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Barclays memos online

20 Mar

The controversial Barclays memos, which the bank has blocked The Guardian from publishing, have been submitted to WikiLeaks – the anonymous online document database.

The documents expose Barclays “tax-avoidance” measures – scamming tax-payers out of over £1bn.

Today Barclays secured the continuation of the gag order, including a provision which stops the paper from pointing its readers in the direction of the Wikileaks page.

Sunny is requesting that bloggers step and in and link to the memos, making a mockery of Barclays’ attempts to block public knowledge of their alleged deception. Click here to view.

The problem when ideology is ill-informed

23 Jan

From Dizzy “Thinks” ::

From former Spanish PM José María Aznar López on whether the current economic crisis signifies a failure of the free market.

It is certainly not a failure of the free market, but a failure of the current mechanism of state regulation and intervention in a sector which is already highly regulated, the banking system. It is the same with politics – democracy is not discredited merely because a bad government has been elected.

Spot on.

Spot on? You sure?

A lack of regulations in the CDS market, meant that when one institution collapsed (Lehman Brothers – or taking it further back and looking at another unstable financial instrument, Bear Sterns), the others lost confidence in each other as they had no idea as to each other’s level of exposure to the crisis.

The day-to-day borrowings between financial institutions seized up, and businesses in the real economy couldn’t secure short-term lending to continue operating (I used to arrange this borrowing myself when I worked in finance). This sparked the inevitable market correction that many of us had been predicting for years.

It was absolutely a lack of regulation of the these complicated financial markets that meant there was no transparency, and credit traders couldn’t calculate risk with any level of confidence. Fear spread quickly, and governments – rightly or wrongly – decided they had no option but to step in and try to grease the system, to prevent many companies having to cease trading because capital they relied on had dried up.

(History: The Republican legislature and Clinton White House took a pass on regulating this emerging economy, who along with our own European governments, share responsibility for the initial collapse.)

I don’t like regulations per se, but they’re often a necessary evil to ensure the stability of a system we all rely on. Good governments write good laws and set sensible, lean and robust rules.

Maybe some of the existing regulations in the banking system are crap, but you’d be a fool to suggest that it was regulation that caused the initial collapse, when it’s the exact opposite that’s true (in the specific cases of CDSs, CDOs, and short-selling).

It’s no use taking an ideological laissez-faire attitude, if you don’t understand the fundamentals of the system, and how a lack of transparency (see rules) can lead to massive ‘systematic risk’.

Darling: Give us our cheap petrol

30 Oct

Considering Alistair Darling “controls” the greatest proportion of the cost of fuel, he’s got some nerve to be taking these sort of cheap, populist positions.

Where was the tax relief when the oil prices pummelled working families and businesses over the summer?

Everyone has to do their bit, Mr. Chancellor.

On the attack…

10 Oct

The irregular quote of the day

10 Oct

Dave Osler has a great piece over at LC. As the newspapers tear into UK councils who invested in Icelandic banks, Dave explains exactly what the authorities were up to ::

For some reason, this morning’s newspapers are full of outcry about what UK councils are doing investing in Iceland anyway. The answer to that seems quite simple; they were seeking the best returns for the council tax payer, which is exactly what they should be doing. Remember, Iceland’s leading banks offered high rates of interest and enjoyed AAA credit ratings. Sounds fair enough to me.

The effin’ scoundrels! How dare they invest my taxes in high-return, triple-A accounts. Outrageous. Quick! Someone contact the tabloids.

nhs prepaid suppliers

27 May

From the FT ::

Hospitals and primary care trusts have prepaid suppliers many hundreds of millions of pounds and have hidden money in other ways in order to keep the National Health Service surplus for last year down to the forecast £1.8bn.

Without such action, senior NHS managers say, the declared surplus for the NHS in England in the financial year just ended is likely to have been nearer £3bn.

WTF?

I’d be *very* interested to know what favourable terms the trusts negotiated before they generously handed over taxpayer’s money in this way? No-one should prepay a supplier unless it means significant savings. Your money in other people’s bank accounts is a financial no-no.

via. Mike Power

defending the indefensible

22 Apr

Northern Rock proved that “irresponsible” lending is dangerous game for banks to play. If a bank has too many debtors who are over-extended, then it leaves itself wide open to punishment if suddenly the economic climate cools. In America, where mortgages are traded between banks and investors like coffee beans, bad debts have created a financial crisis on a gargantuan scale, with the entire US economy peering over the precipice of a long and painful recession. It’s now very easy for all and sundry to point at the banks and crow that their chickens have finally come home to roost. Everyone, it seems, is desperate to see the first banker throw himself 34-floors to his splatterriffic death.

But is this fair, and is this a progressive position to take?

We live in a capitalist society. There are few mainstream Western politicians who still promote a truly socialist economic model. We are now, is seems, locked into market economics. So surely now our aim as progressives, is to make the system as open and as equal as possible? And this is just what the banks, with their reckless lending, have done. I know, shocking, but please stay with me…

Lenders have empowered people to buy into a growing economy. We have seen astonishing growth over the last decade, and house prices have rocketed. What could be more progressive than enabling every hard-working person to enjoy the good-times? Why should people without ready access to capital be denied the opportunity to invest?

The reality is, as banks tighten their belts, young families and professional singles will be forced to rent their homes. They’ll be paying rent to landlords, rather than investing in a property. Large scale property investors will get richer, while their tenants will be cut out of the housing market for the foreseeable future.

Also, I’m not convinced we’ll see a considerable fall in prices. There are plenty of investors willing to pick up empty properties, especially when they know more and more people are looking to rent. And as the economic outlook grows more precarious, home owners will sit tight to see how the situation plays out, so reducing the number of houses on the market and stabilising prices. There are too many factors, including a national shortage of homes, that suggest a collapse in prices is unlikely. So if the predicted dramatic fall in prices doesn’t materialise, and banks are unwilling to take risks, what chance do wannabe homeowners have?

Easy access to capital is the greatest liberator in a capitalist society, and what our so-called reckless banking system has actually done, is enabled people to get onto the housing market and enjoy the growing equity in their properties. Why should it just be the rich who benefit from an economic boom? As progressives we should celebrate cheap capital, and prey that our banks don’t become so “responsible” that they deny hope to so many aspirational families.