Tag Archives: LLOYDS-TSB

Is there “naughtiness with intent”?

” Mr Banker, would you please move your head just a little bit to the side. It appears to be blocking your backside.”

One of the conditions of the Government’s bailout of the banks was that no dividends were to be paid until any loans (the debts to the taxpayer) had been repaid.

It was that condition which caused the participating banks’ shares to be dumped this week. That caused quite striking drops in share prices. In fact, they all nose-dived.

HBOS shares fell so much that it is pretty definite that Lloyds-TSB will want to renegotiate the terms of their proposed takeover. At those prices – so would you! It also begs the question – does HBOS need to be taken over. I know that it’s a small price to pay to wipe the smile off Alex Salmond’s face  but as long as Gordon Brown is in the mood to over-mortgage the country (the United Kingdom – not the Caledonian “republic”), perhaps HBOS is best left alone. Otherwise  Scottish bank notes may have Eric Daniels’ mugshot on the front.  Eeek!!

Currently, the majority of bank shares are being sold by petulant institutional investors in  the full knowledge  that their actions will cause  prices to drop – and it looks like a coordinated effort which is designed to persuade the government to cave-in and agree to some sort of dividend payment.

Once the government has clarified what it intends to do and (inevitably) agrees to postpone the taxpayers “charge” over dividends – watch bank prices increase as institutional buyers pile back into the market.

Financial institutions know that the government’s biggest fear is what is currently shaping up to happen on the stock markets  and that is the inevitable mega-fall. Financial institutions  are not-only still manipulating the market but treating the Treasury and the Bank of England like idiots.

Incidentally,  has the Treasury or the BoE carried out detailed audits of the banks? Do they know the exact extent of their “losses”?

There is still a total lack of numbers – probably because no-one has asked for them.

Black Friday tomorrow?  I’m only asking because it’s about time we had the romance of something black. Unfortunately, the markets are so volatile that closing prices nowadays are a matter of timing and a reflection of current confusion. For instance, yesterdays Dow was rattling up and down at such a rate that the closing-bell value could have ended anywhere between 3800 and 4050, It just happened to end on a high. Of course the high finish will influence the Asian markets which will show the inevitable initial gains – and so it will go on.

Whatever happens, it will be interesting to watch shares belonging to the “silent” banking institutions (those which been keeping a low profile over the last month).

And prepare for an assault on insurance companies.

Even Mr Peston might mess himself.

The fires of capitalism

 

A twisted  fusion of capitalism and socialism is being forged in the white-hot heat of political panic.

 

No-one should  complain because we  are all being forced to run  blindfold towards  a world where profits are privatised and losses are nationalised. We cannot lose.

 

Competition will be a quaint throwback to the last century because both the US and UK governments have now demonstrated that if a company is big enough, it will have Federal and Treasury support. It is the smaller companies who will be allowed to go to the wall because it is only then that they can become financial fodder for their fat hungry cousins.

 

The new financial conglomerates now know that they cannot fail because the State will bail them out.

 

The lesson that has not been learned  is that the sheer size of companies is what  makes them difficult to govern. The only way to manage these fiscal behemoths is to impose rules that are so draconian that eventually, the spirit of capitalism will be totally expunged. The State will be calling all the shots.

 

There has been debate as to who is to blame for the current chaos. The bankers know very well what has happened but  they mutter vague generalisations, citing worthless  sub-prime bonds and a general lack of confidence.

 

There is no way that sub-prime (the greatest euphemism ever?) lending is to blame for the entire financial house of cards tumbling down. The real issue is that  the banks DID NOT HAVE THE MONEY that they were lending. They have behaved like a banana republic which prints more money in order to pull itself out of  the financial quicksand.

 

Yes, they have been using “pretend” money. Mugabe is doing it now, the Wiemar republic did it  70 years ago and  the entire banking system is still doing it.

 

The banking system has relied on “electronic money” for years. It was not real money and they have probably known for years that they were sprinting towards meltdown. George Soros knew.

 

The regulators are not to blame because 90% of their efforts are designed to control the “little man”.  The big picture eludes them . A few days ago the FSA was still issuing statements as to the solidity of HBOS – that’s in spite of the “investigation” that it carried our six months ago on the possible manipulation of HBOS shares.

 

If the current chaos eventually does go from “boil” to “simmer”, the Government must take the opportunity not only to take a close look at the regulatory regime but also think about a complete restructure of the financial services industry.

 

The FSA grew out of a need to control mis-selling in the Pensions and Life Assurance industry. That is still its main thrust.

 

In spite of the increasingly bureaucratic Pensions and Life industry, the bandits are still out there and always one step ahead – they can never be eradicated.

 

A new global authority must be formed that specifically carries out high-level audits and ensures the implementation of  proper business controls within the banking sector.

 

However, we do have to accept that the ratcatcher can never catch all the rats.

A Grimm tale

HBOS and Lloyds

The Republic of Mancunia’s football team (the American one , not the Arab one) appears to have a new shirt sponsor by proxy.
 
The AIG logo currently on the front of Manchester United’s shirts may soon be replaced. AIG is now 80% owned by the US Treasury which neatly completes the Americanisation of the team.
 
So what about the new logo? The Statue of Liberty? The Stars and Stripes? Uncle Sam? Or perhaps, more appropriately, a $-sign?

Will they now be known as the Manchester United States?
 
AIG  was very much involved in the once possibly toxic and now definitely lethal sub-prime mortgage market and had been drawn into substantial dealing with the now-collapsed Lehman Brothers.
 
Just to illustrate the incestuous nature of the financial services market, you may be surprised to learn that AIG owns Ocean Finance. Perhaps they can help AIG to consolidate all of their debts into one easy monthly payment. Below the belt? I don’t think so.

Most financial services institutions are nervously awaiting the  tap on the shoulder – although many will argue that death by  sadistic accounting is not fair.
 
Yesterday,  HBOS shares began their short journey down the financial toilet amid claims that they were in good shape and did not deserve the negative speculation. However, just to be on the safe side, Halifax branches were circulated with a memo asking them to monitor cash withdrawals.
 
One day later they have announced that they are in advanced talks with Lloyds-TSB with a view to a merger. Their shares are now in recovery mode but the proposed merger has all the characteristics of desperation and is the equivalent of two institutions hugging each other in a time of self-induced strife.

Who is saving who? But have you noticed how Lloyds-TSB have kept very quiet during the last couple of weeks? They must have been in discussion for some time now – but whatever happened to due diligence?
 
HBOS and Lloyds are clutching each other like Hansel and Gretel in the dark forest; comforting each other just before the Evil Witch eats them up.
 
Mind you, nowadays the Evil Witch is spoilt for choice. Many have lost their way in the forest.