Big contraction in the City – are people now happy?

 

             City am has recently reminded us that there has been a big fall in City employment, down by 100,000 to 250,000. There has been an even bigger fall in bonuses paid, down from a peak of £11.6bn to an estimated £1.6 billion this year.

               In the wild anti City atmosphere that followed the Credit Crunch many people and politicians said they wanted a smaller City. They wanted an end to excessive bonuses and high levels of remuneration. They have now got what they asked for.

             The government has done half of what it set out to do in its search for a better balanced economy. They wanted a smaller proportion in finance and a higher one  in industry. The City has contracted. We now need faster growth in industry, to give us the complementary “march of the makers” the Chancellor conjured in one of his speeches.

                I am not persuaded the country is happier for this. Many of us would like less inequality of incomes, but some of us want that to happen by people on low incomes earning more, not by people on high incomes leaving the country or working less.  The politics of jealousy may attract socialists, who just dislike rich people, but it does not make anyone else better off. Indeed, it makes the country worse off.

                   The collapse in City earning has led to a sharp fall in tax receipts from the City. At its peak the City contributed a massive £70 billion to the Treasury. Today that is down to £40 billion. The government has to try to find that missing £30 billion from somewhere else. That means taxing people on lower incomes more, through VAT, fuel duty and the rest.  It also means the state borrowing more, so we have higher taxes to look forward to for longer to service the debts. The state still wishes to maintain and increase its level of spending, despite the pressures on revenues.

                 Why has the City fallen like this?  Some of it reflects well paid  people relocating to competing centres with lower tax rates. Some reflects the demand for banks to hold much higher levels of cash and capital for any given level of busienss, which makes them much less profitable. Some of it reflects the end to excessive activity based on too much credit prior to 2007. Some of it results from the growing costs of regulation which cuts into profits and bonuses.

                    The UK needs to be careful. The City was its great economic success story of the last three decades. It generated a lot of wealth and income for those who worked in it, brought other business in its wake to the UK, and paid a large amount in taxes to contribute to our wide ranging public service provision. Most countries with a success story like that would want to nurture it and develop it. Circumstance, political rhetoric and regulatory decisions have in the last five years shrunk the City.

                 Maybe now we should stop shrinking the City, and recognise that it can still provide jobs for many and tax revenue in abundance. Is anyone happier now there has been such a huge fall in bonuses and tax revenues?

191 Comments

  1. lifelogic
    November 14, 2012

    Indeed well with the internet you can easily move so why pay 50% tax plus NI on you salary when in Hong Kong it is 15%. It makes your business rather uncompetitive. Why is HSBC still in London at all one wonders – with lefty Cameron and Miliband coming down the tracks very soon?

    1. Jerry
      November 14, 2012

      You mistake being able to trade off shore with being allowed to trade off shore and still have access to the same markets, HSBC retail sector would likely by down the river without so much as a paper plate to paddle with they moved – in any case if you are correct, and remember that electronic trading pre-dates the internet [1], HSBC spent millions acquiring a UK presence when they bought the old Midland Bank back in the 1980s.

      [1] all the internet has allowed is for people to sit in their spare bedrooms, log into a VPN and call themselves “traders”

    2. Bazman
      November 14, 2012

      You assume that some other company in Hong Kong will be daft enough to employ them and his family think it is a good idea to go there. More simplicity from you.

      1. lifelogic
        November 14, 2012

        Some of the people themselves, may well, as you say, choose not to go (for family or other reasons). The business may well go anyway nevertheless as may the customs The new recruits and expansion will be in the best place for it to go and any contraction will be in places like the EU, where governments over tax and over regulate. Also where governments tell companies that, contrary to all the proven facts, women live the same length as men and drive just a dangerously and wind power is a great idea and everyone should take maternity leave and work the hours they feel like working.

        1. Bazman
          November 15, 2012

          Have you read the Book called The Ragged Trousered Philanthropists yet? We are not going back to the days of a wealthy elite and a starving population in order for you and the likes of you to live out your regressive idealogical fantasies. Fantasies that you believe will not apply to you. Ram it.

          1. Edward
            November 16, 2012

            Bazman, Your views always concentrate on the UK only, as if we were by some magic way islolated and insured from the rest of the world.
            Unfortunately there is a big bad world out there and several emerging nations are going to affect us in our cosy little nation, grab our standard of living and our jobs and our propsperity.
            Unless we decide to innovate, invent, develop and most importantly compete with them.
            You ought to go to the Far East or to India or to Brazil and see what is happening out there, I have and its frightening.
            un-ram it

          2. Jerry
            November 16, 2012

            @Edward: I suspect that Bazman knows far more about the lives of the people in those countries that you will ever know unless you take off your rose-tinted sunglasses, what you suggest is his insular -UK only- perspective is the daily lives of many in the countries you applaud…

          3. Richard
            November 16, 2012

            Jerry what on earth are you on about?
            Rose tinted sunglasses?
            Countries you applaud?
            I just havnt any idea what you are trying to say
            Other than just “having a go”

          4. Bazman
            November 17, 2012

            Can’t disagree with that Edward, but if you have some sort of idea that we are going to compete on wages and conditions you are barking up the wrong tree. Desperation is not a viable strategy. Middle and upper class nitwits cannot rewind a hundred years of social progress and entitlements and nor should they be allowed to.

  2. lifelogic
    November 14, 2012

    A good lesson in positive feedback, higher tax percentages give you a smaller industry to tax which gives you less tax revenues which means even higher tax rates and this gives a still smaller industry …….. and so on into a death spiral. All very good for Hong Kong and all the competitors.

    Another good idea from the 52% Libdumbs – lets all be poor together in some equality fairyland of wind turbines, and electric cars.

    1. APL
      November 14, 2012

      lifelogic: “… which means even higher tax rates and this gives a still smaller industry …….. and so on into a death spiral. ”

      Don’t forget the QE1,2,3,… increasing borrowing until the declining tax revenue cannot service the debt, even at artificially low interest rates. All to disguise the culpability of politicians who over saw the whole disaster

      1. lifelogic
        November 14, 2012

        Indeed and still no real cuts in the size in the mainly parasitic, over paid and hugely over pensioned state sector.

        Some at the BBC even with get a £450K pay off for less than 2 months bad work on a so called “resignation” I understand.

        When will the person who agreed such an absurd (well it’s not my money) contract “resign” – and the one who appointed him too?

      2. zorro
        November 14, 2012

        All going tickety boo in Europe as well it seems….riots and demonstrations all over the place. I wonder how much and for how long the national governments will be able to withstand it…..Can you imagine what would have happened in the UK?

        zorro

        1. APL
          November 14, 2012

          Zorro: “All going tickety boo in Europe as well it seems…”

          The British arm of the European Propaganda organization is giving these items top billing.

        2. lifelogic
          November 15, 2012

          Indeed, had all the BBC think, Libdumbs, John Major/Clark/Heseltine types had their way and the UK were now locked into EURO recession mechanism. We would be having riots here too.

          1. Jerry
            November 15, 2012

            Had the UK joined the Euro then things might actually be a lot different, given that joining the Euro would have meant accepting the rule of the eurocrats there would have been little point in not also accepting a Federal EU.

            Not that I’m suggesting that we should have done so, just pointing out that pontificating about what might be the case is a little pointless – other than it makes a good ‘attack-dog’ against those who are detested…

    2. Bazman
      November 14, 2012

      I don’t think the utility companies and the multinationals that make billions from this country without paying tax to fund the infrastructure that allows them to do so are going anywhere.

      1. APL
        November 14, 2012

        Bazman: ” .. without paying tax to fund .. ”

        But they do pay tax. They pay National Insurance, they pay the wages that attract income tax, their transport fleet pays road duty, they pay fuel duty, if they heat their shops in the UK they pay fuel duty on the gas and electricity, the shops on the high street pay the business rates.

        So, once again Bazman, you are incorrect.

        1. Jerry
          November 15, 2012

          I suspect “Bazman” was talking about Corporation Tax and the like, not employment or indirect taxes.

        2. Bazman
          November 15, 2012

          So they do not have to pay tax, but small businesses and other companies in Britain do? What are you talking about what gives them the right not to pay tax on profits?Wrong? Yes you are.

          1. APL
            November 15, 2012

            Bazman: “So they do not have to pay tax, but small businesses and other companies in Britain do? ”

            But Starbucks, Amazon et al, do pay tax in the UK.

            Bazman: “What are you talking about what gives them the right not to pay tax on profits?”

            Is anyone suggesting that Starbucks or Amazon are doing anything illegal? That would be a no. So where does the problem lie?

            That would be the labyrinthine tax code, much of it put in place by one Gordon Brown.

            But yes, let’s simplify the tax code, abolish corporation tax and at the same time, make the UK a more attractive location to conduct a business.

          2. Jerry
            November 16, 2012

            APL: They pay very little UK tax.

          3. Edward
            November 16, 2012

            Bazman, you asked, “what gives them the right not to pay tax on profits”
            The answer is, the EU.
            Under EU rules, a multi-national company can decide to declare any member nation as its HQ, for accounting and tax purposes.
            Some decide on Luxembourg or Ireland and some Switzerland.
            They set up their HQ there because tax rates are the lowest in these EU member states.
            They do pay tax on their profits, not in each and every country they trade in, but in this single nominated country.

          4. lifelogic
            November 16, 2012

            What gives them the right not to pay tax on profits? – The fact that the revenue have rules that say they did not make profits – that is what gives them the right. Incompetent tax rules, HMRC and government clearly do not want them to pay tax on these “profits”. After all HRMC get all the statements and their tax computations so they can hardly say they did not know.

