Comments on A Swift Blow to the Head: Alex Goodall's Blog: The Bankers' Dirty Little Secrets

;-)

2009-05-06T22:27:00.000+01:00

;-)

Apologies, Alex. I did not mean to imply that you...

2009-05-06T19:57:00.000+01:00

Apologies, Alex. I did not mean to imply that you were angry, or even that I thought you were angry. I was referring to economic policy-makers (in governments, in central banks, in financial markets regulators).

-- Peter

Point taken, Peter, though - as I mentioned before...

2009-05-06T13:35:00.000+01:00

Point taken, Peter, though - as I mentioned before, I think - I don't think I'm actually all that angry!

By referring to "unholy" profit I didn't mean profit per se, but 'profit' earned from risky activities or from activities which created the appearance of adding value without actually doing anything. I think we agree on the former, at least...

Alex, you urge: "new regulation of the banking sec...

2009-05-06T13:23:00.000+01:00

Alex, you urge: "new regulation of the banking sector to eliminate the unholy profit a few people have managed to make from our savings and investments in the past thirty years."Whatever other objectives new regulations should have, I profoundly believe they should not have THIS particular objective. The cause of the GFC/GEC was not excess profits but correlated (systemic) risks previously believed uncorrelated. New regulation should aim to manage and, to the extent possible, control activities which create such systemic risks from the financial system. Regulations which achieve that aim may or may not also reduce bankers' profits. However, framing new regulations with the primary purpose of eliminating profits is simply making policy for reasons of spite or envy, which is precisely NOT what is required to fix the GEC. Whatever governments do now, taking policy decisions in anger is not going to fix the problem. Fortunately, Team Geithner has thus far shown admirable restraint in this regard.

-- Peter