Germany v Greece

In my post Germany 1 – Team GB 0 (follow the link below), I commented on Germany being less and less reliant on selling to the Eurozone. Not good news if you are in need of German goodwill to prop you up financially.  
 

http://stevesmithlive.blogspot.co.uk/2012/11/germany-1-team-gb-0.html

 

 

There has always been an assumption that Germany would (sooner or later) move further and further away from the Eurozone, as the weaker members were effectively dragging them down. In essence, Germany are only as strong as the weakest link in the Eurozone.  

 

 

Some interesting news this week……

 

 

Top level economists in Europe have calculated that it has cost Germany €600 billion to keep the Eurozone together. However, it also calculated that it would cost Germany €1.2 trillion to let the Eurozone collapse. And this answers very nicely the question on many lips as to why Germany have stuck at it.

 

 

Add to this the German Election in September 2013, and it is safe to say that the Eurozone will be held together very tightly……well for the next 9 months anyway.

 

 

2014 could see an interesting unravelling of Greece and in effect Germany could pay them to leave (they’ve got a €600 billion kitty to play with after all).

 

 

Saved for another year!

The Price of Gold

Amongst all the political strutting when the UK economy came out of recession thanks to 1% economic growth in Q3 of 2012 was an absolute gem that our great leaders of Westminster decided not to tell us……we came out of recession thanks to a once in a lifetime economic party designed to make the UK money. AKA The Olympics.

And that is the bigger story……it took something so vast to take us out of recession that there is genuine concern for the UK economy in the short term.

 

I will leave you with just one thought on the subject:

In every Olympics ever held (except Beijing 2008), every host nation has suffered an economic slump the following year.

Let’s hope those gold medal memories last long into 2013 as they will have to be paid for!

Stick or Twist?

Stick or Twist?

Having the Chancellor’s ‘autumn’ Statement in deepest ‘winter’ on Wednesday tells you all you need to know about the current state of our economy and politics……confused.

For all the spin, counter spin, political arguing / point scoring and statistical skulduggery……it is important we understand the simple facts of the current situation.

1.     Under the Labour Government, the UK’s public outgoings were far higher than the public incomings. This deficit was the highest of all developed economies in the world and resulted in the UK public borrowing reaching record levels to bridge the shortfall in income.

2.     In May 2010, Mr Osborne promised to eliminate this budget deficit within 5 years through the austerity measures of higher taxes and public spending cuts. Or to put that another way……the Government would have more money coming in and less going out. The job losses from public sector cuts and increases in taxes were sold to us on the basis of “short term pain for long term gain”.

3.     Mr Osborne’s original estimates were calculated using assumptions on economic growth provided by the Office for Budget Responsibility. Mr Osborne then reviews these periodically and manipulates UK income / expenditure through the budget each year to ensure that we are on track.

4.     Wednesday was the half-way point in the 5 year plan. The result……the income / expenditure hole is actually bigger today than it was in May 2010. 

The Government is powerless in addressing our finances by using fiscal policy if it doesn’t ignite the economy. 

We are now in a Catch 22 situation. If taxes are increased and public expenditure is cut further, this will have a detrimental impact to the economy. However, if the Government borrows further to ignite the economy, it will have more income through taxes in the long term but the financial black hole will get bigger and the deficit will not be addressed.

Stick or Twist?

Well the current Government have decided to ‘stick’. They will stick to the continued plan of tax increases and spending cuts but the outcome will be a 5 year plan becoming 6 (very optimistic), 7 (doable just) or 8 (realistic) years to complete. Throw in a General Election in the middle of all of that and any figure you pick has a decent chance!

A dire state of affairs......

King of Close Shaves

In case you missed it last week with all the media coverage on newspapers, hacking and proposed associated new laws against the want of our Prime Minister (he really is clueless)......the new Governor of the Bank of England has been chosen.   

Out with the old (Mervyn King) and in with the new (Mark Carney)......

