91Èȱ¬

I remember reading somewhere that at the last party conference, the SNP adopted as party policy to ask the OFT to investigate the dominance of business banking in Scotlnad by the two big Scottish banks. I wonder when the party hierarchy will get around to sending a letter to the OFT asking them? Or does party policy not really matter?

Excellent article Mr Fraser! It is to be noted by the powers that be that the i-banks continue to operate in the same model as they were operating before. Bar the limp slap on the wrist for bad behaviour nothing much has really changed.

One would expect that the lack of expected return to 'boring banking' post-crash would have at least raised a few eyebrows in the US and in Europe. Why not tax the i-banks significantly more now to help fund the respective national recoveries and temper the growing deficits? It appears as though the bankers are currently walking away from the mess they caused, scott-free.

Sizwe ()

What if Capitalistic countries could codify the kindergarten rule "When you have won too many marbles, you must go home."? Say something simple, designed to forstall the social law that income disparity eventually culminates in upheaval and death, like At control of or interest in 4 billion Dollars, you must NOT enter any economic activity that may result in an increase in income or assets or control of assets or influence over assets. You may buy only. You may not sell,you may not instruct, you may not consult. You may buy only. We do not need you in our economy. It is someone elses turn.

If we could codify this principle, i suggest that we could then fight in a decent way over the number it should be, rather than await the destruction that comes from a disenfranchised electorate.

If you were a successful thief, wouldn't you continue to steal - if you were allowed to?

Of course these aren't actually Scottish banks.

Pre crunch and pre the government taking them over their shareholders were mainly City fund managers and other similar institutions and they were regulated by that awful FSA/Treasury/BoE tripartite setup.

So they were not actually owned - as people like to romantically assume -by lots of little old ladies knitting scarves in front of their peat fuelled open fires in twee crofts in the highlands.

As to the central question "If you were an investment banker, wouldn't you take your bonus?" then the answer is that the investment banker's boss shouldn't be offering it in the first place but should be putting it into a pot for investing in start-ups, spin-outs and early stage companies so that we can properly rebalance the economy and reduce the reliance on financial services.

A very good post.

I would take things back one step further. To quote from your article 'Couldn't it also be because there's not enough competition in investment banking? The excessive profits being made by these banks, and reflected in ludicrously high bonuses, are because the market isn't functioning properly.

In any other market with excess profits, newcomers would be attracted into the business, and prices would be driven down. But not investment banks, where the barriers to market entry are formidable.'

But how did the barriers to entry become so formidable as to prevent competiton?

Because of the cost of meeting of Regulations.

And how are such Regulations evolved? Through consultation with the major industry players, who given the opportunity will always be seeking to protect their dominance in markets as far as they can. These organisations are often supported by national regulators who seek to protect their national companies from overseas competition, and protect national earnings.

Similar problems exist in other markets from Foods to Pharmaceuticals, led by the EU. Perhaps we need to look to how our Regulators opererate, and look at the bigger picture?

What a horrible world of materialisim we live in, but if this saying came from the bible 'Greed begets Greed' then for once with this particular publication I'd agree.

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Might not the EU set up an agency that prospective clients could consult for education in the in and outs of dealmaking with the investment banks?The agency would of course be concerned purely in hypotheticals and not be involved in any real deals.

If you are an unskilled worker would you work for a profitless min wage, of course not your in for the wonga aren't you

"Bonus questions" is the title of Douglas Fraser's blog.

Most 'ordinary' working people in Scotland, England, Wales and Northern Ireland now know full well that Scottish based banks were as 'globalised', reckless and involved in 'bad banking behaviour' internationally as many other banks?

Scotland's banks used to have a greater reputation than most before globalised banking blew up in a massive bank bail-out by UK taxpayers?

Good and decent reputations of banks take generations to achieve - and Scottish banks and Scottish financial institutions certainly had that great reputation before Goodwin drew The Royal Bank of Scotland into the megalomania of global bonds and hedge funds/short trading.

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Banks are organised into a cartel. They all take the same margins on Forex, IPOs and derivatives dealing: because they can get away with it.
If trading margins were more competitive, their opportunities to make rentiers' profits would be reduced.
Don't believe all the bankers' blether about theirs being a competitive market. What we have here is asymmetric knowledge: they have up-to-the-minute transaction data and from around the world on their Reuters or Bloomberg screens. Outsiders have no chance to match the Bankers' combination of cartel and insiders' information streams.

