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Not so stressed

Robert Peston | 15:56 UK time, Thursday, 7 May 2009

7 May 2009: it's an important date.

Important, because it may well be the day we could relax a bit and be confident that our biggest banks are on the road to recovery - that the risk of any of them going belly-up has diminished very significantly.

Which is not to say that the days of easy money for banks are back, or that rational pricing has returned to money markets (though these markets are a bit less dysfunctional than they were).

The recession is taking its toll: excessively indebted households and companies are experiencing growing difficulties in making payments on loans.

Lloyds TSB bank signSo Lloyds Banking Group will make a humiliating loss this year.

But Lloyds also confirmed today that it has more than enough capital to absorb that loss.

It can withstand more-or-less any shock, other than the kind of economic Armageddon which would give us rather bigger things to worry about than the health of Lloyds.

And at Barclays? Well, that bank is actually growing profits again - thanks to a boom in investment banking and the business of raising finance for big companies - which more than compensates for increasing losses on loans that are going bad.

In a global banking industry what's probably more important is that the US authorities are today - in a very public way - taking steps to ensure that all of America's 19 biggest bank holding companies have enough capital to cope with the economic contraction.

A small number, including Bank of America and Citigroup, will be instructed to raise tens of billions of additional capital.

Others will be pronounced in pretty good shape.

And what matters most is that (at long last) we're probably through the initial phase of the global economic shock - which was all about the seizing up of financial markets, the contraction of the banking system and the collapse of individual banks.

What we have to contend with now is the consequence of that almost unprecedented systemic financial meltdown: recession.

Comments

Page 1 of 2

  • Comment number 1.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 2.

    Sure we're not experiencing some sort of pre-disaster rally?

    A banking equivalent of the stock-market's dead cat bounce phenomenon?

    Well I guess we'll see. I, for one, am glad I mortgaged my grandchildren's future and diluted our currency to save the likes of Lloyds and Barclays. Why, I should have been ashamed to call myself an englishman if those fine institutions had folded!

  • Comment number 3.

    Robert Preston wrote:
    Which is not to say that the days of easy money for banks are back, or that rational pricing has returned to money markets (though these markets are a bit less dysfunctional than they were).
    The recession is taking its toll: excessively indebted households and companies are experiencing growing difficulties in making payments on loans.
    Hurrah: the fast money men are safe! It is now time for the banks and their bosses to make sacrifices to help the households and companies. What plans do Gordon and co. have to make that happen?

  • Comment number 4.

    see my post #45 on your previous blog to see that where banks are concerned nothing has changed... it is still just smoke and mirrors...... Citigroup posted a first quarter "profit" yet apparently needs more billions, so are they technically bankrupt?

  • Comment number 5.

    Don't tell me. Signs of green shoots in the banking industry?

    I don't think so and I fully expect there to be more bad news as personal bankruptcies and repossessions rise in the UK. Also expect financial problems to continue in Europe.

    I fully expect Lloyds to have to raise more money as the fallout from commerical property comes home to roost. The same applies to RBS but only in larger numbers.

  • Comment number 6.

    up 2.x % today (before the post)

    Down 0.3% after the post

    Robert, stop talking the markets don't like it lol

  • Comment number 7.

    Joly ho !!!!!

    Things are back to normal eh ?????

    Robert I think you forgot that we will now be working to 75 or 80 according to the news, paying real tax on our incomes of 50 or 60 % (direct + indirect taxes) in a couple of years time.

    I just dont think the future looks bright.

  • Comment number 8.

    Phew, that's a big relief!

  • Comment number 9.

    Has I pointed out to your previous article. The banks will make a profit. The Government has forced down the base rate, but mainly for savers and the banks have started to lend that money at high interest rates so their margins have rocketed.
    Savers are seeing banks use their savings for free.

    So the suckers who are funding those profits are savers who have been shafted once again by Brown, the BOE and the Banks.

    For busines,any prudent company with money in hand have seen their returns wiped out with the resultant loss to the bottom line.
    Another Gordon STEALTH TAX


  • Comment number 10.

    Sounds good, now we can officially not be worried, when we were at best mildly concerned in the first place. The government wouldn't have let another bank cave, not because it's the right thing to do, but because they have some bizarre drive to want to keep the status quo afloat, and damned be the consequences.

  • Comment number 11.

    I've heard it suggested that the next wave will be countries going under rather than banks. Specifically Ireland with awful consequences for the Euro zone. Is this now looking less likely or is an independent hazard?

  • Comment number 12.

    If the banks are doing so well they can return the taxpayer bailout billions/trillions.

    If they can't, then they are lying.

  • Comment number 13.

    Quote: 'It can withstand more-or-less any shock, other than the kind of economic Armageddon which would give us rather bigger things to worry about than the health of Lloyds.'

    Robert,

    You are doing it again !!!

    This is the kind of childish muddled thinking that got us into this mess.

    So when the 1 in 10 event (Armageddon economic shock) happens that pushes us over the edge, we loose stability and are doomed !!! It is possible to play the game so that when the 1 in 10 event occurs, we are safe, but that requires, it seems, too much prudence.

    And 9 times out of 10 these events do not occur. But play the game long enough (on average 10 times, and with almost certainty 20 times), and the 1 in 10 event will happen !!!!

  • Comment number 14.

    I wrote a few weeks ago that big business usually made profits again within a year of a downturn ( barclays).Those of us in small business will take 7/10 years to recover. So be it !!!

  • Comment number 15.

    Dear Robert

    10 October 2008 was an important date too. It changed our politics. Under a Labour Prime Minister the banking crisis was then tackled head on not just domestically, but internationally.

    A seven-month turn-round?

    Will he get the credit?

  • Comment number 16.

