Tag Archives: bad banks

Public naming

The title seems clear, but hat is linked to all this is not that clear. It all started this morning when we all (those who watched) got confronted with another round of bad news events and all linked to banks. Barclays is scrapping another 20,000 jobs between now and the end of 2016, which might be not that great. However, today we heard that the actual number for 2014 will 14000. That is an entirely different kettle of fish. In addition, the issues with co-op are going on and on which means that the drastic changes there could mean that we see an additional but different change, which will impact many. Although no one is likely to shed a tear when all but one member of the board of directors join the non working class. Lets get back to Barclays though. Here we were told that another change is happening too.  Sky News kindly informed us that Barclays might split up in a bad bank and Barclays, moving over 100 billion in assets into that bad bank deal option. So, when a company goes south, they shed the skin, just like a snake and they dump what is undesirable. Is it good business?

This is a thought that, as a non-economist, is harder to answer for me. Is this about top-level bonuses as well as the dividend for the shareholders? If their dividend is not good enough, make a drastic change. That in itself is not bad business, however, the fact that the top people get a deal after the bad bank deal and they still end up with a huge bonus whilst well over 10000 lose their job is not something anyone should consider as an acceptable act, not to mention the issue of where the bad bank invoice ends up getting paid. So again it is a factor of non accountability, the bad choices will not affect these high end bonus getting executives, it seems all nice to those people.

All this was seems to be just a prelude for the small text the people would see, if they read the text-bar under the interviews. The text “the euro commission expects 17 out of 18 euro zone economies to grow“. Really? I had already predicted that the economy would slowly get better, but not until 2015. Yes, the economies might make a little over 0%, yet the damage that still is (like unemployment), would not see any improvement until 2015 at the earliest and the people will not see any real improvements until late 2015, perhaps even 2016. This would of course depend on the nation where it was happening. The only bright light in that segment was the interview with Roger Bootle. He seems to have a handle on the events and as such, his new book ‘the problem with Europe‘ should be an interesting read.

Where is my issue? Well, that is as always a fair question. You see, Euro zone or not, there are levels of interaction here, so as some nations will start seeing improvements to their economy, others would not see those improvements to any extent this year, which is just the way things tend to be. This entire enterprise of 17 out of 18 economies going positive implies that this implies to be management on several scales, as well as the fact that there seems to be a level of ‘bad’ reporting. I will add to this stating that we all should demand the public naming of those commissioners who signed off on such a brash statement when this prediction does not pan out. If these people are so stating that 17 of 18 economies will grow, then we all should know the names of the people stating that as well as get insight into the raw data and the sources. Those involved, when the prediction fails should all get FIRED!

Reasoning? Well, we know where Greece is at, and as such, their economy will be only barely be getting by as austerity measures will keep on having a hold on them for some time. In addition, as many in Europe are in a bad shape, tourism will remain down for some time, which means that this will also remain a non-factor for Greece. Next to that Spain is dealing with a 25% unemployment rate. That would drag down ANY economy. The issues in Italy are still not that good and France is only slowly getting up, but they have unresolved issues. That is just three of the players, which already brings us down to 15 out of 18. The UK and Germany are above the nil line, but as we see the bank issues evolve, that nil line might remain a close call for now. If you think that one bank is not that big a deal, then consider the effect that 15000 seeking a job is going to have and it is not just one bank (or two for that matter). There is a work culling going on all over Europe. When we inspect the newspapers, we see that many are slinking down and many of them are not getting able to get a new job immediately.

Oddly enough, this all reminded me of the title of a science fiction story called ‘How much for just the planet?’. This is at the heart of what we face. It seems that the economies are taking out the people as a factor. In my view, the almighty need for every player to see the economy in a sterile place is like legalising slave labour. How can any economy exist in a vacuum without people? Never mind the 20,000 at Barclays! Spain where we see one in four people without a job and Greece as a nation still scrapping jobs and having hundreds of billions in debts.

