With thanks to Brendan on the Telegraph Comment today
"I disagree that Greece and Ireland are more extreme cases than ours.
The official balance sheet debt of the UK does not include the state and public sector pension liabilities, nor PFI. Those three are respectively £1.4 trillion, £800bn and £250bn, so around £2.4 trillion in aggregate. And no, it’s not a typo, it really is trillion.
Added to the on-balance sheet debt, the UK taxpayer is now on the hook for liabilities amounting to more than 200% of GDP.
That would not be such a problem but for the fact that UK economy has just shrunk by 6% and does not have an obvious means of generating rapid and sustained economic growth over the next decade or so. Most commentators have overlooked the fact that the two other major countries that had significant financial centres – the US and Japan – are well diversified economies with strong manufacturing and export sectors.
What makes the UK so uniquely vulnerable is that beyond the City of London there isn’t really any world beating commercial base of any scale. Yes we are world leaders in Scotch whisky and cheddar cheese but this isn’t going to make a difference to a £2 trillion debt. Under Labour we have lost 1 million manufacturing jobs and added around 1 million public sector jobs, a straight swap of productive, wealth-generating employment for non-productive wealth-draining employment.
There is no easy route out of this. We do not have raw materials like Australia or Russia, cheap labour like China, specialist agriculture like Brazil or technology skills like India. We have over 5 million unemployed adults of working age and not really any prospect of putting them to work. Paying for their benefits, healthcare, education and pensions has brought the country to its knees.
It isn’t society that is broken, it’s the business model of UK plc.
So while France, Germany, the US and Japan can see a way out, we can’t. It’s remotely plausible, I suppose, that the City will spark back to life and save us, that private equity and hedge funds will ramp up again and borrowing will explode as before but I can’t see that happening in the current bank-bashing climate. Besides most of them will relocate to Switzerland to avoid the punitive taxes.
The UK is holed below the water line and it is in fact necessary now for there to be a major shock to allow the downsizing of our prosperity to occur without civil unrest. Ireland gives some encouragement that the population can be persuaded to accept much lower living standards without burning cars and throwing rocks at the police, let’s hope the same will be true here."
Tuesday 20 April 2010
Sunday 4 April 2010
Stop The Bank Tax Madness: Only Governments to Benefit
Brown hails move on global bank tax: This is WHY
Governments must be rubbing their hands together to try and balance THEIR books with massive tax grab on banks. Politicians of every colour can't wait to demonize the banks for the worst reasons: they want their money. Hang on that's OUR money in all those banks!
AT first they just wanted to help the banks with cash injections for shareholding, deals (and maybe a place on a board here and there) and to stop the banks that are too big to fail. Now for this they got their deals and equity stakes. NOW they want to tax banks as well. Well, how is this going to make banking any cheaper, or make bank lend any more money when our Governments want to tax them?
A tax on banks will come out of tax payers and businesses pockets. Come on think about this and WAKE UP! Read the article below to see how the Government PR machine is in full flow to get their hands of more of our money.
By George Parker in London FT Saturday Sorry but direct Copy below
Published: April 4 2010 22:01 | Last updated: April 4 2010 22:01
"Gordon Brown on Sunday said the large economies were close to agreeing a global tax on banks that would cost the financial sector billions of pounds a year but played down expectations that a deal could be struck at the next Group of 20 meeting in June.
The UK prime minister, who held talks with Angela Merkel, German chancellor, last week, said the scene was set for a “global responsibility levy”.
He said Britain, France and Germany were now broadly agreed on the need for a levy, and he hoped the US would come on board.
“Britain, France and Germany have talked about what we can do together,” he said. “We are agreed on the need for a common basis.”
Last week, France and Germany jointly backed an internationally co-ordinated levy.
Mr Brown told the Financial Times he wanted to reignite the spirit of global co-operation, which had faltered in the year since last April’s G20 summit in London.
Although a British election is expected in little more than a month, Mr Brown is engaged in frenetic international diplomacy to broker a global settlement for banks. “The relationship between banks and society has to change,” he said.
