HBOS: Strong men will weep
If you're of a nervous disposition don't turn to page 20 of HBOS's 2008 results, published early this morning.
These are the last ever financial results for HBOS as a discrete entity: it was recently swallowed by Lloyds - which now has a bad case of indigestion.
The horror story that's told under the heading "corporate" from page 20 onwards is of a bank that appears to have had a death wish.
For all the criticism of the alleged excessive risks taken by HBOS's mortgage department - as per the charges levelled at the bank by its former head of regulatory risk, Paul Moore - the most reckless lending and investments were made by the bit of the bank that provides services to companies.
This corporate division generated losses of £6.8bn in 2008 from loans and advances to businesses of £116bn.
It has had to write off an average of 47% of those loans in this area that have gone bad. Almost 12% of all its corporate loans are now classified as impaired or damaged. And as a percentage of the total corporate lending book, the impairment charge is just under 6%.
On the basis of those statistics, HBOS appears to have left a big bag of money open on the pavement with a sign saying "borrow what you want".
HBOS was too exposed to the property sector; it was too exposed to housebuilders; it was too involved in relatively low-quality private equity; and it made the classic mistake of doing what bankers used to call "pig-on-pork", or taking equity stakes in creditor companies.
As I've said before, it is amazing that the Financial Services Authority, the City watchdog, didn't feel it was appropriate to rein in HBOS's corporate lending department.
In particular, it's odd that the FSA didn't apparently appreciate that the ability of a lender to properly assess credit risk can be dangerously damaged when that lender thinks it's going to make massive returns on equity investments (the notorious "pig-on-pork").
So poor old Lloyds now owns what can be seen as one of the worst-quality loan books on the planet.
Which means that the big message of HBOS's shockingly bad results is that Lloyds lacks the resources to cope with potential future losses.
That's why Lloyds has been in talks with the Treasury on a deal that would see taxpayers taking on the liability for much of the future losses on around £250bn of loans and investments.
These insured assets would include almost the whole of HBOS's corporate loan book, a load of HBOS's mortgages (where the impairment charge has also risen significantly) and a bunch of silly investments made by HBOS's treasury operation.
This insurance deal would be the equivalent of the protection taxpayers yesterday gave to Royal Bank of Scotland - though on terms that may look worse for Lloyds, since HBOS's portfolio of loans to companies is viewed by the government as exceptionally high risk.
To state the obvious but frightening point, HBOS's £10.8bn overall loss was generated last year, before the recession really bit on the ability of personal and corporate customers to keep up the payments.
As of last night, it looked as though agreement was near - which mattered, since the City was aware that both sides had set a deadline of this morning to announce the deal.
However, it's almost elevenses and no deal has been announced.
Is this a matter of grave concern? Probably not.
As I understand it, there is no major difference of principle between Lloyds and the Treasury on the bailout terms.
There's been a technical hitch, the equivalent of what goes wrong when you type the wrong numbers into a mathematical formula.
The point is that the Treasury and its advisers have constructed a model that generates a price for the insurance that we as taxpayers are selling to the banks on the basis of various different measures of the quality of assets to be insured.
So if the data that goes into the model isn't quite right, the wrong answer will be generated on material issues like how much of the loss on loans should stay with Lloyds' current shareholders and how much Lloyds should pay for insurance in the form of new non-voting shares.
The glitch can be solved. And it will be solved, though possibly not till Monday or so.
Because what HBOS's stupendous losses demonstrate is that Lloyds will not thrive again without a fairly substantial financial prop being provided by taxpayers, by you and me.
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I tell you what Robert your blog is making me even gloomier.
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Zombie banks, and a zombie economy.
What a mess.
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Yet the government want banks to lend to businesses! Madness. If a business needs money they are broke already and a loan is just madness cos you will never get it back. Hang on it's a bit like Brown lending to banks........... except it's US who will never get it back!
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The next question Robert is: are you responsible for all of this?
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Why is Crash Gordon's mate Sir Victor Blank still in charge? It is abundantly clear that the stitch up between Blank and Brown last year, which saw the well run Lloyds TSB takeover the basket case HBOS, was a monumentally bad deal for the existing shareholders of LTSB.
Blank must go and go quickly! (With Crash not far behind).
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What alarms me about all of this is the simply lack of any checking having occurred
Will we have to wait for the 30 year rule before we discover whether Lloyds was a willing partner or the whole of HBOS was foisted on them by the government because they had already taken on NR and B&B?
If it is possible to actually get these kinds of figures out in such a sort time, are we to believe that the former management of both RBS and HBOS were completely unaware of the risks that their strategies and operations were actually taking?
With the scale of these "risks" does this not hammer further nails into the coffin of the FSA?
If we also take this along with the evidence from the Governor of the Bank of England to the Treasury committee yesterday then there does appear to be a huge pile of compost appearing in Downing Street.
At what point will someone from the government actually take accountability?
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How could Lloyds have possibly done any real kind of due diligence on HBOS before making a takeover offer?
It seems that GB gave this deal a nod and a wink to the Parties with guarrantees of Knighthoods etc and other goodies and no one even bothered to "Look under the bonnet"
These people are amoral and worse than used car salesmen at their best. Why does Brown hate the people of this Country so much, to wreck it in the way he has?
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Trust me on this Robert. I worked with two of HBOS's much senior executives for several years in the late 80s early 90s and I can't tell you what a kicking was given to me when I dared to suggest that the Scottish property marked was about to tank as had already happened in England. overnight I lost my senior management status and got treated like a pariah. I had only made the observation because I hoped that it would save someone I felt had also become a friend (we had a client/consultant relationship) from making a big financial mistake (trading up at the top of the market. What a fool I was. Neither of these two guys are at HBOS anymore. But I certainly hope that they will read this post and recognise that I am talking about them. HBOS was an accident long in the making.
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Gordon Brown broke Lloyds TSB. Certainly it was "helpful" of them to oblige and buy a dying bank and avoid yet another part-nationalisation. But they were half the size. The government clearly had no idea how bad things were at HBOS and how diluted Lloyds TSB's quality would be. All his wannabe-powerbroking achieved was a breaking down of firewalls and further contagion.
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Surely, these corporate losses can only get worse. This bank is effectively dead.
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Stupendous incompetence.
What bothers me is the insurance scheme.
As soon as the banks have taken out the insurance, they can forget about recovering the debts. The Taxpayer will pay it. The Banks simply won't care now. They'll write it off a.s.a.p so that the State has the burden of what seems to be at least another half-a-trillion quid. It's the easy way out for them. The commercial world always takes the easy way out. Every time. Always. Without fail. It's the way they think...
So I'd rather the Bank of England or a new State Bank took the debts onto their books and actively tried to recover the debt. They can restructure the debt and help those struggling by all means, but the lesson of life is that if you borrow money you should expect to have to pay it back and you'll be hounded until you do...
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Oh well
Now the bad news is out, at least the Government will put guarantees in place and the markets can now move on.
Yes there is more immense debt on the Government and Taxpayer's 'balance sheet', but hey, life has to go on and this is the way those that are the 'powers that be' have chosen to go.
Inevitably, there will be some more pain to come, because Government, Treasury, BOE inactivityand Bank unwillingness to 'fess up' sooner, now mean that property portfolio's have crashed somewhat in value.
We need to move on, Lloyds price will rise again, provided that banking activity now resumes as normally as it can and no more huge losses are announced in 2009.
Perhaps now is also the time to address the need to break out the old building societies from the banks and revert to traditional profitable mutual societies, owned and run by those that understand the property markets.
Banks can be left to the 'rocket scientists'
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Again StrongholdBarricades slips through to post low-level dissatisfaction whilst the rest sit in moderator purgatory. Infiltrator in our midst, albeit with not particularly pro the status quo. Confused
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This comment was removed because the moderators found it broke the House Rules.
OK, sure thing in a modern market economy a thriving banking system is required.....but....
- would it not have /STILL BE been cheaper for the Government simply to have nationalized it and whiped out all the private shareholders.
- also just because all deposits are guaranteed up to ??? why don't the banks default on larger and especially larger foreign loans/ deposits ??? (hardly desirable but surely preferable to taxpayers footing the bill forever and a day.
- why does RP and others persistently perpetuate the myth that the senior management and directors of banks and city firms are so talented and deserve bonuses and huge rewards - clearly they are any but talented. It is difficult to know how they could have run their businesses any worse. Banking is NOT rocket science.
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Gordon Brown, is it correct
to bury the British taxpayer under a mountain of debt?
Gordon Brown, do you regret
luring the British consumer into a life of debt?
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"and it made the classic mistake of doing what bankers used to call "pig-on-pork", or taking equity stakes in creditor companies."
Hmm... I wonder who else has just done that in a massive way?
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McKinsey
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So the house of cards is still falling all be it with a gov safety net!
So we will not see and end to this until we know the depth of the damage with with this will be at least another 12 months probably 24.
In the words of our dear departed freddie 'and another one down another one bites the dust'
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just a thought - there is a lot riding on this formula - what are the chances of them getting it right this time?
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As an ex HBOS employee (I got out the week the takeover was announced - very lucky!), I'm shocked out how bad these results are...and how badly the bank has clearly been run...
What with the ruckus over Sir Fred's pension, someone else is being overlooked! I understand that Andy Hornby, the ex CEO of HBOS who 'stood down' is still employed as a 'consultant' by Lloyds to the tune of £700,000 per year!!
Helloooooo...no offence (actually please take offence Andy, you directly put my livelihood at stake!) but I think it's fair to say that this man should be considered a liability, and as we (the tax payer) own 43%, and by the sounds of it are going to be insuring 100's of Billions of £'s of his bad debt can we please apply a bit of pressure and stop paying these fools obscene amounts of money!
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It is quite apparent then that HBOS lent money to businesses which every other bank had refused.
Also Llyods' management in their greed to take over HBOS purchased a pig in a poke from Mr. Brown.
It doesn't look very good, does it?
I think some resignations are in order in both the City and Whitehall.
What on earth made these foolish people think they were being clever? Is there something in the water? Or is it air pollution?
I hope they all have big pots in which to hold their pensions otherwise they might spill some money on the peasants and that will never do!
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I have a friend who is a very senior banker in London who was telling me that the government are placing a great deal pressure (as the major shareholders) that the assets right down valuations are greater than what they should be thus making the losses / position of the banks look much worse this year. Why would that be? Could it be that when they revalue the assets next year (I presume the bank accounts will be published at a similar time of year i.e. just before the election??) they will be valued at much higher ration and thus make it look to the general public that the government can say “look how we’ve improved the banking position sorry the World”!!!!
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Think we need to get David Blain over here on that plinth to magic way these banks bankers and bonuses. That would be worth while art.
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just seeing if I too can slip past the moderator pphssst...
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This comment was removed because the moderators found it broke the House Rules.
Frankly I am not surprised by this mess. My wife worked at IMRO then at the FSA after its creation in one of its high risk monitoring teams.
The FSA had a practice of not asking hard questions, making visits or looking into the firms being monitored. Most monitoring was desk based apparently and based on reviewing information that companies sent in.
The FSA had, well known to its staff, a policy of not recruiting the best and brightest as it feared they would stay a couple of years, get trained, learn the process and then leave for the private sector. The result was a lack of relevant expertise in accounting, banking and auditing across the organisation.
My wife left out of frustration.
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A trillion minutes ago is 31,688 years ago, close to the beginning of human history (Source. In other words, if you spent a dollar per minute, you could barely spend a trillion dollars during all of known human history
I wanted to try and get a perspective on these huge numbers and google came up with the above. So a pound is worth about $1.40 ergo a pound a minute could NOT be spent in 40% longer time than humans have existed on earth!
We are now talking about a UK debt of TWO Trillion pounds. Twice the number of minutes of £1 spend in the whole of human existence.
Must give it to Labour, some achievement in 11 years or so.
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Robert, good morning
According to Gillian Tett in the Ft this morning, it would appear that the 'toxic assets' or 'debts' announced by the banks might benefit from public auctions of the CDO ABS.
Read the article, an interesting point of view.
http://www.ft.com/cms/s/0/2970532c-0421-11de-845b-000077b07658.html
at least the Banks might finally get closure on the debts issue.
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Of the four principle UK clearers, RBS and Lloyds are now Zombie Banks - dead but still walking with taxpayer social security payments. HSBC has been a little off-colour but is relatively healthy. An interesting case is Barclays.
Put into intensive care by the markets it has been pronounced as still alive (if not well).
Question: does Barclays think it is a strong position in any negotiations with HMG concerning its own toxicity?
Recent noises from them suggest that they think so, but how much of this is posturing and bluff before the game? The reckoning for Barclays may soon arrive. The ducking and diving over the past year seems to have served them well, but if the HMG team are of any use at all, we shall soon see how much toxicity they have concealed.
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One can only presume that Mr Daniels was in no way expecting these figures.
On the Takeover document issued to Lloyds TSB shareholders he explained that whilest no dividend, as such would be paid this year, it was the intention of The Board to pay this in the form of shares.
Also the first action would be to repay the Government Preference Shares which cause this restriction.
Now call me picky if you wish, but won't a profit be needed first.
And the price of insuring these toxic 'assets' looks like it is going to swallow much of/all of that, if in fact a profit can be made in this rescession year.
And yet around 94% of Lloyds TSB Shareholders voted in favour of this deal.
Leemings comes to mind.
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Even Graham Taylor never had results this embarrassing !
But at least he resigned
When will Brown & Darling do the decent thing.
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discrete not discreet (sadly anything but!)
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Is there any scope for shareholders or the taxpayer who has to provide the baillout, sueing the incompetent directors of these banks for negligence and taking away their ludicrously overgenerous pensions?
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Why no riots?
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Robert wrote:
"the worst-quality loan books on the planet"
How do you know?
Let's face facts. No bank in the World keeps accounts in a way that can ever let us know what is going on. For generations the method of producing accounts has been to obscure the facts. This has led the management of banks to adopt the attitude of 'stick their heads in the sand and hope it goes away'.
It is quite probable than when the history of this gigantic financial collapse is written that blame will be placed upon the methods of accounting and supervision that let the managements get away with hiding the facts - even encouraged it. Please start heaping blame upon the accounting profession and legislatures for knowingly allowing this to continue and not qualifying the accounts of the banks.
As an aside my guess is also that the move to mark-to-market will be seen as one of the causes of the collapse.
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I have always banked with Lloyd's, and from my own personal view they have always come across as a quite a sensible bank. But surely buying HBOS is one gift horse that they should of looked in the mouth at.
The shareholders in Lloyd's must be absolutely livid. Does anyone buy a business without looking at the books first ?
I know Mr Brown loves his country, but I think we all know by now that when the name 'Scotland' is attached to any financial institution at the moment it means it's time to tip your hat and say good day to any business dealings with that company. God, what have Lloyd's done ?
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“These are the last ever financial results for HBOS as a discreet entity: “
It was so discreet it was almost retiring!
Perhaps the credit crunch is due to using discreet numbers for accounting rather than discrete ones?
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It really makes one wonder when they're going to stop drip-feeding bad news to the markets. Is this the last of it? Probably not.
And on a slightly pedantic point Robert, HBOS was a 'discrete' entity, not a 'discreet' one.
They've plainly shown no discretion whatsoever.
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If the government is going to take on the risk for the HBOS bad debt anyway, wouldn't it have made more sense to rescue HBOS directly rather than saddling Lloyds with it?
This was a deal that was encouraged (at least) by the PM himself and has clearly poisoned Lloyds, which was a relatively healthy bank before. This matters, because it might potentially be grounds for Lloyds shareholders to sue.
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Actually my comment is about Robert Peston's pdf document just to the right of this blog - The New Capitalism.... My comment is he could do with getting out more, prise open his mind a bit , because his document is mostly just an analysis of what went wrong with banking and living on debt.
What is really under scrutiny now is the structure of society, the so-called market economy, scenarios where local councils, and county councils routinely routinely refer to themselves as 'the business'. Local people are 'customers'. And people who complain have 'issues' , and if they keep complaining they are a social nuisance.
Something deeply adrift in this country, like for example the leader of the Parliamentary opposition, David Matthhews, only a few weeks ago....."Every benefit claimant is a potential Karen Matthews (child abuser). So much for a leading politician's deep understanding of society outside his range of banker friends.
As I said Peston could do with getting out more.
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Robert, you have a talent for determining the facts, bringing them to light and are not afraid to put noses out of joint.
This in stark contrast with Brown and Darling who are, at best, ineffective.
Any chance you could stand in the next general election and replace them both?
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As a practising accountant, I have a number of clients who are property developers or investors. It was very noticeable that in the last 3 or 4 years before the credit crunch, as soon as existing bankers to these clients became difficult over facilities or costs, the client would change bankers to either Bank of Scotland or the Irish banks, Anglo Irish and Allied Irish. With the benefit of hindsight, it is easy to see why and demonstrates that the lending criteria of these banks were much looser than the main clearers or other traditional banks, so risk controls were presumably more lax. The FSA was simply asleep on the job.
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Your point about a death wish is probably spot on, Robert. There's no other explanation. A collective death wish by homo sapiens at this time in history.
There isn't any other excuse, is there?
Looking at the massive destruction of trust which is now a direct result of the mismanagement of banking, all one can say is it has been insane.
Strong men will weep, and women too. We have been plundering a world as though there's no tomorrow, making damn sure of it in the process!
I pity the poor souls who have to crunch the numbers and get them right, though who can tell if it's possible when we're talking of numbers with so many zeros after them?
The devil's in the detail and the glitches are the devil in disguise.
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The government MUST guarantee corporate loans if the market is going to work correctly and the economy is to be stopped from collapsing.
The existence of 'positive externalities' creates the following paradox: the only way the free market can run without artificial distortion is through government subsidy. Sounds bizarre? Yes, but it's still true. Here is why:
http://www.knowingandmaking.com/2009/02/government-insurance-and-paradox-of.html
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Vincent Cable for PM
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Robert,
What appears to me as the most glaring weakness in the RBS (and presumably soon to be announced LBG) insurance bailout is the following:
Is there any real likelyhood of the banks who receive the bailout will actual show any real and effective effort at recovering the highest possible value on the melage of flawed assets when the 'default event' occurs on the majority of them, as it surely will?
Brown is not expecting the taxpayer to believe he is going to set up the world's most successful international debt collecting agency is he?
The scheme announced yesterday gives the incumbent bank executives at RBS and LBG seven years of growing their million(s) pound pension pots and the taxpayer to pick up the inflated tab rather than letting 'brain dead' banks fail at the earliest opportunity whilst cherry-picking the assets from administration to form 'Newbank 2009 ltd' that could have 100% protected retail savers nad minimised the ongoing bill for the taxpayer.
Someday soon Brown will realise we can only spend money once and there is not an infinite amount of it.
Brown and his cronies in the main have never had to produce anything other then words and spend other peoples hard earned money.
QE is not going to help 'UK plc' now or in the future.
Devaluation and inflation will put further self inflicted nails in the coffin of our childrens future.
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There must be a legal basis for investigating the internal decision-making processes within these banks. Betting or gambling with other people's money or with corporate finance for bonus payments must constitute a legally definable conflict of interest and, therefore, a form of fraud. Surely, even the threat of a police investigation and prison sentences will force somebody to break ranks and reveal who made the decisions to buy or take on toxic loans, mortgages, investments - for bonuses - and it had to be a decision. It didn't just happen.
That instruction would constitute a conspiracy to defraud. Even an act of ommission (turning a blind eye) is prosecutable as negligence under English Criminal Law and there must be a case to answer, even if the eventual outcome is a 'Not Guilty' verdict. Charges or the threat of investigation and prosecution would force the maggots out of the rotten apple. Or are the Treasury Ministers and Civil Servants, or even the ex-Chancellor, afraid that the muck might actually land at their door?
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What a supprise,
G.Brown has been on the radio stating that it wasnt his idea that the banks merged he just relaxed the rules....
His statement is at odds with the statements last year when he was pivotal in the discussions of the merger.
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The £40 billion of lost Lloyds shareholder value i.e. mainly our pension funds value, as a result of the takeover of HBOS is effectively Lloyds' shareholders bailing out the Government, which would have to have borne the whole of HBOS' losses otherwise.
Even this incompetent Government, despite the looney left likes of Mr McFall, realises it cannot let a major bank go under or be fully nationalised due to the impact on international investors, equity and bond markets, our pension funds, not to mention the 3 million (or say about 6 million households) of private investors in Lloyds.
So it is not the taxpayer bailing out Lloyds but Lloyds shareholders bailing out the taxpayer.
Particularly as the taxpayer is largely the same group as pension savers (except of course for government guaranteed public sector pensions such as those to Gordon, Mr McFall and Merv the Swerve), it is somewhat disingenuous to say the taxpayer is bailing out Lloyds.
I notice Merv is up to his swerving tricks again - if he was so powerless to act why did he not broadcast his concerns years ago, first privately then from the rooftops, and if nothing were done, why did he not resign and make a stink, instead of sitting there doing nothing, except collecting his huge salary and accruing his huge pension?
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why am i not allowed to post anymore?
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Having read through this article again, I really do believe that we require an election, during which the respective political parties put forward competing manifestos dominated by how, precisely, they would approach this economic crisis.
The breathtaking sums of money offloaded onto taxpayers not only defy imagination: they seem to increase daily.
A government, elected by less than 21 per cent of those eligible to vote, and now headed by a different Prime Minister, seems to be running ever faster to stay where it thinks it is - and, all the while, gives the impression that it has lost the plot. What authority do these people think that they possess?
We're paying for all of this, in any number of ways, and will be doing so for many years to come. Yet we have no effective say in decisions being made which many of us view as folly.
Politicians: it's the stupid economy.
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Why can't I post at the moment?
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I can not post anything with the name of the bank in it!!
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Surely there is a case for Lloyds/Hbos pursuing past directors and senior managers to return bonuses that clearly rewarded negligence and the Government should assist in this as they have a major stake in the company.
However it is unlikely this will happen given the near religious fervour Brown and Darling for private enterprise and its luminaries like Lord Myner
GOAT's - Government of all the tainted!
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Well, Lloyds TSB like to say that they're there "for the journey", which seems to be a long walk off a short pier, after drinking from a poisoned chalice...
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Why are we bailing these morons out?
Seriously?
Why? They've failed, utterly and miserably. There should be no bonuses, no bailout, no debt insurance, nothing for them. These are private organisations, failed (as we can see more clearly than ever) private organisations, and the government is falling over itself to hand them as much cash as it can.
it's sick.
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why is the BBC not accepting my comment properly?
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Everything will be ok because gordons got it all under control.
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HBOS seem to have been incredibly short-sighted.
Was that why they had a bloke with big thick glasses to advertise themselves?
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I am member of an investment group who purchased some commercial properties. We put in 10% and borrowed 90% from HBOS. All properties are let to blue chip companies and all interest payments are made on time. Our loan is due for renewal soon and HBOS have indicated that they will probably not roll the loan over which will result in the properties being sold at a loss. This makes no sense for HBOS who will take an absolute loss on a performing asset, I wonder how much of the commercial loan losses that HBOS have are really necessary.
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"Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion - when you see that in order to produce, you need to obtain permission from men who produce nothing - when you see that money is flowing to those who deal, not in goods, but in favours - when you see that men get richer by graft and by pull than by work, and when your laws do not protect you against them, but protect them against you - when you see corruption being rewarded and honesty becoming a self sacrifice - you may know that your society is doomed."
Ayn Rand - Atlas Shrugged
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Is it time to make Sir Fred Badloss a Mr?
