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I Blogged About Mervyn's Interview...

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Over the weekend I wrote a blog post about the comments Mervyn made in his interview with the Telegraph.

Yesterday and today I have had comments from the BBA questioning my stats and trying to promote the role of the banks.

If you want to debate with the BBA, submit a comment here.

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Over the weekend I wrote a blog post about the comments Mervyn made in his interview with the Telegraph.

Yesterday and today I have had comments from the BBA questioning my stats and trying to promote the role of the banks.

If you want to debate with the BBA, submit a comment here.

Amazing, just amazing. Reminds me of TV Licensing, where any criticism of TVL will elicit a response from a PR firm hired to 'manage their reputation'

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Guest sillybear2

Looks like the BBA's shills are out in force today :-

http://www.telegraph.co.uk/finance/comment/damianreece/8367177/To-Barclays-shareholders-Bob-Diamond-is-worth-every-penny-of-his-6.5m-bonus.html

http://www.telegraph.co.uk/finance/comment/jeremy-warner/8367520/UKs-wanton-destruction-of-the-City.html

Hardly subtle, is it? Actually, Barclays long suffering shareholders have nothing to thank him for, they've lost half their stake over the last 5 years, and almost all profits are being paid to employees, not as dividends to equity holders. However, that's their fault for not voting against being ripped off.

There's a breakdown of the bailout costs here :-

http://2.bp.blogspot.com/_-VeC39yh6nc/SbNbrTpvuGI/AAAAAAAACVk/8GqyWtKMhYY/s1600-h/bailout+costs.bmp

That's before you even quantify the (most probably permanent) loss of output, and the loss of jobs, businesses and capacity of the economy.

As I keep saying, if they've reformed their ways and are no longer leeching off us, why do they keep begging for money :-

http://www.dailymail.co.uk/money/article-1348451/Santander-UK-boss-We-need-liquidity-helping-hand.html

They've already got free SLS money for another year, but that's apparently not good enough, their business model and greed is such that they're now addicted to central bank support. It's actually grounds for nationalisation if you think about it, that's exactly what happened to British Energy when it dipped into HM Treasury for funding in the early part of the last decade.

Edited by sillybear2

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Here’s another figure by the way: the financial services industry paid £54bn in tax to the UK Exchequer last year, .

You know the way they talk you would expect them to be paying at least £trillions to the UK Exchequer. It gets more obvious by the day that the only benefit is to themselves along with the troughing MPs who help to enable it all - and not that much benefit to the rest of the economy,

If the rest of the economy could get the dead weight of the banks, bonusing bankers, troughing politicians and the rest of their ilk of its back then the UK economy might even stand a chance.

Edited by billybong

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Guest sillybear2

You know the way they talk you would expect them to be paying at least £trillions to the UK Exchequer. It gets more obvious by the day that the only benefit is to themselves along with the troughing MPs who help to enable it all - and not that much benefit to the rest of the economy,

If the rest of the economy could get the dead weight of the banks, bonusing bankers, troughing politicians and the rest of their ilk of its back then the UK economy might even stand a chance.

That BBA shill is also quoting dubious figures about financial services true contribution to the economy, Mervyn King covered this in a speech he did in New York last year :-

"In the US, the share of gross value added of the financial sector as a share of GDP rose from around 2-3% in the decade after World War II to about 8% in 2008, driven in large part by a rise in the gross operating surplus of financial intermediaries. And in the UK, in the past decade, the measured scale of the financial sector, compared to GDP, has roughly doubled to around 10%. But this exaggerates the contribution of financial services. Banks do not always charge directly for the services they provide. So the value added of the financial sector is measured by official statisticians (using the United Nations System of National Accounts) as the difference between interest receipts and payments of a "reference rate of interest" which attempts to measure the pure cost of borrowing funds. This convention overstates the true value added of the financial sector because it includes the return to risky lending represented by the difference between the hypothetical pure cost of borrowing funds and the return that is earned. But the fact that risk is channelled through an intermediation industry does not mean that the value added from risk-bearing in the economy is solely attributable to the existence of an intermediation sector. If companies financed themselves directly from households, the statisticians would regard the return on risk-bearing as value added created in that industry. Financial intermediation does add value, but not as much as the statistical convention would suggest."

http://www.bankofengland.co.uk/publications/speeches/2010/speech455.pdf

Basically they're taking credit for value added created by other people, simply because the funds flow through them, that doesn't mean it was generated by them.

