The Futility Monster

He'll pointlessly derive more enjoyment out of your resources than you

The Drones May Fall Into Line

Posted by The Futility Monster on January 15, 2010 @ 10:40

Well, it sort of makes sense here...

Praise be!

Our Lord President Obama has actually taken an opinion on something!

Yesterday he unveiled an opportunity to extract large sums of cash from the corporate monster that is the banking sector.

The plan itself is remarkably bold for a man who has been so timid on various issues throughout the first year of his presidency, when he should be at the peak of his mandate. And yet, it is actually a fairly modest tax that would extend over 10 years, and only be more punitive to those who deserve it the most: the ones with substantial borrowings. It should still, however, raise significant sums of money.

Bankers in the US will bleat and moan that many of them didn’t even accept taxpayer’s money during the height of the crisis; and that they will just have to pass on this cost to the consumer. Of course, that’s all just part of the PR game. First of all, no bank would be left standing if it wasn’t for the unprecedented scale of loans, investments, nationalisation and quantitative easing that has kept the sector going. They should be grateful they’re still here.

And as for passing on charges… well, many banks were planning to do this anyway in order to enhance their profitability after a couple of years of hits. Now they have a perfect excuse to do so, and can blame the government in the process. It’s all about the rhetoric.

With a bit of luck, the plans will make it through the US Senate relatively unscathed. It is an election year after all, and all the polls are still showing a great degree of negativity towards banks, bankers and their bonuses.

What will be most interesting, however, is whether other countries will react in the same way. British efforts to rein in our banking sector now look rather tame in comparison. Surely we should take the opportunity provided by Obama to copy the policy and extract our own pound of flesh? It would be a relatively free hit and wouldn’t be as damaging to UK competitiveness if our biggest rival in the banking sector is doing exactly the same.

That old chestnut of national interest, however, is probably what’s going to stop us. There is still a banker love-in going on in the City of London, and many of them will currently be wondering if Obama’s actions could lead to another round of offshoring. Maybe once our 50% bonus tax has worked its way out of the system we might be in line for even more banking jobs, and even more bonuses…

And this, my friends, is why we need global co-operation. If only Obama had told everyone last year that this was what he was planning all along, we might have got better agreements at the various G20 and G8 summits last year.

A wasted opportunity, methinks.

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