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Oh let me guess - Lloyds Group will still be paying bonuses. What a surprise. They buy a pup and still reward themselves for failure. Now didn't that idiot Gordo say something about not rewarding failure. Who's listening eh?
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These are the last ever financial results for HBOS as a discreet entity-
I am sure Robert meant discrete entity .
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why am i not allowed to post a full comment, only that I can't post a comment??
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Robert:
I reiterate my point that this is not simply "another recession". It is the beginning of a domestic economic catastrophe. We are sliding into a debt vortex.
Government assumption of bank liabilities has now far more than maxed out the conceivable resources of future taxpayers. The only solution would appear to be printing money.
This is being pre-spun by the government. It has a shiny new name ("quantitative easing"). It is necessary and prudent to print money (sorry, "ease quantitatively"), we will be told, because inflation is about to turn negative (which in underlying terms is simply not true).
Global markets will not fall for this sophistry. If the UK starts printing money, sterling will be toast. Interest rates will rise to double-digit rates, as they have in Russia and Iceland. At least these countries have, respectively, energy resources and fish. We are increasingly looking like a banana republic that has run out of bananas.
The blame for this, we are told, can be placed on the bankers. This is yet another example of the government's "blame anyone but us" spin.
Interest rates were far too low for far too long because the MPC was instructed to ignore asset inflation. The tri-partite regulatory system has been a disaster.
Labour has certainly abolished "boom and bust". Unfortunately, it is the "boom" bit that has been abolished.
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Did Brown take the initiative to the merger of Lloyds and HBoS? This could well have have been the course of events since Criosby may have told him about the precarious state of the HBoS balance sheet.
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dear robert,
a question unrelated to the banking fiasco. i am not a conspiracy theorist but...
how come the price of items in the shops have come down, house prices are down, interest rates have come down etc YET the price of motor vehicles have not come down to encourage customers to purchase new vehicles!!!!! i am getting a sneaking suspicion the motor companies must be in cahoots and agreed to not start a price war as not a single company offers reductions on the cost of its vehicles, only some gestures of free insurance etc.
i am wondering whether the motor companies are using this as a opportune time to get rid of large parts of its workforce under the guise of recession so that they can restructure. less outcries now about redundancies as we are all used to it now and less likely to protest successfully.
why is the government planning on bailing out motor companies when it does not seem that the motor companies are prepared to help themselves in any ways. cyanical views yes, but until i see a new car discounted significantly, i maintain that i smell a rat in the motor trade.
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Lloyds did not need HBoS, while Lloyds very conveniently for the government prevented another No-Alliance and Leicester, Bradford and Bang-ly or Northern hole in Sock.
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Aren't people in the UK angry about what I can only describe as corporate fraud?
Why should the tax payer be liable for current and (even more importantly) any future losses by British banks?
They now have cart blanche to do what they like with their businesses, knowing full well that whatever goes wrong, the good old tax payer will stump up the cash to make good their mistakes!
Why can't the accounts from the badly managed banks be moved to the better managed banks and the bad banks allowed to go to the wall - just like any 'real' business would.
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Paragraph 2: 'discrete entity', surely?
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Apologies everyone, including the beeb even, for polluting the website above commenting that I didn't seem allowed to comment.
My educated guess now is that an ampersand character prevents posts going through. Not sure, but when I omitted the ampersands in Britain's illustrious bank names my posts seemed to make it into the bbc-sphere!
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#8 JohnnyZero66
"Why does Brown hate the people of this Country so much, to wreck it in the way he has?"
It is because he is part of a global elite who see all ordinary people as debt slaves - nothing more. The New World Order is global - GB has contempt for all ordinary people, not just those in Britain. He has taken his oaths and his loyalties are not to the people of Britain - he just does not think in those terms.
We are seeing the return to serfdom.
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So we are talking at least 30billion to Lloyds/HBOS for 2008/9. And if the economy doesn't turn soon, even more.
This is going end very badly for britain. It reminds me of 2005/6 when telling people house prices were going to have a big fall was like banging my head against a wall.
So for the last time. Insolvent banks are limited liability companies and should be allowed to fail. The government can pick up the pieces afterwards. The bank's creditors should have been more careful about who they lent to. End of story.
So now I'm going to sit and wait for the ? to plummet, for a run on treasuries, for the govt to default, and for us to be reliant on food aid from europe. Think i'm exagerating. Fine, buy share in RBS and Lloyds then.
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I think competition is partly responsible for this and I'm wondering if we won't all drive ourselves out of business eventually.
We raise targets, cut costs, cut people... Then we turn around in astonishment when someone lifts the rock and finds a whole lot worms underneath.
The lessons may be:
1. Everyone may need to lower their growth expectations of companies. The growth of the last few years sounded too good to be true and it turns out it was.
2. Productivity isn't advancing as fast as we think it is. At the end of the day an employee can only do so much. We gave our guys too many balls and now they have dropped them.
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#6
"Dear Robert - we've discussed these to death - change the record."
Unfortunately the banks have broken all previous records, there are no other record to play and no one has the money to make any more!
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I'm getting to feel dizzy every time I check the business news these days.
Thank God the BBC keeps spewing out trivia in its mainstream news reporting. If the proverbial man on the Clapham omnibus gets to think through where all this is heading, there'll be riots.
Here's me in stuck record mode again ...
Anyone who thinks we'll be pulling out of this nosedive anytime soon is living in cloud cuckoo land.
Take a quick canter through the usual websites and blogs offering objective, apolitical analyses of what's going on in the world, what potentially lies ahead, and the implications of all this and you quickly realise that "train crash" barely begins to describe the situation.
We're talking more like a collision of galaxies here, and the sooner a politician or political party starts telling it as it is, the better. The Tories remain as clueless as ever, whilst Vince Cable seems to be a one-man political party these days (albeit the only sensible, straight-talking guy in politics). Can we not make Vince a member of the Royal Family and have him lead a Royalist uprising against the incompetent, thieving politicos that have screwed us ordinary people into the deck this past decade, whilst setting us up for a generation or two of austerity from here?
Meantime, we'll continue to be spun half to death by Brown's Government until the British people wake up and make the pressure for political change unbearable.
And finally ...
To the Met Police
Dear Superintendent Hartshorn
Many thanks for your kind invitation to join a 'Summer of Middle-Class Rage on British Streets'. I look forward to taking part in what promises to be an exciting and enjoyable event, and seeing your own colleagues on the same side of the fence as me, so to speak. Let's hope it does the trick eh? All the normal democratic means of regime change seem to have failed, so this is our last hope. Can you lend me a 'Brown Out' (or similar) placard please, and an umbrella in case it rains? Many thanks.
Yours
Moraymint
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I remember a photo of a snake which had swallowed a crocodile (I think it was). The crocodile was too big to digest and the snake died of indigestion. Its eye was bigger than its stomach.
Same image I have of Lloyds board at the time they sized up HBoS........... if they are really really lucky they might survive.
I also remember that HBoS had all the lower football league clubs accounts with their associated (basically unsecured) unwieldy and doomed overdrafts. They were the only bank daft enough to see an upside to football as a business. I wouldn't be surprised if HBoS had carried that basket-case business model to all their other business loans, and that there is a bucket-load of bad debt that Lloyds are going to have to write off on their behalf in the next few years.
None of them could run a sweety shop.
Regards,
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Does anyone read the Daily Mail?
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Do these losses and the details of how they were run up now put the lie to "It all started in America".
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With the subject of bonuses in the air why are they being paid to FSA staff when the FSA have hardly covered themselves in glory (although they insist that Advisers show that they Treat Customers Fairly and then charge them for the administration!!!)
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Not all of HBOS divisions made a loss nor can they be tarred with the same brush.
The insurance division was operated with sound financial management and increased profits 15% to £739m.
Unfortunately other divisions appeared to be out of control with wide spread cronyism and zero governance.
The auditors appeared to be in the companies pocket and the FSA - well the lights were on but there was no
one at home
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Pig on Pork, isnt that what the government are doing when asking Lloyds to pay for the insurance in (non voting) shares.
Perhaps I am being stupid...the sounds crazy, If the loans go bad ( and they will - just a case of when and by how much) then the Government will pay out the insurance, and have a set of pretty much worthless shares...Double wammy?
Can someone clarify this..
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#7
"Will we have to wait for the 30 year rule before we discover whether Lloyds was a willing partner or the whole of HBOS was foisted on them by the government because they had already taken on NR and B&B?"
I suspect not, just as the true bill for Bush's presidency is starting emerge in the USA, if/when Brown/Nu-Labour are replaced by 'the in order' - which ever political flavour that is.
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Discrete entity. Unless you meant it was no longer 'careful and circumspect in ... speech or actions, esp. in order to avoid causing offense'.
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Whilst I am no great fan of the FSA, which I have long regarded as an apologist organisation for all the various types of Financial Services Industry cess-pit inhabitants anyway, we should not allow criticism of the FSA to divert any real shred of blame away from the kamikazes in charge of the banks & other institutions - I don't drive my car at full speed at a cliff edge and hope that someone else is watching out for when to apply the brakes!
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Can anyone tell me why it would be so disastrous to let a bank go to the wall? We should have let Northern Rock fail as the US did with Lehmans. This would have sent a number of messages;
• No organisation is above market forces.
• Failure will not be rewarded.
• Governance, Risk & Compliance must always be paramount in any business.
• Shareholders and customers must take an active role in ensuring that any business is run ethically and that the relevant individuals are rewarded appropriately.
If this had happened all that would have transpired is that the other financial institutions would have clawed over the bones and pick them clean. However it may have also made them think about how they conducted themselves and their attitude to risk. Risk in itself in not bad, not understanding and managing risk is bad.
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Trying to pass off the destruction of HBOS as the product of mere reckless stupidy just doesn't wash. Are we really meant to believe that a massive, long-etablished, pivotal business, supposedly highly regulated and tightly controlled internally has by accident suddenly gone off the rails and begun wantonly smashing every simple, basic, known rule of sound business.
People will not be taken for such fools. Things don't happen that way. No presumption of innocence therefore can possibly be allowed to the banking perpetrators. We must start by assuming massive collusion amongst lenders and borrowers to defraud the system, with all those third world loans in the 70s.
The individuals responsible for authorising the worst loans should be dragged before some kind of court of Star Chamber and compelled to account for their actions - fully & candidly under pain of the severest penalties (upto and including death) for any deliberate concealment or attempt to mislead.
Of course this is just another ranting demand for the kind of extra-legal action which (as in the case of SFG's pension) all the legally minded wiseacres will tell us is just stupid and impossible. But it may be the wiseacres who just don't get it. There is probably less danger in adapting ther law to the reality of the new situation than allowing it function as instrument that effectively upholds gross and catastrophic acts of immorality. If the legal system proves useless or worse it may find itself swept away in the coming emergency.
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"These are the last ever financial results for HBOS as a discreet entity:"
Do you really mean discreet (prudent, cautious) or is this a mis spelling of discrete (separate)? Somehow I doubt you would describe HBOS as prudent or cautious.
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Am I alone in thinking that it might have been better if the government had just allowed one of the big banks - maybe HBOS - to fail? That would obviously have been pretty harsh on retail depositors if there weren't sufficient assets for them to get their money back, but the government could have compensated them. Wouldn't that have been cheaper than all the billions that have now been spent trying to keep these failed banks going?
And more importantly, it would have sent the right messages about moral hazard.
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Please can I sue the government for having failed and yet still receiving massive pensions a la Prescott?
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Well, there's the 'devolved model for ya. Nobody was asking what Corporate and Treasury were up to. Indeed they were actively discouraged from doing so. Each part of the business operating in its own 'silo'. The irony is that the 'Little Scotlanders' will be blaming the hated English of Crosby and Hornby for laying the bank low when it was the (Scottish) Ex-Co BoS executives in Corporate and Treasury who took their eye off the ball and wrecked the company. Oh, and the Scottish chancellor/PM who failed to ensure effective oversight.
Poor old Halifax Building Society. Their employees and head office sacrificed to appease the Scottish vote even though it wasn't their business that wrecked the company. Still, the folk of the North of England can be relied on to vote Labour whereas the Scots are flirting with the SNP. No question where the government will be 'influencing' the major cuts to take place.
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I think Gordon should deduct this pension from the salaries of those board members who allowed it to stand in the first place. That should see some sense being knocked into these trough sniffers over the entire financial system - including the Treasury and the FSA.
JohnL
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Keep this quiet.
There is a new company starting up in business with a new slant on family finance.
The business plan has been carefully worked out and has been passed as fit for purpose and its just about ready to go.
The main plan is to appeal to all those clever people who kept the wheels of industy (especially China) turning buying whatever they wanted by borrowing lots of money at high interest rates.
These clever people will be invited to put all their credit card debts ( minimum £10,000)
into a new "SUPER BIG D" company.
There will be a fee of course ( 10 % of their debt) but the main rule is:
IF YOU CAN NOT PAY THE FULL AMOUNT...DO NOT WORRY THE TAXPAYERS WILL PAY IT FOR YOU.
Applications are limited to the first 4 million out of a job.
Please send all applications to NuLab at No 10 Downing Street
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PS tip-top chaff there removing my comment at number 3 from the Fred Pensions thread. The one that questioned whether bringing this up might be a bit of convenient misdirection to keep Merv et a's comments on Brown's inadequate regulation out of the news. And the 300bn extra quid we were now on the hook for.
Post number 3 it was. Now lost and replaced by a universally 'outraged' first page.
Job done. Y'all must be so proud at the BBC covering up for your masters like that. Jump, Robert, jump. Good boy.
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Never mind pig on pork, more like pig in a poke.
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I still don't understand why Nick Leeson got a six year sentence for losing £700 million, but the HBOS lenders got bonuses for losing £11 BILLION.
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This morning I went round my house, gathered all the irritating bits of trash that seem to accumulate over time, and threw them in the bin.
Immediately the world was a much better place.
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24
Problem with that theory is that next year will be much worse when Eastern European and inflation chickens start back to the roost.
This is going to be much darker yet.
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29
Have another look at your arithmetic.
I think you may find it is much worse!
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#46
"Your point about a death wish is probably spot on, Robert. There's no other explanation. A collective death wish by homo sapiens at this time in history."
For many of the Big Players who initiated and drove the extreme abandon that brought about the current financial crisis, its more of an "Eternal Life" wish.
As mentioned before, the crazy wars and the mad banking methods of recent years were in substantial part based on a Christian Fundamentalist belief in the Second Coming, End of Days, Apocalyptic mindsets held so dear in the Republican USA. The aim was Rapture not rupture.
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# 29. oldrightie
"In other words, if you spent a dollar per minute, you could barely spend a trillion dollars during all of known human history"
You've not seen my wife's shopping sprees - she could easily spend that in an afternoon on just bags and shoes.
;-)
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As Alex Salmond said in his speech to Harvard University March 31, 2008...
“of course we Scots are lucky enough to have the one of the best brands in the world (sic) - a global recognition and affection for our culture that money cannot buy.
Take financial services. With RBS and HBOS - two of the world’s biggest banks - Scotland has global leaders today, tomorrow and for the long-term (sic).
And a growing number of American firms - not least JP Morgan, Morgan Stanley and State Street - are discovering that the Scottish financial sector can do anything you can do in London and can do it better and rather importantly in the current environment can do it at lower cost.”
He's right, when it comes to screwing up, the Scottish Banks are unparalled. Have not heard Mr Salmond blathering on about independance or the arc of prosperity lately (aka the suicide pact with Iceland)....funny that.
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It would be MOST INTERESTING to know WHEN the board members who took Halifax private and those who merged it with BoS sold their shares - AND at what price(s).
Is there anyone out there would could provide this information ?
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# 37. At 11:47am on 27 Feb 2009, ejSwede wrote:
"Why no riots?"
Wait for summer. Your average British rioter is most likely to be tempted out when there's some warm sunshine, usually on a weekend.
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So Lloyds, RBS, and Nationwide are all bust without Government help, but nothing is done about the large Final Salary pensions which these companies sponsor. Fred Godwin left with his and now we must continue to reward him for giving up his job. Any other pension sceme belonging to bust companies would be wound up, and end up in the Pension Protection Fund. The PPF would then apply their rules and reduce pensions to be no more than around £30,000 a year (originally £25k but now uplifted for inflation). This would put the employees and directors in the same boat as ex employees of now defunct companies. Why do we continue to protect such schemes purely because they are linked to banks. Let them suffer the same fate as the rest of us, and Sir Fred will be brought to book. He should be able to get by on £30k a year pension, as this is what has been laid down as reasonable for others who have lost out because their old employer went bust.
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Hi Robert,
HBOS was a discrete entity, not a 'discreet' one.
Cheers,
Bloke001
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Time to sue the FSA for criminal negligence? Surely we now have enough evidence.
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A back-of-an-envelope calculation:
The housing market is still at least 150% overpriced (ie average 250k versus sustainable 100k as argued here previously). That's going to trigger negative equity in the vast majority of cases, which will only be capped by the massive shortage of alternative housing - HMG will never allow families to be evicted when there's nowhere for them to move to and their old house will simply come back on the market priced more reasonably.
This will have the effect of dumping about 150bn back onto Lloyds as bad debt, involving most of the population. At least it's less than RBS' second 300bn hangover.
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#12, 39
Lloyds haven't agreed the insurance cover yet, and the deadline has passed.
The whys of this takeover have been discussed - a one-off chance to slip past the Mergers Commission - and it begins to look as if they may turn the corner in two years time, unlike RBS whose report shows bad news for at least the next six years.
In terms of quality of report, Lloyds knock spots off the RBS, and if it weren't for their purblind obedience of their observation of marking-to-market in a falling market without making any additional provision for the latter, Rahere would be nearly complimentary that they were showing the way out of the morass. Merv at least should be happy some poor trog there has been burning the midnight oil reviewing each and every single compound instrument from the bottom up - if only others would follow.
Lloyds are in the happy position of having a tool to make such a provision, however: Black Horse Estate Agents must have plenty of spare time on their hands to be able to assess the negative equity default risk for each of their mortgages.
So all in all, Lloyds look as if they may be trying to maintain their prudence in rough seas. Pity there's a tsunami ahead.
#21
None, HMG's still acting reactively, and us idiots are still unable to post because the moderators are conventional. They've been told by the PM we'll only get out of this if we become unconventional in our thinking, but are the mods listening? Not on your nelly. We really shouldn't be wasting valuable thinking and discussion time on the kind of nonsense which saw Rahere accused by them of abusing himself on the previous blog here, they're obviously experts at their subject.
The alternatives are to push the LobbyGroup to open for business as they intended, or to use Rahere's own area somewhere else: anyone wishing to do so, ask Rahere to do so here and I'll start a thread over there. I work for a living, so it'll be only a couple of times a day, but at least it'll be undelayed and unmoderated.
#37
Wait until the indirect tax rates increase...
#44
Perhaps it isn't a U after all...sorry, man.
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#24 Thechateaux
sounds about right for what I would expect from this Govt and GB.
GB is a man who is desperate to cling to power and try and pull off next years election.
In the end I think he is kidding himself. Labour and GB ratings in the polls were falling badly before the bank crisis and credit crunch ever took hold.
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On 21 January Victor Blank wrote to sharholders that the Lloyds board's clear intention was: "to achieve the repurchase of the HM Treasury Preference Shares during 2009 so as to enable us to resume the payment of dividends."
Did the board at that date still have no idea about the HBOS books?
I hope no one bought shares on the strength of Sir Victor's clear intention and I hope no one is holding their breath waiting for the declaration of the capitalisation we were promised in that same letter.
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54 Zootmac
As PR is most unlikely the best hope long term is the digital democracy potential. BO in the US is the one to watch. In the UK the FOI stutters on but is nevertheless creeping forward. MPs as a whole think the internet is to talk to the constituents not to hear from them. But gradually things are pointing in the right direction. If you have a feedback loop it cannot be ignored forever.
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Robert was the Scottish jobs aspect of HBOS crucial to the decision-making when they negotiated with Lloyds i.e. did it overrode financial and state considerations?
It just seems that at RBS where Fred the Shred says the government knew about his pension they appeared to have one set of motivations and a different set today, possibly cover up.
Perhaps the financial situation WAS so bleak you could not let it go bust but then the sums should have been done to see if we can keep them afloat.
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47. At 11:58am on 27 Feb 2009, inoncom wrote:
"The government MUST guarantee corporate loans if the market is going to work correctly and the economy is to be stopped from collapsing.
The existence of 'positive externalities' creates the following paradox: the only way the free market can run without artificial distortion is through government subsidy. Sounds bizarre? Yes, but it's still true. Here is why:"
I DONT BELIEVE YOU,so stop trying to sell outdated theories and ideas about what "must be done".
Heres something that MUST be done, goverments must be accountable to their electorate.
Bankers who run banks into the ground MUST NOT recieve incentives for doing so... because that is stupid.
Accountancy theories have got us in this mess so any justification for a course of action MUST not use those same theories, or it can be discounted.
Anybody saying "the banks had to saved" MUST justify this with evidence that we would be in a worse position than we are in fact in,if we had had not followed this course of action.
If we can just get the politicians to stick to these rules we might actually get some answers.
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Any bank sector workers wanting to post defending bonuses today. Be interesting to see the reaction.
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#69 - the only bit of your post that I would query is that the US are pouring in amounts that make the UK efforts look pathetically small - I'm not sure how it pans out on a per capita basis.
If the pound, the Euro, the dollar are all collapsing together then it is the relative rate of collapse that will determine who falls lowest.
That may well be us as the £ seems to be heading towards a point where there is nothing to buy with a £ however the numbers in the States look frighteningly large to me and similar rules must apply?
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Who was in charge of the due diligence department at Lloyds ?
I assume before the shareholders voted on the takeover Lloyds made a statement about the valuation of HBOS to the busines?
Has this turned out to be, errr, a bit wrong ?
Don't the shareholders of Lloyds have some sort of claim for neglience on behalf of whoever did the due diligence ?
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Fraser Nelson of The Spectator is asking if anyone is keeping track of this "Bonfire of taxpayers' cash" whilst pointing out that Brown's bailouts aren't fixing the problem. So why are we throwing more of our future earnings (those of us lucky enough to remain in employment) onto the bonfire?
http://www.spectator.co.uk/coffeehouse/3394526/a-bonfire-of-taxpayers-cash.thtml
"No one is keeping tabs on how much taxpayers' cash is gone forever, how much we can hope to get back, what the paper loss to the taxpayer is so far. UBS has issued a damage report otulining the numbers for their shareholders - see here. Why the hell hasn't RBS done one? The answer is that its owners, the government, don't really want people to know what the damage is. Instead of keeping tabs on behalf of the taxpayer, Gordon "two books" Brown has just started a new series of national debt excluding the banks. Purpose: to conceal from the taxpayer what he's done. He rejects the ONS definition of national debt, but won't give us a new one. Just his own make-believe set which excludes every penny sent down this vortex of the imploding banking sector. What's the real story? He won't say. There are all too few banking experts in the press able to find out. In politics, complexity is the second last refuge of the scoundrel (pension funds are the last - or, in Brown's case, the first)."
How have we come to this? and what can we do about it?????????
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Once long ago Rahere was a systems analyst and actually made SM before finance called - that's systems manager to you oiks.
That glitch speaks volumes. They put the figures into the system and it died. They put it in another way and it died. They're now resorting to saying "The answer's 42, now what's the question?". What they miss is that at the end of the day, not only are Lloyds facing the RBS inaffordability question, but also that it's funny-money travelling in a circle of unassessible risk, as it ignores the economic consequences of what Bob's refused to monitor, the imploding economy as a whole.
