Rebuilding the foundations of finance

Quick, Quick, blame somebody else

The big banks are considered not only too big to fail, but too big to be controlled in any meaningful way. The current way of doing business in the financial world is deeply corrupt from top to bottom. All those who can fleece the system do it, using money of ordinary depositors to stuff their own pockets, ripp-off shareholders, ultimately insured by the tax payers. What a rotten system and no political will amongst the 'elite' to change it.
Little has changed since colonial times: a small upper class rules, the masses pay the bills.
You can read more about the consequences of such greed here: https://globalinsights.wordpress.com/

It's not just that we need to lay the foundations for preventing the next boom (though that is important)...a good countercyclical or macro-prudential policy is symmetrical - that is, it provides an automatic growth boost in a recession, as well as automatic brakes in a boom.

Capital requirements are one example of a response to this need. But it's not credible that in a situation like the last six months, the Bank of England would deliberately allow banks to reduce their capital cushion. Instead, a behavioural approach may be more effective - such as this proposal: https://www.knowingandmaking.com/2009/03/towards-rational-exuberance.html

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GIVE UP Mr Peston - we have long seen through this shower of useless, spinning, nincompoops that is Liebour. This guff from one who can not even fill in his own Tax return. Of course as one of their biographers u r totally independent!!!!!!!!!!!!!!!!!!!!

If it should come to this! A Labour government so timid, so devoid of intellectual and ideological courage and imagination that it does not dare regulate a banking industry that has cost the tax payer hundreds of billions, that has almost fatally wounded the economy and that will surely do so again if it returns to 'business as usual'.

The Blair/Brown/Mandelson project is surely now bankrupt on all levels, but this intellectual inability to break with its monetarist dogma sees it serving the rich and irresponsible at the cost of everyone else.

Shame on this government.

Unfotunately we could not afford another bale out of the banks we have already mortgaged our future for decades. Surely the fact the banking crisis happened is evidence that the status quo method of regulation was not effective

View the WSJ's view of why we are in our current mess. A fair summary I believe.

https://online.wsj.com/article/SB124500992205413331.html

So if I am reading this right, the government have no real answer. There was no real problem in the Uk after all. It started in America, Northern Wreck was a small bump. How lucky we are to be ruled by such munificent gods of economics. Imagine how bad things would be if we the other lot in charge?!

As the next episode of lies begins to manifest itself all I can think of is 'buy commodities' and watch the pound collapse further.

UK creditors will not be convinced by this cheap excuse. They will see it for what it is and worry whether they will ever get their money back, or maybe they will lick their lips at some bargain basement sharecropping.

The pound is on a sugar-high from the printing press surge, but as central banks have stated over the last few days, don't bank on a UK recovery and with lack-lustre government non-initiatives and mealy-mouthed compromises such as what is being stated by Mr Darling, the worst is yet to come for taxpayers, public and private sector no matter how well they have managed their finances.

For once Darling is right - they shouldn't try to fix the system, just leave it alone. Its not that the system doesnt need fixed, its that Labour are not going to be in power long enough to fix it, anything they do will get overturned. Based on the recent elections it would be more relevant to discuss the Conservative's policies.

What we have now is a zombie government which will increasingly be discounted by the markets and business. What is the point of senior management engaging with them on anything complex and medium to long term when all the signs are they will be out of office in less than a year? The public spirited thing would be to have an election now.

Whitewash is one way of putting it but tbh we ALL know that the mansion house speach is just all show.

It's business as usual for jobs for the boys, in the club of the elite.

So, there you have it, or not, as the case may be.

Having seen the damage caused to the financial industries, and many many other people too, by poor calibre management and ineffective regulatory structures, we are now saddled with poor calibre political leadership too.

Dear Alistair, you will be considered to be a fool that is doing the long-term interests of your country no favours at all.

We NEED proper regulation to ensure less impropriety within UK business. NO - there is no need for it to be a major contstraint on inventiveness or creativity or entrepreneurship. It quite simply needs to kill off the 'quick profit' and 'quick bonus', 'Anglo-American' way of doing business and promote safe, fair, well-managed companies (and business cultures) that properly manage the medium and long term interests as well.

We don't need businesses full of spivs and quick buck artists, we need a wholesome, flourishing, business sector that both shareholders and customers (and staff and other stakeholders) can have some confidence in.

Oh, and that foreign investors can have some faith in too.

Sadly, it's not about big banks being too big to fail. It's not about anyone's needs at all. It's almost undoubtably about trying to ensure some 'old pals' in the business world aren't too alienated from the current Government so as to refuse to fund the Labour party's next election campaign.

And I even think that Alistair is very probably "obeying instructions".

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With all the booms and busts (and there have been more than I can count) in the past the number 1 point should be that a market driven economy DOESNT WORK.

If an engineer was asked to fix the economy they would concentrate on the rampant execesses of a boom and the damaging waste in a recession. They would fix the problem by implementing a feedback loop. While in principle capital accumilation may work I cant help but feel this reservation principle is a waste.

The biggest problem over the last 20 years is that fact that no moral, ethical or social context is taken by directors. As there are no repercussions on directors for their actions they act in purely self interest - yet they run companies that affect everyone.

The same could be said of ministers.

An acceptance of responsibility by directors and most importantly ministers would be a double win for the people and create a sustainable economy.

Surely a far better feedback loop would be to implement social projects as well as market driven projects. Projects like social housing, infrastructure, training and R&D may not yield a profit - but compared to the losses of so called market driven investments it is small beer.

Not only would those projects be forefilling a social need, the overall cost on the economy would be less for having those social projects - and in some cases the investment in those projects would yield dividends in long term assets which also allow everyone to either have lower running costs or higher profits. For example social housing would allow those with least funds to have more expendable income. The same social housing could then be sold "Maggie Thatcher" style, allowing up and coming families to gain a boost and at the same time paying back most if not all of the building costs. Maybe no vast profits but a SUSTAINABLE cycle.

Of course the reason this has not been already been implemented is because it would affect house prices and specifically stop a boom.

Mr Preston, the reason you havent seen any action on the "credit policy commitee" is because we have the current boom instigation mechanism called "Quantative Easing" in full swing. If such a commitee existed it would of course need to look deeply into what was happening and ensuring the money didnt cause a boom or was wasted. Specifically what Brown out or the City doesnt want.

So is it to be quadrapartite regulation? They just dont get it and giving the FSA a new boss (from the money world) is not sufficient. The banks and financial companies need close supervision and availability of personal credit needs proper regulation as a macroeconomic factor as well as protecting consumers - sometimes from themselves.

The problem we face is that the foundations of the economy are based upon the very same fundamentally flawed economic theory propounded by Harvard, Baillol etc. (see Stepanomics blog for a more detailed posting)

Mervyn Must Go (MMG has to be the starting point. He and his minions are unfit. They ignored the asset price inflation and imported Chinese deflation that gave us the conditions that led to this dire economic predicament. They also fail to grasp that money has to have a sound and valuable and real cost to run a capitalist economy - zero interest rates and indeed too low interest rated of the last decade are the cause of the destruction and will not fix the problem. Interest rates need to be at 4 to 6 percent to run an economy. Lower and it implodes and becomes unstable.

