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Clear answers to straightforward financial questions?

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Jeremy Hillman Jeremy Hillman | 16:55 UK time, Friday, 7 August 2009

All I can say is "Thank God It's Friday".

We're coming to the end of a full week of reporting UK bank results which started with Barclays and HSBC, moved onto Northern Rock, then Lloyds-HBOS and today finished with RBS. We even had a surprise £50bn of quantitative easing thrown into the mix for good measure.

Robert Peston and Stephanie FlandersWe've reported all this in a great deal of detail on radio and TV and online and they have all painted a mixed picture. It's clear that a lot of our audience members want some clear answers to some straightforward questions.
• Are the banks doing enough to support the economy?
• Are the worst of bank losses behind us?
• Is quantitative easing working?
• Where has all the money the taxpayer has put in actually gone?
• And when will we get it back?

Well, it's pretty tough to give definitive answers to those. If there's one thing confirmed by reporting this weeks results, it's that interpreting them is as much art as science.

For confirmation of that, you need only look at our reporting of today's RBS results, where we are reporting a broadly break-even £15m profit while others, including the FT, are reporting a £1bn loss (it depends whether you include the pre-tax post-exceptionals, and we had a lively debate about that ourselves).

Or you could look at how banks have chosen to report their business lending. RBS tell us that they have approved 85% of new loan requests (down from 86%). Barclays claim a figure of 90% approval for loan applications from credit-worthy businesses - spot the difference?

What we have tried to do this week is to extract the meaning and find the story in each of this week's results, and I'd urge you to take a look at Robert Peston's blog posts throughout this week to get the best picture we can provide.

One thing that would have helped this week is if the chief wxecutives of Northern Rock and Lloyds-HBOS - banks in which we as taxpayers have a huge interest - had been willing to speak to us. They could help with the answers to the many of the questions you are rightly asking.

Jeremy Hillman is editor of the business and economics unit.

Comments

  • Comment number 1.

    What I find totally astonishing is that the gov't is going to stick another £50B into the banking bottomless pit, where that money is physically coming from is beyond me, have we got hiddeen funds stashed away or is it yet more reckless lending by the Gov't. Nobody on the public side of the banking fence will see a single penny of it AND at the end of the day, it WILL come out of our pay packets. When is this all going to stop.

  • Comment number 2.

    When it comes to politically damaging figures to the current government, I instantly ignore the BBC 'financial' expert (Mr Preston, Gordon Browns biographer) and instead turn to less biased financial news gatherers such as the Financial Times.

    As for getting a straightforward financial question answered by Mr Brown or Mr Darling, the BBC would be required to actually ask the question, rather than keep allowing government ministers to deflect every question (and that is if you could find an MP whilst they are on their 60 day holidays).

  • Comment number 3.

    In reply to #2. At 6:33pm on 07 Aug 2009, Rustigjongens wrote:

    "and that is if you could find an MP whilst they are on their 60 day holidays"

    Better still, first we obviously need to find someone who actually understands that it's only Parliament (that building by the Themes in the Westminster area of London) that is closed, the job of being an MP (serving their constituents), being a minister and most certainly the work of Government never stops - which ever party is in power.



  • Comment number 4.

    Boilerplated, I was being ironic with my comment about MPs taking sixty day holidays!!.

    I suppose that you were also alluding to the 'Thames' that river that runs through London?.

  • Comment number 5.

    "What I find totally astonishing is that the gov't is going to stick another £50B into the banking bottomless pit, where that money is physically coming from is beyond me, have we got hiddeen funds stashed away or is it yet more reckless lending by the Gov't. Nobody on the public side of the banking fence will see a single penny of it AND at the end of the day, it WILL come out of our pay packets. When is this all going to stop."

    The money doesn't come out of anyone's pay packets. This £50B is extra money for the Bank of England's Quantitative Easing policy. Some in the media talk about this as if the BoE is "printing money", and while not strictly true, in essence the BoE has created £50B. The BoE creates money all the time of course (where do you think the notes in your purse/wallet come from?) but QE is extra wealth creation than normal, and in a very complicated manner than normal too. So essentially, more money has been added to the economy, but this has no impact on the national debt. It is not lending, it is not borrowing, it is created. It does not have to be paid back.

  • Comment number 6.

    Problems with terminology, eh? More than one blog was started around those.

