Osborne's big City moment

"History tells us that our next financial or economic nemesis will be the one we didn't expect, for which Mr Osborne's reforms - however well-calibrated and apt they may seem - are likely to turn out to be utterly useless."

Bit harsh Pesto! We have not even heard his reforms yet and all you can conclude is that time will prove them useless! Even if that does prove true let's celebrate that we finally have someone half sane in office.

Gordon But there has been no such stability in asset prices - house prices went through the roof - or in the provision of credit, which at times became too cheap and plentiful for rational decision making by businesses and households.

And the gulf between the top earners and the rest of us continued to widened. Boy George will no doubt ensure that accelerates as the poor pay for the greed of the rich.

a new Consumer Protection Agency and an Economic Crime Agency.

Given his party are determined to dismantle the huge state we have, are we to assume these agencies will be staffed by just three guys and a dog? Or perhaps it really is a job-creation scheme not for the millions looking for work, but for four or five of his mates?

That brand new Financial Policy Committee at the Bank of England will have the responsibility to maintain financial stability and the power to stop important parts of the economy roaring away in an unsustainable and dangerous way.

Will they view growth in the unemployed as unsustainable and therefore push for new industries deal with it? Or will they decide it is structural and therefore not a problem, or merely just a price worth paying...

I have no faith in the man or his mates - well, apart from the notion that they will enrich themselves while ensuring what he wants leaked to the press will be leaked to the press as a distraction.

In the UK, the financial industry has been regulated in the past by the following:
The Bank of England
The Financial Services Authority
The Financial Ombudsman,
The Basel ll Agreement
The European Union.

Now that’s an awful lot of people doing an awful lot of regulating.
And let’s face it, it didn’t work did it.

And while I’m on the subject, let us consider all those wonderful products sold to us by the financial services sector:

Endowment policies,
Personal equity plans
Payment protection policies
Equity release schemes
Private pensions
Self certification and 100% + mortgages

In fact not a week elapses when some financial institution is reported to have ruined some savers or pensioners investments.

And the there’s:
Unfair bank charges
Unfair mortgage penalty charges

All the evidence points to one inescapable conclusion:
Regulation doesn’t work.

Banking should be banking.
Once it becomes selling to the general public financial products that are wholly flawed, and when the business of banking is so negligently operated that it causes misery, unemployment and destitution for millions; then I feel myself drawn to the belief that it should be state run.

So where we had one SFA we will have a new committee, a new office at the BOE and two new agencies.

The Quangos are mushrooming !

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

"To state the obvious, those New Labour economic reforms of 13 years ago did not prevent us experiencing in 2007-8 the worst banking and financial crisis since the 1930s."

...but Robert - have any reforms ever prevented banking and financial crises?

It seems to me there is a track record of failed financial reforms littering history - isn't it time we tried something else?

.....or maybe 'this time' George will 'make it different' - well don't hold your breath folks I can cast iron guarantee any reforms will either be ineffective or removed within 20 years under persistent lobbying (that's if the financial system lasts 20 years!)

Anyone who thinks this coalition is going to fix a fundamental failure of the system with a bit of department juggling - franky deserve what they will get - a repeat of current events and yet more dissatisfaction with the political system's inability to resolve it.

> History tells us that our next financial or economic nemesis will be
> the one we didn't expect, for which Mr Osborne's reforms - however
> well-calibrated and apt they may seem - are likely to turn out to
> be utterly useless.

Yes. It takes common sense and vigilance to guard against the
"money for nothing" brigade. And what politician has those
qualities?

Financial Policy Committee

The Financial Policy Committee is, I think, the key to improved regulation and money management. If the new FPC had existed then perhaps the right decisions over monetary expansion limiting might have been taken over the last decade.

The only problem as I see it is that the MPC and the FPC may want to do opposite things to the only instrument of control that exists - the level of interest rates. This seems to have been overlooked so far as the rumours illuminate what is planned.

Clearly the FPC would not have wanted to have seen such an absurd increase in mortgage lending on such daft policies and conditions as occurred in the noughties. They would have had two ways to limit this expansion - to put up interest rates or to modify the nature of the security upon which a lender can lend (such as making it the responsibility of the lender to ensure that the borrower can repay a mortgage (i.e. no self cert.). Either of these methods would have prevented the mortgage bubble and would have limited the catastrophic housing price bubble, but they would have also have depressed economic growth.

I want to see the detail, before I pass judgement. The one certainty is that the banking and financial (self!) 'service' industry will not like whatever is enacted!

(I am also not convinced that any of the presently involved people are suitable!)

If you were to check the CV's of most of the top people at the FSA, lo and behold they have spent considerable time in the city. What good is such policing authority? I have attended numerous seminars and workshops run by the FSA and the consultancy firms, all of the panelists have bounced back and from between the banks, FSA and the consultancy firms at some stage in their career. Its common knowledge in the city that doing a stint at the FSA makes you more desirable and thus increases your earning power, especially if you work within Risk and Compliance. Every bank loves to have someone with inside knowledge on their side.

This system is so far up the creek with no paddle.

#2. copperDolomite wrote:

(Re the FPC)- "I have no faith in the man or his mates"

Now your contribution is moderated I see you share some of my concerns (in #8), but I am willing to give the new people the benefit of the doubt and judge them by their actions (except for those who were at the helm during the upswing of the crisis that is!)

"History tells us that our next financial or economic nemesis will be the one we didn't expect" - hang on a minute.
I and lots of other people fully expected the Euro to be a mess, we expected that the Chinese Uni-Trade "They sell to use, we don't sell to them" will leave us de-industrialised and, once the interest payments hit 'critical mass' in eternal debt to the Chinese.
We expect that young intelligent working people who have been priced out and taxed out of the housing market and into bed-sit land,
unable to afford to start a family till they are in their 40's in order to pay for free housing for 16 year old single mums and druggies
will mean a massive reduction in the brain stock of this country over the next couple of generations and we'll have to import brains from India etc - this is 'fully expected' - and no 'Medical stocks are up' (Abortion Chamber equipment suppliers for student-debt ridden pregnant 26 year old graduates) - is not a positive.
We now know, thanks the Sisyphus Equation we know that Company Profits = Company Fixed Assets + Consumer Debt + Government Debt + Foreigner's Debt
So we fully expect that if we are going to stick with our out of date pre-machine age Financial System instead of using NEFS - 'Net Export Financial Simulation' then all that can happen is you move one part of the equation then the others will move as well.
Consequently we also expect that economists who don't know the Sisyphus Equation will write headlines like "Good news in the Markets today Consumer Debt is down, bad news is Company Profits are also down" without the slightest clue that they are two sides to the same double entry bookkeeping(musical chairs system). - All fully expected.

Just a thought, couldn't we put MI5 and MI6 on the case to watch for the greed and stamp it out as the serious threat to national security we found it to be! We'd need a police force too.

Anyone who pleads extraordinary talent and therefore deserves the super salary plus assorted bonuses and pensions gets carted off by the boys dressed in the Darf-Vadar gear weilding sheilds, guns and tasers! Did it a few weeks ago to my old mum's neighbour who was suicidal. Regulated his behaviour well enough to get him off for treatment! That's it! Psychiatric treatment for the supergreedy!

Or will Boy George prune down the equipment for police in the cuts?