Of course Alistair Darling is his master's creature. Admitting failure in the tripartite approach would be tantamount to accepting the "Great Leader", the Fife Stalinist, has not got a clue what he is on about. Mr Darling will be spending "more time with his family" after the general election: the Fife Stalinist, will in the tradition of stalinists down the years, will continue to rewrite history, i.e. "it wasn't my fault guv".

Clearly "traditional banks", i.e. those that borrow money "short" from depositors and lend "long" to mortgage holders and companies need to have the support of the "lender of last resort". Investment banking a.k.a. "casino banking" should be on there own, as in "moral hazard".

Clearly Lord Turner of the FSA Has done the bidding of his masters. He is "the City's whore", since the FSA is paid for by the "financial institutions", except, of course, when they go broke for billions. When these "exceptional" circumstance occur, it is the taxpayer, to some extent, and the currency/"money printing presses" that really pay the price.

Nothing to see here - move on quietly - watch your TV's for further instructions.

Eurasia are our friends - we have always been at war with Eastasia.

End the fractional reserve lending fraud.

Once again, we are witnessing a re-arranging of the deckchairs rather than a meaningful application of the tiller.

Unfortunately, our legislators and banks and the civil servants are operating a cosy cartel that allows the banks to do what they want. Thus they will continue to give poor value, bad advice and act downright dishonestly. The FSA has recently tried to introduce a principle of "Treating Customers Fairly". However, in my experience, working in financial services, I have yet to see much evidence of this.

Until we can get real independence of the Bank of England and a regulatory authority that is not scared to upset its paymasters, we will always get more of the same.

Instead we seem to be allowing politicians with no practical experience in their careers prior to their term in Parliament to be setting the rules. Would any commericial enterprise leave such important decisions to under-qualified, inexperienced people? I think not.

All this talk of sweeping changes to be implemented to the Banking System by Labour. But Mr Darling said in an interview today that the tripartite system of regulation ntroduced by Gordon Brown in 1997 that completely failed to control the banking system is to remain in place. America is in the process of introducing tough new regulation (its own regulatory system, not the much trumpeted global system that Gordon Brown was supposedly going to come forward with and the world was going to follow but which never materialised). And the Tories have promised tough new regulation if they get in at the next election also. So as always Gordon Brown is all talk and no action. And he then accuses other of being "do nothings" and promotes himself as the man of action. Unbelievable. Do the public really buy this? Perhaps someone can enlighten me.

"He will say that the so-called tripartite approach - with responsibility divided between the FSA, the Bank of England, and the Treasury - is not to blame for the financial crisis that precipitated the worst global recession since the 1930s."

Right, they were just following orders. He and his fellow Scot are to blame; they knew what was happening but couldn't resist all that lovely tax and all the new friends they were making.

The sooner we deal with the traitors who engineered this mess the better.

Robert - I am amazed at the continuing policy of the BBC not to give any coverage to the House of Lords findings on bank regulation failure.Why?

Lord Vallance said :

"We need to acknowledge that the regulations and their application contributed to the crisis, and made it worse when it came, because among other things, they had a pro-cyclical bias, did not pay enough attention to liquidity, and were wide open to regulatory arbitrage.

It is also clear that in the UK the tripartite authorities of the Bank of England, FSA, and the Treasury failed to maintain financial stability, in part because it was not clear who was in charge in a crisis and because not enough attention was paid to macro-prudential supervision oversight of the aggregate effect of the actions of individual banks - in the period when boom and bust was mistakenly assigned to history.

We recommend early action to improve focus on financial stability in future. One way to help achieve this would be to return responsibility for macro-economic supervision from the FSA to the Bank."

Darling's attempt to deflect from regulators onto Boards is a figleaf to protect his government from responsibility for what's happened. His plaintive call for Boardroom responsibility suggests that we rely on directors to protect the public interest! In the background, UKFI is wheeler dealing, the Treasury are stress testing banks and through the publicly funded asset insurance programme we might be taking up to 50 billion of risk for the bad loans made.Lord Myners says that banks' asset management might be controlled by government.

Darling complains that banks used off balance sheet methods to avoid effects of regulation. Is he saying the regulators didnt know about this at the time and it came as a shock.......read the Financial Stability & Outlook reports of the BoE and FSA in 2006 - its all there !

Has anyone noticed the REAL problems with our current system?

Take BA for example, last year it made in excess of 900m, it dished those profits out to directors in the form of bonuses and shareholders in the form of dividends.

This year it has lost over 400m, guess what? To fix this, the WORKERS are asked to work for NOTHING!!!

You couldnt make it up, another case of privatising profits and socialising losses.

****** Disgraceful if you ask me!

What this should tell you is that the City has won the war and the UK economy is going to be even more reliant on financial services than it was pre-crunch.

Mandleson's economy rebalancing plan - if it ever actually existed - has been dumped although it will continue to be talked about for political reasons.

So if you're an engineer then leave now. We will be shutting down more engineering/manufacturing companies and few new ones will be started. Manufacturing will become increasingly dependent on inward investment which the Govt and the City will welcome because it won't involve them investing more than token amounts.

Some university science and engineering depts will be kept open in order to provide inward investors with employee fodder they can hire/fire at will ... The rest could be happily shutdown because there will be much reduced demand for science/engineering graduates.

The UK economy is now fully under the control of the big banks and other City institutions. You now either accept it or fight it.....

I hope this is a kick in the teeth to the chancellor, we need to get Darling removed. He's plumping for a system that has been proven not to work, at least Obama's revamping the system that failed America, we need to get someone to revamp ours! And Barclays won't let you withdraw any cash! https://money.sky.com/mp/features/news/2009/06/17/Bank-sorry-for-cash-machine-failure.html

lets face facts:
Banks fed the SUPPLY of cheap mortgages
Regulators - and their political masters - implicity encouraged the DEMAND for cheap mortgages

That is how you get a massive housing boom and bust.

The Banks wanted to feed their profitability, the politicians, in charge of the regulators, dont want to stop a party. How many politicans talked about the need to hold back house price rises? Answer: none, as its politically unpopular.

To say there is no regualtory/political failure is simply wrong and is designed to avoid political backlash

A tripartite system means that there will always be waffle and indecision. There has to be one organisation - preferably the Bank of England - that can weald the big stick and that can be held accountable.

Banks bosses are big on obfuscation. They need to be kept on a very tight rein, they need something to fear...how about consfication of personal assets for maladministration?

Whats going to happen to Credit Default Swaps Robert ?

Soros has an interesting word or two:

https://online.wsj.com/article/SB123785310594719693.html

Ive no doubt the mods will not allow the link as usual.

Is this man going for the title of 'Idiot of the year'?

I might agree with him that it's not the regulators at fault, but I completely disagree that it's the bankers.

Doesn't anyone know what banks do for a living? Are we in an IQ recession as well as an Economic one?

Bankers did what they are paid to do - they made money whenever and wherever they can. Competition requires it - if they don't they die (or get taken over).
It makes me wonder if anyone at the treasury even went to school! Are they seriously that stupid?

The system is why it all happened and this clutz of a chancellor is either dilluded, a pathalogical liar or a complete idiot. It matters not which he is - all are bad for the country.

The Government is falling over it's own lies - correct me if I am wrong but didn't Gordon blame 'A cold wind from the East' last year? If that's true - why is the Chancellor now blaming the banks???

