Friday, 19 September 2008

Financial Institutions and Toothless Regulators

It looks as if they might just about stopped the financial world from unravelling but recent events make my previous comments (12th September) look strangely prophetic. The banks with the most money are gobbling up the lesser banks and we all know the consequences of that for the workers in the financial services industry. The corridors of the Parliament (both in Westminster and Edinburgh) are awash with crocodile tears as the Capitalist system creaks under the strain of unfettered greed. Apparently 'Greed is good' doesn't apply any more.

Meanwhile the regulator issues a toothless ban on short selling of the shares of banks and insurance until the end of the year. The whole system of share trading has turned into a giant casino where no-one really knows the rules, because there are no effective rules. Big Gordy and Smirky Salmond might try to scapegoat the short sellers, but they were acting completely within the law, and it is Governments which still make the law. The fact that there are too many financial institutions in the USA and the UK which have grown so large that if they are allowed to go down they take the country with them is a national disgrace. It means that they can indulge in massively risky behaviours in the knowledge that the taxpayer will cover the losses should they fail.

The real answer is to break them up, and sooner rather than later and preferably put them into public ownership so that the workers who generate the profits share in the success of the enterprise, rather than the present situation where the greed generates massive losses, the workers lose their jobs, the bosses walk away with all the remaining assets, and the taxpayer bears the loss.

This crisis was avoidable, and had the regulators real powers to stop abuse then the people would have been better protected.

2 comments:

one man army said...

not long now untill we are a third world country!!

MARK said...

I think it is time to get back to basics. Cooperative banks owned and run by their members, with each having a say in how it is run. Forget the unelected directors skimming off the cream to give to the hungry shareholders.