Bank Transfers Not Happening
I tried a couple of times make a couple of on-line payments this morning and my son also tried to send me something. But nothing went through.
My only thoughts is that they are setting up so many ISAs, that the system is creaking.
Zopa Mentioned in the Guardian
My Google Alert for Zopa found this report in the Guardian. It’s not particularly relevant to Zopa or peer-to-peer lending as this extract shows.
Not all hairdressers are on one giant VAT dodge, otherwise there would have been some public outcry and we would all, by now, be doing each other’s hair (we would call it peer-to-peer grooming, it would be somewhere between Zopa and a zoo, and it wouldn’t matter what we looked like, because we’d all look the same).
But it does show that you should choose a unique name for your company.
A Good Week for Coeliacs
On Tuesday in the Budget, George Osborne introduced a tax on hot takeaway food. Am I bothered? As a coeliac, who can’t eat any gluten, of course not, as most that will be taxed, would cost me a fortune in toilet paper, if I ate it!
Then today, the Government proposes a minimum price for alcohol. As coeliacs can only drink good quality wine, cider and spirits, I doubt many will be upset!
Nationwide Login Problems
I like to login to my account at Nationwide each morning to see if there are any payments or credits, and that what are there are what I expect.
However, since Sunday, I have been unable to login. Each day, I got a message saying that the system would by back by 06:00.
Due to essential maintenance work some services will be unavailable on Tuesday 20/03/2012 between approximately 00:01 and 06:00 – we apologise for any inconvenience this will cause.
It’s now well past that time.
This is just not good enough.
Update on 21st March 2012
I have since found out what the problem was. I use Google Chrome as my default browser and have done for a couple of months, when I had problems in internet Explorer, whilst using WordPress. This behaviour only showed up in this browser and when I used Internet Explorer everything was fine.
This morning Google Chrome is working fine.
I may have found the solution, but how many customers of Nationwide use Google Chrome and don’t have the computer knowledge I do. In fact because of the WordPress problem, I’m a bit suspicious that all browsers don’t sing to the same hymn-sheet. It does mean that web designers must do a lot more testing, so they don’t get bad publicity because of unforseen changes to the design of browsers.
From both the web designers and the customers points of view it’s a nightmare.
The only way to spot this sort of problem early is to test sites continuously and analyse the web logs every day. The Nationwide problem might have been picked up from the latter, by indicating that there were a lot of login failures with Google Chrome.
A Government Income and Expenditure Statement
I proposed one of these years ago. It has been reported that they might bring in an Expenditure statement for taxpayers.
You’d be surprised about how much and how little some taxes raise.
An Expenditure statement is useless without an Income one.
Groupon Told to Improve
I’ve always felt the web site, Groupon, a bit suspect and in the “If-it-looks-too-good-to-be-true- then it-must-be” category, so if any offer has anything to do with it, I ignore it.
So now the Office of Fair Trading has told it to improve as reported here on the BBC.
I’ll ignore it even more, if that were possible.
Stability in Financial Systems
Adverts talk about get the strength of the insurance companies around you and you say that it’s as solid as the Bank of England.
I am a Control Engineer by training and one of the topics that is important is the concept of stability. Since I learned it all in the 1960s, the definitions have increased in scope a lot. I would describe a system as stable, as one that when you displace it, it returns to the same state of rest.
So as an example of a stable system, if you take a ball-bearing or marble in a typical kitchen bowl, it will lie in the bottom. Give it a small push and it will oscillate in and run round the bowl, until what friction there is returns it to the bottom. If however you balance the ball on say a football and give it even the tiniest push it will run off the edge. That is an unstable system.
In everything we do, we always should deal with stable systems.
So let’s look now at a small savings bank with a 100 branches or so.
Rumours are circulating that the bank has made a silly investment on say the 15:30 at Cheltenham and the horse fell at the third fence. Well, not really! But a banking equivalent!
So savers start to panic, as for many, it is the only savings they have. And when they panic, they withdraw their funds and put them under the nearest mattress. Or at least a metaphorical one!
So the problem goes round in circles, from more panic and withdrawals, until the bank has nothing left to pay out and goes bust. We’ve all seen runs like this on banks and hopefully we don’t want to see any more.
So are there any stable financial systems?
