Double standards?

Today I wish to contrast the way politicians and some in the press respond to bad conduct in banking and in healthcare. It seems to me that we overdo the allegations and the expression of revulsion when bad bankers are revealed, whilst taking an altogether more relaxed attitude to healthcare errors.

Barclays has recently been fined Ā£290 million. It has admitted that some traders acted in a way designed to promote the bank’s and their own personal interests which sought to distort an interest rate in the markets. The traders have all been fired and are the subject of regulatory and criminal investigation to see if further action should be taken against any of them under the law.

A general hue and cry has led to the resignation of the CEO and the COO. The bank is the butt end of endless bad comment and jokes, and the preferred subject for many a Parliamentary debate and enquiry.

Meanwhile Glaxo Smith Kline has just been fined $3000 million by the US authorities. They have admitted to selling drugs to people under the age of 18 when not allowed to do so by the regulators, to offering payments to doctors to help promote these drugs, to not setting out all the side effects of the drugs, making claims about the favourable impact of the drugs on conditions other than the one for which they were licenced and other regulatory infringements and bad practice. Some of the US journalism about the consequences of their poor practice is worrying, as individuals bring their own cases setting out what happened to them or their loved ones from taking Paxil or Wellbrutin.

The company has apologised. Politicians and press have accepted that mistakes can occur in the largest of companies. There is no demand for the replacement of any of the top executives, no witch hunt against the sales teams involved in the errors. There have been no debates in the Commons, no demand for Parliamentary enquiries, no show trials of the top executives. I am not calling for a witch hunt either. I am merely asking why we take this grown up approach to serious errors with a drugs company, and yet take such a different view with a private sector bank that managed to avoid requiring large injections of taxpayer cash in 2008?

Errors and malpractice by bankers can result in higher charges or losses of money for clients. Errors or malpracice in health can have far more serious personal consequences.

157 Comments

  1. Gerry Dorrian
    July 14, 2012

    Also a contrast between the banking industry and football. Most bankers kept their jobs; but when Rangers was found guilty of the same thing that Jimmy Carr did (and got off scot-free) the whole side has been demoted to 3rd league. Do the powers that be think somehow it’s safer to offend predominantly blue-collar fans than bank managers/traders?

    1. lifelogic
      July 14, 2012

      I imagine Jimmy Carr spent the money rather more sensibly that the government would have done. Still it is the government that makes the laws not Mr Carr.

      1. Stephen W
        July 17, 2012

        What on earth makes you write that utter gibberish? Mr Carr would probably spend the money on booze and fast cars. The government will spend the money on filling the deficit, pensions, healthcare, education, etc. I am a low-tax, small-state conservative. But let’s not have any nonsense about tax dodging millionaire celebrity pigs spending their money in a manner that is in any way virtuous at all.

    2. A different Simon
      July 15, 2012

      After reading the article you could almost feel sorry for our poor hard done by bankers .

      Maybe we should have a whip round for them , er hang on we already are ?

  2. alan jutson
    July 14, 2012

    Whilst I take your point JR, perhaps the answer is that by and large people seem to trust doctors because it is regarded as a profession which can save lives and cure the sick.
    This is particularly the case with the very much older generation, who would not dream of contesting a doctors diagnosis.

    The fact that medicine is not an exact science, that everyones body and perhaps illness is slightly different and reacts in a different manner, and the fact that it is perhaps more difficult to prove errors, particularly when the medical profession close ranks on some occassions when errors/mistakes are highlighted, means that some errors never see the light of day.

    To put it in a crude way, their mistakes are often buried or cremated.

    Your example shows clear cut errors of miselling, but I would suggest most errors in the medical profession are perhaps in misdiagnosis, wrong drugs prescribed or the side effects of drugs (hence the reason for a huge list of possible side effects in any packet of pills).

    Another area of growing concern in my view, is that of language between staff and staff, and staff and patients, no one should be employed (certainly in the NHS) who’s English language is not clear and understandable.

    From time -time the drugs companies make a huge error with regard to crippling and perminent side effects, and are thus rightly held to account, but compensation is often poor when compared to other court case type awards.

    Banking is a rather more simple area with which to deal, as mathematics can be proven rather easily, although why some customers cannot add up or multiply for themselves the figures involved, in advance of signing on the dotted line, has always somewhat bemused me.

    To protect yourself against both medical and financial mistakes it is important to ask many questions, and not just take the advice given as fact, indeed if concerned ask for a second opinion, very often your body/brain talks to you, perhaps we should all listen to it more.

    The other factor in Banking perhaps is regulation, given that most products sold seem to be covered by some sort of government approved regulation, perhaps too much faith/trust is given to these products and that is the reason for lack of any questioning.

    Then perhaps in many cases in Banking it is all about greed, although in some medical practices the same could apply, indeed as it could in any industry or service.

    1. Mark
      July 14, 2012

      You need a university level understanding of stochastic calculus to have a sufficient mathematical knowledge to evaluate many banking products. For example this paper looks at fixed rate mortgages:

      http://www.maths.manchester.ac.uk/~nsharp/forthcoming.pdf

      1. Barry
        July 14, 2012

        stochastic=random

      2. Frederick Bloggs
        July 15, 2012

        Few people are going to be buying fixed rate mortgages with prepayment options. This is for banks to value their mortgage books. Not for Joe Bloggs (no relation).

      3. alan jutson
        July 15, 2012

        Then why do people sign up for things they do not understand at all.

        Simply cross out all of the terms and conditions you do not like, or insert some of your own, and see if they accept it.

        Sometimes you get a surprise, other times you have to walk away.

  3. lifelogic
    July 14, 2012

    Surely the reason is largely the evil the politics of envy (pushed by Labour, LibDems, the BBC and even under Cameron the Tories). Also the fact that people have often been ā€œfinedā€ Ā£30 for going Ā£2 over their limits at the bank and are charged 29% interest on cards and overdrafts but paid only .25% on deposits. This when they are often a better risk than the banks themselves.

    It was good to hear David Starkey on Questiontime http://www.bbc.co.uk/radio/player/b01kktms
    He was right on everything he touched, defence, the pointless wars, the Zil lanes and jumped up loss making sports day, education, the Lords reform and even the insufferably complaisant and usually wrong Lord Oakeshot – yet another Public School/Oxford PPE man I note.

    Furthermore he was largely supported by the audience not the usually BBC think lot. I am surprised the BBC let him on.

    1. lifelogic
      July 14, 2012

      The drug companies need watching too. So often they are trying to bribe doctors to over prescribe and defining normal levels of things (say blood pressure, cholesterol etc. as needing drugs). Do not eat to much, gentle exercise and the odd aspirin is surely best for most and keep away from Hospitals, especially NHS ones, as far as possible.

      Again the government, through bad regulation, misinformation and the mad method of NHS funding of health are much to blame as well.

      Reply: This site does not offer medical advice and does not endorse this particular remedy. No drug company in the UK has been found guilty of bribing doctors, which would be a serious criminal matter.

      1. lifelogic
        July 14, 2012

        I often wonder why are cows so full of Cholesterol when they only eat grass? Does anyone know?

        1. Denis Cooper
          July 14, 2012

          They’re not full of it, but they make it because otherwise they would die.

          So would we:

          http://en.wikipedia.org/wiki/Cholesterol

          “Since cholesterol is essential for all animal life, it is primarily synthesized from simpler molecules within each cell … “

          1. lifelogic
            July 14, 2012

            No point in my living off salads then I will stick to my T bone?

        2. APL
          July 15, 2012

          There is a rather incestious symbiotic relationship between the food processing conglomerates and the medical profession.

          The first gives us a diet that promotes (for example) cholesterol, the second prescribes drugs to combat cholesterol.

      2. lifelogic
        July 14, 2012

        Sorry I should have said “inducements, incentives or encouragement” though it is often rather a rather fine distinction.

      3. Bazman
        July 14, 2012

        Why don’t you ask doctors what pressures and incentives, if any, are used on doctors by the pharmaceutical and medical industry to prescribe a particular drug or course of treatment in the UK John? I suspect you know some of the answers? In fact I’d ‘bank’ on it. I have often wondered if the moon is real or are birds mechanical lifelogic? Could you tell me?