That's the great thing about liars - they always trip themselves up eventually..

I give up - how many times do I have to say it.

It's the SYSTEM that causes the crash - not banks, not regulators.

Do we blame the sea when the tide comes in a washes away our sandcastles? Are the beaches full of angry holidaymakers shouting at the sea for destroying their work?

Don't be ridiculous - of course they aren't - they know it's the tidal system that causes that and you cannot blame the grade of sand, the beach, other holidaymakers or any wind from the east.

Will one journalist please have the manhood (or womanhood) to point this out to the Government.

They are LIARS and in times of crisis it becomes so obvious.

re # 24 Javaman1984

maybe off subject but absolutely spot on.

disgraceful if you ask me too!

Serious question folks, is it worth paying into a pension these days?

C'mon someone convince me it's a prudent thing to do.

So basically Alistair is saying

"It wasn't Gordon's fault! Nothing to see here, move along".

Really?

Isn't the GBP 200 billion we are having to borrow this year alone down to the the current and previous incumbent on number 11 Downing Street and their actions over the last twelve years?

#24 JavaMan

Excellent points - and if there are any BA workers out there considering whether they should step in and work for nothing - consider this:

If you work unpaid for a period of time and your company goes bust, or gets taken over (and don't think BA is too big to fail) - then you will never receive that money when your company goes into receivership.

You will loose your job, and also be worse off financially.

Blackmailing the workers is an act of agression by the capitalist - threatening workers with the sack as an alternative for not working for free is dispicable.

Trust me - I (as a working person) would be happier paying the dole to the ex-BA employees rather than seeing them work for nothing whilst "Wiley Walsh" keeps his Roller running.

Most people have already earnt their dole through NI payments - it's time to cash in. Don't feel bad because there will be 3 million others joining you by the end of the year.

If you want to see how the capitalist views this - you should have seen Simon Woodroffe on Breakfast TV this morning. According to him this is perfectly acceptable - and when asked about the BA's CEO's own financial position (in that is pretty healthy) - he shrugged his shoulders and said "That's the way it is"

Oh well, when BA goes belly up because the workers are not prepared to work for nowt - they should shrug their shoulder at Wiley and simply point out 'thats life'.

The workers of BA have not been cruising the streets in Ferrari's for the last 10 years - so why should they have to pay for the crisis they did not create.

The greedy capitlaist caused this crisis by knowingly persisting with a system that inherently fails. I note that Mr Woodroffe has been awarded a CBE for his services to the empire - sadly his attitude reflects someone who's only goal is to serve himself.

Whether we like it or not we have an economy with a heavy emphasis on financial services. An unsustainable model was employed and encouraged at all levels to fuel profit greed and the aspirations of successive political masters. We in turn enjoyed the fruits of easy money. High employment resulted, fuelled by this high-risk money supply, and we were pleased. We imported labour to do the jobs we did not want to do at the price offered and we exported other types of jobs to sustain our 'ever lower prices' culture. The proportion of income paid in tax increased for the majority. Non-food basics prices such as fuel and shelter escalated. We exploited the easy money system to bridge the ever widening gap and to feed aspirations, thus deluding ourselves that all was great.

We've little choice but to get Financial Services back on its feet again, unless of course you don't give a damn about the 2.26m unemployed and 1m+ short timer workers. This probably means allowing a certain level of high risk monies again, because we need the fix quickly. Rebuilding the economy to a more balanced base will take time.

The problem with the green paper approach is that it is very slow. And inevitably by the time it comes into being the legislation is obsolete. We cannot afford this leisurely approach. We need people back in work, and we need the money to flow for this to happen, but without the hidden risks. So we need the regulators to know intimately how risky a bank's business is. In the short term such knowledge will suffice the control risk, through open market caution.

So, let's hit the banks with a heavy duty reporting requirement NOW. Its not a serious burden because if they are not already doing things along these lines then they need to be shut down anyway as they clearly have not learned anything from the crisis.

The fundamental question still remains though: without high risk finance can we ever again support the type of lifestyle and economy of the past 15 years?

Perhaps a little thought about what retired chancellors do after they leave No 11 (10) would explain this latest plan for regulation of the banks or lack of it. Maybe banks should have to get new product approval from the regulators before they are allowed to sell it? Then we would know exactly whose fault it is.

There is a cabal in the City who owe their existance to each other.
A case of you slap my back I'll slap yours.
It is time for some newcomers to be introduced to the regulatory system and to the boardrooms of this country

#15 is spot on. Market Forces did not work 100 years ago (when they were called 'Laissez Faire'in case we have all forgotten and had to be legislated out of existence) and they don't work now. As they were then, they are merely a licence to bully and the law of the jungle - otherwise known as legitimised anarchy. Market Forces are certainly not the mark of civilised behaviour and they undermine any claim we may have to being members of a civilisation

Trouble is, who is not so tainted by 30 years at least of self interest to have the moral fibre, the practical intelligence and the leadership qualities to take over? And with an educational system which has forgotten what education is for, where will such folk come from in future?

Systems are fine provided they are properly run. If people who can run them don't exist, they are a waste of space. Let's stop tinkering round the edges and get back to civilised fundamentals, please, before it is too late.

As the song of my youth said "When will they ever learn?"

If the government won't change the system - we need to change the government.
This is proof the FSA failed first time round through meddling by the chancellor - a power he wants to maintain.

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Wait a second; am I reading this correctly? Mr Darling believes that the financial situation we're in at the moment is not the fault of the regulatory system for allowing the bankers to make the decisions they did, but really the fault of the bankers themselves - those who actually made the decisions?

Is that so?

How very strange! You see, I was under the impression that in the case of, oh, let's say the MPs Expenses Scandal, for instance... that individuals bear NO responsiblity whatsoever for the decisions they take, and that the regulatory system was at fault for failing to prevent it?

I mean; yes, these people may well have been doing things which any reasonable person should've known was an outrageous - like claiming for multiple second-homes, TV-cinema systems, etc. - but apparently (and this is apparently a view shared by the police), they bore little or no responsiblity for their decisions, as the Fees Office told them they could do it.

Don't get me wrong - I agree entirely with Mr Darling in this instance; yes, the bankers SHOULD have known better, and DO bear ultimate responsibility for their own actions regardless of whether the regulatory bodies were able to stop them.

It's only a shame he - and the police - couldn't take this same point of view when assessing the actions of certain members of Parliament.

A little consistency here, please, Darling...?

* Chief Financial Officer (CFO) in charge of UK plc oversees modest expansion driven by massive increase in debt funding of company's capital structure.
* Company stakeholders are questioning the former CFO's role in audit committees and financial regulation committees, as the accounts are being questionted.
CFO moved up to Chief Executive Officer (CEO) role on resignation of former CEO 18 months ago and is fighting stakeholders who want to remove him. Former board members of UK plc now writing book, with working title: 'The turd that would not flush'.

Re BA - If this kind of sacrifice is necessary for the future of BA, The BA board is effectively asking its employees to invest their time in the future of the company. Time is money: BA should, at the very least, offer to pay these employees in shares.

#32. JavaMan1984 wrote:

"Serious question folks, is it worth paying into a pension these days?