    'And at Barclays? Well, that bank is actually growing profits again - thanks to a boom in investment banking and the business of raising finance for big companies - which more than compensates for increasing losses on loans that are going bad.'

    With respect, Robert, how do you know where Barclay's profits are coming from? Is this just what Barclays is saying? How is there a boom ie a significant increase over previous activity in investment banking right now? Smack in the middle of a recession?!

    Or is it that Barclays has started to classify profits made on charging very high levels of interest on loans and overdrafts as investment banking?

    It seems to me that Barclays would like us to believe it is making its healthy profits from anything other than retail and small business customers. I'm just not sure this is the whole truth however.




  • Comment number 17.

    This sounds rather like an article for "Woman's Weekly", short on specifics but long on hope.

    Until Qualitative Easing and other financial stimuli are withdrawn from the equation, we will ALWAYS have a distorted picture of how well the banks are doing (or not).

  • Comment number 18.

    Robert,
    The FSA have issued several CPs ( guidance) on stress testing, liquidity improvements, Basel 11,Tripartite Committee requirements, depositor protections to our good ol UK banks, bless em. When do we, the great unwashed in UK, get to be told the results - I remember Barclays shouting in March they had passed with flying colours and didnt need asset protection insurance or govt capital.Were the US tests equivalent to those issued by FSA or are separate nations running different tests and standards to gain an edge? Loads of questions ere, Robert?

    The Treasury Committee consider bank reform, diversification,monopoly, down sizing,Glass Seagal etc. as an open ongoing and live debate. Whilst the City and Walls Street will want the debate closed, I dont!

  • Comment number 19.

    Todays BOE announcement......The decision means the Bank's Monetary Policy Committee will extend its programme of buying Government bonds from an initial £75bn to a total of £125bn within the next three months........

    So they have already spent £75 billion...can someone tell me what difference it made to the economy?

  • Comment number 20.

    Maybe today is the day we fall of the step/mezzenine floor rather than relax.

    The key day will be the elections on 04 June Not today that will determine if Gordo give Zanu-loabour the suicide pill if they try and remove him by calling a GE as a result ?

    watch out for a snap election ?

    John Moulton of BBC R4 about 2 weeks ago said that this is going to be an "L" shaped recession

    when we hit the bottom we will be staying there for long long time.

    We might have a pause before the real issues are tackle at the next budget and the next 20 of them.




    BTW any thoughts of inovative ideas like taking on board blog comments like MS flanders in the other room, or is it chinesse walls ?


    start of the Election propoganda machine already.

  • Comment number 21.

    Any one who bought bank shares in the last few months ,have doubled / tripled their investment.With the margins the banks are currently making on borrowing v savings ,I would not be surprised if all banks report a profit within 12 months,despite their massive right downs. On reflecting on the banking mess its clear that savers have took the pain and the tax pay the risk.
    Within a couple off years the banks will be back to the own tricks,using the capital of savers as a deposit for commercial investment.

  • Comment number 22.

    Oh dear, looks like Mr Peston is buying all the spin from the snake oil salesman! This is the calm before the storm. The fact remains that the underlying problems remain. The bansk lent out considerably more money than they should have done to people who could not afford to take it. As spending continues to contract, businesses will fail, more people will lose their jobs and will be unable to pay their bills.

    This is not a recession, but a sustained depression.

    The simple fact remains that debt has to be repaid no matter how you dress it up. The banks are sitting on toxic debt, which is waiting to explode. Barclays profits need to be considered in that context. It is rather like someone with £75k credit card debt in a £20k job who gets a small pay rise and tells everyone he is doing well.

  • Comment number 23.

    4. jolo13

    With ref to your post 45 on previous blog, yes of course you are dead right. As all good private sector accountants know, the financials will be made to say what we need them to say when we need them to say it.

    Accounting Standards must not be allowed to slip! Sod Joe Public....

  • Comment number 24.

    The banks might be in better shape, and after the amount of money poured into them by us its no real suprise that they are, its what they do with all this new money for nothing that will define how long and strong the recovery will be. Lets face it the next recession will not be because of wage driven inflation, those days are gone, it will be because the financial services sector won't have heeded the lessons they should be learning now. If we are all working to 70 in the years ahead it won't be much fun if we end up in another asset boom crash!

  • Comment number 25.

    The negative feedback of the banking crisis effect on the real economy has simply not kicked in yet. The real longstanding problems in the real economy are simply not addressed by the propping up of the banks either.

    It does not matter if you prop up the banks with funny money in the short term if you are still running massive trade deficits year on year in the long term.

    It is a very 'bankcentric' analysis of what is going on which is typical and is what got us into this mess in the first place.

    Banking is to the economy as cyberspace is to reality. You can live in it for a while but you have to engage with the problems in the real world sooner or later or your computer will be cut off because you cant pay your power bill with anything real and hey..guess what...no more cyberspace guys...

    Jericoa



    Ho hum.

  • Comment number 26.

    I am with Gothnet - there are no gaurantees that we are through the worst yet. the FTSE tanked from +3% to 0% once the US markets opened.

    let's see what next week brings as the markets digest the nonesense US stress tests. At least our stress tests were real, the US ones were a sham.

  • Comment number 27.

    The BBC are surely having a laugh, printing this kind of hyped tripe.

    Yeah so US stress testing tells us all that everything is just cushty in the, and how many banks in the US have been siezed by regulators so far this year? Is it more or less than in the whole of 2008? Why doesn´t the BBC let us all in on the news? (It is their job after all).

    So Citi need (yet more) money -seems like only last week that they were alleged to be churning out the profits. How are they going to get a good part of this money? Why, by entering into some deal with Morgan Stanley which will allow them to magically raise virtual cash by means of an accounting adjustment. Sounds like a good long term solution.

