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A valueless banking boom?

Robert Peston | 10:16 UK time, Wednesday, 1 September 2010

So how big has been the recent boom in some parts of the banking industry?

Big enough, according to new figures released this morning by the Bank for International Settlements (the central bankers' central bank, as if you didn't know) and the Bank England.

Man stands in front of an electronic boardAccording to the results of their latest triennial survey, global foreign exchange turnover rose 20% to $4trn per day on average (yes, that's each single day) in April 2010 compared with April 2007.

Or to put it another way, a sum equivalent to the entire output of the global economy is traded around once a fortnight on currency markets.

What's more, London's portion of this business has increased even faster, by 25%, so UK based banks' share of forex business is a market-leading 37%.

So no evidence as yet that the reality and threat of horrid new bank taxes and heinous regulation has seriously damaged UK based banks.

As for over-the-counter interest rate derivatives (transactions that are largely bets on the direction of interest rates), these rose 24% globally to $2.1 trn.

And Britain's share of these trades was a striking 46%, up from 44% in 2007.

I presume that warms your patriotic cockles.

What is there to say about an industry that deals in numbers that boggle the typical human brain?

Well, the first thing to point out is that a tiny fraction of this business is carried out on behalf of "non-financial" businesses - or what some would describe as "real" companies (you know the sort of thing I mean - businesses that make cars, or create music, or sell advertising, rather than trading in dematerialised, electronic money on a screen).

These non-financial companies were responsible for just 13% of forex transactions, their lowest proportion for 12 years.

By contrast, "other" financial institutions - such as hedge funds, insurers, mutual funds and so on - contributed a record 48% of the business.

And there's a similar story on the origination of these massive flows of money in the OTC interest rate derivative business.

What does that mean?

Well some would view these statistics as evidence that the banking industry has become more than slightly detached from the "real" economy, that many of its activities are either pure speculation, or attempts to hedge speculation, or attempts to hedge the hedges.

Also, it would be pretty difficult to argue that the net effect of all this financial business has been to reduce the volatility of markets, or to improve the stability of the global economy, or to increase the growth rate of the global economy.

Many might well dispute that the great banking meltdown of 2008 happened because of this explosive growth in financial trading - but the trading certainly didn't prevent the crash.

And there is a massive disconnect between a global economy that has less than doubled in size over 12 years and - on the other hand - OTC derivative transactions that have increased eight fold while foreign exchange transactions have almost trebled in value.

What's more, as I've pointed out before, the global economy was growing quite as fast in the 1960s when much of this financial business barely existed.

So those who can't see the point of all these financial trades may (ahem) have a point - unless, that is, you believe the enrichment of financial traders and hedge fund managers is a social good in itself.

Which is why, some would say, it's slightly odd that when no less an authority than the chairman of the Financial Services Authority, Lord Turner, questions the social utility of much activity in financial markets, and also suggests that it might be no bad thing to levy a tiny Tobin tax on all this frenetic trading in electrons, well it's curious that the chancellor of the exchequer (who could use a bob or two) doesn't lick his chops and demand a bit of that.

Comments

Page 1 of 5

  • Comment number 1.

    The financial system is still out of control. Who will take the reins? Taxation would be a start, why are we waiting?

  • Comment number 2.

    Good to see the past lessons are well learned. Making money from fictitious money. And exactly how much of that "Money" comes directly back to the UK economy in the form of taxes or other benefits rather than going into some city traders already bulging bank account?

    A bumper year for bonuses methinks next year. Nothing changes, us poor minions continue to suffer while the rich get richer.

    If this government is truly "Progressive" as Cleggy claims then yes, I'd be expecting the boy Osbourne to be taking a share somewhere along the line. Sadly, with the Tories funded by Hedges (your prior blog) I can't see that happening. The balance of wealth will never change, certainly not under this administration anyway.

  • Comment number 3.

    Does this mean the BBC will finally stop referring to 'investors' and call a spade a spade; it's gambling and is open to all the abuses that goes with it?

  • Comment number 4.

    roll on the Robin Hood tax.

    "Many might well dispute that the great banking meltdown of 2008 happened because of this explosive growth in financial trading - but the trading certainly didn't prevent the crash."

    do I detect a hint of holiday sarcasm?

  • Comment number 5.

    Don't forget these spivs are bankrolling the tory government: by payments to the tory party, by payments to individual MPs and by financing state borrowing.

    Of course the illusory 'regulation' and trivial levels of tax set up by that same tory government, as a facade to placate an angry electorate, is having no effect upon the spivs.

    They would not have allowed their employees in government to do anything which would have hampered their parasitic trade.

  • Comment number 6.

    Hi Robert,

    I'm pleased to see England at the heart of such a growth in for-ex business. As technology has improved, it has made it easier for these financial transactions to be carried out and consequently more of them are being undertaken. The greater the activity the more fees earned by our wonderful banks, the more taxes that will be paid. It's win-win all round.

  • Comment number 7.

    The main reason that this business takes place in the UK is historical - the international banks set up their international headquarters and therefore major international trading operations here in the 80s because the UK was viewed as a business friendly place to locate. The same banks can just as easily move the operations to Switzerland as they surely will if a Tobin tax on transactions is unilaterally introduced, and the UK will lose the taxes on profits related to these businesses as well as the taxes on the hefty pay of all of the individuals associated with these activities. Hopefully Osbourne realises which side the UK's bread is buttered - the financial sector has been appallingly mismanaged but it remains a massive source of income both directly and indirectly to the UK and therefore supports innumerable public sector activities. There is no such thing as a tax without consequences and for an industry with no particular reason to be here, this kind of talk is dangerous

  • Comment number 8.

    Bubble.

  • Comment number 9.

    Well I’m truly proud that the UK is a market leader in something.
    Even if it is trading money that no one actually has.

    I just hope it doesn’t all go pear shaped for us like the last time.
    Because I don’t reckon we’ve fully quantitatively eased our way out the last mess yet.

  • Comment number 10.

    Doesnt it tell us more about the trading that underpins the valuations of reserve currencies - dollar,euro,yen and sterling. Couldnt we conclude that these currencies stand on a socially useless foundation and largely unrelated to real economy fundamentals. Isnt this the worrying disconnect?

  • Comment number 11.

    Hi Robert,

    Nice post.

    "unless, that is, you believe the enrichment of financial traders and hedge fund managers is a social good in itself"

    Who exactly is taking the losing side of these trades that are enriching the financial traders and hedge fun managers? They aren't creating anything, so someone must on the losing side, right? My hunch is that it's all of us mortals and our collective pension funds. Are our pension fund managers getting outplayed, whilst we pay for their sports cars?

  • Comment number 12.

    How much of this false financial transaction guff get's reported in our UK GDP?

    The published accounts of the banks participating in this false money merry go round are just complete rubbish and have no regard to aspects such as risk, double and repeat counting etc?

  • Comment number 13.

    The people doing all this churning are making a lot of money for themselves. Effectively they are skimming off wealth from the real economy without doing anything useful.

    Tax the transactions and the people. If they complain, let them emigrate.

    Above all stop the mad churning, at best its a distraction, at worst its destabilising for the rest of us.

  • Comment number 14.

    Perhaps excessive speculation could be curtailed if the players were legally forced to insure themselves against their full exposure?

    This would earn more fees for the insurers and prevent trades without the finance to support them.

  • Comment number 15.

    .... just re-arranging the deckchairs in a global game of musical chairs. I wonder who will get caught out the next time the music stops.

