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Money v Making Stuff-Should Britain bid farewell to the golden egg of banking.
Anonymous Post
Posted: 06 September 2011 18:36:38(UTC)
Anonymous 1 needed this 'Off the Record'

Dear all
Jeremy Bosk at 438
'Besides adding to costs, ring fencing would not stop the rest of the bankling system from going wrong again and on such a large scale that governments would have to intervene to protect the whole economy.'
If that is the case, then besides ring fencing we need proper regulation of ther banking casinos.
Comments please.

Prof Eman
jeff lampert
Posted: 06 September 2011 19:20:43(UTC)

Joined: 13/11/2009(UTC)
Posts: 41

Hi Guys

You are all wide of the mark: until this is resolved we are going to repeatedly go from boom to bust.
Not to say this bust is not very very scary.

Most things have changed beyond recognition in the last 500 years!

The problem is that our system of accounting (double entry book=keeping) has not changed much since it was invented some 500 years ago. As such it is out of touch with reality.

Whether you are Greece, a bank or a Madoff it says give me a 1,000.000 to spend however I want to, and I will record that I owe it to you. I will also hold assets that equal what I owe you. You have no way of knowing what those assets are worth, you will just take my word that they are worth what I say they are.

Unfortunately human nature has also not changed in the last 500 years: The Prince is still as accurate today as when it was written.

So why are we surpised when we invite people to take money by dubious means which are virtually uncheckable they accept that invitation?

Jeremy Bosk
Posted: 06 September 2011 21:26:35(UTC)

Joined: 09/06/2010(UTC)
Posts: 1,316

Prof

Proper regulation needs international government, international policing, international co-operation on a scale that is not likely to be achieved this century or the next.

Comparing investment banks to casinos is very unfair on the casinos that generally manage to make staedy profits year after year and decade after decade!

jeff lampert

I partly agree about accounting but protest that most problems are with regulatory assumptions that try to force real life complexity into fictional straitjackets. For example: pension funds are told that they must invest in safe government securities and avoid risky company shares. You take the Greek Government Debt and I will keep the shares in IBM and Microsoft. Thank you very much.

"Whether you are Greece, a bank or a Madoff it says give me a 1,000.000 to spend however I want to, and I will record that I owe it to you. I will also hold assets that equal what I owe you. You have no way of knowing what those assets are worth, you will just take my word that they are worth what I say they are". Really?

Firstly on a secured loan the bank not only takes a charge but employs an independent valuer to check whatever you say. If you do not believe this, then I have a bridge for sale in Brooklyn!

Second on an unsecured loan the bank does a credit check and ensures that you are who you say you are, earn what you say you do, live where you say you do... in short whether you can pay back the loan.

As a matter of interest, why do you associate double entry bookkeeping with Niccolo Machiavelli? The monk who wrote the first surviving treatise on the subject and Machiavelli were both Florentines and their lives overlapped but so does mine with that of Winston Churchill. So what?

The Prince is very melodramatic but The Republic is a better indication of how Machiavelli thought we should govern ourselves.

jeff lampert
Posted: 06 September 2011 21:43:57(UTC)

Joined: 13/11/2009(UTC)
Posts: 41

Jeremy

Firstly on a secured loan the bank not only takes a charge but employs an independent valuer to check whatever you say. If you do not believe this, then I have a bridge for sale in Brooklyn!

How about I swap you for the odd few thousand (sub-prime) houses, a couple of (unlived in) new villages in Spain, or if you would prefer Ireland?

Your Brooklyn Bridge is actually worth MORE!
I am not going to have to pay anything to have the land flattened!
Moylando
Posted: 06 September 2011 21:53:47(UTC)

Joined: 08/09/2010(UTC)
Posts: 28

You will have to forgive my flight to a rather more philosophical view of the condition of this country than the economic slants employed elsewhere in this column.
This country and other western economies have weakened and not strengthened by trade globalisation. How do you deal with weakness? You can support weakness but support won't make anything stronger. We need catharsis.
Rather like my garden. At the end of the summer now buffeted by inclement weather with the days of sunlight getting shorter no amount of watering or fertilising is going to bring its summer glory back. It needs to be prepared for a harsh winter. Dead wood needs to be removed. Some plants need to be ripped out. Some protected. Serious pruning needs to be undertaken. Spring bulbs need to be planted. Insects and bugs have to be frozen dead. For these terms you could delete and insert any number of current institutions. We live in a capitalist system and rather like the seasons and the weather we need the capitalist system to do its work . In the long run politicians can do as little to alter the market as they can do to control the weather. Let what needs to happen - a readjustment to a lower standing of living for a while - happen. Its not what happens it is how we deal with it that matters for the future.
The issue with our country is not so much economic as cultural and behavioural. There needs to be a purging process. There is no point in trying to preserve the status quo. If we had the strength as a people to get through this process without too much social unrest, without blaming and penalising both those that make wealth and those that will need help we could restore ourselves.
And we must stop looking backwards. I don't completely subscribe to Henry Ford when he said " history is bunk" but he had a point.
I certainly don't go along with those who have re-quoted " those who don't remember the past are doomed to repeat it. Doomed! As Matthew Arnold wrote - history is " a huge Mississippi of false hood" Even if we could all agree on what actually happened there is so much vested interest in arguing what caused it to happen or what the consequences are or were of what happened that history may be a good read but as a means of forecasting it is "doomed "
I rather like Henry Ford's other quote ' the only history worth a tinkers damn is the history we made today"
Jeremy Bosk
Posted: 06 September 2011 23:14:53(UTC)