Robert,

'By definition, all such reforms are combating the last disaster to afflict the economy: they're fighting the last war.'

Not sure about that.

It was a bubble.... again!

"And the bits that are supposed to protect consumers and crack down on crooks will be injected respectively into a new Consumer Protection Agency and an Economic Crime Agency."

....so the FSA with a different badge then?

Will this 'consumer protection agency' work "as well" as the numerous failed consumer protection agencies in Energy supply, telecommunications, water supply or any other area which has an ombudsman?

I mean anyone who is familiar with the system will have recognised that all companies operating under an ombudsman scheme don't bother rectifying the complaints themselves but use the ombudsman as an 'outsourced customer complaints department'.

If you look up the definition of 'ombudsman' it is described as:-
"a person who investigates and attempts to resolve complaints and problems"

So we pay for someone to act as an intermediary - but it's clear that the system isn't working - or is being abused by the banks - otherwise why else would the number of complaints being dealt with by the financial ombudsman be going up consitently year on year?

Cases have nearly doubled since 2007 - and George thinks setting up a new 'consumer champion' is going to alter this trend?

https://www.financial-ombudsman.org.uk/publications/ar10/about.html

I don't want to see all you optimists get your hopes up only for them to be dashed again.
....that's what causes depression..

1. At 09:09am on 16 Jun 2010, Chanticleer wrote:

"Bit harsh Pesto! We have not even heard his reforms yet and all you can conclude is that time will prove them useless! Even if that does prove true let's celebrate that we finally have someone half sane in office."

There have been far better and more talented chancellors in the past who have failed to solve the contradictions within capitalism - what makes you think Georgey boy will be any different?
...as for sanity - well anyone who believes they can 'fix capitalism' is insane, therefore the current chancellor is no more sane than the last 100.

It is, indeed, too early to criticise Osborne's plans since he hasn't yet told us what they are.

Having said that, Robert Peston is clearly right to point out that regulations tend to deal with problems of the past rather than the future, and that those wishing to make a fast buck will always find ways to violate the spirit, if not the letter, of any regulations. If Osborne is any good, he should have foreseen this simple and ever-present danger.

But comment no 2 by copperDolomite goes too far and should be ruled out of order.

Unemployment is up.

Millions of people stopping spending as they wonder if they will have a job next year....and that's just from the public shoolboys TALKING about cuts.

I hear that there will be £2.5bn cuts in transport infrastructure spending. I wonder how many guys in the construction industry just stopped spending when they heard that?

"History tells us that our next financial or economic nemesis will be the one we didn't expect"

Would you be so good as to append this gem to each of your articles and utterances on air?

Robert,

'History tells us that our next financial or economic nemesis will be the one we didn't expect ...'

NO NO NO!

Lack of history will lead to this!

If we knew our history we would see exactly what was coming!

'When the guy shining your shoes is giving shares advice - its time to get out' -sound familiar?

How about when you can get a mortgage based on a salary you made up?

6. At 09:37am on 16 Jun 2010, writingsonthewall wrote:
It seems to me there is a track record of failed financial reforms littering history - isn't it time we tried something else?
------------------

The change is coming but first we'll have to go through the painful experience of possibly war as we are in the Forth Turning a decisive era of secular upheaval, when the values regime propels the replacement of the old civic order with a new one.

Let's just hope that The Forth Turning won't mark the end of Modernity and plunges us back into Dark Ages.

10. At 09:55am on 16 Jun 2010, John_from_Hendon

I'm not hopeful at all - see 9. At 09:52am on 16 Jun 2010, RiskAnalyst

Here's a little thought for those who have faith in the system.

It took 38 years to get to the truth about the shooting of innocent civilians in Londonderry and during that time there were clearly many who lied, or were economical with the truth, in order to protect themselves and the reputation of the state.

The relevance is - how long before we get to the truth about the financial collapse, how it occured, who profitted and why nobody listened prior to the collapse - and then claim "no-one could have predicted it" after the event.
Nobody can directly attribute any deaths to the financial collapse - so by my reckoning we should "get to the truth" in about 50 - 60 years.

...and we 'fight' for this democracy? Isn't this exactly the type of thing we criticise other nations for? This country is democratic in name only - there is nothing democratic about a system which has decided the best solution is for taxpayers to pay for regulation to the very people who created this mess.

In the sea of hypocriscy - those who do not face up to the reality of the situtation will drown - those that do have a chance of survival.
Denial by the British public will be their ultimate downfall.

Super-regulator - proof if ever it were needed that big government works

3. At 09:26am on 16 Jun 2010, Dempster wrote:
Banking should be banking.
Once it becomes selling to the general public financial products that are wholly flawed, and when the business of banking is so negligently operated that it causes misery, unemployment and destitution for millions; then I feel myself drawn to the belief that it should be state run.


It's when you get to the detail that a bank run by agencies of the British government fall apart.
Thinking of one aspect of implementing a national bank: the gov's atrocious record with IT systems (for which reasons needn't detain us here). For a start it would be insecure (as gov has shown us with countless records going astray on CDs, memory sticks and laptops.

And the systems would be hopeless. The DVLA, CSA, CRB and HMRC are hopelessly understaffed and their systems don't work. They account for millions of errors per year. A guy from the DVLA on Watchdog admitted to a "tiny percentage", 0.6% of the 4,000,000 SORN records p/a were in error. That's 24,000 mistakes! The HMRC don't even know how many mistakes they've made!

But if a national bank was handling, let's say, 100,000,000 transactions per day (cheques, debit and credit card payments, cash machines, standing orders, direct debits and interest payments) an error rate of 0.1% would give 100,000 errors per day. Would you like them to happen on your accounts?

So please let's not tempt Cameron and Osborne to set up a national bank - that's before wondering what the politicians would do with our money. Look at what they did with it in the past 13 years - wasted most of it on stuff they now claim will yield efficiency saving. They'd grant money to prop up the most rickety businesses. So don't expect much interest on your savings accounts.

11. At 10:03am on 16 Jun 2010, Glenis

You seem to be suggesting that intelligence is genetic. Got a reference for that other the nonsense of Galton? No one should by dipping their toes in the sewar of eugenics.

Regulation is just for Christmas!

What we need is something a little more permanent...namely a UK equivalent to Glass-Steagall.....i.e. ENSHRINED IN LAW!

It protected the US for nearly 70 years.

Vince Cable seemed to be implying that something like this is what's needed here in an article in the Telegraph over the weekend i.e. by breaking and separating the TBTF's.
However, he seems to be distanced from the Chancellor of late.

Cable in new bid to split banks
https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7823572/Vince-Cable-in-new-bid-to-split-banks.html

An example of regulation lifted directly from the BBC website totday:

'Nearly 30,000 UK investors are still wondering what exactly has happened to almost £450m they invested in policies sold by the now defunct investment firm Keydata'

I wonder if they'll ever get anything?

Stopping asset price bubbles? Well I've posted a couple of times that I'd like to see dynamic loan-to-value requirements for at least residential mortgages (as well as limiting the bubbles this utilises the UK's natural tendency to use a home as a savings deivce). This and dynamic capital requirements for banks would be good. Nevertheless if these aren't rule based or accountable to the electorate then I will have little faith e.g. the MPC/BoE currently are required to act on CPI but don't, etither a rule based system or accountability are needed (yes you will be able to sack your MP but not your MPC). Additionally I'd like a little more discussion on supply side constraints particulalry the distorting influence of greenbelt policies. I cannot understnad why economists always seem to discuss a situation as either supply side or demand side, any business person is used to multiple constraints occuring at once (consider a simple linear program of a factory, the objective function can have several binding constraints e.g. from suppliers, internal resources and demand - why is the aggregate economy any different?).