    Let me repeat that humble opinion (about terminology).

    Fraud is a fraud, not a bail out.

    Crime is a crime.

    Banksters are banksters, not bankers.

    I've seen, it was Friday, that Obama saw the light at the end of the tunnel, well, our good administrates, we'll have to imagine the money for each and every person in the world, not for the mass murdering monkeys you have in charge there.

    We can also imagine that there is no money.

    We can imagine..,

    In perfect world you would have only 23 days to get those monkeys of our back.

    Pray tell, when will we have that independent and international investigation of all those state sponsored crimes?

    One way or the other, brother.

    "We're an empire now, ... we create our own reality."
    - unnamed "senior advisor".

  • Comment number 7.

    The banks are too big and there are too few, by hundreds, especially in the mortgage and business loans markets for competition to play a regulative part. The banks therefore have no interest in the greater economy only their own short term position.

    The regulator is too weak with no fixed policy and no clout fines are derisory often ignored by the banks and laughed at because they make more money ignoring the regulator and occasionally having to pay out to customers when forced by the FSA
    They are ripping the citizen of far faster than the regulator is touching them it’s a joke.

    Are the worst bank losses behind us certainly for the time being the citizens tax will take care of that fro the next cycle but oh hen 2020 comes what a disaster then for us all especially in the western world catastrophic. We could with strong regulation and policies setting prevent the collapse that will stack up for the recession then

    The tax payer’s money has gone to writing of toxic debts the vast amount of excessive debt balancing and the wicked practice of debt selling

    When will we get it back you ask answer never because it will come from the tax payer and go back to the government the tax payer will suffer through it all and the only beneficiaries will be civil servants who will keep jobs that could otherwise not have been afforded.

    Meanwhile bankers will continue to make disproportionate money widening the poverty gap considerably until they realise to late what Henry Ford hinted at a hundred years ago that for growing economies to work every one who works in the business/society should be able to afford to buy without credit what the society produces.

    One way or another you have to get the average house price to being no more than four times average salary and maintain that ratio for the entire population for a healthy economy to grow get outside that ratio we are in trouble and will stay there.

  • Comment number 8.

    American banks needs to learn from the British banks ( Barclay and HSBC).
    Due to greed and poorly regulated American banking system whole country is in a big mess.
    It seems not much has been learned from the mistake and still executive compensation runs in millions and no obvious serious undertaking to counteract this huge compensations.

  • Comment number 9.

    the stock market has bounced so asset prices are up hence the billions made in the investment side, the commercial side is struggling becaus eof bad debts from companies,and individuals going insolvent.unemployment is also slowing down new deals as people are uncertain.
    the extra quantitative easing would have welcome if it had come a few months ago.

    interest rates (again) should be up to 1% b/c ceteris paribus

    inflation will be 5% in 2011.

  • Comment number 10.

    #7 Quote: "Meanwhile bankers will continue to make disproportionate money widening the poverty gap considerably until they realise too late what Henry Ford hinted at a hundred years ago that for growing economies to work every one who works in the business/society should be able to afford to buy without credit what the society produces."

    Dear Mr Ford not only realised it, he did something about it too. Better wages, conditions, holidays, production facilities, and hours. But commerce is no longer made up of true entrepreneurs; it is made up of a bunch of opportunists with cash to burn. The marketplace has given up to gamblers with an insurance policy, either blackmail or flogging debts as if they are assets. As #6 so neatly terms them - banksters.

    The banksters work for the large corporate CEOs who sell arms to the rest of a miserable world. Is it really so different from the Mafiosi of old? And will the worms bite back as they have always done in the past? Banksters beware.

  • Comment number 11.

    Imv, not enough attention is being paid by pundits to the notion that the priority of a bank is to get out of the Gov's debt as quickly and as cheaply as possible; to fly high and be their own masters again.

    So of course, their energies and their own business plans will be geared to this over-riding requisite to how they visualise getting their own house in order.

    Where has all the m oney gone? Going? Where else but looking after the banks first. Small businesses and mortgages are way down the list. And the poor little saver? It's a laugh. Wrong. Makes me cry.

    Mark my words. Pay back time from the banks wikll take our little pundits by surprise as they escape the Gov's chains 'with a bound.'

    Then listen to the pundits reading the runes.

  • Comment number 12.

    Why banks are still not lending?

