Reviewing our values.

[baypond]

Micky,

I have only just had an opportunity to sign in, so I have not been ignoring your posts. Typing out posts is not an ideal way of communicating as it is often difficult to get a point of view across in a way that people will view as it was intended, you lose intonation etc. So I will start by saying that if you would like to PM me I will give you my phone number and we can talk on the telephone next week, and then you can vent your spleen at a real life nasty banker!

All my post was really trying to say is that banks are to blame, but so is government. However, a real frustration is that the government is throwing the kitchen sink at the banks by saying the whole problem is their fault when it is not, as you say in the post we are equally bad, and that is exactly what I was saying.

I think you also mistake me for an investment manager which I am not. I am a foreign exchange trader, and I have the same issues as you with my pension.

The left leaning quote was in relation to radio 5Live's interpretation of them. I heard enough in the first minute to understand that it was another argument to kick the financial sector, yet make no reference to politics and what that is worth? I haven't read the report itself, so I would be delighted if you could tell me what economic value they have. To me it sounded like the usual sensationalism.

I am sorry that an entrepreneur and company owner? such as yourself has had difficulty borrowing, my point was a general one that banks have lost the majority of their money on mortgages, credit cards and commercial lending (true a significant portion of this was cross border ie abroad). Because of their losses, their capital gets reduced, and they tighten their lending criteria to protect against further losses. My point here was that politicians criticize banks for poor lending (including trading derivatives) but when they correct the problem, politicians then say that banks should lend more. You can't have both, tell the banks implicitly to lend less and at the same time explicitly tell them to lend more.

I think it is a shame that you seem to regard me as a someone who is some sort of educational snob. I really don't understand why you have to qualify your argument by saying that you are an engineer, and therefore not as thick as I might think. That is an unfair assumption that I (or any banker) look down on the rest of the universe with some sort of disdain.

For what it is worth (and Mickie you might take this as some kind of verification that we are in fact all stupid) I went to a secondary modern school that was closed down after I left because it was so bad. I have 2 A levels and I didn't go to university because at 19 because I wanted to get out and work. Why did I choose banking? Because I had this silly idea that I wanted to be a trader, it seemed glamourous, and well paid. My parents never owned a house during my childhood, and I moved 5 times in the first 8 years of my life. All my ambition has been about securing some sort of financial security, I didn't want bailiffs and tax men knocking on my door to make me bankrupt as they did with my father. So that is my driver in life, and has carried me through 29 years in the city, 26 as a trader. Why do I mention all this? It is because generalisations about bankers, builders, engineers are not always fair. So when you answer this post, you are now addressing me as an individual, not as an industry.

I haven't reviewed each of your points but I can go over each one if you like? Many of them are about a part of the industry that I have no connection to, and so am unqualified to give a fair assessment of.

By the way, my name is Giles, which fits in quite nicely with the baking stereotype don't you think!

[baypond]

Mickie,

I can't remember the exact number, but about 70% of all start up hedge funds close after a year. They do so for a number of reasons, but mostly due to under performance at which point investors withdraw their cash.

[baypond]

Mickie,

Where did you get 45 grand a head from? That seems a smidge high when the actual cost of bank bailouts will be about £10 billion. The headline I often hear is that banks have cost £850 billion, but this number is the amount government will be borrowing over the next 5 years to cover the hole in their tax receipts due to the recession and the fact that they didn't save in the good times. Other numbers that are thrown around that amount to hundreds of billions are usually the amount lent to banks, this is very very different to what will be lost to banks.

[baypond]

"Surely no one held a gun to the banks heads and insisted they lend silly amounts on mortgages did they?" - Mickie

Actually in a way they did. In the U.S, the Clinton administration started taking banks to court (1998) for refusing to lend to poor credit. His mantra was that every person in the U.S had a right to home ownership. In response he forced the two main mortgage lending intermediaries in the US (Fannie Mae and Freddie Mac) to lower their lending criteria and buy sub prime mortgages from banks.

Gordon Brown was not quite so explicit, but made a similar speech.

