All change at RBS

In the light of the collapse in the RBS share price since the rights issue, I would expect investors (and in particular any underwriters who were left with under-subscription) to be taking a very careful look at the RBS Board statements issued at the time and of course any role the auditors played.

At a time when HM Gov are investing taxpayer money, are they relying on the same financials that pertained 6 months ago? How sound are the assets in these balance sheets? Or, is GB relying on a the assessment of a junior minister as reported yesterday with regard to the Icelandic banks?

Thank God I am not an investor in any of these banks, but I feel truly sorry for those who were encouraged to invest and have now caught a cold.

This has got to be an upcoming prime time for lawyers and insolvency practitioners.

I have no sympathy for banks. Why when interest rates fall the banks did not pass it on to customers? Who are the most important people at this time? Customers. Why dont you go and give them a hard time and work for your money. Also what about the treasury spending? Only a few weeks ago the treasury was broke. Now the treasury can rewrite the fiscal rules. When will you ask about that instead of flapping about?

No shares can be sold unless there is a buyer; a tritr remark. So with all the shares plummeting in value who is in the market to buy? Will we find in time that the owners, ie the majority of shares being held are in nominee names of the Middle East, China or Russia. Shares are dealt independently of the company to which they refer, are they not. The fall in price affects the owner and the buyer of the shares. The company carries on making widgets until the widget market is saturated or there is no longer any interest. Am I right Mr P?

I'd settle for a few old-fashioned things from my bank like a return to some integrity and them serving me instead of them trying to make money out of me at every turn eg trying to sell insurance when I'm just going in to the branch to pay in a cheque or massive charges for sending a letter.

I would also like to be reassured that my bank was not borrowing more than say 10% of its capital ie a low level of leverage. This would probably seem very boring to the average city wizz kid but at least we could all sleep soundly at night knowing our money was safe.

I think most people would agree and that we need some sanity to return to what is essentially a support service or that's what it should be.

In exchange the average customer should spend within their means and not run up massive overdrafts but then of course the banks fail to make any money so a bit of a contradiction there. Time for a re-think on how they do business perhaps?

and thus it starts.
taxpayers who are forced to pay tax to a government that seems inept and beyond dangerous they are gambling that things will straighten out before they have to cut government spending on health,military,police etc.
so they have put there shirt (thats our taxpayers money) on a hope that overseas countries will do the same.
they would be better off betting on a three legged horse winning the darby.
they dont care they will still maintain there high wages and expences thus its us who will suffer yet again.
the people of this country needs a good and fair government for the people not rich overpaid bankers and stock market sellers.

The Stephen Hester isn't by any chance the same one that was at CSFB. If so, he singlehandedly mis-sold the famous put option convertibles to Hillsdown, Tesco etc. These absurd instruments all had to be bought back in and were basically toxic paper of the 1980s. Way to go Steve.

V. interesting info.
I can't understand why they are getting off so lightly.
Can't our government just grab them , change the management and then look at compensating shareholders at realistic rates?
Who knows what they will get up to next with a new fix of our money!

Perhaps it's time to stop "banker bashing" and the latest craze "Peston bashing".
Robert Peston and the BBC are duty-bound to tell the facts, unless a government D notice applies, or for legal reasons.
RBS and all the other banks still have big problems, but they are being addressed.
German president Angela Merkel has said " we have to redirect the markets to serve the people, and not ruin them".
That's the most sensible thing I've heard a politician say in a long time.

Let's hope that things are only as bad as Mr. Peston reports and that there are no 'D' notices hiding worse things.

I found the video 'Money as Debt' most instructive!

#8
Whilst it is wrong to engage in banker bashing there is a percentage of people employed in that industry who have acted rashly and recklessly and have been paid very well for doing just that.
As for Preston bashing...I do think that some of the language used in the reporting of this crisis have been imflammatory to say the least...and if we start to think that the German president is going to be the guiding light out of this mess, heaven help us.

Compensation for loss of office at RBS?

It always cheeses me off that top men who get ejected from their post for having done a bad job get huge pay-offs. If Fred Goodwin is to go from RBS, what price he gets a huge payoff that he'll no doubt be "contractually entitled to"?

There was a piece on Radio 5 Live yesterday in which Andy Verity criticised the bonuses paid to two of the top men at HSBC. Surely this is misdirected as they run the only UK based bank that doesn't need to join the goverment bail scheme, thereby preserving hundreds of millions of value for shareholders and providing confidence for customers?

If we are to believe the government when it says it is going to control excessive bonuses for bankers in the future, then surely Sir Fred's pay off (and others who go down with him) should be minimal, if it all, given all he has presided over and taking into account all the huge bonuses he received getting RBS to where it is now?

The financial world is coming to an end and all you have to worry about is the welfare of Sir Goodwin?!

Do you realise he has made in one year more than most ordinary folk will not make in a lifetime, and he is laughing all the way no matter what happens. And not only him but also an army of drones (upper level managers and directors) who have devised, recommended and implemented those strategies that brought us to this sorry state.

Instead of worrying about Sir Goodwin, who is doing very well thank you, and who has no personal accountability and who will not end up his days in a prison, you should be worried about the common people who will lose their jobs.

The RBS Chairman Sir Tom McKillop must be wishing he was back in the ethical world of pharmaceuticals!

LOL

Re #8 banker bashing, we the tax payer are being forced to failout these greedy arrogant bankers. The very least we should have in exchange for our good money is an end to huge bonuses and a shareholding that adequately represents the value of the cash injected.

Fred the shred has been raking in huge amounts in his urge to expand his empire at any cost. The measure of a good deal maker is knowing when to walk away and not overpay and ABN was a bank too far.

How much value has been destroyed by his rash move? He should be turfed out with no compensation and no pension since his actions are certainly going to harm many many people in the UK far beyond the shareholders.

Every senior exec in these companies that have created this scenario should only be allowed to access the rescue fund capital PROVIDED they personally put in the value of 50% of their bonuses for the last three years.

They can all retire happy and wealthy as it stands, why shouldn't they all pay a personal price too? Everyone else will after all.

Robert

I have liked your articles and comments but I am about to say what may sound different to compare to the normal comments regarding the crisis.

Firstly the root problem is not the freeze in the interbank market , this is only a symptom of the disease NOT the disease it self!

The real underlining problem for the world as a whole is that there is too much debt and too much leverage.

Only a few years ago banks in the UK had no funding gap and used the interbank market as a top up source of funds not the main river of funding. Browns plan will not work as he is pushing on a string.

For example there are 4 major UK banks relying on the interbank market and the real plan must be to shrink and break up these failing giants up so that the smaller units can become self funding as any other viable business has to be.

There is no point in tinkering with an essentially unsustainable, greed-driven system. Think of the ideas thrown up in such videos as 'Money As Debt' as the designer fashions on the catwalk: few people (at least the financial powers that be) would 'buy' these designs as they stand, but it should be possible to take these ideas and come up with something that folk actually would buy on the highstreet. There is a dire need for radical monetary reform: at least meet us halfway.

