OneGuyFromBarlick

All I can say in respect of the last item is don't hold your breath....
I heard a discussion on Brexit and one matter that came up was the fact that most of the recent successful applications for equal pay for women were based on EU law..... The Law of Unintended Consequences kicking in yet again.....

See this LINK for a BBC report on the fact that Santander has pulled out of the negotiations over the branches that the EU is forcing them to sell. We still own 73% of RBS and the worry is that there may be a fire sale..... Are we still ruled by EU? Another example of complications due to the lack of action on Article 50.

See this LINK for a report on the class action FOI request Which? has made to the banks demanding them to disclose and remedy the fact that whilst credit and debit card holders are indemnified against fraud not enough is done to protect customers against fraudulent bank transfers generated by scams.

My heart bleeds for poor Mr Stumpf...
`Wells Fargo chief forfeits $41m amid corruption probe'
"Wells Fargo chief executive John Stumpf will forfeit $41m (£31.5m) in bonuses as the bank tries to deal with a scandal over its sales practices. The bank is investigating how two million accounts were opened without customers' permission. It said Mr Stumpf, who was paid $19.3m last year, would not receive a salary during the inquiry. The former head of retail operations, Carrie Tolstedt, will forfeit $19m of bonuses and left without a payoff."..."Earlier this month, Wells Fargo was fined $185m and accused of "widespread illegal practice" by the regulators. Wells Fargo has fired more than 5,000 staff in response to the scandal. Mr Stumpf has so far ignored calls for him to step down."
More here: LINK
Wells Fargo customers used to be the victims of highway robbers. Now Wells Fargo customers are the victims of Wells Fargo employees!

Do you trust banks????
Remember Angela Merkel lecturing Greece and the other supplicant countries about the need for probity and stability in financial institutions? Read THIS Telegraph report into the current problems Deutsche Bank is facing. There is a lot more to it of course, bad decisions and worse investments plus allegations of illegal practices. Classic case of the pot calling the kettle black.....

See THIS for a report in the Telegraph on the state of banking in Germany. Deutsche Bank gives cause for even more concern and other German banks are in trouble as well. There must be some wry smiles in those countries, including Ireland, who were put through the restructuring hoop largely at the behest of the German financial system. They took the high moral ground as being perfect examples of a well run economy but at the moment it looks as though the Emperor has no clothes. Question is, who will point this out first? Europe is not a happy place and this is going to be reflected in attitudes towards Brexit negotiations as they possibly look for a scapegoat. Tin hats on lads!

The casino side of banking ie: the FSTE 100 climbed because the smaller OPEC countries declared an intention to limit output and thereby reduce the amount of oil that was held in reserve. 'Guardian' Oil price and stock markets rise as Opec cuts crude output. OPEC. I'm at an utter loss to understand why higher priced oil in itself would read across to higher profits in the general index. Certainly the oil sector would increase through potentially higher profits but unless the rest of industry is going to hide extra profits behind energy costs then the basic trading position would be more difficult. If on the other hand the price of oil was rising because of an increased demand through industry expanding then the euphoria would be justified. I expect a big unjustified ripoff is being pushed at gullible investors.

P, the bottom line is most likely to be that the storage tanks and available tankers are full of cheap oil and can only be emptied/unloaded as reduced consumption makes space.
Read THIS Guardian report on Deutsche Bank and the markets. A classic example of what P describes re. reduced oil. Monetarists would say this is the market working as it should and self-regulating. I think it looks like an out of control yo-yo!

See THIS for a BBC report on the latest failure of bank security. Over 40,000 customers of Tesco Bank have experienced suspicious transactions, many of them having money extracted from their account. They have had to stop all online banking. I have always kept my banking off-line and will continue to do so.

Tesco are coming in for heavy criticism from IT security experts for not having sufficient security in place and the consensus seems to be that the issue is due to an internal fraud or a compromised third party business. (A spin-off from this event is that I noticed the Financial Conduct Authority has been criticised for not having the necessary technical expertise and has only recently appointed a technical member of staff.)

