Comments on: Recovery and the banks

By: jduck1979

jduck1979 — Wed, 21 Oct 2009 22:22:47 +0000

I think I’ve got the answer to Steve Cox’s question about how Halifax are able to pay 3% interest compared to 0.2% from Barclays……… it arrived in the mail today.

Apparently from the beginning of December, Halifax are making changes to their UK current accounts (which they’re blaming on EU regulatory changes)

- They’re quitting paying interest to current accounts in balance
- Replacing this with paying £5 to anyone who pays £1000 a month or more.

- Abolishing charging interest on account holders using their overdraft facility.
- Instead charging £1 per each day an account holder is using an overdraft upto £1500, or £2 per each day they’re using an overdraft of up to £2500.

So basically poor people like me who already struggle to pay off their overdraft up to £1500 are going to end up getting screwed out of £28 – £31 a month (regardless of how far into their overdraft limit they are) instead of the current £15 – £20 a month or less in interest on the overdraft.

By: alan jutson

alan jutson — Wed, 21 Oct 2009 18:29:31 +0000

Lindsay McDougal

The Government is doing its bit to make RBS look better in its accounts.

All VAT Tax collection and payments from Company’s to HM Revenue and Customs are going to be routed through RBS.

They are switching their Bank Accounts from the present existing Bank being used, to RBS over time. They wrote to my Company last month to inform me of the proposed switch.

Since VAT collection represents a huge turnover of money, I guess the Accounts of RBS will look much improved after next year.

Let us hope that HMRC got a good deal, although if they did I would suggest this is not real market forces which promted the change, but a perhaps Political decision was made.

By: Mark

Mark — Wed, 21 Oct 2009 11:26:43 +0000

Labour, the party that brought you Unaffordable Housing makes it even more unaffordable…

By: StevenL

StevenL — Tue, 20 Oct 2009 22:58:53 +0000

“When I asked Yvette Cooper why Australia had not been in recession and why the UK downturn had been deeper in GPD decline than the Canadian or US, she was unable to tell us.” (JR)

Makes you wonder doesn’t it? Had they forgetten to brief her about Australia and Canada? If you track UK house prices against either currency, well, I wouldn’t say they are recovering.

They just seem to be doing whatever it takes to make house prices look better in time for the election, regardless of the real cost. I wouldn’t be surprised if there are some references to the housing market in their election propaganda and how it would have looked if the evil tories were in power.

By: Lindsay McDougall

Lindsay McDougall — Tue, 20 Oct 2009 20:41:08 +0000

Within regard to selling banks, you are exactly right. I take it that the government can impose its will on both RBS and LLoyds/HBOS. I thought that the state had a majority stake in RBS but only a 43% share in Lloyds/HBOS. Perhaps I am out of date.

As you say, a windfall tax on RBS and LLoyds/HBOS before selling them would be futile. If the government were to impose a windfall tax after selling them, it might end up being prosecuted for fraud by those who buy the shares. I don’t think the taxpayer can win on this one. The best course of action is to maximise the price raised by selling the banks in any way that the government (acting on behalf of the taxpayer) sees fit. If the existing management doesn’t like it, tough.

By all means relax the cash and capital reserve requirements temporarily, provided it is made clear who is taking the risk. If another bank gets in trouble, it is crash and burn time.

Also, I think it is high time that depositors were educated. It is their responsibility to check out the financial health of their bank as best they can, through annual accounts, announcements, share prices and financial journalism. And there should be a corresponding obligation on banks for full disclosure of risky assets.

Reply: All the time the two banks need taxpayer support the government has a strong bargaining hand. If they don’t need the support anymore, then let them pay the momney back with profit to the taxpayer and leave it to the Competition authorities.

By: good money after bad « Paul Danon

good money after bad « Paul Danon — Tue, 20 Oct 2009 18:40:11 +0000

[...] pumps money into the economy by printing it. The government also distorts the lending-market by borrowing at preferential rates. The banks, instead of lending the printed money, sit on it and pay their top staff bonuses. When [...]

By: alan jutson

alan jutson — Tue, 20 Oct 2009 17:49:56 +0000

What a sad state of affairs that your bloggers here, get to know your feelings and thoughts, before you are able to communicate them in open debate in Parliament to the Government.

Much appreciate being kept in the loop on your thoughts and views, on this site.

Please keep up the good work. I am sure eventually for more and more people, the penny will eventually drop that we are spending and borrowing more than we can afford or sustain.

By: Mike Stallard

Mike Stallard — Tue, 20 Oct 2009 16:17:34 +0000

Keep at it – you are right.
On Labour List you might well think that there is no crisis at all. It really doesn’t matter that much.
Today I am trying to fulfil a promise to tech immigrants English for six two hour sessions, but for once, I have decided to get some money for doing it. No less than two bureaucrats are administering the “pot”. There is a lot of paperwork, apparently, which will take up the first lesson.
There is so much wastage, even down at my level and it has got to stop – fast – if we are ever to get some form of recovery.

By: Bill McCartney

Bill McCartney — Tue, 20 Oct 2009 13:56:24 +0000

It is clear from the above and other events that we have a “government” in name only. We are drifting and to do so for another 6+months is very expensive for all of us. We need pressure exerting for a much earlier election. I would have thought the recent debacle over the MPs expenses and Legge would have given a window for such a campaign to commence. Why is nobody pushing this?

