What amazes me is that the following is taken as good news:
Banks set the pace in London as investors welcomed an end to uncertainty over debt-laden Portugal, which confirmed it had asked the European Union for financial help. Banks were also buoyed by signs that the impact of the UK’s tougher capital regime may no longer be such a disadvantage after two European banks announced plans to raise £11.5bn of fresh capital. [British Investment Digest, 07/04/2011]
Let’s break down this ‘good’ news, shall we?
- We’re now absolutely certain that Portugal’s completely finished – terrific news. I’m sure all the Portuguese are delighted, along with every other citizen of the EU responsible for bailing them out (£250 from every Brit).
- Everyone else is going to have to toughen up their capital regimes because they’re more lax than the UK’s. The process is going to suck up £11.5bn of capital, and take it out of circulation, when it could have been allocated to help real businesses grow. Instead, it will act as a cushion so that bonuses are paid to economically destructive bankers.
Yes, great news if you’re a banker, Eurocrat, or other assorted economic leech. The world would not pass a sanity test.