Financial fuckery thread

[Triple Zero]

Share of Income Gains by Quintile - Great Depression til Now

[Cramulus]

Finally, some fucking bank reforms.

http://www.reuters.com/article/2011/09/12/us-britain-banks-idUSTRE78B12420110912

UK Banks are going to be required to separate their retail banking (banking for individuals and corporations) from their risky gambling adventures.
It also looks like multinational banks will have to adopt this structure to trade in the UK.


Fuck yeah.

[Cain]

Wont fly until 2015, though.

By which point we will probably have suffered through yet another economic crash.

It is good news, don't get me wrong, I just worry that, because a Tory government was heavily involved in this, and certain high-ranking Tories were engaged in helping to flog subprime loans, that there will be loopholes and exceptions.  I'll read up more on it, however, before saying anything for sure.

[Scribbly]

The real joke is the amount of fuss being made over securing retail banking by the banks. It'll destroy our ability to compete! We need that money! Bla bla bla.

The FT are running an article this morning which praises the banking reform (alongside one by their banking editor which says it is a waste of time, weirdly). The bit which really jumped out at me was this:

"The ICB puts the annual cost to banks around £6bn. This is modest as a share of banks' assets (0.1 per cent)."

I was talking about this with friends the other week and guessed that retail banking would make up less than one per cent of the banks assets, because the numbers involved in investment banking were so huge. My friend thought I was being hopelessly harsh on them; surely it'd be at least 10% of the bank. And that could really hurt to have to secure!



I've downloaded the Vickers report... seems like it'll be heavy reading, but it also sounds like the vast majority of really good reforms just aren't being reported in the media. Which isn't surprising; it is a 350+ page document.

[Scribbly]

Also, French banks are tumbling - BNP Paribas (which is the biggest, apparently) lost 12% of their share price yesterday and 6% this morning because Greece is now expected to default, and people think that the bank will be unable to finance themselves should Greece renege on their debt. Other French banks lost some (Societe General lost almost 3% and Credit Agricole 0.6%), with more losses expected.

I'm not so up on the French economic situation or what they had to do the last time around, but when Greece goes down, it looks likely (to my inexpert eye) that the French government - or some other agency - will need to step in to bail out BNP Paribas. If they don't, it will go bust... and I suspect that'll start the house of cards falling, because my understanding is that all the banks are incestuously linked through debts to each other, and if the biggest French bank goes, others will go with it... some will only be weakened by the initial collapse, but as more go, it'll add up and up and...!

Exciting times! Greece is expected to collapse at the end of the month, though they claim they can hold out to October. It'll be fascinating to see how this all winds up.

As an interesting point, some of my colleagues at work asked exactly what would happen if Greece defaults. I explained that they wouldn't be able to make pay for their public sector, pensions etc... but I'm not exactly certain what happens with other things. The infrastructure still exists. Presumably the government will try to carry on as much as possible. If the bank you borrowed to buy your house from goes under, presumably that debt is written off? I can't see anyone turfing Greek citizens out of their homes so that they can become the property of whoever was owed money by the prior bank, though I can see that being what may be meant to happen.

I've been trying to find out what exactly the process is. I understand that European officials are going in today to help prepare for a 'controlled default' so maybe we'll hear more about what that entails over the next few days.

[Cain]

Ambrose Evans-Pritchard is being apocalyptic in the Telegraph again; though to be fair he is being much less heated in his rhetotic than German EU officials:

Germany's EU commissioner Günther Oettinger said Europe should send blue helmets to take control of Greek tax collection and liquidate state assets. They had better be well armed. The headlines in the Greek press have been "Unconditional Capitulation", and "Terrorization of Greeks", and even "Fourth Reich".

This is utterly insane.  There are two and only two options for the EU: unite as a single state, at the very least on financial terms, and undertake the necessary measures of job stimulus, bank breakups and sovereign debt consolidation (which will of course necessitate a larger pool of funds for the EU to draw from) or break the EMU up entirely and set back EU relations by 20 years, at least.