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Looks like the BBA's shills are out in force today :-

http://www.telegraph.co.uk/finance/comment/damianreece/8367177/To-Barclays-shareholders-Bob-Diamond-is-worth-every-penny-of-his-6.5m-bonus.html

http://www.telegraph.co.uk/finance/comment/jeremy-warner/8367520/UKs-wanton-destruction-of-the-City.html

Hardly subtle, is it? Actually, Barclays long suffering shareholders have nothing to thank him for, they've lost half their stake over the last 5 years, and almost all profits are being paid to employees, not as dividends to equity holders. However, that's their fault for not voting against being ripped off.

There's a breakdown of the bailout costs here :-

http://2.bp.blogspot.com/_-VeC39yh6nc/SbNbrTpvuGI/AAAAAAAACVk/8GqyWtKMhYY/s1600-h/bailout+costs.bmp

That's before you even quantify the (most probably permanent) loss of output, and the loss of jobs, businesses and capacity of the economy.

As I keep saying, if they've reformed their ways and are no longer leeching off us, why do they keep begging for money :-

http://www.dailymail.co.uk/money/article-1348451/Santander-UK-boss-We-need-liquidity-helping-hand.html

They've already got free SLS money for another year, but that's apparently not good enough, their business model and greed is such that they're now addicted to central bank support. It's actually grounds for nationalisation if you think about it, that's exactly what happened to British Energy when it dipped into HM Treasury for funding in the early part of the last decade.

The real shareholders can't vote. The shares are controlled on their behalf, by the banks.

The law needs to be changed to allow only beneficial shareholders to vote. Only then can you blame them. At the moment they are victims in a crime they are powerless to stop too.

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Guest sillybear2

The real shareholders can't vote. The shares are controlled on their behalf, by the banks.

The law needs to be changed to allow only beneficial shareholders to vote. Only then can you blame them. At the moment they are victims in a crime they are powerless to stop too.

Indeed, crony fund managers or otherwise clueless pension funds vote in favour of their chums every time, against the interests of the real owners of these banks (working people saving for pensions etc). Such block votes should be disallowed unless they're backed by a real mandate from the actual owners, otherwise their interests are not aligned.

The ineffectual boards are also packed full of crony non-executive directors that form an incestuous 'magic circle' :-

http://www.thisislondon.co.uk/standard-business/article-23634375-time-for-the-magic-circle-to-vanish.do

It's more like a magic circle jerk. Not even the unions in their destructive heyday had such a lock on power.

Edited by sillybear2

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That BBA shill is also quoting dubious figures about financial services true contribution to the economy, Mervyn King covered this in a speech he did in New York last year :-

"In the US, the share of gross value added of the financial sector as a share of GDP rose from around 2-3% in the decade after World War II to about 8% in 2008, driven in large part by a rise in the gross operating surplus of financial intermediaries. And in the UK, in the past decade, the measured scale of the financial sector, compared to GDP, has roughly doubled to around 10%. But this exaggerates the contribution of financial services. Banks do not always charge directly for the services they provide. So the value added of the financial sector is measured by official statisticians (using the United Nations System of National Accounts) as the difference between interest receipts and payments of a "reference rate of interest" which attempts to measure the pure cost of borrowing funds. This convention overstates the true value added of the financial sector because it includes the return to risky lending represented by the difference between the hypothetical pure cost of borrowing funds and the return that is earned. But the fact that risk is channelled through an intermediation industry does not mean that the value added from risk-bearing in the economy is solely attributable to the existence of an intermediation sector. If companies financed themselves directly from households, the statisticians would regard the return on risk-bearing as value added created in that industry. Financial intermediation does add value, but not as much as the statistical convention would suggest."

http://www.bankofeng...0/speech455.pdf

Basically they're taking credit for value added created by other people, simply because the funds flow through them, that doesn't mean it was generated by them.

This speech may come in useful if he makes any more claims...