C'mon someone convince me it's a prudent thing to do."

Paying into a pension is always a prudent thing to do, if only for the tax relief. You get full tax relief on your contributions, so for every £1000 invested you get £400 back in tax relief (assuming you're a higher-rate taxpayer). Put another way, for every £600 that you pay in, the taxman very kindly adds a further £400 - thus increasing your investment by an astonishing 66% immediately.

If you're worried about stockmarket performance then you can choose to have your contributions invested in a cash deposit fund. This will produce a small return, but will not ever lose money.

The most prudent approach, however, is to split your contributions between a number of funds from the same provider - cash, equities, property, managed - to spread the risk and maximise your chance of a decent return over the coming years. The bottom of a recession is a great time to be investing in both equities and property.

#32 JavaMan1984. Unless you have access to a final salary pension scheme the answer to your question is an unqualified No!

UK pensions are the biggest con I have ever seen - and I have seen a few. The risks are at so many levels that it would take a book to list them all.

In brief: the risk of predatory government tax raids, the multiplicity of hidden fees and charges, the long term performance of the stock market and the fund manager (the proliferation of zombie funds means that even if the stock market rises, your fund may fall), prevailing annuity rates at the time of your retirement and the timing of your own death.

Pretty much all of these risks are unquantifiable and umnanageable.

I was employed out of the UK for about 10 years and paid into a pension fund on the reasoning that if I contributed, then my employer would also contribute. If I did not contribute then neither would my employer. I would have still done much better had I simply foregone the entire thing.

As with all scams you find the odd person that does OK, but the vast bulk of people are onto a loser.

#35 p45builder

Who exactly is the "we" you go on about ?

Over 50% of houses dont have a mortgage. On top of that there are a very large amount of people who save naturally. What has happened has been caused by a minority of people who have been duped by the "Elite" who have used savings/pensions from the majority and foriegn savings to foster their own ends.

"We" didnt import workers to do jobs "we" didnt want to do. The "Elite" decided that UK workers were too expensive, they didnt want to spend the money, so decided to have mass immigration. Resulting in lower wages, huge social problems and now unemployment. But hey that's ok - someone somewhere got a cheap gardener or labourer.

You say we have "no choice" but to reboot the financial system - utter and complete rubbish. If we reboot the financial system we just carry on down the road of unsustainable debt, when the real crunch comes it will be worse.

Rather than rebooting the financial system lets put that money where it should have always been - sustainable investment in industry.

The banks should have been left to fail but the savers and their saving s kepts - those who finaced the debt should have been left with nothing.

"The fundamental question still remains though: without high risk finance can we ever again support the type of lifestyle and economy of the past 15 years?"

The reality is that we've all ended up paying a lot more for what we already have, in fact less than we already have. Houses arent more productive, they are not better quality (materials have 30-50 years lifespan) and they are smaller. Yet we have paid a lot more for them.

As regards pensions, stocks and shares, there is very little in real assets in them and most of the companies are run at such high debt levels they dont pay any tax - thanks to economists and accountants.

The fact is that the "lifestyle" of the last 15 years has been nothing other than living on debt - this is unsustainable.

If we do reboot our financial system - "Quantative Easing" hey presto 8P - then when the world economy starts increasing interests rates look forward to hyper inflation or a huge number of insolvances.

The only thing a reboot of the financial system would do is allow those with assets in the country to get their money out of the country PDQ before the pound goes through the floor.

There would be a lot less unemployment by putting QE money into real projects rather than financial instruments. Unemployment could be turned into a winner with sensible policies like turing benefits into real employment for money. There are a lot of social projects that are way, way overdue. Why pay people to sit doing nothing when they could be benefiting the whole country AND gaining useful skills AND getting a real sense of worth. Those people would then be able to demonstrate real skills worth money when jobs in the private sector appear. No we'll sign over millions to losing skills and import people via immigration.

Well, of course he wouldn't propose radical reforms. For one, he's a Yes Man to Gordon Brown (which is who he likes to surround himself with, unless they're Yes Women (esp. Harriet Harman)). Now, Gordon Brown himself put the tripartite system of "regulation" in place and it will remain at least until Labour are removed from power. This is based on two constant beliefs:

1) Gordon Brown is never wrong
2) Anyone who disagrees with Gordon Brown is wrong

Brownism must be stopped.

Bob wrote:

'And neither Washington nor Whitehall is suggesting the enforcement of profound structural change at banks: there's no desire to break them up into smaller, more narrowly focused businesses, as some reformers (such as Vince Cable of the Liberal Democrats) have suggested.'

WHITEhall + WASHington = WHITEWASH

I am left with a strange vision of the a group of men urinating out of their tent unaware that it has blown away in the night.

I am also reminded of that old slogan that those who refuse to learn the lesson of history will have to relive it.

If the City and the government want to have another boom and bust cycle just like the last one then they are doing very well. For my part I don't want to know and wish to decouple myself from both the City and the government: fat chance.

We seem to be managed by people who are in Reverse Chicken Little Mode: the sky can't fall so, even though it has, we will carry on pretending that it can't.

Brown might be Pharoah but who will be Moses?

Pathetic, pathetic, pathetic. I worked for an investment bank for 5 years. The internal policies and controls for risk averse investments were already in place. The problem was, they were ignored. The quest for completing deals and generating revenue was all important; compliance were reluctant to get involved unless really pushed. There was a "fire and forget" approach from the front office, and a reluctance to bother senior management. In effect, the VPs and MDs of the trading floor were left to get on it with it, and we in the middle office were giving a great deal of grief for holding anything up.

The US approach, I think, is the way to go. Internal regulation has been proven ineffective. If you need draconian legislation to ensure people abide by the rules then so be it. Consider the staggering sums involved in the "rescue" of the financial system, and the cosying up of Labour to the financial sector. Darling has, for various dodgy reasons, got this all wrong.

rbs_temp wrote in reponse to JavaMan

"The bottom of a recession is a great time to be investing in both equities and property"

I would like to offer an alternative viewpoint.

If you had been investing heavily in a pension up until now then you would not have the cash with which to buy equities and property right now - so the only people who can afford equities and property are the very rich, or those who have not been contributing fully to their pension.

Pensions are all a matter of timing, if you retired 2 years ago and took a cash lump sum you would be laughing. If you retired this year then you would be about 20% worse off. As most people are not in control of this timing, and do not get forewarning of a downturn - this means pensions are a lottery.

I was fortunate in that I did not get my act together and arrange my pension and I have the princely sum of £2000 invested in the stock market (now worth £1600).
However I do have loads of cash in the bank (my pension contributions that I never made).

Sadly rbs_temp is talking about investing money in a pension which you have spare at the end of the month - which is not a reality for most people. Most people in this country are living paycheck to paycheck and to tie up any spare cash in a pension seems pointless.

Added to this, rbs_temp has missed the erosion of inflation in your pension. Sure you might receive tax relief (and it's only 22% for normal rate payers) when investing, but with the value of your pound devaluing by around 3-4% a year (depending on whether it's CPI, RPI or Magnum PI) - this has a big effect on the final sum. All our pension pots will be worth over a million sterling by 2030 - but sadly a million will probably just get you a weeks shopping by then. Currently your food and other bills are going upwards whilst your pension value is falling.

