Loans and Finance

Loans and Finance

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

Friday, December 24, 2010

The Great Railway Seasonal Con Trick

The train companies this Christmas are once again showing their utter contempt for their customers.

In order to meet punctuality targets they are running reduced and amended services, thus ensuring that their pockets are lined (by avoiding fines) but making our journeys even more miserable and tedious than they were before.

Much like the turkey, these companies can get stuffed!

Thursday, December 23, 2010

Santander Screws Up

Santander, the bank with the highest proportion of customer complaints in the UK (216,158 complaints in the first half of 2010, has decided to end the year on a "high" by sending out 35,000 customer statements to the wrong customers.

Well done lads!

Wednesday, December 22, 2010

Cable Denuded of Powers

Vince Cable, the Business Secretary, has come spectacularly unstuck this week by falling for the charms of two young female reporters posing as constituents.

His fall from grace began with his boasted belief that his resignation could bring down the coalition, his self implosion was completed later in the day when the BBC leaked part of the Telegraph "complete expose" (that the Telegraph had "mysteriously" chosen not to publish) where he stated that he had declared war on Rupert Murdoch.

Cable has now been denuded of his responsibility for media regulation, something that he was passionate about and that was a major part of his office.

It is unlikely nthat he will remain in this severely diminshed role for much longer.

Monday, December 20, 2010

RBS Pushes For Bonuses

Despite the fact that it is now a state owned bank (one that almost destroyed the UK financial services sector during its previous existence as a private bank), RBS is trying to push the government to allow it to pay bonuses.

Maybe the government and the hard pressed taxpayer might look upon this request a little more favourably, if the FSA first published a full report into its 18 month "investigation" in to RBS.

However, the FSA is very reluctant to do this and indeed has handed editorial control over to RBS for whatever whitewash is published.

Friday, December 17, 2010

EU Crisis Mechanism

The EU have come up with plans for an EU financial crisis mechanism that, in theory, will avoid piecemeal solutions to future financial shocks threatening the Euro.

All very well, maybe. However, the mechanism requires an adjustment to the Lisbon Treaty (this will mean some members of the EU will have to hold referenda).

Thursday, December 16, 2010

FSA "Investigation" Outed as Useless

The failed financial regulator, the FSA, has been having something of tough time recently owing to its own incompetence and crass handling of its 18 month investigation into RBS.

Having exonerated the board of RBS and company, the FSA steadfastly refused to publish any form of report. Clearly the concept of "transparency" is not understood by those who inhabit the ivory towers of the FSA.

However, having been subjected to a barrage of well deserved ridicule and criticism, the FSA "relented" and agreed to publish a redacted report in March 2011.

Needless to say, expectations about the quality of the report should not be raised too high. In order to publish anything, the FSA claim that they will need to garner the permission of RBS first (ie RBS will have editorial rights over the report).

Impressed so far?

I'm not!

However, this litany of incompetence does not not end here. It transpires that the FSA exoneration of the RBS board may in fact be nonsense, and that the investigation nothing more than an incompetent whitewash.

For why?

WikiLeaks have published a cable that summaries a meeting between Sir Philip Hampton, the new chairman of RBS, and 3 US politicians.

During the meeting Sir Philip allegedly noted that he thought that the previous RBS had failed to live up to their "fiduciary duties", and did not conduct adequate due diligence before buying part of ABN Amro in 2007.

That hardly fits in with the FSA whitewash that exonerates the previous board.

Could someone please tell me why the FSA is still in existence?

Wednesday, December 15, 2010

FSA Digs Itself Deeper Into The Mire

The beleaguered and failed regulatory body, the FSA, has managed through further ineptitude to dig itself (as if that could be possible) further into the mire.

Having steadfastly refused to publish its report into RBS (the report that exonerated the directors and company of any wrongdoing), it has now agreed (under intense pressure) to publish a heavily redacted version of the report.

Good enough?

Not really:

1 The report will be heavily redacted.

2 It won't be published until March 2011.

The FSA really doesn't get it, and is demonstrating why it has become an irrelevancy.

The Country's Debt Burden

As the country faces cuts in government expenditure that are, "apparently", swingeing and ruthless it is worth putting a number of issues into context:

1 The overall debt burden of the country is a staggering £4.8 Trillion.

2 The cuts are cuts in planned inflationary increases in government expenditure, not cuts in actual amounts being spent.

3 The deficit in the Local Government Pension Scheme in England has more than doubled in the past three years to £100BN (7% of the UK's annual economic output).

Despite whatever the politicians might claim, the "cuts" when taken into context are but a pin prick in the backside of the shocking level of debt burden that is crippling the country.

As regards the pension black hole, the solution that the politicians will force on us is going to be increased taxes and increased contributions from members.

Neither of the above solutions will be popular, and will be delayed thus exacerbating the problem. The correct solution should be to change the pensions provided to the public sector to that of defined contribution (as per many in the private sector).

Tuesday, December 14, 2010

House Price Gloom

Those who rather foolishly rely on the capital appreciation of property (ie house price rises) to provide them with a psychological feeling of being wealthy, are set to be rather disappointed this Christmas.

The Royal Institution of Chartered Surveyors (RICS) reports that house prices kept falling in November, as a result of the slow economy and lack of funding for first-time buyers.

The number of transactions is very low and the overall market subdued.

This moribund market is expecting to continue into 2011.

Thursday, December 09, 2010

Buy Like Hell?

Mike Slade CEO of Helical Bar is advising people to buy investment property "like hell", as he claims never to have seen such a gap between yields and borrowing costs.

