In an interview in Prospect Magazine Adair Turner, the chair of the Financial Services Authority in the UK, called for the introduction of a new tax to help cap 'excessive' bonuses in the finance sector, a Tobin tax on the trade of currency across borders, as well as describing the finance sector as having “grown beyond a reasonable size.” Bingo.

That speaking truth to power caused ripples, especially in the financial world. In the UK, the policy consensus amongst the City, government and academia is that maintaining the competitiveness of the City of London should be a primary aim for the British economy. Turner's proposal is seen as questioning that consensus --hence the backlash---Turner has lost his marbles.

A question can be asked: is society simply paying too much to the financial system in order for it to allocate money across the economy for us? It's not a question that the financial sector would admit to being a legitimate policy question.

Questioning the bank's financial power is quickly dismissed. The blocks go something like this. If you raise the question of market abuse the response is what is that? The market is self-regulating Pointing to the need for tough regulation to protect retail customers brings forth the "competition ensures that" response.The blocks gives the impression that the financial sector understands its self to be the very embodiment of the great and the good and so there is no need to cut the financial sector down to size because the sector is full of "socially useless activity".

The block seeks to deny that there has been a very fundamental shock to the 'efficient market hypothesis' which has been in the DNA of the FSA and securities and banking regulators throughout the world"

Comments

Posted by: mars08 | August 29, 2009 8:04 PM