Brilliant banking speech by Miliband

[claig]

Miliband wants a British Investment Bank and tighter regulation of banking and separation of high street and investment banking. He is addressing the elephant in the room, the real scandal that the public wants addressed. He has real integrity and wants the banks to have integrity again.

Miliband is an excellent Labour leader. I think he will win the next election if he carries on like this. Love the new logo too - a British flag with "realchange" as the logo - no Tory party green tree image, no polar bears, no global warming, no more "building a progressive future", no more spin - just simple, true, "real change". Brilliant

[CogitoErgoSometimes]

Five years ago when the banking crisis first hit and Brown opted to prop up the industry, that was the golden opportunity for Labour to introduce tighter regulation as a condition of state support. Those supposedly in charge, the very people Milliband has around him today, were clearly out of their depth and too easily hoodwinked by the financiers. Just two years down the track after being voted out for fiddling while Rome burned and we're supposed to believe that the same people have suddenly found integrity?

[Dropdeadfred]

Milliband and brilliant on same sentence???

[claig]

I think that Miliband is not denying Labour errors and mistakes. He acknowledges that they did do things wrong, but he still wants a judge-led public inquiry to get to the bottom of it all, even though it will possibly highlight lots of Labour mistakes. I think he has integrity because he rises above petty party political considerations and considers the real interests of the country and all of the public. I think he believes that we need "real change", that things can't go on as before, that this is too important to be swept under the political carpet.

[NicholasTeakozy]

I agree it's a step in the right direction. The problem I have with the two new banks he is proposing is that they are to be run by the private sector, and therefore will have to charge more than, say, a building society or credit union due to existing laws on shareholder returns.

I would have preferred him to have gone further. See those banks successive governments bailed out? We own them, yet they continue to rip us off. Nationalise them, get rid of the top management and run them for the good of the customers. Reform banking laws so that there is immediate and total separation of investment and retail banking. Stop rewarding short term profit and start rewarding long term investment.

Stop quantitative easing, in fact order those banks who accepted this new fake money to repay it. Any QE measures to be made by the newly nationalised banks to aid industry, large and small, as making stuff is what makes real money, not shoving large amounts of pretend money around.

In the future, any bank that requires saving should be allowed to fail.

[MrJudgeyPants]

As I've said elsewhere, if you think Miliband has said something sensible, you've probably misheard him. It's exactly the same with this. When he says that he wants a British Investment Bank what he means is that he wants a bank that uses yours and mines savings to 'invest' in British infrastructure. What this really, really means is that he wants a bank to give commercial loans to the government to spend on flagship projects that otherwise wouldn't attract investment. What this really, really, really means is that your money will be on the hook to pay for the grandiose schemes of the government - usually these schemes have no sensible business case or any hope of returning a profit (If this sounds remarkably like HS2 there's a reason for that) but are built by the financially incompetent who don't know what they are doing. Would I put Miliband in charge of my savings and/or pension pot? Would I hell!

Amazingly, we have experience from across the EU where these very businesses are set up. Spain has a lot of regional, mutually owned, co-operative banks known as Casas. These are often run by the local councils to pay for capital build projects. Incidentally, they are also the biggest problem with the Spanish banking system and the reason why Spain is under so much pressure from the money markets. So, Spain has 50% youth unemployment, 25% general unemployment, pays many orders of magnitude more than the UK for borrowing and is threatening to default and be kicked out of the Euro - Ed's response is to copy one of the causes of the problem!

It's been a while since I've had a chance to say it, but Ed is crap!

[flatpackhamster]

I suppose it's possible Miliband will still be in charge of the Labour party by the time of the next election. I wouldn't get too comfortable with him. The old Militant Tendency is pushing its way back, and I doubt that Ed is far enough to the authoritarian left for them.

[EdithWeston]

I thougt it was a very Thatcherite speech - forced sell off to introduce more competition in the hope this will lead to a better service.

And can anyone explain why the separation of retail and 'casino' banking has become the Holy Grail? Northern Rock had no 'casino' arm.

[flatpackhamster]

Piece in the Telegraph about his speech - "He wasn?t taking risks with his own money. He was taking it with other people?s," he said, adding that to change this culture an ordinary bank employee should be on every bank remuneration committee.

That quote was delivered without a shred of irony by the man whose government spent more than it took in taxes from 2001 onwards.

[flatpackhamster]

EdithWeston

I thougt it was a very Thatcherite speech - forced sell off to introduce more competition in the hope this will lead to a better service.

And can anyone explain why the separation of retail and 'casino' banking has become the Holy Grail? Northern Rock had no 'casino' arm.

The thinking is to ensure that retail depositors' savings aren't at risk if the investment wing of the bank goes buns up. That was how it was from the 1930s until 1997. IIRC, the rules on that were shredded by a Mr G Brown, who was chancellor at the time. One of his advisers at the time was a Mr E Miliband.