All very well, maybe, if you are a professional property company with many years experience. However, the rest of the country may well be advised not to follow that advice:

1 Borrowing the money from the banks, at a decent rate of interest, is not that easy.

2 Interest rates in the next year will most likely rise.

3 There are buying opportunities (eg distressed sales etc). However, these are most likely to be snapped up by companies such as Helical Bar.

4 Helical Bar doubtless has a greater cash cushion than most, to enable it to ride out a crisis in the event that they are wrong.

Wednesday, December 08, 2010

Iceland Leads The Way

Iceland has turned the corner of its recession, its economy grew by 1.2% in the three months to the end of September.

How has this been achieved?

It defaulted on its debts, allowed banks to fail and let its currency slide.

Meanwhile, Ireland has passed an austerity budget that will increase its debts and ensure that its economy will stagnate for years to come.

Why cannot Ireland emulate Iceland?

Simple, it is shackled to the Euro. As long as it chooses to put politics above economics its economy will remain moribund.

The Euro itself, despite achieving the political "success" of bailing out Ireland, is under renewed pressure.

For why?

The markets do not accept, quite rightly, that applying sticking plasters to individual failing states is a policy that will work. A Euro wide policy is required to resolve the crisis, eg the issuance of Eurobonds. However, the members of the Eurozone have neither the political will or economic strength to enact such a policy.

Tuesday, December 07, 2010

Minuscule Chance Of Euro Collpase

Stephen Nickell, a member of the Office for Budget Responsibility (OBR), told the Treasury Select Committee that there was a minuscule (1.7%) chance of the Euro collapsing.

Ireland, despite initial fears of it not being able to pass its budget package, looks like it has gained enough support for it to be able to approve its budget this afternoon; thus offering much needed respite to the beleaguered Euro.

Time will tell as to whether the 1.7% (such a precise figure!) odds quoted by Mr Nickell reflect reality.

History is littered with the corpses of previous attempts at currency unions.

Monday, December 06, 2010

FSA Humiliated

Unsurprisingly the FSA's attempt to hide the details of its 18 month "investigation" into the near collapse of RBS, via a pathetic one paragraph "a series of bad decisions was made" fig leaf, has brought down upon it the scorn it so richly deserves.

Sir Fred "the shred" Goodwin is said to be perfectly happy for the report to be published (not that his approval or disapproval needs to be sought), and indeed George Osborne is pushing for the report to be published. RBS is, after all, a public asset.

However, the FSA are defiantly sticking to its guns and refusing to publish until a "legal view" could be established that it could do so within the exemptions of the law.

A nice "excuse" clause such as that may well be appropriate for certain private organisations. However, as noted, RBS is a public asset it is in the public's interest to see the results of the FSA's labours.

Quite why the FSA is so determined to keep the report hidden from public view is causing many people to wonder as to whether it is protecting RBS, or itself and its investigation, from rigorous scrutiny.

Either way the FSA, by this shameful episode, have demonstrated that it has no future.

Friday, December 03, 2010

FSA Ridiculed

Unsurprisingly the FSA's pathetic refusal to publish details of its investigation into RBS (which let management off the hook, and only mildly rebuked them by saying that the near collapse of RBS was the result of a series of "bad decisions") has received the scorn that it so rightly deserves.

The Telegraph quotes Lord Oakeshott, a Liberal Democrat Treasury spokesman:

"We cannot learn the lessons of the worst corporate crash in British history if we can't see the evidence."

Lord Oakshott went on to say:

"Most people, taxpayers and City experts alike, simply will not accept there was no failure of corporate governance on the part of the management, board and regulator of RBS."

One wonders if the FSA's reluctance to publish the details of its investigation is designed to save the blushes of the ex board members of RBS, or to save itself and its pathetic report/"findings" from rigorous scrutiny.

Why is the FSA still in existence?

If someone has a copy of the report, I suggest that they leak it to WikiLeaks (currently accessible via this domain http://213.251.145.96)

Thursday, December 02, 2010

A "Series of Bad Decisions"

The FSA has announced that it will not take any enforcement action against the ex CEO of RBS, Fred "The Shred" Goodwin; the FSA has now closed its 18-month probe into the conduct of RBS executives, the acquisition of ABN Amro in 2007 and a 2008 rights offering.

The Telegraph quotes the FSA:

"The review confirmed that RBS made a series of bad decisions in the years immediately before the financial crisis, most significantly the acquisition of ABN AMRO.

The review concluded that these bad decisions were not the result of a lack of integrity by any individual and we did not identify any instances of fraud or dishonest activity.

The competence of RBS individuals can, and will, be taken into account in any future applications made by them to work at FSA regulated firms.
."

The last sentence is the FSA's attempt to add "stones" to their statement of the "bleedin' obvious", namely that "a series of bad decisions" had been made.

The FSA won't disclose details of its investigation, they expect people to blithely accept their opinion and move on.

Not really very much to show for 18 months of "investigation"!

Did not our government, during the run up to the election, say that they were going to shut down the FSA?

Wednesday, December 01, 2010

Mervyn King Under Pressure

Mervyn King, Governor of The Bank of England, is the latest prominent figure to be embarrassed by the Wikileaks saga.

A cable sent by Louis Susman (US Ambassador) to Hillary Clinton in February 2010 summarises Mr King's views about David Cameron and George Osborne, expressed during meeting that he held with the ambassador.

The Governor opined that Cameron and Osborne "had a tendency to think about issues only in terms of politics, and how they might affect Tory electorability", and was worried about their lack of experience.

There are some who are now calling for King's resignation, citing his alleged "thirst for power". Quite why a private conversation with the US ambassador, albeit embarrassing now that it is leaked, should force him to resign is beyond me.

I suspect those who are making this call are doing so based on their personal dislike of the man, rather than on any specific "offence" and alleged "breach of neutrality" that they claim that he has made.