    Mr Robert Peston, a BBC Financial Correspondent, disclosed on his blog information on Royal Bank of Scotland and Lloyds. Assuming other banks follow the same or, more-less, similar practice (and it is very likely) this appears to explain, why banks are not lending on the level that normally would be expected from such institutions. He wrote:

    "Take Royal Bank of Scotland. Today, its chief executive has set a target to reduce its ratio of loans to deposits from 156% to around 100% by 2013. (…) And there's a similar story for Lloyds. In the six months from 31 December to 30 June, its ratio of loans to customer deposits has fallen from 166% to 152%, as it has simultaneously increased deposits by £20bn and reduced loans and advances by £25bn."

    This information confirms that both RBS and Lloyds were lending with loan to deposit ratio above 100% reaching the current level of loans to deposits. Mr Peston does not write what is the actual level of loans (and also deposits) in monetary terms. It is this factor, that resulted in overblown banks’ balance sheets, which led to liquidity crisis. This is why, to prevent a collapse, the government had to provide fresh liquidity (in form of cash injection, guarantees and now “quantitatively eased” cash) to increase banks’ reserves to secure overblown balance sheets.

    Although it is not clear from Mr Peston reporting, there is an indication that these two banks (and possibly many others) could still be lending with loan to deposit ratio above 100%. And in case of RBS the ultimate target is actually 100%. This indication comes from slow lending, very little liquidity provided onto the market by the commercial banks.

    This situation appears to be (and it definitely has been) perverse. If banks lend with loan to deposit ratio above 100% their profit margin model is as follows:

    L*I(L) – D*I(D) > 0

    (where L is value of loans, D is value of deposits, I(L) is interest paid in by customers on loans, I(D) is interest paid out by banks on deposits)

    L=D*LD

    (where LD is the current ratio of loans to deposits)

    Hence:

    D*LD*I(L) – D*I(D) > 0

    LD*I(L) – I(D) > 0

    As LD is above 100%, this model allows what one would consider as impossible: pay higher interest on deposits than to collect on loans. This is easy money for a bank. This explains why for years of the credit boom banks were able to offer very low (quite often 0%) interest rates on loans and still pay quite attractive rates on deposits. This completely distorted competition on the market as well as pay packages of the bankers.

    But such bonanza could not last forever. As described in the seminal article of this blog "The largest heist in history" this is a pyramid model, called “depleting-reserves banking” as this results in reserves depletion, (depleting reserves at [loan-to-deposit ratio] – 100% at every cycle of deposit – loan cycle). Having nearly gone bankrupt, the banks are now very weary not to deplete the reserves (provided by the government actions) too quickly. Hence they are lending very slowly. The deposit - loan cycle pace is very slow. This slows down the process of reserves depletion but unfortunately is also severely restricts liquidity on the market, which is based on circulating money in the economy. Banks have a perverse incentive to hold on to cash and limit lending.

    If banks were lending with loan to deposit ratio below 100% (as they traditionally had been doing for centuries), the same formula:

    LD*I(L) – I(D) > 0

    would still apply.

    However, as this time LD is below 100%, the interest on loans must be higher than on deposits in order for banks to have a positive profit margin, to make money. Therefore banks would find it harder to make profit, i.e. they would have to be more costs efficient in their operations. This would mean that less money would be available for big bonuses. However banks would be able to circulate money in the economy as fast as they could as at every deposit – loan cycle they would have generated reserves at 100% - [loan-to-deposit ratio] level.

    The government must therefore examine whether banks are still lending with loan to deposit ratio above 100%. The above shows that such practice is criminal as it is a result of a pyramid scheme structure. If they still do (as the signs do indicate) the government must ban it. It creates a perverse situation of further depletion of reserves, effectively slows deposit – loan cycle and creates an inefficient competition environment for the financial industry combined with over-inflated remuneration packages, which effectively come from the loot: reserves depletion. Most likely it is a systemic problem: so all the industry should be examined, not particular institutions. Let us face the real problem: the business model that the financial industry developed in the last few decades is a parasite on a real economy.

    The above is on top of other concerns highlighted in the articles: "Is another loot going on now?" and "How to make money?"

  • Comment number 13.

    I see most commenters avoid the issue you raise Jeremy, 'Why don't Banks speak to the media?', other than where they can control what is published. The reason I ma sure is that they cannot guarentee not to get trapped into saying something that affects the share price. The bad reason is simply that they are powerful enough to feel they can avoid without sanction difficult questions about their purposes.

