Friday 20 July 2012

Turning the Games into Gold

Everyone will have fun and games except the British taxpayer

Customs officers offer some good old fashioned British hospitality

Customs officers plan to walk off the job just one day before the Olympics. Moreover, they won't work any overtime throughout the games.

I suppose it is yet another example of the moral degeneration of Britain. It really has become an island of vipers. Bankers can run up huge losses on failed bet, and then present the bill to the taxpayers. Market interest rates are manipulated, and the regulators and BoE claim they knew nothing. Journalists tap phones of crime victims and Policemen take cash for inquiries. MPS fiddle their expenses. Celebs avoid taxes while lecturing the rest of us on paying more.Security firms are paid huge management fees for incompetence. So why can't a customs officer squeeze a few bob into his pocket by making life difficult for a traveler?

The answer should be "because it is wrong". But if we do not require a minimum standard of decency from a banker, a journalist, a politician, or a policeman, then why should we expect it from customs officers.

In the end, we get the country we deserve.

Wednesday 18 July 2012

Why the ship is sinking

I can't muster any outrage at the story that G4S will pocket its multi-million management fee despite failing to hire enough guards, leaving it to the hard-pressed and much abused British Army to guard the Olympic stadium.

There is no accountability anymore. We live in a country where scammers, blaggers and crooks run the show.

So lets just laugh along, while Nick Buckles grabs his hefty slice of cash.

Whose money is it anyway? It is only the taxpayer who is getting shafted here.

As we all know, the taxpayer is one sorry friendless fool.

Another day, another banking scandal

The stories are coming thick and fast. Here is the latest from the FT:

The Securities and Exchange Commission sued Brian Stoker, a former director in Citigroup’s structured credit products group, last year alleging that he misled investors in a $1bn collateralised debt obligation called Class V Funding III, which was comprised of securities tied to home mortgages.

The SEC alleges that he was negligent by failing to tell buyers that Citigroup had selected some of the assets and placed a $500m bet against them. The SEC is seeking disgorgement of profits and penalties from Mr Stoker. Unless a settlement is reached, jury selection is to begin Monday.

Mr Stoker is one of four individuals the SEC has charged with misleading buyers of CDOs and the first to go to trial. Citigroup agreed to pay $285m, without admitting or denying wrongdoing, to settle the case, but the judge has not approved the pact.

It is the numbers that get me.It is never $100,000 or even a million. These guys work in billions, and if they are playing it for laughs, they are running scams of a few hundred millions.

There is another interesting aspect about these cases. The pattern is always the same. Once caught, the bank in question denies any wrong doing, while the authorities settle for a cash settlement rather than go for a prosecution.

Getting caught doesn't really amount to much. No one gets jail time. Very few bankers ever lose their jobs. If the bank does something unethical, then its tough luck. They open the cheque book, write out a fine, say sorry and move on.

It is an arrangement that doesn't offer much in terms of deterring bad behaviour.

why doesn't Britain make things any more?

Tuesday 17 July 2012

The banking scandals just keep coming

This time it is HSBC and money laundering. From the BBC:

A US Senate probe has disclosed how lax controls at Europe's largest bank left it vulnerable to being used to launder dirty money from around the world.

The report into HSBC, released ahead of a Senate hearing on Tuesday, says huge sums of Mexican drug money almost certainly passed through the bank.

Suspicious funds from Syria, the Cayman Islands, Iran and Saudi Arabia also passed through the bank.

HSBC said it expected to be held accountable for what went wrong.

The damning report comes at a difficult time for the British banking sector, with standards and practices are under the spotlight

That is a cracking collection of rogue states and assorted bandits; Iran, Syria, and Mexican drug cartels.

The FSA had one official watching over two of the countries' largest banks

Just when you think you have heard it all, Lord Turner-head of the FSA-comes along with the following outrageous admission:

Part of the story of the FSA at that time is that we did have, we never used the word, a somewhat light touch regulation in particular in those areas of wholesale conduct.

We were only to a small extent focused on the activities of investment banks. We only had about five people on Barclays and five people on RBS. At one stage we only had one person that was shared between Barclays and RBS.

Yes, that is right; there were times when the FSA had just one solitary official watching over two of the largest banks in Britain. One of the banks - RBS - subsequently failed, requiring a massive financial intervention from the government. The other - Barclays - has just been found guilty of manipulating its LIBOR submissions. Pre-crisis, the FSA simply didn't understand what was happening inside the UK financial system. They missed all the signs, because they couldn't be bothered to assign any staff to watch over these two behemoths.

UK government could announce today the immediate closure of the FSA and the end of financial regulation. It would not make a jot of difference to the likelihood of avoiding another financial crisis.

For all practical purposes, UK investment banks have been unregulated since the creation of the FSA. It begs the question, why start now?

Increasingly, I'm beginning to realise that the financial crisis wasn't the result of a few deviant bankers. In the ten years before the crash, this country created the infrastructure for a financial disaster. We had a central bank that claimed to be focused only on inflation and had no interest in asset prices. Yet, when house prices started to wobble in 2005, the monetary policy committee promptly cut interest rates, sending house prices skyrocketing northwards.

