BEWARE! THE BANKS ARE OUT TO GET YOU!

[Stanley]

By letting them regulate themselves and make the profit motive the main driver of the business instead of following the old model based on service to customers. Direct interaction with customers is now seen as a wasteful activity and every change that is made cuts down on this. The ideal model today is online selling and administration, ask yourself why all the supermarkets are pushing online ordering and home delivery. The day of the corner shop and the local bank is long past, far cheaper to have central hubs and warehousing. We used to joke about people losing the ability to walk because they could do their shopping from the sofa. That day has arrived and it may not be long before even shopping for fresh food is a thing of the past. As you centralise, you increase the power of the top management and they soon see to it that their wages and bonuses rise.

[Tizer]

I wasn't sure where to post this but as it concerns the antics of someone who was a banker I guess here is as good as anywhere.

As the Pope magically creates a couple of saints today at the Vatican in Rome I thought we should all remember Cardinal Bertone, formerly the `vice-pope' and head of the Vatican bank. Ousted from his job he has had to move from his former residence and the poor man now has to make do with a 6500 square foot top-floor apartment in the St Charles palace...which is over 10 times bigger than the Pope's apartment! Not bad for someone `out of favour'.
http://www.telegraph.co.uk/news/worldne ... -Pope.html

The Telegraph article also mentions: " Last month he [the Pope] accepted the resignation of German bishop, Franz-Peter Terbartz-van Elst, dubbed the "bishop of bling" by the media for spending 31 million euro (£25 million) to renovate his plush residence. American archbishop Wilton Gregory recently apologised for a lapse in judgement after he built a $2.2 million (£1.3 million ) mansion for himself in an upscale Atlanta neighbourhood and has now pledged to sell it."

While we criticise RBS and Barclay's bankers we should also speak out about these abuses too.

[Stanley]

It's exactly the same situation and based on the Vatican's clinging on to the fact that there are two kinds of people, those who have been given the power by God and the Laity who are there to be guided and shepherded/patronised. Think Papal Infallibility! Then look at the banks and try to find the difference. Think of any area of human activity where the status of 'professional' as opposed to lay people has been achieved and then look at remuneration backed by self regulation. Solicitors, BMA, senior managers etc. Then look at whether any of them are driving old cars.....
Then ask yourself why it is that all right wing political parties rail against 'big government'. Simples! Democratic government is the only way the people can exert power over the might of big finance and business which is where the big bucks are made and so is a no no to anyone who has an interest in preserving their ability to make money by using capital. They say that the top 1% are job creators but there is no evidence for this. This is the Stiglitz and Piketty argument, that inequality is ultimately bad for the whole of the economy. I have long argued that the best place to invest in the economy is to inject the starter funds at the base of the pyramid as these people spend all of their income and the money moves through the economy generating the multiplier effect, they don't move funds outside the country looking for a better return or lower taxes. I find that the most forward thinking economists of our era are backing me up and wonder how long it will be until the electorate and government get the message.
This whole structure is set up to make entry to the club difficult and create a situation where once a family has been persuaded to get into debt and pay interest instead of earning a dividend from decent wages there is only one way to go, downwards to penury. The only possible escape is a windfall like a lottery win, is it any wonder that gambling is a growth area? If you arrange matters so that the regular banks will not lend to ordinary people in times of need but force them into using the high interest lenders you accelerate the downward spiral and make money on the usurious rates. A win win situation. So is this possibly why a right wing government refuses to place a cap on interest on small loans?
Look back to 1945 when we had a real economic crisis but we also had the anger of the electorate who could remember laissez faire policies before the war and elected a Labour government that was courageous enough to take a leap of faith, build houses, construct a free health care system and improve social welfare. This laid the foundations for progress which we still enjoy today.
Ask yourself another question.... Suppose the NHS had not been established. What would the position of the elderly, disabled, diseased or mentally ill people in today's climate? It doesn't bear thinking about so in a funny way it is the presence of the safety net of the NHS which allows the draconian cuts in welfare to be pursued and hence is the basis for the Tory 'economic miracle'
I could go on but I'll stop. High time the upper echelons in this country woke up to the fact that they are killing the goose which laid the golden eggs. In the end, the present policy trajectory will lead to problems they haven't even seen coming!

[Stanley]

If you need a bit of relief from all the negative thoughts, have a look at 'What Attracted your Attention' and click on the link for the BBC programme yesterday about the future of capitalism. Some really good stuff in there especially Jeremy Rifkind on creative commons and the German experience (He advises Chancellor Merkel). I hadn't realised that creative commons had spread wider than control of intellectual property.

[Tardis]

The Labour Party are giving hints that they are to move their accounts from the Co-op into a bank set up under the Union umbrella.

