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eric pebble

The Ongoing Cover Up. Fraud In The Origination Of The Mortgages, Fraud In The Underwriting, Fraud In The Ratings Agencies.

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OK People out there: Happy New Year to you --- My last thread for 2010.

As you all know - my passionate belief is that Mortgage Fraud/LIAR LOANS are the main [not total] key to the hpi phenomenon - and the financial crisis we are in right now.

Below is a very interesting link to serious people who believe the same.

----------------------------

"Fraud in the origination of the mortgages, fraud in the underwriting, fraud in the ratings agencies."

---------------------------

Fraud

"One of the foremost experts on structured finance and derivatives - Janet Tavakoli - says that rampant fraud and Ponzi schemes caused the financial crisis.

University of Texas economics professor James K. Galbraith agrees: You had fraud in the origination of the mortgages, fraud in the underwriting, fraud in the ratings agencies".

Read all here --- and best to you all for 2011! ;)

http://georgewashington2.blogspot.com/2009/10/ongoing-cover-up-of-truth-behind.html

See here too:

"The Biggest Crime In The World"

That's what former Wall Street banker Nomi Prins told Schechter when he interviewed her last December. "You're talking double-digit trillions of dollars - minimum - already in the beginning of 2009, and we are nowhere near done with finding out how much loss there really is."

http://globalresearch.ca/index.php?context=va&aid=15676

Edited by eric pebble

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Happy New Year Eric, Happy New Year everyone.

As someone who remembers the Money Programme Eric refers to being broadcast (and a few other similarly themed programmes at the time) I wholeheatedly agree.

Earlier this week I was reading through the review of Scott Paterson's book "The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It" on Amazon and got taken aback at a scathing review posted by someone going by the moniker 'hh'. Clearly whoever 'hh' is they are very close indeed to the work of Quants. Despite what you might think about Quants, it wasn't them who encouraged people to sign up to mortgages they couldn't afford.

From what I can tell, the fundamental problem with the work of Quants - forgive my ignorance here - is that risk is based on the Normal probability distribution which assumes that movements (upside and downside risks) will occur with equal probability. In an ideal world that may be true but, as we know all too well, in the real world, during a boom or a bust, that assumption is a gross over-simplication of neolithic incompetence*. Taleb has pointed out this fallacy and having rekindled my interest in the mathematics of financial engineering recently I am inclinded to agree.

The madness of crowds, herd behaviour, fraud, corruption, call it what you will mean that risks become skewed during booms and busts, something the Normal distribution by itself cannot take into account.

During a boom, during times of optimism, expansion and hubris, people become more inclined to take risks and the probability distribution should be calibrated to reflect this such that the probability of an investment decision posing a downside risk being generally higher that of an upside risk - relative to a bust period, thus reflecting the recklessness that the Austrian School of Economics would refer to as malinvesment.

During a bust, during times of depression, contraction and fear, people become less inclined to take risks and the probability distribution should be calibrated to reflect this too, such that the probability of an investment decision posing an upside side risk being generally higher than that of an downside risk - relative to a boom period.

Question is who decides what the underlying risk distribution should be at any given moment in time? Who?

Well,here's an idea : How about the central banks or similar international organisations? We are already up to our eye balls in consumer and producer confidence index-surveys, so why can't they incorporate them (and other related measures) as proxies for integrity/deception/fraud for banks to take into account when they price risk?

How about making the use of such officially published risk probabilities as a legally enforceable basis in all risk calculations undertaken by risk professionals in banks and such like?

That way the public can choose to lie about ability to pay as much as they damn well like; their deception will automatically be reflected in the risk premium their lies pose to the world's financial system. Until the powers-that-be get together and legally enforce change like this we will continue to see further credit crunches and economic catastrophes***.

There. Was that difficult? Can I have my PhD now, please?