    If everything is so great why do we need quantitive easing? Don´t you know that the more you spin now the bigger the shock and outrage when the next phase of meltdown kicks in. You cannot spin your way out of this anymore than you can buy your way out with virtual money.

    As someone else said this reads like an article written for Womens Weekly or something like that, and as John McEnroe said "YOU CANNOT BE SERIOUS"





  • Comment number 28.

    Right then, a lesson in the black art of accounting. Simple version.

    When is a loss, a loss, and when is it not a loss? Tricky question eh!

    Well, in presentational terms, a loss is crystallised and "impaired" when all exhaustable means of debt recovery have been exhausted. Q: Have the banks identified all crystallised losses? A: No, as not one of them appears to have unwound all of their derivative trades which Lehmans should have uncovered, after all, they held the parcel when the music stopped. Until this is done, NOT ONE BANK can safely say they are making REAL CASH PROFITS.

    Q: Can banks get tax relief for losses? A: Yes they can, provided their auditors (who report to the shareholders and the directors only, by law - ordinary folk cannot rely on the accuracy of the accounts, despite the true and fair view audit statements) say that they can and that they are justified. Otherwise, the HMRC will have cause to investigate tax avoidance matters for each reporting bank.

    Banks and financial institutions have long used the art of "bad debt accounting" as a "balancing item" in their reporting. Yes, of course, institutions comply with tax, company and regulatory law. However, in the UK, there is enough "opaqueness" about such laws, as to making real analysis of the numbers, frankly meaningless.

    The question then becomes "when is a profit a profit, and when is it NOT a profit?". A: I have no idea!

    In summary, I don't believe the balance sheet and profit and loss reporting of any bank or financial institution right now. The market traders are once again starting to "bet ranches" on rising stock values. The only reason for doing this is because soverign governments CANNOT allow their financial systems to fail. The consqeuences of such failure are unimaginable.

    Cash really is king in the near future(but not very good for savers as they are used to cover the financiers' mess).

  • Comment number 29.

    the structure of governance in financial companies does not need radical overhaul. The attitudes and competence of the individuals who conduct that governance does. In particular we need to create governance that fosters challenge without creating conflict. The effectiveness of governance is the key issue and addressing this challenge is the responsibility of all of us, not just regulators and boards.

    Hector Sands 07 May 2009

    Isn't that kinda 10 years too late and doesn't it go beyond the FSA - "responsibility of all of us" what is he getting at, how do we all influence the decision making of this culture of obsessive greed which cut all but the rich bankers and managers out?



  • Comment number 30.

    Well, here's hoping the chief oaf of the country (re: Prime Minister) will now resign and a snap election can be called. Undoubtedly the Conservatives will win and do feel that they will do all they can to stop income tax rises. Because if the basic rate does go up, that's it, sheer and utter doom.

    The Conservatives may be the best of a bad bunch, but when faced with a plate of freshly laid cat dung and a plate of stewed cabbage, you know which one you'd rather eat.

  • Comment number 31.

    Whilst news of the increasing strengths of British banks is welcome, one wonders how much they have really learnt from the past 12 months.

    Recently I went into Lloyds to pay a cheque in for my son. The paying-in was fine, but once the transaction was completed the cashier told me that a message had flashed upon her screen offering him the chance to take out a loan "at very advantageous rates" and also did he need a credit card in addition to his debit card.

    They do still seem to be up to their old tricks.

  • Comment number 32.

    So that's all right then. The Government, as shareholders of two of Britains largest banks, will soon be sitting on very large windfalls from the profits that are being made. They can then sell the banks to international consortiums of various types and pat themselves on the back for a job well done.
    Or are we getting ahead of ourselves here; first they've got to make the profit and if wrongly directed by their major shareholder that may take some time

  • Comment number 33.

    Did you have din din with Mandy today Mr Peston ? Somebody has been filling your head with nonsense, I take it that you don't really believe all this rubbish the spinmeisters are feeding you, but feel you have to keep repeating it in case by some miracle Brown survives the next election and punishes you by sending you off to the same remote destination as Damien McBride appears to have gone to.

  • Comment number 34.

    Profits in the banks would be great news if these same banks had already made full provision for all of their toxic assets. Since they have not so provided, cannot possibly so provide, the profits being announced now are no more real than the profits that they have been announcing for years past.

    I wouldn't buy a bank share now with counterfeit money!

  • Comment number 35.

    Hopefully it's not a "w" recession

    So now the banks are saved, maybe they can help save industry

    Maybe they should try and save Gordon too

  • Comment number 36.

    Firstly Robert,

    Thats the second time in one day you have used the word Armageddon, are you trying to tell us something or have you lost your thesaurus?

    Secondly,

    When did you become privy to the US bank stress results.

    Thirdly,

    If you are privy to them would you do us all a huge favour a put the 'stress' levels used against actual conditions.

    Fourthly,

    Like everyone else, has already said, there are a large amount of people who don't believe the banks are 'solvent' (I'm one of them) after all the same people who were cooking the books are still in work. This is all just one big politically based , big money game that we are losing. A lot of people it would seem would like nothing more than to see the whole system torn down and started from scratch with better rules, regulations (preferably more independant from the banking sector chums that currently run it)and transparancy within the system.

    Lastly,

    As business editor I thought I'd point out to you a bit of a mistake. You see under a recent article by your team we find the following quote from the bank of england:

    "The Bank's statement acknowledged that "the world economy remains in deep recession", but added that, "surveys at home and abroad show promising signs that the pace of decline has begun to moderate". "

    Which is weird cause the three head lines next to it were:

    UK recession 'worst since 1930s'

    Record decline in eurozone sales

    UK car sales 24% lower in April

    So who's mistaken your team or the BoE?

    Thank you for your blogs.

  • Comment number 37.

    I have absolutely no faith in the present accounting system,the accounts of the banks as they now stand and even less in the oversight of it all.

