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Money v Making Stuff-Should Britain bid farewell to the golden egg of banking.
Jeremy Bosk
Posted: 09 August 2011 18:41:32(UTC)

Joined: 09/06/2010(UTC)
Posts: 1,316

Interesting article by Samuel Brittain in the FT. Apparently our relative decline was being reversed until very recently:

http://www.ft.com/cms/s/...0-b877-00144feabdc0.html
Anonymous Post
Posted: 09 August 2011 20:16:34(UTC)
Anonymous 1 needed this 'Off the Record'

Still on Life Support
Not quite clear what question you are answering. A request is made for comments.
Is it an answer to -
We are all for golden eggs, in both banking/services AND Industry/Manufacturing. What we are looking for is a rebalancing from rotten/stinking eggs in Banking/Services (many examples given in the posts received), to golden Industry and Manufacturing.
Is your answer no to this statement?
As such I am not against all banking/services, but think the balance is incorrect, excessively weighted towards services.
You are pro services, I am more pro Industry manufacturing. You have not provided me with any facts and statistics to show that this is not the case. Having said that I feel that our exchange to-date has been extremely useful. Any more facts and figures you can produce would be welcome.
To be honest with you, I do not wish to be unpatriotic, but I feel that the German approach to manufacturing/industry and therefore the economy is by far superior to ours. We could do with a cultural change of attitude.
Jeremy Bosk.
In light of the above I am not quite clear how you have concluded that I think that (all?) financial services are evil, nor that (all?) manufacturing is good. Again in my initial comment I make the distinction between good and bad industry and manufacturing, as well as good/bad services. Don't I? As such I think it is you who needs to be a little more nuanced not me.
Correct me if I am wrong, and indicate where I have made statements to support your view.

Prof Eman
Still on life support
Posted: 10 August 2011 08:16:29(UTC)

Joined: 27/09/2010(UTC)
Posts: 52

The question I was answering No to was that posed in the title of this thread -

Money v Making Stuff-Should Britain bid farewell to the golden egg of banking

I dont think that we should seek to exit the banking sector.

As I said above I'm not pro or against any sector, I'm pro good business and against bad. But I'm also against supporting the uncompetitive in order to create an ideal. I suppose you could conclude I am for the free market.

Nice idea to be like Germany, unfortunately it would require us integrating a significant new population of low paid workers as they did when they re-unified the old East, suffering fiscal austerity for a number years as they did when they paid the bill for that re-unification, and then benefiting from an artificially depressed currency due to being part of a monetary union that included fiscally irresponsible nations, whilst still having access to a ready supply of raw materials from within that currency block. Oh, and practising uncompetitive, and borderline illegal (in the eyes of the WTO) trade protection and corporate ownership policies to appease powerful unions.

Unfortunately the cause of much of their advantage is now coming home to roost as if as expected, France's sovereign debt is downgraded in the same way as the US, they will be left as the sole backstop of all ECB issued debt and given the unpalatable choice of paying out huge sums to maintain the Euro or seeing it collapse and watching a newly re-enstated DM sky rocket thereby dramatically reducing their competitiveness overnight, pretty much as the Swiss have just experienced. They'll still have a lovely big manufacturing base, making nice things. Unfortunately nobody else will be able to afford to buy them. With a smaller less well established financial sector and lower domestic consumption, there are serious questions over what that would do to their economy.

Good sausages and beer though.
Anonymous Post
Posted: 10 August 2011 23:27:48(UTC)
Anonymous 1 needed this 'Off the Record'

Dear all including Still on Life Support.
Strange how things change. After the Berlin Wall came down the re-unification was seen as a major economic headache for Germany, now it is seen as a source of low paid workers. I distinctly remember driving through West Germany into what was East Germany at about that time, and finding that Motorway Services were a tent, and that some West Germans were not happy to share their their wealth with the former East Germans. There are different ways of presenting things, but in any case, look at them now.
As to the future, I am not sure whose is more rosy, UK's or Germany's
By reference to BBC Business News-UK manufacturing output falls (0.4% in June) and Trade Deficit widens (from £4bn in May to £4.5b in June).
There was a surplus on trade in services of £4.4b, unchanged in May(Hooray?), But this was offset by a larger deficit on Trade in Goods of £8.9b. (£8.5b in May) (Boo! More services selling more Goods from abroad?) and as per Prof Eman predicting Balance of Payments problems?
Support for Prof Eman comes form David Kern? Chief Economist of the British Chamber of Commerce (BCC), who said "The fall in manufacturing in June was worse than expected."
"While the Government perseveres with implementing its tough fiscal programme, EVERYTHING must be done to support the manufacturing recovery and ensure there are no setbacks."
"Nor escalating B of Payments problems, especially when growth picks up" Prof Eman.