Finally, as a non-ecomomist I have browsed theough the IS-LM model and am not convinced. Is this what the demand and multiplier addicts use for their justifications or is there something more robust?

It is sincerely to be hoped that the new regulatory system that is poised to control unsustainable activities by banks will deal with the fact that all of the banks are at it again. In casino mode they are again risking on derivatives at least fifty times what they have in financial resources and five times the annual GDP of this country. If that is not a bubble tell me what is. And this time round "too big to fail" just won't work. We do not, and will not, have the resources to bail them out at that scale of failure.

24. At 11:11am on 16 Jun 2010, doctor bob wrote:

But if a national bank was handling, let's say, 100,000,000 transactions per day (cheques, debit and credit card payments, cash machines, standing orders, direct debits and interest payments) an error rate of 0.1% would give 100,000 errors per day. Would you like them to happen on your accounts?

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

So how about National Savings? That seems to work fine, at least I've never heard anyone complain about it. The old National Giro seemed to work ok too. And what's the current error rate on transactions of our wonderful private banking system? Zero? I don't think so!

Boringly predictable - a subtly-delivered slam on Mr. Osborne, even before he's had a chance to do anything. The slam I can forgive - it's the boredom that is so deucedly pestilential!

Why do I experience this nagging feeling that the phrasal choices of the author of the lead piece are not at all inconsistent with those of one who was on the payroll of the discredited so-called "government" (the one that has ruined and contaminated this land for 13 years, and now has the barefaced gall to hector the incumbents about the yawning deficit)?

Seems weird to point this out to an allegedly financially astute word-vendor, but: the Beeb's money, Bobby, isn't Labour's money - or, for that matter, any government's money. Governments don't have any money (in the sense of net assets), they extort or borrow money. The last shower of useless, harebrained, deceitful layabouts and degenerates borrowed about one trillion pounds which we and our children and grandchildren have somehow to pay back or fall into bankruptcy.

So it is we who are paying for your pearls of wisdom, not the discredited Politburo members whose interests you, intentionally or otherwise, served so cravenly for years.

Having dealt, on behalf of clients, with the FSA since its inception, I can say without any shadow of a doubt it is one of the most utterly useless bodies created by the cretinous ZanuLab (and that saying something). The ship of fools and incompetents couldn't even hope to prevent or detect fraud (its very existence probably encouraged fraud and malpractice!), and it merely served as a further bureaucratic burden on honest businesses, with its endless supply of stupid irrelevant ambiguous incorrect forms and procedures, and its ignorant, even stupider functionaries.

Borrowing your witticism: but don't be fooled into thinking that any pest is forever. :-)

If Boy George had announced the formation of a new Economic Crime 'Hit Squad', he'd be heading in the right direction. Unfortunately, seems to be another publicly funded body for the lucky few who will get jobs here, 6 figure salaries plus mega pensions. Great. Does this mean they'll be able to prosecute people like Goodwin and start to pay back taxpayers some of the money it's owed? Or am I dreaming?

Anyone watch the Dispatches programme on Ch4 this week? It explained in very simple terms how the City has been feathering its own nest and betraying UK industry for decades.

It seems to me that the first thing that should happen is that the City of London Corporation should be disbanded and the Mansion House turned into affordable flats! It's important to eliminate this peculiar attitude that somehow the City is special and the banks are infallable. In reality what the City has proven time and time again is that it is insular, selfish and strategically pointless.

It has done little or nothing for UK industry, doesn't actually employ as many as it claims and has been complicit in the collapse in manufacturing, the increase in the trade deficit and the increase in property prices and household debt.

If Osbourne doesn't grab these problems by the short and curlies then our economy will continue to decline.

Yes, at last the real culprit of this unholy mess has been fingured. Well done Robert, I've been muttering this under my breath for ages. Peoples' private credit has become public debt. Control of credit is absolutely key to stop this happening again. As for mortgages, it's time to revert to the rules which were in place when I first had one back in 1975, before Thatcher's right to buy threw the rules out of the window. Mortgages should be relative to a person's income and bear no relation to the alleged value of the property. In my case the maximum allowable was 2.5 times my income and the deposit (10% of the asking price) had to be cash and not borrowed either. I would go a lot further, you want to put the brakes on banks then control the issuance of credit cards. Again, bearing in mind that these are a legal version of the very illegal 'rubber cheque' in that money is spent which you don't have, the rules need to be strict. One card per bank account, with a limit closely linked to income, no arbitrary raising of credit limits. The number of cards needs to be controlled, if I was in charge of this then a store card would count as well as a bank credit card, therefore the maximum number of cards per person without it being fraudulant would be two - one of each. A lot of people massively in debt turns into the whole nation being massively in debt, now's the time to draw a line under it. Never mind boom and bust, it's asset bubbles we should be worrying about.
Regards, etc.

17. At 10:26am on 16 Jun 2010, jon112uk wrote:

"Unemployment is up."

BBC London news reported last night that there are 15 applicants for 1 job on average in Hackney.

.....with the London overall number around 8 to 1 - so much for "we're all in this together" - seems some areas are once again hit harder than others.

Don't be surprised if these same areas are cited as 'trouble spots' or 'no go areas' in the future - of course no connection will be made between the unevenness of unemployment and the future hot spots of trouble.

I guess they will blame 'extremists' - which now seems to be used by the BBC as a catch all for 'anyone who is angry'.

It's truly pathetic to watch sometimes...

With regard to your comment that regulations follow crises, rather than anticipate them, I beg to differ.My son is currently taking his GCSE in modern history, part of the syllabus concerns early twentieth century America and naturally includes the Wall Street Crash and the depression that followed. I read through his text book description of the factors leading up to the crash. To say there were parallels would be a massive understatement only the names and the dates were different. Exactly the same reasons gave rise to the same results !. As my son so rightly asked; "So why did we get caught again ?"
Whilst clearly new risks and questionable dealing practices may develop which cannot be for seen simply paying attention to history would have saved us from the most recent debacle.

It is accepted that the banks ran rings round the regulators. They will continue to do so.
They are still risk taking and paying massive disguised bonuses.
Time that some small banks/b.socs were povided with government money specifically to lend to industry.
It's too complicated to start up a bank and not regulated enough when running one.

20. At 10:46am on 16 Jun 2010, plamski wrote:

"Let's just hope that The Forth Turning won't mark the end of Modernity and plunges us back into Dark Ages."


...or maybe not.. I mean if we truly want a system based on 'survival of the fittest' where the most relevant in society are forced to use their initiative and take responsibility for themselves in order to survive....then I saw "roll on the dark ages".

I can light a fire, I can build a shelter, grow my own veg, invested in solar panels, I am training in martial arts and I have set up a water collection system at my flat - I am ready for the dark ages - but I do hope my preparations will be unnecessary.

