BEWARE! THE BANKS ARE OUT TO GET YOU!

[Tizer]

After my post yesterday about the Klarna `pay later' company I read a news story that revealed something even worse about these companies. I knew they worked with retailers online and in the high street shops to encourage customers to `buy' via their services using their debit card and then pay later in instalments. They're already under fire because it persuades people to get into even more debt and if they miss payments the debt collectors are sent to them. But I now find that there are no credit checks, no warnings about getting into debt and - this is the worst of all - the retailers make Klarna (or a similar company) the default payment method both in shops and online. So if you don't ask in the shop to pay a different way, or if online search the web site for an alternative payment method, then you put yourself into debt, perhaps unwittingly. The retailers are not unknowns, they include the big fashion chains loved by youngsters as well as other well-known chains. When I put `which retailers use klarna in UK' into Google this came up at the top with the Google `Ad' symbol': Klarna UK
Don't think you are free of it in Australia - they're there too!

[Stanley]

I had never heard of Klarna Peter until you raised the matter. I don't like anything I have learned.
The latest economic figures are out this morning and are expected to show the economy has been in recession since March. Based on previous experience it could last for 15 months but this does not take account of the Brexit component which I reckon is sure to make it worse. But what the hell do I know about it.
A 'world beating economy'? Reality may be about to dawn on our leaders.

[Stanley]

The economic figures were as bad as expected. I was struck by Sunak explaining it all away as being due to our service economy. Other 'experts' held out hopes that things would get better as Covid retreats. I'm afraid I don't share this optimism and remember Thatcher abandoning smoke stack industries and the railways in her vision of a bright future for our service economy. Pigeons coming home to roost?

[Tizer]

More incompetence in big business...and we're expected to trust banks with our money...
`Citibank sues for $176m payment made in error' LINK
`...The money is part of the $900m the bank accidentally transferred to creditors of the struggling cosmetics company Revlon. The bank says it meant to send Brigade just $1.5m to cover interest on a loan the hedge fund holds. Citigroup blames the accidental over-payment on an "operational mistake"..'.

[Stanley]

See THIS BBC report on the end of the eviction holiday on the 23 August. Many are asking the question, what happens then? Wales and Scotland have recognised the problem but Downing street appears to be pursuing the usual course, employing Nelson's blind aye.
Any consequences for homeless people on the street or bed and breakfast accommodation?

[Stanley]

See THIS Guardian article on debt. Not good news and this is what caught my eye:
"Sooner or later, there will have to be a reckoning. As the recession drags on, more and more debts will simply become unpayable, whether the government and creditors like it or not. We can either wait for this to happen, and brace ourselves for the economic and social chaos it will bring with it; or we can act now to rebalance the burden.
Calls for wealth taxes and debt write-downs must be seen in this context. They are not about the well-off making sacrifices to help the less well-off. The point is that the least well-off are already making eye-watering sacrifices to maintain income flows to wealthy creditors. If this does not change soon, the UK’s recovery will be slow and painful. Tackling growing inequalities between those who own assets and those who owe debts is no longer simply a matter of justice: it is an urgent economic necessity."
Christine Berry makes a lot of sense. I hope someone is taking notice amid the fires raging in politics at the moment. This is really important!

[Tizer]

All very true and I can assure you that it's being covered in great detail and with great concern in the business pages of the respectable newspapers. At least it's making people consider other ways of running the economy and the need to shift towards manufacturing and self-sufficiency, which would strengthen the UK and provide jobs.

Meanwhile in the US...
`US companies award executives big bonuses before declaring bankruptcy' FT
`Companies across the US are awarding top executives multimillion-dollar “retention” bonuses shortly before declaring bankruptcy, angering creditors who claim the payments are rewards for failure. The practice has become commonplace among distressed companies pushed over the edge by the coronavirus pandemic...'.

