Bankers move to abolish personal checks by 2018

Bounced out: The chequebook could be abolished by 2018 after the number issued every day has fallen drastically

After 350 years, cheques to be consigned to the history books

The Federation of Small Businesses said it will ’strongly oppose’ any move to get rid of cheques.

Daily Mail | Nov 23, 2009

By Becky Barrow

Cheques are to be abolished under controversial plans being drawn up by bankers.

They are widely expected to vote next month for the chequebook to be consigned to history.

Yesterday, the move was criticised by consumer groups, business lobbyists and charities representing the elderly.

They raised fears that vulnerable people, who have relied on their chequebook all their lives, will be left confused.

Many others simply prefer to pay by cheque, instead of by direct debit or bank transfer.

The Payments Council said its research shows the number of cheques being written every day has fallen dramatically in recent years.

At their peak in 1990, around 11million cheques were written every day. Latest figures show the number has dropped to around 3.8million.

Cheques, which were first used in Britain 350 years ago, are also an expensive form of payment for banks.

They cost around £1 each to process, which is four times as much as electronic payments.

The council’s 15-strong board – made up of 11 banking representatives and four independents – will take a decision on December 16.

The most likely date for cheques to be phased out in the UK is 2018.

A growing number of stores including John Lewis and Tesco have stopped accepting cheques.

Stores claim they are the most insecure form of payment and that abolishing them cuts queues at checkouts.

But cheques are still widely used for making payments to local tradesmen and for utility bills.

Government departments, such as HM Revenue & Customs and the Department for Work and Pensions, rely on cheques to make millions of payments each year.

Andrew Harrop, head of public policy at Age Concern and Help the Aged, said: ‘Many older people use cheques and cash for all their transactions and are uncomfortable with alternative payment methods, such as credit or debit cards with PIN numbers.

‘To prevent older people becoming financially excluded, any plans to end the use of cheques must ensure there are alternative ways of paying which they are happy using.’

Vera Cottrell, of the consumer lobby group Which?, said: ‘There are still no cheap, safe alternatives to cheques. Until that time, cheques should not be withdrawn.’

The Federation of Small Businesses said it will ’strongly oppose’ any move to get rid of cheques.

Sandra Quinn, a director of the Payments Council, said: ‘We are completely aware that elderly, disabled and disadvantaged people need alternatives to be in place.

‘If the decision is made [to end the cheque], there will be a long time before it comes into effect.’

$4.8 trillion – Interest on U.S. debt

Unless lawmakers make big changes, the interest Americans will have to pay to keep the country running over the next decade will reach unheard of levels.

CNN | Nov 19, 2009

By Jeanne Sahadi

NEW YORK (CNNMoney.com) — Here’s a new way to think about the U.S. government’s epic borrowing: More than half of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest.

More than half. In fact, $4.8 trillion.

If that’s hard to grasp, here’s another way to look at why that’s a problem.

In 2015 alone, the estimated interest due – $533 billion – is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.

On the bright side – such as it is – the record levels of debt issued lately have paid for stimulus and other rescue programs that prevented the economy from falling off a cliff. And the money was borrowed at very low rates.

But accumulating any more interest on what the United States owes at this point is like extreme sport: dangerous.

All the more so because interest rates will rise when private sector borrowers return to the debt market and compete with the government for capital. At that point, the country’s interest payments could jack up very fast.

“When interest rates rise even a small amount, the interest payments go up a lot because of the size of the debt,” Konigsberg said.

The Congressional Budget Office, which made the $4.8 trillion forecast, already baked some increase in rates into the cake. But there is always a chance those estimates may prove too conservative.

And then it’s Vicious Circle 101 – well known to anyone who has gotten too into hock with Visa and MasterCard.

The country depends heavily on borrowing to fund what it wants to do. But the more debt it racks up, the more likely it becomes that creditors could demand a higher interest rate for making new loans to the government.

Higher rates in turn make it harder to pay off the underlying debt because more and more money is going to pay off interest – money, by the way, which is also borrowed.

And as more money goes to interest, creditors may become concerned that the country can’t pay down its principal and lawmakers will have less to fund all the things government is supposed to do.

“[P]olicymakers would be less able to pay for other national spending priorities and would have less flexibility to deal with unexpected developments (such as a war or recession). Moreover, rising interest costs would make the economy more vulnerable to a meltdown in financial markets,” the CBO wrote in its most recent long-term budget outlook.

