As world bankers attempt to secure their jobs for another few years, the Basel III project has successfully produced more acronyms and watchwords for people to spout off at their morning meetings.
The crux of it seems to be that the LCR will not be as onerous as originally planned and will be phased in over a much longer period of time, by which time everyone will have forgotten why it’s there!
No doubt in 20 or 30 years time from now, some bright up and coming banking analyst will highlight the hidden ‘value’ that is represented in the banking sector, as they will be sitting on billions worth of assets and cash that they don’t need anymore for the financial Armageddon that will never, never be repeated again…
Common sense, send BASEL III back to where it belongs #dustbin
For those of you, who don’t know #athhb is an acronym for ‘after the horse has bolted’
- Banks Win Watered Down Liquidity Rule After Basel Group Deal (bloomberg.com)
- Time to put Basel III where it belongs…..#ecb #banks #spiral #stagnation #unemployment (simplesimon8.wordpress.com)
Basel III is the classic, ‘shutting the stable door after the horse has bolted’
Whilst banks are moronically told to build up their capital bases for the next potential Armageddon, the economy goes into stagnation overdrive. Without bank lending small companies can’t expand and will eventually die, base rates will stay at zero, no money is created from savings wealth and savers will not spend for fear of eroding their capital base.
What is the likelihood of the next Armageddon, nobody saw the last one and it was painfully obvious to all but the regulators.
What is needed is better regulation (not the same as more regulation), common sense lending and higher interest rates. Without these the economy will be stuck in a rut for decades to come.
- European banks urge one-year delay for Basel III rules (scooprocket.com)
- Capital shortages, Basel III, and credit crunches (economist.com)
What a novel idea!
See my post dated 13th March 2012
Common sense, don’t run the country without it.
- MPs doubts over RBS, Lloyds sales (bbc.co.uk)
Another Euro 5bn of taxpayer funds disappearing down a black hole. The shambles that is the euro crisis lingers on and on.
Break up the euro currency. Let diverging economies diverge again.
Nationalise the banking system, stick all the rubbish loans into a bad bank for our great great great great grandchildren to sort out.
No chance of this happening anytime soon because apparently the break up of the Euro will be a disaster for us all. Alternatively, the euro could remain and Germany could just leave?
- Spain’s ailing banks ‘only need £79bn’ (independent.co.uk)
Savers have hit for £70bn as printing money ‘helps rich’ admits Bank of England #behindthecurve #BOE #eurocrisis
A staggering admission from The Bank of England, leaves the average reader totally dumbfounded as to why there is no change in direction over monetary policy.
Evidently, according to our great leader at The Bank
‘Without the Bank’s asset purchases, most people in the United Kingdom would have been worse off. Economic growth would have been lower. Unemployment would have been higher. Many more companies would have gone out of business. This would have had a significant detrimental impact on savers and pensioners along with every other group in our society.’
Well to be honest, if The Bank keeps up the same policy, that is exactly where we are heading, into a deeper and deeper downward spiral.
Common sense, put up interest rates NOW!
- Even in recession the rich get richer: Savers have been hit for £70bn as printing money ‘helps rich’ admits Bank of England (dailymail.co.uk)
- Bank of England admits some pensions ‘adversely affected’ by QE as rich get richer (express.co.uk)
- Bank of England’s stimulus plan ‘lined pockets of the rich’ – Belfast Telegraph (belfasttelegraph.co.uk)
So now what?
Barclays and RBS to name but a few have been found out for rate fixing. The likes of JP Morgan have been lying to shareholders. MF Global and PFGBest have been stealing funds from their customers. It’s going to be a hard act to clean up the City.
Next move I expect, will be the reversal of the trend in the 1980′s. Financial organisations will be split into their component parts. A retail bank will be just that. A bank that borrows money from savers and lends out the same money to others at a higher rate. This is called “Margin.” These banks will be dull, boring and their share prices will be stable. Above all else however they will be SAFE. The bank will lend money against secured assets and it’s management will be prudent and earn a modest salary.