  • Comment number 16.

    But what was the cost of this banking boom?

    The reason forex 'gambling' is on the up is that the World's real economy is dead in the water - all that the funny money can do is to gamble on forex and engage in arbitrage.

    This is yet another example of bankers profiting from misery and demonstrates yet again that we are in for a long depression (like the 1870s or perhaps the Weimar republic. The returns from real investment in doing things are negligible. The returns in bonds and similarly nugatory and even negative. Property is vastly overpriced and has one way to go and that is down. So all that is left is speculation in futures and currency arbitrage gambling.

    In the final analysis this is a symptom of economic death and not something to be lauded at all. It is rather a warning of the forthcoming total destruction of money. The money that the bankers created in the run up to 2008 needs to be burnt up and the assets purchased with it need to be down-priced.

    We need to re-establish a real economy with real trade. Then and only then can we start to recover.

    I wonder if this boom is a symptom of the need to get rid of the City of London from the UK? 'We' need the Euro, 'they' need to gamble, the two are not compatible. We cannot continue like this with the 60 million people of the UK being used to support a few thousand financial leeches - it is totally unacceptable! They have destroyed the country once in 2008 and the Nation is still being sucked dry to support them - throw them out NOW. We need a return to rational interest rates, real returns on Government bonds - they need free money to gamble with. They are perverting the British people and sucking the lifeblood from us! It must STOP now - if we don't stop it the collapse that will surely follow will be far more devastating than 2008.

  • Comment number 17.

    Surely it's all just pie-in-the-sky?


    UK bank accounting rules 'fatally flawed', warns influential watchdog

    https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7964816/UK-bank-accounting-rules-fatally-flawed-warns-influential-watchdog.html

  • Comment number 18.

    For the sake of 'the-bleedin-obvious'...I think we have to combine the last sentance of today's RP blog piece with the last sentance of RP's blog piece from yesterday evening.

    You are naughty Robert!

  • Comment number 19.


    I wouldn't have a problem with this if the banks used the money they were making to do something useful such as supporting real industry.

  • Comment number 20.

    I think you are right Robert that these numbers are concerning. The foreign exchange market is ballooning in size and is out of proportion to the world economy.
    One area that it does make me think of is the calls we hear in various parts of the world for official currency intervention,which currently centre on Japan. As notayesmanseconomics says.
    "So central banks should take great care before committing themselves to intervening in this casino as it is easy to get overrun by events.Perhaps they should all be sent the case-study of what has happened to the Swiss National Bank this year and the losses it has run-up."

  • Comment number 21.


    I have small insider knowledge of this behaviour, but I would like to know more.

    I was told that due to gambling laws in this country the vast majority of profits made fall outside of taxation completely.

    But don’t worry we have people in charge who will address this madness………….

    Or do we just have millionaire sons of the city/bankers.

  • Comment number 22.

    To add to post 14, I think the whole system needs to be less reliant on leverage as this would curtail the ability to acquire exposure whether directly or indirectly. This however means...and Sam_from_Hendon won't like this but...rates will have to increase!

  • Comment number 23.

    Watched the video: https://www.bbc.co.uk/programmes/p0073l69

    Not bad, but fails to mention fractional reserve ratio, strangely enough. Fail to mention that banks are able to lend out 10 times more than they have in deposits.

    https://en.wikipedia.org/wiki/Fractional-reserve_banking

    A pretty important piece of information to miss out really, as this is how banks literally 'make' most of it's money and all money in general.

  • Comment number 24.

    Central banks are big players in currency markets. Worth remembering that there are plenty of fixed currency regimes that are maintained for political reasons.

  • Comment number 25.

    We will be a market leader in Bubbles and Bust.

    Trade in the 1960's crew massively after the adventy of the container shipping concept took hold but saw the UK docker drop from 133,000 to around 13,000 today.

    if brown has not bailed out the Banks ie they went bust the other would have taken a keener interest in what all these numbers mean.

    It a game of pass the parcel its just a question of where the fallout ends up again and maybe with the speed of growth it might not be too far around the corner.

    Again there are no free lunches

    taxing it is only taxing future potenial earning/debt when it all goes horribly wrong again.

  • Comment number 26.

    No 6 Sam from Hendon wrote :-

    ""I'm pleased to see England at the heart of such a growth in for-ex business. As technology has improved, it has made it easier for these financial transactions to be carried out and consequently more of them are being undertaken. The greater the activity the more fees earned by our wonderful banks, the more taxes that will be paid. It's win-win all round.""


    I personally can't see this ponit of view, If these currency trading folks are making all this money, then someone else must be paying for it. Either the currency will be devalued due to extra inflation and the public will pay, or the fees for the transactions will cover the costs and the speculators will pay, and eventually they will learn that there is no profit in it and stop.

    There is no such thing as a free lunch, the credit crisis surely must have taught us something. I suspect that it will be us (the poor old proletariate) who will pay. I vote for a transaction tax unless of course you are part of the currency trading that corresponds to real trade creating real wealth.

    Please don't convince yourselves that it is a good idea unless you really understand the maths. I don't beleive that anyone does. You are just transferring risk in another way to other people.

  • Comment number 27.

    Robert, as well you know, money works because money works because money works...

    The social good that investment banks serve is in maintaining this circularity in the public domain by actively demonstrating that it is a circularity and getting on with it regardless. Otherwise, people might realise that the numbers on the computers storing their debit account details and the bits of paper in their pockets are really just that. By investing a huge amount of time and effort, the illusion of significance is maintained, and capitalist society can continue.

    The question of how much to tax and pay the people who run this programme is a more fundamental question about the structure of society than a gut instinct reaction to the lack of tangible output they produce would have us believe. I'm glad the Liberals and Conservatives are working together on this; it needs a careful and measured yet decisive response, since it will effectively fix our country's socio-economic direction for the next few years.

  • Comment number 28.

    Perhaps we should consider the money that is 'farmed' as different to the profit. As derivatives have little if no relation to the underlyings, so why not consider them separate? We don't count the number of wheat grains which farmers harvest and get all excited, rather we consider the margin given the cost of growing versus the selling price and understand physical farming that way. Perhaps we need a nominal currency which is not used elsewhere, so fungible but not liquid and the conversion cost into real currency would act as a tax, and please the forex chaps with a new market.

  • Comment number 29.

    23. At 1:02pm on 01 Sep 2010, Phoenix85 wrote:
    'Watched the video: https://www.bbc.co.uk/programmes/p0073l69
    Not bad, but fails to mention fractional reserve ratio, strangely enough. Fail to mention that banks are able to lend out 10 times more than they have in deposits.
    A pretty important piece of information to miss out really, as this is how banks literally 'make' most of it's money and all money in general'

    Now you've got to ask yourself why?


  • Comment number 30.

    So if all these traders are making fortunes gambling on currency markets who is loosing money?

  • Comment number 31.

    To think that this madness is in any way controllable is a delusion. Pity the politician who stands up against it.

    However, this does emphasise that there is now a critical detachment between the real economy and the virtual economy.

    This makes it even more necessary for retail banking to be separated from virtual banking with the taxpayer guarantee only extended to the retail banks which are necessary for everday life.

    If or when there is another banking crunch the real economy which feeds us all and employs most of us has to be protected. To fail to do this would be a criminal disgrace.

  • Comment number 32.