Marvellous Merv's tenure has certainly left a legacy.  On his watch,  the Bank of England was rightly criticised for not providing any warning or pre-emptive evasive action when banks grew into lethal weapons of mass destruction. To compound the misery, he has never come forward to accept his part of the blame or offered any apology. It was a very close shave that things didn't work out far worse from the banking crisis fallout.....and it was still bad. How he kept his job will offer conspiracy theorists a story to hand down generations. It is a mystery to all.

The one piece of encouraging news is that his successor is a real curve ball. He didn't go to Eton or row with any of the cabinet at Oxford. Instead, the Chancellor went for a Canadian Central Banker and a real outsider. This pretty much tells you all you need to know of Downing Street's opinion of the Bank of England currently.  

What can we expect? Time will tell but the bar has been set low and Mark Carney can hardly do any worse than the past 8 years!

Germany 1 - Team GB 0

When I have looked from afar at the current Eurozone crisis, it is clear that the whole rescue / future prosperity on the continent rests with the ‘economic juggernaut’ Germany. Applying the ‘what’s in it for them’ principle, I naively assumed that this was because Germany would always have too much to lose from the breakdown of the currency union to allow it to collapse. Perhaps I was a little more naive than I thought.

Having recently studied trade partners, exports and imports (I’ve not been getting out too much), it appears that British exporters would probably be more damaged by a Eurozone implosion than German ones. Or to put that another way, businesses in the UK are more dependent on the health of the Eurozone than German companies.

Perhaps more importantly, German businesses are becoming less and less reliant on selling to Eurozone countries and are becoming more and more successful in selling to China and the leading emerging markets.

Two interesting conclusions from my time spent in a darkened room……

Firstly, it is clear that European policymakers need to get their act together. 2013 will see a German election and it will become increasingly obvious to the German voters that it is business with China that is making them richer and there is reducing incentive to show solidarity with Spain / Italy / Greece / Ireland / Portugal (et al). To use German wealth to underpin the recovery of weaker Eurozone economies is far from a vote winner.

Secondly, not only does the UK need to become less reliant on debt-fuelled consumer spending and become more of an investment-led exporting economy, it also needs to re-orientate its trade away from Eurozone economies limping along.

Who’d have thought the German election would become so important to the UK?

A Much Bigger Issue

So a city trader who lost £1.4billion of Swiss bank UBS's money has been jailed for 7 years after being found guilty of two counts of fraud. It is the biggest case of fraud in history in the UK.

How did he do it? There was no sophisticated plan or financial magic…… he simply bypassed the rules that were put in place but not policed effectively. Kweku Adoboli was literally just a couple of trades away from losing the bank £7.5 billion.

But there is a much bigger issue......some alarming points for you:

1.     This occurred in London under the scope of our own regulatory regime (or lack of).

2.     This occurred 3 years AFTER the banking sector issues had been publicised and greater banking sector policing was promised.

3.     The fraud was only unearthed by accident.

Dare I suggest the current Government’s regulatory policy for the banking sector might not be up to scratch still?

I rest my case your honour.

Shameful

Treble Dip Anyone?

Interesting times ahead……

The UK’s biggest buyers of our goods / services are the Eurozone and US. Like it or not, they are a big deal to our economy. We are heavily reliant on them and this is the key reason that our Government spends far too much time schmoozing with them…..

Big news this week then……

Eurozone

The Eurozone has returned to recession. There is no other way to dress this up other than to say that there will be less money to buy our goods / services.   

US

The figures on which parties will make up the US Government have been finalised this week. We already know that the US will reduce total spending next year by 4% and this will cause shockwaves around the world and lead many economies into recession that are reliant on the US buying their goods / services. That’s us……bugger. The reduction will happen unless the Senate passes a bill to reduce this reduction (I think that works stick with me!) in spending by a lower amount……i.e. 2 - 3%.  The problem though is that Obama’s party occupy 53 seats in the Senate, leaving them unable to pass their own ideas due to the 45 Republican seats. Unless a cross party agreement takes place, a Mexican stand-off will see the 4% reduction become live on 1 January 2013.