          5. Jerry
            November 16, 2012

            @Lifelogic: “Incompetent tax rules, HMRC and government clearly do not want them to pay tax on these “profits”.

            I take it then that you would welcome much tighter tax rules, funny that many Free Market supports keep suggesting that tax rules need to be relaxed to allow for investment – even though, unless I’m mistaken, investment can be placed against tax.

        3. lifelogic
          November 15, 2012

          VAT and stamp duty too ……………

          1. Bazman
            November 17, 2012

            and so do all other businesses……………

          2. APL
            November 18, 2012

            Bazman: “and so do all other businesses……………”

            So, all these businesses; Starbucks, Amazon, all the small local businesses, they are all paying tax ( local business rates, VAT, Excise duty on fuel, import duty on their products,) and you are whinging about it because …

            Now if you are whinging that being able to pay less Corporation tax puts the multinational at an advantage to the small business, then yes it probably does. But the behavior is legal and as Edward points out in the comments above, is permitted by our membership of the EU ( something I didn’t know).

            So, Amazon, Starbucks et al, are not doing anything illegal. Now what exactly is your complaint?

          3. Bazman
            November 18, 2012

            The behaviour is legal like the scorpion and the frog. If you want to make money here then we decide the rules. Is that fair APL? Ram it.

  3. Peter van Leeuwen
    November 14, 2012

    Personal physical attraction to lots of money (greed) may not be the same as physical attraction to little children, but perverse incentives should not be the attraction to become either a teacher or an investment banker. A bonus of 1 month salary annually should really be the level to which performance bonuses should descend. Of course this will require global (G20) cooperation, but why doesn’t the UK spend more efforts towards this normalization of a sector which has had its role in the global financial crisis. If the change is implemented gradually, there may be other sectors (industry?) to make up for the current losses in profit.

    1. Lindsay McDougall
      November 14, 2012

      This intervenionist approach is wholly wrong. Why should some arbitrarily chosen group of 20 countries control anything? Companies should be able to pay what they like, provided only that are wholly independent of government (taxpayer) finance. And no bail outs, please – let’s have proper capitalism. Have you noticed the riots against bank bail outs in Spain? Quite right too – nobody forced these banks to indulge in crazy property speculation.

      1. Peter van Leeuwen
        November 14, 2012

        @Lindsay McDougall: it so happens that these banks also hold my pension funds. What would have happened to these without a bail-out? The G20 ( a UK initiative I believe!) is not completely random, just like the G8 isn’t either.

        1. Bob
          November 14, 2012

          @PvL
          Who forced you to invest your pension into a bank?

          1. Peter van Leeuwen
            November 15, 2012

            The 800 billion euros owned by Dutch pension funds is of course spread over various bonds and shares in various ocuntries, some of which will be in Southern Europe. I’m not talking about privately controlled pensions but those of the large Dutch employers.

          2. Jerry
            November 15, 2012

            @Bob: Most people have no control over their pension funds, one of the many problems with them, of course the last thing speculative capitalist want is for the “Plebs” to actually have control over their own investments, it might cramp the style of the hedge funds etc.

        2. Lindsay McDougall
          November 15, 2012

          SPANISH banks hold your pension funds? How so? Who took the decision? Surely shome mishtake. Don’t tell me that somebody thought that Spanish property, a market almost as over supplied as the Dubai property market, was a good investment.

          1. Peter van Leeuwen
            November 15, 2012

            Exposure to Spanish banks happens to be small, but in general there will still be some exposure to banks in Southern Europe.
            See my reply at Bob above

      2. Bazman
        November 14, 2012

        The managers of the bank forced the bank to invest in crazy property deals knowing that they would get large bonuses and would have little personal comeback if it went wrong.

        1. Lindsay McDougall
          November 15, 2012

          Mere semantics – the managers (surely directors) are employees of the banks.

          1. Bazman
            November 15, 2012

            They are managers.

        2. APL
          November 15, 2012

          Bazman: “the managers (surely directors) are employees of the banks.”

          But not least the UK pension regieme set up by the politicians directs how pension money may be invested.

          That largely means, out of the control of the prospective pensioner. Because don’cha know, nanny knows best.

          Let’s see how that holds up in a shrinking economy.

          1. Jerry
            November 15, 2012

            @APL: Most people wouldn’t have know a hedge fund from a CDS five years ago, if you expect the majority of people to understand complex financial investments etc. then youu are going to put an awful lot of accountants out of work!

          2. APL
            November 15, 2012

            Jerry: “Most people wouldn’t have know a hedge fund from a CDS five years ago, ”

            Very true. But if savings were not actively discouraged by the political class, first by deliberately causing inflation such that at a 2% rate of inflation 50% of your savings will be destroyed within 35 years and secondly, by the political decision to impose tax on interest earned on your savings.

            Both of these make a simple savings account with compound interest a diabolical instrument to save for your old age. With out inflation, with out penal rates of tax on the interest, it would compete over thirty years quite well with a more ‘sophisticated’ pension plan.

            But for the politicians, a simple interest bearing account, would be sufficient for a not very sophisticated person to save for his or her old age.

          3. Jerry
            November 16, 2012

            @APL: Savings are not discouraged by political class.

            Don’t blame your pensions mismanagement on others…

          4. APL
            November 16, 2012

            Jerry: “a hedge fund from a CDS”

            And by the way, these exotic instruments, Credit default swaps, junk bonds, negative amortization morgages … & so on,.

            They are only necessary because the political class has made inflation destroy your capital over half a lifetime, because capital formation is discouraged, such measures have made the ‘dash for growth’ and ‘short-termism’ that the City is so villified for, the sensible alternative.

            You have to beat inflation, make use of tax loopholes and tax havens, because your working capital will be decimated in half a lifetime, and you have no hope of recouping your losses because the interest you earn is neutered.

            These behaviors are a direct result of the environment the politicians have created.

          5. APL
            November 16, 2012

            Jerry: “Savings are not discouraged by political class.”

            They are in control, they set the regulatory framework which permits you to save £5300 odd of your own money without the predations of tax on the interest, but even that is a mirage, since with inflation at 2% your capital is destroyed to the tune of 50% in half your lifetime. That is not my assertion, it is math, pure and simple.

            Now as I pointed out to you previously the inflation target is a government set target. The government is the political class.

            This is the way it has been for the last century.

          6. Jerry
            November 16, 2012

            @APL: “They are only necessary because the political class…

            No, they are needed because some just can’t stop wanting ever more money, nothing to do with the state, it’s called personal greed.

            “…has made inflation destroy your capital over half a lifetime…

            Yeah, blame you own weak pension plans on others why not, whilst actually causing the very problems you cite by using the very ‘products’ that even you accept cause the problems in the attempt to out-wit your own greed. Talk about ever decreasing circles…

          7. APL
            November 16, 2012

            Jerry: “Yeah, blame you own weak pension plans on others why not ”

            This is the general case, not my personal circumstances I am discussing. It is the math of 2% inflation* which erodes any capital you have by 50% in thirty five years.

            And the outrage that you are allowed to shelter £5300 of your own money each year from tax on the interest. How magnanimous of the political class.

            Many, possibly most people can understand compound interest. Such an account that was tax free and exempt from the corrosive effects of inflation would over a forty year working life accrue a very reasonable sum. With out all the opaque machinations of the pensions industry with their commissions and transaction fees and all the other ways they skim money of unsuspecting people.

            Jerry: ” by using the very ‘products’ that even you accept cause .. ”

            Ugh? What are you talking about?

            *government policy.

      3. Sidney Falco
        November 14, 2012

        Why not “encourage” top execs in companies to take most of their remuneration in shares in the company they run that must be held for several years in return for very attractive tax rates?

        I’d be happy for them to cash them in TAX FREE free after say 10 years with a taper from 0 – 10 years.

        If they prefer to take a salary, let them pay a high tax rate for doing so. (Shareholders may also realise that the CEO is not confident in the long term future of the company.)

        Alan Greenspan admitted that he made policy mistakes as it never occurred to him that senior company executives would risk the company with outrageous risk taking.

        DOH! As many rarely held stock in the company and were paid very high salaries and bonuses what is their incentive to ensure the long term survival of the company?

        I believe in Adam Smith’s ideas of real capitalism where capital risk and reward are related by a true free market.

        The problem with our current corporatist capitalism is that there is a disconnect between capital (the shareholders) / risk (the salary paid CEOs with no capital on the line) / reward.

        In my opinion, for capitalism to be really successful and a driver of wealth creation in the 21st century, we need to make sure that the CEOs have a lot of their personal wealth in the game…

      4. Jerry
        November 15, 2012

        @Lindsay: I thought they were rioting against the cuts, not the bail-outs…

    2. Sebastian Weetabix
      November 14, 2012

      In a free society people should be free to pay what they like to who they like. In other words, let the market decide. Why should the state limit bonuses for any job to 1/12 of annual salary? Or indeed insist on bonuses at all? It is nobody’s business except those who are party to the transaction.

      Mrs Thatcher did a fantastic job in unshackling our society from intrusive socialist state control. She made us more free. Suggestions like yours are the antithesis of a free society.

      1. uanime5
        November 14, 2012

        In a perfect society the shareholders should be able to decide the level of bonuses. Given that in reality the majority of shareholders have few shares and are fragmented the state needs to limit bonuses.

        Since when were unions considered a form of “state control”? Especially since they often oppose the state.