By: Bernard Palmer

Bernard Palmer — Tue, 20 Oct 2009 13:44:33 +0000

…”why Australia had not been in recession”…

We here in Australia are in a recession and have been for some time. What we are going through right now is in economic terms known as ‘the dead cat bounce’. Everything appears to be rosy but everywhere there are many signs that all is not well.

Late last September on national ABC radio Gary Morgan of Roy Morgan Research said in their independent polling unemployment/under employment was around 14% compared to the Labor government figures of 5.8% employment for August. Supposedly the government now counts you as employed if you work one hour a week.

The thing to watch is the total hours worked. In July 2008 it was 1551 million hours. Last month it was down to 1515m.

If these official figures are doctored then there is no reason not to suspect other ‘good’ figures in recession free Australia.

Reply: Australian GDP figures have shown positive growth for each quarter in 2008 and 2009 so far.

By: BillyB

BillyB — Tue, 20 Oct 2009 12:21:44 +0000

JR – I like your idea of creating a couple of new banks very quickly.

Josh – the economic system is a complex dynamic system not a simple 2- or 3-variable model. It involves game theory, chaotic feedback loops and all manner of other factors. Thats why there is so much disagreement. Beware anyone who claims that it is simple.

By: JohnOfEnfield

JohnOfEnfield — Tue, 20 Oct 2009 10:15:44 +0000

John

We all share your burning anger at the incompetence, intransigence and shear greed for power of this Labour Government.

PS – For your eyes only. You have put the “US” in twice in the following phrase & your piece loses impact because of it.

“the US downturn had been shallowed(r?) in GPD than the Canadian or US(k?)”.

John

By: Richard

Richard — Tue, 20 Oct 2009 10:12:30 +0000

I think the problem is very few if any Labour ministers have any understanding of what you are talking about which is why they can’t argue. Instead they take refuge in pronouncements of whichever economist – Blanchflower, Stiglitz etc they can find who sounds as if they are supporting Labour policies. There is no real debate.

By: Steve Cox

Steve Cox — Tue, 20 Oct 2009 09:41:07 +0000

I have an offshore bond maturing later this month which has been bringing in 5.3% interest. Renewing the same bond with Barclays in Jersey would pay a derisory 0.2% now. So I’ve looked for alternatives (BTW, I live in SE Asia, so I’m nor evading any taxes), and the best rates are being offered by (in no particular order):

Halifax International
Bradford & Bingley International
Bank Of Scotland International
Northern Rock (Guernsey)
…and a whole host of – wait for it – Irish banks.

Does anybody spot the common denominator? Why is Halifax able to offer 3% compared with Barclay’s miserly 0.2%? Talk about unfair competition from state-owned and/or guaranteed entities! The Catch 22 for me is that much as I hate the idea of giving custom to the likes of RBS or Lloyds/HBOS, I need the income and so 3% versus almost zero return is enough to entice me away from Barclays. I find this a disgraceful state of affairs to be honest, our banking system is still very broken indeed, and no amount of QE idiocy is going to fix it.

Well, at least there are no Icelandic banks involved I suppose!

By: Brian Tomkinson

Brian Tomkinson — Tue, 20 Oct 2009 08:16:01 +0000

Labour is already claiming that things would have been very much worse without their spending and, as you say, will extend this to claim credit for any recovery. Much of their argument is purely conjecture. What we do know is the scale of the debt burden that they have inflicted on the people of this country which at best will take many, many years to clear and may bankrupt the country. The magnitude of this needs to be represented vividly to the electorate so that they understand the price they, their children and grandchildren are paying and will continue to pay for this ruinous Labour government.

By: Josh

Josh — Tue, 20 Oct 2009 07:57:27 +0000

I watched that debate yesterday, and I was very impressed by your heartfelt and angry denunciation of the Labour side of the house when they had the gall to claim the Conservative Party was the political arm of the finance sector. Kelvin Hopkins in particular made a ridiculous speech about deficits. I have written to him, and several other born again Keynesians on the Labour side to ask him why, if deficits are so virtuous, did the American not tip back into Depression after WW2? In 1945, the deficit in the USA stood at 21.5% of GDP. Two years later, there was a surplus of 1.7% In basis points, that is a 2,320 point swing from deficit to surplus. If Keynesians claim that reducing deficits will tip an economy further into recession, why did it not tip America back into recession in 1945? Secondly, during the four years of the ”laissez faire contractionary” Presidency of Herbert Hoover, the deficit averaged 4.5% of GDP, and public spending increased by 106%. During the first 4 years of… Freddy, the deficit averaged 5.1%. Are we really supposed to believe that a 0.6% difference between the deficits of Hoover and Roosevelt means the difference between economic depression and economic growth? During the depression, unemployment never dropped below 14% of the population. During the massive deficit reduction period of 1945-47, unemployment stood at 3.9%, and this was after the soldiers had returned home and were no longer in active service, and therefore could not be counted as among the employed. As one can see when one considers the FACTS and not Keynesian dream theories, deficits are not virtuous.

By: Mick Anderson

Mick Anderson — Tue, 20 Oct 2009 07:55:24 +0000

It sounds as though the debate was rather one-sided when the party in government can’t be bothered to turn up. You’d have hoped that something as fundamental as a discussion on the tragedy that is the UK economy would have packed the benches.

Is it because Labour don’t care, don’t understand the situation, or have just accepted that they will be out of office in a few months? Presumably a combination of all three….

Who else spoke for the opposition parties? Did the debate range past banking and into spending, and what other suggestions were made to alleviate the problems?