This is a very interesting situation and a fascinating observation. I am now a part owner of a bank ( I hold shares in Barclays anyway) and I am an implied owner due to the Taxpayer's underwriting of the recapitalisation.

Over recent years we have seen a number of individuals try to reclaim charges that they were levied because they failed to keep within the terms and conditions of their current accounts (namely they went over their overdraft limits and were charged accordingly).

These are the very same people who 'blame the bankers' for the errors that they made in investment and lending decisions.

I, for one, will be most agrieved if these individuals have their charges returned when they have made their own errors in budgeting.

Let's not see OUR profits eroded by refunding those who have been charged for 'borrowing without asking'.

Let's buy Gold with the 50 billion and use gold coins again to trade! Can't be worse!

If as taxpayers we really do have a say in the way banks are run, then I propose they gradually move to a Full Reserve system rather than the fallable Fractional Reserve system that is currently in operation...

FWIW

"Some might say a return to old-fashioned, prudent, know-your-customer banking mightn't be such a terrible thing to ask for."

Some might also call for the return to an era where those leaking market-sensitive confidential information are prosecuted by the FSA.

We made a major mistake when we nationalised Northern Rock and now Robert Peston and Vince Cable are trying to make us do it again.

The banks are at our mercy but hurting them is a bit like cutting of your nose to spite your face as we are all inter connected.

What they need is a loan and we should give them it at a decent rate of return for the taxpayer. Anything e.g. demanding an equity share is basically socialism and all the problems associated with that,

So give them the loan they require make sure they pay for it so prudent banks such as the Clydesdale are not disadvantaged and lets get on and put this unfortunate development behind us.

The horizon is bleaker than written so far. As a pensioner investor with a small stake in RBS I relied on its dividend for income. Now that income will go along with my 20% contribution to HMRG. Worse the shares will be worth nothing from a lifetime of thrift. Join the queue at the benefits office? Hard standing around in the cold at 80+.

Well, we've bet the farm without the slightest reference to parliament and casually invoked anti-terrorism laws to freeze a foreign bank's assets without the slightest indication of a terrorist offence having been committed.

Fascism is, as fascism does. Watch out for an interesting decade or more whilst our political elite run fast and loose with democracy as they grapple to deal with debt and contingent liabilities at close to 85% of GDP.

Throw in the end of cheap energy (the lights could well be going out as early as 2012), untramelled immigration, a monstrous welfare state (6 million households on some form of state benefit or other) and staggering state pensions' liabilities - and you have a recipe for social unease, at best.

We have the politicians we deserve, I suppose. They're all as bad as one another.

Peston, you mentioned the CDS auctions twice and have yet to comment on the outcome of it.

Please do so!

Re 'banker bashing':

When the leaders of a sector act in a way that places short term personal and corporate profit above what they must realise (unless they are wholly unqualified to hold their posts) is in the ultimate best interests of their customers and, I would guess, their organisations then a 'bashing' seems to me the very least they deserve.

It really is about time that the Government got a whole lot more directive in sorting this situation out.

"Some might also call for the return to an era where those leaking market-sensitive confidential information are prosecuted by the FSA."

Has Robert Peston not passed on what information/ideas he had, where else would anyone find out about such matters???

Like a lot of other people who read his columns, I find the information both informative and useful, and I hope that he continues.

It is far too simplistic to say that he is leaking 'market-sensitive' information. By the time that he gets hold of it, the information is probably already third or fourth-hand if not more.

Peter

No. 18, thank goodness our bank is somewhat more understanding and customer orientated than the dreadful behaviour of a few banks you are commending. When we went over our limit a couple of times the bank called us and arranged to increase the limit. That's what I call customer service.

No 16, viable businesses, by and large, aren't "self funding". There's usually a gap between selling the item and receiving payment from the customer. For a business to be viable, it needs to be profitable. The banks are there to take care of cash flow issues. If we had to wait for the customers to pay us before we could pay our suppliers, none of us would be in business.

There's a lot of focus on the excessive bonuses bankers have received up until now - it will be interesting to see if this practice survives the Government intervention. But I would have to say, having worked in a large organisation for many years, that the wastage, excessive expense accounts, lack of accountability, overstaffing, far outweighs the cost of any bonus scheme the city could dream up. Why does a middle manager with no sales responsiblity need a Porsche as a company car? Or how about a sales executive with a several thousand a month expense account who makes no sales in three years? Or IT departments getting internal contracts worth several millions to design systems that halfway into the project are abandoned and never implemented.

Perhaps everyone should pause before investing in these wasteful giants via the stock exchange, because for sure we can all make a lot more money investing on our own account, first by eliminating our personal debt and then by investing in assets that we have complete control over. Even NS & I makes more sense as an investment strategy, rather than gambling on the FTSE 100.

"Some might say a return to old-fashioned, prudent, know-your-customer banking mightn't be such a terrible thing to ask for.". Yes, but Culpability Brown wants the banks to restart the housing market and to line the pockets of consumers to start spending again. And what is Culpability Brown going to do about the rocketing Government borrowing requirement? There are plenty of icebergs ahead for the UK Titanic.

The FSA should be prosecuting ITSELF, FOR INCOMPETENCE.
Talk about asleep on the job.
Oh, we "missed" the fact that one of our top-ten banks was going broke (Northern Rock)", and that all the others were so over-leveraged they would need government help to get them out of it.
And this is the great "City watchdog".
The FSA should be scrapped, and replaced by an organisation with teeth.

I never have understood why any government would be prepared to put the power to create money in private hands, and then borrow that created money back.

It seems as odd a decision as abolishing the army and hiring Group Four or Halliburton (ahem) to replace them -- here's LOTS of power, why don't you take it from me for free and sell bits of it back to me?

I can only assume that financial pressure is used on a person-by-person basis to sway individual decision makers to vote in favour of this sort of idea.

I haven't heard you talking about derivatives much, how does the $650 trillion aprox. of these effect the equation?

If it weren't for Pesto et al we'd all be in the dark cos as far as i've seen nothing of substance has been said in Parliament except the usual platitudes "everything will be done to maintain [sic!?!?!?] financial stability etc". Comrade Paulson has at least fleshed out the G7 plan with some specific actions in a press conference and their Govt and bankers are being held to account in public by Congress.

No such transparency here. Indeed HMG has to be forced to tell us what the hell their plan is. Bit rich of this govt of all govts to squeal cos a hack reports an off the record briefing by a banker, idiot or no. Live by the leak, die by the leak. BBC hold firm.

More solid, useful, informative information comes in a Pesto/Mason 2 minute report than an entire parliamentary statement from GB, AD, and especially from quite possibly THE most pointless minister in all this, our wonderfully informative and erudite Chief Secretary to the Treasury Yvette Cooper.

