Posts Tagged ‘donald trump’

What if Trump is right?

March 10, 2017

The very idea of reforming financial regulation is a thorny subject. Didn’t we, like, have financial Armageddon less than nine years ago?

And, yet, here is this brazen and brash Yankee president suggesting we now tear up one of the key pillars of legislation that will stop this happening again.

Yet what if he is right?

I have been writing about what has come to be known as the Dodd-Frank Act, and all the other legislation that was conceived in the wake of the GFC (that’s global financial crisis, folks) ever since they first were.

And all I can say is – well, gosh! – it certainly has turned the financial world upside-down.

The capital that banks now need has leapt to astronomical levels. So much so that, unless you are the number one or two in a particular sector or region, you might as well not bother.

The Royal Bank of Scotland is now largely concerned with its British interests, having given up its much-touted worldly aspirations long ago. European legislation similarly claimed the scalp of Barclays, whilst Australian bank ANZ no longer lists Asia as its number one priority. In the US, things have been no less painful, with Morgan Stanley and Bank of America Meryl Lynch visibly retreating from certain areas.

The resulting gaps are filled by those that have the might-of-muscle to move in.

This is not good for competition.


Banks are now much choosier about the business that they involve themselves in, which is to say high-profit and low-capital. Who is to say that this is the best business for them to be in? The regulators and the law-makers are deciding the fate of these business lines, and they don’t even yet comprehend what the consequence of consigning these to an early burial might be; nor, indeed, do they always understand which business lines might be the ones to meet their maker.

I do not wish to be an apologist for the banks’ excesses, which in no small measure led to the collapse of the financial markets in 2008. A former boss of mine revealed what can happen if banks are allowed to run the world, with his excellent 2003 scoop against Goldman’s, the former CEO of which is now a top advisor to the Trump administration.

But banks do also perform an important service. Crucially, they lend money, provide liquidity and oil the cogs in the financial machinery that are right now clogging up with grime.

To repeat my question: what if Trump is right?

Dodd Frank – and other bits of legislation conceived post-GFC – were hastily put together in a sort of panicked and frenzied “ah, what the hell do we do now!?” kind of moment. The public was on the backs of the politicians (they still are) and those in power needed to be seen to be doing something.

There are inconsistencies throughout the legislation that has emerged since the financial crisis.

Here’s a case in point.

Regulator’s no longer trust banks’ internal models – those ingeniously-fabricated algorithms that are supposed to show how much risk a bank is actually taking on, which is then used as a benchmark for how much capital said bank should put aside. Thus for many risks banks now have to use a model ordained by the regulators.

And yet….

Those same regulators want banks to be able to have an internal model in place so that they can “accurately” report their expected future losses for accounting purposes; which, it would seem, regulators are prepared to trust.

I’m not saying we should just scrap all the financial legislation that has been conceived since the financial crisis.

But perhaps a little bit of tinkering wouldn’t go amiss.

Instead of simply dismissing Trump’s forrays into financial reform as mere bafoonery, maybe we should be prepared to reflect a little bit more.

Just… what if… Trump… is right?


Trump madness

January 29, 2017

When we lived in Sudan, we lived a couple of hundred metres from the mosque where Osama bin Laden used to go and worship.

In the 1990s.

He wasn’t actually there when we lived there.

In fact, I’m really hard-pressed to find anything that Sudan has actually done against the United States in – what? – the last 20 years. (Remember, when Osama bin Laden orchestrated the 9-11 attacks, he wasn’t actually living in Sudan and had only limited contact with his former home, his erstwhile sponsor Hassan al-Turabi, being something as a persona non grata with the Khartoum regime at the time.)

So why, then, this Sudan visa ban from the current megalomaniac in the White House?

I’m actually kind of hard-pressed to find any logical rationale to the current action from Donald Trump, other than shameless populism and a bloody-minded determination to live up to his electoral promises (which I had, unfortunately and a trifle naively, dismissed as simple electioneering; err… no, he is actually as crazy as he sounded).

Nothing really makes sense, and Donald Trump is acting far too hastily with his executive orders, and without proper guidance. You only have to look how quickly the courts overturned the visa ban – at least temporarily – to see this.

But anyone following Trump closely knows all of this – or if they don’t they are being disingenuous.

I want to make a point here that is slightly more nuanced.

There is a very good case to be made for an overhaul of immigration regimes in Europe and US. Even if you are not a right-wing fascist nutter, there is a case to be made here; and I have made it in previous entries.

But now is most definitely not the time to be making it. The likes of Donald Trump and UKIP leader Nigel Farrage have been riding on the tides of populism for two long, without the benefit of proper rational analysis.

This took the UK out of Europe – which may in fact turn out to be a good thing, but not for the reasons that the likes of Nigel Farrage so often espoused – but I now fear that populism is taking a far more sinister turn.

How did Donald Trump put it? “It’s time to fight fire with fire”.

Indeed it is. And that means being unreservedly pro-immigration. Irrespective of the consequences.

We have for a long time needed a proper immigration policy in place. And we still do.

But to argue for one now is to play into the hands of those privileged populists that seek to make political mileage out of the strife and suffering of others.

Just don’t plant a bomb, Dear Immigrant: that’s not very nice.

It’s not just the politicians that should rethink things

November 10, 2016

First Brexit. Now Trump. It seems fairly clear who holds the responsibility for this: those smarmy world leaders that are at the heart of the political establishment, which now has been very much shaken and could even be crumbling. They didn’t take Greece’s pain seriously. They chose to bail out the banks rather than let them gracefully unwind. They trounced all over Keynes’ legacy and dogmatically welded themselves to the idea behind austerity and then, when people pointed out that actually curtailing spending might not be the best way to stimulate growth, growled and snarled.

But this initial analysis is simple and unfair. It is certainly true that the politicians have for too many years acted with contempt for a large portion of society, but it seems that they are not alone.

Where are all these Trump supporters? Where are all the Brexit voters? Hidden? Ashamed? Frightened of being seen to rock this cozy establishment?

On social media, the only comments I seem to be reading is that the world is in some sort of crisis and a kind of incredulity that people could actually consider voting for Brexit or electing Trump. I.e, are people really this stupid?

But this misses the fundamental point of what has driven people in this direction, and until people start reflecting on that society is going to have a hard time stitching itself back together. Yes, politicians have acted with arrogance and contempt that beggars belief, but they appear not to be alone.

Suddenly, those who for years have lent their support to the political establishment find themselves in the minority, and that is an uncomfortable feeling.

With Brexit, I was strongly divided. I saw the benefits that staying could bring, but I also see the EU as an undemocratic supranational entity that does things its own way with little regard for due legal process upon which our societies have been built.

Had I been able to vote in the US election, though, there is not a snowball’s chance in Hell that I would have chosen Trump. There was nothing in his rhetoric that endeared me to him and, although Clinton had her baggage, she was the least bad choice of the two.

But recoiling in horror from the outcome and despairing at the stupidity of the supporters of Trump – or for that manner the voters for Brexit, who I do feel some affinity towards – just misses the point.

Something is changing with our societies and people are rocking the boat.

Politicians must start to understand why. We must, too.