Seems they failed to mention that the Co-op licence that bank and more than 50% of the directors are from the Co-op

#misdirection

[Stanley]

I've been aware of High Frequency Trading for a while and yesterday heard a commentator making some very serious allegations about the way technology was being used to damage the trading of the ordinary investor by getting in a fraction of a second before the man in the street, buying the stock and reselling it at a higher price. Only fractions of the price but done in enormous volumes it is a cunning wheeze for those who control the fast links. See this ARTICLE for a fuller explanation. This is a distortion of the market which adds nothing to the net worth of the stocks, it is simply a clever way for the flash kiddies who control the algorithms and links to syphon money out of the market. What I don't understand is seeing that in order to do this the original buy order has to be intercepted, why isn't this data theft?

[Tizer]

Later in that Today programme a man from the HFT Association defended HFT but he was crafty and was essentially using a straw man argument. He argued from a view that people were protesting about data being leaked in advance of trades, which would not be allowed by the regulators. The truth is that it's only flash trading that does that, and flash is definitely controversial and probably illegal. But that ignores the rest of HFT...conveniently for the HFT man.

[Stanley]

Yes, I heard him as well and thought he was a devious spiv.

[Tardis]

Fairly damning report into the management of the Co-operative bank, and the even more parlous state of Britannia when Gordon & Ed forged a wedding between the two. A deal that should never have been done, and maybe Britannia would have been another of those banks who lent money on property to go to the wall?

[Stanley]

"Gordon & Ed forged a wedding between the two. "
Not really, all they did was facilitate what the Co-op wanted to do, Exactly what Ossie is doing now and in the process laying the seeds of even worse financial consequences. The report says that it was a bad decision taken by a board with not enough experience of financial affairs. How long do you think you can carry on blaming every financial ill on the last government?

[Tardis]

"Gordon & Ed forged a wedding between the two. "
Not really, all they did was facilitate what the Co-op wanted to do, Exactly what Ossie is doing now and in the process laying the seeds of even worse financial consequences. The report says that it was a bad decision taken by a board with not enough experience of financial affairs. How long do you think you can carry on blaming every financial ill on the last government?

They did set and reward the regulatory framework. Then deflected the blame and set the system in it's current position.

If Osbourne is also so negligent, then history will of course record it as such.

Only by accepting those mistakes, can you actually hope to solve them.

[Stanley]

"Only by accepting those mistakes, can you actually hope to solve them."
I agree, that's the whole point of reading history and noting the mistakes. Pity the present incumbents don't do the same, Just as with Labour, the lessons of the inter war years are plain to see and the remedies applied then are still valid. My point is that using the example of 'what the last lot did' is not helpful and is a smokescreen to divert attention from the even bigger mistakes being made now.
There is a growing, and very persuasive consensus building that the greatest enemy is the enormous imbalance in the distribution of wealth, described by Mr Cameron and Ossie as 'The politics of envy', another smokescreen, they arrogantly dismiss, and never discuss, inequality.
Stiglitz, under the heading 'The evisceration of our democracy' quotes Paul Krugman:
"Extreme concentration of wealth is incompatible with real democracy. Can anyone seriously deny that our political system is being warped by the influence of Big Money and that this warping is getting worse as the wealth of the few grows ever larger?"
Krugman is talking about US democracy but what he says applies equally well to the UK. We have reached the point now when this imbalance is so blatant that any politician who ignores it is not fit to hold office. The banks and the financial sector are of course a prime example. Note how 'performance bonuses' suddenly became 'retention bonuses' when the losses hit. The specious argument that 'talent would migrate' is repeated so often that it is accepted as a universal truth. High time it was tested!

[Tardis]

Almost single handedly destroying so much wealth and yet no one is accountable? The GDP numbers are still 0.6% off the peak, all these years later.

The warning signs were there all along, in the money supply numbers and the asset prices.

Has there been a similar situation in history? Probably if you look at the Venetian banking scandals in the middle ages.

I do know that you don't make something cheaper by subsidising it.

If you read John Redwood's blog today, there are sufficient answers, not all of which I agree with. Things are not so simple.

As Jesus is reputed to have said in the many scriptures: "The poor will always be with us" So it is up to the rest of us to provide the opportunities for everyone

[plaques]

Like most politicians John Redwood likes to give answers to those questions he himself has posed. Quite often missing great chunks out to suit his argument. A very intelligent man who may be worth listening to once he is out of politics.

[Stanley]

"Has there been a similar situation in history?" Many of them if you take the trouble to look. Take two examples, the complete misunderstanding of the economic consequences of the Versailles Agreement, See Maynard Keynes on the subject. Going back onto the Gold Standard in the mistaken pursuit of 'sound money'. 'Reagonomics' in the late 19880s and 90s, copied by Thatcher and her minions.
P is quite right, Redwood is a dangerous man and suffers from the same problem as the examples above, failure to take all the facts into consideration and just using the bits that support his arguments. A senior civil servant friend of mine who worked with him when he was Welsh Secretary warned me about him many years ago. Even his own party recognise this, that's why after Wales his career stalled.
If you really want a fuller explanation of how these seemingly impossible situations come about read Stiglitz, he's very good on politicians confusing the party line with reality. Labour blew it in 2008/2009 when they gave all the money to the banks and saved the bankers, the bond-holders and the shareholders on the specious grounds that they shouldn’t be allowed to suffer. The Tory led Coalition is pursuing the same course and if they had been in power would have done just the same thing. When did they protest about the bail-out when it was happening! Look at the damage that is being done by going hell-bent for austerity. Every major economist and bodies like the World Bank and the IMF realise now that it can only massage the top line figures to the detriment of the bottom 80% of the electorate by destroying spending power and corroding society. This is the basic message of the books I am reading now and they prove to me that I was on the right track in 2008 when I stated publicly that the bail-out was wrong, the money should have been injected at a lower level and allowed to develop the magic of 'the multiplier' as it moved up through the system. I am in the company of men I trust, Stiglitz won the Nobel for Economics and if I'm any judge Piketty is on the same trajectory. Compared to them, Redwood is a joke!

