Bank of England forces bank shrinkage
Has the Bank of England lost its power, to re-work Scotty's famous line from Star Trek?
Last week it cut interest rates by 0.5%, in a coordinated attempt with other central banks to re-stimulate the global economy.
Since then, the LIBOR interest rate charged by banks for lending to each other over three months has barely moved.
And that matters, because banks set their prices for credit provided to households and businesses off that so-called interbank rate.
Or to put it another way, banks aren't passing on to us the full cut in the interest rate which the Bank of England thinks is necessary to prevent a deflationary recession.
This may be particularly frustrating for the Bank of England and the Treasury because they've been doing a sterling job, to coin a phrase, of providing loans and financial support to banks, to make up for the credit that's been withdrawn because of the seizing up of wholesale money markets.
As of yesterday, the authorities had committed - since the start of the credit crunch last August - to provide an incremental £600bn of taxpayer loans and support to our banks.
Which is just a little bit less than the net dependence of our banks on the defunct wholesale markets.
And our banks are likely to get even more financial help from the Bank of England, thanks to imminent reforms announced today of the way it provides them with loans and liquid assets.
Will this do the trick? Will banks start lending more to us and at reduced interest rates?
That's doubtful - and the Bank of England may well be seen as implicated in the way that banks are reducing how much they lend.
How so?
Well, the Bank of England stressed today that all its additional lending to banks is intended only to see them through this time of stress - and that this financial support should not be seen as a source of longer term funding to the banking system.
So if our poor battered banks don't expect a recovery in wholesale markets any time soon - and it would be foolishly Micawberish of them to count on such a recovery - then they have no option but to reduce what they lend to businesses and to individuals.
Which is why it will be very difficult to turn our super-tanker of an economy away from recession.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~20~RS~)
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Yes - you not only need to have the money to lend, you also need the creditworthy borrowers to lend it to.
The latter seem in rather short supply.
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Sterling job? - This is no time for bad jokes Mr Peston
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Gigantic piles of money will not get banks lending as they still don't trust each other. Trust is a bit like virginity - once lost it is lost forever! ([mis]quote from Pride and Prejudice!)
Trust can only be rebuilt when confidence in banks being able to repay loans is re-established. This will not happen until full audited accounts are prepared.
Look, when banks lend you money they want to see six to ten years audited accounts so why will this not apply to, and between, the banks themselves?
I think it is reasonable for us to ask the Bank of England, the Treasury and the FSA to answer this question.
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In the interests of LLOY shareholder, why isn't the board offering 8% coupon preference shares to investors and remaining independent of HMG support package? The 12% HMG coupon is penalistic given that the cost of borrowing has peaked and the LIBOR should now progressively fall.
Alistair Darling was quoted as saying that the banks are free to come up with a 'demonstrably better deal'. Isn't this more flexible and lower cost for LLOY and shareholders alike?
This would allow investors to receive dividends and would support the share price. This would re-attract the departing institutional investors and also still not preclude any purchase of HBOS. Although I do still believe that LLOY would raise sufficient capital from the open market to increase the tier rating and also buy HBOS at a lower market price.
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We all need to face the fact we aren't as rich as we thought we were (especially Gordon).
The 'growth' we have seen in the last 8 years is an illusion created by borrowing £650bn. We are now dependent on international money markets. The international markets are concerned at the the risks these loans won't be repaid. The ususal laws of supply and demand apply. He who pays the piper calls the tune. In today's market those prepared to lend set the rate.They won't lend any more without a significant premium for risk. Would you lend to someone who has already borrowed up to the eyeballs and might lose their job?
The only way to break the dependency is to pay back these loans. Gordon needs to give tax incentives to people to save and disincentives to borrowing. Higher interest rates would help repay these loans quicker.
Gordon doesn't have the political appetite to face the fact we aren't as rich as we thought. He wants to borrow more to continue the illusion longer. He doesn't care about the long term - he just cares about keeping the feel good factor going until the next election.
Repaying these loans means either a lot of pain for a short period or a little pain for a longer period. Either way we have a lot of pain to look forward to. All Gordon's fault for allowing this borrowing binge over the last 8 years.
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If the squillions of taxpayers money thrown at the banks can't persuade them to lend, what was the point?
Perhaps it would have been preferable to guarantee that no depositors would suffer and then let the banks succumb to their beloved market forces.
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It seems like a catch 22, needing to keep banks lending at the rates that contributed to getting us here in the first place.
A day ago I thought what's the point, it's just delaying and deepening the inevitable contraction. But if a delay could help some families and individuals avoid some of the worst effects of recession then maybe it's a price worth paying.
Seems like there will be some very grim choices ahead.
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Can you answer this question? (Sorry if I'm being a bit slow here..)
What dictates the LIBOR rate, who controls this level?... Surely it cannot be the banks themselves?
Interest rates are controlled by the BOE, so should the LIBOR rate be controlled this way as well... In the short term any way???
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And no more information about lending amounts between the BOE and the banks! That's not very transparent and can only add to the volatility of these stocks.
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and another thing, why is it a good idea that the banks can again offer the consumer cheap and easy credit. Isn't that what got us in this mess in the first place?
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Well, would you lend/borrow money now, when you know the interest rate is going to come down in the near future ??
Too much talk of it(interest rates coming down).
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Brown spending more billions was never the answer. Reports say he has never been happier than during this last two weeks !
He will be happy, he has been doing what he does and likes best, throwing taxpayers money around like conffeti.
The man has broken Britain and still no one has the guts to oust him once and for all.
We havnt seen half of it yet and redundencies will pile up before Christmas and we will have no further reserves.
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It sounds like good common sense to me.
There's no point in lending money to dubious borrowers for the banks to take even further losses.
I think they will need to know just how much bad debt they are going to have to write off before they start lending willy nilly again.
No doubt the government will have to start using the recession word 'cos everybody else is and start planning for the cost of unemployment by cancelling some of their unnecessary spending on unnecessary schemes.
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Please please PLEASE stop saying "y'know" in your tv pieces. Your last few minutes on BBC News were excruciating. While you're at it, sit up straight and shave. All in all not an effective performance.
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I see this headline on BBC/business page.
"Wall Street shares open higher but then fall back as investors analyse fresh data on the US economy."
How can they be "analysing" anything? The investors are running like headless chicken.
Perhaps there is just too much information ...
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Could we be seeing civilization fall apart??? I bet the Romans didn't see it coming or the Mynans or Incas etc etc.
The safest place to invest whats left of your money is now in land.... they are not making any more of it you know...
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the banking industry has been given too much power and the result is what we see.
banks that fall into problems dont deserve to be bailed out they should fail and be used to teach other banks to be more carefull with there assets.
the old lady of thread needle street should know better than to become embroiled in politics, jumping into bed with gordon and his boys will only cause greater problems down the line, i advise get out and relearn what you should know.
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Houses eh?
Nice to live in and paint up, but lethal if you over-price them.
Let's hope all governments finally learn that lesson.
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Robert.
"Which is why it will be very difficult to turn our super-tanker of an economy away from recession."
The ship is already on the rocks. Surely you can see that. What evidence is there to the contrary?
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We are well and truly in recession now. Look around at businesses, high streets, car parks at stations.
Refinancing the banks with public money and then let them carry on more or less as before is ridiculous and a complete waste of money.
Nationalise the banks now until hostilities are over as they say.
Sack the directors and managers who got usd into this mess and put new teams in to work to new policies.
What will the banks do with all the houses they will have on their books and have to sell in a dying market?
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The banks that have received such magnificient support from taxpayers should be given 7 days to respond in a positive way. If not the message should be clear, all financial support will be withdrawn
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Is it me, or this now getting a bit boring?
Unless the banks 'do something' soon, then those companies relying on working capital facilities to operate their businesses (not a good thing I know, but it's reality) may not be paying the wages soon. What if that company is a road haulier delivering food and other essentials hither and thither around the UK?
And what if, when the truck drivers (pick any type of worker you like really) don't get paid, they withdraw their labour?
Meantime, elsewhere and just out of the 'interest range' of mainstream news editors, some more countries are facing bankruptcy, especially in Eastern Europe.
Things are going from bad to worse here and I'm surprised at how little attention this crisis is receiving, other than headline news stories. Maybe we're all bored with it? Until the lid blows off, which is not far off now.
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Have you only just realised the dear Old Lady doesn't have much control using its macro economic leavers??
Besides which a half point cut under the circumstances was quite pitiful - it is less an issue of technicalities now than more of a clear psychological tsunami to counter the irrationality.
bw
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I see that the Pru share price has fallen by another eighteen per cent today.
I trust that Big Gordy has another few hundred billion set aside to bail out any casino players in the insurance industry, and give me a £50,000-plus guarantee that my little pension pot is safe.
I have absolutely no idea what my "rights" are as a with-profits pension scheme holder if the insurance company gets into trouble.
Probably none.
Does anybody know anything any more?
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Isn't this what's called the liquidity trap? Time for some helicopter money? I'd be happy to receive some ..
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We tend to overlook the International nature of the City at this level - and that includes you, Robert.
The problem isn't just that Lloyds are reluctant to lend sterling to NatWest, or vice-versa, it's that they're also reluctant to lend to Bank of America or Unicredito, for more obvious reasons. Why should funds backed by UK guarantees be spread out across the world - indeed, can they even be? This is complicated by the presence of true pan-nationals like HSBC and Standard Chartered, and so probably the only real resolution will be for the World Bank to instruct the IMF to act as a global Fed, Bankers of Last Resort in support of all world banks - and that could be interesting in itself, given the uncertain status of certain banks in Central Asia and points beyond. No one Nation can now lead the way, as there will be hundreds of different guarantees creating tens of thousands of loopholes for the unscrupulous: the IMF must collect the National Guarantees and spread the risk across all, creating a two-tier banking structure of those guaranteed and those not, ie AAA and Junk. One can hardly imagine the UK underwriting the Reserve Bank of Zimbabwe, for instance!