What to do with them?
Well. We still have the axe - and the block. Stored conveniently at The Tower close by!

Breaking News! What about the Wikipedia leak indication that a Labour Party Minister encouraged Lybia to pursue health state of Megrahi to bring about his release. He tried to involve Salmond but was told in no uncertain terms that the release of Megrahi would be on grounds of ill health ONLY and not to justify the foreign policy of the Labour Government.

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"I'm none the wiser as to whether the Scottish Government wants to see Royal Bank of Scotland broken up or not......It's a big question on which to be silent."

However, as John Swinney points out in his submission, it's [yet another] question on which the UK does not provide the data on which a decision for Scotland can be reached.

His point is actually very clear.

"We have concerns about the impact on competition in Scotland's banking sector, particularly since the takeover of HBOS by Lloyds TSB, and we encourage greater competition in the market place.
Improved data availability would assist in making progress on these questions. The Scottish Government therefore calls on the ICB to ensure that data on PCAs, mortgage lending to households and lending to SMEs is collated at individual country level in the UK, including for Scotland. We also call on the ICB to ensure that conclusions from this exercise, and each of the leading reform options you identify for further consultation in spring 2011, include an assessment of the impact on Scotland's banking sector and wider economy."

Swinney could have used his submission to make some cheap political points - as Andy Kerr would no doubt have done.

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Douglas

I have to admit to being less than knowledgeable about some taxation aspects like VAT on a SME.


What would be the effect on such a business were they to issue a false invoice to a customer - knowing that it was for work they had not carried out?

Would it be a defence if the customer was an MP?

"What does that say about national economic ambitions?"

Surely these are determined by the degree of fiscal autonomy/responsibility that the nation has?

Certainly, some economists appear to lose consistency in their views when they get a job higher up the Establishment.

# 21 reincarnation

If an SME owner issued a false invoice for a non-existant job where no payment had been received by the SME; then said invoice was tendered as having been paid by a third party the SME owner could end up in serious trouble with HMRC if they were to scrutinise his VAT returns. Any inconsistency with the VAT returns of the SME owner would lead HMRC to consider he is fiddling his tax returns and they would go through him like a dose of salts.

However, if the SME owner were to admit to HMRC that he issued a false invoice because he felt pressured by some-one in high office, say an MP, who wished to use it for fraudulent purposes, the SME owner would be able to avoid charges to himself by giving evidence against the person who tendered the invoice for fraudulent purposes.

Hope this clears it up for you.

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23. Undevoted

Thank you. That was useful. I must remember never to ask the owner of an SME to do dodgy things on my behalf!

23. Undevoted

Come to think about it, it might not be wise to vote for a party in Scotland that selected a candidate for MP who could even consider such a thing. Who knows what such people would do to the economy.

I'm confident that such a situation will never occur, so I'll have the full range of parties to consider in May.

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Interesting to see 91Èȱ¬ Democracy Live has a Committee Debate on Minimum Alcohol Pricing for some part of the UK.



Sounds a good idea. Douglas what would be the economic effect of doing this in Scotland? Indeed the contribution of the supermarkets to Scottish society would itself make an interesting blog.

Off topic - But did our Shadow Foreign Secretary, previously responsible for International Development really divert funds from poverty-ridden countries to help to pay for the Pontiff's visit to the UK?
Did he do that because he was told to by the then Scottish Secretary - or was it because he thought that the under-developed parts of the World would not miss a couple of million?
Its good to see the reality behind the previous New Labour Government's spin.
Slainte Mhor

29. spagan

I was surprised to read that story. According to the Beeb -

Department for International Development "said the cash would not affect overseas aid spending as it was taken from its "running costs" budget.

This part of the department's budget [£1.85m], used to pay for staffing and administration costs, is not ringfenced from spending cuts unlike core overseas development aid which is protected. "

If true, then they clearly didn't need that money in the first place, and is yet another example of how Westminster featherbeds itself and is a total drag on the economy.

Also worth noting that the then Labour Government was borrowing £16 billion per month. So no money was somehow just "surplus".