Cheery fact of the day - Google's predictive search, when you type in 'Ed Miliband' produces as its first hit 'Ed Miliband Gay'.

[claig]

'Would I put Miliband in charge of my savings and/or pension pot? Would I hell!'

I would rather have Ed in charge than some of these spivs with their billion dollar derivative bets gone belly up.

I can't remember exactly, but I think Labour in the past did have a National Investment Bank. I think they invested in companies like Acorn, which I think was the originator of the ARM chip that is used in so many tablets and phones today. Britain has the potential to be a world leader in so many areas. Our universities and brain power are second to none, in spite of the educational dumbing down that has occurred.

Britain needs investment. As Miliband said in teh speech, something like only 2.5% of lending went to manufacturing industry, the vast majority went to financial and property companies. Vince Cable also said something yesterday about the banks not investing enough in British industry.

I think we need another National Investment Bank. I think our money and savings should be directed to our people and industries and away from the spivs. We have been ripped off and mis-sold; it's time our money was used for investment and our interest rather than paying spivs' interest.

I agree with NicholasTeaKozy; we should nationalize the banks we majority own, cut bonuses and change the culture.

[MrJudgeyPants]

NicholasTeakozy "See those banks successive governments bailed out? We own them, yet they continue to rip us off. Nationalise them, get rid of the top management and run them for the good of the customers. Reform banking laws so that there is immediate and total separation of investment and retail banking."

The current scandal about LIBOR refers to events that occured immediately prior to the banks being bailed out - unfortunatley any ripping off that they might be doing is purely systematic and not exceptional!

Secondly, they are currently nationalised - the taxpayer has a majority stake in RBS and Northern Rock and a minority stake of around 40% in Lloyds/TSB/HBOS - or whatever they are called this week. Barclays was never owned by the taxpayer. The management structure that was in place at all the nationalised banks have been sacked - remember Fred the Shred and his golden handshake?

Thirdly, this splitting of banks into investment and retail arms is a red herring. The failure of the banks was nothing to do with the 'casino' element of banking. HBOS and Northern Rock got into trouble because they lent out too much money to too many people and then got caught out when the price of borrowing money shot up. RBS got into trouble primarily because it spent to much money on its ABN Amro and Nat West aquisitions. Lloyds would have been fine if wasn't forced into a shotgun marriage with HBOS to try and keep the plates spinning. None of this is casino banking by any stretch of the imagination.

How can we expect the banks to repay QE money without bankrupting themselves? Unfortunately, stupid government policy has made matters much worse.

"In the future, any bank that requires saving should be allowed to fail."

Amen to that - bailing out the banks was the equivalent to our economy of original sin! All evil flowed from there.

[flatpackhamster]

claig

I can't remember exactly, but I think Labour in the past did have a National Investment Bank. I think they invested in companies like Acorn, which I think was the originator of the ARM chip that is used in so many tablets and phones today.

That tortuous logic is the same one used by the Argentinians to assert sovereignty over the Falklands. Acorn went bust, and it went bust because it misjudged the market and couldn't supply its product to the market. ARM holdings is not Acorn.

Britain needs investment. As Miliband said in teh speech, something like only 2.5% of lending went to manufacturing industry, the vast majority went to financial and property companies. Vince Cable also said something yesterday about the banks not investing enough in British industry.

What British business needs is less regulation and fewer stupid taxes, not more lending. The number 1 and 2 complaints from businesses isn't 'Oh, I can't get a loan', it's complaints about paperwork and tax.

[claig]

'HBOS and Northern Rock got into trouble because they lent out too much money to too many people and then got caught out when the price of borrowing money shot up'

But this should have been properly regulated. The interbank lending market seized up because banks didn't trust other banks anymore due to the fear of what some casino elements might be sitting on and teh fear that they could not be paid back.

There was a systemic failure in regulation and particularly a failure to regulate the casino players with their bad bets, bluffs, big bonuses and bottles of Bollinger. They took us for a ride, came crashing down, walked away and asked us to pay their bills.

[MrJudgeyPants]

"The interbank lending market seized up because banks didn't trust other banks anymore due to the fear of what some casino elements might be sitting on and the fear that they could not be paid back."

Not true, the reason for the problems you speak about was stupid bankers over lending money to people who clearly couldn't afford to pay it back. However, what compounded the problem and made it so destructive was that the loans and mortgages had been bundled up and sold off in packages. No one knew whether the debts in those packages would be paid back or not, hence no one knew the value of their own assets or any one else?s. When that happens, the safest thing to do is to stop trading while you figure out who has what. Worse than this was that those assets (mostly house prices) also started to fall.

