Friday, 25 November 2011

Permanent Occupation

Here's an idea. Every city with a financial district should erect a substantial monument to the 'occupations' in the heart of its financial district, to act as a reminder to all who pass by it that all of society is affected by what goes on there.

While I have no objection to the quaint tradition of enshrining 'bulls' and 'bears' in the streets outside our bourses, should animals alone continue to epitomise our financial system?

Image from Technology News.

Saturday, 19 November 2011

Saving The Euro Does Not Justify Every Means

The Eurozone crisis has now transcended economics. Full fiscal union is all that will carry the Euro across the chasm of doom, and the tension this generates is sweeping economics, the markets and the Euro to one side. European unity itself is at stake. The elected governments of Greece and Italy have fallen and been replaced by unelected technocrats who would deliver up fiscal sovereignty ahead of fresh elections. Last night we learned that the EuroZealots are now so deluded in the strength of this cause they'd even have Britain make the leap. 

There's something very ominously totalitarian in this level of dogmatic desperation. Merkel, Schäuble, Sarkozy and the EC crew would seem to forget they're dealing with a pressure-cooker, and would blithely slam the lid on rather than allow people time to let off steam.

There has been warning after warning that this is a time to pause and try to re-establish consensus on European Union itself - to uphold democracy - rather than to drag disparate peoples along by the scruff of the neck just to save the technocratic dream of a single currency, or even a 'single market'. 

Allowing people time to adjust to the grim new economic reality will not save the currency, but it might just avert the catastrophic conflicts of yesteryear. Similarly, riding roughshod over riotous anxiety levels today will not inspire citizens to embrace a decade of economic gloom.  

This is not an attempt to manufacture a moral panic - though one could say that of the case for EU fiscal union. It recognises that ordinary EU citizens have already taken to the streets to express their outrage and duly elected governments have wilted. Forcing fiscal union and further austerity measures is clearly intended to confront those popular forces. Saving the Euro does not justify such means.

Thursday, 17 November 2011

Red Tape Challenge To Liberate UK Economy

As part of its Red Tape Challenge, the Cabinet Office is now targeting laws that stifle the development of new business models for no good reason. 

So anyone who's run into bureaucracy in setting up an innovative business should submit their comments at: Red Tape Challenge for Disruptive Business Models.

Once the initial ten-week window has closed, highlighted regulations "will be immediately put on probation, and will be scrapped unless the responsible department can justify or satisfactorily modify the regulation in question."

The two examples cited show how 'red tape' may include the absence of a definitive permission, exemption or exclusion, in the existing regulations (the first example certainly being close to my heart):
"Zopa, a company that provides a platform for members of the public to lend to each other, who found that financial regulations simply didn’t know how to deal with a business that didn’t conform to an outdated idea of what a lender is...
A number of businesses have tried to disintermediate estate agents by providing a platform for customers to sell directly to each other at low or no cost. But Estate Agency regulations treat them as if they are traditional Estate Agents, and place burdens upon them that make very low cost internet-enabled business models unviable."
I couldn't see a ready guide to what else would be considered 'red tape', so it's up to you to decide. As a suggestion, one definition I've found repeatedly referred to is:
"a collection or sequence of forms and procedures required to gain bureaucratic approval for something, especially when oppressively complex and time-consuming."
My own view is that 'red tape' and 'bureaucracy' are the same thing: requirements that either have no purpose or exceed their intended purpose or effect. Examples would include data that is collected but never used. Or a financial system that prohibits diversification. Or financial regulation and tax laws that favour 'traditional banking' over new models.

I'll get my coat.

Wednesday, 16 November 2011

A New Regulatory Model For Retail Finance

Over on The Fine Print, I see that my professional alter ego has updated his post on a proposed new regulatory model for retail finance, in the light of a late night post on the US Crowdfunding Bill. Those posts, and some feverish work of my own on the Book of the Blog, would appear to explain a slight delay on this particular front, which I'm personally assured will be rectified shortly ;-)

Thursday, 10 November 2011

Short Churches?

Ever since protesters were forced by police to retreat from the London Stock Exchange to occupy St Paul's Churchyard, I've been fascinated by the effect of the global financial crisis on our Christian institutions.

While the Vatican has seized the opportunity to issue its statement on 'reform to the international financial and monetary systems', the Church of England, of course, was terribly embarrassed to be caught up in it all. Incapable of grasping a real opportunity to shape people's thinking, instead St Paul's initially offered to convene a nice cosy debate. Then the Cathedral's 'canon chancellor' resigned ahead of the Bishop of London's threat of eviction, which was followed shortly after by the resignation of the dean of St Paul's. Finally stirred into action, the Archbishop of Canterbury called for "robust public discussion" about the possibility of a so-called 'Robin Hood tax' on financial transactions.

The Vatican's statement is typically grand, and I've not had the time to consider it all, but here's an extract of some concrete proposals:
"a) taxation measures on financial transactions through fair but modulated rates with charges proportionate to the complexity of the operations, especially those made on the “secondary” market. Such taxation would be very useful in promoting global development and sustainability according to the principles of social justice and solidarity. It could also contribute to the creation of a world reserve fund to support the economies of the countries hit by crisis as well as the recovery of their monetary and financial system;

b) forms of recapitalization of banks with public funds making the support conditional on “virtuous” behaviours aimed at developing the “real economy”;

c) the definition of the domains of ordinary credit and of Investment Banking. This distinction would allow a more effective management of the “shadow markets” which have no controls and limits."
However, I wonder whether our religious institutions could be a bit more active in the reform of the financial system, rather than pontificating from the sidelines? Their wealth and tax-free status has not gone unnoticed, and there's plenty they can do on the investment front. The Church of England's ethical investment policy is here, for example. And it has lent stocks to short sellers. But that's not what I'd call active

Having previously suggested that short selling would be a useful regulatory tool, and that we could do with a secular version of the old Devil's Advocate, perhaps these are areas where the churches can help, along with voting at AGMs on executive compensation, for example. In fact, sometimes billed as the "shock troops of the Vatican" or "God's Marines", maybe there's a calling for highly-trained Jesuit priests on the trading desk of an ethical hedge fund, short selling the stocks of companies that the faithful believe are operating unethically. 

I wonder how they would rate Mr Blankfein's efforts?

Image from

Wednesday, 2 November 2011

No Mandate To Offer Better Public Pensions

Where is Cameron's mandate to offer public sector workers better pensions than the private sector?

Gordo raided the private sector pension pot years ago, as the Tories rightly pointed out in their election campaign. The unions, of course, had no problem with that, since they are the beneficiaries of Labour Party porkbarrelling. And economic crisis has mean that private sector workers have known for the past few years they can never retire.

The public sector needs to understand they can strike all they like. The world has changed.

Referenda seem popular at the moment. Perhaps we should have one to decide this issue?

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