My word, we\’re so lucky to have this man working on his knighthood as an unpaid advisor to the Coalition, aren\’t we?
You know, the man who demanded Gordon Mac mere weeks before Fannie and Freddie went tits up?
The opacity is dramatised by the ongoing multitrillion dollar trading in derivatives – essentially bets on the future prices of financial assets. The justification is that derivatives help buyers and sellers – companies or banks – better to manage risk. Some do. But derivatives are an invitation to speculate.
What\’s the \”but\” doing in there?
Transfer of risk requires that there be a speculator to accept it. The very purpose of derivatives is to allow people to speculate and thus enable the transfer of risk. That\’s the reason they exist!
British banks shamefully neglect enterprise, entrepreneurship, investment and innovation. Only 3% of cumulative net lending in the decade up to the crash went to manufacturing; three quarters went to commercial real estate and residential mortgages.
Yes, that\’s because in the Anglo Saxon version of capitalism we do not use bank lending to fund manufacturing whereas we do use it to fund property. We use something different to fund manufacturing: markets. Bond markets, commercial paper markets, equity markets. Evidence of the absence of bank lending for manufacturing is not evidence of the absence of funding for manufacturing. It\’s just evidence that banks don\’t do it.
But then Willy\’s been ignoring this point for decades, hasn\’t he?