Robert Peston published an interesting piece on his blog "Can banks dodge the break-up?". He wrote: "the Bank of England estimated this [state] implicit subsidy [of being protected by taxpayers against failure] as being worth around £100bn per annum at the peak of anxiety about the fragility of banks in 2008-9, and perhaps half that figure subsequently."
The state, taxpayers, are part of economy. Their subsidies, of whatever nature, come at the costs: they are paid for one way or another. If subsidies cost hundred of billions of pounds, these hundreds of billions of pounds must come from somewhere. For example taxpayers pay them by additional costs of government bonds or through some other transactions with the financial markets. "There ain't no such thing as a free lunch."
The City of the 2010's is strikingly similar to the British heavy industry of the 1970's. It provides no financial value to the economy and can only survive with taxpayers subsidies. Any tax receipts from the financial industry are dwarfed by the subsidies, bailouts and stimulus packages. Even City luminaries, top financiers and bankers, bear a striking resemblance in their attitude and characters to their trade union counterparts, so called "barons", of the 1970's. Will the City share the same fate as British heavy industries of the 1970's? The signs are not particularly optimistic.
The state, taxpayers, are part of economy. Their subsidies, of whatever nature, come at the costs: they are paid for one way or another. If subsidies cost hundred of billions of pounds, these hundreds of billions of pounds must come from somewhere. For example taxpayers pay them by additional costs of government bonds or through some other transactions with the financial markets. "There ain't no such thing as a free lunch."
The City of the 2010's is strikingly similar to the British heavy industry of the 1970's. It provides no financial value to the economy and can only survive with taxpayers subsidies. Any tax receipts from the financial industry are dwarfed by the subsidies, bailouts and stimulus packages. Even City luminaries, top financiers and bankers, bear a striking resemblance in their attitude and characters to their trade union counterparts, so called "barons", of the 1970's. Will the City share the same fate as British heavy industries of the 1970's? The signs are not particularly optimistic.
No bankers in court or prison, in fact, the opposite, collecting huge bonuses for their complicity in one of the biggest shakedowns in history. You really think these people can be likened to Arthur Scargill who drove around in a crappy old Jag? These people have executive jets and unlike the Trades Union bosses, they are protected by the system not persecuted or villified by it.
ReplyDeleteHi Sonia
ReplyDeleteThanks for your comment. I think you made a very valid point. In comparing the banking system of today with British heavy industries of the 1970's I am only showing in my article economic/systemic perspective and I think I have a point.
As to individual bankers they, of course, do much better than ordinary workers of the 1970's. However trade union barons then (and now) were doing very well indeed but still on the scale not comparable with today's top bankers.
Best wishes
Greg
Hi Greg
ReplyDeleteI like this entry a lot, as you imply fundamental change will occur.
Excellent
Hopeful it isn't too long away