What they might be seeing is meltdown. The answer to their question is to stop taking it in huge chunks, get the figures properly audited, and use economic friction (ie "OK so far") to slow the descent. The biggest art will be maintaining sufficient speed to make it up the slope of the other side of the nexus without falling off the cusp (to complete the quotation, "as the guy said as he fell past the first floor of the Empire State").
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Robert, thank you as always for your work maintaining this blog.
Perhaps you'd be kind enough to share your opinion on exactly how much of this rampaging debt we the taxpayers can actually take on.
Surely our pockets can't be bottomless?
What are the consequences of all this government largesse on our behalf?
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And what we have to worry about then is the domino effect around the world.
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Robert.
Well done on those awards last night.
Er - I am sure there will be others - awards I mean later - this year.
But my late fosters parents were sort of heard just now watching BBC Ones 1.00pm news when "hand in pocket casualness" was adopted on approaching the stage.
A sort of sharp intake of breath. lol
Is it just me or has everyone lost their minds. Sack everyone seems to be the cry over one man's rather generous pension. And that helps Great Britains financial difficulties exactly how?
I read about Sir Fred Goodwin's retirement deal - should I get me coat now Mister Tory Party or Union spokespersons?
Noises off. Distractions and or misdirection.
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why has moderation suddenly become a problem...if you insist on pre moderation (why?) then it is your duty to ensure rapid and fair moderation..
to continue....... no matter if the Lloyds directors were "forced" into the deal...what is really significant is that they obviously did not carry out due diligence...so they are guilty of failing in their fiduciary duty and as such should be prosecuted.....
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82
Reading it is not the problem.
You know the country is down the pan when you start to agree with it!
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I wonder what proportion of this is caused by panic when the 'crunch' began.
A business known to me, and a corporate customer of HBOS with a good track record over 6 years of managing its debt to the bank, was forced to liquidate in January this year because HBOS would not defer a loan payment. The company was trading profitably, but could not repay the latest installment on the loan. Not an unusual occurrence, and one which had not caused problems in the past. It was a great surprise when HBOS adopted a new hard line position in Q4 last year.
The result is a liquidated company, 30+ people unemloyed, and HBOS reporting a bad debt.
Is behaviour like this by the banks BECAUSE of the recession, or CAUSING it?
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Looks like the 'spivs' and 'speculators' were right on the button! Anyone heard from Alex Salmond on this recently?
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Is there a moderator strike on today?
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They have raped and pillaged the banks, and now they are clinging on to their pensions like rats clinging onto stolen food scraps... These people are vermin in suits.
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Does anyone have confidence in the treasury negotiating a deal that does not end up with the taxpayer being shafted (again)? The Fred Goodwin pension debacle gives me no confidence at all.
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Having banked with HBOS as a small business - a sorry tale of online hell - we shut the business down - and paid the overdraft off from our own savings. We felt it was the 'right' thing to do. You can guess that we are feeling like mugs after all this debacle..
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Well, we have all got a grandstand seat at the death of the FIRE economy.
As you suggest, RP, the world which emerges will look and feel very different to the one we have been favoured(!) to live through since 1980. The deflationary pressures are sucking the life out of the PRODUCTIVE economy and all our 'leaders' can offer is to try and transfer the debt from the private to the public in the hope that lending can be restarted. Fat chance. The money pump of private bank produced credit is well and truly seized. No chance of a restart. Maturing credits are being replaced but there can be no compensatory new net lending to counter the cascade of deflation which is pouring through the fractured dykes.
Political separation from the private banking class is needed. They are not your lobby Mr Brown. The British people have the right to be considered. Don't follow the Japanese model. US and UK don't have the exporting strength and reserves Japan could and can deploy. UK has precious little to barter with. Think of the huge external debt the City Globals have faciltated. It will just sweep you away if you don't wise up.
Look to the Norwegian experience. Nationalise and purge the rubbish. And sweep away the acolytes of credit with it.
We can rebuild when it is more profitable to build (physically) than to flip and speculate with "bank" created money. The 'banks' directors have forfeited their right to be saved.
Bloggers there is plenty of info. out there to see what has to be done. Doubt the green shoots brigade. Hopelessly compromised and intellectually bankrupt like their banker friends.
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#52 whatevernext1
The managers at the Pension Fund Investors you refer too cannot dodge the bullet in all of this.
Just how well did they understand the industry - they, along with many in the financial services industry, justify their very, very high salaries and bonuses by claiming to be experts in their field.....
It would appear, as usual, that in good times it is down to them, in bad down to others!
#71 godphrey
There are some great deals on cars out there!
#77 sizzler944
Bank creditors.... that would be me and everyone else that has money deposited wouldn’t it! I think you got to work out how much each bank failing would draw from the Deposit Protection Scheme and whether it could stand it
History was one of the most boring subjects at school (2 years of solid dictation!!!!!) and despite my ‘B’ in O Level it has not, as promised, added a great deal to my adult life – although we did cover the South Sea Bubble!
Anecdotal History however can be useful..... anyone care to guess why it appears that from the Bible onwards Money Lenders appear to have been despised?
I think it is because deep down we know that they add very little value to society. Yes I understand there is a need for a basic banking system – but understand that anything above that is there to generate income for the bank, not necessarily to add any value to your life!
A general question (rhetorical) – Anyone else out there in their late 40’s or above had the discussion with someone 30 or less and tried to explain when the younger person has decided not to buy a house because he’d hardly make anything on it if he sold it, that it’s not always been the case that you make 10 grand a year on a house in 12 months....
..... then go on to explain that once over they were just considered as places to live!!!
And something to leave to your kids.....
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A loss of a trillion pounds on over-priced and mis-sold property by banks is already "factored" into my head.
Therefore, none of these disasters are surprising.
Congratulations to RP on his award.
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Robert
Any information on the pensions given to all these bankers that have left HBOS?
Me thinks there is another scandal waiting. What does his lordship have to say?
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#80
"To the Met Police
Dear Superintendent
[...//...]
Yours
Moraymint"
Message understood, over and (Brown)-out...
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So if the data that goes into the model isn't quite right, the wrong answer will be generated...
Does this not presuppose "the right answer" is known independently of the model?
We all know about GIGO and I smell a rat..
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Is it my imagination, or has banker-bashing become the latest national bloodsport?
Anyone would think that bankers (and I'm not using Cockney rhyming slang here) are estate agents, traffic wardens, paedophiles and gangsters, all rolled into one. Why not pick on some dofferent targets like property speculators, accountants, financial regulators (same thing?) or hedge fund managers - they have all contributed to the current mess?
Knighting 'Sir' Fred Goodwin "for services to banking" is like knighting Dracula for services to blood banks. There, it's obviously contagious.
I happen to know a couple of bankers and contrary to current mythology neither has two heads, or long pointy fangs, or horns. In fact they seem like ordinary blokes and they (probably) even pay taxes.
As Swift once wrote, "my heart is too heavy to continue this irony longer".
A note to Robert - please look up the difference between 'discreet' meaning secretive (the opposite of indiscreet) and 'discrete' meaning distinct or separate (see your 2nd papragraph about HBOS).
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Vince Cable for Chancellor.
He, at least, is a politician with insight, knowledge, clear views and firm convictions on the financial crisis who appears to have the interests of the ordinary citizen at heart.
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91. fearlessscenthound:
"Are we really meant to believe that a massive, long-etablished, pivotal business, supposedly highly regulated and tightly controlled internally has by accident suddenly gone off the rails and begun wantonly smashing every simple, basic, known rule of sound business".
Yes, that is exactly what Gordon and co want us to believe - that it was just wanton (and coincidentally syncronised) industry-wide madness by bankers.
The bankers are Labour's latest scapegoats in their strategy of blaming anyone - everyone - but themselves. The bankers are a good target because of their greed excesses. Before that, Gordon blamed America, international markets, oil producing nations, energy companies - anyone, in fact, but himself.
The reality is that regulators were asleep at the wheel, as was government, presiding over an asset bubble and an unsustainable debt binge because they wanted to enjoy the political fruits of a ghost boom.
The tripartite system was a dangerous division of responsibility. Setting interest rates in a way divorced from asset pricing and debt levels was infantile. Did anyone in government, or the regulatory authorities, actually notice the asset bubble, or the lethal escalation of debt?
No. They would much rather we put all the blame on a sudden outbreak of madness by bankers.
Actually, the outbreak of madness happened earlier, and it was not the bankers who went mad. It was all of us, borrowing like mad, believing in ever-rising asset prices and, worst of all by far, re-electing these clowns. I hope that we have learned that lesson. It has cost us enough!
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Let's just nationalise all these companies that can't pay their debts. May not save anything, but at least we can stop any further crooks walking away with the money.
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BTW Robert, if you want a scoop that shows just how useless the government is, start asking about where they're going to put money into Rail (e.g. new rolling stock to carry around fresh air). And then ask a few rail experts whether there's a better way to spend the money.
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#29
For a graphic illustration of size of US stimulus see:
http://hoklife.com/2009/02/18/the-size-of-the-stimulus/
Not sure how accurate it is but it's pretty scary!!
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Robert,
What do you think of my theory?: Gordon Brwn has singlehandedly (and with intent) masterminded the downfall of the capitalist system, and has done a very good job of it.
We're only a whisker away from nationalised banks and re-mutualised building societies (who won't, ever agian, play at being banks).
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Yesterday, Stephen Hester (dreadful Fred's successor) made a point of letting us all know that, as taxpayers, we were taking responsibility for further losses and the banks would continue to operate at arms length.
This is rubbish!!!!!!! For these sums of money in this market we've bought them many times over and deserve all the benefits if they ever come.
NATIONALISE, NATIONALISE, NATIONALISE.
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It's a good time to get your bad news on the table, write down all; the loans; wait until the recession bottoms out and be in a good position to recover. I hope that all the companies are doing that; HBOS/LTSB will be no different - except LTSB can write down the HBOS loans and blame somebody else.
See what the position is in 6 months; all will be revealed.
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Does not such massive losses at HBOS and RBS not raise the possiblity of massive swindles, frauds and insider jobs?
At the least, in depth statistical analysis and data mining should be done to spot patterns of lending.
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In the Autumn last year HBOS had a rights issue. At the time the prospectus led us to believe that this would solve their problems.
It didn't.
My father,who is in a care home, had quite a lot of HBOS shares and participated in this rights issue at a cost to him of £750.
As it has turned out,this was just money poured into a bottomless pit.
It seemsto me quite shameful that HBOS apparently misled ( that is the mildest word that comes to mind) so many small shareholders, many of whom must be in the same situation as my 92-year old father.
Does anyone know of any class action being comtemplated on behalf of these people?
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May i suggest a profit sharing scheme in the future rather then a bonus scheme.
No profit = No bonus.
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A while ago, in the vain hope that the BUSINESS editor might report on business, I asked for a bit of investigative journalism.
I found that when I looked at the companies that were going into administration many of them were 'financed' by either RBS or HBOS.
I found evidence of joint ventures. I found at least one billion pounds worth of property related deals on one web-site alone.
Not only that, a quick use of a calculator indicated that UK mortgages could not possibly generate the size of the problems being mooted.
So it drives me potty to have yet another article about the banks. It drives me wild that anyone might be surprised that problems are in the corporate division or indeed the nature of the businesses affected. Its been there for all to see. In public for weeks and months.
What really aggravates me most is that if I can discover a relatively small number of 'investment' outfits that 'acquired' property through debt financing or perhaps small stakes in banks before their acquisition, a BUSINESS editor should be able to. If you look at the links and relationships between some of these and the people involved and the honours awarded it is mind blogging.
The annual report is just like the end of term essay. Easy to mark and red pen.
I'd be interested to know what impact the REIT legislation that came into force in 2007 had on all of this nonsense.
And perhaps 'discreet' is correct. Robert wouldn't want to go on the personal attack, now would he.
And finally, if I read the RBS report properly yesterday, it has advanced much more in loans in 2008 than 2007. So what's with the 'get the banks lending again twaddle?
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http://news.bbc.co.uk/1/hi/uk_politics/7914993.stm
Brown is threatening to use more public money to chase down Sir Fred's pension
So again we get distraction from the actual point that the government either knew or chose to ignore it during their "friendly" take over of RBS
Whilst I do think that Sir Fred's pension adequately illustrates the city fat cats, I do believe that if there is no legal ability to claw any of the money back then Brown leaves the gate open for court proceedings for maligning Sir Fred's integrity.
Better to have a discussion about one individual though Mr Brown than have the wider one about accountability and the huge taxpayer bail outs resulting from negligent government practice.
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#24 While this is a trick played by countless CEOs in the past, in this case why would anyone trust a Bank's first valuation of these toxic assets?
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Strongholdbarricades!
Any one worked out yet how you've shorted the mod. queue.
Respect!
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A quick look at Lloyds Group bal sheet shows a balance sheet net total of £9.7 billion.
So another year like the last one and they would have an insolvent balance sheet.
Early on one of the reports the Chairman predicts that 2009 will show a loss.
Hmmmm - if Lloyds actually got to the point where by any definition it was trading insolvently ie a negative bal sheet what would happen then? Effectively they can't afford the losses that will come fom their first 10% of the 'toxic debt pool' without becoming insolvent. So the insurance policy we're giving them isn't enough to save them!
Let them go & RBS and lets start again with HSBC and whatever else is left.
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I lent most of my money to mates who probably won't pay it back, gambled the rest on a few footy matches and lost
Just poping down to the bank to see if I can collect my bonus. Anyone coming with me?
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@ Econoce. I made a pun on the well known Scottish dance the ??? Gordon the other day. Apparently this was enough to get the post banned. Don't understand why at all.
But at least they allow posters here to challenge 'Wor Bobbie'. On other parts of the BBC any such post disappears into thin air.
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What happened to the auditors of these banks? This issue was not just a 2008 issue - they have been lending irresponsibly like this for some time - you are not telling me that nobody knew this was coming - a good job they all made their nest eggs prior to this - whatever the bankers may or may not get in future, they have made sufficient to walk away anyway
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1. So, our leaders now say "No reward for failure". It is a good idea. So let's look at the results of Labor party rule.
a/ War in Iraq. They decided to make sweet company to Americans and look for WMDs in Iraq. During the search they inflicted deaths of husdreds of thousands of people, millions of refugees, millions of ruined lives for ordinary, innocent people. After looking long and hard no weapons was found and they will soon be packing and going home with no apology or compensation to Iraqi people.
b/ No regulations. They thought that there is no need to regulate financial markets. Things will regulate themselves, they said. That was policy for many years that brought all of us into all this mess.
Have Tony Blair, Gordon Brown and other people who participated in these two huge failures been paid, rewarded for their masterpiece work? Will they get nice pensions? I suppose so.
So, is it reward for failure?
2. Asset Protection Scheme (ASP)
It is not clear who is benefitting from the ASP. It all depends on details - which are not clear. How are assets valued? Who values them? This aspect alone can make huge difference. If somebody knows - please enlighten me.
3. LLOYDS
I agree with one blogger who said that it is not taxpayers who bail out LLOY sharehlders. It is LLOY shareholders who bail out taxpayers. If Lloyds had not absorbed HBOS with all their stupid, bad loans then taxpayer would be directly responsible for them. It would be fair, by the way. At the end of the day taxpayers voted for Labour and endorsed all their policies that lead to it.
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It is is naive or disingenuous to say that because 6.8bn of 116bn which is under 6% has been lost that this represents reckless lending.It would be more accurate to say that this represents what happens to businesses when their interest bills double and they are forced out of business when they are not lent money they need. In other words this is what happens when credit is reined back too hard and forces businesses to the wall.
Often the tap is turned off in the middle of a development, guaranteeing a business failure.....in which case it represents a lack of good faith in the banks part ,to allow the businesses they were lending to the time and extra funding needed to finish the developments they had been given prior approval to finish.
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Savings, pensions and investments wrecked by the banks and their politician servants. Banks to lend no more than 3 times verifiable income, and no more than is on deposit with them. New money to be created by government, not banks through debt, at a slow rate of 2% per year to allow for business and population growth. The present system is legalised fraud and theft.
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I think No 52 Whatevernext1 is getting at a key issue for discussion. We are in recession, GDP will fall 5,10 or even 15% , our wealth will fall (has fallen) a good deal more (although long term hopefully there will be some recovery of wealth). The actions taken now by the Govt. and others will determine both how large the fall is , and critically (whatevernext’s point) how those losses will be distributed. Unpalatable as I find the bank bail-outs, I do think that on balance they will make things slightly better (on both GDP and wealth fronts) than if we allowed collapses, and in all probability much of the cost will be distributed according to the equity/fairness of the tax system. Bank collapses would , I believe, have very different distributional consequences (and I am not sure who could be confident they would not be hurt). I am concerned that if before a private sector recovery (recession end) we get a new govt committed to public sector spending cuts the downturn will be deeper and longer and with more of the costs(loss of share) being imposed on the least well-off groups. One thing that was clear about the early 80s recession was that a disproportionate share of the costs were visited on workers in industrial areas who lost their jobs and on young people in those same areas with limited qualifications but who had been hoping for reasonable employment. Much of the population (and I include myself in this) suffered little more than a slowing of growth in our income and wealth in that period. Fairness of the sharing of losses deserves more attention. In that light I find it alarming that Fred Goodwin seems to feel that his share of the costs should be mitigated by an enormous hand out (from shareholders/taxpayers). If his pay-off stands will he bear any share of the costs?
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But let's not get depressed. We can beat the New Depression.
http://moneyistheway.blogspot.com/2009/02/beat-new-depression-yes-we-can.html
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Brown demands reparation from Goodwin ; let's have reparation from Brown and his incompetent government for getting the British economy into the near bankrupt state it is in. This is typical of this government's philosophy, attack a failed banker to take the heat of their own failings. If Brown had an iota of integrity he would resign now and allow a new government to try to rectify the damage he has done.
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Can you buy calculators now with enough digits to work out these collosal figures
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I've just thought of a fantastic recession-proof retail idea.......... spine replacements!!
Its a boom market!! I reckon I could turnover several £million by supplying new and replacement backbones to government departments and quango's, especially considering non of our polititians or the movers and shakers in big business actually have one!!!
Pat myself on the back, knighthood and a big pension me thinks!!!
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#129
Sorry to hear about your company and the bank. Cold comfort but your experience is being replicated across the length and breadth. The reason your credit was called is because the bank is sucking in liquidity at the expense of the real economy. The crunch (like 1929-32) and the 'recession' was caused by the banks who created asset inflation in the first place. This was allowed by BoE and HMG in thrall to a failed economic model. In the vain hope of trying to survive the collapse of their own making they are pulling the plug whenever and wherever they can. It is their fault not "the recession" or the "credit crunch" which are symptoms not causes.
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Hello all,
New to this game but have been reading your comments feverishly over the past few days.
What a pertinant lot you are! I live for the day we rid ourselves of the present unelected PM and his incompetant government.
I worked for NatWest for 26 years before resigning in 2003 as I could no longer stomach the heavy handed way we had to sell, sell, sell to customers.
I do remember though that NatWest was subject to fat cat scandals even before Fred the Shred bought it.
Some things just never change.
Lending policies have been tightening for years with the onslaught of centralised offices and branches loosing their Managers, who knew their customers well.
Maybe when all this has settled down we can go back to the more basic forms of banking and leave insurance and retailing to the relevant companies.
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The loss of 10 billion pounds is already known about and is why Lloyds and HMG were able to take over the bank.
Behind all this though,HBOS AND Lloyds retain the ability to generate fantastic profits in the future.
It is time to look forwards, move onwards and be grateful that the worst is behind us.
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This comment was removed because the moderators found it broke the House Rules.
How on earth does strongholdbarricades always manage to jump the queue for moderator review of these comments? Please explain, as it looks very fishy from here.
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HBOS is kaiboshed or perhaps it's better to say 'grocered'...
But at least we have a totally new verb : to FSA. Usually used in the Passive Voice.
I have been FSAed. You have been FSAed. We have been FSAed.
And by whom ?
By Goodwin, Hornby, the Trea-usury, the Audit Function.......
We have also been FSAed by the FSA....but that is a tautology methinks.
We are still being FSAed (Present continuous passive). By whom I wonder ?
And how hurtful...some other Peston blogger, now moderated out, has tried to take the P out of Scotland. There is no P in Scotland. Even Alex Salmond could tell you that.
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Whilst much of what RP has written about how HBOS was destroyed by reckless management lending and lack of corporate governance is true, there is nothing new in his latest revelations because this news is more or less in line with what we have broadly known and come to expect from day one.
There might be one or two figures or ratios to concern or excite the money purists but, for most of us the numbers being quoted have now become almost mind bogglingly meaningless.
To be fair to this government I suspect that if there had been enough time for them to have carried out due dilligence before the merger was agreed, then they (the government) might well have decided not to go ahead with the merger.
Unfortunately at that time events in this country and around the world were deteriorating at a rate that was much faster than anyone could truly comprehend and you can bet there was cross party agreement that maintaining the integrity of our banking system was of paramount importance even though nobody knew what that would entail. So the government with the help of the Treasury and BOE did what it felt was the best thing to do under those circumstances.
Re: 23 The chateaux
I suspect you and your banker friend are most probably correct in your assumption that the government might well be taking a more pessismistic view (dare we say conservative view with a little c) when it comes to valuing some of the banks assets.
In fact providing they can get away with it and for all the reasons you have stated, this is normal practice for any new CEO taking over a failing business. It just so happens that in this case, the new CEO is the government.
Believe it or not, the Conservatives in conjunction with the Treasury and BOE would have idone more or less the same thing if they had been in power.
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Fe fe fi fi fo fo fum
I smell smoke in the economium
Gordon Brown, Gordon Brown
He's a clown, that Gordon Brown
He's gonna get caught, just you wait and see
(Why's everybody always pickin' on me?)
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Have the calculations been done to show what costs the taxpayer would shoulder if this bank had been allowed to fold? Is it costing us more as a nation to keep it functioning?
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[i] SeanDillonFarmer wrote:
So if the data that goes into the model isn't quite right, the wrong answer will be generated...
Does this not presuppose "the right answer" is known independently of the model?[/i]
I think you have it. The "right" answer is already known. Therefore the data needs to be changed until it produces that, right, answer.
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They went in for aggressive lending and boy have they been caught - but of course two years ago aggressive was good- now solid and boring is good.
If you read the Scottish press at about the takeover by Lloyds- they were worried that without HBoS, there would be very little appetite for deals North of the Border- it was a shame there was such an appetite beforehand!!
The shareholders in Halifax are the real losers - BoS took advantage of their strength and deposits to recklessly lend to get themselves bonuses - there was no other reason for it. In fact it was so reckless that if I was a director of a company with HBoS in there, I would go for unfair contract and turn their mixture of equity, juicy prefs and PIK notes and senior debt into unsecured junk bonds.
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re your 2nd paragraph. HBOS may have been a discrete bank but more recently it was anything but discreet
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Expanding a little on #145, I believe that the government is desparate to be seen to be taking some action. Therefore certain departments are being told to spend. It doesn't really matter what on. So easy and quick projects will get done, regardless of how much benefit they will bring, if any.
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Why not hive off the pension rights into the toxic bank arm?
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and there is strong hold barricades yet again, sir you wouldnt happen to be a banker would you?
I refer of course, to your preferential treatment over and above the hoi poloi.
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I thought it's about time we gave these bank executives a collective noun (like a gaggle of geese, pride of lions etc).
So, I suggest that a group of bankers is called
'a wunch.'
