Turner: Regulation must be Trotskyite

A free society would have sorted the wheat from the chaff of these organisations a long time ago. Unfortunately that is not what we have and the poor must pay.

1. Regulation is unfinished - seems reasonable

2. Regulation should be extended to all financial firms is nothing more than a naked power grab. If, as the EU own investigations showed, hedge funds had very very little to do with the credit crunch and certainly not the harbingers of doom that many had called them, then the need for regulation is not proven. They were not regulated before and were only a very small part of the financial market so clearly the risk of everyone decamping from the regulated part to the unregulated is unproven

3. Effective regulations should look at interconnections. What a wonderful idea...in theory. Utterly impractical if those interconnections change minute by minute

4. Regulation must be dynamic. Very good idea but only up to a point. Regulation must also be stable so that all participants in the system do actually know what the rules are otherwise what you have is not an ordered system but govt sponsored/created anarchy.

So half a good speech and half rubbish.

Banks have already realised they must increase capital to cover the certainty of deleveraging. They stopped lending ages ago to all but essentially risk free circumstances, they will however be deep in the brown stuff if property prices fall by 25% irrespective of capital raised as their assets are already marked far too high.

All the capital in te world won't save them from the sovereign losses boiling up at the moment.

He's right. Banks should hold more capital and reduce their loan to asset ratios. This will reduce their profitability, reduce dividends, reduce share prices and make them potential targets for overseas takeovers. So the rules need to be backed up by a slightly more protectionist approach to overseas conglomerates buying British banks.

But I worry that the measure of success (at least in Robert's mind) is the scale of senior bankers' reward (which is a distraction) rather than the long-term stability of the system (which is important).

And wouldn't it have been wonderful if Adair Turner had thought about banks' capital ratios and loan to asset ratios a bit sooner.

1) The task of making the financial system safe is seriously unfinished business.

Enough said...

Lord Turner is only expecting the banks to behave like any sensible person and not invest more than they can afford to lose of their own money. And (unlike most of us ordinary folk who in effect bailed them out and are paying for it now) it's not as if the banks don't have enough to play with.

So, on the one hand the UK banks are going to have to increase their capital ratios significantly above Basel 3 recommendations and on the other they are being urged to increase lending.

How does that work then?

And is it only UK banks that are going to have to do this or is there an agreement that all banks will have to have the same capital ratios? I'm thinking about a level playing field so that UK banks are not at a competitive disadvantage to other banks.

If we think about our problems, Robert, isn't it true that we could conduct policies which we want, were less of our debt held internationally? Isn't that the core of our woes. By contrast Japan's huge debt is held overwhelmingly at home. Historically our trade deficits and interest rate policies seem the main problem. Politically, were the debt held at home better policies to cope with it would look obvious. Then the banks too would be easier to control politically.

Slowly groping their way to accepting that the banks etc need supervision not little old regulation - proactive intervention. Make the job easier by retaining a large public sector presence to underpin real competition and to set high consumer service standards.

All I can see is a big big problem where the banks claim that the assets they took over, land - property companies etc, are worth loads and loads of money but in reality are worth much less.

If these assets were to be marked down at a price that could be realized on the open market then property, housing, would bomb.

The banks are propping up what is left of the property boom.
Will they be able to get investors to buy into their game?

Care to explain the Trotsky element, Robert?

Seems a tad too oblique to me and, normally, I like a (little) bit of oblique.

"The sound banker is not one who sees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him."
John Maynard Keynes, 1883-1946.

Banks need to be made to behave within the spirit of any capital regulation. You can ask them to hold whatever % of whatever number, but if all they do is go back to old tricks of hiding stuff away from the capital calculations then its wet paper bag territory again.

I still cant get the image of the UK banker on Roberts "Too big to save" programme who said the Basel 1 bankers pretty much made up the 8% capital requirement parameter. Even then these so called indispensable financial geniuses smply spent their time looking for hiding places for their ever more complex and woefully understood risk-taking.

More lending? What about more basic professionalism and moral fibre for starters.

A good deterance to a repeat of the continuing series of crises would be to throw some of them in jail. It beggers belief that these people trash the economy, cause untold misery for millions and then keep their jobs and reward themselves with million pound bonuses.

Bankers and hedge fund people - probably the most selfish, immoral, greedy and evil people in the world.

"13. At 20:28pm on 16th Mar 2011, TheGingerF wrote:

Banks need to be made to behave within the spirit of any capital regulation. You can ask them to hold whatever % of whatever number, but if all they do is go back to old tricks of hiding stuff away from the capital calculations then its wet paper bag territory again.

More lending? What about more basic professionalism and moral fibre for starters."

In some ways I think that suggestion is absolutely a good one, the problem is it's almost impossible IMHO to "force" people or regulate them to act within the spirit of the law. Banking or investment banking, hedge funds etc are operating outside of the spirit of the market and the law and (sorry to use the word again) that's the way that current Capitalism works. If you can make money by any means without getting caught breaking the law (or if you are caught and are able to pay your way / use friends to get out of the consequences) then that's fine.

We have a strange acceptance that once people get rich the rules change for them, take F1 drivers for instance. When they make the big time they move to a low tax country, Monaco or Switzerland for instance. What about the people who helped them to reach this pinacle, what about the unpaid marshals who kept them safe at races when they were kids, the thousands who work for low pay in the UK motorsport industry, their teachers, the NHS who probably brought them into the world. Their Tax money isn't coming back into the UK to support these people but they still sell their branded merchandise and watches that they advertise in the UK.

The UK lost it's sense or right and wrong in the 80's when greed was good and if you stood by your morals you got poorer and poorer. Time to stand up for what's right and what you believe in, write to your MP and tell them what you think of their markets and private finance initiatives and an NHS in competition with the private sector. Tell them we don't want fractional reserve banking, tell them we don't need people who've got rich through the suffering of others telling us how our country should distibute it's wealth.

The honest, decent, morally upright people in this country are the vast majority but are kept quiet by the aggressive few.

If you want to be able to look the next generations in the eye do something now.

As I've been writing this a bizarre idea came to me, what if all those who didn't like the rule by money we have in this country today put their religion as "Anti-Capitalist" or "Bank Relocationers" or "Robin Hoodists" or "Church of the New Democracy" we could send a message...... :-)

Too little too late.
Give everyone a haircut, tax the hell out of the banks and get back to real work producing socially useful goods and services.

Maybe he's gearing the banks to encourage savers to remove their savings and invest directly into businesses cutting out the bank as the increasingly expensive and unnecessary middle man.

In the month when mortgage lending fell by 29%, why do we need to curb bank lending?In the country with no liquidity, we do not need another, longer , bigger drought.
We are going to corporately, socially and responsibly shrivel ourselves into Oblivion.

The story on another BBC page about the huge tax rises required to cover future unfunded pensions for all us baby-boomers is more interesting. I had hoped Robert would cover it. And remarkably it's a pretty definite future hardship for us all that isn't quite so easy to blame the banks for.