Ladies and gentlemen, enacting this sort of idea is ultimately just a matter of political will, much like putting Man on the Moon. The problem with it is this: Mark Twain once remarked that a bank is a place that will lend you an umbrella when its sunny and demand it back when its raining: my idea forces banks to do the opposite (taking the punch bowl away before the party gets too boisterous as Mervyn King once noted) but then all my idea really is is the integrity parallel to interest rates in setting Monetary Policy.

Snowball, anyone?

*PS It might have been a good idea for the architects of the Euro to have taken the comparative differences in confidence/integity/hubris between different nations when setting membership rules. For example: Germans - cautious and with high savings. Greeks - over-confident and with little savings. Surely these comparative risks have to taken into account when setting bank capital adequacy rules within each nation, right? I'm probably talking out my ****, but then I am hungover. Happy New Year.

**PPS Its funny how human behaviour being what it is, causes people to get fixated to a convenient simplifcation or misunderstanding, such as taking (for example) some of the more preposterous Biblical stories as the literal truth. Is the Normal distribution the quant's John Frum? :lol:

*** Has anyone even seen a trophy in the shape of a cat's ass?

**** If I can come up with a solution as simple as this, why can't super-genuius Taleb? Perhaps he already knows the answer, but instead of enunciating, he chooses instead to prevaricate while making a fortune touring the world giving lectures slamming the use of the Normal Distribution and giving off an air of consternation that the problem can't be fixed.

Normal distribution.(see how probability of upside and downside risks are equal, regardless of economic conditions)

Gamma probability density function (see how probability be can skewed towards one end by tweaking the parameters - which can easily be changed at any time we like to reflect economic conditions such as integrity/deception/fraud).

Edited by Dave Spart

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The mortgage industry was definately all completely built on fraud. As an example Future Mortgages [part ofCity Group] business development managers used to go round shouting how they did employed self cert as "they didn't wan't the outright fraud on their books that SPML [Part of Lehman Bro's had".

There is no legitimate reason for self cert self employed in my opinion [let alone employed self cert which is just fraud]. If you cannot show three years accounts, with stable/increasing earnings how sound is your business?

Self cert like interest only was designed to increase banks profits and aid the bubble it is that simple and completley obvious.

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Happy New Year Eric, Happy New Year everyone.

As someone who remembers the Money Programme Eric refers to being broadcast (and a few other similarly themed programmes at the time) I wholeheatedly agree.

Earlier this week I was reading through the review of Scott Paterson's book "The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It" on Amazon and got taken aback at a scathing review posted by someone going by the moniker 'hh'. Clearly whoever 'hh' is they are very close indeed to the work of Quants. Despite what you might think about Quants, it wasn't them who encouraged people to sign up to mortgages they couldn't afford.

From what I tell, the fundamental problem with the work of Quants - forgive my ignorance here - is that risk is based on the Normal probability distribution which assumes that movements (upside and downside risks) will occur with equal probability. In an ideal world that mybe be true but, as we know all too well, in the real world, during a boom or a bust, that assumption is a gross over-simplication of neolithic incompetence*. Taleb has pointed out this fallacy and having rekindled my interest in the mathematics of financial engineering recently I am inclinded to agree.

The madness of crowds, herd behaviour, fraud, corruption, call it what you will mean that risks become skewed during booms and busts, something the Normal distribution by itself cannot take into account.

During a boom, during times of optimism, expansion and hubris, people become more inclined to take risks and the probability distribution should be calibrated to reflect this such that the probability of an investment decision posing a downside risk being generally higher that of an upside risk - relative to a bust period, thus reflecting the recklessness that the Austrian School of Economics would refer to as malinvesment.

During a bust, during times of depression, contraction and fear, people become less inclined to take risks and the probability distribution should be calibrated to reflect this too, such that the probability of an investment decision posing an upside side risk being generally higher than that of an downside risk - relative to a boom period.

Question is who decides what the legally enforceable underlying risk distribution should be at any given moment in time?

Well, how about the central banks or similar international organisations? We are already up to our eye balls in consumer and producer confidence index-surveys, so why can't they incorporate them (and other related measures) as proxies for integrity/deception/fraud when pricing risk?

