Blog 2023 Malcolm Blair-Robinson

Barclays

A big improvement here in profits, but if you strip out investment banking and all those dodgy derivatives, the High Street part reflects the slow conditions in the core economy. However, though I hesitate to disagree with George and whilst I know it is akin to blasphemy to question the wisdom of Vince, I now believe they are both wrong, when they whinge on about insufficient bank lending.

The old collapsed economy was built on excessive credit offered in rivers to anyone who asked and many who did not even have to. The result was a very big crash. The banks were at the root of the excess of credit, but to build a sound economy, they will be at the root again. However this time their job is to say no, unless the loan proposition meets the age old criteria for sound lending, which was the bedrock of economic management until all these wisdoms were forgotten and everybody, including the banks, nearly borrowed themselves into financial oblivion.

Economic recovery, built not on sand but on a firmer foundation, requires a good deal less borrowing all round. The banks, the retail side certainly, appear to have got the message. We must now let them get on.

China and Liverpool

The news that the Chinese state investment arm, CIC, is funding a bid for Liverpool F.C. is at some level the most important piece of news today, notwithstanding floods and other human suffering. This is because as it emerges as one of the the world’s  financial mega powers, the concept of Communist State Capitalism is more obviously revealed. This is a far cry from the moribund and stagnating Soviet model, which was echoed in the manner in which our own public utilities were nationalised and run.

The Chinese model is much more dynamic, based upon the principles of investment rather than ownership. It is very successful. Much more so than the old system of ownership of everything ‘by the people’ and arguably as good as, or even better, than free market capitalism, with which it works in partnership. This is very important, not least because of the unresolved issues left by the financial crisis and the large government holdings of shares in rescued banks.

It can have political consequences in the West. Socialist groupings which have had a lean time electorally for some years may find a revival in their fortunes if they promote not public ownership, but public investment, giving to taxpayers the same control of key financial and energy companies through shareholdings as other shareholders enjoy. The difference is that the dividends and profits would help fund the public services provided by the state.  If Labour finds the centre ground too crowded to offer a convincing electoral opportunity, a fact finding trip to China by the newly elected Labour leader could provide some interesting food for thought.