        1. Bob
          November 14, 2012

          @uanime5

          Small investors should be allowed to vote the shares they own in pension funds and ISAs.

        2. lifelogic
          November 15, 2012

          No shareholders need better control and to be able to control directors, fire directors and control directors contracts rather more directly. Not the government.

          Directors should not be able to run companies into the ground will in effect helping them selves to company assets. Similarly politicians should not be able to do the same to the country.

          It is UK voters (and shareholder’s) democratic controls that have far too weak mechanisms to effect any real control.

      2. Peter van Leeuwen
        November 14, 2012

        @Sebastian Weetabix:: Actually, Mrs. Thatcher didn’t believe in “society” as such, which is rather telling if you’re Dutch (the Dutch translation of society is “samenleving” or “living together”). For me, society should not be totally “free”, For instance, I happen to be against theft, crime, tax-havens, and perverse incentives, just to name a few limitations on “freedom”.

        1. Bob
          November 14, 2012

          Do you have any evidence to support your remark that Mrs Thatcher didn’t believe in society?

          1. lifelogic
            November 15, 2012

            Evidence well just that people on the BBC keeps saying it, I assume that is all the evidence. If it was ever said then what it clearly means is society is made up of individuals who should all do what they can to help and consider others whenever they can. It is not some magical state funded organisation, it is just made up of individuals.

        2. Mark
          November 15, 2012

          They’re casting their problem on society. And, you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It’s our duty to look after ourselves and then, also to look after our neighbour. People have got the entitlements too much in mind, without the obligations, because there is no such thing as an entitlement unless someone has first met an obligation.

          I think she had a strong sense of samenleving.

          1. Jerry
            November 15, 2012

            @Mark: That seems to be an adaptation on the “Charity starts at home” theme, in other words she is telling people look after themselves and their own first and foremost as no one else will do it for you! Not what she probably meant to say but that is how most people took her words – even without the media’s selective quotation.

        3. Lindsay McDougall
          November 15, 2012

          The expression we use is “freedom under the law”.

      3. Bazman
        November 14, 2012

        Its not the market that decides, but the chums awarding each other ever more money as they sit on each other pay boards. You are a dreamer.

        1. lifelogic
          November 15, 2012

          Indeed the shareholder control is too weak by miles just as voter power is.

  4. Jonathan Davis
    November 14, 2012

    A Capitalist who cannot see wood from trees is unhelpful.
    Yes we need smaller global financial services industry and more nondebt fueled economic activity. #Germany
    These things take time. Of course you are a politician and primarily think short term.
    Obviously CamMoron doing NOTHING to sort long term problems.
    #politicians! MEH!

  5. Steve Cox
    November 14, 2012

    I’d like to make a few comments on this article if I may, John.

    Yes, the City did and still does employ a lot of high-powered, very well-paid investment bankers, forex traders, hedge fund managers, and the like. But it also employs an awful lot of ordinary folk doing ordinary jobs, and (for London and the City, at least) being paid pretty ordinary wages. So of the 100,000 job losses that you mention, is there a breakdown into how many of them have involved the very well-paid people, and how many have been ordinary support staff?

    Then you mention that revenue from the City has dropped from £70 billion to £40 billion, but how much of that is due to job losses, the reduction or withdrawal of bonuses, and directly attributable to new regulation, and how much of it is simply cyclical. After all, at the top of the economic cycle, especially when the City was such a success story, you would have expected it to be making amazing profits and thus paying oodles of tax. Now that we are still bumping along the bottom of the cycle, it’s perfectly natural to expect profits in, and therefore taxes from, the City to be much lower, is it not?

    And finally, how much of this depression in City activity can be blamed on new regulations of shoring up banks’ capital ratios? We constantly read about how banks cannot lend to small businesses as they have to squirrel away whatever spare cash they have to satisfy Basel 3, or whatever the government or FSA or BoE decides is necessary on that particular day.

    I agree with you wholeheartedly that we need a strong and healthy City, but our financial sector simply became too large in relation to our economy. We were (and perhaps still are) another Iceland or Ireland with a banking sector that is out of all proportion to what the economy can manage when things go wrong. Yes, during the golden years it’s great to have all that tax revenue and well-paid employment, but if the end result is simply to beggar the rest of the economy when things go legs up, then I’d say it’s proof that the sector has become far too large and needs to be shrunk.

  6. Mark W
    November 14, 2012

    I’m certainly not happy. The most alarming thing is that not so many years ago this post would have been seen as a stating the obvious. Now the attacks on wealth creators and the politics of envy have become the default. As the socialists had learnt long ago the approach suggested by Gramsci I do not see a return to common sense anytime soon.

    1. A different Simon
      November 14, 2012

      Mark W ,

      The real wealth creators are those companies which manufacture , mine , grow things profitably or provide genuine services .

      Most of the finance industry is a zero sum game which cannot create wealth , only transfer it .

      Unfortunately the former are getting the backlash from society for the wrongs perpetrated by the latter + politicians .

      – Insurance underwriters who have been real innovators providing an essential service are tarred with the same brush as bankers which is ironic because for years they were criticised for managing risks more cautiously than banks .

      – The entire energy industry gets tarred with the same brush as the big 6 energy retailing cartel .

      When socialists address a problem , they have a habit of throwing the baby out with the bathwater . To them the problem is not wrongdoing but “capitalism” and the solution is to “nationalise” .

      The Conservatives seem to think that essential regulation is red tape and Labour/Lib Dems seem to think that red tape is regulation .

      Consequently we end up without proper regulation which is not enforced and masses of red tape which is .

      1. A different Simon
        November 14, 2012

        Edit : I would like to add that those people providing healthcare and good education are also wealth creators .

        This is self evident if these functions are viewed as an investment rather than a cost .

      2. JimF
        November 14, 2012

        Financial services should allocate wealth to the most beneficial users to promote economic growth.
        Government should allocate some of the proceeds of growth to support and cement society.
        Most people would conclude that allocating other peoples’ money rarely optimises benefit.

      3. Mark
        November 15, 2012

        I think that’s an unduly negative assessment of the role of finance. Just as headhunters have the job of finding people with the right skills to fill jobs, bankers have the job of finding funding to allow businesses to invest, or governments to fund deficits. They also have the job of allocating funding to promising projects, and managing risk by pooling it and spreading it on more speculative ones that may pay off well. Part of the job entails monitoring on behalf of investors in bonds – ensuring that covenants are being fulfilled so that the bonds will be paid on schedule and funds only drawn down against proper progress on a project, and negotiating those covenants in the first place.

        Much of the trading of financial instruments is in support of reducing business risks for customers: an adverse exchange rate or interest rate movement for example, or a letter of credit to guarantee a payment. This is little different in principle to reducing the risk of a manufacturing plant having stoppages because of plant breaking down by investing in more robust plant and doing proper maintenance.

        Of course, modern banks have gone well beyond this, and sometimes adopt the role of speculator that more properly belongs in trading companies where bankruptcy is not a major problem for the banking system. As we know, there have also been cases of mis-selling and market manipulation. But that does not mean that there isn’t a proper productive role for banking.

        1. A different Simon
          November 15, 2012

          Obviously I have no objection to providing letters of credit , a centuries old service which facilitated international trade , and the other services you mention seem highly worthwhile .

          The services you describe are truly banking services though clearly there was a lack of oversight at several levels allowing the risk to be ceded within the banking system , rather like Lloyd’s reinsurance spirals of the early nineties .

          Mark , surely these services don’t require massive balance sheets and gearing ratios so there should be no reason why GENUINE MERCHANT BANKING activities and utilitarian retail banking activities could not safely exist within the same institution .

          What I have a problem with is the media and politicians referring to speculative activities up to and including proprietary trading being referred to as “merchant banking” when they are not .

          If a bank does not indulge in speculative activities like proprietary trading , can you see any reason for it to have a massive balance sheet and astronomical gearing ratios ?

  7. Simon
    November 14, 2012

    If I know anything about the city, a large part of it will be reclassification of employment, and shift from cash bonuses to other type of remuneration.

    Very little of substance will have changed – it’s the one thing it has in common with the civil service.

  8. Pete the Bike
    November 14, 2012

    Maybe we should stop government so much money. Maybe taxes should be cut before every productive person sells up and leaves for a country where most of their money isn’t stolen by sanctimonious thugs from HMRC.
    Spain, Greece, France and others are experiencing the entrepreneur drain now and soon there will only be socialists left, all fighting over how to steal money from each other. Viewed from abroad it will be amusing but do we really want to go the same way?

    1. uanime5
      November 14, 2012

      Do you have any evidence to back your “exodus of entrepreneurs” claim? Also which countries are these entrepreneurs meant to be going to?

  9. Mike Stallard
    November 14, 2012

    Today I have been to the centre of Singapore with all the skyscrapers of the financial district.
    What a surprise that such a small country could be so attractive without the help of Frankfurt and the EU…….

    1. lifelogic
      November 14, 2012

      Indeed all that is needed is law and order small taxes, confidence and a state that keeps out of the way most of the time. As the British showed in Hong Kong.

      1. zorro
        November 14, 2012

        Well done Cowperthwaite…..

        zorro

    2. Bazman
      November 14, 2012

      Singapore is a highly undemocratic with its Internal Security Act (ISA) which allows the Government to arbitrarily arrest citizens and detain them without trial and all newspapers, TV and radio stations are owned and run by the Government. Not so good if you are a native and if you are an ex pat will soon find yourself removed for questioning the system. Problem that you and lifelogic have no qualms about I presume? Others like myself are more expensive.