    I now understand the real reason for the Con-Dem coalition. To hamstring any kind of banking reform that would restrict the kind of financial activity that has no basis in reality. The Lib-Dems were gaining a lot of popular support for being the only party offering to close the loopholes and restrict/prevent these events re-occurring. That has now been gainsayed by a chancellor keen to increase tax breaks for all his "city buddies"

  • Comment number 33.

    RE: #2, "Making money from fictitious money."

    All money is fictitious. That £10 in your pocket only has its value because of the share prices of British businesses, which itself is only fixed by valuations of the financial services industry. If you don't trust them to make trustworthy investments, do you have any greater reason to trust their supposed valuations of the companies currently at work?

    Yes, the £400 per month in rent makes the difference between a roof and homelessness, but only because other people buy into the fiction. On my street is a run-down warehouse that's been looking for buyers, and has been unused as a result, but it's Still There; anyone prepared to overlook the illusion of ownership would be well capable of jumping the fence and setting up shop, with all that's stopping them being the current "owners" of the warehouse (the creditors of its past ownership, presumably) enforcing their financial claim.

    So I don't see what's with all of this quotation-marks-"money" deal. The whole idea of "earning" money is an illusion anyway, since money doesn't really exist to be earned, so why hold banks to account for turning this illusion to their advantage? If you have a problem with the nature of the illusion, perhaps living in this fantasy world we call capitalism just isn't for you.

  • Comment number 34.

    30. At 1:20pm on 01 Sep 2010, Itsallgreek2me wrote:
    'So if all these traders are making fortunes gambling on currency markets who is loosing money?'

    Answer: Probably my pension fund.

  • Comment number 35.

    Upon reflection I find myself unsurprised that we’re market leaders in trading money that no one actually has.

    Let’s face it, the UK government created money from nothing to lend to itself, and is currently paying itself interest on it.

    And if that isn’t silly enough it decided to call it ‘quantitative easing’

    Exactly how much sillier can it possibly get.

    I suppose we could have a row about how much interest we should be paying ourselves, or even default and take ourselves to court over it.

  • Comment number 36.

    The increased currency trades reflect the ongoing currency crisis.

    The hedge funds are merely preparing for the onset of Sovereign default - where you wouldn't want to be stuck in a 'wrong un'. However, just as they always have done they continue to 'pick up nickels in front of a steamroller' and will speculate right up until the inevitable crash. They don't care if it goes wrong, they'll either get bailed out (as LTCM did) - or they will walk away leaving investors with about 10p in the pound while they start up a new fund - I don't know, like john Duffield did perhaps?

    On top of this the banks are really taking the p*** now - check out this 'wiggle your wad that I gave you in my own face'.

    https://www.guardian.co.uk/business/2010/aug/31/credit-suisse-payout-avoids-bonus-tax

    Thanks for the bailout suckers!

    I hope people remember all this for when the time comes - I'm sure the banks will beg for leniency and mercy when we're at the doors with our pitchforks. and torches.

    Give them nothing, but take from them everything!

    Do unto them what they have done to our children.

  • Comment number 37.

    • 27. At 1:15pm on 01 Sep 2010, PaulR wrote:
    Robert, as well you know, money works because money works because money works...

    Isn’t the point that it didn’t and doesn’t work, that’s why we are losing all our hospitals, schools, police force, armed services, securities, the average workingman can’t afford to support his family, deficits, and debt, rule this country.
    What part of that is working?

    For the majority of working men/women who have seen their wages rise under 10% of inflation over the last decade, but their debt rise with inflation, we got nothing out of this, we get nothing out of this, but we are paying with everything we have.

    The sooner we end this farce the better.

  • Comment number 38.

    @ Sam_From_Hendon
    It is not win-win they produce nothing real i.e. something you could take away and use, but the money comes from somewhere; interest charges on national debt, bank account charges, credit card interest.

    Or simply buying small investors making losses and goods prices, if someone has bought cheep & sold dear in a futures market then consumers pay more, but the producer gets the same amount while the dealer skims off the difference.

  • Comment number 39.

    I have harped on about this before.
    The problem with city trades is that the money they generate is exchangeable 1:1 with real money. If there is such a thing.

    Much better for them to trade away to their hearts content in Second Life.

    At least that way if they want to exchange trading (Linden) dollars with real dollars the rate is around 350:1

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

    That way the day of reckoning would be put back by a factor of 350.
    Initially!



  • Comment number 40.

    #1 Are you kidding? Who is Chancellor of the Exchequer? Who are his chums? Enough said.

  • Comment number 41.

    35. At 1:45pm on 01 Sep 2010, Dempster wrote:
    Upon reflection I find myself unsurprised that we’re market leaders in trading money that no one actually has.
    ----------------------------------------------------------------------
    Didn't Ben Elton do a comedy along a similar line? At the risk of getting everyone going on global warming/climate change (although the Beeb back after their summer break are having a good go) isn't that one of the drivers behind carbon trading. Britain, or more correctly London, is good at markets. What can we invent to sell?

    Great that the interminable Beeb hols are over. It's like being back at school. Perhaps, Dempster, I can feed in a bit of info from the discussion we were having a while back on property repos before the end of last term.

    I tried a contact in south-east retail banking. They were reluctant to dig too deep for obvious reasons but had no knowledge of properties being deliberately held - in large numbers or otherwise - on lenders' books. Also thought it highly unlikely, as do I, due to too many downside risks plus current shortage of ready cash.

  • Comment number 42.

    #10 wrote:

    "Doesnt it tell us more about the trading that underpins the valuations of reserve currencies - dollar,euro,yen and sterling. Couldnt we conclude that these currencies stand on a socially useless foundation and largely unrelated to real economy fundamentals. Isnt this the worrying disconnect?"

    I read somewhere recently (I think it was in the FT, but can't remember precisely I'm afraid) that someone had done an analysis of commodity prices and had deduced that ALL commodity prices are being set by the volume of hot money flowing through a market, and not any underlying supply and demand.

    The equivalent has probably been true of forex and equities for years, but the implication of the survey was that we passed some sort of global tipping point.

    And I agree - this disconnect is VERY worrying. Yesterday people posted links to blogs outling how hyperinflation could be unleased in the US - under all of those scenarios this disconnect is the starting point. Needless hyperinflation in the economy that supposedly underpins the world's reserve currency really is the end of the current monetary system...

  • Comment number 43.

    Which is why, some would say, it's slightly odd that when no less an authority than the chairman of the Financial Services Authority, Lord Turner, questions the social utility of much activity in financial markets, and also suggests that it might be no bad thing to levy a tiny Tobin tax on all this frenetic trading in electrons, well it's curious that the chancellor of the exchequer (who could use a bob or two) doesn't lick his chops and demand a bit of that.
    That is Boy George telling us something. It's written all over his face.
    Why would he sort out the economy for ordinary people? Ordinary people are only the hapless voters after all, too daft to grasp what the few voted for.

    There is a poker game being played by the ne'er do wells. And we all know about the dangers of gambling.


  • Comment number 44.

    #30
    Well now ... just like at the bookies, there are some traders who don't get the gamble right!

    It should first be noted that rises tend to occur slowly and over a period of time, with a gradual build up. Drops tend to be sharper and quicker because of panic and auto-trading. The computer programs all dump stock big time that falls more than a certain margin in a time period. Thus the price drops like a miner's cage.

