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virtualslavery

Listed below are comments made by virtualslavery between Tuesday, 9th September 2008 and Sunday, 21st December 2008.

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The New Capitalism - in video 8:03pm on 21 Dec 2008 I agree with post 41.

The financial system and indeed society as a whole will forever be undermined by the selfish, ruthless, arrogant, narcissistic types that tend to rise to the top in so many organisations, be it banks, governments, business....

Given the prevelance of such disordered personalities at the top of organisations, it really is no surprise that we end up in a mess.

If anyone doubts the impact such people have, I’d suggest they read Andrew Gower’s account of the personalities and power struggles at the top of Lehman Brothers, as serialised in the Sunday Times (part 2 in today’s edition).
Deflation or inflation? 3:24pm on 17 Dec 2008 The real question on my mind is whether the goal of the monetary authorities in the US and the UK is to counter deflation or to deliberately engineer a dose of inflation (or possibly even hyperinflation) in order to reduce the value of the vast mountain of debt. Mervyn King used to refer to moral hazard in contemplating whether or to what extent the banks should be bailed out. So what about the moral hazard involved in bailing out those who have overstretched themselves whilst destroying the value of savings for those who have sought to live within their means.
Will HBOS stay independent? 10:23pm on 08 Nov 2008 I think post 40 summed it up pretty well.

This latest bid seems to offer nothing of real substance. There is no new money on offer. The only thing these two ex-bankers seem to be offering is an intention to create a detailed alternatve plan. But without sight of that plan, how on earth are shareholders expected to be able to judge its potential effectiveness. And if they really do have a viable plan for a sound, independent HBOS then why not seek a financial backer?
Barclays protects its bankers' pay 1:21pm on 31 Oct 2008 It looks as though the senior management at Barclays are more concerned with preserving their massive pay packets than they are at protecting the rights of existing shareholders.

I have long believed that shareholders exercise far too little influence over the boards of companies. This was a point made quite forcefully by the Hedge Fund manager Hugh Hendry in a recent episode of Dispatches on Channel 4. The plain fact is that although in theory a company like Barclays should be run in the best interests of its shareholders, in practice many of the decisions, particularly with regard to remuneration, appear to be motivated by the self-interest of the senior management. In effect, senior managers run these companies as if they own them.

I’m not sure what the answer is. Somehow, the various shareholders - pension funds, investment managers and the like, need to get together to exercise a greater degree of control over the companies in which they have a stake.
Nationalisation by stealth 11:24am on 03 Oct 2008 I think Mervyn King is absolutely right. Why should the Bank of England (effectively the taxpayer) take on the risk of holding dodgy assets from the banks without getting something in return. As others have suggested, the BoE should adopt a similar hard nosed approach to that of Warren Buffett in relation to Goldman Sachs. The banks must be made to pay for their gross negligence. Any solution which fails to penalise the banks is both unfair to the taxpayer and likely to encourage similar reckless behaviour in the future.
B&B: end of an era 12:13pm on 28 Sep 2008 I certainly shalln't mourn the loss of the self-cert and buy-to-let mortgage markets. The former was a disaster waiting to happen. The idea that you could simply take someone's word for their level of income was absurd. As others have pointed out, there was plenty of evidence of widespread abuse and yet the Government and FSA did precious little to stamp it out.

As for the end of buy-to-let mortgages, excellent. They've probably done more than anything else to prevent many potential first-time buyers from getting a foot on the property ladder. Buy-to-let was a market fueled by greed and recklessness. Most of the baby boomers who invested in buy-to-let would never have been able to had they been prevented from buying property when they were young.
A stinking septic bank 11:35pm on 25 Sep 2008 Frankly, given what's being asked of the US taxpayer, I'd consider these concessions to be the bare minimum.

Limits on the pay of the executives of bailed-out banks - why the hell not. How can bankers expect to be bailed out by the taxpayer without paying a price.

The US government taking an equity stake in the rescued organisations - again, a perfectly logical and reasonable demand in the circumstances.

Whether the plan will ultimately work remains to be seen, but I cannot see how either of these concessions would undermine its effectiveness - unless, as Robert suggests, the bankers are mad enough to reject the plan rather than limit their pay, in which case they would surely be seen (by just about everyone, including shareholders) as no longer fit to run the banks.
Taxpayers recapitalise banks 10:32pm on 23 Sep 2008 Even if we assume, for the sake of argument, that the current plan is indeed vital for the survival of the US banking system, it is surely equally vital that the banks, and ideally the bankers themselves, pay a price. If the taxpayer ends up bearing the risk and footing the bill for the reckless behaviour of the banking community, then there is absolutely nothing to deter them from repeating such folly in the future.

It surely cannot be beyond the wit of Paulson, Bernanke et al to devise a plan that safeguards the interests of US taxpayers. Would it not be possible, for example, to recoup any future losses suffered by the US taxpayer, perhaps in the form of a windfall tax on the banks, once the final cost to the taxpayer becomes clear. If the US taxpayer ends up making a profit, as some have suggested, then fine. But there has to be some way of ensuring the banks pay in the event that the taxpayer ends up making a loss. Otherwise, the banks will simply conclude (if they haven't already done so) that they can never lose.
Mervyn King insures the banks 2:54pm on 11 Sep 2008 Have to disagree with post number 18.

Unlike the government, the Governor of the Bank of England was one of the few people to sound a note of caution over the pace and extent of house price inflation. The reason the Bank didn't raise interest rates (sufficiently) during the housing boom is surely due to the absence of house prices in either CPI or RPI.

I do not recall any note of caution from the Government during the whole housing boom. They simply sat back and basked in the popularity generated by the credit boom. Totally irresponsible imo.
Why banks won't lend 10:11pm on 09 Sep 2008 I trust this latest data from the Bank will help convince the Government of the reckless futility of providing further taxpayer support for the mortgage market.

The plain fact is that we're finally experiencing the long overdue correction to what was clearly a massively inflated housing market. The best thing the Government can do is stand back and let the market return to a more affordable level.

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