He wants a global levy to be agreed at the G20 summit in Seoul in November, along with capital rules to reinforce banks against a future crisis.
Many bank watchers had been geared up for an initiative at the June summit in Toronto but Canada is sceptical. Mr Brown wants the tax agreed on a multilateral basis, using a common base if possible.
The US has used a levy on wholesale funding but Mr Brown says he has an open mind on whether the tax should target assets or liabilities.
He declined to say how much the tax might raise from UK banks, but cited the annual €1.2bn envisaged by Ms Merkel for German banks and $10bn (€7.4bn) planned for the US levy as examples.
Given the relative size of the UK banking sector, that would suggest Mr Brown is eyeing a levy in Britain of several billion pounds.
Mr Brown said he had agreed with Ms Merkel it should be left to individual countries to decide how to spend the proceeds of the levy.
Germany wants to create an insurance fund to protect against future bank failures but Mr Brown fears this could create moral hazard and encourage risky behaviour by banks.
He is also concerned that any extension of the US bank tax – designed to pay for past bail-outs – could run into congressional problems.
The prime minister believes that the problems in the banking sector have not been fully resolved."
Well thanks FT, now lets do some analysis.
Governments must be rubbing their hands together to try and balance THEIR books with massive tax grab on banks. Politicians of every colour can't wait to demonize the banks for the worst reasons: they want their money. Hang on that's OUR money in all those banks!
AT first they just wanted to help the banks with cash injections for shareholding, deals (and maybe a place on a board here and there) and to stop the banks that are too big to fail. Now for this they got their deals and equity stakes. NOW they want to tax banks as well. Well, how is this going to make banking any cheaper, or make bank lend any more money when our Governments want to tax them?
A tax on banks will come out of tax payers and businesses pockets. Come on think about this and WAKE UP! Read the article below to see how the Government PR machine is in full flow to get their hands of more of our money.
By George Parker in London FT Saturday Sorry but direct Copy below
Published: April 4 2010 22:01 | Last updated: April 4 2010 22:01
"Gordon Brown on Sunday said the large economies were close to agreeing a global tax on banks that would cost the financial sector billions of pounds a year but played down expectations that a deal could be struck at the next Group of 20 meeting in June.
The UK prime minister, who held talks with Angela Merkel, German chancellor, last week, said the scene was set for a “global responsibility levy”.
He said Britain, France and Germany were now broadly agreed on the need for a levy, and he hoped the US would come on board.
“Britain, France and Germany have talked about what we can do together,” he said. “We are agreed on the need for a common basis.”
Last week, France and Germany jointly backed an internationally co-ordinated levy.
Mr Brown told the Financial Times he wanted to reignite the spirit of global co-operation, which had faltered in the year since last April’s G20 summit in London.
Although a British election is expected in little more than a month, Mr Brown is engaged in frenetic international diplomacy to broker a global settlement for banks. “The relationship between banks and society has to change,” he said.
He wants a global levy to be agreed at the G20 summit in Seoul in November, along with capital rules to reinforce banks against a future crisis.
Many bank watchers had been geared up for an initiative at the June summit in Toronto but Canada is sceptical. Mr Brown wants the tax agreed on a multilateral basis, using a common base if possible.
The US has used a levy on wholesale funding but Mr Brown says he has an open mind on whether the tax should target assets or liabilities.
He declined to say how much the tax might raise from UK banks, but cited the annual €1.2bn envisaged by Ms Merkel for German banks and $10bn (€7.4bn) planned for the US levy as examples.
Given the relative size of the UK banking sector, that would suggest Mr Brown is eyeing a levy in Britain of several billion pounds.
Mr Brown said he had agreed with Ms Merkel it should be left to individual countries to decide how to spend the proceeds of the levy.
Germany wants to create an insurance fund to protect against future bank failures but Mr Brown fears this could create moral hazard and encourage risky behaviour by banks.
He is also concerned that any extension of the US bank tax – designed to pay for past bail-outs – could run into congressional problems.
