economic situation is dire

[TrentVilla]

why the policies being pursued by both our government and the EU are the exact opposite of what they should be doing.

Shame Mr Osborne can't find 18 minutes in his busy day to get his head round this.

I'm not sure it is a lack of time that is the problem with Mr Osborne.

[peterms]

why the policies being pursued by both our government and the EU are the exact opposite of what they should be doing.

Shame Mr Osborne can't find 18 minutes in his busy day to get his head round this.

I'm not sure it is a lack of time that is the problem with Mr Osborne.

I was trying to be charitable - put the best interpretation on it. You've gone and spoiled it now.

[tonyh29]

isn't Koo just an opportunist and I'm surprised that someone like peter would quote him .. Surely Koo just stating a position that Nomura Securities want him to take ?

[peterms]

isn't Koo just an opportunist and I'm surprised that someone like peter would quote him .. Surely Koo just stating a position that Nomura Securities want him to take ?

Don't quite follow, Tony. What position would Nomura want him to take? And where's the opportunism? He's making policy proposals based on an evidence-based analysis that shows why Japanese firms have failed to borrow and invest when interest rates have been lower than ever known - an outcome which traditional economic thinking can't explain. What do you see as opportunistic in that?

[drat01]

And it seems that the fear of financial abyss is sufficient for a whole lot of people to turn the other way sadly.

You only had to watch the markets a couple of weeks ago to see whose really broking the power here & it ain't Cameron, Merkel or Sarcozy

Mervin King predicts global financial meltdown if/when the Euro collapses & the markets more or less stayed where they are. 5 European banks announce THEY have reached agreement to help sort matters out & the markets shot up.

Across the pond you now have the same set of politicians, investment bankers and deregulators promoted into Obama's administration in the last few years, who were responsible for allowing the Wall St banking bubble to run amock prior to 2008.

Nothings changed - it's just a couple of ornaments have been removed into storage & the rest simply dusted down & shuffled around.

This isn't about politics anymore... this is about multi national mega financial institutions manipulating matters & world leaders for their own ends.

Good points Julie and the fact that Cameron is trying his hardest backed by the right wing Euro sceptics to hijack this all in opportunistic policy implementation makes it even more disgusting what he has done.

Supporters of parties especially who held very anti EU views, (The Tory right), UKIP and yes BNP ) have totally lost sight of what is happening here in a desire to build walls in typical Little Englander mentality way.

The mis-information being spouted from Tory HQ, media such as the Mail and Express (and god forbid the Sun) show that completely. Look at Cameron now in the HOC and his fawning back bencher's questioning on this being a choice on joining the Euro. Totally pathetic and a real indicator of what is happening and what the real motivation is.

Ironically as Julie has pointed out no country can build barriers and become isolationist inward looking like some are hoping and praying for because those who are making the problems, (the finance sector) are worldwide. Ironically a lot of these are supporters both vocal and financial to the Tory party!!

[drat01]

Some interesting stuff here :

Open Europe

Interesting in what way?

The fact that that "organisation" are a Euro-Sceptic think tank with a vested interest in being anti-EU? Or interesting in that even the Torygraph have often condemned them in the past for being totally biased in the way they question

[tonyh29]

Interesting in what way?

perhaps if you read it you would know :-)

[drat01]

I did read it Tony - laughed at it and cursed you for wasting that few minutes of my life I will never get back.

Look you cannot come on here and quote what is obviously a very biased organisation, trying to deflect their true feelings with some grand name and then start questioning Peter's later post that gives a differing view. That organisation you posted about are really nothing of note in the whole scheme of things and have views that are merely echoing those of Cameron, UKIP (and the other lot who seem to get some annoyed)

[tonyh29]

Look you cannot come on here and quote what is obviously a very biased organisation,

at least i quoted a source unlike others ** cough **

the point was that the doc seems to be guiding /influencing Camerons stance ....

but i'll give you a and an "H" for accusing another poster of using a biased source

start questioning Peter's later post

Peter posts frequently about the evils of financial institutes and then uses one to back up his arguments .. I just found it surprising .. and Nomura must have an agenda I've just got to find the time to work out what it is

[peterms]

Peter posts frequently about the evils of financial institutes and then uses one to back up his arguments .. I just found it surprising .. and Nomura must have an agenda I've just got to find the time to work out what it is

You seem to think that an argument must be either valid or invalid according to the type of person or organisation putting it forward; and then extend that misapprehension to me.

