Wednesday, 31 August 2011
Cable is right, shock
So, perhaps with some perspective saying that Vince Cable is right about something is not the most incredible thing to happen this month. However, I am a trenchant critic of Cable's. Worse I have met the man a couple of times and he is no better in the flesh. His grasp of economics and business is poor considering he is one of the only Lib Dems to ever have had a real job.
Today though, he is trying to be firm on insisting the banking commission regulations about our Banking Sector are enforced. There is lots of speculation as to exactly what will be recommended and lots of FUD from the banks about how much it will hurt them.
They have a small point on the need for international regulation to enable a fair playing field. But apart from that they are just weak with their defence. The main 5 retail banks are so big they played a key role in both blowing up the UK economy in the first place and now in helping to keep the UK on the edge of recession. The Banks also say they are already well buffered from further troubles by all their capital raisings and new regulation already imposed; their shareprices at 12 months lows suggests markets think otherwise.
It is not radical to say that this cosy monopoly must not be allowed to continue and threaten the Country again. I am not in favour of shrinking the financial sector as some kind of suicidal class war stunt, but reducing macro risks to the economy has to be a key plank of Government policy; along with ignoring the siren calls of an overpowerful lobbying effort on the part of the cartel.
We shall see what happens, but noises from Osborne in the past have suggested he agrees with Cable on this in private; which will mean an interesting month ahead again for Bank share prices.