It’s suggested that the banks have had a stern warning from the Toronto G20. I say that’s nonsense. What would really upset the banks is the re-introduction of narrow banking, and I see no signs of that, or genuine competition like encouragement of public bank ownership and I see no signs of that either. I think that FRB is outmoded, any kind of reserve is outmoded and unecessary for a public bank as business needs what it needs and an enlightened culture will understand that it can be funded by the printing press without limit so long as money is created to support sound business in appropriate amounts. Any inflation would be technical not functional, and transient. Anyway, the banks have survived the G20 with their government guarantees intact, have they not? They can still take customers’ money, put it on the financial equivalent of the 3.30 at Kempton, award themselves huge bonuses if they win and apply for the taxpayer to bail them out if they lose. Banks uber alles! This is anti-social nonsense and it needs to end.
Ho hum. I didn’t hear a word about creating an alternative money supply, one where the government exercises its prerogative to create money debt-free and distribute it appropriately to business as it’s needed. I didn’t hear anything about ending the three-hundred-year tyranny of the banking orders. All I can gather is that we’re going to go on borrowing money from banks that create it out of thin air under license from the government as none of the candidates for future government seem keen on discussion of this arrangement, let alone changing it in favour of the electorate that elects them. Vince Cable, Alastair Darling and George Osborne are all of them proposing that as a nation we simply carry on being wholly dependent upon the banks alone for our money supply, thus all of last night’s so-called debating was simply empty theatrical posturing. The most important issue was never addressed.
Budget day but I’m not at all excited. We don’t need a budget to do this or to do that, we need something now that’s utterly beyond the scope of any budget. The environment in which any kind of budget would make a perceivable difference is gone now. No-one seems to be addressing this, probably because they’ve got no idea what to do – witness both main parties accusing the other of lack of detail in their policies on how to deal with the deficit. The pretence is that it’s business as usual, but it isn’t, and I doubt it ever will be again. Buy your tickets now for the end of the world… as we’ve known it…
President Obama Declares War On The Banks, bawls one headline, presumably missing the days when it could stand urchin-like on street corners exhorting passers by to “Readallaboutdit” inbetween sniffs. President Obama, it seems, proposes to reinstate key elements of the Glass Steagall Act to restrain the banks, causing many to think that – at last! – he’s turned against them. The effect of Glass-Steagal (and the new legislation too, to an extent) is drawing a clear line between what we in Britain refer to as casino banking and high street, deposit banking. The point of this is that when the casino bank bets too far and goes broke, it isn’t any longer able to count your and my money, safely deposited with a separate company, as assets it can lose. We don’t all lose our money when the casino banks lose theirs, so the economy as a whole survives, in a much-abreviated nutshell. Glass Steagall was introduced after the Great Depression as a way of ensuring that another Great Depression never happened. Lobbying by the banks saw it repealed in 2004. Lo and behold, as we’ve seen another series of bank crashes followed, again imperilling the broader economy. Good old Obama for bringing back Glass-Steagall, then, eh? Phew!
Not really. It doesn’t address the heart of the problem at all, that the banks simply shouldn’t have the place in society that they do. Banks don’t lend money, they create it. A banking license isn’t a license to lend money, it’s an extension of the sovereign power formerly of the monarch, eventually surrendered to parliament, to create money out of thin air. We pay the banks a fee for this we call interest. When we have a government elected by the electorate to further and safeguard the interests of that electorate that can create money itself for free, it’s an absurd situation to even suggest that when we need money for funding a sound business proposal we have to go cap in hand to a third-party privately-owned bank and ask them to create money for us, incurring fees in the process. It’s nonsense, and the banks simply shouldn’t be in this entirely parasitic position. They give the community nothing, and in charging recurring fees for effectively doing nothing they endlessly cream off money that should be being spent towards the betterment of the community as a whole. They grow fat for doing nothing while the community suffers for no good reason.
Obama’s proposed legislation won’t do anything to change this. What it will mean is that the banks will once again have brought the greater economy to its knees, profited handsomely from the experience, and survived essentially intact to repeat the process in the future. A repeat of the earlier Great Depression scenario, in fact, as they were bailed out back then too. Obama’s proposed legislation leaves them free to repeat the experience again next century, sooner if they wish, if the economy has revived enough to make it worth their while. It’s not a punishment for the banks, it’s a gift, a lifeline – through this they’ll survive in place as they are to cripple us all financially another day.