    The system needs change ,and the present Government are just printing money to make up shortfalls 50 Bn making a total of 125 Bn this year !!!!

    We will shortly be having the IMF running our country !!! although i dont have faith in them either !!!!

  • Comment number 38.

    Every bank is living on borrowed time and they know it. Delaying lending is helping their underlying balances no end and the stress tests are like all previous regulatory investigations......hopelessly inadequate and run by those who haven't a clue with teh reslts subject to this governments interference and spin.
    The public has become so cynical teh UK is looking like a banana republic.
    At some point when we cant breath for debt obligations the truth will out but the only thing we can guarantee is that the truth will not be out until Brown and co have left office.
    The damage he and his sychophantic colleagues have done to future generations is so great that he will go down in history as the greatest incompetent Chancellor and Prime Minister ever!
    That is some ranking and it amazes me we still allow this madness to continue. The public doesn't trust a word he says nor does busines and most importantly foreign investors.
    If you can draw yor self out of denial for one minute Mr. Brown, please resign and give this country a chance to save itself, because with you pretending to run the show this is a reality slow death on a massive scale.

  • Comment number 39.

    #25 Jericoa

    I suspect it's less to do with the trade deficit than the fiscal deficit. With the UK recently reliant on the taxation from a financial sector that was 32% of GDP, it is difficult to see how the debt built up as 40% of an artificially inflated GDP is to be repaid from the GDP of a state with a fundamental structural deficit.

  • Comment number 40.

    #19. jolo13 wrote:

    "So they have already spent 75 billion...can someone tell me what difference it made to the economy?"

    They've staved off deflation without apparently stoking inflation, stabilised the currency, caused the stock market to stage a mini-recovery and seemingly begun to turn the economy around. It is generally accepted that the UK will suffer less of a recession than many other economies.

    Other than that... yes, what has the Bank of England ever done for us?

    (But, seriously... do you really expect to know for certain what effect QE will have? Let alone this early in the whole process?)

  • Comment number 41.

    Oh Whoopee! The US and UK banks are in 'pretty good shape' then. Allegedly.

    But what happened about the issue of trust? Will people trust these bankers with their financial business? Or perhaps it'll be, for some, "once bitten twice shy".

    (I know my dear bank, despite low low interest rates, is milking me dry with the charges for my overdraft at the moment).

    I wonder how many of these banks' customers, investors and shareholders feel that they've been left in 'pretty good shape' by the banks' jiggery pokery?

    So, it seems, instead of them working to re-build public trust, we'll just pretend it all didn't really happen and go into a sort of denial about it all. A kind of super neurotic "but we don't talk about that subject around here" game. Perhaps even a patriotic, 'careless talk cost lives' stance - after all we mustn't criticise the UK "City Grandees, it would vitually be treason. And that sort of strategy is somehow supposed to leave the industry and the UK economy in good stead for future generations, perhaps? I just don't see how.

  • Comment number 42.

    Good grief. Relax? Of course we can't relax. We won't be able to do anything of the sort until the banks demonstrate that they're doing what Brown said they should..... i.e. begin working for us and not for themselves.

    We also need to start seeing a revival in investment in start-ups, a willingness to support manufacturing and the acquisition of foreign companies.. We need to rebuild but we also need to grow...



  • Comment number 43.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 44.

    luko1980 no 30

    I am afraid you haven't quite understood the extent of the problems that we have.

    Whilst I am sure that the Tories' instincts will be for lower taxation, the cutting of public spending and the 50% tax band will not get the economy on an even keel on their own. Almost inevitably the majority will have to pay more tax. The sums just do not add up otherwise. Income tax is the most obvious target, although i would personally link any increase to a rise in the personal allowance.

  • Comment number 45.

    ROBERT PESTON?

    "NOT SO STRESSED"

    SURELY YOU ARE JOKING???

  • Comment number 46.

    Ah!!!

    Not so fast...

    We are still living in fantasy land, are we not...

    Disclosure has never been the Banks' strong point. Correct me - do - if you think me inaccurate...

    Accounting procedures were never really that good, were they?

    It's timely to hear whispered confirmation that my cricket loving Essex Banker has lost none of his arrogance. Boasting that he has made a bit of a 'killing' on the recent RBS share price revival when he cashed in last week! Surely not?

    I had it in mind that this sort of conduct might be frowned upon.

    May be mistaken!!!

    He informs anyone with a mind to listen that 'Bad Debts' will not be fully revealed until profits are being generated again. Accounting practises... blah, blah, blah...

    He slavers into his ale that as far as he is concerned 'Bad Debts' taken from his management actually improves his opportunity for bonus... Hard to believe, but hey... Hip, hip, hip, for our sponsor!

    Some people never learn...

    Ask Godro to explain why this might be permitted...

    (btwp, no need for the accompanying smile...)

  • Comment number 47.

    RELAX?????

    A favour Mr Peston.....quantitive easing

    Now £125 billion

    Who's getting the money, and what are they doing with it?

    Nobody seems to know

  • Comment number 48.


    What about the consequences of a financial crisis/meltdown in eastern europe - if you search the net, this is apparently supposed to be the next big worry.Any thoughts on that ? Will that be a worry for Britain's banks or is that just a European affair ? Or am I asking the wrong person -i.e. is that a (Paul)Mason story?

  • Comment number 49.

    Robert wrote

    "So Lloyds Banking Group will make a humiliating loss this year.
    BUT Lloyds also confirmed today that it has more than enough capital to absorb that loss"

    Er, whose capital is that?

    The taxpayers! Right?

    And that's a good thing????????

  • Comment number 50.

    This message was brought to you by HM Treasury and I Gordon Brown endorse it. I see we are still publishing mindlessly HMT press releases.... Why doesn't the BBC just link to the HMT website and save a salary and pension cost

  • Comment number 51.

