ECB deposit
The graph shows usage of the European Central Bank (ECB) overnight deposit facility. This is where banks have been stashing their cash because they are scared of putting it anywhere else. The amount has now increased to €446 billion, just shy of the all time record of €452 billion. The implication, according to BBC2 Newsnight, is that a credit crunch is weeks away.
Yachts
Stewart Fraser - bothered about hippies
On the 15th November I was watching Channel 4 News and saw Stewart Fraser, the Chairman of the Policy & Resources Committee of the City Of London Corporation, say that the Occupy protesters at St Paul’s cathedral should be moved. He made the usual excuse of our whinging elite when he said that the protesters had no solution, only criticism.
Of course! They are not professional economists or bankers. They represent the people who have suffered from the policies of people like Mr. Fraser. This is like the captain of the Titanic blaming the passengers for complaining. Mr. Fraser would do well to focus more on the incompetent bankers who got The UK into the current mess rather than trying to suppress the people who are protesting.
Anyway, I wrote the bloke an Email which, so far, he has ignored. I suggets anyone else who is interested in this write him an Email too. You could try this address: COL-EB-TC@cityoflondon.gov.uk
Attention: Stewart Fraser,
I just saw your appearance on Channel 4 news in which you were completely dismissive of the protesters at St. Paul’s cathedral and seemed to be making up reasons for their eviction on the fly.
I have worked in the City before but not at any great seniority. I also realise that there will necessarily be conflict between authorities and the protesters in such a situation.
However, you arrogant dismissiveness is extraordinary. You have a bee on your bonnet about a handful of protesters in the street yet where were you during the credit crunch? Where were you as the banks and politicians ruined the economy? Not a squeak. Not a squeak.
As Evan Davis has pointed out, just prior to the credit crunch, at the end of a boom which had run on for ten years (and was therefore due to bust), a major bank (I forget which) had lent £40 for every £1 it had in deposits. This meant that if the value of its investments were to fall by just 2% the bank would be insolvent. This is incompetence and complacency on a massive scale.
Further, at the same time, while the economy was booming, the Chancellor, Gordon Brown, was running a deficit. (If you can’t repay debt in the good times then when can you?)
And where was Stewart Fraser? Nowhere to be seen. Yet when a bunch of hippies pitch tents in the street there you are swaggering around on TV.
Further, while I understand that bonuses can be a useful tool most investors are in it for the long term. It is therefore idiotic to pay traders massive bonuses because they made good profits in a single year.
As a man approaching retirement I require long term growth not erratic variations in my investments. As it is my investments have plummeted.
Your arrogant dismissive attitude emphasises that you guys still don’t realise that a lot of people are suffering because of your actions.
Your profile on The City Of London web site states that you enjoy walking, I suggest you walk. Step down from your role as Chairman of the Policy & Resources Committee.
Fantastic Art Photography
Occupy Brighton
An Occupy protest has sprung up in Victoria Gardens Brighton oposite the King & Queen pub. A bunch of tents and some friendly people open for a chat. They had some good slogans. “Chose love over fear” and “All money is a matter of belief”.
I guess the latter has been true since governments came off the gold standard. Since then it is possible that, if the politicians and bankers screw up enough, people will lose all faith in money. They will see it for what it is: mere paper and numbers in computers. The problems is that millions of us, necessarily, have stakes in money in the form of investments, savings and pensions. However, these being hit by the current crisis the danger is that people do lose belief in the system. Like God, money requires faith. Without faith, it is nothing.
Occupy Brighton
Occupy Brighton
hove station
Quack Quack - Alistair Darling speaking at The Old Market
Last Thursday evening I saw the ex-chancellor, Alistair Darling, speaking about his new book: Back From The Brink, at The Old Market in Hove. These talks are organised by City Books, a small but very active, book shop on Western Road.
The room was pretty packed with a few hundred people who had all paid a fiver to see Mr. Darling. He gave a short speech where he summarised his view of the collapse of Western Banks and how he considered that New Labour had rescued the situation. He claimed that at one point “The system had reached a stage where we were within hours of total collapse” and later said that he had “written a cheque for, effectively, 500 billion pounds”.
Not much was said about the cause of the crisis and he took the opportunity to point out some of the more favourable aspects of Tony Blair’s leadership such as reducing child poverty.
