Banks: the chickens are coming home to roost

Bankers’ bonuses are going to be capped. The poor dears who rely on their bonuses to maintain their life styles will, in the European Union, have their bonuses capped to the equivalent of their annual salaries. It will be a small step on the right path and in the right direction, but it fails to deal with the underlying problem that the banks have caused and still cause for our economies. The second small step will be to separate the traditional banking business for taking deposits and lending from the highly speculative activities which involve what is in effect gambling with other banks.

Both reforms have been and are being strenuously opposed by the banks. They would prefer to pay whatever bonuses they feel appropriate and to use savers’ money directly in their speculations. I suppose every gambler would prefer to gamble with the money of others at no risk to himself because it must be an ideal occupation: heads they win, tails we lose. The profits are privatised but the losses born by society.

The RBS Group managed to make losses of £5.2 billion in 2012. In Spain Bankia made losses of € 19 billion. The RBS claim that their losses are due to making provisions for mis selling of Swaps and Personal Protection Insurance. That statement merely disguises the truth. Previously they entered in their books profits from Swaps and PPI which were the result of activities, some of which were fraudulent, some of which were illegal and some of which were unfair. Many bakers were paid bonuses as a result of those profits, which were not really profits as we now know as the chickens come home to roost.

3 Responses

  1. What would help stop the gambling is to force the banks to carry the reserves they ought to, not fractional, this would create true wealth backed by the total amount of physical labour that is creating it.

    Capping anything will only prolungue the misery of millions, back to the real wealth of nations getting the same in’s as their work outs.

    Imaginary is for children not adults.

    • We could stop the gambling by forcing the gambles to use their own money, not otehr people’s money.

  2. That is what I mean’t Rob, they have the same anmount of their money to back a failing in the system due to natural dissasters, etc.

    Let us trade our labour evenly across the globe for exchange of goods, this means everybody, nobody would get rich, because the interest/profit on our labour would cease to exist and rightly so.

    Let the billions be given back to those expending that energy, then the true value of labour would be realised.

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