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emgebees

Listed below are comments made by emgebees between Tuesday, 7th April 2009 and Monday, 27th July 2009.

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A massive swing 2:06pm on 27 Jul 2009 Tories had a good local candidate and David Cameron led well from the front. Labour just did not realise how much anger was generated by their treatment of Ian so their support just stayed at home especially when they imported a candidate (who was in fact very good but a big ask to come in like he did) and the local prospective candidates kept their heads down and I presume decided that they did not want to get beaten up by standing. Lib Dems could have done well but their candidate was very poor, the Greens could have done well too but their candidate was arrogant and just said no to everything. His response to the Euro elections when he failed to get in did for him long before this by election. A credible Green candidate would have come second. UKIP also had a poor candidate. The message is I think that there is not the talent to go round to have more than about a three horse race in this sort of constituency.
Business still being crunched by banks 5:17pm on 25 Jul 2009 A key reason why the banks are not lending is that the morale within their staff is at rock bottom. I think they will feel completely powerless- frightened to lend in case it goes bad and they get chopped. I think in recent years bank staff have forgotten how to communicate with their customers and so are unable to talk to them so that they get the necessary information to ut forward a sensible proposal to their credit committees and they are alos unable to explain to their customers why they are offering the terms they propose or what it means to ask for PGs and the like. It is not good HMG directing banks to lend to SMEs or for the dorectors to say they in fact are doing so if the troops on the ground are like rabbits caught in headlights
Goldman: Recession? What recession? 6:13pm on 14 Jul 2009 We need to be a bit careful hear as we should look at how much of this has come from placing the enormous amounts of government paper in the market. Interesting that old Warren Buffet got it right again. The other small matter is of course that GS employ on the whole very able people- not like the second raters in many of the other banks- none of whom have the embedded core values of GS. Let's hope those profits lead to big tax payments in the UK as well as the US.
News of the World bugged Sun editor 11:38am on 13 Jul 2009 Robert- you should be ashamed. Why are we surprised, people like the digger will do anything they can get away with. Mind you if she was on your payroll you would want to know what she was up to. And to be frank outside of Fleet Street and the news channels- does anyone really care, I think we all assumed that people like GCHQ monitored all our phone calls these days- have you not seen The Wire yet.
Does Europe need hedge funds? 11:33am on 13 Jul 2009 Of course we would like to have hedge funds- they are important as are PE firms. But and it is a big but, they need to risk their own money not mine unless I have invested it with them- if I put my money in a bank I do not expect it to be risked on gambling. We saw a US hedge fund go down with equity of $20bn and loans of $200bn so a 10% loss on a trade wiped out any equity it had. And what we do know is that these guys often do not know the downside of the main contract let alone within the chain. So we do not need to stop Hedge Funds borrowing we need to stop our banks lending to them- if sovereign funds want to let them but not British Taxpayer owned institutions or any institution that is a licensed deposit taker in the UK.
Cleaning up bankers' mess 3:14pm on 01 May 2009 A report that states the blindingly. Two observations- we all ignored the risks and pocketed the cash (especially HMG on tax receipts) as we did what humans do- never think it can happen to us- we all knew it could not last but I think we expected a soft landing (debate on climate change is similar except when it goes wrong we are wiped out).
A solution should be looked at from a customers view- the saver and the borrower.Saving with a bank or a building society is meant to be very low risk- if we want to put our money at risk we can go for bonds, shares or gambling. the issue was that the banks abused their brands to make us think our money was safe when they were taking extraordinary risks. The borrower wants to be treated with respect and pay a reasonable rate of interest and does not want unreasonable charges or to be bombarded with sophisticated products. In both cases clarity and simplicity must be the golden rule.
These concepts have nothing to do with investment banking- it is risky and should only be done using money that the investor can afford to lose and that means not another financial institution. Complex financing has a place but only with those that can understand the risks they are taking in exactly the same way that savers and investors should understand the risks.
The banks should indeed have a lower guarantee but only when the problem banks have been put on sound footings- at the moment their assets are of such uncertain value that we would all have to withdraw money that would leave the big clearers devoid of deposits and leave very few institutions that could take deposits from local authorities, charities and pension funds. The clearers would also find it difficult to meet cheques drawn on their banks.
So the answer has to be to either nationalise the two clearers- RBS and Lloyd's making the existing shareholders take the rest of the write off on the value of their shares- or continue as now but break up the said banks into probably three old fashioned institutions- two retail banks and one mutual building society - and use the reconstruction to lay the foundation for the repayment of our money and the start of two plcs where existing shareholders stand a chance or getting some value.The unsafe parts of the two banks should be gradually sold off or liquidated- this will take a few years and will tie up taxpayers money for longer than we can afford. Then you can bring in the limit perhaps at £100k that will make the scheme affordable.
Making banks safe 5:01pm on 29 Apr 2009 Surely the answer is to keep it simple- boring banks lend money to us and take our deposits and do not take risks. Investment banks take risks with their shareholders money and that way if they go down- only shareholders lose. It will also be necessary to bring back the old definition of wider and narrow range investments. I want my pension fund to be invested for long term growth not short term gains with high risk. If I want to make risk investments, I will do so but not through a pension policy. What this would mean of course is that we would get smaller returns and the folk who manage our money would get normal pay as they would not be able to deal their way to high bonuses.
This does not mean that high risk hedging and so on should stop. It is worth trying to hedge risks of say wheat prices to encourage farmers to grow it- this will help feed the world. But the risk has to be known and owned- this idea that you can slice and dice and create instruments that somehow pass risk around is nonsense unless you understand what you are doing. Some mathematicians did understand the theory but not the practice and most bankers had no idea whatsoever of the nature and extent of the risks they were taking on- as for AIG, there had to be one who demonstrated criminal stupidity.

