BEWARE! THE BANKS ARE OUT TO GET YOU!

[Tardis]

Today I begin to wonder if the establishment is expelling one of it's own with all the alleged revelations about Paul Flowers surfacing, or actually mounting a sustained campaign against the regulator who gave him the OK to fill the position?

The fact that Flowers' fingerprints are all over a Co-op donation to Ed Balls is also of concern although "everything was declared to the register of member's interests"

[Stanley]

See this LINK for news of the £8billion fine that J P Morgan has suffered. Two things struck me, the defence that the bad loans were almost all from their takeover of Bear Stearns and Washington Mutual doesn't wash, it was what JPM did with those bonds, selling them as good investments without any warnings. Also the fact that they aren't out of the wood yet, other investigations are still going on.
And yet.... JPM shares are at an all time high. Does this mean that evidence of corrupt activity is OK as long as the balance sheet looks positive? We live in strange times.

[Tizer]

Now the Co-op Group Chairman, Len Wardle, has resigned - he led the board that appointed Flowers. Who else was on the board and what have they got to say about the revelations? I wonder if there was a recruitment company involved too? Did they know about Flowers' past when they appointed him? What a mess, but strangely I don't find it all that surprising!

[Tardis]

Co-op & Flowers appears to be a free for all now. He was so closely involved with the Labour Party, it becomes harder to believe that these things weren't known about.

Sounds like the Co-op board may have merely rubber stamped Flowers into position, but I can't understand why the regulator didn't manage to pull up some of this information pouring into the papers?

[Tardis]

See this LINK for news of the £8billion fine that J P Morgan has suffered. Two things struck me, the defence that the bad loans were almost all from their takeover of Bear Stearns and Washington Mutual doesn't wash, it was what JPM did with those bonds, selling them as good investments without any warnings. Also the fact that they aren't out of the wood yet, other investigations are still going on.
And yet.... JPM shares are at an all time high. Does this mean that evidence of corrupt activity is OK as long as the balance sheet looks positive? We live in strange times.

All the fines are levied on the businesses they bought after the crash and originally the US Treasury had stated that they would not be prosecuted for those companies activities.

The share price reflects the fact that the 'fine' means that there is now no further liability on JPM. I believe Tony Bliar is still on the board, could he be the one to talk to about corruption practices?

[plaques]

With respect Tardis, I don't think your comments about JPM are strictly correct. They were fined for knowingly selling misleading mortgage securities. There is also ongoing criminal investigations.
http://www.bbc.co.uk/news/business-25009683

I know it may seem odd to you but perhaps Tony Blair was employed to get them out of the hole they had dug for themselves. An international figurehead is always a good thing to have on board even if you take no notice of them. Lets face it, the thing that drives banks and money markets is sheer greed.

[Stanley]

You are right P. The fines are nothing to do with the other companies or even the bad loans. They are for knowingly selling bad debts without declaring them to the buyers, indeed the whole reason for 'the instruments' was to unload the bad bonds by mixing them with good ones.
The Flowers/Co-op affair gets worse doesn't it. What strikes me is that there should be a fourth enquiry, assessing all the other senior board members. That's right, let's have a witch hunt!

[Tardis]

With respect Tardis, I don't think your comments about JPM are strictly correct. They were fined for knowingly selling misleading mortgage securities. There is also ongoing criminal investigations.
http://www.bbc.co.uk/news/business-25009683

Ms Lake said that 80% of the bad loans at the centre of the fine can be attributed to Bear Stearns and Washington Mutual.

which you'll find JPM didn't own at the time. The FT investigation is much better, but I can't find an unpaid for link.

Plus they can now claw back all that tax too, so that will save them over $3billion

[Stanley]

Argue how you will, the bottom line is that they were caught with their fingers in the till and are being fined for it. That's the severity of reaction we need in our banking system.

[Tizer]

A handy guide from the BBC in 2 parts to the Co-op/Flowers saga...

The timeline:
http://www.bbc.co.uk/news/uk-politics-25039286

`The big Co-op question for regulators' by Robert Peston:
http://www.bbc.co.uk/news/business-25032296

[Stanley]

I see that Paul Flowers has been arrested. Words like door, stable and shutting spring to mind.

[Bruff]

Interesting isn't it. It seems to me we have a chap here in the throes of full-blown personal and in his case no doubt spiritual collapse. He will have to answer to his alleged crimes and misdemeanours, but a part of me finds it a little unedifying the very public rush to pick over his carcass.

Richard Broughton

[Tardis]

Yes, JPM made a declared profit of $5.7 billion last quarter (13 weeks).

[Tripps]

"full-blown personal and in his case no doubt spiritual collapse."

From the words of Jez Lowe's 'Durham Gaol' - "I never was a thief until they caught me."

[plaques]

How’s this for a conspiracy theory. NSA (America) knew all about Mr Flowers and passed the information to GCHQ who in turn alerted Mr Cameron to the situation. Knowing full well that he could make some political gain by keeping quiet he left it until it exploded in the public domain. So the all debacle is Mr Cameron’s fault. The next step will be an inquiry that will be so narrow so as to exclude any other banks or party donations with the result that the only the guilty parties will be the Co-Op bank and by association Mr Miliband. QED.

[Stanley]

They've announced the make up of the new 'enquiry'. Basically the regulators will investigate themselves and it will take long enough to stop it being an issue in the 2016 election so no surprises there. Don't hold your breath!
Just struck me, I saw a report the other day that one of the reasons the report of the Chilton Enquiry has never surfaced is because the US is objecting to the result. What's the betting it will suddenly become possible to publish in time for it to be used to attack Labour in the run up to the General Election. Or am I just an old cynic, watch this space!