        1. Farmer Geddon
          July 14, 2012

          Pharmaceutical companies no longer target doctors as their prescribing is determined by hospital formularies or primary care trusts. Individual drug reps are only able to provide food for meetings up to a value of Ā£5 per head & gifts are no longer allowed, not even free pens.

      4. Sebastian Weetabix
        July 15, 2012

        Bribery is of course not what happens, but they do employ very sophisticated marketing techniques, including lavish entertainment, to influence outcomes. Everyone should read “Propaganda” by Edward Bernays; it would open their eyes to how this works.

    2. lifelogic
      July 14, 2012

      Right too on the dreadful evils of the party list electoral system.

      1. lifelogic
        July 14, 2012

        I read that Gordon Brown will become the United Nations “special envoy for education” ā€“ marking a return to frontline diplomacy.

        Might the UN not be better with someone with at least a little charisma, some respect, integrity, an ability at simple sums, an understanding of sensible Friedman type economics, knowledge of science, engineering, education and a past record with at least some semblance of success and honesty? Almost anyone would be a better bet surely?

        1. lifelogic
          July 14, 2012

          And someone not associated with pointless, counter productive, life (and children) destroying wars – some entered into on a very blatant lie.

          1. Bob
            July 14, 2012

            Do the UN realise that Brown is a bad tempered and psychologically flawed bully??

            Or is it that those characteristics are considered to be compatible with the UNs culture?

          2. APL
            July 15, 2012

            Bob: “Do the UN realise that Brown is a bad tempered and psychologically flawed bully??”

            He’ll fit right in at the UN then!

            (Other personal abuse left out-ed)

        2. alan jutson
          July 14, 2012

          Lifelogic

          Amazing how these political people just circulate amongst the jobs that are available, or which are manufactured for them.

          I would have thought that there must be hundreds of people more suitable, given the alleged reports of his temper tantrums, spelling, and a seemingly lack of patience with those of supposed limited ability.

          1. lifelogic
            July 14, 2012

            Difficult to think of many worse candidates.

            Mind you nothing wrong with inability to spell. It often shows you are thinking more about the logic and meaning rather than mere superficial presentation. A single method of prescribed to be “correct” spelling is socialist in nature. It also prevents any evolutionary improvements (of which English spelling is clearly in dire need).

            Just as prescribing a single “right” accent would be socialist (especially if it made us all pronounce “a” as “ar” save in the word “ass” for some reason. Doubtless it is on the EU list of proposals.

          2. zorro
            July 14, 2012

            I wonder if he ever got impatient with himself…?

            zorro

        3. Barry
          July 14, 2012

          Jobs for the boys

  4. Julian
    July 14, 2012

    If the popular press started calling for the resignation of GSK’s CEO, don’t you think he’d have to go? Suppose they started reporting the size of his bonus? That’s the difference. I think you should address your question to the editors of the Mail and the Sun.

    Finally, I’m not sure why you think it’s ok that there aren’t high level job losses in GSK because of this. If you were in charge of a company that was fined $3bn, wouldn’t you feel responsible?

    1. wab
      July 14, 2012

      Agreed, it is largely down to what the media chooses to become hysterical about.

      On the other hand, given how much money the financial services industry has managed, and continues to manage, to take from ordinary people and put in their own pockets, often because the system is rigged in their favour, often because of misselling, and given their large responsibility for the near meltdown in the entire global financial system a few years ago, bankers should count themselves lucky that none of them have been charged with a single crime and that they are still in business at all.

      GSK claims it has sacked the relevant people. Those people were lucky they were not charged with any crime, but that instead GSK had to pay a large fine.

    2. stred
      July 15, 2012

      According to Wiki, the chairman of GSK in 2001 was Sir Richard Sykes. He then became rector of Imperial College, where he tried to merge with UCL and supported the raising of student fees to Ā£10000 even before the government thought of it.

  5. MickC
    July 14, 2012

    Is it actually “grown up” to allow a huge corporation to pay a fine as recompense for effectively treating its customers lives as utterly worthless?

    In reality, this conduct is more serious than that of the banks-that was merely money.

  6. Matt
    July 14, 2012

    Barclay’s fine approx 5% of income (450m / 9100m)
    GSK fine approx 37% of income (3000m / 8200m)

    You could argue Barclay’s got off lightly

    Barclay’s actions impact on every person in the UK
    The impact of GSK’s actions is much smaller in terms of numbers affected although you could argue has a more direct affect on those affected.

    1. Conrad Jones (Cheam)
      July 14, 2012

      @Matt,

      You make a point that I was going to make.

      In fact the LIBOR rate affects International Markets.
      “London Inter Bank members have the power to govern money markets and impact international economies from Milan, Italy to Misawa, Japan; Bangor, Maine and beyond.”

      Mr Redwood forgets to mention that people’s lives are being ruined and lost as a direct result of the failures in our Global Financial System.

      Barclays have been very successful in operating in a faulty System. Rather than fix the System, the establishment has decided to point the finger at a Bank.

      How do we know that LIBOR rates are not being rigged now – by another Bank?

      1. zorro
        July 14, 2012

        I agree too chaps, been out today so not able to comment before. There is a mile of difference between. It is easy for Barclays to put up a couple of token sacrifices. I am sure that they won’t starve on their multi million payouts. The GSK fine was far larger and may not yet be the end of the matter……In the real world of politics (and the finance that runs it) Barclays is a bigger fish. Bankers have far more influence over politicians, don’t they John?……And their activities have far deeper reaching effects on the well being of countries and economies….

        zorro

    2. Nick
      July 14, 2012

      And how did Barclays impact everyone in the UK?

      Ah yes, they made mortgage cheaper.

      So when the government lowers base rates, they are behaving in exactly the same way as Barclays.

      What about fining MPs for doing the same?

  7. Duyfken
    July 14, 2012

    This seems an unlovable attempt to excuse bankers, all bankers and not just Barclays, by reason of a drugs company possibly having acted in a similarly culpable manner. Two wrongs do not make a right and to bleat about the unfairness of the attention attracted by the bankers, in comparison with the so far less attention paid to GSK does you no favours, JR.

    It is yet to be seen, if ever, that drugs companies worldwide have acted improperly and probably in concert in much the same manner as the bankers have been shown to do; so far it is just GSK in the firing line. In due course, if there have been negligence, malpractice or other censurable practices, this will be sorted in the courts.

    By contrast, the banking industry has been accused of corrupt practices by a closed shop of individuals intent on feathering their own nests, scratching one anotherā€™s backs, and generally bringing the industry into disrepute, all this culture at a cost to customers, to the nationā€™s economy, and to the long-suffering shareholders. It is a cabal which must be broken and of course it needs the attention of politicians, the media and the courts to ensure this is eventually done.

  8. JimF
    July 14, 2012

    Yes but let’s get the balance right here;

    The ethos of GSK is to make money in return for the sale of drugs which 99% of the time are beneficial. Like other innovating companies, they employ top-class researchers to find and patent new formulations to cure illness and disease.

    The ethos of Barclays is to make money; every cent they make over 0.5% interest is at the expense of a person who loses that cent to pay Barclays. There is nothing really ground-breaking or novel about finding new ways to borrow more cheaply or take more subsidy from the government or charge more to the punters.

    That is why Barclays, like other large banks, are seen as skimmers and chancers-less so than RBS and Lloyds but still so. It has nothing to do with Libor price-fixing which is just one small facet of the beast.

    1. lifelogic
      July 14, 2012

      I rather doubt benefit is as high 99%.

    1. lifelogic
      July 14, 2012

      I reed on the link above that Jesse Norman emailed more than 100 Tory MPs suggesting that voting against the reform package would help the Prime Minister, rather than damage his authority. Norman wrote: ā€˜We have a chance tonight to help the Prime Minister by voting against this Bill.ā€™

      Indeed he was quite right help both Cameron (in as much as he can now be helped) and the party.

    2. zorro
      July 14, 2012

      John, have you ever been subject to the ‘Flashman’ treatment?…..Bullying a woman is a disgraceful tactic? I know it was the monkey, but who was the organ grinder?

      zorro

      1. Frederick Bloggs
        July 15, 2012

        Jesse Norman has transformed himself since I saw her sing the marseillaise at the 1989 french bicentennaire at the place de la concorde in Paris.