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'Poor battered banks'???? I hope that you were being ironic!
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All very strange. As I see it, governments have injected capital into the banks in order to provide liquidity, and to bail the banks out with respect to their incompetent management of credit.
But the banks, rather than passing this on, are now hoarding so libor remains high.
They wont lend to each other, and they are selfishly calling in debt which was less risky than the debt that put them into the situation in the first place.
At the end of it, who deserves to survive this more?
I'm not an economist, (which is probably clear from the next comment!) but I begin to wonder if Governments would not have been better off setting up a rival charitable organisation with the sole purpose of lending directly to small businesses, rather than trusting the banks to do it for them.
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Robert tells us that the banks set their prices for credit to households and businesses based on the interbank rate (LIBOR).
LIBOR is based on UNSECURED loans but banks certainly do not usually lend to punters and businesses without it being SECURED on some asset.
Is this 'treating the customer fairly'?
It would appear not, but then again, is anybody outside of banking surprised about that.
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By the way Bobby P - since you are now a celebrity and will no doubt be on a fast track to riches, it may be worth doing a post-nuptial agreement with the other half just in case.
bw
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These people running banks are basically thieves - not in a legal sense, perhaps, but any moral sense.
They will profit from the bailout, requiring more and more cash-incentives to get them to play a role in cleaning up the mess they made.
Sickening.
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The Banks have lied about their liquidity, they have been greedy and foolish.
It should come as no surprise that their first response to the money made available to them will be self-preservation.
Lending it out will have to wait.
The only way to make them lend is to have proper representation at Board level sufficient to outvote the rest. Otherwise, like the NHS, they will suck it in and it will just disappear.
The real question is, will fiat money survive ?
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this is the perfect time to open a bank.
it will have no dodgy debt and so will attract huge investment. It will have the freedom to lend, depositors will feel safe and will have a huge earning [profit] potential as it takes up the business the current banks refuse. its a win win situation.
maybe branson could do it?
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Is King out of his bank-spanking phase yet?
If the new liquidity measures had been in place NR and BB would have survived - remember the naming and shaming of NR led to the first run on a British bank for 160 years and started the crisis of confidence in the banks.
Historians will probably regard this as a significant contributory factor to all that has followed and will follow.
What an error of judgement!
Yet King, an arrogant academic out of touch with the real world who has shown many grave errors of judgement, including not only lowering interest rates in August 2005 (when house prices had stabilised/fallen slightly over the preceding 6 months) but also signalling that they would reduce further, which led to the recent and greatest housing boom, is still in place, apparently still obsessed with moral hazard, despite the fact he helped to create it, and that it disappeared over a year ago.
He must have been dragged shouting and screaming into agreeing to some of the recent initiatives.
The Government ought to sack him so that he can retire on his huge gold-plated Government guaranteed pension, whilst we watch our pensions and investments disappear.
As a result of this fiasco, and particularly how bank shareholders, including our pension funds, have been robbed by the Government, assisted by an incompetent BoE, I cannot see either domestic or foreign monies flowing into shares, and therefore investment in the UK economy for a very long time. There are very clearly more attractive destinations when global share prices start to recover.
What was regarded as a safe place to invest (a major attraction) is no longer - the UK public will pay the price for many years to come, even if the Tories get into power, investors will fear the return of Labour.
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Not sure that banks have stopped lending.
My dad has just taken out a mortgage to buy another investment property. Madness you may say, however all the other properties are paid off and the loan is only 50% of the much forced/reduced purchase price, plus combined rental income will payback in 2 years with enough cash to clear the mortgage and fund the next 50% deposit.
My point - Banks will and are lending to those with secure collateral and sensible borrowing ratios. On the BBC news last night their was a man with no job, a £200k mortgage and a BMW (on HP?). Now I wish this man no ill, but if people think that lending is going to be switched on again at the same levels/risk they are deluded.
Its like jump starting a car with a flat battery, yes you might get it running again but the underlying problem is the battery is worn out and needs changing (next morning same problem). In the case of debt their is to much that needs to be paid back and asset values (houses) need to fall so that the available lending is enough to cover borrowing requirements at sensible levels for both businesses and individuals.
It also does not help that Northern Government Rock is determined to deter people from re-mortgaging with them. Hence the good risk borrowers go elsewhere so taking part of the available funding from other institutions that would normally be available to lend to other borrowers.
In addition would you lend to businesses that may fail, so increasing your losses on top of losses you already have?
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#5 gordonisamoron2,
"The only way to break the dependency is to pay back these loans. "
That may be true but consider the consquences, intended or otherwise. In a debt-based, fiat, Fractional Reserve Banking System the money in circulation exists as a result of loans (personal, corporate, governmental). So, money=debt=money.
If, as you suggest, we raise interest rates that will have the effect of encouraging us to save as the opposite was true with low interest rates which meant that savings delivered a negative real rate of return.
A proviso to this must be that people have some element of disposable income to save. That is not likely to be the case but lets ignore that for the moment. As the money is withdrawn from the circulatory money supply then the money supply diminishes.
The first portion of the saving will actually go to pay off some of the debt. There's no point in having savings returning 6% interest whilst still paying 28 % APR on your credit card. As the credit card balance is paid off then the total national debt is commensurately reduced. Through the magic of Fractional Reserve Banking the repayment of 1 GBP of debt reduces the money supply by 1 x the average lending ratio. So if the lending ratio was, say, 20:1 then paying off 1GBP of debt reduces the money supply by 20GBP. So the effect of paying off our debts reduces the money supply.
When the money supply reduces it causes first, a recession, second, a depression and third, a collapse.
In reality it is much, much worse than I've described above. Investment Banks decided that the 'Reserve' part of the Fractional Reserve Banking system was too restrictive. So, they invented the Capital Adequacy rule. Now the fraction that you have to keep in reserve can be as low as you like as long as you adequately assess the risk. And we know how good they were at doing that......
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Hi Robert,
You didn't really expect that the 50bps cut would be passed onto consumers and small businesses did you? You must be having a laugh.
Bottom line, banks are interested in only one things right now. Self preservation. What this means is parking their toxic waste onto the BofE or Fed's balance sheet, in the form of a repo and then hoarding that money (possibly back with the BofE) in case they need it. All the while they continue to deleverage as fast as they can, so loans are not made and debts are reclaimed and repaid as rapidly as possible.
All this screaming 'We must have a rate cut' by the banks was one rather large con job. The Bank of England must be feeling very foolish for having their pockets picked by the very institutions they were looking to help.
The banks not lending is not the problem. It is a symptom of the problem, that being too much debt. The world has realised this belatedly and everyone with any sense is deleveraging as fast as possible. Nothing the central banks or government do is going to stop this credit tsunami. The world is going into a recession. The sooner our dear leaders pull their heads out if the sand and realise this fact the sooner they can draw up plan B. (Something they clearly don't have.)
Unfortunately the heads of the G11 and many of their central banks have gargantuan egos, unable to fess up to mistakes made and thus make the necessary plans to deal with the oncoming economic implosion.
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Of course, only if you're a Keynsian its all very mysterious why the BoE cut had no effect.
On the other hand an Austrian Economist might point out that trying to inflate an asset bubble thats burst will have no effect.
For a less theoretical and more concrete example, look at Japan, where the real intrest rate has been held to zero or even below and has had no effect whatsoever.
We currently lie at the start of the Japan experience and if we do what they did, we'll get the same result. Although in our case, because of the wild spending spree the government has indulged in, we may have high inflation or even hyper-inflation.
Filling leaky buckets wont help, only a wholesale abandonment of the Basel II accord will even begin to slow this down.
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This comment was removed because the moderators found it broke the House Rules.
Banks cannot lend what they haven't got !! All this talk about banks not lending when the government has handed them a large dollop of cash is just so much hot air.
The large dollops have *NOT* been handed over yet !! The shareholders of the various banks have not voted on whether to accept the terms that the BoE has imposed on the handing over of those dollops of cash !!
Until the cash is in the bank (no pun intended), accepted and signed for, it is *NOT* a done deal !!
Scaremongering and vitriolic comments based on misconceptions and misinformation is not helping anyone, least of all, the people who need it most !!
Can we have more calm and reasoned comments instead of the kill-em-all-and-be-done-with-it type ?? We may not agree with the other comments but calm reasoning *may* help towards solving the problem !! The other type just fan the flames and lead to destructive thinking; just what we don't need at this point in time !!
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Banks will not lend money for a very simple reason. They have now been rumbled for their recklessness over the last decade and will not now dare repeat the same mistakes and risk going completely under.
They know that we are already in a recession and that the housing market will crash - how can it not when average prices are 10 times average salaries?
That being so, they are not going to lend money, even to those with sizable deposits, when they know that the value will tank, creating negative equity and the likelihood of repossession, the value of which will be considerably less than the amount lent out.
Similarly, they will be cautious to lend to individuals and businesses who they deem to be high risk and thus lead to further bankruptcies and repossessions.
With an economy highly dependent on consumerism we are in deep trouble. Whether we like it or not, consumers will be forced to cut back on their discretionary spending and that will hit the high street, leisure and entertainment industry.
The Bank of England are thus wasting their time cutting interest rates, which will just make things a darn sight worse for the consumer by hyping up inflation.
In spite of Brown's ridiculous proclamations that it is business as usual, we will be for an era of considerable austerity.
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#26 Strange as it may seem, HSBC (a Bermudan bank) and Standard Chartered (a South African bank) are probably the only ones that *DON'T* need the government's cash bail-out.
One can tap into lines of credit in the Far East and the other is OK so long as the South Africans keep minting gold Krugerrands for the panic-stricken to buy !!