[Tizer]

Mrs Tiz said I should tell OG members this, she thinks they'll enjoy it...
She's having to send letters to banks frequently at the moment to sort her parents' financial affairs and the power of attorney and to deal with my dad's account. She keeps coming up against the banks' inability to cope with the modern world, such as the power of attorney or the needs of the elderly....so every time she sends a letter she uses one of those Royal Mail stamps with a picture of a dinosaur on it!

[Stanley]

I like it....
I see that there is movement to regulate pay day loan interest. It remains to be seen how effective it is. The bottom line is that if people are desperate the only thing that governs their actions is getting 'instant cash' and they will continue to do so whether they can afford the repayments or not. It's a terrible commentary on today's world that such organisations can thrive. We are building up a long term debt problem with them. Another sign of the times is the proliferation of gambling advertisements on the TV. Disraeli was right, we are Two Nations, the haves and the have nots. My mind goes to the well of despair that exists out there and is growing every day. Did anyone hear the programme on R4 yesterday morning where a reporter went to one of the trial areas for the Universal Credit and interviewed recipients and the council officials having to deal with the fall-out? Heart breaking accounts of true poverty. It is shameful.....

[Tizer]

RBS....the phrase `bag of nails' comes to mind.

[Stanley]

It's got to the stage now where nothing surprises us, the most gross incompetence and chicanery is simply par for the course. This is of course one of the dangers, we become insensitive to the problem.
Did you see the rep;ort that Pay Day loans stay on your credit rating for at least five years even if you have paid them off promptly and this is taken as evidence by building societies doing due diligence searches of potential customers and some of them will automatically refuse a mortgage simply on the grounds you had a loan?

[Tizer]

Building societies doing due diligence searches of potential customers now pry into all sorts of things. There was an article in The Times recently about the questions they pose to potential customers and some seemed less like diligence and more like pure nosiness!

[Stanley]

I was shocked by the reports yesterday that 8.8million 'people' are struggling with debt. Hull and Manchester were cited as hot spots with almost 50% in debt. Of course we aren't clear whether this is individuals or families but it is an enormous and shameful number. And of course the number is rising all the time as families borrow at exorbitant rates to finance essential expenditure. One wonders where it will end..... I can't remember ever being so pessimistic about prospects even in the worst days of 25% inflation. What happens when interest rates on mortgages start to rise?

[hartley353]

It was interesting to read the basis for the calculations on indebitness, if they had included mortgage holders, folks with car loans, people who never pay off their credit cards next month, would the figures have been close to 100%.

[Tizer]

It was mentioned in the newspapers on Saturday. Individuals were asked if they felt `under a heavy burden of debt' and something like "Have you missed more than 3 repayments in the last 6 months". Answering yes to one question or the other was counted towards the 8.8 million, so it seems to be that number of individuals rather than households. Some would be single people, but others married etc, which means many more affected in total. But what really caught my attention was the final lines of the article: "Personal debt in Britain has risen back to the high level of £1300 billion that existed just before the credit crunch 5 years ago".

[Stanley]

I saw that as well and those of you who have been reading my opinions over the years will remember that one of my ongoing criticisms of the present economic policies is that they all depend on people accepting higher levels of debt, the very thing that brought about the crash in 2008. For instance, the attempt to stimulate economic activity in the construction industry by subsidising house purchases and encouraging people to take on maximum levels of repayments at a time when interest rates are at an all time low and guaranteed to increase during the lifetime of the loan is so obviously flawed. There are signs that the Treasury is now coming round to this point of view.
My thesis has always been that the biggest component of GDP is domestic consumption, at least 85%. (This is why the US with its massive internal market operates differently than many others and doesn't depend on exports. China will eventually be in the same position as disposable incomes rise.) This domestic consumption stimulates added vale industries from food production to manufacturing and essential services. This being the case, eroding the disposable incomes of the majority is eventually economic suicide. Add to this the reliance on exports to make up the gap when every other economy has the same idea and comparative energy costs in the UK are eroding our competitive capacity and you have a perfect storm that will not hit us until further down the road. Margaret Thatcher and Keith Joseph, together with their advisers made the decision to rely on the service industries, what we use to call 'invisible exports' having totally swallowed the then current 'hot gospel' economic theories of Friedman and the Chicago School. The lessons learned in the inter war depressions were ignored and total faith was placed in deregulating banks, 'freeing' capital and allowing the market to rule prices. These policies were the direct precursors to the crash of credit in 2008 and another mistake was made then, throwing all the assets into saving the financial industry instead of investing most of it at low level into the economy to stimulate production and gain the benefit of the multiplier effect as the money moved up the food chain.
What we are now seeing is the natural consequence of these policies. Stagnant manufacturing, lack of investment in new plant and paralysing uncertainty in the sector. The strange thing is that the government realises this as evidenced by the way they have guaranteed profit in the electricity generating industry in order to get the essential new capacity we need to survive. (At the same time they have just refused a subsidy to create new and badly needed off shore gas storage facilities to smooth out the seasonal variations expected in gas prices)
Disposable incomes are set to decline for at least ten years on the most optimistic view while global economic conditions like energy costs become increasingly adverse. Add to this the inevitable interest rate rises that will come and present policies look increasingly incoherent.
It gor worse this morning as the energy minister leaks his latest cunning wheeze, he is expected to appeal to the energy companies to hold back price increases not directly connected with global energy costs until 'after the next General Election'. Brilliant! What happens then.... Or are they simply not worried because the can has been kicked down the road and if they lose the next election it will be the next government's problem. This is the politics of the madhouse.
Meanwhile the banks will continue to make money out of debt and shuffling phoney money around the globe, aided and abetted by the other banks doing exactly the same thing and collecting the commission and interest on each deal. Exactly what brought us to the pretty pass we are in now. A 'healthy' financial sector which is in effect a parasite strangling the life out of basic wealth creation.