Tag Archives: Royal Bank of Scotland

A better nation…?

Scotland's FutureWhen I published Leaning Towards No, I expected reaction from Yes voters who’d been hoping I would come down on their side of the fence.

I wasn’t expecting the reaction to be so supportive of the SNP. From the reactions, [hardly anyone]* who plans to vote Yes intends to challenge the SNP’s plans to install devomax “currency union” in place of our present devolved system, and while some actively support the plan, many simply don’t see changing the SNP’s policy as possible.

*Not quite “no one”, as I initially wrote.

It therefore seems likely that – much to my annoyance and disappointment – I really don’t have any choice but to vote No. I don’t support devomax. I never did. I won’t vote Yes to have devomax replace status-quo devolution, and that’s what the Scottish Government’s White Paper says is going to happen.

Let me go through the various objections I’ve received to this, beginning with the silliest. (None of these are direct quotes from anyone, so if you recognise yourself in them, it’s purely coincidental.)
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Filed under Currency, Indyref White Paper, Scottish Constitution, Scottish Politics

Offshore politics

When the SNP transited smoothly from “we’ll use to the Euro” to “we’ll use the pound” that was a campaign tactic.

When the Tories, LibDems, and Labour all bounced to their feet and said ha ha, we won’t let you use the pound, that was a campaign tactic.

I do not believe either the Yes Scotland or the Better Together campaigns have really thought this through: or at least, they are certainly not making a fact-based argument based on having thought this through.

Ian Bell writes in the Herald:

“Hardball” is the macho cliche being applied to the Chancellor’s fiat towards a currency union. Despite its protestations, Mr Darling’s team pursues the kind of negative campaigning that never goes out of style in Westminster. No compunction is involved. The referendum must be won at all costs. But what might that cost be, exactly, if the prize is a united kingdom in the aftermath?

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Filed under Currency, Economics, Scottish Politics

Money money money

I work all night, I work all day, to pay the bills I have to pay
Ain’t it sad
And still there never seems to be a single penny left for me

If you have a car, you’ll have noticed your petrol costs have been going up. When you do your shopping, food costs are terrible these days. Everything’s more expensive, money just doesn’t seem to go as far as it did.

Ian Bell wrote on 30th June
:

So who still believes that the cost of petrol, food or credit, for nations or individuals, rises or falls because of the pure, dispassionate action of market forces? Speculative attacks, such as “aggressive tax avoidance”, are hardly in the spirit of the thing; the fiddling of interest rates is another malignity entirely. It strikes at the heart of capitalism. When prices cannot be trusted – for such is the effect – there is no free market.

In the case of Barclays, and perhaps 20 other household names trading on the public trust, that was the whole idea. The London interbank offered rate (Libor) and its European equivalent were supposed to act as guarantees that bankers’ claims matched reality, that they described accurately commerce between banks and, by extension, the wider world. For the sake of their bonuses and their bank, traders at Barclays decided to dispense with annoying, unhelpful reality. Time and again, for years, under the alleged instruction of “senior management”, they lied.

You don’t need to understand how Libor is constructed as a global benchmark, with highest and lowest figures discarded and averages compiled, to grasp what was done. Bankers were taken at their word. Instead of regarding this as a solemn responsibility, they took it as an opportunity, offered by suckers. The simple analogy is discovering, after a day at the races, that every nag was doped. Forget the casino economy: these characters were controlling the roulette wheel.

Do you remember the Occupy movement? I don’t know why I say “do you remember”: it’s not so long ago that they were camped out on the steps of St Pauls in London, the small area of the Square Mile that is owned by the Church, not Mammon: not so long since the tents disappeared from Charlotte Square in Edinburgh, where they were a daily reminder of the banks that own so many of the buildings around them. They were wild-eyed radical tent-dwelling hippies, who’d listen to them?

But they were right.

Ian Fraser, writing on 5th December 2011 in QFinance:

What disturbed me the most about the November 1 session was the regulators’ seeming nonchalance about criminality in the UK’s banking sector. At times, using the tortured and obfuscatory phraseology, the financial regulators almost seemed to want to pretend that criminality and fraud didn’t, or couldn’t exist in the domain they are supposed to police. This struck me as very strange.

When I wrote “Helicopter Money and Stephen Hester“, it was meant to be an account of what happened to the rich instigators and their victims – to describe the links between Paula Daly, who became homeless after the bank foreclosed on her business in September 2008, and Jeffrey Verschleiser, head of the sub-prime mortgage operations at Bear Stearns, who had just booked a 93-room luxury hotel for a family weekend.

Despite sub-prime mortgage operations having led to a wave of criminal repossessions across the US (including, quite literally, a special court system so that fraudulent and predatory loans could be resolved in the lenders’ favour and the houses attached to them sold again with clean paperwork) Jeffrey Verschleiser wasn’t worried he might get prosecuted any more than he had money worries. I noted this in passing, citing Why Isn’t Wall Street in Jail?, which opens with Matt Taibbi, of Rolling Stone, and a former Senate investigator in a Washington bar in January 2011:

“Everything’s fucked up, and nobody goes to jail,” he said. “That’s your whole story right there. Hell, you don’t even have to write the rest of it. Just write that.”

I put down my notebook. “Just that?”

“That’s right,” he said, signaling to the waitress for the check. “Everything’s fucked up, and nobody goes to jail. You can end the piece right there.”

A fortnight ago, Matt Taibbi wrote about the conclusion of the first criminal trial which has sent Wall Street staff to jail: Continue reading

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Filed under American, Corruption, Currency, Economics, Housing, Scottish Constitution, Scottish Politics

Helicopter Money and Stephen Hester

Bear Stearns was founded in 1923, but although Paula Daly’s Mouse to Minx sells vintage fashion of that era, quite probably when the 85-year-old bank went under on 6th March 2008, Paula Daly didn’t notice – between running her own small business and being a successful self-employed communications and marketing consultant, she says “Life was exhausting, and not without its stresses, but good.”

But in the US the collapse of Bear Stearns is seen as the beginning of the financial crisis of 2008, while in the UK, we date it from the collapse of Northern Rock, three weeks earlier. Both Northern Rock and Bear Stearns had become heavily involved in the sub-prime mortgages: Northern Rock’s business plan was to borrow heavily, extend mortgages based on the loans, and then re-sell these mortgages on international capital markets. This is known as “securitisation”.

Who got the idea for this risky business? In the UK, John Ritblat, former British Land chairman (described as “a charming old rogue, a bit of an old-fashioned spiv” by someone who likes him)

takes much of the credit for the revolution in property financing that has occurred over the past two decades. The industry used to be financed with fixed-rate borrowings secured on the property portfolio, but he pioneered techniques like securitisation of assets which, he believes, has transformed the industry into one financed by long-term, unsecured, borrowings. (The Observer, Sunday 16 July 2006)

Ritblat retired just over a year before August 2007, when Northern Rock first began to feel the chill. A self-confessed workaholic, he evidently knew the right time to retire from the “securitisation” business he pioneered – with an estimated net worth of £100m.

Once the fifth-largest investment bank in the United States, Bear Stearns collapsed in March 2008 under the weight of toxic hedge fund accounts backed heavily by subprime mortgages. The company was quickly sold to J.P. MorganChase (another financial giant and OpenSecrets.org Heavy Hitter) but the bank’s spectacular fall — and the federal government’s failure to stop it — is now seen as the first wave of the epic financial meltdown that created the global recession of 2008 and 2009. (Open Secrets)

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Filed under American, Benefits, Economics, European politics