Maybe it's not a "Blood, toil, tears and sweat" moment just yet but that kind of brutal sentiment is right. Of telling it how it is, that it's gonna be tough, painful, possibly ghastly but we shall come through this, scarred yes, maybe, traumatised even, but we shall come through this and prosper once more. It's the inability of politicians to acknowledge the possibility of disaster when it's plain for all to see which drains confidence in them no matter how earnestly they are working to prevent it (and boy, however much we despise some of them they are truly feeling the pressure right now and i do feel sympathy for them as they face something for which there is no handbook)

If they treat us like adults we MAY begin to behave as adults and prepare ourselves for a possible hellish few years. This might give us some confidence. Then we could cope with, if not exactly avoid, the inevitable pain.

While we are setting terms and conditions, why not insist on a return to British call centres, or even have someone at your own actual branch to answer customer calls?

A lot of UK citizens are going to be looking for new jobs as a result of bankers' shenanigans and it would be a very small recompense to let some of them answer the phones down at the local HSBC, Barclays etc.

1987 remember that year?

Remember a certains Iron Ladies sternest vow?

"The U.K. banks will now under go reform in self regulation to stop this irresponcible lending?''

Why self regulation, because government regulation would strangle the 'Free Market'

2008... BAD LOANS have hacked out the legs of the whole system, so to all you Banks. Bravo, well done you have failed us all. I never went to Oxbridge but I do know a Debt (I.E. Mortgage is not a 100% asset until its paid off) so how do you make an I.O.U. a real and tangible asset. Never.

In the free market you take the risk and if you fall off the swing THERE IS NO SAFETY NET!

Our government should not bail out the banks, they should help the public by putting that money into a State High Street Bank. Let market forces run there course if the PLC Banks survive they survive.

But at least we the public get a safe haven for our money.

Extreme, maybe but for a government to borrow money to prop up a system failing due to over borrowing is madness.

So Gordon Brown lets keep the Post Office and make it a state bank, and let the city keep the free market. I can't wait to buy an ex brokers porsche for a fiver!

"It won't be long before we know how much of the banking system belongs to us. Which means we'd better start thinking about what we want in return."


Should we not have known that first?

'Some might say a return to old-fashioned, prudent, know-your-customer banking mightn't be such a terrible thing to ask for.'

That sounds good, but the branches are gone already.

Banks moving away from customers is also virtually solely responsible for ID theft. It is all their fault because they wanted to do business over the phone, internet, via so called financial advisers.

There is no ID theft when you are known by real long term bank employees who recognise you in your banks. No piece of paper ever used to be needed to prove who you were, nor should it now. Let alone ID card database!

You want a loan for anything you borrow from banks you have history of saving with and are known by.Yes it restricts cheap fly by night operators cutting costs and undercutting and so would need a regulator's eye on it. But better by far. Same with all debt (credit) cards.

Of course regulation has to be brought in to limit the amount anyone can borrow relative to the value of the purchase. Max 75% mortgages would seem about right.

Other than that interest rates should be considerably higher all the time, rewarding basic no risk savers who are the ones now paying for all the greedy borrowers defaulting, so far with a 10% income cut, try that out on all wages, balance the pain.

Banks started to go downhill when they discovered "customer service". of course that doesnt mean what it says, it means each customer becomes a profit centre to screw for as much as possible. The bank manager became a sales director, bank clerks became salesmen. At every point money was to be made. they made it impossible to call the local branch, so we spend often hours of precious time trying to make a poor call centre operator understand. They are also incapable of upgrading their systems, Why in this day and age cant i open and account without the need to send a cheque? they can debit a cheque in a nano second but "allow five working days" for a cheque to be credited.
Pumping billions into the banks and lowering interest rates hasnt worked so, why does anyone think this latest scheme will work. It is time to leave the banks to live or die on their own, give 100% deposit guarantee and instead of giving the banks money the central banks become retail banks and cut out the middleman. I bet the banks would start lending pretty quickly once they realised there was no more "support" to keep them in luxury

How about: first that the shares be underwritten at par value; second, that all banks agree to resolve the charges issue equitably, and halve their present fee for over-overdraft transactions.

This comment was removed because the moderators found it broke the house rules. Explain.

It is the final sentence of Robert Peston's article that will strike a chord with the public.

The UK banking system has long since lost touch with its high street customers.
Everything has been automated an/or outsourced to cut costs, and to hell with the concepts of client service.

I work abroad, but have my accounts with UK banks.
I have had to make countless, expensive phone calls to improperly trained staff in "call-Centres" , to raise questions or issues on simple matters.
Even though banks are informed that I work abroad, they persist in sending communications only to my home address in Essex, by postal service.
No notice is taken of continuing complaints, and neither the FSA nor the Banking Ombudsman is interested.

Who are the chief perpetrators of idiotic service delivery in my experience ??

1) Citifinancial..... the most disorganised and the worst service provider in my life's experience
2) Barclaycard..... I am a customer for 30 years. For the last 15 of which they have never sought to update any information on me, but still seek to impose "over-limit" charges on my account when the "over-Limit" is caused by Barclaycard internal account charges, NOT through transactions on my part.
3) Morgan Stanley....... sold my card account and personal details to Goldfish without my permission
4) Goldfish..... sold my M.S./Goldfish account and personal details to Barclays without my permission.

Also, why is it that, since the de-regulation of the banking industry began in the late 1970's, the Regulator has not been more fully aware of the need to ring-fence speculative "investment-banking" activity from the more mundane, but more economically useful commercial-banking activity of UK banks ????
This is not rocket science. Just plain common sense. The problem however, seems to be that since G. Brown gave Regulatory responsibility to the FSA, the FSA management has prioritised the employment of conceptualising rocket-scientists at the expense of plain-speaking commercial bankers, to the detriment of the Country's businesses, and taxpaying citizens.
It is time to return to old-fashioned principles in the banking industry.
Size is not everything, as we now clearly see. Principle and soundness of judgement are the foundation stones of banking.
It is hard to see how sound judgement can be exercised by inexperienced latecomers to the industry, motivated more by self-enrichment and authoritarianism than by any compassion for the poor (and getting poorer) bloody clients.

Wealth is being destroyed but people will start buying when the price of an asset fairly reflects its worth. It is certainly painful, but the western world has been living on debt for too long, unrealistically inflating prices.

Government attempts to 'fix' the problems will simple extend the duration of the pain and more than likely make it ultimately worse.

Where's the smart money (if there's any left) for when the markets open again on Monday? I see the IMF has just issued an Armageddon press release from Washington as the G7 and Euroland crew fail to say anything new or meaningful, let alone DO anything useful.

My money's on another week of mayhem followed by an extended bank holiday (which I think the headline writers refer to as a "global systemic collapse of the banking system").

Time to stash some cash to tide me over methinks.

Yes, no doubt bankers (generic term) must take some of the blame. But I also feel that had a large proportion of our gold reserves not been sold off at rock bottom prices, that the government had not squandered so much of the huge tax take from the last ten years, that had the golden rule of borrowing only to develop as opposed to maintain been adhered to and the rules not changed at the Chancellor's whim, that the same Chancellor had resisted the temptation to build his 'stability' on a sea of debt this country would be in a very much better situation to withstand this downturn than we appear at present.