So far, that crisis of confidence hasn’t happened. And no one can predict with any certainty whether or when it could occur.

But should it occur, the change could be abrupt.

That’s because the government frequently rolls over – or refinances – the debt it has issued as it comes due.

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National Debt Now $12 Trillion, could top $14 trillion

National Debt could top $14 trillion.

CBS | Nov 17, 2009

by Mark Knoller

It’s another record-high for the U.S. National Debt which today topped the $12-trillion mark. Divided evenly among the U.S. population, it amounts to $38,974.34 for every man, woman and child.

Technically, the debt hit the new high yesterday, but it was posted on the Treasury Department website just after 3:00 p.m. ET today. The exact calculation of the debt is a 16-digit tongue-twister and red-ink tsunami: $12,031,299,186,290.07

This latest milestone in the ever-rising journey of the National Debt comes less than eight months after it hit $11 trillion for the first time. The latest high-point is not unexpected, considering the federal deficit for the just-ended 2009 fiscal year hit an all-time high at $1.42-trillion – more than triple the previous year’s record high.

Much of the increase in the deficit and debt is attributed to government spending outpacing revenue – both exacerbated by the recession and the government response to it – including hundreds of billions in bailouts and stimulus spending and tax cuts along with decreased tax revenues due to rising unemployment.

In recent days, President Obama has spoken of the need to bring the rising deficit and debt under control.

“I intend to take serious steps to reduce America’s long-term deficit – because debt-driven growth cannot fuel America’s long-term prosperity,” he said in remarks prepared for delivery to the leader’s meeting last Sunday at the Asia Pacific Economic Cooperation summit.

The National Debt has increased about $1.6 trillion on Mr. Obama’s watch, though less than $4.9 trillion run up during the presidency of George W. Bush.

But the White House budget review issued in August projects that by the end of the current fiscal year on Sept 30th, the National Debt could top $14 trillion.

It gets worse. The same document projects that by the end of the decade, the National Debt will hit $24.5 trillion — exceeding the Gross Domestic Product projected for 2019 of $22.8 trillion.

The new debt number adds urgency to Treasury Department calls on Congress to quickly raise the statutory limit on the National Debt which now stands at $12.104 trillion. The debt ceiling was last raised in February as part of the $787 billion Recovery Act stimulus bill.

The debt also costs a fortune to maintain. In the fiscal year just ended, the National Debt cost taxpayers over $383 billion. And that amount means the government is only paying 3.3 percent interest. If interest rates go up, so does the amount paid on the debt.

And we’re paying it to scores foreign countries which hold $3.5 trillion of the U.S. Debt.
China leads the pack holding nearly $800 billion in U.S. Government securities, followed closely by Japan with $731 billion.

Among the smaller nations lending the U.S. money are Luxembourg, Taiwan, Singapore and Ireland.

Mr. Obama has said he hopes the health care plan pending in Congress will serve to curb the growth in the debt by reducing the amount government spends on health care. But it’s a claim disputed by critics who say it will have the opposite effect.

Goldman Sachs boss says banks do “God’s work”

Lloyd Blankfein, Chairman and CEO of Goldman Sachs, speaks during a panel discussion at the Clinton Global Initiative in New York September 23, 2009.

Reuters | Nov 8, 2009

LONDON (Reuters) – The chief executive of Goldman Sachs, which has attracted widespread media attention over the size of its staff bonuses, believes banks serve a social purpose and are doing “God’s work.”

In an interview with London’s Sunday Times newspaper, Lloyd Blankfein also said he believed big profits and bonuses at banks were a sign that the world economy was recovering.

“We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. We have a social purpose,” he told the paper.

The dominant Wall Street bank posted third-quarter earnings of $3 billion and plans to hand out more than $20 billion in year-end bonuses.

Blankfein told the Sunday Times that the bank’s compensation practices correlated with long-term performance.

“Others made no money and still paid large bonuses. Some are not around anymore. I wonder why?”

He added that he understood, however, that people were angry with bankers’ actions: “I know I could slit my wrists and people would cheer.”