I’ve said before that Obama is the bank’s puppet, a reader of press-releases, nothing more. His recent proposals do nothing to change that view. When he campaigned on the basis of change, he seems to have neglected he meant the kind of change that usually has plus ca attached to it.
Why are we bothered one way or the other that rating agency Moodys are suggesting Britain might lose its credit AAA rating?
Moodys has been thoroughly discredited in recent times as it repeatedly gave AAA ratings to what turned out to be sub-prime rubbish. I understand it only exists courtesy of the big banks, who fund it.
Why then would we (or anyone at all) take any notice of its assessments?
And, while we’re on the subject, where are all the court cases? Why aren’t we reading in the press of furious pension fund managers and the like suing the backside off the credit rating agencies (like Moodys) and the banks themselves for knowlingly recommending and selling them investments marked as gold-plated when they were anything but and the sellers were well aware of this? It has occurred to me that here is another reason for the banks to be sitting on the output of QE, as they may well be needing all the readies they can lay their hands on to pay the rather large fines that ought to be coming their way. Something rather odd is happening though, or rather not happening; I’m not hearing about banks and credit rating agencies being sued?
I see Gordon Brown has proposed something similar to the transaction tax that’s been recently floated by Turner, this at the G20. It was promptly said no to by Tim Giethner for the Americans.
This is just political posturing by Brown, I reckon he’s aware he can propose that the banks be hung drawn and quartered routinely every day before breakfast, making himself look good in the process, because of course in the American’s corner is Tim Geithner representing Government Sachs who will nay-say it. The American government pretty much IS the banking fraternity so Brown can suggest all manner of draconian measures secure in the knowledge they’ll all be vetoed by former Goldman Sachs’ man Geithner. Brown knows he will look good to the uneducated public but he also knows the educated bankers will guess what he’s up to and understand Labour is still the bankers’ friend. Brown’s suggestions amount to political theatre, nothing more.
don’t always follow each other. I know it used to be that way but these are times without precedent. People keep talking about in recession (booooo!) or out of recession (yaaaay!) as if they’re bad or good things but really nowadays they’re irrelevant things. It’s as if money has taken a life of its own, spun off into some cyberFrankenverse where old rules simply don’t apply any longer. All the quantitative easing the governments are indulging in is expanding the monetary base but not this one, not the one that you live in and I live in. It simply adds volume to the monster in cyberspace. That doesn’t affect us here in the real world. Very few people seem to get that this is an entirely new game in some regards. We never had this cyber aspect before, there wasn’t the facility to create electronic money. There may be inflation at some future date but it’s by no means inevitable.
Education Secretary Ed Balls suggests he’ll be making significant savings by combining schools into some kind of federation meaning he’ll be able to sack any number of heads and deputy heads. How is this saving money? All those heads and deputy heads won’t be working and contributing to the economy any more. Instead in all likelihood they’ll be claiming benefits and costing the country money instead. They won’t be spending money in their areas so they won’t be putting more money into the butcher’s pocket so he’ll have less to put in the baker’s pocket and the candlestick maker will no doubt feel the brunt as well. They’ll all be paying less taxes, needing less support staff and facilities, less advertisements and so forth. In short, cutting jobs is a surefire way of shrinking the economy. I thought we were trying to expand it?
How is any of this making savings? The answer is that overall it isn’t, not when you think about it in context. If Minister Balls hopes to impress then he appears to be relying on the electorate not giving the matter any proper consideration. It’s entirely unsound economics, it only appears to have any significance if it’s viewed out of context. Put it in its true context and it causes more problems than it might solve.
Anyway, like all the other much-touted plans being made by the various political parties, more taxes here, less public services there, it’s real purpose is to maintain the illusion that the growing debt mountain can be solved by prudent budget slashing. Belts would have to be tightened so much that nether regions would disappear into other dimensions. Public borrowing is growing at such an increasing rate there’s little doubt by the next election it’ll be obvious even to the illiterate and innumerate that the sums involved are far too large to ever be addressed within the economic system we have. It always had a mathematical sell-by date built-in to it, it was never a practical long-term proposition, and now it’s broken. We need a new one. On that disconcerting subject, all commentators are mute. What do we replace the banks with?