The most powerful form of enforcing these regulations would be via fear. For instance, if a bank breaks the regulations, it could be charged 10% of its profits for the next 5 years

The competition law should be amended so that it discourages not the monopoly of _one_ big corporation over a market, but the monopoly of _a_few_ big corporations that will have the same effect as one.

And perhaps one that would have the same effect and some more, discourage speculation by forcing investors to hold on to their investment for a reasonable length of time.

Risk. Strange isn't it. These institutions will take risks when it looks as if the outcome will be to their benefit but ask to invest in a start-up or a university spin-out and they'll run a mile.

With the banks it's all "me, me, me" and until you can replace that attitude with one of "us, us us" then things will simply not improve and to do that you have to change the management. Out with the bankers and in with some normal people.

Regulation, Regulation,Regulation,

It will all account for nothing if we don't take the "gambling" element out of the financial system and let these elements fail.

It should be made clear that only the traditional parts of banks will be backed up by the tax payers cash..

It is right, proper and essential that banks and all financial institutions hold reasonable reserves. A banks equity must be able to meet all eventualities. (Note I do not say reasonable eventualities, but all eventualities.)

However we have to recognise that this must lead to a dramatic contraction in the amount of cash in circulation as the banks will have to call in loans. This is right and proper and prudential. The consequence will also be that interest rates will rise, and rise quite substantially. Everyone knows this. This is the new world indeed it is the collapse of this as the old world that created the bubble economy and the crash.

The price of money must be restored to long term values of between 5% and 10%.

WE have to make it possible fro the average employee to buy the average family house on a single income. We also have to do so without state subsidy. The average wage times about 3 must equal the average house in all regions of the country. It must be seen as a collapse of prudential economic management to see house prices at present levels. A farm worker must be able to buy a house near where he works. (And not as now in the case of my great grandfather's house currently on the market at £600,000 when it should cost £90,000 to £100,000 if we are not going to let wage inflation multiple wages by a factor of 10 times - and make no mistake that that is the choice we have to make.)

Cthru. Suggest this idea on www.38degrees.org.uk

it might take off.

I for one don't care if the bankers go even if this costs me personally

what is the point in living if the society you live in isn't just, moral, socially responsible?

At 22:35pm on 16th Mar 2011, hughesz wrote:
"It should be made clear that only the traditional parts of banks will be backed up by the tax payers cash.."

In the proposals by Positive Money, current accounts will become full reserve (ie. the banks won't be able to lend any of it) - no risk.
No need for more regulation, no need for Basle, no need for Compensation Scheme at taxpayer's expense.

Savings accounts can be lent at 100% with no reserve, with the interest rate varying according to the risk.
No shortage of capital for lending.

All new money created by the Bank of England, debt-free.
Reduction in poverty.

It's so obvious, who could be against it? (two guesses)

https://www.positivemoney.org.uk/

Evening Robert,
well, here we are three years later and still the "too big to fail" problem has not been addressed by FSA, BOE or the Politicians!
Does that mean that the problem is insoluble? I think it does.
The real reason that the system came crashing down was GREED.
As most sensible people will know, you can't legislate for greed so it cannot be stopped this way.
Regulation failed utterly. Auditing of accounts was useless. The Ratings Agencies didn't. The demand by European banks for innovative financial instruments was insatiable and the good old US of A obliged.
We cannot put the genie back in the bottle and start again. We have to wait for the rump of this crisis to pass (maybe another 3-5 years). And then....
I say let's abolish all the regulatory bodies since they don't work and cost bank customers a great deal. Let's appoint independent bank auditors paid for by the State to remove the possibility of results being shaped by the bill payer.
Let's separate retail banking from the rest and guarantee only those deposits.

Banks have now failed to provide a socially useful function (providing affordable mortgages, providing finance for small and medium sized companies via overdrafts and loans) so what use are they? The banks do not pay their fair share of tax revenues (corporation tax) and are monopolistic, so no competition is possible.
Let's not look up to them as some kind of financial gods on whom we all must depend.
Sorry Robert, I must be dreaming again, none of this is realistic no matter how desireable, so I guess it's "business as usual" until the next crash which will happen THIS YEAR!

1) The task of making the financial system safe is seriously unfinished business.

The banking and money system 3 years ago was the financial equivalent of a 40 year old Japaneses nuclear power plant badly damaged by earthquake and tsunami. Radical reform is still needed.

To all those reading this blog, read No. 28 again. It says it all.

The whole capital requirements thing is misled. Regulation shouldn't be based around the idea that if banks implode, they have loads of spare money to try and douse the fire.

Splitting retail and investment banks is also pointless. Not only would it be incredibly difficult, it just wouldn't help to eliminate the problem. Northern Rock had no IB arm. Lehman Bros. had no Retail arm. HSBC had both, yet they were mostly fine throughout the crisis.

The feeble regulators also need regulating by all appearances.

It is time that these time and money wasters learn to understand the diffrence between something that is a bank and something that is not i.e. a SOFOMT ( some other form of money trader).

A real bank that meets its legal, accountancy and other definitions is recognisable by the ordinary person in the street as a bank ... and the rest are not.

Which means for the stupid regulators ... that at least two sets of major regulations, tax and bonus systems etc are needed for things that are and are not ... 'banks'

#11

"Care to explain the Trotsky element, Robert?"

https://en.wikipedia.org/wiki/Permanent_revolution

What depresses me is that the regulation argument is just another symptom of the imbalanced view too many people take of our society.

When the law protects those who already have enough trying to keep even more of their money, tax evasion or avoidance, individual or corporate, while clobbering those struggling to get by who play the system (our famous benefit cheats - sponsored by the Daily Mail) then it really is time to take stock and wonder what on earth we are doing.

The rich complain about the feckless as if we all start with the same stuff on the starting line and those who dont make it to the finishing line on time, well tough, forgetting that the odds are so stacked in the favour of those already well-off its a joke.

I know its not as simple as that, but at times it feels that way as we watch those at the top of the tree slither away, refusing to take responsibility for their actions, telling us all how much we need them and that we'd better be nice to them.

There's no politics of envy excuse to be had here by the way, I'm one of the financially lucky ones in life holding out some naive hope that someday we'll wake up and stop trying to convince ourselves that greed is good. Moral responsibility to achieve fairness in our society should be more than a politician's soundbite or platitude.

Cthru @ 15 - great post. I'll have a think about the census, but will probably stick with Jedi - the force will work one day and there's no way I could ever let Yoda down.

Turner: Regulation must be Trotskyite?

A very stupid comment ... that is intended to preserve the salaries and pensions of the regulators, more than anything.

The banking crisis has a simple origin that nearly all and sundry overlooked ... What is and isn't a bank ... and that matters an awful lot.

Until the regulators address this basic bank definition issue ... that permeates and reverberates through anything and everything to do with real banking - there is no prospect of having efficient and effective and reasonable regulation of real banks as the regulation will more than likely subsume real banks with too much 'red tape' and interference and will will under-regulate the dangerous gambling den SOFOMT's (the some other form of money traders).

For goodness sake you useless rambling regulation goons ... spot the basic issues and don't make a mess of it.