He spoke calmly and reasonably and with a trace of wry wit. He seemed to me a sincere politician. As with Jack Straw, people may claim that. though he seems sincere and reasonable in fact, behind the scenes, he is conniving to do so. Like a swan, on the surface complete calm and poise, while beneath the surface there’s frenetic activty. However, after years of the obviously insincere and calculating politicians such as Peter Mandelson, it strikes me that this is a little like the Chinese Room argument in philosophy. Or if you prefer another ornithological analogy: if it walks like a duck and quacks like a duck then it’s a duck. Mr. Darling spoke reasonably and apparently sincerely so perhaps he is a sincere and reasonable man.
In fact I was quite surprised at my reaction. As a serial political ranter, who is quite capable of condemning Tony Blair as the devil incarnate, I found myself thinking more sympathetically about politicians in general and, though Mr. Darling’s manner may have helped this, I think the act of occupying the same room helped establish a more empathic rapport as it allowed the audience to see the man as well as the politician.
After the speech Mr. Darling took questions which were mainly about the financial crisis. He made the point that Germany has benefited from the Euro by having a comparitevly weak currency helping German exports to China and he pointed out that these exports will decline if Germany leaves the Euro. He said “If you want the Euro, you have to accept the consequences of the Euro”. This is a very interesting argument and it made me consider the United States. Though California has screwed its economy there is no talk of California leaving the dollar.
City Books
Simple strategy: Make the public pay
I get a little irritated when Labour supporters blame the current financial crisis on the banks as they’re merely trying to sidestep their own incompetence. The generally accepted root cause of the credit crunch amongst Economists is interest rates held too low for too long and the blame for this lays with the chairman of the America Federal Reserve, Alan Greenspan and, in the UK, the Chancellor, Gordon Brown.
This is not to say that others should not share the blame. We, as individuals, were to blame for knowingly borrowing far too much and, yes, the bankers were to blame for their incompetence in lending far too much and for tying themselves in knots with odd financial instruments such as credit derivatives.
However, I too am angry with the bankers because they are not sharing the pain. It might be argued that the rich, by definition, never suffer during financial crisis but what irks me is the bankers arrogant inclination to actually raise their income by large amounts while everyone else is having to cut back. Today’s Guardian reported that the head of JP Morgan, Jamie Dimon, received a 51% pay rise!
What planet do these morons think that they’re on?
Bankers argue that they have done a brilliant job in making profits for the banks since the credit crunch and in so doing dug the banks out of the mess they were in. This disingenuous as they have achieved all this merely by the putting their prices up. Competition has dropped out of the market, base rates are ludicrously low let yet loan rates and fees are high.
So who is really paying for the banks recovery and Mr. Dimon’s bonus? You are! Joe bloody public again. The same poor bastard who also paid for the banks bail out. You don’t need to pay a £3m bonus for a trick like that.
Whenever criticised bankers usually reply that you have to pay the market rate or you will lose people. Well, OK, let’s lose some of these people. Firstly, where can they go? Secondly, if they have so little solidarity with their fellow countrymen then bollocks to them and thirdly their past performance IS an indicator of future results so good riddance to them.
Levene - Can't wait to get his hands on the branches
It seems that the Bankers are still lining their pockets and this time they have rowed in regulators and law makers from the House of Lords.
Lord Levene, the chairman of the Lloyds insurance market, is to create a new high street bank to be floated on AIM and initially funded by £50m from City institutions including Invesco and F&C. The bank will then issue shares to gain more funds and expand rapidly to acquire other businesses including Northern Rock’s state-owned “good bank”. Not the bad one, mind you, that is to be left for the tax payer.
I heard Lord Levene on the radio a week or so ago who said that he considered that the High Street banking business could do very well but an article in The Independent newspaper quotes Neil Saunders, of the DataMonitor consultancy, as saying “All banks face apathy in terms of switching behaviour….It takes an awful lot to get people to change bank.”
No problem, Lord Levene has thought of that and plans to simply buy up the 600 branches that Lloyds Banking Group had been ordered to sell following its state rescue.
Lord Levin obviously spotted the chance to make some money as did half the regulators and House of Lords.