        A lot of singers seem to go into politics these days.

        šŸ˜‰

  9. oldtimer
    July 14, 2012

    Double standards? Yes.

    Just possibly it is a manifestation of a characteristic noted by C Northcote Parkinson. He noted how Boards/ruling bodies were much more comfortable arguing about the size and location of the bicycle sheds (this was before widespread car ownership) than complex, expensive projects which none of them understood and which were approved on the nod. Could the same possibly be true of Select Committees of the HoC? Everyone knows when their mortgage costs go up – and it affects lots of voters. Who understands the complexity of today`s chemical compounds and their medical indications? Of course if they relate to people who are under 18 and live in another country they are not among your voters. This is the cynical interpretation. Nevertheless, this fine is very damaging to GSK`s reputation. Parliament should be concerned.

  10. Greg Tingey
    July 14, 2012

    Like dying of dehydration, because hospital staff were both grossly incompetent & cruel?
    I take it you know which case I’m referring to?
    Question: Will Manslaughter charges be brought, & if not, why not?

    1. Bob
      July 14, 2012

      @Greg Tingey

      “Question: Will Manslaughter charges be brought, & if not, why not?”

      This will be swept under the rug and we all know why – but we can’t say it, not even on this blog.

      PC strikes again.

      1. lifelogic
        July 14, 2012

        Will Manslaughter charges be brought?

        Highly unlikely they do not seem to apply in the same way to the state sector very often. Why did the police not on insist on seeing the man who called 999 in person also?

        1. Bob
          July 15, 2012

          “Why did the police not on insist on seeing the man who called 999 in person also?”

          Very good question.

          Alas, there will be no show trials here, after all unlike News International the BBC has a soft spot for the NHS.

    2. Daniel T Thomas
      July 14, 2012

      I know which case you are refering to and the answer to your question is no.

      The NHS is a touted as a great British achievment, manned by self sacrificing angels motivated only by a desire to serve the public. Its the eny of world remember.

      It won’t do to have its name tarnished by jailing those responsible for the death of this patient.

      If the thousands who died in our hospitals from MRSA and C.Dificile got no justice then the gentleman in question has got no chance.

      1. lifelogic
        July 14, 2012

        Indeed

        1. zorro
          July 14, 2012

          Yet still this group think obsession with ‘NHS is best’ still continues. Why are we the only country with such a system apart from Cuba (probably also North Korea….although we are having a North Korea like security Olympics)….

          zorro

          1. lifelogic
            July 14, 2012

            Free at the point of death, non delivery, waiting list or rationing.

      2. Farmer Geddon
        July 14, 2012

        MRSA & C.diff result from centralised modern medicine. The key issue is bed occupancy % & availability of side rooms to isolate those with infections – NHS fails due to over-occupancy & few side-rooms – the government tries to blame medical & nursing professions for this shortfall in care provision. These infections are seen world-wide.

        1. lifelogic
          July 14, 2012

          What ever the reasons the NHS certainly fail. Where people to pay they would often go elsewhere or at least refuse to pay the bills due to the poor quality of service.

          Alas it is take what you are given and shut up with the NHS as they have the money already.

          1. uanime5
            July 14, 2012

            Were the Government to give the NHS a budget that would let them employ proper cleaners in hospitals and provide more separate rooms for people with MRSA & C.diff this problem wouldn’t occur.

          2. lifelogic
            July 15, 2012

            It is not the budget it is the absurd NHS system. Whatever budget they got it still would not work. Just more incompetent managers on high wages and good pensions.

          3. Bob
            July 15, 2012

            uanime5

            It’s not the size of the budget, it’s the way it’s spent.

        2. Nick
          July 14, 2012

          Not at the scale they are in the NHS.

          The NHS’s own figures for the deaths it causes or contributes to – 20-80,000 a year.

          1. uanime5
            July 14, 2012

            According to the BBC the total number of deaths caused by infection was 2,704 in 2010. So your figure of 20-80,000 a year is completely wrong. Perhaps you’re thinking of the number of people who get infected but don’t die.

            http://www.bbc.co.uk/news/health-14636224

          2. Mark
            July 15, 2012

            I am amused that you consider the BBC to be more accurate than the NHS on the numbers. How do they get them?

          3. APL
            July 15, 2012

            Mark: “I am amused that you consider the BBC to be more accurate than the NHS on the numbers.”

            The BBC spoonfeeds the legions of the thoughtless lies and disinformation, and they faithfully regurgitate it.

            It is what the BBC is for.

        3. Daniel T Thomas
          July 14, 2012

          The government and NHS response to MRSA and C.Dificile was to spend 60 million pounds on a deep cleaning programme.

          This indicates a lack of hygene. I can confirm this from personal experience.

          For all billions pumped into the ‘envy of the world’ each year the least I expect are basic standards of hygene.

    3. uanime5
      July 14, 2012

      Under English common law (no statute prohibits murder or manslaughter) you can only be charged with gross negligence manslaughter if you owed the person a duty of care and you negligence was so great it deserves to be treated as a crime. Though the first part is satisfied because NHS workers have a duty of care towards their patients determining whether they were negligent enough to warrant a prison sentence is difficult to establish because the common law rules are confusing.

      If the Government would make a statute explaining what constitutes gross negligence or gross carelessness manslaughter this make it far easier to bring manslaughter charges against negligent nurses, doctors, and managers.

  11. Pete the Bike
    July 14, 2012

    I also wonder why Barclays have received so much abuse considering they were merely one bank amongst many that have indulged in (misrepresentation-ed), (attempted and alleged-ed) market manipulation and all sorts of other dubious practice which, for the most part, was condoned if not encouraged by the FAS, Bank of England and, most of all, successive governments. It isn’t Bob Diamond gone rogue, it’s the whole financial system that is based on fractional reserve banking, money printing and theft.
    Take away money printing and deficits and almost every government and bank would be out of business in a week. Is that the sign of a reliable, honest economic system? More like the sign of an criminal, alcoholic, spendthrift, bankrupt on a very short trip to the gutter.

  12. Mike Stallard
    July 14, 2012

    A lot of people will want to skip this remark.

    Bankers are no longer the professional people in stripy suits and bowlers. They are out to make money. MPs are no longer the people who are deeply respected. On Question Time a politician said that more politicians in the House of Lords was the last thing people wanted. He received a loud cheer. Doctors and solicitors are receiving five times the local wage for a factory worker. Teachers are treated like rubbish by their own pupils and indeed they are frightened of offending them too. Children can send a teacher to prison with a couple of well placed lies.

    Meanwhile the Methodist Church, once the driver of Socialism, is down to a few hundred thousand people. The CofE is in rapid decline. Our Cathlic Church where I took refuge is not to be permanently without a priest. We have no Bishop. The Scottish Church in our town is all but closed. Even the Quakers are wiped out completely.

    OK so are the two factors interrelated? Or aren;t you supposed to talk like that comrade?

    1. Max Dunbar
      July 14, 2012

      Most teachers are rubbish and they are virtually unsackable. We have all been there and suffered at the hands of these, to put it kindly, mediocrities. There are a few outstanding teachers and not all of them are marxists but the problems that they suffer from in the classroom are largely of their own making.

      1. lifelogic
        July 14, 2012

        The law makes many useless staff unsackable alas and many know it. Sort it out Cable now please.

    2. Bob
      July 14, 2012

      The Fabians take the long view.

      1. Mike Stallard
        July 14, 2012

        …..and that is?

        1. lifelogic
          July 14, 2012

          When they have changed people’s genetic structures, their DNA, and the whole of “human nature” then Fabian policies might actually work!

          1. Lindsay McDougall
            July 14, 2012

            There was a joke doing the rounds during Clement Attlee’s time after WW2: “Socialism is a system which ensures that when people get no bacon they also get no eggs.”

        2. Bob
          July 14, 2012

          Fifty years ago they planted communist sleepers into our establishment at all levels and those people then opened the doors to increase their numbers ever since.

          The BBC is an obvious example.

          Their objective is to break down, undermine our society to make it ripe for conversion to a dictatorial tyranny, it will be done in the name of fairness or saving the planet; in other words the old wolf in sheep’s clothing ploy. The same way it worked with Mao.

