´óÏó´«Ã½

So, between them, Mandie and Darling - it sounds like an episode of Blackadder - can't even organise a brekkie? Hmm, I hope no one's blood sugars plunged as a result and they fell over.

I suppose they can't put feeding the Press on their expenses anymore!

It is quite interesting. Obama loses the Mass Senate seat and is so shocked by the implications for his re-election results in 3 years that he changes course overnight.

The US Public, quite rightly, are angry about the bankers and the banking system. They see no signs of economic recovery outside of Wall Street and, via the Mass election, sent a signal to Obama to get his act together. Obama, albeit a year late, has now started to.

Meanwhile, with a British general election just a few months away at most, it appears that Mandie, Darling and Brown don't get it. You think they would be more clued up. The anger felt by Americans is felt just as equally by the man and woman on the streets here in the UK. I am amazed that Labour is oblivious to this - I suspect it will come back to bite them at the ballot box.

What is it that they say in 'Carry On Up The Khyber'? The British fort is surrounded, the garrision is outnumbered and someone asks what they are going to do.

Do? What do you mean do? We're British! We never do anything until it is too late!

so everyone has to live or die by market forces except those who claim they are the acme of capitalist risk taking?

no wonder Mervy must despair at the institutionalised incompetence of the british political class.

it is clear the uk must have some firewalls with the 'highly globalised economy' which is nothing but jedi mind trick talk for a chinese ponzi get China rich scheme?

some might think a 'highly globalised economy' is a good thing. But one must beware making the assumption that the 'highly globalised economy' is being run in your favour according to just rules.
As long as the chinese devaluve their currency to make it even cheaper than the uk pound then the 'highly globalised economy' is nothing but a slot machine with the odds favouring those who can rig the machine. Even a 51% win rate for the house means in the end all your money will go to those setting the machine.

a highly globalised economy = playing with global players whose rules maybe designed to turn you into beggars [which is why we need the firewalls].

# 2

Ah but everyone knows the British are best with their backs to the wall, generally speaking it is advantageous to our performance to be 2-0 down at half time.

Paul,

Pretty much as predicted i guess, the labour machine will try to maintain the city of london as 'ponzi central' for as long as possible, supported on a bed of expert opinion and rhetoric, there will be much talk on curbing their excesses but little meaningful action, and what action is taken will have the tacit nod and wink from the city in adavance as a'measured compromise' via the gentlemans club known as the FSA.

We are, after all, as vunerable as a nursing baby in terms on our reliance for food and warmth from finacial ''services'' (HA) a misnomer if ever I heard one.

Poor conservatives, they cant really take the moral high ground as they will look more left wing than labour. We are condemned to another election comprising of a **** fight for the middle ground with no substantive difference, hence the nation will choose based on charm and charisma rather than vision and policy....again.

Oh yes..and DC will win..

#1 tawse57 wrote:

"So, between them, Mandie and Darling - it sounds like an episode of Blackadder - can't even organise a brekkie?...
...I suppose they can't put feeding the Press on their expenses anymore!"

---------------------------------

I'm surprised the ´óÏó´«Ã½ didn't oblige!

Spending by ´óÏó´«Ã½ on major events 'out of control'

Yesterday

S&P

"In our opinion, the weak UK economy will continue to hinder the credit profile of the UK banking industry,"

"This reflects the sharp decline in economic output and our expectation that the unwinding of the high level of debt (of the Government, households and certain industrial segments) will weigh heavily on relative economic growth prospects and banks' financial performance."

S&P actually downgraded Britain on December 21 from level two to level three out of ten - the same rating as Portugal and Chile - on its Banking Industry Country Risk Assessment scale.

But its report released on Thursday gave more detail on the rationale behind the move, which places the UK behind the likes of Canada, France and Germany.

#6
Additional , I hit post before I had finished.

S&P Quotes from


Combine that with notable recent remarks from investment funds "beware the ring of fire" type of stuff, I suggest things look rather bleak.


But I am glad "Those that matter in Britain" are in a ski resort acting remarkable cool.

I don't suppose those, from a party that alleges it wants to strengthen democratic accountability in this country, want to ask the little people of this nation if they have confidence in them still ?

Silly me.

From a UK taxpayers point of view this is quite terrifying stuff.

What we absolutely don't need for the UK economy at this point is more bankers in London, with their consequent banking liabilities.

While each other major economy is heading for a solution that is in its own taxpayers' interests, it is just us fools who are seeking a solution in the bankers interests?

