LeftBanker

Brown’s “big” proposal to tax financial transactions – the so called Tobin tax – has been met with opposition by almost all the finance ministers of the G20. The reason is obvious; it actively discourages the trading of financial assets. It is this trading in 2009 of assets on the back of a new financial bubble that has partly offset the losses that the banks and investment banks have made in the rest of their operations. Without these trading gains the scale of the financial bailouts by governments for the banks would have to have been much larger.

Many of these trading transactions are structured by buying one asset and selling another asset. This means that the amount of capital (cash) that a bank has to put up to cover losses in the transaction is much smaller. These large nominal positions have smaller returns but on very small amounts of capital. An upfront tax on these transactions will make many of them unprofitable or have to a low return for a bank to enter into them. Brown knows this but needed to be seen to be making a stand against the greedy bankers. He knew he would get no support for his proposal. It is nothing but a cynical public relations exercise.

It is ironic that Brown has come up with this proposal in a week that the government gave away another £56 billion pounds of our money to the banks through a further £31 billion bailout for RBS and Lloyds and another £25 billion on Quantitative easing (QE).  QE gives money to the banks and financial institutions for unwanted government and corporate debt. Little of this money is flowing into the real economy – the banks are hoarding it to cover losses and future losses and the financial institutions are using it to buy other assets helping to create the new financial bubble.

A real reforming move would be to tax these banks profits at much higher levels and have a progressive tax on high earners to cut out their bonuses. Both would create huge revenues to spend on public services. A 100% tax on all earnings over £50,000 would mean the public sector budget could be increased by 33%. Brown, the person who over saw the deregulation of the financial markets and creation of the easy money environment that helped lead to this crisis, is clearly not up to any such radical proposals.

The real priority for Brown is to implement public sector cuts to make us pay for the bailouts and stimulus programmes. The latest leak that the government is going to cut youth training programmes at a time of massive youth unemployment is a case in point.

The G20 offered nothing new but a continuation of their stimulus programmes. They fear if these are withdrawn the world economy will slump into a depression. This is because there is no real consumer demand due to rising unemployment and no fresh credit available from the damaged banking system. They were of course unable to resolve the dispute over exchange rates where the United States and China have kept their currencies artificially weak to make their exports cheaper against their main competitors in Europe and Japan.

The G20 continues to subsidise the private car industry and private housing market with our money. These two industries are major contributors to the climate change crisis and the financial bubble respectively. But they would rather support them than use the money to create a lower polluting public transport system and sustainable social housing for whole of society.

These stimulus programmes and the bailout will have to be paid for by us. The International Monetary Fund in a report issued this week estimates that the major developed economies will face ten years of public sector cuts and tax rises to pay for it all.

It’s up us to not let them get away with it.

The announcement that £31.3 billion more was to be given to the banks means more cuts in jobs and public services for us. It also, points to the weakness of the banking system once the super investment banking profits, made from a huge rally in financial assets since March of this year, have been stripped out.

This was undermined by the fact that the Royal Bank of Scotland (RBS) has agreed to enter an insurance scheme where we will guarantee up to £282 billion of losses on its “toxic assets” – anything from derivatives to personal loans.

£25.6 billion was given to RBS with the other £5.7 billion going to Lloyds TSB/HBOS. Lloyds hopes to raise another £21 billion from it’s’ shareholders – read our pension funds here. But this is highly unlikely as Lloyds is haemorrhaging money from the takeover of HBOS and its speculative loan business. Lloyds has no investment banking business of note to rescue it. It is almost wholly dependent on the UK economy and that as we have seen with last week’s release of gross domestic data is in its longest and deepest slump since the great depression of the 1930s.

Shares in Lloyds and RBS fell by over 10% after the announcement was full digested by the market. Both banks need the funds (capital) to cover future likely losses. The outcome is that Lloyds will have to come cap in hand to us via the government for more money to shore up their capital.

As part of the bail out the government announced the selling off of parts of both banks. Buyers will again be difficult to find as the outlook for high street banking looks bleak given the depth of the UK slump. The sell off was in part an attempt, under the cover of meeting European monopolies legislation, to hive off the non-toxic parts of the banks and leave us saddled with the loss making parts. Hidden away was a modernisation programme which was just further mass redundancies with RBS announcing 3,700 people will loose their jobs by May 2010 from their high street branches.

The global economic crisis and UK slump will lead to further losses and bailouts and more cuts for us.

The only answer is for all the banks to be taken under full ownership and control, and to socialise their loans into rents and cancel all derivatives contracts.

The announcement that £31.3 billion more was to be given to the banks means more cuts in jobs and public services for us. It also, points to the weakness of the banking system once the super investment banking profits, made from a huge rally in financial assets since March of this year, have been stripped out.

This was undermined by the fact that the Royal Bank of Scotland (RBS) has agreed to enter an insurance scheme where we will guarantee up to £282 billion of losses on its “toxic assets” – anything from derivatives to personal loans.