          Google “Common Purpose”.

          1. uanime5
            July 14, 2012

            Who are these communists from 1962 working for? What ‘dictatorial tyranny’ are they trying to establish?

            those people then opened the doors to increase their numbers ever since.
            Where do they keep getting additional Communists from?

          2. lifelogic
            July 15, 2012

            uanime5

            I do not see them as communists. At the BBC they seem to be mainly slightly silly, often female, art graduates with a slight chip on their shoulders, a religious belief in the goodness of “equality”, the EU, more government, more tax, fairness and global warming – often from Scotland I note.

          3. Bob
            July 15, 2012

            uanime5

            1) Who are these communists from 1962 working for?

            They’re employed by the government, the educational establishment, the media etc etc.

            2) “What ā€˜dictatorial tyrannyā€™ are they trying to establish?”

            A dictatorial tyranny is a dictatorial tyranny.
            Are you asking what it will be called?
            If so I can only guess it will be something that sounds benign.

            3) those people then opened the doors to increase their numbers ever since.
            Where do they keep getting additional Communists from?

            By indoctrination – see (1) above.

            Are you one of them?

          4. Lindsay McDougall
            July 16, 2012

            If you need an antidote to the BBC, try watching Russia Today and Al Jazeera instead some of the time. You get a different point of view. They have their own biases but they are good news channels.

          5. Lindsay McDougall
            July 16, 2012

            For uanime5:

            If you want to know where all the communists have gone, look at the policies of the Green Party. They don’t just want Green measures, they want to destroy capitalism.

            Try remembering communism in action , e.g. (1) the factories in Easy Germany with lakes of toxic emissions stretching as far as the eye could see (2) the practice in Stalin’s Gulag of getting prisoners to handle raw creosote without gloves.
            Not very Green, eh?

          6. uanime5
            July 16, 2012

            Bob I noticed that you didn’t answer any of my questions so I’ll make them simpler.

            1) Who is the current leader of the Communists and who are the former leaders?

            2) How do you know about this plan to establish ā€˜dictatorial tyrannyā€™? You’d think only though high ranking members would know this.

            3) When did the Communist change from infiltration to indoctrination?

          7. Bob
            July 16, 2012

            uanime5

            1) Who is the current leader of the Communists and who are the former leaders?

            Cannot say, as it is not a company with a board of directors or a country with a president.

            If I mention some of the top people this comment would be blocked by the moderator.

            However you will find reference to them in the book “Watermelons” by James Delingpole.

            2) How do you know about this plan to establish ā€˜dictatorial tyrannyā€™? Youā€™d think only though high ranking members would know this.

            I worked it out for myself, based on the events that lead to previous dictatorial tyrannies, and comparing them to the UK over the last 30 odd years. The signs are all there to see for those who haven’t already been indoctrinated. Have you read “Wild Swans” by Jung Chang?

            3) When did the Communist change from infiltration to indoctrination?

            After infiltration of the media and educational establishments.

  13. Mark
    July 14, 2012

    Yesterday we debated transport, where road deaths are now down to around 2,000 a year, with big efforts through legal measures to try to reduce this still further. Yet a little searching produces these stories:

    http://www.nhs.uk/news/2012/07July/Pages/One-in-twenty-hospital-deaths-preventable.aspx

    http://www.guardian.co.uk/society/2012/may/23/nhs-failings-causing-diabetes-deaths

    http://www.telegraph.co.uk/health/healthnews/9387023/Hundreds-die-from-strokes-at-weekends-because-of-poorer-NHS-care-study.html

    and plenty more, numbering tens of thousands of deaths per year: just those stories total around 40,000.

    Of course, the solution to this is not to pour endless quantities of money in, but to improve standards, much as Gove is trying to do in education. I was never entirely convinced by Lansley’s reforms, but it’s almost certain that the emasculated version left behind after Lib Dem opposition will be less successful in tackling these problems.

    1. uanime5
      July 14, 2012

      I don’t see how Lansley’s plan to reduce the amount of money available to the NHS will fix any of these problems. You need better trained nurses and cleaners, not fewer or worse trained staff.

      1. Bob
        July 15, 2012

        @uanime5

        The NHS doesn’t need more money, it needs to spend it’s budget more carefully.

        I suggest:

        1) Sack a few hundred managers and trade union “Pilgrims”

        2) Take the cleaning function back in house wherever there are cases of MRSA, Cdiff etc.

        3) With the money saved is 1 & 2, they could employ more full time staff and save another fortune on agency staff;
        http://www.dailymail.co.uk/health/article-100135/Agency-nursing-costs-450m.html

        How’s that for starters?

      2. Lindsay McDougall
        July 16, 2012

        Andrew Lansley doesn’t plan to reduce the amount of money available to the NHS. He plans to reduce the rate of increase. Given the rapid increase in the population over 65 (from 2011 for the next 15 years) and the forthcoming avalanche of obesity related diseases, that’s some task.

    2. Mark
      July 14, 2012

      Then we have the real interaction between road accidents and health:

      There were 159 people killed in road accidents on London’s roads in 2011.

      Against that, probably 500 were killed by road humps:

      http://www.standard.co.uk/news/ambulances-hit-out-at-road-humps-6954162.html

      How do we get joined up thinking, or will we continue to “save just one life” by killing three times as many in some other fashion?

      1. lifelogic
        July 15, 2012

        Still they are removing some speed humps so the Olympic officials do not have to suffer the indignity of being jogged up and down. To be replaced later costing Ā£50,000.

        A real sense of priority from the coalition as is rather typical of Cameron/Clegg.

  14. Brian Tomkinson
    July 14, 2012

    Double standards abound in this country. One example I find galling is that politicians make Ponzi schemes illegal for all except government. There are too many others to list here. I don’t agree with your statement : “I am merely asking why we take this grown up approach to serious errors with a drugs company”. I don’t consider such leniency as “grown up” if by that overused expression you mean mature and wise.

    1. Bob
      July 14, 2012

      Yes, the state pension is a Ponzi scheme which Bernie Maddoff would be proud to run.

      You pay NI your whole life, and then they steal your house to cover long term care costs. Can you imagine an insurance company saying thanks for the premium, but any claims will be means tested?

      1. zorro
        July 14, 2012

        And they are sizing up to allow more immigration to supposedly keep the Ponzi going…..

        zorro

  15. Denis Cooper
    July 14, 2012

    The news about Glaxo came from the US, while the news about Barclays and the other banks in the UK is indigenous, and so has got far more attention.

    And according to the Guardian, not my default source of information but the one which came up near the top of the google references, that will be because our own MHRA is a pussy cat compared to the ferocious FDA tiger in the US.

    http://www.guardian.co.uk/business/2012/jul/08/pharma-misbehaviour-gsk-fine?newsfeed=true

    “All of GSK’s problems have come to light in the US, where corporate abuse is taken very seriously. Britain is different, and the FDA’s equivalent, the Medicines and Healthcare products Regulatory Agency (MHRA), appears to engage in lighter-touch regulation … “

    1. Farmer Geddon
      July 14, 2012

      GSK used to be run from the States & the recent scandals resulting in fines (eg manufacturing plant fine, avandia fine & paroxetine fine) all result from mis-management by (Americans – or by management in the USA?). Since Andrew Witty’s appointment, company now more UK based & ethical standards, transparency & social programmes are enforced so similar scandals involving GSK will be rare.

  16. Caterpillar
    July 14, 2012

    The area of reward is also treated differently. There are academic papers showing that extrinsic motivation has crowded out intrinsic in health care, but this is largely ignored by the media. Nonetheless in the case of the finance industry media and Treasury Select Committee alike pick up on the supposed ethical behaviour changing role of extrinsic reward.

  17. Acorn
    July 14, 2012

    Have you noticed how pissed the BBC is over the John Terry acquittal? They just won’t leave it alone; like a dog with a bone. The bad boys of the moment will be whomever the main stream media say it will be. As of yesterday, are the (non PC -ed) boys making a comeback?

    Do you think that Select Committees will gradually take-over from the House of Commons? At this rate, Cam will have to stop opposition MPs from Chairing them. Kieth Vaz is running circles around Theresa May. Talking of double standards, it is so amusing watching expenses scandal MPs quizzing Libor scandal banksters. Hypocrisy rules OK.

