Those whom the Gods would destroy, they first make mad.
Michael Saunders, the Chief UK economist at Citibank, was quoted by the Daily Telegraph this morning as saying that “the Government could use the accumulated profits from quantitative easing (QE) to finance a special temporary tax cut for a year or two”. When it comes to post Glass-Steagall bollocks, this one is a lulu that attended college in how to be an A1 extract of 100% pure and unadulterated testicles.
Listen up: here is the world according to Mr Saunders: according to official figures, the profit by February 2013 from QE to the Bank is £20.7bn – more than enough to knock 2.5p off income tax for a year. But hark – hark and wait – the real potential profit is even larger, as the QE programme has been extended by £50bn to £375bn since the official figures were compiled. Saunders thinks the ‘profits’ could therefore reach £30bn by 2013…which would fund – drumroll, deep intake of breath – a two-year tax giveaway!
Oh dear. Oh dear oh dear oh dearie me. Just when you thought it might be safe to venture back into banking accountancy, along comes Michael Saunders.
The by now rather dotty old lady in Threadneedle Street is sitting on QE profits because it bought gilts. Gilts pay interest from the Government, which in this context – all other things being equal – is, be ye in no doubt, the old lady herself. Saunders of the Citi is proposing that a £30bn sum made by the Bank of England by buying stuff off itself can be called profit – or even ‘tax giveaway’.
In fact, the profit is virtual printing – upstream inflation, if you like. Here in Lilliput the United Kingdom of Camerlot, Rubber Bands and Alex Salmond, the man pretending to be Chancellor (George Osborne) has just completed two years of austerity to save £13bn in Government spending, while the Government as represented by the BoE Governor (Mervyn King) has just spent £325bn underpinning the clay foundations of our banks stimulating the economy. Given that the economy is, as a result, stimulated after the manner of my wife watching a football match, the Government just went £312bn deeper into debt.
No it didn’t. Yes it did. OH NO IT F**CKING DIDN’T: pay attention. The Government will make £30bn profit, and that means a tax giveaway that – who knows? – might see the Coalition re-elected in May 2015.
Iggle burgle ungle engel dribble I think it’s time for my medication now Nurse.
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Let us now head south, and leave on a jet-plane bound for Sunny Spain – que viva Espana! This morning, The Slog posted about a unique new EU invention, The Bank Customer Haircut. You see, what happens is that a Spanish Caja lends more than it can cover, and so forecloses on the unsuspecting homeowner before mis-selling preference share savings products in the Caja to those self-same suspicion-free customers. But even that degree of perfidy doesn’t work, so the bank goes bust, and the EU Gauleiters decree that the already twice-shafted customer shall lose all the savings that were innocently ploughed into the prefs, complete with Government-backed advertising.
While all this surreal criminality is in full swing, ECB Lady Bountiful Mario Draggifeeti refuses a Spanish central bank request that the EU Central Bank should buy its bonds. But nihil desperandum, because if the Spanish central bank sells its bonds to the already insolvent Caja banks (see Para above) then of course the ECB can lend inordinate sums of taxpayer money to the insolvent Cajas who will never repay it, so they in turn can buy the bonds of the equally insolvent Spanish central bank.
Yesterday, The Slog suggested that the construction of this vast spaghetti junction of Fiscal Rules by-pass routes in Spain might be the reason why the ECB’s new Frankfurt HQ building project has been put on hold. But I wasn’t being serious: how on earth could anyone take this kind of three-card trick seriously?
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And finally, another big white bird takes us North West to New York, where Benjamin Lawsky has had the audacity to call time on US Federal Regulator/Bankster incest, how very dare he?
Compared to Peter Sands, the head of Standard Chartered Bank, Tim Geithner’s leveraging equipment is a little under-sized. There’s no double-entendre intended there, but whereas in Poland earlier this year, Federal Tim could only envisage €350bn of EFSF money transmuting into two trillion, overnight Sands turned a $15m “maximum” misdemeanour into the all-time megascam of $250bn in rogue dealings with Iran.
Most of the MSM missed this dramatically engorged discrepancy, but at an ri (reality imagination) ratio of 17,000:1, the SCB boss must surely claim the world record. The unknown question today is, “The world record what?”
An insider email I got this morning from a trusted (as in, reliable and real) source suggests poor old Peter just might be the Twit in Charge of a Global Bank gold medallist:
‘I don’t have much doubt about what happened; just how naughty it was may be quite another matter. Standard Chartered are a contender for the title of “world’s most boring bank”; they know one big thing – trade finance – and that is pretty much what they do. Don’t bother going to them for derivatives, advice on takeovers or even loan finance – trade finance is what they do. They are run by an amiable bunch of buffers who cut their teeth in Bombay, Nairobi, Djakarta and so on. They are good at political risk in the East, deeply averse to market risk, and almost wholly ignorant of North America, with all its myriad legal and similar pitfalls.’
I’m more than happy to take that at face value, as SCB have never figured much on my radar beyond a brand-name that makes me think of rubber plantations, restless natives, and ‘the demmed heat’. And to be fair to those who see only an easy target for the ambitious here, I haven’t seen Ben Lawsky taking a swipe at Goldman Sachs in recent memory.
But I must also record that the British media went out of their way over the last three days to depict Standard Chartered as a shining example of dynamic probity, innocent victims of perfidious American greed…and yet somehow also proof that nice guys can come first. As a verdict, I don’t really think that holds water.
Related: Why even Dollar Power doesn’t seem to be enough for Hillary
The Slog 