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# 69
This 'quantitative easing'. Sounds as though the economy is suffering from constipation and a mild purgative is necessary. If it means getting rid of the Brown, I'm for it!!
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Grotty results from a grotty bank.
Pathetic wasters. What can one expect from a bank that uses a tubby little Howard as its poster boy.
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This comment was removed because the moderators found it broke the House Rules.
Halifax (HBOS) are currently running an ad (at least they havent lost their sense of humour) showing people handing out fivers to current account customers each month. If only they'd stuck to simply doing that instead of trying to be a bank. Even if they had given £5 to everyone in the UK every month it would only cost £3.6bn a year - a lot less than their losses - and we'd all have £60 each to show for it instead of a large slice of a toxic loan landfill site.
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I think Gordon Brown should call a early election to give the people chance to endorse this government schemes
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not for rulers to crave beer
lest they drink and forget what the law decrees
and deprive all the oppressed of their rights
Give beer to those that are perishing
wine to those that are in anguish
let them drink and forget their poverty
and remember their misery no more
Speak up for those that cannot speak for themselves
for the rights of all who are destitute
Speak up and judge fairly
defend the rights of the poor and needy
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Why are the British not marching in the streets?
I am ashamed to be British. One catastrophe after the next. We rubbish the Italian, Greek and other Governments for being corrupt. Looks like the British Government has joined this exclusive set. How do a bunch of buffoons make such high office?
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Strong men are weeping; some of us weaker souls are losing the will to live, figuratively speaking I hasten to add. Does anybody have a vision about the way out of this mess and the pain involved ? My guess is it will involve printing money on a massive scale and putting the economy on a wartime footing. I really can't see it all beginning to get better 3rd Quarter 2009.
The factors affecting the banks must be felt in the small building societies around the country. I remember a month or two back one building society saying that it was OK for 2 or 3 months then it would be a problem supporting savers without new business. Any sign of malaise coming from this sector yet ?
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Tubby made it clear to all and sundry in the cafe last night that he was no longer prepared to watch Mr Pesto use his licence payer funded blog in a way that always seems to avoid the political dimensions of the current financial horror show playing at theatres throughout the City even in Mile End. After reading the latest HBOS accounts Mr Pesto says that he cannot understand why the FSA did not take action. For a while Tubby was gobsmacked. Did Mr Pesto not listen to the confessional earlier this week where the sleep factory implied that there was a politically correct environment of light touch regulation promulgated by our Dear Leader and woe betide anybody who rocked the boat. Did Mr Pesto really not hear Mr Kings testimony that our dear Leader had been less than prudent with public spending? Tubby took a deep breath and urged Mr Pesto to remember that it fair game to take on our Dear Leader even in a financial blog because the tripartite system which he devised has put him in play. In the current economic dogs dinner trying to play the political neutral is self important humbug.
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What is the point of nationalising losses?
Cast them off, duck down, plug ears, close eyes, open mouth and wait until the shockwave has passed.
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hmmm it's turned out to be a bit of a BLACK FRIDAY but at least I managed to get rid of the RBS shares I bought for 12.8p at 26
I thought they should be nationalised when I had the shares and I think they should be nationalised now; along with Lloyds - only by taking formal control (temporarily) can they be used for the public good and the shareholders could be paid out at the current low share price if the shares were suspended first.....
sadly the UK and US govts and their advisers remain unable to contemplate moving away from free market solutions; one only need look at the ongoing attempt to 'part-privatise' the post office - following on from the disasters of privatising the water companies, trains etc etc etc
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Robert, we need positive proactive journalism, you need to change your attitude look for the green shoots. You seem unable to recognise your part in this disaster . Asset values and business confidence are directly proportional to one and other, you know how easy it is to persuade people that we are in a recession or cause a run on a bank. We have now arrived in the recession you and the rest of the media seemed intent on having. You have spread the doom and gloom and generated the climate in which good assets have turned bad and bad assets become more toxic. The balance sheet of all major financial, commercial and industrial companies are effected by your opinions. I think you and the rest of the media should take a holiday for a couple of years and come back when we mortals are ekeing an existence in the "blade runner" environment you so desperately seek for us all. Maybe then and only then will will the cost of your irresponsibility be realised.
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# 171 onward-ho
The worst is behind us. Would it were true!
This has been a crisis for 18 months now and still has a long way to go.
I wish you were right but I think that although an optimistic cast of mind never goes amiss and that hope springs eternal (as it should) there is still a lot of tunnel with surprises (unpleasant in the main) to come before 'happy days are here again'
Find Paul Volcker's latest testimony on 'you tube'
Read Soros and Buffet.
Standard and Poors make grim reading in their latest forecasts.
Fantastic profits are no longer part of the future in the economic landscape that will emerge seems to be the informed concensus. Least of all from Banks which will revert to the service of industry and commerce not distort the economy as self-serving masters.
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BELIEF BEGGARED
the Fred Goodwin - NewLabour row about who agreed to what presents us with a dilemma
who to believe? a banker vs a politician
the equivalent of choosing between an estate agent and business consultant
Question: what do the following situations have in common:
1 Fred takes his pension as no need to make any more gestures and has done nothing wrong; Labour politicians were unaware as didn't read fine print; Myners and Brown and Darling all deny agreeing to anything
2 US now says some prisoners were rendered; UK govt says they would have stopped it but had no idea so no rules broken and do not condone torture
3 Jaqui Smith has broken no rules claiming 116,000 a year while living in sisters back bedroom
4 Brown condemns greed and demands money back from Fred; always have been against greed; must have been a different Blair and Brown who warned FSA off regulating properly and congratulated the City; Blair getting 5 million from JP Morgan? not relevant!
Answer:
our politicians, who live in a bubble all their own, have made some kind of neuroscientific breakthrough so that their hands act entirely independently from their brains! they not only fail to remember why they did what they did but say that they never knew why they took any actions in the first place
the THREE MONKEYS REDEFINED AND IMPROVED for the 21st-century
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#47
"The government MUST guarantee corporate loans if the market is going to work correctly and the economy is to be stopped from collapsing."
Would that be the free market?
The market is working correctly.... it is correcting the massive mistakes as we blog
#112 rahere
Why stop at housing and negative equity.......
...... add in car loans and credit cards and the number of people who's assests don't add up to their liabilities may be even more frightening........
#141 merryMorganLeFay
I heard Peter Sutcliffe seem like an ordinary bloke!
I like the thought of Banker-Bashing, please remember but for the Gov bail out these banks (and it seems like most of them) would have gone bust........... assets would have been sold so someone who still be chasing mortgage repayments, but anything over the Bank Deposit Protection Schemes threshold would have been lost, plus shareholders money (pensions schemes), plus many 1,000s out of work, plus accounts frozen......
.... the alternative could have been a real blood sport!!
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Whast we need is a JUST government. That is, one that engages in:-
Joined
Up
Strategic
Thinking
I normally describe myself as politically ambivalent but I'm beginning to realise that the required solutions to our current woes are actually beyond the intellectual capacity of the members of the current government.
I suppose we are all partly to blame in that we allow a Prime Minister of a supposedly mature and sofisticated democracy to achieve the top job on a "buggins turn" basis.
Not a very mature approach when you think about it.
We then complain when we find he's not actually up to the job. He himself must be terribly disappointed after ten years of planning for it and then screwing up in such a big way.
The really worrying thing is that there is no obvious alternative on the current political scene.
Where are the big ideas men of yesteryear?
Keith Joseph, Hugh Gaitskell, Rab Butler, Roy Jenkins, Tony Crossland et al. You did not have to agree with their politics but could at least appreciate the rigour of their arguments.
I could not name a single current parliamentarian whose intellectual superiority I would acknowlege - and by the way, I'm no bright spark.
Eebyebumm, its a worry thinking you're on the road to h*ll in a handcart
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CONGRATULATIONS ON YOUR AWARDS ROBERT!
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Could we take a look at Accounting when we do the post mortem on this.
One of the issues we seem to have now is very clever use of accounting to find profits and defer liabilities....
Maybe time for an overhaul
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The flaw in this half baked Keynesian thinking is that the same people who are supposed to bail out the banks are the ones who are to borrow the extra credit.
Unfortunately they are already in debt, taxed to the hilt, and many about to loose their jobs.
Credit is not capital. Read the parable of the broken window to see the extreme stupidity of trying to spend your way out of a recession.
Even Keynes wouldn't have sanctioned deficit spending in the good times. He would also have prevented trade imbalances from getting out of hand.
Where does this lead us ? Rewarding the feckless and punishing the thrifty and hard working. The debt will never be paid back except by money printing.
State failure here we come.
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hehe you have to laugh about it all. We hear all about HBOS but why did Lloyds takeover such a bad bank in the first place?
Who do I blame? Whoever changed the system in 1997! We all know who that was.....
Maybe we should take back his defered wages [pension] and see how that makes things any better? I'm sure he wouldn't like it!
What is needed is a new system of banking tailored to function as it was suppossed to do [ie. A system that prefers you to be debt free via social housing provisioning bought by Banks]. However, we know the current global players do not want this system.
The New World order is destined to progress unless we all wake up and do something to stop this sickening and shocking takeover of our lives, money and liberty.
So what can the ordinary law abiding citizen do against these useless leaders in all areas of our society?
Rebel..... sell your remaining stocks, take your savings out of the Banks, pay your bills but takeout any residue money in your bank account. Make these banks suffer.....they deserve to fail. When they do the government will be forced to setup a new more ethical banking system. A system fit for purpose.
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Well, I certainly hope the managers of this debacle are limited to bonuses of at most 6-figures...
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@173
I have no idea, see other blogs
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Has "StrongholdBarricades" paid for Premium Platinum Club Membership of bbc.co.uk or something?
His comment is approved straight away - ahead of 20 other comments!
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I would like to ask a few questions :-
If there is a shortage of credit in the UK because foreign investors have withdrawn their capital would the printing of money by the Bank of England for the purchase of UK corporate debt be a good or bad thing and would the money supply have been increased?
Why is everyone saying that there was very little due diligence done on HBOS when Daniels said that 5000 hours had been spent on it, the first share price offer was 1 for 1, then 80p for 1, then 60p for one so assessments were being made over a period of time?
Why is the HBOS loss such big news since it went into print when Daniels gave almost the precise figure for writedowns in November and by RP in a blog a few weeks ago?
Why do posters who come up with supposed anecdotal evidence e.g."I have a friend who is a senior banker"," I am a practising accountant" etc., not become
'Whistleblowers' so that the readers can take them seriously?
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Just taking time out from the mop and bucket. I'm very good at clearing up mess. I find that If I have no use for something its best to throw it out. Some bleach, fresh air and sunshine are great disinfectants. A duster and hoover come in useful for detritrus.
I am willing to turn my cleaning powers to a number of institutions. I am happy to be paid by results but would hope that a good pension might be thrown in.
In support of my application, I'd also like to add that I have experience of salvaging a crumbling organisation running a deficit requring a massive cash injection to re-establish solid foundations. I like rooting about in dark corners and try to rely on facts and data. I try not to make decisions on the fly.
There are a number of bloggers I'd like on my board.
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What are the names of the companies/people who have defaulted on RBS loans?
Just as Goodwin lived the life of riley while RBS was giving away money and has retired to luxury while his former company crashes and burns - so the people responsible for the companies who default(ed) on RBS may be making merry with the money torn from the pockets of even the poorest taxpayer.
So name and shame -- who isn't paying their debts?
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What is equally as worrying as the sheer incompetence of senior bankers, regulators and government ministers is the apathy of the British public to it all.
We are on the precipice of bankruptcy as a nation yet there is no significant public outcry. Where is the march on Parliament, the calls for Prime Minister Brown to step down or the insistent cries for a general election?
I'm not advocating a general strike but you would think that there would be some show of taxpayer indignation.
The Sun runs a protest campaign about the fictional Deirdre Barlow jailing and the Express and Mail over car tax increases but don't bother over the total destruction of our national finances.
Where are the responses from the Left? Where are the suggestions of new economic models that would stir debate, interest and hope. Where is the modern day Marx? Where is the Adam Smith or Milton Friedman from the Right?
I fear we are not only financially bankrupt but also intellectually, morally and politically.The campaign against the Corpus Christi student on University Challenge for being too intelligent typifies much of modern Britain.
It pains me to say it but maybe we get the bankers and politicians we deserve. They know there will be no significant outcry or backlash at the ATM or polling station so they proceed as they wish. As another commentator said most people who banked with RBS who will continue to bank with RBS and most people who voted Labour will continue to vote Labour.
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I'm not an Economist, I am just a humble Electrical Engineer so I don't understand complicated things. can somebody enlighten me as to how to persuade a Bank to write off my 3500 quid bank loan.
Should I just write to them and explain that things are tough in the car industry, I may soon have to go to the government for financial assistance and that I will be defaulting on the loan. The other option I have been considering is increasing the loan amount by, say, one or two Billion pounds.
On the face of it the first option seems a bit simpler but I have heard that the banks will get a bit snotty over a couple of grand and pursue me to the ends of the earth for it, even to the extent of taking somebody's home away. However if I owe them a sqillion, apparently, they will do all they can to absolve me of the responsibility to repay, take me for a champagne dinner, give me a cigar and send me on my way.
Logically, and that might be where I am going wrong, Writing off 6.5 billion would cost 3000 quid more than writing off 1,857,142 loans of 3500 pounds each, (not allowing for admin charges of course) seems a little strange to me but as I said, I don't understand complicated things.
can anyone explain ???
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#145 and #181
They've been doing this for years. I think government deficits (losses) funded from borrowings outrank the losses quoted this week.
I'm not sure which department is finding the money for all the bail out business. No doubt each will pass the buck and point at someone else.
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Does anyone really think that the massive commercial lending losses by the various banks, now being disclosed, have only arisen in the last few months?
I predict, when the dust settles, we will see that the banks were hiding potential losses from their auditors and the outside world for years.
The only question is whether the regulators have the stomach for action against the bank boards and auditors.
My guess is not!
Comment from an experienced chartered accountant and auditor.
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Dear Mr Barricades
You have great potential. I would like you to join my cleanup business. I offer you the post of head of media relations. Your ability to get the message out quickly will come in very useful and your contact book is clearly worth using.
Can we use your stronghold as our operating base. I have found that building a new headquarters often comes just before a collapse of a business empire.
Yours Truly
mrsbloggs13c2
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I would like to propose a new collective noun for bankers.
A wunch
... as in a wunch of bankers.
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@ 206
Comedy genius StrongHoldBarricades
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Mr. Goodwin -although the catalyst for the current wave of public disgust is only confirming what most people think of the financial "services" industry - the problem would not have become a problem if our so called "Government" had done their job properly in the first place and not relied on stable door technology - they then sit there po faced and try to tell everyone "it wasn't my fault guv" - you can only infer from this that they think we are all credulous plebs who don't deserve any genuine respect .
Perhaps a few poacher turned gamekeeper appointments to Government instead of our current "slaughter of the innocents" scenario would turn the tide.
ACTION NOT REACTION PLEASE GORDON!
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If the proposed one GBP toilet charge by Ryanair includes VAT of 13 pee we are left with breathing as the only untaxed activity.
Discuss!
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Throughout my years in productive industry (we had some, then) whenever a new management took over the first priority would be to shake all the skeletons noisily out of the balance sheet and blame their predecessors for horrid writedowns. The next year, they'd claim early success. Then progressively they too would start 'managing' the published results. Is banking different? Watch this space...
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Only 6.5 billion lost, huh, I bet those directors won't be getting very big bonuses this year eh... bloody amateurs.
C'mon lads, let's see if we can get it up to 10 billion in 2009.
Bonuses, logically, are linked to success. the last time taking control of something and crashing it was considered a success was in Okinawa 1944 and they called them Kamikazes.
At least the half crazed suicidal Japanese Pilots had the good grace to remain in the cockpit during the dive.
Fredbeard is still floating down, his golden parachute glittering in the rising sun as his bank crashes ineffectively into the sea.
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Even though they just bought HBOS Lloyds should just ditch it and quick. lloyds will have bought the HBOS bank and its subsidiaries so it should just cease to support them and let them die. Would be cheaper in the long run and repair the damage. The Government can then pick up HBOS and let Lloyds get on with its old style prudent banking.
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113, rahere: "The alternatives are to push the LobbyGroup to open for business as they intended, . . ."
As far as I know it's open 24/7,
John
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why does this goon and on. if the government can muster 1/2 dozen men who can be trusted to establish an authority to oversee our financial institutes, -- do it, kick all the old managers out, fire the fsa and everyone else who think they have done a good job and get this country out of this greedy culture that exists and while they are doing that task, kick the do - gooders into touch and stop them bickering too. Then maybe, just maybe, this country can get back to GREAT BRITAIN,and not the sad excuse it is at the moment, just do it
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#178
I get it. It's a bit like global warming then?
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it will only come out in five or so years time what the banks are currently doing regarding duff property loans. rather than own up to the immediate loss, there are plenty of 24 hour administrations where the portfolio is being bought back (at a smaller loss) and then shifted to overseas entities which are off the books for the time being. in this way the true loss figures are with-held from the taxpayer. for example, you know that a 100 million loan has gone wrong. the assets are only worth 25 million. the company goes into 24 hour administration, with the bank buying back the portfolio for 75 million. This gives a loss of 25 million. however, the assets aren't worth the 75 million which has been paid. the investment of 75 million goes offshore, and it will only be truly liquidated later on, when a further loss of 50 million will be realised. the net effect of all this is that the taxpayer is being misled as to the true entent of the ultimate liabilities.
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why does this go on and on. if the government can muster 1/2 dozen men who can be trusted to establish an authority to oversee our financial institutes, -- do it, kick all the old managers out, fire the fsa and everyone else who think they have done a good job and get this country out of this greedy culture that exists and while they are doing that task, kick the do - gooders into touch and stop them bickering too. Then maybe, just maybe, this country can get back to GREAT BRITAIN,and not the sad excuse it is at the moment, just do it
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183. Thegrimcrim wrote:
"and there is strong hold barricades yet again...
I refer of course, to your preferential treatment over and above the hoi poloi."
Maybe strongholdbarricades personal details are...
A. Aardvark from Aalborg, so he just naturally pops to the top of the list.
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why does this mess go on and on. if the government can muster 1/2 dozen men who can be trusted to establish an authority to oversee our financial institutes, -- do it, kick all the old managers out, fire the fsa and everyone else who think they have done a good job and get this country out of this greedy culture that exists and while they are doing that task, kick the do - gooders into touch and stop them bickering too. Then maybe, just maybe, this country can get back to GREAT BRITAIN,and not the sad excuse it is at the moment, just do it
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This comment was removed because the moderators found it broke the House Rules.
Why are those corrupt, negligent, greedy banking executives not behind bars together with those persons in the government whose responsibility it still is to REGULATE?
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Hi Robert
You are right to highlight the business lending fiasco at HBOS. This of course is the same bank that has been advertising a competition for companies to get free debt for FIVE YEARS.....
The issue is the small tip of the iceberg which the Government hasn't a clue over with its encouragement of yet more borrowing with the likes of HBOS.
The real problem is that in a market contraction weak companies, which include those highly leveraged go to the wall, leaving those well run to take up whatever market slack there is.
Irresponsible lending to weak companies which LloydsTSB/HBOS and RBS are about to do more of, actually do more harm because they prolong 'weak companies' artificially (for a while) and starve the stronger companies of benefitting thus causing more economic problems. The knock-on effect cumulatively is that it delays economic recovery because nobody can afford investment, i.e. a zombie economy.
It seems as though very few people in this country understand market dynamics and what a recession actually does.
I run two SMEs - the last thing on earth I would do right now is borrow more money - at least a few contributors on here get it.....
MADNESS...MADNESS...MADNESS
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ERROR:
"and it made the classic mistake of doing what bankers used to call "pig-on-pork", or taking equity stakes in creditor companies."
My dear Peston, from the perspective of HBOS, you mean "debtor" companies. A bank's creditors are those that lent it money and we sometimes include depositors in that definition. Its debtors are the ones it lent the money to or in this case, gave it to.
One other point. No-one seems to have picked up on the fact that Andy Hornby kept putting it in his CV that he graduated "First" in his class at Harvard Business School. The problem is that HBS does not rank its students other than making the top 5% "Baker Scholars". There is no "First" in the class.
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Have we got to wait thirty years to find out what role Gordon Brown really played in this tragic farce?
Some us will not be around to find out!
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206 StrongholdBarricades
''I have no idea''
Hah. The secret is out. You simply have to have no idea. Zen and the art of posting. Thank you master.
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so,when the FBI have done their investigations (unlike the so called FSA),the American shareholders have mounted a "class action" just how may 747's will be required for the extraditees?
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#152
I agree on one condition these profit are real and not speculitive based on the fact that the loan will be repayed.
It think that bonuses should be paid on a loan mauring and being paid of / refinanced.
For ever missed payment the seller of the loan should lose a finger ;-)
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It annoys me that had LLoyds not been bullied into taking on HBOS, the media would have had some bright results to splash across my breakfast table. Whilst on the general media, is it really necessary to ram home the bad news with 'worst in a quarter of a century', when worst in almost 25 years is more accurate and less inflamatory?
Finally, may I pose a question to you Robert?
Let's say we are in the summer of 2010 and enjoying the fact that we are definitely coming out of the gloom. There is no doubt that the economy is on the up with good news happening all over. What will is likely to have caused the recovery and if we can identify it, can we make it happen in the next three months? Regards
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brownwatch...459 days
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bong
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HA HA HA!
HBOS should be HBOS IN ADMINISTRATION!
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191. Angie3763
''How do a bunch of buffoons make such high office?''
The question is how do such a bunch of buffons make coffee, let alone office. Does somebody make coffee for them. Bet that is the case.
However, I am reminded of Nigel Lawsons alledged comment re geoffrey Howe in the recent drama about Thatcher. Beware the fury of a patient man.
Every day appears to be another nail in the coffin.
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(bong)
just thought I would try and post a comment that couldn't offend anyone..... and see if I could be moderated as fast as the mighty barricades..........
some hope
you da man stronghold.
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re. bong
just wanted to see if an innocuous comment could get moderated as fast as barricades.
Some hope
You da man stronghold.
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107
Yes. All directors share dealings must be reported.
All employee share dealings should be reported to the compliance officer for OK.
I wonder if a freedom of information request might winkle that out?
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In the knowledge that this government and all its advisers couldn't even flush the toilet without getting it wrong............
I despair about this insurance deal. I suspect they (well of course I mean us) are going to get suckered big-time.
The only scenario the government should be looking out for is this -
When the deal is in place, does it makes the banks MORE or LESS likely to foreclose on businesses or mortgage holders who find themselves in arrears.
From what I have seen around me -and as noted by earlier posters, the banks are all very quick to shut down business customers at the moment. Good companies are being put into receivership because their short-term cashflow is poor, not because they are insolvent.
In troubled times such as these, the government should be trying to ensure that as few people lose their homes, and that as few workers lose their employers.
Accordingly, any deal should put serious pressures on the banks to accommodate their debtors as much as possible.
Regards,
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174 Amused2Death
''I have been FSAed. You have been FSAed. We have been FSAed''
FSA - Fella Sleep All the time, him get bonus for sleep long time.
Fella Brown him gone head walkabout. Dawn real time soon.
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We have to pay the top salaries otherwise we will not be able to attract the best talent.
Who the H*ll are these guys kidding..
Talk about the emporors new clothes...
As Father Jack would say... Talent... My A**e
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Glad its entertaining,
MrsBloggs you are more than welcome to share the draughty castle, but I feel we must defend the barricades
I note that the Sir Fred story has turned on Lord Mynar now, maybe he will take the "bullet" for Crash and Darling?
