President Obama’s savage attack on Wall Street’s bankers was primarily politically-driven on the back of the disastrous loss of one of the Democrats’ prized Senate seats in Massachusetts. Undoubtedly, Main Street, USA, is profoundly unhappy about events on Wall Street – unprecedented levels of taxpayers’ money being used to prop up leading US banks, not forgetting AIG, and now monster bonuses. Bankers’ message to Main Street – heads we win, tails you lose.
In the UK, Labour Party apparatchiks will be poring over any available focus group data to see how this presidential attack has played out. Whilst the forthcoming General Election will be dominated by the economy, bankers may be the political target – not the clerks behind the window of the local Midland but the strutting investment bankers clutching their chunky bonuses from RBS, which has received over £45 billion of taxpayers’ money.
The Prime Minister, of course, will be portrayed – rightly or wrongly – as the man who saved the UK economy as RBS and Lloyds – two of the four clearing banks – faced financial oblivion. And indeed, with the injection of massive amounts of new capital, nationwide bank branch closures were averted.
In truth, the Election should focus on the compelling priority to return the UK’s public finances – so grievously damaged by 12 years of Labour Government – to stability. In particular, public sector net debt (PSND) has soared and is currently way above the percentage of national income when the IMF was called in by the Labour Government in 1976.
But the reality is that the Election campaign may degenerate into a ‘bare-knuckle fight’ – to use a notorious CBI phrase – between the Labour Party and the Conservative Party’s City friends, including bonus-fuelled investment bankers.
And, with Obama’s fighting speech, are the gloves now off?