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Is there anything to stop the UK taxpayers' bailout billions being used by UK banks to pay their foreign-owned CDF instalments, as and when they fall due? In other words, could the bailout injections evaporate into the offshore ether, rather than lubricating the seized-up machinery of UK business banking and mortgage finance?
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I think it's simply a sign of the fact that those running the banks are really not very bright and are certainly completely unpatriotic.
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Time to cut out the middle man then and send loan cheques out to the public. Good Oh. Happy Crimbo
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13 virtualsilverlady
Unfortunately it looks as though the approach will be to expand public spending and push up national debt. Dear Prudence at work again.
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# 4
Well, all these banks still exist not because they are so creditworthy, but because the market got the message that behind them there is the UK government.
If the LLoy followed your suggestion, then the only reasonable action from the Treasury would be (not because they would contemplate it, unfortunately) that in this case Lloy is excluded all auctions of treasury bills, any kind of central bank money distribution (why should the government support them in any form? They are strong enough, you said). Try to do it from your own capital and deposits. Then Lloy would disappear in no time.
You know, once upon the time the Bundesbank played this game beautifully. And oddly the banks participated in it - after all it was Bundesbank's ball.
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# 12
And how did Brown destroy the country? The man may not be the most talented PM, maybe boring, conceited whatever, but he had no real role in destroying the country (and it isn't you know).
The British government has absolutely no means of developing a coherent economic policy partly for historical reasons (it never really had), partly because of the 18 years of Tory rule that destroyed the infrastructure of developing such a policy and the 11 years of new labour that did not make any serious attempt to find a way to do so.
And as Peston's blog shows not even BoE has the influence any more on the financial sector (well, it has always been consensus driven, anyway).
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Robert,
Now is the time to focus on what the banks are doing in practice to help hard pressed sme's.
The reality I suspect is that they are doing the exact opposite of what the government has tasked them to do.
At the moment they are busy raising interest rates and costs to their captive market...businesses cannot just change to different banks and are having the life squeezed out of them by banks whose sole interest is themselves.
Its time to make sure this is stopped before it goes too far and every business must speak out now!
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# 22
Excellent points.
Having said that companies could reverse to bill of exchange and BoE could directly discount them to overcome the shortage of working capital credits.
Some of the East-European countries are really interesting as you said as they are quite similar to Iceland in the main factors of their crisis, notably Hungary and Poland (maybe Slovakia).
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# 25
Yes, in a way it is a liquidity trap as the government is alone on one side of the market and everybody else is on the other and hence interest rates stay high as any amount the government throws at the market, it can be absorbed (after all, the banks were extremely liquid in securities - OK, a large proportion of them were worthless, but it's a different matter and now they are very liquid in cash if they want to be).
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I do note your analogy of our economy to a supertanker, you are in my opinion correct.
In a past life I was a Chief Engineer of a supertanker.
They were useless, there is a direct likeness to our economy.
There was a problem coming to terms with these facts.
regards
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I hope my bank isn't going to lend money on property in the near future. Why would any bank want to lend money to any of the companies operating in this country ? The building industry has been living in a bubble of ripping off the consumer for the past ten years along with estate agents lawyers developers and sundry other speculators. If property prices drop by 30% it will be followed by a drop in the price of the materials needed for building. Negative equity will of course affect those wishing to sell at a profit and those who bit off more than they can chew, but those who bought a house to live in and don't want to sell will be OK providing they still have a job. Property prices were inflated by greed and easily got credit and have to drop to a realistic level so that ordinary people in ordinary jobs can buy a house to live in.
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Some new news,
> Sarkozy said the auto sector may need help given that the United States was making cheap loans to its carmakers
http://uk.reuters.com/article/newsOne/idUKTRE4961YE20081016
It's trade war time!
Not to forget that it's generally agreed that protectionist policies exacerbated and prolonged the 30's depression.
"When I was a boy I was told that anyone could become president; I'm beginning to believe it." -- Clarence Darrow
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Why not bypass the banks completely? Lend directly to the economy. Open a commercial lending arm of the BOE... Northern Rock, or B&B.
Like it or not, right now, our money (97%) of it was created from debt. This means that when banks stop lending, the money vanishes. When the money vanishes, so do the stock markets, the sales and the jobs.
If the banks won't lend. Someone has to. Failure means a depression.
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26 rahere
..One can hardly imagine the UK underwriting the Zimbabwe Reserve Bank...
Sorry rahere, nothing would surprise me with this mob. I thought it bizarre that the UK declared financial war on Iceland, having said what a safe place it was for the punters life savings when questioned a few months ago. Then to immediately lend the same icelandic institutions in the UK 100M GBP, ringfenced or not. Erratic.
Or to provide money to banks in distress and expect them not to use it for what they judge best rather than what the treasury imagined they might use it for. No nothing would surprise me.
I have never seen how truely multinational banks could be supported by individual national reserves.
I am waiting for some institutions/banks/businesses to fail because I believe that is what the banks behaviour says is coming, then we might have some uplift. Could be the various governments desire to let no banks fail is a mistake but I guess it depends which ones fail and where.
Have the LB UK administarors got the money back which was piped across the Atlantic at the last minute.
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Gordon Brown came in with his grant of independence to the BoE from ministerial control. Possibly that arrangement has less relevance in the present climate. Could it be that if he does not rescind that arrangement he may also go out with it?
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43
No.
Yes.
Scared yet?
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ALL THIS IS JUST TOO LATE!
HAD UNCLE MERV DONE HIS JOB THIS LUNACY WOULD NOT BE NECESSARY.
HAD THE FAT CATS AT THE FSA DONE THEIR JOBS THIS LUNACY WOULD NOT BE NECESSARY.
I JUST DESPAIR ALL THESE IDIOTS GET PAID AT LEAST TEN TIMES THE AVERAGE SALARY,AND THEIR EXPENSE ACCOUNTS ARE MORE THAN MOST PEOPLE EARN.
WHY OH WHY???
TIME FOR AN ELECTION LETS HAVE A CLEAR OUT.
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#29 - JohnConstable
It is blindingly obvious isn't it? The banks are not passing on the benefit of lower interest rates to their customers and they are not adjusting LIBOR. They are watching their own backsides and more especially the hip pockets.
Presumably they are sticking to the letter of the agreement with HMG because they sure as hell are not honouring the spirit of it.
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During the first half of 2007, the Bank of England was happy to see LIBOR become disconnected from the policy rate, as it meant inflationary pressures could be squeezed by higher borrowing costs without a rise in the base rate. Recent evidence suggests it is going to take much more than 600bn for the Bank of England to regain control of the money markets, and hence inflation.
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Can we agree that a major financial adjustment is underway in this country? Can we further agree that this is happening because the British have over-indebted themselves over the last decade or so? If we can agree on this, why is it surprising that the next step isn't lending further zillions of non-existing Pounds to people who already have more debt than they can ever repay?
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What happens when the ALT.A market defaults. With £1 trillion tied up in secondary morgages , buy to let and remortgages' aren't we in for another banking crisis
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#60
Stuck shift key still?
I'm sure that Merv King will be flattered to know that he could have cured a world wide banking crisis had he only known...
At least we're not short of nutty fruit-cake and unlikely to be so for some time judging by some comments on this blog!
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#56
Good question.
How about giving more attention to un-sexy Credit Unions or other co-operative banks that are run for the benefit of the members rather than institutional shareholders?
A characteristic of the Thatcher years was the de-mutualisation of building societies and what a disaster that has been.
Personally, I think that we are heading for a revolution in which the control of money will be placed firmly back in the hands of the people until such time as we can once more place trust in a privately-run banking system.
I for one do not want my hard-earned dosh simply given over to the banks so that they can hoard it in order to pay off the looming debts that they haven't even admitted to yet. Lending and borrowing is what banks are supposed to do, not just borrowing from tax payers.
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Looks like we're near the bottom now. Take a look at http://tradeforce.blogspot.com/ for greater insight. Probably the most insightful blog concerning this whole crisis.
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Until it becomes clear just who has been left with the Lehman toxic stock of CDS's and people know whether AIG, Swiss Re and a number of monoline insurers can balance the books to an extent that allows them to survive it is going to stay like this.
We are in a classic prisoners dilemna as none of the banks know what the other banks hold in terms of toxic debts that can't be paid or hold insurance with AIG or the monolines that can't or won't be honoured.
Its sad but true that the banks are acting totally rationally in hoarding cash as they don't know how much they will need to survive. No one knows how much of the paper they have of CDS's or other financial instruments is worthless as the people that need to pay them can't pay.
One thing is certain there will be much more red ink on the Footsie and many more banks and insurers that go to the wall over the next few weeks.
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# 60 alexandercurzon
Please don't shout at us
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Robert, what with all this money the Government is pumping into the economy, what's the impact on long-term inflation? Doesn't an increase in money supply empirically relate to a rise in inflation?
Please keep up the excellent reporting. Not all of us are as dumb as Panorama seem to think. That was an abysmal programme this evening; a complete waste of sixty minutes. It could have been much better but they don't even trust the viewer to be able to watch Will Hutton for more than twenty seconds without the having to switch the camera to one that can pan out from behind a piece of scenery.
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The global markets are bigger than governments and it is ordinary taxpayers, national & local government employees and media personalities with insider information that must ultimately suffer a correction.
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"Has the Bank of England lost its power?"
It never had it in the way implied above.
Central banks do not set interest rates, the capital markets set interest rates. Central banks set a target which they defend by injecting or withdrawing liquidity. This target is usually near the market rate and it usually lags the market. When the MPC meets to vote on the official interest rate, it mostly meets to decide whether or not it goes with the market now or delays another month. Usually this does not matter as there is little divergence.