Koo works for an organisation which is a big consulting firm, which I believe also does asset management and banking.

Can I hold in my head at the same time the idea that many organisations involved in asset management and banking have been doing dangerous, selfish and often illegal things which have caused a global crisis, and also that someone working for them may have valid and useful insights into economics? Astonishingly, I can.

[blandy]

Can I hold in my head at the same time the idea that many organisations involved in asset management and banking have been doing dangerous, selfish and often illegal things ...and also that someone working for them may have valid and useful insights into economics? Astonishingly, I can.

You and your fancy hi-falutin' notions of being able to consider 2 things at once! Pah. Where will it all end? Anarchy, that's where.

[drat01]

Just for a bit of light relief to the cock up that Cameron has made, it seems that Joey Barton agrees with him :-)

Excellent, so that makes the Daily Mail, the Daily Express, the Sun, John redwood and Joey Barton ............... :-)

[tonyh29]

Not to mention Frank Field and The other labour MP who stood up and praised Cameron in the commons earlier :-)

WWED

[tonyh29]

Peter posts frequently about the evils of financial institutes and then uses one to back up his arguments .. I just found it surprising .. and Nomura must have an agenda I've just got to find the time to work out what it is

You seem to think that an argument must be either valid or invalid according to the type of person or organisation putting it forward; and then extend that misapprehension to me.

Koo works for an organisation which is a big consulting firm, which I believe also does asset management and banking.

Can I hold in my head at the same time the idea that many organisations involved in asset management and banking have been doing dangerous, selfish and often illegal things which have caused a global crisis, and also that someone working for them may have valid and useful insights into economics? Astonishingly, I can.

But luckily for us you arent patronising with it :-)

I just said I found it surprising ,that is all made no reference to your intelligence or right to form opinions

[drat01]

Not to mention Frank Field and The other labour MP who stood up and praised Cameron in the commons earlier :-)

WWED

Kate Hoey and Frank Field (well Field was not exactly praising him now was he)

Meanwhile Clegg - the PM deputy was hiding, what a great Gvmt this is(not)

[drat01]

I like C4's Factcheck as it seems somewhat balanced compared to the written media. As they have written here, so many of the soundbites coming from the UKIP, and Tory party are actually BS, because what Cameron et al are claiming to have saved was never really under threat

The background

David Cameron remains adamant he achieved his aim of protecting Britain’s financial services industry by refusing to sign up to an EU-wide treaty on closer fiscal union between the eurozone countries last week.

Labour and Lib Dem opponents say he created a huge diplomatic row for nothing, and there is no more protection for City banks than before the Brussels showdown.

And there were ominous rumblings from the European Commission this week, with finance commissioner Olli Rehn warning: “If this move was intended to prevent bankers and financial corporations in the City from being regulated, that is not going to happen.”

The analysis

What actually happened in Brussels?

Let’s remember that Mr Cameron didn’t actually veto an attack on the City.

Greater regulation of financial services wasn’t even on the table. In fact, what was up for discussion wasn’t a treaty at all, and most of the proposals for greater fiscal union between the nations who use the single currency wouldn’t directly affect Britain anyway.

Mr Cameron has made it clear that his strategy was to use the threat of refusing to sign up to an EU-wide treaty change as leverage to try to extract some assurances about the future of the Square Mile.

The gamble was that the eurozone countries would think unanimity between all 27 countries was so important for getting their proposals made law that they would offer some kind of incentive in return – a bluff that ultimately failed.

So was there a threat to the City?

It may be politically naive, however, to say that there was no risk of the “fiscal compact” between the eurozone countries affecting the financial services sector where the City of London currently reigns supreme.

Mr Cameron was being asked to help hasten a closer financial union between a bloc of countries dominated by France and Germany, who have both said they want to see measures that could affect the Britain’s financial sector disproportionately.

