BEWARE! THE BANKS ARE OUT TO GET YOU!

[Stanley]

Fire fighting Tiz. I'm afraid you are right. Easier and cheaper to have lax management of the system and cross your bridges when you come to them. The bean counters haven't got enough imagination to assess the long term benefit of good customer relations. It's an intangible and can't be measured accurately so it doesn't fit the McKinsey management model which so many firms seem to follow.
I see an increase in the number of banks offering me £150 to change my account to them. Nothing to do with the latest report that not enough people are shopping around of course.
Quietly away, in the background, the pension pot access scam proceeds with not a peep from the regulators. Could it be that it's having the desired effect and increasing the income streams of the Treasury and the financial institutions? I thank my lucky stars again that in 2000 I was forced into an annuity and seem to have been incredibly lucky. I shall be getting another 3% increase in February......

[Tizer]

Philip Aldrick, economics editor of The Times, wrote on Saturday about the increasing discrepancy in financial status of the young and the old. His closing sentence was: "The old have never had it so good; the young have never had it and never will."

[Stanley]

He's right. Particularly in this country. I have been banging on for years about the fact that a young family with no leverage provided by inherited money are far worse off than we were at that stage. Since 1980 their position has gone downhill in all the important areas, security, opportunity and the possibility of advancement. I contrast the difference between my two daughters who migrated to Oz and the one who stayed here. Susan has managed her job well and is OK but only because she surmounted all her difficulties and constantly improved her qualifications. Not everyone can do that.
I am more secure than I have been at any time during my life, mainly because I have loving daughters who support me and the fact that politically, attacks on pensioner's incomes are a no-no!

[Stanley]

See THIS for a report on Barclay's new CEO James Staley. The impression they seem to be projecting is for the investment bank to be 'slimmed down' even further but with both Staley and his new Finance manager coming from J P Morgan the suspicion is that profits from investment (up 31% in the latest figures) will feature largely in the bank's recovery. Profit is the name of the game and I can't see either of them disregarding such a lucrative income stream.... So, my assessment is that happy days are here again. Or am I just and old cynic.....

[Tizer]

The Bank of England is warning that domestic debt is back where it was before the credit crunch. Total personal debt (i.e. not including mortgage debt) in the UK is now £1.477 trillion (ONE AND A HALF THOUSAND BILLION!). It's mind-boggling! There's lots of statistical money facts here: LINK

[Stanley]

And that's only domestic debt. This is what I keep warning about, the fact that the 'economic miracle' is based on ever increasing levels of debt, the same root cause that triggered the last melt-down. Phantom money!

[plaques]

In the old days life was simple. The pound notes in the system moved round comparatively slowly. Capitalist to worker to tradesman / shopkeeper to bank to Capitalist. Now that most people used credit cards this cycle of events is speeded up without the need for the government to increase the overall supply. The effect would be the same as before as long as people didn't go into debt and having to pay interest. Paying for the use of the card can also be viewed as interest. This interest is 99.9% profit, there is no value added other than a few electrons whizzing round the system. As more people use 'credit' the faster will the money supply be depleted from the system. Finally, when the music stops, the Capitalist will have all the money and the workers will be in total debt to them. A modern form of slavery. Indeed Phantom money!

[Tizer]

Phantom money; I like that, `phantom' really is a good description. It's all about power, about who has the power to `create' money. The rest of it is smoke and mirrors. Now we have `Bitcoin' which is beginning to show the flaws in the money concept. Of course two hundred years ago there was an avalanche of tokens made by industrialists and others which caused some consternation and was a result of the government not being able to make coins fast enough to meet the rapidly increasing demand. Boulton & Watt solved the problem by applying steam power to coin minting (it made a change from stamping out buttons for the Navy!).

[Stanley]

I forget the phrase he used (it could have been 'credit money') but Marx identified the danger of phantom money in 'Das Kapital'. That man was a century before his time.... If you substitute failure of the credit system for his predicted failure of Capitalism he got that right as well! God alone knows what he would make of a currency as badly flawed as the Euro!

[Tizer]

There's a story in The Times this weekend of a man accused of stealing one of those fantastically expensive handbags when he and his girlfriend visited one of the posh London shops. He claims he didn't steal it, that he was told he could take it outside while he had a smoke. He says he's so rich he doesn't need to steal anything. As evidence he's submitted photos of him with an open suitcase packed full of Euro banknotes!

[plaques]

As evidence he's submitted photos of him with an open suitcase packed full of Euro banknotes!

So that's where it got to. I wondered where I'd put it down.

[Tizer]

We watched a Dad's Army episode the other day where it starts with Fraser counting his piles of gold sovereigns on a desk. A visitor knocks at the door. He quickly sweeps them into a metal box. When the visitor is leaving he knocks the box and the coins spill out onto the floor. Unfortunately for the producer's of the programme the clinking of the coins on the floor sounded more like bus tokens than heavy gold sovereigns!

[Stanley]

Maxwell should have used that defence.... remember the nickname? 'The bouncing Czech'.
They should have used lead discs painted gold for the sovereigns, that would have sounded more authentic.

[Pluggy]

This caught my eye this morning :

http://www.bbc.co.uk/news/business-34695708

HSBC's profits are up because they haven't been fined as much......

[Stanley]

I saw that as well Pluggy. The Lords of the Universe sail on through hard times..... 'Austerity'? What austerity.....?