And how about making the use of officially published risk probabilities a legally enforceable basis in all risk calculations undertaken by risk professionals in banks and such like?

That way the public can choose to lie about ability to pay as much as they damn well like; their deception will automatically be reflected in the risk premium their lies pose to the world's financial system. Until the powers-that-be get together and legally enforce change like this we will continue to see further credit crunches and economic catastrophes***.

There. Was that difficult? Can I have my PhD now, please?

Ladies and gentlemen, enacting this sort of idea is ultimately just a matter of political will, much like putting Man on the Moon. The problem with it is this: Mark Twain once remarked that a bank is a place that will lend you an umbrella when its sunny and demand it back when its raining: my idea forces banks to do the opposite (taking the punch bowl away before the party gets too boisterous as Mervyn King once noted) but then all my idea really is is the integrity parallel to interest rates in setting Monetary Policy.

Snowball, anyone?

*PS It might have been a good idea for the architects of the Euro to have taken the comparative differences in confidence/integity/hubris between different nations when setting membership rules. For example: Germans - cautious and with high savings. Greeks - over-confident and with little savings. Surely these comparative risks have to taken into account when setting bank capital adequacy rules within each nation, right? I'm probably talking out my ****, but then I am hungover. Happy New Year.

**PPS Its funny how human behaviour being what it is, causes people to get fixated to a convenient simplifcation or misunderstanding, such as taking (for example) some of the more preposterous Biblical stories as the literal truth. Is the Normal distribution the quant's John Frum? :lol:

*** Has anyone even seen a trophy in the shape of a cat's ass?

**** If I can come up with a solution as simple as this, why can't super-genuius Taleb? Perhaps he already knows the answer, but instead of enunciating, he chooses instead to prevaricate while making a fortune touring the world giving lectures slamming the use of the Normal Distribution and giving off an air of consternation that the problem can't be fixed.

Normal distribution.(see how probability of upside and downside risks are equal, regardless of economic conditions)

Gamma probability density function (see how probability be can skewed towards one end by tweaking the parameters - which can easily be changed at any time we like to reflect economic conditions such as integrity/deception/fraud).

Great Post : )

mortgage rules need to be sensible. No interest only. Max age at end of the term 65 or retirement, loans calculated for affordability based on long term average rates with contingency margin. Loans of no more than 3 times sole income on a status only basis. These things create healthy if boring, steady markets. Houses need to be boring affordable but great places to live.

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The mortgage industry was definately all completely built on fraud. As an example Future Mortgages [part ofCity Group] business development managers used to go round shouting how they did employed self cert as "they didn't wan't the outright fraud on their books that SPML [Part of Lehman Bro's had".

There is no legitimate reason for self cert self employed in my opinion [let alone employed self cert which is just fraud]. If you cannot show three years accounts, with stable/increasing earnings how sound is your business?

Self cert like interest only was designed to increase banks profits and aid the bubble it is that simple and completley obvious.

self cert is fine....self cert and NO CHECKS GUARANTEED....no that is a different matter.

but bankers care not about Fraud....they Robosign thousands of affadavits using a Dead persons signature.....and this is seen by the LAW ENFORCERS as corner cutting, rather than A: Forgery and B: Perjury.

so they drove a few million into mortgages that people couldnt afford without a rollover to a new teaser, clearly a fraud when viewed in the light of a 30 year term. A fraud not only on the mortgage payers, but on the bondholders they sold the debt onto.

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self cert is fine....self cert and NO CHECKS GUARANTEED....no that is a different matter.

but bankers care not about Fraud....they Robosign thousands of affadavits using a Dead persons signature.....and this is seen by the LAW ENFORCERS as corner cutting, rather than A: Forgery and B: Perjury.

so they drove a few million into mortgages that people couldnt afford without a rollover to a new teaser, clearly a fraud when viewed in the light of a 30 year term. A fraud not only on the mortgage payers, but on the bondholders they sold the debt onto.