Mr Osborne has to be seen to be doing something, anything, making a noise, putting on a show. Just so long as he is seen to be anything other than being impotent (Which he so obviously is). His hands are tied and he knows it. King Canute had more of a chance of affecting the incoming tide, never mind this joker and the tide of increasing indebtedness, because this is a tide that will never ebb. The fact of the mater regarding regulation is very well highlighted here by repeated posts on how well it is working and has worked in the past.
What is needed is a mechanism to totally control the flow of money. Its speed and the amount of money in circulation will in itself create all the regulation that is needed. The economy will shrink, stabilise or grow all depending on the flow of money allowed

"History tells us that our next financial or economic nemesis will be the one we didn't expect"

This statement above all others shows the root of the financial and economic problems. Many people in this country did expect the financial crisis, it was the only possible outcome to the increasing credit and asset bubbles.

Just about everyone (apart from Gordon "the end of boom and bust" Brown)knew that a recession would hit us at some point so I think we could all see that coming.

That the two would come together was a not difficult to work.

No Robert, I think it is the 'intellectual elite' that have been taught the same economic theory at the same universities by the same lecturers that didn't see this coming.

Only Economic theory expects economic growth to continue for ever. Something which is not possible or desirable.

35. At 11:53am on 16 Jun 2010, writingsonthewall

Sound's like extremist talk to me WOTW, lock him up!

BBC moderators how did you let this through? You know every comment by WOTW should be sent to the men upstairs!

24. At 11:11am on 16 Jun 2010, doctor bob wrote:

"It's when you get to the detail that a bank run by agencies of the British government fall apart.
Thinking of one aspect of implementing a national bank: the gov's atrocious record with IT systems (for which reasons needn't detain us here). For a start it would be insecure (as gov has shown us with countless records going astray on CDs, memory sticks and laptops."

doctor bob - as someone who knows this specific area intimately - I can assure you that financial implementations of IT systems are just as bad - if not worse than Government attempts.

The difference? - well when things go wrong in the private sector they can be covered up, brushed over, and the bill footed by unwitting shareholders in the form of reduced dividend payments. The public sector is unable to do this, either through the greater transparency which comes with Government, or the media who are so keen to criticise and show 'public money being wasted'.

I can assure you that I was involved in a project at a FTSE 100 insurance company - investment division - and that project ballooned to 5 times the original budget and time. Once the system was implemented a new head of department took over, just as the last 'screws were being tightened' he decided that there was a better system, a new project was begun before the old system had even been used. At a cost of £3 million to the company the system was never used 'live' by the business. These costs were 'wrapped up' into the new project under the guise of 'prototype system' and off we all went again.

....now who do you think footed the bill for that little lot? I know the CEO still got his bonus (we weren't in recession then) and I certainly got paid, along with the others who stated "this isn't as easy as it looks" from the beginning.

Now that sort of inefficiency in a Government project would be all over the front pages. The lack of transparency of private corporations (even though it's a PLC) ensures that incidents like these go unreported.

Needless to say the 'project manager' continued to be given projects despite his resounding failure to manage budget expectations from the beginning - I guess this is what you get with a 'survival of the fittest' system!!

@ 3. At 11:49am on 16 Jun 2010, Wee-Scamp wrote:


> It seems to me that the first thing that should happen is that the City
> of London Corporation should be disbanded and the Mansion House
> turned into affordable flats! It's important to eliminate this
> peculiar attitude that somehow the City is special and the banks
> are infallable. In reality what the City has proven time and time
> again is that it is insular, selfish and strategically pointless.

I'm sure that everybody here would agree that The City is a bunch of
good for nothing twits who are dragging us all through the mire.

But how are we to dispose of them? It's alright for the Scots and Welsh -
they can quit the Disunited Kingdom and join Europe. But what about
poor England? How can the English release themselves from these bloated,
good-for-nothing parasites?

"By definition, all such reforms are combating the last disaster to afflict the economy: they're fighting the last war. History tells us that our next financial or economic nemesis will be the one we didn't expect"

What a very daft thing to say. Of *course* financial nemeses come from unexpected directions - because once you know to expect them you can head them off. To go from that to (essentially) saying that it's pointless to guard against the foreseeable problems is obviously wrongheaded.

27. At 11:17am on 16 Jun 2010, Dempster wrote:

"An example of regulation lifted directly from the BBC website totday:

'Nearly 30,000 UK investors are still wondering what exactly has happened to almost £450m they invested in policies sold by the now defunct investment firm Keydata'

I wonder if they'll ever get anything? "

...or maybe the Portsmouth football club investors who are being offered 20p in the pound - one of whom is the Inland revenue - which is money due to the taxpayer.

It seems the moral hazard is dead and now it's become 'investor beware' as the essence off trust seeps out of the failing system.

# 25 copperDolomite wrote :
"You seem to be suggesting that intelligence is genetic" - Got a reference for that other the nonsense of Galton?
Why do I need to get a stupid reference from some book-ish theoretic who stayed on at Uni to 'study' such a daft as a bat non-subject
as "Social Sciences" because he couldn't get a proper job after his first degree ? Get out of your Ivory Tower and take a walk... at midnight in Hackney
that'll learn you the joys of single mum Ghettos - you can provide a reference or two yourself then to the paramedics as they try to stem your blood loss.
These are not funded by 'Rob the Rich to pay the poor' taxes that take one Jag off a rich greedy banker archetype to put food on the table of poor 'hard working Families' - these are funded by "Rob the people who want to get a nice job, work hard, have a nice family and house'" and they take all of these from them and give it to people who can't be bothered - and know it does not pay to be bothered - to get out of bed in the morning. The higest rate of abortion is
not school girls, it's women in their twenties. How many of these, if they had the money to get married and have a house would not kill their babies ?
A generation ago, before abortion was legalised and a married man in a basic job could afford a stay at home wife with his married man's tax allowance meaning he paid little or no Income tax - the answer was all of them - the Tax system we have at the moment is little short of a genocide of the middle class. Daily abortion rate 600 per day in UK.

36. At 11:58am on 16 Jun 2010, John wrote:

"Whilst clearly new risks and questionable dealing practices may develop which cannot be for seen simply paying attention to history would have saved us from the most recent debacle"

If you look at all the crises - the vast majority of them begin in banking. In the 1920's banks were lending people money to buy shares - in 1985 banks were lending to people at 5 times their wages to buy houses - in 2006 banks were lending 125% of the property value to remortgage or purchase.

There is the common thread - with the exception of a few crisis which were exasperated by political events (i.e. the suez crisis) - they all orginate in banking

After each crisis regulations are imposed to 'stop it happening ever again' - but rest assured these are all removed by the next one - mainly because the same industry (finance) claims they are no longer necessary or they restrict competition.

Your son is right to ask - but I don't hold much hope we will get a credible answer.

6. At 09:37am on 16 Jun 2010, writingsonthewall wrote:
"To state the obvious, those New Labour economic reforms of 13 years ago did not prevent us experiencing in 2007-8 the worst banking and financial crisis since the 1930s."

...but Robert - have any reforms ever prevented banking and financial crises?

------------------------------------------------------------------------
The unreformed, and presumably unrestricted, Bank of England saved us from disaster in the 1970's.

#34

I too remember the good old days of sensible mortgage lending, and was shocked to see my local building society still offering to lend 4.25 times annual salary. It is this irresponsible lending that is sustaining and fuelling higher house prices.
My first house was a one bedroomed cottage and the only way to get a mortgage on cottage property in 1973 was through the local authority. The rules were that your monthly repayment couldn't exceed your weekly wage and you had to have at least a 10% deposit. My wife and I's joint income at the time was £28 per week (£1450 p.a.) and the house cost £3200.

