Tuesday, June 23, 2009
Everything’s fine in bankerland
City ‘failing to learn lessons’ of crisis
It seems that memories are failing already. Or they're just hoping to get away with it
Posted by letthemfall @ 02:42 PM (1415 views)
24 thoughts on “Everything’s fine in bankerland”
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denzil says:
too true indeed!
One of the main obstacles to reform (outside of bankers) is the Govt. I’m sure Gordon Brown is acutely aware that his economic miracle was heavily based on the madness in the money markets and filling consumers wallets with the fruits of HPI. He’s lost one of the two and will be reluctant to plunge the dagger into the other one.
charlie brooker says:
http://www.housepricecrash.co.uk/forum/index.php?showtopic=118002
51ck-6-51x says:
In the words of the ghost of Jim Morrison, “If you book them, they will come.” ( Wayne’s World )
If the private enterprises are vying for this talent then they value it, regardless of my or your conviction that their only value is in destruction; of course they do not care about the system stability, only their own survival and prospering. Why would one expect anything else?
Similarly if there are rules they will stick to them (to the letter of the law that is, not to the letter of morals) again, why expect anything else.
If you can come up with a better system please do; it could be your legacy!
Oh, and forget the threat of violence over immoral acts ( even with a greater good argument ) – it may make them think twice to start with but it would end with corporate army’s and corporate states, not a road I like the look of.
icarus says:
@3 – Talent? Yeah, it takes more talent to come up with new ways to skim off the top than it takes simply to supply credit for productive purposes. A thief needs skills that a farmer or a carpenter wouldn’t normally have.
System stability? That’s another department – the govt and regulators.
Better system? It’s the “credit-supply-as-a-public-utility” model and it existed for decades outside the Anglo-American investment banking world.
alan says:
Hungary has learned the hard way.
The IMF stepped in today with a 1.4bn Euro loan.
letthemfall says:
Arguments about value, the market and all that tosh do not hold here. The banks are bust. The only reason they haven’t gone under is either foreign capital or the treasury bailing them out. If it were not for the Govt there would be no viable banking sector – and no viable economy. That the banks should carry on as before is scandalous. The regulators should come down on them from a great height. The system was okay, but it has been corrupted. The banks have failed badly; and the bankers who ran them are abject failures. If our Govt doesn’t sort this out that will be their greatest failure.
An Bearin Bui says:
Funny how when people get free money off the government to cover up their mistakes they just turn around and start doing the same stupid things all over again. Kind of like when you tell a teenager they’ll be grounded if they come home drunk one more time, then they come home drunk and instead of following through, you’re cleaning up their sick in the bathroom and making them toast and tea for the hangover the next morning… before too long your kid’s a raging alcoholic…
Moral hazard is the official term, I believe…
shipbuilder says:
3. 51ck-6-51x said…
“Similarly if there are rules they will stick to them (to the letter of the law that is, not to the letter of morals) again, why expect anything else.”
I’m sure we’ve had this discussion before, but why shouldn’t companies stick to the letter of morals?
bystander says:
……… But these bankers are sticking to the letter of morals, the morals of all bankers; ‘I’m alright Jack’ and ‘none for you 20 billion for me’ etc. etc. To paraphrase and misquote Paul Whitehouse (if memory serves me well), inthe character of an obnoxious investment banker when asked about the ethics of ripping people off for short term gain; ‘Ethics, ethics, don’t talk to me about ethics………………………….I own most of it’
bellwether says:
The banks and bankers are really no more or less moral than people posting on this site. Blaming banks is as irrational and short sighted as blaming estate agents. It exposes envy and an almost embarrassing lack of intelligence. Banks were as conduits for government policies have become scapegoats for government policies.
The Government have been active and complicit, artificially stimulating the economy with cheap credit. There’s was a failure at manifest and represhensible level, loose monetary policy, failure to take land values into account when calculating inflation, insistence by government that there was an undersupply of property (eg Barker Report), the refusal to intervene throughout the whole period when house prices became detached from income, the lauding of banking leaders, it was Sir Fred Goodwin last time I looked, the failure to introduce a land tax system that would reduce speculation in property, the failure to address the laws which make renting such an unpalatable option, the recapitalisation of the banks in exchange for promises to sustain lending at the same levels that broke them in the first place.