Profligate spender Obama goes to pay respects to his Beijing bankers

Liu Mingjie (C) and a customer discuss Liu’s bag and t-shirt ‘Oba Mao’designs in which he superimposed the face of US President Barack Obama over that of China’s late revolutionary leader Mao Zedong for sale at his shop in the tourist Houhai district of Beijing on September 23, 2009. The entrepreneur who goes by the English name Stefan is a former engineer who worked for Germany’s Siemens AG and US-based Cisco Systems before starting his business three years ago, according to state media, introduced the Oba Mao design bags and t-shirts, including coin purses, earlier this summer and says the shirts have been selling well. Getty Images

China’s Role as U.S. Lender Alters Dynamics for Obama

NY Times | Nov 15, 2009

by Helene Cooper, Michael Wines and David E. Sanger.

When President Obama visits China for the first time on Sunday, he will, in many ways, be assuming the role of profligate spender coming to pay his respects to his banker.

That stark fact — China is the largest foreign lender to the United States — has changed the core of the relationship between the United States and the only country with a reasonable chance of challenging its status as the world’s sole superpower.

The result: unlike his immediate predecessors, who publicly pushed and prodded China to follow the Western model and become more open politically and economically, Mr. Obama will be spending less time exhorting Beijing and more time reassuring it.

In a July meeting, Chinese officials asked their American counterparts detailed questions about the health care legislation making its way through Congress. The president’s budget director, Peter R. Orszag, answered most of their questions. But the Chinese were not particularly interested in the public option or universal care for all Americans.

“They wanted to know, in painstaking detail, how the health care plan would affect the deficit,” one participant in the conversation recalled. Chinese officials expect that they will help finance whatever Congress and the White House settle on, mostly through buying Treasury debt, and like any banker, they wanted evidence that the United States had a plan to pay them back.

It is a long way from the days when President George W. Bush hectored China about currency manipulation, or when President Bill Clinton exhorted the Chinese to improve human rights.

Mr. Obama has struck a mollifying note with China. He pointedly singled out the emerging dynamic at play between the United States and China during a wide-ranging speech in Tokyo on Saturday that was meant to outline a new American relationship with Asia.

“The United States does not seek to contain China,” Mr. Obama said. “On the contrary, the rise of a strong, prosperous China can be a source of strength for the community of nations.”

He alluded to human rights but did not get specific. “We will not agree on every issue,” he said, “and the United States will never waver in speaking up for the fundamental values that we hold dear — and that includes respect for the religion and cultures of all people.”

White House officials have been working for months to make sure that Mr. Obama’s three-day visit to Shanghai and Beijing conveys a conciliatory image. For instance, in June, the White House told the Dalai Lama that while Mr. Obama would meet him at some point, he would not do so in October, when the Tibetan spiritual leader visited Washington, because it was too close to Mr. Obama’s visit to China.

Greeting the Dalai Lama, whom China condemns as a separatist, weeks before Mr. Obama’s first presidential trip to the country could alienate Beijing, administration officials said. Every president since George H. W. Bush in 1991 has met the Dalai Lama when he visited Washington, usually in private encounters at the White House, although in 2007 George W. Bush became the first president to welcome him publicly, bestowing the Congressional Gold Medal on him at the Capitol. Mr. Obama met the Dalai Lama as a senator.

Similarly, while he was campaigning for the presidency, Mr. Obama several times accused China of manipulating its currency, an allegation that the current Treasury secretary, Timothy F. Geithner, repeated during his confirmation hearings. But in April, the Treasury Department retreated from that criticism, issuing a report that said China was not manipulating its currency to increase its exports.

While American officials said privately that they remained frustrated that China’s currency policies lowered the cost of Chinese goods and made American products more expensive in foreign markets, they said that they were relieved that China was fighting the global recession with an enormous fiscal stimulus program to spur domestic growth, and added that now was not the time to antagonize Beijing.

China is not viewed as a trouble spot for the United States. But this administration, like its predecessor, has had difficulty grappling with a rising power that seems eager to avoid direct clashes with the United States but affects its interests in many areas, including currency policy, nuclear proliferation, climate change and military spending.

In that regard, two members of Mr. Obama’s foreign policy team said that the United States’ interactions with the Chinese had been far too narrow in past years, focusing on counterterrorism and North Korea. Too little was done, they said, to address China’s energy and environmental policies, or its expansion of influence in Southeast Asia, South Asia and Africa, where China has invested heavily and used billions of dollars in aid to advance its political influence.

