New UK banking regulation
The Vickers Report in the UK has made three main recommendations which the government will implement, it claims, pretty nearly in full. Firstly apologies to our many North American readers but the same may happen to you in due course so it is instructive to consider the consequences. Bear with me please because there will be knock-on effects in the global market. It may well be that some of these reforms also find their way into the Eurozone, possibly not a moment too late. Despite the recent spats between leaders, wiser heads on both sides of the Channel do recognise the importance of London as a financial centre and it seems that Britain will have an observer role in the reconstruction of the Eurozone systems. Continue reading
Ups and Downs in Europe
We feel compelled to offer a timely response to both the Euro and British positions during the shenannigins this week in Brussels; particularly as many of our readers are in the US.
The benefits of a Euro are clear – one currency, one way of pricing (in theory) across the whole area of some 330 million people, cutting out the expensive transfers of one currency to another. Before the Euro, a traveller moving across Europe would have to change his or her currencies a number of times – or have a lot of space in his wallet for different notes and coins. It would cost a fortune each time he changed money and at the end of such a journey it was doubtful whether he would have had 10% of what he started with even if he spent nothing at all. Now it is a lot easier – the change you get from the restaurant in Lisbon can be used Helsinki, that from a taxi in Dublin can buy you a coffee in Larnaca and you don’t have to go into numerical overflow in Italy. It seemed a logical extension of the single market in goods, services and labour. Continue reading
The Big British Walk Out
People have their breaking point. When this is reached they protest – individually and collectively. What I find fascinating about protesting is not the protest itself – this is not that difficult to comprehend – but that people in different countries protest in different ways which largely follow historical trajectories and are therefore predictable. The Greeks torch and destroy their own country; the French build barricades and fight and die on them in the name of their ideals; and the British walk out. Continue reading
Why we need banks
People are angry – you can understand that. They see that the problems have largely been caused by the banks and are saying – hey let’s return to full reserve banking where a bank has to have all the money before lending it to you. That way there can’t be any problem. Others are saying – hey we don’t need banks. Just look where they’ve got us!
I understand these positions and have some sympathies. But I want to consider the effects of either of these two. Continue reading
