*Only* 14%?

Totally laughable. Maybe we should have a footballer tax as well now, or one on anyone the socialist left doesn’t like.

As always, its one rule for the Fabian left, and another for everyone else they seek to control.

In media reports of Cameron’s new year message, I’ve been looking hard for any references to the contribution that the banks and bankers made to the financial crisis through high-risk lending – remember all those 100% mortgages and better – fuelled by those bonuses.

David Cameron says spending cuts tough but necessary
http://www.bbc.co.uk/news/uk-politics-12097226

On how much to blame Gordon Brown, try this independent assessment by Martin Wolf in the FT:

“Can we not at least blame Mr Brown for the bloated public spending and grotesque fiscal deficits? Yes, but also only up to a point. Between 1999-2000 and 2007-08, the ratio of total managed spending to GDP did rise from 36.3 per cent to 41.1 per cent. But the latter was still modest, by the standards of the previous four decades. The jump to a ratio of 48.1 per cent, forecast for this year in the 2010 Budget, is due to the recession. Nominal spending is currently forecast at 3.5 per cent higher in 2010-11 than forecast in the 2008 Budget. But nominal GDP will be 10.3 per cent lower and tax revenues 16.4 per cent lower. Critics of his fiscal policies were right, but the error was far larger than anybody imagined. It is true, however, that Mr Brown must take a share of the blame for Labour’s failure to ensure the extra spending would be well managed.”
http://www.ft.com/cms/s/0/3074d7ba-5ec0-11df-af86-00144feab49a.html

For a historical survey of public spending over the period since WW2, try this from the IFS:

A Survey of Public Spending in the UK (September 2009):
http://www.ifs.org.uk/bns/bn43.pdf

Sorry Bob, it wasn’t investment banks making those high risk mortgages – it was high street banks.

As for public spending, the IFS don’t account for war spending. If removed public spending as a % of GDP has been trending upwards for the last 100 years, and is basically at all time highs. Of course, it would be higher still if Brown hadn’t hidden so much spending, by taking it off balance sheet through things like PFI.

And there I was thinking that Keynesians were supposed to pay down debt in the good times, not expand it. Deficit spending in good times and bad, and the idea that *more* debt can get us out of a debt fuelled crisis. Total joke.

So, err, bankers are 28 to 70 times more likely to emigrate than the general population then?

And you think this shows they are happy?

This report came directly from Reuters. There’s no lefty spin on it. Read the original article if you like.

Also Tyler, if you wanted to move abroad I’m sure the ‘Fabian keft’ wouldn’t mind…

I’m disappointed more of them don’t want to leave.

@4 Hey if they don’t want their job at their level of pay I’ll gladly have it.

“I’m disappointed more of them don’t want to leave.”

A singularly stupid, ideologically-blinkered opinion. Regulate and tax them, rather than export them!

@3: “Sorry Bob, it wasn’t investment banks making those high risk mortgages – it was high street banks.”

Really, how do you explain this news report from 2009 or Barclays other problems:

Barclays lost a quarter of its stock market value last night, just hours after the ban on the short-selling of banking shares was lifted.

Shares of Britain’s third-largest bank plunged 32.4p to a ten-year low of 98p, wiping £2.71 billion from its value, amid speculation that Barclays will have to open its books to City watchdogs if it is to be allowed to benefit from the Government’s latest rescue package for the banking sector.
http://business.timesonline.co.uk/tol/business/article5533488.ece

In America, investment banks there were undoubtedly deep into sub-prime mortgages:

Quote: “Goldman Sachs insists it made $1.2bn loss on sub-prime market. Emails released by Congress sub-committee imply Goldman bankers boasted about making ‘serious money’ on mortgage defaults”
http://www.guardian.co.uk/business/2010/apr/25/emails-goldman-sachs-mortgage-defaults

“According to pre-released testimony, the head of Goldman Sachs, Lloyd Blankfein, will admit that his bank failed to raise the alarm about excesses in the mortgage industry and got involved in ‘overly complex’ derivatives deals that fuelled perceptions of Wall Street running out of control. Blankfein will tell the committee that the Securities and Exchange Commission’s $1bn (£647m) fraud case against his firm marks a low point in his career. ‘It was one of the worst days of my professional life, as I know it was for every person at our firm,” Blankfein says.'”
http://www.guardian.co.uk/business/richard-adams-blog/2010/apr/27/goldman-sachs-senate-hearing-live-blog

If only the retail banks in Britain were into high-risk mortgages as claimed, why then all the concerns of bankers here about mooted proposals to separate retail banking from casino banking operations? The fact is that the large high treet retail banks are also into investment banking – and insist that it’s not practical to separate one kind of banking from all the other kinds.

