a href="http://www.guardian.co.uk/business/2009/jun/24/financial-crisis-city-banking-money" This article /a raises the worrying possibility that proposed new regulations to stop reckless, greedy and irresponsible actions by firms in the finance and banking sector may not come to fruition. The trouble seems to have been that the government finances are so dependent on tax revenue from the City that, because of the public finance position, they want it to recover as soon as possible.br /br /The problem, though, that the authorities should realise is that - by letting them go back to their bad old ways - they are setting the stage for another financial crisis several years along the line. The same issues that caused the crisis this time will cause a further crisis. And, once again, these institutions will have to be bailed out by the State because they are 'too big to fail'. So, in the long-term, hoping the City recovers and that this will solve the budget deficit issue is not true - it will in fact just lead to another crisis which will have to be met by large scale borrowing.br /br /Like a smoker who keeps on smoking despite the fact it is bad for him because it deals with his short-term nicotine cravings, the Government looks like it will be prepared to let an unregulated City do its thing because of its craving for a quick rise in tax revenues [without raising rates] and a quick recovery in GDP growth.br /br /A real long-term solution to growth after the recession would involve concentration on manufacturing, especially high-tech manufacturing, and on non-financial services.div class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/38622711-8946116069263340901?l=vinospoliticalblog.blogspot.com'//div
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