05 August 2009

No way are the Barclays and HSBC results good news

More on this next week when I've got a bit more time, but just to say: Richard Murphy is absolutely right on the Barclays and HSBC results. Their results for bank lending to the personal and company sector were absymal (due to huge debt write-offs) - they made all their money on investment banking. Effectively they were making money by participating in the kind of financial gambling which brought about the current economic collapse in the first place.

And they're able to do it with impunity because they know governments will bail them out if they crash again. We should've nationalised the bastards when we had the chance. Never mind... a job for the next Labour government (hopefully 2015-ish).

A nice summary in the Guardian of how investment banking operations make money. Note that very little of it relates to activities which actually increase output in the real economy of goods and services - it's really about redistributing resources from one economic agent to another rather than creating new resources.


Van Patten said...

Even in the wake of this fiasco do you still contend that RBS and HBOS should not have been allowed to go to the wall?

One early New Labour idea which could be due for a comeback would be the idea of a windfall tax on employees of investment banks. What do you think?

giroscoper said...

Windfall tax - interesting idea, I like it.

RBS/HBOS - the problem is if they'd been allowed to go to the wall, they would have taken a LOT of other companies with them. There could have been a chain reaction that would've destroyed the entire banking system and then we're into 'Mad Max'. Having said that I always liked the film (Mel Gibson's finest hour by a long way) so maybe it would be OK...