Happy Days!

This week's Channel 4 Dispatches - How the Banks Won by Will Hutton, makes the Mansion House speech a dubious exercise to me. How much of this speech is for show or for political play, and how much actually gets put through into banking reform, is more fascinating and at higher stakes than any chess game analysis. If Mervyn King is an economist and still in charge of the bank of England since the August 2007 credit crunch revealed the dysfunctional global banking system, then what will a speech do, except that if it is pro-reform, serve to request populist support because it needs it?

This is nonsense, it is a pure whitewash.

The financial services industry will NEVER stop creating booms and busts to fleece everyone else until those who do this are made PERSONALLY liable and jailed for a long time when they screw it up for everyone else.

Nothing short of that will make any difference at all.

Surely the best reform would be "No more bailouts." You fail-you fall.
Simplify the interpretation of fraud. Set specific lending and investing criteria and when you are outside those the onus would be on the financial institution to prove innocence and less on a regulator to prove guilt.
Just a thought.

Here are some more reasons to doubt the new regulation system.

First of all Boy George (I'm using this from now on - thanks OffToOZ ) seems to think that transfering the powers from the FSA to the BoE is going to make any difference whatsoever. I might remind everyone that prior to the collapse there was no statement from the BoE saying "It's all going wrong, but it's not our responsibility to resolve it" - the BoE were as unaware of the problems building up as the FSA were. Some conspiracy theorists might claim that Gordon blocked such statements - but he was unable to block later statements by the BoE about the failings of the Tri-partite system - which were far more damaging to Gordon and his Government.

Secondly - this story (below) shows the problem and how deep rooted it is. This must be the umpteenth investigation into a failed financial institution which has been prompted by accusations of covering the financial facts up through clever (but no doubt legal) accounting methods.

How can you regulate something you cannot even see? I mean it doesn't matter if you put the BoE, the FSA, the CIA, MFI, ABBA, the FBI or NASA in charge of regulation - none will be effective if they do not have reliable facts about the financial position of a company in front of them.

https://news.bbc.co.uk/1/hi/business/10329173.stm

I suggest 'the boy' stops acting like a cameleon and changing his colours, gets out of the church of the poisoned mind and starts to realise that working regulation 'is a miracle' and that we're all 'victims' - and that his clunky financial reforms will 'really, really hurt me(us)'.

40. At 12:36pm on 16 Jun 2010, Treading Water wrote:

"Just about everyone (apart from Gordon "the end of boom and bust" Brown)knew that a recession would hit us at some point so I think we could all see that coming. "

...and the reliable media - don't forget that whilst they were busy headlining the news with the "New X factor winner interview" or some other nonsense, they missed all the signs that were so obvious - and unlike the rest of us they had access to the details.

The fact that the media is showing it's 'shock' at the financial collapse - post the event - is testament to their inability to produce quality investigative journalism.

Even now there are few mainstream media elements who are still talking about the recession in any detail - they all think it's gone away - fixed by some miracle they feel they don't understand.

Watching the spreads on Japan and the PIIGS recently has convinced me more than ever that our troubles are only beginning...

I am due to exchange contracts on my house within the next few days. My buyers have stated that they wish to hold off until after the emergency budget next Tuesday. They live in France and are purchasing my property for when they are in the UK. I do not quite understand why they are holding back, but can only assume that they are worried by the possible increase in CG Tax. Can you advise please. Many thanks

48. At 1:08pm on 16 Jun 2010, Up2snuff wrote:

"The unreformed, and presumably unrestricted, Bank of England saved us from disaster in the 1970's. "

The bank saved us - or was it in fact the discovery of oil in the North sea right in the middle of the suez crisis that saved us?

You're using the same logic that the Tories have been using to cite Canada as a 'model of cuts' - conveniently forgetting the oil boom which was what really got them out of the brown stuff.

I could be wrong but I can't find any actions of the BoE which led to salvation in the 70's.

49. At 1:11pm on 16 Jun 2010, henburyman
34. At 11:50am on 16 Jun 2010, RWWCardiff

...and do you know why all the stops are pulled out to promote and persuade people that home-ownership is key in our society?

...because with the decline in real wages - inflating asset prices (namely houses) is the only way Briton's are given the illusion of increasing wealth and therefore don't down tools and strike.

It's no coincidence that increasingly 'flexible workforces' and the decline of union membership has occured amidst increasing home ownership as workers feel like they are making progress - when in fact they're actually going backwards.

A man on a paupers wages in a Lords house feels like a lord, when the debts are due and the house is taken back by the lender, the pauper realises it was only his surroundings that had changed - he was always a pauper.

Why does Robert want to pursue the line that we should leave the FSA alone? The tri-partite system of regulation was a farce where no-one took ultimate responsibility because there was someone else to blame.

As to the conclusion this is really Old Testament prophet stuff. I think that the Coalition is demonstrating that it is prepared to tackle the legacy of failure and it deserves credit for doing that.

...and while we're on the subject of regulation - does this story sound familiar?

https://news.bbc.co.uk/1/hi/england/10328720.stm

My favourite part is the paragraph "Motherwell Control Systems, of Castle Street, which is in voluntary liquidation, was not represented at the court. "

This is a phrase you're going to see a lot of over the next 10 years.

41. At 12:41pm on 16 Jun 2010, Treading Water wrote:
35. At 11:53am on 16 Jun 2010, writingsonthewall

Sound's like extremist talk to me WOTW, lock him up!

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

So 'I'm-alright-Jack' obviously doesn't think these are extremes times then.

The day of reckoning is coming.

How depressing is last paragraph in your piece Mr Peston, but not unexpected.

Since the well-qualified, and experienced Mr Laws, left Mr Osborne's side, I'm really worried about who is holding the baby reins now?

If ever we still needed, one tiny kind of nannying; it's to control and stop an unqualified chancellor running into the very dangerous 'financial road' and dragging us all with him?

I'm guessing the BBC has spent all its money and can't afford enough moderators! But at least they hired some more Equality and Discrimination Officers.

8 - Good comment.

There's alot of reaction to your last comment, but the substance of the news is 'sensible' - yes, but will be times when the aim of the Financial Policy Committee and that of the MPC conflict.

It may be prudent at the moment to allow some asset prices to runaway if to ramp up interest rates causes wider econonomic damage - it's clearly a balancing act, but I welcome the FPC and hope they intelligently keep a watchful eye. It's a very imbalanced economy which must make the job all the more difficult - given the effect of a change on one area may not affect another and so on.

I see the FPC as a background (you say subsidiary of B0E) group that prevents the excesses that brought us to this point without over-reacting, which is where the conflict may come. This is something many of us saw the need for years ago, so welcome FPC - an extra pair of eyes for those in Govt who seem to need all the help they can get.

@ 55. At 1:56pm on 16 Jun 2010, Margaret wrote:

> My buyers ... live in France and are purchasing my property for when
> they are in the UK.

If CGT goes up, maybe the value (to them) of your house goes down, as it
will not be their main residence?

Dillers wrote:
"Surely the best reform would be "No more bailouts." You fail-you fall.
Simplify the interpretation of fraud. Set specific lending and investing criteria and when you are outside those the onus would be on the financial institution to prove innocence and less on a regulator to prove guilt.
Just a thought."