 

Not looking good for our two biggest customers then.

So, despite all the spin and chest thumping from Westminster that our economy was in great shape when we limped out of recession a few weeks ago, there is a pretty realistic chance we will head back into recession quicker than you can say treble dip.

Not really the sort of hat trick anyone wants on their CV.

Obama Re-Elected President of the UK!

So there you have it......we now know who our President is for the next 4 years! 

'We'?

Damn right. Ask yourself why TV / Radio / Newspapers ran with the story 24 hours a day? Because the US Presidential Election is more important than our own Prime Minister election process. The UK is nothing more than another US state with a different currency in real terms and the Prime Minster is a State Governor. 

Scary but true. 

How did it get to this stage? A couple of things for you to consider.

1. The US is the biggest economy in the world.

2. The US is the biggest buyer of goods / services in the world.

3. The US is the biggest buyer of exported UK goods / services in the world.

4. US economic policy impacts the UK in a bigger way than any decision made at Westminster.

So in short, the US is a big deal. Their politics are our politics. Their decisions are our decisions.

 

Don't be fooled by Cameron stating that we have a 'special relationship' with the US. The relationship is very much one sided. We need them......they don't need us as we bring very little to the table. 

I wonder how long it is before we in the UK get to vote in the US Presidential Election? Could be sooner than you think!

4 more years! 

Taxing Treatment

Scratching my head at this one……quite a contradiction.

An investigation into Starbucks in the UK has shown that despite £3 billion in UK sales since 1998, only £8.6 million has been paid in tax. That’s a tax rate of less than 1%.

So that suggests……

(1)   They are hugely unprofitable and have had many years of losses.

Or

(2)   They are hugely profitable but have found a loop hole (or two) in the UK tax system.

Or

(3)   HMRC are useless at upholding tax rules.

I’ll let you make your own mind up on this one. But does a company that plans to create 5,000 new jobs over the next 5 years and shareholders were recently told by company executives that the UK business was "successful", "profitable" and they were "very pleased with their performance" sound like a company making losses?

Regrettably, my money is on a mixture of (2) and (3).

One day we will have a fair and just tax system that is policed efficiently.

One day.  

The US Elephant

White Elephant: A Possession Unwanted By The Owner But Difficult To Dispose

With less than a month to go to the US Presidential Election, you can expect our media to really ramp up the coverage of all things Obama and Romney over the next few weeks.

The big issue though is the US Government debt that is the elephant in the room of the US economy and will form the backdrop to the election campaigns. Both parties need a strategy to tackle this……according to the Congressional Budget Office, $655 billion of spending cuts are required. That’s 4.7% of US national income. Or to put that another way……the largest economy in the world will be spending less on our goods and services. The US sneezes……the rest of the world catches a cold.

Tightening of that magnitude could cause the US to fall into recession and this will have a ripple effect.  

So forget the Eurozone problems, Greek demonstrations, 1 in 10 Spanish loans being in arrears, a clueless Government in the UK and X Factor……the real stories to shape the next few weeks are in the US.

Hold tight……it’s a huge few weeks for us.

Good luck everybody.

There’s Gonna Be A Revolution……Apparently!

Revolution: A Radical and Pervasive Change In Society

I started last week to believe every newspaper, radio station, TV programme and politician telling me that it was a momentous day for the UK and pensions. Probably best summarised by the merchants of doom’s (AKA Daily Mail) headline:

The Pension Revolution: Shake-up For 11m Workers As Every Employer Is Forced To Provide Staff Retirement Schemes

But here is the thing……when you ask people from non-profit making organisations (AKA The Government) to make decisions for profit making organisations where 3 out of 4 people work (AKA The Private Sector), mistakes will be made.