To give an example, Bank A approves a mortgage for a family for £100k. Over the course of the next 25 years this family should repay a grand total of £200k. Bank A doesn't want to wait 25 years for all its money but it knows it can make some money by selling the debt to Bank B for somewhere between the two figures - let's say £150k. Bank A is now £50k up on the deal just for approving a mortgage. Bank B is also up on the deal because it has just bought £150k for £200k. The problem becomes evident if the family get into difficulties and can no longer afford to repay their mortgage. In the years running up to the crash this wasn't a major problem as the asset (the house) would have most likely gone up in value anyway. Bank B makes its profit (or at least most of its money back) when it evicts the family and sells the house.

The danger for Bank B comes when the house gets repossessed and the housing market is in decline. Now it is trying to sell its asset into a falling market and it loses out twice over. Under these conditions, the safest thing it can do is to stop buying debts from Bank A - it is those banks that went bust / had problems.

[claig]

I think Miliband is in touch with the public who have had enough of Labour 'light touch' regulation and have had enough of being a soft touch for the spivs.

Miliband wants to take the lid off the can of worms and look inside and he wants some of teh crooks to be canned and put inside, he is on the public's not the spivs' side. He wants to do some spring cleaning to stop the spivs springing more surprises and walking away with their pockets stuffed full of their bonus prizes.

Labour has a new slogan - "real change" - and that is what the public expect.

[claig]

'Four in ten small firms are being turned down for bank loans in a sign of the continuing crisis facing entrepreneurs, a report reveals today.
The Federation of Small Businesses warns: ?The ongoing credit squeeze is becoming critical.?

Research based on interviews with around 2,850 small businesses found 41 per cent which asked for finance were ?refused? over the past three months.'


www.thisismoney.co.uk/money/news/article-2160935/Banks-lending-small-firms-report-turned-loans.html


Miliband is talking about stopping banks mis-selling products like risky swaps to small businesses.

[CogitoErgoSometimes]

"And can anyone explain why the separation of retail and 'casino' banking has become the Holy Grail? "

It's the dumbed-down shorthand that's being used by people that have no clue how it works. Parliamentarians and civil servants are totally in the dark about high finance. Ironically, the CEOs of banks seem not to fully understand what's going on either. So there's no point putting MPs and bank CEOs together in an inquiry because they won't ask the right questions and we won't get the right answers. It's the blokes in the middle that work out the complicated transactions that make all the cash. So all of this grandstanding about 'we need to get to the bottom of it' is rather redundant because we're asking the wrong people.

[claig]

I don't think the lawyers in the Levenson inquiry have previously worked in newspapers, but they are capable of asking searching questions that unearth what has been going on.

We have judges and lawyers and economists and market commentators and ex-market members that are capable of questioning some spivs under oath and finding out what has been going on. It is an excuse to say that nobody knows what has been going on apart from the spivs.

[flatpackhamster]

claig

But this should have been properly regulated. The interbank lending market seized up because banks didn't trust other banks anymore due to the fear of what some casino elements might be sitting on and teh fear that they could not be paid back.

It was properly regulated until 1997. Maybe Saint Ed could explain to you why he now wants to regulate the stuff he didn't want to regulate in 1997.

There was a systemic failure in regulation and particularly a failure to regulate the casino players with their bad bets, bluffs, big bonuses and bottles of Bollinger. They took us for a ride, came crashing down, walked away and asked us to pay their bills.

And, had we had a sensible government in charge, the answer would have been 'no'. There was no reason to bail out the banks, except that those banks were based in Labour constituencies.

[claig]

'"And can anyone explain why the separation of retail and 'casino' banking has become the Holy Grail? "

Because the casino elelment has teh potential to infect teh entire system and bring it down as being "too big to fail", which inevitably means that the public has to bail the gamblers out.

A separation of retail banking from the casino element means that we can ringfence the losses and that the public will not be liable for the losses of the gamblers. If they want to go on a boozed-filled Bollinger betting binge, then the public will no longer have to pick up their bar bill.

[CogitoErgoSometimes]

Be serious. Newspapers are 100x easier to understand than the slippery ins and outs of high finance. It's why fraud trials go on for years, often end up collapsing, and why there have been recent calls for them to be held without a jury. HMRC are always one step behind the tax experts that find loopholes. Even a well-briefed parliamentarian will be given the runaround.

[claig]

'Be serious.'

I think Ed is being serious. Of course we as a country have the ability to hold an inquiry on the banking scandals and are able to hold the bankers to account. It is not as complicated as they make out. People like Stiglitz and others would easily be able to expose what has been going on.

[claig]

This stuff is not rocket science. It's child's play compared to the science that Professor Higgs and our inventors and scientists are involved in every single day.

[claig]

'Big Boy' and his Bollinger buddies are minnows compared to our eminent scientists.

[JuliaScurr]

flatpack 'Militant Tendency pushing it's way back' - I think you got your Trots mixed up. The Socialist Party (inc D Nellist) is in TUSC. We like them. They aim to stop the cuts (made to pay for bank bail out). Why would they want to 'push back' in to Labour which also supports cuts, just slower?
If you must talk nonsense, please base it in logic.