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Modern economics

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Dave B
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Re: Modern economics

#661 Post by Dave B » June 30th, 2012, 10:17 am

Latest post of the previous page:

. . . The key bit of information which is missing is (I think) your appreciation of what is covered by the FSA. It is not just "casino banks" (which is a stupid slogan anyway), but includes the trustees and advisers of your own company pension scheme . . .
I know that, Nick, in fact I think I mentioned it somewhere.

I wonder how much prelaunch testing there is of these dodgy products, not onlt for potential gain but for collapse and all effects of that?

I would love to know the real cost of these things to all of us, the cost of court cases, receiver's fees, police investigation etc., not just what the banks will claw back from us to pay for the fines and losses etc. their employees cost them.
"Look forward; yesterday was a lesson, if you did not learn from it you wasted it."
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animist
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Re: Modern economics

#662 Post by animist » June 30th, 2012, 3:52 pm

Nick wrote:
That way wealth would be more fairly distributed and the tax base would grow as workers share more of the wealth.
Sadly, probably not. More likely to reduce economic activity and reduce the size of the cake. Just look at minimum wage and employee "protection" legislation. The higher it is, and the more there is, the worse the unemployment, and hence the worse the distribution of thenation's (smaller) income.
this of course assumes that the size of the cake is the main criterion for decisions on fairness versus freedom. So, Nick, are you in favour of a minimum wage?

Nick
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Re: Modern economics

#663 Post by Nick » June 30th, 2012, 4:18 pm

Dave B wrote:
. . . The key bit of information which is missing is (I think) your appreciation of what is covered by the FSA. It is not just "casino banks" (which is a stupid slogan anyway), but includes the trustees and advisers of your own company pension scheme . . .
I know that, Nick, in fact I think I mentioned it somewhere.
Oh! I which case I don't know why that is not apparent from your post... :D
I wonder how much prelaunch testing there is of these dodgy products, not only for potential gain but for collapse and all effects of that?
That's any interesting question, Dave. The answer is, that they do an enormous amount. But that doesn't always help. The Savings and Loans Trust (I think it was...) went spectacularly bust when things didn't go quite according to the script, and they had 2 Nobel Prize winners on the staff. Furthermore, the regulators (over here, at least,) refuse to examin any products before they are released. They just have a set of rules (which runs to about 30 volumes!) and tell the companies to abide by them all. The truth, ISTM, is that the FSA is too scared to authorise anything. Much safer to criticise once it goes wrong, rather than prevent it from going wrong in the first place. So would more regulation stop the odd defective product? Probably not.

There are also lots of rules about being precise about the degree of risk the consumer must expect (at least in retail financial services), but some "consumers" are deemed to be "professional investors". This would include just about every product offered by the "casino" banks. In these cases, it is held that the investors are sophisticated enough to do their own due dilligence. For retail sales, the FSA have a history of waiting for the disaster to happen before intervening. Not the best solution, IMO. Furthermore, the rules just seem to generate paperwork, and protect neither the customer, nor the provider. Just box-ticking. Furthermore, the FSA have a history of changing the rules retrospectively. This causes havoc with PI insurance, as it is impossible for the insurer to completely assess risk, if the risk my change retrospectively.

And I suppose I must come clean about a personal gripe. The FSA increased their fees in 2003, after 3 disastrous years for the stock exchange (and hence financial advisers) specifically because their final salary pension scheme was not performing well enough. Grrrr!!
I would love to know the real cost of these things to all of us, the cost of court cases, receiver's fees, police investigation etc., not just what the banks will claw back from us to pay for the fines and losses etc. their employees cost them.
The real costs include the huge sums spent on jumping through hoops, a lot of which prove to be ineffective. The other costs are recovered through the fines on offending firms. That's one reason for the fines.

And, as I've said already, these sums pale into insignificance when set against the costs the whole world is now suffering because of the actions of politicians. I'd dearly like to make Ed Miliband and Ed Balls financially responsible for their actions, but all they want to do is wound the government. They don't care about the consequences. Not one tiny little bit.