Look back at the headline……Every employer is forced to provide a retirement scheme for employees. The key mistake……employees are not forced to join. And therein lies the issue.

With incomes already stretched due to spiralling costs of food, petrol, electric, gas, etc……does a deluded Government expect 11 million workers to pile into something they don’t understand, trust and can’t afford?

Let me be the first to tell you that this is nothing more than a paper chasing exercise for employers. And in 15 years time when the Government realises it has failed due to a low take up rate, they might actually insert the line ‘and employees forced to join’.  

This is scarily and head shakingly obvious for anyone outside of Westminster.

Come on……a little bit of joined up thinking please Downing Street.

West Coast Woe

Everything you need to know about the people at the very top who run this country on our behalf is summed up in the bidding competition to run the West Coast main line train route.

Put simply, the process to bid for the 13 year franchise (worth around £5 billion) was fatally flawed and the winner (First Group) bid on different terms to its competitors.

The Outcome......

Firstly, the decision to award First Group the franchise has been overturned whilst the process is reviewed and likely to be repeated on a level playing field. 21% of the company value has been wiped off via the stock market share price and thousands of jobs are now at risk.

Secondly, £40 million of taxpayer money must be paid out to the 4 companies to reimburse the costs of their bids. That's £40 million......of our money.

If Westminster cannot get the process right to award a £5 billion contract, is it any wonder I have constant concerns at their ability to manage a far bigger economy.

We are one of the most significant players in world economics but this is amateurish.

The most shocking thing is that this isn't shocking.

Private Sector Power

I really do despair at the lack of creativity at Westminster. No spark, no originality, no enthusiasm and as a consequence, no postive result.

A Quick Recap......

The Government is desperate for the Private Sector to grow. Firstly, this will create jobs and replace the ones that have been lost with the Public Sector cuts. Secondly, it needs the Private Sector to invest, expand and grow us out of this economic mess. In other words, the Private Sector is crucially important.

Latest Government Thinking......

The problem is, the Private Sector isn't growing at all. No expansion and only limited jobs being created. Why? The Government believes that the banks are not lending simply, freely and cheaply enough (didn't that get us here in the first place?) to the Private Sector to instigate the economic boom that the Government wants.

Only one thing for it then (well in W1's mind)......set up a bank themselves. The headline being grabbed with this one will centre on the £1billion that taxpayers will put into the bank, with the key remit being to lend to small and medium sized companies.

My Thinking......

1. Nice headline......you forgot to mention where the £1 billion is coming from!

2. Exactly how is this going to help to stimulate the economy in the short term when it is predicted to take at least 18 months to establish.

3. Why does money need to be created to spark economic growth? Why not give tax breaks to businesses on energy, fuel and profit that can be used to invest / grow?

4. Why not use key business leaders for their experience and entrepreneurial flair to ignite the Private Sector that they dominate with fresh ideas?

It just all feels like an accountant is being used to fix a lorry. Completely inappropriate.

This isn't rocket science is it?

No Sex Please

I really can't understand this one at all. And for once, I can't even blame the banks or politicians.

The Background......

When it comes to matters of sex, some of our European partners are renowned for their more liberal approach, romanticism, guile and prowess. Yet, interestingly, the forthcoming EU Gender Directive flies in the face of individuality and sexual expression.

The EU Gender Directive will come into force on 21 December 2012 and will force all UK Insurers to treat men and women the same when it comes to insurance premiums. This means that whether you are insuring a car, your house or your life, men and woman must pay the same.

The Problem......

Women are generally a lower risk to insure as they are less likely to claim. They drive safer, they live safer and they live longer. As a consequence, they pay less. All very fair and above board. But the new ruling will mean that this will be unlawful shortly.

What Next?

I just don't get it. An insurer will weigh up the risks when insuring something and set a premium to do so. End of. But this is effectively saying, do not consider some of the risks and increase your premiums for women.

