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Friday, 3 August 2012

Not the way to punish the bankers

France's introduction of a Tobin tax on share dealings is the precursor of a unified Eurozone effort to cripple the City by an EU-wide financial transaction tax. Naively promoted as a way 'to punish the bankers' it is no such thing; it will instead punish the UK economy, and the financial well-being of millions of ordinary folk. With the prospect stronger than ever of the UK becoming a semi-detached nation, the EU fears the strength of the City and the advantages that independence will bring. 

You cannot punish bankers with fines and taxes. They are simply passed on to savers, investors and even the governments that impose them, leaving the bankers themselves not the least inconvenienced. There is only one way to punish errant bankers - jail. When Fred Goodwin and Bob Diamond are both serving 15 to 30 years in adjoining cells like that below, we'll have started to solve the institutional corruption in the banks.


Anonymous said...

You can't argue logic with mouldy potatoes/investment bankers/EU commissioners Raewald.

Now I won't tell you again.


DeeDee99 said...

I very much doubt if any of the senior bankers who are responsible for the financial crisis, the mis-selling of products and the Libor scandal will ever see the inside of a British jail.

Our Government and the SFO doesn't have the guts to do anything about it.

The British people want OUT of the EU and in return the EU is out to destroy the UK as this article spells out.

They can't have a successful independent (or even semi-independent) Britain acting as an example to the rest of the countries which will remain trapped inside their Superstate. To break the UK, they must destroy the City - so that is what they will do.

And all we have to stop them is Call Me Dave. So they'll win.

Anonymous said...

Good God man. For someone that must read a lot about this subject you have taken your brain out and placed it with all the others who write tripe about this subject.

The people that need to be in Jail are the politicians first, then the regulators, and yes many a banker has pushed the limits. But the greed and stupidity that they have displayed is as a result of crony capitalism that rewards failure (by not punishing it)

We will never resolve this issue whilst bloogers commentators and others conveniently divert attention from the root cause.

Most of what the Bankers where doing was being hailed a few short years ago by all the left wing governments in the West as the right thing to do. Hell the US even passed laws forcing banks to lend to those who could not pay. I expect better of you.

Resucuing the banks was the most stupid thing we did, as that has consigned the world to at least a decade of stagnation and millions into poverty. We would have been well on the way to recovery now had we dot done it.

Nothing like the stigma of failure to focus the mind.

woodbine willy said...

You've got to admire the minimalist chic design of that cell.

Johnm said...

Hearing endless castigation of the "bankers", who are just another cog in the faster-rotating wheel of "world" government (AKA communism).
I have long held the opinion that communism never fell, it just morphed into a mixture of green imperialism and world governmentism.
The UK politician is closer to the E U and the UN than to their electors, and banking deregulation is better considered as part-and-parcel of the move to global dictatorship.

Anonymous said...

We will never resolve this issue whilst bloogers commentators and others conveniently divert attention from the root cause.

To be fair I think many people haven't yet understood it. The banking industry got the way it is by being heavily subsidised by the state over many many decades, to the point of being almost a nationalised industry; people don't see it like that, because as no money actually changes hands until there's a crisis, they don't realise that premium-free credit insurance is a subsidy. In terms of commercial risk it makes no sense that a bank can borrow at less than, say, a water company, and yet they can because their credit is guaranteed by governments, allowing them to borrow at government rates. The resulting market distortions have brought us a hugely over-leveraged society and a banking system which would have collapsed anyway sooner or later, regardless of "derivatives" or "greedy bankers". Regulation was always, in one way or another, going to allow leverage to increase over time, because that was the whole point of the system; if the regulators had somehow been able and willing to set minimum reserve ratios which were impossible to circumvent, the political and other "benefits" of fractional reserve banking would have disappeared.

Anonymous said...

Anon @ 20:26 - Spot on

You can also see the malevolent hand of over reaching statist government in the unfolding Euro disaster...

Anonymous said...

DP111 wrore..

The purpose of the Tobin tax is to raise revenue. Bankers are just an excuse, just as AGW.

Raedwald said...

Anon 10.41 - Your arguments in favour of bankers come dangerously close to "A big boy did it". Bankers innocent? I don't think so. Not one CEx, one Chairman, one Board raised an objection to the insane creation of $700 trillion of largely worthless derivatives - all are mired in greed and avarice; not one objected to the fraud, corruption and false accounting used and in use to cover up their bankruptcy, at a time when the bonus pool is only marginally reduced and not one banker has faced the courts.