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It's more like a magic circle jerk. Not even the unions in their destructive heyday had such a lock on power.

Would Maggie have waged war on the banksters I wonder? Maybe she would- I disagreed with everything she stood for, but at least she had integrity of a sort. The last politician I placed any faith in was Vince Cable :lol:

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Guest sillybear2

This speech may come in useful if he makes any more claims...

It's rather like a mobster claiming he's a "wealth creator" because he beat $1k out of 50 shop owners and used the proceeds to buy a new Cadillac.

"Nice economy you've got going on there, wouldn't it be a shame if something nasty happened to it"

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I'm a PR, as you know, and the banks, BBA, etc., are involved in a massive PR drive - no doubt loads of financial PRs are hanging about on forums, blogs, etc.

Curses on them all, the scum!

Talking of scum: http://www.prweek.co...DCMP=ILC-SEARCH

There are a few shils on here most of the time too, haven't noticed them today though...

Edited by wise_eagle

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Interesting comment piece here: http://www.prweek.com/news/1057975/Anthony-Hilton-Why-bankers-dont-get-it/

A year ago this column bewailed the fact that the banks 'did not get it' and had no feeling for the depth of public anger caused by their bonuses.

A year later, in spite of the belief expressed by Barclays' chief Bob Diamond that we should 'move on', they still don't get it.

The challenge this poses for the PR and marketing people whose job it is to represent the banks was the subject of a breakfast seminar this week under the banner of the Financial Services Club. As a correspondent who has failed to move on, my contribution was to list the following questions, which I think still have to be answered.

How profitable are the banks? Bankers say they only pay bonuses to people who earn them big profits. But Andrew Haldane, the director for financial stability at the Bank of England, proved last year that the banks' ability to borrow funds cheaply because governments will not let them go bust is an implicit subsidy that accounts for all of their profit.

How do they make profits? Conventional borrowing and lending is low margin; hence the move to create and trade exotic products. But one person's profit is another person's loss. To be consistently profitable they need an edge. Their edge is their size relative to the market. Critics say it is market abuse - they make money because the odds are stacked in their favour.

Are they talented? You could take 1,000 of the best Oxbridge graduates but no amount of training would turn them into a Tiger Woods or a Robbie Williams - people with unique talents. But Goldman and the others are successful at turning them into bankers - which suggests such people are made, not born. In American investor Warren Buffett's words: 'Don't confuse the value of the person with the value of the seat they sit in.'

Do bankers create wealth? If finance becomes an end in itself, it skims off wealth from other people's activities. Long-term studies in the US suggest that as the financial sector has grown, the underlying growth rate of the whole economy has slowed.

Is being a world leader in toxic financial products worth the economic and social cost? I leave you to judge.

Anthony Hilton is City commentator on London's Evening Standard.

... The thing is, bankers never will get it. We need to hold them to account. Through street confrontation, lobbying, general activism.

Edited by gruffydd

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It's rather like a mobster claiming he's a "wealth creator" because he beat $1k out of 50 shop owners and used the proceeds to buy a new Cadillac.

"Nice economy you've got going on there, wouldn't it be a shame if something nasty happened to it"

LOL.

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Would Maggie have waged war on the banksters I wonder? Maybe she would- I disagreed with everything she stood for, but at least she had integrity of a sort. The last politician I placed any faith in was Vince Cable :lol:

Indeed. The banksters of today are the miners of the 1980s.

Inefficient, un-needed and self interested.

Someday we'll look back at them and wonder why we didnt dispose of them sooner.

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Indeed. The banksters of today are the miners of the 1980s.

Inefficient, un-needed and self interested.

Someday we'll look back at them and wonder why we didnt dispose of them sooner.

It looks that way.

It's really hard to gauge the benefit of an industry that basically deals in exaggeration and skims off the top.

So corrupt and entwined seems our political system at present that we appear to be suck with this situation - this imbalance. The politicians became enthralled by the numbers without understanding what was going on. Millions, became billions, and soon the numbers became meaningless. Too big to fail! How did that happen?

Finance should lubricate the economy, not drown it.

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In an editorial that pulls few punches, The Financial Times has tonight come out very much in support of Mervyn King’s stance re the banks.

