Blogged this at Labourhome

Another one I just put on www.labourhome.org. I like the crowd over there. It's stuff I've done before here but I still don't know the answer. Maybe a helpful banker will tell me one day.

Show me the money!

I need some expert help. OK, I know that the current financial crisis was caused by lack of regulation and allowing the markets to govern themselves. And I know that because we had to bail out the banks with jillions of pounds we are in terrible debt, so much so that we have to cut social spending and our children's children will still be paying it off long after we are dead. I'm told that if we hadn't done this the financial system for the entire world would have crashed and we would all be very poor.

What I don't know is where did all the money we gave the banks end up. I've asked this on a number of sites and nobody seems sure. I mean if we say to a bank, "Here's a couple of billion, Fred", where is that money now? It can't still be in the bank vault surely. Neither Brown, Darling or the civil servants have really told us.

So the banks were going broke and their customers were saying, "We want our money back". The banks didn't have the money as they were sitting on sub-prime mortgages or suchlike. If we didn't give the banks money then they would have defaulted and these customers would have lost their money.

Of course the small customers were already covered by government bank insurance so I suspect that most of the readers of this blog would still have their money. Some of the money would probably belong to pension funds, charities and local authorities but one has to suspect that much of it has gone to very rich people. You know people that have far more money than would be covered by the small depositor insurance. I'm thinking of Russian oligarchs, oil rich sheiks, Swiss bankers, hedge fund managers and people like David Cameron and the other 16 millionaires on the Tory front bench.

I smiled when someone told me that Michael Caine was saying he would leave the UK because of the 50% tax. I wonder if some of his deposits were saved by the rest of the tax payers. See Michael, "Not many people know that".

I can't argue if people tell me that if we hadn't bailed the banks out we would have far larger problems than if we had let them fail, covered the small depositors, and then cherry-picked the best bits for nationalization. They would say, "Les, if we had done that then the reputation of the City of London would have gone down the tubes." Sure I know that since we no longer have any manufacturing or industry in the UK, we have to have all these financial geniuses in the City bringing in the money we need to pay for bits and bobs from China.

I accept all this as all three major parties say it's so, but will someone please show me where the money went. If Michael Caine, David Cameron and Fred Goodwin have some of it, I might go and ask for it back.

So how many bankers will go to jail?

None is a fairly safe prediction.

From Woody Guthrie's Pretty Boy Floyd -

Some will rob you with a six-gun
And some with a fountain pen
And as through your life you travel
Yes and through your life you roam
You will never see an outlaw
Drive a family from their home

This was written in the thirties during the depression which hopefully the politicians will not let us fall into again. I think it would be a good guess the guilty men will not be punished. The politician will let the guilt slide off them onto the bankers. Below are a few lines pulled off Google which shows why they make such easy targets.

HSBC - Stephen Green, who earns a basic salary of £1.25m a year, will not benefit from the bonus scheme. The bank's chief executive, Mike Geoghegan, could earn as much as 4m in bonuses, on top of his £1m-a-year salary, and up to £7m as part of the bank's long-term incentive plan, according to the proposals.

RBS - Sir Fred Goodwin, the chief executive of Royal Bank of Scotland, earned £4.1m last year, including a bonus for the bank's acquisition of ABN Amro, which the bank now admits it overpaid for.

HBOS - Andy Hornby, the boss of HBOS, earned £1.9m in 2007 but his bank was forced to sell itself to Lloyds TSB last month to avoid going bust.

Lloyds TSB - Lloyds own chief executive, Eric Daniels, was paid £2.4m last year.