Saturday, December 11, 2010

Mervyn King banker to lead student protest?

In the UK, student street action in several places about raised tuition fees is turning increasingly ugly. Even Prince Charles and Camilla got caught up in it. Their limo was damaged in Regent Street, London when their route went by an angry group of protestors. But it is not all about extremists. The core of the trouble for the government is the massive increases in maximum tuition fees that universities can bill students with. Today at £3250, in future to £9000, despite assurances from politicians that re-payments (after graduates are earning above a given salary) will be reduced. Obviously this package is not being sold very well. On BBC radio there has been talk of parents dropping their school age children off to participate. When ordinary people do such things a government may have a problem.  In the 1990s huge numbers refused to pay the Thatcher poll tax - exit Thatcher - exit Poll Tax. 

This is all in the context of continuing feather-bedding of bankers, where it is estimated that, BBC News 5 October 2010 banking bonuses will reach £7bn this year. This is what the protest should be aimed at. It is quite extraordinary. The banks have been bailed out, by taxpayers, from annihilation over the past 2 years and yet the bonuses are nearly at the pre-crisis levels.  And all the UK government is doing is trying to get the banks back to normal. The system should be brought to heel and a new banking paradigm installed. Even Mervyn King, Bank of England Governor said recently in a speech , that several times likened current banking to 'alchemy':    
'Of all the many ways of organising banking, the worst is the one we have today.'

To tap the profits which are the source of these bonuses, banks create credit out of thin air and use it in money-making financial devices. They do not need more of your deposits or savings to lend more out, as Prof. Richard Werner (Chair of International Banking at Southampton University), writes in New Paradigm in Macroeconomics (Palgrave Macmillan) p192:
'Occasionally economists worry about a 'savings shortage' or 'capital shortage', which they feel is holding back growth. There is no such thing. Savings do not impose a limit on economic growth. If more money is required for investment, banks can simply create it. 

See this blog for 27 & 29 Nov. Money could be created to invest in that very productive source of growth: education. To illustrate the choice: If that part of banking profit reflected in the UK bonuses was credited to student fees the 1.9m UK students would each receive around £3500. Quite apart from what the banks are making before bonus payments. 

It is banking reform that needs protesting for (see Follow the lead of Mervyn King our country's top banker.
posted by Charles Bazlinton.
Read The  Free Lunch - Fairness with Freedom . Rational change from ancient roots.

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