    Thats good then isnt it? Time to borrow a few quid methinks, make my current debts a bit cheaper to manage, now lets see, bank rate .5%, LIBOR is low enough, now in a competitive retail market what %ag could I expect to pay?
    About 10%? no, I don't believe it!
    Now in a position like that even I couldn't fail to make a profit.
    Good news all round then, banks ok, everyone else snookered.
    Well if things don't change they'll stay as they are.
    Enjoy the warm summer everyone, at least we won't have extortionate energy bills to pay...............

  • Comment number 52.

    Too funny. Pundit comes running after bank shares are up 4,5,6 times from their lows in March. Yes, lets mark May 7 as a MEDIUM TERM TOP!!!

  • Comment number 53.

    Relax
    Don't be ridiculous man.
    Consider the time period predicted to get the PSBR back to 40%.
    I might be dead.

  • Comment number 54.

    And so the laundery machine entered the spin cycle. And every body remarked on just how fast it was. For our processing unit utilizes the latest dry cleaning/ laundery machinery.

  • Comment number 55.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 56.

    Dear Rob,
    I find it very interesting that you are buying the commentary coming from the very analysts who do not get money from being bearish and who's ability to detect a change in the market is about as accurate as 10th century Christians predictions of the end of the world.
    The truth is that the inflationary fiscal stimulus (aka quantative easing) is the equivalent of putting a 10 million volt shock through a patient on his/her deathbed. If he/she did not respond then we really would be up the creek without a paddle.
    The problem is all this excessive voltage has to find a home, and in this case the sick patient is going to go into a hyperinflationary spiral with the morons in charge of the central banks won't know how to fix.
    We're not out of the woods, not by any stretch. Analysts who are perpetually bullish are full of it and like the central bankers have no idea why we got to where we are and as a result have no idea how to get us out.
    I am riding the market up and will probably take some profits in the coming weeks before people wake up, smell the coffee and finally (hopefully) see through the incompetence of these buyside morons.

  • Comment number 57.

    Could somebody please explain to me exactly why HMG (or anyone) thinks we need economic growth or to try and avoid a recession ?

    Surely, we need a sustained period of economics stagnation and decline to a) reduce debt b)try to save the planet's resources c) lead happier lives in the long run.

  • Comment number 58.

    Not so stressed ...

    You're referring to the bankers I take it ... and not to all the hard-working people who now live in fear of losing their job and who will be told to work until they're at least 70 to start to pay back all the debt the Government has taken on ...

    Hard-working people are going to be overburdened by the stress of paying for all the self-interest, daylight robbery and greed of a small minority of people in positions of power - it's one of the worst examples of Poweromics I have ever seen - a conspired (not inspired) and historic event, but for very different reasons I feel.

    Turkey's don't vote for Christmas - this is true ... but are hard-working people going to let them get away with this?

  • Comment number 59.

    Glad everything's OK.

    Another £50 billion well spent today in my book.

    Right where were we?....

    Oh yes, Britain is a property owning democracy, with freedom and aspiration, we are all stakeholders in the future, we will never again be held to ransom by the Unions, tell Sid if you see him.

    Get the champagne out of the ice bucket, I think the coast is clear.

  • Comment number 60.

    If it is so important and I do not doubt that it is, that Banks hold large enough cash reserves, how pray is this necessity going to be achieved in the UK. Who has the confidence to buy up shares in the mega basket case of British banking now calling itself the Lloyds Banking Group and after they post their latest losses who in their right mind would want to participate in a new shares issue by it.
    The writing is already on the wall for this monstrosity to be broken down at some time in the future. If HBoS and RBS were too big to let fail who wants this "achiles heel" to survive any longer that it is safe to do so. Against these known facts there won't be many speculators risking their money on Lloyds and savers will be giving it a wide berth for as long as interest rates stay at a derisory 0.5%.
    Maybe the early release of another £50 billion of Quantitative Easing has a two-fold objective; increase the money supply only for it to be stashed away in the Banks' reserves and also to hold down the value of Sterling. Of course none of this will have an impact on lending to small businesses to get the economy on the move but, we can't have everything.
    Sometime, anytime soon, bank staff will be getting paid bonuses for; achieving their cash reserve targets.

  • Comment number 61.

    Perhaps someone can answer my question:Will the banks ever pay back the money that the tax payer gave them to bail them out of their self inflicted mess?

  • Comment number 62.

    Seriously folks,

    Let's stop messing about.

    Inject 500 billion not 50 billion into the economy / the bank.

    The aim is obviously to inflate our way out of the problem (ho, ho ho)- at least until after the election.

  • Comment number 63.

    Robert,
    It's nice to see a little bit of optimism.
    A couple of glasses of wine normally do the trick.
    But 1929 and 2008 may yet prove to have a lot in common.
    Let's hope not.

  • Comment number 64.

    If we all stood outside tomorow at 3pm and ate a cucumber sandwich, maybe that would help ?

  • Comment number 65.

    So the banks are in a good position after a huge influx of tax payers money, obviously time to re-instate their huge salaries and bonuses,if they everer went away. So business and joe public can start borrowing again at over inflated interest rates, compared the base rate, and providing they are in work, as many are now facing redundancy or bankruptcy. At least the banks are in a good position to profit from that and be ready to fleece the next generation. Nothing changes in this world other than the different ways those in charge find to keep power and make every one else pay for it.

  • Comment number 66.

    GORDY'S been using OUR MONEY TO PAY HIS BROTHER.

    WHEN WILL THIS LOT REALISE THAT THE GAME IS UP?

  • Comment number 67.

    http://news.bbc.co.uk/1/hi/business/8039096.stm

    Does that put a dent in your statement?

  • Comment number 68.

