“Banking Will Be The Mining Industry of the Nineties”
My old friend and bank manager, David, said that quote about 1995 or so. At the time he had just been promoted to Business Banking Director of Lloyds Bank. One day, I’ll tell everybody about the rest of that lunch, but I suspect that some of the guilty are still involved in banking.
What I would say, and I know others will agree, although one has now joined David as one of the Devil’s right hand men, is that there never ever was another bank manager who was as good as David, when it came to guiding and nurturing companies from inception to stardom. In some ways though, he was a rogue. But he was always a rogue on the side of the angels.
He had seen banks at all levels and knew that they were massively overstaffed and that the only way in his view they could survive and prosper was by cutting out the deadwood. He told me that what had happened to the miners would happen again to workers in the banking industry.
And then yesterday, Lloyds announced a lot of job losses.
So David was eventually right, but he had seen the writing on the wall all those years ago.
Perhaps Not The Cheapest Way To Borrow Money!
I saw this advert on the Underground today.
An Advert for QuickQuid on the Tube
Note the interest rate of 1734% APR!
Farewell Cheque Guarantee Cards
I moved my account to Nationwide, when Barclays took over the Woolwich some years ago. I never ever used the cheque guarantee card that I received.
So I don’t think I’ll miss the fact that they’ve been abolished.
Will anyone?
Zopa Abandons Listings
Basically, Zopa had two different forms of lending; markets and listings.
Markets work by lenders getting together to fund loans to borrowers. All is done automatically by the computers and risk assessors in the middle.
Listings are best defined like this.
In a nutshell, they work just like an online auction, except that the ‘price’ comes down instead of going up.
Once a listing becomes 100% funded, you’ll see that the overall interest rate will begin to fall as lenders compete with each other to be included in the loan.
I never used them. And as they weren’t as popular as markets and were quite expensive to administer, Zopa have now dropped them.
Would Any Sane Person Buy Into the Greek Privatisation?
Let’s say you are the CEO of a utility company, which has a good record of managing water supply in say, Britain, France or Germany.
If you were asked to participate in the buy-out of a Greek water company would you be interested? Given the feeling in Greece and the attitudes of the workers to the proposed privatisations to help bail the country out, I think you would probably say no, as you value your health and you don’t want to be fired by the shareholders of your company.
I suspect very few companies will actually get involved in providing the finance, unless the prices are so low. But then if that is the case, Greece will not be able to meet its debts.
So are we back to square one with the Greeks?
No! Square zero maybe or even square minus one!
On the other hand consultancy about the privatisations might be a nice wheeze! But who will pay you, if no-one will provide the finance.
How To Fund A Dog Wash!
The Times today has an article about peer-to-peer lending by Alexandra Frean.
In it she describes how a guy called John Good from Davison, Michigan got the money to expand his car wash into the clean dog business by using a loan from Lending Club.
It’s all good stuff and just shows how the banks are missing the peer-to-peer lending market, which I think will be one of successes of the next ten years or so and probably much longer.
In the United States the systems are different to the UK, but it doesn’t totally stop them having successes. I myself use the peer-to-peer lending site, Zopa, as my deposit account as even if I run it conservatively, it gives me upwards of six percent before tax. There is risk and I have had 3 contracts out of 2359 go bad, which have cost me £322.60 or 0.6 percent of my total investment. Alexandra’s article quotes returns of 9 percent net of defaults and charges in the United States.
I could probably make a higher return, if I upped my rates, but then I’d get a higher rate of default, as I’d probably attract more risky borrowers.
I also think I’m benefiting because I’ve been lending money for some years now and have a strong feeling about how you arrange the rates to get the best value.
Are Pensions Just An Enormous Ponzi Scheme?
The title of this post was suggested by someone who I know well, who works in the City.
He has a point, as once people stop joining and contributing, it all goes belly up.
Think about it! And think too about all the rules brought in to protect the early joiners in the scheme and also to make sure that advisors get their part of your hard-earned pension pot!
It’s All Greek To Me!
I like Greece and the Greek people for that matter, even if they do smoke too much!
I also like the euro and on the whole think it is a good thing and we should have joined, just like we should have joined Schengen.
The trouble with Greece is that they don’t like rules and especially those imposed by others on their economy. One Greek told me that’s why they all smoke in restaurants despite it being against the law.
So perhaps their economy wasn’t strong enough for Greece to join the single currency, but for a few years it gave them a lot of cheap money, just as it did Ireland. So now that the lenders want it back, there’s problems all round. Robert Peston of the BBC analyses it all here.
I’m no economist, so where it will all end, I do not know. But I am a qualified control engineer and I do know that the Greek economy has all the stability of a bicycle with the handles stuck either turning to the left or right.
Just like the bicycle, the Greek economy will have an awful crash.
The villians really are not the Greeks here, but the politicians who wanted a single currency and didn’t really think through about how to make it work properly. If the right rules had been in place from the first day, then there would have been no need for a bailout of Greece, Ireland or Portugal.
I suspect now, that if it was that stable, then we would have joined the euro. Or we would have at least tried to!
Would Anybody Ever Use Western Union?
I had four spam e-mails this morning with a title of “You have $250,000.00 Lodged in our Western Union” and a body of “RESPOND FOR DETAILS”
I like the fact that they call it our Western Union!
Does it mean they own it or there’s another one, we don’t know about? The e-mails came from a supposedly Peruvian .pe e-mail address.
Western Union’s name is now so discredited that I and I suspect any serious person, who uses the Internet, would ever use it. I have never used the company in the past and probably never will in the future.
Although looking at the financial results of the company, they seem to be doing quite well.
A Thought About Pensions
Are the Unions attacking the wrong target in the Government over pensions?
If I look at my pension, it’s not as big as it could be and that is probably because the advice I’ve received over the years about it could have been much better in places. It has been managed by three or four providers, a couple of whom have been taken over. It is now being managed by a friend, who works for a respected institution, but getting it there involved large amounts of paperwork and slowness on the part of the previous company.
But I’ve been lucky compared to some of my friends, who have suffered downright incompetence, or were unlucky enough to have chosen the likes of Equitable Life.
So is the problems with paltry pensions, not so much the rules, but the management by the companies and individuals involved? I know this doesn’t apply to pensions provided by the government, but poor private pensions, must mean that there is pressure for everybody to come in line.
Remember too, that when pensions came in, it was expected that those receiving them would only live a couple of years at most. Now most live a lot longer.
But if you think the problems are bad here, then just look at some European companies, where pensions are funded totally from taxation.
The Anonymous Widower 