One has to wonder who it was who decided that Lloyds should be ordered to sell the 600 branches and whether any of those involved in Lord Levine’s new bank had any involvement such as the “non-executive directors” of the new bank Sir David Walker (former official of the Treasury and Bank of England and deputy chairman of Lloyds bank), Lord McFall (chaired the House of Commons’ inquiry into the banking crisis) or Charlie McCreevy (former EU commissioner). Presumably these honourable men merely spotted a chance which came about coincientally following thier decision to force Lloyds to sell its branches. One can imagine them around the board room able: “Buy up the 600 branches? By Jove, never thought of that!”
The article in The Independent says that “executives will be appointed after the flotation”. It seems odd to wait until after the flotation to appoint executives but perhaps the new bank will be such a money spinner that they could employ any old fool to run it. If past performance is any indicator of future results then they probably will though it is not known if Sir Fred is still available.
Lovely Jubbly as del boy would say.
Gordon "Slopey Shoulders" Brown
This morning I listened to John Humphrys interview British Prime Minister Gordon brown on BBC Radio 4′s Today program. Quite a good interview, Humphrys pushed Brown fairly well.
Humphrys tried to pin the Prime Minister down on a couple of points. He posited that while Gordon Brown was Chancellor he had bragged endlessly about prudent stewardship of the British economy claiming that he had “abolished boom and bust”. This false promise had encouraged everyone to borrow on the assumption that the economy was in safe hands. So much so that this led the the economic mess in which we now find ourselves.
Mr. Brown’s response to this was that previous “busts” had been caused by high inflation and that Brown had not let inflation get out of control. He claimed that the credit crunch had been caused by property loans being packaged up into derivative financial instruments where the risk could not be easily assessed.
Gordon is TALKING BOLLOCKS!
If one reads The Economist one discovers that the generally accepted view of the cause of the credit crunch was low interest rates.Yes, the impenetrable derivatives exacerbated the situation but the cause was cheap credit which was made available by the likes of Gordon Brown (as UK Chancellor) and Alan Greenspan (as chairman of the America Federal Reserve).
Cheap credit might normally give rise to inflation but China became a member of the World Trade Organisation in 2001 allowing it to supply cheap products to the developed world keeping high street inflation low. Note that inflation stayed low not because of Brown and Greenspan’s low interest rates but in spite of them.
But the cheap money that Brown and Greenspan were making available had to go somewhere so it went into fueling aasset price bubbles in equity and property.
This is not the reasoning of one lone blogger but a précis of the opinion of main stream economists as reported in The Economist newspaper. However, speaking personally, I recall that around the year 2001 the silicon chip maker ARM was trading at a Price Earnings Ration which would mean it would take a thousand years to pay back it’s offer price! If I could see this was absurd how did the situation evade the Chancellor of a major world economy? If taxi drivers could see that providing mortgages to people for more than the price of their home without checking their income was reckless why did this escape Gordon Brown?
It is worth noting that The Economist had been warning of the asset price bubbles for years before the credit crunch arrived. If they knew then Mr. Brown should have known. So when Mr. Brown claims that he kept inflation low he is either incompetent or deliberately misleading the general public.
I suggest that Gordon Brown is like any number of technocrats who are amazingly knowledgeable about a subject but have no judgement or understanding. Mr. Brown read of the mistakes made with inflation in the past, learnt the accepted remedy and then blindly applied this remedy without once stepping back and seeing the enormous bubble in property and share prices.
Mr. Brown is like some bureaucratic ticket collector, deaf to the beseeching cries of the passengers, he insists on following rules and clipping everyone’s tickets while the train careers across a cliff.
Mr. Humphrys pointed out this morning that the stock market valuation for The Royal Bank of Scotland had grown larger than the UK economy. Even with this alarm bell the size of the Mount Everest Mr. Brown did not think that there had been any indication of the impeding disaster.
This morning, on Radio 4′s Today program, Gordon Brown was TALKING BOLLOCKS!
Even during the boom years Gordon Brown was spending more than the exchequer was raising in tax. The Budget deficit in 2007 was 2% of GDP! If he was borrowing in the good years then what on earth did he think he would do in the bad years? The truth is that this arrogant fool thought that he was so clever that he had ensured that never more would there be bad years. Now we have the bad years New Labour have resorted to the same tactic as Robert Mugabe’s Zimbabwe – they are printing money which in turn is devaluing the pound.