One hint of the Obama administration’s new approach came in a speech this fall by James B. Steinberg, the deputy secretary of state, who has deep roots in China policy. He argued that China needed to adopt a policy of “strategic reassurance” to the rest of the world, a phrase that appeared intended to be the successor to the framework of the Bush era, when China was urged to embrace a role as a “responsible stakeholder.”

“Strategic reassurance rests on a core, if tacit, bargain,” Mr. Steinberg said. “Just as we and our allies must make clear that we are prepared to welcome China’s ‘arrival,’ ” he argued, the Chinese “must reassure the rest of the world that its development and growing global role will not come at the expense of security and well-being of others.”

The Chinese reaction has been mixed, at best. The official China Daily newspaper ran a column just before Mr. Obama’s arrival suggesting that the United States needed to provide some assurance of its own — to “respect China’s sovereignty and territorial integrity,” code words for entirely backing away from the issues of how China deals with Taiwan and Tibet.

In the United States, the phrase “strategic reassurance” has been attacked by conservative commentators, who argue that any reassurance that the United States provides to China would be an acknowledgment of a decline in American power.

In an op-ed article in The Washington Post, the analysts Robert Kagan and Dan Blumenthal argued that the policy had echoes of Europe “ceding the Western Hemisphere to American hegemony” a century ago. “Lingering behind this concept is an assumption of America’s inevitable decline,” they wrote. White House officials shot back, insisting that it is China that needs to do the reassurance, not the United States.

In China, Mr. Obama will meet with local political leaders and will host an American-style town hall meeting with students in Shanghai. He will then spend two days in Beijing meeting with President Hu Jintao.

It seems unlikely that Mr. Obama will get the same celebrity-type reception in Beijing that he received in Cairo, Ghana, Paris and London. China seems mostly immune to the Obama fever that swept other parts of the world, and the Chinese are growing more confident that their country has the wherewithal to compete with the United States on the world stage, analysts say.

“Obama is still a positive guy, and all over the world most people think he’s more energetic, more sincere, than Bush, more a reformist,” said Shi Yinhong, a professor and an expert on United States-China relations at People’s University in Beijing. “But in China, Obama’s popularity is less than in Europe, than Japan or Southeast Asia.” In China, he said, “there is no worship of Obama.”

For instance, during the Bush and Clinton years, China might release a few political dissidents on the eve of a visit by the president as a good-will gesture. This time, American officials say, they do not expect any similar gestures, although they say that Mr. Obama will raise human rights issues privately with Mr. Hu.

“This time China will agree to have a human rights dialogue with the U.S. on some cases,” Mr. Shi said, but “the arguments have changed compared to the past. Now we say, ‘We are a different country, we have our own system, our own culture.’ ”

CNBC – Dollar Will be Utterly Destroyed, Global Currency, New World Order

Youtube | Nov 6, 2009

Posted by: SignificantImagery

The dollar will get “utterly destroyed” and become “virtually worthless”, said Damon Vickers, chief investment officer of Nine Points Capital Partners. Due to the huge wage disparities between the United States and emerging markets like China, Vickers said that may resolve itself in some type of a global currency crisis.

“If the global currency crisis unfolds, then inevitably you get an alignment of a global world government. A new global currency and a new world order, so we may be moving towards that,” he said.

For those who have claimed this is a fake clip I suggest you visit CNBC’s website:

http://www.cnbc.com/id/33709379

Note the inverted pyramid/illuminati triangle with the hypnotic spinning lights of Nine Points Capital Partners in the background. – PJ

‘India, China will create New World Order’

Former governor of Reserve Bank YV Reddy delivering the Justice Konda Madhava Reddy memorial lecture on `Global Financial Crisis & Asia’ in Hyderabad.

Express News Service | Oct 31, 2009

HYDERABAD: Indicating that the US will no longer be the leader of world economy, former Rerve Bank of India governor Y Venugopal Reddy has predicted that India and China will dominate the scene. Delivering the Justice Konda Madhava Reddy Memorial Lecture on `Global Financial Crisis and Asia’ at AV College here today, he said return to normalcy at the end of the recession need not mean return of the old world economic order.

“Asian economy suffered less and is recovering faster than the rest of the world as both India and China managed to strike macro-economic balance.

