Yet more news over the last 48 hours of the financial system’s failure to adhere to it’s own rhetoric and to the capitalist system’s needs to function properly.
First we had Sir Philip Hampton stating the banks are too big to fail and bankers are paid too much. Finally admitted but hardly something the rest of us didn’t know. (Peston, R, 2011)
Then, today Goldman Sachs defy logic yet again when revenue drops significantly (13%) yet the pay goes down only 5% and the restraint shown in the final quarter of 2009 is now a thing of the past. ( Treanor, J, 2011)
On the 11th January 2011, Bob Diamond told us all at the cross-party Treasury Select Committee that the Banks had made amends for their past excesses and should now be left alone to “take risks” and make profits. (Kirkup, J, 2011)
He said “There was a period of remorse and apology for banks. I think that period needs to be over”.
We are over 2 years into a financial crises that is still ongoing and will continue for several years to come. Shocks in the market place will continue this year with debt management in the Euro zone and stresses on the Euro. In the UK we have many shocks of price rises beyond our control, a weak pound and what will soon become rising interest rates. Youth unemployment has just reached 1 million. (Butterworth, M, 2011)
Our entire financial system and the very basis upon which our society rests is in danger until the financial services sector is fully reformed, meaning that banks are no longer too big to fail. At some point capital reserves must increase in the biggest banks and some of these may well require breaking up and the separation between investment and retail banking. Regulation will also be a major factor, not more regulation, but better regulation.
The bankers, whether its Barclays, Goldman Sachs or RBS still haven’t got it yet, and until we have some brave politicians who can take them on globally, the next financial crises will be just around the corner.
Butterworth, M, (2011), Youth unemployment jumps to record high, [online], telegraph website, available athttp://www.telegraph.co.uk/finance/personalfinance/8269835/Youth-unemployment-jumps-to-record-high.html
Kirkup, J, (2011), Bob Diamond: Bankers should stop apologising, [online], Telegraph website, available athttp://www.telegraph.co.uk/news/8252771/Bob-Diamond-Bankers-should-stop-apologising.html
Peston, R, (2011), RBS Hampton: ‘Journeyman’ bankers are paid too much, [onile], BBC website, available at http://www.bbc.co.uk/blogs/thereporters/robertpeston/2011/01/rbss_hampton_journeymen_banker.html
Treanor, J, (2011), Goldman Sachs bankers to receive $15.3bn in pay and bonuses, [online], Guardian website, available at http://www.guardian.co.uk/business/2011/jan/19/goldman-sachs-bankers-pay-bonuses?showallcomments=true#end-of-comments