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Osborne lectures EU on banks

Robert Peston | 10:22 UK time, Thursday, 6 January 2011

The European emperor had no clothes, is broadly the gist of George Osborne's article in today's FT  about the eurozone's financial strains.

George Osborne

What he has to say about the weakness of Europe's banks, and the apparent fatuousness of last year's much heralded "stress tests" to assess the robustness of EU banks, is worth quoting:

"It is revealing that the tests conducted last July identified a capital shortfall of just €3.5bn. Yet less than six months later, Irish banks required 10 times that amount. That is why the UK has already gone further with tougher stress tests that mean our banks are well capitalised."

This does of course raise a question for Mr Osborne and the Financial Services Authority. Readers of this blog will be well aware of the widespread concerns last spring that the stress tests weren't tough enough, that they exaggerated the strength of Europe's banks.

Yet the UK joined in the chorus of European countries claiming that the stress tests proved that the health of European banks was tickety boo - only for it to become conspicuous within weeks that many of them had and have less capital relative to their loans and investments than their US and UK counterparts, that their liquid resources are inadequate and they remain too dependent on unreliable wholesale funding.

Some would say it might have been helpful if Mr Osborne, or the chairman of the FSA or the governor of the Bank of England had raised these concerns a few months ago.

Since Mr Osborne's criticism of the stress testing process is bound to infuriate his fellow European ministers, it might have been better to annoy them early.

Mr Osborne hopes that new stress tests, which European governments have agreed to conduct, will be more credible. And he raises the possibility of semi-nationalisation of some continental banks.

He makes two other striking points. First he sets himself up as roadblock to German hopes of restricting the short-selling of European government bonds, or the selling bonds that the investor does not already own.

Mr Osborne says there is no evidence that short-selling has in itself made it more difficult for European governments to borrow, which is presumably the point that matters. He argues that current plans to limit such speculation would actually force interest rates higher, which would be the opposite of what EU members would wish to achieve.

Second, he is plainly worried that European governments are trying to water down the new global Basel rules on the amount of capital and liquid resources that banks must hold. This is what he says:

"It is vital that we insist on its implementation in the US and elsewhere, and that we do not weaken the measures as they are translated into European law. And we should do the same with the agreed G20 principles on bankers' pay. Any talk of 'European specificities' in Basel III that are not already accounted for, and any delay to the agreed timetable, will simply reaffirm markets' suspicion that we are failing to address the difficult issues."

Why does this matter? Well there are many who believe that the new Basel standards for capital, liquidity and funding maturity don't go nearly far enough to make the banking system less prone to the kind of meltdown we saw in 2008 - and so any dilution of those standards might not be a wholly good or reassuring thing.

Comments

Page 1 of 2

  • Comment number 1.

    Short selling has the capacity to do great harm and little to do any good (except for the gamblers who get it right). Sounds like a good idea to regulate it out of existence.

  • Comment number 2.

    Why is Osborne reduced to hoping the new stress tests will be more credible - did he have no involvement in their specification? He will undergo an appropriate stress test when the level of bankers' bonuses is determined - especially for nationalised/part nationalised banks. Indeed the is the prospect of a delicious opening up of another fault line in the coalition's policy menage melange!

  • Comment number 3.

    Remember, those tests were done by bankers and other people infected with their greedy, odious culture. Everything they utter is assumed to be intended to save their own skins, whatever the cost to the public.

    Only when we've purged the whole crowd (and hopefully impoverished them) can we move past this point.

    Yet what is the delay - why are these people still on the loose?

  • Comment number 4.

    Osbourne makes some good points but query why he did not make these same points a long time ago.

    The simple fact is the banks are now so interconnected that if a major German or French Bank goes under it will have a huge knock on effect to all UK banks.

    For political reasons George is trying to pretend he is independent of Europe and will not contribute money to propping up the Euro or French and German Banks.

    For economic reasons George needs to ensure that bothe the Euro and the French and German Banks are saved.

    Tricky position.

  • Comment number 5.

    Short selling is an important part of the "price discovery" process which allows markets to work efficiently.
    If investors with a negative view on a security can only reflect that view by declining to buy, as opposed to actually selling, then the market price will be distorted and, ultimately, more volatile.
    The key is to ensure transparency, so that Short selling cannot be used to manipulate market pricing.

  • Comment number 6.

    [[[5. At 10:51am on 6th Jan 2011, BLOATEE wrote: ]]]

    Well said, lets have transparency and regulation but let the markets operate. Sellers sell to buyers and generally deals suit both parties and thats how it should be. Shorting is simply the markets reaction to others having an undly and as has proved to be the case with say Greek and Irish debt, an unjustified view of reality.

  • Comment number 7.

    [[[1. At 10:35am on 6th Jan 2011, Al wrote: ]]]
    Why is selling any worse than buying? One assume the price will rise and the other that it will fall. To the extent that all invetsment is a gamble then surely both are gambling? Do you also want to ban gambling?

  • Comment number 8.

    So, banks don't have enough capital, as proved by Ireland, despite the bankers telling us they do.

    Someone somewhere is telling lies. Again.

    Nothing to do with the fact that more money going to capital means less for the bonus pot though.

  • Comment number 9.

    5. At 10:51am on 6th Jan 2011, BLOATEE wrote:
    > Short selling is an important part of the "price discovery" process
    > which allows markets to work efficiently.

    Short selling drastically increases the market coupling between multiple partners in an unnecessary transaction, causing contagion due to speculation that is socially useless and which brings bankers into disrepute.

    > If investors with a negative view on a security can only reflect that
    > view by declining to buy ...

    ... then they can get a proper job and not bother the rest of us with their gambling addictions. Let's have a nice Tobin tax and clean up from these little twits.

  • Comment number 10.

    This really does show that nothing has changed in the nature of the regulators of the banking system, and relying solely on yet another Basel smokescreen called I, II, III or however many you like to clear this whole mess up, is a bit like thinking an elastoplast will cure a broken bone.

    We still just don't trust banks and bankers - especially when they start pretending that their ridiculous ideas of "risk weighted capital requirements" are of much use in an uncertain world.

    Let's say that again....

    We still fundamentally do not trust banks and bankers!

    (The report on today's news of the huge levels of cash being stashed by people at their own homes is yet more evidence of this).

    The sooner our country unilaterally decides to split retail banks up from investment banks, in order to ensure that government guaranteed savings from members of the public cannot be hijacked by the gamblers for their own profit, the better.

  • Comment number 11.

    Quite right that Osborne lectures the EU on banking.

    We are the masters of the art of transferring wealth from the peasants to the elite...aka privatising the profits and socialising the losses!

    Let's face it, it's the sole purpose of banking in liberal democracies.


    Ban naked short selling and the hedge funds would go out of business overnight...but it's the hedgies that fund the Tory Party.

  • Comment number 12.

    The Originate-to-Distribute model of banking itself facilitates "peek-a-bo" accounting:

    http://forensicstatistician.wordpress.com/2010/11/19/is-modern-banking-fundamentally-flawed/

    Until this is stopped the charade of "stress tests" will just continue. The ICB know about it, but will they report on it, and will Osborne have the gumption to implement proper reform?

  • Comment number 13.

    #10. Noideaatall wrote:

    We still fundamentally do not trust banks and bankers!

    (The report on today's news of the huge levels of cash being stashed by people at their own homes is yet more evidence of this).


    Not trusting banks is a perfectly reasonable reaction to the events of the past few years, but stashing money under the mattress, at 0% interest and significant risk of loss, is an idiotic response. The government guarantees all bank deposits up to £85,000 per person per institution, and savings beyond that limit can be placed in National Savings and Investments, which offers a relatively poor interest rate (of around 2%) but absolute 100% guarantee.

  • Comment number 14.

    What a muppet George is - he thinks he can PROVE to the country that the banks are safe with a few scenarios.

    "Yet the UK joined in the chorus of European countries claiming that the stress tests proved that the health of European banks was tickety boo - only for it to become conspicuous within weeks that many of them had and have less capital relative to their loans and investments than their US and UK counterparts"

    That's funny - because I recall saying something similar at the time - ah well, never mind, at least the 'experts' have caught up with the rest of us 6 months later.

    Unless these tests include one which shows 5 years of flat or falling retail sales, 5 years of flat or falling construction orders and roughly 20% spending reduction by the Government.....and all the knock on consequences for the lenders (as some lenders are finding out today as the retailers come cap in hand following a bad christmas) - then the tests are worth less than the tiny pea shaped brain inside Georges spacious head.