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Dave B
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Re: Modern economics

#664 Post by Dave B » June 30th, 2012, 5:00 pm

I recognise that even if the cost of the fines etc. were taken out of the banks profits (and bonuses/commissions if I had my way) someone has to suffer (and my company pension provider, and therefore myself, might be one of those) but it does grate that the fines initially benefit the industry that committed the crime in the first place. And I do think that the person with ultimate power also has ultimate responsibility for the overall ethics of the organisation - even in detail. That person has the power to make internal discipline strong enough to deter illegal actions - if he/she does not they he/she shares the responsibility for them as well.
From a post of mine on the last page, Nick. Dunno how to link to a specific post.

I think other "social" costs can be added to the total bill these crimes and cock-ups cause; that of benefits for lost jobs, medical costs for those who suffer physically or mentally . . . Commissions and bonuses should be the first sacrifices, including claw-back, then they share holders should take some of the load, not the existing customers and certainly not the private ones. OK, as above, that might hit my pension as well, but it would be hypocritical of me to claim that pension funds should be a special case.

They asked me, again, at the local branch a week ago if I wanted to invest my savings in something more "attractive" than cash ISAs. I managed not to laugh or swear. I will settle for something that merely reduces my losses due to inflation, but is relatively safe, thanks.
"Look forward; yesterday was a lesson, if you did not learn from it you wasted it."
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Sel
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Re: Modern economics

#665 Post by Sel » June 30th, 2012, 7:10 pm

I'm pleased you are asking the questions, even if answers are illusive
Nick, first thanks for commenting on my post. My knowledge of economics stops at my retirement investments. :sad2: :shrug:

I can understand somewhat the complexities of this mess and that every action can have unintended consequences. But, is it not time that society search for some real solutions to the economic problems haunting all of us? Solutions that benefit all, not just the powerful corporations.

On a different note, our former Prime Minister, Jean Chretien, resisted the urgings of our Canadian banks for less regulation. They felt they were being restricted in their ability to play with the big boys. He basically told them he felt deregulation would lead to merges with the large American banks leaving the Canadian people between a rock and a hard place.

With the crash of 2008 he was proven somewhat right when our economy fared far better than the other western nations with less regulated banks. Our largest hit was the result of our economic dependence on the American consumer and American production that uses our raw materials.

The old boy screwed up royally on other fronts but he got that right. :smile:
"The good life is one inspired by love and guided by knowledge." Bertrand Russell

Nick
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Re: Modern economics

#666 Post by Nick » June 30th, 2012, 7:30 pm

animist wrote:this of course assumes that the size of the cake is the main criterion for decisions on fairness versus freedom. So, Nick, are you in favour of a minimum wage?
That all depends on what the level of the minimum wage is. Too low and it is ineffective. Too high and it keeps people in unemployment and destroy the creation of extra jobs. And there is always that danger that increasing the minimum wage hits those on low incomes by raising the cost of the goods and services which they buy.

If, say, the minimum wage raised the cost of local authority services, so that local council rates rose, it is just diverting money from one area to another. There is no guarantee that it will transfer money from the comparatively rich to the poor.

I can think of better ways to help the poor than to increase the minimum wage. For a start, if the wage is considered a mimimum, what is the government doing taking money off them in income tax? Likewise, for someone on Jobseekers Allowance, once they do (less than) a single hour's labour, they are effectively taxed at 100%. Great incentive to get themback into work, wouldn't you say? ANd a huge incentive to stay in the black economy. It's ludicrous!

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Alan H
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Re: Modern economics

#667 Post by Alan H » July 2nd, 2012, 10:16 am

For those fed up or utterly disgusted with the antics of the big banks, this might be a useful website: Move your money
Why Move Your Money?

We all know that the banks have failed us and something has to change.

