Barclays Bank today reported obscene profits - more than £7bn an increase of 35 per cent, or £200 each second. That's not much of a surprise when you see the many ways that banks rip us off. The puzzling thing is that the wizz-kids in the City marked the shares down.
What did they expect? What would it have taken for them to be satisfied?
Share price appears to bear no relationship to the success of a business but exists simply in the mind of a few people whose sole role in life is to make a profit out of trading shares. Is this a sound basis on which to base our economy?
I can see the point of issuing shares to fund the start of a business or the expansion of a business, and I understand that people who make that investment deserve to share in the success of the company they have backed. If there is a profit, they deserve a dividend.
I'm even willing to accept that investors might want to sell their shares.
What I don't find acceptable is that they should have two pay-outs - from the dividend and from speculation over the share price.
It seems to me that most transactions in the City are not in companies, they are in shares i.e. the investment is paid to the share owner not the company.
Wouldn't it be better for the economy if people who have money to invest, put it directly into new businesses or expanding businesses and not just moving pieces of paper around the City? Share price should remain fixed, their value coming from the dividend created by a successful business, not from speculation.
Saltaire Sam
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