    Still, why do you want to know the news 6 months early - better wait to be informed by the professional journalists who are keen to bring you 'up to the minute' news 24 hours a day.

  • Comment number 15.

    Since legendary banker bonuses are still unrestrained I have a plan, they sould be tied to shareholder dividends. No dividend = no bonus, a simple rule and one worth considering I believe.
    Regards, etc.

  • Comment number 16.

    Bit slow with that bank article Rp

    GC

  • Comment number 17.

    [[[10. At 11:24am on 6th Jan 2011, Noideaatall wrote: ]]]

    I agree we do need decent rules and regulation backed up by prtoper enforcement. You should make your concerns known to the committee on banking reform (forgotten their correct title). The more pople that express their concerns the merrier.

    I find it hard to believe that many people are keeping cash at home. Very foolish for obvious reasons and particularly as the £50k insurance limit is being increased to £85k. And of course one can have lots of £85k accounts. Interest rates may not be brilliant but 2% to 4% sure beats leaving loot under the bed.

    On the last point are you really happy for all our cash to be looked after by the government? I wonder how the Greeks and Irish would feel about that vote of confidence? I wonder what our government would do with all that money; maybe lend it to Ireland or Greece or the EU stability fund or spend it on another Millenium Dome or the Olympics or more yet more welfare payments?

  • Comment number 18.

    #15

    No - Banker's bonuses should be tied to some sort of index which could be determined from how well the plan of broadening the economy is working, whether UK owned manufacturing levels are improving and of course whether the "useful" company birth rate is going up.

  • Comment number 19.

    #3, #9

    Jacques - I wonder how much time you've spent writing posts to this blog over the past few months? Doesn't seem to be having the desired effect on government policy - perhaps ministers just aren't reading your posts avidly enough?

    These posts all seem to contain vitriolic comments, which detract from any, albeit idealistic, elements of truth in what you say. I wonder, when you say "bankers", to whom you refer - anyone that works in a bank, or the 1% or so who either sit on the boards of retail banks, or make the big calls in the investment banks?

  • Comment number 20.

    5. At 10:51am on 6th Jan 2011, BLOATEE wrote:

    "Short selling is an important part of the "price discovery" process which allows markets to work efficiently. "

    So how well did the price discovery work for the CDO market then?
    a) Very well
    b) Not every well at all

    Price discovery is just a more palatable phrase for 'place your bets gentlemen' so as to not arouse suspicion about the gambling dens of the city.

    ....now will someone who has never worked in banking and yet feels it's their duty (or self interest) to defend them, please like to step forward and blather on about market theories which don't stand up to the tiniest practical test.

    Did anyone see the news today / yesterday? - they're talking about the rising cost of commodities again - oh and the price at the pumps is at an all time high.

    The facts of life are finally revealed to those who are so duty bound to defend the system. When will they break ranks?
    £1.50 a litre?
    £2.00 a litre?
    ...or will it take £2.50 a litre before they see the speculators are skinning them alive?

    oil price around $90 a barrel in a world downturn with subdued demand? - if that isn't market manipulation then I don't know what is....

  • Comment number 21.

    All this user's posts have been removed.Why?

  • Comment number 22.

    [[[12. At 11:32am on 6th Jan 2011, Hawkeye_Pierce wrote: ]]]
    Very well balanced article and well worth the read. Lets hope they take some notice!

  • Comment number 23.

    13. At 11:37am on 6th Jan 2011, rbs_temp wrote:

    "Not trusting banks is a perfectly reasonable reaction to the events of the past few years,"

    Really - but I thought this was all "normal capitalism"? - I mean we have booms and busts all the time and this one is no different - right?

    "but stashing money under the mattress, at 0% interest and significant risk of loss, is an idiotic response."

    Idiotic you say? - well I can think of many things which are idiotic, but putting your money when you can see it doesn't seem to be one of them.
    Maybe you could inform us what rate you are getting on your savings (after tax) because the last time I checked I saw that 0.1% is pretty standard on ISA's (in the safer building societies) - are you quibbling over 0.1%?

    "The government guarantees all bank deposits up to £85,000 per person per institution, and savings beyond that limit can be placed in National Savings and Investments, which offers a relatively poor interest rate (of around 2%) but absolute 100% guarantee."

    ....absolute 100% guarantee? - what happens if the UK defaults? Don't the national savings go down the pan too - or become worthless through inflation and therefore may as well be? Doesn't the £85,000 guarantee also evapourate at that point too?
    Please do inform us how a bankrupt Government can guarantee anything (and remember - Ireland wasn't bankrupt...until it was...despite it being clear it was months earlier - so don't be too quick to challenge the bankrupting of the UK Government)

    The 'under the matress' is a natural and common response to a financial crisis - it's not all about safety - it's also about tax and the black economy.

    ....or did you think the clever people of Britain were going to continue paying 'banking taxes' in the form of charges and fees for moving their own money about - oh and the Inland revenue might find a bit of a problem collecting all the taxes if people start using cash again.
    I mean it's what always happens - didn't anyone tell you that when you raise consumption taxes then the people will simply avoid them?

    My only recommendation would be to buy a safe - a small fire proof one as the mattress is susceptible to fire damage. Other than that I also have a large amount of cash at home and several gold and silver bars - all being kept safe by Mrs writingsonthewall who is guarding it with a 12 bore and night vision goggles.

  • Comment number 24.

    From an article I read recently about debt scarcity but clearly recognises banks problems and why stress test are a fabrication. It relates to US banks but clearly there is a knock on effect with all UK and EU banks exposed to BoA et al.

    "A further, major reason for the coming debt scarcity will be the tremendously impaired financial condition of the banks. The values assigned to many bank assets are fictional according to numerous experts. QE2 is about many things but one of them is aimed at delaying the potential for implosion of the banking system. In 2009, the Financial Accounting Standards Board (FASB) caved in to government and banking industry lobbyists to allow many bank assets to be ‘marked to fantasy’ and not ‘marked to market.’

    This viewpoint is best expressed by highly respected Associate Professor William Black (and formerly a senior regulator who nailed the banks during the savings and loan debacle) and Professor L. Randall Wray, who wrote an article on October 22 in The Huffington Post, entitled, "Foreclose on the Foreclosure Fraudsters, Part 1: Put Bank of America in Receivership." They wrote that, "FASB's new rules allowed the banks (and the Fed, which has taken over a trillion dollars in toxic mortgages as wholly inadequate collateral) to refuse to recognize hundreds of billions of dollars of losses. This accounting scam produces enormous fictional ‘income’ and ‘capital’ at the banks."

  • Comment number 25.

    21. At 11:56am on 6th Jan 2011, Samanthav

    It's funny isn't it - I mean it's not what old george was saying a year ago!

    "British banks will not need government help to shore up their financial position after the publication of European Union 'stress tests' on July 23, Chancellor George Osborne said on Thursday"

    http://uk.reuters.com/article/idUKTRE66E23920100715

    Now why hasn't a keen eyed journalist from the BBC spotted this one - I mean George stands behind the tests when they make the banks look safe - but later says they are not up to standard.

    Sounds like more like a case of 'convenient truth telling' by George.

    "Some would say it might have been helpful if Mr Osborne, or the chairman of the FSA or the governor of the Bank of England had raised these concerns a few months ago."

    Clearly it wasn't convenient before - but now fear has overtaken fame.

    How many times can a chancellor get it wrong before he gets the sack? Do we have to wait for George to plunge us back into recession first?

  • Comment number 26.

    19. At 11:53am on 6th Jan 2011, smith_cw wrote:

    "These posts all seem to contain vitriolic comments, which detract from any, albeit idealistic, elements of truth in what you say. I wonder, when you say "bankers", to whom you refer - anyone that works in a bank, or the 1% or so who either sit on the boards of retail banks, or make the big calls in the investment banks?"

    Here's a rule of thumb....if your bonus is more than the GDP of lichenstien and you think pin stripe suits are 'the in thing' and you don't have a clue how you earn your money (without using pointless acronyms and the term 'margins') - then you're a banker.
    Everyone else (including myself I might add) are merely pawns - we will be collateral damage in this war - but it's a sacrifice worth making in order to place morals at the heart of our society and prevent it being run by the greedy and selfish.

  • Comment number 27.

    23. At 12:07pm on 6th Jan 2011, writingsonthewall wrote:

    "oh and the Inland revenue might find a bit of a problem collecting all the taxes if people start using cash again.
    I mean it's what always happens - didn't anyone tell you that when you raise consumption taxes then the people will simply avoid them?"