"28. At 23:53pm on 16th Mar 2011, splendidhashbrowns wrote:

Let's appoint independent bank auditors paid for by the State to remove the possibility of results being shaped by the bill payer."

While this sounds like a good idea there are a couple of significant problems:

1) "Independent" auditors would certainly come from the banking sector. The Investment houses and Banks will tell the government that what they do is very complex and needs someone from inside to understand it and, as all Governments have done, this one would be dim enough to accept it (or rather will gladly accept it as part of their ongoing the rich get richer programme).

2) Regulation and Auditing just gives the Banks etc the opportunity to get round the regulation and then say that what they were doing wasn't illegal or banned or regulated away. "If the regulator didn't spot it then it's not our fault if the world economy crashed"

What's truly staggering is that we had the chance to make sure that investment banking world played fair in the future by punishing those responsible this time. But what we've done is to litterally reward the people at the top of these institutions. We took away all their bad loans and not only allowed them to keep their jobs but allowed them to pay their big fat bonuses. Bailing out the banks is one thing but our Govenments have failed to provide the risk takers with a consequence for their actions and that means the market / Capitalism is not working....

TheGingerF @ 34 - Let down Yoda already you have, always here the force....... ;-)

9. At 19:43pm on 16th Mar 2011, watriler wrote:

"Make the job easier by retaining a large public sector presence to underpin real competition and to set high consumer service standards. "

Clearly you use a different public sector to the rest of us .....

The key here is as #2 says in that regulation should be dynamic, but there also needs to be a period of stability between changes otherwise there is always a danger of someone being approved for a loan, but before the money is transferred the rules are changed and so the loan is not allowed.

Also, rules that do not work or are no longer relevant, should be repealed.

23. At 22:35pm on 16th Mar 2011, hughesz wrote:
"It should be made clear that only the traditional parts of banks will be backed up by the tax payers cash.."

Define traditional/ Banks have operated foreign exchange, overseas trade, insurance, loans etc for many hundreds of years.In the history of banking, the holding of accounts for ordinary people is a new thing.

> Turner wants our mega banks to be forced to hold more shock-absorbing equity
> relative to the loans and investments they make.

The extra equity must come from the bonus pool and the bloated wages bills, not the customers. To achieve this, it is necessary to exempt smaller banks from the rule. Customers can then go elsewhere to avoid the bloated industries that have threatened the British way of life.

Furthermore, we are still waiting (it's been 4 years) to see the perps punished. If we want to avoid repetition, the greedy bankers who caused the crash must be brought low and removed from the "City". And don't forget the size taxes, the Tobin taxes and the break-ups that are yet to come - but what's the big delay? Who is holding it up?

Amazing as it seems, Sir Greedie is still stalking the land, clutching a "super-injunction" that prevents us from calling him a banker. Look, is it time to remove the current set of employees of the FSA and BoE and replace them with good people trusted by the public?

Its all too little too late I'm afraid, the inevitable consequence of having a debt based monetary system. Nothing short of the Positive Money proposals will do anything other than delay the inevitable collapse of the system. I wish I could be more positive but its clear that the debt that such a system creates grows exponentially (see economist Steve Keens work for more detail), and this will be the downfall of the system. Eventually common sense will prevail, but only after every other option has been tried first.

We are having a go at the banks good and proper but surely the banks were working under the relevant authority FSA etc.

The problems we have now with the banks stemmed from lack of supervion in USA, where the bundled up mortgage derivitives was not worth the paper they were written on ( obvioulsy we have a situation where the problems of the banks has been magnified by the last goverment spending money as if it grew on trees ) so could someone tell me why the Feds and any other regulatory body over in the states are not subject to any class action from the rest of the banking world to recover their losses.

It is a good idea that banks should have to increase their reserves and that should be mades a priority, after that the share holders should get a dividend (the treasury needs the income never mind the ordinary shareholders) and then the bonuses can be paid, but only in relation to what the shareholders get.

If this means their (star) staff walk well there are plenty of peoople willing to step into their shoes- but where will they ALL walk to? Nobody is indispensible from the CEO down.

But as it was risks and derivatives that screwed the banks then the level of risk has also to be regulated as well the content of any derivative package.

But any regulation should be subject to our banks NOT being made an example of, level playing fields at all times.

38. At 09:24am on 17th Mar 2011, yam yzf wrote:

> accounts for ordinary people

Are there other types of people?

38. At 09:24am on 17th Mar 2011, yam yzf wrote:

> Define traditional/ Banks have operated foreign exchange, overseas trade,
> insurance, loans etc for many hundreds of years.

He's not talking about Scrouge and Cratchit - he means banks with computers and stuff like that.

> Its very mission will be to significantly limit banks' and other financial
> firms' cherished freedoms to lend, invest and sell what they like, to whom they
> like, when they like ... in response to perceived threats to economic stability.

That's spot on. Banks will have a list of things they are allowed to do, and all else is barred unless they can show how much it will benefit us _all_.

More capital, is that it?

Yes I think in the new world of smaller British banks, (if that ever actually happens, all that has happened is loads of talking about it over the last 3 years,) is that UK banks should be given protection from foreign takeover, if those foreign banks, by virtue of being foreign, are able to avoid the stricter UK banking regulatory framework - assuming it ever happens. Stricter regulation will mean less money around, meaning less lending, profits, dividends and therefore lower share prices. The UK needs to get back to sensible banking and one of the "prices" we should pay for this is the area of bank takeovers, making them near impossible.

But more capital is not enough. We need bank break-ups or at the very least a Glass-Steagall like splitting of commercial banks from their retail counterparts. Even Mervyn King can't stress this enough!

https://www.telegraph.co.uk/finance/comment/liamhalligan/8378245/Historys-lesson-is-that-investment-and-retail-banking-must-be-separate.html

And what about taxpayer bailouts? Are we going to do that again or are bankers going to be made to face up to their own moral hazard? If so how? The regulatory aspects of banking have been a farce and a failure! They were poor even before Gordon Brown's tripartite offering. Remember negative equity and bank losses in the early 1990's, (well before 1997?) Regulation does not have teeth, (when all it amounts to in practice is a few words written on paper and ignored because no one can be bothered to enforce them!)

The, sad, reality is probably some serious legislation. That amounts to a wholesale change in the share structure of banks. Namely that they lose the right to Limited Liability and become Unlimited. By today's standards this would be draconian - but it works!

37. At 09:17am on 17th Mar 2011, yam yzf wrote:

9. At 19:43pm on 16th Mar 2011, watriler wrote:

"Make the job easier by retaining a large public sector presence to underpin real competition and to set high consumer service standards. "

Clearly you use a different public sector to the rest of us .....

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Or maybe you use a different private sector to the rest of us?

For example, National Savings is run by a bunch of lowly Civil Servants, yet offers me a level of service which is in many respects superior to that provided by the UK banks, which apparently have to be run by multi-millionaires.