The banks won’t change of their own accord and politicians and regulators are too narrowly focused on maintaining the status quo, so we must be the agents of change. It is simple: make a positive decision about where to put your money.

Banks rely on the deposits of ordinary savers. So when you choose where you keep your money, you are choosing between supporting business as usual or taking a simple but powerful step towards a better banking system and a better future. By moving your money you can directly support an ethical and socially useful bank, and send a message about the sort of society and economy you want to see. And one you’d rather not.

The time is right. Public anger with the banks is at an all time high. Politicians are reflecting the country’s mood with talk of 'responsible capitalism' and there is an increased interest in co-operatives. We need to seize the moment and steer our leaders in the direction we want them to take.

The campaign follows a highly successful movement in the US which has led to over 10 million people moving their money into local financial institutions - in a single day over 40,000 people moved their accounts. It's not the first consumer boycott in the UK either. In the 1980s a student led campaign successfully resulted in Barclays pulling out of apartheid South Africa.

" At an individual level, you can't do everything to put an unfair economy right - but you can do something. Move your money is the new fair trade. It is THE campaign for our time." - Ed Mayo, Secretary General of Coops UK
Alan Henness

There are three fundamental questions for anyone advocating Brexit:

1. What, precisely, are the significant and tangible benefits of leaving the EU?
2. What damage to the UK and its citizens is an acceptable price to pay for those benefits?
3. Which ruling of the ECJ is most persuasive of the need to leave its jurisdiction?

Nick
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Re: Modern economics

#668 Post by Nick » July 2nd, 2012, 6:25 pm

It is said that one is more likely to get divorced than move one's bank account.

I am really disappointed that the banking industry appears to have been subject to such "ungentlemanly conduct". I use that phrase, not to try to lessen the seriousness of what has occurred, but because it reflects the erosion of the approach which has been so significant in the growth of London as a world centre (especially such institutions as the Lloyds market.)

It is a tragedy that trust has been lost. Of course, not everything is as it may initially seem. For a start, though of course we need to take appropriate action to restore faith in the City, we can do withour the inane comments from the 2 Ed's, who seem to be solely concerned with injuring the government, and don't seem to care a fig if it damages the City (and hence 10% of all tax revenues) too.

And the biggest manipulation of interest rates has come from the spectacular stupidity of the Euro project. If you are keen to point your anger at the insitution most responsoible for the cock-up we now see before us, look towards the failed EU project. The Barclay's debacle is but a pin-prick compared to the Euro disaster, which has thrown millions out of work, as a direct result of political wishful thinking.

There are also alternative views of the LIBOR scandal out there. Foe example, here. Dunno if I agree with it, but sometimes things are not always what they seem.

By all means move your money if you want to. But bear in mind that small, local, mutual banks may also be reckless, inefficient, unprofessional and reliant on bail-outs. This is exactly what we have seen in the Spanish banking crisis. Not that encouraging...

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Dave B
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Re: Modern economics

#669 Post by Dave B » July 2nd, 2012, 7:50 pm

Nick, you must have been wearing very thick and long blinkers to have only just come to the decision that the financial industry is a place where greedy and criminal types proliferate. I have long been amazed that the evidence of the past few years has not dimmed your apparent affection for this industry.

Oh, I agree it is essential, but it is that very quality and value that makes it essential that it is controlled and that the merest sniff of dodgy dealing is flattened by a foot worthy of Monty Python. As several pundits have said, they just have not learned from previous experience, every shiny new wide-boy thinks he is cleverer than the last and can get away with it.

It is probably more political than credible but more and more of those pundits are now saying that Diamond must have known what was going on. I think he should be pilloried just for claiming that the banks were now fit to be trusted to police themselves.

