It takes the Brits to put the pieces together and spell-it-out for the terminally slow Americans. This piece on Business Secretary Vince Cable’s revelation is from the Guardian this morning:
Britain’s banks are “throttling” the economic recovery because of an anti-business culture which focuses on short-term profits, the business secretary, Vince Cable, has said.
As Ed Balls warned of widespread outrage if the ousted Barclays chief executive, Bob Diamond, receives a £16m pay-off, Cable accused banks of undermining multibillion-pound measures to help businesses.
Speaking on The Andrew Marr Show on BBC1 on Sunday, the business secretary said: “The real problem at the moment is that the banks – because of their existing culture, which is frankly anti-business, obsession with short-term trading profits, not focusing on the long term – are throttling the recovery of British industry.”
Tell me more:
He said: “There has been a breakdown in the mechanism, in the transmission. It just doesn’t get through to companies. We are going to ensure that the new money that the chancellor and the governor of the Bank of England talked about at the Mansion House does actually directly reach the companies.
“Given that our leading banks are, frankly, throttling recovery by not making business lending available, particularly to small-scale companies, we now have to focus single mindedly on that task. How to make sure that the additional money gets through to business.”
The business secretary indicated impatience with some of his Conservative colleagues, who were wary of state intervention, as he praised the scheme by his predecessor, Lord Mandelson, to revive the car industry.
Highlighting the importance of working in collaboration with business, he said: “Laissez-faire just doesn’t work. When you are making big long-term investments you have to have the government and the private sector working together. It has been a great success story in the car industry, similarly in aerospace and life sciences and others.”
Well, it *used* to be a great success in the life sciences business but no longer. Mr. Cable might want to check in with the people who live and work around Sandwich, if there are any left. A lot more government intervention will be required if Britain and the US ever expect to be on top in that area again.
The shadow chancellor had earlier warned Diamond against accepting a £16m pay-off from Barclays. Balls said: “People will look at that and think that is totally outrageous. It is outrageous that somebody should stand aside because the board decides there is a problem and then get a payout which is off the scale for anything normal people will receive in their life times.
“The shareholders are going to think really hard about this. The government will need to look at this and talk to the shareholders. They clearly talked to the shareholders about Mr Diamond.”
Indeed, the shareholders should think long and hard about a lot of things. For instance, do we need so many people to be trading their defined benefit pensions for 401Ks that will be used by the banks as a constant, monthly replenishing source of money with which they can gamble? Do the hard working people of America need to also be the same shareholders who cheer at a bump in their portfolios at the same time they fear for their jobs (so other 401K shareholders can get a bump in their portfolios)? By the financiers’ logic, the 401K will achieve its maximum value as the number of workers approach zero. How did we get talked into this scam in the first place anyway? It sounds so stupid and self-defeating that we should all have our heads examined. Oh, sure, there’s nothing wrong with investing if you have the money to do it but to use Wall Street as your primary source of retirement income? Let’s face it, we are morons.
The politician that proposes a mechanism that allows us to convert our 401Ks to pensions gets my vote.
Anyway, it’s good that someone in government, well, someone else’s government, has finally made the connection between incentives for short term profits and an anti-business atmosphere. Perhaps the Brits are finally waking up to the idea that all of the deficit reducing austerity measures are meant to do only one thing: increase the wealth of the wealthy at the expense of everyone else, including Main Street businesses. I don’t expect Republicans will acknowledge that this is what is leading to so many layoffs and dragging the economy down. For that matter, I don’t expect Democrats to acknowledge it either. And from what I can see on the frontpage of the NYTimes, this is something that the city elites don’t want to talk about.
By the way, why do I have to go all the way to London to get any new information on the LIBOR scandal? Why exactly is there so little coverage of the LIBOR scandal in American newspapers? Who are they trying to protect with this “nothing to see here, move along” attitude? Anyone want to take a guess at this? And did you know that the CFTC started investigating the LIBOR manipulations back in March of 2011? That means they must have been aware of it before that time. THAT means that when Occupy Wall Street was righteously indignant at Zuccotti Park and was getting beaten up by the DHS and smeared by our elected officials, the Obama administration was well aware that there had been fraudulent interest rate manipulation on an enormous scale. Those same students who can’t pay their huge student loans with their high interest rates are the same people who were potentially harmed by these manipulators. Why was it so necessary to kick people when they were already down on Wall Street’s behalf? And knowing this, do we have any reasonable expectation that Barack Obama will hold Wall Street accountable for what it has done to our economy and our futures?
Why so much silence from our elected officials? And what did Tim Geithner know and when did he know it? Inquiring minds want to know.
Oh, and I ran across this bloke on twitter. Is he representative of the British public? Because he is asking a very good question about why the scandal is being handled like an internal governmental investigation instead of a judicial inquiry. It’s similar to what we are doing here. That indicates that they are trying to prevent too much public outrage and real reform. But if the general public gets the gist of the scandal as well as this guy does, then how long will this stay contained? And what effect will it have on an election year?