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The Inside Man

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  1. They don't have a licence so they cannot lend, but they can guarantee. Are they able to assess the risk? No. Do they have systems to support this? No. Do they have any experience in this area? No. Have they been advised by the banks on this? You bet. Shouldn't a council be focused on delivering key services to people in the area, not underwriting financial risk? Is that what we would expect to be a good function of a council? One question is, does this represent a good use of Council Tax payers' money? Another question is, does this exist in their charter as a Council - i.e. does this represent a service you could expect them to provide? Third question is, do they fully appreciate and accept the risk that they are transferring upon themselves, and are they happy to stand by this risk? What happens if the risk materialises... will they resign as they have squandered money that could have been more usefully spent on schools, roads, refuse and other services? The other options is to threaten to sue them for any materialised losses. That might focus their minds as to whether they are able to assess the risks. I am sure there will be precedent for this - look into the US and how the councils "invested" in pension funds - a similar financial instrument, but at least one with more chance of a material gain than an underwritten promise. T.I.M.
  2. I am really surprised how the focus of the credit easing by the central banks has been interpreted as a good thing, with the markets shooting up and the press doing their best to create an illusion of "yay, we're all saved". I suppose they are all playing their part. However, if you look closely at what has been done, where the money has gone, and what the central bankers have been saying there is a clear clue as to why this has been done. The Euro is now toast and the overwhelming expectation of all central banks is that it is game over for the single currency. The credit provided to the banks will enable them to "weather the storm" of the imminent break-up, the shockwave of which will impact most of the major banks with a number of defaults, write-downs and asset price adjustments. The lack of credit during this period would likely break them, so in step the central banks to ensure they all remain afloat. The experience of last time has led them to believe that acting pre-emptively may well keep things from going completely ballistic... they hope. In reality they don't really know whether it will or even if it will be enough, but there is a palpable sense of fear amonst those in the know now. Brace yourselves, we're nearly there. I'd be surprised if it made it beyond January. T.I.M.
  3. Oh I see, sorry, I didn't get from your earlier posts that you are a troll. Never mind, was nice exchanging messages with you for a while. I'd better get back to running my business and helping my clients now. Cheers.
  4. Agreed. Half of our business is trying to help clients build this capability in house. Quite often they don't have it. The other half is doing it with them... we aren't an IT firm so we sit alongside the client and deal with the IT firms. Might also be worth looking at why projects fail. I'm biased, but most often is is because the requirements were so badly written that the estimate was poorly formed, and the contract was written so tightly that it leaves both sides with nowhere to go. We see that ALL the time. Very rarely is it becuase a technical solution doesn't work (since most things can be made to work, even if they aren't 'optimal').
  5. Problem is, the private sector generates money and contributes to GDP. Public sector soaks it up and spends it. You might not agree with the state of the world, and how things are run, but the profit motive does tend to keep people in jobs that they pay taxes on so the public sector can be funded. I guess posting on here that I work for a big-4 fim as akin to saying I'm a banker. Again, you might not like the description but it's a statement of fact rather than opinion or boast. I'll keep my head down...
  6. +1 And here too (North Cheshire). What I can't understand is that properties coming on the market here are getting more and more expensive, with prices that would make people in the Surrey commuter belt feel like they were being mugged. There is no good reason that prices here should be comparable with the home counties or Greater London, yet they now are. The end result is that most of what is on the market has been stuck there for a long time, and won't sell at anything like that price, and what is coming to the market is WAY overpriced and will do the same. The market is stagnant, and the transaction rates are awful. The odd ones that do go SSTC also seem to come back on a few weeks later, albeit at the same (or higher!) price. I suspect the chain or finance proved too much. At the price point we're looking at there is absolutely nothing interesting, or even worth looking at. A couple of years ago when we started looking (nervously) there would be 2-3 a month we would investigate further. Now there is nothing, and there hasn't been all year. Like you, I'm rather sick of trawling Rightmove as a result.