Do Darling and Mandelson really feel that a nation of 55m people (or so) really can all work in "financial services"?

If this is correct, as a UK taxpayer I'll be hoping fervently that the US/Japan/EU really do rip the consensus apart, and that it will be the bankers themselves who are faced with dealing with a whole range of different regimes, even if the city of London then has to re-engineer itself as a centre of something else.

(Actually thinking about it..... would not a system with a whole number of different financial regulatory regimes in itself actually lead to a much more stable financial environment??).

I agree on Darling seeming calm - unflappable. It's probably his biggest strength.
Are Darling and Mandelson aligned in terms of cabinet politics? I've been thinking they are for a while and a lot of stuff comes down to their position against that of Brown & Balls.
Personally, I think their position tends to be the more sensible one.
I think Darling's calmness is a probably for Osbourne as he looks a bit jumpy and shifty in comparison. Particularly so when you consider how well Cable tends to come across as well.

I think Darling and Mandelson and correct that splitting the casino and standard banking parts won't sort things out alone. A lot of what is being gambled with in the casino area has real world impacts.

I don't think Darling and Mandelson position is strong enough though. The last year has shown that the markets just don't allocate money where it is most needed - unless where it is most needed is banking profits. So the actual system doesn't work as they believe it to - I think I might be parroting Soros but I haven't read in full what he said. That means the current system needs to be fundamentally altered and their position doesn't seem to be quite that fierce.

Don't be fooled by the rhetoric of Darling and other Financial Services apologists:

"Mr Darling insisted. Northern Rock, he said, had been a small bank with systemic importance; Lehman had been a pure investment bank and its failure nearly brought the whole system down."

Facts:
1) Northern Rock (like many others) was heavilly into re-selling loans (the "originate & distribute" model), it was not behaving at all like a tranitional retail bank (originate & hold the risk)
2) Lehman was allowed to collapse because it was in effect a Casino bank.
3) Goldman and JPM were miraculously converted into Retail banks after Paulson threatened the US Gvt that the stock market would tank if nothing was done (so why GS and JPM saved but not Lehman?). Therefore receiving taxpayer support for what WAS a casino bank (possibly because they were in effect underwriting the dubious origination of RETAIL loans - the murky path through AIG CDSs!)

The crux of the issue is that Gvts have been bailing out CASINO banks. The dividing line has been blurred in recent years, and Darling et al are making hay out of the obfuscation. Look at the Haldane article again - the Gvt has been held over a barrel by a sector that can cunningly morph between Retail & Investment bank.

The only conclusion that can clearly be drawn from what happened in 2008 was a clear indication that the "originate & distribute" model of banking itself was flawed!

#4 - Jericoa

Yes, we do do well with our backs against the wall but I do fear sometimes that we have outstayed our welcome with Lady Luck when it comes to performing miracles.

Anyhow, being 2-0 down at halftime may well result in a brilliant second-half comeback only for us to lose on penalties.

I have just been reading an interesting article in the Western Mail about a talk that Ken Clarke gave in Cardiff last night.

On one hand he talked about the enormous public sector cuts that any future Government would have to make, and make from day one, but then went on to say, quite rightly, that Wales and the North of England was dangerously over-reliant on public sector jobs.

The thing is, you can get away with saying things like that in Wales and often it takes a long time for the penny to drop, if at all, as to what the implications of such statements are.

So the Tories going to make huge public sector cuts? Wales and North of England over-reliant on public sector jobs? Do you know what it is yet!?

The UK Labour party's position on too-big-to-fail is full of inconsistency, or is it. They believe capital is the answer - in other words enforced self discipline. Socialised financial losses are ok but take a tax from banks for the privilege bestowed on them. The resolution regime is the final defence. Is it? Hang on, the big banks wont be allowed to fail so what's the point of a living will?

But lets get to the Barclays point. If you cut us down, and big banks like us, you wont have us to sell your sovereign debt. Remember, the big boys are the gilt-edged market-makers working with the DMO. Now, this is where big spending governments could find themselves in hock to the big banking boys. Its a weird alliance, but you see the logic.

That's exactly why Obama wants to get rid of the ransom. I agree with him.

5. Given the fund flight from Greece, I thought it might be worth drawing people's attention to the of different countries (their budding labour markets). It's worth comparing Greece, Spain and USA with say Finland, Hong Kong, and Japan. Maths will do.

> so why GS and JPM saved but not Lehman?