Joined: 09/06/2010(UTC)
Posts: 1,316

jeff lampert

The houses were not sub prime, the borrowers were. The borrowers frequently lied about their ability to repay with the active collusion of American realtors and mortgage brokers, sometimes working for the Mafia. There is a limit to what bankers can do to protect themselves from large scale fraud co-ordinated by gangsters. Additionally, government authorities forbade lenders to use normal commercial judgement. The politicians are more to blame than the lenders.

Moylando

Factual references please for your second paragraph.

I agree that cultural and behavioural issues come first because it is those that block the needed economic reforms.

I like your garden analogy up to the point where you talk about the seasons and the weather being beyond political control. With man made climate change a reality accepted by all but the most wilfully ignorant, the politicians had better learn some control and quickly.

Part of the problem with people who want to ignore history is that they get their quotations wrong. What Ford actually said was they "History, as it is taught in our schools, is bunk". He was referring to the sort of wilfully ignorant numbskull who thinks history is a list of Kings and Queens. A moron like Blair, or his mentor Thatcher.

Such people see what they want to see. Most do not see the words "as it is taught in our schools" because they complicate a simple idea and make it too hard to turn into a slogan for the rabble.

A supporter of Blairism / Thatcherism waking up in a homicidal mood would look at the sixth commandment and see "Thou shalt kill". They would then repeat it to the equally insane and ignorant mob and it would become accepted as fact that the Bible said, "Go out and murder". None of them would be guilty of hypocrisy. They are sincerely ignorant and stupid.

For the benefit of the majority of Christians who have never read their own Book, the sixth commandment actually says, "Thou shalt not kill". There is a short three letter word in the middle of that. Who can tell me what it was? No takers? Didn't think so.

Who on Earth has ever tried to use history as a forecasting tool? History (and the lies told in its name) does influence current attitudes. Crusader has a very different resonance in Europe and the Middle East. "How the West Was Won" and "Manifest Destiny" have different meanings to the Native Americans and the gangsters who stole their continent from them. Current events have a much greater influence than historical ones.

For philosophy to work it needs to be grounded in fact. See under epistemology.
Anonymous Post
Posted: 07 September 2011 13:53:51(UTC)
Anonymous 1 needed this 'Off the Record'

Dear all
Have just come across DailyMarkets.com- Forex- German Industrial Production Blows Past Expectations.
Industrial production in Germany rose significantly more-than-expected in July, official data showed on Wednesday.
Official data showed that the industrial production climbed by a seasonally adjusted 4.0% in July, blowing past expectations of a 0.5% gain.
Year-on-year, German industrial production rose at an annualised rate of 10.1%.
Seems there is no better way to get economic growth and come out of the recession than by the industrial route.
Pity we did not take it.

Prof Eman
Still on life support
Posted: 07 September 2011 14:28:56(UTC)

Joined: 27/09/2010(UTC)
Posts: 52

Prof

It’s interesting that you find production growth in Germany as a positive. There is a strong argument to suggest that actually that increase is a huge negative as the more production in Germany grows, the greater the imbalances that build up within the Euro area and the harder it will be for Greece, Portugal, Italy, Spain etc to grow their way out of their respective difficulties. Germany needs to stop producing quite so much and start consuming goods and services produced by their neighbours.

Your statement that “Seems there is no better way to get economic growth and come out of the recession than by the industrial route.” is pretty much unsupported by Germany GDP growth numbers as reported in August by Reuters, Germany is delivering far worse growth than UK, worse even that Spain which has its own serious issues……

http://www.reuters.com/a...p-idUSTRE77F0Z920110816

Just because you make stuff, it does not necessarily follow that you will grow. You need consumers to buy your stuff and that is what is in short supply.

Jeremy Bosk
Posted: 07 September 2011 23:38:06(UTC)

Joined: 09/06/2010(UTC)
Posts: 1,316

Omnes, especially Moylando

Back to how an understanding of history can help in interpreting modern events.