    Hmmm, that is not tax avoidance, that is tax evasion.

    To think that so many people on here attack avoidance, but some of those same people seem to give the ok to evasion......

  • Comment number 28.

    23 WOTW

    `..... I also have a large amount of cash at home and several gold and silver bars - all being kept safe by Mrs writingsonthewall who is guarding it with a 12 bore and night vision goggles.'

    Where my money is concerned my wife has a natural homing instinct so we don't need such posh technology.

  • Comment number 29.

    28

    Where my money is concerned my wife has a natural spending instinct so we don't need such posh technology.

  • Comment number 30.

    #26

    "Here's a rule of thumb....if your bonus is more than the GDP of lichenstien and you think pin stripe suits are 'the in thing' and you don't have a clue how you earn your money (without using pointless acronyms and the term 'margins') - then you're a banker."

    That's ok then - when I next spot a stereotypical cartoon character on the street, I'll know who to lay the blame with.

  • Comment number 31.

    19. At 11:53am on 6th Jan 2011, smith_cw wrote:

    > government policy

    We've kept these pages largely clear of shameful banking-sycophancy, allowing proper debate to occur. Let's just hope they remain afraid to pop their heads up!

  • Comment number 32.

    A few more points...

    Short selling is definitely not bad, IF the instruments in question actually are borrowed first, as this of course will mean some capital is required behind it all and that there is a time related cost to the borrowing.

    But naked short selling of course requires no initial capital requirement and supposedly has no borrowing cost, so there then becomes an asymmetry between buying and short selling, which would undoubtedly lead to increased volatility and probably, economists would say, a resulting incorrect market price.

    It's neither the buying nor the selling (if done correctly) that is the problem though - it's the leverage, and the lack of transparency which is the problem.

    Rich hedge funds that play wholly with high net worth individuals money must absolutely be free to bet on whatever they like, but the minute they start borrowing money from publicly supported institutional banks then we have a right to set down some conditions.

    But a far better way of arranging things, rather than for example having a member of the public putting their money in a bank, which unbeknown to them is then lent to some gamblers at a Hedgie or indeed the Giant Vampire Squid, would be to have that member of the public deposit say 80% of the amount in a bank knowing it to be safe, and then themselves choose to put the other 20% into the hands of a gambler to go seeking higher returns.

    I think Robert has already written about the value of the guarantee we have been been handing out to these combined retail/investment banks, and it's got to stop!

  • Comment number 33.

    5. At 10:51am on 6th Jan 2011, BLOATEE wrote:
    Short selling is an important part of the "price discovery" process which allows markets to work efficiently.
    If investors with a negative view on a security can only reflect that view by declining to buy, as opposed to actually selling, then the market price will be distorted and, ultimately, more volatile.
    The key is to ensure transparency, so that Short selling cannot be used to manipulate market pricing.

    ==============================

    Your point falls down in that the short seller is not actually an investor, in that which they are short selling since they don't actually own it in the first place therefore they are not invested in it.

    They are merely gambling that the price will go down between when they sell (what they have borrowed) and when they have to settle the transaction by buying it back.
    They are not doing anything other than gambling that based on their assessment of the information available to them they have bet the right way.
    They are speculators/gamblers not investors.

  • Comment number 34.

    #31
    "We've kept these pages largely clear of shameful banking-sycophancy,"

    Seems self-defeating - surely the point of making such radical suggestions as chasing an entire industry off these shores is to make your voice heard in a potentially constructive way? Why shout to an already 'converted' audience only?

    "allowing proper debate to occur."

    I'd have thought that a debate requires both sides of the argument to be argued - not one to be shouted down as soon as it gets raised.

  • Comment number 35.

    31. At 12:43pm on 6th Jan 2011, Jacques Cartier wrote:
    We've kept these pages largely clear of shameful banking-sycophancy, allowing proper debate to occur.
    =================
    It is an interesting definition of 'proper debate' which only alows one side of the argument to be expressed.

  • Comment number 36.

    11. At 11:31am on 6th Jan 2011, DebtJuggler wrote:

    Privatising the profits and socialising the losses - brilliant!

    I give the financial sector another 6 months before total collapse... enjoy.

  • Comment number 37.

    #27

    "To think that so many people on here attack avoidance, but some of those same people seem to give the ok to evasion......"

    That's because the legality of avoidance is not based on morals or ethics anymore.

    A tradesman working for cash-in-hand is a no-no, but the same tradesman can give his wife billions tax free, if he plays the system.

  • Comment number 38.

    Have you noticed that whenever George starts talking tough on the banks their share prices go up?

  • Comment number 39.

    32. At 12:51pm on 6th Jan 2011, Noideaatall wrote:

    "Short selling is definitely not bad, IF the instruments in question actually are borrowed first, as this of course will mean some capital is required behind it all and that there is a time related cost to the borrowing."

    ...but the derivative issuer is giving the purchaser a false sense of security - which is not a good thing (especially if the holder then extends his risk further assuming he is 'covered')

    This was evident when AIG collapsed - because who would have been paying all those short contracts out - who insures the insurer?

    At least in insurance they club together to provide cover for such an eventuality - there is no such thing in finance.

    With the trillions of outstanding derivatives in the world - who is going to cover a repetition of the AIG problem? I mean the US can't afford anymore bailouts and nor can we.

    Of course Capitalists claim that all these positions will 'net out' - this may be true eventually, but sadly, as is common for the Capitalist - they do not marry theory with real life.
    The sellers will not all default at the same pace and time as the buyers in the derivative market - the wave will destroy the sellers and then the buyers (who will no longer be covered for price falls)

    Still - you can't teach these capitalists anything - they have to allow it to actually fail several times before they get the message that market theory is all good on paper but in practice it's a different story.

  • Comment number 40.

    35. At 12:58pm on 6th Jan 2011, AnotherEngineer wrote:

    "It is an interesting definition of 'proper debate' which only alows one side of the argument to be expressed."

    What argument?
    When has any banking sympathiser actually come on and been able to clearly explain.
    a) The source of their profits
    b) Why the system based on debt is sustainable
    c) How the country can engage in 'belt tightening' and yet 'economic comsumer stimulation' simultaneously

    I have seen a variety of arguments and reasons why things are wrong - but very little to explain why things are right.

    To have an argument you require 2 opposing views which concregate around the facts - in this case there is very little to say as the banks screwed us all (albeit a lot of the population haven't realised it yet) and they don't have any intention of paying it back.

    It's an impossible argument to win, it cannot be reasonably justified - that's why it's simply not happening.

  • Comment number 41.

    34. At 12:57pm on 6th Jan 2011, smith_cw wrote:

    "Seems self-defeating - surely the point of making such radical suggestions as chasing an entire industry off these shores is to make your voice heard in a potentially constructive way? Why shout to an already 'converted' audience only?"

    2 years ago this was anything but a 'converted audience' - which means people like Jacques have been successful. However there are a few still left clinging onto the hope that 'someone' will sort it all out.
    The converted audience is not just relative to this blog - it's a reflection of the nation as a whole.

    "I'd have thought that a debate requires both sides of the argument to be argued - not one to be shouted down as soon as it gets raised."

    ...see post above...there is no argument because nobody can justify it. There aren't 2 sides to it - unless someone is prepared to play devils advocate - or fancies a wind up.

    P.s. Chasing bankers from these shores will make 0 difference to the economy - as long as we strip them of their assets and make them pay their taxes before they go.
    Of course those who sympathise with the banking fraternity already expect the bankers to take it all with them - maybe that's the flaw in their thinking which makes them fearful of an exodus.

    I'm happy to drive bankers to the airport and leave them on the runway in their birthday suit.

  • Comment number 42.

    Can we have another banking article Rp? Please??

    GC

  • Comment number 43.

    40. At 13:17pm on 6th Jan 2011, writingsonthewall wrote:
    mostly nonsense as usual; if only one side is valid then you cannot have a debate, which was my point.

  • Comment number 44.

    37. At 13:01pm on 6th Jan 2011, newblogger wrote:

    "That's because the legality of avoidance is not based on morals or ethics anymore."

    ISAs are avoidance. Buying cigs and wine in France is avoidance. Taking full advantage of the tax rules to minimise tax payments is avoidance. All perfectly legal

    Paying cash-in-hand so as not to pay VAT is evasion. Illegal

    Just because the tax laws are written badly and made so complicated that even HMRC do not completely understand them is gong to lead some smart people to find ways of legally paying less.

