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citygambler

Listed below are comments made by citygambler between Friday, 10th July 2009 and Tuesday, 28th July 2009.

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Who'll boss our banks? 6:09pm on 28 Jul 2009 This isn't pertinent to Robert's article, but his particular piece today is of little or no relevance to most people so here goes..

You may have noticed that there has been a bump in the road of the New Bull Market today, shares down a bit after substantial recent gains. You know what brought this about? The chairman of BP saying he couldn't see any prospect of an increase in demand for Oil for the time being and the Consumer Confidence index in the US fallng again. The first is a bit of a slap in the face for those who believed that everything will be 'back to normal' in six months or so, the second is yet another example of how economists are perpetually flummoxed at how The Real World doesn't fit in with their sophisticated models, despite the fact that widespread job destruction in the US is THE major factor holding back any economic recovery..Its so obvious its laughable, yet Bloomberg TV keeps bringing on their seemingly never-ending supply of Economics/Finance professors and Fund Managers who claim to be mystified by why near destitute Middle Americans who are up to their eyeballs in debt and largely in fear of losing their jobs and homes aren't out there spending every cent they haven't got on needless fripperies
They need to get out more, as my mam used to say..
Business still being crunched by banks 10:02am on 24 Jul 2009 129. At 00:06am on 24 Jul 2009, JohnnyZero66 wrote:

Why has the UK stock market risen form some 7 to 8 days in a row?

Because there is a hell of a lot of 'dead' money floating around, money that pension funds, insurance companies and Hedge Funds took out of the system when the markets were falling but can't get any worthwhile return on by just having it sitting around on deposit. Their money has to be 'put to work' so now that shares are (relatively) cheap they are putting it back in play. The doom mongers who are forecasting the footsie to be under 3,000 at the end of the year keep forgetting that with virtually zero interest rates and low yields on bonds that the stock market is the only place for institutional investors to make any substantial returns, its almost irrelevant how the real economy is doing, as long as they avoid the basket cases there are enough solid investment opportunities for them to make their money.
Two labour markets 8:32pm on 15 Jul 2009 My god, look at how badly the markets have taken this news...not. If you look at the synopsis for the days trading in London it says 'Investors were buoyed by the earnings reports from Goldman Sachs and Intel,taking this as an indicator that the recovery might be on the way' Two things to note, neither of these companies is British and Unemployment Figures aren't deemed worthy of even a cursory mention. Unfortunately, as I have pointed out before, the numbers of people out of work barely register in an economists worldview unless they are utterly appalling, say 25 percent or so. Otherwise job losses are seen as a good thing in most sectors as it is taken as a sign of cost-cutting and reduced pension liabilities (where they exist). Thats why Britain was said to be booming in 1985 despite the destruction of most heavy industry and 4 million (officially) unemployed..

On a side issue I followed the link to the announcement of the closing down of the wind farm around Campbeltown, the company is Danish and were looking for the Govt to grant them a licence to build 300 more wind turbines along the west coast of Scotland, presumably that licence has been refused, therefore the company is shutting down. A fit of pique or a sound business judgement? Perhaps the British government isn't aware that foreign companies have no compunction about upping sticks and leaving if they don't get what they want, although they have had enough experience of it by now to have learnt this harsh lesson.
Has the City learned anything? 11:12am on 14 Jul 2009 Blimey its the return of Corporate Raiders of The Lost Sark..well, almost. Jimmy Goldsmith, Carl Icahn,T Boone Pickens, you should be living at this hour!

If this is going to be a leveraged buyout then as always,its a question of whether Reolution Operations can persuade enough shareholders that the current management of Friends are not looking after their interests..i.e that they have a business with a huge pile of assets and a moribund share price. The normal demand is that these assets should either be used more actively to grow the business or that they should be partly liquidated and the proceeds returned to the shareholders.

To be honest I don't follow Friends Provident very closely so I don't know whether their share price is fair, below average or relativly good. Given that they operate in a sector which has been hammered in the last eighteen months I suppose the shares may be cheap at the moment, especially if they are sitting on a large cash pile and doing nothing with it. That latter scenario is usually what has the asset strippers sniffing around and will be the crux of any argument that the current management are 'not maximising shareholder value'. Sadly, many shareholders will be receptive to such blandishments and a soundly run if somewhat stolid finacial institution could be ransacked by these appalling vultures.
No quick sale of RBS and Lloyds 5:40pm on 13 Jul 2009 re #64 Rugbyprof
That is far too rational an assessment of the situation, it fails to take into account how the media would report the wholesale suspension of banking shares (for instance). Do you think that kind of news would have people resting peacefully in their beds, safe in the knowledge that the government had everything in hand? No, it would have resulted in a run on deposits that made NR look like a tea party.

There would have been a domino effect, obviously NR and B&B would have been first to go, followed by RBS and (critically) HBOS..there goes 40 percent of domestic mortgages and 8 million private accounts for a start.The knock on effect woud have crippled Lloyds also. Imagine the chaos in the HR department of somewhere like Tescos or BT when 20 percent of their staff try to change bank accounts for payment due in a week's time?

Your points about transferring millions of mortgages and bank accounts make it seem as if such a thing is a mere trifle, it would have taken YEARS to sort out..
Politicians, for all of their faults, seem to have a greater understanding of human nature than ivory tower academics pontificating about theoretical best case scenarios that could never actually happen in the real world.
No quick sale of RBS and Lloyds 3:15pm on 13 Jul 2009 "62. At 2:03pm on 13 Jul 2009, Ian_the_chopper wrote:
Post 47 & 56. if the banks are too big too fail then surely they must be broken up into deposit taking and speculative banks with only the former having government protection?"