Sir PG is talking about purchasing. Just as I thought, there must be money to be made already if you are super rich and can afford to take a risk of losing some money at the outset.
Who else is buying into what might seem high risk? If you can spread that risk across a range or buy specific stocks that you know are now at too low a value, say mining, energy etc, stuff that will always be needed. Oil now seems like a bargain. We should be building reservoirs for the stuff to stockpile, or refilling the North Sea reserves. Who would have thought that? Only a few weeks ago we were about to run out of the stuff and the price was running out of control.
If the bankers have been naughty so to has the stock market. Have all the shares been overvalued to such a degree? Or is it like house prices in as much that there was no real basis for their value? Do investors not look at the accounts before making a judgement about these things?
I guess not or else there would not be wild swings up and down or are published accounts a waste of time? That opens another can of worms?
There is not enough honesty and openess throughout finance and business, not that that is new!
It is just worse and more immediate now.

I am afraid that ROBERT PESTON and a few other "sensationalists" are only out to make a name for themselves.
The problem is that they will RUIN many ordinary people's lives in the process. (Self-fulfilling prophesy springs to mind)
Read the sensible comments,on the BBC News page, made by Sir Philip Green.
Why can't we have a few like him to run the country?

How's about we get back to real, proper money. Y'know, the one based on actual stuff - hard labour (physical or intellectual) and useful, long-lasting goods. Here's how to do it.
Join a time bank. There's loads starting up and although at the moment your "time" is not "worth" anything other than "time", that'll change soon enough.
Because pretty soon, local businesses won't have the "money" to pay for goods and wages (or there won't be any banks left to provide that type of facility) and will need another way to pay for these things. If those businesses start accepting "time" as payment from their customers, they can then pay staff and suppliers in - you guessed it - "time".
Because you can only earn "time" by actually DOING or PRODUCING something, the money supply cannot be vandalised by money-makers betting on the future value of stuff - the stuff is always worth the "time" invested in it (this should have the added side-effect of effectively eliminating interest. This is a good thing. Think about it.)

Join a time-bank - it makes sense.

quote42: "Government attempts to 'fix' the problems will simple extend the duration of the pain and more than likely make it ultimately worse".

Very well said. That statement doesn't need further explanation. Yet it has to be heard by someone and I very much doubt that the people in charge are even able to listen to the truth. If they are, why didn't they listen in past years when they were warned over and over again of the disaster waiting to happen.

Sounds like a sack race, can't they televise it as a reality show. You know bit like a pancake race but with toxic bonds, dont drop them banker. Or three legged banker races, points awarded, no that wouldnt work you would never get two bankers to work together. Golfing weekend for the winner who picks up the most taxpayers muney, can't do that AIG have had that already. Vote off the banker you dislike the most. Could raise more money than the treasury on the phonelines. Open the box, oh youve got the icelandic bonds, sorry you have latrine duty. Or how about a memebr of the public interviewing them and asking pertinent questions before they are allowed to have their application considered. Still the bankers want us back in the stone age. How many bankers does it take to change a light bulb in the stone age - A light bulb - who needs a light bulb if you have a wicker man.

re Banker Bashing.....

we all need to remember that one of the main problems has been the general greed of the public. This wasn't caused by bankers, but they did help facilitate the greed, by loosening lending standards to those that it seems really can't/couldn't afford it.

We all know people that probably spend too much money, and we all know some of those people fuel excess spending on credit cards, and we can even read about people paying their mortgage on their credit card!

Now where does the blame lie for this? probably the bank should of simply said no, been stronger in credit checks, or quicker in taking back assets.

The Times ran a story earlier in the week showing a perfect example of the utter nonsense that individual members of the public were allowed to get away with. The article (Tues I think) related to a chap who was unsure if he'd lost circa £180k due to having a bank account with Icesave. Where did his money come from? a buy-to-let mortgage from Northern Rock!! So this chap decided to speculate on the property market (as have far too many people - the root cause globally) and then decided to be greedy (perhaps) by putting the money on desposit at the highest interest rate possible, by a bank that needed to advertise high rates because nobody would lend it money. There is a reason HSBC don't offer the best rate on the high-street. They don't need the money that much.

You could simply argue that society has become too materialistic that many would rather be seen with it than without it, and they do this by borrowing on credit cards/topping up the mortgage when they really should know better.

It was far too easy for everyone to become a property developer. In fact, just for fun, why don't we blame Property Ladder! :)

#28 dktreesea

I have to disagree you and hope that I do not work for a company that you run as it would eventually collapse.

Ask any accountant and they will tell you that most business failures occur because of cash flow not lack of profits.

Indeed look at Northern Rock which at the time was making good profits but died as a commercial company because of the collapse of its cash flow.

Young businesses do need help with cash flow but beyond a certain point that business as to fund itself or at some point it will fail.

Returning to the banks 2001 virtually all UK banks were self funding and indeed HSBC , Standard Chartered , Co-op , Nationwide and many others ARE self funding not relying on the interbank market as their source of funding.

We need to break up RBS, the Halifax has a huge depositor base and can be easily salvaged even with a falling housing market, shrink the RBS side.

UK has 1 person every 5 minutes going bankrupt or insolvent and the average household has a non mortgage debt of £9,500.00 .

So who is left to borrow?

If I go to the bank and ask for a loan right now, mortgage or personal, there's a very good chance I'd be turned down flat for some reason like my credit rating's only 99.9% (or some similar excuse)!

Why then, can't I say NO back when the banks come calling to me, the taxpayer?

I could be paying for this for many years to come. Does that sound like a loan to you? And one I wasn't really looking for at present.

We're throwing more and more money at the problem but what if the markets just don't accept this fix? When the markets open on Monday heavens knows what's going to happen. Has anyone yet thought just how we could manage without a viable banking system?

I've worked through bank strikes but that was different. Then you stock piled cheques and moved cash around between businesses so the system did manage to keep going. But this won't be the same. Then you knew that an operational banking system would return. If the banks fail how do we cope?

#28

I'm a contract analyst/project manager in IT.

I worked in a financial organisation in IT for a period of time and was very shocked and disappointed.

There were no procedures, no standards - infact ex students were encouraged to find their own path etc. Seeing the chaos in the organisation and the do as I say work ethic I fast came to the conclusion that little work was being done. The department was nothing more than an exercise in justifying profits within the organisation.

I couldn't stand to "work" there.

"I expect HBOS, Lloyds TSB and Barclays to disclose that they're raising up to £25bn between them - all of it underwritten by us as taxpayers or simply given to them by us (aren't we generous?)."

Peston at his irresponsible best. Sensationalist guff that a tabloid journalist wouldn't get away with.

An analyst would not be able to advise his/her clients with unsubstantiated hunches or hearsay. So why is this man allowed to significantly sway investor sentiment on a massive scale?

Auntie, you should be ashamed of yourself.

