Royal Mail Flotation

If I want to sell my house I go to a reputable estate agent. They advise me on the value of my house and if I think the advice is reasonable I ask them to find a buyer. They then market the house and find a buyer at the price (or near the price) the estate agent has advised. If I find out the next day that the person to whom I sold the house has resold it at a profit of nearly double the price I got I might well ask questions about the competence and integrity of the estate agent who advised me in the first place. Continue reading

Plus cas change…

The World’s largest bank is J P Morgan. It makes on average around US$460 million every week. On the fifth anniversary of the collapse of another large bank, Lehman Brothers, regulators announced that J P Morgan had been fined $920 million for violating US laws about security trading and for attempting to cover up those criminal actions. In essence they pretended portfolios were worth more than they were worth to cover up massive losses they had incurred. Continue reading

What Higher Energy Prices Mean to A Prosperous Economy

Many people who do not consider that rapid climate change is a threat  argue that those measures taken to prevent or slow down rapid climate change are damaging to our economy, because they would make renewable energy more expensive and add a burden of cost to our economy. Continue reading

Consulting and Consultants

Old habits die hard. The one sure way to escape responsibility is to appoint a consultant. If you follow the recommendations of the consultant no one will blame you; the old adage is true: no one got fired for buying IBM. Continue reading

The Banking Crisis Continues

The banking crisis has not gone away, but is still with us. Banks have thinly disguised their shortcomings. They are still diseased, even though they have the appearance of modest health. Regulators, at the behest of governments, are trying to cure the patient without killing it. Whether they will succeed remains to be seen. Regulators are prescribing unpleasant medicine which will prevent banks from being as profitable as they once were, in order to try and reduce the risk of bank failure, which is catastrophic not just for the banks and their shareholders, but also for society. Continue reading

The Archbishop and the Camel

Oh dear! The investment policy of the Church of England has embarrassed and irritated its most senior priest, the Archbishop of Canterbury. This Archbishop is not exactly a man of the people or a person who has lived a life of poverty. Eton, Trinity College and the oil industry isolates those who follow this career path from the trials and tribulations of ordinary folk. I do not say that a rich man cannot become a priest, but I am suspicious of the motives of rich privileged people who enter the church and climb to the top of that greasy pole because climbing every greasy pole involves an element of getting a good shove upwards from others. Continue reading

To Enrich the Few

The lobby groups are marshaling the great and the good to speak up against a financial transaction tax in the European Union. Eleven of the twenty seven member states think a financial transaction tax is a good thing, but the rest are either undecided or are opposed to it. Britain is opposed, fearing the tax, which would be levied on trades in bonds, currencies and shares, will damage its “banking” and financial markets. Continue reading

High Frequency Trading: astonishing but not surprising

I have always failed to understand why stock market authorities around the world, whose job it is to regulate markets for the protection of investors, permit parties to conduct high frequency trading. High frequency trading, or HFT, is not really trading at all. Companies design algorithms which enable computers to spot market discrepancies that arise in a millisecond or less on the market, and then take advantage of tiny differences by putting in very large buy orders and then very large sell orders all within a millisecond or less. It is not really trading at all, but simply a competition as to who can figure out the most complex effective formula to take advantage of what is no more than a fractional dealing between something happening and something being recorded. Continue reading

How to Borrow Money and How to Repay Borrowing and How to Avoid Borrowing

In the United Kingdom the Bank of England base rate is a mere half of one per cent, the lowest it has been in modern economic times. If you deposit money with a large bank or institution you will get a rate of interest tied to that half per cent; it may be a few points higher or a few points lower, depending on how long you are prepared to trust the bank with your money. In any event it will not produce a real return or even keep up with inflation, which is running comfortably more than 2.5% a year. Continue reading

The True Worth of a Government Guarantee about your Bank Deposits

The European Union has 27 member states. Virtually all of them have had economic problems. In virtually all the economies, the economic problems were caused by over spending. Nations in effect bribed the voters with gifts of large pensions and large social security payments which the nations could not afford. Those gifts would be paid for by future generations unless the future amounts of the bribes were curtailed, and thus “austerity” became the solution for most of the economies.

But not all of the economies got into economic difficulty by making large bribes. Certainly Italy, France, Greece, Spain and Portugal did, but certainly Cyprus did not. It got into difficulties by investing its depositors money in Greece and in particular the Cypriot banks lent money to the Greek banks that proceeded to lose the money lent. Continue reading