Prof Eman
Jeremy Bosk
Posted: 11 August 2011 04:37:19(UTC)

Joined: 09/06/2010(UTC)
Posts: 1,316

Prof

Drawing conclusions from one month's figures that are sure to be revised is a waste of time. It would still be a waste of time if they were guaranteed to be one hundred per cent accurate. Trends over time are what matters.

My last point is made very well by your point on how perceptions of German re-unification have changed over time. Quite a lot of time on a human scale.
Graham Barlow
Posted: 11 August 2011 12:05:47(UTC)

Joined: 09/03/2009(UTC)
Posts: 203

The City of London provides world wide services in all financial matters. Those services go from one extreme to the other. From spread betting, short term spec, CFDs and the like to Sovereign debt marketing Bonds at the other end and everything in between from stock market to foreign exchange on a mega scale. It is the world's biggest collection of financial markets, from Insurance reinsurance, banking ,public flotations and the like ,shipping hire grain and commodity dealing.. If you dont understand it, and have never worked in its complex ,sophisticated world Dont pontificate and carp and critisize a mighty Empire that Britain is fortunate to have in its midst . Its sustains Britain even now going through recessions ,make no mistake you armchair bound pontificating experts.
Graham Barlow
Posted: 11 August 2011 12:52:55(UTC)

Joined: 09/03/2009(UTC)
Posts: 203

Just one ryder to the foregoing. If you wonder why the people of the World come to do business in the City, in my 40 years experience the oustanding feature was honesty integrity and having their contracts written by British lawyers subject to English Law (They liked and admired the Law of Equity in their cotracts) In addition structuring of contracts was part of the flexible approach to business. I remember a French Executive saying after a contract had beensigned"My word I do like the way you English drive!". Imaginative skills are all part of oiling the Worlds commerce to keep going, and it has a deep history in Britain. For those who are interested The Bank of England have historians working to publish the unique history off many institutions in the City.. Mistakes have been made by Politicians(The FSA for example) and a trendy influx of unskilled PHDs from Universities who had not studied the complexities of Banking, this allowed much long standing experience to be put out to grass resulting in serious trouble in Banking management. Just look at the RBS top management. There is no substitute for long EXPERIENCE. You cannot learn it out of a book. .In my day it was Bank apprentice to top management with on the job training and refresher couses lasting years until you were ready to be let loose at the Coal face. It worked and produced well run profitable Banks. Unfortunately the instant expert syndrome became very trendy in the 21st Century. A PHD in Anthropologh from Cambridge was perceived as an Excellent qualification to preside over an institution providing the most complex Financial services with all its attendant risks.
Anonymous Post
Posted: 11 August 2011 22:52:13(UTC)
Anonymous 1 needed this 'Off the Record'

Jeremy Bosk
Trends are indeed important, probably the best indication of the shape of things to come.
However, looking back, the choice to move to services from Mrs T's SOP-Services Our People, does not appear to have done great things for our Balance of Payments/economy. Neither does it appears to have done great things for the US. We are not alone in having trade deficit problems.
Please take a look at BBC Business News -US trade deficit widens to $53.1b as exports fall.
imports and Exports of Services were virtually unchanged, but manufacturing is showing problems.
"Even a historically low dollar could not drive excess foreign demand."
Some similarities with UK? Other services based economies?

Perceptions depend on what tint of glasses you wear and the experiences you have had, and the position you want to argue for e.g. German economic re-unification Many factors like class,wealth upbringing, education etc. Different people therefore see the same situation differently and provide different explanations e.g. the recent riots. Here again trends are useful, as normally you can determine whether we are moving in the right or wrong direction e.g. on B of Payments gap, widening or narrowing. As such I am a wholehearted supporter of trend analysis.

But nevertheless, in the context of my 1st paragraph I think the UK manufacturing figures are significant, and unlikely to be revised by much more than a 0.1 or 0.2 %. Unless things are done to improve the manufacturing lot, it could well be the start of a trend.

Prof Eman
Jeremy Bosk
Posted: 11 August 2011 23:56:43(UTC)

Joined: 09/06/2010(UTC)
Posts: 1,316

Prof

We need services and manufacturing. It is not a case of either / or. A strong service sector does not imply a weak manufacturing sector nor vice versa.

The answer to the title question is a resounding no.

If you have a broken arm the physiotherapist will warn you about left right dominance and advise that you do not get used to relying on the unbroken arm. They will advise exercising the broken arm as soon as it comes out of plaster until it is as strong and agile as it was before the break. Thus with services and manufacturing.
Anonymous Post
Posted: 12 August 2011 09:01:58(UTC)
Anonymous 1 needed this 'Off the Record'

Jeremy Bosk
I do not see the question quite as simply as either /or.
I see the question as do we promote/assist MORE the money side or the making stuff side.
Both are in difficulties at the moment, but the banking sector has had bail-outs, considerably bigger than what most people are comfortable with, but the industry/manufacturing has been largely ignored.
My thinking is that this should change, and that more assistance should be given to making stuff.

Prof Eman
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