    You won't make much money in a settled market. Traders need fluctuations to make big gains. If the market is stagnant, you invent a rumour via a friend of a friend of a friend who apparantly carelessly talks about this or that problem or good news in the lift. Ears wag and the stock starts moving. Say a shedload of money is placed (er bet .. possibly without any justification) on the pound rising, then until there is evidence to the contrary, the city sheep will presume that someone else knows something they don't (probably insider knowledge suspected) and will place more money on it, causing pound to rise. In theory, when crap BOE figures come out, pound drops and the all including the original knowledgable traders lose. However, before figures are released, new genuine insider info causes original traders and those in the know to dump immediately before figures released. This is why often bad BOE or company figures don't appear to cause a panic shortly after release - the market has already adjusted to take account of it - the insider knowledge came yesterday before figures announced, the ones in the know sold their positions and made money probably to lots of little investors having a speculative punt without any knowledge.

    You go to local casino. You play roulette. Number five comes up. More money is placed on Number five. Number five comes up again. Shedloads are put on it. This is irrational as the chances of it coming up are identical to any other number each spin. In the city, you combine this irrational behaviour with insider knowledge, which is the equivalent of having an electro-magnet placed near number 5 at the casino that only you know about.

    All strictly illegal of course, but the regulators don't want to upset the apple cart when they might need a job in due course.

    The other losers in currency trading will be 'little people'. If the pound goes up, some other currency - say the dollar, will go down. That means that all Americans are a little worse off at that time, but only a few travellers that try to buy sterling notice the difference. This is perfectly normal when currency rates are determined on the true facts of the economy of the countries concerned, but the speculator's don't care about anything other than making a profit and rumours help a lot to create a false market.

  • Comment number 45.

    > What is there to say about an industry that deals in numbers
    > that boggle the typical human brain?

    You'd have to have a pretty small brain to be boggled by these numbers. It's roughly the number of grains of sand in a few of cubic meters. Tiny numbers, in fact.

    Oh... but we are talking about bankers, aren't we? That explains why their brains are boggled so easily! It doesn't take much for them.

  • Comment number 46.

    > levy a tiny Tobin tax on all this frenetic trading in electrons

    Now you're darned tootin' - what's the delay?



  • Comment number 47.

    Like many central & local government departments the banks are more or less self perpetuating. Don't be shocked if they don't buy the Isle of Man and do all this work out there in the ether in the comfort of there own self perpetuating island. However, if they do we want our money back first. Maybe Paddy Ashdown was right, in the future there will be no national governments.

  • Comment number 48.

    37. At 1:55pm on 01 Sep 2010, chestham

    How long will it be before we are digging out the song 'Nothing Ever Happens' by Del Amitri. Remember:

    On the values of copper and tin
    While American businessmen snap up Van Goghs
    For the price of a hospital wing

    Nothing ever happens, nothing happens at all
    The needle returns to the start of the song
    And we all sing along like before




  • Comment number 49.

    41. At 2:07pm on 01 Sep 2010, Up2snuff

    I went to two repossessions last month where they had decided not to sell but to rent them out. And I remember talking to one manager in the last recession that said he had around 50,000 repossessions currently being managed and rented out waiting for prices to recover.

  • Comment number 50.

    > So those who can't see the point of all these financial trades
    > may (ahem) have a point

    About time somebody said that.

    > unless, that is, you believe the enrichment of financial traders
    > and hedge fund managers is a social good in itself.

    Oh yeah - like anybody could give a hoot about them! Everybody agrees that the impoverishment of financial traders and hedge fund managers would be a marvelous spectacle.





  • Comment number 51.

    RE: #37, "Isn’t the point that it didn’t and doesn’t work, that’s why we are losing all our hospitals, schools, police force, armed services, securities, the average working man can’t afford to support his family, deficits, and debt, rule this country.
    What part of that is working?"

    The fact that we accept the illusion, and close hospitals, schools, fire police-men and women, soldiers and workers and have our children and parents slave away out of a fallacious obligation to the system, rather than question it, suggests that it's doing what it's supposed to. That might be abhorrent, but so long as we rely on financial transaction, such is the price we subconsciously pay.

    It's a bit like Climate change. We all of us want the benefits of a green earth, but are unprepared to make the changes required to bring it about. We fly everywhere, and think that a carbon-offset tax frees us of our obligations, we buy apples flown half-way across the world and drive petrol-guzzling cars because there isn't enough market demand to fund bioethanol petrol stations or electric car charging points.

    The same is true of a risk-free economy. You can't have your cake and eat it. If you want mortgages, student finance and venture capital, you need debt, speculation and interest; it's no good just hoping that the level of prosperity we all enjoyed during the good times can be maintained by punishing the banks when the necessary flip-side of the coin rears its ugly head.

    We (those of us hard-done by the 30-to-50-something middle-class of this country meddling with forces they didn't understand) may decide to forgo both the benefits and the risks of the boom and bust. But if we do, we can't expect to continue to live the life we've been accustomed to. That's just wishful thinking.

  • Comment number 52.

    Perfect reason to manage the bonuses. They should perhaps just be 13% of what is paid if related to true and real need trades.
    But, yes, I was against a Tobin tax but it would be logical to impose it on all or at least 60% of transactions.

  • Comment number 53.

    34. At 1:43pm on 01 Sep 2010, Dempster wrote:

    30. At 1:20pm on 01 Sep 2010, Itsallgreek2me wrote:
    'So if all these traders are making fortunes gambling on currency markets who is loosing money?'

    Answer: Probably my pension fund.

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

    Thanks, I suspected that was the case. Whenever I start to think about how this all works it just seems ridiculous so I assume I must be missing something. Then I get a headache and need to lie down...

  • Comment number 54.

    "According to the results of their latest triennial survey, global foreign exchange turnover rose 20% to $4trn per day on average (yes, that's each single day) in April 2010 compared with April 2007. "

    That's chicken feed - you wait until the commodity boom gets going - then you'll see some numbers.

    You see eventually the 'bubble hoppers' will move on from forex, property and US treasuries and go for the only bubble left - the one which we all rely on to live - food.

    Don't think that the morals of financial genius's will get in the way of profit making - morals are for wimps as far as they are concerned. They alleviate their guilt with the occasional 'bung to charity' which improves their standing and makes them feel a little bit alive inside.

    If only these charities in receipt realised that most of their work is being created by the disparity of wealth these same 'donors' are responsible for - I'm sure they would turn it down.

    In one day a speculator can make a million people hungry, homeless or unemployed - giving a little back to charity is hardly recompense for this.

    WHAT ABOUT THE OMEN ROBERT?

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

    Surely you can't ignore it forever - I realise it's not a guaranteed indicator of a crash but there hasn't been a crash since 1985 on the NYSE which wasn't preceeded by one

    Death cross, Hindenburg omen - all we need now is the sound of four horsemen approaching over the hill...then maybe the sheepole will get the message.

  • Comment number 55.

    It seems the UK probably does rather well out of this casino relative to the rest of the world. At least the UK employees are all paying tax here - even if their non-dom bosses and shareholders are all merily sheltering themselves offshore in the Cayman Islands and other tax havens.

    It therefore seems that there needs to be a world solution involving some kind of Tobin tax that simply makes it less profitable to speculate and more profitable to produce productive goods and services.

    John Kay put it rather well in a piece in the FT last month. Are the banks are behaving like robber barons on the Rhine, extracting a levy for doing nothing more than exploiting a position of privilege or are they actually adding value by creating liquid markets and lower costs for market participants.

    https://www.johnkay.com/2010/08/18/robber-barons-of-the-rhine/

    To me it is very clear they are not adding value. How can it possibly be sensible that the entire output of the world passes through the foreign exchange desks in the City of London 4 times a year - that is utter madness and the rest of the world is foolish to let them do it unfettered.