    Introduce a falt rate and remove all allowances would not only reduce the level of tax needed but also make it not worthwhil paying someone to identify loopholes as there would not be any

  • Comment number 45.

    27. At 12:22pm on 6th Jan 2011, yam yzf wrote:

    "Hmmm, that is not tax avoidance, that is tax evasion."

    Yes it is - I think they know that yam yzf - that's why they use cash.

    "To think that so many people on here attack avoidance, but some of those same people seem to give the ok to evasion......"

    I didn't say it was OK (either of them) - I said this is the normal reaction to an increase in taxation and spending cuts for the masses. That's called putting words into people's mouths to benefit your own argument and you are doing that more and more lately....

    The bottom line is that cash transactions are impossible to trace - especially if they're occuring on a grand scale (why do you think builders take a discount for cash)

    Don't be surprised when you start hearing a lot more of this.....

    "...thanks, and what would the price be for cash?"

    It's all been welll documented in the past - you tax the poor, they stop paying, you employ more tax inspectors, it costs more, and the income is reduced - suddenly your 'tax increase' designed to increase Government revenue has become a public spending increase.

    This is the law of unintended consequences.

    The markets (that's the real ones) - will be very busy I think....

  • Comment number 46.

    40. At 13:17pm on 6th Jan 2011, writingsonthewall wrote:
    off the point as usual.
    My point was that you cannot have a one-sided debate: it is not a debate. You and Jacques and a few others believe that only one view is valid and anyone who takes a balanced view is a bank sympathiser/apologist. The two of you try to prevent any sensible discussion.

  • Comment number 47.

    To: smith_cw / RBS_temp / Anotherengineer

    I propose a platform for informed debate on the merits of modern banking. The article was linked on post 12:

    http://forensicstatistician.wordpress.com/2010/11/19/is-modern-banking-fundamentally-flawed/

    So far #22 has made an explicit comment that it is "well balanced" and "worth a read".

    As WoW has said, we need a debate. I have laid out my stall for you all to pitch at, and am awaiting your informed response.

  • Comment number 48.

    34. At 12:57pm on 6th Jan 2011, smith_cw wrote:
    > I'd have thought that a debate requires both sides of the argument to be
    > argued - not one to be shouted down as soon as it gets raised.

    That's exactly why we try to minimise the banking-sycophants off on these pages. We want honest debaters to have their say. Bankers are, of course, exceptionally self-serving and regarded as universally dishonest (hence the blog about their feeble attempts to “stress test” themselves). We welcome all debate, but we don't want an endless sequence of self-serving denial from the perps themselves! We already know that turkeys don't vote for Christmas; that debate is over.

    Bankers must try to remain silent while we discuss their fate in an open way. One way or the other, they have to learn to serve us and obey us - their masters.

  • Comment number 49.

    #41

    "P.s. Chasing bankers from these shores will make 0 difference to the economy - as long as we strip them of their assets and make them pay their taxes before they go.
    Of course those who sympathise with the banking fraternity already expect the bankers to take it all with them - maybe that's the flaw in their thinking which makes them fearful of an exodus.

    I'm happy to drive bankers to the airport and leave them on the runway in their birthday suit."

    Interesting idea - so we close the entire banking industry down, collect the taxes, and drive them to the airport. I presume you'll use the cash under your mattress to pay for the petrol to do so, but once you've spent all of that, how are you planning on paying for anything without banks in place? Perhaps the bartering system could be re-enacted.

    Obviously, your mattress will be soggy, since once the banks have all been run out of town, they'll have foreclosed on the mortgages they've lent to private citizens, thus making you and all of us homeless, unless you had such a pile of cash under the mattress that you could afford to pay it off in full...

    It's all well and good pointing out the deficiencies in a system, but unless you make a sensible set of suggestions on what to do, rather than "I'll drive the lot of them to the airport and leave them on the runway", it's rather fruitless. Perhaps it's this lack of rational argument that's driven "sympathisers" away from the so-called debate.

    It's a bit like listening to the current Opposition party harping on about what the coalition are doing wrong, without giving clearly better alternatives, and forgetting that it's as much their political mess being cleared up as anyone's.


  • Comment number 50.

    43. At 13:33pm on 6th Jan 2011, AnotherEngineer wrote:

    > if only one side is valid then you cannot have a debate, which was my point.

    Bankers may be very stupid, but they can count more than two sides in an argument!
    Look, we want all aside to have their say, except (of course) the perps themselves. They are to be the Object of the debate, not the participants! If you can't understand that, can you waste time elsewhere?




  • Comment number 51.

    Is this the recovery?

    http://www.bbc.co.uk/news/business-12128289

    ...what about this?

    http://www.bbc.co.uk/news/business-12125690

    ...or this?

    http://www.bbc.co.uk/news/business-12126775

    ...oh wait a minute - here's our recovery.

    http://www.bbc.co.uk/news/uk-12122493

    Can someone explain how the mismanagement of the Economy by this Government is any different to the mis-management of the Economy by the last one?

    It seems we have the same rising public spending, the same brittle economy and now we have riots instead of 'heavy tutting' from the middle classes.

    Who are we going to try next? - I think it's time for the monster raving loony party to have a go.

    Private sector to 'pick up the slack' indeed - yeah George, of course it will - eventually we'll pay through the nose for 'Doctor Nick' to patch us up in his private clinic - but not in the timeframe you need it to happen matey boy.

  • Comment number 52.

    34. At 12:57pm on 6th Jan 2011, smith_cw wrote:

    > Why shout to an already 'converted' audience only?

    These feeble bankers may be on the ropes now, but we have to keep them there. Keep the pressure on; the only way out for them is abject surrender.

    Keep bashing.


  • Comment number 53.

    @ 47. At 13:38pm on 6th Jan 2011, Hawkeye_Pierce wrote:

    > I propose a platform for informed debate on the merits of modern banking.

    Seconded, but how can we keep bankers as the Object of the debate? How can we stop them from actually interrupting us?

  • Comment number 54.

    #36 Ted wrote:
    I give the financial sector another 6 months before total collapse... enjoy.

    ---------------------------------------------------------------------

    Might be a bit longer. I think we'll need to bail the banks out one final time. They have one last bite of the cherry. One last chance to get a big lump of tax payers money and invest it offshore and pay some big bonuses. The Irish banks have already had their slice.

    One more round of paying the people who caused all this. One more round of QE and then the dominoes start to fall (default). It seems like all these cuts and austerity measures might just be to make sure we aren't the first domino in the chain.

    When the public find that all this pain: All the job losses, the tax increases, the cuts... all that pain was for nothing. We'll spend more on the next bail-out than we've saved in cuts/tax increases. We will be spun to the public (like it was for our recent contribution to bail-out of the Irish banks) as a loan - the taxpayer will get their money back with interest. That reassurance won't work once the defaulting starts.

    I'm stocking up on popcorn. This should be a cracker of a year.

  • Comment number 55.

    49. At 13:44pm on 6th Jan 2011, smith_cw wrote:

    > nteresting idea - so we close the entire banking industry down, collect the
    > taxes, and drive them to the airport. I presume you'll use the cash under your
    > mattress to pay for the petrol to do so,

    We're not talking about essential industries here, like trash collection or water supplies. Anybody can set up a bank in ten seconds. We already have plenty who work directly for us. So, no problem there. Banks are just a few computers. It's not high tech, like the fire brigade. They're a doddle to run – just buy a safe and you're in business right off. So stop these ridiculous scare tactics. Banks are a 10 minute setup, make no mistake about that.

  • Comment number 56.

    #48

    "Bankers must try to remain silent while we discuss their fate in an open way. One way or the other, they have to learn to serve us and obey us - their masters."

    Thanks for validating my point on the heady rhetoric. We aren't masters of anybody - I think you'll find slavery went out in the 1800's. What we, as taxpayers, do hold is a majority shareholding in two companies. Two. No more than that. The private companies, such as HSBC or Barclays, who have no direct government ownership certainly don't answer to you and I.

    #47

    The article is well written, and raises questions, if not answers. The point made in there regarding over-extension of banks - in reply to this, what do we all therefore do when a bank's A-D ratio is below 1? Continue to bash away, or stop, think and maybe reflect that they're not part of those destined for the runway that WOTW's taxi's headed for?

  • Comment number 57.

    46. At 13:36pm on 6th Jan 2011, AnotherEngineer wrote:

    "off the point as usual."

    Not at all - maybe it's just your understanding which is off the point.