      1. APL
        November 16, 2012

        Bazman: “Singapore is a highly undemocratic with its Internal Security Act (ISA) which allows the Government to arbitrarily arrest citizens and detain them without trial and all newspapers, ”

        RIPA 200o – Courtesy of Blair & Co.

        Just recently our esteemed Gerald Kaufman says he wants restrictions placed on the ability of the press to report things he doesn’t want them to report. Wonder why that would be? Wonder if he was stung by the expenses scandal?

        And then our ‘first democrat’ and guardian for the constitutional rights of the subject’ Ken Clarke is out there trying to defend the indefensible.

        The man is (wrong-ed). But is doing well making Singapore look like a liberal democracy.

        1. Bazman
          November 17, 2012

          You are comparing Singapore to Britain? Not real. Shall we look to that other great role model Russia as great capitalism?

          1. APL
            November 17, 2012

            Bazman: ” You are comparing Singapore to Britain?”

            Yes.

            On the metric you cite, arbitrary arrest, we rival them now.

            Ken Clarke, is busy building a Police State, sorry, putting the finishing touches to a Police State.

            We already have indefinite periods of detention without trial.

            Neither are we a capitalist economy. So we pretty well equal Russia too.

            All that rhetoric the Political class spouts, about not letting the terrorists change our way of life, meanwhile utterly transforming our country into a Police State.

      2. Bazman
        November 16, 2012

        The lack of comments on this speaks volumes, as does the defence of companies ripping off the public by not paying taxes or by managers with executive powers running virtual cartels such as banks and utilities. What we are dealing with here is supporters of financial (excess). Supporter who are somehow protected from this by undisclosed methods and payments.

        1. Bazman
          November 18, 2012

          Needs response.

  10. Mike G
    November 14, 2012

    JR

    I assert that the finance industry has become substantially parasitical, absorbing and depressing significant productivity %points. It is obvious that the banks in “recovery” mode are exactly this, arbitraging almost free BOE money into loans many %points higher. The ultimate illustration of parasitical growth is long term decline in investment returns. “Financialistation” has caused the disaster of phantom growth fuelled by credit creation

    Finance has to get back into balance and back to adding value, which will mean reversion to traditional roles.

    However, from direct experience, the worst effect of financial sector growth is from the grossly disproportionate rewards system. This has directly sucked the intellectual oxygen from the rest of the economy. For industry to grow we need top brains creating productive technology not trading algorithms (a zero-sum game if ever), so the loss of the obscene bonus is a necessary start. That oak tree looks terrible when the luxuriant ivy is stripped away, but only then might grow again.

    For industry to grow, business innovators must be able to get rich.

    There is a terrific opportunity here, as China’s technology-cloning growth reaches the limit, and they have to become technology innovators. What goes round comes round!

    MG

    1. JimF
      November 14, 2012

      Good points. Artificial profits sucking in the intellect, which should never have gone there in the first place. Still being propped up by ZIRP and QE.

      1. zorro
        November 14, 2012

        They would be dead as dodos without QE and ZIRP. They are like vampires feeding off our blood….

        zorro

    2. Chris B
      November 14, 2012

      I totally agree. A sustainable industry should be value adding in the long term. The financial industry in the UK seems more about asset inflation and even value destruction than adding value. It may bring in plenty of money from abroad but that just means it is parasitical to other countries as well as our own.

      Some services are necessary even when not value adding. In that case they should be as efficient as possible. The UK finance industry, given the amount it diverts into its own pockets, is very far from efficient from a wider economic perspective.

      As for the number of jobs, I recall being very surprised at the proportion of the US workforce involved in real estate and look how that turned out. What is a reasonable proportion of the working population to be working in finance?

      The government dependence on taxes from the finance industry has the appearance of an addiction to their cut of the proceeds. They are being bought off.

    3. Mark
      November 15, 2012

      Andrew Haldane recently made this point at a Select Committee meeting where he gave evidence, and backed it up with studies that show that beyond a certain size, banking has a negative influence on an economy.

      http://www.bankofengland.co.uk/publications/Pages/news/2012/100.aspx

  11. Richard1
    November 14, 2012

    The stock market is down roughly 10% since it became clear Obama would be re-elected. This hits mainly rich people with large investments. We are more equal in wealth as a result than we were a month ago. Do egalitarians think we are now happier? How much more does the market need to fall before we are so equal that society is ‘fair’?

    1. uanime5
      November 14, 2012

      Do you have any evidence to back up your claim that the stock market fell 10% between November 6th and November 14th, and that this fall was directly attributed to Obama being re-elected? Thought not.

      1. Richard1
        November 15, 2012

        You clearly have a limited understanding of how markets work. Look at a graph. The relevant dates are approx a month before 14 Nov by when the balance of probablility was Obama would be re-elected. You’re an egalitarian I think – are you happier now the rich are poorer & society is more equal?

        1. uanime5
          November 15, 2012

          Given how close everyone claimed the election would be there’s no evidence that one month before the election investors would have trades less.

          Don’t forget that the stock market rose under Obama because of the stimulus he gave to various industries.

    2. Sidney Falco
      November 14, 2012

      Which stock market are you referring to?

      I assume you know that there are many stock markets.

      In your opinion, which of these markets most closely reflects the real economy and why?

      I’m not being flippant. I really would like to know.

  12. Acorn
    November 14, 2012

    So flogging dodgy CDOs on one side of a casino bank, while the other side of that bank, was betting on the CDO failing, is a good way to make money? Selling mortgage products that were never going to be repaid, (Liar Loans), and dumping them in “special purpose vehicles”, (SPV/SPE) to hide the debt/bankruptcy risk from the parent casino bank, (Enron style); good public purpose, is it?

    Before the US election the congressional republicans did their utmost to bury the following CRS report. It collated evidence that showed that reducing taxes on the top 0.1% incomes, has had negligible influence on the growth of the economy since WW2. The drop from £70 to £40 billion tax mean that many times that difference is fortunately still in the pockets and pension funds of those that didn’t get mugged by the casino Banksters.

    1. Richard1
      November 14, 2012

      This is a silly post by Acorn. Wrong-doing and foolish behaviour can occur in any sector. That’s not a reason to close down a whole industry. Vibrant capital markets are key to economic development – look at what happened in Communist countries which closed stock exchanges and had no capital markets.

      Your point on tax rates is meaningless. Many factors affect growth over a long period. There is extensive evidence linking lower tax rates, and lower ratios of tax/GDP, with superior growth and higher prosperity. This has been debated many times on this site before.

      1. uanime5
        November 14, 2012

        Well it’s clear that you don’t understand why communist countries had economic problems. Here’s a hint: it was due to a lack of competition not a lack of capital.

        Given that you couldn’t provide any evidence to back up your claim that low taxes = higher sustainable growth it’s clear you just made it up.

        1. Richard1
          November 15, 2012

          You are absolutely right that competition is key to success in an economy – I hope you will support it on this site in future in areas such as health and education in the UK where there hardly is any. There is loads of evidence on the link between low tax rates and growth / prosperity, much of repeated before on this site, including in response to some of your previous posts.

          1. uanime5
            November 15, 2012

            1) Exactly how is the economy improved by having competition in education and healthcare? Especially since in the USA competition has been shown to increase the costs of education and healthcare.

            2) You’ve never provides any evidence that low tax = high growth. If you had any real evidence you would have included it rather than pretending that the evidence was somewhere else.

      2. Acorn
        November 14, 2012

        The meat of my post did not pass moderation. It was concerned with the fact that reducing taxes on the 0.1% highest incomes, has not improved the prosperity of the other 99.9%, shown by US data since WW2. Tax / GDP was not in question.

        Fortunately, some of our Lords are armed with the data, and a bit more, that did not pass moderation, for the debate on the Enterprise and Regulatory Reform Bill, I suggest you follow the debate. This is one big mess of a Bill.

        Meanwhile, keep in mind that the UK GDP is about $6 billion per day, out of a world total of circa $190 billion per day. Currency trading in the UK is circa $1900 billion per day; out of a world total of $4000 billion per day. How much of that do you think is to buy capital assets that will generate future income streams? Nearly half of it is for customer speculators, the rest is casino bankers speculating.

        US dollar/euro remained the most traded currency pair, with 32% of total foreign exchange market turnover, similar in percentage terms to April 2007. The level of trading in US dollar/sterling fell to 13% of the total, down from 17% in April 2007 and 22% in April 2004.
        The US dollar continued to be the most traded currency in the UK market, with 85% of all trades having one side denominated in dollars. The euro showed a slight rise from previous surveys to 44%,

        Now, this is the bit that we should worry about … the proportion of turnover involving sterling fell from 22% to 18%. (FX share always sum to 200% as trades are in pairs).

        $6 billion a day GDP, is not enough to sustain a nation with 62 million people in it that are getting older. (sources left out but mostly US FED; BoE and BIS Triennial Survey).

      3. sm
        November 14, 2012

        A vibrant capital market would have resolved a lot more of the bad debts and a more of the banks pdq. The City should be pleased with the massive state support it has been able to leverage.

        Iceland seems to be doing well at the moment? Why is that?

        If we look at other industry sectors – how many would have been able to extract that level of unwilling support and unlimited support?.

        Mining, fishing, textiles or politicians and bankers?

        If only our governments were capable of ensuring the losses were picked up by the losers it would have been more helpful.

        Those that depend on subsidies don’t usually get sympathy on this blog, so why start now? For the record i am not happy, but we are where we are and the contraction was inevitable and mathematically certain.

        So why not pursue Steve Keen’s idea to create money for the people to pay down debt. That would contract the banks (if we moved to full reserve banking) and enable spending in other areas as well?