So keep it simple- capital in banks can be kept to present requirements and investment banks can take risks with shareholders money. Insurance companies and boring banks must keep investments simple and with long term growth in mind- racy investments should be for those that can lose as well as win. And what about this so called flight of talent- let them go somewhere else and lose a fortune- they have added zero value in the last 10 years so what do we lose if they emigrate. The City can then concentrate on the real challenge of funding trade and finding ways of hedging risk within boundaries that can be both understood and paid for.
Why tax the rich? 6:17pm on 28 Apr 2009 It seems fair and reasonable to ask hogher earners to pay a higher amount of tax. After all in this deep recession- if you earn more than £150k, seems pretty fair to cough up a bit more. It does not raise much revenue but fairness is an important concept- pretty alien in tax though.
What does seem silly is to restrict pensions to basic rate relief from next year- creating a false market now for high eraners of being able to put £200k in and get 40% tax relief- if you have sufficient earnings. And the other nonsense is to make the changes next year and yet keep CGT at 18%- we do not have the close company provisions now so I imagine an awful lot of income will be converted to capital.
In fact it is all a bit acaedemic as when I heard the speech, I thought they were announcing an autumn election and so all bets will be off in 2009
Tories to break up banks? 5:17pm on 08 Apr 2009 Osbourne is right but he needs to look at different ways to do it than simply breaking up the banks. He also needs to make sure that there are other industries where they do not become too big to be allowed to fail and put the whole economy at risk.
The banks would be easy- split boring banking from investment trading and make sure that trading is done with capital not debt- the big bucks were made by using incredible gearing- and of course A very small fall wiped out equity in so many institutions. If I recall RBS's assets were 160 times its capital so a 1% fall in assets wiped it out. The other thing that will keep the banks and other financial institutions out of trouble is that G20 has put in place something that will bring sanity to the world of credit derivatives- that mad world where risk took on a different meaning.
Non-banks are the really big problem now as well- could we afford for BP to fail? Could the US afford GM to fail or Germany VW let alone any county allowing Microsoft to fail. Somehow the world has to develop a model whereby we can get the benefits of businesses with global reach- investment- competitive consumer pricing etc-and yet have them governed in a way that stops them taking risks that can bring them down and us with them. On the other hand we do need to let some big businesses go- at the moment with 20% excess production in cars- something has got to give.

What we need I think is accountability, transparency and effective regulation that sense checks the risks taken by large corporations- in much the same way as the IMF sense checks Governments- this would only be necessary for the top 1000 companies in the world so it could be done. We could even get S&P to just do their credit checking properly- now that would be a good idea! If we backed that up with Governance where non-execs were not just the good chaps from the City but folk chosen with both expertise in business and sceptical enquiring minds (many women fall into that category as do some trade unionists and even politicians- non-execs need to thinks of all stakeholders not just shareholders)- then I think it might just work.
Should the banks back Britain? 7:16pm on 07 Apr 2009 Do we really know how much capacity the banks really have? There is no way that the British Banks can meet UK demand as they only funded 65% I think it was in 2007 and the foreign banks have gone AWOL. It is also true that they are taking far too a dim view on security because they are bankers and want as much as they cam get when asset values are so uncertain. As to new projects or expanded facilities- where will it come from? In many medium sized businesses, the owners have to decide how much they will risk. In the past our banks have funded UK business far too much and the shareholders far too little. Another recalibration that has to take place is for people to take risks with their own money not the banks- unless they are willing to pay a risk premium to the bank which in the current climate is about 10-12% so bank borrowing of many times base rate but then the Internet money swapper that is not regulated is averaging 9% and I bet they are better prospects than the average.

The other thing of course is that there is still this mountain of consumer debt that has to start coming down.

What does all this mean? Fundamentally I think it means the richer have to take a bigger share of risk. As shareholders they need to provide more of the funding and they should take out less money from the companies they run and own ie they have to do more for less.A reversal of the imbalance where the rich have incomes too far in excess of the average. What is the compensation? A fairer more joined up society with feel good factors coming from being part of success and so on rather than money you do not really need being the only reward for success.

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