    "My point was that you cannot have a one-sided debate: it is not a debate. You and Jacques and a few others believe that only one view is valid and anyone who takes a balanced view is a bank sympathiser/apologist. The two of you try to prevent any sensible discussion.""

    ...and as I have said, if there is a credible argument then please - lets hear it. Lets hear why the near collapse of the Economy is 'good for us' and how it was all caused by the spending of Government (remember the golden rule, we didn't borrow over 40% of GDP until the banks went bust giving us the dual problem of recession (reduced income) and bailout (increased spending))

    Simply saying the following:

    "We shouldn't be angry with banks and tax them to pay for their mess as they might leave the country"
    "We need banks"
    "Banks create wealth"

    ...without anything to demonstrate this, is akin to me winning an argument about the moon by simply stating "it's made of cheese" - ignoring all the other facts which point to it being made of rock / iron.

    We don't need banks - FACT - society has managed previously without private banking and private banks.
    Banks create wealth - as stated many times, banks only extract wealth from the production process - this can be proven by the following:

    1) When production slows - banks don't make money anymore
    2) Banks never pull us out of recession - it's always manufacturing or some other productive industry. True 'wealth' is only contained within goods and services which have a NEED - which is why recession reduces this (as we only buy what we need, not what we desire) - all other wealth is fictional and unreliable - it's just a shame the banks already pocketed that wealth (which never actually existed) and left us with the bill.
    3) Not one banker can explain how they create wealth - they all point to the lending process as 'wealth creation' - but this is not creating anything, this is taxing the capital which is lent to complete the constructive activity (whatever that may be)

    The 'argument' is dead - anyone still trying to claim these are not true are simply placing self interest and emotion over reality (hence their inability to produce a logical and reasoned counter argument)

    The biggest laugh is that whilst banks supposedly 'create wealth' - despite all their humility and sorrow for what has happened - it's very odd they cannot simplt 'create wealth' to get us out of it.

    .....strange that one isn't it?

  • Comment number 58.

    I think that George is actually a much better chancellor than i expected him to be - he is not scared to annoy the Eurozone countries and he has generally got it right about cutbacks in that we are now seen as some kind of shining light of how it should be done. Of course this could all fall flat on it's face if we don't start getting back to strong growth but if we do then I can see him staying put for a long time. I have more confidence in his honest and open approach than in the last government's spin.

  • Comment number 59.

    49. At 13:44pm on 6th Jan 2011, smith_cw wrote:

    "Interesting idea - so we close the entire banking industry down, collect the taxes, and drive them to the airport. I presume you'll use the cash under your mattress to pay for the petrol to do so, but once you've spent all of that, how are you planning on paying for anything without banks in place? Perhaps the bartering system could be re-enacted."

    Credit unions, true building societies and Government run credit issuers.....or did you think banks with shareholders and drives for giant profits were the only way to do things (you must get out more)

    "Obviously, your mattress will be soggy, since once the banks have all been run out of town, they'll have foreclosed on the mortgages they've lent to private citizens, thus making you and all of us homeless, unless you had such a pile of cash under the mattress that you could afford to pay it off in full..."

    Did you not read the bit about 'stripping assets'? - the reverse will be true, all our debt will be wiped out - the banks take the hit - unlucky, I guess that's the way the cookie crumbles.

    "It's all well and good pointing out the deficiencies in a system, but unless you make a sensible set of suggestions on what to do, rather than "I'll drive the lot of them to the airport and leave them on the runway", it's rather fruitless. Perhaps it's this lack of rational argument that's driven "sympathisers" away from the so-called debate."

    I did that - see above.

    "It's a bit like listening to the current Opposition party harping on about what the coalition are doing wrong, without giving clearly better alternatives, and forgetting that it's as much their political mess being cleared up as anyone's."

    It's not a political mess - it's a financial one. The politicans have played their part - but they didn't create it.
    You cannot blame the government for not regulating properly anymore than you can blame a woman for the criminal damage caused by her 25 year old son. It's called responsibility - a big word, one that is clearly not understood by all. Their crime was to pretend they could fix it (to get elected) when they clearly cannot.

    This is why there is no 'argument' - your basing your assumptions on...

    a) There isn't an alternative to banks (when there are, both past and present)
    b) When a banker (or bank) leaves the country of his own free will and does so knowing his / their assets will be stripped - they cannot still make a claim on debts issued within that country.

    You're also not aware of the movement in the US where banks - who have already foreclosed - are finding the previous owners moving back in and refusing to leave.

    You see we're all goverened by consent, and when we don't agree with the law anymore it's our fundamental right to remove that consent.

    That is the difference between a free man and a slave - and people are beginning to exercise that right through all manner of civil disobedience.

  • Comment number 60.

    55. At 13:59pm on 6th Jan 2011, Jacques Cartier wrote:
    We're not talking about essential industries here, like trash collection or water supplies. Anybody can set up a bank in ten seconds. We already have plenty who work directly for us. So, no problem there. Banks are just a few computers. It's not high tech, like the fire brigade. They're a doddle to run – just buy a safe and you're in business right off. So stop these ridiculous scare tactics. Banks are a 10 minute setup, make no mistake about that.
    ============================
    I see it all now.
    You're really a banker showing how ludicrous the anti-bank arguments are.


  • Comment number 61.

    So taking this at face value: EU banks have had a 'stress test' UK banks have had some sort of super stress test.

    I would be interested to know where that places savers with EU banks operating in the UK - Santander springs to mind as having bought up no end of what used to be british brands.

    Are these EU/UK banking brands subject to stress test or super stress test?

    As the domestic economy goes back into decline, and a re-run of the banking collapse threatens, this could be and important issue in deciding where to place your dosh.

  • Comment number 62.

    All of those calling for the expulsion of bankers ought to wake up and smell the coffee. The fact is that we need banks to lend money to businesses at all levels. During the last bubble they took some risks and got carried away but it was partly the banks and partly the governments which caused that. Both of these institutions did this because of demand from the public so to complain about this now seems churlish - surely the correct response is to acknowledge the past errors and build a better system. Pulling down the temple in anger helps nothing.

  • Comment number 63.

    #23. writingsonthewall wrote:

    Maybe you could inform us what rate you are getting on your savings (after tax) because the last time I checked I saw that 0.1% is pretty standard on ISA's (in the safer building societies) - are you quibbling over 0.1%?

    Oh come on, WOTW. You (claim to) work in the banking industry; you should know that it's easy to get significantly more than 0.1%, even in an instant-access account.

    I have an ISA bond with Nationwide paying 3.5%, a cash ISA with Barclays paying 2.5%, instant-access with Santander paying 2.4%, instant-access with Nationwide paying 0.49% and the rest with NS&I paying 2%. Even after tax, the return is a lot more than 0.1%. The rates are not impressive, of course, but at least I'm getting a few thousand pounds a year that I would not be getting if I kept my money under the mattress.

  • Comment number 64.

    #55. Jacques Cartier wrote:

    Anybody can set up a bank in ten seconds. It's not high tech, like the fire brigade. They're a doddle to run – just buy a safe and you're in business right off.

    Laughable.

  • Comment number 65.

    56. At 14:00pm on 6th Jan 2011, smith_cw wrote:

    "Thanks for validating my point on the heady rhetoric. We aren't masters of anybody - I think you'll find slavery went out in the 1800's."

    Funny that - never heard of DEBT SLAVERY? - you see that's the slavery you're in to the banks (unless you're retired with no mortgage) - it's true they are not our slaves - but they will be if they don't come to heel.

    "What we, as taxpayers, do hold is a majority shareholding in two companies. Two. No more than that. The private companies, such as HSBC or Barclays, who have no direct government ownership certainly don't answer to you and I."

    Did they not use the special liquidity scheme?
    "Barclays and HSBC both benefited from the Government's Special Liquidity Scheme, allowing them to swap bad assets for loans."
    http://www.thisislondon.co.uk/standard/article-23727175-banks-should-profit---but-not-at-our-expense.do

    Did they not benefit from low interest rates from the BoE?

    It's funny how the assistance to 'dole scroungers' is made so obvious and yet the benefits doled out to banks is less clear - and certainly the public's view is clouded by this (as you have proven)

    Care to reassess your statement about who got help from the Government and who didn't?
    The entire banking industry stopped being an untouchable private sector the moment it requested a bailout - whether they felt they were in imminent need or not.

    "The article is well written, and raises questions, if not answers. The point made in there regarding over-extension of banks - in reply to this, what do we all therefore do when a bank's A-D ratio is below 1? Continue to bash away, or stop, think and maybe reflect that they're not part of those destined for the runway that WOTW's taxi's headed for?"