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233
Gross misconduct then
Fire NOW.
No Pension.
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I think I'm beginning to understand the scale of the debt problem.
I spoke to a friend today who is one of a team of five debt counsellors at the local CAB.
This week he saw 15 clients who had debts of between 52K GBP and 93K GBP and only two had a current source of earned income!!! Cripes!
And 9 out of 10 were customers of Lloyds??
Double cripes!!
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246 allmyfault
The use of the term insurance by HMG seems to be misplaced. The whole point of insurance is that you take a population, a peer group, and ask for a sub from all of them so that when things go wrong for a few then the money from the many peers helps. The insurer does his sums and seeks a balance. In this case there is too small a population to balance the books. In common with many things with this bunch of clowns the books do not balance. The word gift would be more appropriate than insurance.
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#232 Rugbyprof
100% with you. The last place I would want to be now is in hock to a bank or similar.
The lend at any price policy (which is failing anyway because it can't confront the deflation maelstrom) will eek out zombie life in weak and overleveraged enterprises for a while. It will only postpone not cancel the inevitable. Good luck to you with your two SMEs.
Private debt will continue if the banks implode or not. If you make your payments it will just go to the organisation which is able to acquire the rights to your debt. Might be a Chinese company just to jolt a few cosy notions which can't sense the way the wind is blowing.
Printing money (easily done) is happening as we blog. This has already been factored in by FOREX markets in the form of the weak pound. The more you print the lower the pound. The lower the pound the higher the cost of the food and fuel you inport ie inflation.
Print for too long you'll need a pram to transport the notes to buy a loo roll.
Would you invest 100 pounds if it will be worth say ninety in a months time in terms of its purchasing power?
HMG (or the Privy Council) have to get a grip. Nationalise the good assets in the zombies and liquidate the rubbish. Its been done before but needs skill, character and determination to pull it off efficiently.
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A genuine question.
Can someone please explain, in simple terms, this business of "off balance sheet" items.
I've spent my career producing accounts and the last job each time was to prepare the balance sheet.
This was a statement of all assets and all liabilities of the organisation.
If any liabilities or assets were omitted the balance sheet would not balance.
It goes back to the first priciples of accounting called double entry book-keeping.
I genuienly do not understand the concept and would appreciate clarification/explanation.
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Did anyone else find it tragi-amusing that Gordon is now 'demanding Goodwin's pension is taken back by any legal means possible.
It obviously did not even occur to Gordon that people in glass houses should not throw stones....
I hope he is successful and sets a legal presedent so we can return the compliment on his good self.
Hold that thought for a while...feels good doesn't it?
jericoa
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0xFFh,Jericoa: Hope you haven't deserted us.
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I know this is dumb. But it's not been long since Loyds acquired HBOS. What about dumping it in Poundland at cutting its losses?
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Re: Shred Sir Fred
Little has been said about the implications of Sir Fred having to yield some or all of his post1998 RBS pension (surely that earned prior is legit?). A huge number of high earners with not dissimilar pension rights earned by the over-exuberant banking community face purgatory too. Or was Shredding Fred the cover for another government debacle slipped out under the bad news?
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rather ironic all the comments about the state of Lloyds (and also RBS) losses. This set me thinking, what is the definition of a loss. I found this.
"loss of money or decrease in financial value"
Pretty bland, but if thats the example, its basically spending more than your income. Sounds bad, can't do that forever can we.....
Lets look an another example, call it UK plc. Over the last 4 years the losses are:
2007/8 -£38.7bn
2006/7 -£32bn approx
2005/6 -£42bn approx
2004/5 -£40bn
In fact, last time a surplus was recorded wsa way back - about 2001.
My point is that while bank losses are bad, however the UK as a country has been borrowing consistently for 7-9 years.
Why you might ask, in a previously booming economy? Perhaps is more to do with our unrealistic expectations (NHS, schools etc) and our desire to avoid paying the required levels of tax to meet those expectations.
Sorry to break it to you all, but there is no magic wand, and we all need to be prepared to live less excessive lives and expect a lot less from the state.
We also need to look at one Gordon Brown. Any business leader who recorded losses for that number of years would be removed.
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This is probably the reason Brown is so keen on Goodwin's pension. This Marriage made in hell (and as a shareholder of both I voted against the merger as I knew that it was bad for HBOS and I wanted my Lloyds shares to be safe!!!) and it was Brown and Blank at a Cocktail party that dreamt it up!!!! No escaping the consequences for Brown, and sadly not for me. Surely we can sue the Llloyds management for this piece of incompetence, they must have been negligent surely, this was doing Brown a favour not looking after our interests?
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I am as ready, for what it is worth, as anyone to hurl insults at the Bankers
BUT;
How many of the Loans were actually "social engineering" under a different name. ?
I imagine, but can only actually guess, that some loans were made to avoid possible actions etc for one type of "illegal discrimination " or another.
Perhaps there is just a little bit of "blackmail" going on here.
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#254 Ehbahgum
Off balance sheet financing
Take too long to explain on blog.
Go to wiki. It's all there.
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we use this alot working with young people. Its called diversion therapy. Jangle something that captures their attention and it takes their attention away from something else.
Mr Brown et al have got us all all exactly where they want us. Whilst every one is busy 'not believing what he knew or didn't know about £650000 whatever' we have nicely been diverted from the point that he is mis-managing the economy. Is being the operative word
Is this the same guy that was chancellor for 10 years. Please what didn't he know. Any other manager who didn't know what his team was doing would be sacked or at the very least disciplined
And whilst we are at it, i don't remember voting in Mr Brown. Who else remembers voting for Mr Brown to be Prime Minster.
Diversion therapy works wonders
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Lest we forget,
this is still early days in the meltdown.
This is not a short-term blip in the smug and cosy West's smooth ride to wealth and pension heaven. There is no recovery in 2010 or 2011. (Try 2015)
We have had a decade and more of reckless borrowing against the future, and we have been found out.
Unfortunately we have the most abject and useless crew of idiots at the helm of both government and banking.
There is no recovery on the horizon. If we are very lucky indeed, this slump could be carefully landed -like the plane- in the Hudson without sinking, but at the moment we are in a nose-down tailspin to join the bottom-feeders.
A huge proportion of these reckless loans are likely to fail;
this government is going to print money like crazy.
your savings are not secure;
your job is not secure;
your pension is not secure;
your mortgage is not secure;
be afraid, be very afraid.
Regards,
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43. At 11:53am on 27 Feb 2009, amclpreston wrote:
What is really under scrutiny now is the structure of society, the so-called market economy, scenarios where local councils, and county councils routinely routinely refer to themselves as 'the business'. Local people are 'customers'.
Last year I wrote and told my Council that I wasn't impressed with the level of their Council Tax and services, so I would like to cease being a Customer of theirs and become a customer of some place with a much lower Council Tax - they told me I couldn't.
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peteinamerica says "start asking about where they're going to put money into Rail (e.g. new rolling stock to carry around fresh air). "
More people travelled by rail last year than in any year since 1947, but then you'd know about that on the other side of the Big Pond, wouldn't you...
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#254 EBAHGUM
An off balance sheet liability is something that is close to being a liability of the organisation but has been structured in such a way that it doesn't meet the technical definition of a liability.
For example an operating lease is off balance sheet because you do not show your liability to make payments on the balance sheet. With a finance lease you capitalise the item and show the full liability. But with an operating lease just the rentals go through the profit and loss account. Yet in both cases you use the asset in the same way. The difference relates to who holds the risk of ownership.
Another example is the PFI funding. Technically the risk of the project to build say a hospital doesn't sit with the Government but with the private financiers. So the funding liabilities don't go on the governments balance sheet. So by transfering the risk to the private sector (for a huge fee payable by the government of course) the Government justifies keeping the liabilities off the books. Even though in practise if the private financiers could not meet their obligations the liabilities would fall into the government's lap. As may soon happen.
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I keep hearing that there's a problem in dragging back bonuses that have been paid out and spent or squirrelled away in the Cayman Islands.
Surely, if it can be done to drug barons, it can be done to the organised criminals who were running (and ruining) our banking system?
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#261 PeterBolt
In my view Social engineering ( ie money invested in potentially non-viable contexts like parts of US sub-prime )couldn't produce the horrendous black hole in the banks accounts. Across the finance sector as a whole its not even the mortgages in the UK at the heart of the problem. After all 80% of UK housing is either debt free or at low levels despite the witch hunt. Think thousands of shopping malls, think golf courses outside every American town with more than 500 inhabitants, think of cities of time share resorts. Think of private bets in derivative and futures markets many times greater than the value of UK mortgage book. Think last summers oil price. Where is it now? They bet billions and got it wrong! Simple as that.
If that helps to see where the responsibility lies I would be happy. Sub-prime lit the touch-paper and the whole jerry-built financial edifice is well and truly turning to ashes and hurting a lot of innocent and confused people.
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#147
"What do you think of my theory?: Gordon Brwn has singlehandedly (and with intent) masterminded the downfall of the capitalist system, and has done a very good job of it."
How about that capitalism has been given such a free hand in the last 30 years that it has finally burnt it's self out - bit like those big bright stars in way off universes that eventually implode, sucking everything near-by into the resultant black hole?
Our forbears were not stupid, they didn't build up a a whole raft of regulation and tradition over decades and centuries just so that people like Thatcher, Reagan, Brown to dismantle them in the blink of an eye (relatively speaking)...
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I see Icelanders stormed the Icelandic Central Bank today.
How long before we see such scenes here in the UK; not long apparently.
Some reckon Wall St is due to crash this March.
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blefuscu wrote:
80% of UK housing is either debt free or at low levels
This has to be one of the daftest statements ever made on any blog, never mind RP's.
How, pray tell, blefuscu, do you work out such a fanciful figure -- do you work at Number 10, per chance?
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wohaaa
My posts are being removed, after being passed by the moderators.
This stinks.
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Whilst it is true many directors of PLC's have no worthwhile qualifications to their names, this is even more true of the cabinet. I suspect Darling and Broon could benefit from an NVQ level 1 course in basic numeracy.
#152 Profit is unfortunately a vague term which is capable of being manipulated by a less-than-straight accountant (or the Government)
#234 I see your point, the mods are very slow.
#208 Could it be that the 5000 hours of due diligence was not conducted for Daniels, but under the influence of Jack Daniels?
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WE SHOULD HAVE GIVEN H.B.O.S TO SCOTLAND LIKE THE FIRST MINISTER WANTED HE SAID HE WOULD SORT IT OUT FOR SCOTLAND?
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This comment was removed because the moderators found it broke the House Rules.
I've paid my mortgage off, and got rid of credit debts. I Just need to sort out the hideous council taxation then utility bills and that's it let Gordon Brown and the bonus mob sort it out without my help. I refuse to be a debt slave to pay off other peoples mess implemented through government policy. No borrowing, Pay As I Go. That’s my motto.
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"Wot no riots?"
(re the 3 posters who are wondering why.)
Apparently the BoE will reduce rates by another half a percent to just 0.5 percent next week.
We can expect to see charging for all bank accounts - no interest on deposits and term deposit rates at 1.5 percent -- You want riots - just wait till the pensioners who live on the interest from their nest-eggs get wind of yet another cut to their income - many will have lost three quarters of their income. (There are 7 times more savers than borrowers.)
PS why will GB not do the same as Barack Obama and cap all incomes for bankers (and pensions) at 250,000 GBP? (Answering my own question: is it perhaps because he wants a job in the city when he 'retires' - like so many of his senior civil servants!)
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250 sosraboc suggests that gross misconduct would be followed by no pension. I don't know Goodwin/Hornby's contracts but I very much doubt that incompetence can be construed as misconduct. While dismissal can arise in such a case it is very doubtful that a pension could be withdrawn unless it could be proved that G/H or any other executive formally breached company rules/legal constraints or exceeded authorities.
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Every rule and regulation was brought in because the market could not regulate itself - the invisible hand if it exists at all is a greedy grasping hand that has no long term interests.
Complaining about regulation in the financial markets is just like the Police asking for more powers; there was a time when markets were totally free and the Police had all the powers they could have. The police abused those powers and the markets crashed. Anyone who believes in the ability of any group of people with this sort of power to govern themselves is living in a dream.
All these events are tied up together: accountability is the common factor. The 30-year-rule is in place specifically to prevent politicians being held to account until after they've got their pensions; deals are done behind closed doors to prevent accountability; the banks were allowed to do what they liked.
There is no inherent difference between public and private ownership - British Steel was a disaster not because it was nationalised but because it was not accountable for its losses; HBOS is a disaster not because it was a capitalist privately-owned body but because the people in charge knew they could skim of the huge wages and scarper before they were caught. Brown is a hopeless chancellor and PM because he only has to answer to us every 5 years and in the meantime he can feather his and his friend's nests. Globalisation is a threat not because we should fear foreigners but because it is used as a tool to move decisions further and further from the ballot boxes of the world.
We need accountability, and if the current form of Parliament can't give it to us, then it's time for a new form of government in this country. Because a government which has lost its fear of the people is, at best, one step away from tyranny.
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Did any one look at the books before take overs by RBS and Lloyds went ahead, considering what has come to light since makes one wonder !. Either they did not see this or were to blind by greed to see it.
If these banks overlooked and ignored the obvious at the top of the pile, makes you wonder what they overlooked and ignored at the bottom of the pile.
I have heard a lot about not breaking any laws or regulations at any level of the financial system, however, the light touch of the regulators may have overlooked wrong doing and law breaking, about time the regulators started looking a wee bit deeper.
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#267 TimBJones
Many thanks.
I think I'm a little clearer than I was.
"Technical" definition of a liability explains a lot.
i.e. let's call it what we like and then we can ignore it for accounting purposes.
Once again, thanks for the clarification.
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#262 blefuscu
Belated thanks for the suggestion, which I will ceratinly follow up.
People on this blogg are so helpful.
They should be running the country.
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259 brownloadofrubbish
re debt / tax
Tax take from the economy has been consistent 43 to 46 p in the pound for decades. Up at 46 in the last few years. This is a fairly common figure across the major european developed countries. To that has to be added PFI and PPP, an attempt to get more money into the public sector without it showing on PSBR. Prior to this 80s and 90s was the sale of national utilities, some sales such as Royal Mail still in the pipeline, all giving extra money for HMG. Basically there is little left to sell.
The bank prop looks to be focused on trying to preserve the City as a independent financial sector but income has to drop.
The figures look unsustainable in terms of volume. There has to be a cut back in public expenditure and unfortunately the longer it is left the worse the impact.
Further those with or near to negative equity are not likely have to disposable income to fund any alternative service purchasing. It looks to me as though all to thorough a job has been done by Brown.
Perhaps that is why there is little noise coming from the opposition parties - they know there is no real answer other than cuts.
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272 scotbot
Last time I looked generally the talk was of approx 10 Million households with mortgages. Today they are reporting some 4 million with near to or already into negative equity. I have not looked any figures up but my understanding was approx 1/3 of houses had no debt that was all. Some will have little debt. The problem is that appart from those who have entered the property market in the last five years there has been equity release via one scheme or another. The problem is that the housing market historically has run at just over 2 percent of stock turnover for a normal balance market. A boom occurs when turnover moves to 4 percent, and the market stalls at 1 percent turnover. The problem is you could be looking at a long time for the negative equity group to get rid of the negative equity via inflation. So a difficult market will remain. First time buyers still cannot buy a house and people still insist on putting property on a prices you could only describe as hopeful. House prices still are moving downward.
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I hope that the people dealing with this situation , risk weight the portfolio of HBOS and then make them pay through the nose for the substantially higher risk than that of the RBS portfolio. On analysis the RBS portfolio is likely to be much higher quality!!!
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263. At 7:53pm on 27 Feb 2009, nobletututu wrote:
"And whilst we are at it, i don't remember voting in Mr Brown. Who else remembers voting for Mr Brown to be Prime Minster."
This is getting tedious now, still here we go again...
our style of democracy is what is known as a Representative Democracy. You vote for an MP. not a Prime Minister.
The newly elected House of Commons then decide on who will be the Prime Minister of the next Government, Further to that nobody becomes PM unless invited to by Her Majesty Queen Elizabeth II who usually accepts the will of the Commons but doesn't have to, so, taken to the letter of the law, only one vote is required, HM's. and GB got that one.
are you denying HM that right?... you're not a commie are you???
the only people who voted for GB live in Kirkcaldy and Cowdenbeath (and Windsor Castle of course).
Now you might want to believe that you are voting for Dave, Nick or Gordon at the next election. but unless you are living in Whitney, Sheffield Hallam or the above mentioned K&C then you are not.
It is a system that has worked for hundreds of years and long may it continue.
you should read up about parliament and it's history as it is very interesting and you clearly don't understand what you are commenting on.
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Itn seems to me that the board of Lloyds TSB were in breach of their fiduciary duty when they did not do full due diligence on HBOS, and as such can probably be sued by the shareholders; all the more so because serious doubts were raised at the time by large numbers of shareholders who were ignored.
Anyone for a class action?
"The chief executive officer of a company has a fiduciary duty to the company's shareholders. This means that any course of action the CEO takes should be in the best interested of the shareholders"
It clearly was not and a number of us told him so.
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I too find all this very depressing. I hope there are riots.
But on a more cheerful note, as a teacher, I thought Britain was just full of mindless chavs so I find it really refreshing to read the colourful language and thoughtful comments from contributors to this blog.
Poster 69 - congratulations on a very well written and witty post.
Somebody (can't remember who) made a very good point about Nick Leeson. I don't see why he was prosecuted for criminal behaviour, when the other fraudsters have got away scot free (no reference to Brown's nationality here). There seems to be no logical reason for this, other than the fact that he was just an ordinary bloke and bank bosses operate outside the law, as do politicians.
Oh and Robert, I forgive you for not knowing the difference between 'discreet' and 'discrete', particularly as I've recently finished marking GCSE coursework full of gems such as 'I done this on a spreadsheet'.
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Not to ignore the furore over Si Fred's pension pot, but has anyone stopped to ask what 'severance' and pension package has been provided to Andy Hornby? A package that is being cushioned to the tune of £60,000 per month from Lloyds for 'consultancy'.....
Hornby and his predeccesor Crosbie, who destroyed the BOS and the HBOS, should not escape the treatment being given to Si Fred.
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Insurance it's not. The risk is nearly all one sided. It's clear that we wretched taxpayers are going to pick up whatever is in the toxic bucket. Obviously the banks will throw everything under the sun that might even possibly be a bad or doubtful debt into this category and there will be nothing the government can do to stop them. It's a golden opportunity to clean out the skeletons in the attic. Mortgages, commercial loans, credit cards, the lot.
Banks are far more capable than their equivalent in the civil service and (especially) in government and it's comical to see them making rings round the inexperienced and none too bright, ministers particularly. Except that it's horrendous to watch as soon as you think about who's paying the gigantic bill.
We could have modernised our infrastructure with the sums involved, and instead we paid it to bankers.
Well done bank management, we've been well and truly stuffed and you are laughing all the way to the next bonus... oh dear!
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Strategy v Tactics
A Nationl strategy is required for such things as:-
Energy
Transport
Defence
Education
Pensions
Health
(Please feel free to add to the list)
Strategy requires a 30-40 year time scale. This is irreconcilable with a political system that offers 7 or 8 elections over the same period,
For the political elite, the short term expediency will always outweigh the long term consideration.
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282#
I am glad you got an explanation from 267 because I posed 3 questions in my post of 208 and got no answers however I did not understand 267's response in relation to banking. I thought that the off balance sheet in banking related to conduit entities to whom a bank woul sell structured securities and they in turn would sell them on but would require a guarantee from the originator as insurance to the purchaser.The guarantee would be noted in the bank's balance sheet. If my understanding is wrong I would appreciate being corrected.
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re 287. Rhubidium
Spot on! And exactly what I've said myself in the past. No one gets to vote for Gordon except his local constituancy.
There are a number of examples of people becoming PM mid-term, with John Major and Jim Callagahan just being two recent examples. Douglas-Home, Eden, Macmillan, Churchill, Lloyd-George all further examples.
The only amendment to this system that I would propose is a 'termination clause' in the parliamentary electoral system that forces an general election within 18 months of a new Prime Minister coming to power mid-term.
This allows stability in the system, means that people know they'll get their say soon enough, and gives the new person a chance.
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I saw this relating to American Insurance Group, it applies and explains what happened here :
____________________
Still confused about how AIG lost its shirt by going into the securities lending business big time? We understand. It's terribly complex and full of words that make your eyes glaze over.
So we decided to break it down into the simplest terms Wall Street transactions can be explained: the two cows story.
You have two cows.
John Paulson borrows one cow so he can sell it for $100. He gives you $10 as collateral.
You buy your neighbors cow for $100, which you finance by taking out a $90 loan from the bank and use John's $10 to make up the rest.
You brag to everyone about your financial health. You have assets--two cows you own, plus one Paulson owes you--worth $300, and liabilities of just $100.
A third of the country goes vegetarian.
You thought your two cows were worth $200 and now they are worth $140.
You express confidence in your financial health. Your assets are now worth only $200--your two cows plus the one John owes you--but your liabilities are still only $100. If necessary, you could sell the assets at this distressed price and pay off all your loans.
You hold onto your cows because you are sure the market is "dislocated." Some day someone will want to eat beef again.
The rest of the country goes vegetarian. Your two cows are now worth $2 each to guys who want to make dog food.
John Paulson buys a cow in the market for $2 and he gives it to you as repayment of the loan. You now have three cows worth six bucks.
John wants his $10 back.
The bank calls. It wants its $90 back.
You call the Federal Reserve and ask for a bailout.
_______________
Just swap names of the institution and manager, It fits!
€z
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When I look at the vast sums involved in all of this,
I think of how much the Falklands were worth, in cash terms, when the UK went to war to retain them. Those poor souls who died or were maimed in that War. How much was spent to regain the assets?
Then I think of the aftermath of the Second World War, where Britain ruthlessly but covertly persued a "Revenge policy" on, for example, the SS officers and troopers responsible for war crimes (such as shooting escaped prisoners etc.) No trials, they were just hunted down and shot!
Don't involve the lawyers in this disgraceful display of greed that has ruined our prospects of remaing a wealthy country.
The culpable bankers have robbed, harmed and blighted almost everyone in the country, they should not be allowed to enjoy the fruits of their criminal irresponsibility and incompetence.
€z
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292. At 11:39pm on 27 Feb 2009, EBAHGUM wrote:
"A Nationl strategy is required for such things as:-
Energy
Transport
Defence
Education
Pensions
Health
(Please feel free to add to the list)
Strategy requires a 30-40 year time scale. This is irreconcilable with a political system that offers 7 or 8 elections over the same period,..."
I disagree, the Tories managed to destroy every last one of those things with their national strategy and it only took them 18 years.
Energy:- sold off the lot to some French and Germans.
Transport:- turned it into the deregulated mess we still have today.
Defence:- slashed the armed services to the bone.
Education:- starved of cash, does the name "Milk Snatcher" ring any bells.
Pensions:- don't remember reading about any pensioners frozen to death this last decade. seem to remember it used to be a problem though.
Health:- do i really have to spell that one out.
We are still hearing people say, I voted Labour but not again, this is encouraging to me, as a Labour supporter, because in 1996 nobody would even admit to voting Tory the first time. It also amuses me to remind you that the Tories won an election in the middle of one of their two recessions. Remember, they put John Major forward in 1990 to lose the 1992 election but the damn fool won it and left the Tories to weather the downturn they had created.