It's because they got scared, isn't it?
They let Lehman collapse like good little economic liberals.
AIG, who were struggling, shot their hand up and said "you've just splatted us by doing this we're gonna have to renege on our CDS positions."
That'd cause problems for everyone else.
So they throw the TARP over AIG and every financial institution they think might do a Lehmans.
The fate of most the large financial institutions has become so inter-related that whether or not they are retail or investment banks doesn't seems to be that important a factor.

#12 "Hang on, the big banks wont be allowed to fail so what's the point of a living will?"

I guess the theory is that - in needing to create a living will - the risks are crystallised and so the risk of failure is realised and failure is avoided. But you're correct. The point is, will the bankers really care?

A couple of points:

A lot is being made of the complexity involved in splitting up the banks. The bankers make a lot of their superior intelligence, and the arcane nature of some of their products (and especially their tax avoidance schemes) would suggest they they are no incapable of solving the problems of this complexity.

A finally, a lot of noise is made about the bonuses. More focus should be placed on the huge profits. No excess profits, no bonuses. This money is coming from somewhere, and we are all paying for it one way or another.

#14 "The fate of most the large financial institutions has become so inter-related that whether or not they are retail or investment banks doesn't seems to be that important a factor."

That's where my train of thought is heading. Darling is saying that you needn't (or can't) split them into Retail / Investment. In a way, I agree, this split would be futile without attacking the "originate & distribute" model.

It is this "innovative" operating model of the sector that has created the inter-dependencies and blurs the lines of responsibility & risk exposure. Herein lies the very core of the banking sector's Moral Hazard, and it needs removing, not containing!

This is the fulcrum that the crisis has hinged on, yet no-one is really discussing it. It cuts to the core of the structure of modern financial institutions. If you remove (or tax) the products that the Prop desks deal in, then you de facto remove the Prop desks!

Everyone has been deluding themselves that innovations such as "originate & distribute" have been good for the economy (good for deluding the public, perhaps).

Surely, the ultimate solution is to reign in this fragmented operating model, bit by bit.

On the face of it what our government says about the Lehman collapse sounds as though it makes sense, it was after all a pure investment bank, but the reason it nearly brought down the banks worldwide was because they were NOT as clearly defined as Lehman was. Nobody knew who had what debt, how much they were holding or even what it was all worth, and it was that confusion that caused the financial meltdown by a systemic loss of confidence and lack of transparency. If we split the banks into retail and investment banks nobody is saying that it will prevent a future financial crisis, it just means that the taxpayer can be more selective about where it pours its unlimited money in the future. And that is what the banks don't like....they know that as each country comes up with it's own set of banking reforms and regulations, none of which will work unless brought in globally, they just have to sit back and wait as the whole thing is argued off into the sidelines, with each country blaming everybody else for the lack of progress. As for the broader point about a small group of people talking to themselves whilst the rest of the world goes on around them. I think that the population at large will get more concerned with things once it becomes time to start paying the bill for all these global stimuli. Its like we are in the eye of the storm at the moment, we have been buffeted by the recession and now we are in a kind of limbo waiting for the pain of the spending cuts and tax rises to kick in. If economic growth comes back strongly then the pain will be mitigated somewhat, but as Paul knows after his trip to Derby last year there may be plenty of jobs out there but they are mostly paying between 7.50 and 10 pounds an hour. The average wage in Britain may be 25 thousand a year but many more people earn under that amount than earn over it, and its how these people fare trapped between rising inflation, stagnant wages and falling public spending and the severity of the resultant social situation that they find themselves in that will feed back to the bankers via the resultant pressure on politicians to be seen to be doing something about it. At the moment I don't think most people know what is going to hit them.