    It's not a taxi - I'll do it for free.
    You seem to be concentrating on 'how much is enough to hold to be safe' - if anyone knew the answer to that then very few of us would be working right now (after all that's the main motivation for most people to work)

    Nonetheless - no amount of capital can cover what could come next - simply because we don't know how big the next bust will be. Maybe it would be better to get rid of the busts - but you can't fix that with a few tests and a little extra sugar on top of your capital!

  • Comment number 66.

    56. At 14:00pm on 6th Jan 2011, smith_cw wrote:

    > Thanks for validating my point on the heady rhetoric.

    You're quite welcome. I always answer valid posts from my fans.

    > The private companies, such as HSBC or Barclays, who have no
    > direct government ownership certainly don't answer to you and I.

    Once we've seen them acting at all times with the public interest uppermost in their minds, it might be possible to cut them that much freedom. Until then, they must either show that they are helping the people of this country, or risk being split down. They have choices at all stages in this process, but unhelpful banks will be removed from the business sphere, make no mistake. There must be no repeat performance – we've all seen quite enough of banking greed and incompetence already.

    Banking is a utility business, like the drains or the post office. It must be run in a simple, transparent and reliable manner, or others will be given control and the current owners will be stripped of their rights.

    I think I've got that right.

  • Comment number 67.

    "Osborne lectures"!!!!

    What on earth does he know to lecture about?

    Has he ever run a business?

    He certainly has no experience of anything useful - so just like the other jokers he is the ideal person to lecture - on the basis of: 'those that can do and those that can't teach'!

  • Comment number 68.

    @ 64. At 14:24pm on 6th Jan 2011, rbs_temp wrote:

    >> Anybody can set up a bank in ten seconds. It's not high tech, like the fire
    >> brigade. They're a doddle to run – just buy a safe and you're in business
    >> right off.

    > Laughable.

    Yes - it's amazing how bankers have made a big deal of their simple, utility trade.
    Some of the computer programmers are quite clever, but shuffling money from one
    account to the other using a computer? Yes, laughable!

    Now the things I have been involved with (drug discovery, particle physics, orbit science (my specialty), super computers etc.) are hard. But banking - low-tech child's play!!

  • Comment number 69.

    62. At 14:20pm on 6th Jan 2011, Peter White wrote:
    Pulling down the temple in anger helps nothing.
    -------------------------------------------------

    I beg to differ on this. All the big changes in civilisations since the start of recorded history have been the result of at the very least a metaphorical sacred demolition. Some worked out well and some led to centuries of barbarism. How would barbarism manifest itself in this millennium?

    From collapse comes the potential to rebuild in a new way. We just do not know at this precise moment whether underpinning the temple foundations will do the trick. History also tells us that we have no true idea about where we will end up, except that embracing logical change is likely to be better than following old dogma.

    Standing still is never an option.

  • Comment number 70.

    I notice that a lot of energy is devoted to knocking the bankers, but there is hardly a mention of the Rating Agencies.

    That's odd since they are the real villains in this debacle - the bankers were just the fall guys. Foolish? - yes. Hateful? - No.

    So much for keen informed analysis.

  • Comment number 71.

    #55

    "Anybody can set up a bank in ten seconds"

    Excellent - so instead of whinging about those we do have, I presume the Bank Of Jacques is being established even as I type?

    I'll happily have my mortgage with you, at a zero margin interest rate, since there's clearly no risk of my defaulting (take my word for it, no need to check). Let me know when the paperwork's ready?

  • Comment number 72.

    I wish everyone would stop bashing all banks, not all of them, got into trouble. The UK banks which did get into trouble were able to because of the poor regulation and mis-management of the banking sector by the Labour Government.
    I understand that other countries banks also ran into difficulties, but it was not a GLOBAL crisis, like people make out. Banks in Australia and Canada have not hit any problems because their banking regulation is tougher in these countries.
    The problem with bank bashing also by the Government, is that sooner or later, the large successful UK banks will have enough of it and move to Asia or somewhere else, meaning lost jobs and lost tax revenue.

  • Comment number 73.

    Peter wrote:

    "Some would say it might have been helpful if Mr Osborne, or the chairman of the FSA or the governor of the Bank of England had raised these concerns a few months ago."

    The men at HM Treasury and in league with the Fools of Threadneedle Street in that they are only ever wise after the horse has bolted! The appalling (non) economists prattle on but ignore sound analytical advice and it must always be remembered that the same people are running the show now as were running it five years or more ago. They got it horrifically wrong in the past despite receiving sound advice and they are getting it wrong now.

    The problem is debt and its consequence for competitiveness. The dead weight of historic debt will cripple the economy for decades - the debt of which I speak is NOT government debt, but private 'secured' debt.

    These imbeciles simply haven't a clue. The private debt mountain has to be deflated prior to an economic recovery or else stagflation/hyperinflation/an unsustainable asset bubble will destroy the UK again. But every time sound advice to limit the bubble comes out of the FSA it is immediately countermanded by the Fools of Threadneedle Street (and the MPC in particular).

    Get interest rates up (base rate up to 5% in steps) - bail out the banks again - introduce a National Maximum Income (a la David Cameron's idea) - build social housing and infrastructure with QE/deficit financed money. In a very few years the UK can again be competitive and prosperous. Their idea is to bumble along with over stressed banks and cut and cut - this can only lead downhill to the a repeat of the Long Depression of the 1870s.

    Osborne should be told to stay quiet until he knows something - only after he has sacked the Permanent Secretary of The Treasury, the Cabinet Office Secretary, The Governor of the Bank and many of his 200 economists can sanity resume. These people in the permanent government are still in post since before the crash and these are the people whose actions and inactions caused the bubble that destroyed the country so they must go.

  • Comment number 74.

    60. At 14:18pm on 6th Jan 2011, AnotherEngineer wrote:

    "I see it all now.
    You're really a banker showing how ludicrous the anti-bank arguments are."

    Jacques is undestating the time - Metro bank took at least a week to set up, it's not really 10 minutes.
    However banking is no longer required - bring yourself into the 21st century - for this is how lenders will be matched with borrowers without the requirement of a middle man creaming off a living.

    http://uk.zopa.com/ZopaWeb/

    Unless of course you're adamant that the judgement of a banker made in Canary Wharf about a borrower in Kansas for their motor home is better than your own.

    The only downside is Zopla isn't big enough - maybe if the Government hadn't wasted £850 BILLION on saving the zombie banks then maybe a state run (not for profit) exchange would have already been set up (including the facility to lend to Government)
    Imagine what that would do for the economy, what a stimulus - instead of us 'hoping' a banker will distribute his multi-million pound bonus is spent domestically on industries that need it (and not foreign car manufacturers) we could ensure the benefit was spread across the nation - a much broader and better stimulus.

    Still, you'd need to get out of your closed banker thinking to realise this - now can you produce a reason why the lender / saver shouldn't be directly responsible for the loan rather than being forced to place their savings in the hands of a (already failed) third party - who then cream a living from it?

  • Comment number 75.

    #65

    "Did they not use the special liquidity scheme?"

    Yes, I'm sure both did, but did they go cap in hand asking for it? Of course not. I also like the way you used the source as being a newspaper column, written with a slant, rather than the BOE's own rules and regs on the topic. Have a look at the below, and decide if it's such a one-way street?

    http://www.bankofengland.co.uk/markets/money/marketnotice080421.pdf

    "'how much is enough to hold to be safe' "

    As a starter for ten, an A/D ratio of less than one is a good spot to be in. Clearly it's a moving feast, since the ratio is a snapshot of any one point in time, but nonetheless, as an indicator of a healthy balance sheet, or otherwise, it covers the bases well enough.

    Unlike some on this post, I'm not claiming to have any answers, ludicrous or otherwise. I'm just frustrated of reading, week in and week out, the same tired rhetoric.

    If you're that devoted to changing the free market economic system, please do. Don't just talk a good game.


  • Comment number 76.

    71. At 14:51pm on 6th Jan 2011, smith_cw wrote:

    >> JC: "Anybody can set up a bank in ten seconds"

    > Excellent - so instead of whinging about those we do have, I presume the Bank
    > Of Jacques is being established even as I type?

    Sure - there's plenty of them on every council estate in England. The small ones are called "Lone Sharks", but they have the same ethical structure as the big ones, and they are also staffed by morons! Some things never change, eh! But just stop pretending that banking is difficult. Please don't make us laugh.

  • Comment number 77.

