Loans and Finance

Loans and Finance

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News and information about loans, money, debt, finance and business issues.

Friday, May 29, 2009

House Prices Rise

House prices rose by 1.2% in May.

However, before you crack open the champers, I would draw your attention to the following:

1 The figure is provided by Nationwide, an organisation with an interest in talking up the market.

2 One swallow does not make a summer, prices are 11.3% lower than they were a year ago.

3 Rising house prices will not necessarily get people back to work.

Thursday, May 28, 2009

Doomsday Scenario

The FSA is currently stress testing banks under the doomsday scenario whereby unemployment reaches 3.7M, house prices halve and the recession lasts another 1.5 years.

Needless to say, the FSA will not be publishing the results of its stress test; lest it becomes a self fulfilling prophecy.

The question is, what will the FSA do if it finds that banks are likely to fail under such conditions?

The FSA claims that its use of stress tests is "embedded in our regular supervisory processes". That being the case, why did it not identify in the past banks, such as Northern Rock, that were already "basket cases"?

Wednesday, May 27, 2009

Famous Names Scrapped

Abbey, Alliance & Leicester (A&L) and Bradford & Bingley are to be scrapped; or at least their names are to be consigned to the dustbin of history.

Santander, the Spanish banking group that owns all three brands, has announced that it will re brand them under the "flame-logo" and Santander name by the end of 2010.

Given that the above names currently exist and function side by side in many highstreets, it is fair to assume that once the re branding has occurred the next step will be staff cuts and office closures.

Tuesday, May 26, 2009

Fraud Soaring

The Times reports:

"Fraud is soaring during the recession and must be made a police priority, the senior officer heading the national drive against economic crime said.

The number of reported frauds rose by 64 per cent during the past financial year, with people from all walks of life falling victim
."

What of the sub prime pyramid scam knowingly operated by the world's leading banks, where valueless debt was repackaged and sold on in the financial version of "pass the parcel"?

Was that not fraud as well?

Friday, May 22, 2009

Threat To Credit Rating

Standard & Poor's have threatened the Chancellor's reputation, by saying that it was revising its outlook for Britain's "triple A" debt rating to "negative" from "stable".

Any future downgrading would cost the Treasury more in interest payments on government debt.

That being said, ratings agencies happily gave banks and their pyramid scam schemes triple A ratings in the past; why should anyone set much store by their ratings now?

Wednesday, May 20, 2009

It Will All Be Over By Christmas

Alistair Darling claims that the recession will be over by Christmas.

Isn't that what they said at the start of the First World War?

Labour, under Brown, simply refuse to see reality.

Tuesday, May 19, 2009

Firing Blank

Sir Victor Blank (soon to be ex chairman of Lloyds TSB) made two fundamental errors when he jumped at the "opportunity" offered to him by Gordon Brown to take over HBOS (which of course also meant that Brown could dig himself out of an embarrassing hole and avoid the spectacle of HBOS going bust):

1 He did not conduct a thorough due diligence into the loan book of HBOS before completion.

2 He trusted Gordon Brown, and assumed that he would never be "hung out to dry" (which of course he has been).

Never trust a politician, least of all Brown!

Monday, May 18, 2009

Shutting The Stable Door

The hapless and hopeless Financial Services Authority (FSA) has made another futile attempt to shut the stable door, on another of its regulatory failings, long after the horse has bolted.

PricewaterhouseCoopers has been called in by the FSA to investigate the conduct of former board directors of Royal Bank of Scotland (RBS).

The FSA wants to assess whether the RBS board, including former chief executive Sir Fred "The Shred" Goodwin (proud recipient of a £16M pension), behaved competently as the financial crisis destroyed the value of ordinary people's investments etc.

The FSA will examine whether the stock market was kept properly informed about the bank's financial position in the period surrounding its £12BN rights issue in the spring of 2008.

Too litte, too late!

