Saturday, Jan 24, 2009
Foreign bankers took advantage of lax UK rules - now UK taxpayer is saddled with massive losses
money morning: Great Britain - The “Rust Belt” of Global Finance
''Because of the importance of Britain’s financial sector, its bank bailouts need to be nearly as large as those in the United States, yet its tax base is only one quarter the size.''
Posted by hpwatcher @ 07:21 AM (623 views) Add Comment
9 Comments
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1. hpwatcher said...
Article says it all really.....
2. stillthinking said...
I hadn't heard of the hollowing out idea before. Also, I didn't know there were so few companies truly based in London, I thought the whole point was that they had to move completely to take advantage of the UK regulatory system.
More dire news anyway.
3. drewster said...
Not sure he's entirely right. If the banks are mainly foreign-based and their customers are foreign too, then why does our government have to bail them out? Saving jobs isn't the issue - there are cheaper ways to do that. Can't we just let the foreign banks go bust like Lehman Brothers did?
Also I wonder if this is the same Martin Hutchinson who writes the popular column The Bear's Lair?
4. troy said...
The better solution, says Langrick, is to allow the government to issue enough new debt-free dollars to cover the interest charges not created by the banks as loans:
“Instead of taxes, government would be empowered to create money for its own expenses up to the balance of the debt shortfall. Thus, if the banking industry created $100 in a year, the government would create $10 which it would use for its own expenses. Abraham Lincoln used this successfully when he created $500 million of ‘greenbacks’ to fight the Civil War.”
National Credit from a Truly National Banking System
In Langrick’s example, a private banking industry pockets the interest, which must be replaced every year by a 10 percent issue of new Greenbacks; but there is another possibility. The loans could be advanced by the government itself. The interest would then return to the government and could be spent back into the economy in a circular flow, without the need to continually issue more money to cover the interest shortfall.
The fractional reserve Ponzi scheme is bankrupt, and the banks engaged in it, rather than being bailed out by its victims, need to be put into a bankruptcy reorganization
BORROWING FROM PETER TO PAY PAUL:
THE WALL STREET PONZI SCHEME CALLED FRACTIONAL RESERVE BANKING
Ellen Brown, December 29th, 2008
www.webofdebt.com/articles/ponzi.php
5. Riverman said...
There's some truth to this, but it's massively exagerrated. London has a diverse economy and it's not entirely dependent on banking.
Its infrastructure is in dire need of improvement, but it's not appalling. At least not compared to mumbai or shanghai or anywhere else in the east that everyone thinks banking will move to. Or Sydney, for that matter, which has terrible transport facilities.
6. plato said...
This article enhances my suggestion some time ago that a great proportion of the City of London was/is in fact a black economy. Earning and spending yes, but avoiding direct taxation.
7. plato said...
....and I should have included 'laundering'.......
8. letthemfall said...
This is a better article than I expected and highlights the rotten core of our economy, viz financial services, which have grown bigger than the apple, now turning black too. But I think the banks our govt is bailing out are British owned - Lloyds/HBOS, RBS, NR... Allowing one of these to fail would be extremely serious; more than could mean economic annihilation.
I don't think the general public have really grasped the seriousness of the situation. I called in (with appropriate reluctance) to my local estate agent yesterday. She told me that although people are looking at houses, their offers are not being accepted. They still feel their house is somehow worth some arbitrary high figure they've put on it. Or it could be they are so financially stretched that they would be done for by selling lower.
EAs seem to have split personalities at the moment. First she said that her job was at risk and things were as bad as she had known in 30 years. Then she thought is was still a good time to buy because you could lose your money in the bank. So the idea of housing being a sure bet has yet to recede. It probably hasn't occurred to those who think that way that if people ever start losing their savings then houses would plunge in value.
9. hpwatcher said...
still a good time to buy because you could lose your money in the bank.
Ah, the new mantra of estate agents.......