Friday, September 21, 2007

British Bankers Association behave as a union to protect their industry

The Bank loses a game of chicken

... and they do so at the expense of the wider economy. This is a great analysis from Martin Wolf in the FT who lays the blame for the recent credit crunch squarely at door of the banking industry itself. They have engaged in irresponsible lending and now essentially hold Mervyn and the whole UK economy to ransom for taxpayers' money to bail them out of a jam. "In a game of chicken, the loser is the player who swerves first out of the way of the other driver’s car. Since the Bank is concerned about the health of the economy, while the banks are concerned only about their survival, the former is at a huge disadvantage. Apparently, the banks told the authorities they would not lend to their weaker brethren until the Bank opened its wallet. The threat was credible and the Bank swerved."

Posted by an bearin bui @ 12:05 PM (1487 views)
Please complete the required fields.



10 thoughts on “British Bankers Association behave as a union to protect their industry

  • planning4acrash says:

    It just occured to me that, just as we protected industry during the 1970’s, which became untenable, we are now doing the same with financial institutions. We all know that this can only be done up to a point and the government will eventually have to throw in the towel if the crisis gets too bad and if the bailing out stokes too much inflation and becomes too unafordable. That would result in the last element of our economy loosing favour. What do we have left? Creative industries? I had a vision recently of artists occupying Canary Wharf and City offices, in the same way that Victorian factories in Shoreditch are now full with artists and flats instead of the furniture makers that made the place big in the first place!

    Reply
    Please complete the required fields.



  • planning4acrash says:

    Maybe France is ahead of the game on this, because it goes to extraordinary lengths to protect its cultural capital.

    Reply
    Please complete the required fields.



  • Ok so the banks failed to regulate themselves, this is happening throughout society in all our institutions politics, medicine, police etc etc this leads to a lack of trust and more state controls which is what’s happening now in the banking sector. Maybe these are just the signs of a failing society.

    Reply
    Please complete the required fields.



  • I was thinking the other day that should the economny collapse, painful as it would be, how much time would be available for people to be creative. And how much they would have to be creative, since the £ would buy sweet FA on the worlds markets, and the country would have to start making things for itself again.

    Rather than the economic robots we have been trained to be.

    Reply
    Please complete the required fields.



  • What I find frustrating is that all other industries are told to take a jump in the lake when they face market downturns yet we are fed the line of financial / economic stability whenever it comes to banks. In the tech slump, tens of thousands of people were laid off from big tech multinationals operating out of the UK and the government offered little or no help. Tech jobs are being outsourced to India and China all the time and we’re told it’s due to “globalisation” and the free market making it too expensive to produce things in the UK. Germany seems to manage fine, however. This govt clearly has its darling (no pun intended!) industry of finance and banking and they get special treatment and their outrageous salaries are justified by pointing to the free market. But banking is obviously not a free market, any more than doctors on the NHS operate in a free market. It is a rigged industry and a realm of privilege for the elite of the UK, all at the taxpayers’ expense.

    Reply
    Please complete the required fields.



  • @planning – you’re dead right. Virtually everything else in this country is propped up by the public sector, so why not banks?
    By the way, which bit of the UK’s cultural capital would you trade on? Cool Britannia? I think they already tried this and found it wasn’t worth much.

    Reply
    Please complete the required fields.



  • I regard Mr King as none of those things. Not because he isn’t any of them, but because i don’t know that he is any of them and i have never met him.

    If he is guilty of anything then its the usual run-of-the mill economist stuff , nothing more. Maybe he did not appropriately recognize, as did few, that the things that were not caught in the inflation target were as problematic as they were. Maybe he did.

    He was initially given the target by Mr Gordon Brown. He was given a worse target by Mr Gordon Brown at a later date. Mr Brown, a man who still talks as though he has cured the fundamental human trait of boom and bust. More about Mr Brown at more opportune moment.

    There is NO DOUBT who is to blame here. Just look at the actions of the Northern Rock managment 5 minutes after being bailed out. 20 million GBP to caretaker that kind of a disaster .. i don’t think so. These people cannot be allowed to run away AND certainly they must modify their behaviour beyond all recognition.

    I heard some further nonsense on a radio show the other day about how this was the first “bank run” in modern history. We had survived 2 world wars .. blah blah dumb mother f** blah. I missed who called. Probably one of the dumb bankers who got us into this mess worried about this 5 figure salary.

    Here is a problem. In the last 30 years we have been UK plc a wholly owned subsidiary of the United States plc. They did a management buy out in the 1940s. We arent even that good a performing subsiduary, but we have some good assets such as location.(Kirstie Allsop is right for a moment).

    Now the mother company is also in trouble. A minor subsidiary is not going to come in for much help.

    Mr King cannot afford to lose. He needs to seek allies who can help him .. and fast.

    Reply
    Please complete the required fields.



  • financial planner says:

    Anyone got the full article which they can copy to HPC?

    Reply
    Please complete the required fields.



  • whiteknight

    An excellent analysis, here here.

    Reply
    Please complete the required fields.



  • Got gold?

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>