Barclays is not the first one to play the bad bank approach, but these elements, these devaluated parts as we saw in 2013 with SNS/Reaal, these all have an impact and writing off these parts without impact is not just bad, it should be wholly criminal. Consider you as a reader own personal situation. Just dump your pet (preferably dog) in the street and walk away, leave your child as it did not read as fast as all the other kids at day-care and never return, or walk away from your mortgage as the house had devaluated for over 15% and the bank wants a huge payment down on the lost value. Do you think you can do any of these matters and not get held to account? So, why are the banks not held to account, moreover, those high bosses walking away in the past usually did so with a 7 figure bonus in their pocket.

So why are we not demanding the same for the euro commissioners, the bank directors as well as, to some extent, the shareholders? They made a ‘bet’, they relied on dividend, but alas, there will be no dividend this year. Adding a bad bank solution, so that they can still get some coin is just not acceptable. If there is a bad bank and it has the write-offs of Barclays, then we should see a diminished value of the bank value and as such, the shareholders, will alas lose out on this quarter (and perhaps additional quarters) dividend.

Why?

Because, as the bank drops it’s ‘assets’, the government (and as such us the poor taxpayers), should not be confronted with the fuck up of others (please pardon my French here). Here I see where what I partially proclaimed in the past, and what the book of Roger Bootle seems to instil is that the UK stepping out of the EEC might not be a bad thing. He does state that it will be a risky thing, but is that not what economies are about? A risk paying out brings wealth and the other does not. I have spoken out against the plans of UKIP in the past, but when we consider these brash statements by the Euro commission, perhaps this path should be explored in all seriousness. Those players are all about keeping THEIR Status Quo, but at what expense? That is at the centre of the issues no one seems to be able to explain. I wonder what happens when we tally the collection of these bad bank acts (all over the EEC) and we take a line of the values and in the end, who had to pay for it all, then take another look at the costs for all those without a job and see then how well these EEC economies are doing. My guess is that 7 (not 17) out of 18 positive economies would still be a really good result.

In this article I made an earlier mention of ‘legalised slave labour‘, I think it is fair that I explain that part. We cannot just make a rambling accusation like that and let it slide.  If you are in the EEC and you have a job, then consider the work as you have been doing it for the last 5-8 years. How many of you are now structurally working overtime and not getting paid for it? I am not talking about the odd job where we put in an extra hour. No I am talking about on average working around 45 hours a week whilst only getting paid for 40. The boss is not giving you part of Friday or Monday to make it square with you. No, you hear the remarks on how the job must be saved and if the job is not complete another firm will get it, often enough those bosses end up having long lunch meetings to offset the hours they make. In this economic environment, pretty much everyone is accepting those odds, as they are afraid to lose their jobs. It is simple and plain slave labour. It is also likely that these people have been on frozen incomes for some time. So when we look at indexes like the DOW and see it rising whilst the unemployment rates remain too high, you better believe that legalised slave labour is a real factor. It goes far beyond the banks, when you look at the news all over the UK, the number of messages where a few hundred jobs were shed by almost a dozen companies in 2014 alone is staggering. This is not me judging whether these lost jobs are valid (it is their choice to do so), but the impact on the UK economy is far above negligible, which keeps the UK economy fragile for now.

Those claiming that the workforce got a whole lot more efficient should re-examine themselves. I wonder if those weeks when they are investigated are ‘suddenly’ less efficient later on. Whether these ‘enterprisers’ rely on part time people for half a day, so that those people will not get a coffee break or lunch break, or that the full workday people end up working a little late regularly is of no consequence to the bosses. As the humanity factors have left the workplace, the statement that the economy is growing just more then an incorrect statement, it is flat out wrong!

Any economy depends on people as consumers, as service providers and as result creators. As we look at the implementation of “how much for just the economy?” we now see an incomplete and inaccurate picture.

By the way, if Barclays has used bad banks to write off the value of these assets to NIL, can I please get one of those divisions? Even at 0.1%, the division should be able to make well over 10,000,000 pounds, which is more then I have ever made in half a century. Growing big in small strides is not beyond me and it would allow me to settle comfortably.

Opportunity is where you find it, which is also part of any economy!

 

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