Current, deposit and savings accounts in reputable UK banks and building societies, could probably be considered stable up to a government-guaranteed limit of I think £85,000. It’s all laid out here. but then is it worth it for an interest rate of about 3%?
I have a strong feeling that Zopa, the peer-to-peer lender, is also a stable system. Other companies of the same type may well be too! but I am not as familiar with them as I am with Zopa.
Let’s look at an adverse event, that might affect Zopa.
Suppose another peer-to-peer lender gets involved in a mis-selling scandal or suffers a run because of some very bad publicity.
Let’s say this causes a lot of possible borrowers to look elsewhere. Now as demand has dropped, lenders, who are still keen to lend money, will drop their rates to account for the new situation. And then in turn these lower rates will entice more borrowers, thus restoring the system to where it started.
What actually helps the system become stable is that each lender has control of their own little feedback loop and as there are thousands of lenders, the system will adjust very quickly.
In a bank say, there will be one guy taking the decisions and they have a high chance of making a wrong one. All you need for a stable system, is for the average in something like Zopa to get it right. As Zopa uses a computer algorithm, every decision is taken according to the same rules.
You can look at other scenarios with Zopa and I haven’t found one yet, that doesn’t return to a stable position.
This stability could be your guarantee of a safer investment. I haven’t obviously got access to Zopa’s full data, but just like water finds its own level, a balance is probably struck between lenders and borrowers.
Zopa And A European Transaction Tax
There has been a lot of talk and some would say hot air lately from politicians about a European Financial Transaction Tax. This morning I heard on the radio, that such a tax would reduce the value of pensions dramatically, as every time your pension provider bought or sold a share or bond, you’d pay tax on it. It would probably mean that annuity returns would drop significantly.
On the other hand, if you look at Zopa, which gives me similar returns to what I would expect from my pension or annuity provider, I would hope they are outside of a European Financial Transaction Tax. Unless of course, the tax means that every time we make a transfer from our bank account, 0.01% goes to a central fund in the EU to bail out countries like Greece and Italy.
I would think that if any British Prime Minister allowed that, we would see riots, like we’ve never seen before.
So one of the advantages of an investment like Zopa, is that it should be outside any proposed European Financial Transaction Tax. On the other hand, this just might get the EU to make companies like Zopa illegal or ensure that every lender was registered with some new bureaucracy. Remember that a civil servant’s first duty is to create more jobs for others of his ilk.
So my advice to those who want to have a safe place for their savings, might find Zopa and the other peer-to-peer lenders, a safer place than stocks and shares.
An Excellent Comment on Banking
My Google Alert for Zopa found this today by Richard Heller on a web site called politics.co.uk. I particularly liked this bit, which is the author’s idea.
The banks should be compelled to offer all their customers a facility called a good neighbour account. The customer would receive a guarantee that all the funds from such an account which are available for investment by the bank would be lent exclusively to local people and local small and medium-sized businesses. They would not be lent to foreign dictators or racketeers and they would not be used to speculate in fantasy financial products which their bank cannot value or even understand.
The bank in question would not have to track its use of every single such account. But it would have to publish accounts to show that all the available aggregate funds in such accounts had at least been matched by aggregate local lending to individuals and qualifying businesses. There seems to be a market for this kind of lending, as witnessed by the recent growth of peer-to-peer financial institutions. Britain’s largest such company, Zopa, had its best-ever month in January. But no one has yet tried to bring the concept into a current account.
If demand for good neighbour accounts really took off, it could force the banks to revive the old model of Captain Mainwaring banking. The hero of Dad’s Army received money from local people and businesses in Walmington-on-Sea. He kept some of this in cash or at call. He lent the rest to other local people and businesses in Walmington-on-Sea. Captain Mainwaring, and others like him, helped Britain to finance the huge demands of the Second World War and then to finance a generation of recovery and growth. All this was achieved with the minimum of government regulation or support.
In contrast with the Mainwaring era, too many of Britain’s modern banks have been run by Private Walker, the spiv, or worse still by Private Pike, the stupid boy.
He mentions Zopa as nearest to this ideal of banking, which certainly our parents would have recognised.
Zopa of course has paid me a lot more in interest, than ever I would have got from a reputable bank.
The Anonymous Widower 