Of Banks And Leaky Buckets

Bank

I saw that Philip Stephens of the FT reckons the Independent Commission on Banking has let the banks off the hook.

I'm not so sure.

Once you accept the principle that retail banks must be 'ring-fenced' from their casino counterparts, it's a slippery slope. Firstly, it's questionable whether ring-fencing will work without formal legal separation. Secondly, ring-fencing won't mean much without a prohibition on the retail bank either directly or indirectly financing any of the casino operations - including providing security for casino activities. Surely the two businesses will have to behave truly independently. Mere firewalls will not prevent a repeat of the banking crisis.

But forget all this talk of fences and firewalls. Today's banking model is just a very leaky bucket.

Banks rely on you not having the first clue where your savings end up, or even caring how much interest is earned or who by (proof of that, if you needed it, is in any Barclays' TV ad with a Stephen Merchant voice-over). Your savings and the interest can leak into anything from a credit card balance to a synthetic CDO tracking shonky mortgages in Florida. Similarly, you sign up for loans and insurance, and your money runs out some more holes in the form of fees, charges and commissions or a giant fine to the FSA. For every hole that gets plugged - whether it be restricting early repayment charges or forcing better disclosure in consumer credit, stopping the Great PPI Robbery or requiring customers to be treated fairly - other holes appear in the form of additional current account charges and so on. Now they whinge about having to sell branches to create competition, and the costs of restructuring to prevent more holes being made by toxic investments.

At what point do we throw away the bucket?

Do the NHS and the BBC Really Need My Help?

I was recently invited by 38 Degrees ("people. power. change.") to email my MP to save the NHS. Previously, I was told the BBC needed me to ride to its rescue.

Now, I've been a great supporter of harnessing people power via the Internet to facilitate social, political, commercial and retail improvements. Hence my subscription to updates from 38 Degrees (amongst others). I was attracted by the mission statement:

"38 Degrees brings you together with other people to take action on the issues that matter to you and bring about real change."

But I don't think you improve the effectiveness of our institutions - particularly the NHS and the BBC - by campaigning against the forces for their reform. Both institutions devote adequate resources to that already. I don't mind emailing my MP to support one of a number of rival reform proposals. But I won't trouble anyone in support of the status quo.

Image from kuduTalk.

Our Defences Against Disaster Weaken Over Time

Maintaining the Thames Barrier?

There's an interesting post at Zero Hedge speculating on the core theme behind the meltdowns in the debt markets, Gulf of Mexico and Fukushima:

"The bottom line is that if we continue to let the top 1% - who are never satisfied, but always want more, more, more - run the show without challenge from the other 99% of people in the world, we will have more Fukushimas, more Gulf oil spills and more financial meltdowns."

Yet danger lurks in positioning the lack of critical thought as the fault of the "top 1%", since that presumes the rest of us are even thinking at all, let alone critically or correctly.

It's not only 1% of us who fail on the critical thinking front. And not all people at the top of large organisations fail to think critically or act responsibly. There are plenty of yes-men and flunkies ready to act without question, while others genuinely and honestly believe it's their job to simply do what they're told.

However, given the devastating impact of recent disasters and the broad range of scenarios, the fact remains that our large-scale organised defences to key threats do seem to weaken steadily over time, regardless of the adequacy of the initial defensive position. We can also see that process at work in, say, the construction of the RMS Titanic, or the state of the New Orleans flood defences or the failed attempts to implement tsunami alert systems ahead of the Boxing Day Tsunami of 2004.

It's easy to blame cost-cutting itself, and management greed or short term shareholder expectations as its source. Or perhaps even a general human tendency towards complacency. It's easy because such 'causes' let 99% of us off the hook.

But surely that's the root cause of the problem. We all know that our society's defences to major threats weaken over time, but we lay the blame elsewhere instead of each bearing some responsibility to constantly question the readiness of those defences - whether as staff, parents, investors, taxpayers or voters. We are not powerless victims. The rise of the Internet, the empowerment of individuals and all the ensuing bottom-up changes those trends have wrought demonstrate that.

Image from Carbon Based.

The Bribery? What Bribery? Act 2010

It's okay folks. The Bribery Nothing-wrong-with-the-odd-backhander Act 2010 will limp into effect on 1 July, rather than convert Twickenham rugby stadium into, say, a new experiment in social housing, as feared.

The Ministry of Justice has even produced a helpful guide to Bribery, featuring lots of placatory language and easy talk of "prosecutorial discretion".

They may as well have stood in Parliament Square with a bullhorn shouting: "Get out there and sell UK plc, damn it. We need the spondoolies."

Image from Ministry of Justice web site - no joke.

This post is written for information purposes only, and is not intended to be relied upon for any purpose whatsoever, including but not limited to participation in government or corporate procurement exercises anywhere in the universe, either as we currently understand it or as it might turn out to look like following more intensive research involving the Large Hadron Collider and an errant strip of aluminium foil that a cleaner inadvertently left in the chamber after a late night game of cards [er, that's enough disclaimer. Ed].

Ode To London Tree Pollen

Now Spring has sprung,

I am undone

By dim-witted English trees -

They blossom now,

Only t' forget how

To hold-on to their blasted leaves.

Where I come from,

(I am no Pom)

The trees are not so dim -

Being Evergreens,

They keep their leaves

And rein their pollen in.

But be patient please,

While I sneeze and sneeze,

Brief Summer will soon wane -

Then these bloody trees

Will forget their leaves,

And the process will begin again.