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In the first of an occasional series of guest blog posts, we cut consumer drone Chris Fyles loose from wage slavery for a short while to have a pop at bankers…

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Jeremy Vine

“Today on the show, I will be being smug and patronising to members of the general public about banking”

I was listening to Jeremy Vine on Radio 2 the other day.

(That can never be a good way to start anything, but on the other hand a terrible confession of this nature helps grab the reader’s attention, so…)

The discussion was on banker’s bonuses – specifically those at RBS – and whether the millionaire Cabinet should step in to defend the interest of the Man in the Street or just allow the trough to overflow as usual. At one point, a Man in the Street came on air to say that he’d lost his job in the recession and had limped on for the next four years, but that bankers had to get their bonuses because of their vital role in the British economy and this was “just market forces”. It was the standard argument that if we want the best, they must be “incentivised” or else they’ll just leave and go to live in Switzerland.

As a man found frequently in the street myself, far be it from me to pick apart this happy slave’s point of view, but I’m going to regardless, so let’s just get on with it.

Argument:

(1) Britain has the largest banking sector as a proportion of its economy of any country in the developed world (apart from maybe Switzerland or Luxembourg)
(2) Britain’s banking sector is vital to the British economy
(3) Without awarding large bonuses to top bankers, they would leave and seek work elsewhere
(4) Without their top employees, British banks would collapse
(5) See premise (2)

Conclusion:

It is vital to Britain’s economic interest to award large bonuses to its top bankers

Loadsamoney by Harry Enfield

“Wanna feel my wads?”

I think premise (1) is currently indisputable. But what about (2)? Is banking vital to Britain? This depends on whether another premise is true – let’s call it (2a): Banks are good for business.

Given that (1) is true, if banks really were good for business, you’d expect Britain to have the most vibrant economy in the world – its manufacturers would be putting the Germans to shame, its workers would be drowning in well-paid jobs and its high streets would be crammed with bustling shops. But, as we know, we’re a long, long way from that, aren’t we? And yet our vaunted financial sector continues to wax – coincidence? I don’t think so.

Fat Cat

“Whaddya mean you’re using me as a metaphor? Do the RSPCA know about this?”

Because, it is this drone’s opinion, banks are parasitical on real work. Far from enabling dreams to get off the ground, they trap people into years of payback on mortgages, business and personal loans and various other forms of credit which simultaneously inflate the price of everything well beyond what could be affordable without a loan, thus making loans essential.

For instance, if there were no mortgages, houses would cost a tiny fraction of what they do now, because buyers would only be able to pay what they could really afford and sellers would charge what they could realistically expect to get. Instead, the only way most people can buy a house these days is to take out enormous loans that will take twenty-five years to pay back and present them with homelessness if they lose their jobs in the meantime. And this is supposed to be progress?

Peter Rachman on the phone

Rachman ordering another hike in rent

“Ah yes, but,” you cry, “if there were no mortgages, only the rich could buy houses and they’d gobble them all up and become rapacious private landlords charging their terrorised tenants an arm and a leg (possibly literally)”. True, possibly. But then again, housing associations and credit unions could also buy up houses, while if government actually enforced tenants’ rights, brought in rent control and stopped subsidising Rachmanism with our taxes there would be far fewer greedy capitalists willing to take on the hassle of being landlords than you might think. In any case, banks protecting you from crooked landlords is a bit like Mussolini protecting you from the Mafia. Or the other way round. Banks don’t give you independence, they trap you in debt. You don’t own your house, the bank does. They are in charge and don’t you forget it.

Bob Dylan having mortgage problems

“The answer my friend is blowing up the banks, the answer is blowing up the banks…” *(see footnote)

Meanwhile, businesses can’t expand (or even start up) because they can’t get loans. Why do they need loans? Because the cost of everything is artificially inflated to ensure maximum returns on… loans. The banks are the lenders and in many cases also the main shareholders, via hedge-funds, in big businesses, many of which do nothing but move money around for their own benefit.

Our economy is chronically unbalanced and will continue to be so while we swallow the trickle-down nonsense that what is good for the top is good for all. Banks are not vital to the economy, they are a parasitical drain on it. We can bail them out when they stuff up and they still end up calling the shots while their grateful peasants knuckle down to austerity, part-time sweatshop insecurity and the demonisation of the welfare safety net (good for returns on those loans after all).

Fred Goodwin

“I trickled down all over the economy and it felt good”

This is not “market forces”, it is an oligarchy, which shores itself up by pretending that no one else could manage things as beautifully. There are 60 million people in Britain, is it really true that not one of them could do as well as the current denizens of RBS? Goodbye, premise (4) – whether or not individual banks went under, alternatives would replace them, or we would find we were better off in their absence. And as for (3) – the sooner the usurious swine leave for good, the better. Conclusion: it is in Britain’s economic interest to upturn the trough.