And talking of trust . . . I do not like the idea of politicians, with their, er, ethical record, being the policemen in the up coming enquiry. Odds that they will come up with a guaranteed objective finding? Against?
"Look forward; yesterday was a lesson, if you did not learn from it you wasted it."
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Alan H
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Re: Modern economics

#670 Post by Alan H » July 2nd, 2012, 11:46 pm

Alan H wrote:For those fed up or utterly disgusted with the antics of the big banks, this might be a useful website: Move your money
Of course, you may want to avoid Triodos Bank: The Bank that likes to say ‘Quack’.
Alan Henness

There are three fundamental questions for anyone advocating Brexit:

1. What, precisely, are the significant and tangible benefits of leaving the EU?
2. What damage to the UK and its citizens is an acceptable price to pay for those benefits?
3. Which ruling of the ECJ is most persuasive of the need to leave its jurisdiction?

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Dave B
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Re: Modern economics

#671 Post by Dave B » July 3rd, 2012, 8:32 am

Well, Bob Diamond has gone "to protect Barclays". I know that this is basically symbolic and political, even though he was an expert in investment at was at the helm during the Libor fiddling.

But something else caught my ear early today - exam boards. OK, not directly associated with economics but involving an aspect of economics I have never had explained to me in a way that is not a sort of logic loop - the off loading of running such things to private companies when doing so builds dangers into the system and the added costs of having to pay enough to give share holders their cut, unless it is a non-profit organisation - I don't know how many are.

The issue is that competition has been introduced into the examination "market" with incentives to attract schools. Thus, it seems, that schools are going for the boards that offer the best chance of passing the most candidates regardless of standards.

This is an artefact of competition, of business practices basically, nothing to do with academe. They decided that giving a single board nationwide, the responsibility of a single subject was not good, it would reduce "investment" because there was no competition.

The whole emphasis was not, "How can we improve the system to guarantee that the kids get the best possible exam and the nation gets the best possible result," but "We have to keep it a viable business." Commercial viability over the nation's future - again.

Sorry, but I think even a bunch of civil servants would be safer here.
"Look forward; yesterday was a lesson, if you did not learn from it you wasted it."
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Alan H
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Re: Modern economics

#672 Post by Alan H » July 3rd, 2012, 10:02 am

But doesn't market competition drive innovation and quality up and provide choice in the market (or some such guff)?

Seriously, I was amazed when I found out that different parts of England sat different exams. In Scotland, everyone sits the same exams - and it's been that way for decades.

Then we see what interference 'market pressure' (and inept HR departments) is having on Universities: Is Queen Mary University of London trying to commit scientific suicide?
Alan Henness

There are three fundamental questions for anyone advocating Brexit:

1. What, precisely, are the significant and tangible benefits of leaving the EU?
2. What damage to the UK and its citizens is an acceptable price to pay for those benefits?
3. Which ruling of the ECJ is most persuasive of the need to leave its jurisdiction?

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Dave B
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Re: Modern economics

#673 Post by Dave B » July 3rd, 2012, 10:10 am

Choice is great, providing all the choices provide a quality service that benefits the kids, the schools and the country!

The market mentality is hitting every sphere, the police get the same "points" for solving large and small crimes - so things like dog bites, that might require a lot of time, get dropped as soon as possible - regardless of the lack of benefit to the victim. If you get the same points for booking a drunk, a matter of one form and goodbye I have heard, then better ten drunks than one dog bite is the temptation, takes less time and effort.

As, "My word is my bond," has become a sick joke so has, "To serve and protect," in some respects. And "market pressure," is the cause.
"Look forward; yesterday was a lesson, if you did not learn from it you wasted it."
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Alan H
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Re: Modern economics

#674 Post by Alan H » July 3rd, 2012, 10:19 am

Latest...

Barcaly's Chairman, Marcus Agius, resigned at the weekend.

This morning, their CEO, Bob Diamond, resigned.

Marcus Agius returns as Chairman until a new CEO can be appointed.

Cue the quip on Twitter that Agius' resignation bounced.