[Stanley]

"the need to shift towards manufacturing and self-sufficiency"
Absolutely correct Peter. How many times have I banged on about this? I knew in my bones that the Thatcherite view of the 'new economics' in the 1960s was a big mistake especially when coupled with blind adherence to Friedman and the Chicago School of Economics. It made sense for the metropolitan classes as it shifted the centres of wealth generation into their backyard. That's simplistic I know but not a million miles from the nub of the problem.
They were convinced they had it right because the economy boomed in many ways but what they missed (because there was no incentive to look for it) was that their mistaken policy coincided with the mid century leap in technology and that gave them a veneer of success. Problem was that because they had strangled manufacturing and the dirty industries investment in them fell and instead of the main thrust of technology and improvement going into industry it went into things like the City and the finance markets. Another big loser was apprenticeships and technical education. Since then, and still today, they have been puzzling over why productivity has shrunk. Surprise surprise!
I must stop, I could write a book about this. At the moment we are at the stage where we are daily getting evidence that all the above is somewhere near correct. Work it out for yourselves. I have a theory that removal from the realities of what was essentially craft work, running practical matters like railways, mines and manufacturing industry took the honesty out of work. You may be able to fool a spreadsheet but you can't get away with ignoring the basic physics of say running a steam engine. In the end that spreads like an infection into ethics and policies. That's where we are today.

[Tizer]

We've become Luxembourg but want to be Germany!

[Stanley]

And the key thing about Germany is that a basically competent and well educated country was smashed into the ground then the Marshall plan injected funding and triggered a renaissance. Compare and contrast with Britain, saddled with obsolete and worn out machinery but what was worse, convinced by 'victory' that it was in the right and had a God-given right to succeed. Dreams of a revived colonial system and adherence to old industrial and financial practices had a temporary set back when Labour took control but then reverted to the old ways of thinking entrenched in the establishment. Tradition, the class system and dreams of Empire led us inexorably to Brexit and eventual decline. Look at the disparity between the rich and the poor and the false economy we have and work it out for yourself.
I listen to 'experts' discussing different types of recovery and wonder who is right, them or people like me who fear there is no recovery, as things stand the damage is terminal. Who is right? Time will, tell and from the noises coming out of Brussels that day isn't far off.

[chinatyke]

I listen to 'experts' discussing different types of recovery and wonder who is right, them or people like me who fear there is no recovery, as things stand the damage is terminal. Who is right? Time will, tell and from the noises coming out of Brussels that day isn't far off.

This morning I listened to a guy called Dr Yukon Huang, a senior associate in the Carnegie Asia Program. Previously he was also some high official in the World Bank. This guy really talked sense in an understandable way. For example, on the subject of too much debt he said "inflation or higher taxation" cures it. First time I've noticed him but I'll look out for him again.

[Tizer]

Compare and contrast with Britain, saddled with obsolete and worn out machinery..

That makes me think of our railways. We continued with steam long after railways in many other countries turned to electric power and that put them well ahead of us and better prepared for using renewable energy. In the early years of the 1900s we had an electric railway but we gave up and sold the engines to the Dutch.

[plaques]

For example, on the subject of too much debt he said "inflation or higher taxation" cures it.

Only if he is talking about long term government debt. Our government is currently in a position where they can borrow long term at very low interest rates which are fixed for the term Inflation therefore erodes this debt. For Joe Public on short term loans the interest rate will increase in line with inflation but interest rates to savers will lag behind the curve. Those at the bottom are always the losers from government mismanagement. Raising taxes can also create an inflationary situation providing the taxes don't hit the people who are spending all their money. If they are raised too high on low incomes people have less to spend on inflation becomes deflation. The top 1% will and are already moving their money away to avoid paying higher taxes. This leaves only the wealthy to take large sums from. They will of course squeal like stuck pigs and say they will not vote Tory. The Tories will invent all different scenarios why they can't do it and put it on the back burner again.

[Whyperion]

I dont really like posting macro-economic thought in an effective bank/funds/interest thread, but the normal measures of 'recession' that BBC and ITV happily flagged up, and Sunak lifted the carpet to brush under, while a technical measure, don't answer the 'normal' means of at least a pretence of attempting to control an economy for 'growth' - whatever that is and what kind of desirability it might have - when the entire economic fundamentals of human exchange have fallen apart. Sorry, I am a stuck record again, but the 'service' economy is three sectors - servicing economic activity (Banking, Accountancy, Finance including loans, bonds , futures , trading and hedging), servicing other activities - Cleaning, Training (and Education) , Communications (Advertising, Marketing, Conferences and Telephony/Internet and so-on), and servicing the lifestyle of individuals - Religion, Sporting Participation and Events, Music, Arts, Culture and similar. Other bits like transport and the completion of the circle of the making of stuff for these support industries of office, etc, space, desks, chairs , cables. The entire edifice is collapsing and the figures as reported dont show it, nor the impact on employment/unemployment.

