The scheme deserves the benefit of the doubt at this stage.
But Northern Rock would still better have been turned back into a mutual building society, along with all of the banks apart from the Union-safeguarding public stake in HBOS and RBS.
Iron-clad by the same statute law that should impose an absolute division between retail banking and investment banking.
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How can you have an absolute division between retail and investment banking when both use the same products, such as foreign exchange futures?
ReplyDeleteYou could if you turned all the retail banks into mutual building societies, iron-clad as such by statute.
ReplyDeleteMutual building societies are already not allowed anywhere near things like foreign exchange futures, and rightly use that as a positive selling point.
Someone from their trade association was on Radio Four today making that point in relation to Northern Rock. He was right.
So, why not protect all retail banking in that way? It wouldn't even be terribly hard to do. The institutional model already exists. All that is missing is the political will.
No, that wouldn't affect the issue at all, which is that there isn't an absolute division in the functions of retail and investment banks, so you can't legislate for them. This seems amazing, but it looks as if you've literally never heard of the shadow banking system. What about the consumer finance arm of GE? Is that a retail or an investment bank or neither?
ReplyDeleteAll that you are saying is that it isn't currently the case, so that there are currently some companies that do both. Well, I know that. Don't we all know that?
ReplyDeleteThis was not allowed in America for many decades until Bill Clinton, a man with an awful lot to answer for, caused all of the present trouble by permitting it, one of the most spectacular examples of how dangerous are people who come from the Left but build their careers on trying to out-Right the Right.
Here in Britain, we have a long-established model ready and waiting to rectify this: a form of retail provision of financial services which is already legally forbidden to play these extremely risky games with its customers' (i.e., its members', which are its owners') incomes and savings.
If we only allowed retail banking to be done by institutions organised on that model, and thus with those restrictions, then that would be that. Anyone else who refused to make the change could just be told to get lost.
So what if some other institutions already do that sort of playing? Of course they do, until someone stops them. So let's stop them. The heartland of capitalism stopped them for generations. If it could be done there, then it could certainly be done here.
As much as anything else, that would mark an important break with our insistence ever since the 1980s on being more capitalist than the Americans, largely because we took on their (in fact, historically quite recent) economic ideology while neither retaining our own restraints of religion, of local and national patriotism, and so on, nor taking on theirs. Look where that has ended up.
Poor Tom. Rich Tom actually, but you know what I mean. He cannot imagine a world in which these things did not exist and therefore could not impose their political will on the tax-paying little people. He probably did not know about the restrictions on building societies. How can such financial institutions possibly exist? I don't think he has even tried to get his head around mutual ownership.
ReplyDeleteYou are right about Clinton, triangulation has turned out to be one of the most destructive political ideas of all time. Nafta and Gatt. The creation of an Islamonazi state in Europe, with another one since as a result of the same process. Repeal of Glass-Steagall. Beating welfare claimants like workshy dogs. Homicidal penal policies towards teenage boys. Don't forget the export of the Third Way to Britain and other countries.
You are also right about how Britain always took the 80s further than America did because we had given up the things that put a break on Americans. We had given up faith, flag and family so there was nothing to hold back our greed. You have written before about the differences between the Premier League and the NFL/NBA/MLB. There are thousands more examples. Tom probably thinks he likes the Americans and is like them. Would that he truly did and would that he truly were.
Mutual building societies are legally not allowed to do casino banking? Not just they don't, they are not allowed?
ReplyDeleteThat's right, Jake. Not allowed, and have no desire to be. Northern Rock lasted 100 years like that, and one tenth as long with no such restrictions.
ReplyDeleteAnyone who declares a desire to be able to do that sort of thing with the money of retail customers thereby declares their unfitness to be allowed to do it. We don't need to reinvent the wheel, as they would have to do elsewhere. We have the ideal model already to hand, to make this impossible.
Anonymous, very well put. At the risk of tipping Tom over the edge, there is now a major political party, consistently ahead in the polls and the only viable Opposition to this extremely unpopular Government, which is in no sense the political wing of the casino banking cartels. Imagine that, Tom. Imagine that.
