ED WON!

[pinkbasket]

There you go.

"I generally vote centre left as I vote with my conscience. Also i spend much time campaigning and helping those excluded."

You say you vote with your conscience, but markets have no conscience. That's why we need to regulate them. We can't wait until we achieve some mythical global regulation. Sarkozy called their bluff and said "OK let's regulate" and was politely ignored. He actually believed what they were saying. The markets lobby against regulation, they say it is uncompetitive and we can only regulate if everybody plays by the same rules. But they seem to forget all of that when it comes to workers' wages. They don't care that our workers are uncompetitive compared to Chinese workers, they don't demand that China creates a level playing field, because they are investing their money in China and are prepared to let us sink or swim.

Here is what the Democrat, Joseph Lieberman, said about markets

"No matter how passionately we believe in capitalism as the best system for economic growth and opportunity, the invisible hand cannot do it all," Lieberman said. "Markets have no conscience. To ensure markets of integrity, as well as efficiency, as well as profit, that invisible hand needs to be assisted by the firm hand of government oversight in the name of ethics.

"Can deregulated markets be left to police themselves, or does government need to become more vigilant in ferreting out abuses than it has been? The results of this investigation answer that question definitively: unregulated and unprotected energy markets are a recipe for disaster for consumers and businesses that need to buy energy."

It makes no commercial sense NOT to regulate, that is what caused this recession

Claig - driving the bankers away won't curb 'casino banking'. It'll just be done by bankers based in Zurich with our money. And no control or tax revenue for us.

Err presumably we get to choose whether to put our money into Zurich or not

We won't drive the bankers away. There'll still be there on every high street, they'll still want to take our savings. All we'll do is make sure that they don't gamble it away irresponsibly. The United States is the heart of capitalism and has much tighter standards and regulation than we do. They introduced teh Glass Steagall Act after the Wall Street Crash, they made sure that banks couldn't get too big and powerful. They separated the casino side from main street, so that the ordinary worker wouldn't end up penniless due to some fatcat irresponsibly playing with their life savings. They created margin limits and a much tighter regulation than we had. The financiers successfully lobbied to have it removed and look what the end result was. Many astute pundits foresaw what would happen. Even the fatcats knew it would happen, but they didn't care, they wanted to make hay while the sun was shining, tomorrow was another day and they'd be long gone by the time the shit hit the fan and the public would have to bail them out. There was no downside for them, it was easy money, they could take the suckers for a ride.

They'll squeal a bit if we regulate them, but they won't leave. They didn't leave when the USA introduced Glass Steagall, they just knuckled down and made an honest living.

Claig- you are looking at the tabloid headlines...as a matter of fact there has been recent agreement on some aspects of regulation e.g. Basel 3. This is perhaps the most important aspect of regulation as it relates to bank capital/leverage ratios. The German's, i believe, forced us to introduce it gradually. On banker's bonuses, I believe it was the French and Canadians who didn't want to adopt the UK suggestions so what you are saying about Sarkozy might just be another politician grand standing. This is part of the problem; politicians are grandstandinding and not having an informed discussion, open analysis with the public.

You should read the report that explains that banking crisis are inevitable and will happen once every many years and that the bonus structure isn't the main contributing factor.

How can you claim that the US has "much tighter standards and regulation than we do" ? Erm....I think that you will find that the had the biggest sub-prime lending problem; I think that you will find that they have the most generous bonus payments a la Goldman Sachs; I think that you will find that it was some of their corporates like AIG that turned themselves in unregulated banks...I could go on.

I am finding this discussion very frustrating because of the way that you are throwing around Daily Mail type mis-information. No point really in continuing if you aren't dealing in facts.

Of course agreement is useful. Yes the Germans forced us. Why did they need to force us? Why couldn't we decide to do it without being forced?

I'm not aware of Sarkozy being against regulation on bankers' bonuses. He always seemed tough on them. The Guardian tell us

"Nicholas Sarkozy threw down the gauntlet to other G20 nations tonight when he announced a new set of rules limiting traders' bonuses and vowed to make the country the global "example" for the cleaning up of the banking system."

www.guardian.co.uk/business/2009/aug/25/nicolas-sarkozy-bankers-bonuses

and the New York Times said

"France and Germany, which has also recently announce steps to curb bonuses, fear that regulators in the United States and Britain are taking a lighter approach. They worry that their financial sectors will lose talent if there is an easier environment abroad."

