smoking guns and mirrors
News Posted On: 25 January 2010
On Friday French and British politicians rallied around U.S. President Barack Obama's plans to cut the big banks down to size. The proposals, announced on Thursday, were designed to meet head-on the culprits behind the global crisis. The plan would restrict banks from having a potential conflict of interest when they invest directly in speculative instruments like hedge funds.
A technical market top was already in last Friday, and investors ensured the news weighed heavily on banking shares as the DOW suffered its worst daily fall since October. You could be forgiven for thinking the banks themselves were pushing the market lower to show Obama what would happen if he attempted to derail their gravy train. After all, it was Goldman Sachs who, while talking up the property market to unreasonable heights was secretly making huge bets that the market would crash. Some would call this criminal deception and insider trading.
Obama's words, while adjudged harsh on banks by talking heads in the media are slim rebuke for the real financial shenagigans that have been going on. On Thursday last week by way of scant contrition Goldman announced it would cut average compensation per employee to a mere $498,000.
Of course the taxpayer has had to fork out large sums to save the banks. Not mentioned in the media is where the bail-out money came from. It was not printed by your government on your behalf – it was borrowed. Where do you borrow money from? Banks. Who do you thing UK PLC owes her so-called National Debt to? Think about that when you hear about the fat bonuses being doled out with your children's future earnings.
Nothing of this dark truth is revealed in comments from our European politicians. Instead we get French Economy Minister Christine Lagarde saying it was a "very, very good step forward."
Conservative finance spokesman George Osborne told BBC Radio. "I have said consistently that we should look at separating retail banking from activities like large-scale propriety trading...."
Actually what he should have been saying is that Britain will take back the right to coin its own money - as most people think is the case even now thanks to our selective education system - should his party get elected. But he won't, remembering that was what another President - John F Kennedy - had vowed to do.
So how will all this affect property? In the short term anything could happen, but longer term the amplified money supply is very likely to feed through as rampant inflation from which house prices will not be immune.
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