    1. Denis Cooper
      July 14, 2012

      That case should never have been taken to court, and whichever CPS employee authorised it should be reprimanded and/or demoted.

      I’m also deeply unimpressed by the approach of the magistrate.

      Having read his full judgement, it’s something that should never have defiled our court records, and all this is at public expense.

      A short dismissal of the case as vexatious, and a warning to the CPS to never again waste the court’s time with such cases, would have been sufficient.

      1. zorro
        July 14, 2012

        Totally PC inspired, I’m afraid…..

        zorro

      2. lifelogic
        July 15, 2012

        Should racial insults really be a crime anyway I think not?

        Surely it just reinforces the impression that there is something inferior with belonging to certain groups – clearly they should all be proud of their backgrounds.

        Soon we will not even be allowed to say “you silly man/woman” or anything much at all. Even when true.

        1. Lindsay McDougall
          July 16, 2012

          If you want to know if there any systematic differences between races (or any other groups for that matter), the logical thing to do is to conduct a thorough survey using IQ and aptitude tests. The bigoted left wing intelligentia always howl down any suggestion of this. The last person I read of who attempted anything like this was Professor Eynseck, who was beaten up for his pains by left wing ‘intellectuals’. Some intellectuals!

          (then ignores this advice by naming ethnic groups that he thinks are intellectually better etc -ed)

          1. Lindsay McDougall
            July 16, 2012

            I didn’t ‘ignore this advice’. I repeated a quote from William S Buckley Jnr made at the Cambridge Union in 1966. He asked a QUESTION and I made the point that his QUESTION had never been answered.

    2. Electro-Kevin
      July 14, 2012

      OK to bed a man’s wife but you dare call him a certain name.

  18. Neil Craig
    July 14, 2012

    I think this is a mattwer of fashion and the media’s inability to simplistically portray 2 groups as the baddies at once. Some years ago there was a breast enhancement story in which the pharmaceutical industry were portrayed as the villains. $25 billion damages were extracted from the industry and Dow CVorning driven into bankruptcy by the lawyers on the basis that their enhancements had caused illness (we have had a small scale revival here recently).

    In due course when all the statistical studies were it was proven beyond serious dispute that it was entirely hysteria and they had had no medical ill effects.

    If you want real examples of doublo standards look at bankers or anybody in the wealth creating industries V civil servants or lawyers. For example Sir fred Goodwin lost was vilified and became Fred for gambling in a way all the politics had eagerly supported. On the other hand when Sir Andrew Muir Russell told the Scottish Parliament building inquiry that he personally had deliberately hidden the fact that the building costs were Ā£400 million, Ā£360 million more than promised he ket his “Sir” and was given several lurative sinecure jobs. The same is happening now in that Barclays are taking the fall for a Libor scandal which (A) was and could only have been mastermined by the Bank of England & (B) had far less fraudulent effect than the Monetry Policy Committee’s keeping interest rates low despite their legal duty tom use it to prevent inflation.

    1. Denis Cooper
      July 14, 2012

      Why the Bank of England?

      Mervyn King has said that the Bank had no regulatory responsibilities in that area, and with the confusion created by Brown’s tripartite regulatory structure I have no grounds for disbelieving him on that.

      Why not point the figure at the FSA, which apparently did have responsibility, and in particular Sir Callum McCarthy, its first chairman, who was allowed to slink off into the background when the crisis hit?

      1. Conrad Jones (Cheam)
        July 14, 2012

        The serious Fraud Office has had it’s budget slashed from Ā£53 million down to around Ā£34 million. It could be below this figure now.

        The Bank of England has recently announced another round of QE3 totalling Ā£50 billion pounds. (I predict it will not be the last – expect QE4, QE5, QE6 etc)

        I wonder who thought it was a smart move to save Ā£19 million on the SFO?

        We spend more money on arresting shoplifters.

        1. sm
          July 16, 2012

          Some have questioned the independence of our prosecuting authorities in the past.

          (refers to the Blue Arrow case. Argues the authorities do not prosecute white collar crime sufficiently. )

  19. Max Dunbar
    July 14, 2012

    The Show Trials are sickening but they are not restricted to bankers. There is one going on at the moment concerning a well known footballer who allegedly said something nasty to a fellow player on the pitch.

  20. Pericles
    July 14, 2012

    I suspect that what is driving the political vehemence against the bankers is the embarrassment of politicians over their having baled out the sinking financial institutions ā€“ something that ought never to have happened, now raised to an art-form by the E.U., which has agreed to bale out Spanish banks without adding the sums involved to Spainā€™s balance sheet.

    Politicians cannot argue on the one paw for the efficacy of market forces and on the other for the need of intervention with tax-payersā€™ money.

    Ī Īž

  21. Richard1
    July 14, 2012

    The reason is simple: the public perceive, encouraged now by politicans on all sides and by the press, that banks and their employees live high on the hog at the expense of the taxpayer (unlike drug companies, though they of course supply the state) . The most pernicious effect of Gordon Brown’s wrong-headed bank bailout is a general anti-finance and anti-capitalist backlash. Perhaps it was a clever & deliberate strategy by Brown all along to promote anti-market collectivism, albeit at huge cost to the economy? Rather like Mao’s Cultural Revolution & Great Leap Forward.

    1. JimF
      July 14, 2012

      Deliberate? Yes, because he was still in thrall of those clever guys at Lehmans et al.

      Clever? No. He lost the election.

      His intentions were always to tear down the English, middle-class, home-owning, man-in-the street in favour of anybody else. I really don’t know what his problem was, but the only chink of ligght with Cameron is that he’s not Brown.

      1. zorro
        July 14, 2012

        I don’t know about that….in quite a few areas he is proving to be an ‘heir to Brown’ more than anything else….

        zorro

      2. lifelogic
        July 15, 2012

        I see little difference between Cameron and Brown other than one has a party with some sensible people to the right of him (to try to placate occasionally) and the other is fairly middle central to his party.

        I suppose Cameron is more pro EU. They are both tax borrow and tip down the drain, state sector think people.

  22. Bazman
    July 14, 2012

    When is the witch hunt against tobacco companies going to stop? This legal industry that employs thousands across the country in many ways is constantly hounded and harassed for going about their lawful business. It is entirely the choice of the individual as to whether they smoke or not and the health implications are inconclusive. The governments hypocrisy against a lawful trade whilst at the same time taking billions in taxes is just wrong and contrary to popular belief is big and is clever…. Make the rest up yourself.

    1. David John Wilson
      July 14, 2012

      The majority of smokers start the habit before the age of 16 and then spend most of their life trying and failing to give it up. The companies that have for years encouraged this situation and even now do little to prevent it can hardly be described as going about a lawful business.

  23. forthurst
    July 14, 2012

    I find the LIBOR issue quite confusing. We are told that the BoE did not use it as a yardstick, since in any case, at a particular time under investigation by the Commons Treasury Committee, it was entirely hypothetical because the banks were actually not prepared to lend to each other for any term at any rate, presumably because they suspected their potential counterparties of having an asset base of smouldering toxicity, but that the banks were nevertheless culpable for misquoting such rates at which they might have been able hypothetically to borrow or lend to each other, but rather that they, the BoE, monitored the overnight rate which was the only wholesale lending which had not dried up. Clearly a system of pricing which is not even based on actual transactions is inherently open to abuse and doubtless abuse occurred and large amounts were made and lost including amongst those whose interest rates of borrowing and lending were pegged to LIBOR.

    There seems a tendency for US regulators to be somewhat harsher on foreign corporations of any stripe than their own often significantly political funding ones. When will UK authorities start to initiate investigations other than on a me too basis with the USA? Is it because they either know or don’t know which particular criminal activities performed by US corporations are to be ignored by US regulators?

    I would like to know more about the circumstances of the sale of the gold by the Labour government instituted by Gordon Brown. We have been told that a US bank was short of two tons which apparently was the responsibilty of the UK taxpayer to fix. This is the sort of matter which the Treasury Select Committee should be looking at, the implicit right of US banksters to gamble, lose a lot of money, and come to the UK taxpayer for a bailout. The demise of the Wall Street gang including the Fed (of publicly undisclosed private ownership) would be very good news for the whole world. Perhaps we would have fewer wars in support of the petrodollar?

