Signal failure

So, last Friday the FT confidently announced that George Osborne 'will signal an end to “banker bashing” next week, amid a clamour from the City for him to ease off on regulation and cut the controversial bank levy.'

The signal clearly didn't get through to the Governor of the Bank of England when he 'called for longer prison sentences for bankers who break the law, in a speech attacking ethics in the City' at his Mansion House speech. 'I agree with Mark', added Osborne.*

Like a daft boy, I fell for the FT's trailed version of the speech, on the grounds that:

• He who pays the piper calls the tune, so he might have blurted an outrageously indiscreet a shout out on behalf of his party's sponsors** while still pumped up with post-election-victory feelings of invulnerability.
• Typically 'x will say'/'x is expected to announce' stories are deliberately leaked by the person being quoted to get the crucial agenda-setting sound-bite into the headlines.

Except when the story turns out to be complete rubbish.

I'm happy to have been proved wrong on this one. If publicly toadying up to failed, bailed, unjailable Big Finance is becoming as unacceptable here in Britain as it seems to be in the USA, that's got to be a good sign.



*Well, that was the gist - George's full banker bash went:

The public rightly asks: 'Why is it after so many scandals so few individuals have faced punishment in the courts?'
Individuals who fraudulently manipulate markets and commit financial crime should be treated like the criminals they are - and they will be. 

** There was a bit of flannel about how honoured Britain's economy was to be hosting such a grotesquely disproportionate concentration of dysfunctional, hypertrophied financial institutions (without mentioning HSBC by name), but no news of bank levy concessions and nothing so outrageous as Osborne's predicted channelling of Bob Diamond.

Brand values

HSBC brand to disappear from UK's high streets as bank renames branches 

Chief executive says HSBC will rename its UK retail arm after it has been ring-fenced - though the new name has yet to be chosen

Telegraph headline

Sounds like a re-branding no-brainer to me (and probably to anyone else who's ever seen Despicable Me).

Gulliver to relocate to Lilliput?

A major company which employs 48,000 people in the UK is planning to cut 8,000 of those jobs. Which is horrible news for the 8,000 people whose lives are about to be turned upside down. Job insecurity is no joke, especially a culture where you're one pay slip away from the moral stigma of being re-classified as an aspirationally-deficient specimen of undeserving poverty (serves you right for making the lifestyle choice to become the involuntary recipient of a P45).

In this case, there's something of a silver lining for the rest of us - the company in question is that chronically scandal-ridden, Too-Big-To-Fail behemoth, HSBC. Chief executive Stuart Gulliver may still be keeping us guessing when it comes to HSBC's threat to relocate its corporate HQ to Hong Kong, but size-wise, the organisation's direction of travel seems to have changed from a Brobdingnagian heading to a diversion some way down the road to Lilliput.

Since 2008, it's been easy to slip into despair and imagine that the TBTF banks had got away scot-free and would just carry on metastasising away, threatening the lives of their their host economies. But it does look, at first sight, as if the treatment may be shrinking the tumours:

Global regulators have issued dozens of rules aimed at making the biggest banks safer. That’s leading to another result some wanted: making them shrink.

HSBC Holdings Plc, Europe’s biggest bank by market value, said this week it’s considering “extreme solutions” for some of its units. Royal Bank of Scotland Group Plc is reducing its U.S. trading staff and getting out of two-thirds of the countries where it operates. JPMorgan Chase & Co. is closing branches, raising fees on some institutional deposits and looking for ways to shrink its trading businesses.

From a Bloomberg Business article titled Biggest Global Banks Shrink Under Pressure From Regulators* (or: How I Learned to Stop Worrying and Loook at The Graph).

Even if there is a good news element to this story, though, it's a qualified one.

The TBFT banks may have started shrinking in absolute terms, but what matters is their size relative to the rest of the economy and we shouldn't need reminding just how much that shrank after the bankers' crisis:

In other words, the banks have plenty of room to shrink, but still outweigh the rest of the economy, so maybe Mark Carney's nightmarish vision of of UK bank assets amounting to more than nine times GDP hasn't yet gone away. As Ann Pettifor wrote a couple of years ago, when it looked as if business for the banks was 'better-than -usual':

By contrast, business is better-than-usual for bankers. Not only are they too-big-to-fail, and too-big-to-jail, but the British government now actively subsidises their lending on existing housing – and in the process inflates house prices. The Chancellor is the banker’s strongest ally in Brussels where attempts are made by the EU to limit bonuses and tighten regulation. And now the governor of the Bank of England is cheering on the possibility “of UK banks’ assets exceeding nine times GDP and that is to say nothing of the potentially rapid growth of foreign banking and shadow banking” which he believes can be “a global good and a national asset”.