Then there will be the ‘racy’ investment bank. It will play with other people’s money and rack up huge positions in derivatives. If the position goes right, the trader will get a bonus and the shareholders will see their asset appreciate.
In the event of armageddon the punters will lose out but critically, the average man in the street won’t suffer. The prudent tax payer will no longer be punished and thousands of honest employees won’t be dragged into the mire.
Common sense, you know it’s where we need to get back to.
- Leicester city council withdraws millions from Barclays bank over Libor scandal (independent.co.uk)
- Another one with his hands in the till #PFGBest #Wasendorf (simplesimon8.wordpress.com)
- Scandal at the bank #Barclays (simplesimon8.wordpress.com)
And so it goes on, with regulators seemingly powerless to prevent it.
And yet if I want to draw a paltry £50 from my own personal account at a British High Street bank, I have to go through endless security checks. So who is getting it wrong? Looks like the blame should fall fairly and squarely on regulators and banks (again). The problem is that regulators don’t understand what they are regulating until it’s too late and as long as you are big enough, Banks don’t care.
So where are we heading? Into a world where job growth will be strongest in the Regulatory area. Can’t be long before there are more regulators than bankers.
Common sense, don’t regulate without it.
- PFGBest: Regulator Fail (managed-futures-blog.attaincapital.com)
- PFGBest Update: What We’re Hearing (managed-futures-blog.attaincapital.com)
- MF Global 2.0: $220 Million in Segregated Client Funds Missing at Broker PFGBest (silverdoctors.com)
So Bob didn’t hang around to try and fix it?
I expect he probably thought to himself, who needs all the hassle anyway although his mood might change, if reports to claw back previous bonuses are true.
It’s important to analyse what we have learnt and what has been achieved during this latest debacle.
Well first of all, the Barclays share price has fallen by around 20% since last Thursday, wiping out money from pension funds etc etc…So nobody gained in that respect, in fact everyone lost out.
What have we learned about banks in general? We know that they are capable of manipulating markets to make profits. Didn’t we know that before? We have learnt that the people at the top can’t really be 100% responsible for the actions of their staff but in a world where everyone’s inside leg measurement must be publically available to all and sundry, someone’s head has to roll.
In this case it’s Bob Diamond. Never mind his record at the bank, never mind the fact that Barclays survived the 2008 financial crisis without taxpayer funding, somebody has to go. Who was pushing at the front of the queue? Turns out it may be Mervyn King, who back in 2008/9 told us the economy was fine, partnered by Lord Turner, chairman of the FSA who as usual can verify that the FSA knew nothing about anything!
The beneficiary of all this hiatus seems to be The Nationwide Building Society, where new accounts are being opened in the wake of the recent computer glitch at RBS and the scandal at Barclays.
So what next, do you trust your bank? Of course not, did you trust them before. Of course not! That’s why you’ve not put all your eggs in one basket.
On the plus side the press have a story and the politicians have something to bang on about too. Sadly, in the end though, everyone loses.
Common sense, don’t break a story without it.
So what happened last week? Well, while I was away, sunning myself on a distant beach, not on a Greek Island I hasten to add, the United Kingdom celebrated The Queen’s Diamond Jubilee.
Love or hate the Monarchy, The Queen is an amazing individual. Over 80 years old and stood the whole way during the 4hr pageant on Sunday, waving to her loyal subjects as she travelled along The River Thames. Granted, she doesn’t have to do the washing when she gets back home but a marvellous individual. Not to mention the benefits she brings to the UK economy through tourism. Long may she reign over us!
The other notable event of last week was the Euro 100bn bail out of the Spanish banking system. Widely described as a sticking plaster to cure a broken leg, it remains to be seen whether any good comes of it. However it may help to calm the nerves of customers of Spanish banks, therefore preventing a “run” on the banks and a collapse of the banking system.
- IMF chief Christine Lagarde pays NO TAX on her £300,000 salary #hypocrisy #euro #Greece (simplesimon8.wordpress.com)
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