Sunday, August 2, 2009

Our savings and taxes are being used as a piggy-bank for the City

Bankers are getting away with murder

Despite the worst banking crisis in history, costing the taxpayer £1.3 trillion in public support, bankers are behaving as if nothing of any significance has changed at all.

Posted by devo @ 12:07 AM (1253 views)
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24 thoughts on “Our savings and taxes are being used as a piggy-bank for the City

  • I’ve been wondering how clever guys like 666, flashman etc.can read the same sites as me (Denninger, Zero Hedge, Mish etc.) and not ‘get it’.

    Then I was reminded of a quote that explains it…

    It is difficult to get a man to understand something when his job depends on not understanding it.

    Upton Sinclair

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  • @devo

    “It is difficult to get a man to understand something when his job depends on not understanding it.”

    I think my job is mostly a waste of time these days (indirectly subsidised by the taxpayer) but for some strange reason I don’t feel ready to resign and possibly bankrupt myself. Perhaps I’m a coward.

    I really hope that you are a truly financially independent person to have put a comment like that on this blog. I agree that the great banker’s bailout stinks but your comment goes too far for me. Pracically speaking I suggest that the bloggers who have real experience in the world of finance and make the time to contribute here have demonstrated a greater awareness than normal compared to their peers.

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  • 2. quiet guy said… “Practically speaking I suggest that the bloggers who have real experience in the world of finance and make the time to contribute here have demonstrated a greater awareness than normal compared to their peers.”

    Hmm, might I suggest you are damning them with faint praise?

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  • @devo

    “damning them with faint praise?”

    Consider how many people are employed in the UK financial industry versus how many of those apparently contribute here – a select few I’d say. I don’t see why their contributions can be called ‘damning them with faint praise’. Revulsion in response to the bailout is natural but in the end, like it or not, we will need financial services if we want to raise our standard of living.

    I honestly think that you’re pointing you gun at the wrong target. The real villians have made their pile and retired. It seems unlikely to me that we will ever hear anything honest from the money mafia here.

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  • Thanks for your kind words quiet guy. I knew when I started posting here that I’d have to expect some stick. I called myself ‘flashman’ as a perverse acknowledgement of this expectation. I really don’t mind what devo is saying. He has passion and a bit of fire in his belly. I might not agree with everything he says, but on balance, I prefer a bit of tub thumping to the apathetic state of the general population.

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  • stillthinking says:

    I had thought you called yourself Flashman after the eponymous anti-hero of the George MacDonald Frasier books..

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  • I think devo’s quote is rather apposite. That’s not to say it applies to all bankers, much less those who contribute here (and I know of no one who has said explicitly they are bankers). None the less, my impression is that the majority who are in the position of earning large salaries will do what they can to hang on to them and offer all kinds of specious justifcation for why they deserve every penny. Banks have failed abysmally, yet seem to being getting off lightly, which demonstrates that they do not in fact earn their money but are merely in a position where they can divert a proportion of large cash flows into their pockets. It appears weak govt is allowing this position to continue.

    stillthinking: In which case he must be a literary man?

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  • stillthinking: Yes several years ago, I read every one of the Flashman ‘papers’. Perhaps the funniest books ever written. I even read Steel Bonnets and the McAuslan trilogy, in the hope of catching another glimpse of Flashman. Sadly George M F is now dead so there will be no more. That is, indeed, where I got the name from but like I say, I chose it as a perverse acknowledgement of how I was likely to be regarded by some on this site.

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  • devo – I thought flashman was as anti-investment-banker as anyone, but in favour of those financial services which serve the real economy. The only slight disagreement I have with him is that he sees (or saw) investment banking as an annoying sideshow while the real economy hummed along, driven to a large extent by technology (correct me if I’m misrepresenting your views flashy). I think top investment bankers are kleptocrats who inflict significant damage on the real economy.

    The interesting question is whether the Browns and Badgers are complicit or misguided in bailing them out. Surely you don’t shove hundreds of billions their way in the HOPE that they’ll do what you want.

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  • The underlying premise of the sites I mentioned above is that the financial system is mortally wounded.

    I don’t get the same impression from HPC and certainly not from the most financially-literate posters, namely flashman and 666.

    I find this confusing. Either they are holding back on saying how bad things are going to get, or they are not as clever, in a wider sense, as they think they are.

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  • Mortally wounded? Depends which part of the financial system we’re looking at. The top 5 or 6 investment banks are doing very well indeed.

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  • “The top 5 or 6 investment banks are doing very well indeed.”

    Courtesy of the taxpayer. Trouble is, the taxpayer is coming to the stage where he has given until he can give no more.

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  • True, without govts using money from taxpayers, China, oil states etc. there would have been no revival of the big investment banks. And there’s a definite limit to which that funding will continue. But do those banks need continuing govt support? The rest of the banking sector is certainly in deep trouble, but while the majority of banks are desperately trying to repair their balance sheets Goldman, JP Morgan and a few others are making huge spec profits (without doing a damned thing to revive the non-bank economy). We’ll have to see how long they can carry on like this while the rest of the world suffers.

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  • And what about the $quadrillion derivatives wildcard?

    (Cue obligatory notional/net 666 post.)

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  • @devo

    “the financial system is mortally wounded.”

