Hi Guys

Did you not notice?
Under Tony Blair the "Golden-egg" hatched:
into a HUGE VULTURE

http://visar.csustan.edu/aaba/heritage.html

Jeff Lampert

Unfortunately the banks are the people with the money.

If you need to borrow they are probably safer than the Mafia and possibly less expensive than the pawn broker. Do not ever trust them and get out from under their malign thumb as soon as you can. Or at least diversify your risks by borrowing from as many as you can for that inevitable moment when one decides to try and destroy your life and that of those close to you.

A friend of mine tells the story of sitting in his works canteen when the talk turned to, " What would you do if you won the lottery?" After the usual suggestions, one man answered, "I would find some total stranger and destroy his life without his ever knowing who or why. Just because I could". He was surprised when people stopped talking to him.

Accountants vary. I know two that are honest, kind hearted and competent. I did know one that was a crook. Amazingly, he was bankrupted, lost his job, his house, his reputation and eventually his family because he was conned by a more competent fraudster. He, his business partner and the con man who conned the con men, destroyed nearly 400 jobs when it all went belly up.

Prof

We all have a vested interest in profitable and well run banks.

Barclays and HSBC are relatively speaking both of the above.

They sold parcels of US house mortgages to investors. They are accused of not checking the quality of those mortgages on an individual basis. Instead they relied on past experience that a certain limited percentage would default. This was standard practice for decades.

But these mortgages were not representative of past experience. The US authorities had ordered lenders to stretch the definition of creditworthy to help the poor. They had ordered lenders to not engage in "red lining" by which loans were denied to residents of certain areas. The low level agents of the banks knew they were selling mortgages to those who could not pay them back if there was the slightest sign of a slackening economy. So they sold as many as possible to no hopers and helped them fill in the American equivalent of our liar loans. Then the low level agents - mortgage brokers - left the business or at least the state before the proverbial hit the fan. In many instances the low level agents were actually fronts for the Mafia. The game was to take the commissions and run before the foreclosures began.

So there is plenty of blame to go around and unless the US courts and Congress show even more than their usual bias against foreigners it will all be settled quietly and at not too much cost to the banks.

That the US authorities prosecute someone is no evidence of their guilt or innocence. Us authorities are at least as liable as ours to make a complete hash of it. Look at the way they let Bernie Ebbers get away with his Ponzi scheme for decades despite an accumulation of evidence against him. Look at the collapse of the case against Dominique Strauss Kahn in New York. You might expect the authorities to take more care when arresting an international civil servant.

And no, Prof. I do not think banks are staffed by saints nor that DSK is a nice man.

Can we all live on investments? If we print lots and lots of cash and give the whole country a slice, can we all invest, buy shares in each other, repackage each loan by another name, and create jobs in financial services?
A working man puts some excess cash in pension fund, the pension fund lends it to a bank, the bank invests in an investment trust, the investment trust has shares in an insurance company, the insurance company makes its profit for shareholders by taking the same man’s money and pocketing half. Everyone is making a profit and living well on the proceeds, including Robert on his yacht..
It cannot work at a national level. It only works on a global level because somebody somewhere is creating the food and goods we need and this country still has lots of cash from the empire days. When it’s all gone, then what?
My wild west town has now "developed" into 90% bankers, insurance agents, investment advisers, stockbrokers, mortgage companies, pension funds, tax advisers, tax collectors to pay the sheriff, judge, teachers & rubbish collectors and just 10% of the community is farming or making things.

Prof

I have a very low opinion of most banks.

You say, "The story goes that they are guilty of 'misrepresentation and other improper actions'".

The misrepresentation you refer to was the packaging of mortgages to which I referred.

The banks took thousands of mortgages, bundled them together into a Collateralised Debt Obligation and sold them on. The collateral in question was mortgages secured on people's houses. The banks looked at past experience and in accordance with long standing practice said, I paraphrase, "Here is a bundle of mortgages. On past form, X per cent will not be repaid when due or in full. So we are offering the whole bundle at a discount to reflect the risks". But, the US government, the Mafia and the bent mortgage intermediaries had changed the rules of the game. So the percentage of delinquent loans went through the roof (no pun intended!). Investors who bought the CDOs lost money and have enlisted some parts of the US and state governments to blame everyone but themselves and their own greed. These purchasers of CDOs were professional investors and should have been just as aware of the risks as the banks. They were all warned by Gillian Tett in the FT years before the smash. Greed blinds and deafens.

jeff lampert

Cutting spending, jobs and growth will lead to a vicious spiral of despair and possibly revolution. Hitler rose to power in 1933 because of Germany's economic woes, not because many Germans in the Weimar Republic had some primal urge to build gas chambers.

We need more spending on railways, ports, the National Grid, new power stations, schools, hospitals etcetera. Create the jobs and people will have money to pay taxes to pay off the government debts. Consumers will have money to create jobs on our desolate High Streets. We will have a virtuous spiral of happy and peaceful prosperity.

The UK does have the credit rating to borrow a lot more. Cameron and his gang simply lie when they pretend otherwise. In this economic climate the risk of adding seriously to inflationary pressures is next to nil. Just think of all the money we will save by not pushing people onto the dole, by not keeping teenagers unemployed and angry enough to riot.

Just think.

Ask why Cameron and his gang are recreating the conditions of the 1930s and what do they hope to gain?