Tuesday, 8 January 2013

It’s a mad, mad, mad, mad world

Sometimes it seems that our economy is being run from a parallel universe.

For example, you might think that the big banks that have been mired in scandal would make a bad investment. You would be wrong.

Today’s Financial Times reports on how bank shares performed last year:
In several cases 2012 share price performances were seemingly driven by some bizarre inverse correlation with lenders’ misdeeds. Among the best performers were three of the big UK banks – Barclays, which was fined $450m over Libor and lost its chairman and chief executive; HSBC, which was fined $1.9bn over Mexican money laundering and Iranian sanctions breaches; and Lloyds, whose PPI mis-selling has cost it £5.3bn. Barclays and HSBC shares were both up about 50 per cent, while Lloyds’ investors doubled their money.
The sad thing is that this news will be treated within the banking world as a vindication. The necessary reforms will become even less likely – until the inevitable next crisis.

[The FT’s website requires (free) registration; if you are unable to register, search for the headline “Bank shares buoyed on a sea of scandal” on Google News.]

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