  • Comment number 56.

    5. At 11:07am on 01 Sep 2010, jon112uk wrote:
    Don't forget these spivs are bankrolling the tory government
    =================

    Presumeably the 4 businessman substantially bankrolling the Labour party are not spivs in your eyes but altrustic paragons?

    Descending to simple name calling without argument is the basis of the school playground

  • Comment number 57.

    a_sensible_comment #7

    Is there any evidence that taxes are paid in UK - most hedge funds are off-shore; most banks account outside the UK (Barclays, Santander, HSBC, etc.). Until there is world agreement that globalised financial systems are the new Mafia/Triad/Cartels of the world, and act to shut them down, productive enterprise will continue to falter (I think Marx had something to say about this). The so called "industrialised world" has passed its production to the "emerging economies" for the sake of quick profit at the expense of their indigenous populations, while the elected representatives have gone hand in glove with the process of "exporting production". Fictional activities producing personal wealth but little or no social gain; a banking crisis in 2008 alleviated by "the taxpayer" results in the 80% owned RBS financing the American Kraft's takeover of the British employer Cadbury. Money made for RBS, jobs lost for Cadbury employees; bonuses for RBS managers; welfare payments for Cadbury employees; further expenditure for "the taxpayer". Boy George and devious Dave are feathering the nests of supporters of their regressive experiment in social and political engineering. How wonderful that they have been let loose to take even more from "the taxpayer" to the benefit of their banking cronies at the expense of the majority of the population who opposed their views.

    Likewise, John_from_Hendon #16

    The problem is, as mentioned above, most of the "real economy" has been passed/sold to India and China by profiteering company directors in the EU, USA and UK. While devious Dave's solution is to turn us into "theme park UK" attracting the newly rich from the Asian continent to photograph the quaint in a new version of the 18/19th century "grand tour". Best get your yokel outfit from Moss Bros in anticipation of the souvenir market.

    But worry not, devious Dave has a "cunning plan", he will asks us (yes everyone of us) what we think of his party's proposals. Monthly, weekly, hourly (probably phone lines are now open - think how much ITV made from it) voting on every last thing that can be conceived. Does anybody remember my favoutite Peter Cook movie "The Rise and Rise of Michael Rimmer" - I suspect devious Dave and boy George do, their political gerrimandering appears to be heavily based upon its plot. Wait for the denouement when we all pass total control to the favoured lads and their "dinning chummies".

  • Comment number 58.

    Playing devils advocate here, but what if tomorrow the same scenario was to be replayed as happended a couple years ago... what would happen?

    Has ANYTHING actually changed? Are we in a better position?

    To be brutally honest all I've heard is rhetoric from our mumbling rulers. The political, economic and (more sadder) moral profile remains as always has been in the world of invisible markets. Greed is still good.

    Like stealing candy from a baby and having it's mum imprisoned for your theft.

  • Comment number 59.

    At that level of business retail and business deposits are still being gambled. Who is currently regulating these activities and have they got anything to say about it ?

    I hope to God it's not Lord Turner if the best he can do is to question its social utility.

  • Comment number 60.

    Of course, after realising that their money goes into London's casino (stock market) big time and the amount of value added (errr... none), the rest of the world might notice the big accountancy firms, their ridiculous pricing and worst of all the total unsuitability of the hugely expensive audit regime as practised to identify and prevent company fraud quickly.

    I will also be interested to hear of the resolute action being taken in the US over the Madoff Ponzi scheme which took place over many years. I bet the auditors are told they did nothing wrong or blame Madoff as he shouldn't have been so naughty but nice that they didn't spot the scheme!!

  • Comment number 61.

    What is with all the banker bashing!
    It just smacks of jealousy, and I'm not even a banker.
    These people work their socks off for their bonuses. And deserve them.
    They then pay %50 tax. And what is left over gets plowed back into the economy in one way or another.
    It is the government that continues to waste money, not banks.

  • Comment number 62.

    56. At 2:50pm on 01 Sep 2010, Justin150 wrote:

    "Presumeably the 4 businessman substantially bankrolling the Labour party are not spivs in your eyes but altrustic paragons?"

    Red Neo Liberal, Blue Neo Liberal, Yellow Neo Liberal, Red Neo Liberal, Blue Neo Liberal, Yellow Neo Liberal. I don't think the point was a political argument - it was merely another person pointing out that our leaders are not our leaders.

    They should be thankful for name calling, for next stop is violent retribution for the theft of our future wealth.

  • Comment number 63.

    @ 56. At 2:50pm on 01 Sep 2010, Justin150 wrote:

    >>5. At 11:07am on 01 Sep 2010, jon112uk wrote:
    >> Don't forget these spivs are bankrolling the tory government
    > Descending to simple name calling without argument is
    > the basis of the school playground

    Please don't besmirch spivs by comparing them to bankers. Spivs are socially useful, by supplying black-market stockings and bacon at time of war. Bankers, on the other hand, are a bunch of conniving misfits who perform no socially useful function whatsoever, according to Lord Adair Turner.

    Tax the hell out of them, until they get the message.

  • Comment number 64.

    61. At 3:10pm on 01 Sep 2010, StGraceham

    Did the last 2 years just pass you by ?

  • Comment number 65.

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

  • Comment number 66.

    61. At 3:10pm on 01 Sep 2010, StGraceham

    The tell you that and hope you'll be so washed up with watching the footie followed up by the X-factor that you will feebly believe it!





  • Comment number 67.

    54. At 2:41pm on 01 Sep 2010, writingsonthewall

    To WOTW never heard of the Hindenburg omen, till now that is.

    I still think they’ll end up printing more money, to avert a crisis.
    A crisis may trigger a default on sovereign debt.

    And a default may well end up marking a shift away from governments operating on a debt based system.

    And if governments aren’t operating on a debt based system, they won’t be paying interest to financial institutions.

    So my guess is, sufficient QE to prevent default, thereby keeping governments operating on a debt based system, and financial institutions in receipt of slice of tax revenue in the form of interest.

    Everything thus far has revolved around keeping the financial sector afloat, and I can’t see the voting public ever being interested enough to recognise how they’re being fleeced.

  • Comment number 68.

    Oh come on 61, they don't work harder than anyone else in the rest of the country and the work certainly isn't 'deserving' of lottery win sized bonuses. They are in a position of priviledge. Fair enough, many have outperformed their peers to get such jobs and many do a good job and improve the lot of their customers but just happening to be the person who picks up the phone to execute a £million currency trades for clients does not warrant a huge end of year payout which in essence has been taken from the client in the form of a spread and passed onto the clients customers/shareholders as a cost. Much like an estate agent doesn't really deserve 3% for selling your house or a recruitment agent 25% of your first years earning for sending in your CV after a quick word search against the 'clients' job spec. We can't justify having so much cash being allocated to such a small minority of people for what is a materially small part of the reason for such a transaction.

  • Comment number 69.

    If it's true what Robert is saying, which is basically the bookmakers are gambling amongst their selves because the punters are all skint, then after they gobble each other up, what will be left apart from one very fat ugly bookmaker...Makes you wonder about your own sanity really.

  • Comment number 70.

    Governments may be inefficient with spending but banks suck this up and hoard it for the few. Neither are useful for society in that sense.

