Comments on: The Queen’s speech – a case of excessive risk taking

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By: Etta Legarreta

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By: Vanessa

Vanessa — Wed, 18 Nov 2009 23:32:08 +0000

It is not really surprising that nulabour have dumbed-down the Queen’s Speech and all things to do with the Parliamentary process – our government is now the EUSSR in Brussels and there is nothing these MPs can do now. Why don’t the tories tell the truth for a change with the announcement that our debt will be halved in 4 years time – that is an EU Directive – we have been ORDERED to cut our debt by 2013, no doubt, so we are eligible to go into the euro. When will we be made to drive on the Right?? Just because Napoleon was left-handed!

By: ManicBeancounter

ManicBeancounter — Tue, 17 Nov 2009 19:57:16 +0000

On the subject of greed and ruthlessness, it is worth quoting Dr Bernard Mandeville (a 17th century writer)
“the worst amoung the multitude do something for the common good”. This works so long as there as there are checks and balances. In a free-market economy the excesses lead to a downturn. In the last couple of decades, when there has been signs of a downturn it has been checked. First when the dot.com bubble burst and then after the terrorist attacks on the USA in 2001. It was not helped that on both sides of the Atlantic government spending increased, providing a fiscal stimulus to fuel the fire. The market-based checks and balances were undermined, and the goverments cheered on the risk-taking.
There is a gross conflict of interest between a democratic, but valueless and image-consious government taking responsibility for controlling the financial system. Having nominally-independent regualtors and central banks does not help if they are imbued with the same philosophy of short-term appearances over long-term substance. The lessen from this crisis is not that greed can bring down the system, but that we are limited in our knowledge of the global system. Therefore, we should not reign in the energies of the selfish and ambitious through arbitary power. Instead we should look to providing underlying stable structures, letting the market adjust for the minor excesses. It is only if that adjustment gets out of control should the government step in to correct.

By: Adam Collyer

Adam Collyer — Tue, 17 Nov 2009 15:50:10 +0000

Why “paradoxically”? The same logic applies to the private sector.

By: chris southern

chris southern — Tue, 17 Nov 2009 12:49:46 +0000

Many things are illegal that this goverment has willingly done, rules don’t stop tryants and power simply attracts them.

By: Lindsay McDougall

Lindsay McDougall — Tue, 17 Nov 2009 01:07:44 +0000

I wonder of Gordon Brown and Alistair Darling have it in mind to retain the government’s shareholdings in RBS and Lloyds/HBOS, the theory being to use their share of the profits to help finance a high level of public expenditure. There’s a problem with this theory; after a while even profitable companies in the public sector become unprofitable because the necessity to make profits to survive has been removed.

Paradoxically, it might be best to let the CEO of RBS have a bonus but only if he makes substantial profits. This would incentivise him to sell off parts of the RBS empire more rapidly than he otherwise might. Would something similar work with Lloyds?

By: Ex Liverpool rioter

Ex Liverpool rioter — Mon, 16 Nov 2009 23:42:15 +0000

Good Evening John
Sorry to bother you on a different subject but many of us “Workers” (you know people whom generate wealth) have become alarmed by news coming from Holland. It seems that the Dutch government is to force by 2012 GPS tracking of Everyone’s car……24/7!

The main use is of course road tax, but it could very easily be used to for speed detection and there is also the question of civil liberties. I & other were wondering about your views on this subject?

Cheers
Mike

By: Mick Anderson

Mick Anderson — Mon, 16 Nov 2009 20:13:24 +0000

I’ve a sneaking suspicion that it was a comment on one of the MPs blogs some months ago, rather than a proper proposal. I can see the appeal, though.

You know the old saw – if it seems too good to be true, it probably is.

By: John

John — Mon, 16 Nov 2009 19:23:15 +0000

I think your analysis is correct. All these attempts to lay political traps for the Tories are just far too smart for thier own good. Even if Brown manages to score a point or two it won’t even register outside the Political Class and the Westminster media.

People just don’t care any more. We don’t care what Brown or New Labour say about anything. Brown might think his latest too-clever-by-half wheezes on parental leave will win him votes but I suspect most people are more concerned about the state of the public finances and thier own job prospects to care.

The country is falling apart and Brown continues to arrange his window boxes and challenge the Tories to swap his crocuses for tulips. His failure to appreciate or acknowledge just how unpopular he is will be his memorial.

That said, considering the mess that New Labour has made of things Cameron hasn’t got anything to to sing about. The Tories should be utterly ashamed that they’re only 14 points ahead considering the state of the nation.

By: Martin

Martin — Mon, 16 Nov 2009 18:54:13 +0000

How about a plan to get this country manufacturing please.

We have all the usual ping-pong about debt and tax etc.

How about optimising all policies to create a manufacturing economy.

By: Javelin

Javelin — Mon, 16 Nov 2009 15:13:28 +0000

I don’t understand the bonus thing is how do I determine whether a bonus should be paid.

Let’s say I work in Credit Derivatives at a big global bank.

So what does this mean – I’m basically providing lots of insurance policies against bankruptcy. I may have 10 traders in the UK and 10 in the US and 10 elsewhere. I may have 100K+ trades on my books going back 10 years and going forward 20 years.