[Tizer]

Lord Myners speaking out about Co-op Bank...saying there were people on the board who didn't know the difference in meaning between debit and credit. This is the sort of incompetence in organisations that I've been ranting about for years now.

[Stanley]

"people on the board who didn't know the difference in meaning between debit and credit."
Snap Tiz, I heard him as well. In my limited experience with Boards I have always been shocked by the fact that so many of the members were simply incompetent and very few actually knew the rules that governed them. At Ellenroad I got John Youngman, the CEO of Coates Inks, to come up from London and give them the idiot's guide to what they could and should not do. It didn't go down well and made very little difference. I think the main problem was that instead of acting with collective responsibility, many of them, usually the co-opted councillors, brought their own agenda to the table instead of considering what was in the best interests of the Trust. He brought copies of a small book on the subject and gave them all a copy.... It didn't do any good because shortly afterwards a Tory Councillor went public in the local paper saying that the Trust was insolvent when it wasn't. I had to inform the board about it and point out that if he was right they were all liable to be fined the amount the Trust owed instead of the nominal £5 under Limited Liability. He published a retraction the following week. I was not popular! It was like piloting a large ship with dodgy steering gear!

[Tizer]

The chickens have come home to roost at Barclays with 19,000 jobs to go by 2016, 14,000 of them this year. About half will be in the retail banking part of Barclays which makes you wonder what customer service will be like, considering it's so bad already. The shares have gone up of course - as usual, the big shareholders take the short term view and rub their hands with glee at the prospect of people being sacked and more money for themselves. It's time we shifted towards organisations that put the customers and employees first.

[Stanley]

Don't ho;d your breath Tiz. Nothing will improve until meaningful regulation is applied to force the banks to operate as a service to the customer and by that time they'll all be in kiosks in supermarkets and malls. Note that the chairman said in his announcement that they were aiming for more interaction via the net. They hate face to face contact and it's 'wasteful'.

[Tardis]

Co-op group loses even more control over Co-op bank as it tries to cover the £400 million loss

[plaques]

Co-op group loses even more control over Co-op bank as it tries to cover the £400 million loss

Tardis. It has become blindingly obvious that the Co-op Bank has been badly managed with virtual amateurs at the wheel with lots of in-fighting and poor governance. The bill for this mess is around £2.5 billion plus other losses on Somerfield etc. Hidden inside all this is the fact that the takeover of Britannia with its own sub-prime mortgage fiasco creating a £1.5 billion black hole in the Co-op’s book. Why due diligence prior to the merger didn’t spot this has never been explained. The flip side to this disastrous merger was that it stopped Britannia going bust and possibly several other building societies that were in a similar perilous state.
As they say, lessons must be learnt and £2.5 billion isn’t exactly peanuts but compared with the current Quantitative Easing of £375 billion to keep the rest of the private banks afloat, much of which will be funded one way or any by the ordinary tax payer, I think you are making a bit of a song and dance about it.

[Stanley]

P, he equates Co-op with Labour and so sees the worst side of it. The big mistake was being seduced into modifying the original concept of the Co-op Bank and following the Gadarene Swine in their stampede over the cliff in search of oodles of loot. The main thing about any restructuring of the Group is to get back to the mutual and cooperative model that served them so well and I wish them luck. Their forte has always been trading and the sooner they get back to that and away from banking the better.

[Stanley]

Pressure is building to stem the rise and rise of house prices. Hard to see the Tories abandoning their help to buy strategy so the Treasury and the BofE are looking at other ways of slowing mortgage issues down including much stronger income qualifications. Nigel Lawson says that Carny ought to stop complaining and use the tools at his disposal. It looks as though he may do just that.
There are reports that trading in derivatives based on suspect mortgages is approaching the level last seen in 2007. All this is reinforced by the UK Rich List which shows that the top capital owners have doubled their wealth since the immediate aftermath of 2008. Banks are basically operating in exactly the same mode as 2007. All told it is not a cheerful picture of an economy that has learned lessons. They are doing it all over again!

[Big Kev]

Is it just me or are the "runaway house prices" all in Londaon and the south east? There doesn't seem to be much movement in Barlick.

[Big Kev]

Is it just me or are the "runaway house prices" all in London and the south east? There doesn't seem to be much movement in Barlick.