And don't get me started on the topic of the late lamented National Giro, which was streets ahead of the clearing banks of the day in every possible way, especially technically. Again run by a bunch of lowly civil servants. Like every and any UK public sector success story, it was seen as a threat to the money men, and we can't have anyone showing those clowns up, now, can we? So it had to go.

Explain to me how it is that the majority of those highly paid gents in the City who run the funds "industry" manage to charge 1% or more per annum, yet underperform the index to which their fund relates? In other words, if all managed funds were run by chimpanzees with a pin and the the relevant page of the FT, the public would, on average, get a better return. Plus the difference between a bunch of bananas a day and several hundred thousand per annum (plus performance bonus, of course).

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

Unfortunately we will never learn.

Regulation now needs to be strict, transparent and 100% implemented and enforced.

The "spirit" is no longer applicable as is too vague and massively open to abuse.

Unfortunately with the nature of democratic politics that we have, any regulation will be watered down and delayed to the point of ineffectiveness by the lobby groups and not much will really change.

The regulation needs to be built from the bottom up, firstly by clarifying the position with consumer deposits in banks and regulating these absolutely. If consumers have no confidence in the banking system then it is worthless. To do this the government would need to make clear that consumer deposits are guaranteed by the government and there needs to be a mechanism in place to allow the banks and government to facilitate this. The banks will maybe allowed to take a fixed percentage on the interest that the government is effectively paying on this debt, boring maybe, but essential at the base level.

The link between riskier lending to say business also needs to be clarified, if people are looking for a higher return, with some risk then this needs to be clear and where that money is going.

Mortgages is tricky as it has a high social interaction, maybe would suggest some type of national benchmarking system where the governemnt underwrites part of a mortgage loan, as long as the loan is reasonable against the benchmarks. This would leave the government potentially owning a large proportion of property should things go belly up but this would mitigate the risk on the lending institutions and borrowers.

The Monetarists should remove their one eyed spectacles and see the money supply for what it is, debt! Yeah yeah, the "broad" money supply is increased by a factor of x by the fractional system, amazing! look how we create money from nothing, be amazed! be astounded! we are so clever! BUT, debt is also increased by the same amount! Instead maybe we should look at how much debt we can support as an economy, unfortunately the government would have to step in as the banking sector cannot be left in isolation to determine this.

We are in a mess when we have to rely on government intervention as the private sector cannot be trusted to function properly.

46. At 10:11am on 17th Mar 2011, haufdeed wrote:
37. At 09:17am on 17th Mar 2011, yam yzf wrote:

9. At 19:43pm on 16th Mar 2011, watriler wrote:

"Explain to me how it is that the majority of those highly paid gents in the City who run the funds "industry" manage to charge 1% or more per annum, yet underperform the index to which their fund relates? In other words, if all managed funds were run by chimpanzees with a pin and the the relevant page of the FT, the public would, on average, get a better return. Plus the difference between a bunch of bananas a day and several hundred thousand per annum (plus performance bonus, of course). "

Let's look at it another way - the govt take approx. 40% as direct taxation of my salary and they are unable to provide a return on the pension, hospitals that try to tell me that a broken collar bone that has separated by 4 inches will heal ok and just leave me deformed but that is not a problem, provides doctors that are unable to tell the difference between Athletes Foot and a Verucca, provide doctors that tell me that I need to make an appointment two weeks ahead of knowing when I will be ill, provide roads that are pot-holed, provide the armed forces with substandard equipment. And then local government take another slice and use it on their pet projects rather than what their communities need and want.

So 1% is not so bad for a fund manager, especially as you have not been forced to use said fund manager as you have chosen to invest in a fund.

BTW, does National Savings give overdraft facilities if wanted, provide cash machines of their own?

49. At 10:31am on 17th Mar 2011, yam yzf wrote:
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As regards the medical profession, I agree your comments 100%. And that applies equally to public and private sector. Unfortunately nothing will ever be done about it in a country where most people treat doctors as the new priesthood, where GPs pay is doubled as their hours are halved and no one demurs, where the consultants have been playing the politicians for complete fools since 1947.

Your comment regarding the Government "not providing a return on the pension" is not understood. But if you want a clear example of "not providing a return on the pension", there are numerous classic horror stories in the vaunted private sector, if you opened your eyes.

If you seriously believe that paying 1% of your capital to someone who then underperforms the market and loses yet more of your capital, is good value, then I'm very sorry for you.

National Savings has a function which is closely related to its name (a refreshing novelty in itself, these days). So, no, it doesn't lend money or provide cash machines- why would it? However it is an example of good customer service in the public sector. Which is the point that I was making.

Never mind the capital requirements - will the FX desks of investment banks be able to handle the margin calls coming in today due to the rocketing Yen?

The news is faster than the people can handle - we have:

Middle east trouble - Bharain, Yemen and even Syria.
Lybia trouble
Surging food prices (almost gone un-noticed today with all the other news)
The removal of the worlds 3rd biggest economy from the playing field and the repatriation of the Yen by the Japanese retail investors
The unemployment figures in the UK
The housing start figures in the US
EU debt (Portugal downgrade) and Irish arguments over corporation tax.

...oh and the small matter of moratoriums being imposed all around the world on Nuclear plant construction - at a time of rising energy prices. Prompted by the very real possibility of a nuclear meltdown in Japan (do you think the MSM will trundle out all those 'experts' who bravely proclaimed "this is no Chernobyl" in the first few days to apologise when it turns out to be one? - I mean didn't they know one of the reactors is using Plutomium? - the experts eh? Will give their expert opinion to the highest bidder!)

It doesn't bode well for the system I'm afraid - still what can you expect with one that is now built on 'hope' and 'faith'?

All the capitalists will get burnt - the carry trade appears to be over - now a Tsunami is brewing in the FX markets as the world looks to replace the previous status quo.

Stop losses are going to be punctured today - support appears to be lost.

This is why I don't 'play' in markets - it's a shame some people think they are 'clever capitalists' rather than what they really are - "the one born every minute".

Of course the moralists amongst us will be appalled that there are speculators prepared to PROFIT from the desperate need of the Japanese citizen to call in their savings (in foreign currency) in order to rebuild their economy.

...but then capitalists never really think about it too hard do they - otherwise they might have to wrestle with their consciences. That's how they sleep at night.

Robert - it's time to put in some overtime - the news is flowing faster than you can blog it and this regulation story might be a moot point if there are no banks to regulate!

I also hear Obama has some pretty harsh penalties lined up for those banks involved in forclosuregate - oh did you think that had gone away too?

42. At 09:48am on 17th Mar 2011, Jacques Cartier wrote:
38. At 09:24am on 17th Mar 2011, yam yzf wrote:

> accounts for ordinary people

Are there other types of people?
------------------------------------------------------------------------------
Are you losing it, old son?

There used to be bankers, ordinary people and ... Faker Jacques.

Or are you reforming ... ?

More equity? Perhaps my suggestion of linking executive renumeration to dividends may now gain some traction.
Regards, etc.

