The Budget 2009 sets out how the Government is working to achieve its longterm goals of economic stability and a fair society. It includes plans and forecasts for growth, inflation and public spending over the next few years.

To find out how The Budget 2009 will affect you, click here to visit the DirectGov website 

Mulgan is not alone in questioning the wisdom of bailing out the banks, with eminent economists proposing alternative solutions in bastions of the conservative media, including the Financial Times, the Wall Street Journal and Daily Telegraph. Nobel economist, Joseph Stiglitz says we should let the bad banks fail and set up new good banks instead. Paul Romer, from the Stanford Institute of Economic Policy Research has the same idea. Accepting that we need banks, Romer says “Turning bad banks into good banks is a difficult and risky way to get them. It’s simpler and safer to start entirely new banks.” Financier and philanthropist, George Soros, stops short of the new bank idea but argues that we should not purchase the toxic assets of bad banks. William Buiter, from the London School of Economics, sees a common logic between these proposals and says that “Bailing out the holders of existing bank debt and other bank creditors would be outrageously unfair: they did the lending and made the investments, they should eat the losses.”

Less eminent writers are also tackling the issue on the blogosphere. Irish blogger, Niall Larkin, blogged about a conversation he had with an economist friend about the possibility of dumping bad banks in place of new, good internet banks, perhaps using the Post Office and Credit Union network for on-the-ground activities. The commentary includes a post from a lady in New Zealand who tells us about the Kiwibank that is doing exactly that. And, even the right-wing Daily Telegraph published a blog by Tracy Corrigan where she references Voltaire for reasons “Why executing bankers is good for morale”.

I’m not sure that execution is either a humane or practical way to fix things, but the blog sums up the sense of moral outrage people in the UK have been feeling recently. Last week, some of the leading bankers in the country appeared before the Treasury Select Committee to account for themselves. Despite glib apologies, it was abundantly clear that none of them felt any real remorse. One of them gave great offense when he described his income as modest and, on further questioning, we learned that he has been earning an average of £1million per year. This in a country where the minimum hourly wage is under £6.

The committee hearings occured at the same time that we learned that the banks intended to pay themselves their customary enormous bonuses. Despite swallowing up billions of tax payers money, the government said it was necessary to pay the bonuses due to contractual obligations. An online petition was set up to stop the bonus payments and is open for any UK citizen or resident to sign.

On the Baseline Scenario, blogger James Kwak, suggests excessive bonuses be paid in the form of toxic assets from the institution. “That would get the assets off the bank’s balance sheet, and into the hands of the people responsible for putting them there – at the value that they insist they are worth.”

Irish economist and writer, David McWilliams has also given thought to how we can turn crisis into opportunity. Describing public service cuts as “social vandalism”, McWilliams turns his focus on the social consequences of mounting unemployment. He suggests following the course taken by Argentina during economic crisis, where they matched middle-aged, out-of-work experts with young, innovative but inexperienced entrepreneurs. The process led to to the establishment of many successful businesses and helped turn around the economic decline.

This blog describes just a handful of the ideas and suggestions that are out there. But, for all the great ideas, it will take political will to make a difference. We won’t stop propping up the old order until we make it clear to our rulers that nothing less is acceptable. In these desperate times it is not enough to talk about things and expect somebody else to do them for us. We are all responsible for our future.

References
http://short.ie/mulgan

http://short.ie/corrigan

http://short.ie/stiglitz

http://short.ie/romer

http://short.ie/soros

http://short.ie/buiter

http://short.ie/larkin

http://www.kiwibank.co.nz/

http://petitions.number10.gov.uk/bank-greed/

http://short.ie/baseline

http://short.ie/mcwilliams

–
Published with permission from Triona Carey.
Follow her on twitter: @Triona

Outside an RBS branch in Scotland, the BBC sought public opinion on these shallow apologies and one wag summed it up with “Dick Turpin probably apologised too”. Dick Turpin was a thief, murderer and highwayman who was hanged in 1739 in York for horse-rustling. His legend is more glamorous, depicting him as a dashing champion of the poor, more in the tradition of Robin Hood.

The bankers who were questioned yesterday were a motley crew, elevated (?) to nobility (?) by the Blair/Brown government, earning obscene amounts of money and without a banking qualification between them. Rewarding themselves with monthly salaries that most people don’t make in a year, these are only small change compared to the annual bonuses they earn.

The Treasury Committee investigation happens against the backdrop of announcements that these banks intend to pay bonuses as usual this year. In the case of the RBS, this amounts to bonus payments of over £1 billion being paid to the staff of a business that recently reported approx £8 billion losses for last year (the biggest corporate loss in UK commercial history), and which has been bailed-out by the government to the tune of £20 billion. When questioned how this can be allowed to happen, our government tells us that the banks have contractual agreements that must be honoured. Excuse me – did I hear that right? We, the tax payers, own 68% of the RBS – does that not give us any say in arrangements?

