RandomBear

Why on earth would I want to do that (having just said it was a crappy business)? And moreover who would bank with me? Did you even read the post?

The Government has gone on record several times saying they want more banks so I don't think this is actually an issue. It's convenient for you to pretend it is though. As usual nobody wants to address a serious point - namely that retail banking is a crappy business and has required far more bailouts since time immemorial than investment banking.

I'm not going to respond to the final point about Goldman which is a bit silly. Your understanding of retail banking is unfortunately poor as well. There is a lot of risk in retail banking. The FSCS which already exists is already a bailout. You call it a subsidy, which suits your argument, but basically it is a bailout which exists because even retail banking is risky. Retail banking, as well as being risky, is also very correlated. In bad economic times, house prices go down, which hits your mortgage collateral, then people lose their jobs which leads them to withdraw savings and stop paying mortgages. Retail banking is not some sort of fantastic business that makes money with low risks. In fact, I would probably rather be in a business with some (low) amounts of leverage and far less correlation between my business lines. If retail banking is SUCH a great business then why isn't there a queue of people ready to enter it? [e] Bloo thanks for your reply, this post also makes sense in response to your own comments about Glass-Steagall. With regards to "was it a Ponzi scheme?", yes I guess it was. Many did not see it coming. Some did. Sadly the ones who saw it coming were generally allowed to be shouted over by those making the most money for the bank, which was, surprise surprise, those turning these types of scheme and who did not see it coming, blinded by greed. That's the real tragedy/stupidity, depending on your view.

OK worked out how to make the multi-quote feature work at last Bloo, it's 100% agreed, even in the City, that the recycling of securities and the ever spiralling levels of complexity were not actually fulfilling any purpose other than stopping ratings doing their real jobs. Nonetheless, I would go so far as to say that if you really want to look for the source of those issues, point your fingers no further than the ratings agencies. People do not do things without incentives, bankers more than anyone. The ratings agencies and their broken and inconsistent models created a whole industry based around ratings arbitrage. I agree that this was stupid. Bankers know it was stupid. Some bankers were the ones gaming the system. But the poor regulation and the poor models of the ratings agencies are what encouraged them. I'm not trying to avoid blame, just pointing out that much of it is currently misdirected. With regards to your final point, I'm not sure, I don't remember that really happening apart from with HBoS/Lloyds. RBS was so big it seemed to be consensus that it had to be helped, especially after Lloyds had already been. As for NR/B&B that wasn't much of a rescue. What other ones are you looking at? I agree, but the problem is that most old fashioned banking lines of business are actually quite risky. They are all actually incredibly correlated to the economy, particularly mortgage and unsecured lending. Some areas of merchant/investment banking are not - witness Goldman making huge amounts of money this year. So there is an INCENTIVE for retail bankers to diversify into investment banking. If you fix that issue then I can agree with you whole heartedly.

Well done, you wrote a 10 line rant without a single scrap of reasoning or sensible argument. Good work.

Well, I can only speak for myself and those close to me, but as for the younger people in the City that haven't yet been spectacularly enriched and actually still work very hard, we would prefer that the Governments of the world had managed to come up with fairer, tougher regulation, rather than giving up on that plan and just going with a spectacularly unfair 50% extra tax instead which won't go any way to stopping these sorts of things happening again in the future.

I don't know why I bother sometimes but reading through this thread I see a number of well argued yet balanced posts all in favour of SOME FORM of banking, and then a load of mindless idiocy and amusing one liner replies slamming them. Don't be surprised when there's nobody left to argue with, gents. Noone seemed to actually have anything sensible to say about the fact that banks act to deploy capital more effectively and allow the "matching" of capital requirements to investors. Without banks to do that "matching" it would take a business owner quite literally years (and I would wager cost him more) to actually find investors to lend him the cash he needs to invest in the business. Also, once again everyone skips over the fact that if the Government had not stepped in it would not have just been banks going bust, it would have been all of your retail deposits disappearing, god knows how many more small and medium sized businesses (and even large ones) and far higher unemployment. The bailout was far from desirable, hell, noone IN banking wanted it, but it was necessary. Probably more for the general public than for the "banksters", actually.

This is not even vaguely true. Please do not spread misinformation. Even if you cannot directly invest in individual stocks (which I do not believe is true), there are plenty of ways of investing in pretty much any country's stock market. I am heavily into Brazil at the moment, and I certainly do not have a Brazilian Real bank account.

Er George Osborne urged the BoE not to hike rates next year just the other day, so unless you're gambling on Vince Cable esq, I don't think there's much chance of either of them wanting this...