Enron's Jeff Skilling is serving 24 years for conspiracy, fraud, false statement and insider trading. Why the hell shouldn't Bob Diamond and Fred Goodwin be there with him?

Get real. Wake up.

G. Tingey said...

Except the Tobin tax is not going to be implemented in the UK AFAIK.
Could be very interesting!

Anonymous said...

Senor bankers go to goal, then the senior politicians cannot help but be compromised and implicated too.

This is a mutual backscratching operation and why we are unlikely to see either really senior bankers nor politicians in gaol.

Anonymous said...

Raedwald Anon 10:14 here I am very real. I'm an engineer who happens to work for a bank, but not a banker and like many of my colleagues (who also work for banks and are not bankers) we are pissed off with the entire miss directed BS about banks. I don't blame anyone for being pissed off with banks, but we have to look at ourselves and ask, who the f~@?}k borrowed all the money???? RBS and HBOS were the 2 basket cases in the UK because they lent too much money, and RBS engaged in a disastrous takeover. These organisations should have been allowed to fail. End of story. Sell the assets and get back to being local retail banks. But that didn’t happen and now we are no further forward having taken down Lloyds in the process, probably the soundest bank in the country.

I had to move house several times as I chased employment in the last 15 years, and each time we seemed to end up with more and more dept. This was so our neighbours could buy BMW's and 2 holidays abroad every year.

It’s the people of this country that need to be real as they voted in bunch of uber dickheads who just spent spent spent. If it had just been the consumer boom then we would have half a chance of getting out of this as a country, but from having a just about sensible public sector in 1997 we have now have one that is completely unsustainable that many in the public are refusing to accept must be cut.

I sat down with a mate of mine for a drink one Friday evening in August of 2007 after the very first announcement about subprime. One of us worked for the said organisation and the other a hedge fund, we clicked glasses and said “well it has started” We knew what was about to happen then, just a couple of engineers, but we still have brains and still know how to use them. Just the other day I was talking to one of the “bankers” and he said “they all knew what was going on then too” that was politicians and 2005 we were talking about. Libor (another monumental smokescreen in order to misdirect public attention) is all political and it should come back and bite them all, especially the politicians like Balls and Brown.

Notwithstanding all of this the way our economies are run with crony capitalism with a small cadre of Politian’s, bankers and industry leaders must stop. How that is done is now being debated. We need to change the root cause first and foremost. There has been much activity in financial services that has been foolhardy, the recent Knight Capital debacle a classic example. There has been criminal activity, MF Global being an example where strict rules are being broken, but where the leading management is being protected by their political fiends. These are not banks, and this activity always happens, and is why we have rules. But the rules at present protect the corporates and not the individual; they reward failure or activity that will inevitably lead to failure. We need to get back to rewarding success and protecting the individual. And for that to happen we must concentrate on where the biggest failure has occurred. And that is Politics. Yes Raedwald I am very real and informed.

By the way I wouldn’t bother to write this if I didn’t like you site. But this is one subject where everyone is being deliberately misdirected, IMHO.

Raedwald said...

Anon 10.14 - Thanks. I didn't think you were one of the half-mill bonus group, and I appreciate that the vitriol against the banks that applies to maybe 2-3% of bankers is unfair to the tens of thousands of ordinary bank employees who are honest, diligent and in the same boat as the rest of us - and I assume my readers are bright enough to distinguish between the two.

And to be fair, I've savaged the global corporates and the entire political class on here as much if not more than the investment banks; they're an unholy triumverate of mutual support. But the banks as they are now are very much one leg of a three-legged stool, and we only need to collapse one leg to bring down the whole.

Many thanks for taking the time to write - I really do appreciate the feedback on here.

Bill Sticker said...

Jailing bankers isn't the answer. They exist to make money for themselves and their shareholders. Simply removing one head of the Hydra does not kill the beast. Another will simply grow in its stead.

The root of the problem is bad debt, and giving excessive credit to the non-credit worthy. That practice has to end, or the same old situation of dodgy derivatives trading will crop up yet again a few years down the track. Albeit in another form.

Peter Ward said...

Bankers knew that governments couldn't allow them to fail, therefore there was no downside to their bets and no risk of failure. Who allowed that to happen? Presumably the regulators? Who allowed the regulators to do that? Presumably the very governments who got value from the deal. Value? I guess it was that banks kept buying government debt that so kept governments afloat and ratings at AAA. Everyone wins, except us punters. But that's not surprising really -- we're not the banks' customers after all, we're just a source of money for them.

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