The leaders of those countries, Nicolas Sarkozy and Angela Merkel, have made it clear that they support a version of the so-called Robin Hood Tax – a levy on

transactions of currencies, bonds and shares in Europe’s trading centres.

London is by far the biggest and so (rightly or wrongly) banks based in the City would be hardest hit, with a knock-on effect for the rest of the economy. Mr Cameron and the chancellor, George Osborne, are implacably opposed to the idea.

Other critics say there is already a stream of financial regulation emanating from Brussels that could hurt the UK banking sector, and there are fears that closer co-operation between the eurozone club could exacerbate that.

Is the City in the clear now?

An EU-wide Robin Hood Tax – which John Major called a “heat-seeking missile” pointed at the heart of the Square Mile (surely it should have been an arrow?) – does now appear to have stalled on the launchpad.

EU members have a veto over new legislation that affects tax, so Britain can continue to refuse to sign up to the proposed tax on financial transactions with impunity (that would still have been the case if Mr Cameron had signed on the dotted line in the early hours of Friday).

Will the rest of Europe push ahead with a financial transaction tax (FTT) anyway? And what effect will that have on the British economy?

The British Bankers’ Association says an FTT across the rest of Europe is “not an eventuality we would expect” as there wouldn’t be much point in missing out on the biggest source of revenue in Europe.

But the European Commission has indeed mooted the idea of collecting the tax everywhere else except Britain.

EU tax chief Algirdas Šemeta said that the FTT will be “designed in such a way that it doesn’t matter where transactions are taking place”.

So a German or French bank trading in London would still be taxed, and it appears that British financial institutions will have to cough up if they do deal with a buyer or seller in the eurozone.

Not surprisingly, Mr Šemeta concluded that “London will lose out” even if the UK government refuses to implement the tax directly.

And he’s not the only one who’s worried. FactCheck contacted several major city banks and law firms and all declined to offer a prediction on whether the financial sector would emerge as a winner or loser, citing continued uncertainty about the situation.

What about other regulation?

As far as other forthcoming EU legislation deemed by some to be hostile to London, like a recent ban on short-selling, they will go ahead with or without Britain’s involvement in the fiscal compact.

Unless they involve tax, regulations will continue be made law by under the Qualified Majority Vote system, where Britain gets 8.4 per cent of the vote.

As Cambridge law professor Eilis Ferran told FactCheck: “We are in no different a position to where we were last week.”

The verdict

Does all this mean that Mr Cameron really scored nul points last week? After all, he has created an enormous amount of ill-will and hasn’t won any safeguards for Britain’s banking sector.

The legal and diplomatic complexities of the situation make it impossible to say for sure now.

The ongoing row over whether the 26 countries can use EU-wide institutions like the European Court of Justice without Britain’s approval remains a burning question.

If Mr Cameron really has succeeded in delaying the creation of the fiscal compact, there’s an outside chance that Britain could yet win some kind of concession from the eurozone countries as negotiations continue.

If not, it’s difficult to see how Britain’s interests have been served in any way by this episode. We will have no more power to head off hostile regulatory laws than before, and indeed by staying out of the club of 26, there will be less opportunity to steer its activities away from things that favour the eurozone agenda over the wider single market.

All Mr Cameron will have done is make powerful enemies and run the risk of Britain being routinely outvoted as we attempts to negotiate on regulatory threats to the City.

link

[peterms]

But luckily for us you arent patronising with it :-)

Patronising?

Did you think of that all by yourself? :winkold:

[tonyh29]

:-)

[peterms]

Nice piece by Chakrabortty.

He lays into both the smarmy one and by implication his towel-folding chum, and also No-balls; as they deserve. Honourable mention too for the dreadful Angela Knight, who should be thrown from a high window.

Britain is ruled by the banks, for the banks

Is David Cameron's kid-glove treatment of the City remotely justified, when it neither pays its way nor lends effectively?