Finally, investing in a pension simply adds to the depth and severity of a crash. When you hand over your money to your fund manager he will do whatever he can do within his mandate to "get you the best return".

......so will you be surprised when you discover he (or she) has been investing in sub-prime mortgages because they offered such a great return?

Even the mandate is no protection - complicated instruments and a sub-standard FSA means mandates can be 'bent slightly' to outperform your rivals (as I have already explained this week).

If you're still not convinced then ask yourself why the Government is so keen for people to invest in pensions that they offer tax relief as an incentive.

EVERYBODY KNOWS - if the Government are encouraging you to do something then there's a very good chance it's a bad thing for you.

They need ordinary folks to buy into the pension dream, otherwise a whole industry will be lost, a mountain of tax will be lost and the Government would have to foot the bill by providing a state pension for all. The Government thinks that themore people who invest in the rollercoaster of the stock market, the less the volatility will be (because in a crash people are reluctant to reduce their pension - it's a long term tie in) - meanwhile the ones who can get in and out of the market (the wealthy speculators) manouvre themselves in and out ensuring the pension holders get stuck with the losses.

In answer to javaMans question I would say.

Don't trust anyone else to invest your money for you, construct your own pension where you are completely in control, choosing what you invest in and when - alternatively work for someone who offers a final salary pension - which unfortunately means becoming an MP - but you'll get my vote.

Gosh what a surprise:

Government still full of people involved in setting up and running regulatory system find they were not to blame for it failing to do what it was supposed to do.

The regulatory system does not cause the events it is supposed to protect the wider economy and public from the effects of excessive greed and risk in the financial system. It is manifestly obvious that it failed otherwise the billions pumped into the system would not have been required and the taxpayers will not be paying off the results for some considerable time without any benefits to show for it.

I am sure his audience tonight will be mightily relieved by the news since it is yet another nod and wink that nothing is really going to change so they can go back to troughing it regardless.

Interesting contrast between 45 & 56 there, I'd be interested to find out which sectors these opposing views are formed from.

For the record, I'll go with armagediontimes (based on recent events and experience). Sorry 45 no offence meant.

#32 45 46 52 - Have to agree with 52, unless you have a final salary scheme, avoid pension salespaersons like the proverbial plague.

In 1988, we were informed that a 'pensions advisor' would be invited into the office. He recommended that we all contract out of SERPS and buy a private pension from his company. Several unfortunates did so and his advice turned out to be disasterous. Luckily (and against prevailing office opinion) I ignored him.

In 1993, we (a different office) were informed that a 'pensions advisor' would be invited into the company etc ... you can guess the story. This one went bust not long after and discovered that his 'plan' was about as safe as 'Bernie Madoff Investments'.

Most 'pensions advisors' are scam artists who cannot get a job in any other line of work. If they weren't selling pensions it would be sub-prime mortgages or loan-sharking.

Like a contributer above my measly £12,000 of stock-market investments have fallen to about £8,000 buthave lots of cash from not paying into dodgy pension funds. BE CAREFUL. Cash is king at the moment as found out yesterday when buying a new car- discounts on offer for cash were tops!

Why bother to invest when one can't assess the regulatory framework and it's cost. This should have been sorted out last year. We knew what was coming in April 07.

This govt can't make a decision. Events have overwhelmed their simple minded ideology.

Of course it was not the regulation of the banks that caused this mess. It was the lack of it! And people borrowing too much money etc. etc.

Re my post 54, was meant to say 45 & 46

A pig with lipstick, is still a pig. Same names, same faces, new dresses being proposed.

55. At 1:21pm on 17 Jun 2009, TheNewPonzi wrote:

#32 45 46 52 - Have to agree with 52, unless you have a final salary scheme, avoid pension sales persons like the proverbial plague.

I agree unless its final salary with lashings of MP top ups, a pension is practically a waste of time. That said, it is a lottery and you could end up 'Not bad'

.. and who do we have to thank for the appalling returns on pensions? Step forward G. Brown whose first act of theft in 1997 was to remove dividend tax credits. Not a problem for him of course on his state-sponsored scheme. Former Labour MP Robert Maxwell only stole £400m. Brown has done 25 Maxwells a year, for the last 10 years!!!!!!!!!

55. TheNewPonzi

Of course you could always not use an adviser. i've met many advisers but only a few who i think were any good.

PPPs old in late 1980s and 1990s were terrible. contracts are better now.
Still I think personal pensoins are not suitable for many people as they are simply not comfortable with making investment decisions. if you know what you are doing it is possible to make some great returns (double digit on average is well achieveable). However with many people having a low disposable income or a low tolerance to risk i can't see this being a popular or appriopriate route

At the start of the year the NAPF annual survey showed that 76% of final salary schemes are now closed. if they did that survery again the figure is undoubtedly going to be higer. So final salary schemes, best type of scheme they may be, aren't going to be an option for most. Until someone comes up with a better idea (it is too early to know how successful "career average" scheme will be) we're stuck with this system where risk is pushed onto the member.

i think it is about people taking more personal responsibility. As long as you are saving that is something - whether it is an ISA, unit trust bonds or otherwise (although i've seen some of you guys suggest we sve nothing!). You can still buy purchased life annuities from insurers from capital OUTSIDE of a pension at retirement. rates are better than standard annuities. also since you used your own capital to buy one it isn't assessed for income tax like normal occupatoinal or personal pensoins. It is classed as part return of capital and part interest - hence only savings rate applies to part of the payment. There are many many options and alternatives to pensions - look around

Even with greater buffer capital this is still fractional reserve banking with all it's hazards. "Tinker"ing is just that, no more than a gesture (so it won't upset GB and AD's remaining friends. In any case, by the time any proposals have been run past "interested parties", i.e. the banks, they'll be so watered down as to be quite irrelevant.

It is lending practices which must be heavily curtailed. Breaking up and downsizing banks would take that part way, but real fear of the BoE needs to be instilled (as once existed, before Gordy's tripartite fantasy land), and clear laid down limits imposed and enforced, at customer and bank levels. Rebuilding the same foundations just builds in future failure - the current model is busted, and indeed if we were trusted to see the figures (we never have been yet) the banks are probably all still technically if not actually bankrupt.

Furthermore, it is a joke to suggest that some committee would actually recognise let alone chose to at upon sensing too much money-making. This was precisely the realisation that was run-from last time round, and the same bunch of insiders, their pupils or acolytes, faced with the same choice, will opt to take the moeny and run all over again.

Crazily, the model for recovery still seems to be to restart mass lending, the very thing that got us into the present financial collapse. I am forced to assume it is the only mechanism our benighted so-called leaders can think of which could remotely generate enough revenue (and hyperinflation - ya knows it's coming)quickly enough to veil the attrocious state fo public finances following Crash's printing of money in the face of reduced tax take.

All the while, GB and AD dare not, shallnot acknowledge that they sat atop the pile, raking in money in the good times to serve their purpose over their duty to us. We, it must be remembered, give politicians a mandate to run the country in a sound, stable and sustainable fashion, not drive it onto the rocks like this mob. So still they blame the banks, the regulators, us, anyone but themselves. The highest responsiblity lay with the PM and the Chancellor, though, and so the greatest fault of all is still theirs.

62,

Yeah here is a viable alternative in my very humble opinion.