Sorry, no this will not work. The way the system works means the crooks get their money out BEFORE it all goes wrong. Only the little people will suffer with this approach.

Personal, unlimitied liability (including jail) is the only way to stop this happening again and again.

@ 51. At 1:40pm on 16 Jun 2010, allan365 wrote:

> The financial services industry will NEVER stop creating booms and
> busts to fleece everyone else until those who do this are made
> PERSONALLY liable and jailed for a long time when they screw it
> up for everyone else.

Spot on. And if they have no money, then bring back the birch.

56. At 2:01pm on 16 Jun 2010, writingsonthewall wrote:
48. At 1:08pm on 16 Jun 2010, Up2snuff wrote:

"The unreformed, and presumably unrestricted, Bank of England saved us from disaster in the 1970's. "

The bank saved us - or was it in fact the discovery of oil in the North sea right in the middle of the suez crisis that saved us?

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

Whoa! Your timelines are all over the place. Suez was the 1950's, NatWest was 1970's and North Sea Oil only brought in significant revenues for the first time in the 1980's.

The BoE saved us on the middle one.

One thing about this blog is that no-one has any illusions about how precarious is the state we are in.

No-one has any control over what will happen next and they are pulling every lever they can think of but nothing is working.

The deficit has been defined as the main problem but just to keep everyone's mind away from the real problems of sovereign debt.

Let's hope George Osborne has a Plan B for if it takes twelve months to hold an enquiry on banking reforn it may be far too late if the problems of sovereign debt hit us first. How much longer can they play for time?

Banks would have to be bailed out yet again but is this really a viable option anymore?

Perhaps WOTW's preparations for the worst are closer to the truth than being told that everything's under control.

49. At 1:11pm on 16 Jun 2010, henburyman wrote:
#34

I too remember the good old days of sensible mortgage lending, and was shocked to see my local building society still offering to lend 4.25 times annual salary. It is this irresponsible lending that is sustaining and fuelling higher house prices.
----------------------------------------------
For owner occupation it doesn't fuel the market as much as people buying endless numbers of properties on SCMs and financing the loans via rental income.

Hopefully, a senior person at the Society checks what the borrower does with their monthly income. If they live fairly frugally, then there may not be a problem. How else with the market at present levels are people to buy houses in which to live in and go to work from?

It is technically not irresponsible lending if the Society has its loan covered by a forced sale value of the property. But if the property market collapses in a big way ...

Hey! Let's all be really careful out there, today.

46. At 1:00pm on 16 Jun 2010, Glenis

Sad. Though this is about banks and whether or not Boy George can sort out his bookkeeping in line with his politics.

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

61. At 2:32pm on 16 Jun 2010, corum-populo-2010 wrote:

"If ever we still needed, one tiny kind of nannying; it's to control and stop an unqualified chancellor running into the very dangerous 'financial road' and dragging us all with him?"


I think we could have done with that about 10 years ago for Gordon Brown. I'm not sure who this mythical person is that you think is capable and qualified to oversee the economy?

Shuffling the deck chairs is totally pointless, maybe even worse.

What is needed is an end to the fantasy of Capitalism and ever continuing growth of the accumulation of wealth by a few. The belief that financial services interest serve anyone other than the employees of these firms is ridiculous, not even shareholders in the FS space are getting much of a slice of the action at the moment, never mind the customers.

Someone mentioned the Ch4 Documentary this week, and I think it is right, private interest in one square mile is controlling UK plc, holding us to ransom, what is worse is that the new govt. is going to give them more power (in the BofE) to beat us with. This Elite of foul digested material need to be taught the basics of humanity before they will even take a peculiar look at changing their behaviour, something more drastic before they will actually change.

If only I or someone else had the meatballs to do something.

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

New Labour's economic reforms of 13 years ago did not prevent us experiencing the worst banking & financial crisis since the 1930s.
This was not the fault of New Labour. This was the fault (and remains the fault) of American non-regulation of their banking industry. If the Americans really wanted to bring the financial industry under control, all it has to do is reinstate the Glass-Steagall Act.
House prices in the UK, as well as the USA were seriously affected by sub-prime loans where the buyer should never have been extended credit in the first place; then, the situation got compounded by credit default swaps tangled into derivative bundles that got traded all over the place, including Europe and I'm sure the UK.
This was tantamount to playing with supply & demand so that a few people got very rich from the terrible suffering of others.
The only way to prevent banks from taking crazy risks is to separate investment banks from regular banks so that crazy risk takers have the option of using crazy-risk banks if they want to, but with eyes wide open.
Whether the Financial Services Authority is made a subsidiary or arm of the Bank of England matters not a hoot; it’s the seperation of bank functions that is needed.
The new Financial Policy Committee at the Bank of England will have the responsibility to maintain financial stability...Again I say - separate investment banks from regular banks.
History tells us that our next financial or economic nemesis will be the one we didn't expect...
1. separate investment banks from regular banks and
2. audit for credit default swaps and other derivative instruments that should be moved to bad debt registers for potential write-off
3. make illegal derivative trading as well as negative default swaps, or have them traded through a regulatory body that knows what it's doing and can effectively monitor accordingly.
Osborne has confirmed that former Monetary Policy Committee member John Vickers will chair a banking commission which will look at the structure of banks, including whether institutions should be split into retail and investment banks. Oh gracious, haven’t the last few years yelled at us that this seperation is mandatory. Get on with it.
Osborne further confirmed the Bank of England will be given responsibility for systemic risks and handed oversight of banking supervision. Fine, move the chess pieces, put FSA here or there. This is not what matters; movement will not safeguard the banking system. Osborne: "The coalition government is also committed to handing to the Bank of England responsibility for the oversight of microprudential regulation. It is clear that the central bank needs to have a deeper understanding of what is going on in individual firms."
Deeper understanding? I’ll tell you what’s going on, the regular public does not know (and shouldn’t have to know) the difference between an investment bank, a risky investment bank, and an ordinary-everyday bank.
It's the Government's job (BoE) to address this problem.

67. At 3:23pm on 16 Jun 2010, Up2snuff wrote:

"Whoa! Your timelines are all over the place. Suez was the 1950's, NatWest was 1970's and North Sea Oil only brought in significant revenues for the first time in the 1980's."

In October, 1973 the crude oil-rich Middle-Eastern countries had cut off exports of petroleum to Western nations as punishment for their involvement in recent Arab-Israeli conflicts. Although the oil embargo would not ordinarily have made a tremendous impact on the US, panicking investors and oil companies caused a gigantic surge in oil prices. This is sometimes referred to as The Suez Crisis 2.

@ Dempster 09.26

I completely agree with your views!

My biggest fear is that Mr Osborne will baulk at taking the severe measures required to inject some sanity into the financial system.

If you habitually operate an economy on the principles of a casino, you will sometimes win big. Eventually however, you will be toast...

As we all rely on the Financial system, how about bringing back the five percent Stamp Duty on Share transactions, with a similar Duty on Bonds Sales etc ?

That would raise money back from the bailed out City, and it would affect people only according to their individual wealth, a progressive Tax.

How much of the Gov'ts debt is owned by the Bank of England ?
How much has been created to bail out the Banks ?