Now there is an obvious difference and the truth is revealed. The market says higher via a steepening in the long end of the yield curve, the Bank of England says lower and must defend its target with fresh liquidity. Cutting 50 bips against the grain of the market was a purely political move, the coordinated cut was jawboning to prevent a market crash. It probably had more global resonance than actual effect here.
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Well government controls at least two banks so if they order them to cut rates others will fallow.
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71 ralphcorderoy
I thought the Panarama programme was a bit superficial also.
An aside - It really annoys me when some expert says 'we all have spent/borrowed too much', excuse me, speak for yourself. If all the government rep can say is interest rates are lower now than when the last bumpy landing occurred it is pathetic. Interesting that the media are starting to layout their vision of Brownland - the banks the cowboys but Brown a useless sheriff, the FSA an incompetent deputy. Think that we will have that typecasting for some time. No boom and bust, eh. True enough - Just megaboom and megabust.
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Its all a bit irrelevant now that Brussels has ruled on the five year dividend ban. I'd like to see how the Treasury officials are going to get out of that one. Special opt out?
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Surely the banks are just being sensible until the effects of CDS's become apparent and they know just how much they are actually in debt. I always assumed that what we had fed them to date was only a small down payment on what they would eventually require.
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I cant use the words to describe whats happening like others as I am dislexic and find it difficult. However, I cannot understand why, just as the lorry crashes into the deer we just stand there staring at the headlights?
In order to produce phantom money the banks need to produce phantom balance books containing guarenteed deposits form the payments of the phantom loans they have given out.
A loan produces more phantom money that enables further loans based on the deposits(repayments) of those phantom loans from the tangible money supply.
The assets of which this phantom money was produced have tanked to the point that the people that gamble(invest) in assets realise that the phantom money is far in excess of the value of anything tangible including the reserves of the creditors.
Everyone knows that the only way out is to produce more phantom money and tangible repayments to carry on the circus. However, there are not that many people left willing, able or forced to borrow. The number is declining everyday from companies to Mr Smith and therefore, the only result that can happen is
1. We are forced to take out loans of phantom money
2. We dont take out these loans and live on tangible assets (cash, commodities for now)
Both actions result in the same answer, and raising or lowering interest rates will make no difference
The Banking system will collapse and the difference between letting the Banks themselves collapse or letting the level of Governments collective debt collapse their respective economies have exactly the same result.
Recession, Depression and a reorder of world economics to
1 save the world by reducing carbon emmisions
2 let people live in affordable housing
3 local communities forming living almost entirely on local produce as world corporations dissapear from every day life
Sorry about the spelling but the death of branding, mass marketing and globalism is worth making a few mistakes for.
I love markets - but remember your purchase could go off quicker than it sell by date!
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Re-working . . . .?
-What Scotty famous line from Star trek .?
It wasn't:
"The more they overlook the plumbing, the easier it is to sop up the drain.!" was it .?
Scotty (James Doohan) in 'The Search for Spock.'
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WHY has the abbey building society, with whom I have a mortgage account, only reduced its SVR by 0.15% to borrowers when many institutions have reduced theirs to 0.5% --Abbey boasts that they have won Euro Banking awards --but they arent helping ordinary customers like me who are struggling every month to make ends meet .
I have come off a fixed 2yr rate and have my house of 22 years up for sale to escape a big mortgage after a divorce and cancer.
I have enough money to pay my bills JUST
every month but am worried not just for myself but for many many people who are in the same boat or in even worse circumstances.
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Panorama was pathetic.
"People spending on cars and holidays."
"We are all to blame".
This was very, very insulting.
A lot of people have had no choice to rent and try and save for a house for years now. While the banks have hiked up house prices people have been suffering and delaying making families.
My parents have never ever gone on holiday in their lives.
Totally and utterly disgusted.
How about the billions lent on BTL ? Tax breaks for landlords anyone ?
How about the billions gone on dividends, asset sales and bonuses ? How much has not even been taxed ?
How about the billions made on our pensions ? Taxed by Brown and commission - never mind the stock trades being made.
How about the trillions lent out to ever hyped mortgages ? Where did 3x salary go ? Taxed by HMG.
How about the billions/trillions lent out to hedge funds ? Speculation on oil ? wheat ? copper ?
How about the billions sunk into student loans ?
How about the billions sunk into the PFI ?
How about speculation in share markets ? Mining shares ? Bank shares ? Soveriegn weath funds ?
How about the 10's of trillions some of the banks have outstanding on the derivative markets with practically meaningless capital reserves ? JP Morgan anyone ?
How can it be justified to have billions in city bonuses and million pound wages not to be taxed and then drop the 10% tax rate.
It stinks.
If the BBC doesn't stand up to the bar and take the chance of getting reform through investigative reporting then expect the same old same old in another 10-15 years time.
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Robert, the banks won't be passing on the base rate reductions because the rates of interest are too low, when factored against the risks they are taking , heading into a recession.
As you, and others rightly say just about every day, we all got used to borrowing too much money, too cheaply.
The price of money at the interest rate the banks can draw it in (LIBOR) won't drop until the gap with base rate has widened far enough to ensure interest income can sufficiently cover the cost of bad bebts.
Until that plays tough why don't the Govt get a Business Loan G'tee scheme / such like, going - i.e. if the Govt underwrite the debt on a borrower-by-borrower basis the banks would fall over each other to offer the credit. The banks do the admin, the businesses (with a resonable bsiness case) get the money and the Govt. covers the risk - which is what they're doing now anyway, but without bagging the benefits.
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So the libor rate hasn't moved despite the bail out this means that the bailout was the wrong answer.
Until libor returns to its historical average then the system is still broken.
Personally I believe the answer is the solution currently being undertaken at Northern Rock, stop lending, hike up rates, demand repayment from customers and pay of the staff.
We need to face facts the money markets are closed and will be for some time and the money borrowed from them must be repaid.
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81 There are no tax breaks for btl you pay tax on the profits of your business just like any other business does.
In fact btl is taxed very unfavourably, tax rental losses can't be set of against other income. This results in a situation were you have to pay tax on money that you haven't actually made.
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74 You do know that Northern Rock are only cutting their standard variable rate by .14%instead of .5%
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#84
No tax breaks ? What about VAT on repairs and improvements ?
Don't just say "other businesses" are the same. "Other businesses" don't effect first time buyers like BTL has.
BTL is a social and moral disgrace that has distorted house prices.
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#67 Strange but I seem to remember that the de-mutualisation occurred in the Blair years. In fact, I have several pieces of paper telling me what a lucky chap I was to receive some shares in various de-mutualised building societies !!
It all came about because I was paranoid about putting all my hard earned dosh in one bank, oops sorry, I mean building society savings account !! I know I am paranoid but was I sufficiently paranoid ??
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are we now becoming a third world country? (sorry but I can't remember the fancy new of term)?
Secrecy and highly questionable practices by politicians and banks, most people barely able to keep a roof over their heads, credit referencing in overdrive, the use of litigation to make a quick 'buck', rising unemployment, and the most affected by all this (ordinary hard working people) being left by the wayside.
Doesn't much sound like the country of gentlemen to me! A person's word used to be their bond-where did that go? Up the Swanee with the sense of responsibility!
The worst thing is we are powerless to do anything-anyone reading these blogs must be seeing comments being made now which are the same as those posted before.
How can we wipe the arrogant smiles of their greedy, self important faces? The electorate is getting more and more angry-recurring themes are-
The French revolution
Sweden
Balance sheets and total honesty required
An impending recession (at my lower station in life it seems as though we have been in recession for some time!)
T name but a few
It seems that the most precious commodity around at the moment is trust.
At what point will the world leaders listen?
I did ask a while ago if anyone knew if the monies promised globally had actually been given-maybe not-governments hoping that rhetoric alone will save them parting with the money. Maybe then they can pretend they have so they don't have to show gross mismanagement of their treasuries!
Common questions from the common people, but becoming increasingly strident.
All that money, and all the people in desperate need of financial support, but GB is not on their doorsteps with a lot of cash, is he?
Banks shouldn't be lending our moneyback to us-they should be compensating us by dropping mortgage rates so we keep our homes over our heads, and get our wages paid. Do any of those arrogant bankers and politicians live an increasingly frugal lifestyle? They have absolutely no idea of what the rest of us are going through!
I'd like to open an account and the BofE, but due to being unable to work following emergency brain surgery, I'm stuffed by the credit agencies, with my husband working incredibly long hours just to pay our bills-we have no credit cards either!
How can we, the people, take much more of this? Safeguarding jobs and homes by keeping the vultures and wolves (banks with their impersonal call centres) from our doors? I bet GB will be able to afford lots of new shinies at Christmas when a lot of us won't!
I guess we'll just blow our stacks on here and let them all ride rough shod over us as usual-what else can we do? We are never going to get the action we want-let alone an apology from anyone else (all credit to the F S A guy-more courage and backbone than any of the others).
Boilerplated-r u going to get taxed on your fruit cake? There seems to be an awful lot of it around? If I go to the bank I might get one I can ice for my Christmas cake!
Btw I don't really want a Robespierre -he was not a nice man at all. Just want some retribution and compensation for the total rubbish
Bash the bullies, spank the banks and pummel the politicians -at least then we'd feel like someone was doing something!
How
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doesn't that saying go -oh what a tangled web we weave, when first we practice to deceive-?
There must be a lot of cobwebs in London!
This will probably not get passed by the moderators as it may me deemed off topic!
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Tigerjayj,
The term you're looking for is 'banana republic', although as another poster mentions, this is not strictly true, as we don't even have bananas to fall back on.
You ask what happened to 'my word is my bond' - that's a little dated, old chap. Of course, the city's motto in 2008 is 'my word is my AAA+++ sub-prime mortgage-backed derivative*'
*conditions apply. The value of our word can go up as well as down.