The national interest. It's a phrase we've heard a lot recently. David Cameron promised to defend it before flying off last week to Brussels. Eurosceptic backbenchers urged him to fight for it. And when the summit turned into a trial separation, and the prime minister walked out at 4am, the rightwing newspapers took up the refrain: he was fighting for Britain. In the eye-burningly early hours of Friday morning, exhausted and at a loss to explain a row he plainly hadn't expected, Cameron tried again: "I had to pursue very doggedly what was in the British national interest."

As political justifications go, the national interest is an oddly ceremonial one. Like the dusty liqueur uncapped for a family gathering, MPs bring it out only for the big occasions. And when they do, what they mean is: forget all the usual fluff about ethics and ideas; this is important.

You heard the phrase last May, as the Lib Dems explained why they were forming a coalition with the Tories. More seriously, Blair used it as Britain invaded Iraq.

But here Cameron wasn't talking about foreign policy; nor about who governs the country. The national interest he saw as threatened by Europe is concentrated in a few expensive parts of London, in an industry that would surely come bottom in any occupational popularity contest (yes, lower even than journalists): investment banking.

In its haste to depict events as Little Britain v Big Europe, the Tory press hasn't dwelt on the inconvenient details of last week's fight. But it was only after the prime minister failed to secure protection for the City from new financial regulation mooted by the EU that he told Nicolas Sarkozy to get on his vélo.

On one issue in particular, Cameron had a good case: Britain wants banks to put more money aside for a rainy day than the EU is considering. Elsewhere, he just looked unreasonable – what exactly is wrong with having international banking supervision? One reason for the euro crisis was that its members have 17 national bank watchdogs and barely anyone looking across borders.

Step back from what even EU officials were calling "arcane" details, though, and the big principle is this: the prime minister effectively stuck relations with the rest of Europe in the deep freeze in order to protect one sector of the economy.

In my recollection, no British minister in recent times has termed one industry as being of "national interest". "Vital" or "key"? Why, such words are the very currency of the MP's address to a trade association. But on the big phrase, I asked the Guardian's librarians to check the archives from 1997 onwards. They came back empty-handed.

Cameron is merely expressing more openly something Labour frontbenchers also believe: that the City is pretty much the last engine functioning in Britain's misfiring economy. Indeed, one of the Labour lines of attack against Cameron this weekend has been that he has left the City more open to regulation.

A few weeks ago, the shadow chancellor Ed Balls warned against any further taxes on financial trading within Europe. However, he said, he would urge a "Robin Hood tax with the widest international agreement". In other words, Balls will give his fullest support to something that has no chance of happening.

This is the same kind of political subservience towards the City, observed by the Financial Services Authority (FSA) in its report into the collapse of RBS. According to the watchdog, a major reason why Fred Goodwin wasn't checked as he drove RBS off a cliff was because of "a sustained political emphasis on the need for the FSA to be 'light touch' in its approach and mindful of London's competitive position". Had regulators been harder on the bankers, "it is almost certain that their proposals would have been met by extensive complaints that the FSA was pursuing a heavy-handed, gold-plating approach which would harm London's competitiveness".

As all British taxpayers know by now, securing the "competitiveness" of RBS has wound up costing us around £45bn.

So what is it that justifies the kid-glove treatment of the finance sector? Switch on the news and you normally hear some minister or lobbyist (come on down, Angela Knight of the British Bankers' Association) talking about the vital contribution banking makes to employment. Our tax revenue. Or the role banks ideally play in directing money to needy businesses.

These claims are repeated so often that they rarely get even the briefest patdown from interviewers, let alone backbench MPs or economists. Yet they are largely bogus, as explained in a new book called After the Great Complacence, produced by academics at Manchester University's Centre for Research on Socio-Cultural Change (Cresc). Indeed, on nearly any important measure, finance actually contributes less to Britain than manufacturing.

Take jobs. The finance sector employs 1m people in Britain. Chuck in the lawyers, the PRs and the smaller fry that swim in its wake and you are up to a grand total of 1.5m. And most of these people are not the investment bankers for whom Cameron went to war in Brussels. At the big British banks such as RBS and HBOS, 80% of the staff work in the retail business. Even if Sarkozy were to shroud Canary Wharf in a giant tricolore, those staff would still be needed to staff the branches and man the call centres. Even in its current state of emaciation, manufacturing employs 2m people.