India scored over other countries with efficient balancing between savings and investments due to its conservative nature,’’ he said and accused developed countries like the US for consuming more than they could save while other countries starved. “India can take measures to manage the crisis by defining the parameters of a new order through a process of rebalancing and withdrawl of certain extraordinary measures that can strike a financial balance. It is in a better position to wrest significant gains from globalisation than many other developing countries.’’ He suggested that India voice its concerns along with other developing countries to modify the international trading arrangements for the benefit of developing countries apart from identifying and strengthening itself.

Former Supreme Court judge Justice P Venkatrami Reddi, AP High Court Chief Justice Anil R Dave and AP State Human Rights Commission Chairman P Subhashan Reddy were among the dignitaries who attended the annual event organised by the Justice Konda Madhava Reddy Foundation.

Soros: China will emerge as winner in “New World Order”

 

“The new world order that will eventually emerge will not be dominated by the United States to the same extent as the old one. China may be able to take its place to some extent,” Soros said.

Soros: China will emerge as winner from current economic turmoil

Xinhua | Oct 30, 2009

by Mu Xuequan

Budapest, Oct. 30 (Xinhua) — Investor and philanthropist George Soros forecast in Budapest on Friday that China would emerge as the big winner of the global financial crisis.

Soros called on Chinese leaders to “rise to the occasion” and take an active role in the creation of a new multilateral financial order urgently required to reinvent the “broken international financial system.”

Soros also warned that “the worst financial crisis since WWII” may not be over. The Hungarian-born billionaire sounded a pessimistic note throughout the week and said that those who believe the global economy is stabilizing are wrong.

In the last of a week-long series of lectures on capitalism and the global financial crisis at the Central European University in the Hungarian capital, Soros spoke of disarray in the international financial system and confusion in the political arena.

Soros urged greater international cooperation and called for a reorganization of the world order to prevent a total breakdown. “The total freedom of financial capital to move around internationally has proved to be a source of instability and needs to be curbed. A new grand bargain is required,” he said, referring to the Bretton Woods conference at the end of WWII which led to the establishment of institutions such as the International Monetary Fund.

“Global markets need global regulations, but the regulations that are currently in force are rooted in the principle of national sovereignty. A new multilateral system needs to be invented that would serve the interests of both the United States and China and of course the rest of the world,” he said.

“Such an institution could then decide how to treat financial institutions that are too big to fail and would consider new rules to control capital movements,” Soros said.

The reorganization of the prevailing world order should also extend beyond the financial system and involve the United Nations, especially membership of the Security Council, Soros argues, if progress is to be made in resolving issues like global warming and nuclear proliferation.

“The process needs to be initiated by the United States but China and other developing countries ought to participate in it as equals. They are reluctant members of the Bretton Woods institutions which are dominated by countries that are no longer dominant. The rising powers need to be present at the creation of the new order to ensure that they will be active members of it. Hopefully the Chinese leadership will rise to the occasion. It is no exaggeration to say that the future of the world depends on it.”

Soros believes in the long-term the United States stands to lose the most from the recent turmoil and China is poised to emerge as the greatest winner.

“In the United States, the crisis was an internally-generated event leading to the collapse of the financial system, while China was largely insulated from the financial crisis although there was an external shock to exports. The new world order that will eventually emerge will not be dominated by the United States to the same extent as the old one. China may be able to take its place to some extent,” Soros said.

It is also in China’s interests, however, to submit to a new multilateral system, according to Soros. “In order to continue rising China must make itself more acceptable to the world, move towards a more open society, combining an increased measure of individual freedom with the rule of law.”

Leading bankers study Pope’s encyclical on social teaching in the City of London

Leading bankers study Pope’s encyclical on social teaching

indcatholicnews.com | Oct 21, 2009

A private seminar was held this morning at Schroders Bank to explore the relevance of the Pope’s encyclical on social teaching, Caritas in Veritate, for the financial sector.

The seminar was organised by Archbishop Vincent Nichols and brought together a number of leading figures in the City to look at issues of ethics and values in the light of the moral principles of Catholic social teaching, and the various challenges facing leaders of the financial sector in the UK.

A message  from Cardinal Bertone, Secretary of State  to Pope Benedict,  said: ‘The Holy Father was pleased to be informed of the meeting .. he sends his cordial greetings to all participants. He is gratified to learn that leading figures in the world of finance  are responding to the challenge to explore ways of building ‘authentically human social relationships of friendship, solidarity and reciprocity.’ And he encourages them always to promote the integral human development that is rooted in a transcendent vision of the person. He assures all those taking part in the seminar of his blessing and prayers.’

