Friday 1 December 2017

Corbyn; I still hate Bankers but I dont know why

What is it with people and fighting the last war?

BQ's excellent preceding post on the UK military highlights how hard it is for people to break away from their pre-conceptions. We need a big army or a big navy, whatever, we say what we want then often try to fit that into the story we want to tell.

So today Mr Jeremy Corbyn, a serious candidate to the be next UK Prime Minister, is engaging in his old game of the politics of envy. In this FT article, he is quick to blame bankers for all our ills and also to suggest we don't need them anymore. Worryingly, the bankers quoted decide to play up to this with some very unhelpful statements which do them no good at all.

But overall the Corbyn critique of banking is a decade or more out of date. Did the banks cause the great crash? Yes and no, certainly the total mismanagement of the UK banks such as HBOS and RBS was key - but so was the complicity of the UK government (including the useless Bank of England at the time) in allowing this to continue as long as huge tax revenues came in.

We all know what then happened, bust banks and a bust economy that has struggled for 10 years to recover and indeed even in 2017 we are not close to having a stable economy. The structural deficit remains and so does a large QE programme with near zero interest rates. There is nothing normal about the asset bubbles created due to this monetary experiment.

However, this time, in 2017, the Banks are no responsible. Regulations are much tighter, derivatives are more closely regulated. So anaemic is bank lending and their attention to their balance sheets that a whole new industry of non-bank lenders is thriving and fintech companies are being founded at 30 a day in London.

Bankers pay has collapsed, very few now earn the millions that were on offer 10 years ago - only top management really earn it. But Hedge Funds are crazy, 20 people businesses often with a chunk of them taking tens of millions home each year. There are hundreds of hedge funds in London. All the real profits are in these trading and asset stripping businesses, often created with family office money from the Middle East and elsewhere.

The continued inequality in the UK is not driven by the army of compliance managers at Barclays, nor was it ever, it is driven by the use of London as the financial centre of the world's rich families and estates. As much as this causes angst, why would we wish this away? There is nothing to replace it were it to be regulated away. All we would see is a sharp decrease in bankers, lawyers and accountancy jobs in London.

A real far sighted government, of which there is no sign, would instead be looking for ways to either spread this business across the UK (unlikely due to the nature of personal networks) - or better harness the taxes paid to kick-start the more normal economy outside of the South East.

Corbyn as a populist is in fact far more dangerous than Trump. He is stupid in his analysis as show here, stuck in an out-dated world view which cannot solve the issues he espouses so highly and has nothing to offer but the politics of identity and envy.


andrew said...

What is it with people and fighting the last war?

... because they think that with the benefit of hindsight, they might have won. But they probably would not have.

You can see the beginnings of a coherent attack strategy on Lab

JC has a long track record of not standing up for the UK and having a lot of not nice friends.

This will not endear him to a lot of the older population. They still remember the IRA.

A number of Lab MPs (esp the momentum approved ones) do not have a good track record on anti-semitism/sexism/general incitement to nastiness/'transactional dealing' etc

This will not endear them to a lot of the younger population

All the cons need to do is not be conspicuously horrible and not c*** up too much.

... so with Boris - where the joke is just not funny anymore - we are probably sunk.

Electro-Kevin said...

There is going to be a big problem with Conservative voters not wanting to turn out and vote.

For the umpteenth time the Daily Mail "We understand. But our readers must hold their noses and vote Tory."


Not ever again.

Steven_L said...

or better harness the taxes paid to kick-start the more normal economy outside of the South East

Lots of this London economy isn't taxed.

Banks and other financial institutions pay no VAT on most of their services. 'Normal' businesses pay a 20% tax on gross profits. Any suggestion of doing similar in financial services (such as a bank balance sheet levy, or a tax on spreads) is vigorously opposed.

These wealthy foreigners claim the VAT back in their shopping.

There is no VAT on new luxury flats or any other sort of property speculation.

The only way to level the playing field after BREXIT is to scrap VAT and raise the money in a more equitable way. It's no coincidence that the parts of the economy that are exempt from mainstream taxes (money lending and property speculation) became bubbly and blew up the economy.

Travel is also subsidised in London whereas in the rest of the UK we pay 70% tax on our fuel.

A bank balance sheet levy, and a reformed residential property tax based on rateable value like business rates to replace VAT, council tax and stamp duty is the way to fix this.

You call that 'communism', but the way things are going actual communists are going to get the keys to number 10 and 11 and throw the baby out with the bathwater.

We could also lower fuel duty and aim to make a surplus from public transport in the south east.

Anonymous said...

Given today's announcement by RBS, it appears that bankers believe they don't need bankers anymore.

Now that is a much more interesting question than the ravings from a career meddler.

James Higham said...