    Robert, your confidence in the stregth and integrity of the banking sector seems to be contrary to the following story from today's news site

    http://news.bbc.co.uk/1/hi/business/8039096.stm

    I wonder what full stress tests in the UK and Euro zone will pick up?

    House prices are still falling in the UK and UK commercial property is still in a real mess which means that more lenders both private and commercial are likely to default in the near future.

    According to IPD commercial property values fell by 8.7% in Q1 2009 on top of record losses last year.

    [Unsuitable/Broken URL removed by Moderator]

    I don't see the light at the end of the tunnel just yet. It may be getting worse less slowly but it isn't getting better.


  • Comment number 69.

    20 million homes approximately owned in this country at an average value of say £175,000 = £3.5 trillion, YES TRILLION in housing stock equity.

    A 1% rise in values equates to £35 billion.

    10,000,000 cars on the roads of britain average value say £5,000 is £50 billion worth of motors.

    Getting on for 30 million workers in this country earnig an average of £25,000 per annum.

    Wages being paid in this country roughly £75 BILLION p.a.

    Yes per annum, i.e this year and every year.

    You illiterate and totally innumerate morons have no idea of the size of the figures involved in macro economics, you count up your change at the bar and think you know how the economic world works.

    The biggest problem Britain faces is the endemic stuoidity of its population, but one just has to look at the television ratings to see that.

    Mithras, you annoy me.

  • Comment number 70.

    Stress testing banks is vital to confidence ,what if the unthinkable were to happen and banksterrs were no longer able to wheel their wheelbarrows through the streets great and narrow full of their bonuses ,index linked pensions and doubledutch tulip bulbs for their allotment .It would be the end of crapitallism and AAA'scozyated gravytrainocracy musquerrading as dimocracy.

    As for the stress test, the bankster planksters should get loaded up with any masonary lieing about the place and dumped into the nearest pond , if they float then the experiment can be repeated until no more masory can be found and pond life is no more .

  • Comment number 71.

    Robert

    Surely this rising confidence is just a symptom of the bear rally? We're probably only half way through this crisis and the worst is yet to come. I would be very surprised if the banks are over the worst.

  • Comment number 72.

    post 69 Moncursalion "stuoidity"

    As you say the morons are p'd off with o to lose but their negative equity chains.

  • Comment number 73.

    #40 RBS-TEMP claims.......

    "...They've staved off deflation without apparently stoking inflation, stabilised the currency, caused the stock market to stage a mini-recovery and seemingly begun to turn the economy around. It is generally accepted that the UK will suffer less of a recession than many other economies...."

    er, you what? not in the world I am living and working in.

    Inflation?
    True inflation is running at nearly 10% because of imports of food, manufactured goods, transport, sportsmen, well just about everything.

    Stabilised the currency?
    We hit the floor mate, we aren't floating in nice warm water.
    In 9 months we have dropped 25% against the Dollar and 15% against the Euro (stumbling up from a 20% drop a month or so ago)

    Stock Market recovery?
    That sounds a bit like saying Leeds are heading for the top flight again 'cos they have stumbled into the Division 1 (actually it used to be called Div 3) playoffs.......

    Begun to turn the economy around?
    Maybe you don't get out much; perhaps if you travel the Midlands engineering areas, or look at the construction sites, or sit in Terminal 5 at Heathrow, or tour the middle class suburbs and see anxious faces. You will see no sign of a turnaround anywhere except in the banks revelling in the colossal bail-outs and BofE buying tonnes of corporate and government bonds.

    It is generally accepted that........
    the UK economy is a complete basket case, with a Government in denial, and a mass media scared to report the truth.

    Regards,

  • Comment number 74.

    This blog appears to be full of buffoons queueing up to be more pessimistic than the last buffoon and bash the government a bit more because they think it makes them look good. Well done, all of you.

    And to the buffoon who used the term "Zanu Labour" - look at what's happening in Zimbabwe and hang your head in shame. How pathetic.

  • Comment number 75.

    Re: #69 (Moncursalion-Occamist): based on your figures, the annual national wage bill is £750bn, not £75bn. Still, I suppose that supports the argument that people make glaring, boneheaded errors when handling large numbers.

  • Comment number 76.

    #69 Monocled Optimist or something wrote~

    lots of big numbers......

    Well for most of us, it is easy enough to understand that a national economy operates at a household level, writ large.

    If you steal or borrow too much money,
    if you raid your granny's pension,
    if you ain't productive,
    if you don't look after your repairs and maintenance,
    if you don't educate your children well,
    if you don't pay your debts,
    if you live at a level above what you can afford,
    if you are a burden on you relatives or neighbours,
    if you don't set aside something for a rainy day......

    ... then perhaps you can't afford either your TV licence or your pint at the bar.

    Regards,

  • Comment number 77.

    Why am I still working at 2 in the morning?

    Just doing my tiny bit, shoulder at the wheel .....

  • Comment number 78.

    #73. allmyfault wrote:

    "Inflation?
    True inflation is running at nearly 10% because of imports of food, manufactured goods, transport, sportsmen, well just about everything."


    Call me old-fashioned, but I prefer to believe the figures from the independent Office of National Statistics than those of a reactionary internet blogger.

    According to the calculator on the BBC website, my personal inflation rate is something like MINUS 7%. And I'm sure I'm not unusual in having a below-base-rate tracker mortgage.

    As for Sterling... check out the exchange rates for 1995 (under a Conservative government). Pretty much what they are today. We've been there before. In fact, we've been at near-parity with the US dollar before (under a Conservative government). It happens. Sterling has been a long-term basket case for decades.

    Are any of you here old enough to even remember previous recessions?

  • Comment number 79.