  • Comment number 71.

    Greatest lies of 2010

    ... it's all about the weather - nothing to do with speculation.

    https://www.bbc.co.uk/news/business-11153827

    ...and we'll make profit from the banking bailout

    ....and the cuts are good for us

    .....and we're all in this together (except those of us with large country mansions and fat inheritances)

    ....the BRIC's will save the world

    My goodness, if there was a lie detector within 100 miles of these porkies there would be more needle scratching than in a rebel without a pause.

    ...carrying over from last year - the unbeatable Baroness Green shoots.

    https://news.bbc.co.uk/1/hi/uk_politics/7828549.stm

  • Comment number 72.

    56. At 2:50pm on 01 Sep 2010, Justin150 wrote:
    5. At 11:07am on 01 Sep 2010, jon112uk wrote:
    Don't forget these spivs are bankrolling the tory government
    =================

    Presumeably the 4 businessman substantially bankrolling the Labour party are not spivs in your eyes but altrustic paragons?

    ==============================

    Don't mistake me for a labour supporter - my position is simple: labour were a lousy government, the current lot are even worse.

    But it is the tories who are in the process of making (at least) half a million ordinary people unemployed in order to fund a massive transfer of wealth to their rich backers. £millions from spivs to tories: £billions from tory government to spivs. A formula familiar to any banana republic.

    I make no apology for decrying that.

  • Comment number 73.

    @ 61. At 3:10pm on 01 Sep 2010, StGraceham wrote:

    > What is with all the banker bashing! It just smacks of jealousy,
    > and I'm not even a banker.

    Why would anyone be jealous of a bunch of socially useless bean counters
    who have bankrupted the nation with their compulsive greed? Are you mad,
    or just silly??

  • Comment number 74.

    Before we start wailling about currency trading/speculation, we really should spread our net even wider and look at tha activities of the 'banks' across the whole of the commodities markets and then thoroughly trawl their profits reports. It matters not if the commodity is money or steel or oil or rice - the end result is the same.

    Can any of you tell me why, when global economic activity was on its knees, merchant banks and international fund holders started to present growing profit trends? If they were not engaged in speculative commodity action (may even be rigging in the case of the Silver market) where did these profits come from when their own reserves were shot-through with toxic debt?

    Wealth has truly divorced itself from value!

  • Comment number 75.

    The vast majority of bank workers do not earn these extravagant figures which are batted about by the press.

    It is just boring to hear the constant whinge at bankers, when the vast majority dont get anywhere near these figures.

    As for the top earners. these people are very good at what they do, and should be rewarded. The government makes enough money out of the banking system to realise this, which is why they will never clamp down on them as hard as people on here seem to want.

    I'm more of a cricket and big brother fan.

  • Comment number 76.

    #57. honestgeraldinho wrote:

    "most of the "real economy" has been passed/sold to India and China"

    I think you are running down our capabilities too much. We MUST not accept that we cannot compete. We MUST compete. OK the prerequisites are and will be a challenge, but I think it is wrong to give up before we start.

    We need to join the Euro to get out of the hands of the City of London and to have proper access to our huge home market (the EU) without the banks stealing our had earned income.

    We need to get our property prices down to internationally competitive levels for two reasons first so that business can get the use of property at competitive costs and secondly so that wages and salaries can be internationally competitive again (and at the same time reward work, rather than bankers).

    We need to unleash the potential of our people.

    I don't see that Dave Boy is much help, by the way. Nor do I think Georgie boy will be much help either - but their policy aims of reducing debt is a step in the right direction - provided that the debt they are talking about is both private and public. We have to squeeze out the excess debt from the whole economy one way or another. (It is not an easy thing to do and it will, without doubt, hurt the overly indebted.)

  • Comment number 77.

    #75 StGraceham
    You make a very good point there, but it won't wash on this blog as it has to be all doom and gloom and death to bankers. I agree with you, there are too many whingers who should divert their energies into more useful activities and try a bit of optimism.

  • Comment number 78.


    74. At 3:50pm on 01 Sep 2010, foredeckdave wrote:
    "Before we start wailling about currency trading/speculation, we really should spread our net even wider and look at tha activities of the 'banks' across the whole of the commodities markets"

    without a doubt, what about those pushing food prices so high it's causing hundreds of millions to go hungry, this is mass murder for profit and it's being done in our name.

    the sooner the people of this country disassociate themselves with these people the better.

    the sooner these people are treated for what they are, CRIMINALS, the better.

  • Comment number 79.

    The Crisis of Capitalism says it all
    https://www.youtube.com/watch?v=qOP2V_np2c0

  • Comment number 80.

    @ 75. At 3:51pm on 01 Sep 2010, StGraceham

    'The government makes enough money out of the banking system'...

    I think you mean - 'The parties make enough money from the companies/familes of the banking system'...

    Speaking from one of those people who doesn't pay 50% tax, who works damn hard and is constantly worried about losing his job through the mismanagement/handing (call it what you want) I feel I have a right to have a pop at these poor babies!

    Especially when I go for a loan and I am expected to pay 19% interest (if I borrow more though I'm informed it does go down slightly, go figure!) at a bank I AND EVERYONE ELSE OWNS!!!!

    At least Dick Turpin wore a mask.

  • Comment number 81.

    75. At 3:51pm on 01 Sep 2010, StGraceham

    It is just boring to hear the constant whinge at bankers, when the vast majority dont get anywhere near these figures.


    So you agree that the sooner we've got them sliced down to a harmless size the better. 'Cos then we can go back to living a better, less insecure life and ofcourse, not be bored by the greatest theft of nations any longer.

  • Comment number 82.

    Good Afternoon Robert,

    StGraceham is right that banks are full of talented people who work extremely hard. The UK Banks are currently profitable and this means more taxes for the UK as a whole. Banks have been able to make profits because low interest rates are enabling their customers to stay afloat. Credit card defaults are rising see
    https://www.bbc.co.uk/news/business-11153577
    so the only way that we are avoiding complete catastrophe is through low interest rates. Today Reuters, see
    https://uk.reuters.com/article/idUKTRE6803HM20100901?feedType=nl&feedName=uktopnewsmid
    , have reported the results of their poll of 60 economists. This shows that the expectation is that interest rates will not rise until well into 2011. I hope this is right and I have confidence that our policy makers heed this advice and keep interest rates low for as long as possible. We have a fragile recovery but it is a recovery that is gathering steam. Inflation will fall in the median term so interest rates must be kept low so we can focus on growth through a tight fiscal / loose monetary policy.

  • Comment number 83.

    75. At 3:51pm on 01 Sep 2010, StGraceham wrote:

    > It is just boring to hear the constant whinge at bankers, when the vast
    > majority dont get anywhere near these figures.

    The only whinging I can hear is coming from your direction. Why not find something to do (cricket?) instead of boring us with your unsubstantiated claims?

    > As for the top earners. these people are very good at what they do, and should be rewarded.

    Yes – they should be “rewarded” with a Tobin tax! Did you not read the article? Their activities are futile and damaging .

    > The government makes enough money out of the banking system to realise this,
    > which is why they will never clamp down on them as hard as people on here
    > seem to want.

    We/the government owns half of it already. If the government can run a bank properly, any Tom, Dick or Harry can. There's no need for high wages – in fact you could sack half of them and not notice - the computers do all the work anyway.