  7. Sorry, that's twaddle. The office of government commerce (OGC) agreed rates with the IT vendors for the provision of different grades of staff, including architects. This comes under a contractual framework called Catalyst. Catalyst rates for a typical architect are around 750 pounds a day. The fully loaded cost to the consultancies for this person is about 500 a day, either contract or permanent, so the margins are not as massive as people think. When you then take into account the risk that the businesses are taking, and the costs of bids/proposals/management overheads, government contracts are typically not that profitable.... unless you can get a large one. The OGC and Whitehall are pushing back against these, so they are likely to find themselves in a position where they get "no bid" responses to a lot of small unprofitable pieces of work soon. For us, I'd rather put people into Banking/Telco/Media/Utility jobs where we can make a far better margin. Government contracts are very hard and expensive to win, soak up resources and make feeble margins. I left banking to run a technical consultancy for a big-4 firm so I'm painfully aware of this.
  8. Check your contract... in particular for clauses that might allow them to vary the monthly lease charge (which is usually only done in cases of personal lease purchase, where a payment is based on a variable interest rate is used related to an interbank or finance house rate... these aren't the norm in company cars). You entered into a contract for this car, at a quoted rate. Unless they have written the ability to change this into the contract then simply write back and refuse to accept the changes, pointing out that they are in breach of contract if they try to enforce the change upon you. Even if they have written a clause allowing them to vary the payment check to see if they have provided an option for early termination in such a case. If they have not, then there may be grounds for this being declared an unfair contract. UK contract law does not allow for someone to construct a lease contract that allows them to subsequently vary payments without your agreement. Imagine if they suddenly decided to up it by 30, 70 or 200 percent because they felt like it. You should have protection from this in the contract, if it is fair and legal. IMHO it sounds like they are trying it on. They know that they will be hit for VAT on servicing and maintenance costs so they are using it as an excuse to bump up the payment, somewhat disproportionately too! Check your contract. Push back. Don't accept it. Threaten legal action or invoke a termination clause/process (both of which cost them a fortune so they are keen to avoid). Good luck!
  9. Looking at the locations announced (Edinburgh, Chester, Halifax)... yes, it's HBOS IT, probably the BoS Corporate IT team and the Halifax Retail IT teams. It was inevitable once Lloyds made the decision to migrate customers over to the Lloyds IT platforms, which was done in early 2009. Since then they have been needed to design and implement the migration, but now.... I am still amazed that people are surprised by this. It was a part of the deal, Lloyds have to make the acquistion work for their shareholders, and nobody announces in excess of 50,000 redundancies in one go unless you don't care about shareholder value (and in reality, many of these people are needed through the integration process, which can take from 1-5 years). There is still quite a bit of pain to come, both from the private sector (M&A work and rationalisation) and public (impact of quango slaying and downsizing). Jobs take time to be lost, both through the need for people to merge (as above) or the impact of indecision, notice periods, etc.
  10. HMRC systems (NIRS, NPS) were constructed under the contracts with Accenture and Capgemini. PricewaterhouseCoopers doesn't do that kind of work anymore (after selling it's IT arm to IBM in 2002). And £800 a day was the low end of the scale, although government work is done under the Catalyst framework these days, so the rates are much lower and more comparable with contractor rates. Agree totally with the last point though.