        1. zorro
          November 14, 2012

          sm – eminently reasonable but we know why they won’t give money to people to pay down debt. It’s because the banks want it to pay their debt and they control the politicians….

          zorro

          1. sm
            November 15, 2012

            I fear the system is breaking down, there is no point flogging a dead horse. At some point to save themselves (or at least some of them) logically they should.

            Worryingly… gun sales in the US are going up?

            They (the private banks) created the fiat debt loans with a stroke of keyboard when people signed the contract, so the government (on behalf of the people can create fiat and dispense it equally to the public to repay part of those debts.)

            I guess this is what QE is (if its not reversed) except those that get their hands on the cash first benefit first, the insiders, the favoured ones not the public more equally as a whole.

            People cant spend because they don’t have money or are paying down debt.

            They could try it say in £60 bn tranche or £1000 each with the proviso it must paydown debt first and wait.

            It amounts to downsizing the banks in leverage, and it would be fitting as we fight fire with fire.

          2. zorro
            November 16, 2012

            sm – I expect that gun sales are rising as the people there feel that Obama might be ready to make more attacks on their second amendment rights or at least stopping any increase in firearms sales….

            zorro

      4. Sidney Falco
        November 14, 2012

        “Vibrant capital markets are key to economic development”

        Do you believe that the capital markets are functioning well?

        1. Who decided that the price of money should be 0.5%?

        2. Is this a true reflection of the rate that savers/investors would receive from borrowers if there were a really true free market?

        1. Central banks.

        2. No.

        The current central banks’ policy of low interest rates and QE is in no way a free and “vibrant capital market”. It is a distortion of markets as they do not want normal corrective recessions/depressions to fix previous bubbles.

        1. Richard1
          November 15, 2012

          I agree with your view on this & agree there are many distortions in the capital markets, of which central bank manipulation of the price of money is probably the worst. My point was to ask whether political leftists feel society is fairer when rich people get poorer, as that certainly makes society more equal.

  13. Roy Grainger
    November 14, 2012

    For once I find you somewhat disingenuous, in your list “Why has the City fallen like this?” you fail to mention explicitly one of the main reasons: the sheer incompetence of many of the large city companies and their employees which has resulted in them variously making massive losses, going bankrupt, or being nationalised. Of course they end up with fewer less well-paid staff as a result. This is a free market in action – it is the price of their own failure.

    1. martyn
      November 14, 2012

      Agreed but add greed as well. Incompetence, short termism and greed make for a fateful and lethal mix.

    2. Hoover
      November 14, 2012

      Nothing in the City is the free market in action. Thanks to mountains of regulation and a government monopoly on production of money, finance is one of the least free market industries in existence.

      1. sm
        November 15, 2012

        If government had a monopoly on the money or electronic money creation we would have full reserve banking, we don’t have this. (suggest positive money website as a good read).

    3. JimF
      November 14, 2012

      Except it isn’t really a free-market- they were propped up by too low interest rates in 2005-6 and by taxpayer bailouts from 2008. What you’re seeing is a damage limitiation exercise compared to what could and perhaps should have happened in a free market.

      1. Sidney Falco
        November 14, 2012

        In my opinion you are right.

        We should have been allowed to have a very deep, painful recession to compensate for the previous bubble.

        However, in democracies how is this possible?

        People will never vote for short term pain for long term gain.

        I don’t blame the politicians. I blame us, the electorate.

        The government should stop referring to “deficit” and call it “future tax on our children and grandchildren”.

        1. sm
          November 15, 2012

          How many people voted in favour of bailing the banks? The Icelanders chose not too?

    4. Sidney Falco
      November 14, 2012

      “This is a free market in action”

      It most certainly is not.

      And, to be fair to Mr Redwood, he was one of the few sane voices who suggested alternative action (at the time!) which was ignored.

  14. alan jutson
    November 14, 2012

    Whilst I agree we need the city to prosper, the problem JR was that these huge bonuses and profits were in some cases fake.

    Why else did some Banks go bust and need taxpayer support, if it was so profitable.

    Most of us have no problem with people earning a bonus if it is paid on sensible terms.
    The problem most of us have, is that whilst huge bonuses were paid on so called short term profits, no clawbacks were taken when long term losses were revealed, and the poor punter not only got stuffed investment wise, but also had to cough up for the losses through increased taxation as well.

    So yes, let us encourage the city to expand and do well, but then let us all share in its wealth, even if it just means less taxpayer support.

    1. Sebastian Weetabix
      November 14, 2012

      There should be no taxpayer support. Let them go bust.

      1. alan jutson
        November 14, 2012

        Sebastian

        No Taxpayer support, agreed.

        But we are where we are.

        So I would settle for less support, until it was withdrawn completely.

      2. APL
        November 16, 2012

        Sebastian Weetabix: “Let them go bust.”

        Yes.
        But don’t forget the cardinal reason why the government has propped up the big banks, it isn’t because a retail banking collapse might cause hardship for the population, the government has shown it doesn’t care two hoots for the population, it’s because with out the big banks, the government would find it impossible to deficit spend.

        That is the reason governments have propped up the banks.

  15. Disaffected
    November 14, 2012

    Of course not. Poor thought out strategy by the chancellor, again. What is his plan for growing industry?

    You talked of independent PCCs the other day. What is going on with the selection of IPSA board members and why is there so many ex MPs on the panel- hardly independent. The selection procedure and panel appears to be skewed to suit the Speakers preference for who he wants. Why not have an independent speaker for the House and an independent IPSA? Parliament still appears to be rotten with scandal and corruption. When are the party leaders going to exercise some leadership and clean up politics?

    1. David John Wilson
      November 14, 2012

      That will have to stop once the EU rule on 40% women on boards comes into effect. There won’t be enough female exMPs

  16. Matthew
    November 14, 2012

    We need vibrant sectors across the entire economy.

    The idea is not to make the “City” lower in absolute terms, but maybe in relative terms, as we seek to increase manufacturing and other non finance trade.

    David Cameron seems now to be giving out the right message about safeguarding the city.

  17. Bob
    November 14, 2012

    John Bercow accused of trying to rig board of MPs’ expenses watchdog.
    http://www.telegraph.co.uk/news/newstopics/mps-expenses/9676213/Commons-speaker-John-Bercow-accused-of-trying-to-rig-board-of-MPs-expenses-watchdog.html

    This will help to restore some trust, (etc)

  18. sandy winder
    November 14, 2012

    Socialism’s greatest enemy is prosperity. A prosperous country with healthy tax receipts and high employment means more wealth to spend on public services. Every policies the left have is to make it harder for new jobs in the private sector to be created. That is why these European strikes are taking place. They know that it will increase poverty throughout Europe. More people in poverty generally means more votes for left wing parties.

    1. uanime5
      November 14, 2012

      So Germany is the enemy of socialism? Well it’s clear you don’t understand how socialism works.

      Regarding the strikes in Europe they’re mainly occurring in countries that have introduced austerity because their politicians have mismanaged the economy, for example Italy, Spain, and Greece.

      1. zorro
        November 14, 2012

        Nothing to do with them being caught in an eternal recession mechanism from which they will not be allowed to exit so they have no choice but to enact severe budget cuts in an already spiralling economy or face more lectures from the German Chancellor…..

        zorro

      2. Lindsay McDougall
        November 15, 2012

        Germany has been steadily reducing taxes. Although Angela Merkel is a Euro fanatic, she is also a “right of centre” Christian Democrat. It’s France that is the high tax and spend country. French public expenditure is 56% of GDP, which creates a problem because not even the French dare tax that highly. I will make you a prediction: it will only be a matter of a few years before France joins the Club Med basket case economies and hold out their begging bowl.

    2. wab
      November 15, 2012

      “Socialism’s greatest enemy is prosperity. A prosperous country with healthy tax receipts and high employment means more wealth to spend on public services. ”

      Those two sentences are complete contradictions of each other. Or do you think that socialists hate public services and that only capitalists (you know, the ones that perpetually whine about paying any tax) want public services?

  19. oldtimer
    November 14, 2012

    Some of the past activity was the result of speculative bubbles and dubious practices we can well do without. It is obvious that work will continue to gravitate to where the action now is – to Asia. The employment data in financial services shows that the growth is in the Far East. Tax and regulation will speed the process. The City will have to work hard to maintain its present status. The country will be much poorer if it fails.

    I have little confidence that much can or will be done to promote growth elsewhere in the economy. For a start attitudes are hostile to business and industry, taxation is too high, disastrous energy policies are a real disincentive, the state consumes too much, the economy will flatline for several years. UK exports will not succeed on the basis of low cost; they require high function that adds significant value for the customer (eg ARM software) or are high on the emotional appeal offered by some branded products (eg the Evoque). Even such products as these are unlikely to be immune to a prolonged slow down in the world economy. There are not enough businesses like this in the UK. It is hard to see where they will come from.

    I have yet to be convinced that those running our affairs in government have fully grasped the nature of the predicament we are in, let alone devised the remedies to deal with it.

  20. Denis Cooper
    November 14, 2012

    I’m not exactly impressed when some people get huge rewards which seem wildly out of proportion to the useful work they’ve done, but in the case of the private sector I’m prepared to accept that if the owners of the company, the shareholders, are willing to overpay some members of staff then that’s their money and their decision.

    However I do object when the design of the remuneration scheme encourages reckless or even criminal behaviour focussed on short term performance, and then I’m expected to help bail out the company because it’s too big to fail or it’s strategically too important or too many innocent people would be hurt if it was allowed to collapse.