No 25 (Hiddenranbir) - re: CDS auctions

There is some info here . . .
https://www.cds-market.com/
Though - for some reason - there seems to be very little media coverage of this subject.

I believe the high st banks' position is untenable now. These are the emergency steps I would introduce.

Nationalise all of RBS, Barclays, Lloyds, HBOS and HSBC. Sell off all their assets to recover tax-payers money.

Use funds recovered to reimburse depositors. The shareholders lose everything and all the banks assets (such as buildings) have to be sold.

Introduce exchange controls so that money cannot be syphoned off abroad. This will also stop the bankers themselves from hiding their money abroad.

Allow new banks to form (eg Tesco) with clean balance sheets to provide a clearing service so that customers can pay direct debits etc. These new banks can employ some of those laid off by the majors.

The current measures are simply mortgaging our children in the form of future tax. We should take ourpunishemnt now and refuse to put more good money after bad.

+51

Halifax belongs to HBOS not RBS!

#46

Isn't this the same Sir Phillip Green who gave an Arcadia dividend of 1.3 billion ?

Holding 92% of the shares both himself and his wife earned a total of 1.17 billion pounds.

As I understand it he paid no tax what so ever.

Why ? because he lives in Monaco.

IMHO a person who doesn't live and pay tax in this country should not be allowed to run any company or be a director. They should also have strict limits on the amount of money they can take out of the country without paying Tax.

I am totally DISGUSTED by your comments.

RBS NatWest seems to be a 'poison chalice' for its leaders -

Remember the previous senior executives, including Tom Frost, who had something of a roasting from the press after Blue Arrow and had to step down some 18 months ahead of his planned retirement date. According to the International Herald Tribune of 31.3.1992 "the recession and its puny profits are forcing the bank to re-examine its forays into investment banking and into the United States, and to take an axe to costs across the board".

He was followed by Derek Wanless who, according to the BBC News website report of 25.2.2004 was ousted as Chief Executive of NatWest bank in October 1999 after the RBS takeover of the bank "after the once-mighty (NatWest) bank fell prey to a number of hostile takeover attempts from much smaller firms"

And now, Sir Fred appears to be another pending casualty.

Perhaps he too will subsequently be asked to report on the failings of the NHS or some other hapless part of our State machine (as did Mr Wanless).

As for Mr Peston's views, my feeling is that he comes across as an economics 'guru', whereas in reality he is simply the typical BBC reporter sewing the meltdown scenario. That approach surely cannot be helpful to anyone, public or Government, at this very difficult time!

50 tommy sm

If you have looneys borrowing looney sums from looney bankers that are regulated by looneys that is what you get. Ladders and Snakes, or should that be Snakes and Ladders. Better not mention the snakes they bite.

Have you ever tried to fix something whilst being intently watched by others? Your abilities are dimiished as you constantly answer questions and are distracted from the task.
Whilst there is a role for being informed, is there not also a time when the bigger picture is best served by avoiding constant microscopic scrutiny. Those attempting to resolve this awful mess stand a greater chance if they are not constantly firefighting rumours.

Sorry, but I fear the 'banker bashing' won't stop until those in the financial industry guilty of criminal negligence, false accounting, incompetence and fraud have been found, tried in a court of law, and if guilty, imprisoned, and their assets stripped from them as proceeds of crime.

Anything less would be a cover up and a farce.

This comment was removed because the moderators found it broke the house rules. Explain.

No 56. Vegetable_Grower

Firstly I am assuming that Derivative are CDS's.

Maybe it's because this market is so huge ($640 trillion), agains't the total World Wealth ($170 trillion), that even a minority % loss in this market would bankrupt the World's economy. No one want's to peer over the edge.

No. 46 I see the IMF are now warning of a Global meltdown tonight - are they sensationalists too ?

#55

You said it "Analyst".

An Analyst is a person that advises clients.

Is Robert Peston a Financial Analyst ?
Is he getting paid as a Financial Analyst ?
Is he on commision ?
Are you paying for his "advice" ?

If you are an "Investor" then what are you doing on a BBC blog trying to get Mr Peston sacked and the BBC blamed to boot ?

I think you will find that the companies involved have a far greater and important role in ensuring they report the facts to the market in a timely manner.

History suggests that very large organisations have an internal philosophy /stream of ethics / morality which is very difficult to shift without very urgent cause.

Tunnel vision is not limited to banks and politics (organised religion and the legal system must come close), but it does take clear heads and very strong action to change and improve matters.
Most up to date banks have so espoused computer models of financing and custromer services that it will be like stopping a mega tanker at full speed. Nothing will change instantly.

So for a small factual diversion - the 'latest' Bankers' Almanac ratings on world bank assets. (Quoted in million US$ but relating to global business).

1 (1) The Royal Bank of Scotland Group plc , Edinburgh , UK $3,782,880
2 (2) Deutsche Bank AG , Frankfurt am Main , Germany $2,953,727
3 (3) BNP Paribas SA , Paris , France $2,477,272
4 (4) Barclays PLC , London , UK $2,442,996
5 (5) Crédit Agricole SA , Paris , France $2,067,577
6 (6) UBS AG , Zürich , Switzerland $2,007,224
7 (7) Société Générale , Paris La Défense , France $1,566,904
8 (8) ABN AMRO Holding NV , Amsterdam , Netherlands $1,498,849
9 (-) UniCredit SpA , Milan , Italy $1,493,799
10 (9) ING Bank NV , Amsterdam , Netherlands $1,453,382
11 (10) The Bank of Tokyo-Mitsubishi UFJ Ltd , Tokyo , Japan $1,362,598
12 (14) Banco Santander SA , Boadilla del Monte , Spain $1,334,671

Stop me if i'm wrong, but I still fail to see what the politicians or the banks can do to solve this whole mess.

Surely the problem is with the off balance sheet derivatives called CDS. It seems to me that the governments of the world have done enough to manage to stabilize these banks by pumping many billions of dollars into the system, but neither the banks nor anyone else actually knows what liabilities are actually out there so will not lend until they can work out the mess. With the SAME money being used to underwrite many differant CDS obligations (sounds a bit like a Ponzi scheme doesn't it?) once one bank goes there will be so many defaults it will bring down the whole system.

The politicians are actually doing all that they can do, which is absolutely nothing. All they are doing is telling us that the system is sound and reliable - blah di blah.

They lower interest rates around the world - WHY? That doesn't affect the rates that banks lend to each other at. Why use a tool that governments use to tweak and fine-tune the economy when the sword of Damacles is hanging over the banks.

Are they seriously just going to play a waiting game and see what happens over time. That would be a serious waste of money.

We need to cut out the crap now. Create a new banking system that will lend to us to keep the economy going and dump the rest of the rubbish - unfortunately that may mean Gordon and Alistair's directorships with various banks going up the swannee but there you go.

So what now? Well it looks as if we shall actually see how the film The Italian Job actually ended doesn't it? Wealth beyond our imagination at the back of the bus, counterbalanced by all of us at the front of the bus - no one move a muscle - 'ang on i've got a great idea....er ..er!