That's like saying......

A 17 year old must be insured for a car at the same price as a 50 year old or you are 'ageist' and 'driverist'.

Or a Robin Reliant has to be insured at the same cost as a Porsche or you are a 'carist'.

Or a dog must be insured at the same price as a hamster or you are a 'petist'.

I just don't get it.

This all smacks of too many men in Brussels, with too much time, eating moules et frites over an extended lunch washed down with too much red having a right good snigger at us.

Frightening.

Now Remember......Try Not To Look Old or Vulnerable!

After an investigation by the Financial Services Authority into the mis-selling of Payment Protection Insurance (PPI) its conclusions were……well……underwhelming.

Martin Wheatley, the FSA Managing Director, announced that “offering financial incentives to bank staff to sell PPI was the reason why so many were mis-sold.” Hardly a ‘stop the press’ moment is it.

Is it just me or is this bleedin obvious?

My investigation would have gone along the following lines:

1.     Walk into your bank where you hold a current account.

2.     Deposit £100.00 into your current account.

3.     Look vulnerable, old or (ideally) both.

4.     Wait for the Double Glazing Sales man / woman (they will have a badge giving them a title saying something like ‘Banking Executive’) to interrogate you on your mortgage, insurance, credit card, savings or all of these.

5.     Walk out feeling jaded, confused and dirty.

6.     Expect a phone call within 24 hours from a ‘Banking Executive’ because you didn’t keep a straight face during the interrogation and blinked, thus indicating that you wanted to proceed with something completely inappropriate.

In all seriousness……there is a bigger message. The FSA have highlighted that if you give banking staff financial incentives, they will put their own personal greed before the client need. Pretty straight forward action required then……stop sales incentives on bank related products and we can avoid a repeat of the £9 billion compensation paid for mis-sold PPI.

Simple really isn’t it. Or is it……

The FSA has decided not to ban such practices but instead it wants banks to “review their incentive schemes and ensure controls are adequate over the next 12 – 18 months.”

So there you have it – yet more evidence of the power that banks have over Government, their own regulator and anyone looking vaguely old or vulnerable.

It’s only been 4 years since Northern Rock collapsed. No rush I guess. 

Greece Is The Word

Well, who would have thought it......Greece has counted its pennies and has realised that the public spending cuts that it must make over the next 2 years can't be achieved. And if Greece doesn't agree to make the cuts and then deliver them, the bail out agreed by the Eurozone (well Germany and France plus the 'hangers on') will not be granted. And if the bailout is not granted......take your cash out of the bank and hide it under the mattress.

The bailout is a complete joke anyway. It is a bit like a bank lending money to someone to buy a house who is unemployed. Ah, bugger......that's exactly what they did. In essence, lending money to someone that can't afford to repay it will only offer short term respite......the problem doesn't go away. As a result Greece is asking for more time to implement the £11 billion of cuts.

So why now?

Unbelievably, it's because European politicians are now back from holiday. Sad but true.

One of the outcomes of all the Eurozone debt problems is that Greece is now the most powerful player in Europe as it decides all our fates.

Hold tight......the next few months could be bumpy.

A New Low (Updated)

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UPDATE

I can’t quite put into words my feelings on this……I feel sick to the bottom of my stomach.

The Background……

As per below, New York regulators accused Standard Chartered (the UK’s fifth largest bank) of hiding $250bn of transactions with Iran that was used to fund their nuclear program and terrorist activities. Standard Chartered defended this by stating it was nearer £14 million. My opinion……the amount is irrelevant - it should never have happened.

The Update……

Standard Chartered has agreed a $340m (£217m) settlement with New York regulators as their fine / punishment.

One Quick Question……

Why pay a fine of £217m if you believe that you have only done £14m of wrong doing?

This pretty much sums everything up nicely.

Sickening

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ORIGINAL POST

Well, who would have thought it……a new banking scandal that reaches new depths of dishonesty and morality. And for what? Yet more corporate profit.

