27 October 2009

George Osborne does not know banking

George Osborne is the Tory Shadow Chancellor of the Exchequer. He has never had a real job. He has a second class degree from Oxford and has spent almost his whole working life either as an MP or working for the Conservative Party. His own ample inherited wealth has protected him from risking his own money in business.

So for him to call for banks to limit bonuses to £2000 or hand them out in shares is stupid, stupid indeed, and shows him up for how incredibly shallow he is, and indeed how shallow the Conservatives are.

The Conservatives are going for the envy vote, knowing that those in the banking sector are small in number and will probably vote Conservative.

The Times quotes Liberal Democrat Treasury spokesman Lord Oakeshott:

“If state-owned banks such as RBS and Lloyds pay bonuses using shares, they would have to issue new equity, which would dilute the taxpayer’s holdings,” he said. “George Osborne clearly does not understand how shares work . . . His ignorance is toe-curling and he hasn’t a clue how markets and public companies operate.”

Osborne talks of retail banks, but it is investment banks that pay large bonuses. So he doesn't even have a cursory knowledge of the banking sector.

Allister Heath in the excellent City AM got it bang on

"The Tories are persisting in their belief that there is a moral equivalence between RBS, which went bust and had to be nationalised, and HSBC, which didn’t take any money from any government. Talk of moral hazard: regardless of how well you do, you will still be hammered by the government."

This, you see, is the moral vacuum that those almost across the political spectrum fail to note. Politicians want to punish all banks, yet they rewarded the bad performers, so only the good performers truly lose out. Heath eviscerates Osborne in his editorial and concludes that the outlook is bleak if the Tories really do believe this nonsense:

"expect HSBC and Barclays to start working on their exit plans: no other country, including the US, is planning this sort of separation."

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