Have you got any links showing that Sarkozy was against tough regulation on bonuses? You may well be right, but I would put money on it that this is another case of Gordon Brown claiming credit for "saving the world" and claiming that he introduced something that Sarkozy was already in full agreement with.

I don't think that the bonus structure is the cause of the banking crisis. I think there was a much bigger failure in the regulatory system than just bonuses, which are just a sop that are used to placate the public.

Banking crises do occur periodically, but not on the scale of the crisis that we have recently experienced.

France and Germany have always been in favour of tighter regulation. It is the UK that has always been behind these countries in calling for tighter regulation
www.spiegel.de/international/europe/0,1518,628123,00.html

Historically, the US has had tighter regulation than the UK, and it was the US that introduced the Glass-Steagall Act, which was only repealed in 1999 due to lobbying by the financial industry.

"However, the New Deal brought tighter banking regulations to both sides of the Atlantic and the combination of tight statutory regulation in the US and loose regulation and continuing oligopoly in Britain worked well until the middle 1960s. At that point, the invention of the euro-market, together with the replacement in 1966 of a very strong Bank of England Governor Rowland, Lord Cromer with a series of weak ones brought the existing regulatory system for the first time into question. The US houses, tightly regulated at home, found they could operate much more freely in the European market, and those without banking licenses needed pay little heed to the Bank of England?s opinion. The result, from 1969 in both Britain and the US was a series of unpleasant scandals and bankruptcies followed by a decade-long downturn in the financial services business."

Big US banks liked the UK environment because there were less restraints on them here than in the States. The City always mentions this and has been against tight regulation, because it says that this keeps us competitive and attracts foreign players to our market.

I know that progressives are not fans of the Daily Mail, because it tells it like it is and not as the progressives would like it to be. Here is the Daily Mail telling us that the Europeans want to regulate the hedge fund industry, and shows how the European hedge fund industry (80% of which is based in the UK) is lobbying against such regulation.

www.dailymail.co.uk/money/article-1278921/Hedge-funds-brace-EU-crackdown.html

Well what has Sorko done about bonuses at Soc-Gen and Credit Agricole where i believe that the Govt still has large stakes? There is a difference between Gran standing and actually walking the talk. You see Paris and even Toronto would dearly love some of the Fin Services industry that we have in London.

I think that your championing of the Daily Mail says it all.

In my opinion, the discussion of separation of investment banking from retail banking is mostly a red-herring. Northern Rock was not an investment bank. AIG was not even a bank. Sadly their isn't much deep thinking on the structural issues of banking.

The thing is if capitalism will have massive failure every 100 years or so. Unless you stop innovation and leverage. The whole concept of banking and leverage (lending) is underpinned by risk and occasional systemic failure. Banks work out their capital requirements based on a small probability of failure: but the implicit assumption is that there will be failure at some point. This is embedded in the regulations. Basel 3 is trying to reduce the chance of failure but innovation will work around whatever banking model that is putting place and build up systemic risk. Unless you want to close down capitalism that it is what will happen. Not advocating complacency but I would prefer if we had better education of the public on the inherent risk of globalised capitalism not scape-goating and popularity broad brush daily mail finger pointing

Apologies to the OP on the tangential debate....I will leave this subject now.

Claig - I'm not against better regulation and I suspect many banks would favour it or at least adapt to it. But we do need our finance industry, although a medium term rebalancing to other industries would be prudent.

Fattyb might be happy keeping her savings under a mattress - but most people need a mortgage, pension and decent return for their life savings.

I can (just) remember the days when building societies would write to their customers telling them they needed to save more - so the society could increase it's mortgages to first time buyers. High street banks alone can't meet modern banking needs.

Maybe separating off the investment arm is possible (I don't know). But we need investment banks and I'd rather have them in London than in Zurich/HongKong or where ever.

TDaDa - I agree with both you last posts (x-posted). Enjoy the rest of your weekend

jackstarbright - i completely agree

thank you. Enjoy your's too

Sarkozy walks the walk and talks the talk
business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5524600.ece

Sarkozy is not a progressive, he is a conservative. He is the exact opposite of a progressive and a grand stander, he is a realist. That's why he says

"The French president, Nicolas Sarkozy, said "we all know that would have occurred without government intervention to maintain the trust and support the industry: total collapse."

"It's not about liberalism or socialism neither right nor left, is a reality."

He is not grand standing. The grand standers are the politicians who say they are "saving the planet" and "saving the world".

The financial lobby always says that those evil foreigners want to do down our competitive business in the City of London and grab the riches for themselves. They don't want to be regulated. As Christine Keeler said "they would say that, wouldn't they?"