Stay with your parents as long as you can (Even when you are married)
Save like crazy.
Buy flat / semi detached house number 1 outright!
Save like crazy.
Buy flat / semi detached house number 2 outright!
Retire to costa del sol (Renting out a 1 bed flat)
Do that while renting your two uk households.

Insert a little bit of (watch for the crash) and (watch for the boom) into that general plan and I reckon you are onto a winner. Trouble with BTLs is the same with everything else Leverage

Think Im mad? Im willing to bet thats as good a retirement as any pensions advisor on here can do for me or my kids.

More Fudge, carry-on lads get the bubble going again,

the tax payers will pick up the tab if it all goes belly up
again.

Someone seems to have disliked my critical comments at #2 and referred them to the moderators. Hours later my comments are still withheld, not being moderated.
Is this a new form of censorship? Withholding (not moderating) comments until the discussion has moved on, especially if the comment is an early one? Have other readers had a similar experience on this board?

#66 invisiblehandadvisor

Check your e-mail to find out why is was moderated. Fix the problem and repaste.

Apologies, have not read all the comments so I am sure someone will have already said this but:

This is an entirely political decision taken in order not to question the system put in place by the previous Chancellor and does not reflect the facts as have emerged.

Using Northern Rock as an example, the institution did not understand the systemic risk posed by loss of liquidity even for highly rated borrowers. The FSA did not understand this risk either. In my opinion the responsibility for looking over the entire financial system to spot systemic risks should lie with the regulator. Yes NR's share holders can feel aggrieved that their managers did not see the risks but as a private institution, whilst it was in their commercial interest to recognise all business risks it was not part of their raison d'etre - whereas for the FSA it very much was one of their core responsibilities.

And this is where the disadvantage of splitting regulation of banks away from systemic responsibility for monetary stability becomes clear. The FSA tries to do many different things from protecting individual consumers to regulating multinational banks but does not have overall responsibility for monetary stability which belongs to The BoE; and not by coincidence it was at this point where there was a demarcation of responsibility that the problem occurred.

I will be interested to see the Lib Dem and Tory proposals.

Is this government really Labour? Or is it a well-camouflaged alien force set out to dissolve Earth having finally found its weak-spot, Britain?
The system that is not considered for changing (and therefore has no chance of evolving into something better) will stay "as is" and so the aliens will get a second chance and probably then succeed.

More dithering.

More pointing away and spinning on the spot and saying the problem is over there when it clearly was not.

This just reinforces an opinion that those that caused the problem, at the very least helped the problem develope cannot solve it. They have to admit mistakes and that is clearly beyond them.

Until mistakes are acknowledged in what way can they be fixed. Further in what way will anybody want to invest until they have some assurance that a reformed playing field has been established.

So lets just lurch along zombi - like then with the finances of the living political dead. Even to the extent of pretending that holding a fixed budget in the public sector and ignoring inflation is not making cuts.

No rush. Hmm. Cute comment if you are in a job, eh. The idea is to get things going asap. Not to indulge in the usual lets not make a decision, lets hold a committe meeting, and refer motions for consideration, and get together in months.

Sorry, but when was Lehman Bros, ah yes, Sept 15 2008. 9 months ago. And after 9 months since the worlds biggest crash - lets have a bit of status quo. Yes thats going to do it, get conviction things are sorted out about get people opening their wallets.

#54. JavaMan1984 wrote:

"Interesting contrast between 45 & 56 there, I'd be interested to find out which sectors these opposing views are formed from.

For the record, I'll go with armagediontimes (based on recent events and experience). Sorry 45 no offence meant."

Why on earth should I be offended? I am offering a purely personal opinion based upon my own experience, not trying to sell you a pension.

Where are you going to put your money then? In a savings account paying 0.5% interest on (taxed) income? Under the mattress, paying 0%? And what are you going to live on when you retire - the state pension?

I am with you RBS but that simply means we are the stupid few, just make sure when you give this advice that you qualify it with the words to the effect that 'the investment can go up and come down...and stay exact where it is now'!

#55 The New Ponzi wrote

"contract out of SERPS"

Ahh - that takes me back....I too remember that conversation and that same advice (different place, different time).

What that little phrase actually means to the man on the street is "give up your safe and reliable state pension contributions and let my friends gamble it on the casino they call the stockmarket. Who knows - you might even win!"

....if that idea had come from a private company they would have been referred to trading standards. I think you'll find (if the information is ever released) that not a single MP will have contracted out of SERPs because strangely they didn't follow the same advice they were giving.

71,

I'm going to enjoy it as I can't take it with me. I'm poor (my definition) and I know it, might as well enjoy something in life as opposed to saving for a day that may never arrive. And even if that day does arrive, my savings will have been wiped out by

1. Inflation
2. Deflation
3. Deceit
4. Lies
5. Poor regulation
6. Incompetence

#66 and #67 The problem is that comments, after having been initially approved by the moderators, can then be put into moderation again presumably because someone complained. Comments are then being held awaiting moderation for hours, if not days, effectively thereby allowing censorship of your comments without giving a reason. The person who posted the comment initially doesn't know why it was put into moderation belatedly, after having been initially approved (maybe because of a reader complaint). The blog readers move on, long before the issue is finally resolved. The only solution is that comments which are being investigated by moderators are moderated fast. Moderators seem to be very slow here in such cases.

64. JavaMan1984 wrote:

I don't doubt that the plan could work. you would be putting most of your fait into property though.

i note a lot of people say pensions are rubbish as rules (the goalposts) move. E.g. change in state pension age, change in minimum pension age from 50 to 55 for personal plans

However the same is true of ANY investments (even ISAs were not initially intended to be permanent). there is the danger with your plan that the goverment might get fed up of people making money via property. they may turn on BTL landlords (maybe a different tax rate for rental income?) or rack up capital gains when you try to sell

How can anyone make a solid 30-40 year plan with the number of legislative and government changes that occur in that timeframe? we all end up taking best guesses. only with hindsight does the beset route become clear.

Labour think they have the answer in Personal Accounts. I'm not convinced. New Zealand and othe nations tried similar initiatives but many people simply opted out of te schemes immediately.

The FSA completely failed to do its job. Largely the same personnel remain in place and will prove to be not up to the task once again. Sack the lot of them !

If Darling is passing the blame then what about the majority of the population??

Yes, the banks were greedy, but as Fred Goodwin said, if they had scaled back risks in the climate of boom then the market would've punished them. It was allowed to run out of control but this was also fuelled by the demand for consumer debt and short-term returns for shareholders. Someone had to step in and call a halt to the rotten ideals and easy money. This was never going to be banks or the useless FSA.

Banks have to return to sound strategies with regulation to ensure they do. Then the level of greed and desire to 'buy now pay later' will slow in this country. Every man and his dog wanted to be an entrepreneur or millionaire and until they did, they would just pretend by flipping houses and drawing off the equity or flipping credit cards for lower interest, all promoted by the media's obsession with status and wealth.

The regulation is not to protect us from the banks, but rather to protect us from ourselves.

#68 M1chaels

"systemic risk"

This is the third time I have heard this exact phrase today (one of them was an ex-chancellor using it on the radio this morning). I'm not having a dig at you personally - it's just co-incidence you used it.