£25.6 billion was given to RBS with the other £5.7 billion going to Lloyds TSB/HBOS. Lloyds hopes to raise another £21 billion from it’s’ shareholders – read our pension funds here. But this is highly unlikely as Lloyds is haemorrhaging money from the takeover of HBOS and its speculative loan business. Lloyds has no investment banking business of note to rescue it. It is almost wholly dependent on the UK economy and that as we have seen with last week’s release of gross domestic data is in its longest and deepest slump since the great depression of the 1930s.

Shares in Lloyds and RBS fell by over 10% after the announcement was full digested by the market. Both banks need the funds (capital) to cover future likely losses. The outcome is that Lloyds will have to come cap in hand to us via the government for more money to shore up their capital.

As part of the bail out the government announced the selling off of parts of both banks. Buyers will again be difficult to find as the outlook for high street banking looks bleak given the depth of the UK slump. The sell off was in part an attempt, under the cover of meeting European monopolies legislation, to hive off the non-toxic parts of the banks and leave us saddled with the loss making parts. Hidden away was a modernisation programme which was just further mass redundancies with RBS announcing 3,700 people will loose their jobs by May 2010 from their high street branches.

The global economic crisis and UK slump will lead to further losses and bailouts and more cuts for us.

The only answer is for all the banks to be taken under full ownership and control, and to socialise their loans into rents and cancel all derivatives contracts.

he announcement that £31.3 billion more was to be given to the banks means more cuts in jobs and public services for us. It also, points to the weakness of the banking system once the super investment banking profits, made from a huge rally in financial assets since March of this year, have been stripped out.

This was undermined by the fact that the Royal Bank of Scotland (RBS) has agreed to enter an insurance scheme where we will guarantee up to £282 billion of losses on its “toxic assets” – anything from derivatives to personal loans.

£25.6 billion was given to RBS with the other £5.7 billion going to Lloyds TSB/HBOS. Lloyds hopes to raise another £21 billion from it’s’ shareholders – read our pension funds here. But this is highly unlikely as Lloyds is haemorrhaging money from the takeover of HBOS and its speculative loan business. Lloyds has no investment banking business of note to rescue it. It is almost wholly dependent on the UK economy and that as we have seen with last week’s release of gross domestic data is in its longest and deepest slump since the great depression of the 1930s.

Shares in Lloyds and RBS fell by over 10% after the announcement was full digested by the market. Both banks need the funds (capital) to cover future likely losses. The outcome is that Lloyds will have to come cap in hand to us via the government for more money to shore up their capital.

As part of the bail out the government announced the selling off of parts of both banks. Buyers will again be difficult to find as the outlook for high street banking looks bleak given the depth of the UK slump. The sell off was in part an attempt, under the cover of meeting European monopolies legislation, to hive off the non-toxic parts of the banks and leave us saddled with the loss making parts. Hidden away was a modernisation programme which was just further mass redundancies with RBS announcing 3,700 people will loose their jobs by May 2010 from their high street branches.

The global economic crisis and UK slump will lead to further losses and bailouts and more cuts for us.

The only answer is for all the banks to be taken under full ownership and control, and to socialise their loans into rents and cancel all derivatives contracts.

Cuts: that’s what all the major parties – Labour, SNP, Conservatives and Liberal Democrats – are arguing about. But not if there is an alternative to the cuts but who would be the best at making the cuts. But let’s be clear we are bailing them out of the complete mismanagement of their economic and [...]

The recent meeting of the G20 leaders in Pittsburgh has seen the USA radically restructure the management of global capitalism’s finance and economic systems. The G20 came in to existence in the late 1990’s as a response to the first globalised financial crisis – the Asian crisis.
While the world economy has been globalised for decades [...]

The government has spent about £150bn over the last year bailing out RBS, HBOS and Lloyds. This has taken the form of being sold shares in these companies and in return giving the banks cash to cover losses and bring their capital (cash) up to regulatory required levels.
In addition the government through the Bank of [...]

A black hole is opening up in the Edinburgh city budget that could eventually lead to the city going bankrupt. A combination of the recession, the Trams project and the SNP’s policy of freezing the council tax is opening a deficit that is being filled with job cuts, wage cuts and cuts in services. This [...]

Over the last two weeks there has been lots of telling economic and financial data from which some commentators have drawn the conclusion that the worst of the economic and financial crisis is over.  We set out here to examine this data and determine if these commentators are right by looking at the banks, [...]

Many politicians are trying to talk the economy up saying that the worst of the recession is over and recovery will start by the end of 2009. This is certainly the stance of the Labour government with Alistair Darling estimating in his budget speech a lower decline in the economy than a raft of think [...]

The quarter one GDP figures released today showed the UK economy shrank by 1.9% just two day after Darling had predicted a 3.6% decline for the whole year. This shows how far off the market he was and was generally trying to deceive the mass of the population. This means that the public cuts will [...]

Budget is to pay for bail out of banks
Unable to raise money on financial markets because our IOUs (Gilts) are worth nothing – in line with Portugal and Greece
Deficit for 2009 at over 12% biggest of the G20 countries
Big cut in public spending and over the near term and medium and long term
Tax rises after [...]