Why Gordon Brown is a hero and bankers are the UK's biggest asset

No need to check the calendar. It's not April 1st. I'm not being ironic either. As we approach the general election in May, I just felt it was time that someone injected a little bit of sanity into the current debate about the deficit, the economy and the banking industry.

Lets start with Gordon Brown. His name has become a byword for incompetence. The Conservative party would have us all believe that Brown was a hapless incompetent who rammed the economy into an iceberg, mismanaging the UK's finances and losing control of public spending. The inconvenient truth for the Conservatives is that rather than wrecking the economy, Brown actually saved it. The financial meltdown of 2008 was caused by two things. The first was lax regulation of the banking industry. This was as much a product of the Tory years of deregulation under Thatcher and Major as it was Blair and Brown. The prevailing pre crisis view was that deregulation was a good thing. If anything, had the Conservatives been in charge 1997-2008, the regulation regime would have been even more permissive, it certainly wouldn't have been stricter. When the crisis hot, Gordon Brown correctly realised that the UK economy is reliant on banking. We are arguably the centre of the global finance and maintaining this is vital to our national wealth. In the US, the hard right orthodoxy of the Bush regime allowed many financial institutions to go to the wall. In the UK, Brown baled them out. The net result is that the UK still has financial services industry with global credibility. The baled out banks have recovered and are once again contribiting to the UK economy. It should be remembered that the then Conservative opposition questioned the use of tapayers money to bale out Norther Rock, RBS and Lloyds TSB. Had these companies gone under, who knows what shocks and meltdown may have happened. It should also be remembered that Brown played key role in negotiations to ensure that the worlds banking system didn't collapse. Its should also be remembered that the problems in the banking industry largely started in the USA, not the UK. There is a saying that when the USA sneezes Great Britain catches cold. This certainly was true of the 2008 banking crisis. As a result of huge bale out process, the UK's public finances were plunged into crisis. We are still paying. What isn't discussed so much is what the UK economy would look like without the Brown lead bale out.

This brings us to the banks and bankers. Both seem to get a never ending bad press and I can't remember the last positive major news story about the banks. The question is how fair are these comments. Of course when banks do bad things, it warrants a story. No one could claim that much of the torrent of bile is unwarranted, but wouldn't it be more sensible to try and get some degree of balance. Banks make a huge contribution to the UK economy. Over 1 million people work in the banking sector in the UK and the organisations they work for bring huge wealth to the UK. Banking products are a part of modern life. Few of us would own homes if the bank didn't provide mortgages. When we buy things in shops, we use credit and debit cards (often using money the card companies are lending us in the form of a credit limit). If we want to buy on line products, we simply do an on line transfer. If we get woken up at 2am and we need an emergency plumber, we cn get cash oiut of an ATM. Modern life would be unimaginable withourt banks and the services they provide. We would also all be far poorer. In London, we have a fantastic city. We have great public transport, but leasing companies own most of the trains. When schools, hospitals and roads are built, these are financed by banks, the money is paid back once the facilities are in operation. In London most businesses, pubs and restaurants are kept running by bank employees.

This brings us to the subject of the bankers themselves. Often they are portrayed as fat cats. Most people who work for banks, don't get paid any more than the rest of us. The call centre staff and branch staff, who for most of us are the main contact, are not highly paid, although they bear the brunt of the public wrath. When we talk about "fat cat bankers" we generally think either of senior investment bankers or board members. I would hazard a guess that senior bank executives are no better paid than senior executives elsewhere in the private sector. as to the traders who get huge bonuses, these are usually driven by commission and profits of the organisation. If you work for a profitable institution, why shouldn't the people who generate the cash get the money? We hear the same comments sometimes about footballers and pop stars. At the end of the day, if you work in an industry that generates lots of money and you have a desirable skill set, you will earn a lot of money.

Then there is the issue of HSBC and the policy of its subsidiary that helped the rich avoid tax. I cannot believe the hypocritical guff talked about this. Every time any of us pay a trader cash to secure a cheaper deal, we are party to tax evadion. Everyone who has ever bought a cheap packet of cigarettes from a dodgy importer, has been a party to tax evasion. If you buy dodgy DVD's you are party to tax evasion. I don't know anyone who would willingly pay more cash to the taxman than they are legally required. Many don't actually see a bit of small scale tax evasion as a crime. As to the activities of HSBC, this was as much to do with the activites of the rich as to their bank. Of course HSBC should be hammered, but ultimately we are indivudally responsible for paying our taxes.