The best bet is Inflation (including Wage).

Inflation distributes the Bill for the Banks bail out directly and proportionately to those who have benefited and who continue to benefit from a Stable, financial system.

I watch and await with interest to hear what this coalition decides to do.

56. At 2:01pm on 16 Jun 2010, writingsonthewall wrote:
"The bank saved us - or was it in fact the discovery of oil in the North sea right in the middle of the suez crisis that saved us?"

This the second time you've quoted this WOTW. The Suez Crisis was in 1956 - oil was found in the North Sea around the late 70's early 80's!
Slight mismatch in dates. Don't forget we had MacMillan's you've never had it so good after Suez.

WOTW also wrote "I don't want to see all you optimists get your hopes up only for them to be dashed again. ....that's what causes depression.."

I'm glad you are not an acquaintance, I'd be in the funny farm now!

As Osbourne, he's doing the right thing. The 3 headed hydra of the Hon. Member for Kirkcaldy was a loopy idea and we paid for it.

58. At 2:10pm on 16 Jun 2010, ARHReading wrote:

"As to the conclusion this is really Old Testament prophet stuff. I think that the Coalition is demonstrating that it is prepared to tackle the legacy of failure and it deserves credit for doing that."

If the coalition were really tackling the legacy of failure then they would be looking a bit deeper than a few pointless regulations. Their failure to recognise and address the contradictions within the capitalist system which have continued unabated despite the huge resources (money) thrown at it to maintain stability - is akin to clearing up the BP oil spill merely by skimming oil off the surface and not looking to stem the leak under the sea or investigating the actions which lead to the leak in the first place.

65. At 3:08pm on 16 Jun 2010, allan365 wrote:
Sorry, no this will not work. The way the system works means the crooks get their money out BEFORE it all goes wrong. Only the little people will suffer with this approach.

The little people are going to suffer anyway but at least the majority are not loaded up with these financial institutions debt. Don't give "the crooks" more money!

Problems caused by excessive spending and indebtedness can not be cured by more spending and more indebtedness, any more than the cure for excessive lending is more excessive lending.

Let the financial institutions fail "what's special about them" that makes them deserve a bailout that would never be granted to firms in most other industries. Moral hazard should bring about better risk assessment. Let the tax payer decide if they want banks or any other institutions to be underwritten by them.

Banks are merely intermediaries between depositors and borrowers. They are not the only ones who can carry out this function.

44. At 12:52pm on 16 Jun 2010, Peter Ellis wrote:

"What a very daft thing to say. Of *course* financial nemeses come from unexpected directions - because once you know to expect them you can head them off. To go from that to (essentially) saying that it's pointless to guard against the foreseeable problems is obviously wrongheaded."

Now that's an interesting point of view.....but wait a minute, wasn't one of the accusations laid at Brown's door by the opposition and their cronies - that he went and spent money on public services and didn't keep some aside just incase an unforseen event occured....like...I don't know....the financial system collapsing?

Therefore where does the neo-liberal ideology stand now? We can't regulate for the future but the Government must retain funds to insure against the unforseen failures of the private sector?

So Government can't tell the private sector what to do through regulation (that would be statist) - but they must always be prepared to pick them up if they fall over?

Imagine bringing children up like this...

67. At 3:23pm on 16 Jun 2010, Up2snuff

Apologies - I mean the 1973 oil crisis.

https://en.wikipedia.org/wiki/1973_oil_crisis

...and as you know - from the recent share price and rights issue of rockhopper - the mere discovery of oil is enough to attract investment in vast quantities.

I'm still not sure what the BoE did in the 70's to save us.

68. At 3:25pm on 16 Jun 2010, virtualsilverlady wrote:

"Perhaps WOTW's preparations for the worst are closer to the truth than being told that everything's under control."

I work on the premise that if I were in Government, would I risk an unnecessary panic by admiting "it cannie take no more captain" - or would I keep a lid on it until it was really too late - in the hope that I could fix it before it went horribly wrong. Don't forget the average PM is an eternal optimist (I mean you have to be in order to get through the day)

If you place yourself in that position there is only one conclusion - that is why I am preparing. My worst case scenario is I used some of my FIAT currency to buy some stuff which I don't need - which would be in keeping with the last 15 years for a lot of people - and I will be flogging it all on E-bay in 5 years time. If I'm right however it could be the difference between life and death.

I have however resisted digging a bunker - I shall start one once I know we've reached the point of no return. Don't worry - I'll let you know when that time comes - and of course you're all free to join me (well those who don't call me names or accuse me of being a pessimistic anarchist)

...and it's talk like this which makes me think how I do about the future...

https://news.bbc.co.uk/1/hi/world/europe/10329418.stm

If you don't pay the Russians - they cut you off.

If you only have worthless sterling to offer as payment - they cut you off.

If you pay with worthless Government bonds - they cut you off.

The consequences of our huge currency devaluation have yet to be felt.

I hear that the working definition of a 'currency collapse' is a 25% fall - both the Euro and Sterling are close to that level now.

Everything which has been done to stem the bleeding will cost us dearly in the long run.

The Bank for International Settlements has just published figures for bank exposures to foreign borrowers. UK headquartered banks had very large exposure to private Irish bank and non bank borrowers - $230bn, they say.Do I take it that in future the Financial Policy Committee will direct banks not to lend too much to one country's citizens and corporates as opposed to another. Will that go for UK resident banks / all banks who have headquarters in UK? Isnt this a bit of a hornets nest,internationally?

"History tells us that our next financial or economic nemesis will be the one we didn't expect, for which Mr Osborne's reforms - however well-calibrated and apt they may seem - are likely to turn out to be utterly useless."

Superb insight Robert, snigger. Whatever regulatory body is in place is likely to be far better than the dog's dinner imposed by GB. If this proposed body is in place in fifty years time and another crisis happens, is this going to be GO's fault? Take off the permanently rose tinted NuLabor spectacles and get real.

78. Do we really rely on the financial system or does it rely on us?

Increasingly pessimistic about current set-up.

Banks always get in trouble retail and investment banks, money itself has no real intrinsic value without the backing of gold it’s just a piece of paper (or few MB's on a mainframe). The market/banks are punishing the people/govt's of Europe for saving their asses and creating vast profits for their staff. This is madness, these individuals (no doubt Georgie-Boy supporters) are effectively complaining and forcing the costs of protecting them onto 'normal' people.

I say if the market wants UK and other European nations to return to some fiscal orthodoxy then do it, but first piece of that is the immediate disposal of Financial assets all insurance on banking transactions, and immediate recall of loans made to support the financial system...... not sure how the credit worthiness of all banks would be effected, but at least the smug bankers telling us we have a deficit problem and should sort it out quickly before they get the hump with UK sovereign debt can open the windows in their gleaming city towers and consider their options.

The banking system is increasingly losing any point in the UK except to inflate asset prices and this is self serving. The retail banking market is saturated, I see no reason why without any competitive pressure, with dysfunctional behaviour, this mature market with little or no growth potential should not be entirely nationalised with risky investment banking with the potential for infinite growth or at least until the desire to shaft one person for personal gain disappears separated and left for the holy market. This way basic financial infrastructure required for everyday business outside 1square mile of the country can be maintained in a boring regulatory environment…. And never will we need to bail them out again.