By many accounts, investment banks lost hundredes of millions of not billions on derivatives trading, including trading in collateralised mortgage derivatives, when the lack of market transparency was already apparent to experienced market traders years before. If only we all had taken note of this warning from Warren Buffett in 2003 about derivatives:

“The rapidly growing trade in derivatives poses a ‘mega-catastrophic risk’ for the economy and most shares are still ‘too expensive’, legendary investor Warren Buffett has warned.”
http://news.bbc.co.uk/1/hi/business/2817995.stm

All kinds of high-risk investments were made by all kinds of banks because of their incentive systems. British taxpayers had to bail out Northern Rock, as well as RBS and Lloyds TSB after it acquired HBOS.

The recession heavily impacted on the British economy because of our relatively high dependence on financial services. With the resulting recession, tax revenues sank, hence the scale of our budget deficit. Befire the financial crisis, public expenditure in Britain was not unusually high as compared with other west European countries, and nor was Britains’s national debt relative to national GDP.

The banks bear a heavy responsibility for our present economic predicament so I was astounded when I could find no mention of banks in the media reports of Cameron’s new year message.

No surprise here then. Whinny bankers threaten to leave and then don’t.

Pity.

Are banks in Britain helping small businesses to flourish now that there’s a ConDem coalition government in place and the British economy is at last being turned round, as Mr Cameron has told us all in his New Year’s message.

Not according to this recent news report from the Daily Mail:

Banks are still crippling small businesses by refusing to lend money and abruptly axing overdrafts, an alarming report said yesterday.

More than three years after the credit crunch struck, ­ conditions for small firms remain ‘very tight’, the Bank of England report added. [23Dec2010]
http://www.dailymail.co.uk/news/article-1340809/Bank-England-warns-lending-small-businesses-tight.html

Why do so many people try and excuse the greed of these parasites? I’ve never understud the desire to be a lickspittle. I saw a couple of Professor Michael Hudsons videos on youtube recently and in one of them he mentioned how he’d never seen so much sucking up to money has he saw in European countries and he was glad to get back to the US. He’s one of the good guys and always worth a listen if you’ve got the time. You should try and get him to do an article for this site.

http://www.youtube.com/watch?v=PlWPWU1vtkc

http://www.youtube.com/watch?v=E3DsmGvVqiw

@12: “Why do so many people try and excuse the greed of these parasites? ”

A tangental but slightly more challenging question is how come Melanie Johnson, previously a New Labour government minister as economic secretary to HM Treasury, is now chair of the UK Card Association, which represents major banks and building societies?

What presently brings her new elevated status to public attention is that she has recently written, in her official capacity, to Cambridge University requesting them to withdraw public notice of a PhD thesis from the university’s website because the thesis reveals a fatal technical flaw in the standard Chip and Pin security technology of debit and credit cards.

As reported, the thesis shows how to design and construct an electronic device for a modest cost of about £20 which would enable fraudsters to bypass the Chip and Pin security system.

Understandably, the banks are rather concerned at the prospect of this information gaining wider currency. Cambridge University – at which Ms Johnson previously studied – has written back saying that it is not the function of the university to suppress genuinely innovative academic research – reference:
http://www.guardian.co.uk/science/2010/dec/30/bankers-thesis-bank-card-security

@Tyler

Why should we tax footballers they were not bailed out using tax payers money?

@14 I think footballers have become the “undeserving rich” to stand next to the big society’s “undeserving poor” when it comes time to throw rotten tomatoes. Or as you noticed, a useful distraction from those doing the serious looting.

It’s illuminating to recall how the financial crisis first developed in Britain when a run started on Northern Rock in November 2007 because the bank was unable to pay cash out to its depositors who wanted to take their money back.

The reason for Northern Rocks insolvency was because it had been borrowing heavily on the wholesale money markets to finance the mortgages with high loan-to-value ratios it was handing out. Over a short time period, interest rates in the wholesale money market shot up:

“Northern Rock had found itself unable to secure loans from other banks on the inter-bank lending market, the Libor, so the Bank of England had stepped in as lender of last resort. The news set in motion a run on the bank.” [9 November 2007]
http://news.bbc.co.uk/1/hi/business/7086473.stm

The reason NR – and then shortly afterwards other banks – had problems in raising inter-bank loans was because banks became suspicious that the collateral used to support loans was either worthless or worth a great deal less than the inter-bank loan it was supporting.