My banker told me today she was absolutely mobbed doing tax payments today and it took ages to get through on the phoneline to HMRC.
I think the tax take is going to be better than expected this year.
Also I've noticed a second Polish shop opening in my street this month .....the queues for salted fish at Xmas were massive ........my cleaner is back in the UK......HOORAY!.....and if the Poles are coming back, something is stirring again in the UK economy.
A doctor I know told of a very poor and dying patient insisting on paying a fee for a certificate. Another customer of mine insisted on paying a bill himself rather than an invoice being sent to his company so I wouldn't have to wait for it.
People seem to appreciate things more.
And the announcement today of tax breaks for UK Oil 2 in NW Scotland will make a massive difference to UK GDP over the next 50 years.
And the orders for the IPAD are humungus and there is a stampede to get the last of the Car Scrappage deals.
Interestingly , some of the big American originated but UK contract grabbing service companies are losing public contract bids as new UK small businesses ourbid and outcompete them.
We had a job booking a restaurant table for tomorrow night and everyone seems to be going on holiday again.
I tell you it is starting to feel like 2006 again, even Tony's back on the telly and it is funny how on the one hand he is horrendous, and on the other he is dead right.
He makes you feel sorry for Gordon, but preferring Gordon.
And he makes me feel old and sad and remembering people who aren't here anymore.
We really need to spend more cash on helping ex-soldiers get back into life in Britain and on erecting memorials for those killed, and those bereft.
And you know, a service for the Afghan dead ,the Iraqi dead ,as well as the UK soldiers would be ok.
We need an amnesty on asylum seekers as a heck of a lot of good future citizens are being chucked away after years of housing, schooling and benefits.....where's the sense in that? Their children are so bright and eager to stay here.
Their parents are desperate to get going in the UK.
The word on the street is that the Tory doomchants are sounding like a broken record and the opinion polls are already picking this up.
We have all got a bit bored of this depression, don't you think?
Gordon is really trying hard to establish peace in Afghanistan and Iraq , and to keep it in Northern Ireland, and I think people do realise this.
Maybe it is time to change the rhetoric of the War on Terror, to The Ackmowledgement of Loss, and the Importance of Reconciliation.

Onward Ho says UK will be ok.........ok?

We seem destined to be cursed by extremes.

At one, Nokias flying about. At the other, a near Zen-like ability to cruise along in neutral oblivious to all save 'getting on with the job'.

And, neither, from maniacal to mellow, we can be assured, at all chemically assisted.

Just, given the evident results so far, not sure if either are proving the best ways to run teams running economies, or countries.

OBAMA is in a movie about hedge fund corruption called "Stock Shock." Even though the movie mostly focuses on Sirius XM stock being naked short sold to hell (5 cents/share), I appreciated the education re the dark side of Wall Street. DVD is everywhere but cheaper at www.stockshockmovie.com

this is like watching a replay from 1929 or post war , where the Bank of England and the city firms see themselves as the centre of the universe.

And what happened then,sure the London city gents and the rest of the hoorays even Keynes made money from speculating and keeping the pound high and interest rates high, once you got out of London it was unemployment city , that is how Labour managed to get as strong as it did, it came about because of the injustice of those who were supposed to serve us, making the rules to suit them and sod everyone else,
If that is what Darling et al and I include the Tories in waiting (because they are the same) are planning on doing then we are fubared.

Now is the time to make changes when it is this bad, the experiment for the majority has failed it only serves the minority

THE ASSUMPTION BEHIND THE OVER-REGULATORS IS THAT THE CRASH HAPPENED BECAUSE OF CORPORATE BANKER STUPIDITY AND THEY NEED TO BE CONTROLLED ..... I HAVE NEVER MET A STUPID BANKER, AND VERY RARELY HAVE I MET A RISK-TAKING ONE .... RISK IS WHAT THEY STATE IS MAXIMAL AND OVERCHARGE FOR, AND TAKE EXCESSIVE SECURITES FOR.
It really is a joke tarring bankers with this brush when by and large they are the most cautious people on earth.
The crash happened as much because of panic and pessimism as it did because of risk-taking.
It happened as much because of over-zealous interest rate-rises imposed for too long by central rate setters.
AND IN ALL THE DISCUSSIONS I HAVE HEARD, WHY DOES NO-ONE CRITICISE INTEREST RATE RISES BEING USED TO DEFLATE PROPERTY MARKETS AS THE LEADING CAUSE OF INSTABILITY, INSOLVENCY AND RECESSION?
Why do we blame the runaway car and not the excessive braking that caused the skid?
And it happened to Northern Rock becuse the Bank of England and theTrteasury sat on their hands for a week too long and did not bung the Northern Rock a couple of billion soon enough to avert the cashflow crisis.
It happened to RBS because they were doing too well and expanded at the wrong time.And they were prey to short-selling manipulators.
It happened to HBOS for the same reason.
And it was as much a valuation crisis as it was a finanial crisis.
I have seen district valuations coming in at 15% of real cost, and bank valuations at stupidly low values.
It looks as though the recent imposition of mark-to-market valuations has also been a contributor but this seems to be getting ignored by everyone.
What do you think of this Paul?
If the central banks want to control over-exuberance in the market they wil also have to do something about irrational 50% falls in mark-to market valuations, possibly banning their imposition once a development has been approved as they then trigger off sales at stupidly low levels and lose the banks themselves large fortunes.