Friday, May 15, 2009

Myners Lambasted

The hapless and hopeless Lord Myners was on the receiving end of another public humiliation yesterday, as the Treasury Select Committee gave him a well deserved public kicking.

Reviewing the shambles of Sir Fred "The Shred" Goodwin's £16.9M pension payoff, the committee stated that Myners was too much of a City insider to properly police payments and failed to provide "adequate oversight".

The Committee stated that Myners should have sacked Sir Fred, and that Myners should not have allowed the RBS board to handle negotiations with Sir Fred.

The Committee heaped further humiliation upon Myners' shoulders by calling him "naive".

Why does this man still have an official role in government?

Oh, how naive of me, because he is a friend of Brown!

Thursday, May 14, 2009

Online Check In Charge

I see that Ryanair is introducing a £5 online check in charge.

All very well, except that for all flights booked past 20 May all check ins must be via the net.

A nice little earner by anyone's measure!

Wednesday, May 13, 2009

Slow Healing

The message from Mervyn King, Governor of the Bank of England, is that the economy is healing but that the "process may be slow" (source The Times).

The underlying message being that the Bank will not be tightening monetary policy anytime soon.

So long as the politicians can resist trying to tamper further with levers of the economy, there is every reason to start to be optimistic.

Tuesday, May 12, 2009

Dead Cat Bounce, or Green Shoots?

There are tentative signs of a recovery in the housing market. The Times reports that the Royal Institution of Chartered Surveyors (RICS) have stated that 41% more chartered surveyors are reporting new buyer inquiries rising rather than falling in April, this is the highest reading since August 1999.

RICS also reported that estate agents sold an average of 10.6 properties between February and April, this is up from 9.7 in the three months to March.

On the retail front, the British Retail Consortium (BRC) reported an increase in like for like sales in April of 4.6% (the largest increase in 3 years).

The question is, are these green shoots or merely a dead cat bounce?

Monday, May 11, 2009

MyChoice Homebuy - A Lesson In Failure

The government's much vaunted scheme, MyChoice Homebuy, to help first time buyers onto the property ladder has failed.

First time buyers using the scheme, who had been promised money, have had to pull out of purchases at the eleventh hour as a result of the fact that the scheme has run out of money.

Seemingly, if the government is to be believed, the funding shortfall is as a result of the scheme being so popular.

Had the government thought this scheme through properly, this foul up would not have happened.

Friday, May 08, 2009

£50BN Bung

The Bank of England surprised the markets yesterday by announcing an unexpected extra £50BN in quantitative easing to buy government and corporate bonds, thus raising the total value of the quantitative easing plan from £75BN to £125BN.

The unexpected move indicates that the strength and timing of the recovery is still very much uncertain.

Thursday, May 07, 2009

A Tax By Any Other Name II

Tax
The government is to be congratulated for coming up with yet another ingenious way to tax us. Its plans for "voluntary" id cards in Manchester, at £30 a pop, are merely another tax raising measure.

Quite who will voluntarily hand over £30 to this money wasting government remains to be seen.

Tuesday, May 05, 2009

A Tax By Any Other Name

GreedThe government has found another way to tax us:

"Anyone letting a residential property would have to pay about £50 to register with a national body. This would include developers, buy-to-let investors and the growing ranks of 'accidental landlords' who cannot sell their homes and have been forced to let them out instead."

Source The Times

Unrestrained joy!

Friday, May 01, 2009

Bankruptcies Rocket

Unsurprisingly, given the state of the economy, the number of bankruptcies has rocketed. The Insolvency Service report that corporate insolvencies rose to 4,941 in Q1 of 2009, a rise 56% over the same period last year, and rise of 7% on Q4 of 2008.

Individual insolvencies rose by 19% to 29,774, this is the highest level since records began in 1960.

Personal bankruptcies rose by 23% per cent to 19,062, and individual voluntary arrangements (IVA's) rose by almost 12% to 10,713.

Unfortunately, things are likely to get worse before any improvement in the economy (as and when that happens) kicks in.