50. At 10:55am on 17th Mar 2011, haufdeed wrote:
"If you seriously believe that paying 1% of your capital to someone who then underperforms the market and loses yet more of your capital, is good value, then I'm very sorry for you. "

Losing 1% of capital is better than losing 40% and the 1% I have a choice over, the 40% I do not

"National Savings has a function which is closely related to its name (a refreshing novelty in itself, these days). So, no, it doesn't lend money or provide cash machines- why would it? However it is an example of good customer service in the public sector. Which is the point that I was making."

I understood that, and do agree with you on NS, but the point I was making is that there is but one small example of good public service. BTW, I went private and collar bone is now where it should be and is usable as it should be :-)

"In a functional market, you invent something and you charge all the market will bear for it. Someone else figures out how to do it cheaper, or decides they can do it for a slimmer margin - not the same thing, you know.
In the first case someone is more efficient and in the second case they're just less ambitious or less greedy. They do it and you have to drop your prices to compete. Then someone comes along who's less greedy or more efficient than both of you and undercuts you again, and again, and again until you get down to a kind of firmament, a baseline that you can't go lower than, the cheapest you can produce a good and still stay in business.
That's why straight pins, machine screws, and reams of paper all cost basically nothing and make virtually no profit for their manufacturers.
So if you want to make a profit, you've got to start over again, invent something new and milk it for all you can before the first imitator shows up. The more this happens the cheaper and more efficient everything get. This is what the "system is for".
We are approaching the pure and perfect state now with competition and invention impossible easy now. We are approaching the economic singularity"
Globalisation is unfortunate for us in the West (cf Ricardo's wage equivalence). How can UK manufacturing compete in the long run. The Chinese and Indian workforces are almost infinite. Average wages in urban areas are £2,000 per year and less in rural areas. There is no minimum wage, no health and safety regulation whatsoever. The Totalitarian government won't tolerate and unions or industrial unrest.
Think children and young girls soldering consumer electronics together by hand for 18 hours a day until the fumes kill them. Or they cant take it anymore and jump off the roof of the factory (this is so common some factories have nets to catch the jumpers).
Researchers for The Sunday Times examined wage slips that showed many workers for multinational suppliers have seen no rise in pay for eight years. In the same period, consumer price inflation has eroded earning power in real terms and the proportion of China’s GDP taken by wages has fallen.
So higher pay fulfils two aims of China’s more enlightened policymakers. It will give workers more money to spend on goods, and it should also spur Chinese factories to move up the “value chain” and out of the sweatshop era.
Such Chinese firms face a tough time because, to take one example from the state media, most textile factories are surviving on profit margins of 1% to 2%.
But there is no question that foreign middlemen have room to cut their margins. When The Sunday Times tracked a plastic item that retailed in London for 99p back to its source, it emerged that the cost price at the factory gate was 22p. And when the factory’s raw material costs were stripped out, the Chinese supplier had only 6p to cover wages, operating costs and profit.
“In other words, wages could double and it could be absorbed,” said one British buyer.
The other side of the coin is the people that are doing well out of this system. Even hyper efficient businesses in China or India need capital to start. This why we face a fiancial crisi in the West. Allt he money is wahing out of the devloped world to fid a home investing in people that will work for 1/40th of what we will. The owners of capital are fine - they are making millions and are immune to the forces of globalisation. Worse still they are not paying anything but minimal taxes here.
Is this what you want to become? You really want to compete with the £2 billion workers in China and India, backed by a totalitarian regime.
The current government is not recognising the problem, They are in a policy stance of managed decline- a slow and inexorable race to the bottom where the vast majority of workers in the UK compete with China and equalise their living standards with them (at a level permanently and vastly lower than we are used to) whilst the very few who are rich enough to own significant and ever increasing lumps of capital, the bankers and the very senior management of multinationals experience stratospheric growth in income.
This is the path to mass civil unrest and misery.
Do something about it.
Watch:-
https://www.zeitgeistmovingforward.com

Then demonstrate on march 26th:-
https://action.unison.org.uk/page/content/march/
Join:-
www.38degrees.org.uk - these are the people that collected 500,000 signatures and force the government to back down on selling off our forests
Join www.onegoodcut.org - to complain and demand change in the banking system

re #33
I thought it might be a reference to 'Permanent Revolution' but as there is no hint of that elsewhere in this Blog, I wandered off for a bit of unsuccessful research.

Permanent revolution will not help the banking industry. Just think back to what Pesto has been rabbiting on about and you lot have been moaning about for the last 3 years!

Rigourous regulation and watchfulness would be better.

51. At 11:04am on 17th Mar 2011, writingsonthewall wrote:
Never mind the capital requirements - will the FX desks of investment banks be able to handle the margin calls coming in today due to the rocketing Yen?

The news is faster than the people can handle - we have:

Middle east trouble - Bharain, Yemen and even Syria.
Lybia trouble
Surging food prices (almost gone un-noticed today with all the other news)
The removal of the worlds 3rd biggest economy from the playing field and the repatriation of the Yen by the Japanese retail investors
The unemployment figures in the UK
The housing start figures in the US
EU debt (Portugal downgrade) and Irish arguments over corporation tax.

..........
You missed peak oil!
Tick, tock……. The clock is ticking and time is running out.

51. At 11:04am on 17th Mar 2011, writingsonthewall wrote:
Never mind the capital requirements - will the FX desks of investment banks be able to handle the margin calls coming in today due to the rocketing Yen?

The news is faster than the people can handle - we have:

Middle east trouble - Bharain, Yemen and even Syria.
Lybia trouble
Surging food prices (almost gone un-noticed today with all the other news)
The removal of the worlds 3rd biggest economy from the playing field and the repatriation of the Yen by the Japanese retail investors
The unemployment figures in the UK
The housing start figures in the US
EU debt (Portugal downgrade) and Irish arguments over corporation tax.
----------------------------------------------------------------------------
How is the 'conflicted' WotW? Helping the 'bankers impose the misery' and wishing he could be doing some trading, perhaps ... ;-)


All the capitalists will get burnt - the carry trade appears to be over - now a Tsunami is brewing in the FX markets as the world looks to replace the previous status quo.
----------------------------------------------------------------------------
Oh no! Not the end of Writings?

Well, Robert. I listened to the interview on Radio 4 this morning with Lord Turner. He spoke basic common sense and also pointed out that banks will have a long time line to increase their capital base. So the usual rantings from banks are, in my view, over excitement from a bunch of hysterical children?

Shareholders of Banks are always concerned, as are savers. But let's never, ever forget, Robert, that private or institutional shareholders in our banks would have no shareholding or dividend at all if the tax-payer had not bailed them out?

The problem for the government is that whatever they do to apply pressure to the banks especially with regard to bonuses and keeping greater reserves the banks can always get out of it by reducing or minimising lending, cutting rates to savers and increasing charges to customers. And as we know in the final resort they can also get the taxpayer to bail them out.

Regulating the banks has to take the form which not only applies restrictions to make banking safe but also prevents them from taking action to offset the restrictions by raising funds in the ways described above.

Bankers will only really pay attention when a major jail sentence - 20 full years in prison - is targeted at them if they fail to operate in a safe way and in the manner prescribed by the government.