  11. I sense some of the same where we are. I think the prices were just over-inflated through to 2007, and then when it "crashed" we ended up with a segmented market. At the mid-top end those that believed that their house "was worth it" have stuck to their crazy valuations. At the low-mid end there just has not been much movement as there have been no FTBs/mortgates/etc... As a result the market has ground to a halt. We see a lot of new property (each day!) coming onto the market, but it's still at prices that they hope they could get at the top of the market or beyond. We've been watching a cluster of houses that were being sold at around 650k at the peak in '07... in the past two years they have been on and off the market at 750, 799, 850k... so they are now priced higher than the equivalent home in Hertfordshire or Buckinghamshire on a commuter line... and surprise surprise, they are not selling. Realistically they are worth probably still worth about 600-650k in comparison to the other properties in the area... so where has the other 200k come from? Is this craziness on behalf of the buyers, or are the EAs also complicit in driving up the market in order to make more money? Who is setting these ridiculous valuations? One house near to us has gone SSTC three times in the past year, and then come back onto the market. We asked the EA whether this was a survey issue, and they said no, it was a finance issue for the potential buyers. When we dug into it a bit deeper, we found that the first surveyor priced it at 150k less than the agreed price, and it fell through, and each time it sold since it's been the same problem. YET the price remains the original asking price.... figure that one out! There are a few examples of price drops, but it feels like they are just starting. IMHO it takes a long time for the prices to come down becuase it is dependent upon the surveyors seeing that a similar house sold for less and then factoring in recent falls, but since an average sale takes 3-4 months to complete it might result in just 3-4 steps down in a year for a particular house/style of house in a street/area. And in the meantime, the stubborn sellers will hold out for the price their house is "worth", and no less. Stalemate.
  12. You are definitely not alone. We live in the north part of Cheshire, and although we have a nice house now we are "stuck" and can't trade up to the sort of house that we had our sights set on as our next and "final move" when we bought this one. House prices are now totally out of step with where we are, and I think overpriced by about 30% even by current standards. We are constantly having debates with estate agents and sellers that think we are a suburb of London! My wife and I have been looking for over a year (even though we know it's not the right time to buy... it's just a head v heart thing), and we have found nothing we can afford that makes sense. Where we are, houses are priced in direct comparison with a commuter zone of London. As an exercise we recently did a search of a 40-min radius of London stations, and there were better, cheaper and more houses that we could buy than where we are... stuck between two Northern cities about 5 miles from an industrial town! It's just absolutely bonkers, and totally unjustifiable IMHO. Unless prices come down by 25% or more I can't see us moving. I believe they will (as per my other post on here) so my head says stay put for now... even though my heart is on the lookout for a new place to live. The galling part is that like many on here we've done everything we could to ensure that we were "protected" and lived within our means. Others we know didn't, got into trouble, and now my taxes are paying the mortgage on their lovely house whilst we can't afford to buy one like it. If we werem't happy and well adjusted it would be enough to drive you to drink! T.I.M.
  13. I stand corrected! Hadn't realised we'd gone over the 2% mark in a month, partly becuase I was tracking the wrong index (one of the VI ones!) T.I.M.
  14. Lots I agree with in there. I think 3-3.5x salary as a norm is a sensible and reasonable long-term average (and goal), and as usual with a correction we could overshoot. I think on the salary side you have to take "household" salaries into account, as the increase in two-salary households has driven up the average (to over 30k or thereabouts). That might be less so in future, but it's the norm for many (especially those mortgaging themselves up). But yes, I'm aiming for about 100k as an average at the moment and I can see falls down towards that, maybe even if we overshoot. I am naturally conservative tho, so I'd be happy with 30%. Any more is a bonus!
  15. I was about to register my disagreement with Shylock, but I think you've hit the nail on the head. It's relative. You can't equate equity and other liquid assets to houses, they are highly illiquid markets and behave differently (i.e. more slowly). Back to houses... look at the "practice crash" we just had. 1-ish% falls each month. Yes, it equates to 15%-ish over a year, but we won't get 5% per month as some here would like. I can't ever see falls of more than 2% per month happening, even in a panic situation, as there is not enough motivation in the market for all sellers to need to sell and far too much emotion in the assets that we are talking about. And it's never happened, historically. Personally, I think we're talking about 3-4 years of falls, from later this year through to 2014... and somewhere in the region of 5-10% per year initially, rising to about 10-15% and then falling back towards stablity. Overall I can see something like 30% coming off prices over this period. T.I.M.
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