  • Comment number 14.

    As banking has spent the past three decades changing its spots it is unlikely that we will see a change to their disingenuous treatment of customers any time soon. That is why the folly of bail out should never have been attempted. The Government is just another silly punter who stands to lose all their (our) money.

  • Comment number 15.

    #14

    Aye. When the rules were changed for building societies to increase competition to the main clearing banks the tearful ending of less, bigger banks and little opposition was always going to happen. That New Labour couldn't practice a little of what they preached pre-1997 really hammered home the message that if you are rich you'll remain rich and if you are poor we really don't give a damn.

    So rich guys get the bail out, the poor get their hovels and history repeats.

  • Comment number 16.

    I'd love to know what actual changes the financial institutions have made to ensure that the credit crunch does not happen again.The bankers said they never saw the crisis coming so what indicators have they put in place to identify further crises? Have bad debtors been chased for payment or have banks just casually written them off? Will debtors with multiple credit cards and insufficient income to pay be brought into line. The banks have been very quiet about that and, it seems, could use someone like Alvin Hall to get their debts under control, starting perhaps by abolishing the bonus culture and overinflated executive salaries which the banks and their customers cannot afford.The banks need to remember the example of Northern Rock & Lehman Brothers and consider what would happen if their customers, disgusted by the bankers' personal profiteering, simultaneously withdrew their money.It's definitely something worth thinking about because it might actually happen as Northern Rock discovered.Next time the taxpayers might not be so willing to bail them out.I certainly wouldn't.

  • Comment number 17.

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

  • Comment number 18.

    I seriously hope that the era of business that are to big to fail and thus need government handouts is over. Debt just gets piled on piled on further, and who gets to pay for it...good question as no one really wants to come up to plate when it comes to actually financing these bailouts, so Fed just keeps doing what they do best...it prints!

    A writer for Business World at Harvard

  • Comment number 19.

    It seems a little unfair that rchifflet's posting at number 17 has been bundled unceremoniously into touch.

    It would seem that the money markets, who have used IT to connect up information and pass it on quickly, may have used software intended for one purpose for rather different purposes. Industries, including the financial markets, are not in business to prevent losses they are in business to maximise profit. So any IT designed to indicate a high risk can also be used to determine how to reduce that risk, or use it, to make a profit, especially if that profit is going to be very short term. Marketplace manipulation is not new, but the speed of its impact is.

    When it comes to money are there not just too many grey areas that are not being adequately policed?

  • Comment number 20.

    Dear friend,
    Good article from on economic point of view
    After reading your inputs and from other economic editors,we are getting some hope and quick correcive actions were taken by financial institutions and from government bodies
    If British government,Brtishers,migrants and others start to spend less on lavish ways,less in entertainment business,cultivation of saving habits among younsters,students,adults and from salaried income brackets will surely bring England back to good economic fortunes.

  • Comment number 21.

    We could be radical and learn to live within our means.

    It is possible to live without bank loans.

    In fact, if you constantly rely on borrowing to make ends meet, then your business or household is not viable in the long term. The economy will always expand and contract, and interest rates will always rise and fall. Therefore, those businesses and households with long running debts will be vulnerable when the economy moves downward or when interest rates move upward. Borrowing is a way of spending tomorrow's income before you've earned it.

    The media's lazy obsession with bank lending, house prices and consumer spending is part of the reason why we got into such a mess in the first place.

  • Comment number 22.

    Quantitative Easing - isn't that just Newlabspeak for devaluation of the pound? Ok they're not "just printing more money" but that's only because it's going straight into the banks electronically. The near parity with the Euro? Not devaluation?
    BTW we have been "radical" and lived within our means, not buying on credit (apart from our home) saving our money, only to watch it now stuck in a "no mans land", No interest on savings, prices still rising, still paying massive interest on a mortgage (stupidly fixed at 6.5% about a year ago) Wages frozen, no bonus this year and a "revised" pension plan that appears to consist of giving some private group my money to go play in the Vegas Casino one more time

  • Comment number 23.

    No.22. pandatank

    As you point out, the reckless and feckless are being rewarded at the expense of sensible and productive households and businesses.

    Bad behaviour is rewarded, and good behaviour punished.