The government have a responsibility to the electorate. The bankers have not responsibility. So we get angry at the banks. Duh.
bystander says:
“The bankers have not responsibility”, @bellwether
……..and yet through their lack of responsibility their greed (bonus culture built on short termism) they have, along with a complicit government and sheeple, almost brought this modern capitalist culture to the abyss and hundreds of thousands of people in the UK, and millions around the world have been thrown onto the pyre. Your protective attitude towards banks and bankers is generally a good thing, but even you must admit that fraud and devious manipulation of financial vehicles should be punished. If I do not pay my tax on time I get fined or worse prison time, even if I say I didn’t understand what I had to do or all the information required, why then do the city fat cats like Dick Fuld, Sam O’Neil, Adam Applegarth, Fred Goodwin etc. walk away from their responsibilities, handsomely rewarded for failure, with us all having to accept that they are innocent because they didn’t understand these CDO’s, CFO’s ( ‘UFO’s). You get paid the big bucks you take responsibility, and that has nothing to do with morals or ethics, but culpability. If this view shows an “embarrassing lack of intelligence”, then please explain why?
Dunkindogdo says:
I’m not convinced by all the talk of extensive regulation, surely all that’s needed is an accurate measure of inflation (that includes house prices), such that price bubbles can spotted, and interest rates adjusted in time to stop all the lemmings from over borrowing?
inbreda says:
Failing to learn? What’s the lesson?
“Take a big risk and win = rich. Take a big risk and lose = rich.”
So they take big risks. Lesson well learnt IMO!
devo says:
10. bellwether said… The banks and bankers are really no more or less moral than people posting on this site. Blaming banks is as irrational and short sighted as blaming estate agents. It exposes envy and an almost embarrassing lack of intelligence.
Let me explain this to you again, er, belly. We are all to blame – every one of us. HOWEVER, we are not all equally to blame. The financiers knew that their actions were going to lead to disaster – most of the people and, amazingly, the government did not.
Now we have the ridiculous (albeit temporary) situation where the financial industry continues on its merry way, courtesy of the taxpayer, while the rest of the economy suffers!
letthemfall says:
bellwether falling back on tendency to abuse again. Banks were not conduits for govt policy; they were private enterprises (two or three still are) which took massive risks to try and gain huge rewards. Private companies have to stay solvent or vanish. Banks of such size as ours are an exception because of their concrescence with the economy. With such far-reaching effects, the banks of course have responsibilities. If they abdicate these society suffers and society should do whatever’s necessary to prevent such events happening again.
shipbuilder says:
The amoral structure of companies and how they operate allows them to be conduits for government and requires them to be regulated to a greater degree. This is a deeper structural problem that I am talking about.
I am constantly astounded on this site by people’s confidence that a wee fiddle with the current political/economic system will sort things out. Apparently any sort of suggestion of deeper problems is ‘socialist’. Also, apparently, our system is perfect and requires no further significant evolution. Much like the times when we all believed the sun orbited the earth, we’ve achieved all we can achieve.
icarus says:
bystander @11 – some valid points but your overall argument makes too big a distinction between banks and government, e.g. look at the size of US political party contributions by Wall Street. or, in this country, look at the close connections between Mandelson, Sir Evelyn de Rothschild, the Policy Network ( a super think-tank funded by Sir E de R), Downing Street’s senior advisors, Clinton and Blair. A few years ago the regular diners at the exclusive Other Club included Lord Rothschild, Lord Carrington, Prince Charles, the Duke of Devonshire, Winston Spencer-Churchill, Sir Edward Heath, Sir Denis Thatcher, Gordon Brown and Tony Blair……no conclusive proof of anything, just a flavour of the goings-on. Many bankers, old aristocratic families and top politicians often relax together for a chin wag.
devo says:
16. shippy said…’I am constantly astounded on this site by people’s confidence that a wee fiddle with the current political/economic system will sort things out.’
That’s because people are basically happy with the current system as long as it can be tweaked in their favour – ie lower house prices.
There are far fewer of us who think that our whole system needs to be rethunk.
