I think it’s safe to say that the banks haven’t persuaded many people that they are fine global citizens over the past year.
Haldane argues that limited liability for bank shareholders is a problem because it limits downside risk (holders of equity know they won’t lose everything if the bank goes bust) but the upside payoffs are unlimited. This, Haldane, argues creates a bias towards recklessness by bank shareholders.
It’s important to note that not everyone thinks that the ONS is the one letting the side down. Another former member of the MPC, Danny Blanchflower, argues that the Bank should look at its own faults first.
The eurozone insurance scheme probably needs to big enough to guarantee, at the very least, 1 trillion euros of Spanish and Italian debt if it is to be credible to the financial markets.
The big losers resulting from a large writedown are going to be commercial banks, private investors and, potentially, the European Central Bank.
Greece would not have been able to borrow if European banks had not been willing to lend. The ECB cautions about profligate borrowing by sovereigns. But what about profligate lending by banks?
The Government says that the IFS researchers are being obtuse and failing to factor in the revolution in work incentives that the Government’s welfare overhaul will create.
A mixed picture. On a longer view we’re better off. Total output is higher than we thought. But in terms of recovering from the recession, Britain is doing less well than we believed.
Mr Osborne characterises the idea that the government should cut more slowly as a huge gamble. But the Chancellor is making a gamble himself. He’s betting that the British economy can withstand an average fiscal tightening of 1.6 per cent of GDP per year over the Parliamentary term.
The Institute of Directors, distinguished as it might sound, is a business lobby group. And like all business lobby groups its primary job is to benefit its members, rather than to present the public with the full picture.
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