That's not the same as an actual base rate hike, which I think is what the OP was talking about... You are right, long dated IRs will go up and yield curves should steepen.

http://www.dailymail.co.uk/money/article-1237623/Bank-Englands-Monetary-Policy-Committee-member-Adam-Posen-tells-banks-stop-moaning.html A few choice tidbits 'Everyone whinges when their piece of sod is trampled on. 'It is not credible that every hedge fund manager in Mayfair is going to move to Zug. 'To the degree there were real reasons that the City was Europe's and one of the world's leading financial centres, those don't disappear overnight and those don't disappear because some activities are constrained.' On the bonus tax: 'Yes they are going to whine and complain. But sorry, it is not obviously bad policy or obviously unjust. 'If they want an alternative, let them make a constructive alternative (suggestion) to pay for cleaning up the mess.'

Zero chance pre-election, sorry.

At the moment many EAs are willing to take on property for as little as a 1% fee. Even the websites where you effectively do sell the property yourself charge 0.5%, so 1% is pretty good. On a 30k flat (let's assume you can sell it there) it's only 300 pounds (!) and you would clear 4,700 before solicitors' costs. The problem is that the legal work and conveyancing etc is the expensive bit, and that is the bit you can't do by yourself. Good luck but I don't think you need me to tell you that the situation is all of your own making - if you hadn't lied about what you were doing with the property this would never have occured.

Depends on the lender but I believe the majority of loans are done on a spread over base rate or Libor. I think you should be able to find fixed rate terms but I'm not sure how appealing they will necessarily be - could easily be 6%+ despite the low level of base rates.

Because if those goods increase in value we will see wage inflation. If my wage goes up 10%, as do the cost of everything I buy, I am still better off assuming that my total spending each month is less than 100% of my wage. For example Wage: 5,000 per month Tax etc 1,200 ish a month Mortgage (fixed rate, 300k of debt at 5%): 1,773 per month Other spending: 2,025 per month Now assume 10% wage and goods inflation: Wage: 5,500 per month Tax etc: 1,400ish Mortgage: 1,773 per month Other spending: 2,025 * 110% = 2227.50 Left over= £100 That £100 can now be used to pay down the mortgage faster or for additional discretionary spending, whatever. Inflation makes a (fixed rate) debtor better off.

You lost 30% of the money in NS&I because it had a lock-in? Sorry, I don't understand the post, can you clarify?

A short sale is a sale where the amount realised is SHORT of the amount needed to clear the debt and admin costs. I.e. a negative equity sale basically.

Not really. It's some substantive analysis that I'd be quite happy punting on, IF and ONLY IF CHEAP trackers i.e. base rate +50 or so were still available. As it is I'm halfway through a 4.89% 5 year fix, and although yes at times it feels like a little annoying that some of my contemporaries (and my parents) are paying pretty much zero, I know that at the time I took out the loan I could not have afforded a rise to 6% or more in rates. So it was and still is the right choice. Fixes these days are not so low anyway, much higher than they were in 2003 for example when rates went down to 3.5%.

If they put up rates and people go bankrupt that will knock inflation on the head pretty quickly and probably even trigger deflation. I'm not saying rates will stay at 0.5%, they won't, but I would not be surprised at all to see them go to 2.5%-3% relatively quickly then stay there for a long time. The expansion in the spreads charged over trackers and over base rate on SVRs, as well as the decrease in the number of fixed rate mortgages held by the public has made the economy more sensitive to changes in interest rates so they won't need to move them so high again probably. It is a new normal in this case, at least for now.

I think this is a good article but it actually avoids making a few points that make the position even worse than the author thinks. First, people always look at the pay rate. What they need to really look at is what the spread over the base rate is, and what the spread over the equivalent maturity swap rate is for fixed deals. With 5yr swaps at 3.15% ish a 5yr fix at anything south of 5% looks like better value to me than a tracker at base rate + 200 or 250. If you are on a tracker at base + 2% you shouldn't be looking at the 2.5% you are paying now, but the 5.5%-6.5% that you are going to be paying pretty sharpish whenever the bank does start to raise rates. Moreover, the spread between SVRs and base rates has been gradually widened out as base rates have been cut. Now it may well be that when rates start to normalise that spread also gets tightened back in, but perhaps not. This is Money reports that "the average SVR is 4.8% based on the rates charged by 15 major lenders", an average of 4.3% over base rate. If interest rates returned to a low-ish neutral rate of 4.5% without any narrowing of that spread, low and negative equity customers trapped on SVRs will see an average rate of 8.8%. Pretty scary. Even if you believe as I do that the BoE will not be able to get back to "normal" rates anytime soon, a base rate of even 3% (still very low indeed by historical standards) would pose a lot of problems for borrowers.

I have come to the conclusion that this thread is the best troll ever. No Alfie Moon, you are a troll. I am correct, and you, Alfie Moon, are a troll. A genius troll to have lured so many supposedly intelligent people in, but a troll nonetheless. Great work.

Keep your filthy hands off my AMG alloys!!

I love this graph. It's like the holy ghost of the HPC religion. Where does it even come from? Does it in any way deal with the extent of intervention that this market has seen? I'm becoming increasingly agnostic.

Probably they've done as much high LTV lending as they can do for this year so they need to do some better quality lending to get the LTV of the whole mortgage book down again.