    1. Conrad Jones (Cheam)
      July 14, 2012

      What else is confusing is the amount of Derivatives on Bank Consolidated Balance Sheets under the “Assets” column.

      Using Barclays as purely an Example:

      Under the Assets Column 2011 Consolidated Balance Sheet – Barclays PLC Annual Report 2011 – page 199:
      “Derivative financial instruments” Ā£m 538,964 2011
      “Derivative financial instruments” Ā£m 420,319 2010

      Derivatives are the Biggest Assets on the Balance sheet – but how is the value calculated? How do we know they are correct?

      “Shareholdersā€™ equity” Ā£m 55,589 (almost a tenth of the Derivatives)

      Isn’t it the Securities that brought down Norhtern Rock? Barclays could still be elligible for a Bank of England bailout if it got into difficulties.

      Assets
      “Loans and advances to customers” Ā£m 431,934

      Barclays has actually increased it’s loans from 2010, but this asset is still less than the derivatives figure. Derivatives now play a more important role than lending – which is what I thought Banks were supposed to do – apart from a Safe place to keep our money. Could it be that QE3 will be aimed more at Derivatives than Lending?

      1. forthurst
        July 15, 2012

        The Keiser Report on RT Episode 314 discusses a US bank and its derivative ‘assets’.

        The main issue on derivatives is whether they are held at current market valuations (if indeed a market for them exists at all). What do they relate to? Interest rates? Currency exchange rates? Commodities? If theses banks weren’t underwritten by the taxpayer, would anyone else invest in them ?

      2. Frederick Bloggs
        July 15, 2012

        Derivatives are “marked to market”. These will be mostly interest rate swaps. There is a very well known and clear valuation model for these. Model validation (independent of traders) has to approve the model implementation. Product controllers (independent of traders) will have to agree the values and accountants will have to approve the product controllers. It is hard, but not impossible, to mismark interest rate swaps. And if you did, it would be sackable and probably criminal.

    2. Conrad Jones (Cheam)
      July 14, 2012

      From zerohedge.com:

      “Faced with the prospect of a global collapse in the banking system, the Chancellor took the decision to bail out the banks by dumping Britainā€™s gold, forcing the price down and allowing the banks to buy back gold at a profit, thus meeting their borrowing obligations.”

      This may or may not be true but:

      “First, he broke with convention and announced the sale well in advance, giving the market notice that it was shortly to be flooded and forcing down the spot price. This was apparently done in the interests of ā€œopen governmentā€, but had the effect of sending the spot price of gold to a 20-year low, as implied by basic supply and demand theory.

      Second, the Treasury elected to sell its gold via auction. Again, this broke with the standard model. The price of gold was usually determined at a morning and afternoon ā€œfixā€ between representatives of big banks whose network of smaller bank clients and private orders allowed them to determine the exact price at which demand met with supply.”

      Gordon Brown’s actions seemed to be aimed at getting the minimum price possible for the Country’s Gold. Has the UK benefited by having half it’s Gold dumped on the Market at rock bottom prices or was Gordon Brown incompetent. If he was, why didn’t Tony Blair notice before Gordon got into No.10? Tony Blair does now work for JP Morgan so must have some Financial Savvy.

      1. Conrad Jones (Cheam)
        July 15, 2012

        I guess this could be returning a favour the United States did for Britain in the 1920’s and 1930’s by devaluing it’s currency to save the Pound.

      2. Conrad Jones (Cheam)
        July 15, 2012

        This also provides compelling reasons to believe in the manipulation of the Gold Price, since, if LIBOR was able to be manipulated then so too is Gold. GATA has been saying this for years.

        1. forthurst
          July 15, 2012

          I noticed that Gavyn Davies, who is now extremely wealthy, was the emissary to Gordon Brown in this matter although it is not clear precisely whom he was representing. However, we have not seen the ‘convincing’ evidence of financial armageddon that Gordon Brown saw, so we don’t know why if US banks had been caught short of gold which they had possibly borrowed and sold for carry trade purposes it was not the responsibility of the US Treasury to open Fort Knox for the same purpose, or why the Fed could not have lent them the money (of which they have an inifinite supply) to redeem their short positions etc. We don’t know whether the large amount of bullion with tungstun cores floating around was a relevant issue. We don’t know whether a ‘British’ bank was also involved. We certainly don’t know whether Mr Davies earned a ‘success’ fee.

          We don’t know whether the US banks were actually acting on behalf of the Fed in shorting gold to support the dollar.

          “Tony Blair does now work for JP Morgan so must have some Financial Savvy.”

          Not necessarily. Personable people ‘more like us’ with political skills are often employed by corporations to provide ‘political advice’ ie act as emissaries on behalf of those who otherwise might appear ‘foreign’.

  24. Gary
    July 14, 2012

    Both are examples of corporatism, ie fascism, out of control. Both receive taxpayer subsidies. Both received a slap on the wrist and regard it as a cost of doing business. The small difference is that the healthcare industry, unlike the bankers, has not yet brought the world to the edge of ruin. That is why the bankers deserve special vitriol.

  25. Gary
    July 14, 2012

    In a really fair world barclays would be out of business, and glaxo would see customers desert them. That may yet happen.

    1. Farmer Geddon
      July 14, 2012

      Doubt it, all large drug companies have skeletons in their cupboards & no one else is developing drugs. No drug companies no new drugs, is that what you want ??

  26. sm
    July 14, 2012

    Double standards- No.

    The ”too big to fail” with their ”too big a bonus” story just became ”too big to ignore” and cant just be brushed off or downplayed with spin and language as scandal etc. A victim of their own success, unfortunately for us.

    People now suspect banks, politics and big business to the detriment of democracy are unhealthily entangled, probably moreso in banking but maybe not. Awareness of the fact that things are not right, that the deck is stacked is pervasive.

    High living costs, housing costs, high utility costs,high taxes at low income levels. Financial repression for those in the non protected private sector, as evidenced by QE ā€˜s effect on annuities, interest income and general inflation in all things. Pension apartheid between the highly paid senior public sector and the private sector. Then again in the reward structures and taxation of those in a position to influence the shape and form of their own contract.

    We seem to have become ruled by a self serving class not restricted to the public or private sector. We need to restore the public ethos and remove private sector rewards in the public sector. It plainly does not work.

    Perhaps the pharma industry and regulators can clean up their act. ā€“ the banks seem beyond redemption and really need to be replaced with new competitors.
    Interesting to note the regulators to be feared belong in large countries where serious jail terms or worse are handed out.

    Also i note you still will not discuss why we allow private banks to create debt money. Why not force them to intermediate only and lend out/gamble only money/equity they can lose safely.

  27. Matthew
    July 14, 2012

    You could easily call it ā€œMulti Standardsā€

    The focus of the press and of parliament is a bit like a search light thereā€™s not enough breadth and depth to the analysis of the bankā€™s failure.

    The searchlight falls onto Barclays ā€“ we have the spectacle of Mr King informing Mr Diamond that the BOE donā€™t have confidence in his stewardship of Barclays ā€“ you scratch your head and think ā€œhang on a minuteā€¦.ā€

    Why not extend the searchlight too the accountants or auditors?

    If they had done a better job insisting on more conservative accounting, then a lot of the failures that we have seen with the banks may have been prevented. (As would Enron and Equitable Life)

    Too often they will allow the inclusion of dodgy assets in balance sheets; these assets have a habit of vaporising at crucial times.

    The old saying an ounce of preventionā€¦worth a pound of cure

    As a young auditor I was often surprised at the ā€œbendingā€ the partner would do to accommodate the managementā€™s interpretation of the accounts. Nothing has changed in the intervening years.

    Enough of inquiries break up RBS and get the show on the road with lean mean banks eager to lend to SMEā€™s.

  28. Lindsay McDougall
    July 14, 2012

    In due course, Barclays and other British banks will be sued for alleged losses due to fixing LIBOR. The rat pack will be headed by the American legal profession, a group of rapacious parasites who make Bob Diamond look all sweetness and light. They will present a load of nonsencical calculations based on stupid assumptions in a bid to fleece Barclays and other British banks as much as possible.

