VINCE CABLE, THE COALITION’S BUSINESS SECRETARY is beginning to sport the rhetoric of a modern day witch-finder general when it comes to ‘greedy bankers’. On today’s edition of the Andrew Marr Show, he promised further retribution against the banks, suggesting a need for ‘fundamental surgery’. As ‘helpful’ as Project Merlin (the agreement between the banks and the Coalition) was, Mr Cable said it was ‘by no means a finished article’.
Use of such language causes much buttock-clenching among the Tory half of the coalition. Both the prime minister and his chancellor had sought at least a truce with the banks after Project Merlin was launched. However, there are many in the nation (including Mr Cable) who will not be satisfied until the heads of these institutions are put in the stocks and held up to public ridicule.
Remember the good old days when Mr Cable’s profession topped the unpopularity polls? Now it is the banker’s turn to feel the nation’s wrath. Whether they were bailed out or not by the taxpayer, it seems that the public refuses to discriminate between what they see as arbitrary categories.
When the banks were weaving their magic and the country was feeling its benefit, the politicians also enjoyed success with the electorate because of it. The 100 per cent mortgages and those creative pieces of fiction ( the mortgage application form) completed by those who naively succumb to the advances of those selling the mortgages, faced little warning from the politicians at the time. Instead the politicians used such sleight of hand to conjure up for themselves further terms in office.
In other words, all partook of the kind of thimble-rigging that governed our economy and almost lead to its collapse.
It was of course more complicated than this; but the bad loans were the kindling that eventually set alight the whole economy, and it was the tax payer who manned the fire hoses, while the politicians set about blaming the bankers as if they and they alone were to blame for the whole conflagration.
To eviscerate the bankers alone as we appear to have done on this occasion threatens an even greater tragedy for our economic welfare. The politicians will never tell the electorate that they, as much as the bankers were greedy. For if ever there were a case of ‘f it looks too good to be true – then it is’, the dodgy mortgage transactions that once flourished were just that.
People thought they had found the Holy Grail in home ownership, and there was no politician available at the time to disabuse them of this belief because they to found themselves as beneficiaries of the great economic madness that was unfolding before their eyes.
Now, after all of this mess, what are the politicians asking the banks to do? Why, lend and continue lending. The banks, having been told they must behave more responsibly regarding their lending, after behaving so irresponsibly, are now behaving irresponsibly in not sanctioning loans to businesses . Are the politicians seeking to orchestrate the policies of the banking system? If so they and they alone must accept any failure that such overtures may embrace.
THE FINANCIAL SECTOR in this country is regarded as second only to Wall Street in terms of finance. We long ago demoted manufacturing in this country, and promoted the financial sector. The City of London is the magnet for most of the world’s financial activity.
In total some £20 billion is collected in tax per annum from City trading. The more prolific and profitable its dealings, the more revenue it pays in taxation . If ever there were a goose that laid a golden egg it is indeed this country’s financial sector. Twenty billion is no small contribution to health and education.
Now we come to bank bonuses, where individual city bankers or traders receive large bonuses from their companies.
Such large bonuses , let us remember, are distributed according to performance. What this means in the private sector is ever greater profits for their company and ever greater taxes to be paid as a consequence.
As for the individual recipients of such bounty (in many instances totalling over the million pounds) there is also a further tax to pay. Those who receive such bonuses give half of it to the government to spend wherever they choose. Yet the politicians are the very people who seek to blacken this source of revenue.
Wealth is good for both the individual as well as the economy of nations. Wealth, in a fairly regulated democracy, does indeed trickle down to help the poorest. It does so through taxation which allows the state to provide help; but also from all forms of charitable giving. An example of which is the founder of Microsoft, Bill Gates, giving away billions of dollars to various projects in the Third World.
We no longer live in a country of 18th centaury mill owners. But, to hear the attacks lavished upon the bankers you would be forgiven for thinking that time had indeed stood still.
This country has no longer a major manufacturing base from which to sell to the world. Our industries have undergone major upheavals over the past 30 years. We no longer have the manufacturing strength that entitled us to call ourselves Great Britain. Now we import goods to be distributed through the service sector.
The financial sector is now the economic backbone of this country, and if we wish to continue to compete, this sector must not driven away from these shores by the ill-considered prejudice of people who would have something real to complain about if the financial marketers did indeed flee on mass to some other, more favourable and less vindictive corner of the globe.
Vince Cable has led the charge against the bankers, and believes more needs to be done to rein in the bonuses. I, on the other hand believe that the greater the bonuses the more the government’s croupiers at Her Majesty’s Inland Revenue can take in taxes.
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