This is the self preservation soci.......

#57 wykhamist

I am totally with you my friend - we have been saying it for a while now and as more people are actually becoming aware of the real situation many more are coming to the same conclusion.

RObert, I enjoy your blogs immensely and find your 'take' on economic events to be both insightful and precise. However, I cannot believe that you believe that we, the people will have any say in what we want from the banks, the politicians will have what they want already identified and we won't get a look in. I may be cynical but someone is lining their pockets in this 'crisis' and its most likely the speculators, the bankers themselves and their political 'friends' most of whom are in the business of setting themselves up rather than setting things right for society, despite their many protestations of 'service', most of which society could do without very well.

The more we wriggle within the existing concepts, the more credibility we lose. The IMF thinks we're on the edge of terminal meltdown, if so, then the rulebook's out the window on a Mugabe scale.
There's firstly, as always, the evidence of the old diplomatic adage of letting someone else have your way, which in this instance means they pick up your bill. The worst offender here is, of course, the World Bank, whose role in this crisis has been remarkably silent.
Then, secondly, it's arguable that politics as a whole is discredited - the average Tom, Dick or Harry was happy to leave politicians to their sand-castles as long as they didn't affect him. Now that it does, then he perceives them as having failed. What their vengance may be will be interesting; I'd be watching the emigration figures like a hawk.
Thirdly, there's still the question of cashflow. Where's the cash gone? Moreover, has anything been done to stop the haemorrage, and remove the cause of the harm? The first rule of crisis management is get rid of what's been doing the harm, BEFORE stabilising the situation - the governments have been doing the second without tackling the first, which means everything done so far's probably wasted - fortunately there's a difference between proposing a 700bn injection and actually doing it, we're probably only 10-20 bn in. It's surely time to clear out the sceptics by force - mass redundancies in the City will tend to concentrate minds wonderfully.

Almost said this when I happened to bump in to you in cheltenham today. I think you are in danger of becoming part of the news rather than just reporting on it. This is real money affecting real lives. The more we whip up the story the worse it will get. Why can't the bankers and news reporters do us all a favour and take a deep breath and calm down a bit. People are creating the panic so it will take people to stop it.

Dear Mr Peston,

I am looking forward to buying your book in a few years time (assuming an economy still exists). I am sure you know a lot more than you are allowed to print!

As to a title, how about "The Economy, my part in its downfall".

Keep up the good work ;-)

No 65, landrace :
"Firstly I am assuming that Derivative are CDS's."
I believe it's the other way round, ie: CDSs are ONE type of derivative. Though I am certainly no expert :o) I think the CDSs are only a "mere" 58 trillion dollars. Whatever, still a very big number.

I think you may be correct . . . too scary to look into.

Another source of info:
https://en.wikipedia.org/wiki/Credit_default_swap

I'm not an academic, an economist, a city trader, a politician or a chief executive so please can someone tell me if I am correct in my assumptions.

1. The banks have created this problem through reckless lending. This isn't just the American banks but the UK ones too.

2. If this situation wasn't bad enough the banks concerned then, in a bid to maximise short term profits and bonuses, bought the very same reckless loans when they were bundled together into investment packages.

3. Nobody thought at any stage, including those paid to do exactly that (CEO's and FSA), that this was completely irresponsible.

4. The government finally get involved and tell the UK public that the banks must be saved to protect the wider economy.

5. They give the banks (private companies) our money which will result in higher taxes or less government spending on public services.

6. The banks then refuse to play their part in the rescue they so desperately need by still refusing to lend to each other.

Should this not tell us that they know something we don't?

My guess.......they know that house prices are going to fall by at least 50%, more mortgage defaults are imminent and a massive recession is on the way. They know very well that the good times are well and truly over and it's time to pay for their (both govenrment and banks) irresponsible behaviour.

The problem is that it is the people that didn't borrow excessively, lived within their means, were prepared to wait for a better car, larger house and more exotic holidays but did put money aside for a rainy day, 'invested' in a pension and maked do with what they had are really going to pay the most.

Robert is at it again!

More doom and gloom.

Is there any need to report such negativity?
This only leads to more investor uncertainty. Stock markets hate this uncertainty and fall as a result.

Governments are trying hard to install some confidence and then we have this type of reporting.

At this time I would ban this type of reporting as it is dragging the whole market down, especially the banking shares.

How is the market suppost to recover whilst this continues?

The novice invester will become spooked, sell their shares at a massive loss when in reality it could well be prudent to sit tight at this time.

Many people are going to make a massive amount of money out of these stock market falls by purchasing some of these shares at rock bottom prices.

How far will these shares fall on Monday due to Roberts comments. RBS for example could well fall another 20% and savy investors may then move in and make a killing.

There is a famous saying that surely should apply during these times: If you have nothing positive to say, then say nothing at all.

WHAT A CROCK!!! of, you know what.
The more I read, the worse this mess becomes. AND, all this blogging, bulliten news and economic mumbo jumbo, funny money , hocus pocus, TRIPE...COMES DONE TO THE SAME OLD THING. HONEST, TRUSTING CITIZENS ARE BEING HURT EVEN MORE BY THE SAME FRAUDS THAT CREATED THIS ECONOMIC BREAKDOWN IN THE FIRST PLACE. This crisis has turned into a worldwide PANIC, and this needs to be settled down or frozen until a real PLAN is inplace. No more just running about throwing trillions of dollars at problems before they have been sorted out and understood abit. At this rate most citizens will lose faith in the entire process soon, we are on The Sinking Ship of State! SOS, SOS, SOS.......

Well, well, well.

We all knew it was coming - check out the IMF statements!

Perhaps Mr Goodwin would be kind enough to sell his house and return his bonuses so that RBS can compensate all the businesses that have gone bust and families he's caned.

At least he's had the guts to be first up to the plate.

Robert, just a little point - didn't Barclays say on Friday that they wouldn't be using the government funds, as they had secured what they needed from China? Or was that HSBC?
No, I'm sure it was Barclays.......

It's so mad at the moment, I apologise if I've got this wrong.

Did I see you say balance sheet - can we see.....pleeeeeaaaaase?

Hey, #23, Tantivvy, please don't worry about standing in the queue at the benefits office at your age. They do it all over the phone now.

Robert
Here you go again. Can you stop bashing the banks for a while.

It's not helping the situation.

Did you learn anything from the complaints made about your blog on Monday.

Is this all about you? About you getting the 'scoop' irrespective of the damage causes to banks' share price.

So, will RBS open down on Monday - based on your speculation that Sir F will be replaced?

Less speculation and more news please.

Less about being the first to report news - and more about hard facts please.

Robert

Please less of the stirring......comments such as the following are not useful at all.

"I expect HBOS, Lloyds TSB and Barclays to disclose that they're raising up to £25bn between them - all of it underwritten by us as taxpayers or simply given to them by us (aren't we generous?)."

Stop speculating. Please!

You are doing more harm than good.

This comment was removed because the moderators found it broke the house rules. Explain.