    It's the way we live now......

  • Comment number 24.

    It's not really surprising that banks will not talk to the BBC. Whatever the mistakes they made in the past (and they sure did make some big ones) it seems that the BBC have chosen bankers as the ones who should shoulder all the blame for the mess we are now in. Of course, they should take their share of the blame, but so too should this government under whose watch this crisis was allowed to happen. But the Labour line is now to shift all their share of the blame onto the banks, and of course the BBC will go along with this. Anything to minimise the impact on Labours popularity before the election is good by the BBC. The venom seen in BBC interviews with bankers compares starkly with the easy ride given to the government. Still, shouldn't really be surprised, the left, including the BBC, has forever hated big business and big profits.

  • Comment number 25.

    It is time for the government, financial pundits and the banks to stop pretending that fiscal measures have started the recovery and everybody will come through this unscathed, thanks to Brown's financial acumen. Sooner or later, everybody who is not feeding from the public purse is going to feel the pain and we will leave a diminished country as our legacy. The spin needs to stop and a leader emerge who can spell it out as in Churchill's blood, sweat and tears speech. When reality sets in and the stark truth is acknowledged that this generation blew it and the piper must be paid, the repair work might start for the sake of the next generation.

  • Comment number 26.

    I appreciate the difficult job the BBC is trying to do.

    No-one I have yet seen interviewed is prepared to put their head above the parapet and talk openly and honestly about the economic situation.

    They are holding back especially those who are obviously very sceptical about all the positive noises those with vested interests are mouthing continuously.

    The same positive people who seem to have to adjust their figures downwards every month or so.

    All in all it begins to look like one heck of a conspiracy by banks and government to hide the real truth and try to put it out a bit at a time hoping they can keep up with the curve. They certainly aren't ahead of it.

  • Comment number 27.

    I'm confused, or amused, must be the later.

    You see, the gloom (abroad, where ever that maybe) suddenly turned to bloom and it’s not just a say of any but the 'Nobel laureates' had put they weight behind it.

    Such interesting contradictions in data provided, because just few days before this noticeable, must have been triggered by something bloom, Deutsche Bank provided quite an estimate which could be marked as gloom, although imo it's rather fair estimate of things to come.

    Remember that 'psychology of denial' letter? It was pretty straightforward and clear take, it said>

    "In summary, your majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole."

    As stated before, imo, the 'conscious words' will not be enough, those will not resonate within 'unconscious' parts of population, not this time and not at this time.

    Good riddance to those who invested in murder, you fellows have overdrawn, it's time to pay.

  • Comment number 28.

    #27

    Interesting that all those "many bright people" are now asking to be trusted again as all those "green shoots" spring up here, there and everywhere. No such thing as waiting for a harvest in this expedient, opportunistic, corrupt and disfigured society is there?

  • Comment number 29.

    I am still wondering what happened to the money that disappeared out of individual retirement accounts. No one seems to be able or willing to answer that question. Did it just "disappear." Seems niether the banks nor the governments have any interest in finding out the answer. I you go to a bankers account and tranfer funds to your account, you will go the jail, but apparently the reverse can be done without penalty.

  • Comment number 30.

    #12 v-ery good article.

  • Comment number 31.

    @29

    Well, all of us, wondering wanderers, we can bleat, we can beseech.., or we can demand inquiries of this and that magnitude, for our children and our children's children and for all of our kind.

    "According to some estimates we cannot track $2.3 trillion in transactions," Rumsfeld admitted.

    $2.3 trillion — that's $8,000 for every man, woman and child in America. To understand how the Pentagon can lose track of trillions, consider the case of one military accountant who tried to find out what happened to a mere $300 million.

    "We know it's gone. But we don't know what they spent it on," said Jim Minnery, Defense Finance and Accounting Service.

    http://www.cbsnews.com/stories/2002/01/29/eveningnews/main325985.shtml

    A trillion here, trillion there.., pray tell, have you read how much money will banksters earn from those already in debt, from those stretched out folks who were led into the trap? I've read it somewhere the other day, what was it? Some 40 + billions.

    Banksters work on micro level, MMF works on macro level and people are watching it in bamboozlement, oh my.