Whatever the minutiae of the reasons for the cock-up it was entirely predictable that something like this was on the cards. It is over 20 years since Janet told me what the bank's attitude to Risk Management was when she worked on the team in charge of that at a very large American bank. It would appear that nothing has changed. She said then that whenever her team raised a question of digital security the only criterion used by management in deciding on whether to heed the warning was "What effect will this have on profits?". She also told me that they didn't understand the technicalities and this was one of the factors which led them to allow the algorithms that facilitated the trade in derivatives which in turn led to the collapse of 2008. All the evidence is that security and investment in skills necessary to protect trading have been neglected. Add incompetent management is pure banking terms and you have all the elements of a disaster. The question is, how much more robust are other banks?

`She also told me that they didn't understand the technicalities and this was one of the factors which led them to allow the algorithms that facilitated the trade in derivatives which in turn led to the collapse of 2008.' (Stanley)

Mervyn King says that this is about to happen all over again. A combination of the algorithms and surging debt. Combine that with climate change continuing, Brexit approaching, Trump ruling America, rising antibiotic resistance, terrorism etc and it's obvious we're in `interesting times' again!

The algorithms.... Janet told me that the big problem with most of the algorithms used in the bank's operating systems is that they were designed deliberately to act almost like a virus. She said that they are so deeply embedded in the systems that the only way to get rid of them 100% is to extract the data upon which the system depends, the archives and records and store them on new external media. Then you have to physically destroy the old equipment and start from scratch with an entirely new suite of equipment and a clean operating system. This was what she successfully did with the WA Police high security system. Her argument was that this was the only way to guarantee a completely secure system and once it was up and running the data could be returned to it. After that, the system was only as secure as the quality of the security imposed on it in terms of adding any further functions or allowing access. For example, the new system did not allow copying unless it was done by the highest grade of Sworn Officers. The banks all have systems that have grown like Topsy over the years and contain code written decades ago when these dangers were not recognised. Almost anyone can shove a memory stick in the slot and download files. Think of the cost of rectifying that and then think of the board asking the question about profits.....

Algorithms have crept everywhere now. For example when we try to take out insurance or a loan they are being used to assess our `worthiness'. Post code assessment is being used increasingly and it's hard luck if you live near people who have bad debts or keep claiming on insurance because you'll be judged by their behaviour and marked down. This has serious implications for society - the people who will be most likely to get `low marks' will be the poorest, the disabled, the less educated, the oldest because the system is weighted against them. They are more likely to live in what the algorithms deem to be`bad' areas. There are even a few people in the insurance industry who have spoken out about the dangers.

I think you are quite right Tiz but as I read your post I could imagine a young person reading it who, because they were born in the IT age, will see the problem as being in the actual algorithms and not the fact that they have to be used because that is what our new computerised systems dictate. For their benefit.....
There was a time long ago when the day to day business of recording transactions, communicating with customers and taking day to day decisions in a business or service organisation was done by and army of clerks sitting at desks with paper or ledgers and a pen and ink. Think of the goblin's bank in Harry Potter and you get the idea!
Then computers were bought and employed. At first they were only used for storing data in a form which could be retrieved and printed. Next it was realised that by employing software (which is essentially a bunch of instructions using algorithms to automatically execute complicated tasks) some tasks could be automated and the clerks who did the job became redundant which saved money on wages and helped pay for the systems. This opened the flood gates and more and more functions were automated and transferred to the computer. The white collar middle class who had manned the ledgers and customer service points became redundant. Then it was realised that Computer Numerical Control machines could be built which, once programmed could accomplish tasks that previously had needed highly skilled operators. This was applied to everything from manufacturing industry and functions like traffic control on transport systems and more workers were either de-skilled or made redundant saving more wages. Work out the repercussions of this for yourselves! They include rising unemployment, closure of points where organisations interacted with the public like High Street bank branches and the creation of low paid jobs like shelf-stackers, machine minders and call centre operators. This is where we are at now, an enormous part of the everyday functions of society are no longer controlled by sentient human beings but by algorithms embedded in large IT systems which are only as good as the investment in skill put into them in terms of programming and maintenance. The whole reason for for using IT in the first place was to 'make processes more efficient' and part of this was sacking the operatives. So there is a built-in imperative in these organisations to avoid spending money on wages for skilled persons to do these tasks. Even worse, they had a tiger by the tail because as we are seeing now, in the absence of proper upgrading and maintenance these systems are vulnerable and if not run properly can cause untold damage. Think of 'flash crashes' in the markets, computer fraud etc. Many of the operating systems used in our most basic functions were designed 30 years ago and over the years have been 'upgraded' but not replaced so they are full of redundant code, old algorithms and weaknesses. In other words, the organisations have to spend money which impinges on profits or in the case of governance, makes operations more expensive.
This is the brave new world and the reason for the problems highlighted by Tiz. End of sermon!