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I have a question or two about this essay.
Robert, if we the average mutts living our average lives, decide we are tired of living on borrowed money, decide we just don't wish to do business with these people anymore, what then?
Won't that sort of leave the banks 'all dolled up with no place to go', as we say over here?
If they won't lend to one another, and if we won't borrow from them, they still have their operating expenses, yes? What do they do then? If we begin socking money away in savings accounts, they have to pay interest, and aren't those demand accounts liabilities on their books? I'm not being silly, but asking to see if I understand rightly. Perhaps someone else here could help me out with these questions.
****
I wonder if some part of the slowdown is that 'The Consumer' has sort of gone on strike, tired of paying for shoddy goods on borrowed money lent at usurious rates?
We really could use a new car here, not just because it would be cool to drive new wheels.
But for now, I'd much rather put money in my local mechanics hands to replace the rear oil seals on the Volvo (about $350 USD), and install new tires on the pickup truck (about $600) instead of assuming some 30K in debt over the life of a car loan to buy that new (or even newer) vehicle. I don't want to ever get in bed with these guys again, if I can avoid it.
Am I the only one who feels like this?
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Here is what Roubini thinks.
This makes me wish I had not opened up that Chinese
fortune cookie that said, "May you live in interesting times."
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#91, OldSouth, don't you realize that you are being
unpatriotic by not mortgaging your house to buy
cheap toys painted with lead for your kids?
The next thing that they will tell us is that "paying
taxes to fix this mess is patriotic."
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THE BILDERBERG GROUP
Laughing all the way to the bank and beyond.
The 2006 plan, stage 1 has been implemented...
Watch this space...riots in America next...US army on the streets against the constitution...but hey that's getting ripped up piece by piece everyday and the UK is not far behind...
Interesting times indeed!
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This crisis could not have been so badly handled by accident; it must be by design.
Brown's Falklands factor? £37bn handouts to Scottish banks to fix the Glenrothes result? Nationalisation? Bilderberg plan?
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#92 gunsandreligion
Thanks for the link!
At least Roubini seems to be a man with a plan.
Let's hope that our leaders only have the cajones to carry out such radical steps.
What's required cannot be undertaken by the faint hearted.
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4:
I mentioned the use of convertible preference shares back when b and b was trying to fund raise.
But this Gov't wishes to Nationalise our Banks, it does not wish to support Pension Funds or small Shareholders.
Quite frankly their actions show they couldn't care less what happens to our investments.
See Bradford and Bingley.
Hamfisted handling, that has cost our economy jobs, our customers choice, and our pension funds alot of money!
Remember it is easy to close a Bank, not so easy to start a new one.
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When will the Housebuilders start going bust?
At this rate Mr Peston would be talking about them to ?
Or does he have set priorities?
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@57 Glanafon
Diolch a chi!
Indeed, the risk is there, given the increasing irrelevance of the UN in thje current world - it's fast becoming a third-world club, and that's a potential disaster. The dispiriting thing is that the FSA states "we'll get tougher" and then immediately finds jobs for the boys, which we all know is the root of their failure in the first place. Poachers turned gamekeepers? Third star to the left and straight on till sunset...
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I'm in the process of negotiating new loan terms on a property with one of the major banks that have required capital injection from taxpayers for their survival.
Far from the rescue package and recent interest rate cut helping, my personal experience in just the last two weeks has seen the interest rate soar by 0.45 per cent (virtually wiping out the rate cut benefit), the arrangement fee increase by 0.25 per cent, the length of the loan term reduced by more than half, not to mention the additional conditions attached to the terms of the loan.
How on earth can this be justified as compliance with the government condition to channel funds to maintain mortgage and small business lending levels at competitive rates? It seems to me that the banks have got what they needed and have absolutely no intention of keeping any promises at all.
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#88 Neither were a few others that followed him (Robespierre) !!
#91 If everyone thought like you do, this crisis wouldn't have happened in the first place !! If everyone lived reasonably within their means and not try to make funny money out of conjured up situations, this crisis will also not have happened.
As it is, this is not the case. many people lived beyond their means and borrowed to fund that lifestyle. They spent on things that were once luxuries like foreign holidays and fancy gadgets that they have no real need of. Fancier cars, fancier homes and fancier furnishings have become a "need" instead of a "want" !! And successive governments of all stripes in the West have encouraged this because it made the economy "appear" to be growing !!
To fuel this profligacy, jumped-up salesmen and barrow boys invented ever fancier "products" out of thin air to "create" more funny money, again encouraged (or at the very least, not regulated) by these governments !!
Meanwhile, in the Far East, various countries have discovered that if they manufactured goods cheaper and fancier than they can be made in the West, those goods will sell like the proverbial hot cakes !! Much of their earnings are saved and/or reinvested in more profitable manufacturing !! Where governments are concerned, they bought up foreign companies, if they could, or foreign bonds and debt instruments, if they couldn't.
However, all "good" things must come to an end and this ended in the current crunch !!
Currently, the Far Easterners hold huge wads of not just US but European debts !! The great fear now is that if they drop all that debt into the market, the Western economies will be well and truly sunk !! If Western governments start to welch on their debts, they might just do that since they will have nothing to lose.
An apocryphal tale summarised this situation succinctly. During one of the Davos meetings, the Americans, already feeling the pinch, had delegate after delegate berate the Chinese for not letting their citizens consume more in order to "save" the global economy. Finally one Chinese delegate stood up to reply and he said, "It is very difficult to convince his fellow citizens to spend more because the Chinese like to save today's spending for tomorrow whereas the Americans like to spend tomorrow's savings today !"
This is exactly what happened !! And this is what caused all this mess now !! And it is not just the Americans that like to spend tomorrow's savings today !!
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@42 Strangely enough nothing, Ishkandar - whyever else do you think I chose them? Look for the deeper meaning - you're right so far, but what does that mean I was saying as a consequence? It brings out my real point, that the world is bigger than GB realises, and there are deeper relationships in the banking world, and flows in London, second only to NY, are going places he never expected if they are to work. The Lehman CDS auctions present a similar quandry, insofar as what's being auctioned isn't truly Lehman, but London. These guarantees may either come back to haunt us or place the UK at the top of the heap, ahead of NY, depending on whether they sort the business - at this point, it looks more like the former than the latter.
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With reference to Northern Rock. Why has a nationalised institution not reflected the the full 5% BOE Base rate cut to its standard SVR?
Whilst it is tax payers money that is keeping it afloat, it is these same people it is 'ripping off'.
Granted they are repaying the Govt faster than initially targeted, but given the current financial climate, NR should have decency to do the 'right thing' at this difficult time for ordinary mortgage holders.
Further, NR is lending new monies for new mortage business at ok rates, but not prepaired to let existing customers switch products. Wheres the logical sence in that?
Anyone comment?
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LIMBO OR PARALYSIS?
We appear to now be in a state of LIMBO.
It's like we are sleep walking along the railway line, eyes transfixed on the express train heading straight for us.
Is it that we are now just resigned to our fate?
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How can the bank of England possibly have thought dropping rates by 50 basis points would help reduce the rates banks lend at, when Northern Rock a bank funded directly by the Bank of England refused to drop it's rate and is now currently lending on it's standard variable rate 300 basis points above the bank of England target rate. Surely this in itself shows what a joke the current setup is. Another alternative would have been to force the Northern Rock to lower rates to 5% and supply the funding directly through Northern Rock. This would have the effect of forcing the banks to reduce rates, if they didn't new customers would come to Northern Rock which would in turn have the effect of shrinking the other banks business to a more scaleable level. Given this is Tax payer money Northern Rock would have a stringent criteria with which to lend money as well.
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@99 rahere
FSA?
They are part of the problem not the solution, the same as this the government!
Getting tougher, soft-touch days over? Back-slapping to replace the fondle?
If they are indeed an authority on financial services, they would have known what was happening and where it would lead. Lord Turner and his useless pack should be out on their ears.
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The most bizarre aspect of all this is the fact that the Governments own bank, Northern Rock didn't pass on the full 0.5% cut to it's customers. What chance is their of the other banks passing on the cut if the government doesn't lead by example?
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I had a dream last night, which probably turned out to have been written for the TV soap Dallas. In the dream the board of Lloyds TSB had resigned en masse for crimes against their shareholders, Vince Cable had gone to confession for confusing bankers with shareholders when discussing dividends, and Gordon Brown was not superman seeking to run MFI (sorry IMF) but a failed politician who had robbed pension funds, funded wars in Iraq and Afghanistan, scrapped the 10p tax rate, lost 25 million personal records, kept soldiers living in hovels and encouraged the populace to live for today because tomorrow will never come. Kind of like Groundhog Day. Thank goodness it was only a dream.
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If the Banks can continue to visit the watering hole that is the BoE, and borrow money at a rate that is presumably more attractive than LIBOR and considered less risky as these loans are UK Goverment backed.
What incentives do the Banks have to borrow from each other, if the central banks keep pumping money into the system?
Surely, now the big institutions have been stabalised they have to weaned off Central Bank support and forced to live in the real world with the rest of us?
Seems to me that this is a big game of chicken and the goverment moved first the Banks survive at the cost of tax payer and our slowing economy.
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I agreee with #21 but woudl go a lot further, if banks do not start to lend as then take away their licence to exist.
When the Swiss banks operating in New York were alleged with keeping holocaust funds that were not theirs, they were given an ultimatum make their offer serious of lose their licence.
Funny thing, they suddenly found another $1 billion to pay out within days!
Politicians appears to be so scared of the banks thy are now looking like a joke.
Banks don't care about their customers only about themsleves. Politicians are duty bound to do the right thing. The present support/bail out is doomed to failure and bound to set inflation through the roof in 2 years.
By then Bush will be gone and so will 'Prudence' Brown are we really saying this deal is the best we can deliver.