The Daily Mail, usually so sober and sound in its judgements, does have some journalists who you would agree with, champions of unregulated bankers, like you. Here is one of them stoking up fear of the foreigner and supporting bankers' calls for a light regulatory regime. They laughingly call it "le grand stitch-up". It's a stitch-up alright, but it has nothing to do with Sarkozy.

www.dailymail.co.uk/debate/article-1232786/PETER-OBORNE-Le-grand-stitch-Labours-shameful-deal-hand-control-city-French-cost-dear.html

The French don't want to take over the City and locate it in Paris. They have some of the world's largest and most profitable banks and they operate internationally and are there at the heart of the City. They employ staff from every country and operate in the language of international business, English. They don't want to kill the goose that lays the golden egg. Their energy companies are some of the largest in the UK and they want to operate in the UK to get access to UK customers. They don't want to harm the City. All they want is regulation, which Gordon Brown says he also wants. They don't want some hedge-fund Herbert threatening the entire world financial system because the Herbert was unregulated.

"In my opinion, the discussion of separation of investment banking from retail banking is mostly a red-herring"

Vince Cable disagrees with you, and I think he is right.

Northern Rock is a minor player in all this and it suffered from a classic liquidity crisis. It could have been bailed out. The inter-bank lending market froze up because banks no longer trusted their counterparties.
The reason for this lack of trust was the huge risks caused by derivatives trading. The gambling, casino side had infected ordinary banking and created a lack of trust which led to a collapse in the inter-bank lending market. There is lots of deep thinking about the structural issues in banking, but there are vested interests in finance who don't want to listen. They want to carry on as usual, their siren voices risking the collapse of the world financial system.

Unfortunately you are providing examples of Sarko playing to the public gallery. Token forgoing of bonus by board members is the biggest con. The traders at Soc Gen and Credit Agricole are doing well thanks That is where the real money is not the token board member giving up the odd bonus. If Sarko was serious then he would use his stake in the banks or taxation. Has he introduced a bonus tax/levy on the banks as per the UK.

It looks like the UK's bank bonus tax was a joint initiative with Sarkozy. Gordon and Sarko agreeed to a joint programme in a tete-a-tete. It is possible that the press reported it as an initiative taken solely by Gordon, but it seems that they both agreed to combine and do it together.

dealbook.blogs.nytimes.com/2009/12/10/france-to-join-britain-in-tax-on-big-bank-bonuses/

In fact this is what the French said

"??We have been advocating this for a long time, and we are delighted to see that Gordon Brown is taking that stand,?? Ms. Lagarde said. ??The president,?? she added, ??thinks he is brave to take on the City.??

so maybe they were the ones that convinced Gordon, and allowed him to take the credit

Don't you think ED looks like Ray Romero from 'Everybody Loves Raymond'. Ray even has an older brother who is often bitter about how his mother seemed to prefer Ray over him.

Rays nose is a bit bigger but apart from that he is a dead ringer. Ha Ha Ha

Claig- i stand corrected on whether Sarko was just grandstanding given that he did join the UK in taxing the banks. But note that these actions only really make sense if don't multilaterally.

Interest view here on banking regulation. Again this highlights the fact that action needs to be well thought and multilateral to avoid unintended consequences; as opposed to knee jerk crowd pleasing.

...if don't done multilaterally.....

Where is Ed?

down the registry office?

TDaDa, it would be nicer to have multilateral action, but some people believe that multilateralism is an excuse for procrastination and may in fact be a smokescreen for not carrying out regulation.

The article that you linked to shows that the Swiss are not hanging around for multilateral action. They are imposing very strict regulation on their banks, which will restore confidence in their banks and give them a better credit rating and encourage investors to invest in these banks since the regulation is making them safer to invest in.
The article points out that it would be very difficult for the UK to impose the same strict regulation on UK banks, because it would be difficult to raise the capital required. That shows how precarious the situation is.

Obama leads the capitalist nation par excellence, and he is not hanging around waiting for multilateral agreement, to the disapproval of Peter Mandelson. Mandelson prefers to wait for multilateral agreement, but this could be like waiting for manana. In the meantime, the United States and the Swiss are busy restoring confidence in their banks.

business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7048662.ece

In fact, reading those articles I think it is beginning to come clear exactly why Mandelson wanted to kick the problem into the grass and wait for Godot, unlike the the Swiss and the Americans who were grabbing the bull by the horns.