I have booked back to back trades on a lot of the trades – so if Ford goes under I’m hedged out and my only profit comes from the margin on the two trades. So I have to net out my trades to figure my net risk. But when doing back to back trades two different traders may have done bought and sold different sides of the trade, so calculating net exposure may have to be at the desk level. But what happens if one trader takes more risks – do his risks effect all the other trades on the desk?

So what happens when I leave the bank. Is my involvement in all the trades I have made kept on the record. All the trading systems have a login name but it is different to the windows login and it is not linked to the personnel records. Bonuses are only calculated at the end of year for the traders who are active on the system. User names are left on the trading system for audit purposes and can be looked up on a trade by trade basis – but there would need to be a new application that links usernames and trades that needs to be written to keep track of these trades over the next 5 years.

What happens for example if the notional on the credit derivative is increased? Does the new notional get assigned to the new trader or to the trader who originally made the trade? Does only the marginal increase get assigned to the new trader even though the client was about to decrease the trade but the trader then persuaded them to increase it. Does the new trader then have to book the what the client was possibly thinking of decreasing it by and then off set it against the increase they needed to protect their business?

So if risk is measured across the whole desk then is this just the UK desk? Does it include the US desk if the book is passed from the UK over night? What happens if a trader in the UK asks a trader in the US to cover a position because he has to go home because of his sick child? Who is responsible for the risk? Are all these intentions recorded?

What happens if my bond and equity desk are hedging out the underlying on the credit desk as a form of back to back hedging? Does this mean that the fix income desk, equity desk and the credit desk have their risk capped in synchrony? Sounds to me like all trading desks are interlinked?

What happens if my bonus is capped / pared down – does this mean I’ll take smaller or bigger risks to make my bonus bigger.

The whole thing is total rubbish. It will never work.

By: BillyB

BillyB — Mon, 16 Nov 2009 14:48:49 +0000

JR “They can already stop excessive risk taking if they can identify it. ”

On TV last night a city trader said “‘Never forget that banks are populated by greedy, ruthless, clever people and they will find ways around this”

Why don’t HMG recruit some of the poachers as gamekeepers?

Oh.

I guess they have.

That was the problem.

By: TCD

TCD — Mon, 16 Nov 2009 14:45:15 +0000

Are you going to vote against the 50% tax rate as Boris argues in the DT today?

By: THE ESSEX BOYS

THE ESSEX BOYS — Mon, 16 Nov 2009 14:31:13 +0000

Did we not hear of an intention to repeal unworkable and unnecessary legislation introduced by Labour in a single Act of Parliament?
A sound idea we reckon.

By: Stuart Fairney

Stuart Fairney — Mon, 16 Nov 2009 13:58:17 +0000

Sadly it’s not new, look at the unfair contract terms act for example where the government gets to play ‘nanny-auditor’ between two parties when one decides he suddenly doesn’t like the contract he freely entered.

Mugabe indeed.

By: Ross J Warren

Ross J Warren — Mon, 16 Nov 2009 13:28:24 +0000

Sorry John I have put these posts in the wrong place, so please do not publish them here…I will try to be more careful in future

Ross.

By: oldrightie

oldrightie — Mon, 16 Nov 2009 12:56:11 +0000

I hope The Tory HQ is better prepared for Labour nastiness than they were for the equally obivious Lisbon Treaty bull dozing.

By: Ross J Warren

Ross J Warren — Mon, 16 Nov 2009 12:24:29 +0000

Sorry that should have been:

So far from being lightweights we are Rational, sensible and honest and determined to do what is best for G.B.plc.

Sorry about the missing word there.

By: Ross J Warren

Ross J Warren — Mon, 16 Nov 2009 12:21:10 +0000

Sorry I must remember to keep the jargon down. Mr O being President Obama and his misreading of the strengths of Dave and his team. I do apologise, as they say on the American side of the Internet, “my bad”. Personally I cannot see any logic in voting for UKIP, it will only weaken our ability to fight Europe. If the leaders of UKIP were indeed so committed to being outside the E.U. you might think, as principled politicians, they would
give up their seats and refuse to take a penny from the E.U. Frankly the more of us who vote for D.C. the stronger our hand will be. I am in favour of being in Europe but prepared to get out if the Continent again slips into psychotic politics. I would also point out that had we not become split on the E.U., we would have been the party in power, and we could be drinking to the good health of a newly liberated Great Britain. As it is, we frankly only have ourselves to blame. As for UKIP its going to be a wasted vote and as a result you will be represented as well as you could have been. Bin & Boo are both sceptical of Europe, we are indeed a euro sceptic party. However the leaders of UKIP are in my opinion, playing a lot of people for suckers. As I have said if they meant what they say, wouldn’t they demonstrate that by resigning their seats? As it is you would be far better represented in the E.U. by the Conservative party, who at least are being honest, and not pretending that withdraw would be either easy, or frankly in the national interest. The most important consideration right now is getting our economy running again. So market confidence has to be our overriding concern, any question of a frankly crazy withdraw without negotiation would send many business men and women scurrying as fast as possible for the Exit, taking their money and vital skills with them. So far from being lightweights we are Rational, sensible and honest and determined to what is best for G.B.plc.