With so many countries around the world now racking up debt like there’s no tomorrow it comes as no surprise that new indices are being launched to track this. It will be interesting to see just how accurate the indices are or if they are able to give advance warning. There is an article on it in the FT here.
Category Archives: market crash
It’s painful to write this post – £325bn in toxic assets dumped on us taxpayers by the morons at RBS whilst they pay one of the men responsible for this horrific damage over £600k per annum as a pension. Really, it makes my eyes water! And what’s worse than the sheer injustice of it is that this is a damaging move for several reasons:
1. The market needs to find it’s new balance and putting in a ‘false’ supply of money will only deepen the trouble we’re in
2. If we had propped the banks up to a small extent then we should consider it a lost investment and walk away but now, with so much at stake we are probably committed to the bitter end
3. If bankers are not punished for their behaviour then they will do it again, safe in the knowledge that their actions have no repercussions for them
4. The preservation of these part nationalised banks is now a political imperative so they already know they are safe
Bankers must be grinning ear to ear.
When banks are under pressure not to pay bonuses or just to reduce the bonus levels what do you think will happen? I expect those at the bottom of the tree – administration and ancillary services staff – will be the ones to suffer. How long before we hear ‘We’ve cut bonuses this year by 50%’ sotto voce ‘by only paying the top people’? After all, they are the ‘skilled’ people they can’t afford to lose. What a disgrace.
And what of the latest idiocy to come from Government – blaming everything on bankers when it was they who put in place the state of affairs that led/allowed the banking behaviour to develop. Despite their greed I do have a little sympathy with the bankers when they say what they did wrong was fail to anticipate the scale of the collapse. They worked within the framework that existed in order to maximise profits. That’s what shareholders expect.
The fact is that government policy (low interest rates for far too long), regulatory conditions (lax rules and not enough policing) and the (entirely natural) greed of bankers led virtually everybody in the banking industry to participate in practices that ultimately led to our current situation. The fact that they didn’t understand many of the financial instruments they were using is the part for which they cannot be excused. They didn’t understand the risks but proceeded with the gamble anyway. Or worse, they understood the risks and thought they could escape with the cash before being rumbled. Who could have predicted they would be rumbled yet still escape with the cash?!
Those at the top walk away with their millions from years of gambling excess while the rest suffer job losses and eroded savings. As usual the blame and the money goes right to the top.
UPDATE: an interesting take on the american solution
The Financial Services Compensation Scheme (FSCS) has confirmed that save as you earn share plans are covered by the scheme. You should bear in mind that if your savings in such a scheme are held in a bank or building society they will count towards your total £50,000 compensation limit with that institution.
These days it is important to remember that the FSCS also protects investments. After all, cash is likely to offer less attractive returns now that interest rates are coming down. Now it might be said that cash is a risk – could be time to look at fixed income products.
Very interesting article on bankrupt countries The Ghost of Argentina: What Happens when Countries Go Bankrupt? – SPIEGEL ONLINE – News – International
The article contains well researched analysis of the situation in Argentina, Pakistan, Hungary, Ukraine and others. Of course a big worry is that the smaller countries might drag some larger countries down with them.
It’s fairly depressing reading so I recommend listening to Glenn Gould play Bach as an antidote!