[Tizer]

Away from Paris and in the banking world it's business as usual:
`Barclays pays extra $150m penalty for forex misconduct' LINK
`Regulators to report on HBOS failings' LINK

[Stanley]

The thing that struck me in that report was "No one else will face fines, as too much time has passed since the events took place." Cobblers! The main reason is that so many of the people deemed culpable have moved on to senior positions in other financial institutions, business or even government. Too much boat rocking invo0lved.
PE have a good account of the report on HMRC by the Public Accounts Committee. (LINK) The report itself was bad enough but the Eye article claims that some of the figures accepted by the PAC were at best optimistic and at worst misleading. Since 2005 they have lost 40% of their workforce at a time when successive spokes persons have been claiming that extraordinary measures are being taken to collect tax. One more example of how 'cutting waste' in the public services can actually damage the service to the point where it is not fit for purpose. Is what has been saved by the cuts larger than the tax not collected?
See THIS for a report on the sale by the Dutch Government of the ABN-AMRO bank which they bailed out after RBS found it was a bank too far.... Is my memory correct, did RBS pay £50billion for it? Financial experts?

[Tizer]

And today's FT front page says: `Senior managers blamed for HBOS collapse face only limited penalties'
"A much-delayed report into the 2008 collapse of HBOS heaped blame on the bank’s board, top management and its regulators but any further action against them will take at least another two years and be limited to industry bans.....the worst penalty any individual could face from financial regulators — and only after a fresh investigation is completed, which typically would take two years — is a ban from working in financial services. This is because the old statute of limitations that applies in this case prevents the Financial Conduct Authority from fining individuals after three years have passed."

EDIT: I've just read Stanley's `All change after the millennium' article and that reminded me...the self-certified mortgages (`liar loans') that were partly responsible for the credit crunch are back. They were outlawed in the UK in 2010 but a bloke from Barnsley has found a loophole and has set up a business in an East European country to offer them here. The FCA has no control over his business because it's based in another country. How is he going to check whether or not his `customers' can afford to pay the mortgage? He says he will look at their profiles on social media sites! The man was running a pay day loans business which has become unprofitable now under the new regulations. He claims that he will be able to set up a new version from the foreign country alongside his liar loan business. Wonga are said to be planning to use the same loophole to get around the regulations.

[Stanley]

Tiz. I think you might be referring to Ernie buying his house on 'rental purchase' which in those days was a legal and well recognised route to home ownership. The deeds only changed hands after the final payment was made. As far as I know, any default by the purchaser rendered the contract null and void and any payments made were non-recoverable. In the case of Hey Farm, we applied for a mortgage down the usual route but were refused by everyone including the local council who were in the market then. I went to my bank manager in Burnley and he trusted me enough to give me a personal loan of £2,500 which in those days was an enormous sum. Roughly six years income. I paid it back at £15 per month fixed payment despite interest rate fluctuations. I think it took 15 years to pay it off. I can still remember the day when I got my monthly bank statement in the post and it was printed in black ink instead of red. I went to the bank straight away, terminated the Charge on the Farm and brought the deeds home with me. Definitely a red letter day.....
Up until then I was the sole owner of the farm but when I went to my solicitor to deposit the deeds with him I changed to joint ownership with Vera my wife by Deed of Gift and I can still remember the wording of it started "By reason of the love and affection borne by....". Lovely confident days!

[Tizer]

Self-certified mortgages were originally for those people who didn't have a fixed regular income and therefore couldn't meet the usual loan to income equations that the lenders used. When we started our publishing business we were in that situation and after a year when we wanted to move to Somerset the Halifax gave us a new, much larger mortgage. But we'd had a mortgage with them for about 12 years and never missed a payment. In the early 2000s the banks were handing them out to anybody, with no checks on their ability to pay. They were still handing them out after the credit crunch until the government banned them. They do have a place but only if you can prevent abuse - and bankers have become good at that.

[Stanley]

And can you remember the plethora of warnings by commentators and TV programmes flagging up the abuse even when the government and the lenders were insisting it wasn't a problem? The same thing is going on now with the pension fund raids, commentators are pointing out the dangers but the government and the providers insist that everything is fine. In both cases the results of the policies are that there is the illusion of a buoyant economy and in the case of the pensions the government gets an increased tax take. Do these people never learn from experience?

[Stanley]

Not reported on the web yet but Mark Carney is going to be asked why UK inflation is still negative when his task is supposed to be to keep it at 2% per annum. Perhaps it's the target that is out of date!

[Tizer]

This has just popped up on BBC News alerts:
`Barclays fined £72 million by FCA for poor checks on mega-rich clients'
"Banking giant Barclays has been fined £72m for failing to conduct proper checks on very rich clients because it did not want to inconvenience them. The City regulator said Barclays arranged a deal worth £1.88bn for wealthy clients in 2011 and 2012 which it kept quiet. It did not conduct the proper checks on clients who should have been considered politically high risk. The bank said it cooperated fully with the inquiry."

At the same time, it looks like auditors are at last getting some flak for their behaviour in the HBOS scandal.

[Stanley]

It is high time the big auditing firms were reined in. They are up to their necks in so many dodgy schemes and their dual role as both consultants and auditors is deeply suspect.

[Stanley]

THIS grabbed me this morning. Tracey MacDermott denies she has gone soft on banking or that she has been leaned on by the Treasury. Really? I also heard a small item that advisers were to be once more allowed to take commission from products they recommend.... Sounds as though happy days are here again or am I just an old cynic.....