In short, banks stopped trusting in the honesty – or competence – of other banks.

The obvious question is this: If banks don’t trust other banks, why should we trust banks?

Point 1 – the website that is alleged to have carried out the poll doesn’t reveal any reference to it when I use its search function
Point 2 – the financial services sector is not the same as banks any more than bus conductors are the same as airline pilots
Point 3 – the overwhelming majority of workers in financial services in the UK do not have the option of relocating overseas as they are dealing with individual people in their locality/region – how could a bank cashier in Tamworth, a mortgage broker in Kilmarnock, an insurance broker in Aberavon, a stockbroker in Dorchester, an IFA in Ipswich, a loss adjuster in Lincoln, a pensions clerk in Portsmouth, a compliance officer in Coventry relocate to Switzerland or Bermuda or Dublin?
14% is an impossibly high figure. There just aren’t that many relocatable jobs.
Point 4 – Actively looking for a job overseas and happy to stay in the UK are neither mutually exclusive nor are they comprehensive – in the current jobs market there are far more unhappy workers hanging on to their jobs than actively looking for a new job that probably doesn’t exist. 14% actively looking for new jobs overseas would imply a *minority* who were happy to stay in the UK. Since I can find no trace of the original survey I cannot tell whether “The majority of people working in Britain’s financial services industry are happy to stay in the UK” is a result of an appallingly badly-phrased questionnaire or a non-sequitur when interpreted first by Reuters and then secondly by “Miss Ellie Mae”.
Point 5 – While a lot of us (except George Osborne who needs their taxes) would say “good riddance” if all the Hedge Funds and casino bankers left for Geneva/Cayman Islands/whatever, that group does not comprise 14% of the financial services sector. There are (according to ONS) 1.1 million people working in financial services – so 14% would be 154,000 within that sector actively looking for jobs overseas. HMRC say that only 171,000 taxpayers, in total, earn more than £200k and a lot of those are lawyers, footballers, national or local government employees and businessmen (and a few other sportsmen, authors and entertainers and a lot of BBC employees). There just aren’t enough people in financial services affected by the change in tax rates to have 14% looking for jobs overseas (and a lot of those who are couldn’t go anyway).
Is there any chance of a link to the survey that was quoted (if it exists) to find out what it did say and why? Because 14% of all workers in financial services is utter
nonsense.

@ 17 John 77

” how could a bank cashier in Tamworth, a mortgage broker in Kilmarnock, an insurance broker in Aberavon, a stockbroker in Dorchester, an IFA in Ipswich, a loss adjuster in Lincoln, a pensions clerk in Portsmouth, a compliance officer in Coventry relocate to Switzerland or Bermuda or Dublin?”

According to the story, this isn’t about everyone working in FS, it’s a poll of “415 workers in London’s City finance district”. So unless they’re taking that literally and polling cleaning staff and the people in the local Nero’s, it does at least attempt to reach the people that “bankers” tends to mean when people talk about the credit crunch (i.e. when people say that “bankers should have to pay to fix this mess”, they don’t mean Bob and Karen who work behind the tills at Natwest).

In other words, and this comes as absolutely no suprise on this site, it’s the headline that is inaccurate, not the story. However, I agree that it would be nice to get a link to the survey and some details of its methodology, as “online poll” often means “lazy click-button survey that reveals nothing”.

The real question is, do we care if any percentage of individual stock brokers and the like leave the country? I say no: their jobs remain, to be filled by someone else.

@ 18 Chaise Guevara
I agree that the headline is wrong but so are bits of the story, starting with the opening sentence which claims the majority of those in Financial Services are happy to stay in the UK because only 14% are actively seeking a job overseas …A bit of a non-sequitur.
“The real question is, do we care if any percentage of individual stock brokers and the like leave the country? I say no: their jobs remain, to be filled by someone else.”
The fuss that was made over increasing tax rates was that lobbyists claimed the overpaid “stars” would go, taking their jobs with them and hiring locals as subordinates/service providers/pizza delivery boys, reducing UK employment by more than the number of people leaving as well as reducing UK income tax receipts.