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schadenfreude corner (banking division) - The Villages

hutch0
Date: 2009-02-28 21:07
Subject: schadenfreude corner (banking division)
Security: Public
Location:home
Mood:calmcalm
Music:jt bruce
It's been interesting, the past couple of days, watching the opprobrium heaped upon Sir Fred Goodwin, former chairman of the Royal Bank of Scotland, which just posted 2008 losses of £24.1 billion - the largest loss in British corporate history.
The question of whether the man dubbed `the world's worst banker' actually deserves to walk away from the biggest banking disaster this country has ever seen with a £16 million pension is, of course, pertinent, and the Government has picked it up and run with it, with Gordon getting in such a snit that he's threatening legal action to get Sir Fred to hand back some of his cash. The hatred of Sir Fred has grown to such ridiculous heights that one Scottish MP is demanding that he be stripped of his knighthood.
Some commentators have seen the Government's hand in the leaking of the details of Sir Fred's pension in order to deflect attention away from the fact that they've pumped another £13 billion into RBS. I think this misses the point. Sir Fred has done nothing illegal. He was an absolutely shit banker and he doesn't deserve to walk away from the RBS catastrophe with a pension that will pay him just under two grand a day, but that pension was granted him under RBS's rules. He didn't steal it, and much though it may pain us, he's under no obligation to give it back.
I don't, personally, think the details of his pension were leaked to deflect attention from the continuing RBS bailout. That was never going to slip by under the radar. I think they were leaked in advance of Gordon's speech today, in which he basically turned on the banks and the people who run them.
He said that the financial world had lost sight of ordinary people's values, such as fairness and hard work. "Some came to believe that we should sacrifice the value of being fair to that of laissez-faire," he said. "Some acted as though free markets could be value-free markets." And of course the image of Sir Fred polishing his pot of gold was uppermost in people's minds as Gordon gave the speech.
What Gordon didn't say was that the buoyant economy of the past decade or so was driven by people who acted as though free markets were value-free markets. And as Chancellor Gordon was perfectly happy for these people to do their thing. Their astronomical salaries - and astronomical pensions - were excused by saying that if we didn't pay them enormous sums, they'd go and work somewhere else - for the French, maybe, or the Germans. Additionally, I think they were badges of honour. "Look how well we're doing, we can let our bankers pay themselves so much."
The prosperity of the past few years, we all know now, was nothing more than smoke and mirrors. It was like a shark - it only stayed alive while it was moving forward. As soon as it stopped moving, it began to drown. And as Chancellor Gordon was right at the heart of that illusion. The same bankers he bitch-slapped today were the ones he was happily hobnobbing with a few years ago. And let's not forget that Sir Fred Goodwin used to be one of Gordon's financial advisers.
But of course this catastrophe isn't Gordon's fault. It's the fault of the United States. It's the fault of greedy bankers. That's why Gordon made his speech today, and it was handy to have an example uppermost in our minds as he spoke.
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calcinations
User: calcinations
Date: 2009-03-01 10:13 (UTC)
Subject: (no subject)
Seems as good a reason as any. But you see why I have been annoyed with Gordon Brown for months now.
Meanwhile, even capitalists I have seen on a blog or two have been fingering the FSA for being rubbish and requesting more regulation.

What we should do with Fred is send him to Coventry. Everyone should ignore him or freeze him out of whatever social situation they meet him in.
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hutch0
User: hutch0
Date: 2009-03-01 13:44 (UTC)
Subject: (no subject)
Well yes. I'm normally robustly cynical about politicians of all stripes, but I've been coming round to your way of thinking about Gordon for ages.
However, I see the dread hand of Mandelson, and possibly Alistair Campbell, in this. If you step back a little, the issue of Fred Goodwin's pension seems a fairly minor one compared with all the other woes facing us, and for that reason alone you have to wonder why the government is making such a big thing of it.
I've seen some similar comments about the FSA, but I seem to remember arguments against tighter regulation a few years ago, on the grounds that it would stifle the freedom of the financial world. Of course, that's all come home to roost now.
I don't really care what happens to Fred Goodwin, so long as he doesn't get another job running a bank. Or even running a corner shop.
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calcinations
User: calcinations
Date: 2009-03-01 16:07 (UTC)
Subject: (no subject)
How about this wee article by Stiglitz about the freeing up of the banks to lend recklessly:
http://casinocrash.org/?p=699
Of course mere regulation is not the way forwards, but free markets can only operate if they are actually quite free and also properly bounded by rules and remember the usual information asymmetry- that is one reason I blame the banks etc far more than normal people. The banks (and the FSA for that matter) are supposed to be concentrations of professional expertise; us plebs on the other hand are not and cannot be without spending several years learning stuff, and lets face it few people will be doing that.