Just read the FT "State to save HBOS and RBS".

Seems as though the financial gurus are still willing to shaft the public at the first opportunity:


"A handful of Treasury officials have grown concerned about the potential for conflicts of interest emerging between the advisers working on the bailout deal and the financial implications.

For example, Goldman Sachs, which is advising Royal Bank of Scotland, also has large financial exposures to the bank."

The shareholders of banks gave all this the thumbs up. they are the true owners of the banks, and the largest pension/insurance funds keep a very close eye, and give very frequent opinions on how they think things should be run.

No chief exec or senior mgmt has suddenly started shredding paper because they have been up to no good. There has been no dark magic trick.

Banks require enourmous amounts of funding to sustain their businesses, and most of the time, the money they borrow gets passed on to individuals, businesses, local authorities etc. When they can't borrow because of a crisis of confidence then they have to go to the lender of last resort, in this case the government. Too many things fall down if banks can't pass on their funding.

Jail? you serious! nobobdy claimed whilst the stock market kept going up and people were getting divident cheques posted through their letterbox.

There are so so so many wrong things related to this blog, it is worrying. I can understand the anxiety, but please take a step back first.

#57

What complete nonsense. Other than the tens of thousands of bank staff you seem to want to lay off, any tax payers money used by the banks will be repaid. This will not necessitate having to sell assets such as buildings as you seem to advocate. Major UK Banks are liquid and depositors funds are safe contrary to what the press would have you believe or like you to believe.
This is a global issue and not specific to the UK. Let's get some perspective here. Yes banks are seeking help from the government. Yes this means using tax payers money. Banks have put tens of billions of pounds in to the government coffers over many years for the benefit of tax payers and non tax payers alike. Did the banks get any praise for this? Of course not.
Oh and Mr Peston when you say that banks should return to 'know your customer banking' then i invite you to my office to see how we have been doing exactly that with out customers for many years and continue to do so.

From FT online:

"Angela Merkel: the woman who saw the crisis coming"

"Merkel has declared that Britain and America are to blame for the crisis by repeatedly blocking her efforts to introduce better regulation into the markets. Steinbrück declared the US was now a busted flush as a financial superpower.

The German stance should not come as a surprise. When Gordon Brown claims nobody saw the crisis coming, Germans could reasonably take that to mean he wasn’t within earshot of Merkel.

At the Davos World Economic Forum in 2007 Merkel said: “We want to minimise the structural risks in the international capital markets through greater transparency.” Nobody listened.... "

"Steinbrück said: “They [the proposals] elicited mockery at best or were seen as a typical example of the German penchant for overregulation.”

The Germans finally got their way at the Paris mini-summit a week ago....."

"Further details on the Paris agreements are expected to emerge during the EU summit this week in Brussels. For the Germans it would mark the end of years of lecturing from Brown over their reluctance to embrace free-market liberalism. Neither Brown nor Blair ever missed the chance to remind the Germans that their treasured social-market economy was a bit fuddy-duddy and not a patch on “Cool Britannia”. Berlin is thankful it only half-listened. "



Seems Tony Blair and Gordon Brown were warned some time ago but mocked the messanger instead.

As an ex-bond trader for natwest (now rbs) to me it's obvious that we are engaging in a catastrophic waste of money attempting to fill those black holes of stupendous losses in bank balance sheets and to shore up their woefully inadequate capital. Banks are *conduits* for capital but they are not *sources* of capital as we are painfully discovering. We need to to go directly to those current fonts of wholesale money, wherever they are, and find the means to attract it back to financing the british economy and reasons for doing so. How do you do that? Ask them!

My solution: by starting pristine new investment conduits ('banks') and providing investment opportunities that are no-brainers in this environment (easy). But chucking money into the black pits at the centre of the banks' balance sheets will merely ease the pain for their shareholders and **especially** their bondholders. It will do nothing at all to get lending restarted. It's scam. Good money after bad. You are merely reimbursing 100cents on the dollar to the bondholders for their lousy decisions.

What i would like to see is some investigative reporting from yourself talking directly to these sources of intl capital and ask them straight: 'what would convince you to lend money directed toward the british economy? what return? how much risk? what guarantees?.....'

Robert,
The Government has decided to buy, on our behalf, shares in the ailing banks to support them in their time of need and improve liquidity. It is repeatedly being said that this is taxpayers money at stake. What does this really mean?
My question - is this money actually from tax returns as this phrase sort of implies? When Ms Yvette Cooper (and Mr Brown) was asked the other day by a BBC correspondent where the money was coming from for this bail-out she did not offer a straightforward answer. When pushed Ms Cooper, rather surprisingly I thought, indicated from the markets!
Does this mean the big investors ie the pension fund managers? Will they be encouraged to buy into the banks brokered by the Government? If not then who? I thought it might be the IMF, Japanese or Chinese investors. But this would not be our money of course.

If it is our money and it is not actually from the tax returns pot then it's is our pension funds at stake here. Worrying to say the least. People should be made clear on this; our tax returns are one thing our family silver is quite another. I think the Government has a duty to be transparent at this time but I am not an accountant and find much of the vocabularly of finance goes all too easily over my head. Keep on picking it apart for us Mr Peston so we know where we stand.

I I was investing a large sum of money in a company I would want to do "Due Diligence". For that I would require a full set of accounts and open access to the books and the officers of the company would have to fully and openly answer any questions that I may choose to ask.

If confidence is (ever) to be restored the Banks MUST, as a matter of the utmost urgency, produce up-to-date audited accounts. Throwing money at them will NOT work by itself. In fact it is throwing money away, and taxpayers' money to boot!

I would recommend suspending the listing of all banks and related financial companies until they have produced a full set of audited accounts. This will steady the markets and prevent destructive speculation.

(I would wish to see particular emphasis on the valuation of assets and liabilities both on and off the books. I would also like to see assets valued at mark-to-market as well as on a net present value of future cash flows income basis with significant risk analysis, including the risk of counter-party default. Valuation should be on the bases of both a going concern and bankruptcy. There are plenty of honest professional accounting skills out there and they must be used. OK it will take some months, but at least when it is done we will al know where we are and then perhaps confidence will return, indeed I do not believe that confidence can return without full and open disclosure, given where we are today.)

For all those people blaming the media for causing the crash - the real effects are already in progress.

This one is a real corker recommended by FT online:


"The crash of 2008: now the pain sets in"


"Klaus Baader, an economist at Merrill Lynch, predicted a rise of 350,000 in unemployment as companies shed staff to protect their profitability. “The real recession in the UK hasn’t even begun yet,” he said.

Economists expect unemployment to rise sharply over the next two years, with some forecasters anticipating a rise of 1m in the jobless total. Already, say business groups, the impact of this is being seen."


Some of the price movements are due to realisation of profits coming down for the next two years.


"The stock market has already got wind of what will be a string of huge earnings down-grades as businesses suffer from the downturn. Consensus forecasts were for 6.7% profit growth for 2009, but Philip Ish-erwood, equity strategist at Dresdner Kleinwort, said investors were only now coming close to predicting the extent of the damage heading their way.

