News & Analysis
Labour Floats an Investment Bank – Oh, boy!
Ed Miliband urges a return to 'stewardship banking'... Ed Miliband, the leader of the Labour Party, has urged major reforms of banks to create a return to "stewardship banking" to counter the shift to "casino banking" over the past two decades. He said the shift had resulted in the" mis-selling of products to small business, failure to lend", and the "fleecing of ordinary customers, such as in the payment protection scandal" and a culture "too often driven by short-term gain". With "all of us paying the price of what the banks did in the financial crisis in lost jobs and all the other consequences". "We need a banking system which serves every region, every sector, every business, and every family in this country," Mr Miliband said in a speech at the Co-op. – UK Telegraph
Dominant Social Theme: Once banks are good again, the world will be a better place.
Free-Market Analysis: The head of the Labour Party is going green, as in "Greenbacker." One of the planks of the US Greenbacker movement, from what we can tell, is an investment bank.
And now Ed Miliband is on board. In fact, the Labour Party has just issued a big white paper entitled, "The Case for a British Investment Bank." It is written by attorney Nick Tott and although he claims the opinions are his own, he comes to the conclusion (surprise!) that an investment bank is possibly a great idea.
We would propose humbly that it is not. What it is, in our view, is going on is simply an attempt by Labour to capitalize on the anti-banking fury that is currently being whipped up.
We're already on record that the LIBOR scandal is a sham, created by the powers-that-be to further demonize the banking sector. The idea apparently is to set up a new round of definitive securities industry hearings that will finally make it impossible for people to raise sizable amounts of money without the blessings of regulatory authorities.
Of course, the regulatory authorities, like other parts of Western commerce and culture, are nowadays entirely controlled by what we call the power elite, dynastic families that run central banking around the world and have access to virtually unlimited funding.
With the dominant social theme of central banking coming under intense attack, these elites have apparently determined the solution is to involve the government more intimately in financial matters. This way, control stays with the powers-that-be either via the private sector or via government monopoly regulation.
The Labour Party is an invention of the socialist Fabians and therefore from the very beginning an outpost of power elite control. It is no wonder then that Labour is leading the charge for a British investment bank that will ultimately be controlled by the very elites it is intended to confront.
In fact, in his speech Miliband presented five elements of government control of finance that will actually benefit the shadow elite that pulls the levers of government behind the scenes. Here they are:
• Separating retail and investment banking as recommended by the Vickers report.
• More competition by forcing the big bags to "sell off hundreds more branches".
• The formation of a British Investment Bank to help small businesses.
• A code of conduct for banks with those who break rule "struck off".
• More criminal prosecutions for financial crimes.
Miliband called these "root-band-branch" reforms designed to bring common sense back to British banking. He also attacked the bonus culture at banks, according to the Telegraph article (excerpted at the beginning of this article), which he pointed out "saw Bob Diamond, the chief executive of Barclays who resigned last week after the bank admitted rigging the key Libor rate, making more than £120m over five years."
From Miliband's point of view, Diamond and other bankers are fiddling with "other people's money" – however, what Miliband does not admit is that all money is essentially being fiddled with by the central banks that print it.
"He wasn't taking risks with his own money. He was taking it with other people's," he said, adding that to change this culture an ordinary bank employee should be on every bank remuneration committee.
He said reforms we needed to build a "more responsible banking system to serve a more responsible capitalism" that can help rebuild the economy.
The trouble with this prescription is that a more responsible banking system will apparently include a British investment bank, the leaders of which shall have no idea what kind of enterprises to fund or for how much. This is the problem with monopoly banking solutions in general.
Government never knows what ideas are relevant nor how much money they need.
In the private sector, competition tends to winnow out elements of inefficiency. But in the public sector, failure only piles on top of failure until the entire heap collapses in a loud explosion that usually has terrible consequences for both government and private sector.
In this case failure is already baked into the pie as Labour is calling for an investment bank that will include a good deal of "green" emphasis. It is probably safe to say – as a general rule anyhow – that nowhere in the world is "green" enterprise either succeeding or making good returns on investment.
An investment bank funded in some manner by the British government will eventually pile on even more debt burden while it attempts to reshape the economy into something that most British don't want.
Of course, we have pointed out in the past this is likely part of the plan as well. The elites behind all this nonsense seem to be actively pointing the world in the direction of ever more ruin. When people cannot take it anymore, additional world government will probably be suggested.
Chaos is always the answer of the power elite when it is challenged. War, Draconian regulatory authority and recessions and depressions are fomented to distract people from the larger issues.
In this case, we have asked if these sorts of strategies are going to be as effective as in the past, given the presence of what we call the Internet Reformation.
There is little doubt the powers-that-be are headed for a massive regulatory overhaul that will seek to put all kinds of finance thoroughly under regulatory authorities that they control. This worked well in the 1930s, when financial regulations were first put into place.
Conclusion: Whether people will allow themselves to be manipulated a second time remains to be seen.