[baypond]

[quote user="buelligan"]  They do not put forward reasons why they disagree with the conclusions drawn (other than to say that it is all the Government's fault).  If they really believe it is "all the Government's fault",  I would ask;  how, then do they justify paying bankers as we do?   If bankers are truly just putty in the hands of politicians why are we paying them at all?  Why not get rid of these middle-men and simply pay the politicians to feck it up? [/quote]

OK I have read a fair proportion of the report, and the fact is that not everyone wants to be a cleaner or nurse, or work in a job that this foundation rates as being highly socially acceptable. I do not denigrate those professions, I admire nurses and carers for all that they do, but for me, I don't think a society that strips people of all ambition would ever work. Why do we pay bankers what we do? Why do we pay anyone what they get paid? Supply and demand is the only answer. The report says that higher paid people pay less tax on a relative basis. That is absolute rubbish as far as I can see, since we are on PAYE and the government strips away up to 77% at source for this year.

[Mickie Hill]

Thanks Mr Baypond.

Busy old day for me today.

Ill have a good butchers tomorrow.

[baypond]

cmon Mickie, av you lost your norf n sarf?

[baypond]

Mickie?

[Mickie Hill]

Been under the cosh old mate: sorry. Easier morning today and Ill be back.

Trying to clear everything up for Chrissie.

 

 

[Dog]

Perhaps someone could explain to me why dealing in foreign exchange is useful?

Seems to me to be like lots of the other 'trading markets' that are just skimming cash from the need for some essentials.

These trades produce nothing and are just using a big pot of money to annex more, it is not creative or productive except for the skimmers.

[baypond]

Probably true, we are providing a service that skims money. So do greengrocers selling vegetables, so do car makers selling cars, so do butchers selling meat, so do train companies moving people around, so does anyone involved in any company. You have me bang to rights, I make money out of providing a service. So do undertakers, and the roman catholic church.

[Dog]

So you cannot explain why dealing in foreign exchange is useful?

[baypond]

all the time there are national currencies, then foreign exchange is useful. Without it you couldn't buy and sell currencies and there wouldn't be an efficient way of conducting any form of foreign trade. And if you suggest there should only be one world currency, then Greece, Spain and Ireland would suggest that it is not wholly clear that a single currency is the answer.

[Dog]

Foreign exchange is certainly useful for trading with other countries. A single currency would contribute towards lower inflation. Perhaps you could share with me the total value of trades and the total value of  money needed to fulfil international merchantile function?

[NickP]

[quote user="baypond"]all the time there are national currencies, then foreign exchange is useful. Without it you couldn't buy and sell currencies and there wouldn't be an efficient way of conducting any form of foreign trade. And if you suggest there should only be one world currency, then Greece, Spain and Ireland would suggest that it is not wholly clear that a single currency is the answer.

[/quote]

Just a thought. Surely, if there was only one currency there would be no currency dealers, therefor no fluctuations in currency rates? How would that "not be an efficient way of conducting trade"

[baypond]

[quote user="Dog"]Foreign exchange is certainly useful for trading with other countries. A single currency would contribute towards lower inflation. Perhaps you could share with me the total value of trades and the total value of  money needed to fulfil international merchantile function?[/quote]

A single currency is no guarantee of lower inflation. The only guarantee of lower inflation is appropriate fiscal and monetary policy. Even within the single currency, if policy was too loose, inflation would rise.

I don't know what the ratio of fx trading to that required to fulfil international mercantile function is, but it is certainly the volume is far higher. However, volume and competition make the cost of you transfering money abroad cheaper, just look at companies like HIFX and World First etc. Additionally it is not just mercantile trade, it is also foreign investment, dividend repatriation, and hedging of future liabilities which also goes in to the mix.  I am not sure that high FX volumes cause damage anywhere. However the jury is out on whether or not the massive allocation of pension/ money to commodity trading is helpful when it can drive up (or down) commodity prices.

[baypond]

I think there are many benefits of a single currency, it is just the fact that it doesn't solve all the problems for all the people. It can cause distortions in the economy resulting in socioeconomic problems, hence Greece and Ireland. By the way, I am no economist and there are people far better qualified to speak on these subjects. My argument was never about FX trading !!