If ,for example, the failing highly paid executives hauled before the Parliamentary Sub-committee investingating the banking fiasco, had received a mail jail sentence instead of large bonuses that would have sent a powerful message out to the banks. Instead the failure to do so has convinced bankers that the government is powerless to act.

Even now the government is pussy-footing around the banks wondering what action to take which is why government action is so ineffective. So we see George Osborne boasting about his annual £2.5 billion tax when New Labour were taking £3.5 billion. We see Project Merlin, a government effort to show the public that they are doing something but nothing the banks are going to lose sleep over and nothing that will really address the safety problems in the banking system or the payment of obscene bonuses.

It does seem that the only way taxpayers can protect their money is to remove it from the banks so that when the banks do fail it will be bank employees who pay the price.

@51. At 11:04am on 17th Mar 2011, writingsonthewall wrote:

Busy week. Just the start brought forward a month or so by recent 'events'.....

#51. writingsonthewall wrote:

Middle east trouble - Bharain, Yemen and even Syria.
Lybia trouble
Surging food prices (almost gone un-noticed today with all the other news)
The removal of the worlds 3rd biggest economy from the playing field and the repatriation of the Yen by the Japanese retail investors...

...oh and the small matter of moratoriums being imposed all around the world on Nuclear plant construction - at a time of rising energy prices. Prompted by the very real possibility of a nuclear meltdown in Japan...

It doesn't bode well for the system I'm afraid - still what can you expect with one that is now built on 'hope' and 'faith'?

What does any of this have to do with "the system"?

Perhaps you can explain to us exactly how any of this would be different if the UK were a functioning Marxist society.

The question no one seems to ask is what do customers want from their banks? At the moment we have essentially a one size fits all approach. If there were really competition between banks then customers would expect to have choice. This is very important because most of us have to have a bank account of some sort to pay direct debits and to make other money transfers.

The current accounts offered by UK banks seem virtually identical. Giving the impression that we are dealing with a cartel. There is a lot of debate about reserve ratios. Why can we not choose for ourselves a bank with a reserve ratio policy that we want? Personally, I would choose one with a 100% ratio, and only invested my money absolutely securely, say by depositing it at the BoE. Why can we not choose to receive interest instead of free banking? This means that those with accounts which are not very active are forced to subsidise those who are very active.

55

We need the forests, to burn when we run out of oil.

My solution would be to create a European economy with better (less fractional reservy) financial servcies, very strong social protectionism and slap bucket loads of import tariffs on slave labour goods from outside the market.

This in conjunction with very heavy government support and investment in high tech industries (fusion, renewable energy, biotech, AI, space elevator, age mitigation etc) to provide export fodder.

Also subsidies and very good venture capital for small enterprises especailly if they have a high tech or services focus that can be exported.

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

58. At 11:40am on 17th Mar 2011, Up2snuff wrote:

"How is the 'conflicted' WotW? Helping the 'bankers impose the misery' and wishing he could be doing some trading, perhaps ... ;-)"

What's to stop me.....except SENSE!

Only fools tinker with things they don't understand - and really anyone who is in the 'market' doesn't understand it.

"Oh no! Not the end of Writings?"

Not at all - this is the birth of something new - it appears to be the end of capitalism though I'm afraid - can't see how they're going to fix this one - print more money perhaps?

The Japanese are demonstrating the short term solution that has proven to be - no fixes - just pushing the problem down teh road...until the road ends of course!

64. At 12:07pm on 17th Mar 2011, EazilyGrizly wrote:

"We need the forests, to burn when we run out of oil."

Things to burn for heat will not be a problem...

https://www.mtholyoke.edu/%7Ejiang20j/classweb/worldpolitics/images/weimar%20burning%20money.jpg

World economy collapses and financial meltdown happens...

Government point fingers at the banks as lending irresponsibly...
Banks plead 'not us Gov', you set the framework, we was just operating within the rules... (a framework and rules they had lobbied for a long time to water down..)
Government takes strong action to mend the framework by introducing new rules...
Banks plead 'that ain't fair, we'll make less money and pay more tax and lend less money, our staff will drift away to competitors and the economy will suffer...

...um, fault on all sides for creating an environment where the financial meltdown happened.

But, despite being a fan of capitalism and the free market economy, the recent few years has taught us that:

a) you can't trust the people to have common sense... if your handing out cheap money people will gorge themselves on it without consideration of how it might be paid back;
b) you can't trust the banks to act responsibly. Create money, lend to people and business without bothering yourself if they can pay it back, cleverly package up and insure or pass on the repayment risk to some other sucker, report the profits, take the bonus and its not your problem any more;
c) the Government and its regulators we too slow to keep up with the financial innovation and ill equipped to do anything about it.

You can't change people, and banks have cried wolf far to often.
Much as it pains me to say, I applaud the Government for grasping the problem to make sure this never happens again.

57. At 11:27am on 17th Mar 2011, Averagejoe wrote:

"You missed peak oil!
Tick, tock……. The clock is ticking and time is running out."

Oh I was very slack in my list - I also forgot.

Chinese economy slowing due to the loss of it's closest trade partner as well as their desire to control inflation by raising banks capital requirements.

Non-US T-bill holders dumping their bonds on the fear Japan will dump theirs first.

The massive price surge in Iodine and panic buying in Japan.

The food riots in India (already underway)

The political unrest in Pakistan following the payment of 'blood money' to release the CIA man.

Nigerian rebels threatening more attacks running up to the election.

The Ivory coast ban on cocoa as election failure turns to civil war

The Algerian protests starting soon (big oil producer)

The upcoming protests in Europe (more and more are coming - bigger and bigger each time)

Iranian sabre rattling and Israeli isolation.

Some things are simply not reported - like the extension of the wheat export ban from Russia now exteded until the end of 2011.

....I am getting slack.....or is it that I cannot keep up?

The snide capitalists will point out that a lot of these issues are 'ongoing' - which is true - however the combination of 'ongoing' and 'new' and of course 'world economic instability' are truly the mult-coloured combination of events that produce one single colour.

Black (as in swan)

...and to think....only recently those greedy capitalists decided that buying 'tail risk insurance' was simply too expensive....

https://www.businessinsider.com/are-investors-revolting-against-black-swans-2011-3

What fools - and they talk about 'risk' like they know what they're on about!

66. At 12:20pm on 17th Mar 2011, You wrote:

"Your comment has been referred for further consideration. Explain"

Sorry rbs_temp - your full explanation is within this post and apparently the moderators feel it's not suitable.

Not that you bother to read any of it anyway - reason and logic went out of your window around when 'truth' took a flight.

Maybe the revelation about the Nuclear plant was the reason this was pulled - well I didn't write that story BBC - you should speak to the editor of that publication if you don't think it's accurate.

Is it possible the BBC are holding back that story so they can produce their own version and claim to have 'breaking news'?

How sad if that is the case, maybe their journalists can't cope anymore and it's becoming embarassing for them.