The Accused……

Standard Chartered (the UK’s fifth largest bank) is stood accused by the New York State Department of Financial Services of laundering as much as $250bn (£161bn) over nearly a decade. It said the bank hid transactions for "Iranian financial institutions" that were subject to sanctions. The regulator said that Standard Chartered had hidden 60,000 such secret transactions, with the proceeds used to fund Iran’s nuclear program and terrorist activities. Essentially, Standard Chartered are accused of falsifying payment directions by stripping the message of unwanted data that showed the clients were Iranian, replacing it with false entries.

The Defence……

Standard Chartered have refuted the claims and stated that the US Regulator did not present “a full and accurate picture of the facts” as the figure was nearer $14 million.

 

So that’s ok then? The fact that a penny had been laundered to fund nuclear programs and terrorist activities is a penny too much……let alone $14 million. Do Standard Chartered just not get it? $14 million is not excusable if you were originally accused of $250 billion.

Is there no barrier to what a bank won’t do for corporate greed?

 

Olympic Blames......Time To Count The Pennies

There is no doubting that these Olympics games will live long in the memory of many in Great Britain (or is that now GB?).

Many will judge the games from the abundance of memories offered by watching supreme athletes achieve their dreams up close. It is nothing short of inspiring.

Many will judge the games by the medal haul for Team GB.

Many will judge the games from an efficiency perspective because the games appear to have been delivered with such competence (despite a few ticket grumbles along the way).

However, rightly or wrongly, many will judge the games from a financial perspective. When GB makes an investment of £9 billion to host the games, it seems completely fair that many will judge the games by what the financial return was. Especially when you consider only one of the last 8 cities to host the Olympic Games turned a profit.

I have been fortunate enough to visit Sydney and see the ghost town that is the former Olympic Park (apart from a handful of sporting events each year) and we need only look at Athens to see the legacy that the games left on Greece.

Having seen up close a number of Olympic events in London, I came away thinking that the organisers had missed a trick somewhat. When there are millions lining the streets for the cycling and triathlon and no rights have been sold to ‘officially’ sell food and drink, questions start to form and head scratching will begin. Damn it, I would have bought a Team GB t-shirt, hat, flag and anything else tacky but......the merchandise stalls were nowhere to be seen. Could you imagine the opportunity that this brings not being maximised at a Premier League football match? Really disappointingly……we had 7 years to prepare for this.

I really do hope that when all the pennies have been counted, we don't regret not doing more to have maximised our once in a lifetime opportunity and covered our costs. It will all just lead to political sparing and nothing cheapens a memory so quickly like ‘those lot’ bickering at Westminster.

A New Low

Well, who would have thought it……a new banking scandal that reaches new depths of dishonesty and morality. And for what? Yet more corporate profit.

The Accused……

Standard Chartered (the UK’s fifth largest bank) is stood accused by the New York State Department of Financial Services of laundering as much as $250bn (£161bn) over nearly a decade. It said the bank hid transactions for "Iranian financial institutions" that were subject to sanctions. The regulator said that Standard Chartered had hidden 60,000 such secret transactions, with the proceeds used to fund Iran’s nuclear program and terrorist activities. Essentially, Standard Chartered are accused of falsifying payment directions by stripping the message of unwanted data that showed the clients were Iranian, replacing it with false entries.

The Defence……

Standard Chartered have refuted the claims and stated that the US Regulator did not present “a full and accurate picture of the facts” as the figure was nearer $14 million.

 

So that’s ok then? The fact that a penny had been laundered to fund nuclear programs and terrorist activities is a penny too much……let alone $14 million. Do Standard Chartered just not get it? $14 million is not excusable if you were originally accused of $250 billion.

Is there no barrier to what a bank won’t do for corporate greed?

 



Time To Add A Few More To The Unemployment Figures?

