Thursday 19 March 2009

FSA Report; Brown poodle spouts claptrap

The title may be a bit hard, but Lord Turner has long history with New Labour. He has issued two previous reports, both of limited effect in the long-term.

Actually there is some sense (e.g. more thorough and consistent approach to audits) in the huge report published today, but I also find some logical inconsistencies in the report.

Most of the regulations for banks after all needed to be put in place ages ago. The problems they seek to solve have been solved by the market. Assets are now marked down, some banks have failed, mortgages are not being handed out willy nilly. So much of the prescription is to fight the last war, as is usually the case with these things.

However, what is missing in the FSA Elephant in the Room. Why should the FSA regulate anything again, it has proved a failed organisation in this crisis, so too has the Bank of England in many ways. The organisations need to be merged. The BOE needs the FSA's staff and insight, the FSA needs access to the BOE boffins who can see the patterns in money markets etc.

None of this is addressed, for this would be critical of G. Brown and his lame duck Government. Brown's hedge fund friends, source of so much funding and of course Lord Myners, also get off lighlty. A nice populist attack on bonus's. This is a very political report.

One last point I wanted to make is on the silliness of over-regulation. Example A is the suggestion that mortgage lending should be strictly monitored, perhaps even with limits on the multiples that people can borrow. Why is this needed ? As an answer to the world where lending was too lax, but this world was caused by BOE interest rates being held too low, not by the banks. When rates went up and credit became tighter, banks reduced the criteria. Now we have a very tough market to get a mortgage in, with strict lending criteria.
Where is this sudden need for more regulation? The state does not need to do everything, indeed generally what it does it does badly. I hope the BOE and FSA look closely at monetary policy in the future, that is the way to stop asset bubbles. Little mention of that today.

(hat-tip for graphic to


Mark Wadsworth said...

Land Value Tax would have prevented this by keeping house prices low and stable, as well as enabling a shedload of other taxes to be scrapped.

That's the next war we have to fight (as well as the previous ten or twenty wars ) credit bubbles are always the flipside of asset price/property price bubbles, so choke off the latter and there's no need to worry about the former.

Anonymous said...

Agreed completely. This is more vacuous posturing. I think that most people who have thought about the matter would agree that the world needs another Glass Steagall which Little Lord Turner dismisses bizarrely out of hand. How could anyone argue that investment banks and commercial banks shouldn't be separate when the taxpayer is de facto guaranteeing deposits. I am not sure why anyone believes that hedge funds were to blame for anything other than highlighting mark-to-makebelieve. Certainly not as much to blame as the FSA. First of all he should write a long letter to the public explaining why we should ever listen to the FSA again or any Lords and Knights for that matter. Mervyn should be running everything not that he is perfect but he seems to have some clue.

Anonymous said...

This Land Value tax is a steaming pile of socialist shit. The government doesn't own my land & lease it to me; I own it. It belongs to me. It is mine. You might as well suggest I pay a tax on the contents of my house.

It is bad enough the bastards tax my income. And you're suggesting they should not only screw my income but also my assets. As for the suggestion that "other taxes could come down".... give me strength. Other taxes NEVER come down.

Occasional asset bubbles & market corrections are a very acceptable price to pay for property rights. Property rights = freedom. You let them tamper with it at your peril.

The country does not need this kind of fiddling. It needs the government to be smaller, to basically fuck off & leave us alone.

CityUnslicker said...

MW - I think SW has set you an interesting challenge. Are you a Commie in disguise?

Anonymous said...

The entire system is utter rubbish and is based on a myth and uphelp only by hypnosis. been, from its "invention", simply tokens exchanged for work done...for energy expended.
How in heavens name can any organisation "lend" or "print" tokens for work that has not been done?
The only way that the system can work is the supply of money must be roughly equal to the value of the goods, sevices and property in the community.
Any other situation is either inflationary or deflationary and the more out "Masters" (blast them to hell) tinker in their blind ignorance and despair, the worse the situation becomes.
It is not possible for any country to support so many parasites as we are doing. Parasites who produce nothing, but simply pay themselves huge salaries (and bonuses) just for moving about tokens for work which has tnever been done and never will be done. These include national and local politicians, bankers, quangoists, business "leaders", most large company directors, most of he consultants of the world etc etc
No I am not a communist or other sort of "ist" other than a realist.

AntiCitizenOne said...

Land Rights are an externality that should be paid for.

Your right to land is a entitlement to monopolise it at the expense of everyone else in the country.

The LVT is a tax, but the tax is then paid out equally to every citizen via a dividend.

hatfield girl said...

Perhaps a 'Steaming pile of physiocratic etc...' Mr Weetabix ?

I have to pay it but the registers haven't been revised since probably the 18th century so it's not a lot. Still, a mistake in principle, agreed.

Anonymous said...

" AntiCitizenOne said...

.... The LVT is a tax, but the tax is then paid out equally to every citizen via a dividend."

When do I get my equal share?

AntiCitizenOne said...

If I had my way... ASAP.

Anonymous said...

"Your right to land is a entitlement to monopolise it at the expense of everyone else in the country."

My land doesn't belong to "the people", it belongs to me. History shows that when something belongs to "the people" it belongs to no one and is 'cherished' accordingly. That's why capitalist agriculture is wildly more efficient & productive than collective farms.

What we should have is a flat tax on income, whether earned or unearned.

LVTfan said...

SW, show the the land you created. I'll show you what I've created. Which of us has a better claim to each?

My claim to the fruits of my labors exceeds your claim to be entitled to the fruits of my labors or to the rent on land to which you hold title.

Anonymous said...

Are you kidding? I till the soil, rip out the weeds, mow the lawn & everything. I have turned natural wilderness into sylvan glades.

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