...or was it the revelation about foreclosuregate - well that's sourced too!

https://www.businessinsider.com/obama-admins-shock-and-awe-plan-to-punish-banks-2011-3

~62. At 11:52am on 17th Mar 2011, rbs_temp wrote:

What does any of this have to do with "the system"?

Perhaps you can explain to us exactly how any of this would be different if the UK were a functioning Marxist society.

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

Are you serious? That's a jest surely? You really don't know?

All this user's posts have been removed.Why?

#69. At 12:38pm on 17th Mar 2011, Rational Viewpoint wrote:

You can't change people, and banks have cried wolf far to often.
Much as it pains me to say, I applaud the Government for grasping the problem to make sure this never happens again.

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

Yeah sure.

Sorry folks, it's too late - that's TOO LATE!!

If this mess could have been fixed don't you think it would have been instead of the irreversible "debacle" unfolding before us.

I haven't been posting much this last week because I'm busy, busy preparing. And for what we are about to receive I am not truly thankful.

@ 62. At 11:52am on 17th Mar 2011, rbs_temp wrote:

> ... different if the UK were a functioning Marxist society.

It would help a lot if the UK had any form of functioning society.

@16. At 21:17pm on 16th Mar 2011, Robin Gitte wrote:
"...get back to real work producing socially useful goods and services."

This may very well sound like a stupid question but what are "socially useful goods"? Any old piece of tat could be construed as useful to a certain extent in the sense that it is providing employment and boosting the economy that way. However, even something useful, if overproduced, can be detrimental: wider environmental concerns regarding the raw materials, refining, production and transportation etc.

I wonder if there is a way of ensuring that what is produced is both "socially useful" (in whatever context you prefer to define that) but is also able to be produced on a basis of "need", which again would require definition - real needs are, I think, thus: water, food, shelter. These are pretty much essential for survival, but in order for a society to progress the "needs" become additional to that.

Just a thought, not a terribly well developed one so go easy.

52. At 11:18am on 17th Mar 2011, Up2snuff wrote:

> There used to be bankers, ordinary people and ... Faker Jacques.

Everyone may regard bankers as sub-human underlings, but they are still ordinary people, (genetically).

Just remember - the Government doesn't lie.

The banks ARE safe.
The radiation you are experiencing is not dangerous to your health
The army are on the streets for your OWN protection
We are in recovery

Now please move along - nothing to see here - you know what curiosity did to the cat don't you?

Did anyone notice the cancelling of the POMO yesterday? For those not sure this is where the Fed buys back the treasury bonds they issued only a few weeks before with QE money.

https://www.zerohedge.com/article/guest-post-how-ny-fed-gifted-extra-157-million-wall-street-yesterday

...and yet people claim the banks aren't still being bailed out? Clearly they don't understand how the system works (or more accurately - doesn't work)

Mindless money printing going on all around on a massive scale - so big the average guy on the street has no idea it's even going on - nor what it's effects might be...

WOTW

If only the banks had created real money then we could burn it, they didn't even have the decency to do that.

There's a boat load of Libyan dinar somewhere though, probably good for a couple of cold winter nights.

To burn money we would have to chop down the trees in the first place to make the money, so we may as well just burn the trees.

70. At 12:47pm on 17th Mar 2011, writingsonthewall wrote:
Black (as in swan)

...and to think....only recently those greedy capitalists decided that buying 'tail risk insurance' was simply too expensive....

https://www.businessinsider.com/are-investors-revolting-against-black-swans-2011-3

What fools - and they talk about 'risk' like they know what they're on about!
==================================

Yes, what people don't get is that traders already have an in-built insurance system. When the leveraged bets are working then it's off to the Ferrari dealership. When the position inevitably blows up then you simply hand back the keys to the server room back to the bank but you still get to drive home in the Scuderia.

Up2stuff.
Up2stuff.
Seems im not the only one you like having digs at. Except with me you seem to like to ride on the back of other criticisms with pathetic one liners and without directly replying to any of my posts. A sort of cowards style blogging. Well look, if you want to be a little coward thats your choice. Or perhaps next time you are on NR you might want to man up a bit, although I don’t think its in your nature is it.

66. At 12:20pm on 17th Mar 2011, You wrote:

"Your comment was removed because the moderators found it broke the House Rules."

Oh I know what it is - it's because I asked if all the nuclear experts who have appeared on TV this week will be dragged back in to apologise for underplaying the serious potential of the nuclear disaster in Japan!

There's no substitute for accountability - this week we saw all the MSM in full action - determined to reassure us about nuclear reactors before half the facts were even established.

If this goes sour then I shall expect accountability - a full disclosure of who said what and who paid them to say it. I have my list of names from the world of academia who engaged in this deception.

"this could never be another chernobyl" - I seem to recall.

This is similar to the line "this banking crisis must never be allowed to happen again"

Not one of them seemed to know that one of the reactors is using Plutonium - so much for expertise!

"The water cannon had been called in to spray the Fukushima Daiichi complex’s No. 3 reactor, which contains plutonium fuel and has been the top priority for authorities. "

https://www.telegraph.co.uk/news/worldnews/asia/japan/8387826/Japan-nuclear-plant-water-cannon-begins-dousing-reactor.html

Using water cannons? - if that's not desperation in a nutshell then I don't know what is.

Luckily I have iodine already in my survival kit bag - I knew where the best long term investments were 20 years ago.

I wonder how long those investors will survive the radiation hiding behind their bits of paper they so readily trade for more bits of paper?

72. At 12:55pm on 17th Mar 2011, NorthSeaHalibut wrote:

"Perhaps you can explain to us exactly how any of this would be different if the UK were a functioning Marxist society.

Are you serious? That's a jest surely? You really don't know?"

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

I would be fascinated to know as well. Please do tell us. We could do with some fantastic story-telling on here...

Would it be possible to put some figures to explain how many Billions of extra capital each bank has to hold to achieve the capital ratios that are required.

Response to Post 74 @ 13:01pm on 17 March 2011 - 'NorthSeaHalibut'.

Oh dear, the usual constipating comments, from you, on this business blog?

37. At 09:17am on 17th Mar 2011, yam yzf wrote:

> Also, rules that do not work or are no longer relevant, should be repealed.

The idea of a "regulation lifecycle" is way too hard for politicians or bankers to handle. They have single-threaded brains, I'm afraid, and are unfit for purpose in the real-time, multi-threaded, totally-aware medium scale future.

78 WOTW: hasnt the US reached its legla limit on borrowing - debt limit - now? eg

https://www.cfr.org/united-states/ticking-us-debt-limit-clock/p23948

80. At 13:18pm on 17th Mar 2011, Reticent_Trader wrote:

"Yes, what people don't get is that traders already have an in-built insurance system. When the leveraged bets are working then it's off to the Ferrari dealership. When the position inevitably blows up then you simply hand back the keys to the server room back to the bank but you still get to drive home in the Scuderia."