Since when did a bonus become a right, not a reward? Who wrote these contracts and what court would uphold them? You can write all the contracts you want but if they are illegal, based on bad law, then they won’t stand up. And what on earth are our elected representatives up to, giving £20 billion of our money to an organisation without any provisos such as “you won’t steal from us anymore” and “you won’t get any more big salaries or pay rises until you pay back every single penny you borrowed from us”?

At the same time we hear that the FSA (Financial Services Authority) that oversaw this fiasco plan to reward themselves with £13 million in bonuses. We could be forgiven for thinking that this is all one big conspiracy of the powerful and the wealthy and that our government is as complicit as the rest of them.

As the country heads into the worst recession for a hundred years, according to Ed Balls, close confidante of the Prime Minister, jobs are rapidly disappearing as small and large businesses go to the wall. The High Streets are becoming ghost towns and local government is cutting back. It won’t be long before children are going to school hungry and going to sleep cold. What is the future for them, saddled with a debt that will last for generations, supporting an increasingly aged population and a national debt the scale of which we can’t even comprehend.

We can’t undo the damage done by immoral shysters in suits, drinking gold champagne and storing their ill-gotten gains offshore, beyond the reach of the taxman. We can, however, insist that the rot stops now. You can start by signing a petition to stop the banking bonuses at http://petitions.number10.gov.uk/bank-greed/ and you can email your MP and councillors and ask for an explanation.

There are other things we can do, such as think about new economic and banking models where we stop throwing good money after bad and take control into our hands. More on this soon.

–
Published with permission from Triona Carey.
Follow her on twitter: @Triona

The monetary policy committee had voted to cut the cost of borrowing again today to a new record low after hearing fresh evidence that the UK economy is in poor shape.

Some people in the city of London had hoped for a full percentage point cut to help struggling businesses effected by the credit crunch.

LATE 05. The first campaigners won bank charges reclaims
JAN 06. They contacted this site and the first MoneySavingExpert.com reclaiming guide was published
MAR 06. The first newspaper column on reclaiming was published
MAY 06. The first TV programme dedicated to reclaiming bank charges (ITV1 Tonight) was broadcast
LATE 06. Increased publicity meant the scale of reclaiming grew exponentially
FEB 07. Bank charges reclaiming became front page news due to its sheer scale
FEB 07. The millionth bank charge reclaiming template letter was downloaded from this site
MAR 07. The two millionth bank charge reclaiming template letter was downloaded from this site
MAY 07. The three millionth bank charge reclaiming template letter was downloaded from this site
JUL 07. The banks agreed to a test case with the OFT, to decide the underlying principles
JUL 07. The test case was announced and the FSA waiver placed bank charges reclaiming on hold
AUG 07.The four millionth bank charge reclaiming template letter was downloaded from this site
JAN 08. The evidence was given in the test case
APR 08. The result of the test case. Charges ARE governed by fairness rules
MAY 08. The five millionth bank charge reclaiming template letter was downloaded from this site
MAY 08. Banks given leave to appeal the decision that Bank Charges are subject to fairness rules
JUL 08. Further evidence given on banks historic charges
JUL 08. FSA extends reclaiming hold to Jan 09 & new hardship rules introduced
OCT 08. Result on historic charges: CAN be classed as unfair and most are not penalties

Q. Where can I see the main judgement?

A. The full 450 paragraph judgement from Apr 08 is on the Judiciary.gov website. The following is the conclusion:

449. As for the position at common law, I accept the banks’ submission that none of the terms which I have considered (the terms now generally used by the banks for personal current accounts other than basic accounts and also certain of the terms used until recently by Clydesdale and RBSG) could be unenforceable on the grounds that they are penal (paragraph 323 above).

450. With regard to the 1999 Regulations, I conclude that, of the terms now generally used by the banks for personal current accounts (other than basic accounts), those of HSBC, Lloyds TSB, Nationwide and RBSG are in plain intelligible language, and those of Abbey, Barclays, Clydesdale and HBOS are largely in plain intelligible language but not so in certain specific and relatively minor respects (paragraph 293 above). However, I reject the banks’ contention that the Relevant Terms are exempt from assessment as to fairness under Regulation 6(2) of the 1999 Regulations (paragraph 421 above). This does not mean that the Relevant Terms are necessarily to be regarded as unfair under Regulation 5(1) or that they are not binding upon consumers under Regulation 8(1): those are not questions for me to decide in this judgment. For the reasons that I have explained, I decline to make any declaration as to the meaning and effect of the requirement of good faith in Regulation 5(1) of the 1999 Regulations (paragraph 448 above).