I think of the two scenarios one is vindictive the other is not, not sure which is better though. As at the end of the day a collapse in the financial system will destroy the lives of some but I am sure the police and army could restore law and order

3. At 09:26am on 16 Jun 2010, Dempster wrote:
In the UK, the financial industry has been regulated in the past by the following:
The Bank of England
The Financial Services Authority
The Financial Ombudsman,
The Basel ll Agreement
The European Union.

Now that’s an awful lot of people doing an awful lot of regulating.
And let’s face it, it didn’t work did it.
And while I’m on the subject, let us consider all those wonderful products sold to us by the financial services sector:

Endowment policies,
Personal equity plans
Payment protection policies
Equity release schemes
Private pensions
Self certification and 100% + mortgages
In fact not a week elapses when some financial institution is reported to have ruined some savers or pensioners investments.

And the there’s:
Unfair bank charges
Unfair mortgage penalty charges
All the evidence points to one inescapable conclusion:
Regulation doesn’t work.

Banking should be banking.
Once it becomes selling to the general public financial products that are wholly flawed, and when the business of banking is so negligently operated that it causes misery, unemployment and destitution for millions; then I feel myself drawn to the belief that it should be state run.
-----------------------
Well said I agree with every one of your comments, the consumer has been well and truly reamed on a number of occasions and still the politicians are slow to implement radical reform.
We all know what wants doing yet they take 2yrs to do minor tinkering at the edges! He who pays the piper calls the tune,they simply do not want reform carry on as normal!

85. At 5:26pm on 16 Jun 2010, writingsonthewall wrote:
67. At 3:23pm on 16 Jun 2010, Up2snuff

I'm still not sure what the BoE did in the 70's to save us.
---------------------------------------------------------
Put together the secret lifeboat deal to save NW from going under. Had they not succeeded, some folk think the BoE would have gone bust following a domino collapse of the UK banking system.

Yep. We've been there before ...

Hey! Let's be careful out there tomorrow ...

76. At 4:28pm on 16 Jun 2010, Treading Water wrote:
67. At 3:23pm on 16 Jun 2010, Up2snuff wrote:

"Whoa! Your timelines are all over the place. Suez was the 1950's, NatWest was 1970's and North Sea Oil only brought in significant revenues for the first time in the 1980's."

In October, 1973 the crude oil-rich Middle-Eastern countries had cut off exports of petroleum to Western nations as punishment for their involvement in recent Arab-Israeli conflicts. Although the oil embargo would not ordinarily have made a tremendous impact on the US, panicking investors and oil companies caused a gigantic surge in oil prices. This is sometimes referred to as The Suez Crisis 2.

----------------------------------------------
That explains it. Ta. The history books call it the Yom Kippur War.

You are clearly an angry man......

If you have a genuine complaint, follow it up

Otherwise, I think we have got the message that you don't like the city.
-----------------------------------------
I would say about 80% of the population feels the same way!
Please bear in mind that millions of families have now been saddled with debts probably for generations and the city still seems to be stuck with the attitude that its all there fault.
Incentives in the form of bonuses created this mess along with the fractional reserved banking business model. You cannot blame ordinary families for that.The city has harmed itself by the working practices.
And I have just been reading the article on BBC news about the Office of fair Trading, basically they are DOING NOTHING or have no plans to tighten up the regulations about pawn brokers and excessive interest being charged. So ask yourself this who are the OFT protecting?,the families caught in this recession no change that slump or the businesses.
that exploit people in a bad situation?
https://news.bbc.co.uk/2/hi/business/10316235.stm
-----------------------
I put this comment in here because its relevant to consumer debt to show how these bodies "appear to be protecting the consumer" but in reality they are not.Classic Politicians doing something to make it look as though they are looking after the electorate but in reality they are not.
My guess is the guy was from the city!

79. At 4:41pm on 16 Jun 2010, supercalmdown wrote:
How much of the Gov'ts debt is owned by the Bank of England ?
How much has been created to bail out the Banks ?

The best bet is Inflation (including Wage).

Inflation distributes the Bill for the Banks bail out directly and proportionately to those who have benefited and who continue to benefit from a Stable, financial system.
---------------------------------------
Yes but, no but ...

Inflation nails those who are not carrying debt. It actually encourages taking on debt. It disadvantages kids and pensioners. We are told continually these days that both groups are v. important.

As has been posted already by me and others, I am sure, the best way of nailing the damage, with or without inflation, would be to print zillions of dosh and give every taxpayer, say, £100,000. Or to have given every taxpayer this two years ago. Those who didn't have houses then and wanted one would have been able to buy up spare properties. Housing market - no crash, boom continues, MPs have a year to get even richer. Those with a sharp eye for an investment like kevinb would have waded into the world's stock markets. Those who had massive credit card debts would have paid them off and had a bit spare to spend. Students would have completed degrees without debts hanging over their heads. And those of us of a careful nature, with everything nicely settled, would have paid the money into the bank. Banks saved! Hooray. Job done.

But who knows what would have happened to inflation? In theory, according to the textbooks, there should have followed a period of massive money-supply-led inflation.

Instead what we have now is lack-of-salary-increase inflation. Oh joy! A deep thoucus on this before trembly and ploddy, ploddy forward into the complegating darko futuremold. Oh blow your cool, man ... here now allagain over ...

76. At 4:28pm on 16 Jun 2010, Treading Water wrote:
67. At 3:23pm on 16 Jun 2010, Up2snuff wrote:

"Whoa! Your timelines are all over the place. Suez was the 1950's, NatWest was 1970's and North Sea Oil only brought in significant revenues for the first time in the 1980's."

In October, 1973 the crude oil-rich Middle-Eastern countries had cut off exports of petroleum to Western nations as punishment for their involvement in recent Arab-Israeli conflicts. Although the oil embargo would not ordinarily have made a tremendous impact on the US, panicking investors and oil companies caused a gigantic surge in oil prices. This is sometimes referred to as The Suez Crisis 2.

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There's got to be a joke in there somewhere. Something like 'Another Suez but without a British Prime Minister'! Anyone do better? Over to you kevinb.

All this will be irrelevant if people stop using banks. Don't take advantage of any products they offer. If you cant afford something, then don't have it, or save. Although I suspect most people will continue to use banks and financial services because of their addiction to material things. The whole banking industry exists to screw you, END OFF. and I hope they all cease to exist one day.

Dillers wrote:
"..."

I am not disagreeing with you in that no bank (or any other business) can be too big to fail. I think the problem is that those at the top will not be dissuaded from running the company as a casino just because the bank can fail.

While they gambling with everyone else's money they will siphon so much money off for themselves they will never have to work again and won't care when the bank goes under screwing lots of little people.

I feel we need something in place to stop the behaviour that leads to the failure and only the REAL threat of bankruptcy and long jail sentences will do that IMO.

Regulating the banks, giving power to the Bank of England and the FSA is a step in the right direction. I wait for the 'emergency budget' however which will probably have cutbacks and affect peoples lives. This could be a possible destabiliser and could be a decider for the confidence of the new government.

itsmerob wrote:
"All this will be irrelevant if people stop using banks. Don't take advantage of any products they offer. If you cant afford something, then don't have it, or save. Although I suspect most people will continue to use banks and financial services because of their addiction to material things. The whole banking industry exists to screw you, END OFF. and I hope they all cease to exist one day."

Use ethical banks e.g. Co-op