What about taxes? Lobbyists like to point out that banks are usually the biggest payers of corporation tax, but usually omit to mention that corporation tax isn't that big a money-spinner. For their part, even leftwingers will usually assume that the bankers effectively paid for the tax credits, hospitals and schools we enjoyed under Labour.

It's not true. The Cresc team totted up the taxes paid by the finance sector between 2002 and 2008, the six years in which the City was having an almighty boom: at £193bn, it's still only getting on for half the £378bn paid by manufacturing. It would be more accurate to say that the widget-makers of the Midlands paid for Tony Blair's welfarism. But that would be a much less picturesque description.

Even in the best of times, the finance sector hasn't paid anything like as much to the state as the state has had to pay for them since the great crash. According to the IMF, British taxpayers have shelled out £289bn in "direct upfront financing" to prop up the banks since 2008. Add in the various government loans and underwriting, and taxpayers are on the hook for £1.19tn. Seen that way the City looks less like a goose that lays golden eggs, and more like an unruly pigeon that leaves one hell of a mess for others to clear up.

Ah, but what about lending? After all, this is why we have banks in the first place: to channel money to productive industries. The Cresc team looked at Bank of England figures on bank and building society loans and found that at the height of the bubble in 2007, around 40% or more of all bank and building society lending was on residential or commercial property. Another 25% of all bank lending went to financial intermediaries. In other words, about two-thirds of all bank lending in 2007 went to pumping up the bubble.

This doesn't look like a hard-working part of an economy humming along: it's nothing less than epic capitalist onanism.

If the statistics don't support the arguments for the City's pre-eminence, the public don't either. In 1983, 90% of the public agreed that banks in Britain were well run, according to the British Social Attitudes survey. By 2009, that had plunged to 19%.

In other words, both the evidence and the voters are against investment bankers. So why do the politicians cling on to them?

Part of the answer is financial. Bankers used the boom to buy themselves influence – so that, according to the Bureau of Investigative Journalism, the City now provides half of all Tory party funds. That is up from just 25% only five years ago.

Another part must be cultural. Running this government are two sons of bankers. Cameron's father was a stockbroker, Clegg's is still chairman of United Trust Bank (and famously helped his son get some work experience). For its part, Labour spent so long outsourcing all economic thinking to Gordon Brown and Ed Balls that it has long lost the ability to argue against the orthodoxy of giving the City what it wants.

In a poorer country, the cosiness of relations between bankers and politicians would be scrutinised by an official from the World Bank and disdainfully pronounced as pure cronyism. In Britain, we need to come up with a new word for this type of dysfunctional capitalism – where banks neither lend nor pay their way in taxes, yet retain a stranglehold on policy-making. We could try bankocracy: ruled by the banks, for the banks.

What are the results of bankocracy? It means that the main figures arguing for a Robin Hood tax are the Archbishop of Canterbury Rowan Williams and Bill Nighy. It means that opposition to the rule of banks isn't found in Westminster, but in tents outside St Paul's or among a few grizzled academics and NGO-hands – with no political vehicle to carry them. Meanwhile, the politicians declare that the national interest of Britain can be defined by what suits one square mile of it.

[Awol]

And there were ominous rumblings from the European Commission this week, with finance commissioner Olli Rehn warning: “If this move was intended to prevent bankers and financial corporations in the City from being regulated, that is not going to happen.”

Did anybody vote for this slimey worm who makes threats towards the United Kingdom? Does he have any form of democratic mandate? No? Well he'd best disappear back up his own rectum then.

Labour and Lib Dem MP's, the EU mafia and their BBC fellow travellers are ignoring one simple truth; a clear majority of UK voters support Cameron's position.

The EU has been put on notice that UK Plc no longer defines being a good European as simplying agreeing to whatever Germany and France tell us we have to do. Unless they want to force the hand of the political class and allow the Eurosceptic British public to end our EU membership they'd be wise to think very carefully before making any more threats.