Mad Bankers' Disease

It has been fun seeing the Bankers and other fellow financial travellers' squirm in front of the Treasury Select Committee these last few weeks although I ultimately feel the whole process is rather ineffectual.What we really need is some kind of financial "NUREMBERG TRIAL" for the characters who created this mess.

The negligent ,and I'd say thieving, bankers should be facing some kind of proper financial or even criminal sanction for their actions rather than the slap across the wrist with a damp teabag these grillings represent.That Fred "The Shred" Goodwin gets to keep his near £700,000 annual pension,not to mention all the (supposedly contractually obligated)bonuses being paid to other failed bankers is shameful.The fact is that if these banks had not been bailed out by the tax payer there wouldn't be any question of this money being paid at all.......they'd have been no money to pay them.

FSA chairman Lord Turner and Mervyn King,the Bank of England governor,in their grillings before the Treasury Committee both pointed the finger for the apparent lack of effective regulation at the government and its insistence of a "Light Touch" approach.In some ways this debacle is rather reminiscent of Mad Cow Disease in the early 1990s when a lack of proper and effective regulation lead to cattle being fed cattle with disastrous consequences.

But when all is said and done I don't think you can blame MAD BANKER DISEASE on the BANKERS any more than you can blame mad cow disease on the cows.What we had in both instances was a regulatory failure.But the failure was not with the regulators themselves,they could only do their job as prescribed ultimately by the politicians.

The bankers aren't blameless of course,they were greedy b*ggers and they should face penalties for their actions where appropriate.But it's bankers job to be greedy,it's their whole point for existing.If fox kills a chicken you can condemn that fox but it's ultimately pointless doing so.You need a freaking better fence and you should ask why the fence wasn't sound enough in the first place? The politicians are the real ones culpable here.They are the ones who should be grilled.And in particular I'm thinking one politician...........

Please step into the dock Gordon Brown.

New Labours obit'?

The British Labour Party is to my mind finished! The upcoming election(maybe this year,probably spring 2010) will be an annihilation for them,barring an incredible re-invention between now and then(stand up Alan Johnson please).

But what of the not insubstantial constituency that is the "Centre-Left" voters of the UK? Abandoned by "New Labour" long ago can we really wait the 10-15 years it'll take Labour to re-invent itself(and be forgiven) in opposition.We need a credible progressive CENTRE LEFT political force in the UK sooner than that to counter what could otherwise be a long dark period of Conservative rule ahead.

One of two things needs to happen.Either the Liberal Democrats need to "grow a pair" and re-seize the centre left mantle,or there needs to emerge(possibly from Labours' ashes)and new political party.

Martin Kettle in todays Guardian predicts such an opportunity for the Liberal Democrats.These really are,as he says,"seismic times",the like of which have on previous occasions brought about much politcal change, and I don't think this time will be any different.Vince Cable is one of the few sound voices in these uncertain times,although I do fear that the leader of the Lib Dems(whatshisname,i've gotta look this up here?)Nick Cleggs' greatest acheivement is in managing to make Tory leader David Cameron look "substantial".........quite some feat!

The other option,a whole new political party,is what I'd like to see rise from the current and approaching turmoil.I sometimes mourn that the British political system,unlike the American,only allows re-invention in opposition.Even then it's an incredibly slow and painful drawn out process,witness Labour 1979-97.

My point is WE CAN'T WAIT THAT LONG this time! Something new,and of the "LEFT" has to emerge.

I do believe we will see something positive,and of the "Left" emerge out of the coming economic and political chaos.It's going to get ugly shorter term but we will ,longer term, arrive in a better more equitable place.

The demise of Bonus Culture?

The climate seems to be moving towards a consensus,with the public at least,that something really has to be done about the insane "Bonus Culture" of the last 20 years.There seems little doubt that the excessive risk this system elicits has been a big driver in creating the current shambles we're in.

Unfortunately I fear Gordon Brown and Alistair Darling just don't get it! Their advisers on getting to grips with the situation are in general all "BANKERS" with a vested interest in maintaining the current failed system.Any move to place limits on bankers excessive pay,if they happen in the UK at all,will be due to President Obama shaming them into it.

It was also very telling that Peter Mandelson warned part nationalised RBS bankers against how new bonuses would "appear".An obsession with how things "APPEAR",rather than any real substance,has been the chief charactoristic of the "New Labour" project.

The obscenity of City Bonuses paid largely on nebulous capital gain over the boom years has massively "looted" our financial system.This behavior was akin to an individual say paying themselves a hefty bonus based on the capital gain of their property in any given year.Many home owners effectively did do this by borrowing against their properties.At least they owned the property in question and by owning property in the first place were exposed to an element of risk(unlike the bankers).Either way this was a reckless financial act.The money simply didn't exist!

But now ,with prices in retreat, how do you fill the hole? And what a hole........the 31billion(Centre for Economics and Business Research estimate)paid out in bonuses to UK bankers in just the last 4 years ,had it not already been siphined off, would've gone some way to filling it!

If the "market" worked correctly you'd expect shareholders to have called a stop to this greed.Of course these days there's a disconnect between shareholders and any moderating influence they might have had with most shares held in "managed funds".Funds "managed" by people who see no fault in a bonus culture that also enriches them.

But of course not all of those BILLIONS went into bankers pockets.A sizable chunk went in taxes to the Exchequer.That's a big reason why I don't think Gordon Brown will do anything to stop this insane bonus system.