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anyone ever hear of a '2a-7 put'
anyone know that AIG are going to announce the biggest corporate quarterly loss in history next week
$60 bn
for the last quarter of 08, not the year
read this if you are feeling brave!
http://www.nytimes.com/2009/02/28/business/28nocera.html?ref=business
despite the best efforts of the English (and Scots) the American financial institutions remain the biggest pirates of all
let's here it for the special relationship once again!
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War crimes,nothing more nothing less.
Out on bail instead of being in the electric chair,
And after you get a lovely pension !!
Warned of Armagedden months ago and this is only beginning
A
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for those of us following the 'should we shouldn't we' bank nationalisation argument, here is an interesting article from the other side of the pond
http://www.nytimes.com/2009/03/01/magazine/01wwln-lede-t.html?_r=1&ref=business
it basically says that temporary nationalisation does make sense in the current situation
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I wouls say that a bear market doesnt suddenly become bull market overnight.
We have phases to go through first.
Since there is still a Credit Crunch going on as we speak, business across the world cannot function as they normally would like.
More job losses and contraction to come.
And perhaps more fraud likely to be uncovered as the good times have gone bust.
--------------------------------------------------
"We need to move on, Lloyds price will rise again, provided that banking activity now resumes as normally as it can and no more huge losses are announced in 2009."
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What gets me is of our three banking terminal case, LloydsTSB HAD the best chance of reviving itself in the short term.
Then Brown forced it into a 'marriage of convenience' with HBoS. No need to strip HBoS's assets out and lock off the debt, too complicated, too little time as Brown was Saving The World.
Desperate to prove that the UK wouldn't see a Lehman Brothers, he mated the only viable banking organisation with the toxic timebomb and DIDN'T EXPECT IT TO GO OFF.
The issue isn't where HBoS's debts were the largest. It's why Brown and the FSA didn't suspend HBoS' operations; push a rug under the feet of its savers, put a line in to short-term debtors (defined as those paying their HBoS tabs) and cut the core defaulters out of the business before selling it along to LloydsTSB?
The core defaulters could then be handed straight over to the Treasury to have their payment terms renegotiated or assets seized. This, in turn, would've proven reasonably profitable for the taxpayer.
However, the situation transpires that Brown had money pumped into the trading system; more money pumped into individually failing banks and is now writing a third cheque, with taxpayers' money, to buy up the core defaulters (who should've been locked off in the first place) under the pretense of an insurance scheme. In a few months' time I have no doubt he'll be writing a fourth cheque to pay out on the insurance these banks have taken out.
Gordon Brown's fallen for the world's biggest pyramid scheme.
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#294, brownloadofrubbish: "The only amendment to this system that I would propose is a 'termination clause' in the parliamentary electoral system that forces an general election within 18 months of a new Prime Minister coming to power mid-term."
Which merely demonstrates that you, too, do not fully understand the parliamentary system of government.
We vote for an MP (and, by extension, a party) - not a prime minister.
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#264 allmyfault wrote: "this is still early days in the meltdown.
This is not a short-term blip in the smug and cosy West's smooth ride to wealth and pension heaven. There is no recovery in 2010 or 2011. (Try 2015)"
I disagree. There have been recessions before and there will doubtless be many more ahead. This one is a little deeper than others recently but, in the end, it is just a recession and recessions are little more than a collective state of mind. As soon as confidence returns it will feed upon itself and we will be back on track.
Two years from now the banks will be profitable again, house prices will be rising and the financial panic of 2008/9 will be all but forgotten.
What will also be forgotten is the furore over Sir Fred's pension and bankers' bonuses in general. Never again? Don't make me laugh. Does anyone here remember the similar "fat cat" outrage over executive pay in the mid-1990s? Cedric Brown? British Gas? No, I thought not...
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so whats the point of the FSA.
why not let these instituitons go to the dogs and instead of the government guaranteeing their losses they should be investing into a new finacial organisation buying up some of the best bits (infrastructure , branches, re=employing the hard working staff and sacking the fats cats with no pensions etc.
i'd take a stake in that .... oh you mean i don't have a choice??.
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brown beggers belief, he wants tightening up of bank regulation in the world!!! ,note....not just britain, i dont remember brown ,pre 2007, telling us how well the global economy was doing!!!, but he sure told us how well the british economy was doing. but please dont resign brown and leave us with that woman harriot harperson, iI WANTTO SEE BROWN DEMOLISHED IN THE NEXT GENERAL ELECTION, and then say i"it was the global voting system that needs changing"...... brownwatch..458 days.
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#304 i tend to agree but 2 things 1.brown wont be here. and 2. house prices will not explode because people will need to put larger deposits down.
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#304. rbs_temp wrote: "There have been recessions before and there will doubtless be many more ahead. This one is a little deeper than others recently but, in the end, it is just a recession and recessions are little more than a collective state of mind."
A "collective state of mind" is not a definition of a recession that I have read anywhere else. Lost manufacturing, mounting unemployment, jobs gone overseas, home repossessions running at several hundred a week, ordinary savers losing 80 per cent of their income from their own savings (or losing their savings altogether), ballooning State benefits bill, eye-watering rises in prices of staple foods - all just a "state of mind" to you?
"Two years from now the banks will be profitable again, house prices will be rising and the financial panic of 2008/9 will be all but forgotten."
If this crisis were just about UK banks, you might be right. But it is not - it is a worldwide contagion - and when VAT goes up to 20 per cent, and everyone is being taxed at 45p in the pound, you will not see house prices rising.
We are only at the start of an accelerating cataclysm. More bank crashes to come and, very likely, resignation of the Government.
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Wages haven't gone up. In fact a lot of companies have frozen wages this year. If the Banks are to lend responsibly (large deposit, four times salary) how can house prices rise?
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Sir Fred SHOULD renounce 90% of his pension pot, BUT make it publicly contingent on Mr Brown's resignation and 90% cut in his pension entitlement too.
Likely ?
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#310 there are hundreds of fred goodwins,hes the fall guy,he earns peanuts compared to some people in the bbc,whom we pay for.brown uses goodwin as a smokescreen,its pathetic ,like #304 said remember cedric brown(god not a brown again). and anybody with any sense wont chuck away a 693 grand pension. would you? im damm sure i wouldnt.
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This comment was removed because the moderators found it broke the House Rules.
This comment was removed because the moderators found it broke the House Rules.
#307:
You're absolutely correct.
Brown won't be here. Not merely because of the recession (because Cameron would not have done things any differently either in the years preceding the recession nor during it) but because Labour is now bankrupt of ideas generally and the nation is yearning for change.
Sensible, conservative lending policies should ensure that house prices do not rocket, and that's a good thing. But property is still subject to the laws of supply and demand, and real prices will rise.
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#311: "there are hundreds of fred goodwins,hes the fall guy,he earns peanuts compared to some people in the bbc"
I don't think there's even a grain of truth in that. A £693,000 pension "peanuts" compared to what some BBC employees earn? Absolute nonsense.
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#308: "A "collective state of mind" is not a definition of a recession that I have read anywhere else. Lost manufacturing, mounting unemployment, jobs gone overseas, home repossessions running at several hundred a week, ordinary savers losing 80 per cent of their income from their own savings (or losing their savings altogether), ballooning State benefits bill, eye-watering rises in prices of staple foods - all just a "state of mind" to you?"
The effects are very real (albeit overblown by the media), and the very real suffering of those caught up in the recession cannot be overstated, but it still all comes down to a lack of confidence. Once confidence returns, the economy will follow.
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298 somali_pirate_SP500
I'm not surprised. Ive been saying for months the real loser in the housing crisis is the insurance policy issuer. So if the banks are beggered what shape are the insurers in. AIG have always been to the fore. They look to be the worlds biggest financial latrine. Bit like the giant walking marshmallow man in ghostbusters but made of someting nastier. No wonder nobody wants to shoot it down. If there is something strange in your neighbourhood its probably a bank or insurance company. And dont forget that unlike this country in the US the individual can throw the house keys in and walk and they can't come after you, and some are doing just that. This still has a long way to go. And the real situation is only known by those with a vested interest so it is difficult to believe the bad news has finished, it is squeezed out by failure.
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279
Lying on a CV is generally dismissable offence. "Bad leavers" tend to lose entitlements, even on options etc. Certainly it would kill any discretionary elements.
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glanafon wrote:
You can have no negative equity on your property, but still have a huge mortgage (still debt) and owe money on credit cards or loans (still debt). That's what I was griping about: saying that 80% of households are debt free is a nonsense.
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#308
"We are only at the start of an accelerating cataclysm. More bank crashes to come and, very likely, resignation of the Government."
If another large bank or two goes down, either here, in Europe or the USA I predict a "National Govt." here in the UK as we really will be staring a world depression in the face My only question is who would lead and be in such a Govt's. cabinet - Brown/Darling are out, they are the Neville Chamberlain and Lord Halifax's of the day, part of the problem - Osborne whilst bright is to young and inexperienced, could Vince Cables really cut it being Chancellor?...
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304
Cedric the pig in clover.
I do.
At the time I spoke to a group of middle range bank managers using the adverse publicity as an example of moral hazard risks.
It was all over the newspapers.
None of the audience knew who or what I was talking about.
Outrage is very temporary.
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Robert - your account is astonishingly accurate. Who feeds this information to you before it gets into the public domain?
Some of the phrases you use are literally quotes from those who have been in the room. Is it someone from the government advisors (Credit Suisse) giving you this or Shriti Vedera?
How did you know that Eric Daniels was forgoing his bonus before it was announced?
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#304
Yes I remenber the fat cats of the 90's but don't just remember British Gas. There were Bankers in there too. One of which nearly destroyed NatWest. No government bailout then, just Fred the Shred!!!
I also remember the 70's 3 day weeks, power cuts, no bin men, massive unemployment, the country held to ransom by the workers!
Hey Ho same ol' same ol'
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Strong men will weep?
where are our serious critics of all that is wrong here?
http://www.youtube.com/watch?v=S1pAAnPLXa4&feature=related
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It's one sorry tale of dubious competence after another. I'm no expert in these matters by any means, but it seems to me that the Government's bank bailout must be costing far more than it can hope to earn in revenues over at least the next two years - and then there's the ubiquitous "everything else" to still worry about. As a layman it dawns on me that the effects of this and related banking disasters are going to be with us for at least ten years. We will be constantly reminded as we dutifully hand over our greatly increased taxes levied (by whichever shade of government) to pay for the failure of a few.
As a layman, I would at least derive some satisfaction from hearing a reasonably lengthy series of dull thuds as the heads of the culpable are publicly severed and fall. I hear nothing.
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308 diganddelve
''and when VAT goes up to 20 per cent, and everyone is being taxed at 45p in the pound, you will not see house prices rising.''
We are already there. Total tax take has been 46p in the pound for years, decades. A eyewatering 50p looks on the cards unless cuts are made. Taxation cannot be pushed too high or there is no point in working.
I'm not sure that this is so different to other recessions, just more so. The main difference is communication and the internet. It is more in your face. Further, job losses have been large scale, thousands announced at once. Makes the headlines. It is a bit like aircraft accidents. Lots of people involved in one incident so big headlines. dwarfed by the carnage on the roads but you would never think so to read about it. In the 90s recession businesses were less forward about problems and layoffs but they were not seeking handouts then, redundancies were in batches of a couple of a hundred in many cases and backdoor.
And being relatively poor is not that much of a problem if property is cheap but it isnt at present. Nobody will enter the property market whilst it slides down. If you are in it then trading across with no negative equity is possible. It has to pick up sometime then there will be activity and a bounce.
There are already groups better off for this recession, it is just they are not as vocal as those who feel threatened.
I didnt see much concern about the damage done to victims in the 90s for example, most of the time it was walk on by, I'm alright Jack. Even a workforce voting at a union meeting to keep free coffee rather than backing the motion to ask the management to save a job with the coffee budget and to charge 10p a cup. You have to get your priorities right and put a cost on a person - a cup of coffee. Even a sort of - if you have a problem it must be somehow your fault, because the commentator wants to believe the world is a meritocracy because that stops them being at risk. That comment is not directed at you, it is just an observation.
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321 sosraboc
''outrage is very temporary''
This may be true for the chattering clasess. Not for all of us as you are aware.
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319 scotbot
I was nay disagreeing, I was agreeing. 4 million in or near to negative equity at this stage, with further slides likely is very significant, let alone other forms of debt. It is more than enough to mess the market up. Let alone the personal debt problem. The 4 million indicates the level of remortgaging which has been going on, it is higher than the number of FTB who have entered the market in the last 5 years. There has been a massive thirst for debt.
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#255 Jericoa
You laughed at brown 'demanding' the pension money back.
Now it is even funnier - according the BBC, the demand is now a 'plea'.
http://news.bbc.co.uk/1/hi/uk_politics/7916215.stm
I wonder how much this is the BBC repositioning itself as Browns position becomes more and more untenable - or where the word 'plea' came from?
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Come on - it seems pretty clear that the whole UK banking system has been a massive ponzi scheme for years.
The bankers thought the government/treasury knew this and were in on it.
It transpires that Brown was actually too stupid to realise this (even with all his access to all the important info).
He has now let the cat out of the bag for all to see, but still fails to see the truth himself.
Because brown fails to realise that it is a ponzi scheme, he is keen to pump in (our) money to keep it going, because he really believes (or has convinced himself to believe) that the pyramid can grow forever.
Given browns activities elsewhere - one wonders if he actually understands what a ponzi scheme is, what makes them a scam (rather than a clever bit of accounting), and why they are always destined to ultimately fail...
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#323
"I also remember the 70's 3 day weeks, power cuts, no bin men, massive unemployment, the country held to ransom by the workers!"
Yes, I do too, I also remember that it was during a Tory Govt. how many strikes have there been of that scale since '97, how many were there in the 1980s. As for unemployment, the level of unemployment was small fry compared to the 3m plus (headline figure) of the early 1980s.
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When does Brown 'fess up to the fact that he has not been a Caledonian Kirk prudently steering us down the aisle of righteousness for the last 10 years but actually has been allowing the "clergy" to set up a casino in the Chapel. A disingenuous Blair I could just about suffer but an incompetent Brown is too much. He has to go.
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303. At 06:52am on 28 Feb 2009, rbs_temp wrote:
......We vote for an MP (and, by extension, a party) - not a prime minister.
___________________________________
We don't really. We're just conned every few years into thinking we do. The actual differences between the parties (minus the huffing and puffing) is small in terms of the effect on most individuals.
This has long been the case - dating back at least to the days of Gladstone and Disraeli when only the rhetoric of debate distinguished the Whigs from the Tories.
There is an uspoken conspiracy between the two parties not to upset the applecart of patronage and perks - and fierce opposition by both to the idea of proportional representation.
Most MPs (not all) are are mere jobsworths. With the large government majority that has existed for the last decade and the decay of the Cabinet system, we are effectively ruled by prime ministerial decree.
On occasions, this has been an extremely good thing. Churchill. Thatcher. But it's a case of time and place. The electorate very sensibly kicked Churchill out in 1945 and opted for Attlee, the best peacetime PM we've had before Mrs. T.
Churchill, of course, wasn't elected PM. He exercised the absolute power of a dictator. Thank God!
Sir, it is the man or woman. Not the party.
Brown is not the man to get us out of this. How can he? He spent the last 10 years getting us into it! His motivation now is cover his arse.
He is increasingly detached from reality. His "saving the world" mis-speak was merely a Freudian slip.
God help us if he can't be removed swiftly.
There are empty Coke bottles floating down the Thames that would make a better fist of things.
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309#
Houses prices will rise again in 3/4 years.Demand always outstrips supply.
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I shouldn't worry about riots. A country where one can't call a criminal a criminal without being censored can surely deal with a few rioting pensioners.
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So tell me Robert has this problem with HBOSs book been the fault of the USA?
No, oh I thought all this problem came from the US.
It does now appear that we have a problem that was created here and all whilst Gordon and his merry men were asleep. But then they were too busy cosying up to these great bankers instead of keeping their beady eyes on what the bankers were actually doing.
Nobody did proper due diligence as they were totally ignorant of what was on the books. Who actually conducted the due diligence? Very quiet on that front. If you have a survey done on something that is not in great health you get the best guys in and ask them to start looking hard at the worst bits first.
I totally give up on anything that has happened with this, I am a minor shareholder and fed up with the total incompetence of all the parties, it should never have happened.
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"the Treasury and its advisers have constructed a model that generates a price for the insurance that we as taxpayers are selling to the banks on the basis of various different measures of the quality of assets to be insured.
So if the data that goes into the model isn't quite right, the wrong answer will be generated on material issues like how much of the loss on loans should stay with Lloyds' current shareholders and how much Lloyds should pay for insurance in the form of new non-voting shares.
The glitch can be solved. And it will be solved, though possibly not till Monday or so."!!
Sounds like amnother hash being cooked up over another frantic weekend
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This comment was removed because the moderators found it broke the House Rules.
Of all places, the Daily Mail web site has it right. The real rate of inflation for those living on basics is just over 10%. The best available interest rate on fixed term investments is around 3.5%.
I make that a real interest rate on savings of minus 6.5%. Is it any wonder that some people are calling for Sir Fred and his ilk to, at the very least, have their pensions and bonuses clawed back?
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335 pigsty hill
I have trouble visualising a pensioner riot. It somehow seems unthreatening. Perhaps the police will have to deal with Hells Grannies. I can't see the government being worried about that sort of civil civil unrest. After you while I riot, no after you. Have you brought your thermos. Are you wearing one of those giant single slippers you put both feet into.
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"There's been a technical hitch, the equivalent of what goes wrong when you type the wrong numbers into a mathematical formula"
I may have said this before -
It is not highly regarded by your peers to be a diligent maths or science student
The high fliers do arts
Learning tables, doing long division without a calculator etc were left aside (possibly because teachers no longer knew how to do these things either)
By the time our kids get to College/Uni they are caught up in media studies
OK plenty end up working in the city, but only if they can play with fancy mathematical formulas
Nobody was checking the bottom line, or if they did they were laughed at or worse
Is it time to make school boring, to insist on basic skills?
Perhaps teachers need massive bonuses to ATTRACT AND KEEP THE BEST PEOPLE
Bankers should be boring, not highly paid and just be there to make sure the figures add up and the bottom line is secure. Lavish lunches and private jets must go.
Why do we pay our members of parliament good salaries and expenses and money for second homes, without some kind of performance related structure? Holidays on Russian yachats must stop.
It all seems like a very cosy gravy train to me - city bankers, government
Comments about public service workers recently led me to see that top people in public service are also on the gravy train
But most of us, public service or private are just trying to do our jobs, bring up our families, earn a decent salary and keep a bit for our old age, oh and enjoy life, let us hope for a good summer because none of us can afford to go abroad this year
It seems to have become a bit topsy turvy
These people in government and running banks and public services WORK FOR US
Why are we putting up with us
I have not taken to the streets for many years but I feel an urge to upset the complacency of the donkeys who SHOULD HAVE BEEN WORKING FOR US
Unfortunately I keep coming back to 'who is going to be able to sort out this mess'?
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thank you Pigsyhill for pointing this out
I have thought for a long time that inflation for me is well over the published one
and my tiny pile of savings is losing money as we type
I'm off to tend my vege patch
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340 glanafon
As a granny about to riot
I wear uggies by the way not slippers
I think the government will be very afraid once the grey lobby hit the streets
There are more of us than anyone else
And we vote more than anyone else
And we are just a tad fed up at the moment
And riots don't have to be violent
Ghandi shows the way
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#339 Pigsty Hill.
Printing money also erode the value of our saving.
So, on the one hand we have enromous debts and risks placed upon us. On the other hand, out saving which gives us some independence and freedom are rapidly eroded by quantitative easy and the low savings interest rate.
Add these and the control of the retail banks to ing to the surveillance controls ... I wonder whether the financial and economy are really as we are told and reported???
More things to puzzle over.
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334
Such faith....
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#340
[ re 'pensioners riots' ]
"I can't see the government being worried about that sort of civil civil unrest."
I'm not so sure, nothing more emotive than sending either pensioners or children to jail, just think what reaction there would be if (and I'm NOT suggesting this should be done) 50% of all pensioners stopped paying their Council Taxes or occupied local/national govt. buildings and then faced the law-courts for their actions - No, the Govt (any Govt.) would be very afraid...
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Gordon Brown addressing the party faithful just said that "UK banking practices are unacceptable and must be changed...."
Remind me..who has been in charge of the banking industry since 1997? oh yes a certain Gordon Brown...! This man lives in another world....
he is now exploring all legal avenues to recoup Goodwin's pension...all words and no action as usual, he knows that legally goodwin's pension arrangements are watertight so he is being his usual disingenuous self pretending to the population he is actually doing something!
on another matter next week could be the week it all implodes....AIG results, Citigroup insolvent, etc etc.....
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Slightly off topic I know but Mervyn King really is a star. For those of you who are as obsessive as me - particularly those posting in the small hours - you may want to check out www.parliamentlive.tv and go to Thursday's session of the Treasury Select Committee. Reading between the lines, the poor man is clearly under huge pressure being asked to take the blame for things way outside the BoE's remit, being asked a lot of ridiculous questions by people who don't know what they are talking about and his patience is strained. The moment about an hour and five mins in where various Labour MPs try to get him to condemn Goodwin's pension, to get a headline for the following days papers and he elegantly and wearily brushes them off and tries to remind them what the hell they are there for is a classic. In a world where there are precious few people who know what they are talking about and can actually be trusted, THIS MAN MUST NEVER BE SACKED OR ALLOWED TO QUIT. Someone ought to launch a Facebook Group - Save Mervyn King
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Good Morning Scot Bot.
The figure surprised me too!
23,000,000 housing units in UK
11,000,000 mortgages
one million sales (changing hands) in 2006/7
50% of properties have been in unchanged ownership for more than twenty years.
Majority over 50 are debt averse and did not participate in the frenzy. They live in their houses and don't move. For them the 'value' is academic.
The problem of debt is located (in terms of the citizenry) in about twenty percent of the population mainly under 45.
I am over 55 and have never had a credit card out of CHOICE. And I don't have a mortgage. Most of my aquaintances are near the end of their 25 year stretch too.
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Gordon is using his favoured tactics this morning combining arrogance , cynicism, opportunism and repitition.
While the leader of the opposition is in mourning he is pitching himself as the 'GRAND PROTECTOR AND ARCHITECT OF A NEW GLOBAL BANKING SYSTEM THAT WILL...OF COURSE...HELP SMALL BUISINESESS AND HARD WORKING FAMILIES.
Of course, himself and the bankers labour so courted and rewarded with knighthoods in the good years are now conveniently ditched , thrown to the dogs in fact in a grasping attempt to save some votes now that their very cosy economic / political deal is busted. Big tax receipts in exchange for light regulation and knighthoods like confetti.
He thinks himslef so superior in inteligence that nobody could ever be smart enough to see through his smokescreen.
How long before we see Sarah Brown making 'in promptu'speeches again I wonder?
Seeing the truth makes me feel so tired.
Jericoa
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The "pig on Pork" activities of HBOS are not new.As a Senior Executive Credit and Risk I regularly attended "workout" meetings often held at the Bank of England.As far back as 1995 it was the practice, in certain instances ,of BOS as it was then known to try and buy out other banks loans and then gain effective control of the company by converting debt to equity.Although the UK Clearers were not keen to assist ,the smaller banks often did so as to free up their balance sheet and time spent on dealing with the problem.
