Hats off to our deficit-cutting bankers

"Nice work gents. . . I don my hat". Those forex-rigging HSBC traders copped some decent lingo. But it could quite easily have been George Osborne. That's not to suggest the U.K. Chancellor himself was actually involved in manipulating the $5.3 trillion a day market.

But rather, that he's made an even bigger turn than the numpty traders who were playing fast and loose with price of the dollar. After all, the fines that the five banks have coughed up will now go straight into Osborne's pre-election coffers. Last week's capers will add another £1.1 billion ($1.73 billion) to the previous booty, making a total of £2.2 billion. Nice work indeed.

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Now, you may think that there's no better way to redistribute wealth than take it from crooked bankers. But it's actually a bit more complex than that. Traditionally, fines were kept by the U.K. regulators that levied them - like in most major financial markets around the world. But, then the sums involved started getting bigger - too tempting, maybe, for a cash-strapped Chancellor behind on his deficit reduction plans.

Back in 2012, Osborne muscled in on the money regulators were hoovering up from the banks via a nifty rule change. Even so, for a while he made a big play over the money being redirected to charities - especially for the armed forces. As he put it at the time in the House of Commons, the fines from those who demonstrated the worst possible values would go to those who embodied the best.

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Some £35 million has gone to military charities, £20 million for armed forces' veterans and childcare support, £1 million to the Invictus Games, the sporting competition for wounded service personnel, £1 million to the ceramic poppy installation at the Tower of London to commemorate the centenary of the First World War - and a further £1 million for showing the poppies nationally.

Who could object to that? Well no one - until you add it all up and see that only £118 million has actually been spent from the £461 million raised in Libor fines. The Treasury won't even answer where the rest is. As for fines collected outside of Libor, like forex, well those really have had the Chancellor rubbing his hands. The £1.74 billion will wing its way to the government's consolidated fund - the pot to which all tax receipts go and from where all public spending comes.

Come the Autumn Statement on December 3, those funds will be pretty handy - especially when he has already been angling for the pensioner vote with tax give-aways of £150 million. Osborne is also facing the embarrassing prospect of having to admit that government borrowing this year will be higher than last. In March, the Office for Budget Responsibility forecast that net borrowing would fall to £95.5 billion this year. But tax receipts have been far weaker than expected which means that - just six months in - the government has already borrowed £5.4 billion more than expected.

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This leaves the Osborne clawing behind the sofa for every penny and the income from these fines sure comes in handy. The Chancellor has form here too - faced with a similar crisis in March 2013, he pushed some planned Whitehall spending into the following year.

After massaging the numbers, the deficit was judged to fall by less than £1 billion. The Institute for Fiscal Studies, noted back then: "There is every indication that the numbers have been carefully managed with a close eye on the headline borrowing figures for this year."

Now, clearly some of the money will find its way to good causes. But this is, after all, the run-up to one of the most closely fought elections in modern history. Perverse though it may sound, Osborne has done very nicely out of these recalcitrant bankers. Why, he must be drooling at the prospect of another scandal. The gold price, perhaps? Chapeau!

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