He predicted a 5% drop in UK corporate profits this year, plus a further 10% fall next year. “And this,” he said, “could be optimistic.” "

Sir Fred Goodwin? Who cares? How many of his customers in RBS, Nat West or Direct Line Insurance (and all the rest) have even heard of him, let alone talked to him, or seen him? How many of them are going to be saying 'Oh, poor old Fred'? 0.001% perhaps?

That's perhaps the whole trouble with the financial industries, they think their bosses are their customers and their customers are nobodies.

This Government has - amazingly - over the last few years managed to get many parts of itself, local government, the nhs, social care and education a lot more focussed on delivering evidenced, measurable, customer outcomes. O.K. still way to go, but it's better than some years ago in many places.

Perhaps this 'nationalisation by stealth' process will help banking and associated financial service industries get back to basics, i.e. delivering services to their customers as opposed to squeezing money out of their customers by every means available to them, many of which are, in all honesty, quite unscrupulous.

But, in the absence of properly implented, effective, regulation, that's what greedy people will do.

Just as, if given the chance, some will take on the role of school bully for no other reason than they had that chance.

We read every day just how much many consumers do not trust bankers, but now they are even untrusted by each other. How did these 'wonderful', highly paid and allegedly worthy of such vast remuneration, bunch achieve getting their profession into this mess?

It seems to me to have been by bad management, poor judgement, being greedy and not having the skills and abilities that matched their huge wages ... in the main.

So, another one bites the dust.

The world needs a new breed of banker for a new type of bank.

Nationalise the banks. The government could pick them up for a song and sell shares in them to institutions and individuals in the form of government savings bonds. I don't really see the point in the government lending money to the banks and having shareholdings when it could own the whole shebang.
I'm tired of hearing the market's mantra and myth about how much more efficient it is than government. It's cosmetic nonsense readily accepted by a gullible public that's all. Look at the idiotic duplication among the utility and rail companies!
Governments might not be much more competent than business but at least you can kick them out after four-five years and they are more accountable and less lightfingered (at least in properly functioning democracies).
We must do something to avoid the spectre of the robber barons making huge profits from the taxpayer at regular intervals (Black Monday and now this) by rigging the financial markets so that everyone else carries the can. These people are parasites and should be recognised as such. They are souless creeps who have reduced life and everything it to the status of a commodity.
It's lamentable, two thousand five hundred years after Croesus and Midas, we still haven't got the moral of the story.

#59

What an excellent comment. I couldn't agree more. Green's knighthood is a disgrace. Who should be more ashamed: Green for his disgusting greed which exceeds even his retailing expertise or the government for rewarding it?

Nothing shows this government's abandonment of morality and its technocratic worship of money better than this: the government gave a knighthood to a man it should have been imprisoned for tax evasion and shamed as the unacceptable face of capitalism.

This is not irrelevant either, beyond Green's nerve to comment on UK-plc but refusal to contribute. The unthinking worship of capital is what has allowed us to get into this mess. And, we'll need to ensure that people like Green contribute to the enormous cost of cleaning up this mess.

I also wonder why the BBC continues to refer to Green as the owner of companies of which he isn't. His wife, the Monaco-domiliced Tina Green, owns these business to avoid UK tax. The BBC shouldn't flatter Green or dignify the tax avoidance.

81 - JimsterBond007:
RBS needing to raise £10bn + Lloyds TSB and Barclays needing £25bn between them is hardly "speculation". After all, these banks agreed to raise extra capital last Wednesday. If anything, Robert is only going over old ground here (but aren't we all encouraged to recycle nowadays?). The exact figures may turn out to be slightly different but they seem to be in the right area.

Is the Govt applying pressure and guarantees to get the £4bn owed to investors in the Icelandic banking system released because it knows those same investors will breathe a huge sigh of relief at having not lost their money and will then look at keeping their current & future savings much closer to home?
- from a (former) Icesave customer

If you want to know why we're in this mess please have a look here: [Unsuitable/Broken URL removed by Moderator] It explains how the fraudulent Fractional Reserve Banking system works

From FT online:

"Pound 'will keep falling'"

"STERLING will continue to slide against the dollar as long as financial turbulence persists, analysts say, as international investors dump the pound and euro."


Seems as though the UK is not "best placed to survive the storm" as some would have us believe.

#81

It's not his job on the line, whatever happens to the financial markets. Reporters exist in a moral vacuum, free to criticise others for their decisions that affect the economny, yet amazingly touchy about receiving criticism themselves for the same thing. Somehow they believe they alone are immune from considering the consequences of what they do.

Since I have no training in finance or investing, I'm hoping someone will explain what it means to say (some?) derivatives are carried "off the balance sheet," and what the implications of this are. Does this have some implication other than the fact they are unregulated and no one knows who holds them?

I've tried to follow what's been going on with the auction of Lehman Brothers bonds and the fact large sums must now be paid by those who sold(?) the credit default swaps (i.e., those who have been receiving an income stream from the insurance "premiums" paid by the CDS buyers who wanted to insure their Lehman bonds against default). (Please correct me if I've got this wrong!)

Do (did) banks as well as insurance companies (like AIG) also underwrite (sell) CDSs, or did they just buy them themselves as insurance against bonds they have purchased?

Does what applies to CDSs ("off the balance sheet") also apply to other derivatives? People mention the huge number and amount of these other derivatives. Are they significant in the same way as the CDSs, or are the latter the only kind of "bad" derivatives?

Any clarification would be appreciated.

No. 50 tommysm

"we all need to remember that one of the main problems has been the general greed of the public. This wasn't caused by bankers..."

You have a point; there's no irresponsible lending without irresponsible borrowing.

But the problem here is not that individuals succumbed to temptation, so much as that our whole society was reshaped around debt-financed lifestyles of conspicuous consumption.

It's very difficult to opt out of society, and very costly, not least in terms of mental health.

I rent a flat from a housing association that's taken on our local council housing stock. Nothing wrong with that - ask the Singaporeans, a hard-working, disciplined people who live mainly in public housing developments.

But I would never tell my office colleagues where I live - they would be shocked. In Britain, having a mortgage is like having a regular job, a badge of virtue and social competency; living in social housing is a badge of failure, like being long-term unemployed, a sign that I've joined an 'underclass' living in 'sink estates'.

So while I'm glad I'm not burdened with a mortgage, I have some sympathy for people who've got out of their depth in debt.

And who reshaped our society around debt-fuelled owner-occupied hyper-consumption? We all have a responsibility, but in practice it's rich, powerful, well-connected people in politics and business and media, and not least the bankers, who pull most of the levers of power most of the time.

When we rebuild our society after the coming crash, we need to insist, if not on 'shared values' (a bit too much to hope for in these postmodern times), then at least 'arms control' mechanisms to restrain the upward spiral of greed and envy.

Don't envy the greedy, fearful rich. Pity their lost souls!