You're still gonna need a bigger rope

*Assuming that it really is the regulatory medicine that's shrinking the banks, rather the aftershock from the crisis/low productivity/secular stagnation/anything else that might lead to fewer investment opportunities.

Satisfaction all round

The judge concluded: "I am satisfied that during the course of the early hours of 29th January 2015, at around 5am, the defendant was guilty of screaming and shouting whilst having sex at a level of noise which caused nuisance or annoyance to (a neighbour)."

I guess the defendant was pretty satisfied, too. At least I kind of hope she was - her noise levels may have been anti-social, but it would be a bit harsh to get thrown in the nick for just faking it.

Payback time

George Osborne will signal an end to “banker bashing” next week, amid a clamour from the City for him to ease off on regulation and cut the controversial* bank levy. 

FT (behind the paywall)
Now where was the NYT piece I quoted just before the election? Oh, yes:

No political party in Europe has done more for hedge funds and bankers in recent years than the British Conservatives.

And the party has been well rewarded for it.

Hedge fund managers have been writing eye-popping checks to the Conservative Party before the British election on Thursday. And with no campaign finance limits for party donations, there is little to hold them back.

More than $2.3 million has come since last year from Michael Hintze, an Australian billionaire who lives in London, where he founded the hedge fund CQS. Michael Farmer, another hedge fund manager, has donated roughly $2.2 million over the same reporting period, and far more in the last decade. Stanley Fink, who once ran the Man Group and has been party treasurer, has donated $1.3 million since the 2010 election, records show. 

The best politicians money can buy, brought to you by a party which has learnt nothing from the global financial crisis (except  how to line its own pockets by sucking up to the people who nearly destroyed the economy in the first place).

George Osborne, please step up to the podium to accept the Sepp Blatter lifetime achievement award. This handsome 24 carat gold pig, complete with solid gold trough and expertly crafted brass neck inlay is the City's special way to thank you for the willing sacrifice of your soul.

If you want a picture of Britain's future, imagine a stupidly expensive Gucci loafer stamping on a human face – forever.

*Weasel word alert - 'controversial' with whom, exactly?

Riding the tiger

If we are to believe Conor Lynch, the political debate on the other side of the Atlantic sounds as if it's in a more hope-y change-y place than it is here in Britain, at least when it comes to neutering the ravening beast that is Big Finance:

...if we are to believe the data suggesting the millennial generation is the most liberal yet. In fact, a few years ago, a Pew poll suggested that millennials (18-29) view socialism more favorably than capitalism, which is quite astonishing for the United States.
Elizabeth Warren and the rising liberal movement have created a real fear within the Republican party and Wall Street. Certain right wing pundits paint Warren as nothing less than a radical socialist, aiming to overthrow the capitalist system. This is fear. Fear that the new liberal movement is not just a fad, and that the future is moving leftward...
...The fact is, Wall Street is afraid of modern liberalism, and is working hard to kill it from within with the same arguments that were made in the eighties and nineties. The only difference is, today, we know just how bad neoliberalism has been for the majority of people, and how good it has been for folks on Wall Street.

Link here (trigger warning: article contains gratuitously annoying pop-up ad)

If we are to believe that the American future is moving, if not leftward, then at least away from the full-spectrum dominance of Big Finance, then why aren't we?

I think the answer has been around for a while. Remember the 'Would you rather fight one horse-sized duck or 100 duck-sized horses?' question. A no-brainer version would be 'Would you rather fight a German Shepherd half your weight, or a tiger that weighs three times as much as you?' I think there wouldn't be much Internet debate about which was the least worst option here:

Total bank assets as a percentage of host countries' GDP (from a Zerohedge post written in 2010)

• UK - RBS, Barclays, HSBC: 337%

Compare that to the top 5 banks in the US (a list which excludes hedge funds such as Goldman Sachs).

• US - JP Morgan, Citigroup, Bank of America, Wells Fargo and Fannie: just 56% of GDP.

There was a young lady of Niger
Who smiled as she rode on a tiger;
They returned from the ride
With the lady inside,
And the smile on the face of the tiger.

Castrate the City

Forget Cameron's 2017 Referendum, as under Lisbon 50-53 that can't get us out until 2020, by which time the City will have been well and truly castrated.

Just in case you were still under the impression that Ukip was some sort of anti-establishment grass-roots movement, here's City boy and Ukip donor Stephen Hill letting the world know that Ukip is even further up the City's fundamental orifice than the party that sent George Osborne trotting over to Europe to lobby for weaker bank regulation whilst the world was still reeling from the bankstas' crisis and gave Boris Johnson a platform to lecture the stupid proles about not being beastly to the bankers.