Your sermons are always welcome and always valuable!

As further proof of how our banks fail to understand IT and security there's a damning report on Tesco Bank on the front page of the FT this morning. Internet security specialists have told the FT that they warned Tesco Bank about security flaws in recent months but the company took no notice. One security firm had warned of evidence that Tesco Bank customers’ current accounts, savings accounts and credit card details were being traded on the dark web. Another warned the bank that there was a number of security flaws in its mobile apps. The FT quotes Martin Alderson, chief executive of Codified Security, as saying: "The number of times that we tried to reach out to Tesco and got no response is quite shocking. I think it speaks volumes as to how seriously they take the security of their company". The report has a lot of information about what the specialists discovered when they challenged Tesco's IT systems and it makes depressing reading.

And significantly, exactly the same attitude that Janet reported to me when she worked on Risk Assessment for a large Merchant Bank. The only criterion was the affect on profits, security wasn't even considered. Some things are very slow to change!

Stanley wrote:...The only criterion was the affect on profits, security wasn't even considered...

I can give you another, bang up to date, example of that. Just when we thought the banks couldn't get any worse....
It's not long ago that the banks and card companies introduced what they call `second level verification' for card transactions carried out online. This meant that if you bought something on, say, Amazon or John Lewis web sites not only did you have to log in to the site with your password but you were asked for a second password at the final point of purchase, when you'd entered your card number and clicked the Buy button. In practice, they didn't ask for the whole password but asked you to enter two or three of the specific letters or digits. So it might say `What are the 2nd and seventh digits?' for example. I remember having to make passwords for this verification and using it to make purchases online - but then it seemed to disappear and now we're back to the original state of first level only. So what happened? The answer was in an article in The Times on the weekend. The banks and card companies say they have abandoned second level verification because (a) customers were less likely to complete a purchase if they had to enter a second password and (b) the banks had `extra costs' due to people forgetting the password and asking for a reminder. The real reason is that they are vigorously pursuing what they call `frictionless transactions', in other words removing all barriers to purchase regardless of their effects on security. They take the cynical attitude that it's worth risking fraud in order to get more purchases; another example of the joys of having companies run by accountants.

There's a postscript to this story. In January 2018 a new EU regulation will come into effect which obliges the banks and retailers to use second level verification for online transactions. With Brexit we'll miss out because our government is in thrall to the banks and is very unlikely to institute the rule in the UK. The banks know this so they don't feel any need to boost security online.

I'd noticed that happening with my card but thought it was because my purchases were below a cut off point. You're point about the EU regulation is well made. Our regulation is crap and designed to cause the least inconvenience to the financial markets because of the power they have over the government. What a brave new world we live in.....

I'm not sure where to post this.... I am always puzzled by government borrowing. In the present frenetic economic climate, any monthly borrowing less than what was forecast is hailed as a triumph. However we are also told that the probability is that at the end of the financial year the final figure will be higher than what was forecast. probably something like £60Billlon. My question is, does this mean the National Debt rises by that amount or are there some ameliorating circumstances?

Yes - I believe the annual deficit is added to the national debt. The figure will be higher than predicted, because they will not meet Mr Osborne's optimistic forecasts.

I think we are all going 'number blind'. The government announced last week £1.3 billion, for infrastructure investment, presumably for the whole of the UK. . Sound a lot - until you read that repairs to Buck House will cost £0.36 billion, which is about a quarter of that figure alone.

I realise there is no direct connection between the two numbers, just an indication of scale..

A billion quid isn't much in this day and age when you're looking at government spending. Pensions alone are upwards of 2 billion a week.

4 or 5 billion for repairs to the Houses of Parliament which will be paid for by the taxpayer while I believe that Queeny is paying for the Buckingham Palace repairs in return for a temporary relaxation in taxes on the Crown Estates from 85% to 75%.

Perhaps you could suggest a 'temporary relaxation of tax' to pay for your kitchen refurbishment?

Seems fair to me.

We all went `number blind' when £ millions became £ billions. They sound so similar that we just accepted it without question. What a pity that 1000 million wasn't given a totally different name. I would have suggested `jumbo' as a good term. At least we wouldn't have confused it with million. Anyone got a better name for billion?