We had regulators who couldn't be bothered to actually staff teams to follow developments in the largest banks in the country. It is also a fair bet that the few solitary regulators assigned to look over the Barclays and RBS didn't have a clue what those banks were doing.

And we had, inside each bank, a crew of corrupt bankers, who would, proverbially speaking, sell their grandmother to a slave galley, if they thought the transaction would pay them a groat. Over in Westminister, our elected MPs were busy writing up falsified expenses, and paid no attention to the unfolding catastrophe that the financial sector that was cooking up the river.

What did the rest of us do? Those of us who owned property loved every minute of it. Those who did not were left out in the cold.

Now, five years after the crisis, the truth about our desperate situation is beginning to slowly emerge. The economy is a wreck. It is uncompetitive; starved of credit, and cannot grow. Our government cannot reconcile its revenues with its expenditures and it is running up, year after year, massive and unsustainable deficits. The Bank of England is printing money in order to buy government bonds from the banks. For their part, the banks are depositing the money back into the Bank of England. Across the Channel, the economies of our main trading partners have begun to implode.

Who is to blame? I'm beginning to think that it doesn't really matter any more. It's not as if anyone will be held to account, because we have collectively forgotten what it means to bear responsibility for our actions.

Monday 16 July 2012

UK Bank pre-tax profits higher now than before the crisis

Who is paying for the crisis? It is not the banks, that is for sure. The Bank of England may have cut their interest rates to zero, but that hasn't stopped the banks from increasing their net interest rate earnings; the difference between what they receive on their loans and what they spend on interest payments on deposits and other financing operations. Since the crisis began,their interest earnings have increased by about £15 billion per half year.

Now, the banks are carrying a large stock of bad loans. That is reflected in their higher impairment charts, which have increased quite a bit (see chart below).

But what about the bottom line? Have banks seen a huge fall in pre-tax and provisioning profits? Of course not; profits are higher now than before the crisis.

The financial crisis has been a sequence of scams perpetrated by bankers. In the 10 years after 1997, UK banks fired up an almighty housing bubble. By 2007, the banks were full of bad loans and dodgy investments. But that didn't affect the income streams of banks. Instead of sucking up the losses, banks went crying to the Government and the Bank of England. The Government handed over uncountable billions of pounds of tax payers money. The Bank cut interest rates to zero, screwing every depositor and saver in the country, and ensuring that banks became even more profitable after the crisis than before.

Despite all the bad investment decisions, price fixing, miss-selling, money laundering and insider trading, the banks are doing better than ever. There are no consequences and no accountability. The bonuses continue to be paid, profits are up and no one except those chumps Bob Diamond and Fred the Shred lost their jobs.

It is time to stop blaming the banks. It is our fault. We let them get away with it. We allowed them to walk all over us, to pick our purses and then walk away. We didn't stop them when they powered up the bubble. We allowed the banks run the economy into the ground. We didn't stop them when ransacked the treasury so that they could continue to pay huge bonuses as the economy contracted.

We deserve to be rolled over and screwed because we never had the collective will to put a stop to it. We didn't take responsibility for our own country and cry out "enough". We just let it happen to us. Now we are paying for our spinelessness.

(In case, anyone is wondering where this data comes from, well, it is from the Bank of England's very own Financial Stability Report.)

Sunday 15 July 2012

More finger pointing and blame-storming

Barclays reckons other banks were also meddling with LIBOR. From the BBC:

Senior managers at Barclays have warned staff in an internal memo that the Libor scandal will envelop other banks. The memo circulated on Friday said that revelations about its rivals would "put in perspective" Barclays' culpability.

Will other Bank CEOs follow the lead of Bob Diamond and resign? If Bob had to go, then so must others.

Fear and Trembling - the US Justice Department is building a prosecution to hold bankers to account for LIBOR fixing

According to the New York Times, the US Justice department’s criminal division is preparing cases against several financial institutions and their employees. And yes, that means Barclays and its traders. Indictments could come later this year.

The newspaper also reported that UBS could be next to receive the Barclays treatment. The Swiss bank is the next "target for regulatory action". In the coming weeks, we should expect an explosion of early retirements of senior bank officials, along with lost bonuses and a snowstorm of contrite press releases.

Evil dictators - the body count

(click on the graphic for a larger version)

Go on....have your say....who was the worst dictator evah....

Saturday 14 July 2012

Another seedy story of theft, tax evasion and dishonesty

You just can't rely on those Swiss bankers any more. There was a time when the wealthy and well connected could open up anonymous numbered bank accounts in Z├╝rich and Geneva, deposit huge sums of money, and no one would ask any questions. You can't do that any more. These days Swiss bankers want to see your passport, 10 years of utility bills, and the contents of your handbag. Even if you manage to open up a dodgy account, an employee in the bank might appropriate your details and sell them to the tax authorities back home.