Some Capitalists on this blog are blaming you and your reckless borrowing for the crisis.

What have you got to say to vlasko and Lorne2 about that then?

Set the Capitalists against each other - it's easy in a system of contradictions...

You see Friedman was wrong - you can't all follow self interest and the result be a coordinated movement in the same direction - you actually end up pulling everything apart.

63. At 3:06pm on 06 Sep 2010, Disco Slide wrote:

"I doubt a banker would ever be seen on a left wing blog."

Left wing??? - this is about as left wing as Norman Tebbit!!

You need to re-align your political compass - it must have been affected by that sun storm recently.

72. At 3:44pm on 06 Sep 2010, BluesBerry wrote:

"Patient bankers who have split investment banking from mom & pop banking, who are adequately capitalized, and transparent will survive and be good for our economies."

Bold statement - but untrue.

Q. What's the fundamental purpose of banks?
A. To distribute natural resources (fronted by money) to the areas that need it.

Now as a general rule - how's that going?

Considering the amount of waste in society, considering how many businesses were allocated resources - for which there is now no demand - I'd say, very, very badly.

Now some banks have failed it's all too easy to say "these are just individual banks problems" and to keep the system going.

To make such a statement really doesn't appreciate how the system works - and not just individual banks within it.

Still, actually knowing what you're on about has never been a condition for getting on this blog!

81. At 4:37pm on 06 Sep 2010, Disco Slide

People are paid what they can get - not seen the unemployment figures, the wage cuts, the reduction in the standard of living over the decades?

81. At 4:37pm on 06 Sep 2010, Disco Slide wrote:

"Funnily enough most people get paid an average wage, an elite get paid a lot."

Really? - it depends on how that 'average' is calculated. back to school my friend to look at Mean, median and mode.

"How do you class being under paid? A cleaner will always get paid less than a banker."

Why? - because you value the extraction of wealth from production more than sitting on a clean toilet?
I'd say if you think that's right then you are one dirty boy!

"I'm sure it would work both ways, I've seen stockbrokers leave their jobs to become better paid teachers."

Oh really? - I don't think so. It's more likely they couldn't live in the moral desert any longer and wanted to do something more rewarding than simply the financial one.

"If workers don't feel that they are paid well enough they leave to get a job at the level they deserve."

...errr never been introduced to the old boy network? When you're a big boy you can come and work in the city, if your Dad owns a bank you might get a nice niche job in the emerging market division - otherwise it's cleaning for you my son.
Anyone who works in the city knows this - but of course they can't admit it because they would be jeapordising their future employment.

Go and look up the qualifications of the Northern Rock board and come back and tell me how they got their jobs on merit.

"People are paid what they feel they are worth."

Well I feel I'm worth £3,000,000,000 a day just for coming on this blog and destroying the contradictory stance of Capitalists - so why aren't I paid that?

I don't know what world you're living in - but it's not this one.

People are paid the minimum the boss can get away with - ultimately just enough to keep the worker alive enough to do the job he's employed for.

....or have you never heard of diminishing profit - it's only been around about 200 years so I could understand why you might have missed it.

Here's a quick introduction...

https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall

82. At 4:43pm on 06 Sep 2010, doctor bob wrote:
Learn that in the global system, a national government cannot win.

And since we are the government....

So much for democracy, the ability to set the rules we agree to live by...

Longshanks et al are back.

82. At 4:43pm on 06 Sep 2010, doctor bob wrote:

"I've heard it all now. It has nothing to do with bullying tactics. Look, a multinational will site itself where it can do business the best. The last thing a multinational bank wants is interference from a national government, especially an incompetent one."

Doctor Bob - can you explain the difference between an incompetent Governemnt which was forced to save the financial system from collapse - and an incompetent bank that didn't even see it coming?

"Now it has a choice to make: kowtow to these idiotic wailings of the Banking Commission and politicians - or move somewhere more amenable. HSBC's CEO has already left the UK."

idiotic wailings? - were these idiotic wailings being lambasted when banks were begging for salvation from doom?

"It's a gross invasion of privacy to single out bankers to declare their salaries. It's idiotic. It'll merely fire up further hysteria against the financial world among those who know nothing about it (except what the media tell them - and in this field a little knowledge is dangerous indeed)."

Well I do work in it - I'm happy for my salary to be published and I have over 10 years 'knowledge' of it. So what were you saying about privacy again? Want to see the salary of your councillors (which is right) but you don't want us to see your own salary? - why not Bob, couldn't justify it perhaps?

"By all means declare every salary so (as another poster said) the middle classes can see that they aren't so much better off than the working class after all. "

At last we agree - this is what should happen and then (to be more accurate) the 'middle class' will realise they were always working class and their wages are very similar.

That's when the revolution gets going - because suddenly the truth will be out.

Why do you think most companies (especially corporate ones) make it a disciplinary offence to reveal your salary to another member of staff?

Dum, de dum dum....

84. At 4:49pm on 06 Sep 2010, davidbrent wrote:

9. At 10:17am on 06 Sep 2010, Peter Bench wrote:

Why not write something objective to explain how these banks earn their money instead of bashing them?

-----------

Excellent point, because despite all the talk over the last few years about bankers' pay I still don't understand exactly what it is that they do to earn the £million bonuses. I'm not being facetious or taking a swipe at them, I honestly don't get it.


Hmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm


AAAnd neither do bankers, they create homoweopathic debt money with one part per quadrillion provided by a depositer and the rest they have a legal sanction to create/counterfeit as debt of equivalent value to the original unit value of the deposit.

As with homoeopathic medicine the sickindebted feel temporary relief and swear by it.

LOL


If you want to understand what is going on ,then throw your economics theory books created to brainwash the banks latest raw recruits from university out of the window and study game theory.


Basickalley banksters counterfeit into existance immaginAAAiry wealth and take their cut on an annual basis, providing that they can contualy sign up people who believe in homeowepathic medicine , but unlike those that think it worth saving sum of the homeowepathy for a rAAAiny day to accrue extra tax benefits [hahaha rofl call an ambulance]they use theirs to swan arround the med before retiring to bongoland after a long career in the purforming AAArts


What bankers[AAArobs ] create is infact multiples of nothing[0] plus 1 UPMANSHIP [0 was imported from the Arab world ]

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