Perhaps they didn't give him a loan in the early days. IRA connections maybe.

Anonymous said...

Or perhaps he has read and understood Foley v Hill (1848) and then linked this to so called "Quantitative Easing"

Anonymous said...

OT, but someone should really do a post (or a series) on the Hertford College lectures by various insiders on our Prime Ministers and Europe.

Quote from Andrew Adonis

"A surreal aspect of all these No 10 discussions about Europe is that they focused almost entirely on what didn’t happen –the Euro –as opposed to what did happen – enlargement, and the decision to admit the first eight central and East European states in 2004 without the seven year brake in immigration which almost the entire rest of the EU decided to adopt. My diaries don’t record a single conversation about the immigration issue and whether we should have imposed a brake. From memory, there was one short discussion, in a strategy meeting with Tony in late 2003 when someone mentioned Home Office advice that the number of Poles likely to come after January 2004 would be about 30,000 and it would all be ok; and we agreed we would go after Iain Duncan Smith as a quasi-racist if he played the anti-immigration card, as indeed we did Michael Howard in the 2005 election."

Anonymous said...

"In Corbyn’s mind the bankers are The Jews, and Jews are the bankers"

I don't think even Corbyn thinks all Jews are bankers. But for a demographic which is about 2% of Americans to have provided the last 3 Fed Chairman over a 30 year period is statistically very unlikely, to say the least.

Electro-Kevin said...

Anonymous @ 7.10

You forget to mention the study, work and family ethic involved in that statistic.

There are a surprisingly large number of successful Jewish surgeons. 14.1% of doctors are likely to be Jewish.

You can't network your way into being a doctor.

Your comment was rather snidey, I think.

Electro-Kevin said...
This comment has been removed by the author.
Electro-Kevin said...

Of course, Corbyn is in denial about the success of the work, study and family ethic.

It doesn't fit with his anti work, study and family agenda. The failure of some groups can have nothing to do with absent fathers, feminism and the veneration of, say, Rap 'music' over real culture.

Judaism is the very antithesis of Labourite ideology. It proves them wrong so they demonise it.

Electro-Kevin said...

BBC on Coventry's bid for the City of Culture: A load of hip-hop and graffiti. Pretty much like every other city's bid in the UK. "Our city's rich heritage" Really ? Why don't you show us it then ?

Rock 'n' Roll was done and dusted in a couple of years, ditto Punk, New Romantic, Grunge.

Just when the fuck is Rap music going to end ? It's been going on for thirty years now. The same monotonous drone that the Corbynistas worship.

CityUnslicker said...

SL - You can't put VAT on trading which is done every few seconds. the effective tax rate will kill it. There is a good reason banks are excluded from VAT.

As for property, when you add stamp and rates together, property in the UK has some of the highest taxes in the G20.

Anonymous said...

@EK - those types of music are still chugging along. Quite a lot of punk festivals about (Rebellion in Blackpool is fun, not least for spotting which 50 year olds kept the 'faith', and which ones are having a weekend reliving their youth), old rock bands still fill up stadia and new ones keep coming along.

Even the New Romantics have seen a bit of a resurgence.

And some rap is fine, it's the morons going on about being serious about being all gangsta that spoil things. Plus it makes for great sport, read a feminist some lyrics, watch her face get incredibly red, then show her a picture of the grinning black faces that wrote it. I advise stepping back if the conflicts in her head get too much, it all gets a bit 70's sci-fi like Scanners... ;)

But Public Enemy... You'd likely find Chuck D agreeing with you about much of Black culture's flaws. And I'd point out there are a fair few Jewish rappers, including chart-botherer Drake and the late Adam Yauch from the Beastie Boys, so they're not mutually exclusive.

And I've yet to meet a Corbynista who likes rap, the handful I've encountered are more likely to listen to crusty stuff like The Levellers.

And at least it's not boring shit like Buble and Boe, FFS, if beige had a sound...

E-K said...

Ha ha

Great comment

Steven_L said...

You can't put VAT on trading which is done every few seconds. the effective tax rate will kill it. There is a good reason banks are excluded from VAT.

And John Lewis don't sell consumer goods every few seconds? I think you could quite easily slap a 20% annual tax on the difference banks make between what they lend out at and what they borrow at. It's just a political choice not to do this.

And there is sod all tax on residential property bar stamp duty, you can't fool me! Residential property has just been a giant tax free windfall for folk who were the right age and in the right part of the UK. It's a complete nonsense so say "well our rates are some of the highest in the G20 therefore we have high property taxes". Property taxes raise 9% of receipts, VAT 18% and taxes on labour 45%.

Again, it is a political choice to tax labour heavily, have high VAT and low to non-existent (and even negative if you look at the bigger picture) property taxes.