Why is self cert fine? There is never a justification for it. God know's i have heard the mortgage industry spin on it enough times over the years, but all it amounts to is the person cannot prove there financial state is as it should be to afford the mortgage at that time, but they give their word they are good for it. Buyers lie. I used to love seeing Lender level Experian and Equifax reports and see how people would lie about their credit history lol

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Why is self cert fine? There is never a justification for it. God know's i have heard the mortgage industry spin on it enough times over the years, but all it amounts to is the person cannot prove there financial state is as it should be to afford the mortgage at that time, but they give their word they are good for it. Buyers lie. I used to love seeing Lender level Experian and Equifax reports and see how people would lie about their credit history lol

because even with Self Cert, they asked for checks and books in the old days in many cases.

hence some banks GUARANTEED no checks...and that went for PAYE clients as well.

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OK People out there: Happy New Year to you --- My last thread for 2010.

As you all know - my passionate belief is that Mortgage Fraud/LIAR LOANS are the main [not total] key to the hpi phenomenon - and the financial crisis we are in right now.

Below is a very interesting link to serious people who believe the same.

----------------------------

"Fraud in the origination of the mortgages, fraud in the underwriting, fraud in the ratings agencies."

---------------------------

Fraud

"One of the foremost experts on structured finance and derivatives - Janet Tavakoli - says that rampant fraud and Ponzi schemes caused the financial crisis.

University of Texas economics professor James K. Galbraith agrees: You had fraud in the origination of the mortgages, fraud in the underwriting, fraud in the ratings agencies".

Read all here --- and best to you all for 2011! ;)

http://georgewashington2.blogspot.com/2009/10/ongoing-cover-up-of-truth-behind.html

See here too:

"The Biggest Crime In The World"

That's what former Wall Street banker Nomi Prins told Schechter when he interviewed her last December. "You're talking double-digit trillions of dollars - minimum - already in the beginning of 2009, and we are nowhere near done with finding out how much loss there really is."

http://globalresearch.ca/index.php?context=va&aid=15676

Good work Eric.

I fully agree that lack of regulation allowed fraud, and that that was a major cause of the bubble. But as you know, I think (know that) less people would even be tempted to commit fraud in the first place if interest rates were not kept artificially low since 2004 (for Brown's political reasons). So fraud and low IRs were the 2 major factors boosting demand.

And the other major factor was on the supply side - blockage by planning - without which we would be having now a housing cost correction similar to the American and Irish.

These 3 are, IMHO, the 3 main causes of the bubble.

Unfortunately, all 3 are still happening now. :(

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Fraud is so endemic in Britain that it has become the very large part of its economy.

It starts with people at the bottom who believe telling a few lies on an mortgage or loan application is acceptable. After all if their friends and neighbours do it then it must be OK. The total failure of the state to act against these frauds must make it acceptable, surely?

We then have the full complicity of the banks and financial institutions , who see these many minor crimes only as a lucrative money making scheme. The banks and their employees go on to make Billions of pounds of profits plus bonuses.

Finally at the top we have the Government, regulars and legal system who behave like the three wise monkeys. They conveniently fail to notice anything awry. This is because they also profit from it, politically and financially.

The result it a nation that at all levels is corrupt, and must remain corrupt. Exposing the lies and deceit would bring about the near total collapse in the economy, because it makes up such a large part of it. The Government is so deep in the deception that it will even resort to paying off the fraudsters with fresh tax payers money, and think nothing of it.

The Government feels obliged to partake in a classic money laundering operation, paying off criminals via the banks and welfare system with tax revenues, using clean money to wash away dirty money.

Being honest in a society of crooks is a lonely affair.

Edited by Lord D'arcy Pew

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Fraud is so endemic in Britain that it has become the very large part of its economy.

It starts with people at the bottom who believe telling a few lies on an mortgage or loan application is acceptable. After all if their friends and neighbours do it then it must be OK. The total failure of the state to act against these frauds must make it acceptable, surely?