Via: Moneysavingexpert

Regardless of changes in interest rates or swap rates between the dollar and euro, each banker is aware that banks for centuries actually work with a base currency: consumer confidence. Any disturbance of the market in financial services could lead to withdrawal of resources and undermine and even threaten the survival of even those companies that have no direct statement of the crisis. Therefore, not only in USA but worldwide there are funds to guarantee deposits of banks that protecting client of a possible bankruptcy of servicing Treasury. Despite differences, the idea in all countries is roughly the same: licensed banks regularly import certain amount protected fund in the event of insolvency of one vault, collected funds used to pay deposit users to a certain limit. The amount guaranteed will be returned if the bank in which you invested your money, the victim, was 40 thousands. Of member states of the European Union, the highest security is in Italy – over 100 thousand Euros, followed by France, Great Britain and the Netherlands. However, this limit is not the only important indicator by which to judge the effectiveness of protection of deposits. Several months before the European Commission published a report that explores the possibilities of European financial markets to maintain stability in conditions of crisis. Analysts pay attention not so much the amount would be recovered in case of failure of the vault, but the proposed rate harmed customers.

One of the indicators that give a clear idea whether the Fund Deposit Guaranty would able to fulfill its role as strong market is the ratio of funds available to it, and total deposits collected in the country. Although as a ceiling of guaranteed amount is not headed to the top of the European Union to explain above indicator ranks second after Lithuania in the Community, with 1.58 percent. Overall, the index is higher in the new Member States where moving average around 0.86 percent versus 0.53 percent for the EU-15. Another factor that undoubtedly plays a huge role in maintaining confidence in the banking system, weather and the number of procedures has to take investors to regain their funds. These conditions vary greatly across many European countries, such as procedural steps to recover the deposit moving between 4 and 21. At the same time, 13 percent of guarantee funds in the Community complain of problems in cooperation with other local authorities. Regarding the time for payment of Deposit strapped banks, statistics indicate that over 90 percent of the amounts were restored to the existing three months, although the share of benefits customers in that period was only 70 percent. According to analysts, in most cases the delay was due to difficult access to information, insufficient personnel or shortage of funds. That’s why most countries allow for financing of the fund through loans if needed.

Stock brokers and bankers around the world clearly realized how serious the Chinese curse to live in interesting times. Sudden collapse of three of the five largest global investment bank shocked markets and breeds crisis, which analysts can compare with a nightmare a 30-year rule.

Lehman Brothers sought protection from its creditors, as announced by U.S. bankruptcy laws, and Merrill Lynch were bought by Bank of America for 50 billion dollars – a sum which until recently would look ridiculous low for such an institution. Bear Stearns disappeared from the map since the spring, when the Federal Reserve helps JPMorgan Chase to buy them, providing them with a credit line of 29 billion dollars. And something more – turns out that the injury does not stop here. AIG – a company with such a powerful presence in many countries around the world that one possible its collapse would know virtually every household from Asia to Europe, America and Australia. No wonder that the U.S. Federal Reserve made ready forces to save the giant and announced that he will grant an emergency fund of 85 billion dollars in exchange for 79.9 percent of the company’s capital. According imposed by regulators plan, this management company will be replaced, but the loan will be secured by the assets of the insurer and is expected to be repaid through the sale of subsidiaries. Representative of the Federal Reserve cited the global financial press said that the final result most likely will be a controlled liquidation of AIG, although not ruled out the possibility the patient to survive. The interest on fixed allocations equal quarterly Libor plus 850 basis points – a level high enough to ensure that the insurer will do everything possible to pay the debt as soon as possible.

Although in need have fallen only a few companies, their profound awareness scale shook every corner of the world. Finance guru and former Federal Reserve Governor Alan Griynspan commented that in his entire professional life was not witnessed a crisis of such a size. Reaction, as always in such situations was Panic. Although we are relatively insulated from such disasters, the tsunami not dilute the Bulgarian capital market, a Moscow market saw even forced to suspend its session because of an unprecedented crisis of quotations. On the interbank money market, the voice of resources was unprecedented, despite significant intervention of central banks. Overnight interest rates in pounds sterling example hit seven year record of 6.79 percent. European Central Bank responds only for a day scored emergency funds of 70 billion Euros, while the English bank injected 5 billion liras from Monday to Thursday, with additional 20 billion on Tuesday. Overseas, the Federal Reserve intervened with 50 billion dollars, while in Asia the Japanese bank – with 24 billion dollars.