Related

Inequality is good, says Goldman Sachs chief, Lord Griffiths

All participants attended in a personal capacity. They were (listed alphabetically): Marcus Agius, Chairman, Barclays Bank; Helen Alexander, President, CBI; Bishop John Arnold, Auxiliary Bishop in Westminster; Ben Andradi, Managing Partner, Syntel and Trustee of Catholic Trust for England and Wales; Sir Win Bischoff, Chairman, Lloyds TSB; Geoff Boisi, Chairman and CEO, Roundtable Investment Partners; Gavin Boyle, CEO, Tudor Capital UK; Robin Buchanan, Senior Adviser, Bain & Co; Mel Carvill, President, PPF Partners Ltd; Dominic Casserley, Managing Partner UK and Ireland, McKinsey & Co; Sr Catherine Cowley, Lecturer in Christian Ethics, Heythrop College, University of London; Michael Dobson, Chief Executive, Schroders; Stephen Green, Group Chairman, HSBC Holdings; Lord Brian Griffiths, Vice Chairman, Goldman Sachs International;  Field Marshal Lord Peter Inge, former Chief of the Defence Staff; Louis Jordan, Vice Chairman, Deloitte;  Rt  Hon John McFall, MP Chairman, Treasury Select Committee; George Mallinckcrodt, W KBE, President, Schroders; Philip Mallinckrodt, Group Head of Private Banking, Schroders;  Paul Marshall, Founder and Chairman, Marshall Wace; Archbishop Vincent Nichols, President, Catholic Bishops’ Conference of England and Wales; Andrea Ponti, Global Head, Healthcare JP Morgan; Anthony Salz, Director, Rothschild’s; Archbishop Peter Smith, Vice-President, Catholic Bishops’ Conference of England and Wales; Keith Wade, Chief Economist, Schroders; Charles Wookey, Assistant General Secretary, Catholic Bishops’ Conference of England and Wales;  and Professor Stefano Zamagni, Professor of Economics, University of Bologna, adviser to the Pontifical Council for Justice and Peace on Caritas in Veritate.

Inequality is good, says Goldman Sachs chief, Lord Griffiths

Lord Griffiths has echoed the ‘Greed is good’ maxim by Gordon Gekko, played by Michael Douglas in the film Wall Street, by saying inequality is good

Inequality is good, says Goldman chief, echoing Gordon Gekko as he defends huge bank bonuses

Daily Mail | Oct 21, 2009

By Rupert Steiner

The vice-chairman of Goldman Sachs has launched an astonishing defence of bumper bonuses just a year after bankers brought the world’s economy to the brink of collapse.

In a speech likely to recall fictional banker Gordon Gekko in the film Wall Street – whose mantra ‘greed is good’ came to sum up the excesses of the 1980s – Lord Griffiths claimed taxpayers should ‘tolerate the inequality’.

And he insisted that banks should not be ashamed of rewarding staff.

His comments came as it was revealed that President Barack Obama is set to slash bonus payouts by as much as 90 per cent to executives at Wall Street banks that received billions of dollars in taxpayers’ cash.

Last week, Goldman Sachs provoked anger after revealing that it planned to lavish a record £13.4billion in pay and bonuses on its staff.

Around 5,500 of its employees work in London and are in line to pocket an average of £440,000 each after the bank revealed a sharp rise in profits.

Lord Griffiths, who was speaking at a debate on ethics held at St Paul’s Cathedral, said: ‘We have to accept that inequality is a way of achieving greater opportunity and prosperity for all.

‘We should not be ashamed of offering compensation in an internationally competitive market to ensure that businesses stay here and employ British people.’

The 67-year- old, a former adviser to Lady Thatcher, also said government attempts to rein in bonuses would only result in banks quitting Britain, causing huge damage to the economy.

‘We should think about the mediumterm common good and make sure that going forward we have one cluster of industry here in London – the financial sector,’ he said.

Lord Griffiths’s comments will be a major embarrassment for Chancellor Alistair Darling and Treasury minister Lord Myners, who have already promised to slam the brakes on corporate excesses.

They are also likely to enrage millions of credit-starved businesses and families hit by the credit crunch.

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