Never mind all that, it's a sideshow - what about the missing carry trade? - what are the effects going to be?
How many margin calls will not be met by the end of today? How many FX desks will blow up?
What currency will be the next carry trade? - the dollar? What sort of mess would that create? Why has the injection of 55 Trillion Yen made little difference? Are they likely to close the Nikkei next week?

The sheepeople need to know the consequences of this panicking central bank action - I presume this means the US will start printing again (QE3) - they need to keep the markets afloat at all costs!

Here's a visualisation for all the people who can't picture what a financial disaster looks like...

https://finance.yahoo.com/echarts?s=USDJPY=X+Interactive

It's like a ski jump!

Robert is failing us - his story is irrelevant at the moment - it's what's happening in forex that really matters at this stage.

83. At 13:31pm on 17th Mar 2011, That_Ian wrote:

"I would be fascinated to know as well. Please do tell us. We could do with some fantastic story-telling on here..."

GO AND READ A BOOK.

The best way to learn is to discover yourself - being spoon fed is what we do to babies who don't know any better - until they learn to feed themselves that is...

I did explain it - but the BBC decided it was too much for the public to bear - I suggest you write a complaint letter from "confused of blogosphere" - I'm sure you'll get a polite response.

How is the idealogical nightmare that is your philosophy coming along? - decided greed is nurture not nature yet?

...actually I seem to recall the last conversation (where I gave up) was where you weren't sure the difference between the two!

re #81
Whooohooo, Fubar really got to you! C'mon mate, you have to admit he made a good point. I was, for some time, making incrementally but small steps to 'the left' from a broadly centrist position and you, almost single-handedly amongst the posters here, have almost turned me around and driven me 'rightwards'!

Look, if you can post sincere well-thought out alternative policies that are up to snuff we will treat them with the respect they deserve. We may not agree. We may challenge. We may criticise. We may support you. We may take your thinking on board and make good use of it. But that is part of the hurly burly of debate when posting here.

If you have to slag people off and then get huffy when people point out the shortcomings of your behaviour, thinking, doctrines, beliefs all you do, in effect, is to invite us to make a fast scroll through any post with your name at the top.

#85 corum_populo_2010

Would that make your response the suppository then?

WOTW - i am interested in your solution too. What is the moderators problem exactly?

Robert, what I haven't seen you mention is whether the banks will make more attractive offers to high-street savers if they need to increase their equity to loans ratio, i.e. compete for our custom, or are we too small a market to provide the sums they need?

@ 82. At 13:29pm on 17th Mar 2011, writingsonthewall wrote:

> Luckily I have iodine already in my survival kit bag - I knew where the best
> long term investments were 20 years ago.

A nuclear meltdown is the one thing I'm not prepared for. I think Japan should ask their bankers to fix the reactors - they can hardly do any worse than their engineers!

BOJ issues trillions of yen, value of yen surges,

that's not how it's supposed to work, greater supply, lower price...or am I missing something?

surely also with a sale of Japanese assets yen devalues?

Appreciating yen, inflationary pressure on Western economies?

Lord Turner is simply wrong. If banks increase their capital requirements excessively then they will not be able to lend. No lending, no purchasing, no economy! I'm lucky as I live in the Venus Project and hence have a printer which can print anything I want. It takes about a day to print a house.

Back in the real world, we all know that the banks will "fail" again and by "fail" I mean require more funding. I'm yet to meet anyone who can explain why the taxpayer shouldn't support banks. Schools educate taxpayer's children and so taxpayers have to pay for the schools (obviously my children don't go to state school but hopefully you follow the example) so as banks help taxpayers, why shouldn't the taxpayer pay for them? HM Gov should put a penny on basic rate income tax (we used to have a lower rate, who took that off?) which should be used to fund banks. Banks will then be able to lend more and so consumers will be satisfied.

Simples.

88. At 13:51pm on 17th Mar 2011, writingsonthewall wrote:
80. At 13:18pm on 17th Mar 2011, Reticent_Trader wrote:

Never mind all that, it's a sideshow - what about the missing carry trade? - what are the effects going to be?
How many margin calls will not be met by the end of today? How many FX desks will blow up?
What currency will be the next carry trade? - the dollar? What sort of mess would that create? Why has the injection of 55 Trillion Yen made little difference? Are they likely to close the Nikkei next week?
===================================================

That is all true. I wonder how our friend from last week, PostTaxHedge, will be doing since he was basically doing the carry trade but believed himself hedged because tax payers would step in to cover any adverse asset movements (i.e. yen).

For those who don't know, the carry trade was essentially the main pre-QE source of financing for banks and hedge funds who borrowed cheaply in Japan at 1% and "invested" in higher yielding economies like New Zealand, UK, US at 5% to 7%. While there has been a degree of deleveraging since 2008 and QE has overtaken it as the main source for speculative financing, there are surely still some massive exposures to Japan from London and NY banks and hedge funds. If this disaster had occurred in 2007 then I suspect Mayfair would have been ghost-town by now.

It's fast becoming a real perfect storm for the financial system:
1) Oil spike
2) Euro debt crisis
3) Forced unwinding of Yen-carry trade.

Any one of those would do incalcuable damage. Three at once?

The FSA are shutting the stable door after the horse has bolted.

This is bad news to bank customers (most of us) as it restricts competition and allows banks to get away with the huge margins between what they pay to savers and how much they charge to lendors.

It is likely that the next financial meltdown will be different to the recent one and know doubt the regulators will miss that one as well.

At the end of the day regulation does not work and the best regulator out there is the market.

87. At 13:45pm on 17th Mar 2011, Payguy wrote:

"78 WOTW: hasnt the US reached its legla limit on borrowing - debt limit - now? eg

https://www.cfr.org/united-states/ticking-us-debt-limit-clock/p23948"

...if you listen carefully you can hear the 'tink' of a can being punted down the road.....followed by the whirring of cogs as the presses warm up again...easy money for the easy money addicts.

Got to love those Gold bears - every 'breather' is met with roars of 'crash' - and yet everytime the price picks itself up and carries on again. They simply don't understand why Gold has value and why paper money is losing it's faster than ever. It's fundamental, not fashionable.

What's really concerning is who will buy the UST's when the fed doesn't - it was a question before the 'second biggest player' was forced to move from the market - now it seems that QE3 is inevitable - it's that or face the crash that's got to come sometime!
https://www.pimco.com/Pages/Two-Bits-Four-Bits-Six-Bits-a-Dollar.aspx

(this is an old article - which has been made much more relevant now..the images showing who is buying what clearly demonstrates the awesome problem faced)

94. At 14:18pm on 17th Mar 2011, Jacques Cartier wrote:
@ 82. At 13:29pm on 17th Mar 2011, writingsonthewall wrote:

> Luckily I have iodine already in my survival kit bag - I knew where the best
> long term investments were 20 years ago.

A nuclear meltdown is the one thing I'm not prepared for. I think Japan should ask their bankers to fix the reactors - they can hardly do any worse than their engineers!

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how about some respect being shown to those engineers who are working round the clock, exposing themselves to high levels of radiation and basically throwing away their chances of a long and healthy life in order to sort out the mess caused by two completely non man made events.