    All things related you know..,

    Eh, to repeat that opinion stated before on one of these lovely outlets, it is irrational to expect that corrupted people are capable of fighting corruption, and I see no justification whatsoever for the fact that those who have committed obvious, colossal fraud while in provably vast conflicts of interests are still walking freely, talking, or rather lying loudly. Then again, we live in the world where governments can simply say no to inquires, because inquiries would show that those in charge were not using our money to buy chandeliers, but death and destruction.

    Good thing that fear tends to return into the hearts of those who played with it, what goes around comes around we say. Trembling little Deimos and puny heartless Phobos are about to meet each other, what a lovely reunion that one will be.

  • Comment number 32.

    All right, it's all over, for e-con-o-mists!

    http://online.wsj.com/article/SB124993702311020493.html?mod=googlenews_wsj

    Think that Soros chipped in to, bottom down, he said.

    And check this one out>

    Global Confidence, lol, that's right, if you play with 'global recession' you'll have to outwit it with 'global confidence'.

    http://www.bloomberg.com/apps/news?pid=20601102&sid=aZHVGrfifhvg

    That was pretty fast, eh? Have we seen it before? When was it? I'll admit, this push is better coordinated than the last one.

    Let's now see how the complex system (of people) will react to it and will the recession end for populace too.

    Put your money where your mouth is, eh?

  • Comment number 33.

    So Pensions 'are at a tipping point' as the week ends. That wouldn't be related to the massive shedding of jobs by big business, so that the funds have ~ 10x the number of pensioners as contributors,the paybacks from the pension balance during the boom times, and the pension contribition holidays enjoyed by many of the current employees at our ( the pensioners expense) would it?
    The there are the actuaries who didn't notice that it was a goal of the EC to give citizens a longer active life. The increase in age span expected were published by the EC offices throughout the 80's and 90's, but I guess financial experts don't read that sort of thing.

  • Comment number 34.

    It would be welcomed if someone actually asked some straightforward questions about finance.

    For example in the past few decades those on low pay have been forced into credit to survive. That was okay as long as they were repaying their debt, but along came a spider and took their job away. So who, exactly, is responsible for that unmet debt? Is it the worker who is struggling to find a new job? Or is it the financiers of this world who engineered a mess that they have largely been bailed out of (through taxes)?

    So if I follow the logic correctly the question the BBC should be asking is "How come it is Jo Public who always ends up paying not just for his mistakes but also those of wealthy bankers?" And can you ask this question in a live TV debate with the errant bankers already secured in stocks (the wooden kind).

  • Comment number 35.

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

  • Comment number 36.

    What started the ball rolling was the high oil price.

    All countries quickly got the oil price back down to help with stability. However this will be short lived since the daily world consumption is now 90Million and rising due to ever popular demands and a steady population growth. It's thought by many that in a handful of years the daily output will not meet the daily demand resulting in the oil price shoooting back up and never coming down. As a result it will trigger the next financial collapse at a time when governments will not be able to afford to bail out the banks and businesses so soon after the current events.

    It will take many years to get over our oil addiction and returning to coal will be our short term fix until the technology magic wand sorts out the issue long term. However don’t forget that there may be many political and military wars to come driven by the governments long craving for oil and air supremacy. Especially by counties that are dependant on imports to survive.

  • Comment number 37.

    http://www.woostercollective.com/Dead_Bull.jpg

    Who will 'exit' next?

    People, onto the streets..,



  • Comment number 38.

    'one of the few economists who accurately predicted the magnitude of the world's recent financial troubles', what a descriptor, eh?

    http://www.reuters.com/article/ousiv/idUSTRE57M29R20090823

    "damned if they do and damned if they don't", now that is definitely a descriptor I like to use to categorize these administrates that are on their way towards 'one way or another' oblivion.

    We will either have law and order, and that means that those who committed mass murder and colossal fraud will end up where they belong and that we'll need more ascetic sanctuaries for all the real Madoff's out there or we'll end up in one of those 'apocalyptically anarchistic scenarios' in which villains will have no sanctuary at all.

    One way or another, damned if you do, damned if you don't, from east to west, a slip, a double-dip.

  • Comment number 39.

    These recent news reminded me:

    Grayson: "Well, look at the next page [in Bernanke's written report], the very next page has the U.S. dollar nominal exchange rate, which shows a 20 percent increase in the U.S. dollar nominal exchange rate at exactly the same time that you were handing out half a trillion dollars. You think that's a coincidence?"