Gordon Brown has presided over a decade in which the United Kingdom has morphed from a leading developed country to a major debtor nation. The UK has never defaulted on it’s debt before but now there is talk of the UK losing it’s triple A credit rating meaning that investors consider default a possibility.
That this moron considers that his record shows prudence and competence only serves to underline that he is not fit to be in government let alone Prime Minister.
If readers are undecided on which party would be best placed to lead us out of the economic mess then consider that judgement and understanding will be necessary and Gordon Brown has neither. Also consider that, as imperfect as Western democracy is, the one advantage it has is the ability to throw out a bunch of leaders who have messed up.
New Labour and Gordon Brown especially have messed up big time and should be thrown out by the British electorate!
I have been mulling over the expenses scandal currently bubbling away in the British press and it seems to me that this is the straw that broke the camels back. The expenses scandle is the last in a long stream of betrayals by our leaders and specifically by New Labour. It is time for a general election. (See petition information below).
New Labour came to power promising an end to the sleaze that defined the fag end of the last Tory government. Tony Blair portrayed himself as embracing an innovative vision of The United Kingdom and promulgated a bold modern vision of the future of the UK.
MPs who tried to stop you seeing their expenses
However, it quickly became apparent that the cardinal attribute of New Labour was not vision but spin. One after another New Labour ministers proved themselves corrupt and were dismissed from office only to be brought back in once the fuss had died down.
New Labour policies turned out to be the wholesale adoption of Thatcherism but, as with all converts, the policies were embraced as a doctrine and without understanding or judgement. Privatisations continued and New Labour became the bitch of big business.
Tony Blair began hobnobbing with the super rich and power went to his head. At the frenzied height of New Labour devotion to hyper-capitalism he tried to introduce super casinos. That a Labour government should consider the massive expansion of gambling in this country when the only people calling for it were greedy American business men beggars belief but by this time he was so far gone he could not see further than the Gordon Brown’s balance sheet.
When George Bush decided to go to war with Iraq Blair’s dragged us in too. The Islamist terrorism unleashed the Big Brother tendency that is never far from the minds of any Labour government. New laws were introduced to detain people without trial, CCTV became almost ubiquitous
The credit crunch brought claims from our leaders that this was a global phenomena that had little to do with their policies ignoring the frequent articles in newspapers such as The Economist describing the dangerous asset price bubble which was being fueled by cheap money and would eventually burst.
When ordinary people protested against the bankers in London the police responded with highly questionable tactics such as kettling and casual violence which may have left one man dead. Yet our leaders supported the outrageous tactics and trotted out the usual platitudes about violent demonstrators.
Luckily the widespread use of video technology by the general public revealed that the violence was mainly perpetrated by the police.
Now we learn that those we trust with the leadership of our country are fiddling their expenses like so many seedy second hand car salesmen.
On The BBC, Radio 4 program Any Questions this week it was suggested that the British people use the upcoming European elections to withhold votes from the major parties. Our leadership on the panel showed the depth of their depravity once again by attempting to scare the public with the spectre of racism and erroneously implying that this meant a vote for the BNP.
Lord Falkner went on to complain that it was a tragedy that New Labour would be judged on the expenses story and that this was a distraction when more important issues were at stake.
Lord Falkner is Talking Bollocks!
There can be no more important issue than whether our leaders are trustworthy. Their policies and promises mean nothing if the are prepared to waive aside their probity and obligations for a few thousand pounds.
While preaching prudence our leaders have led us into the worst economic crisis for decades. They led us into an illegal war that caused the deaths of thousands and severely damaged Britain’s reputation abroad. They continue to introduce ever more draconian laws which erode our civil liberties and they encourage the police to suppress protest using methods not dissimilar to those found in Zimbabwe.
Now we hear that they have been fiddling their expenses.
During the Any Questions program Susan Kramer, MP, suggested that we need a general election. She is right. The British people must be given the chance to decide whether their representatives deserve the confidence and the responsibility with which they are entrusted.
We need a General election now.
http://petitions.number10.gov.uk/GoToCountryNow/
Matt - The Daily Telegraph
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