As the late, great crunchy might have said (in one of his more lucid moments), ‘more pain is needed’ (unfortunately), before this will happen.
letthemfall says:
shipbuilder
I too do not understand why there is so much use of the word “socialist” as a perjorative. It sounds like so many Margaret Thatchers in the late 70s. A shame we can’t have a more mature debate on these matters. I think you’re right about the deep structural problems. When you think about politics and the economy from the early 70s and see that we are still stumbling around in this country, one has to look deeper than many are looking.
icarus says:
Sorry, that was a response to bellwether @10, not bystander @11.
51ck-6-51x says:
@ icarus
RE: talent – err, so you got my point! Maybe I should have put talent in quotes for you, but it is talent ( as is picking locks ). Furthermore if anyone could do it and enough were willing to do it, the reward would not be so high.
RE: system stability – leaving this to the state in a capitalist system, as you suggest, is great so long as there are no ties between state and business, however this will never happen! ( or at least it would not last long before arbitraged. ) Therefore this needs to be built into the system ( which would force an increase in insurance policies to spread risk of ruin, which in turn should lighten the load on the state, which is a good feedback loop in my opinion. )
“It’s the ‘credit-supply-as-a-public-utility’ model” – Sorry, I really do not think central decision making is the way forward. In fact I go the other way from the very same premises as you – I observe the instability in today’s markets and trace back to root causes which were decisions made by governing bodies ( governments, and international councils ), and it screams to me that the problem is that we have not tried the free market approach …
…The conspirators may prefer to think that ‘They’ made a decision a handful of decades ago to feign an attempt at laissez faire capitalism, and not just to show the masses it does not work, but to incite them to rise up against it, to play into ‘Their’ hands and to yield control back into ‘Their’ grasp more firmly than ever before. Maybe this goal is coming to fruition?
—
@ Shipbuilder –
“why shouldn’t companies stick to the letter of morals?” – What like people do?! 9or rather do not!) That is what law is for, to enforce a social normalisation of morals. It is illegal and immoral for me to do X, but legal, yet immoral to do Y – if I do Y I may be shunned by a subset of society (even a majority), I may be punished by those who feel strongly (but this could be so if I do Z which is neither immoral, nor illegal) but I am not punished by the state. I ( or a corporate body ) may do Y without specified recourse other than that of my own conscience ( or that of the decision maker inside the corporate body ).
– in a nutshell yours is a fruitless argument – we must legislate rather than assume others abide to the same set of morals that we do, it is illogical to do anything else whilst things like greed and fear exist.
“Also, apparently, our system is perfect and requires no further significant evolution.”
– My point is that we do need such change, but we need to think about this very carefully in order to remove centralisation, not increase it, as such centralisation will naturally attract those who wish to gain from such power (and this means not only addressing capitalism, but also the system of parliament and the democratic system). The distributive properties must be inbuilt by design, not enforced (or controlled) centrally – this is key in my opinion.
—
Trace back the unwanted effects to their causes; the root causes are of course those human traits such as fear and greed, ideally these would be addressed, but if we assume this is not possible right now*, the answer can only be the distribution of power in order to make individual fear and greed work for us and for the effects of the inevitable collective fear and collective greed to be damped by the system itself (self-regulated).
* Hmm, maybe we should summon the Wild Stallions,Theodore Logan and William S. Preston Esquire!
icarus says:
5ick-6-5ix – Your post is a bit late to make it worth a full response. Regarding the public utility model, just consider that a government is necessarily deeply involved in a banking system anyway. Banking and credit systems are inherently unstable – they cannot meet the claims of all their depositors at any one time. They must therefore be regulated and underwritten by a state with currency-printing and tax-raising authority. Unless you go back to the Austrian School with banks issuing their own currencies.
51ck-6-51x says:
icarus – I know my response is late. I do that a lot!
“Just consider that a government is necessarily deeply involved in a banking system anyway.”
This assumption is the key to failure, and is currently correct. This needs addressing via system design in order to keep the useful properties of fiat currency without yielding power. I am not going to suggest it would be an easy task, but we should aim for a system that works across society.
bellwether says:
I’ve got no sympathy with/allegiance to the banks. My point is simply that the only parliament can enact,and see to the enforcement of, necessary legislation. If parliament/governent fails in this you can hardly blame the banks for taking the piss.