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……

Meddling Merv?

The latest banking scandal involving the ‘fiddling’ of rates that the banks lend to each other is now exposed, it will dominate political news for weeks and will ultimately see many heads roll. The question that remains unanswered is how many banks are implicated. I guess time will tell.

The interesting thing about the resignation of the Barclays Chief Executive, is that he has a clear incentive to implicate as many people as possible when grilled by MP’s to dilute his own shortcomings. What is unclear is whether he knew what was happening or not. Either way, he had to go.

The bigger issue is the role of the Bank of England in all of this. It is being intimated by Barclays that, not only did the Bank of England know of the illegal ‘Libor fiddling’, but they were actually encouraging it.

I completely understand that the Bank of England are useless and not fit for purpose……giving an ideal excuse to Mervyn King in not identifying that this was going on. But encouraging it? Well, this would bring things to an all time low. Government heads would then roll……which might not be a bad thing.  

Perhaps, the biggest issue is that nobody is shocked or surprised by all that has gone on. That is the biggest and saddest outcome from all of this.

Shameful.