Does anyone else know this means 'A risk with the system'?? I all three uses today it has been followed by reasoning on how to prevent these risks occuring.

...but the risk is with the system, the only way to remove the risk is to remove the system. If driving a car blindfolded is systematically risky then it doesn't matter how good the seatbelt is, or how big the crash helmet is or even how strong the car is - you still risk crashing.

In this system we're getting our car fitted with all the mod cons, airbags, rollcage etc - but we're refusing to stop driving with a blindfold on.

The problem with society is that it's not driving the Government to find another way. This is helped by the poor understanding of the public as to what is REALLY happening. There is a good reason why financial instruments are so complicated - it's because the less people that understand them the more excess profits you can get from other parties lack of knowledge (CDO being a perfect example). I'm not saying we should all dive head first into Socialism, but we should be looking at changing the system so this risk is removed.

However your Government (and mine) doesn't see changing the system as a priority (because their friends are doing very nicely thank you) and would rather invade countries in order to offset the systemic risk by taking us down a 'war Economy' route. It's aided and abetted by the lazy and backward indiviudals who say "There is no other way than the market".

The biggest systemic risk is with fluctuating prices, they are not controlled and therefore we're all subject to the whims and fears of the market participants - which as we can see are uncontrollable. You only have to look at the oil market to see how our lives are affected by the gambling of the speculators.

Fixing prices would provide the stability we need in this recession and also prevent booms re-occuring. It would allow the Government to take genuine environmental measures (without taxation) and prevent the excess profit taking that gets us into this mess every single time.

Things have changed since the fall of the Soviet union, price data can be managed effectively - which was impossible before. We don't need to live our lives running on the treadmill of inflation. We plan our houses, we plan our schools, we plan our hospitals, we plan our lives....so why do we not plan our Economy?

There is one bright side to using the market Economy however,

If aliens land on this planet with the intention to invade, they won't last 5 minutes as they will find their stomachs rupturing when they fall about laughing upon hearing we manage our Economy at the roll of a die (or many dice) and do not plan it like the rest of our lives.

....oh and of course seeing the chancellors eyebrow / hair combination and being "Taken to our leader" will finish them off completely...

#71 rbs_temp

"Where are you going to put your money then? In a savings account paying 0.5% interest on (taxed) income? Under the mattress, paying 0%? And what are you going to live on when you retire - the state pension?"

....yes - as long as he hasn't already been conned into contracting out of it by a pension snake!

How about this for a radical idea rbs_temp - how about Java man spends his money on the people who loves and the people who he befriends througout his life building up a social network that will support him when he comes to retire.

I realise that's a difficult concept for someone who's "all about the money" to contemplate, but that's how my father in law is working. He is just about to retire and he is surrounded by people who want to pay him back for his generousity throughout his life (including me) - which is why he has just been able to buy his own house, get it refurbished with kitchen, bathroom, double glazing and have a vegetable patch dug for him at the bottom of his garden and all on his "measley" state pension.

How? because his family, friends and relatives all pitched in to make it happen, and best of all he didn't have to screw anybody to get there.

He is what I call a truly rich man unlike these trinket chasers who populate the city of London.

This just confirms that Brown and Darling are lining themselves up for lucrative 'positions' in the finance world after they have departed from government. Most likely they will be within the big banks.

The compliant politico's are always well rewarded after their tenures in 'public office'.

Time will prove me right...just wait and see!

Does anyone have faith that the FSA has either the manpower or the knowledge to properly regulate the financial services industry any better than they did before? I don't. The price for bailing out the banks won't be felt properly until taxes rise and public srevices are cut, then people will be more critical about the banks and how we've supported them.

Anyone remember when the Vogon spaceship was sent to demolish earth, and it hung in the sky like a giant block of flats (hitch hikers guide to the galaxy), moved slowly over Jodrell bank without causing so much as a bleep, "which was a shame really because it was exactly what they had been looking out for all those years"............. thank you very much the FSA !!

79

Fixing prices? I assume you are not being serious here? How can you fix prices that are impacted on internationally? Our government doesn't control the price of oil - yes it dictates to a certain extent the price paid at the pump (due to taxation) but it can't dictate oil prices (given that our oil production levels are so low). No we are past the times of the Soviet Union but a good example of a country with centralised price fixing is Zimbabwe? Been there recently - if so, go and try to buy a loaf of bread - or better still, take some money out of a cash point and see how far the central price fixing will benefit the economy!

#80. writingsonthewall wrote:

"How about this for a radical idea rbs_temp - how about Java man spends his money on the people who loves and the people who he befriends througout his life building up a social network that will support him when he comes to retire."

That's a nice idea.

But the people you love will support you when you retire whether or not you've bought their love during your working lifetime - just as I willingly support my own parents and elderly relatives.

I don't think I'd like to have to go cap in hand to friends and family - no matter how much we love each other - every time I fancy a new holiday or a second latte in Caffe Nero. And I would like to be in a position to help out my grandchildren and great-grandchildren when I am elderly.

Financial independence leads to peace of mind and the knowledge that you can come to the aid of those who might need it even after you have retired.

Hmmm... not quite so clear-cut now, is it?

Changing the structures would not make much difference anyway. There are lots of different structures around the world, and each has failed to control extravagent risk-taking.
The Treasury, BoE and FSA together are concise as any substitutes proposed elsewhere. Changing structures would simply delay rule making and re-start learning curves & relationships within each institution.
What really matters are the details of the regulations, and the penalties that are allowed to fall upon miscreants whose risk-taking cause losses. Bank shareholders have paid their penalties for allowing excessive risk-taking, but Directors who made policy & cultures have been spared. That's not good.

The bankers annual "pat on the back" dinner and address by the chancellor is now (to me) a truly nauseating spectacle.
Let's hope they enjoy their pheasant and quail and finest wines.
Perhaps fish and chips and a cup of tea would be more appropriate.
Fish and chips? Most of the shareholders, pensioners and unemployed whose lives they have messed up can hardly afford even that.
But we mustn't deny them their lavish lifestyle....we're only paying for it.
All industries thrive on one thing above all else....common sense.
That has been sadly lacking in this sick financial industry.
Dinner of shame? Dinner of failure? It's difficult to know what to call this shindig any more.
The government that oversaw it all and their banker mates? The moderators would cut me off if I gave my honest opinion...it would be unprintable.
We all eagerly await the "regulation" that is supposed to protect the public from future negligence and incompetence.

#85 rbs_temp

I cannot see any confusion - I didn't suggest you 'buy' the love of your friends and family, and it's certainly not a case of going cap in hand to anyone. However building relatioships by using the wealth you have today is more rewarding that handing it to a gambler who will take a cut of the winnings, but pass all losses straight to you.

Your personal dilemna is produced because you are proposing assisting the previous generation (your parents) and the next one too (your children / grandchildren).

I advocate helping out the previous generation (as generally the previous generation is poorer than the next), but helping the next one only produces lazy, selfish and ungrateful people - which is what we have in this current generation - children of the 80's and great grandchildren living off stolen colonial wealth.
This is also why there are people in this country who have absolutely know idea what it's like to do a hard days work - and yet control vast amounts of the nations wealth and power.

I realise this is complicated by the fact that this current generation has gone and blown the next generations wealth, but under normal circumstances this rings true.

