Thursday, 10 February 2011

Merlin Agreement - another failed opportunity to create a fairer society

HM Treasury's stated aim over the lifetime of the Parliament is 'to secure a rebalanced and resilient economy that will create the conditions for sustainable growth' based on the following three priorities:
  1. To head  the Government’s drive to reduce the structural deficit in a fair and responsible way.
  2.  To create the conditions that secure an economy that is growing sustainably, is more resilient, and is more balanced between public and private sectors and between regions.
  3. The Treasury will reform the regulatory framework for the financial sector to avoid future crises.
The much anticipated outcome of the negotiations between Treasury and Banking sector officials outlined in the Project Merlin agreement yesterday represents another spectacular failure by HM Treasury to impose an ambitious tax on the financial services sector to realise the goal of fairness in reducing the structural deficit or of effectively reforming the regulatory framework for the financial sector to avoid future crises.

Commenting on Robert Peston's blog on Project Merlin yesterday - see details -
  bloggers raised some important issues which are summarised below:

13:31pm on 9th Feb 2011, torpare wrote:

Rearranging the deckchairs on The Titanic?
The mega-banks:-
-continue to control society, not society them
-make up an oligopoly, between the members of which there is little or no genuine competition
-continue to be the issuers of virtually all of our money, to their own enormous financial benefit
-are still "too big to fail" and so are implicitly indemnified by the taxpayer against any adverse consequences of their actions
-hence benefit from the better terms on which they can borrow as compared with what the cost of borrowing would be were they not so indemnified
-continue to pay bonuses the money for which would not be in their coffers were not the contribution to their profits made by this subsidy - meanwhile, the taxpayer (who gives it and thereby helps to swell the bonus-pool substantially, is him/herself being relentlessly squeezed by a combination of falling real incomes withdrawal or attenuation of public services to meet the governments deficit-reduction targets - neither of which cause any pain whatsoever to the recipients of the banks' bonuses.

And we are expected to cheer?

At 13:45pm on 9th Feb 2011, writingsonthewall wrote:!
All the sorcery and trickery of Merlin himself - what another great way of pulling the wool over everyone's eyes. If only they knew why the recession began in the first place - then they wouldn't conjure up such a ridiculous and unworkable solution. The promise of lending "on commercial terms" is a joke, an SME overdraft rate is about 18 - 25%, totally unworkable for most small businesses. It wouldn't be so bad but the banks are borrowing (from each other) at less than 1%.

This is a great way of giving the impression of 'doing something' when actually 'doing nothing'.....or rather not as it's as transparent as the sky is on this beautiful sunny today.

At 13:52pm on 9th Feb 2011, danj180 wrote:
The best paid staff will still not have to reveal their pay meaning they are still unaccountable to shareholders.

Chancellor "From this year onwards, the four major banks have committed to disclose the pay details not just of their executive board members, but also of the top five highest paid executives not on the board, " i.e. if you are a trader and not an executive and get paid £10 million - the shareholders/owners of the company will have no knowledge of your pay - and we say that this is transparent!

Clearly not about 'all of us being in this together', as the Chancellor would have us believe. Based on the pitiful debate in the House of Commons following the Chancellor's announcement, it does not bode well for either the Coalition Government or Labour dealing with the loss of public trust in financial and political institutions any time soon!

Frank Kantor