    Does this mean that we can all stop running around like headless chickens and start correcting some of the howling errors of the last few months. Will Brown et al now realise that the FSA is NOT the right tool for monitoring the banks going forwards and get rid of it. Put the responsibility on the auditors with serious financial penalties for getting it wrong and they'll do a far better job. If the FSA screw up who pays - the taxpayer? If, as they did recently they really screw up then the Chairman (or was he CEO) gets a job at the Treasury!!

  • Comment number 80.

    Robert, was this piece written for you in Downing Street. The US stress tests are laughably lightweight, with a quite low drop in GDP incorporated. Large chunks of the profits in the first quarter of some banks, e.g. Citigroup, are created by writing down their own bonds to market, even though the liability remains face value. The IMF estimates of remaining toxic asets are constantly increasing.
    The accounting rules for banks are a joke, and I am an accountant I would add. The worst may possibly be over in terms of some stability in the system, but to imply that all is now hunk dory, which is what the overall gist of your blog, and commentary on BBC1 last night, do is misleading in the extreme.
    Proper investigative journalism requires a bit more work than regurgitation of PR from governments.

  • Comment number 81.

    good old gordon messed up again ,i bet he loves joanna lumley .brownwatch 388 days

  • Comment number 82.

    #78 yes i remember all the recessions back to the early 70,s and the differance was we ,by and large, had intelligant people to pull us out, this time we have a complete bunch of numpties.

  • Comment number 83.

    #81. rvpisneverinjureds wrote:

    "good old gordon messed up again ,i bet he loves joanna lumley .brownwatch 388 days"

    388 days is a very, very long time in politics. All it will take is a noticeable improvement in the economy - or merely in people's confidence - and/or an unforeseen political event and the polls will swing right round.

    The government's current troubles are not, I think, indicative of the way they are handling the global economic mess (and it is global - there are many nations in a far worse state than we are) but rather of their general air of incompetence. And that is something that could be turned around very quickly with a bit of listening, some decisive action and a reshuffle or two. Cameron is a lightweight, and the next election is not a done deal.

    And before you write me off as a Labour apologist - I didn't vote for them last time and I will not vote for them next time. I simply believe that real-world politics is about more than soundbites. Though I can see that you're pretty pleased with your "brownwatch" soundbite because you use it every day even though no-one's listening.

  • Comment number 84.

    #84 RBS_temp. You may believe that real-world politics is about more than soundbites, but that view is definitely not shared by "real world politicians"

    You seem to have trouble recalling the names of any of the "nations in a far worse state that we are." Let me help you out, why not try Iraq and Afghanistan to start with. If you are bored with those examples ask yourself who put Mr. Mugabe in power in Zimbabwe.

    Yeah there are a lot of countries worse off than the UK - and the UK would certainly know as they have acted to cause many of the problems that these countries suffer from.

  • Comment number 85.

    Just who, precisely, could possibly be offended by my comment that one of the bailed out banks, you know, the one with the pension, was offering credit cards at rates about the same as rpi for 12 months on balance transfers and three months on purchases

    Moderators, I see this post is still missing. Precisely what arcane rule did it break? Advertising?

    Perhaps some bank worker complained.

  • Comment number 86.


    Surely all the figures we are being presented with are being massaged and then spun to create the impression that "the worst is over". The banks, and the Treasury, have masterchefs trained in the art of book-cookery. The famous "stress tests" took so long to come out because they were being "negotiated" - and were preceded by leaks suggeasting they would be much worse. Classic stuff.

    Moreover, the Government has enough strategists to have worked out a critical path between now and the next election. This can only be based on "get the bad news out of the way" and then talk up any good news and say "told you so".

    The current position appears to be

    a) That they have pumped enough money in to stabilise things (nb In answer to the question "where has it gone?" Its prbably gone to buy up the Government debt that no-one else seems to want.)

    b) That the banks are reflating on profits from interest rate differentials and by pushing up every conceivable charge.

    c) They have just about convinced themselves that things are looking up.

    This confidence may feed into a modest recovery later this year (leading to an "I told you so" moment for Alistair Darling.) Watch for the ah-ha moment when the Conservatives are calling for spending/tax cuts, and when the macro-economy is looking slightly less peaky.

    Never mind if any of this is real.

  • Comment number 87.

    Re. No. 16 [ROBIATI] "Barclays in profit thanks to a boom in investment banking". There is little doubt that what they are doing is the same as RBS: Buying back, with borrowed capital, their own risk impaired corporate bonds at half the price at which they were issued and recording this as a profit! A bit like buying back your own re-possessed house at half price using your credit card!

  • Comment number 88.

    #84. armagediontimes wrote:

    "RBS_temp. You seem to have trouble recalling the names of any of the "nations in a far worse state that we are." "

    Not at all. The list depends upon which particular figures you look at, of course - unemployment, manufacturing output, budegt deficit, whatever - but might include Ireland, Iceland, Spain, Japan, most of the Baltic and eastern European states... even, on some measures, France and Germany.

    No doubt you will blame Gordy for all these countries' woes.

  • Comment number 89.

    #78 RBS_temp

    Reactionary, moi?
    Nay, nay & thrice nay.
    pissed off? Yup, you betcha.

    I graduated in 1980, that was a recession everywhere but London.
    I've worked in the private sector ever since (construction/design).
    We get the first of every recession, and are fairly slow out of them as well.
    I've been conscious through every recession since the 3-day week, so I think I can spot a doooozie when I see it, and this recession is definitely one.

    Regards all the same,

  • Comment number 90.

    #88 RBS_temp. I did not blame "Gordy" for anything. I merely identified certain countries that are in a manifestly worse state than the UK and pointed out the UK connection with those countries.

    Strangely you respond with a completely different list. But that´s no problem. Look at Iceland. It´s banks came to the UK and engineered the leveraged acquistion of material swathes (material in respect to the size of Iceland) of the UK economy. It all went pear shaped and "Gordy" responded by threatening Iceland with UK anti terror legislation.