    Face up to it, StGraceham - it's a low-tech, sun-set industry about to be distributed across the globe by the Internet. London is one web-app away from extinction (Google-banking, anyone?) and it's best if you all get used to the idea. Find something new, while you still can.

  • Comment number 84.

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

  • Comment number 85.

    Many of comment on this board are devoid of reason, with posters acting in such an ill informed mass hysteria. 'let bash the bankers' or 'tax the spivs' all of which do nothing to solve the deep problems of this country.

    London is the powerhouse of the UK economy whether you like it or not, providing the tax for the services the rest of the country demand. It is idiotically illogical to 'shrink' this part of the economy in some attempt to re balance it. The government should be removing the shackles from the rest of the economy to let it grow and catch up. It should be a long term aim to reduce the level of taxation in the economy, and growth will surly follow.

    That aside - the perceived failings of the banking sector ( which makes up only part of the City) is more down to failings of oversight and government.

    This sort of speculation is nothing new, nor are the crashes that will always follow. Politicians never have a sense of history. Bubbles often come around, people will loose money, the public will wring their hands and history repeats itself. It is neither good nor bad, but just a fact of human behavior.

    ( I'm not a banker nor live/work in London)

  • Comment number 86.

    Are Sam-from_Hendon's posts a joke? Just proves theres no point trying to argue with ignorance.

  • Comment number 87.

    And so the theft goes on. The slow dismantling, the slow destruction, the slow collapse for the majority, civilised society rolling back to darker times just so that a few thousand already rich white men can sustain the lifestyles to which they have become accustomed.

    All man made of course, all preventable. The crops still grow, the sun still shines. There are still just about enough homes to house everyone. Such fuss because the rich simply cannot bear the thought of being, well, not rich.

    Nothing we can do about this man made madness because the powers are too well entrenched. And boy do they know it!

    A few numbers on computer screens moving in the wrong direction and hundreds of thousands starve. What a brilliant economy our betters built. What verve, what genius! They engineered it out of blown glass. The smallest dent, the smallest hit and its gone.

    Just imagine how well we're going to do during a crisis that doesn't centre around little numbers on a screen. Something that nature throws at us, something that's real outside of the head and ledgers of bankers. Something like coming slap bang into the brick wall that is the realisation: that finite reserves of oil, or gas, or coal or whatever, really are finite, and not infinite like our economic paradigm treated them as being. And that what we have on earth, is a population that is increasing exponentially and will demand (probably violently) to be fed regardless of whether the food, or the means to get the food were to run out, or simply become too expensive to be viable.

    Fun times ahead!

  • Comment number 88.

    82. At 4:20pm on 01 Sep 2010, Sam_From_Hendon

    The guys who built the bomb were very talented too, indeed the pilots who took the bomb and dropped it out of the sky, above the first one Japanese city then another were highly talented.

    Those who own patents on wheat and a whole host of crops employ exceptionally talented people and thus control the world food supply or are attempting to, are similarly talented.

    The poor peasant farmer who caring grew the beans used to make the coffee in my hand are exceptionally talented.

    Talented may be a virtue. But what you do with that talent and how it is rewarded is the question.

  • Comment number 89.

    Our Robert has obviously been writing up vast numbers of his Picks whilst on some windswept beach in Wales. To be kept in reserve.
    I wonder if he has been advised to release them on particular days by representatives of the News of the World.
    It just isn't cricket.

  • Comment number 90.

    @ 82. At 4:20pm on 01 Sep 2010, Sam_From_Hendon wrote:
    > Banks have been able to make profits because low interest rates are
    > enabling their customers to stay afloat.

    Nonsense. Low interest rates are rewarding the profligate debtors and socially useless banks, at the expense of socially useful savers. Furthermore, pensioners who have toiled for a working lifetime are seeing their savings being eaten by inflation. They will soon need to depend on the state, unless things change.

    > Credit card defaults are rising ...

    This can only be a good thing as it engenders moral hazard. Bankers would prefer wise and helpful savers to be penalised rather than the culprits (banks and profligate debtors) but that must not be allowed to continue. Sam_From_Hendon continues to be wrong at every level.

    > the expectation is that interest rates will not rise until well into 2011.

    Then we must spoil their expectation. Savers will not prop up profligate debtors and gormless bankers indefinitely. The time has come for a swing in the pendulum if we are to avoid a generation of spivs and spendthrifts from ransacking the savings of careful prudent people. Tories are supposed to help by being tough on failures and spendthrifts - so let's see some action.


    > Inflation will fall in the median term

    If you believe that, you'll believe anything. That is exactly why we must wrest control of our money system from “The City”, who make futile predictions in unpredictable times, and then obstinately refuse to change direction. The interest rate must be used merely to control inflation, and nothing else. When will they ever learn?

  • Comment number 91.

    85. At 4:32pm on 01 Sep 2010, DEAL3R wrote:
    Many of comment on this board are devoid of reason, with posters acting in such an ill informed mass hysteria. 'let bash the bankers' or 'tax the spivs' all of which do nothing to solve the deep problems of this country.

    London is the powerhouse of the UK economy whether you like it or not, providing the tax for the services the rest of the country demand. It is idiotically illogical to 'shrink' this part of the economy in some attempt to re balance it. The government should be removing the shackles from the rest of the economy to let it grow and catch up. It should be a long term aim to reduce the level of taxation in the economy, and growth will surly follow.

    That aside - the perceived failings of the banking sector ( which makes up only part of the City) is more down to failings of oversight and government.


    Yes all the repos and unemployment are a mere perception!

    Oh, thanks for the reminder of all those members of the public marching through London demanding their government, the employees of the population remember, deregulate the banks, fire the bank risk managers and let them gamble with the earnings of the generatins still to com and demanding that all bank sales people should have a badge saying 'Financial Adviser - we can help you find that 125% mortgage, such a smashing, wonderful idea'. The second demand of the peasants was a government that ignored the public, but did what ever it could to ensure the spivs could buy as may tropical islands as they liked because we love those spivs and think they should enjoy luxury at our expense!

    Can't believe I forgot all about that! Doh!



    (To help you out, there is more than a hint of sarcasm above!)



  • Comment number 92.

    Good point at 85 since each individual will act in the way that logically suits that individual best and not in the manner which suits society as a whole best and this ensures history repeats itself. As Nash illustrates however, this isnt the best way to act but it is human nature. The problem people are angry with here which is justifiable is that despite London being the powerhouse, it also acts as a tax on value to the rest of the nation since it takes a massive slice out of the cash circulating to facilitate the economy's transactions. This 'hunters (bankers) cut' which is evident in bonuses etc would be better utilised via distribution to the rest of theountry/world, via lower fees, tighter spreads, etc instead of it being at such individuals discretion to spend in champagne bars or huge second homes and the like. Giving a small minority such wealth and trusting them to spend it somewhere which keeps people in jobs demonstrates wrong thinking. Not relying on them to decide where this cash makes its way back into the system is far better. Having said all that, human nature will not work this way as logic for the masses is illogical on an individual level when one thinks only of oneself.

  • Comment number 93.

    "75. At 3:51pm on 01 Sep 2010, StGraceham wrote:

    The vast majority of bank workers do not earn these extravagant figures which are batted about by the press."

    No they don't - but then who's saying they are in the firing line? - You assume they are but the gallows will work 'top down' and not bottom up - you're confusing it with this system which screws the poor to save the rich

    "It is just boring to hear the constant whinge at bankers, when the vast majority dont get anywhere near these figures."