During the fall of the Roman Empire, Gaul (modern France) was conquered by a Germanic tribe, the Goths, whose reputation as savage wreckers is thoroughly undeserved. Driven west and south by the invading Huns they liked and admired what they found in the Roman Empire so much that they decided to keep it. That included Roman legal systems. Documents exist from the fifth century in which Roman citizens sign over their villas and farms to their new masters in exchange for living in the same place as managers, not owners. The beginnings of tenant farming and Feudalism as exported to England and Wales by the Normans.

Those who get upset by the appearance of foreigners in the UK can console themselves. The incomers like what they see including most of the social customs. They want to preserve and not destroy. Lacking armies they can only compete using their brains and hard work which gives us a fair chance.

As a kid your views of foreigners are formed by the media including Hollywood and the TV news, by neighbours and relatives who have been there. Then you get to know some foreigners directly and your views usually change. History is all about getting to know foreigners including your own ancestors. "The past is a foreign country: they do things differently there". http://en.wikipedia.org/wiki/L._P._Hartley.

I liked foreigners generally. My mother played bridge with a Bolivian woman whose daughter married into a Greek - Italian family. Her grandsons went to an English Public School. Her niece, a UN interpreter, took me and the grandsons to the pictures whenever she visited. Other bridge players included a balalaika playing Russian fencing master who had been a seventeen year old Colonel in the White Army, a Thai diplomat, a Polish Jewish survivor of the camps. They were an asset to their adopted homeland.

I generally disliked Muslims. Many relatives and neighbours had been in the Middle East from Iran through Iraq, Syria, Jordan, Palestine and Egypt during the two World Wars. They were uniformly unimpressed. In the early fifties my older cousin married an Iranian engineering student. They had a son who was looked after by her mother while she worked all hours in a factory to support her husband and son. One day five years later, studies finished, he left a note on the kitchen table. He was going back to Tehran and his first wife. First wife! What first wife? The son joined the British Army in the late sixties and was one of the youngest to die at the hands of the religious and nationalist savages in Northern Ireland. So Muslims are not uniquely evil.

I had earlier moved to live in the south of England. I was regularly beaten by a Pakistani-born bus driver sitting across a chess board. He told me about reading the job advertisement from London Transport. Apparently the English did not like the shifts or the poor pay. Enoch Powell was alive and in full flow. Honest, intelligent, hard working and willing to integrate - what more could you ask? At the same time I worked with an Indian born Muslim employed on menial clerical tasks despite having a PhD in nuclear physics. He blamed racism from people who did not accept Indian qualifications and experience. I blamed a complete lack of social skills and an inability to communicate with women.

Back in the north I worked with a blue eyed blond man who in appearance could have been a poster child for the Third Reich. He spoke with a thick Arabic accent and was a Berber from Algeria. These are the descendants of another maligned Germanic tribe, the Vandals. Passing through France, already bagged by the Goths, they established an empire in Spain, Sicily and North Africa. Conquered by the Moors, they retreated into the Atlas Mountains. They adopted Islam but retained many Germanic attitudes including a much higher social standing for women. My Berber colleague worked well with western women.

Later on as a mature student, I met a Kuwaiti who only thought he spoke English and had come here to avoid conscription and get an education. Tutoring him in English and business was easier than trying to hide. He met and married an English girl (after twenty years, no first wife has appeared). He works in the UK and the Netherlands, his children are thoroughly Anglicised. I am introduced to visiting relatives. He now helps the children of of his, mainly paleface and Christian, fellow students find jobs.

All subsequent experience has confirmed my view that Muslims, Christians, Jews and any other religious or racial group are not all alike. Individuals choose from the teachings of their religion and culture what fits their own personality.

We learn from meeting different cultures, we learn from trading with different countries. When we stop learning, we may continue to walk and talk, but we are dead.

It does not matter who makes things or who sits at a computer keyboard shuffling money around the world.

It does matter how we understand the world around us. History, geography, economics, philosophy all help us make better decisions now.



Anonymous Post
Posted: 08 September 2011 18:03:45(UTC)
Anonymous 1 needed this 'Off the Record'

Dear all/Stil on Life Support
Just had as look at the Chart of the Day : British Banks' 'too big to fail' subsidy.
Pity we do not have a subsidy for the industrial sector?
Stiil on Life Supprt.
Banks in other countries enjoy this subsidy, but it is much smaller - the TBTF subsidy in the UK is 62% higher than in Germany, the NEF finds.
I wonder whether there are other subsidy differences say on the industrial sector. Also whether the %precentage on churning is different between the two countries?
Furthermore, 'The size of benefits (not for the poor), extended to the banks compares unfavourably with the tax received in return. For example, a report by PricewaterhoiuseCoopers (PwC) calculates a total amount of taxes borne by the banks for year to April 2010 to be (just) £15.4b' it says.

Prof Eman

PS Still on Life support - Will be replying to you more fully shortly
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