Just imagine the reaction in America if one of Obama's economic advisors recommended sending in troops to, say, California, to enforce austerity.  This is the level of insanity being proposed by Oettinger.

And BNP Paribas' woes can be tied directly to German insanity towards Greece.  Apparently, Germany is acting in precisely this way in order to make Greece submit to even further demands for austerity.  Its destabilizing entire global markets to try and coerce the Greeks into a financial plan which wont work anyway and makes their default even more likely.

[Scribbly]

There won't be popular support for closer integration. The publics of the various European countries are basically still locked in an Us vs Them mentality when it comes to everyone else. Particularly the UK and... well, everyone. French bans on UK product and tabloid screaming about British Jobs for British Workers spring to mind.

So... that leaves breaking up and the collapse of relations. But that doesn't help the situation; that's just a consequence. The international banks are all so tied into these markets that European countries allowing their neighbors to collapse just means that they drift closer to it themselves. People are already saying that France is probably going to have to recapitalize their banks when Greece falls. Greece is comparatively tiny. What is going to happen when it looks like Italy is going?

[Faust]

Then there is the option of the schizm...

Any country wealthy enough, or with enough resources & political sway become the new EU, Germany France England would be a given, ireland would probably make it in despite its weak economy because we have proven to be useful in diplomatic relations where GFE would otherwise have a door slammed in their face.

Then it creates a lower tier EU with failing debts and its own currancy, they will try and sell it as countries working towards having the economic strength to sit at the big boys table, all the while meaning we exploit their resources like we did to poland and slovakia until they become too expensive to use any more.

[Scribbly]

I can't see the UK giving up the pound.

It isn't doing great, but we have no incentive to give up control of our own currency, and very little to unite our economy with that of other countries; that is what has gotten them into this mess! They are different economies with different needs, united with a single currency, but without the political integration needed to function properly.

I saw the notion of a 'strong' and 'weak' Euro floated on the FT a couple of weeks back, where the strong nations break away from the weaker nations, but it is still just a temporary measure. As long as the constituent countries continue to act as individual countries rather than united as a single nation, their economies will need different measures taken at different times, and any attempt at a single currency will fail. There simply isn't the desire in Europe for all our different nations to be subsumed into a singular state.

[Faust]

It's not something Ireland would be interested in anyway, we refuse to give up our nutrality and if we were part of one state making military decisions that ceases to exist by default.

[Cain]

There won't be popular support for closer integration. The publics of the various European countries are basically still locked in an Us vs Them mentality when it comes to everyone else. Particularly the UK and... well, everyone. French bans on UK product and tabloid screaming about British Jobs for British Workers spring to mind.

So... that leaves breaking up and the collapse of relations. But that doesn't help the situation; that's just a consequence. The international banks are all so tied into these markets that European countries allowing their neighbors to collapse just means that they drift closer to it themselves. People are already saying that France is probably going to have to recapitalize their banks when Greece falls. Greece is comparatively tiny. What is going to happen when it looks like Italy is going?

That parochial attitude has been allowed to fester by European elites, who basically belittled and condescended to those opposed to the larger EU projects on nationalistic grounds.  I'm fairly in favour of intergration in principal, and even I'd concede that the response to nationalists has been along the lines of "bitter people clinging to guns and god flags and history".

The message that should've been sent is this: the countries that are going to dominate the future are large.  Very large.  China, India, USA and Russia large (theoretically Indonesia too, in the far future).  No European country, on its own, can compete with that.  The largest state in Europe is Germany, and that is not even half the population size of Russia, a massively underpopulated country that also has the advantage of owning territory from the Baltic through to the Pacific.  Now, if we want to have a say in the future, and not merely be historical amusement parks and vassals to these emerging powers, we have one simple choice: unite.  It's unite or submit to de facto foreign control.  Yes, all European countries will, as a result, have less autonomy among themselves, less control over their own futures, be tied permamently to the fortunes of other states.  But it's better to have a portion of a say in Brussels, than have no say in policies from Beijing, Moscow and Washington.

But I suspect that it is far too late for this kind of argument now.

[Cain]

Then there is the option of the schizm...