    Previous episodes of damaging corporate recklessness led to the introduction of Long Term Incentive Plans for senior managers, but as typically they only run for three years they’re not what I would mean by “long term”.

    And in fact when a bloke from an insurance company is trying to sell me some investment scheme as a “long term investment” that will also mean at least 10 years and maybe 20 or 25 years, while back at Head Office his most senior managers may well stand to benefit from “Long Term Incentive Plans” which run for just 3 years.

    That’s where I think it would be right for the government to intervene, not to control the total sums paid out as bonuses to individuals but to insist that the bonus schemes must be designed to discourage damaging behaviour in pursuit of short term performance.

    1. martyn
      November 14, 2012

      Agreed.

    2. Sidney Falco
      November 14, 2012

      I agree 100% with this Denis.

      Please read my comment elsewhere about ideas I have to address this problem.

  21. TFS
    November 14, 2012

    What a load tosh that Socialists dislike rich people. What you should have said is that socialists dislike the rich people hide the monies in offshore accounts to hide it from the eyes of the taxman.

    The Rich like the socialist state as much as the next man. Privatize the profits socialise the debts is their mantra.

    Wow, who’d have though another MP being a cheerleader for our Ponzi finacial system and the rich fraudsters that permeate it.

    Maybe you should watch a bit more MaxKieser, and some other websites that will given you a more honorable look on what going on.

    1. APL
      November 14, 2012

      TFS: “What a load tosh that Socialists dislike rich people.”

      Socialists are rich people; Poly Toynbe, Tony Blair, ‘Lord’ Mandleson, ‘Lord’ Kinnock not to mention his whole family, the list is huge. Not many of them, oddly enough, seem to have made their money from their own sweat and graft.

      It amuses me to hear these people suggesting ‘the rich’ should pay more tax, listen up folks, just get your cheque books out and make out the cheques to the Inland Revenue, it really is as simple as that.

      1. APL
        November 14, 2012

        APL: “just get your cheque books out and make out the cheques to the Inland Revenue,”

        Not to forget of course, those in receipt of EU stipends are receiving them at UK tax advantageous terms, that is UK tax free.

        Would that be tax avoidance, perhaps? Or simply special pleading from positions of privilege to reduce their own tax burden.

        Just a curiosity, are these ‘tax breaks for the boys’ entrenched in the European Treaties?

      2. APL
        November 14, 2012

        Ho ho ho! Can this really be true ?

  22. English Pensioner
    November 14, 2012

    I’ve never objected to rich people except those who make their money out of politics like Blair & Co.
    In order to get anything from their riches, they have to spend their money and this in turn keeps other people employed. If they have one of the mansions (that Clegg wants to tax), they’ll then need a gardener and someone to do odd jobs as the very least. If they have posh cars, there is a heavy maintenance bill and insurance, possibly even a chauffeur. It all keeps the working man employed. If they are rich enough to have a yacht, why that will cost them thousands simply to own it, let alone use it for cruising.
    Its far better to aim to go up in life than to try to bring down the rich to your level.

    1. John Doran
      November 16, 2012

      What a sensible view Mr Pensioner.
      If,in addition, we had a level tax rate for everybody say 17%,
      & companies had a minimum tax rate of say 1% of turnover,
      so multinationals couldn’t dodge completely,
      we might be edging towards a sane world.

      Instead,of course, we’re edging towards bankruptcy & socialism.
      Deep joy.
      We live in interesting times.

  23. MickC
    November 14, 2012

    The problem with “the City” is discovering exactly how much of the activity is “economic” as opposed to merely “financial”-in other words how much is actual real wealth producing and how much is mere smoke and mirrors.

    The fact that the UK is in such a parlous condition despite the City being inhabited by so many allegedly brilliant people and having had a good time for so long rather points to the smoke and mirrors side of things.

    Other countries seem to do better for their population without the “financial sector” which is much vaunted in the UK.

    Sympathy for the City is very much in short supply-and is not likely to be other than a bear market for a long time.

    1. A different Simon
      November 14, 2012

      About time Parliament was moved out of a financial centre and relocated to an economic one ?

  24. Ralph Musgrave
    November 14, 2012

    Banks generate wealth???? According to Andrew Haldane of the Bank of England, the subsidies that banks get come to several times their profits. On that basis they generate no wealth at all.

    Secondly, the banking industry in the UK has expanded a whapping TEN TIMES (relative to GDP) over the last thirty years. I don’t remember economic growth being all that poor thirty years ago.

    1. martyn
      November 14, 2012

      agreed

    2. A different Simon
      November 14, 2012

      Sucking 10X the money out of the real economy is be bad enough .

      Sucking the best brains from the best universities when they could have been allocated to more productive pursuits is a tragedy on so many levels .

      There is no switch which can be flicked to suddenly re-establish the culture which existed in banks 20 years ago as it took decades to create .

      I fear the process of de-industrialisation will prove to be irreversible and that we’ll soon be absorbed into a United States of Europe anyway .

      1. zorro
        November 14, 2012

        Well that has always been the plan, hasn’t it…?

        zorro

      2. John Doran
        November 16, 2012

        Over my dead body.
        I do not want my sons, & grandchildren living in a socialist superstate.
        I suspect there’re many like me.
        Vote UKIP.

    3. zorro
      November 14, 2012

      Well we had some industry (made things) then I seem to recall….

      zorro

  25. Jerry
    November 14, 2012

    No one wants to see employment contraction and I don’t think that people were calling for such [1], what they were calling for was less of the Bonus culture and more of an “Honest days pay for an honest days work”, Up-Selling seems to be rife these days, couple that to a bonus culture and it was (and still is) a recipe for CDS style problems because the only thing that matters is the bonus culture.

    [1] I do recall people suggesting that there needs to be a rebalancing of the UK economy, less reliance on the “services sector” and more reliance on actually ‘making things’

  26. Neil Craig
    November 14, 2012

    Yet more government parasitism.

    We know that we could be out or recession and into fast growth any time the Lab/Con/Dem/Green coalitionm wanted to stop preventing it. This current “world recession” is a total and deliberate lie – the non-EU world economy is growing at about 6%.

    The new aristocracy and the Luddites oppose growth because growth helps the poor become wealthy – a much greater difference then the wealthy becoming wealthier.

    If this is clearly true then, by definition, any politician who denies it is wholly corrupt & thus unfit for any role in government.

    1. uanime5
      November 14, 2012

      This current “world recession” is a total and deliberate lie – the non-EU world economy is growing at about 6%.

      No matter how many times you post this it will never become true. Canada, the USA, Australia, New Zealand, and Japan are not growing at 6%; only developing countries can grow this fast.

      1. Neil Craig
        November 15, 2012

        N o matter how often Uni tells this lie it remains abith the normal standard of hionesty among “environmental2 activists and a complete, total and deliberate lie.

        It requires no great arithmetical understanding to know that an AVERAGE is made up of figures both below and above the average & ignorant as he is, I do not believe Uni is that ignorant of arithmetic.

        China, Russia, India, Taiwan, Hong Kong & Singapore have been growing at “above average”. Taiwan is as developed as Britain and the last two are richer.

        1. John Doran
          November 16, 2012

          What is happening Neil, is an equalising of wealth between the developed world & the third world.
          This whole “crisis” started in the US, with the FED.
          Alan Greenspan authorised the low interest rates, & the “diced & spliced” mortgages which led to the US housing bubble.
          When this burst as bubbles always do, banks across the developed world realised that their “diced & spliced” mortgage portfolios were worth pence on the pound. This led to the collapse of Lehman Bros, the loss of confidence in the banks, & the contraction of the money supply we see now. Banks do not know what debts they have on their books. Even today, 5 years on, banks are hoovering up the vast majority of QE that the Bank of England wants to see lent to individuals & small business to get some growth going. Banks are too selfishly concerned with their balance sheets. When we see the situation whereby “banks are too big to fail”, & profits & bonus payments are private, & losses are nationalised, then that is both completely immoral & unsustainable.

          Andrew Haldane speaks good sense. If banks absorb more in subsidy than they generate in wealth, then that is another real reason to break them up.

          Break them up vertically. IE split the casino side from the less risky side.
          Break them up horizontally. No bank should be so large as to be a risk to the country if it fails.
          If a bank fails, let it’s shareholders & employees ( & it’s employees should be shareholders by law) take the hit. They’ve had the profits in salaries & bonuses, let them take the losses also.

          In particular we need to get away from central banking, which is failing. We have effectively had I think it’s 15% inflation in 3 years, eating away at the value of savings & pensions.
          Even Mervyn King thinks we have ” The worst possible banking system”

          Bogpaper.com/What’s wrong with the economy?

          is a must read. It is a 17 page report by The Cobden Institute in conjunction with the Adam Smith institute.

          We also need govts who do not spend more than they have.
          Govts have run deficits for 30 out of the last 34 years.
          Put simply, we are living beyond our means, & our children & grandchildren will be paying our bills.
          How immoral is that?

          Getting back to the “wealth equalising” I started with, It’s all tied up with UN Agenda 21, the facts of which an “environmentalist” like Uni might be privy to.

          Luckily, the fightback has started: in June this year Alabama became the first US state to ban UN Agenda 21, & other ststes, counties & cities are following suit.

          The New American 10 July 2012 is another must read.

          We live in interesting times.
          🙂
          JD.

          1. Neil Craig
            November 16, 2012

            It is only equalising because most of the developed western world (not all the developed world as I already pointed out) is mired in anti-technloogy Luddism. The entire housing bubble was inflated by government to maintain growth while preventing real growth – which always almost entirely comes from technological improvement. The results were inevitable.