The whole world is fighting for this crisis.

- In 1997 the company bought the credit of Northern Paribas, while the National Credit Bank has bought the French Foreign Trade (BFCE), giving birth to Natexis; 

- In 1998, Banques Populaires took over Natexis, and in April the same year, Credit Mutuel took control of the European Union CIC; 

Overall, however, the concentration of the banking sector has made rapid progress: in 1984 there were 1556 banks in France, 50% decrease in the number of banking institutions operating at the end of the century. In 1999, there were only 1,000 left. 

French banks still need to improve their profitability if they want to resist foreign competition properly. At the same time, the framework of rules and constraints, they must abandon some of their traditional practices, such as self-service check to offset the absence of any interest bearing accounts deposits. Finally, French banks must adapt quickly and develop new distribution channels for their products, even when it seems that the old relationship between the client and his branch has not yet ended. French banks will have to adapt to new conditions resulting from competition from new players on the market, offering new services through the Internet so far granted only to banks. However, they were able to respond to similar challenges in the past.

First, the banking law of 1984, which placed all banks whatever their status under the same set of rules, was the starting point of a succession of moves that effectively abolished credit specialization, and which led to the deregulation of the banking system a consequence of credit liberalization, all these institutions entered into competition on their domestic market, under equal terms, with practically no restriction at all. 

Indeed, since the introduction in 1989 of a solvency ratio (BIS ratio), the globalization of financial services within Europe, which took place between 1993 and 1999, at the initiative of the European Commission and the creation of the European single currency at the beginning of 2002, French banks have been faced with growing competition from foreign banks. 

Finally, newly privatized banks had to face a most troubled economic trend. During the nineties, several major crises throughout the developed world. The French economy met with a substantial recession in 1993, while Asia faced a major financial crisis in 1998 and the property market was also seriously disrupted during that period. Consequently, the major financial crisis, which reached its peak in 1997-1998, hit Credit Foncier, Credit Lyonnais, CIC and SociaUne new banking revolution 

Twenty years ago, the French banking industry was highly regulated and divided, the French state was still under control. However, for various reasons, it has undergone significant changes since then, especially during recent years. 

First, the Banking Act of 1984, which placed all banks, whatever their status under the same set of rules, was the starting point for a series of movements that effectively abolished specialization credit, which led to the deregulation of the banking system as a result of liberalization of credit, all these institutions entered into competition on the domestic market, under equal conditions, with virtually no restrictions at all. 

Indeed, since the introduction in 1989 of a solvency ratio (BIS ratio), the globalization of financial services within Europe, which took place between 1993 and 1999 at the initiative of the European Commission, and the creation of the single European currency at the beginning of 2002, French banks have faced growing competition from foreign banks. 

Finally, the newly privatized banks faced a more difficult economic trend. During the ninety-ten, several major crises in the developed world. The French economy has experienced a sharp recession in 1993, while Asia face a serious financial crisis in 1998 and the property market has also been severely disrupted during this period. Accordingly, the major financial crisis, which reached its peak in 1997-1998, hit Credit Foncier, Credit Lyonnais, CIC and the Marseillaise de Credit sévèrement.té particularly Marseillaise de Credit particularly severely.

This policy proved to be dangerous, however, and banks were threatened by massive withdrawals during the 1870 war and crises that erupted during the Great Depression from 1873 to 1896, especially in 1882 and 1889. Major investment banks were the Banque de Paris et des Pays-Bas (1872), the Bank of Indochina (1875), and Union Bank of Paris (BUP), created in the early twentieth century by several families of senior bank Protestant. The banks and came to specialize in operations and expects that progress on securities and loans in securities carried on stocks. At the same time, they differed from major investment banks, even if they have also been set up as limited liability companies, the latter, which has no branches in the provinces and called for their resources primarily from large, fixed deposits or bonds, vested interests in other companies and gave them long-term loans. 

On the eve of the First World War, France had relatively diversified banking structures. Investment banks and high bank themselves including forward transactions, large financial transactions. The letters of exchange, which has multiplied and took on greater significance than in other countries, has been the mainstay of short-term loans. The economy has so plentiful and relatively cheap commercial credit at its disposal. 

However, criticism has been raised. The big banks, whose clientele includes many foreign securities, such as “loans from Russia”, became the subject of a campaign of violence, which peaked during the period 1906 to 1910. The “Financial oligarchy” was accused of misuse of domestic savings abroad at the expense of development at home. Finally, small entrepreneurs and artisans complain of difficult access to bank loans, so that the minister Finance Caillaux, has created a commission in 1911 which was responsible for filling this gap in the banking system by preparing a law that promotes the development of the “banks”. The law was adopted in 1917.