    65. At 14:27pm on 6th Jan 2011, writingsonthewall wrote:

    "Did they not use the special liquidity scheme?
    "Barclays and HSBC both benefited from the Government's Special Liquidity Scheme, allowing them to swap bad assets for loans."
    http://www.thisislondon.co.uk/standard/article-23727175-banks-should-profit---but-not-at-our-expense.do"

    Maybe you should read the rules on the SLS - no bad loans were allowed. Again, don't let facts get in the way

    "Care to reassess your statement about who got help from the Government and who didn't?"

    The statement made by the original poster was about Govt ownership and this after WOTW said in an earlier post to me:

    "That's called putting words into people's mouths to benefit your own argument and you are doing that more and more lately...."

    Kettle, pot - please choose ;)

  • Comment number 78.

    64. At 14:24pm on 6th Jan 2011, rbs_temp wrote:

    "Anybody can set up a bank in ten seconds. It's not high tech, like the fire brigade. They're a doddle to run – just buy a safe and you're in business right off.

    Laughable."

    Hey, just because you find your job in banking 'hugely complicated' - it doesn't mean it actually is.
    Complicated is a relative thing - maybe you should try something very complicated before you make the assumption that banking is so.

    I was told IT was hugely complicated and 'not for me' by my careers advisor - luckily I didn't listen to him and as a result I owe a large part of my career for "refusing to believe IT was complicated" - and guess what, it's not. In fact it's incredibley simple - but who's to know when everything is bound by acronyms (does that sound familiar?)

    Don't be fed the truth rbs_temp - seek it for yourself. Get the fund manager drunk one night and ask him how it all REALLY works.
    I could tell you some stories of how pension funds nearly tanked because of one exhorbitant lunchtime drinking session......or the covering up of a massive loss by a trader who left his unhedged positions open while he went for a steak lunch.

    King with no clothes rbs_temp, it's all the king with no clothes....

  • Comment number 79.

    71. At 14:51pm on 6th Jan 2011, smith_cw wrote:

    > clearly no risk of my defaulting (take my word for it, no need to check).

    I have special measures for defaulters. The paperwork is ready. Just send 10,000 to me, as per the instrcutions below.

    It may interest you to know that I have secured from the probate an order of madamus to locate any of deceased beneficiaries. Please acknowledge receipt of this message in acceptance
    of our mutual business endeavour by furnishing me with the following;

    1. Beneficiary full name and address
    2. Direct Telephone and fax numbers
    3. Occupation and position
    4. Nationality and Date of birth
    5. Marital status
    6. Gender/sex

    These requirements will enable me file letter of claim to the appropriate departments for necessary approvals in your favour before you can personally appear for the claim. I shall be compensating you with 30% of the total money while 10% will be for any expenses incurred
    the rest will be mine on final conclusion of this project.

  • Comment number 80.

    75. At 15:02pm on 6th Jan 2011, smith_cw wrote:

    'Unlike some on this post, I'm not claiming to have any answers, ludicrous or otherwise. I'm just frustrated of reading, week in and week out, the same tired rhetoric.'

    =================================================

    Me too!

    I wouldn't mind so much if new, untried and sound suggestions were proposed. So much of the rubbish offered up is based upon failed, anti-democratic systems that have been consigned to the economic dustbin.

    Sloppy thinking is no substitute for constructive innovation.

  • Comment number 81.

    Ask yourselves how credible bankers are when they need to be regulated in the first place. Banking is a talentless service... young girls on £14k per annum and a primitive web site linked to a few servers in a basement.
    My bank has no skills whatsoever to offer me or any business that requires an understanding of their investment requirements... so what exactly is their worth?
    ANSWER - 0

  • Comment number 82.

    At 14:55pm on 6th Jan 2011, writingsonthewall wrote:
    " maybe if the Government hadn't wasted £850 BILLION on saving the zombie banks then maybe a state run (not for profit) exchange would have already been set up (including the facility to lend to Government)"

    still pretending £850 billion was used. Really, you should say how much has actually been spent on saving, not how much was pledged as potential support ie insurance. In fact, have a read of this and you will see that the current estimates of support (insurance not cash) required are lots less and that, to quote the NAO:

    "The most likely scenario is that there will be no overall loss on the main guarantees, namely, the Asset Protection, Special Liquidity or Credit Guarantee Schemes. The Treasury had originally estimated on the information available in 2009 that the total cost of this support might be between £20 billion and £50 billion."

    http://www.nao.org.uk/publications/1011/support_for_banks.aspx

  • Comment number 83.

    Back to the madhouse of politics and bankers.

    Politicians pretending to be all knowing all seeing economists and bankers behaving like lottery ticket sellers.

    Roll up! Roll up! The man from Goldman Sachs says. Make your fortune this year by buying shares. Lots of 'em so we can draw what's left of your money out of you and pull the plug when we see fit.

    Hard to see who is running the world at the moment but from the arrogance of the man from Goldman Sachs he certainly thinks he does.

    He doesn't talk inflation for that's a subject for the ordinary people who feel its worst effects while in his world inflation is good. He must be expecting a lot of it if his prediction of a 20% rise in the markets is accurate. And he should know.

    But as WOTW says earlier we are just pawns in the big picture. Expendable and easily ripped off.

    We have to labour for what we earn they only have to borrow it from cyberspace until they can replace it with more of the real stuff they have squeezed out from the rest of us.

    In the meantime we have the petty distractions to keep us all involved while the really big stuff goes on unnoticed.

  • Comment number 84.

    60. At 14:18pm on 6th Jan 2011, AnotherEngineer wrote:

    > You're really a banker showing how ludicrous the anti-bank arguments are.

    Not at all. People have bought into this idea that banking is hard. Well, I guess it is compared with (say) picking spuds.

    But bankers are just part-qualified chumps. Most can't mend a fuse. They can't do anything but count, so the default, non-creative drudgery job for them is banking.

    That's life for that shower. But I'm not bankrolling chumps. If they can do proper work, I still need tiles on the conservatory.

  • Comment number 85.

    80. At 15:30pm on 6th Jan 2011, TonyH wrote:

    > Sloppy thinking is no substitute for constructive innovation.

    Correct. I prefer to just punish the perps and make everyone happy.


  • Comment number 86.

    #77 and #82 should be read as one posting......

  • Comment number 87.

    #76

    I think you're confused. Lone Sharks tend to be found off the coastline, feeding on fish, seals and the odd unfortunate surfer.

    Loan Sharks, on the other hand, don't offer Savings rates. Not sure how that ties in with your blinkered view of banking, retail or otherwise.

    Thanks for the insight though - you certainly did make me laugh.

    and re #79

    I presume you kept the paperwork from when you fell victim to such a scam?

  • Comment number 88.

    72. At 14:53pm on 6th Jan 2011, noshow_nickyo

    Fact 1 - all banks benefitted from the bailout and subsequent economic conditions created by the BoE and Government.
    Fact 2 - You cannot blame the Government for 'lack of regulation' anymore than you can blame the police or the courts for the decisions of criminals to commit crime. Banks are not children under 10 and therefore do not have a special concession where they are deemed under the age of responsibility (and if they were then their behaviour would have resulted in being taken into care)

    The banking jobs can go to Asia - then they can have the problem when these 'clever dicks' fail to see the next crisis.

    However they're not going anywhere - it's amazing how few people can see a bluff as obvious as this one - the cost of relocation and the downsides of moving abroad all outweigh any regulation that this puny coalition will produce....besides, if you look around the majority of western nations are currently lining up greater restrictions (do you think the EU is bovverred about the whining of banks?)

    I'm sure there must have been a parallell argument in colonial slavery where it was important not to annoy the master because of what he might do to you - so long as what he is doing to you now is perceived to be less punishing than what he 'might' do to you.

    I'll make you a deal, you run all the banks out of town and I'll take the £850 billion we get back from the banks in the form of their assets and I'll build the Government a giant Zopla to replace all banks in one go.

  • Comment number 89.

    75. At 15:02pm on 6th Jan 2011, smith_cw wrote:

    "Yes, I'm sure both did, but did they go cap in hand asking for it? Of course not. I also like the way you used the source as being a newspaper column, written with a slant, rather than the BOE's own rules and regs on the topic. Have a look at the below, and decide if it's such a one-way street?"

    Now that's a new one - the SLS was FORCED onto the banks - yeah, ok mate.

    "As a starter for ten, an A/D ratio of less than one is a good spot to be in. Clearly it's a moving feast, since the ratio is a snapshot of any one point in time, but nonetheless, as an indicator of a healthy balance sheet, or otherwise, it covers the bases well enough."

