Wednesday, 12 January 2011

Bankers Bonuses or pave the streets with ...... carpet

Bankers bonuses have surfaced again. We were right to get angry in 2007 when the credit crunch went global. Bankers had been too comfortable in their risk taking and left nothing in reserve. As the saying goes "there are  none as blind as those who don't want to see". And this perfectly describes my own observations of the slow motion car crash of the financial merry-go-round. That was then and this is now. The truth is that banks are now performing well and better than expected in many instances. Instead of record losses and collapse we are now seeing huge profits. These profits have been made by doing exactly the opposite of what they did to cause the credit crunch. Cautious lending, retaining funds and steady growth. Yes, some would argue that lending is too cautious and growth too steady but, nonetheless, their fingers were burned and there seems to be an overwhelming desire from them to keep cool. What does this have to do with paving the streets with carpet? I'll explain. As I am not (yet) in political office I still have the luxury of courting unpopularity. Let's pay the bonuses in full and be glad about it. In fact let's encourage the banks to pay more! Many years ago I asked my Dad what he would give to charity if he won the pools. He said he would give nothing but would carpet all the streets in town. He was obviously being metaphorical but this was his attempt to explain economic dynamics. The carpet fitters would get a huge amount of trade, they would have to employ extra people, they would all be paid and they would spend their new found wealth. The shopkeepers would have to buy more stock to fuel demand and factories fill their order books to supply the retailers, etc., etc. I was gobsmacked, all this because some lunatic wants to carpet the streets! With Bankers being paid huge bonuses we get double bubble. They increase their spending power and, however frivolous, the money they spend stimulates the economy. As most of these recipients will be on the highest rate of tax, we, the taxpayer, get half the bonus as PAYE. Their frivolous spending will account for another 20% to the taxpayer in VAT. If the banks continue to refuse to be persuaded to lend more money then keeping the bonuses in the bank will add to their profits and we only get 27% of that as Corporation Tax. So withhold the bonuses and we get a smaller cut. The unpalatable truth is that the Banks MUST pay big bonuses, they are the only businesses that can.

Bankers Bonuses let's pave the streets with carpet

Sunday, 9 January 2011

Don't Shoot the Messenger

So today we have seen the Shadow Chancellor of the Exchequer making a fool of himself on Sky News. Red Ed's chosen one to lead Labour's front bench on the economy did not know the answer to a simple uncomplicated question about employer's National Insurance contributions. he obviously hadn't reached the chapter on NI in his Economy for Dummies he said he needed to read and probably didn't even know that employers had to pay national insurance. The immediate reaction is to lampoon the gaff and point fingers. No doubt he'll be getting more than his fair share of this next time he's at the dispatch box. On reflection, though, the biggest mistake Alan Johnson made was to accept the job in the first place. He is quite obviously out of his depth and this begs more questions about the man who put him there. The question in my mind is did Ed Miliband really appoint him when the smart money was on Ed Balls? The appointment of the former postman, union leader and self confessed Marxist suggests more than a light touch from the Union bosses to push Red Ed into putting him in this top position. As I predicted in my blog "Shadow Shadow Cabinet - What a Balls Up" (, the real Shadow Cabinet isn't the one full of Labour MP's, it's the one full of union bosses. And now we hear that Ed Miliband's efforts to appoint himself a chief of staff has failed at two hurdles with James Purnell and Lord Falconer. Will he be turning to his Shadow Shadow Cabinet for guidance?

I think we have seen the first signs of the Shadow Shadow Cabinet sending out the messenger but we should not shoot him, we need to aim our sights higher.

Don't Shoot the Messenger

Saturday, 8 January 2011

Fiddles, Fat Cats or Felons?

I’ve been reading the comments in the blogosphere about the recent jailing of former Labour MP David Chaytor over his expense fiddles. This was passing me by until I read one particular blog from a Journalist I have long admired and will again admire when I’ve got over it. The blog “It’s not hard not feel a bit sorry for David Chaytor” ( has absolutely missed the point. We have no obligation to feel even the slightest bit sorry for him and shouldn’t feel guilty for not doing. Like the rest of us we were horrified by some of the fiddles going on with the MP expense system. Most MP’s were whiter that white, a few were bending rules and a few more were breaking the rules – we got angry, the scandal exposed and MP’s learned from it. A very VERY few went beyond a fiddle and were downright criminal. A nose in the trough is wrong but David Chaytor didn’t just bend rules or exaggerate claims. He didn’t just accidentally claim for something which wasn’t a legitimate expense or flip a house to max out his allowances. He lied, he cheated and he stole money from the tax payer. There are no Party Politics here, he’s a criminal, convicted by the courts and he’s being punished just as Archer and Aitken have been before him.  The big difference here is that he is an MP and that does make a difference. He is not only a convicted fraudster but also an abuser of the trust his electorate placed in him and the court seemed to have reflected this in the stiff sentence and not giving him full credit for his belated guilty plea.

Three other Labour MP’s have opted for a trial and maintain their innocence. If they are found guilty they have better get used to the taste of porridge.