    I hope that when the time comes British politicians are ready, willing and able to rubbish the claims. There will be problems with sub judice in the cases brought in British courts but there is nothing to prevent us from rubbishing claims made in American. Ridicule is a very powerful weapon.

    As for drugs companies, virtually none of the powerful drugs with powerful side effects that are provided to geriatrics are beneficial to the British economy. They are not always of net humanitarian benefit. We are not immortal; when are we going to recognise it by refusing to prescribe such drugs? It’s the job of politicians to stop this nonsense by getting the medical profession under control. When will it happen?

  29. Conrad Jones (Cheam)
    July 14, 2012

    Mr Redwood is absolutely correct in saying that a Witch Hunt is not going to fix the problem.

    “I am merely asking why we take this grown up approach to serious errors with a drugs company, and yet take such a different view with a private sector bank that managed to avoid requiring large injections of taxpayer cash in 2008?”

    From Forbes.com:

    “Bob Diamond has revealed that one of his big fears during the 2008 global credit crisis was that his bank, Barclays, would be taken over by the British government.”

    We should look at the System which motivated Barclays to act in an unethical way. We should also look at the Pension System – which encourages so many people to invest there savings in a Market which has been proven to be questionable.

  30. Brian Tomkinson
    July 14, 2012

    When are “errors and malpractice” by the BoE, FSA and BBA going to properly investigated or are they to be excused and treated in a “grown up way”? The only way they will be made accountable is by the media, politicians have neither the will nor ability to deal with these problems.

  31. Conrad Jones (Cheam)
    July 14, 2012

    In a comment I made on the PositiveMoney website, under the Article:

    “Why Money Disappears When Loans Are Repaid”

    I said:

    “So a Bank simply verifies the credit worthiness of a Borrower. Turns a
    individuals I.O.U. into an approved generic I.O.U. that Tesco’s will
    accept.”

    Barclays issues I.O.Us which act as Money, but is not Money (just like any other Bank).

    If I lend someone Ā£100 and they write out an I.O.U on a piece of paper with their name, signature and the amount. I cannot go to a shop and spend that I.O.U unless the shopkeeper knows the person and trusts them.

    The Ā£100 I lent them has been transferred from me to them and I have gained an I.O.U in exchange. I’ve lost purchasing power and they have gained it.

    When they pay me back that Ā£100, I tear up the I.O.U to cancel the debt. The debt has been destroyed but not the actual cash, that’s still in existence.

    When a Bank makes a loan, the borrower signs a Loan Agreement. The Bank then issues them with a Commerical Bank Approved I.O.U which CAN be spent in a shop becasue the shop knows and trusts their Debit or Credit Card. But the Bank did not loan them Money – they created a generic I.O.U which they charge a fee for. When the Borrower pays the Bank back – the original I.O.U get’s destroyed and hence the Commercial Bank Money get’s removed from the System. The only money that remains is the Interest paid on top, which the Bank then adds to it’s Cash Reserves or Profits.

    Banks are able to INCREASE the Money CREDIT supply by increasing the rate loan amounts created to loans repaid.

    Banks are able to INCREASE the Money CREDIT supply by decreasing the rate loan amounts are created to loans repaid.

    Banks cannot create money out of thin air but they can and do create Commerical Bank Money (Bank I.O.Us) out of thin air which, act as money.

    To any Accountants who may be reading this, is there any alternative to the Double Entry Bookkeeping Model which Bank Balance Sheets (ASSETS = LIABILITIES) use ?

    We need a more transparent and stable monetary system – not Bob Diamond on a stake with his hair on fire.

    1. Conrad Jones (Cheam)
      July 14, 2012

      Banks are able to INCREASE the Money CREDIT supply by increasing the rate loan amounts are created to loans repaid.

      Banks are able to DECREASE the Money CREDIT supply by decreasing the rate loan amounts are created to loans repaid.

    2. Nick
      July 14, 2012

      To any Accountants who may be reading this, is there any alternative to the Double Entry Bookkeeping Model which Bank Balance Sheets (ASSETS = LIABILITIES) use ?

      ==============

      Yes, the government has its own system.

      They take the money for pensions. That should create a liability. However, they book it as income, so now they can spend it.

      The problem arises as it is now. The money is due, and they can’t afford to pay it. So they default, for example, by raising the state retirement age. More contributions and less paid out.

    3. Frederick Bloggs
      July 15, 2012

      Banks do not create money out of thin air. They can only lend what they have i.e. money received from depositors and money borrowed by the bank.

      1. sm
        July 16, 2012

        Others disagree.

        If you are a large enough bank what is to prevent you from creating and lending money out which is then re-deposited into your megabank network by either directly by the entity borrowing or the suppliers to the borrower?

        Suggest you look at Steve Keen work.

        Its kinda like selling something you dont have the capacity to do right now but in general know you can cover it later from the individually uncertain redeposits and make a profit.

        Think shorts? Think derivative’s.Think gambling.

  32. kfc1404
    July 14, 2012

    Be it banking or healthcare, the principle is the same: the guilty are not punished. You have to steal a bottle of water to go to prison these days.

    1. Bob
      July 14, 2012

      Difficult to steal a bottle of water if you’re in an NHS hospital being guarded by (unhelpful-ed) nurses – and they won’t even let the police bring you a life saving drink of water.

      The National Death Service indeed.

      1. Bob
        July 15, 2012

        @Mr. Redwood

        Thanks for the edit but do you really think that “unhelpful” covers the fact that they prevented police from saving a life?

        1. Bob
          July 15, 2012

          Correction, “saving a man from an agonising death”.

  33. Electro-Kevin
    July 14, 2012

    “…grown up approach to serious errors with a drugs company”

    Errors ? Some might call it corruption.

    Were it not for the banking crisis doubtless GSK would feature more prominently in the news.

    The banking crisis happens to be a lot bigger.

  34. Arunas
    July 14, 2012

    Mr. Redwood,

    You surely understand that LIBOR is a cornerstone benchmark that trillions of financial contracts are based on. It is used on a principle that the banks are telling the truth. The trust has been broken, and the consequences are impossible to understand.

    In contrast, misrepresentation of a drugs is lamentable, but is affecting only the unfortunate individuals involved. The damage self-limiting as it requires corrupt health professionals to (mis-) prescribe the drug promoted by a corrupt company. On GSK side, there is no issue of trust, just dirty business between the company and the doctors (the trust issue is, of course, between the patient and the doctor – but there the patient has a choice).

    You surely understand that banking is based on trust and trust only. A bank caught lying cannot, should not survive. I personally am moving my account from Barclays on the ground that I cannot trust what they are telling me. I hope that all banks who had misrepresented their data will collapse and will be replaced by institutions and individuals more trustworthy. I know this is going to be painful, but it is necessary to operate on this cancer and not just sedate us, the public, with more morphine to avoid the pain for a little longer. This would only lead to less painful, more rapid death of the country.

    1. Frederick Bloggs
      July 15, 2012

      I would wait. Barclays was probably (and we will see) the least bad offender.

  35. Simon
    July 14, 2012

    The GSK thing happened in the US, almost no-one in the UK has heard of it.

    There have been many calls for the people (to be charged with, where appropriate-ed) criminal behavior if GSK to face individual punishment, but again, these things are being said in the US.

    Imagine, if you will, another terrible case like thalidomide in the UK -which by most accounts was caused by error. Of course there would be calls for prosecution, resignation, and much worse.

    1. Farmer Geddon
      July 14, 2012

      Thalidomide was an error waiting to happen. Current legislation then allowed drug companies to do as little or as much preclinical (animal) work as they thought suitable. Regulatory control has tightened up where it is now too bureacratic. Fortunately thalidomide was not licensed by the FDA, although it could be argued that thalidomide was and still is a useful drug as long as it is properly monitored. It is now used in the treatment of myeloma & immune diseases such as Behcet’s disease with close monitoring.

      1. Electro-Kevin
        July 14, 2012

        Criminal intent (mens rea) does not need to be present for a criminal act to have been committed.

        In the case of damage or personal injury recklessness to such an outcome need only be proved.

        1. uanime5
          July 16, 2012

          Electro-Kevin you’re knowledge of the law isn’t that good.

