What is Replacing Traditional Banking?

The economy of the world is changing. In 2008 the banking system came close to collapse because the banks had leveraged their deposits and forgotten that when times gets bad, leverage wipes out assets when times are bad just as effectively as leverage makes money when times are good. The banks were too big to fail, because they would have lost people’s deposits if they were put into insolvency. Most businesses are too small to matter, if they go broke, but this was not the case with the banks. Continue reading

How Long is “Long Term”?

The news that a banker is being prosecuted in London for manipulating the LIBOR rate will be welcome by those who think that the banks have got off their criminal and fraudulent behaviour rather lightly. However we have to look at the root causes of why bankers manipulate FOREX and LIBOR rates. Greed is always a factor but there is, I believe, a structural problem with the way that we organise our capitalism.  Continue reading

Good Money and Bad Money: the Rules have Changed

There is good money and bad money. If you took out a mortgage in order to buy a house or a long term loan in order to buy an assets between 1964 and 2008 in most developed or developing nations in the world you borrowed good money and repaid in bad money. If you saved money between the same periods in a deposit taking institution you parted with good money and in most cases got back bad money years later. In 2008 the rules changed although most ordinary people did not know it, because the rule change was not generally known.  Continue reading

How to Defraud People

Barclays has set aside £800 million to pay fines for being involved in rigging foreign exchange markets. In November, HSBC, Royal Bank of Scotland, UBS JP Morgan Chase, Citibank and Bank of America have all be fined for rigging foreign exchange markets. No one has gone to prison and the ill-gotten gains for these frauds cumulatively must exceed many billions of dollars. The lesson of this is obvious. Continue reading

Swiss Police Investigate Money Laundering!

The world is full of ironies; some of them are subtle, but it is the obvious ironies which often pass without being noticed.  Continue reading

Your Friendly Neighbourhood Tax Evader

According to the BBC the massive bank, HSBC, has helped hundreds of its customers evade tax by colluding in maintaining secret bank accounts in many countries in the world. This should not come as a surprise because HSBC has wealth larger than the vast majorities of the countries in the world and in terms of power, money is usually more powerfully than armies and police forces, as numerous monarchs and world leaders have found to their cost throughout history. Continue reading

Crooked Banks Again

I suppose I have to write about the £2 billion fines that some of the banks have paid because their staff have manipulated the foreign exchange market in order to improve their bonuses. There will be more fines soon because Barclays has yet to be dealt with and has admitted wrong doing.  Continue reading

How to Write Modern Business Plan

Business has changed. It used to be based upon demand for goods and services and the supply of them; around this central activity lurked ways of financing the supply of goods and services both in terms of those who make and sell and in terms of those who buy. Today it seems that a business plan should ignore those traditional activities and work from a different base. Continue reading

Big Crooks and Little Crooks

Today’s story is a tale of Big Crooks and Little Crooks. The morale of the story is that if you have to be a crook be a big crook, preferably the biggest crook, because that way you are almost certain to escape punishment and it is unlikely that you will be deprived of some at least of your ill gotten gains. Continue reading

Secret Swaps

Another, yes another banking scandal is emerging. After the PPI mis selling (or fraud to use a more accurate description) to individuals and after the sale of interest rate hedging products scandal to medium sized businesses scandal, it has now emerged that the banks were selling secret swaps to customers. What they did was this: they agreed fixed rate loans with customers which customers wanted to protect themselves from future interest rate rises. That is fair enough; a customer makes a decision on wanting a fixed and floating rate, and if the customer opts for a fixed rate that is what the customer expects to get, but expectation and reality are two different things in the world of banking. Continue reading