I wish I was a banker

The nationalisation of banks has taken up many of the editorial pages of late, everybody has their own opinion and in particular there is some serious divide in the academic realm. However, the reality is that if banks are nationalised then the people working in them should by right, become public servants, and if I was a union organiser in any of the large banks I would be ensuring that everybody is organised so that the necessary steps are taken, when the state becomes the new boss, that state worker benefits are part of the deal.

Why not? Why should the state be able to offer teachers a certain contractual benefit but not other people who will be in essence, in the state employ? It’s not semi-state we are talking about, rather a nationalised bank is fully state owned. There is only one shareholder and that is the government.

There are plenty of precedents for bank employees not getting state job style benefits but there is something that nobody has mentioned yet, …

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Euribor yield curve changes April 2009

Below are two charts of the Euribor yield curve (many thanks to Bank of Scotland Treasury for their excellent daily reports!).

Here we can see that there is not much of an inflationary expectation at year two or three, it is virtually a dip at the 3year mark, then there is some uncertainty, in year four it goes up by about 75 basis points, then we are back into a general steady upward trend.

Only a few days later and the three year price has shot up by 50 basis points, we would read this as being an indication that the markets are forward pricing in some expectation of inflation at the two or three year mark, if the rise filters through to the left hand side then it will be showing a stronger and stronger likelihood of this happening. Appropriately banks have just raised their fixed rates meaning that the window in which people on variables can cash in low are …

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