            The good news is that technology is still imptoving faster than at any time in history, Moore’s law, for example, shows computer capacity doubling in little over a year now. Britain is, per capita, about the most scientifically advanced country in the world. We could have growth at least matching the fastest in the world any time the politicians were willing to end their Luddism and allow it. Every informed politico in the LabConDemGreen movement knows it but only UKIP wants to do it.

  27. ian wragg
    November 14, 2012

    John,
    Surely the bonuses and taxes from them were an illusion. The banks have taken every penny they paid in taxes to bail them out just adding to the countries debt.
    Brown supported the dodgy practices of the city and bankrupted us in the process.
    I’m all for people getting rich but from tangible activities, not smoke and mirrors.

  28. martyn
    November 14, 2012

    Yes I am much happier. The City encouraged greed and deceit. Less of that makes a happier country. By the way John some socialists are rich. Some of us even made loads of money without being greedy or deceitful.

  29. waramess
    November 14, 2012

    Always great beneficiaries of a bubble the banks were due to shrink pretty quickly when the bubble burst.

    Over-regulation now as a response has come at exactly the wrong time and the focus should be on a radical re-organisation of the banking system rather than more regulation.

    Very worrying, given the banks own virtually all the money in the system, we let them run investment banks and play the markets with what should be our money. Total madness.

    The argument that mortgage banks aso got into trouble is a very shallow one for it was simply another example of the banks making unwise investments with other peoples money.

    Full reserve banking must be an issue with the banks once again as custodians rather than debtors and a full dismantling of regulation in order that lenders themselves can once again determine prudent amounts that might be lent to banks rather than the present flawed system devised by Central Banks.

    As Anna Schwartz pointed; out the smart thing was to save the banking system, the dumb thing was to save the banks, and of course we chose the dumb thing which makes the job more difficult.

    1. sm
      November 15, 2012

      Well said.

  30. Lindsay McDougall
    November 14, 2012

    If we want to help the City compete against cheaper foreign centres, we could make a start by getting rid of the transaction tax.

    Huge bonuses are fine provided (1) the employers of the recipients of huge bonuses do not then hold out their begging bowls to the taxpayer, and (2) the earnings leading to those bonuses are honestly earned. The mis-selling of PPI and interest rate swaps to gullible innocents do not easily fit into the category of honest earnings. Perhaps is these policies had not been sold, the gullible innocents would have contributed more in taxation.

    If you want the City to recover quickly, you need to sell off the government’s bank shareholdings, have a rigid no bail outs regime and move to minimum regulation (in the teeth of EU wishes if necessary), all PDQ. The message is simple – banks are not special, they should be treated like ordinary businesses.

  31. Electro-Kevin
    November 14, 2012

    “Many of us would like less inequality of incomes, but some of us want that to happen by people on low incomes earning more, not by people on high incomes leaving the country or working less.”

    Then why, oh why, are we importing millions of unskilled people who suppress wages and make housing unaffordable ?

    Without the surplus of unskilled people in this country we wouldn’t need nearly so much money from the City to prop up the welfare state. We wouldn’t need to subsidise the low paid with a raft of supplementary benefits so that they could afford inflated rents and mortgages.

    Let’s remember that it is the City where it was decided to sell off manufacturing – the true wealth generator in any country – for short-term profit to the benefit of a few individuals.

    No. I didn’t want to see fewer jobs in the City and no – I don’t believe in equality, just fairness. This sometimes means founding directors earning 100x secretaries – deservedly so.

    But I can’t help thinking that the sooner we run out of money the sooner the welfare system will collapse and the sooner we stop being a magnet for the (substantial) immigration of unskilled (etc) people.

    1. Electro-Kevin
      November 14, 2012

      I wouldn’t like for people to think I’d said anything racialist or bigotted in those edited parts, Mr Redwood.

      In fact I don’t know why they’ve been edited.

      My concern is more about numbers than race. I’d gladly exchange many of our people for theirs.

  32. Glenn Vaughan
    November 14, 2012

    It amused me to hear some Premier League football supporters wanting to lynch people in the City for their high bonuses.

    Yet those football supporters will attend home matches and watch their heroes kick a ball about for ninety minutes, while those same players receive salaries of £200k or more per week.

    1. David John Wilson
      November 14, 2012

      Many of the footballers are paid abroad through their companies and so don’t pay tax on these huge salaries.

    2. JimF
      November 14, 2012

      And the football clubs receive how much bail-out money from the government?

      1. Electro-Kevin
        November 15, 2012

        Jim F

        “And the football clubs receive how much bail-out money from the government?”

        Shed loads in fact, Jim.

        Sky TV is an essential for any unemployed person. Count the satellite dishes.

  33. JimF
    November 14, 2012

    Yes, happier because a bubble is never a good thing, and it has popped.

    Your precis of the situation is slanted by the non-realisation that income and tax receipts which are based on ever-inflating asset prices and ever decreasing interest rates are essentially artificial. The only people who benefited were those with an interest in the underlying asset, or trading it, leaving “the makers” who salt away their earnings made in the real world in old fashioned Sterling worse off. OK, if you own a house in this funny-money world then fine, but where would a nation of million-pound houses get us? Would we really feel better off as a nation?

    Perhaps this City bust is the beginning of the beginning of us realising again that our future lies in areas of creativity aside from trading on the certainty of lower future interest rates and higher asset prices. We can design things, and under the right regulatory, tax and exchange rate framework we can make things. The problem is that this government is still propping up the old school – banks, estate agents, real estate markets, overborrowed people and corporations, instead of lowering taxes and regulations on enterprise across the board and letting the genie move out of the bottle.

  34. Rebecca Hanson
    November 14, 2012

    While I think it’s useful for you to draw attention to the reduced income of and tax revenues from the city John, this is a weak blog because it misses or misunderstands many essential components of the issues and in doing so loses it’s credibility, which is a shame.

    You seem to have missed the essential insight that the very high tax revenues happened due to there being a massive bubble so there was always going to be a very substantial collapse in revenues. Instead of mentioning this or considering any of the economic issues which have caused contraction you have instead painted a picture of a contraction deliberately caused by jealous socialists who dislike rich people.

    I am a critic of the city culture of short-termism and narrow, self-interested consideration which I believe (and can coherently argue) acts against the development of high quality financial services which will build the reputation and income of the city in the long term. But instead of dealing with the real reasons why people have concerns you have chosen to pen a portrait of people like me being ‘jealous people’, ‘socialists’ and people who go around ‘disliking rich people’ and imply that if we did not exist city revenues would still be at the levels they were at the height of the bubble.

    Have you been taking lessons on how to systematically sideline and discredit those intelligent concerns from Michael Gove John?

    1. Lindsay McDougall
      November 15, 2012

      It would have been more useful if you had asked to see the tax receipts from the City for each year since 2001, so that we could all make our own judgements as to what is normal. You have to adjust for inflation; I just thought I’d mention that because most people are too lazy to bother.

  35. RB
    November 14, 2012

    “…not by people on high incomes leaving the country ”

    Let them leave. They are not needed. We will do very well without them.

    1. David John Wilson
      November 14, 2012

      We might even get a better English football team if the foreign players all went abroad.

  36. uanime5
    November 14, 2012

    Well if the wealthy work less that does leave more work available for everyone else, which should help reduce unemployment.

    Regarding the City the main problem was that it became too powerful and received too much nurturing from the Government to the detriment of everything else (such as manufacture). As long as the brightest in society go into the City to make money, rather than become engineers and scientists, the UK’s industries will continue to decline.

    In other news it seems that in order to promote academies popular schools are going to be closed down to force pupils to attend new academies. How exactly is this giving parent’s more choice?
    http://www.independent.co.uk/news/uk/politics/exclusive-thriving-schools-to-close-to-make-room-for-academies-8313131.html

    1. Lindsay McDougall
      November 15, 2012

      Too much nurturing from the LABOUR governments of the naughties.

  37. Gary
    November 14, 2012

    Financial engineering is finished for decades. The financial middle man has decimated capital and savings. The seedcorn had been exhausted.Collateral has been sliced infinitely thin supporting an enormous inverted pyramid of derivatives of derivatives of derivatives. Books are cooked, nothing is marked to market.Massive bonuses are paid for success or failure. Customers accounts are plundered by hypothecation and re-hypothecation. Risk has been transferred to the people. When bankers are allowed control of the nation’s money they leave a hollowed out , burnt husk. We have to keep relearning these terrible lessons.

    ” I believe that banking
    institutions are more
    dangerous to our liberties
    than standing armies. If the
    American people ever allow
    private banks to control the
    issue of their currency, first
    by inflation, then by
    deflation, the banks and
    corporations that will grow
    up around [the banks] will
    deprive the people of all
    property until their children
    wake-up homeless on the
    continent their fathers
    conquered.”-
    Thomas Jefferson

    1. zorro
      November 14, 2012

      Very prescient Mr Jefferson….

      zorro

      1. sm
        November 15, 2012

        We dont seem to have any of the major politicians of substance saying anything similar at the moment? Why?

        1. zorro
          November 16, 2012

          Probably because they lack substance…..Jefferson was well aware of what powerful central banks could do. The privately owned Bank of England had been causing the colonials issues for some time….

          zorro

  38. Robbo
    November 14, 2012

    “The government has to try to find that missing £30 billion from somewhere else. ”

    Err, no it doesn’t. It could instead reduce its expenditure to match its means. That is what we all have to do, sooner or later.