As an independent body, the Bank of England (fronted my favourite civil servant  Mervyn King) is redundant as an organisation.

I have spent far too much time highlighting their inability to regulate the behaviour of the banks past, present and future. But one of their other key responsibilities is to control our economy to stop boom / bust scenarios being played out and create a stable environment for our economy.  They do this through controlling inflation, setting interest rates and instigating Quantitative Easing.

HOWEVER

Since 2009 we have seen interest rates reduce to their lowest level in history, £375 billion pumped into the UK through Quantitative Easing and VAT rise from 17.5% to 20.0%. The result......a double dip recession that is currently the longest in 50 years.

The latest inflation figures highlight that we are currently at a level of 2.4%, hitting the Bank of England target (2.5%) for the first time since 2009. But here's the thing......the target has been hit by accident not through good policing of economic policy.

To put this simply, the Bank of England is powerless to control / manipulate our economy and as such, might as well not exist at our vast expense.

Surely it’s time for a rethink / fresh approach?

Just a thought……

La Historia Más Grande Del Verano No Son Los Juegos Olímpicos

(The Big Story of the Summer Is Not The Olympics!)

Interesting that the biggest threat to our economy currently is not the idiots running our country, but the mess unravelling in Spain.

A few key points for you:

A third of Spanish Government debt is owned by Spanish Banks. Spanish Banks are all but collapsing financially. The Spanish Government has tried to borrow money from the open market to help prop up its banks but the cost to do so has increased dramatically due to the perceived risk to lend to Spain.

And there in lies the problem......Spain can't afford to borrow itself out of trouble. We've seen the same problem before with Ireland / Portugal and it led to mass hysteria with the financial markets and a Eurozone bailout with huge implications for all of Europe.

And where next for Spain? It seems that the only real outcome will be a full scale Eurozone / IMF bailout. Messy at best......deeply deeply worrying at worst.

The only real surprise is that it has taken so long for everyone to stand up and notice.

Don't let the Oympics mask the big story of the summer!

Best of British?

The Background Bit……

A US Senate probe has disclosed how lax controls at Europe's largest bank left it vulnerable to being used to launder dirty money from around the world (to the tune of billions).

The report into HSBC identifies huge sums of Mexican drug money almost certainly passed through the bank. In addition, suspicious funds from Syria, the Cayman Islands, Iran and Saudi Arabia also passed through the British bank. The US Department of Justice said it is conducting a criminal investigation into HSBC's operations and HSBC has stated that it expected to be held accountable for what went wrong.

The Issue……

Well, there are plenty of issues to pick from this story. Drugs, criminal activities, dirty money, money laundering, corrupt banking. But my biggest issue with the whole story is one word that may have got lost……

British

HSBC are registered in Britain, run their operations from here and come under British law and regulation. Yet, it took the US to uncover the issue with Money Laundering. How many more stories (or clues as I like to call them) do we need to understand that the banking sector and the control of it is, well, out of control?    

More bank bashing? More regulator bashing? More Government bashing? No……just a mere citizen worried about the greater powers that run our country only doing half a job……

Shameful.

I Like A Good Crime Thriller......

The Barclays plot thickens……

Paul Tucker, the deputy to Marvellous (not) Mervyn King, has got himself in a right old mess when giving evidence to the Treasury Select Committee investigating the Barclays scandal. He is essentially the second most powerful economist / civil servant in the UK but he was called to question for a suggestion that he instructed Barclays to fiddle interest rates.

So, his response to the killer question……

“I did not put pressure on Barclays to rig interest rates but told the bank to be more adept in the way it was borrowing, or risk having to be nationalised”.

That’s a bit like asking someone to go to the supermarket with no money and telling them to be creative with how they acquire the goods.

Paul Tucker is currently the favourite to succeed Mervyn King when he comes to the end of his second 4 year spell shortly. Is this really the kind of person we want to control our economy? Probably not, but the shadiness suggests he will fit in nicely.

Crazy……