We must suspect the Bank of Englands independence has been compromised by Prudence behind the scenes for years and that is why what should have been done never was.
Prudence only realy knows how to spend and tax, there si othing over the last 11 years that suggests there was any knowledge to run a tea shop let alone a country!!
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# 61 threnodio
My point was that it seems very unfair for banks (and some building socs) to be able to get unsecured funds from the wholesale (LIBOR) market but when then lending on to families and businesses, they insist that the loans are secured against assets.
I also thought that if banks borrowings from the wholesale market were secured, then this would have the effect of pulling LIBOR more-or-less back into rough parity with the BBR, because the risk element would be much reduced.
Hopefully, the current turmoil will ultimately result in a total recasting of the banking system into a much fairer, ethical and responsible entity, in the widest context of those words.
Plus there are some very interesting developments on the web regarding 'social lending', that is person-to-person lending, which might eventually provide real competition for conventional banks for retail customers.
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Cutting what used to be known as bank rate when LIBOR rates remain high is just playing at King Canute in which the retail saver is punished yet again.
Markets are about greed and fear: we have had the greed and now we have the fear.
We are in for a nasty recession with a hard landing for the economy with millions unemployed. We just have to accept the reality and conserve our energies and resources for rebuilding after that horrible event.
All that we should be concentrating on at the moment is ensuring there is enough food in the country, enough fuel, sufficient clothing and footwear and everyone has a dry and warm place to lay their head at night.
Yes, it could easily get that bad!
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I cant believe Radio 1 news’ lead story this morning, concerning the rate at which Northern Rock repossesses properties (actually I probably can, considering Newsbeats tendency towards hyperbole), as twice the industry average.
Analysts have been saying since last year that the 125pc “Together” product range was ill conceived and that people would default. It has also been noted that people have been greedy and stupid, borrowing more than they could afford.
Surely this is the natural conclusion – Default and repossession? A simple way to avoid this situation would be to pay your mortgage? I’m sure some of those people who claimed compensation for being “wrongly” sold PPI wish theyd just kept it now.
Much was made of taxpayer money being loaned to NR to the tune of GBP 26bn. This week, much was made of the fact NR had paid back over half. Now Radio 1 isn’t happy with the methods employed to repay that money.
Can we not allow them a little good news? Its been a lot grimmer up North since this all started last September.
Actually, saying that, I think 50pc performance bonus for every member of staff is repugnant, so maybe we cant!
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Well, looking at the markets it seems that the city has taken David Cameron’s speech this morning very well indeed.
Could it be that we need a Conservative government to lower the LIBOR rate?’
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If the other banks are anything like Barclays which has somewhere in the region of $2.4 Trillion in exposure to CDS, then the fact that banks are hoarding money does make sense.
It is time that the whole shadow banking world of derivatives is brought into the open and all financial institutions are made to declare their outstanding obligations. My honest view is that the amounts are so huge that globally, all Govts. need to declare them null and void and get them written off in total, and also legislate to make sure that either they remain banned as investment vehicles or that they become highly regulated and brought out into public scrutiny. There is no other choice.
The small stock market bounces we are seeing won't last, hedge funds are still looking to dump vast amounts of stocks to convert into cash so as to shore up the margins demanded by the investment houses, with some hedge funds loosing around 45% value on the year to date, they are going into meltdown having to sell more and more simply to free up cash to keep going, which pushes down the markets more, which means they have to liquidate more assets. The real bottom of the market is still some way away, perhaps as much as 2-3 weeks or more.
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#87
I thought de-mutualisation, of building societies, started under Thatcher. Care to cite any evidence to the contrary?
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@94
the BILDERBERG GROUP!!!!!
are you Alex Jones or just a firm fan? i don't think that Dennis Healey (Bilderberg Group founder and member) strikes me as a man that wanted to plot to take over the world.
if there are to be riots on the streets in the US (and i hope not) then it won't be because the Bilderberg Group wished it to be so.
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If the Banks are repaying their Creditors with money from the State, who are the Creditors receiving the money from the Banks, and just where are they putting it?
Sterling deposits are held inn Sterling accounts with a British Bank or the British Branch of a Bank.
So which happy institution is calling in its loans and not relending ?
This institution needs a talking to !
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It wouldn't be Barclays, or HSBC would it?
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Pulling the rug out from under their competitors and giving the Gov't a windfall tax on the Shareholders of the other Banks.
Perhaps Santander is hoarding ?
Naughty naughty.
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#110 robertdmarshall
'Politicians are duty bound to do the right thing.'
Shurely shome mishtake!
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Our hapless Prime Minister, Gordon Brown, has decided to 'woo the bankers at HBOS, RBS, and Lloyds/TSB'.
Many people, myself included, would agree with Dr. Spooner were he to decide to use exactly the same expression.
TH
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Conspiracy theorists are out in force again.
Adam Weishaupts organization was never set up to take over the world, but to ennoble mankind, which looking at the state of the world it obviously failed to do so!
Unless widescreen tellies, dvd players and dishwashers count as ennoblement.
I think the credit crunch is largely due to dishonesty of mortgage brokers, cannibalistic opportunism amongst shortselling hedgefunds, Gov't incompetence around the world, add to that Gov't opportunism when they see a chance to 'windfall tax shareholders'.
No classical illuminated organization would stoop to mucking about with Banks.
After all their funds would be in Banks!
Now at this point your standard conspiracy theorist would happily say there could be a dog fight going on between different rival conspiracies.
But then that would mean that there would not be one controlling world gov't, which defines the first conspiracy theorists assumption.
I'm still waiting for my street lights to be fixed.
Obviously the Bilderbergs can't fix a streetlight, let alone control the world!
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I think I've said something along these lines this before.
Perhaps all lending should be direct with the Bank of England, cutting out the commercial banks.
Leave them the job of cash handling, which they can perhaps be trusted to get right.
The commercial Banks could still be an agent for the loan, a convenient door on the high-street, but the borrowers relationship is directly with the Bank of England. Always. Mortgage holders and credit card users would know where we stand then.
But I don't restrict this idea to retail customers. It would apply to the banks too if they need to borrow money. The wouldn't lend to each other. They would borrow from the Bank of England. Always. We're partially down that route already, just need to take the final step.
Its a radical long-term change, but hey presto, I've abolished LIBOR and conveniently disposed of the problem caused by inter-bank lending..
My few million quid consultancy, some honarary doctorates, a knighthood and a place on the panel of Dragons Den will be in the next post I presume...
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If the FSA handle bank regulation the way they handled my insurance dispute it will take them two years to decide they're not going to do anything.
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#122 - That had me spitting my tea over my monitor when I read that! :)
A much needed dose of laughter on an otherwise drab and gloomy day.
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Not being versed in who sets or how LIBOR rate is determined (and to be honest, I don't really care) but I would have thought LIBOR could be tied to Bank of England base rate. Let the clever financial guys argue what the LIBOR to BOE rate difference. Put a ceiling and floor on allowable fluctuation from BOE base rate. I guess pre-crisis historical data would be useful here.
The Banks can not be trusted to do anything right and are turning in to (dangerous) drama queens, but their petulance is having dire consequences on everyone and everything.
Oh, but hold on, the financial sector has proven there appears to be very few clever financial guy's. Give me the data and I'll sort it out.
I fear the financial sector is making everybody physically sick with their antics and worse still, becoming a standing (world-wide) joke, though nobody is laughing too much. They are still playing Russian Roulette with the economy and beggar thy neighbour and especially, stuff Joe Public, (Not related to Joe the Plumber).
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#114
The markets are up because (other than the feel good factor from the USA and Asia over night) they have realised that Cameron is only the oppression (pun intened...), they realise that had the Tories been in power not only would the market be 'dead-lining' but all the banks would have been allowed to go to the wall because that would be 'Free market' forces - the market being right - at work.
The market knows that it's been to a party for the last 25 years, that daylight has now come and that the clearing up has to be done - they know the last thing they need is to sip at the bile filed beer glasses.
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All this talk about the problems in the banking industry and how the bankster's foolishly used up all our money, reminds one of the biblical tale about the unwise virgins who foolishly used up all the oil in their lamps and then lost their way in the dark.
Since we learned that our bankster's also behaved like foolish virgins (albeit they are now wealthy ones) with our money, they too appear to be wandering around in the dark not knowing what to do or where to go.
Against that background and with so many unwise virgins running our banks it's no wonder things are not happening, too many of them have become too frightened to do anything.
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I really enjoyed this blog this morning. Insightful stuff. This is the first time in an age that the author hasn't started with "I can reveal that...."
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If I was HSBC I wouldnt lend to a busted flush business who had to go cap in hand to the government for funding (i.e. all other banks)!
The finance guys at these institutions havent got the brains they were born with and obviously the smarter ones all work at HSBC and Santander.
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Say what you like about Robespierre, but at least when the French get angry about something, their government stands up and takes note. You have to thank the man for that.
Was it Lenin who said, you can't make an omelette without breaking a few eggs?
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Can't we start new banks or co-operatives?
With all the taxpayers' money sloshing about, and the clear demand for credit, could we not build a new banking industry and let the old one drown?
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Might it not be that the banks' lack of trust in each other is because they do not know the extent of their counterparty's exposure to dodgy derivatives?
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there was a man on bbc24 just now i think is name was andrew fisher , give him the pm job. he is spot on in what he is saying. ha and where is mr preston this morning. he is slowly becoming a supperstar. hehe
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#134 - not while the politicians are always going to favour the status quo of the current banking elite. After all, they and their friends do well after leaving office and end up working for those same firms, look at Tony Blair.
I am in agreement, I would favour letting the current banks fail in a controlled manner if they are not capable of being solvent.
