Saturday, October 9, 2010


George Osborne warns banks of new taxes

Politicians are wary of looming public anger over bonuses, with pay-outs in the City expected to reach £7bn this year, according to the Centre for Economics and Business Research, at the same time as workers face pay freezes and benefits are axed. In addition, small businesses are still struggling to secure loans from the banks – a situation that threatens the recovery. Mr Osborne added in threatening tones: "Banks would do well to pay close attention to what I said [at the Tory conference]. We are very clear that they have to get credit flowing to small and mid-sized businesses." Should the Bank of England decide to restart its £200bn quantitative easing programme to offset any slowdown in growth, he indicated he would be supportive.

Posted by devo @ 01:01 PM (3924 views)
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8 thoughts on “Puppet

  • Repeat after me, “We’re all in this together.”

    But we’re not all in it together, are we? How can you be, if you’re the recipient of part of this year’s £7bn bonus pot? How Cameron has the gall to repeat this [email protected] at every opportunity, beggars belief.

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  • What’s my opinion ?

    I suspect it’s only a fairly small percentage of city workers that could be considered responsible for the actual crisis.
    There should be a witch hunt for those people with jail sentences handed out.

    Until things are in some way back to normal it is in fairly bad taste to be not only paying out, but appearing to be so pleased that you are paying out huge bonuses.

    Afterall the majority of those bonuses will have been earnt by pushing up and down the prices of the worlds basic commodities as opposed to anything actually constructive.

    Whether it is possible to have a fairer internationally agreed way of swapping/exchanging commodities with one another cutting out the middle men (ie banks & traders) I don’t know.

    There must be if we sad down and thought about it.

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  • “We’re all in this together.”

    Except all of us devo.

    It’s a very subtle irony.

    An in joke, rather like “Things, can only get better.”

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  • mark wadsworth says:

    Having mulled this over, I’ve decided that in my idealised tax world (where most tax revenues are from/on consumption of LAND) credit bubbles are far less likely to arise (land values are kept low and stable).

    But to ram the point home, I’ll have another tax of specially for banks, which will 3% on the higher of:
    a) Total normal deposits from UK depositors, and
    b) Total loans secured on UK land and buildings (as registered at HM Land Registry).

    Given that

    a) The “supply of money” curve is fairly flat – people’s propensity to save is fairly indifferent to interest rates (the advantage to saving is to spread consumption over your lifetime to maximise your marginal return to spending)

    b) The “demand for money” curve is quite steep, i.e. interest rate sensitive, banks will only lend if they can earn at least 3% on their spread. They can earn a 2% more or less in their sleep, for example, of which half is pure profit.

    This of course drives a wedge between depositors and borrowers. So depositors will only get (say) one per cent interest (a bit less than otherwise) but borrowers will be paying three per cent more than otherwise, say 5%.

    The total revenues from this would be ball park £30 billion or £40 billion (a bit less than than the total taxes that banks generate in corp tax, income tax deducted from savings, PAYE and so on), which goes into the pot and gets dished out as a Citizen’s Bank Dividend of £500 or £600 each per annum. So yer average saver gets a lower interest rate but is largely compensated with the CBD.

    Yer average voter says ‘yippee! hooray!’ and it will be a popular tax. Yer average borrower is indifferent as the higher interest rate pushes down house prices to match so the cost of mortgage stays the same.

    And the rate of 3% gets nudged up or down so that it maximise revenue, it might go as high as 5%, revenues might go up to £50 billion. I dunno, but there’s only one way to find out…

    Together with LVT this will make credit bubbles and house price bubbles a thing of the past. What’s not to like?

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  • MW @ 3 said……..’Together with LVT……’

    What’s LVT, Mark?…..sounds interesting

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  • “Whether it is possible to have a fairer internationally agreed way of swapping/exchanging commodities with one another cutting out the middle men (ie banks & traders) I don’t know.”

    I’m not sure how you think it currently works but I can’t think of any fairer way than the way it works now. I don’t need a bank or a trader if I want to buy or sell wheat, corn or any other commodity. It is pure free market that takes place on an exchange which is transparent. I wish houses were bought and sold the same way.

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  • I don’t see how extra taxes will help, it’s just more costly paperwork; just claw back the fraudulent bailout money and phase out fractional reserve banking.

    Lack of lending to businesses is an insulting red herring; the real issue is growing government interference, including taxation, on businesses, which drives up costs, so the last thing business needs is more debt when they can’t leverage the debt to increase revenue after debt payments, taxes, and other expenses!

    LVT is not interesting, it is effectively a tax on space, so a non-starter, because space alone does not generate money, except from the already taxed rent of property on land. Money mainly comes from work with resources (including energy), and most of the raw resources come from land outside of the UK. LVT seems to be just cleverly disguised Socialism. All Socialism is ultimately destructive, because it is a economically incompetent or corrupt.

    My house makes me no money, it actually costs me money to run, so WTF should I pay even more (LVT) for living space, because others decided to expend money renting rather than buying their own living space? Haven’t the pro-poseurs heard of supply and demand?

    Supply and demand only gets a bad name because state interference in the financial markets enables bubbles to grow far beyond what the undistorted market would allow e.g. massive state interference in market ‘regulation’ and banking; even complex derivatives are a by-product of state interference because they are a creation of corporations, psychopathic state supported ‘persons’.

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  • Peter L. Griffiths says:

    George Osborne must surely have recognised that credit default faults are at the source of the bank crises in the USA, Ireland, Spain and Portugal. Yet he and his coalition colleagues still seem to think that it is the university students who must make the appropriate sacrifices.

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