We then have the full complicity of the banks and financial institutions , who see these many minor crimes only as a lucrative money making scheme. The banks and their employees go on to make Billions of pounds of profits plus bonuses.

Finally at the top we have the Government, regulars and legal system who behave like the three wise monkeys. They conveniently fail to notice anything awry. This is because they also profit from it, politically and financially.

The result it a nation that at all levels is corrupt, and must remain corrupt. Exposing the lies and deceit would bring about the near total collapse in the economy, because it makes up such a large part of it. The Government is so deep in the deception that it will even resort to paying of the fraudsters with fresh tax payers money, and think nothing of it.

The Government fells obliged to partake in a classic money laundering operation, paying off criminals via the banks and welfare system with tax revenues, using clean money to wash away dirty money.

Being honest in a society of crooks is a lonely affair.

Good post.

Fraud, from top to bottom, from MP and bank directors robbing millions, to millions of benefits cheats. Fraud from top to bottom.

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Fraud is so endemic in Britain that it has become the very large part of its economy.

My dad had a period when he was 100% honest in his accounts, (namely as he needed to money to come from the business to be completely legit). He looks back at that time and thinks how stupid he was to do this.

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Good post.

Fraud, from top to bottom, from MP and bank directors robbing millions, to millions of benefits cheats. Fraud from top to bottom.

Does this fraud always have a tipping point? That if a certain amount of individuals in a colony behave fraudulently the colony itself will die out, so that honest behaviour returns?

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Does this fraud always have a tipping point? That if a certain amount of individuals in a colony behave fraudulently the colony itself will die out, so that honest behaviour returns?

Nah in Southern Italy fraud and the black economy (may not be the same thing) is reputed to be over 60% of the economy there.

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Nah in Southern Italy fraud and the black economy (may not be the same thing) is reputed to be over 60% of the economy there.

I read somewhere that some towns in China are policed by the gangs as the populace prefer it to the inept and corrupt police, or it might be Japan.. so the honesty coming out of the previously criminal?

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Does this fraud always have a tipping point? That if a certain amount of individuals in a colony behave fraudulently the colony itself will die out, so that honest behaviour returns?

Its a classic " The Emperor's new clothes "

http://en.wikipedia.org/wiki/The_Emperor%27s_New_Clothes

The result of acknowledging the obvious is financial chaos. This is why on one wants to be the little boy pointing a finger.

Most believe it is better to live in a rich kingdom of lies, than in the a the poor Hamlet of truth.

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I read somewhere that some towns in China are policed by the gangs as the populace prefer it to the inept and corrupt police, or it might be Japan.. so the honesty coming out of the previously criminal?

Not sure. But there are some instances in Japan, there was a massive earth quake in Japan in the 1990s. The government sat with its thumbs up its A55. 2 days later still there with thumbs in its bum. So the local Yakuza crime syndicates sprung into action distributing food, medicine and blankets to people. Huge labour gangs of suspiciously heavily tattooed men came to dig people out. The government arrived a week later and noticed it was all over.

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Does this fraud always have a tipping point? That if a certain amount of individuals in a colony behave fraudulently the colony itself will die out, so that honest behaviour returns?

I don't think there is a "self-correcting mechanism" there, unfortunately. It just means a less efficient, less fair country, poorer and sadder than it could be otherwise.

It can keep happening for a long time, like in many poorer countries, that are actually much worse than Britain. For instance, think of sub-Saharan countries - no "self-correcting" there.

If we don't fix that, politically and culturally, we could even keep going down, historically. 100 years ago one of the richest country in the world was Argentina...

Edited by Tired of Waiting

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Will read this later.... but I totally agree with Eric.

Ability to get a loan even if you couldn't afford it is what's pushed prices up. Financial embiciles have ruined it for today's kids and any prudent savers who wanted to do best by their efforts. Here's hoping mortgage tightening continues.

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Most believe it is better to live in a rich kingdom of lies, than in the a the poor Hamlet of truth.