The recession in the 1930s was in part built out with re-armaments, yet this increased public debt so it was in part an illusion. Governments (and the EU appears to have recognised this) are going to have to spend money, but less clear is where, and where will it be effective ? Infrastructure - even if it is never going to be used - appears a partially obvious, and a better definition of building 'sustainable' development needs to be made , such that offices and residences are at least preparable for covid type future infections (there will be another at some time). I dont think the present government desires to undertake radical changes to the taxation regime necessary to fund over the next 80 years. We have the small advantage, the virus has hit at a time when we are able to connect and learn and communicate remotely and for the kind of work that needs people working together PPE is probably no bad thing anyway. So, an investment in younger people, with a means of finding the kind of support work that working in bars, clubs etc that have normally done to fund higher education has to occur, with training in the services we need, health, health-care, etc . Measurement as an increase in 'economic' output will be low, but it should hopefully head off 'worklessness' around the country.

[Stanley]

Very true Peter. Nothing wrong with being late in steam but then converting to electric and in the beginning that was the intention but diesel gave a short term 'cheap' fix so that was the political decision. We are paying for that now and of course, even though it is agreed that we should electrify, projects are continually shelved and then rolled out again and we are in the ridiculous situation of building dual purpose motive power units that can switch from diesel to electric.
Ken, as long as the Tories are a tool of the wealthy classes they will favour regressive taxes and bugger what it does to inflation. That is a fact of life. They say the opposite but when did they ever do any different?
Meanwhile, there is a disaster coming down the line at us in the next three months. Happy Xmas.

[Tizer]

The GWR say they have electrified the line from Paddington to Cardiff but there's no electric link between Bristol Parkway and Bristol Temple Meads so it's not fully electrified. Also they've abandoned the Cardiff to Swansea stretch`because it's too expensive' and rely on the `bi-mode' engines you've mentioned.

[PanBiker]

Single rail, MAGLEV bullet train on top, sorted, unfortunately we invented it but missed our way.

[Whyperion]

Ken, as long as the Tories are a tool of the wealthy classes they will favour regressive taxes and bugger what it does to inflation.

If I were tories I would have really laid into (was it introduced by Labour) Insurance Premium Tax ). Expensive tax on businesses and hits the poorest / just about managing in a single hit on the necessary car and buildings insurance, and desirable other protections.

[Tizer]

HMRC are going to be very busy because of all the claims made by companies and individuals during the covid-10 crisis. They've already had to reject about 30,000 furlough claims and identified thousands of scams. They've had many claims by businesses that were found to have no employees or were not eligible for other obvious reasons.

[Stanley]

I have also heard those reports Peter. My Matt cartoon in Jokes yesterday was on that same subject. One of the reasons the banks were so leery about plunging into the emergency loans. Could be that for once, they were right.

[Stanley]

Yesterday I heard our Dear Leader being upbeat about the way the UK is triumphing over the pandemic and springing back to life. I found myself wondering if he really believes this, is whistling in the dark or is on some very effective medication. I would appreciate some guidance. Am I missing something?

[Tizer]

He's suffering from Trumpism!

[Stanley]

I fear he is heading for some very turbulent water. I note that in addition to Sunak's coded warnings spokes persons for industry and finance experts are being less bullish about prospects of 'recovery'.
Note the guarded admission yesterday that the middle classes are going to be the target for higher taxes. An opposing opinion is that we shouldn't even be thinking about paying debt off but shelling out the interest and using the current account to stimulate the economy. That make sense to me as getting people into work has a double effect, raises the GDP and lowers out of work benefit payments.
Bur what the hell do I know about it...

[Tizer]

Trump hates the West Coast tech companies but they're the stocks that have been keeping the US markets high. Now they're going down - I wonder how Trump will handle that?
`Stock market bloodbath: Dow and Nasdaq plummet in the worst day since June' LINK
`Big Tech has become a drag on the broader market. Shares of Microsoft, Facebook, Apple and Google parent Alphabet fell on Friday, weighing on the major averages ahead of the busiest week of earnings season..'.

[Stanley]

In my humble opinion, anyone who uses stock market prices as a bellwether for the general economy is deluded. The stock market level is only an indicator of how well the sharks are feeding. They can make more money out of disaster than 'legitimate' investment. Think short selling and asset stripping.