I have just been listening to the conference speech of John 'Vince' Cable and have been left with the impression that the Tories have got into bed with some very strange people indeed.
Perhaps I could just say something about bank bonuses. Britain had, essentially, four large banks. Two of them, Lloyds and Natwest, have been bailed out by the taxpayer while the other two, HSBC and Barclays, have not.The government has no business telling the independent banks what to pay their staff, so if there are two jobs for a dealer and Barclays is offering £1 million whereas Natwest is constrained to offer £25,000 plus luncheon vouchers, it is pretty obvious where the talented staff are going to go. But we need talented staff in these temporarily nationalised banks to make top profits to improve the valuation of the bank to let us get our money back.
There is public concern at bankers but it is being misdirected. The recession didn't happen because of bankers' bonuses and Vince Cable knows it. The dealers (these are the people who get the big bonuses)were encouraged by the senior management to take risks. Why? Because Gordon Brown had made money too loose, interest rates too low. The banks were over-leveraged. Why, you might ask, didn't the Bank of England have a quiet word with some of them, as it has always done in the past, and just warn them to behave rationally? Because Gordon Brown took the job away from the Bank of England and gave it to some other people who didn't have a clue what they were doing.
Lastly it would have been easy to make the banks ringfence the capital of their traditional businesses (the bits you and I see) and when what Cable regards as the casino bit got into trouble we could have let them go under. Simples.
It is no good Cable railing that capitalism is sometimes horrid. It is, but it has made us rich.