This is something I struggled with last year, so many things could be different now if I had only lied and generally acted fraudulently.

Things would certainly be different right now if I was not taking someone before a judge for lying and being fraudulent.

Perhaps my new years resolution should be stop being such a mug and tell more lies, but then, I would have joined the party too late.

If only the Americans would stick two fingers up at these fraudsters and refuse to pay their debts, that would be a global game changer. They can't take the entire populace to court and they can't put them all in prison.

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A good thread.

Quite disheartening really that the virtues of decency and honesty, which once upon a time were the essence of Britishness and British Fair Play should have been usurped by the bankers and the career politicians devoid of an ounce of integrity. Unfortunately, the stupidity and gullibility of the great British public who attuned to slick marketing fell for it... and the stampede to oblivion began.

We appear to be witnessing the UK being turned into a Third World Banana Republic. How many politicians and those in the establishment were into property. This a a key issue, which would explain their 'ignorance'; and why they won't do the right thing and let it be. The closer we get to an election the more likely they will attempt to kick the can down the road.

I was in a conversation with a woman who worked in the public sector who as a couple were on so much money they didn't know what to do with it. There was one big party, and now the hangover.

The maths tell us this can only end in tears - probably ours.

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There's a question then: SHOULD we all be a bit more fraudulent?

When my dad used to say to me, 'if everyone stuck their head up a chimney, would you' I used to say, 'I would be a fool not to', but perhaps, unfortunately I got his point and kept my own honest path, which until recently has been successful and rewarding, in fact I have won jobs and good business deals because of it. But I now get the feeling that even my professional reputation for honesty is not only utterly devalued, it is distinctly not wanted!

Edited by Tonkers

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There's a question then: SHOULD we all be a bit more fraudulent?

The answer should be, we should lock all fraudsters up, including those who lied on self cert mortgages.

We seem to think it's acceptable to lie and cheat, so long as we don't personally know the victims (benefit fraud, liar loans, pretty much most white collar crime). Our culture has shifted to thinking that it's not such a big deal, but a physical mugging of 'one person' is, in fact it's successful to walk all over someone else to get what you want. Perhaps if you met the pensioner who was living on less money because of your activities, or had to look at ruined lives so you could have your piece of gold. Then again, they probably wouldn't give a sh1t so long as they get their new car; holiday overseas and larger house.

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A good thread.

Quite disheartening really that the virtues of decency and honesty, which once upon a time were the essence of Britishness and British Fair Play should have been usurped by the bankers and the career politicians devoid of an ounce of integrity. Unfortunately, the stupidity and gullibility of the great British public who attuned to slick marketing fell for it... and the stampede to oblivion began.

Nicely phrased. In the early nineties I noticed that the new generation of Radio One DJs who had replaced the likes of Nicey and Smashey were exorting her young impressionable listeners to "Geh un ah ih chewed" coz yo ain't nobardy unless yo "Goh un ah ih chewed". I expressly remember Lisa I'Anson in particular doing just this, as she trimuphantly wallowed in her own Dunning-Kruger delusions of grandeur in front of the nation's youth. Well done Lisa, you encouraged a nation of kids to grow up ignoring the consequences of their actions, "Because your worth it".

PS It may not surprise you to find that Lisa I'Anson is an anagram of Sin As I Loan.

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When my dad used to say to me, 'if everyone stuck their head up a chimney, would you' I used to say, 'I would be a fool not to', but perhaps, unfortunately I got his point and kept my own honest path, which until recently has been successful and rewarding, in fact I have won jobs and good business deals because of it. But I now get the feeling that even my professional reputation for honesty is not only utterly devalued, it is distinctly not wanted!

I have left job interviews in the past thinking that it was a mistake to relate a story that indicated I had scruples. Seriously. The one that sticks out in my mind was for a job as a entry level trader at a market maker...in hindsight I was rather naive.

Edited by Tiger Woods?

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  • 294 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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