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

'You love Red Ed and his Cracking Inventions'

Ed yes, but not all of the Shadow Cabinet

It has got nothing to do with left-wing thinking and everything to do with globalisation and the removal of jobs from communities and the opening of factories in cheaper locations abroad

That.

How many billions do we pay in subsidies to the rail companies?

rail companies have always worked like that. even in the 'golden age of steam'.

'Erm, I think you'll find it's the Taxpayer who provides all this largesse.'

Erm, I think that taxpayers Mr & Mrs Jones can run a whelk stall, but not a space programme. The State is an extension of the citizens; it can achieve what individuals on their own cannot.

'BTW, do you have any information on when "all our people" are going to be educated? Last I heard not even 60% of pupils achieved a basic 5 A*-C GCSEs including English and Maths in 2011.'

All our young people are in education, and the State educates most of them. The level of education they receive can vary, but is likely to improve under Gove's reforms.

I don't think he's offering anything new or thoughtout. Everyone supports tighter regulation ....now just like everyone supported light touch 10 years ago. Uk investment bank- what does he mean- to raise cash fir infrastructure projects - this is what pfi does ..and has been derided by press recently.
I personally think the division of investment banking and retail is a good idea but this wasn't the direct cause of the crisis ( I find it ironic that bad lending is blamed fir the crisis but now banks are derided for not lending) and could lead to more expensive retail banking.

' I find it ironic that bad lending is blamed fir the crisis but now banks are derided for not lending'

I never believed the story that it was bad lending. Everybody like Vince Cable etc says that it was "casino banking", there was no retail bank lending there, just derivative gambling. That's why they want to ringfence the retail lending banks and teh mortgage lenders from the casino banking elements.

The people who make billion dollar losses are the traders on the trading floors, not the bank mangers on the high street.

If Mr and Mrs Jones can't pay their mortgage, the high street bank repossesses their home. They are not on the hook for billions.

What? The question is whether securitisation made lenders take risks with lending that they wouldn't have taken if the risks had stayed on balance sheet- eg did they suspend judgement- losses only came when borrowers defaulted. The investment banks that collapsed during the crisis did so because of liquidity issues - not through derivatives. But investment bankers are easy targets- saying that people shouldn't borrow huge multiples of unpredictable income is not palatable.
But if vince cable says differently then I bow to his knowledge of banking

Repossession means in general that the bank ends up with a house that is worth less than the loan- this means a loss for the bank. Scale this up by the millions of mr and mrs jones...

'The investment banks that collapsed during the crisis did so because of liquidity issues - not through derivatives.'

The investment banks needed liquidity to cover their positions and the black holes caused by their derivative losses. Counterparties called time on the transactions and credit margins and rollovers were no longer good enough. It was the iinvestment (not retail) bank Lehmans that first went belly up and infected the entire system.

'But if vince cable says differently then I bow to his knowledge of banking'
You are not alone, a lot of people bow to his knowledge too.

'Repossession means in general that the bank ends up with a house that is worth less than the loan- this means a loss for the bank. Scale this up by the millions of mr and mrs jones...'

I'm not sure, but I think teh banks may even have insurance for this. The house prices also eventually recover and they can receive rental income. This is not what caused the near collpase of the entire financial system. We have had housing collapses before and they didn't require trillions of pounds of taxpayer money to put right.

This is about the casino banks, not banks that lend to the public.

Although the two banks are now interconnected due to teh light touch regulation which has failed to separate the retail arms from teh investment arms. Miliband is calling for that separation in order to safeguard teh taxpayer from having to bail the spivs out yet again. But it seems that the Tories may not go as far as implementing a full separation. We will have to wait and see.

It was exactly because Lehmans didn't have a retail banking arm that it was allowed to collapse. If the High St banks hadn't had customers with deposit accounts they'd have been allowed to go to the dogs.

And for the record, the electorate didn't favour light touch regulation. I'm betting the majority of the electorate wouldn't have known who the toothless FSA were, nor how little power they had or he lightly the Banks were being regulated right up to the point the shit hit the fan.

But that's all beside the point. If Ed really wants to convince the public that he can deliver loose real change, what's he got on the next 5 PowerPoint slides?

'what's he got on the next 5 PowerPoint slides?'

He is keeping that up his sleeve, but we may well be told soon.

Well let's hope so because until he's finished writing them tonight then its just a load of same old.

Frankly, I could have done what he's done so far myself --if I didnt think it was a cynical ploy to appease the part of the electorate that is prone to believing Slide 1.

'It was exactly because Lehmans didn't have a retail banking arm that it was allowed to collapse.'

It should have been saved, not allowed to collapse. It would have cost far less than what the taxpayers have had to pay over the subsequent years. It should have been shored up and an orderly analysis of all derivative positions could then have been done behind the scenes and positions could have been closed out and some banks could have been allowed to fail without causing panic on the streets.

some investment banks could have been allowed to fail

Rubbish, the US was too busy shoring up deposit banks and AIB. If that had gone tits up we'd all be living in boxes.

Lehmans stupidly was still profitable when it collapsed - it had a mismatch in between short term /long term funding and lending which was hugely impacted by the situation. Banks such as northern rock had no investment banking positions.
Derivatives are risky -and can leverage up risk hugely- but they weren't the culprits this time. This was different from others really because of the interconnectedness of the global markets- us property collapsed - the impact wasn't limited to the us.
Banks don't really have insurance for property repossessions- they may pass on risk to other banks ( either via securitisation or via derivatives) - but this just creates the contagion effect. They don't get rental income that would cover debt/costs.
Banks run their business on borrowed money- this is the fundamental problem- if something goes wrong and people stop lending - the house of cards collapses. This could be something real such as the property Market collapse or just Market sentiment. The fact that derivatives demanded margin wasn't a problem caused by huge derivative losses but to a degree normal demands which lehmans couldn't meet.

But again, back to the point of your thread.

If Ed can hatch a plan that's got actual substance, and let's face it on the strength of what he's got so far even you'd have to agree the ink is still wet, let him bring it out.

He's got 2 years to stop dicking about and craft an idea that's more than bullet points.

I'm ready to hear it, I just don't believe he's got it yet. And I bet if you were honest, youd agree.

'the US was too busy shoring up deposit banks'

They have got teh billions to cover deposit banks. Where do you think they found teh $700 billion to rescue teh bankers and teh billions to rescue GM. Covering the deposit banks was not teh issue, it was covering teh black holes in the investment banks which had infected teh entire system. That is why they are all now talking about splitting teh gamblers from teh retail side, so that it can't happen again.

There is talk of making the gamblers personally liable for their losses and removing limited liability, which is apparently how these investment banks used to be (when maybe they were partnerships, but I don't know enough about those times). That would stop teh gamblers in their tracks; they would all be queuing up at Gamblers Anonymous with no handouts from teh public.

Ed has not got all the answers, but he has got the questions. He wants a judicial inquiry to find out the answers. He is a clever man, a PPE from Oxford, but he can't do it all alone - that's why he wants an inquiry to get to teh bottom of it and find out what went wrong and why and what can be doen to make sure it never happens again. That is a good start. A journey starts with a single step. He has taken a brave leap (since we don't yet know what this will reveal about possible Labour mistakes) in the right direction.

Ed has looked into what the Deputy Governor of the Bank of England called "the cesspit" and has shouted "rien ne va plus".

Excellent, and when he's finished installing his Casino to English app he can finish his PowerPoint slides