Of course in the States they had the 2nd Glass Steagall act which pretty much did what you are suggesting, it was repealed in 1999 at the behest of the immensely powerful banking lobby purely so that retail banks could gamble in the same way as the 'investment' banks. Read the justification for the repeal and be careful you don't hurt yourself laughing, particularly at point 3 -

The argument against preserving the Act (as written in 1987):

1. Depository institutions will now operate in deregulated financial markets in which distinctions between loans, securities, and deposits are not well drawn. They are losing market shares to securities firms that are not so strictly regulated, and to foreign financial institutions operating without much restriction from the Act.

2. Conflicts of interest can be prevented by enforcing legislation against them, and by separating the lending and credit functions through forming distinctly separate subsidiaries of financial firms.

3. The securities activities that depository institutions are seeking are both low-risk by their very nature, and would reduce the total risk of organizations offering them -- by diversification.

4. In much of the rest of the world, depository institutions operate simultaneously and successfully in both banking and securities markets. Lessons learned from their experience can be applied to our national financial structure and regulation.
No quick sale of RBS and Lloyds 12:40pm on 13 Jul 2009 "28. At 11:17am on 13 Jul 2009, AqualungCumbria wrote:
Robert playing devils advocate just what would have happened if these banks had been allowed to fail and then the Government had cherry picked on behalf of the tax payer the parts that were worth saving....

I feel as though we have not got the best of the deal"

Well, the first thing that would have happened is the biggest stock market crash in history,followed by utter chaos of hundreds of thousands of mortgage holders and depositors queuing outside all of the banks branches. Sterling would then plummet on the foreign exchanges, not in itself such a bad thing but it makes investors even more nervous, therefore the markets would continue to fall even further. With most of the Footsie 100 companies shares in freefall pension funds and other institutional investors would withdraw their money and put it into Treasury Bonds, again forcing the market down. Then there is the small matter of x million frozen accounts to which no-one has access until the administrators have had a llok at the books and decided who is entitled to what remained of the assets. Yes, there is a deposit guarantee scheme in place..how many months/ years do you think it would take for any of that money to get back to Ten Million customers. Of course everyone would have to switch bank accounts in order just to get paid (again, do you think that would happen overnight?) and then there are all of the business overdraft facilities that would be wiped out, instantly putting many small firms either out of business or in terrible financial straits. Within a year 'real' unemploymet would be at five million or so..

That is just PART of what would have happened, it really is a joke to read so many posts saying 'they should have let the banks fail' like it would have had no effect whatsover...
A tale of two economies 10:57pm on 12 Jul 2009 Re: Jaded Jean (76)

"It doesn't matter what we call it. 'It' correlates hightly with US High School SATs, UK Secondary School SATs, OECD PISA results, and international measures across the world. They all say the same thing".

They may all say the same thing, which is that some people are better at memorising facts than others,and although memorisation is one component of the somewhat nebulous concept of intelligence it is far from being the only one. For example, unless you are a genius Quadratic Equations are only solvable unless you have been shown worked examples of the method, if you can't remember if the bits in brackets or outside are done first then they are still tough to solve. If you say to me the 'Eleven Plus' was a measure of intelligence I would say that nobody ever took the eleven plus blind, we were all coached to get through it and those who couldn't get through it simply couldn't remember how to answer the questions or were confronted with vocabulary that was outside of their personal experience.

Wilful ignorance on the other hand is a different matter, and it may well be that in certain socio-economic and racial classes the pursuit of knowledge and education is not seen as the great emancipating force that it used to be. 'Knowledge' and 'Intelligence' however are not necessarily the same things.

I find it hard to discern exactly WHAT it is you keep trying to say, forgive me if this is wrong, but behind the opaqueness of your remarks there seems to be some kind of apocalyptic vision of a future world where 'The West' has been taken over by non-caucasian groups of various religious and political leanings that are not to your taste..
A tale of two economies 3:03pm on 12 Jul 2009 re: 69 Jaded Jean

I'm not sure what relevance the first link has to the points brought up by John From Hendon, it appears to only address what the author believes is the suppression of politcaly unacceptable views on race and intelligence by the scientific 'establishment'. The whole thing would be interesting if only IQ was a real measure of intelligence, or if someone could define 'intelligence' precisely enough so that genuine empirical research could be done in this area.

Interestingly, in 'Freakonomics', Dubner and Levitt showed that the propensity of Black parents in the US to give their children outlandish christian names IS a barrier to economic progress in every area apart from sport and entertainment..but that has nothing to do with IQ tests or genetic 'intelligence' and everything to do with social conditioning.

You are obviously an erudite person, but intellectualism is not a trait nowadays that gets you as far as it used to. What matters is the ability to bend people to your will by force of personality (lying) or by shrewd manipulation of the media and markets (insider information) There aren't many academics with any influence over how the world is run, other than in the Faculty of Economics at Harvard.
A tale of two economies 10:27pm on 10 Jul 2009 This may or may not be relevant to the current topic but..
I just read the article 'Deflation Woes Return To Japan' and I stll can't understand why deflation is such a terrible thing. The only reason given is that in times of decreasing prices consumers put off making purchases in the expectation that they will be able to buy things cheaper in the future. I don't understand this, if you have to replace a broken fridge or washing machine or TV or whatever you have no control over what the price will be at the time you have to replace it. If prices are going up you buy now because you don't want to pay more in a months time. If prices are going down you buy now because it's 'cheap'. Surely in a deflationary economy even if wages are frozen you can still buy more stuff becuse prices are going down. Is it then a bad thing purely because Japanese companies can't make any money selling in their home market?

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