I seem to have got a bit angry there. Never mind, back to the hive…Buzz, buzz…

* NB: The writers of Floyd’s Giblets do not in any way endorse Bob’s incitement to criminal damage and arson.

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4 thoughts on “A consumer drone speaks…

  1. I think the argument around mortgages and loans etc is a little daft. I mean unless you expecting a government to provide universal housing for everyone…. wait I minute I forget you are a communist facist……. it all makes sense now.

    Still on a serious note the UK economy is skewed because basically we did not manufacture anything that was that much good. So when many of the manufacturing industries had government support withdrawn or went private that sector naturally shrank by a huge amount.

    If we’d made anything any good (like Germany for example) then manufacturing would still be incredibly strong.

    Housing is hi in the UK cost wise because A – we don’t build cheaply (in the us for example a house costs 5 pence because the big bad wolf can huff and puff and blow it down) B- we would’nt buy a pre fab house or an “ikea” house C – were obsessed with home ownership D – there’s a lot of people on a small island E governments have failed to build housing and replace housing stock lost since right to buy came in. All of this is fixable by some bold moves – there’s nothing economically or technically preventing this being solved but no one wants to stick their neck out.

    Business on start up need massive loans because most of the time all they have is an idea. To develop that into something that takes money if you are planning on making something and sell something, and money if you need premises or a shop or whatever. The cost of these things maybe some what artificially high BUT if they were lower it would not mean more loans would be made because everything would cost lower meaning that technically the loans are similar risk. Banks are not loaning right now because they cant take on the risk because of prior liabilities for bad loans they made in the past. Not much you can do about that unless the governments do the loaning.

    As for bankers pay – it is fallacy to say that the best bankers should be extravagantly remunerated – someone being paid 70k a year to do a bank job or 700k is likely to be similarly educated and have similar ability. Their pay is inflated because they’ve inflated their pay themselves by creaming their pay from the deals they make. It’s wrong. Plain and simple.

    An oligarchy is exactly what it is as you say.

  2. Thanks for replying, Keir, makes me feel wanted. I didn’t argue, actually, that British manufacturing went down the tubes because of banking- it killed itself, pretty much, although I don’t think it was entirely due to making bad product. Complacency and terrible labour relations had a lot to do with it, as did a failure to diversify in the face of cheaper competitors (so, not that the stuff was ropey, more that it cost too much to make). To whit, people still want to buy Minis, but they’re BMW these days (ah, those Germans…but would they have bought the brand if it was unwanted? Don’t think so).

    Anyway, back to banks, manufacturing committed suicide, but the corpse has yet to be reanimated and that does have an awful lot to do with the over-privileged position the banks enjoy as a result of occupying the vacuum left in the economy by all the dead factories. Their dominance (and that of the financial sector generally) means that things are run for them, even if that means investment in yet more money-moving/laundering rather than creating conditions in which new businesses can survive. The economic skewing has been more and more apparent since the credit crunch, but successive governments allowed it to build up and did nothing because it made them look good as long as things appeared to be working. You could go back to Thatcherite monetarism and then the housing bubble of the eighties to see when it got supercharged- just as, by no coincidence, manufacturing had finished writing the note and loading the revolver- but of course Blair and Brown were just as guilty of living off it.

    On the subject of housing bubbles- all of what you say is true but I think you might have missed the point a bit. The concept of grovelling to a big lender to get a mortgage as the only way to get a roof over your head is so universal as to amount to brainwashing. I’m trying (hamfistedly) to push the idea that there are alternatives, such as rent-to-buy, shared ownership and various other forms of mutualism- and if that’s all a bit too Che Guevara for you, there are individualist schemes like seller-finance (not that everyone wants to take that kind of risk, but it is possible). The problem is that often these can’t see the light of day because of the outrageous inflating of costs under the malign influence of the mortgage racket- erm, industry. Similarly, with business loans, again there are alternative ways of getting finance to the traditional scheme of indentured servitude to a bank- and yes, many of these involve mutualist crowd-sourcing-type things and yes I probably should just sod off to my commune right now- but again, the artificial inflating of costs serves to make it damned difficult to get sufficient capital by these methods. Which brings us back to the oligarchy.

    Glad we agree!

  3. Ugggggggh. It’s midnight and I’ve just come home drunk! It was very difficult to read all three versions of this at one( triple vision rum and coke). Lech Vs Schindler! Kee you’ve been trading in the American res Gestae for too long child of Regan? Stick to the bacon butties and we will all turn out well. Fyles Medea, I love what you wrote! Nils Carburundum et al. Please come to Cayman and experience some real loose Wild West shit shot bankers? Glib? Very drunk but very full of love for you both. Fascist and compassionate fascist alike! sleep!

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