Breaking up the major banks would
require that they transform how they operate. At
root, a bank should do little more than provide
somewhere safe to place savings, and create
some credit. Localising banks, diversifying
ownership structures, and placing greater
democratic and public control over banking
functions will all help lead them towards that ideal.
The British banking system should become like the Spanish cajas. So that the politicians and union leaders can drive the entire thing into bankruptcy.
The introduction of direct controls on the
movement of capital in and out of the economy,
including emergency taxes and legal restrictions,
would help prevent either possibility. Growing
empirical evidence, recently summarised by the
IMF itself, suggests that, despite the rhetoric of
globalisation, well-applied controls can work in a
range of different economic circumstances. By
managing the flows of capital we can structure a
suite of controls so as to attract longer-term, more
stable investments. Controls that affect the quality
of capital flows invested are, IMF and other
evidence suggests, generally more effective than
those seeking only to impact on quantity –
although these can also be important.
Given that we depend upon foreigners sending us their capital we should stop those dirty foreigners sending us their filthy garlic smelling money for us to enjoy.
With the useful side effect that if no one can take more than £25 out of the country without permission then we can steal it all without their fleeing.
BTW, one does hope that they know that this is entirely illegal in the EU? Capital controls are entirely verboeten.
QE could play a central role in rebalancing and
repositioning the entire economy. Were the Bank
of England to mobilise its capacity to create new
financial assets, and push them towards real
economic activity, investments could be made
and economic activity restarted without running
immediately into the barrier of the financial
system. ‘Green QE’ has been proposed as an
ideal means of raising financing for long-term
investments in sustainability. These will need to
be very substantial: at the upper end of the scale,
Dieter Helm has estimated that £500 billion of
investment in infrastructure will be needed over
the next 10 years to upgrade it to a more
And then we\’ll just print more money to pay for everything. Like that hasn\’t been tried before. Anyone ever heard of Zimbabwe?
Maybe Andrew Simms should have finished that course of study at the LSE?