Whilst I dont agree with the large payouts top Bankers have received I find it two faced to hear our politicians voice their disapproval when they in the main are just as bad.Further had the Regulatory System operated correctly the Northern Rock and HBOS fiasco would not have happened.
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Next, devalue an already stricken currency by introducing another interest rate cut and bring in Quantative Easing.
Is this a deliberate attempt to destroy sterling?
Global currency within the next 10 years?
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Robert,
I think I have discovered your elephant, and maybe your source
The open secret that all this bank bail out has been done by Crash without the involvement of Darling
Now why would you have a position of Chancellor if you aren't going to allow them to do the job? Why are we paying the salary? Obfuscation?
Surely that means that the two most powerful positions of the country are vested in just one individual?
All roads lead to Crash, and whilst he may ask Lord Mynar and Darling to take the current bullets flying because of this debacle surely you should be asking questions and getting this into your blog.
Now we have all the bluster of Crash to try to keep up the diatribe over a signed off deal done earlier with Sir Fred when he knows that it is the only avenue open to him, but things have a way of returning to haunt.
Remember the finger pointing
Don't accept the deflections
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#348 Wharfgirl
Yes. King has been a cassandra for years.
Looking back at the cuttings to 2005 has seen him making his point in public (and I'm sure in private). His remit (and that of the MPC at the BoE) was inflation. He has no power to effect policy beyond the narrow (albeit important) lever of interest rates as measured by inflation management. The Government chose to exclude asset inflation in its preferred measure of inflationary pressure within the economy for populist ,electoral (and ideological) reasons. The ultimate responsibity lies in Nos. 10 and 11 Downing Street.
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re. 304 rbs-temp
(everything will be OK soon)
Nope, it most definitely will not be OK soon.
The average joe has been enjoying massively increased credit card, store card etc. limits for the past 12 years.
At the same time he/she has increased his mortgage substantially, either in equity release, or new and bigger home, enjoyed bathroom and kitchen fit-outs, conservatories, new car, etc. etc. all on borrowing.
He/she has been encouraged to borrow at 5 times salary and more, at 100% of collateral and more.
How on earth do you think that is sustainable? This runaway train has hit the buffers big-time.
If Gordo the Great says three times salary for all new mortgages, how on earth do you get house prices to rise. (Well unless he doesn't actually get round to enforcing it I suppose -but isn't he a decisive man of action???????)
We have a monstrous balance of payments deficit, a wretched exchange rate, miserable exports, a huge public sector, a lousy government, zero interest on your savings, rising unemployment and a pensions crisis that has festered under a blanket for the past few years.
Outside of the revolution, there ain't many factors working in our favour at this point to generate any momentum for recovery,
... but I admire you optimism.
Regards,
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#348 wharfgirl and others.
(Merv. is all right)
Well Mervyn should take a leaf out of the new, refreshed Pesto's book and start getting blunt and stroppy.
He has got bigger responsibilities as a citizen than he has as BofE employee.
We haven't got the luxury of relying on narrow-brief focus from the insiders who know the big picture, just 'cos they are polite.
This is roll-up sleeves time.
Regards,
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#355 allmyfault
Obviously there are some who see this as a 'confidence' issue. Just another 'recession'. No doubt if we all wish hard enough the gloom will lift!
There are series of false dawns to come, I'm sure you would agree.
The road to recovery is no yellow brick road and those rosy pink spectacles are still, it would appear, in place in the land.
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Oh dear oh dear!
Hbos being a poison package is no surprise, surely?
I would ask, however, why it was imperative that RBS sign the insurance ring fence scheme by the day their results were published, yet LBG get a 'stay'?
If the business model calculations worked for RBS, why don't they work for Lloyds?
What is it, exactly, about Lloyds' figures which are crashing the calculator?
If the calculations are changed to make it work, does this, in fact, give an advantage to Lloyds over RBS, or is it to do with the government share percentages?
The whole phrase 'business model' gives me the creeps-isn't that what caused this whole appalling mess?
And the change of language from demanding to pleading sounds just the same as the change of language and rules to be applied in exchange for a bailout.
It seems to be a case of go in with hard hitting soundbites to appease the masses, then back off a million miles an hour.
All very strange. Is it just a lack of courage, or some other, undisclosed reason?
Turn and turn about it seems.
Wonder why?!
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National Rail Enquiries are dismantling their call centre in the UK and moving it to India in order
to cut costs. BritishTelecom have already moved their Customer Service operation to India, following the example of Barclays Bank et al. Can nothing be done to stop this wanton destruction of UK jobs in such attempts to maximise company profits at the expense of our UK work force. ?
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I stick to the solution that I've put forward before.
The government should buy HBOS from Lloyds. Pay Lloyds a fee for starting the process of putting the HBOS books in order. Then put Crosby, Blank or a similar expert in charge of HBOS and look forward to the (negative) profit.
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As if all of this bad new from HBOS was not bad enough I'm amazed by the current "Jobs of the Boys" attitude in Lloyds Banking Group. In particular why are all the new top jobs going to ex-HBOS people especially the job of Deputy Group Finance Director who will have a massive influence on the risk policy of the new bank.
Surely the idea of the takeover was to instill the prudence and best practice of Lloyds on HBOS not to just create a new larger HBOS with all the problems that will bring from their stupid risk policy.
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@355 and 357
I agree
With luck Peston et al will recognise these brief oasis' on the barren plain but I wouldn't hold your breath
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304 - rbstemp
I'm afraid you must either be very naieve or very gullible.
The severe recession (virtually now a depression) we are now in will mean the so called 'major' economies will not recover for a generation. If they ever truely recover.
The FIAT money principles of recent times are now dead and will not be resusitated. The massive fractional reserve lending policies seen in recent years has seen to that.
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Post 363
Sorry that last part should have read:
'The massive fractional reserve lending policies of recent years has seen to that.'
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Jericoa-I agree with you on the tiredness issue-mine comes from having a seemingly misplaced faith in the inherent goodness of people.
I see so many ordinary people who know what's gone wrong, plenty of fantastic sensible ways to at least stabilise things, ways to prepare ourselves for a new future and so on.
I hope, every day, to see Gordy do what he needs to do-bash the banks, start investigations, prosecutions, be totally transparent, honest and humble.
In short, to show a genuine concern for the people of this country. If someone is humble and honest, but still made mistakes, we would forgive and admire them for at least trying.
My fatigue is from daily dashing of my hopes and optimism, and the frustration of notbeong able to change a thing.
For some reason, the banks, auditors, the likes of Fred Goodwin and other CEO's are able to dictate exactly what the rules of engagement are, and in so doing, happily destroy the lives of us lesser mortals.
Until we see genuine evidence of conscience in banks and government, wearily I have to accept that no amount of shouting, ranting and raving will ever make a difference. These people need to be honest with themselves-but that will never happen.
Megolomamia seems to rule-not ok!
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343 grannyfromthesticks
Go granny go. ; )
However. Ghandi was in a country occupied by a foreign imperialist power in small numbers. The campaign worked because he forced brutal tactics to supress unrest. How can you force physical brutality here against pensioners. No politican will back it.
349 blefuscu
...'' The problem of debt is located (in terms of the citizenry) in about twenty percent of the population mainly under 45.'' ...
The problem is the older brigade are the savers not spenders on the whole.
The younger indebted group are the engine of the economy because they spend more per head of population, consume. Knock them out with the debt load and you inevitably slow economic recovery.
Further - economic policy treats everyone as the same even though the different groups react differently. It is highly likely that policy favours the younger group as this will be the group the HMG wants to see spending again.
The problem also is that if recovery does not happen the younger group will not be providing tax revenues to help the services provided to the older group. The desire at HMG has to be to take all measures to get recovery. This in all likelyhood has the outcome that the older group suffer relatively.
Whether anybody likes it or not in due course HMG will put measures in place to promote FTB entry into the housing market. The figures point to 4 percent turnover being a housing boom, as per Lawson and Brown periods, and 1 percent being a stalled market as per Lamont and Darling.
Getting housing stock turnover at previously steady rates of 2 percent per year is needed to reactivate the housing market, which is the largest domestic borrowing vehicle.
The spin off from basics like house refitting etc is significant. There is nothing wrong with this. It is normal. What is not normal is the sort of forced feed of funds into a overheated market which has occurred in the last 5 years or so. And for HMG or anybody else to pretend they did not know what wqas going on is ridiculous. All they had to do was look at the stock turnover.
The housing market has to complete its fall then economic recovery can get going. It does not matter whether you regard housing as the cause or effect, it is part of the picture. The problem occurs in the housing market when turnover rises and despite what anybody tries to say to the contary it is actually quite easy to restrict the flow of funds into the market if there is the will. You just turn off the tap for a while.
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359 possumpam wrote:
call centres moving o/s to cut costs.
..''Can nothing be done to stop this wanton destruction of UK jobs inattempts to maximise company profits at the expense of our UK work force. ?''..
Yes, refuse to have anything to do with the business doing this. Refuse to use the call centre and demand face to face contact. If subsidised by the taxpayer write to your MP
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May I suggest that the persons responsible for the destruction of the banking system in this country have acted in their own self interest and in a way that has caused more harm to society that all the terrorist that have been generated in the UK.
*‘Anti-terrorism, Crime and Security Act 2001
Freezing Orders
Orders
4. Power to make order
(1) The Treasury may make a freezing order if the following two conditions are satisfied.
(2) The first condition is that the Treasury reasonably believe that—
(a) action to the detriment of the United Kingdom’s economy (or part of it) has been or is likely to be taken by a person or persons, or
(b) action constituting a threat to the life or property of one or more nationals of the United Kingdom or residents of the United Kingdom has been or is likely to be taken by a person or persons.’
*Crown copyright
So, if we can do it to Iceland – Why not the Bankers? Over to you Sir Fred…………
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#365 Tigerjayj
I have to agree with your observations. Despite it being somewhat out of favour (lip-service paid) a huge part of the problem is a question of morality. Not in the narrow, doctrinal sense, but the triumph of what the Pope calls 'relativism'. The 'anything goes' of the red guards of liberalism. The only measure of success is excessive consumption. Conscience is for wimps in the Schumpeter 'creative destruction' of recent years. The more debt the banks created, the more consumption. Becomes a state of mind which leads to ever more reckless risk taking by banks who made themselves rulers not servants to the real economy. 25% returns is madness. Then 'invest' in ever more debt securitisation and so until the WALL. I resent Britain having been taken hostage to these amoralists. They have the power of money creation (fractional reseve banking) and have driven it off the road in an environment without regulatory speed limits.
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to 365
There is something that will make a difference.
It's the honest straight reporting of facts and figures - without any comment - that sheds light into the darkest corners of our 'winners take all' economy.
Nothing wrong with a bit of shouting,ranting and raving. Better than skulking in the midst of the hopeless silent majority.
Be grateful that our own special War Correspondent, Peston ,keeps us supplied with ammunition for the conflict.
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#366 glenafon
Agree with you. But surely the proximate cause for the overheat in a global economy ultimately lies in the transatlantic debt culture. Interest rates could have taken some of the heat out of UK (I would have supported that) but the crash has Globalisation and USA written all over it. The horror is how vulnerable the UK is to the fall-out with precious little room to manoevre given the flawed fundamentals and the whole-hearted allegiance to messianic neo-liberalism in terms of policy.
But we are where we are. We have got to get the ship of state afloat and soonish.
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343. At 11:13am on 28 Feb 2009, grannyfromthesticks wrote:
==="As a granny about to riot
...
I think the government will be very afraid once the grey lobby hit the streets
There are more of us than anyone else
And we vote more than anyone else
And we are just a tad fed up at the moment
And riots don't have to be violent"===
What the government fears more than anything now is an active, well informed electorate that is unlikely to vote for Labour.
As the "grey lobby" (ooo - I hate casual stereotyping, it's a habit I try not to fall into) are the largest active block of voters, his only hope is to disincetivise them from voting. Maybe all the polling booths will be at the top of the largest hills in the local area, with no public transport and only open when Countdown is on...
...sorry, I've fallen into my own trap.
I'm not expecting rioting in the streets over the economy. Like most things, any riots will come from tensions only loosely related to the recession we find ourselves in and unable to get out of.
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#340 glanafon doubts the possiblility of a pensioner riot.
Don't forget that we were the ones throwing bricks in Grosvenor Square in the Sixties and, after all, we have much less to lose now than we had then.
In fact, as #344 puzzling points out, we may soon have nothing at all to lose.
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343. grannyfromthesticks wrote:
==="As a granny about to riot
...
I think the government will be very afraid once the grey lobby hit the streets
There are more of us than anyone else
And we vote more than anyone else"
Indeed, granny, but for whom? With two Tory Parties, both committed to neo-liberalism, and the Nice Party committed to nothing in particular, is there a choice?
"The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which."
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320. At 09:29am on 28 Feb 2009, Boilerplated wrote:
#308
==="If another large bank or two goes down, either here, in Europe or the USA I predict a "National Govt." here in the UK as we really will be staring a world depression in the face My only question is who would lead and be in such a Govt's. cabinet - Brown/Darling are out, they are the Neville Chamberlain and Lord Halifax's of the day, part of the problem - Osborne whilst bright is to young and inexperienced, could Vince Cables really cut it being Chancellor?"===
Although I really like the analogy of Brown and Daring as Chamberlain and Halifax, I can't see a Government of National Unity coming out of this mess; mostly because Gordon Brown won't even acknowledge how much of a mess it is. Fairly soon the most important issue of Brown's reign will be to hammer home the importance and prestige of government (note the small 'g'); as that's his only hope for re-election.
Vince Cable would be an exceptionally good Chancellor, although be prepared for a fully nationalised banking system (sans HSBC) if that happens. I'm not certain that Cable is a fan of the Brownian "jam tomorrow" approach of socialising the risk and privatising profit.
I have also got to ask for a clarification from an earlier post:
270. At 9:04pm on 27 Feb 2009, Boilerplated wrote:
==="bit like those big bright stars in way off *universes* that eventually implode, sucking everything near-by into the resultant black hole?"===
By *universes* do you mean galaxies? If you can see into far off universes, then you've got sight that looks beyond n-dimensional space, and the corrective lenses for that are pretty expensive.
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Do remember the oldies are asset rich but cash poor. All the equity release pressure sometimes touted by younger pushy relatives. They'll only take it off when you need care. The house is your care home money box.
Well that was the pressure exerted by the debt (death wish) economy on individuals. Know of cases to numerous to mention.
If you want the high street to experience an improvement (not BMWs, foreign holidays et al.) raise the pensions. The back log of repairs etc. the shetland cardigans. That'll get the local shops going. An extra hundred a month will go straight out into the real economy.
You laugh. It's being done. In Germany.
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Perhaps there should be a new mantra-
An HONEST day's work die an HONEST day's pay?
Not tried and tested but could apply to all amoral earnings-in banks and elsewhere?
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As the world slumps into a synchronous economic depression it is time to think carefully about the future of our economy. There is no better way to begin tackling the problems of the future than to remind ourselves of solutions that have been applied in the past.
One of the twentieth century’s greatest economics historians, J.K. Galbraith reminds us that the big questions in economics are always relevant to the prevailing circumstances. In ancient Greece there was great concern over the ethics of charging interest on loans, By the eighteenth century the industrial revolution was in full swing and economics had become less concerned with the morality of levying interest payments on loans and more engaged in whether borrowed capital could produce a return over and above its cost. In the 1920’s and 30’s economics was preoccupied with the human effects of mass unemployment and poverty. Ideas in economics really are relevant to the epoch that the ideas are conceived and applied in.
It is instructive to look at the ideas that have prevailed most strongly in recent decades in the leading industrial economies. Across the developed world from China through Russia, East Europe and westwards all the way to the Pacific, the dominant economic philosophy was based on free markets in goods, services and capital. The differences in economic policy across the regions were to be found in the extent of the freedom allowed to the market. If there has been a common belief across the industrial world it is that free markets were uniquely capable of allocating wealth.
It is becoming apparent that the ideas that have driven the governments of the industrial world in the last two decades are changing now. At great speed.
As the world’s banking system succumbs to state control and as monetary convergence is put into reverse by government led devaluation strategies it is no longer reasonable to refer to free markets as the world’s dominant economic policy. Something else is taking shape.
We are witnessing a move away from the creation of a universal system of trade. What the world is now doing is moving back to a system of locally managed economies, a system of multiple free-ish markets. Many challenges lie ahead for each of these multiple market based economies but chief among the challenges is the need to allocate sufficient wealth across multiple communities in sufficient measure to ensure that governments are able to retain the support of their citizens. For citizen power, for the moment at least, remains as a basic tenet in the G20 system of beliefs.
When it comes to allocating wealth, societies around the world are faced with a new question. That question concerns the measurement of wealth. We no longer have a reliable measure of wealth via the traditional yardsticks of the US Dollar or the Euro or some other currency, neither can wealth reliably be measured through the debtor books of firms or banks. Neither can recently conceived wealth measuring techniques such as the quasi currency of carbon credits and debits be relied upon to reflect the carbon-sink wealth of say Brazil compared to the carbon-sink poverty of say Holland.
As growth in the worldwide production of goods and services pauses, economists too will have a chance to pause and to think.
If we play safe and assume that there is really nothing much under the sun that is truly new then we might benefit by dusting off some old ideas and practises.
Might I suggest that we start by reintroducing an old measuring stick that will enable us to give a reasonable approximation of our wealth? The measuring stick I refer to is old fashioned and is not prone to toxicity or severe bubbling. The ancient Egyptians were masterful at working with this measuring stick, they set such store by it that even now, three thousand years later we are struck by the Egyptians’ ability to make the measuring stick as beautiful as any work of art in any museum in the world.
For the moment, whilst the world pauses, should we not look again at using the most widely applied measurement of wealth across nearly all civilisations across nearly all of known history?
For expediency, and to reassure the world’s citizens in these uncertain times should the G20 en-masse revert to the GOLD STANDARD?
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#339 Pigsty Hill wrote: "The real rate of inflation for those living on basics is just over 10%."
It has been thus for many years. The rate of inflation suffered by pensioners and the disadvantaged has always been significantly higher than the headline rate, and made worse by successive governments' mean-minded attitude towards pensions and social benefits.
But there are winners as well as losers. The millions still in work, with a mortgage and looking for the next plasma TV or car, are already enjoying deflation and have probably never had it so good. Even a year ago a 1% mortgage rate would have seemed like a flight of fancy.
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The fall in interest rates which is hitting savers is having many unintended side effects.
A pensioner may no longer afford the personal financial costs of continuing with certain voluntary work. This affects the elderly, the disabled, youth and young children.
If one riots or partakes in civil disobedience, such as refusing to pay council tax, one will get a criminal record, precluding them from much voluntary working.
I suspect many people doing hospital runs, meals on wheels type services, church visiting, and work with the elderly and frail also have to be selective, as budgets can only stretch so far.
I think anyone who suggests we will be turning this around before the end of this year is a fool and anyone who thinks things will be better in 2010 is over optimistic.
Ideally, in my view, whoever forms the next government should tell us the true state of the economy. There should be referendums on how the taxes are to be spent, because we will no longer be able to afford public services as they are now, particularly free at the point of need health services for all. We will need to make difficult choices and playing hunt the banker or punish the politicians and other fat cats may be satisfying but it will not get us out of our predicament.
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Slightly off-topic, but I think I may just have observed another sign of the credit crunch.
I've taken out a maintenance agreement for my central heating system with a well known utility company, which I am supposed to pay for by monthly direct debit. They have now written to me about 3 times telling me they can't collect the money, even though they are using the correct bank details and my bank have confirmed that if they requested the money they would hand it over and they have no reason to block any direct debits on my account.
I've sorted this out by paying the whole year's fee in one go by credit card. This no doubt boosts their cash flow, and a conspiracy theorist might suggest that that was the outcome they wanted all along.
Personally, I still suspect they wouldn't have the wit to do anything like that and it's just sheer incompetence, but it makes you think, doesn't it?
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370, possumpam:
"to 365 . . . Nothing wrong with a bit of shouting,ranting and raving. Better than skulking in the midst of the hopeless silent majority."
Better in what way? Better as in 'having more of an effect on anything?'
How much better?
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373 Pigsty Hill
....'glanafon doubts the possiblility of a pensioner riot'....
By all means riot. I just doubt the effectiveness that is all.
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What our bankers have forgotten or failed to do is how to asses RISK.
Our country seems to have a collective blind spot on how to asess risk , either we have massive risk or no risk , with little in between . RISK in banking requires judgement as well as intuition and perception. it requires a depth of knowledge based on several factors so as to judge any given situation as to the rewards or losses possible.
The route to risk blindness is caused by greed,target driven sales, excessive competition and easy credit with no thought to the consequences.
What we need to move towards is a clearer understanding of the risks based on educating bankers again to know when to lend and when to say no. Balance is required through professional judgements based on all the factors a lender needs to know.
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sosraboc
I somehow doubt a landslide government will want to seek guidance from the voter but you never know. I am assuming DC gets in.
The NHS funding is interesting DC is ardent about the NHS but it does not mitigate funding problems. personally I expect more lifestyle changes demanded before entering the waiting list. There is a growing lobby for it.
There will be plenty of 'voluntary' workers via the JSA work programmes I think. HMG will not want too many people working in the black market so it will be a case of keeping them busy.
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#363 sirsevernbanks wrote: "rbstemp, I'm afraid you must either be very naieve or very gullible.
The severe recession (virtually now a depression) we are now in will mean the so called 'major' economies will not recover for a generation. If they ever truely recover."
I'd like to think that I'm neither naive nor gullible - I simply happen to hold an opinion that differs from yours.
The current crisis will, almost certainly, affect the way the banks and the economy operate for the next generation. With that, I am in full agreement. But I believe that we will recover a lot sooner than that.
Of course, neither of us knows for certain what will happen. We cannot see the future, just as no-one saw this current crisis approaching. (And I dismiss those people who claim to have been forecasting this for the past decade, because in a cyclical economic system such predictions are bound to come right eventually). But I believe that by this time in 2011 we will once again be living in a nicely expanding economy.
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#382
In terms of having an effect I think amore effective approach would be the modern high tech version of a riot.
A co-ordinated move of everyones bank accounts out of those institutions whom have proven to be immoral or irresponsible or both and into ethically run banks (there are a few). It would both send amessage to govenment and to the banks and those individuals whom are still feeding off the fat of p[revious poor decisions.
That way you would be sure that none of your salary or savings is contributing to immoral pension pavements.
All it would take is a well written e-mail chain to be set off, the net and peoples anger would do the rest...
I think they call it democracy...I dare you to moderate this out.
Jericoa
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#387,Jericoa: at last a practical idea that everyone can get involved in that might just make something change! Obviously I am writing this assuming that your post get's through moderation.
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#378 icelandexpress
Interesting observations. Things are going through a 'sea change'. Future landscape still unclear but hazy structures may be emerging. There is the beginning of 'barter' deals between China and Russia. The $10billion deal between Germany and China announced yesterday is essentially a non-dollar denominated barter deal including 25,000 each of automobiles from BMW and Merc.
Your praise of JK Galbraith (despite the snooty academic economists) is quite justified. I read The Great Crash (well written and funny) and The Affluent Society some three decades ago and some of the insights he provided me have underpinned much of my thinking about the world ever since.
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All this talk of riots...! There's not a lot of point going out and getting angry if you have no actual objective in mind. OK you've let off steam, and that might make you feel better, but you go back home and what has changed? I think that's the problem. We're all unhappy about the uncertainties, the broken promises, the lost savings etc. But exactly what do we want to do about it? Who do we want to govern us? Who do we think has the right ideas? Rather than being against things, we need to work out what, if anything, we are collectively FOR and how to get that to happen. Frankly, I have no idea of the answers
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#388 lobbygroupdotorg "Obviously I am writing this assuming that your post get's through moderation."