    Bernanke: "Yes."

    Grayson: "hah-hah-hah-hah!"

    http://www.youtube.com/watch?v=00ECLxK2YTs

    Is that Paulson fellow still at large?

    What a world.

  • Comment number 40.

    oh, it actually surfaced, well at least the tiny bit of it, so ridiculous, the fact that such information's has to be acquired via blog.

    http://blogs.reuters.com/rolfe-winkler/2009/08/08/beware-the-jobs-number/

    What do you folks think, how high is unemployment rate in China, officially versus actually?

    One way or another, such bummer, its 'crowding out' time.

  • Comment number 41.


    Copy to Mr Will Hutton he might be able to persuade the BBC to re-broadcast Galbraiths book mentioned below and Bleasedales 'Boys From the Black Stuff' It's all there.

    I do wish Mr Peston will be rather more sharper in talking to bankers. Mr P asked Blank 'whether he preferred cricket to business ????
    What ???? Come on this was more like a Evan Davies question or This is Your Life' Again and again the BBC hold back on what is a the greates capitalist crisis for well, er, a 'long time' 1913 !! (whatever) and apparently Mr. P has actually visited Blank's private cricket club !!
    How about asking Blank like say

    ' Why are you still in your job ?

    What do think of the mass sackings of workers; loss of value of savers?

    Do you support the dependency culture that exists in the City?

    What is your response to being opposed by shareholing voters ?

    Why have not you been sacked with a Woolies payout have your savings confiscated and be subject to DWP snoopers checking so called benefit fraud by the poor ?

    Again Myners, nice chat - how about

    Again
    How come you've still got your job ?

    How big is your 'wedge'scouse for pay ?

    Why were you so incompetent in lettting Goodwin et.al run rings around you/

    NOT well you had some 'fun' running M&S WHAT ???

    'You were adopted' (so what, so was I; and I was a teacher )

    You are going to study for a theology degree (SO WHAT HAS THAT GOT TO DO WITH THIS CRISIS ? ) Bring on Eamon Andrews and his Red Book.


    Good

    However good on Mr P for taking on Murdoch.

    I have also asked Mr P to ask for J.K.Galbraiths BBC series The Age Of Uncertainty to be repeated and Boys From the Black Stuff it's all there.

    Yes as you say as someone who has taught economics IT IS NOT A SCIENCE in that it does not have a predictive capacity as are necessary criteria of science. See David Omerond 'The Death of Economics'

    Previous e.mail

    PLEASE PLEASE PLEASE could Mr Peston try and persuade the BBC programers to rebroadcast J.K Galbraiths 'The Age of Uncertainty-I have the book (partly published by the BBC) in front of me and although is was broadcast in 1977; what he said then is so prescient now

    Galbraith refers in one chapter and accompanying episode. 'His impression of Oxford were adverse; he later held that the Oxford public...did no work. (a part of Oxford history that the current 'Universities UK' organisation may not wish to emphasise.) Men and women do their best when they reap rewards of diligence intelligence and the penalties of sloth.It is equally important that people be free to seek the work or conduct of business that would reward efforts. What served the individual...then best served the society by getting the most (p15). Later he quotes Smith
    with reference to what I would call by the metonym of "the sut" and their behaviour.

    "being the managers rather of other people's money ....it cannot well be expected that they should watch over it with the same anxious vigilance....Like the stewards of a rich man art apt to consider attention small matters (although I wonder what Smith would think about bonuses ?) as not for their master's honour, and very easily give themselves dispensation from having it. Negligence and profusion, therefore,must prevail, more or less, in the management of the affairs of such a company...Without an exclusive privilege...(joint-stock companies) have commonly mismanaged the trade. With an exclusive privilege they have both mismanaged and confined it. (Wealth of Nations)
    As Galbraith sardonically commented that...it is too bad a visit by Adam Smith cannot be arranged to some forthcoming meeting of the United States Chamber of Commerce, the National Association of Manufacturers..or the gathering of the CBI -(we can add our own so obvious organisation examples-guess who ?)