Ultimately banks and bankers make a hueg contribution to the UK. Banking and finance are perhaps the most important sector of the UK economy. Gordon Browns intervention in 2008 maintained this position. If banks suddenly ceased to exist, it would not only wreck the UK economy, but it would make our own lives hugely difficult. The sole purpose of banks is to make money. They will do this however they can. It is the duty of the regulatory authorities and the government to make sure they do this responsibly, ethically and in a way that is beneficial to the economy. It is extremely stupid to continually hammer the countries biggest asset. I do think the banking industry needs to take a long hard look at what it does, up its game and take corporate responsibility seriously. I also think they should start to remind us all that they are very good for the UK. And finally I'd like to see a few members of the Labour party actually talk about their achievements.

Sympathy for RBS staff

I daresay that not too many of you feel very sorry for the staff of RBS at the moment. Usually we only talk to the bank when things go wrong. They overcharge us, they cock up our mortgage, they get our electricty cut off by stopping our direct debits. That sort of thing. As if that wasn't bad enough, the bloke who used to run it got paid millions in bonuses, crashed the bank, got bailed out by you & me (the taxpayer) and then swanned off with a big fat payoff and a gold lined pension. I'd say that Sir Fred Goodwin is near the top of most people's list of people they wouldn't even urinate on if he caught fire.

We don't like our banks much right now, deservedly so. I was however rather saddened by a little story I was told last night. A good friend of mine works for RBS. She was at the Morrissey gig (she's a Moz nut) and we shared a cab back. As we were coming back, she told me that the previous evening she'd been drinking with Morrissey's crew til 6am (what a girl, she then did a full days work, only pausing for a shower and a change of clothes). One of the friends of the crew, on finding out she was an RBS employee had subjected her to a long tirade of bile about what a terrible person she was for working for RBS. She explained that unlike Fred, she got no bonus at all this year. She's got a mortgage to pay and she doesn't even know how long she'll have a job. She'd been harangued with "How can you justify this, how can you justify that".

The point is that 99.9% of the staff are not to blame for the global recession or anything else. They do humdrum jobs for not much money. Sure some are rude, some are unhelpful, but no more so than any other firm. I happen to think it's pig ignorant to ruin someones evening purely because they work for a company where a few guys at the top have behaved badly. By all means slag off Sir Fred if you see him, but blaming everyday bank workers is cruel, nasty and spiteful.

Banks: Banking on the wrong kind of profit

Did you read any of the reports in the paper today about what the Government plans to do with all of the banks they bailed out? Well having, in effect, nationalised them, saving them from going bust, there is a cunning plan. UKIF (the organisation set up by the Government to manage the broken banks) will wait till the stock market goes up, then flog the shares at a great big profit. Real clever, isn't it? Just one little flaw in the plan. What happens if they don't go up? Duh !!!!! Of course they will, won't they. Well maybe you trust all of the fat cats who knackered them in the first place to sort the mess out. I don't. Gordon Brown hasn't flown a team of Martian financial experts in to do the job, apart from a few in the top layer, it's the same people who were there before.

The problems of the United Kingdom are not something that have just happened since Gordon Brown walked through the door. The decline of manufacturing has been going on ever since the 1950's under Tory and Labour. North West London used to be the worlds engineering powerhouse. Companies such as DeHavilland, Boosey and Hawkes and Van Den Plas were based locally. How many people do you know who actually make things today?

Why did they disappear? Ultimately because the banks preferred to lend money to companies which could turn in bigger, quicker profits. Property business exploded. Shops selling imports turned into massive chains. The little guy on the corner had a bad month? His overdraft was called in and he was off to the benefit office. If when Sir Fred Goodwin at RBS had his overdraft called in by the Government, he got a huge bung and a massive pension.

Reform the banks. Make them lend to the little guy. Make them moderate their profits and provide decent service. We, the taxpayer own them. We saved them. I've got RBS and Lloyds shares, but I'd much rather see a smaller more stable profit, than what we've had. The sad thing is that a bank dedicated to long term, income generating lending would transform the country. As it is, even a Labour Government purely sees the banks as a cash cow to be milked when the time is right.

I did wonder what the initials UKIF stand for. If we don't start lending to business, I suspect that it could well be "United Kingdom is F***ed"