Controlling World Finances Part One.

I cannot deny that there are millions of people in the world more qualified than me to attempt an article with such a title, I can barely lay claim to QBE [Qualified By Experience], and even that was of the "absorbing very hard financial knocks" variety, so into the deep end I jump.

As a start I will call on the help of three Presidents. I understand that circa 200 years ago President Thomas Jefferson used words similar in meaning to "I consider that bankers pose more of a threat to liberty than standing armies". At Davos, in January 2010 President Nicolas Sarkozy is quoted as saying "Pay and bonuses for many bankers bore no relationship to merit and were morally indefensible". And continued, "In the future there will be much greater demand for income to better reflect social utility and merit". A few days ago President Barack Obama, in New York, was quoted as saying "A free market was never meant to be a free licence to take whatever you can get, however you can get it."

For some time now the British Government, among others, has been pressing for Internationally agreed action in regard to curbing "casino gambling" type investments in all manner of conjured up financial instruments linked to, you name it, price movements up or down before or after a certain date. Superimposing the question of insurance over the transactions adds to the difficulty of anyone, with less functioning grey matter cells than Professor Albert Einstien was gifted with, attempting to understand exactly who will benefit. Another move that is being discussed is imposing a tax on certain types of transactions. In the background of cynical or practical minds, the immediate "thinks" is that any such tax will be carefully slotted into the small print of the deals that an investor is offered to ensure that the bank, on the face of it, might be handing the required percentage over to Government, but in reality that money came from the investor.

A salient point, often made, in regard to attempts to control or attempt to levy some form of tax on "The Banks" is that it has to be the same in all of the major economies. Part of the reasoning being to curtail the movement of the top flight [pun there] specialist personnel from one country to another. These are much the same reasons as companies often give to justify huge payout packages for some of their gifted experts. A few months ago a leading financial institution announced large bonuses for no less than five thousand of its UK based staff. That number of recipients suggests to me that they are not a particularly rare species. Perhaps it was something similar to that that triggered President Sarkozy's remarks at Davos.

In my previous blog to this I suggested that all countries, after agreeing on the broad principles involved, should nationalise their banks. That of course is surely the ultimate form of control.
I would like to see a gathering of internationally acclaimed financial and economic wizards tasked with the job of raising and debating the pros and cons of such nationalisation. Perhaps a separate gathering of humanitarians and psychologists could discuss the possible impact and acceptance of such nationalisation. Mr Devi Lishimp prompts me to insert a little plug here, a large number of people decry what they see as the "nanny state" approach to governing a country. I would surmise that many of those, who support that derisory description, were very pleased when Government stepped in and acted as a true "nanny" as they took over Northern Rock and then went on to save other major banks from being wiped out. Our population, as well as that of most of the World, should never lose sight of the World Financial Armageddon that the Banks and Financial Institutions wrought. In my opinion that alone is more than enough justification for the nationalisation of banks before the whole disastrous mess is recreated.

This blog will be continued in Controlling World Finances Part Two. Thank you.

Frederick W Gilling Wednesday 05 May 2010