In the same way that King’s interview was a highly significant development, this is as well. It’s interesting because it’s possible that Martin Wolf, the FT’s chief economics commentator and one of the most respected financial journalists in the world, may have had some input into this editorial. Wolf is one of the members of the Independent Commission on Banking which is due to outline some of its thinking on banking reform in its interim report next month, although its final report won’t be released until later this year.

The UK banking community is becoming increasingly isolated, even though at present it appears to have George Osborne very much in its pocket (despite HM Treasury’s frantic attempts to argue to the contrary after King’s broadside). If this pressure persists, it’s not inconceivable that we may see some much-needed reform. I’m not holding my breath yet, but Mervyn King’s interview and this latest editorial in the FT are tipping the scales.

Mr King’s plain speaking is particularly welcome because too much deference has crept into the dialogue with the banks. Despite some populist anti-finance flashes from the coalition, ministers have treated the banks as their equals – if not their superiors.

For instance, the attempt to negotiate a deal with the banks – the so-called Project Merlin exercise – was misguided. Although the government never spelt out what its quid pro quo would have been, the implication was that it would go easy on regulatory reform in return for more lending. That comes dangerously close to the mentality that led governments to invite trades unionists to have beer and sandwiches at Number 10 in the 1970s.

Financial Times

[For non-FT subscribers, try Googling "King helps the case for banking reform".]

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Nice blog. I love the bit from the BBA about balance sheets when:

1. Not all the credit created through uber-leverage is yet on the balance sheet which....

2. will instead be hived off to bad banks which......

3. Will be guaranteed by UK taxpayers who....

4. Think they will be guaranteeing legitimate non-performing loans when....

5. In reality what they are guaranteeing is a load of toxic crap created off-balance sheet....

6. Which never touched or will ever touch the balance sheet

Ask the ******wits when the British Bad Bankers Association (BBBA) is going to be set up

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After many comments criticising the banks and the BBA, Brian has been back this morning.

Apparently we've upset him as he's taking his toys away and going home: "OK we get it. We’re not welcome here, so this is our last contribution on this site".....

He goes on to say the BBA want "to contribute constructively to public debate" but when it looks like we disagree with their illusion he's not interested any more. Maybe with more feedback for them across the media they might give up altogether. Maybe go and form a banksters association in Switzerland.

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Nice blog. I love the bit from the BBA about balance sheets when:

1. Not all the credit created through uber-leverage is yet on the balance sheet which....

2. will instead be hived off to bad banks which......

3. Will be guaranteed by UK taxpayers who....

4. Think they will be guaranteeing legitimate non-performing loans when....

5. In reality what they are guaranteeing is a load of toxic crap created off-balance sheet....

6. Which never touched or will ever touch the balance sheet

Ask the ******wits when the British Bad Bankers Association (BBBA) is going to be set up

Au contraire, when will they set up the British Good bankers association?

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Indeed. The banksters of today are the miners of the 1980s.

Inefficient, un-needed and self interested.

Someday we'll look back at them and wonder why we didnt dispose of them sooner.

Are you for real???

Miners created something, something that the entire British economy was built on at one time. They may have been a bit inefficient, but they were only rendered obsolete by cheap imports, from countries with a lower cost of living (sound familiar?)

Miners will be needed again, eventually, when we have to rely on our domestic coal supplies, instead of shipping it halfway around the world.

Banksters are effing useless though, and we'd be much better off without them.

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Are you for real???

Miners created something, something that the entire British economy was built on at one time. They may have been a bit inefficient, but they were only rendered obsolete by cheap imports, from countries with a lower cost of living (sound familiar?)

Miners will be needed again, eventually, when we have to rely on our domestic coal supplies, instead of shipping it halfway around the world.

Banksters are effing useless though, and we'd be much better off without them.

We'd be better off without banksters, but not without banks (I don't want to risk keeping my savings in a box under the bed). Their is a bit of an analogy - the inefficient self-serving rubbish that's wrecking the whole thing needs to be cut away ruthlessly, but totally wrecking the banks (again, separate from totally wrecking the vastly over-paid useless self-serving morons who run them) is about as good as wrecking the mines.

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