    Do you consider Iceland to be a terrorist state?

    It is true that all is not well in France, Germany and Spain. Now who owns most of the UK electricity industry? Why France, Germany and Spain. Who allowed those countries to buy up most of the British electricity industry, and did so in the certain knowledge that British companies could not acquire similar assets in the acquiring countires? Why, your friend "Gordy."

    Do you think that as investment funding becomes harder to obtain that the French, Germans and Spanish will channel investment toward their home countries or toward the UK? I hope you are not afraid of the dark.

  • Comment number 91.

    #90. armagediontimes

    You're rambling incoherently. I doubt that even you know what you're trying to say.

  • Comment number 92.

    91 rbs_temp

    No, it makes perfect sense to me. I think it must be you....

  • Comment number 93.

    yeah RP

    "The recession is taking its toll: excessively indebted households and companies are experiencing growing difficulties in making payments on loans"

    Yeah, including needless and ruthless insolvencies on a massive and distressing scale, pity you glossed over that.

    So, on the road to recovery eh? Who? Us? The banks?

    Funny thing that. We get the social trainwreck (ongoing in case you don't geddit yet) and an incalculably large burden on 'public' finances to achieve what? Salvation for a few banks who didn't understand the complexity and risk of what they were doing?

    Is that ALL this has been about? Those bankers - they belong in gaol.

    GC

  • Comment number 94.

    All the doomsters and nay-sayers on this blog have been proved wrong. The economy has stabilized thanks to prompt and effective effort by the UK government and US treasury. The full recovery won't be very long in arriving. Bonuses back for the city. Surging markets and a revitalized housing sector. Roll-on May 2010.

  • Comment number 95.

    78 rbs temp
    'Call me old-fashioned, but I prefer to believe the figures from the independent Office of National Statistics than those of a reactionary internet blogger'

    I am usually inclined to place more faith in some internet bloggers than in your dear 'independent' Office of National Statistics. (ho, ho, ho)

  • Comment number 96.

    #75 STWL2006

    My humble apologies for my glaring mistake, I should know better than to post late at night after a 12 hr shift and when angry.

    The factor of 10 error does however underline even more clearly the size of the figures involved.

    The whole point in the macroeconomic world is that if you drift a few points under the median then you have what we now see, a deep and troubling recession. If you move back those few points, you stabilise, add a point and all is smiley-smiley again.

    There is a very good BBC presentation on here somewhere turning the Macro economics into the personal. The one point it makes that is absolutely telling is this.

    One billion is to the UK economy as is a TENNER to a young person on £15,000 per annum.

    The Doomsayers on here are not spouting their "End of the World" slogans because they understand the numbers, or because they have secret inside sources of information.

    They have held the same views through the ups, the downs or anywhere on the merry-go-round, they, as they are perfectly entitled to do, HATE this administration. If there were not the current fiscal difficulties they would be back to their mainstays of immigration, feral children, single mums, people who double park, speed cameras and "BLOODY STUDENTS".
    Oh, and of course THE FRENCH!

    The SME lobby, need to ask themselves how many SME got started(i.e. Got their CAPITAL) by extracting equity from the inflated house prices they now scream about. How many SME managed to get off the ground(i.e Got their CAPITAL) because of the easy borrowing conditions they now scream about. How many SME, including small builders, kitchen installers, footwear retailers etc made a good go of it due to the lax borrowings regime and the cash in the economy from equity release. The screaming savers need to look back at the years of UNEARNED income at 7 & 8% a year they got on their pension funds and savings.

    What sickens me about the whingers is they only want upside for themselves but having had that for most of thelast 15 years still manage to hate anyone who is not them, hypocritical little Hitlers and Eva's.

    They truly are the rotten, toxic, hateful poison that mars our beautiful, tolerant and incredibly wealthy country.

    I myself am not tolerant (or beautiful) and would be the first volunteer for firing squad duty (marksman class) should we ever get my kind of regime in place.

  • Comment number 97.

    #95 jollyMrMarch

    "I am usually inclined to place more faith in some internet bloggers"

    and Russian roulette is your game of choice?

  • Comment number 98.

    #91 RBS_temp. Bluster - the last refuge of the scoundrel.

  • Comment number 99.

    #98 Armagediontimes

    #91 RBS_temp Bluster etc.

    So when he replies with a list of western hemisphere countries known or highly suspected to have a worse fiscal status than our own, compared to your list of two war zones or ex-war zones and an African country destroyed by a savage despot, you respond with a non-sequiteur about how the French(Funny, its always the FRENCH) are going to abandon the highly profitable companies that they have spent 10's of billions on in this country by turning off our lights and water. "Rambling" was not the worst he could have accused you of.

    "Last refuge of the scoundrel" I think you'll find that on a blog not a million miles away.

  • Comment number 100.

    #99 Moncursalion-Occamist

    OK Mr. Brain you tell me how, and on what, the French have spent GBP "10´s of billions" in the UK power sector- but I forgot big numbers are not your strong point.

    Did I say they were about to abandon their business? No, only you said that.

    For your information the speciality of EdF is nuclear plant. So you tell me how long it takes to build a new nuclear plant - and given that no-one has started building any yet you tell me whether these yet to be built nuclear plants have any possibility of being on line before the UK needs new power.

    Maybe you would like to look at how much nuclear plant costs to build, then look at you electricity bill and ask yourself - Am I paying enough to incentivise the building of new nuclear plant? (The answer, by the way is No).

    So what are hoping for that the French just decide to sell you power at below the cost of production because you deserve it. Or do you think there may need to be another solution?

    I think I recall reading something from you bemoaning the state of ignorance of many of the posters. Ah well pots and kettles and all that.

 

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