Its Leader is very attentive to advocates both of mutualism and of strong government regulation, as well as of democratising the City of London and protecting its age-old working class. Imagine that, Tom. Imagine that,
For that matter, even George Osborne has expressed his support for a British Glass-Steagall and his fondness for the mutual model. At that point, I fear that Tom's head might finally have exploded.
Its Leader is very attentive to advocates both of mutualism and of strong government regulation, as well as of democratising the City of London and protecting its age-old working class. Imagine that, Tom. Imagine that
ReplyDeleteIncluding you, perhaps at one degree's remove, but perhaps not and probably not for very much longer.
Loving the spectacle of you taking to pieces some spoilt little rich boy with a previously unchallenged sense of his own entitlement at everyone else's expense.
That really is a killer blow, isn't it David? In America, of all places, retail and investment banking were forcibly separated for 66 years during which America became the economic power house of the world. Since that law was repealed, America has gone down the pan economically and taken everyone else with it.
ReplyDeleteGlass and Steagall were Southern Democrats and proud of it. Clinton was a Southern Democrat who expressed his shame by playing the hillbilly. He would drag out faith, flag and family to get him out of a scrape but he hardly believed a word of it and was visibly taking the micky as he said the words. Glass and Steagall did, and weren't.
Tony Blair listened to Clinton. But Ed Miliband listens to faith, flag and family supporters who want to separate retail and investment banking. Like Glasman. Or Lindsay.
I don't know how I had never thought of that. America still had faith, flag and family, so it still had limits on its new economic ideology in the Eighties. We had largely given up our religion, patriotism and family values. So we had nothing to stop that ideology from destroying what little remained of them.
ReplyDeleteA frightening amount makes sense when you take that on board. I am so proud to have known you for many years. You are a very great man, kept down for a decade by a double wannabe, a wannabe Blair as Blair was a wannabe Clinton. I have known that double wannabe for a long time, too. But I am not proud of that.
Is the consumer finance arm of GE a retail or an investment bank?
ReplyDeleteWho cares? What matters is that it would have to choose to be one or the other, or else cease trading in the United Kingdom. Or, I must add, in any of the British Overseas Territories or the Crown Dependencies.
ReplyDeleteAnd if it chose to be a retail bank, then it would have to become a mutual building society, or else cease trading in the United Kingdom. Or, I must add, in any of the British Overseas Territories or the Crown Dependencies.
By becoming a mutual building society, it would in any case become subject to the legislation, already on the books and fully enforced, that bans mutual building societies from, to use your own example, the foreign exchange futures game. There are a number of other such examples.
So there would be a triple lock: the British Glass-Steagall, the already existing and enforced statutory ban on casino banking by mutual building societies, and the democratic pressures inherent in the mutual model. The first of those prevailed in the United States for nearly 70 years, which you either do not know or cannot bring yourself to admit. The second prevails in the United Kingdom right now, as you flatly refuse to admit, rather suggesting that you know absolutely nothing about the subject.
Seriously, go and look it up. Building societies are already not allowed to do these things (nor do they want to), which didn't used to be allowed at all in America while she was becoming and remaining the greatest economic power in the world, also a period of stringent import controls there.
If no one except building societies were allowed to do retail banking, with existing banks free to convert to that model and carry on, then that would be that. And we'd all be a very great deal better off in a very great many ways.
how dangerous are people who come from the Left but build their careers on trying to out-Right the Right
ReplyDeleteLike Tom?
Especially when they started out on the Far Left, as they very often did.
Like Tom?
I only ever use the building societies for exactly the reasons that you give.
ReplyDeleteThey are owned by the customers, so the customer service is superb. Plus they are legally forbidden to do the riskier stuff, which Tom, probably a City boy in his early twenties, naively assumes everyone does. They don't, dear boy.
Building societies are part of a completely closed world to Tom. The world of credit unions, trade unions, co-ops, the North and people who did not go to public school. You know, the people who pay tax but now have to go without essential services, all to keep Tom in bonuses.
I reckon Dave Boat might be right. A few years, maybe months ago, Tom was affecting to be a Trot or something like that. They know nothing about our world, either. But you do, Mr. Lindsay. Keep up the good work. You are our coming leader.