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Friday, 11 December 2015

Feathering Their Nests

Have you noticed how the architects of the bust in the British economy, have all landed plum employment in large banks? Gordon Brown at Pimco as an advisor (all payments to his charity), and  Alistair Darling at Morgan Stanley as a board member (in 2014 MS board members received $75k pa plus upto $30k for joining a committee and $250k in stock awards).

How ironic that the two men who managed to misunderstand how economic cycles actually worked, are now advising the taxpayer bailed out banks.

The Gravy Train Just Keeps Rolling Along ...

Mr Darling was Chancellor of the Exchequer who left no money in the kitty when Labour left office .... while Mr Brown of course, famously exposed his lack of economic knowledge when he declared the end of boom and bust in the British economy. He was of course wrong, but even an 'A' level student could have explained that to him.

All economy's have cycles. The best you can do is stretch the booms, and manage the busts. Post WWII the world had a long boom which properly busted in the early 1970's. We had another long world boom from the end of the 1980's, until post 2000AD.

It's how you manage the booms and soften the busts, that make you a chancellor. Brown rode the boom as though it was his own creation. But even then he failed to anticipate the inevitable bust. He carried on visiting the 'money tree', that the Labour Party mythology thinks grows in the private sector, while dramatically expanding the public sector. He raided private pension funds (bringing final salary schemes to an end in the private sector), in order to effectively finance the final salary public pensions for the new public sector workers.

He and Darling created the Private Finance Initiatives (PFI), to borrow from our possible future incomes, to pay for our greedy now .... but this morally dubious scheme was wasted on non profitable items such as the ever hungry NHS, instead of vital infrastructure such Road, Rail, and Power (nuclear).

These schemes largely collapsed due to financial difficulties, and ended up being funded by taxpayers aka the 'money tree' (see Metronet and Tubelines for examples of a bad idea not understood). Total cost of PFI schemes to-date £68bn, mostly (as Vince Cable explained), with the taxpayer funding all the PFI costs.

All in all, a tale of ineptitude and hubris that you can hardly credit, and all paid for by you and I. Now they get their rewards from a grateful financial sector, for keeping the banking gravy train afloat ...

There's no justice for most of us.

5 comments:

  1. Don't they all?

    ReplyDelete
    Replies
    1. If you mean 'feather their nests' ... yep I guess they do.

      Delete
  2. Well said. When I was young I used to hear about "bankers" and what they were like, with a critical ear, but they've prooved themselves to be the immoral leeches on society that I'd heard - and more! Same goes for politicians who lie with them.

    ReplyDelete
    Replies
    1. Its the poltico's who are most hypocritical, as investment bankers don't try to pass themselves of as moral beings.

      Delete
    2. I'm sure you're right, although it can be difficult to judge which is the most diseased rat as they scurry between our larders and their lairs.

      Delete

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