You couldn't make this stuff up.
Alan Henness

There are three fundamental questions for anyone advocating Brexit:

1. What, precisely, are the significant and tangible benefits of leaving the EU?
2. What damage to the UK and its citizens is an acceptable price to pay for those benefits?
3. Which ruling of the ECJ is most persuasive of the need to leave its jurisdiction?

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Emma Woolgatherer
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Re: Modern economics

#675 Post by Emma Woolgatherer » July 3rd, 2012, 12:04 pm

Alan H wrote:Of course, you may want to avoid Triodos Bank: The Bank that likes to say ‘Quack’.
Oh, no. I had been seriously considering them. Glad I didn't ever get around to it. Thanks, Alan.

Emma

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Dave B
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Re: Modern economics

#676 Post by Dave B » July 3rd, 2012, 12:24 pm

Had some interest, many years ago, in the Steiner schools - there are some aspects of there ethos that seemed attractive - but dropped it when I found out the true nature of the beast!

Made an appointment with the Co-op Bank for next week.
"Look forward; yesterday was a lesson, if you did not learn from it you wasted it."
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Alan H
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Re: Modern economics

#677 Post by Alan H » July 3rd, 2012, 12:32 pm

Dave B wrote:Made an appointment with the Co-op Bank for next week.
All my accounts (current, savings, ISA, credit card and business banking) are with smile and the co-op! Have been for a decade or so. :D
Alan Henness

There are three fundamental questions for anyone advocating Brexit:

1. What, precisely, are the significant and tangible benefits of leaving the EU?
2. What damage to the UK and its citizens is an acceptable price to pay for those benefits?
3. Which ruling of the ECJ is most persuasive of the need to leave its jurisdiction?

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Dave B
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Re: Modern economics

#678 Post by Dave B » July 3rd, 2012, 12:59 pm

Hmm. did a bit of looking and not sure about the interest rates on the ISAs. Currently getting 4.25 - 4.3 on fixed term ISAs and 2.6 on the savings ISA that I can draw on if need be. The higher ones do give a bit of protection against inflation.

The 2.9 and 0.5 offered by the Co-op do not compare well. Will I have to decide on principle over potential losses?
"Look forward; yesterday was a lesson, if you did not learn from it you wasted it."
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Alan H
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Re: Modern economics

#679 Post by Alan H » July 3rd, 2012, 1:37 pm

Dave B wrote:Hmm. did a bit of looking and not sure about the interest rates on the ISAs. Currently getting 4.25 - 4.3 on fixed term ISAs and 2.6 on the savings ISA that I can draw on if need be. The higher ones do give a bit of protection against inflation.

The 2.9 and 0.5 offered by the Co-op do not compare well. Will I have to decide on principle over potential losses?
Yep. It's your money - you have to decide what you allow them to spend it on and whether the returns you get are sufficient recompense for whatever you turn a blind eye to... :D

I find it a very easy decision to make.
Alan Henness

There are three fundamental questions for anyone advocating Brexit:

1. What, precisely, are the significant and tangible benefits of leaving the EU?
2. What damage to the UK and its citizens is an acceptable price to pay for those benefits?
3. Which ruling of the ECJ is most persuasive of the need to leave its jurisdiction?

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Alan H
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Re: Modern economics

#680 Post by Alan H » July 3rd, 2012, 3:11 pm

And another one falls on his sword: Jerry del Missier, Chief Operating Officer
Alan Henness

There are three fundamental questions for anyone advocating Brexit:

1. What, precisely, are the significant and tangible benefits of leaving the EU?
2. What damage to the UK and its citizens is an acceptable price to pay for those benefits?
3. Which ruling of the ECJ is most persuasive of the need to leave its jurisdiction?

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Dave B
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Joined: May 17th, 2010, 9:15 pm

Re: Modern economics

#681 Post by Dave B » July 3rd, 2012, 3:19 pm

Got an "r" missing from, Missier, Alan.

Don't not make no difference to the link though :D
"Look forward; yesterday was a lesson, if you did not learn from it you wasted it."
Me, 2015

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