We also need to get rid of the EU rules on state aid, how stupid is it to allow a company to fail because it cannot be given state aid or because it might stifle competition, when we have the Govt. allow the Lloyds/HBOS merger which is state aid in all but name, and stifles competition. We must stop the free market stupidity and Govts. should be allowed to support and own certain parts of the economy that are key to the running of the nation. In that I include all the utilities, e.g. gas, water, telecomms and also transport in the form of rail, bus etc. The state aid rules only help some firms get richer at the expense of the consumers who cannot get state support for the essentials in life.
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#135, see my point at #115. There is still a huge blackhole in the form of derivatives exposure that banks are going to have to deal with, Barclays alone has an exposure of some $2.4 Trillion!
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The BBC. used to have "Action Network".
And I had a spot on that with a title, "Sovereignty Politics Taxation". In that Website, I posted many remarks about the Treasury and Politics, about expansion of the economy and the liquidity of the Banking system. And I mentioned the warnings of Mervyn King, Govenor of the BoE. about the debt that so many people were living on. And that is how we have arrived at todays situation. Now you need a complete change to the Economy and the processes of the Financial Structures.
The first action must be the removal of the Treasury and the Government from the duty of Taxation and Revenue Collection. Quite legally, all Taxpayers can have their income paid Off-Shore and avoid all demands from HMRC. for payment.
You cannot blame the Americans, no one forced the Banking community to take part in that dodgy trade. And if those working in the Investment Banks do not understand the words "Hedge Fund", they are in the wrong business.
What I then propose is that all Taxation is the responsibility of your Parish Council,
your Town Council and your County Council. In this fashion, it would be very difficult for anyone to avoid Taxation, but then if Taxation is to be the responsibility of the Taxpayer, and if the starting threshold is set at £500. each week, that takes care of the low paid and then the other end of the population, the Pensioners. The top and tail would end up not paying Taxation. And again, the waste could be taken out of the system. Mandy would get nothing like his £1.million pay-off or his two or three hundred thousand £Pounds, £300.000. pay and expences every year. And while on about pay for that lot there in Westminster and Whitehall, I make it only 172 MPs, would be needed if each English County was to elect just Four MPs to each County. Scotland Wales and N Ireland would do as they see fit.
You see, within a few short paragraphs, we have managed to reduce Taxation to less than 20% in the £Pound. I would like to see it down to just 10%. Why do we need all these semi-officials creeping about looking into your rubbish-bin and making sure you wash behind your ears. What a Bl****load of nonsense.
Enough for now, Kind Regards atflynn.co
"Norfolk's Mutineer"
(Much of the action network material from 2005, until this April, is now posted on www.atflynn.co.uk )
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Post 123 Supercalmdown,
You seem to be labouring under the false impression that anyone who talks about the bilderbergers/mega-rich and their goal of a one-World dictatorship(democratic one even!),is a "conspiracy theorist".
When the the players involved publicly state their intentions,then it`s hardly necessary to talk of "conspiracy" surely?
Still,who cares about anything other than getting their grubby little hands on as many crumbs from the overlords table?
"Let them eat cake"(especially that nutty variety)
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Hmmm. Market down a lot over the last couple of weeks - but the GBP billions that this represents has gone somewhere surely?
The same applies to other world stock markets surely. Massive sell-offs - cash being used for something?
Would it be the fund managers reverting to cash for T-bills / gilts?
Would it be investment banks (there should be a different name for these institutions other than 'banks') hedging their losses?
Maybe the system is 'sorting itself out' (no, maybe not)
Anyone with a bit of economics knowledge out there care to clarify / expand my thoughts, because at the moment, I'm getting more and more confused !!!
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re: post 103 by MrLogical
The trouble with the NR "virtual reality " style rescue is that it was predicated on the bank getting money in to pay down debt by forcing redemptions on mortgages and , in effect, "right-sizing" itself in relation to it's ability to get money to invest nowadays aka depositors income--- in the olden days it was previously called accessing Money Market finance.
Once it's deposits were 100% guaranteed (and given the crises emerging everywhere else) it could suck money in almost without end..BUT to protect the others like BandB, AandL (remember those soon to be gone grand old names of British thrift) Abbey, HBoS etc an 'artifical' ceiling on the total savings it could attract was at 1.5%
Like the HBOS and LloydsTSB 'solution' however, the Northern Rock Solution is an answer to a problem that has totally disappeared.
Propping either of them up to preserve 'confidence' has become pointless.. ... propping them up in itself may not be, but not for the reason of preserving confidence---- expecially now a large part of the rest of the industry is in the same place.
Having started Northern Rock's bailout for a political reason they now have West Yorkshire, Scottish and other heartland areas also wanting 'special treatment'...and the thing about special treatment is you can't give it to everyone, or it isn't 'special' anymore.
The chances of returning Northern Rock to "the market' via a float or private buyer are nil, I feel---certainly not at a profit...and certainly not without continuing to guarantee deposits etc into and after the 'privatisation' or 'sale'.
Calling all this a "triumph" is bizarre.... and re the main point of the article, passing on a question,.... can anyone tell me why the apparent unshakeable confidence exactly, that lowering interest rates will 'work' as seems to be expected ...and not 'fail to work'; as happened in Japan where they went all the way down to zero and below?
Finally why do people keep referring to what "they did wrong in the 30's" and how well we now have learned those lessons... Doing that isn't only a possible re-fighting of the last war by Generals ill prepared for the next one; in our internet driven, globalised, just-in-time, low-redundancy-systems, 21st century world...it's like preparing for the 21st century 'Totally integrated Battlespace' war by relying completely on the Battle of Culloden for instruction.
What we need is joined up thinking leading to joined up action.....not off-the-cuff first- pass panic-ing, passed off as well thought through planning; that once done CANNOT be re-visited in case everyone begins (rightly) questioning it's relavance..... Part of joined up thinking being to realise when the former ' brilliant solution' is no longer applicable and may now in fact be making things worse.
Northern Rock and HBoS and LloydsTSB both fall into that category to my mind----- Anyway------Glad I got that lot of my chest, ------ Now I can concentrate on seeing if the rowing boat that has been battling across the North Sea from Iceland to Amsterdam with our Kaupthing Edge money in it's padlocked chests has arrived at ING---or been sunk en route...
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It's obvious the Brown is using the stockmarket as a barometer, hoping and hoping (as he does) so, given its instability, we'll be waiting a VERY long time for any good to come of anything else he's likely to do, too long of course..
I say shut it down for a month or more. As the MD of a 40,000 strong IT firm said on Today this morning, the value of company shares doesn't matter, what matters is getting on with the work.
As for trading on currencies - just ban it. Who needs it anyway? It's all just paper, as we now know.
GC
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# 1O1
It's not a credible argument if one remembers that there is recession with or without (mainly with) financial troubles in every 8-1O years at an average since 1825...
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I`ve just had a comment referred to the moderators for mentioning the World Trade Organisation`s approval of certain products.
How bizarre.
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# 111
Social lending is certainly interesting. Kaldor raised a very similar scenario in this debate with Friedman in the 197O, in which Friedman was clearly shown as a charlatan (Kaldor's point was then that if the central bank wants to hold back the money supply at Christmas time, then the market will create alternatives).
It would also be an interesting development if banks were allowed to lend only against collateral or against securities that emerged from business transactions and involve at least three parties. The French operated a system like this in the 196Os and it was quite successful.
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# 124
The system has existed in Eastern Europe, it's called one-tier banking system and to be quite honest, it worked pretty well (it was not the cause of the problems there). But it had to go for ideological reasons: competition and efficient allocation of resources... It sounds painfully ridiculous.
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To all conspiracy theorists (to which I might partially add myself to this group).
Again, I must advise you all to read the posts by 'purpleDogzzz'
The latest posts have been mainly on Nick Robinson's blog titled 'It's the real economy, stupid'
This guys a one man guerilla freedom fighter armed only with a keyboard. He's funny as well.
It would be great to meet him (or her?)
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#140
Thanks formthat and yes, when someone states exactly what their purpose is then it can't simply be dismissed as any type of conspiracy theory.
Indeed it then becomes conspiacy fact
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# 141
Sorry for stating the obvious, but only new issuance create additional capital, all the rest are just redistributed. Stock markets do not do allocation of resources (except for new issuance), but set the rules of the game for hostile takeovers, hence, efficiently or not, control over management - but only in capital market based economies, and certainly not in most continental European ones (or Far Eastern ones).
The current troubles main characteristic is not simply the redistribution of existing assets, but redistribution of losses on assets, which makes the common interests irrelevant.
One of the most interesting aspects of all rescue plans so far that none attempted to change the hierarchy of values and hence behaviours. All of the rescue plans are therefore supports to the status quo.
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So we are hoping to borrow our way out of a borrowing problem. Hmm, like drinking a way out of drinking problem?
and another thing . .
Brown's overarching and crystal clear message to the city and the general public has been "prudence" and "no return to boom and bust" so what about those who actually believed the then chancellor and decided not to save?
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I agree with profoundbigbear's comment - a coupon of 8% on LTSB Pref Stk would be attractive to private investors.
Also, why hasn't the FSA announced an enquiry into LTSB's share price movement between 6th and 13 October when leaks based on inside information led to a fall of 40% in the market price? As a result existing shareholders are heavily diluted at a depressed 173.3p under the government sponsored capital raising .
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The primary basis of the taxpayer bailing out of the banks was that they would recommence lending to business and the public.
If they do not do that the government must take away their licences to trade. It really is that simple.
It was not the taxpayer who chose to trade speculative derivitive instruments and £trillions promised can only have come with the conditions that the banks start to operate again.
If they don't they need to know the consequences, its a natural quid pro quo.