Any country wealthy enough, or with enough resources & political sway become the new EU, Germany France England would be a given, ireland would probably make it in despite its weak economy because we have proven to be useful in diplomatic relations where GFE would otherwise have a door slammed in their face.

Then it creates a lower tier EU with failing debts and its own currancy, they will try and sell it as countries working towards having the economic strength to sit at the big boys table, all the while meaning we exploit their resources like we did to poland and slovakia until they become too expensive to use any more.

In the long run, I see any kind of schism eventually going all the way down, to the nation-state level.

It may take a couple of decades, but I can only see a two-tier level as a temporary stage, so long as national interests trump cooperation.

[Doktor Howl]

Then there is the option of the schizm...

Any country wealthy enough, or with enough resources & political sway become the new EU, Germany France England would be a given, ireland would probably make it in despite its weak economy because we have proven to be useful in diplomatic relations where GFE would otherwise have a door slammed in their face.

Then it creates a lower tier EU with failing debts and its own currancy, they will try and sell it as countries working towards having the economic strength to sit at the big boys table, all the while meaning we exploit their resources like we did to poland and slovakia until they become too expensive to use any more.

In the long run, I see any kind of schism eventually going all the way down, to the nation-state level.

It may take a couple of decades, but I can only see a two-tier level as a temporary stage, so long as national interests trump cooperation.

We always go nationalistic at the beginning of a century.  You can set your fucking watch to it.

[Scribbly]

That parochial attitude has been allowed to fester by European elites, who basically belittled and condescended to those opposed to the larger EU projects on nationalistic grounds.  I'm fairly in favour of intergration in principal, and even I'd concede that the response to nationalists has been along the lines of "bitter people clinging to guns and god flags and history".

The message that should've been sent is this: the countries that are going to dominate the future are large.  Very large.  China, India, USA and Russia large (theoretically Indonesia too, in the far future).  No European country, on its own, can compete with that.  The largest state in Europe is Germany, and that is not even half the population size of Russia, a massively underpopulated country that also has the advantage of owning territory from the Baltic through to the Pacific.  Now, if we want to have a say in the future, and not merely be historical amusement parks and vassals to these emerging powers, we have one simple choice: unite.  It's unite or submit to de facto foreign control.  Yes, all European countries will, as a result, have less autonomy among themselves, less control over their own futures, be tied permamently to the fortunes of other states.  But it's better to have a portion of a say in Brussels, than have no say in policies from Beijing, Moscow and Washington.

But I suspect that it is far too late for this kind of argument now.

Yeah, sorry if I wasn't clear - I would personally be in favour of a united Europe. Partly because I would like to see Nick Farrage's head explode, but mostly because I think it is the most sensible way to combat the major issues of the day. We need to completely restructure the global economy and fight climate change - two things which need the world (or at least, most of it) to act in unison, which would be much easier with a united Europe.

But like you say, and I agree, it is almost certainly too late for that. Individual European countries see each other as competitors at best, enemies at worst. The EU is a massively bureaucratic, corrupt and entangled mess ... and we don't have any credible politicians standing up to make the case for a united Europe, or any plan as to how to get there.

I think politicians tried to sneak it in by the back door, incrementally. I really don't think it has helped at all. We're going to eat each other, I think, over the next couple of years... and in about ten years time, the nationalists will be looking around at the ruin of what was Britain... and probably trying to find a way to blame it on the Europeans.

[Cain]

I thought you would agree.  I just had to vent - between idiotic elites and short-sighted nationalists, we're fucking our only decent chance to have any say in future global affairs.  It's not like the UK is going to resurrect the empire anytime soon, is it?  Why else should anyone listen to us?  Because of our vast, impressive, half-mythological history?  Because we consider ourselves to be so important?  Hah, hardly.  The Chinese will buy our castles, the Indians will write our history (and probably more accurately than we do), the Americans will control our military and the Russians will control our energy resources.

We're fucked from several dozen different directions, and those who are supposedly the most "patriotic" and concerned about national prestige are doing their utmost to consign us to the dustbin of history.