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mustrumdavid

Listed below are comments made by mustrumdavid between Wednesday, 4th March 2009 and Thursday, 24th September 2009.

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Turner: Not banks' enemy 09:16am on 24 Sep 2009 Of course Mr Turner wishes to preserve the larger banking entities. This gives the FSA more power and allows them to have a role separate from the Bank of England in regulating powerful organisations. It is NOT in his interest to split up the banks even though it IS in the taxpayer's interest.

Ultimately, we cannot afford to have shadow banking systems implicitly having one way bets. If, by preserving the large banks, we expose taxpayers in underwriting risky investments, then let's break them up. I have no problem with people making supernormal profits from risk taking. What I object to is allowing such people to have one way bets on the taxpayer!
PM: 'We'll cut with Germany, France and the US' 10:03pm on 14 Sep 2009 I cannot understand what people are complaining about here. Yes, we know Brown doesn't answer direct questions. Yes, we know he always takes the credit when things go right and disappear when they go wrong. But, why are we wingeing about Government spending now and the level of indebtedness?

Have we not learnt from previous recessions and depressions that cutting expenditure leads to a greater downward spiral. It would appear that to most commentators here that Keynes had never existed. The Nobel Laureate, Paul Krugman also is in favour of Keynesian techniques to get us out of this mess. It is only by boosting aggregate demand can we get the global economy out of its current doldrums.

To talk of reigning back expenditure now is to consign between half a million to a million more people to the dole queues for another five years. Do we really want that? Do we want the social tensions and the mad-cap Right-Wingers on the street stirring things up? Because, that is exactly what will happen if we do stop the spending and start reining back public expenditure now.

I think Mandelson has it right. This is where the line between the parties is being drawn. The Conservative wants to cut-back expenditure now. Labour want to wait until there are signs of recovery. My own view, for what it is worth, is that whilst we have a triple A rating and we can still borrow without paying out punitive rates, we should continue the current economic policies to protect jobs.

Economies have had debts going back to the Napoleonic Wars. As long as there are investors willing to finance the boosts to aggregate demand, then it is fine to continue borrowing to protect employment. For all those doom and gloom merchants who wish to cut back expenditure, if we cannot get the global economy working effectively, then all bets are off.

Yes Blogpolice #36, the whole finance system is "creating wealth out of thin air". That is what banks do! You put £10 in and they can lend up to £100 out. This is called Fractional Reserve Banking. If you do not understand how this works then a good explanation can be found in Niall Ferguson's "The Ascent of Money, a financial history of the world". As for paying for decades, we still pay interest on Government Bonds issued several decades ago. Money is debt and whilst you can finance it, you can continue to operate the current policy. When the economy recovers, that is the time to look at cutting public expenditure and repaying debt!
Hester: fast recovery "dangerous" 8:54pm on 12 Sep 2009 I find it incredible in this modern era that we have people arguing for protectionism. What is so sacrosanct about saving British jobs? Why stop at British, why not preserve Scottish jobs at the expense of English jobs? Indeed, why not make sure the jobs are located in Edinburgh rather than Glasgow?

The argument about out-sourcing to India should not be one of protectionism but one of whether it makes sense strategically for RBS. Clearly, they think it does. However, out-sourcing has its dangers; inability to forecast the future and being locked-into rigid contracts are a few.

If Indians can do a job cheaper to the same quality, then why not let them do it? Or do we think the world owes us a living. There are historical precedents to this. In the 16th Century, China led the world economically, scientifically and in terms of standard of living. They ignored the outside world and by the 18th Century, the found they were following behind. By the 19th Century, China became a backwards country. That is what protectionism does to a society in the long run!
How did Phoenix Four do it? 03:58am on 12 Sep 2009 This is absolutely appalling. If these people can get away with this sort of behaviour then we must revise commercial law. But, I suppose we find it acceptable for senior directors in financial services to make one way bets so why not let everyone else do it?
Who'll be shot when banks misbehave? 11:08pm on 31 Jul 2009 Those who are really responsible will not be fired. Instead they will hang on in Government as long as possible!
Business still being crunched by banks 12:57pm on 24 Jul 2009 The key issue is what are we expectig from the banking system. Do we want them to be profitable generators of taxation? Do we want them to be serve the wider economic needs?

Clearly, the banks are behaving in a way to maximise their own positions within the context of the rules set by Government hence the larger spreads and their views on risks. Is this really in the public interest?

Free Market theory is well and good but banking is not free and I am not convinced that allowing banks to maximise their own positions serves the public interest of providing liquidity.
Treasury forecasts £77bn loan losses for Lloyds and RBS 11:17pm on 22 Jul 2009 Err scottycelt said "the taxpayers will be the big winners?. What abut those taxpayers who have lost their jobs because of this crisis? As for the pension funds and small shareholders, as holders of equity, they benefited in the good times now they suffer in the bad times.

The reality is that the banks were allowed to get so big and so that they could not be allowed to fail. None of the proposals put forward changes this. They will still be in a position where we can't allow them to fail. The big banks need to be broken up! As for the market arguments, banking has never been a free market in the last few years. There are significant barriers to entry and suppliers can't exit when gthey like.
Why King changed his mind 10:44am on 18 Jun 2009 I am surprised Robert that you have not commented on the Governor speech: that the large banks should be broken up. With such large institution carrying out riskier investment banking, the Taxpayer is at risk through moral hazard. Do you think the large banks should be split up?
Watchdog says markets not rational 10:59am on 14 Mar 2009 Markets are not infallible because the efficiency conditions of a Free Market never happens. The signs were there when the banks got too big that they created a moral hazard that forced Governments to convene. The key to this problem is allowing banks and insurance companies to create money through fractional reserve banking. This should be stopped!

I have nothing against investment banks taking a punt on higher risk investments for a greater return but depositors at these institutions should take the risk not the public.

My solution is to take away the power to create money and lodge that with a Nationalised Bank that works on very conservative rules. Other financial services may borrow from the National Bank and charge a premium for services such as running current accounts, providing credit etc. This is the model that money lenders work on so why not extend that to commercial banks?

Any profits made by the National Bank could be thyen used to offset taxation.

We have the moral hazard so why not let us have the benefits?
China: All about jobs 09:59am on 04 Mar 2009 Robert, I was in Dongguan at this time last year. It appeared to be vibrant and full of people purposefully pursuing their dreams. What I did notice was the large proportion of Mandarin speakers there rather than the native Cantonese speakers. I think here is the potential issue.

If these migrants do not have jobs or prospects of jobs, they do not have the local family network to help them through. Some will not be able to travel back and will be a source of trouble for the authorities.

Despite Chinese being normally law abiding, in such desperate times, these migrants may well despair so much that they will cause strife.

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