    Any views on how it will play out? A currency crisis or a very long Japanese-style recession seem to be the most likely scenarios (I’m talking about the USA here) but some claim that the dollar will collapse in value this year (Jim Sinclair says early November!!)

    Perhaps part of the reason that we don’t have much discussion about these things is to avoid being labelled as lunatic fringe and because there is no mainstream political interest in financial reform – everybody would be quite happy to go back to the debt binge again.

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  • titanic
    I’m not sure that anyone can accept rewards but remain totally blameless, even if it is by default. It’s the following orders, going with the flow thing. I don’t lay blame at any individual’s door, with the exception of the obvious culprits who’ve been roundly blamed already, but nor do I absolve the rest. The readiness of one to accept large bonuses also presumes a readiness to work in a field where such is possible.

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  • My conclusion is that the sense of community and responsibility to others that once existed in this country and elsewhere in the world has been both actively and passively destroyed to make way for individualist consumerism. It was not some evil plan, but was the obvious route to be taken by those wishing to maximise their profits and personal wealth.
    What better way to do this in the UK than simultaneously destroying the only political party and political view that ever stood in some opposition to it, as incompetent and ultimately self-serving as that party was. When everyone is convinced that socialism = state control, that it is evil sent to destroy the individual, then logically the only refuge is individualism, a world where you are in competition with your neighbour, where other people are to be feared and ultimately your only responsibility is to yourself. This was achieved in the 70s and 80s in the US and in the 80s and 90s here.
    It beggars belief that so many cannot see the link between this self-obsession and our celebrity culture, our banker’s and politician’s greed, abuse of the welfare system. Any suggestion that we may want to work together has become evil collectivism and it seems to me that any sense of balance has been lost.
    Sadly, this point will be lost in a world where most only see the extremes – “If you’re not with us, you’re against us”, as someone said.

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  • 16. quiet guy said… Any views on how it will play out?

    I suppose this is the reason for my first comment.
    How can we start to solve the problems we face if those that caused them refuse to acknowledge that they exist?

    Any further comments from myself will delve into the realms of tinfoilhattery, so I will resist the temptation for the time being.

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  • Actually, my point about “What better way to do this in the UK than simultaneously destroying the only political party and political view that ever stood in some opposition to it” could as easily be applied to parts of old Conservatism pre-Thatcher as old Labour pre-Blair.

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  • shipbuilder – did you see the last two minutes of B, B & Fortune a few weeks ago (unfortunately the only part of the show that wasn’t put online). A Nye Bevan speech to the Lab Party Conference 50-60 years ago, dubbed with Bevan saying (Welsh accent sounding just like Bevan) “I say give the people what they want. National Health Service? They don’t want a f***ing National Health Service They want iPods with thousands of tunes” (Wild applause), Warms to his theme – “Education? Free education? Do you think people want education? No, that’s not what they want. What they want is mobile phones with over 500 ringtones” (Standing ovation)

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  • TC, ultimately it is about getting rid of the systems designed to benefit the few at the expense of the majority – whether they be via the vehicle of the state, or the vehicle of business. Most people I talk with on this subject just can’t get over this first hurdle – they either believe that big business or big government is the solution to our problems and bizarrely can’t see the similarities between the two. The demonisation of the individual by totalitarian regimes has been replaced with demonisation of collectivism by those that ‘defeated’ them and we have lost the balance between the two that is most true to our nature. Unfortunately, anyone who argues against the prevailing mood will be regarded as part of the ‘opposition’. Divide and conquer.

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  • Icarus – unfortunately I didn’t see that – it sounds good, I’ll look for it on youtube. I guess the point is that the people get what they want. I think that’s a bit chicken and egg – our views are formed from childhood by the society around us – I don’t buy the line that we are all fundamentally self-serving. All the evidence suggests that in the absence of a corrupting culture, people work together in communities. It can’t be a coincidence that the rise in mental health issues has been in tandem with our isolation from and fear of each other.

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  • 27. titaniccaptain said…

    “As a Christian I am never going to be satisfied with any political system lol.”

    Though a system which prioritises people over mammon and is based on love (rather than fear) of your neighbour might be a start? It seems incredible that, given our leader’s claims to Christianity, we have ended up with the exact opposite of this, doesn’t it?

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  • shipbuilder – I think people’s tastes/demands are shaped by the political/media/economic environment. Here I’m talking about the mass/majority of people. You and I may not react the way we’re supposed to but those who pull the levers know public opinion and how it will react (+ or – 3%) to given stimuli/policies/messages. Look how quickly the populations of much of the world became avid property speculators when the powerful put the conditions in place.

    The reason the Bevan ‘speech’ was funny and absurd is that it’s inconceivable that Bevan would say that – but it’s not inconceivable that an opportunist like Blair would say something along those lines – look at how the Labour government has privatised parts of govt depts in ways that make millions for individuals (e.g. the govt’s international development fund – privatised, concentrates on anything but low-profit but development-enhancing areas like agriculture in third-world countries, preferring instead to invest in high-margin shopping centres and – yes – mobile phones with a choice of 500 ringtones. These are areas that would attract private money anyway and don’t need quasi-public backing).

    TC – most people I know use their phones to let their mates know that the gang has changed its mind and will be in the Rose and Crown instead of the Carpenters’ Arms.

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