    ...and if there is an earthquake in London next year - is that capital ratio going to cover it?
    Clearly you're missing the point, you can submit all lengths and types of ratio but you can never know - which is exactly the trap the banks fell into. They thought they were safe through their 'cleverness' - but didn't see the most obvious (and repeated) failures - lending too much to too many in order to replace their diminishing profit (a quick skirt through history will show that most crises begin with banks lending too much)

    "Unlike some on this post, I'm not claiming to have any answers, ludicrous or otherwise. I'm just frustrated of reading, week in and week out, the same tired rhetoric."

    Well then you need to get off your backside and fight for change then.

    "If you're that devoted to changing the free market economic system, please do. Don't just talk a good game."

    I'm already on it - but you must understand the people who want to keep this system are very rich and powerful (that's why they want to keep it) - threats of moving offshore shows we have them scared - the reality is banks cannot make profits without genuine production - this will be evident when strikes and protests stop production in the country.

  • Comment number 90.

    48. At 13:41pm on 6th Jan 2011, Jacques Cartier wrote:
    34. At 12:57pm on 6th Jan 2011, smith_cw wrote:
    > I'd have thought that a debate requires both sides of the argument to be
    > argued - not one to be shouted down as soon as it gets raised.

    That's exactly why we try to minimise the banking-sycophants off on these pages. We want honest debaters to have their say. Bankers are, of course, exceptionally self-serving and regarded as universally dishonest (hence the blog about their feeble attempts to “stress test” themselves). We welcome all debate, but we don't want an endless sequence of self-serving denial from the perps themselves! We already know that turkeys don't vote for Christmas; that debate is over.

    Bankers must try to remain silent while we discuss their fate in an open way. One way or the other, they have to learn to serve us and obey us - their masters.

    ======================

    Which means what you want is not a debate but a trial where the defendant is not allowed to speak and no witnesses for the defence will be allowed.

    Otherwise known as a kangeroo court.

  • Comment number 91.

    87. At 15:41pm on 6th Jan 2011, smith_cw wrote:

    > Not sure how that ties in with your blinkered view of banking, retail or otherwise.

    You don't seem very sure of anything at all, to be honest. I expect you work in the sordid industry. Chin up - we weren't all destined to do good things.

    Please desist from saying that banking isn't trivial - some of us can do genuinely difficult work.
    All we ask of bankers is that they efficiently care for our money. If they can't do it, plumbing is a good option - I need a new bathroom, and I've hurt my knee.

    Now toddle off and shuffle some paper around your desk, like a banker.

  • Comment number 92.

    82. At 15:35pm on 6th Jan 2011, yam yzf wrote:

    "still pretending £850 billion was used. Really, you should say how much has actually been spent on saving, not how much was pledged as potential support ie insurance"

    Still having this same argument are we? - has the support been withdrawn? NO - then it's counted.

    "In fact, have a read of this and you will see that the current estimates of support (insurance not cash) required are lots less and that, to quote the NAO:

    "The most likely scenario is that there will be no overall loss on the main guarantees, namely, the Asset Protection, Special Liquidity or Credit Guarantee Schemes. The Treasury had originally estimated on the information available in 2009 that the total cost of this support might be between £20 billion and £50 billion.""

    Most likely scenario? - don't make me laugh - the most likely scenario was a profit...then it got downgraded to break even....then is became a 'small loss' - now we're down to between £20 billion and £50 billion - but we've not actually seen a penny of any of this potential.

    Don't worry, I put a pound on the lottery so this time next week (according to my estimates) I will be a millionaire.

    Read it and weep dear boy
    RBS 40.87 - break even 45p
    Lloyds 67.98 - break even 75p

    We're a long way from selling either of these stakes and it's a long way from finished yet - I mean the share prices are not likely to start rising following the retail news and the continuing failure of the Euro zone.

    Don't forget - the Irish Government also claimed they would 'see a profit' from their banks in the beginning - and look how that turned out.

    You can smooth it over as much as you like - but you won't stop the subsidence which is moving the house.

  • Comment number 93.

    @ 81. At 15:33pm on 6th Jan 2011, Ted wrote:

    > Banking is a talentless service.

    I'm glad everyone is in the picture (except bankers, who don't have a clue how simple their trade is).

    But programming is quite hard. Bankers may be dunces, but the programmers are pretty good, actually (even though they only write trivial record keeping systems).

  • Comment number 94.

    74. At 14:55pm on 6th Jan 2011, writingsonthewall wrote:
    Jacques is undestating the time - Metro bank took at least a week to set up, it's not really 10 minutes.
    However banking is no longer required - bring yourself into the 21st century - for this is how lenders will be matched with borrowers without the requirement of a middle man creaming off a living.
    =================
    I notice that one of the founders of Metro Bank had previously founded Commerce Bank in the US so it hardly started from scratch.
    Can you name an industrialised country that has no banks? How does Zopra move money to and from customers? Could it handle multi million pond/dollar transactions for major companies?

    http://uk.zopa.com/ZopaWeb/

  • Comment number 95.

    90. At 15:51pm on 6th Jan 2011, Justin150 wrote:

    > what you want is not a debate but a trial where the defendant is not allowed to
    > speak and no witnesses for the defence will be allowed. Otherwise known as
    > a kangeroo court.

    The average life expectancy of a kangaroo is about 4–6 years. We all expect that trivial retail banks will be an internet application by then.

  • Comment number 96.

    94. At 16:00pm on 6th Jan 2011, AnotherEngineer wrote:

    > Can you name an industrialised country that has no banks?

    Google can run it all. Relax, will ya?

  • Comment number 97.

    2. At 14:53pm on 6th Jan 2011, noshow_nickyo wrote:

    Canada and Australia have not been unaffected : unemployment is high, house price inflation is high and in reality both these countries are primary produce suppliers to China, and are mere extensions of that country's economy.

  • Comment number 98.

    #91

    "You don't seem very sure of anything at all, to be honest. I expect you work in the sordid industry. Chin up - we weren't all destined to do good things.

    Please desist from saying that banking isn't trivial - some of us can do genuinely difficult work.
    All we ask of bankers is that they efficiently care for our money. If they can't do it, plumbing is a good option - I need a new bathroom, and I've hurt my knee.

    Now toddle off and shuffle some paper around your desk, like a banker."

    --------------------------------------------------------------------------------

    Ah - the personal attack - the last resort of a "debater" unable to back up their rantings with valid logic.

    Thanks for highlighting your true colours - it's been enlightening, if not exactly educational.

  • Comment number 99.

    90. At 15:51pm on 6th Jan 2011, Justin150 wrote:

    "Which means what you want is not a debate but a trial where the defendant is not allowed to speak and no witnesses for the defence will be allowed."

    Wait a minute.....they had their chance to speak when hauled up in front of the parllimentary commitee - and answer they had none - here's a reminder of how it went (because you have clearly forgotten)
    http://news.bbc.co.uk/player/nol/newsid_7050000/newsid_7053600/7053631.stm?bw=bb&mp=wm&news=1&ms3=6&ms_javascript=true&bbcws=2

    "Otherwise known as a kangeroo court."

    ...well maybe we simply put them all on control orders - I mean if the police think it's reasonable to put people under house arrest because they think they might be criminals (but don't have any evidence to prove it) - then surely the same should be applied to bankers?

    What I don't understand is why you are so keen on the banks? - what have they done for you that earns your undying loyalty?

    You are now part of a very small group - those who cannot (or I suspect refuse) to see what has happened for what it is.
    It's a robbery of the taxpayer by the banking system, whether through incompetence or criminality - it matters not - and yet you (as a taxpayer) leap to the defence of the banks - which you disguise as self preservation - but the reality is that if we had followed the free market rules then we would have no banking system anyway (and consequently no bankers to flee the country) - so what would we all have done then?

  • Comment number 100.

    #89

    "You need to get off your backside and fight for change"

    Sorry - too busy doing my day job usually to get involved in fools errands. On a rare day off today, so thought I'd participate in the forum for once.

    However, given your frequency of posting on here, I can rest assured that you'll be fighting the good fight for me.

    I don't quite get what an earthquake in London will have to do with the price of fish (probably drive it up, but that's by the by), let alone a bank's A/D ratio - bottom line, if there's more in Savings and Current Accounts than is lent out at the time of this earthquake, then no amount of skirting through history provides a basis for your argument. The problem, however, is that not all retail banks & b/socs have their balance sheet set up this way.

 

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