          Firstly mens rea is the mental state the person had when they committed the crime, not criminal intent. The main types if mens rea are direct intent (deliberately planned to commit a crime), recklessness (foresaw a crime could occur but performed the action anyway), and negligence (didn’t try to prevent the crime).

          Secondly the mens rea is almost always required to prosecute someone for committing a crime and usually a lack of intent means that you haven’t committed a crime. Though there are some crimes which can be committed through recklessness, such as involuntary manslaughter, people are usually charged with these crimes when intent can’t be proved. Gross negligence is only used for manslaughter.

          Thirdly there are strict liability offences where the mens rea is irrelevant, such as selling contaminated milk, but they’re very rare.

          Finally you’d sue for personal injury if you were injured in an accident but a criminal who attacked someone would be charged with assault, battery, ABH, or GBH.

      2. uanime5
        July 14, 2012

        In all fairness it would have been difficult, if not illegal, to test the effect of Thalidomide on pregnant women; even though it was a drug prescribed for morning sickness. Even today most drugs are tested on men to ensure that this testing won’t result in birth defects.

      3. A different Simon
        July 15, 2012

        A friends Brother is a thalidomide victim and he’s having more frequent fits and can’t feed himself anymore .

        His Mother (in her eighties) and him have been treated as pariah’s by the drug company and the relevent Govt department.

        They claim to have evidence that the side effects were not entirely unknown when it was approved for use in the UK – but not in the US as you point out .

  36. cosmic
    July 14, 2012

    You can make a direct comparison between Barclays and GSK, but to do so is rather simplistic.

    The Barclays affair is not an isolated example of a bank misbehaving, it’s a particular instance of something endemic, insidious, destabilising and on a huge scale. Furthermore, there’s reason to suppose that parties outside Barclays, knew, or suspected, and certainly ought to have known, that something improper was going on.

    1. Frederick Bloggs
      July 15, 2012

      Look in 2008 everyone knew that Banks were understating Libor. Even Tim Geithner described it “as the rate at which banks do not lend to eachother”

      They allowed this to go on since the market was so screwed up that for banks to report honestly that they could not borrow would have caused the uk and us to have to bailout all of the UK banks in the crisis and bank run that would have followed. The banks were right to lie and the regulators were right to ignore it. We should be praising the BoE but due to their cackhandedness, they have turned their good judgement into a self-inflicted wound.

  37. Ian
    July 14, 2012

    Over here we have the EU’s medicines agency telling us which drugs we can take. Undoubtedly they are “got at” by drugs firms from time to time, because the agency isn’t accountable in any reasonable sense of the word.

  38. Simon Stephenson
    July 14, 2012

    “I am merely asking why we take this grown up approach to serious errors with a drugs company, and yet take such a different view with a private sector bank that managed to avoid requiring large injections of taxpayer cash in 2008?”

    I’m not entirely certain why it should be considered “grown up” to allow the penalty for the wrongdoing of individuals to be borne by the shareholders of the company they work for. If the goings on in Prohibition Chicago had been carried out by Al Capone Inc. would you have been content with a settlement where the company paid a fine, and Mr Capone himself had merely to issue an apology?

  39. Remington Norman
    July 14, 2012

    John,

    The banks almost brought about the collapse of the entire financial system absorbing billions of public money in the process which they are not likely to re-imburse. That is why we bash them and not the big pharmas.

    1. Michael James
      July 14, 2012

      That’s exactly right. Being too big to fail entails very special obligations – which the banks have flouted. Barclays’s fine is insultingly small; hence the outcry. Why wasn’t it fined as much as, or more than, the pharma firm?

  40. Jon
    July 14, 2012

    There s a hypocricy I see. All the rules that govern finance are written by govermnents through the elected representatives. Labour favour borrowing and spending and so they changed to rules to allow excessive borrowing and changed the rules again to scupper savings. Brown surrounded himself with bankers hell bent on leveraging and credit. When the problem hit who did they blame?

    The difference between the healthcare issue and the politicians like Brown and Balls is that one are bad apples in an industry the other are making that bad an industry across a whole countries finances in order to get themselves a job. They make Maddof look like a child playing in a garden pond.

  41. Barry
    July 14, 2012

    John well said. As a further example, the clinical head of the NHS described the annual thirty thousand plus preventable Deep Vein Thrombosis (DVT)deaths in hospitals as a national disgrace. This ā€œdisgraceā€ is neither a caused by a lack of funds nor by a scarcity of medical resources. There is a monstrous failure by many hospitals to introduce and exercise relatively simple checks to identify and treat DVT. Unlike the Bankers, preventable DVT hospital deaths barely get a mention.

  42. English Pensioner
    July 14, 2012

    One doesn’t have to go to America for examples of double standards – One just has to look at the NHS. only today was I reading about one particular NHS trust where the regulators failed to notice, or ignored problems, but no-one seems to have been fired. Even if they do “resign” from the NHS Trust, it is only usually a matter of weeks before they have found fresh employment in another NHS Trust next door.
    Perhaps Health Administrators should be licensed, just as some bankers are required to be licensed. At least then their licences could be withdrawn and some unfortunate patients in hospitals elsewhere wouldn’t suffer their “care”.
    And as for the NHS regulators, they seem no more capable of spotting a problem on the horizon than their banking colleagues. Perhaps we need a licensing scheme for regulators!

  43. uanime5
    July 14, 2012

    1) Barclays’ manipulation of libor occurred in the UK, Glaxo Smith Kline’s misselling occurred in the US. The is why people in the UK are more interested in the former than the latter.

    2) Barclays’ actions effected libor and everyone who borrowed money in the UK, Glaxo Smith Kline’s actions only effected people who used a specific medicine. So Barclays’ actions effected far more people.

    3) Glaxo Smith Kline has to provide medical care to anyone injured by their medicines in exchange for not being sued (such lawsuits can be ruinous in the US), Barclays’ doesn’t have to provide any compensation to people who lost out because of their manipulation of libor and cannot be sued. Thus people have more remedies against pharmaceutical companies that break the law.

    In conclusion Glaxo Smith Kline’s actions effected less people and there were better remedies for anyone who was injured so the public fury was far less. By contrast the bankers have been repeated destroying without receiving any real punishment and at time have been protected by politicians, so it’s no surprise that people aren’t willing to tolerate yet another scandal involving bankers.

    1. Lindsay McDougall
      July 16, 2012

      The only LIBOR intervention that Barclays’ board had knowledge of was a short period at the height of the banking crisis in October 2008. They UNDER recorded their rate in a very thin market because the Deputy Governor of the Bank of England said that Barclays were posting higher than everyone else and it made it look that Barclays were having trouble with funding (within 2 days they had finalised Arab funding). That will have brought a BENEFIT to borrowers if it had any effect at all.

      As Mr Redwood has said, savers might have missed out. So the damage is restricted to a short period and a small difference in interest (don’t forget that the Barclays posting was diluted by that of other banks) in a thin market. Quantify it if you can – I’ll lend you my magnifying glass.

      The trouble with you is that you believe your own propaganda.

  44. A different Simon
    July 15, 2012

    So many examples of double standards .

    MP’s and Civil Servants deciding to award fantastic DB pensions to themselves and consign private sector workers to a doomed scheme like NEST rather than having the guts to apply the breaks and come up with something accessible to everyone which works .

  45. A different Simon
    July 15, 2012

    John ,

    There is brave contrarianism and then there is distasteful contrarianism as exemplified by Lord Longfords calls for the release of the Moors murderers and apologists for the banks .

    I’m not claiming anyone is blameless . Anyone who doesn’t check where the consumables and durables they use come from and at least try to buy locally or British is letting their fellow citizens down and also cutting their own throat in the process .

    I applaud people like yourself setting an example by driving Jaguars which although Indian owned have a higher British content than Mercedes and fashionable BMW’s .

    The financial services industry might just act with consideration , restraint and respect for others if they were acquainted with the consequences of their actions up0n other people and realities of life for people struggling at the bottom of the food chain .

    A couple of weeks community service in/living with a family from , a town where they have helped facilitate the offshoring of jobs and gained fat fees and bonuses for it might just make the penny drop .

    Reply: Thanks – I have moved on from Jaguar to Land Rover, where they also have high UK content in the manufacture.

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