It's all right, the moderators are all watching the rugby on Sky ;)
Seriously, that chain e-mail's a very good idea. They've failed to take care of our money - hit the bad stewards where it hurts!
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When are we going to start prosecuting some of these guys? It is daylight robbery on a massive scale. Basic banking training let alone a smattering of commonsense would have avoided this. This is criminal.
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moaning impotent brits. what a pathetic nation of spineless plebs. makes me ashamed to be british!.
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387 jericoa
Your getting there jericoa. It is individual action that is important. : )
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#393 powerkeepitreal
You missed out 'spendthrifts' and 'american stooges'.
What will emerge after the unpleasant hangover is a fairer, more realistic society that channels its intellectual skills away from instant cash into somewhat more productive political economy.
And, as a footnote, away from the corrupting influence of the american casino mafia and the money-laundered mob money funded Wall Street banking system.
(Just to be contentious)
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#392 funnygrumps "This is criminal."
I got 'moderated' for saying that.
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It would be neat if the Post Offices were inundated by people opening accounts on Monday morning. Might stop MandyPandy's scheme.
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OK, anyone care to name a few banks that didn't get involved in this madness?
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One question I'd like to ask - Why are our taxes being used to help the incompetence of these idiots?
We as taxpayers should have the right to say if we should help out these buffoons.
And I agree with powerkeepitreal - we are a nation whom always moan and do nowt about it - its about time we took the same stance as they do across the channel - when the French don't like something they let their government know about it.
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#398: Co-op maybe?
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385 Glanafon
I too doubt any government will use a referendum for such decisions even though there are merits.
I do believe the hard choices will have to be made and even a landslide will likely be on a small proportion of the potential electorate hence referendum.
I take it you have little experience of Job centre service. Any "voluntary" work coming from JSA will be minimal and likely to be litter collection or similar menial work. I guarantee it will be very inefficiently organised as the proposals are pure NuLab spin and nothing more. It will not help the backbone of the voluntary sector.
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Anyone know of a link to where we could learn more about this kind of stuff?
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386
rbs temp
I beg to differ on there being no one who saw this coming.
I made numerous references regarding the potential problems to the financial institutions I worked as an internal auditor for and was fired for my troubles.
I am not alone.
Because I was so certain we were in a bubble we put our property on the market while still job hunting. The property sold for about 20 percent more than it would currently be put on the market for and even then I doubt it would sell.
No job as people do not want us oldies, particularly boat rockers.
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398
You of all posters should know.
Piggy banks of course.
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Re 402's question"
"I certainly don't have the answers - this wasn't even my idea". Maybe try Google?
Some pages are indexed by Google faster than others. Even down to a specific sentence - though you need to include the quotes in the search query :o)
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Re: #403 sosraboc
Saw it coming too. Got out of unit trusts into cash, but what more can you do when the whole system is run by greedy idiots?
Still, they're all right and that's all that matters.
I'm not surprised that you were punished for warning about the coming disaster. Nothing much has changed since Cassandra warned Troy about the Wooden Horse.
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402
It depends what you mean by this kind of stuff, but if you want to learn about risk and governence matters you can do a lot worse than this link,
http://www.riskmetrics.com/
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# 397 lobbygroupdotorg wrote:
"It would be neat if the Post Offices were inundated by people opening accounts on Monday morning. Might stop MandyPandy's scheme."
The Post Office seems only to introduce savers to the Bank of Ireland. From the Money Saving Expert forum, Martin Lewis' blog:
Bank of Ireland provides all Post Office branded savings products (with the exception of its Child Trust Fund)
Whether or not the Irish government could meet its compensation guarantees is not known, particularly since (a) it took over ownership of the Anglo Irish Bank and (b) as reported in the Daily Telegraph 24 February 2009 the Irish police have raided the head office of Anglo Irish Bank.
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374
the Green Party?
in the face of no better ( ie more likely to win) party at least it is a protest -
and with so many of us?
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In other major economies a large part of their stimulus package is aimed just as much at the people as the banks. In America for example billions of Dollars are to be used in paying down peoples mortgages to 30 percent of their earnings because the Americans have realised that its better for the long term stability of an economy for as many people as possible to have as much disposible income as they can. Likewise in China, billions of their package is to be spent on building cheap, afordable homes for low paid people for exactly the same reason. Only in this country do we seem to be using taxpayers money to provide mortgages with lower deposits than the market deems appropriate in an effort to re inflate the property bubble again. Is this a wise thing to be doing? Who has really thought this through? What about all those people who can not afford to live anywhere, is it right that their taxes should be used to underwrite the equity in other peoples homes while at the same time paying to price themselves onto the street? I think in this country the terms of our bailout are being dictated by the banks, and what they want, unsurprisingly, is the ability to lend to anyone and earn all the interest, but take none of the risk, so what are we underwriting here? The same mistakes that got us into this mess in the first place?
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# 398
I voted with my modest means a few weeks ago and moved all I have to the co-op bank. Why on earth would I want to bank with llyods TSB anymore...convicted money launderers in the USA for recycling Iranian cash...among other things.
If the banks can not behave in a moral way we can at least refuse to support them as individuals with salaries and savings and debit cards etc.
I am sure there are others out there as well beyond the main high street 'spiv' banks (the post office has been mentioned).
I felt a little aprehensive about switching banks but the reality was 2 forms (1 to open an account another one at work to change my details).
Apart from that I made 4 phone calls, the rest I could do online ( direct debit changes and the like). It probably took 1.5 hours of my time.
As a result of making the switch I actually felt better about myself, however small my act was at least I felt I was doing something tangible. A great deal of my frustration regular posters may have noted comes from the sense of powerlessness.
If I was was more tech savvy I would compile and set off a catchy compellling e-mail chain in the hope that many more would make the statement I have. Who knows, a few big corporations may join in as well....
Alternatively you could wait for Gordon or whom ever follows to sort the banks out......
Your choice..
Make it..
Jericoa
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# 398
Google Triodos for an ethical bank or:
www.triodos.co.uk/
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afternoon me hearties
the strand from many posters discussing how ordinary citizens might be able to gain a voice in this crisis is an interesting one, and IMO it is as crucial to the future of the UK as the as the big economy and environment questions
there are things that people can do, but they need to involve community action, local organising, the reinvention of trade unions, developing our own micro-banks and people's banks as in Bangladesh etc
a lot of these things oblige us to rediscover that society which Thatcher told us was dead
a lot of younger people need to find out why unions are a good thing; but our unions also need to rediscover some radicalism; factories like BMW Cowley should have witnessed sit-ins and direct action; pressure must be applied and workers being made redundant must voice their feelings
consumer movements can put real pressure on bad banks and employers through boycotts
and we should all march or take part somehow in the many protests that will take place before and around the G20 meeting in London at the start of April; you can find information on many websites; protests may be peaceful or direct - I'd imagine there will be a wide variety
it will be hard to get a message over - even in a situation where it was easier to come up with a single coherent message - the Iraq war and WMDs - a march of over 1 million could be ignored by this govt
but the growing ranks of unemployed, savers, pensioners, students and other groups crippled by debt, can make an effective lobby with plenty of time to do things!
for too long too many people have been tranquilised by empty celebrity culture, TV and crap fast food and alcohol; but all the kids I know care about the issues and want to improve things; don't believe all this propaganda put around about hoodies and hooligans
I'm planning to sail my galleon and pirate crew up the Thames for the G20 but must check if the mainmast will fit under Tower Bridge; if we can get there we'll be giving a 21 gun salute to the City fatcats
if enough people can use this slump to rediscover some of the principles of the post-war era to improve our society then we could have a post-depression sustainable economy that will be better than what we had pre-2007; but we will not have as much stuff! which is fine with me
the US and UK govt stimulus packages are based on optimistic modelling of a V-shaped slump with a strong rebound in late 09, which is quite unlikely now, so we need to get serious and plan for a better future that is not based on credit-driven consumption or nicking stuff
as you might imagine this is going to oblige pirates like me to make big sacrifices too, but for the sake of my little privateers I'm willing to do it
http://www.nytimes.com/2009/02/28/business/economy/28recession.html?_r=1
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When the HBOS take-over was announced I felt a sense of forboding that my reliable and safe Lloyds-TSB was getting into a very bad situation.
We all know that audits are verifications of historical events but all properly managed companies have monthly accounts and I believe that banks do this on a daily basis.
Then we also had forecasting proceedures in place,so how do so many banks fail to operate inadequate proceedures without drawing the attention of the FSA, BOE, Dunn & Bradstreet,the Treasury,the auditors and uncle Tom Cobley and all.
There appears to an entire systemic failure
and heads must roll.
davitman
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The elephant in the room is the FSA. Noone seems to have laid much at the FSA's door. In fact, although their supervision has manifestly failed they have done little apart from saying "oops", that they will do better next time, stated their intention to increase their budget (by about 40%) and to take on more staff and increase salaries. Are they not also benefiting from failure? I am really surprised at how easily the media have allowed them to be out of the limelight.
Even now I would have thought the FSA could make investigations into the behaviour of the remuneration committees who seemed to ahve allowed contracts for senior staff which provides for the upside but little for the downside. Thus providing a permanent incentive to executives to take short term and high risks. Remuneration committee chairmen seem to have got away without anyone pointing at their responsibility.
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#413 somali_pirate_SP500 wrote: "there are things that people can do, but they need to involve community action, local organising, the reinvention of trade unions, developing our own micro-banks and people's banks as in Bangladesh etc"
It's only a recession. Coupled with widespread anger against the banks, I'll grant you, but still only a recession. And a lot of people are over-reacting.
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401 sosraboc
''I too doubt any government will use a referendum for such decisions even though there are merits.''
The main hope is digital democracy. BO is the one to watch. It is likely to come here. FOI is proving troublesome for some but they cannot put the geni back in the bottle.
...''I do believe the hard choices will have to be made and even a landslide will likely be on a small proportion of the potential electorate hence referendum.''
You may be right but I remain dubious about it happening. You make a fair point. I do not disagree the idea. The likely outcome is fudge. ie tricks like cutting waiting lists by saying to the smoker or drinker you have to achieve a lifestyle change first. Introducing means testing. It has already been floated for council housing. It will be a question of justifying lack of access by control through measures which can be defend to the majority.
...''I take it you have little experience of Job centre service.''
Actually I have had all to much of a JobCtre+ experience. I was a senior mgr (and also heavily involved with a private IP consultancy which was shut down not because of demand but because the bluechip customers just would not pay in a sensible timeframe). As you know the higher you go the greater the accountants desire to eject you if the business cannot be steered in the right direction by the muffins at the top, and the greater the capability to lose money then the higher you go. So I along with others was ejected from my professional career. I suffered the lobotomy which is called JSA and ultimately moved to involvement in setting up another business. The business works because it was set up for these conditions. After Mr 15 percent interest rates Lamont we were not prepared to join in the madness again.
...''Any "voluntary" work coming from JSA will be minimal and likely to be litter collection or similar menial work. I guarantee it will be very inefficiently organised as the proposals are pure NuLab spin and nothing more. It will not help the backbone of the voluntary sector.''...
Yes and no. I agree motivated genuine voluntary workers are a precious resource. The fact is NuLab and Blulab are both shimmering into one strategey on the unemployed. They will if at all possible use JSA as labour. It does not matter how ineficient the workforce is, they are prepaid. They cannot leave then loose on the black market. There simply are not enough jobs in the pipeline. Long term unemployment beckons for some. It does not matter how much you groom or send CVs there just will not be jobs for some. You took drastic steps. It was the correct decision. That is not in anyway meant to be speaking down, it is just an observation.
I expect only muted growth in the recovery phase of this recession. The problem is that the people who borrow and spend have been culled. Whatever you do to pick up the people who spend damages the savers, which is what you are seeing now. Whatever you do to pick up the savers damages the borrower spenders. That was the message from Japan. You effectively have two segments of the ecomony reacting to different drivers. You cannot possibly move both forward at the same time. If you have to chose you lean to those who borrow and spend because they have more economic impact. Or you stutter along. Its not rocket science is it.
The BoE actions I see as broadly right. Stop people with borrowing sliding into foreclosure because the social cost is too high and asset damage catestrophic. Hence low interest rates temporarily. Stop imports temporarily but at the same time avoid formal protectionism. Try and fix the banks to get the City generating money because there is not much else. In time up interest rates. Older age group will not like it but they are not economically active. If they spend their money it helps. If they save it it helps. As a group they have done well in the last 30 years. I cannot see anyway of protecting them from the storm. If the economy is not fixed to the max asap then there will be greater reductions in public service funding because there will be no tax revenue. The most vulnerable group if this happens are the older age group. Cries of merit are meaningless, recession does not recognise merit.
I like you cannot see anything other than a reduction in public services
Apologies for the length of post and also if some are upset. That is just the way it goes.
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#416 rbstemp
ummm my point is that a lot of these things need to be done to improve our society and sustainable future anyway, whether we're having a recession or not
I hope you aren't a climate change denier as well!
let's hope that we don't fall into a long global slump of course; let's hope that the planet doesn't warm up by 6 degress C and that the ice caps don't melt
but hope is usually best allied with some intelligent preventative action too
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"As I've said before, it is amazing that the Financial Services Authority, the City watchdog, didn't feel it was appropriate to rein in HBOS's corporate lending department."
Give us a break Robert!
You know only too well the mantra of Greenspan/Clinton economics, the one that Gordon Brown placed so much faith in, states that the markets will always correct themselves.
Well they didn't! Government intervened and the banks now know that come whatever government will always bail them out.
Don't loose faith in Capitalism though, those same market forces are still working on its components at the micro level of our economy and beyond government scrutiny.
Round two will begin sooner than later!
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416. rbs_temp
Agree.
It will all fizzle out and the inertia needed to be overcome to make structural change is too high. It is individual action which can be more telling because it is more likely to be sustained. Organising people is hard work. There is nothing stopping people not doing trade with a business that they disagree with. There is nothing stopping people buying local or green or ethically. All of those things can have profound impact. If you dont agree the human rights record of a country you do not have to buy their stuff. Simple as that. Then whoever is importing it and selling it quickly gets the message. And in turn the country gets the message.
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I went to hear Roger Bootle speak on Thursday at a CityWire event and he was surprisingly upbeat. Other than a further 28% fall in UK housing prices over the next 18 months and further unemployment he predicted that the pound would rise against the Euro and we would not see a 1930's style depression due to the 'quantative easing' and stimulus packages. So you optimists should cling to this. He could be right.
On the other hand just in case he turns out to be another wind bag economist worth his weight in camel dung, i did join Cosco for £25 and have filled my garrage with canned food. Its amazing how wonderful an investment in food makes you feel. Buying in bulk also saves a fortune. I cannot recommend it strongly enough.
If i were Fred Goodwin some of the money grabbed from unsuspecting tax payers supporting the once proud bank I destroyed might be well used in buying round the clock protection. He must be held in universal contempt. If he was in China he would have received the death penalty. That is what they do to those who breach normal morality in order to enrich themselves and cause the ruin of millions.
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417 glenafon
I don't have a problem with your posts, you try to be balanced and not knee-jerk in your assessment of the situation, which is not true of most of the posters on this blog.
I think you are missing one salient point in this post though, which is how the economy has got so out of kilter between savers and borrowers in the last 15-20 years. The amount of savings in the UK is utterly dwarfed by the vast amount of debt, debt which unfortunately is all that drives our economy which is totally reliant on consumer spending to keep it going. Income from manufacturing exports and financial services is valuable, but really if people are not out there spending/squandering (however you like to see it) their money, then there is no fallback position, unlike in Japan during the 1990's where the dormant domestic market was propped up by the great exporting success of their manufacturing industry.
I'm sorry for repeating the same old argument here, but the world has changed, the government doesn't care about people saving money, they probably consider it 'hoarding'..Banks don't depend on depositors cash to make loans anymore so even that argument is no longer valid. You basically aren't doing your patriotic duty unless you are actively pumping money into the retail sector, because that IS the economy now..
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#416 rbs-temp
Try saying 'its only a recession' to somebody who has just lost thier job or is being put on short time and realise that it is suddenly extremely diffacult to get another job.
I rather suspect they may be a tad annoyed with your flippancy.
I hope you are right and it is 'only a recession'.
I think you will find however that there is aconsensus among slight optimists, level headed persons and gloom mongers alike know it is not 'only a recession'either in human costs or on a dry technical level.
It has the imprint of a depression. At absolute best it will be the worst 'recession' since the 70's.
In the states it is already the worst for 25 years and noboddy is talking about green shoots yet.
Just how bad does it need to be exactly for you to think this is serious?
I am genuinely curious to hear your response.
Jericoa
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403 sosraboc wrote:
''people do not want ... boat rockers.''
Hmm I dont know the ins and outs of your situation other than you have previously flown high. And a public forum is not the vehicle to discuss.
I can understand your apparent problem. I applied for various jobs back in the early nineties. I heard the lot.
eg I could employ you but -
You would have my job in a couple of months and I would be working for you or be pushed out.
Or try - you have worked at too high a level, I do not expect you to take instruction from me.
You are over qualified and will be moving on
You have the qualifications but our workforce is young. I don't know if you will fit in.
You would expect to have staff under you that is what you are used to.
You have used software xyz, abd, doh ray mee, have written your own programmes but we used a different dialect.
You are likely to tell our MD where he is going wrong because you have more experience than him.
We do not understand why you want to work for us.
You are used to handling a big budget.
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I could list a number of senior people, including finance directors, from companies you would probably recognised who have had similar experience.
If you have run into a road block then the only way forward realistically is to offer your services self employed. You need to be positive about marketing yourself and use the tools around. I would have thought you were quite capable of web design to get a website up and running. Course are available via Open university etc. If you are knowledgeable, friendly, available, there is no reason you should not do well. Forums and websites are a good way of making contact (not this one).
I would suggest you dont let the situation get to you if that is a risk. You did not fly by accident and you clearly have backbone.
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416 and 420
Sorry folks but this is not just a recesssion, this is a Darling Brown recession. ie clinical depression and saying "cheer up, pull yourself together, roll up your sleeves" will not get UK out of it.
It needs CBT, Prescription Drugs, self awareness and serious exercise.
It is not a two day (two year )wonder.
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To all bloggers who have said in effect let the likes of NR B&B etc go under, this is pretty much what the US did in '29. You would have had queues of people pulling their money out of every single financial institution imaginable, those who didn't get theirs in time would have been wiped out, all credit cards would have been stopped, commerce would have ground to a halt, it would have taken for ever for depositors compensation to be paid and so on and so forth. I'm afraid that lending institutions have failed in their prime duty of distinguishing between applicants capable of making constructive and beneficial use of loans and those not. The damage has been done. People are going to be hurt and disappointed. All the various schemes are about who, by how much and about how to restore the trust and optimism that has been destroyed by this episode. Personally I don't see the latter happening unless several of the prominent actors in this mess are singled out and made an example of - even if an act of parliament has to be passed to change the law. Who would ever again trust a bank, share or pension when this sort of behaviour is so richly rewarded,
Yours Aye,
Graucho
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298. Somali_pirate_SP500
thanks for the truly terrifying NYT link
378. iceland_express
that started out as an excellent piece, good on the change that is now upon us. However I do not accept that economists as a group retain much credibility, neither do I see the gold standard as the panacea that you do.
FWIW I think we can all take a number of actions in support of a better future:
Disengage from the instant gratification society - difficult but necessary. Juast say no, people, you know you can if you try.
Engage with issues and oppose people and policies that dont put the generality of the people i.e. society (yes Maggie, you were oh so wrong) FIRST.
Welcome change and uncertainty. Its coming anyway, so why not?
Go back to basics:
-Buy good, ethical, local food properly priced (not the cheap subsidised factory farmed rubbish we are offered now)
-Use selfless not selfish transport: walk, cycle, train or bus to get about.
Maybe then we as a society might get the leaders we deserve rather than the lot running things at the moment.
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405 continued .. Googling "Rahere's blog" including the quotes produces a similar result.
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As a long time Coop bank account holder (1975) with cash deposited with them from a house sale in 2007, I really hope it doesn't start accepting just any Tom Dick or Henrietta as account holders and mortgagees (though fellow bloggers are welcome of course!)
We don't want them to get ideas above their station and think they could be one of the big boys now do we?
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# 233 "No-one seems to have picked up on the fact that Andy Hornby kept putting it in his CV that he graduated "First" in his class at Harvard Business School. The problem is that HBS does not rank its students other than making the top 5% "Baker Scholars". There is no "First" in the class."
So was he a Banker Scholar? Or just a Merchant Banker?
Stronghold Barricades must be Peston's alter ego (or more realistically a BBC employee). That explains the preferential treatment.
# 266. Pigsty Hill wrote:
peteinamerica says "start asking about where they're going to put money into Rail (e.g. new rolling stock to carry around fresh air). "
More people travelled by rail last year than in any year since 1947, but then you'd know about that on the other side of the Big Pond, wouldn't you...
Well yes I would. Because you assumed. And it made an ass of u. I'm not in America any more. And I have it straight from people who are applying for government funds that money is going to go to the wrong places to fund the wrong things (the fresh air comment was a direct quote). I also know that quite a lot less people are travelling now than there were 3 months ago, which you obviously do not. Grunt on.
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The thing these all have in common
HBOS
RBS
GB+AD
is
SCOTLAND
cut them adrift with all the debts along
with GB+AD and let England Get on with
it
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425 sosraboc
I keep telling my wife that her CBT will come in useful in the months and years to come. She'll surely be busy but I'm not certain that all of the punters will be able to pay for it.
For me I think I may apply for a job in a prison because they are sure going to be one of the few growth businesses.
Though as I now live only half a mile from the Thames in West London, global warming may put a stop to my cunning plans anyway.
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422 citygambler
I couldnt disagree.
There has been a wealth transfer from the young to the old and because the young have little accumulated wealth they have been given debt to enable the transfer. They have been manipulated into debt before they leave uni. If they want a job they face debt, transport, they face high accomodation costs due to high house prices. The older group have benefited enormously from this but in the main the only complaint they make is the party has stopped. Somehow most people seem to think the party can start again - not for a long time.
Things have got out of kilter because housing has been seen as savings hence the draw. It has been going on for decades so it cannot be undone easily.
What is left as an economy is functioning well it would appear. If it is not big enough to carry everybody in their accustomed comfort that is just the way it goes. I can only act as an individual and all steps that can be taken have been taken here and with our offspring.
It is going to take a long time for the debt to reduce so I can see no easy upturn. The government has to try to trick / ease people into more debt. That is the only growth they are seeking at present. I expect soft loans for FTB etc in about 18 months to try and get things going. I dont agree but that is the environment I expect. I'm damned if I will play that game. Take a look at property on the internet in other countries and you soon think householders in this country still have got it wrong. Property is still coming to market way overpriced.
There is still money about, not apparently for big ticket items, not for stuff which has a short life span in many cases. But there is still money about and pretty much always will be. You just have to supply something people value, not big ticket. We do that.
If you argue that the wealth was artifical then I do not see a problem in people finding themselves poorer. What do they expect. It is like the expat living abroad saying that when sterling was overvalued they could buy more. So what, it was overvalued. I have felt I was living on fantasy island at times. It got so bad I asked if the village was really a rehabilitation ward in the grounds of a lunatic asylum because everybody seemed to have jobs that made no sense and make 'money' on houses onl