Yes, it may be MAndelson to blame, and in the week when they suddenly announce they are going ahead with their part privatisation of the Royal mail, it just adds to the fun. We've known for a decade that labour carry out news manipulation.
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hutch0
User: hutch0
Date: 2009-03-01 17:55 (UTC)
Subject: (no subject)
As far as I can understand what he's saying, Stiglitz is right in at least one respect: a big chunk of the problem we're facing at the moment is that commercial banks were behaving like investment banks in a kind of feeding frenzy, and over here at least the FSA was powerless to stop them.
It's important not to consider the banks in isolation, though. Much of the boom was powered by lending, and it wouldn't have happened if we hadn't been so keen to borrow. And we wouldn't have been so keen to borrow if the general culture hadn't brainwashed us to want stuff we wouldn't normally have been able to afford.
I know it's not exactly the same, but it does look to me like the biggest Ponzi scheme in history.
Don't get me started on the Royal Mail.
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calcinations
User: calcinations
Date: 2009-03-01 19:13 (UTC)
Subject: (no subject)
well, look out for more posts over the next couple of days on my LJ about brainwashing and the royal mail.

And yes, I do think that it is a clearly proven fact that one is born every few seconds, and therefore we need saving from ourselves by restrictions on lending and borrowing.
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hutch0
User: hutch0
Date: 2009-03-01 19:25 (UTC)
Subject: (no subject)
Then expect me to be pestering you. A lot of things about the Royal Mail thing are starting to irritate me enormously.
Another thing about that Brown article in the Observer was the thing about our future being in high-tech jobs and green industries. Which sounds great and futuristic and ecologically-friendly, but I remember high-tech being sold to us as the saviour of livelihoods when the pits and the steelworks closed and it didn't quite work like that. Gordon might as well say we're all going into film-making.
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calcinations
User: calcinations
Date: 2009-03-01 20:28 (UTC)
Subject: (no subject)
The bit about high tech which he forgot to mention is that it needs, ummmmmmmmm, a bit of dosh to get off the ground. Ten billion would do for starters. R&D isn't cheap you know. (Unless you are an underpaid post doc)

Its another reason I think I know more about economics and how the world works than Brown. Investment is a matter of putting money into something, and you don't do that unless your investment does something more efficent, eg builds a new steel factory that is 10% more efficient than the old one and uses 30% fewer workers.
So what green industries can we get a decent return on just now? Few that I can think of, unless you give them subsidies, and as for high tech, the more high tech it is, the less the general populace is fitted to be employed in them, thus leading to more problems.
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hutch0
User: hutch0
Date: 2009-03-01 21:49 (UTC)
Subject: (no subject)
Presumably he's going to issue the `challenge' and he expects private enterprise to come up with the retraining and the jobs. When that doesn't happen, it won't be his fault, it'll be those bastard green businessmen. One of whom will be identified as having a huge pension...
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calcinations
User: calcinations
Date: 2009-03-01 11:18 (UTC)
Subject: (no subject)
I found this today- translations of russian lolcats:
http://rolcats.com/
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hutch0
User: hutch0
Date: 2009-03-01 13:45 (UTC)
Subject: (no subject)
Oh, that's brilliant. Some of those captions are so bitter, aren't they?
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hutch0
User: hutch0
Date: 2009-03-01 18:19 (UTC)
Subject: (no subject)
Ah. Now I sit and look at them, there does seem an enormous discrepancy between the Russian captions and the English `translations.' I'll have to get Bogna to take a look at a few of them.
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