  39. forthurst
    November 14, 2012

    What is surprising about a financial bubble, is not its inevitable collapse but that, as with this most recent example, when the BoE and the private secret FED sustained it with ever more cheap money, instead of anticipating an inevitable collapse after they put on the brake, we were lectured about the new paradym and that things would be different this time.

    The test of a viable business model is its ability to survive a downturn; what we witnessed was the testing to destruction of non-viable business models demonstrating that their authors were not clever at all, just greedy and incompetent. We have further discovered that some of what they did was criminal and that the main culprits appear to have escaped prosecution despite the huge wealth they extracted from the world economy and the huge damage which they inflicted in return.

  40. Ferdinand
    November 14, 2012

    You call it jealousy, I call it envy. Envy can inspire good actions, jealousy rarely. What has triggered this is the call for Conservatives to catch the centre ground. If it means those in the middle it also means those who are average. Not good, not bad, not rich, not poor, not entrepreneurial,not lazy. There is no hope for us if that is the aim of Cameron. My economics teacher said an economy works best when it is a mountain. Those who keep raising the top lift up those at the bottom.

  41. Jon
    November 14, 2012

    Whilst we do need to re balance our economy that needs to through the other industries growing not by reducing one to make it more balanced. We should be mindful of that. What I’m not clear on is just what is changing. I recon the banking sector will account for fair proportion of the reduction but the reasons I’m not clear on.

    What I do know is that most of us that commute to work in the City are not on high wages. I also note that the trains are not less busy.

    I also note the unions want another train strike and the TFL bosses are looking to reward them with yet another bonus for doing so. I do wonder about that relationship.

  42. Sidney Falco
    November 14, 2012

    “It generated a lot of wealth and income for those who worked in it”

    Have we not forgotten that a lot of this wealth was imaginary?

    Once this imaginary wealth was unravelled in 2007, and many banks’ balance sheets were shown to be works of fiction, didn’t the banks only survive by moving this “imaginary wealth” / “real losses” to sovereign debt?

    2008 onwards casts a dark shadow over how successful the banking sector really was.

    (I’m referring to banks in particular, not the many other financial companies that make up the City of London financial sector.)

  43. nemesis
    November 14, 2012

    Indeed, Mr. Redwood. Vince Cable, the Berlaymont and the Occupy movement should all be dancing in the street by now.

  44. sm
    November 14, 2012

    As mentioned above allowing our private banks to grow the money supply like a pyramid scheme caused the collapse when price of the bubble assets proved difficult to sustain.

    Some describe it as “the Wiley Coyote moment… running over the cliff”

    The question always was who is going to be left to pay?

    The smart insiders were long gone or otherwise protected. So what to do? Enter save the world politicians and insolvent bankers? Now we get tax, inflation(tax),deflation(tax) and stagnation as the bad debts chips are wiped. Just a shame far too many good people are getting wiped as well in and outside of the City.

    If it was fair to socialize losses it is surely fair to supertax the illusory gains in the past. Even as far as a temporary wealth tax. (Leaving aside questions of criminality).

    Also why are property prices still so high? versus wages.

    Should we have had a referendum like Iceland?

    I just wish more people were aware of alternatives like positive money, Steve Keens ideas amongst others. Then also be aware of illuminating discourse on Max Keiser or Rowans blog, Golem xiv , Ian Fraser and or many other sites.

    But most have to live with the MSM coverage which has always played catchup and crowded out warnings. Maybe if our MSM press were better we might not have ended up where we are?

  45. Martin
    November 14, 2012

    Let me really stir things and suggest that the anti Euro tone started by Mr Brown means that the UK is turning its back on a currency area much larger than Sterling and hence the financial sector can’t expect to be used as the banker for the Euro zone.

    Indeed the amount of anti-Euro bile in the British media must cause anybody in the Euro zone wanting to perform financial business to look else where rather than a country where a section of its media thinks it can afford to insult potential customers away.

  46. Steve Buckel
    November 15, 2012

    Not enough space but I’ll try. You mention excessive activity based on too much credit prior to 2007.

    It was not just a quantitative issue but a qualitative one as well. From the very late 90s it seemed all the boring old rules were thrown overboard. I exited the industry at this point and forecast it would all go wrong. I sold up and left the country in May 2007 and converted all my pounds. My predictions came true within months.

    The peak figures you mention were illusory. The profits that were stated never existed save as in the imagination. The bonuses were real though and paid out.

    Why did Lloyds Bank manage to prosper from 1765 until 2007 but then need to be nationalised? The Royal Bank of Scotland was founded in 1727 and was fine until Fred Goodwin took over in 2001. One has to ask the really searching questions as to why banking giants can subsist for centuries but be blown away in just six years by mind-bogglingly bad stewardship.

    As I saw things continuing to grow in the early 2000s, I even began to question myself Have I got it all wrong after all? I even became ill at my inability to fathom it out. Had everything I had learned in four decades been pointless? I am much healthier now I am completely out of it and feel completely vindicated but, if I could my time again, I would not have had this madness start at all in 1997.

    Deregulation is excellent. No regulation is disaster.

    1. Jerry
      November 15, 2012

      Deregulation is excellent. No regulation is disaster

      That sounds like an oxymoron, you can either have regulation or non, perhaps you meant “light-touch regulation”, if so many would suggest that ideology has failed too.

      1. Steve Buckel
        November 15, 2012

        Understand your point but it is not actually an oxymoron. Deregulation is not only the act or process of removing state regulations but of diminishing them as well. Margaret Thatcher’s government repealed whole statutes at times but altered or diminished others.

        1. Jerry
          November 16, 2012

          Which ever way you spin it Steve the ideology has failed, the men in bowler hats of these financial sectors in times past didn’t invent regulations or request them from the state just to make life difficult, they did so because they understood the need for checks and balances. Unfortunately, just like your Hight Street bank, the suits and Ipad have displaced the bowler hats and today’s copy of the FT, short term has taken over from the long view…

          1. Steve Buckel
            November 16, 2012

            Then we disagree about nothing except the semantics of my closing paragraph.

            My main argument is in my original fourth paragraph. I entered banking at the lowest step and rose in 25 years to the top levels. That was a fast progression in old fashioned terms. But it was long enough for someone who absorbs culture like a sponge to realise the worth of the traditions of a time much longer than my lifetime.

            Where I was fortunate was that I managed to get at the forefront of online services in the early 1980s. Here was a subject area where there was no tradition to compare. It was possible to do business at any time of the day or night, bank holidays included.

            Not only was it successful but highly profitable as the staff component was much lower but such staff as one had were deployed on quality control rather than shuffling paper. Treasury function became a 24 hour business as well.

            Sorry to go on at length but you can see that I was just a traditional boring old banker but making more profit than the others.

            It was the introduction of 125% mortgages, CDOs and the appointment of non-banking personnel (plus many other similar things) that caused the overheating and diminished the qualitative approach which had existed before. (John seemed to have missed that out which is why I pointed it out to him. I normally regard him as very sound in approach.) It also provided the perfect environment for the creation of bubbles. History is littered with these and the causes are always the same.

  47. wab
    November 15, 2012

    “Many of us would like less inequality of incomes, but some of us want that to happen by people on low incomes earning more, not by people on high incomes leaving the country or working less. The politics of jealousy may attract socialists, who just dislike rich people, but it does not make anyone else better off.”

    Nobody minds rich people who earned their wealth. The problem is that most of these bankers did not earn their wealth. They are not like James Dyson, or even Richard Branson or David Beckham.

  48. Richard McGarry
    November 15, 2012

    “Many of us would like less inequality of incomes, but some of us want that to happen by people on low incomes earning more, not by people on high incomes leaving the country or working less. The politics of jealousy may attract socialists, who just dislike rich people, but it does not make anyone else better off.”

    My problem with the “Rich and Powerfull” is that they tend to forget that the idea of a “Self made man” is a myth. Without the market, which is Joe Public there would not be a single rich person, so a better more equal distribution of the wealth would make the market richer and in turn make the rich richer. The UK with its Welfare system adds not detracts from the market. There is plenty to go round, but the greedy as always will drive it to destruction.

  49. palepete
    November 15, 2012

    Sorry John, you make a very confusing analysis about the City. No wonder Mr Cameron has left you out. I thought you were on our side. The city would be smaller still – and quite rightly – if the Bank of England properly fulfilled their statutory duty to control inflation. Meanwhile the cost of the debacle falls on pensioners with saving like me. I am not anti City – just realistic. I worked in the City for my whole career. But I also trained as a fund manager and compliance manager. Its just gambling gone wrong. We can do without it in the future. Its a transfer of weath from the weak to the strong based on City guys believing their own myths and spin.

  50. REPay
    November 15, 2012

    The reason the City grew so unhealthily was because the last government, Gordon Brown being easily the worst manager of public finances ever, loved the tax take.

    1. Jerry
      November 16, 2012

      @REPay: Err, when did Gordon Brown make these bankers behave the way they did, just because the regulation might allow something it doesn’t mean one has to do so, only an idiot would drive at 70MPH in a pea-soup fog on the motorway just because it is legal to do so… Yes the regurgitations should have been better, just as the matrix signs on a fog bound motorway should be showing a much slower speed limit but that alone doesn’t remove personal responsibility from those directly in control of how they act.

    2. Bazman
      November 17, 2012

      The City and bankers knew best and any criticism of their methods was seen as socialism and you know it. The Tories deregulated the City and Labour believed the lie.

      1. Bazman
        November 18, 2012

        Respond please.

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