With friends like these…
Simon Culhane is the chief executive of the Chartered Institute for Securities and Investment. Its website describes it thus:
(CISI) is the largest and most widely respected professional body for those who work in the securities and investment industry in the UK and in a growing number of major financial centres round the world.
I think we can conclude therefore that quite a lot of his members get big bonuses.
In the Times today he has possibly the silliest piece I have read on the recession. He argues that:
Banks are the scapegoat for politicians’ mismanagment”
His argument seems to be that only £8 billion of the current annual deficit is due to the banks as this is the cost to the Exchequer of rescuing Northern Rock, Lloyds TSB and RBS. This is therefore the only contribution that banks have made to our current economic difficulties.
The rest of the deficit is due to increases in government spending. He says:
Fundamentally, although income fell for two consecutive years, spending continued to rise and incredibly is planned to rise still further. (my emphasis).”
It is hard to know where to start with this.
We have a recession that was made in the banking and finance sector. The government has inevitably increased spending because it has had to meet the costs of the recession. It has also suffered a catastrophic fall in income because the tax take has collapsed because of the recession, which as I may have mentioned, was made in the banks.
This would have been true whatever party was in power. Even if the Conservatives were already implementing their planned cuts, the same article could have been written.
There have been just one or two externalities from the finance crisis. They add up to a lot more than £8 billion. To completely ignore this and be quite so unaware of the difference betwen the structural and cyclical deficits is not so much pre-Keynes as pre-historic.
The campaign for a Robin Hood tax has rather stretched the Sherwood Forest metaphors. But I remember from the 1960s TV show that the Sherrif of Nottingham’s allies were never that bright.
I can understand why bankers want someone to speak up for them (and their bonuses), but perhaps they could have done better than call Nottingham central casting.