"Business as Usual"

These excerpts from the BBC News website of January 11 2011 give a flavour of how the democratically elected government representing the British people is proceeding in its attempts to make the investment banks contribute to society and the wider economy; not to mention taking their share of the extreme pain they have meted out to the nation - or at least its less fortunate and wealthy members.....

This is a story about British politicians and banks, but it must be said that the global investment banks have meted out huge damage and misery to many millions of people in many countries over the last decades - and continue to do so with no apparent end in sight. So this story will have resonance in other countries with democratic political systems that appear to be incapable of reining in the power of the banks for the good of society.

In Britain....

On January 10th 2011, the UK Cabinet office announced that it had withdrawn from negotiations with the investment banks over bonuses, saying:

"We've made a broad statement which is about the need to see some restraint and some responsibility from the banks, but we are not going to set bonus pools for individual banks," the prime minister's spokesman said.

Chancellor George Osborne has warned banks that no measure "is off the table" if they refuse to act on concerns over the size of bonuses.

The comments come amid reports that payments for leading executives will total £7bn this year.

Mr Osborne said he hoped (!) talks would lead to banks lending more, and paying lower bonuses "than they would otherwise" have done.

He also said: "I can confirm that we are now in discussions with the banks to see if we can reach a new settlement where the banks pay smaller bonuses than they would otherwise have done, are more transparent about those they do pay, make a greater contribution to local communities and regional economies, treat customers more fairly, and above all lend materially and verifiably more than they were planning to lend to the businesses of Britain - especially the small businesses - so that they can grow and create jobs this year."

Prime Minister David Cameron has said the coalition cannot "micromanage" banks and his deputy Nick Clegg told the BBC he understood public "anger", but restoring lending to people and firms was the priority.

Mr Diamond, the Barclays chief executive, was questioned by the Treasury select committee over whether he would take his bonus this year.

He said he would discuss the issue with his family before deciding what to do and was determined to act "responsibly", adding that the government had not urged him to curb the amounts given out.

The total annual payments meted out to bank staff this year are expected to reach £7bn, down from £7.3bn last year. (!!!!)

Abject surrender or collusion? The "distributive coalition of interest" between top politicians and the banks

The latest weak and vacillating attempts to reform banking by a coalition government led by the Conservative Party seems a very poor response to an economic and financial disaster caused by the investment banking industry, which was then bailed out by the taxpayer.

The scale of the surrender to the bankers can be judged by reading the introduction to a report on the banking from the Centre for Research into Socio-economic Change (CRESC), the respected research institute connected to the University of Manchester.

In short, the report reveals:

The CRESC report examines the so-called "benefits" bestowed on the economy by the banks.

Banks as a source of social and economic value?

One of the central claims of the bankers has been the huge social and economic value to the British economy of the investment banking industry.
The CRESC team put this "value" claim under the microscope.
They reveal that:

To sum up....

The investment banks have soaked the average saver/citizen to provide funds for speculative transactions between bankers which have no social value but provide the basis for huge bonuses.

They create asset price bubbles that collapse and have to be bailed out by the taxpayer at enormous cost in terms of tax income but also through the misery and impoverishment of a large part of the populace.

They also cause widespread destruction of useful industry, including advanced technologies by circulating funds amongst themselves for speculation rather than useful investment. This completely destroys the original purposes of banking, which were to give savers a decent return and provide funds for the long term development of productive industry.

They have bullied and bribed senior politicians of both major parties into letting them continue with "business as usual" after the disastrous crash of 2008. Many politicians in turn have sought to justify their inertia and collusion by spreading narratives about the positive social and economic effects of banking and the consequences that might flow from displeasing investment bankers.

Unless different forms of finance and investment are created, Britain is destined to become a relatively poor country, denuded of advanced technology and skilled occupations, uncompetitive in world markets, with a permanent balance of payments deficit. The country is already well down the slippery slope of international uncompetitiveness; continued pandering to the investment banks will cause the decline to accelerate.

The tragedy is that this decline is mainly the result of ignorance laced with greed on the part of political and financial establishments. Not so long ago deliberately seeking to undermine the wellbeing of a country from within would have been called "treason".


The material in this article is drawn mainly from a report by CRESC, but also excerpts from the BBC news website and the "Daily Telegraph", a right-leaning UK newspaper.

CRESC report
"An alternative report on UK banking reform

A public interest report from CRESC jointly authored by a working group of practitioners and academics based on the ESRC Centre for Research into Socio-cultural Change, University of Manchester".

"This report is dedicated to C. Wright Mills, who studied unaccountable elites and defended democracy".

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