    Galbraith observes ..(Smith) would be astonished to hear heads of great corporations...proclaim their economic virtue in his name.They, in turn, would be appalled when he-of all prophets-told them their enterprises should not exist. (p.26) I assume Smith would want smaller banks !
    Again "People of the same trade seldom meet together, even for merriment and diversion,but the conversation ends in a conspiracy against the public, or in contrivance to raise prices" (Wealth of Nations)

    " As far as stockholders are concerned (shareholders). They seldom pretend to understand anything of the business of the company.....receive contendtedly such half-yearly or yearly dividend, as the directors think proper to make them (Wealth of Nations)"

    As Galbrath points out, these great points. are .."uncelebrated in modern business oratory" and unfortunately it seems in the plethora of television finacial reporting and commentary by City experts or in intellectually vacuous avalanche guru 'managerialist' books.Mr Peston's obviously the exception, although he didn't mention Galbraith in his own book.

    Quotes from Galbraith

  • Comment number 42.

    "I personally have lots of concerns because the U.S. has huge piles of debts. Even though the economy is large, it is relying on debts, so its foundation is shaky," Chen Dongqi, vice-head of the macro-economic institute under the National Development and Reform Commission (NDRC) said this Monday.

    Chen should have said.

    'I personally have lots of concerns because the U.S. has huge piles of debt based on imaginary money. Even though the economy is large, it is relaying on imagination, so its foundation is shaky.'

    Fundamental and global problems, eh? Lack of water on water world, oh my..,

  • Comment number 43.

    So, what happens to the economy which attracts H1N1 while the immune system is compromised?

    IMF estimates, 'depending on how severe the swine flu gets, the global economy could see an impact of between $384 billion and $2.633 trillion'.

    Perhaps economy can be inoculated with some sort of nanotech-no-logical stuff?

  • Comment number 44.

    Most interesting>

    'It could have been scripted by the late John Lennon, but the International Monetary Fund's (IMF) chief has used a speech in New York to talk about "peace".'

    http://news.theage.com.au/breaking-news-national/imf-chief-says-give-peace-a-chance-20090923-g2ta.html

    A shift from 'murder based economies'? Construction without destruction? Prosperity without corruption?

    One of these days this whole world will go sane.

  • Comment number 45.

    Those conscious words are lost in the statics, butterflies flutter with depression and so the recession finally begins.

    Flu season is coming, good luck to all.

  • Comment number 46.

    People are saying it loud, fraud is a fraud.

    I've been waiting for hours to see which msm outlet will find it newsworthy… there's not much to see though, picky as we are.

    http://www.huffingtonpost.com/2009/10/25/showdown-in-chicago-prote_n_333245.html

  • Comment number 47.

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

  • Comment number 48.

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

  • Comment number 49.

    You, yes you. I'd be interested to know, do tell, did any fractal amount of the 'untold trillions' reached you already? Do you feel 'stimulated'?

  • Comment number 50.

    The banks take unnecesary risks: if their investments work out, then they think they deserve huge bonuses and to keep the profits. If their investments fail, then it's us, the taxpayers who should bail them off and some even have the nerve of requesting bonuses even in this case. Either way their business goes, they don't lose. It's unfair.
    The main problem is that too much freedom has been given to them: they're allowed to gamble with other people's money. Credit is too prevalent in our society, whereas I think it should be the exception, not the rule.
    Widespread credit isn't doing any good for our society: it just makes the rich richer and the poor poorer. Bubbles, which grow on credit, are one obvious example of this. Of course credit and lending are important of our economy, but they should be used when there is such a need. Tom

  • Comment number 51.

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

  • Comment number 52.

    Say, have you noticed how 'they've' managed to imagine millions and millions of 'ends' for a few and failed to imagine millions and millions for the people who are losing the means to fend for themselves and their families as we type?

    imagine 'them' gone... and they'll be gone.

  • Comment number 53.

    For the life of me I cannot understand how banks can openly admitt to such huge proffits of 100's on billions of dollars proffit when such a short time ago they were all going bust.

    Well I do realise how, they charge us for everything they do with our money. Letters that are sent out, using ATM's (cashpoints) moving money around, sending money to other banks etc etc etc. They even charge, if you go below a certain balance.

    Don't governments regulate these practices ??? Its absolutely obvious that they are the crooks in the financial industry and should be made to show how these profits can be achieved in such a short time.

    Its beginning to feel like its safer to keep money in a safe at home.

  • Comment number 54.

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

  • Comment number 55.

    one of the fundamentals is fear, is it?

    petty, I'd say.

    stupid stupid fundamentals! eh?

    lol to all

 

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