    ...that's not the problem, the super bonus culture take enough for 4000 staff. "just following orders" are we?

    As for the top earners. these people are very good at what they do,"

    ...do you mean like 'assessing risk' and 'investing wisely'? - do you discount the people who worked at lehmans then? - oh and those who worked at RBS, Lloyds, Northern Rock and any other insititution which is currently sucking the teat of the taxpayer?
    Seems to me they do anything but their job well.

    "and should be rewarded."

    If you can explain how a banker generates wealth (and doesn't just skim it from the working man / woman) - then you and they can have that bonus. After 2 years still no-one can explain how bankers 'generate wealth' - so I'm not holding out much hope that you will be able to either.

    "The government makes enough money out of the banking system to realise this, which is why they will never clamp down on them as hard as people on here seem to want."

    What banking system? - have you been asleep for the last 2 years? Didn't you notice that the banking system stopped making money in 2007 / 2008 and since then it's been sucking the taxpayer dry - either through direct support or through the screwing of the consumer.

    "I'm more of a cricket and big brother fan."

    Well if you are a fan of big brother - maybe that's why you have such a dodgy view of banking. I work in finance so I know how corrupt and feckless it all is - you simply assume it's a clever 'black box' - without ever bothering to look inside.

    I got some 'magic beans' here - fancy swapping them for your cow??


    "77. At 4:03pm on 01 Sep 2010, Roger Knight wrote:

    #75 StGraceham
    You make a very good point there, but it won't wash on this blog as it has to be all doom and gloom and death to bankers. I agree with you, there are too many whingers who should divert their energies into more useful activities and try a bit of optimism."

    Optimism? - you mean dellusion?

    Which school of Economics do you come from? The last time I looked they're all up in arms about the impending collapse.
    Putting on rose tinted glasses and believing the tripe politicans roll out isn't going to save you - you're just going to be a lot more scared than the rest of us who have accepted the inevitability.

    Watch the Anglo-irish bailout - or the longer Japanese vampire banks - see how they're performing now - it's a glimpse into our future.

    Also watch the US, they went into recession / depression 6 months before us, so whatever they're doing now, we're likely to see the same in 6 months here.

    Want to know why Obama's pulled the troops from Iraq? - To quell the expected uprising. Even the Government has finally realised where we're heading.
    Why do you think both the UK and the US have done the ultimate no no in fighting wars and declared a 'finish time' - it's because come hell or high water, that's when they're expecting to have to deploy troops onto the streets.

    ...but you can wrap yourself in your optimism - I'm sure somebody will sort it all out - won't they?

  • Comment number 94.

    @ 85. At 4:32pm on 01 Sep 2010, DEAL3R wrote:
    > London is the powerhouse of the UK economy whether you like it or not

    This is exactly the sort of ill-informed, complacent comment that gets us absolutely nowhere. Do you think for one second that the world will sit still? The money system is being distributed across the Internet at exactly the same time as you sit there typing in, thumb in bum, mind in neutral.

    > It is idiotically illogical to 'shrink' this part of the economy in some
    > attempt to re balance it.

    We have no choice in that – the network will strip it away at Internet speed. Sure, London will house some computer centres with aircon and networks, but money markets? Pull the other one, it's got bells on it. London's finished, and you havn't even noticed yet! Try to catch up.

    > The perceived failings of the banking sector ... is more down to
    > failings of oversight and government.

    What rot. It's all down to fear and greed, as you well know. It was handy when all the fear and greed was housed in one cesspit (London), but when it spills over the rest of us, well sorry but it just has to go. We can't all make a living cutting each others hair or counting each others money etc.

  • Comment number 95.

    "82. At 4:20pm on 01 Sep 2010, Sam_From_Hendon wrote:

    StGraceham is right that banks are full of talented people who work extremely hard. The UK Banks are currently profitable and this means more taxes for the UK as a whole."

    No it doesn't

    Banks are writing off this years profits against previous years losses - the taxman will get squat my doey eyed friend.

    "Banks have been able to make profits because low interest rates are enabling their customers to stay afloat."

    You must work in a bank to trundle out such rubbish - did they send out an E-mail telling you what to say?

    "Credit card defaults are rising see
    https://www.bbc.co.uk/news/business-11153577
    so the only way that we are avoiding complete catastrophe is through low interest rates."

    Err - how about PEOPLE STOP BORROWING - or do you just keep lowering rates the more people borrow? - What comes after 0.5% Sam? Ever heard of Japan?


    "Today Reuters, see
    https://uk.reuters.com/article/idUKTRE6803HM20100901?feedType=nl&feedName=uktopnewsmid
    , have reported the results of their poll of 60 economists. This shows that the expectation is that interest rates will not rise until well into 2011."

    They may be right - but that doesn't mean it's good for the worls.

    "I hope this is right and I have confidence that our policy makers heed this advice and keep interest rates low for as long as possible. We have a fragile recovery but it is a recovery that is gathering steam. "

    Oh - so you're obviously laden with debt and are hoping to keep your payments down. QUICK FOLKS PUMP THIS DEBT JUNKIE WITH SOME MORE FREE CASH UNTIL HE EXPLODES INTO A PILE OF WORTHLESS PAPER!

    "Inflation will fall in the median term so interest rates must be kept low so we can focus on growth through a tight fiscal / loose monetary policy."

    Did you pull that straight from the BoE website? - Makes you sound clever doesn't it?
    So do explain how inflation will fall in the medium term when we've just injected £200 billion into the Economy?

    Do you believe in magic?

  • Comment number 96.

    77. At 4:03pm on 01 Sep 2010, Roger Knight

    ...actually I've just seen one of your 'responses' to one of my posts yesterday.

    You can forget what I just wrote - you're seriously not worth debating with as you're knowledge of history is nearly as poor as your knowledge of banking.

    now get back to work slave - you've got debts to pay.

  • Comment number 97.

    @4:22pm on 01 Sep 2010, Jacques Cartier
    ##-We/the government owns half of it already. If the government can run a bank properly, any Tom, Dick or Harry can. There's no need for high wages – in fact you could sack half of them and not notice - the computers do all the work anyway.##

    We are not the government. I do not want the government to own the banks as they will be driven by a political agenda ( even though there may be a big profit to be had!). The motive of a bank is to generate profit, nothing more nothing less. There is no room for social good.

  • Comment number 98.

    So much negative comment - but remember you can trade currency yourself quite easily - you need a PC on the net so you can set up an account and some stake money (note real money you're prepared to lose).
    You might win. I reckon some people make a good living at it (most probably don't). Very democratic really. If you can't beat 'em join 'em - it's another thing to spend your time on apart from offering opinions on this blog !

  • Comment number 99.

    Actually folks, considering the number of people from hendon calling for the maintainence of low rates - I'd say that's where the problems of the country lie.

    You want overextended people trying to live like lord and lady muck on a paupers salary subsidised by unsustainalbe debt - I think Hendon is the epicentre.

    Here's the Tories blaming the poor and needy - and all along it was the feckless middle england wannabe's who brought us all down.

    I've got news for you - the BoE cannot control rates, the market does - and it will speak soon and no matter how much wingeing you do about Merv, it won't make a blind bit of difference.

    Sold the dream - bought the nightmare - fools.

  • Comment number 100.

    85. At 4:32pm on 01 Sep 2010, DEAL3R

    First time is it?

    MORE PROPOGANDA FROM THE SPIVS AND BANKERS.

    At least I'm real.

 

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