These two stories appear next to each other in an FT email this morning:
You do not need to read the stories themselves to understand what they say. The messages are clear.
One says, "The City of London will flood unless action is taken."
The other says, "The banks that dominate the City of London do not want to contribute to its flood defence."
And yes, I know tax does not fund anything, but it does divert resources to create space for necessary spending, so the link does exist.
The real issue here, though, is a simple one. Whatever Jamie Dimon wishes to pretend, and there can be no doubt that he lives in a world of make-believe, the system of neoliberal capitalism that he has promoted has done two things.
First, it has made him, and many other bankers, extraordinarily financially wealthy.
Second, it has brought our planet, our country, our civilisation, our democracy, and our way of life to the point of an existential crisis, the consequences of which, unless they are tackled now, will overwhelm us, quite literally in the case of flooding, sometime in the next decade or two.
The fact is that the system that has created Jamie Dimon's wealth and the continued existence of UK society as we know it are incompatible. I am not saying that we do not need banking, because that would be absurd; we obviously do. What I am saying is that we do not need a system of extractive, rentier, neoliberal banking in the form that we have it, which is, quite literally, leaving us tottering on the brink.
So why do we need to tax that banking system? That is not because we need its money to pay for flood defences in London. The government could create the funds in question. The reason is that unless we tackle the cause of the crisis that London faces when it comes to flooding, there is no point in bigger flood defences.
In that case, the reason for taxing banks more is quite simple. They sit at the very epicentre of our crisis, driving and fuelling neoliberal capitalism through the extraction of rents from both the planet and finance. Unless we limit their size and influence, we have no chance of survival. Tax is one way to achieve this outcome.
Jamie Dimon is fighting for his own survival and the preservation of what he thinks to be his wealth.
I am interested in the survival of London, this country, our planet, and the well-being of the people on it.
One of those objectives is bigger and more important than the other. We have to choose between them. Jamie Dimon has made the wrong choice. We need to make the right one.
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May I suggest then that The City of London puts its hand in its collective pockets and funds the Flood Defences for London??
That would require them to understand that their own self interest is ultimately a collective one. There can’t see further than their own noses. So no chance.
Dimon who got a pledge from Labour that if JP Morgan build a new UK HQ in London there’s no business rates to pay for 50 years plus.
But surely, if the markets and the City and the Stock Exchange (Blessed be their name, great is their omnipotence, may they live for ever), can’t come up with a solution for London’s flood defences, they aren’t good for anything? After all, they insist on maintaining private control of “water and sewage”, so it is their problem, not the state’s.
Let the Worshipful Lord Mayor and the City of London Corporation sit down with the big investment and retail bank CEOs and Thames Water shareholders and come up with a solution AND the money.
They are keen on small government – well, when the City floods they’ll have a much smaller Corporation.
(The less savoury part of me would quite approve of this, but I’m trying not to give in to it).
🙂
Even “climate change deniers” are no longer deniers – the evidence is just too compelling. However, they still cling to the idea that human contribution to it is not important and that it is “natural variation” (sunspots, wobbly orbits etc.). Well, whatever the case we need to act and act now – even the “deniers” must recognise this….. and Dimon must, too.
So, basically, he is saying that someone else should pay – not him or his bank.
We don’t need a “windfall tax” but we do need a new tax regime for banks.
Banking has always been a cyclical business and come the next downturn (and there will be one and probably quite soon) there will be massive credit losses. We need to ensure that banks do not distribute (dividends) too much in the good times so that they can cope with the bad times without government bailout – and this is largely done through regulation but tax can play a part here. This is an argument that has been running for 20 years… and one that banks seem to be winning in the last few years. The point being, it is not new…. merely that bank lobbying seems to be winning at the moment. The push for relaxing regulation must be resisted.
What IS needed is a tax regime that reflects the new world of excess reserves in the system that is what is driving bank profits. Banks earn base rate on their Reserve Account at the BoE but do not pay anything on current accounts. This needs to be tackled and is a subject that has been covered in this blog.
Agreed
The Thames valley has a very very large catchment area. A cloud river over some/part of the valley will cause a massive surge of water down the Thames. This link takes you to spring tides now through to next year. https://www.gowerlive.co.uk/big-tides/. There are 10 “events” each one covering a +/- 3 days. (times are a bit off – dates are not)
If a cloud river and spring tide coincide the results wrt London could be “interesting”. I am not wishing it on the city but we are dealing with physical realities. In the case of Dime-On (geddit?) if something does happen perhaps I can call him Dime-Off?
London has been sitting on its hands for a decade or so wrt flood defences. It will probably take another decade to get things sorted. So I’d give it better than evens that something bad happens. Suggestion to those living on the south bank of the river: move. Suggestion to City of London – please don’t, I need some entertainment.
My house when I last lived in London had a bigger flood risk, by some way than, the house I now live in the Fens.
Please explain ‘cloud river’ as looking it up did not find anything sensible.
many thanks
I think Mike means atmospheric river:
https://en.wikipedia.org/wiki/Atmospheric_river
Maybe this?
https://en.wikipedia.org/wiki/Atmospheric_river
Thanks to Matthew and and Robert. Apologies for the incorrect terminology – but we got there !!
(the one I remember was in Greece year or so ago – wiped out Greeces breadbasket oh & the one in Germany – in the west – wiped out lumps of a town etc etc )
Jamie Dimon and his fellow bankers must think the rest of us are complete fools. The banks have successfully managed to privatise their profits and socialise their losses. They caused a major financial crisis in 2008 which required the state to bail them out via quantitative easing. The coalition gov of 2010 used the bail-out as an excuse for imposing austerity over the following years. Since then, while society has suffered as these cuts have taken their toll, bankers have generally prospered. They have benefitted from unnecessary interest receipts on their reserve accounts with the Bank of England and always a sympathetic approach from that institution towards interest rates which are kept as high as they can get away with. The Bof E management and the Treasury mandarins seem to have an eye on a well renumerated job in banking when they retire.
Banks certainly have an important role to play in the economy and deserve to be rewarded for it, but please don’t be greedy or forget that they depend on a successful society as well. Stop thinking about what society should do for them and start thinking about what they might do for the rest of us. They could be nationalised tomorrow and we wouldn’t notice any change other than improvement.
I imagine Mr Dimon would say JP Morgan did not require any emergency funding during the global financial crisis and only availed of US government liquidity programmes for political reasons, that is, it was asked to, to avoid any market panic that might have arisen from a distinction between strong and weak banks.
But the support was, inevitably, systemic.
Mervyn King, a previous Governor of the BoE actually said in a speech in 2010.”
“Of all the many ways of organising banking, the worst is the one we have today.”
He should know.