“We ought to be grateful to the world’s bankers for going back so quickly to their bad old ways. We should be pleased they are once again paying themselves a bonus for one-year’s work which most people outside financial services could not earn in a lifetime.

We should be thrilled that their businesses have, within a year of being rescued by the taxpayer, once again become highly profitable, not by the skill of their management but by virtue of their ability to use their position at the heart of the system to overcharge their customers – be they those who seek to borrow money, those who want to change pounds into foreign currency or those in the corporate sector who need help to raise new capital.

The reason we should be so pleased by these developments is that they prove conclusively bankers are incapable of reforming themselves. It follows therefore that we will have to do it for them, and their behaviour removes any doubt about whether or not this is the right thing to do.”

http://www.thisislondon.co.uk/standard-business/article-23743650-details/making-good-from-bad-in-this-crisis/article.do

“The real tragedy is that the failure of Lehman has left Wall Street’s survivors both bigger in relative terms and more secure politically. As long as the big banks feel confident that they can count on the government to bail them out – for who would now risk “another Lehman”? – they can more or less ignore calls for lower leverage and saner compensation.

If only we had learnt from Lehman that no bank should be “too big to fail”, we might still have a real capitalist system, instead of the state-guaranteed monstrosity that is the real legacy of last year’s crisis. If only.”

http://www.ft.com/cms/s/0/f96f2134-a15b-11de-a88d-00144feabdc0.html

But then with Goldman Sachs partners as Obama’s biggest individual donors…

This is the real scandal of the moment. A lot of perfectly good firms, who have survived the recession so far without going bust or having to make massive layoffs, are about to do precisely that in the next few months – for no better reason than want of credit to see them through a few months till the upturn translates into actual revenue for them.

It’s unbelievably ridiculous that we are letting banks we own use the taxpayers money we have given them to finance their own bonuses – or dole out mortgages at 5% on money they get at 0.5% – and accepting that these banks will put loads of firms out of business and people out of work in the next few months, with the decrease in tax take and increase in the benefits bill this will cause.

What in fucking hell does Gordon Brown think he is doing? Do any of these maniacs realise that the economy needs a productive base?

Not according to this:

“The current levelling off in Britain’s housing market is a ‘false dawn’ and prices will not reach their 2007 peak for at least another five years, according to a report published today. . . ”
http://www.guardian.co.uk/business/2009/sep/14/house-price-rise-false-dawn

And this:

“House prices will not return to the peak reached in autumn 2007 for at least another five years, according to Ernst & Young’s Item Club. The influential group’s gloomy forecast contradicts the increasingly optimistic outlook of the Government and some commentators that the British economy has begun a sustained recovery.

“The recent rise in property values is a ‘false dawn’ that will not last beyond spring, Hetal Mehta, Item’s senior economic adviser, said. In a special report released today, Item predicts that homeowners are in for a drop in prices in next year’s first half and then two years of stagnation. Sustained recovery will start only in 2011 and take until at least 2014 to return prices to their 2007 high, Item says.”
http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article6833095.ece

But by several reports, the bankers are already back to their old bonus practices.

Availability of credit has forced up property prices , not scarcity. If people are limited by what they can borrow , property prices can only increase because salaries have increased- read V Cable The Storm. In the USA, no income , no job no asset mortgages were a disaster.

A stimulus would normally never take the form of a huge raft of subsidies for financial firms. Financial firms are the worst place to put stimulus cash, I’d rather restart British Leyland than restart the broken financial system.

This is bad, but not because activist government is bad, but because conservatism can sometimes mean Socialism for Business, i.e. the socialisation of financial losses and the privatisation of gains. This is not inevitable, but following on from Dave’s post earlier, until a mass Labour movement forces something else to happen it will feel like it.

Agree, but the whole debate was reduced to ‘do-nothing’ or ‘do-something’.

The BoE have basically created money out of thin are, given loads to the banks, who then wonder what the hell they are supposed to do with it. (the banks gotta lend innit).

It’s the mindset that got us in this situation in the first place and is now being repeated. Fool me once…..