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The BOE [Start Wreck , warp factor to infini8ty and beyond] will be sending its short memo[ry] to the Prime Minister
"Beam us up Scotty "the shields are down
This hole farce has the makings of Toy Story 111 ,nothing like it since the woodentops
Cameron could play Woody ,Gordon could play Buzt[to infinity and beyond] lightyear and Mandel could play MPerrorZorg[or OBE WON and the liberal leader whoever he is now can play look Skywalker
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Just heard some of Feedback on Radio 4... I had no idea that RP had claimed that his report of 7th October had influenced the markets HIMSELF!!! I had assumed this was just everyone elses opinion -
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Can't believe that George Osborne's remedy for solving the financial crisis on the Today programme this morning.
1. Regulation of the financial markets.
2. Ensuring that we have a more balanced economy to include a manufactiuring base.
Has he conveniently forgotten how Thatcher and her merry band of men deregulated the financial markets and totally destroyed our manufacturing base during the 80s??? What I found even more disturbing was the interviewer's lack of questioning on this issue.
Ref comments 91 and 101-with you all the way.
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"Strange as it may seem, HSBC (a Bermudan bank) "
Bermudan?
It's Hong Kong and Shanghai Banking Corporation.
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Hey Pesto - where's today's blog?
I can't be expected to go a day without a fix.....
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Gullible Troubles
The city seems to be a mirrored device that con sumes a quart out of an investerrrs pint [pension]pot , claiming to securitize it for a rainy day and turns an Englishmaaans home into his saaand caaastle before the tide comes in, whilst the FSA did the King Canute rediscocovering the high tide bit that left homeowners like jellyfish floating in a sea of debt fending off the loan sharks
The cold fusion experiment to connect the big bid up house price end of the pyramid with the little AAA's off balance sheet reamortizing end has failed .
Wages will now shrink faster than the outstanding Debt relativity
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Credit, too much of it that is, is the reason for the current financial crisis. There's no reason to look any further than the effect uncontrolled, unlimited credit would have on any society. It wasn't always like this, at one time there were strict credit controls, the price of everything was determined by what people could afford, not by what they could borrow. There is only one winner in a credit driven society, the banks. The system of credit the banks have lived off for quite some time is elegant in its design and too complicated to try to explain here, not only has it fed them for centuries, it has a built-in safety net designed to force Governments to come to their aid in the event they overstep the mark. Banks do not create wealth, nor any other financial institution for that matter, the people who make things create all the real wealth, financial institutions only manipulate the wealth produced by others. A shakeup of the financial systems around the world is long overdue. While the 'poor bankers' are on their knees Governments around the world should turn this crisis into an opportunity and drastically reform the banking system.
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New Yorks just opened, and what a shock, market down almost 200 points in the first few minutes. Another roller coaster day, down, up, down, and probably close down today.
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#158. I think if the interviewer had asked such questions then the first point would have been that the UK was bankrupt in 1979, living off handouts from the IMF. The top rate of tax was 83% and the basic rate of tax was 35%. We had the closed shop, wild-cat strikes, secondary picketing and nationalised industries that could neither get the trains to run on time (maybe not even now, but certainly not then) and a car industry that was on its knees. The Russians had tanks in Eastern Europe and the threat of war hung over us like a black cloud waiting to burst. Inflation and interest rates were lottery numbers. The public purse was empty.
I do remember the 1970s. I also remember the unemployment of the 1980s. But don't look back at the 1970s with any sense of loving.
That's just plain daft.
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#160 - don't worry,
RB will read it like he'd just committed it to memory on BBC's 'pm at 5pm' on radio 4 ..
GC
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The volatility of the world's financial markets is just another reason why the financial system needs to be reformed. I don't want to state the obvious, but stocks and shares represent money provided to assist companies. It was never intended that stock exchanges would become playgrounds for gamblers. The only reason the stock market is bouncing around is that today’s technology allows shares to be traded by the minute. Gangs of gamblers jumping in when stocks drop and out again, even for the slightest profit. Perhaps a system of punitive taxation on traded stock profits that reduces depending on the length of time the stocks are held is the answer. At least that would reduce the volatility of the marketplace and provide some financial stability for the hard working companies whose stocks are traded.
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#129 You are totally wrong. Yes Thatcher did support big bang but the Conservatives had reservations about how Gordon Brown took away responsibilities from the Bank of England and set up the FSA as far back as 1997.
Many like yourself (Labour members?) seem to be trying to convince people that the Tories have policies that they simply don't have.
I think we can take it that David Cameron is the voice of the Conservative Party in the UK and when he says he has plans to ensure greater responsibility in banks, less rewards for high risk takers in finance and a greater understanding of the value of money he means it!
Also you must stop trying to put a 1980's Conservative Party in office in 2008. This would not be the case. The party in the 1980's was the way it was because that was what was required at the time.
If you listen to Cameron and Osbourne you will hear that they have fresh new ideas and policies that are relevant to the world today.
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Robert,
An academic economic reference for you when you come to write the book, regarding two (of the many reasons) why lending may not be as fluid as expected by the Government.
a) Forthcoming Regulation
Nobody yet knows what regulation will be introduced by the FSA etc; and therefore nobody wishes to put themselves in a position whereby any lending now might lead to future difficulty in meeting the future rules on capital adequacy etc
b) Forthcoming Recession
Borrowers are expected to be hit under the expected Recession and therefore future 'riskiness' is a bit of an unknown. Therefore the previous level of risky lending might be a bit tighter than the Government thinks it should be.
Full article from Wharton at U Penn here
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2072
cheers
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Check this out:
http://uk.youtube.com/watch?v=b8EBOv9MnnM
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Re 164
No denying the country was in a mess at the end of the 1970s, and am certainly not looking back with longing to those days! Having said that, it has to be stated that part of the reason that British industry was in such a mess was in no part the responsibility of bad management as it was the fault of the unions. Can't blame the present mess on the unions this time though.
Just love the way that a past government-no matter what the so called colour-blames the present one and totally forgets the part they played when they were in power. If anyone believes the Cameron and the Tories would have done/will do any better at managing the economy, well that is plain daft!
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No. 78, You got it about right and described it well. You are less dyslexic than many of the 'intelligent' but hysterical posters I have read these past two weeks
No.100. Yes. Are you really suprised?
Mr Peston. You are an intelligent man, currently on the pulse. Within the limitations of your position, is there any way I can read what you REALLY think about this?
I have read your blog/comments with interest from here in Czech Rep (relative safe zone) and have determined that your views are insightful, but tempered by your position. Constrained in the same way as the investment bank risk managers....
I would be interested in reading raw unfettered comment from you Mr Peston under whaterver guise .
To Number 169.
That is such a weak video. The man has to read from notes continually - great charisma. Clearly the next leader. hah.
The PM is here to stay until the tory party nominate Boris. End of story.
TO EVERYONE.... Please please remember, this crisis is a USA created problem - In the USA it is LEGAL and NORMAL for people to walk away from their homes when in debt. This is NOT the case in Europe.
In the EU you are prosecuted in court for mortage default.
Sorry for shouting. But get this right.. US Sub-Prime is the cause, nothing else, Failure of institutions to understand the multi-level mortgage packages they were buying and the LOCAL LEGISLATION RESTRICTIONS is why the world is where it is at.
I trade commercially across EU borders and I fall foul of the weirdest local regs.
So, happy recession everyone and raise a glass to US ideal of land of the free.. Its true.. for them.
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#164
We also had all but full employment (well compared to any time since), everyone who wanted a 'house' had a place to live that they could call home and what is more we still had something that was called society...
Yes the 1970s had faults and problems but it was a very much better place to live that Thatchers Britain.
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Mr P
Do you think you are helping the situation? One may argue that you are doing your job... but sometimes the needs of the many out weigh the needs of the few
Sort your life out and get real.
Life, especially in the UK, is full of too much spin and info that is not factually correct !
Am sure you dont think you will be out of a job at the end of this - and it shows !
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#167
Trying to re-write history again I see, but what do we expect from a Tory supporter, heck your leader can't even remember that he was an adviser to the last Tory PM - says it all...
The Tories have no new policies, three weeks ago there was no economic crisis, they wanted even less regulation, they wanted to remove ALL regulation from mortgages - the Libs were correct to call Cameron a Chameleon, in the time he has been the Tory leader he has changed colour at ever change in world events.
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#173
More likely, it's the 'few' who don't like the rest of us knowing what is going on - what they are doing and how they are doing it...
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maroon3 apologies for the comments at bottom of previous posting I got a little carried away!
Following link is up to date. HMRC are going after everybody who did not own up during the amnesty period when pay back of the tax owed without prosecution was possible. This followed on from the German authorities who paid bribes for customer lists from bank employees in Switzerland and Liechtenstein. I think HMRC customs threatened Banks with UK registered and offshore businesses in order to cough up the details.
http://www.telegraph.co.uk/finance/personalfinance/3143433/Four-celebrities-in-tax-cheat-probe.html
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The bank of england is one of the reasons we are in this crisis. Raising intrest rates was the most stupid thing to do. They were thinking of old inflation,comparable to the head chef of the titanic worrying about the next days menu while the water rises. It stems from having too many academics and not enough business advisors.Most only look at history and have no imagination. The next big world problem stemming from rising intrest rates will be Deflation,a much more dangerous situation.It is already starting with house prices and equity also commodities.
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mon then can you email me and let me know why my post removed?
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Robert - your blog is so important to the public. Such vital and intelligent analysis. Nowhere else can one find this level of concise detail and honesty. Thank you so much.
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Maybe if people such as Robert Peston tried to look for some positive news somewhere else instead of the economy, you might find quite a lot in the world that is still okay.
It might also be worth considering the idea that if people such as Robert and his media colleagues refrained from talking things down all the time, inciting unnecessary hysteria, then we may all be in a better position than they say we are now!
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If only Gordon had not sold off the gold we would have being in a much better position
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