Sadly because of inflation (a man made phenomenon) we're all sold this lie that we need to contribute to a pension now in order to have an income when you retire. Unfortunately this is not true and there are no guarantees with a pension.

If there was no inflation - you would not need to be worrying about the interest you're earning at the bank and you wouldn't need to make sacrifices now to combat it.

What it requires is clever thinking and talent at the top - and despite all the waffle and bravado this is one commodity which is severely lacking in parliment and the governance of this country - and I mean ALL SIDES.

#87 There are no moral principles in the banking world. With a few exceptions, it is a weasels world: every weasel for him- or herself so to speak ........... and they seem to believe that the whole world is full of weasels like them. Sad really.
You can read more about the depressing details (literally: creating economic depressions) of the worlwide weasels game here:
https://globalinsights.wordpress.com/

Ok folks,

Ive asked a question today about pensions (which seems to have hit a nerve) regarding whether they are worthwhile or not. My next question is even simpler,

Who on here (honestly) would advise their children that getting into debt to buy a house is a good idea?

I expect a half baked set of measures and wouldn't be surprised if a few years down the line the same thing happens again. We've already heard how they want to restore lending to 2007 levels, something which is totally at odds with the need for less recklessness.

79. At 3:50pm on 17 Jun 2009, writingsonthewall wrote:

"The problem with society is that it's not driving the Government to find another way."


But that is because there is no system in place whereby society is able to.

Hell, if the people of the UK - despite recent happenings - can't drive the Government to calling a general election, then what flippin' hope have they of getting them to deal with the details of the economy?

I don't mean to sound cynical, but isn't that the reality?

Have you noticed the way UK politics have basically plodded on significantly untouched and unchanged by the drama of the last few weeks?

Government and big business will do what they like, and ordinary people have two fundamental choices - like it or lump it.

(No doubt in a couple of weeks time we'll discover that actually, despite all the noises that were made, they aren't really going to change all that much at all about the Parliamentary expenses system, just tinker around the edges and throw out a few sound-bites for the evening TV news.)

Lets just hope that the markets give this 'lack of' regulation the big thumbs down, what we all thought the price for our bailout money was going to be was the outlawing of all the stuff that got us into this mess. How can the FSA track every mortgage approval to check that people are not being lent sums they can't afford? They can't! Dodgy lending needs to be banned! How can the FSA keep on top of banks that have bigger balance sheets than the entire economy? They can't! The kinds of risks our banking system took need to be owtlawed! The bankers need to know that if they mess up in such a big way again they will be breaking the law, and will be punished if they do so. Thats the minimum price we demand in exchange for the banks knowing that all their mistakes are forever going to be underwriten by us. And it is only by making certain things illegal that we as consumers and taxpayers can feel confident that our futures are really safe.

It is inevitable that regulation has to evolve so whatever comes won't be the last word on the subject. Surely one of the issues is culture and I am not sure how you regulate this. Much of what we have lived through has come about as a result of greed - people trying to make money by the use of synthetic investments much sought after by hedge funds. Until we take investment back to basics and rid the industry of its worst excesses we won't produce the sort of economic climate we need.

#84 Horned_Devil

"Fixing prices? I assume you are not being serious here? How can you fix prices that are impacted on internationally? Our government doesn't control the price of oil ..."

Well my question back to you would be if the price of oil cannot be fixed then how do you explain the extremely volatile changes in the oil price ?

The cost of materials, wages, transportation, processing and selling doesnt change on a daily basis so why and how does the oil price change ? It changes based on speculation which is purely fear and greed.

The price of oil is fixed already from exploration to consumption - it's the market which distorts the price.

The market doesnt work - the same goes for the stock market. Stock prices should be pretty much static if the accounts are to be believed, with seasonal and perhaps monthly variations.

Tell me exactly why it is correct for an individual to buy oil commodities and never actually have the oil delivered and stored ? They are directly affecting the price with none of the consequences, all of the financial markets are gambling - unfortunately with our livelyhood.

Wouldnt it make sense to make buying stocks mandatory for at least one financial period - better still one dividend period ? Wouldnt it be better to link the commodities markets to physical shipments only ?

Restrict gambling to betting shops.

For me, wee-scamp in post 25 gets closer to the truth. The UK is rapidly falling behind in the reality stakes. As other economies develope, based on science and engineering, it is likely they will withdraw from London. What will the UK have to support it? Financial experts? They will be living parasitically in some other centre of finance. You need people who can have ideas, people who can translate them into reality. Sure, you do need people to produce the finance but I think the point is that there is a great imbalance in the respective jobs in Britain. After all you do need something to finance; the City doesn't much care whether it is in Dehli or Bradford.
Production and brilliance is at a low premium in the birthplace of the industrial revolution. So this regulation that is taking up so much time in discussion is perhaps more akin to discussing the arrangement of the Titanic's deck chairs.

Sadly the bankers do not have the right mindset which would allow them to accept regulation. They will not be able to see why they should have to accept folk meddling in their business.
All bankers want to do is get on with money making.
That is what they do.
They will always be on the lookout for shortcuts and loopholes that will make them money. It is what they do.

What encourages them more is the thought that with regulation there might not be enough money making going on to support them all.
That is right. Regulation means bankers reining in - essentially losing jobs.
And what will they be able to do instead?
All those awfully clever bankers looking for a job in the real economy.
It will be like ex service personnel looking for a job in civvy street.

It looks like we are all going to have a double or triple whammy.
First of all the bankers muck up the real economy by earning more than they reasonably could if they were not bankers.
Then the real economy has to bail out the banks.
Then the bankers jump unskilled into the real economy.

Heaven help us.

Darling Al obviously thinks the worst of the recession is over, and we have survived.

News for you Al, maybe pass it on to the Dear Leader if you are still talking -
THE RECESSION HAS BARELY STARTED!!!!!
(Apologies to the honourable Curzon)

If you read any of the US serious commentators on the economic state of the West and the ongoing mischief and gorging tactics at the banks (since barely anything of detailed substance is reported in the UK media) you would know that the train-wreck is still to come.

An absolute and complete re-drafting of the entire rules of the game, some serious accountability, and a lot of jail-time or at least financial ruin to some of the key players in this debacle is the very least that is required.

Regards,

Until banks write off ALL OF THEIR DOUBTFUL DEBT, the true extent of the losses will remain a mystery. Sounds to me like turkeys voting for Xmas then.

Perhaps some old fashioned remedies are needed. Banks were designed to be the custodians of our money and to lend to non related businesses to help those businesses grow and evolve. Methinks our bankers forgot some simple golden rules.

Banking IS boring. Please let it return!

95

So how exactly can our government fix the price of oil? All of those factors you mention exist - so, if our government is going to use "price fixing" to help the economy how is it going to do that with oil (given that we don't control production)?

As for the cost of "materials, wages, transportation, processing and selling" not changing on a daily basis - I think you will find that in fact they do (on a more macro scale) - our economy doesn't operate in a vacuum so we can't control all of the aspects of production so these things do change based on (if nothing else) exchange rate fluctuations! If the government was going to fix the price of, say bread, then how would it cope if we were reliant on overseas supply of wheat? Force shops to sell at a loss if the exchange rate fluctuates?