Anything, be it government or management must preside over a governable entity. When we are confronted with twenty-four hour banking, across time zones, with transactions coming under different national laws at different geographical stages of the process, it comes impossible to regulate or scrutinise. Ninety-eight of the top 100 UK companies in the footsie, are registered in tax havens. The Inland Revenue tries to negotiate with them in order to reach some tax agreement. Vodafone has been given a complete exemption from corporation tax for this year. TNCs' know perfectly well that they are beyond reach. Every western country has similar problems; their legal frameworks do not allow the powers available to make much difference. Bank reforms can only affect the general taxable population, or small corner shops, to the TNCs' they are largely irrelevant.
The Germans were angered yesterday when PIMCO (large investment house.) has said that it will not make any more sovereign loans to the EU until Germany acknowledges its obligations to the indebted eurozone. That is hitting below the belt; that may be an effective method to force Germany into becoming the lender of last resort. Isolating the EU from the global financial markets, as China has already decided; plus threats to EU exports, may be kind of discipline Britain, the USA and China will assert until they have persuaded Germany to comply with their wishes. Germany may become totally intransigent, but a price for that obduracy will be extracted.
The financial system has a long history of crises; the existence of a crisis is nothing unique. What we can say is unique is the existence a unified global market which is now able to circumvent national laws and any central supervisory authority. In the late 19th.C, for example, Britain had a serious problem resulting from poor investments and loans to Latin America. That resulted in a massive outward flow of gold down the proverbial 'black hole'. The Bank of England had to stop that with some urgency.
Despite protestation from some concerning QE, that will be with us for many more years. Sir Mervyn King intimated only last night that more can be anticipated in the U.K. The Federal Reserve Board in the USA has said that they could be doing likewise. If banks need recapitalising they either borrow the money from institutions which have often borrowed the same from other institutions, or produce their own, which does have the advantage of keeping interest-rates low. That is unfortunate for investors, and pension funds, but it is still better than a global default on private and corporate debt. If war broke out, for example, the national debt would rise, and purchasing fluidity would be produced from QE. It may be that Germany will see QE as a means by which the ECB can be the collective lender of last resort, thereby removing much of liability from themselves.
Much of what is discussed in the BDF's economics section may often be of interest to students of moral philosophy, or those who try to segregate subjects into political left/right divisions, but the immediate need is for an economic/financial system relevant to the circumstances of our time. That is the constant in this debate. Much inflation is a statistical abstraction; don't see if it is hiding under the sofa, it won't be there. Such speculation is in the same league as asking, 'What law makes the law, law?' or 'If everything has a first cause, what cause caused the first cause? Expel them to the literature department to read metaphysical poetry. Don't let them become decision-makers in the real world.
All very interesting and you make many good points but how will the £350 billion be repaid to the BoE?