Robert Peston did a first rate programme for BBC 2 on banks last night.
I, like many, find Peston’s style a little irritating. But this could be entirely forgotten in this programme which delivered one key and consistent message: that these banks created toxic assets (one commentator called them fraudulent), accounted for them for them incorrectly to artificially inflate profits through the creation of artificial structures, were then systemically bailed out (i.e. all banks failed, and all were saved), and despite this they’re carrying on doing exactly the same thing now, and this will, inevitably, result in another failure soon. There’s not an if or a but about that, it’s just a when?
Despite this politicians have failed to take action.
And bankers still threaten to leave the UK unless we acquiesce to their demands — demand that we let them keep their profit and that we bear their reckless losses.
Peston clearly thinks this is wrong. Good for him. He’s right.
And the villain of the piece? Undoubtedly Sir Philip Hampton, the unreformed banker who chairs RBS who had the gall to say the UK had to be made attractive to keep banks here when he chairs an organisation owned by the state he was seeking to demand favours from on behalf of the elite of which he is a member.
I am increasingly aware that people are now asking whether we can do without the investment banks — which are the toxic element of the banking industry. And increasingly I think the answer is an unambiguous yes. The cash they create can be more effectively created with lower risks in other ways. And they don’t finance our tax revenues — they leach from them. I admit I haven’t formulated the whole logic of the bank free alternative, yet. But it is something we need to do.
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Richard – I agree with you, it was an excellent programme. I also agree with all of your comments regarding banks failing so I won’t comment further on this. However, my view is that if people want to ‘gamble’ their money with an ‘investment’ bank then they should be free to do so. However, these ‘investment’ banks should be completely separate from the retail banks and they should be allowed to fail, thus protecting the normal account holders. Until this happens we sadly will keep bailing these parasites out. Incidentally, I was delighted to read that Barclays were fined for their part in completely misleading investors, especially those who could afford it least.
I haven’t seen the programme yet, but will make a point of watching it. I’m currently reading Joseph Stiglitz’s ‘Freefall’, which, although written from the an American perspective, describes a situation there which sounds remarkably like the one over here, as you describe above.
The banks made huge profits by activities which eventually brought them down, were bailed out at everybody else’s expense, and now continue to behave exactly as before. The regulatory authorities are staffed by people of the same mindset, and the politicians profess their indignation at the bankers’ behaviour, but do absolutely nothing to hold them to account or introduce proper regulation, even though people like Stiglitz and Richard have shown there is plenty that can be done.
Which prompts the question, are America and Britian really democracies where the voices and interests of ordinary people count, or do we exist just to serve the interests of the bankers?
‘I am increasingly aware that people are now asking whether we can do without the investment banks — which are the toxic element of the banking industry.’
We don’t need them, was the unequivocal conclusion of Larry Elliott and Dan Atkinson in ‘The Gods that failed us”.
‘Toxic assts’; not a helpful label for those after practical remedies. The banks so obviously failed to fulfil their role in providing financially responsible credit arrangements. Where are our nation’s watchdogs? I am happy to find a website homing in on the injustices and inefficiencies of taxation that are undermining our economic lives.
Did you see the story in the Mail? Barclays fined £7.7m for mis-selling – story is here. Granted they are highlighting it for the gloat factor, but this has got to be another nail in the bankers’ coffins.
Richard,
I posted on the Inflation – reality hits home thread an outline of what needs to be done. We need to nationalise, or partially nationalise, the creation and price of credit. It’s cartelised and a) too easy and b) far, FAR too costly – the investment banks, especially, are parasites on the rest of society and economy.
Ann Pettifor addressed most of the issuesm in a more scholarly way than I canm in her book, The Coming First World Debt Crisis, in 2006.
I’d advise everyone with an interest in this area to read it and marvel at how many of her predictions have come true, from socialising the losses to blaming the debtor victims.
There is a real need as a Taxpayer to have a Legal means of addressing the misuse and Fraudulent use of Taxpayers money as this consistent. The prevention of this would make the Tax Revenue more efficient for better use and also may also reduce the Taxpayers burden which release individuals to save and spend more towards the Economic strength of the Country
@James and @Mike
Barclays fined Barclays fined £7.7m for mis-selling ….
Which shows that influential journalism and the Financial Services Authority can obtain justice for pensioners.
The Barclay’s case is very similar to the Premier case — but unfortunately the FSA has no legal jurisdiction on the Isle of Man.
@Syzygy, given that the rest of the economy bailed the banks out, I’d say it’s a case of they need us, rather than we need them.
Nice to see Barclays, for once, being held to account for their incompetence.
Unfortunately, it’s a drop in the ocean compared to the money the rest of us have had taken from us and given to the idiot bankers. Given the long term pain most of us are going to suffer, I’m beginning to think it would’ve been better not to bail out the banks. Yes, a massive crash would have painful in the short term, but in the long term we could repair the damage, and at least the bankers would have suffered as well.
As it is now, there’s long term pain for many innocent people while the bankers have only learnt that they can get away with murder.
We do not need the banks and their debt money.
http://www.positivemoney.org.uk
If you do not know about this, then I suggest you take a good long look.
Truth be known, the Treasury can order all the money we need free of interest – we don’t need the banks for loans of forged money stolen from the borrowers.