According to Angela Knight, Chief Executive of the British Bankers' Association:
"A bank is like any other business - if its fixed operating costs go up then so does the price of its product."
Angela has provided a nice illustration of how (a) banks are not like any other business, and (b) she has the same grasp of business and economics as most other politicians.
In a competitive market, prices are determined by customers' alternatives, not by suppliers' costs. Only in an uncompetitive market (or one with strong and inelastic demand, insufficient supply, and minimal margins) can suppliers automatically put up their prices to ensure that their margins are not squeezed by rising costs. In a competitive market with the amount of flesh on the margins that is indicated by banks' recently-announced earnings (if we take them as credible, as Ms Knight undoubtedly would), one would expect margins/earnings to be squeezed as a result of rising costs.
The sort of privilege that enables banks to take this sort of attitude can only be endowed by government - as we have seen since the start of the Credit Crunch. No wonder the banks appointed a politician to be their representative.
People need to understand, when they talk naively about the failure of the market, that banks are not and were not part of the free market. They stand on the corporatist side of the fence, with the politicians, public-sector bureaucrats, and other VILE* beneficiaries of government-granted privilege. Ordinary, unprivileged workers and businesses stand on the other side. It is corporatism that has failed, not the free market. And yet the corporatists are successfully persuading people that the market has failed, and that it is right to inflict the costs on the ordinary businesses and workers, in order to protect the corporatist privileges that caused the problem in the first place.
We all know who the scumbags are (politicians, bankers, senior bureaucrats and corporate leaders). And we can all see that they have escaped relatively lightly from the debacle they created. Why then do people fall for the delusion that places them in opposing camps? Left-wingers blame "business" and expect politicians and bureaucrats to rescue us. Right-wingers blame the public sector and expect bankers and other corporate leaders to rescue us. Hang the lot of them, I say. They are all part of the same machine that uses the power of the state to enrich themselves and impoverish the rest of us.