The prime minister believes that the problems in the banking sector have not been fully resolved."
Well thanks FT, now lets do some analysis.
Thursday 1 April 2010
Customer Care Is Dead: Debt Collectors Rule
RIP Customer Care:
Replaced by call centres, poor administration and the propensity to terminate agreements and send out for the debt collection agencies.
In fact some loan agreement terms and conditions are so generous to the client (due to base rates at 0.5%) that finance houses appear to be forced into termination in order to turn a profit.
Unfortunately I cannot name names but car loans are a perfect example. Fall behind (there is still an ongoing recession in full flight) and they will send out default notices and terminations like confetti. But when you read the fine print, they have within their remit the ability to charge you with base rate plus 5%, (total 5.5%) but via the courts they can apply 8% and ask for all outstanding premiums to be paid in one lump (even though you may not have completed on the term of the loan). Then they can get the car back as well. What a way to turn a profit!
It's called churning. And churning is big business. But big business has a guilty secret of making mistakes, and burying them into your account. Then they take you to court. If you have the temerity to defend yourself they capitulate, but if you don't they take your money, even if you do not owe all they say. And worse, the court system adds in it's fee, and costs. And then there is the unbelievable statutory interest at a princely 8% yes, thats 7.5 % over base.
All in all there is a game going on in the UK called 'churn the debtor'. Every company, bank, mortgage lender, finance house and debt buying agency is in on the scam. They are aiming to transfer unsecured debts into secured debts via the court system. Then, hey presto, they will sell on the secures debt at around 3-10 times the price they paid for it. It's the bad side of capitalism, but the legal system has to take some of the heat - they love it. They get paid by the hour whether the case is right or wrong, even if they make mistakes and you pick up the bill - it's called chargeable hours.
It's a "reprehensible business" (to quote one District Judge), but hey it's legal.
So the tip of the day is to challenge everything. If your lender or credit card co or even the debt collector say you own £XXXXX, then challenge it. 9 times out of 10 the figures are wrong. Or worse, some debt collecting agencies actually fabricate debts. Yes really!
Times are becoming bad, customer care is a sham and few can see it at the moment.
Replaced by call centres, poor administration and the propensity to terminate agreements and send out for the debt collection agencies.
In fact some loan agreement terms and conditions are so generous to the client (due to base rates at 0.5%) that finance houses appear to be forced into termination in order to turn a profit.
Unfortunately I cannot name names but car loans are a perfect example. Fall behind (there is still an ongoing recession in full flight) and they will send out default notices and terminations like confetti. But when you read the fine print, they have within their remit the ability to charge you with base rate plus 5%, (total 5.5%) but via the courts they can apply 8% and ask for all outstanding premiums to be paid in one lump (even though you may not have completed on the term of the loan). Then they can get the car back as well. What a way to turn a profit!
It's called churning. And churning is big business. But big business has a guilty secret of making mistakes, and burying them into your account. Then they take you to court. If you have the temerity to defend yourself they capitulate, but if you don't they take your money, even if you do not owe all they say. And worse, the court system adds in it's fee, and costs. And then there is the unbelievable statutory interest at a princely 8% yes, thats 7.5 % over base.
All in all there is a game going on in the UK called 'churn the debtor'. Every company, bank, mortgage lender, finance house and debt buying agency is in on the scam. They are aiming to transfer unsecured debts into secured debts via the court system. Then, hey presto, they will sell on the secures debt at around 3-10 times the price they paid for it. It's the bad side of capitalism, but the legal system has to take some of the heat - they love it. They get paid by the hour whether the case is right or wrong, even if they make mistakes and you pick up the bill - it's called chargeable hours.
It's a "reprehensible business" (to quote one District Judge), but hey it's legal.
So the tip of the day is to challenge everything. If your lender or credit card co or even the debt collector say you own £XXXXX, then challenge it. 9 times out of 10 the figures are wrong. Or worse, some debt collecting agencies actually fabricate debts. Yes really!
Times are becoming bad, customer care is a sham and few can see it at the moment.
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