One of the great unspoken scandals of the post-2007 financial crash era is that no reform of the banking system has been put in place, though domestically the bank bail-out will cost UK taxpayers some £1.4 trillions by 2015 and globally the crash nearly collapsed the world economy. Despite those gigantic detriments, 5 years on next to nothing has been done. The Vickers Commission was set up, but failed to recommend the obvious remedy – splitting investment banking from the retail operations. Then the capital ratios proposed, inadequate as they were, were watered down after City lobbying, and then postponed to come into operation till 2019! Not only that, another source of great instability has been studiously ignored. Continue reading
Tagged with Debt crisis
Why are we still so obsessed with preserving the banks?
It is sad, tragically if not pathetically sad, that 5 years into this long-drawn-out recession still virtually none of the key lessons have been learnt. It is not about injecting a new morale and spirit of Olympic aspiration into UK economic enterprise after two weeks of glorious athletics achievements. It’s about realising that the financial crisis will not end until certain fundamental decisions are taken, none of which are in sight at the moment. Prime amongst these decisions is radical reform of the finance sector. For the last three decades the banks have been treated with kid gloves at the expense of everyone else. And the same intellectual virus continues to infect governments everywhere. Continue reading
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How long can this go on? Not the Coalition, but peace on the streets?
The latest news about inflation – RPI up last month from 2.8% to 3.2% when wages are virtually flat – is bad enough, but the background makes this a whole lot worse. Since 9 August 2007 when the collapse at Northern Rock heralded the start of the Great Financial Crash, debt, despite all the privations of the last 5 years, has not eased, it has deteriorated further.
Total debt – not just government debt which gets all the attention, but the equally important household, financial and corporate debt – has actually increased in 10 Western countries since 2007. One of those is the UK, but the list also includes the US, Germany, France, Canada as well as the more predictable countries in deep trouble – Greece, Spain, Portugal, Italy, and Ireland. Continue reading
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To consolidate its lead Labour now needs to correct 3 major mistakes
With business leaders, even the director general of the British Chambers of Commerce, now slamming Osborne’s policy for indecision, equivocation, short-termism and political manipulation, Labour must now be poised to take a decisive lead in the crucial area of economic policy. But if it is going to consolidate a lead which at present is much too dependent on the Tories’ obsessively sticking with manifestly failed policies, Labour must put right 3 fundamental failures which have so far drastically held it back. Continue reading
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Cancel the Greek debt
The Greek general election on June 17 presents a clear political choice on whether to continue with the ‘austerity’ measures imposed by the Troika of the ECB, EU and IMF which have caused a disastrous economic slump. Greek GDP fell by over 13 per cent between 2007 and 2011 and contracted sharply again in the 1st quarter of 2012. In real terms the compensation of employees has fallen by approximately 15%. The cause of the slump is the investment strike by capital, down nearly 47 per cent since the slump began and accounting for nearly 90% of the entire fall in output. Continue reading
