BEWARE! THE BANKS ARE OUT TO GET YOU!

[Tizer]

I'll be glad to see the end of Wonga but unfortunately it will bring another crisis - the people who have been using it to get by won't be able to get a loan from a bank so how will they manage?

The banks won't be feeling generous at the moment. They're just about to find out that claims for PPI compensation are to be allowed from the children of deceased parents who were caught by the scam.

[Stanley]

I'm afraid you're right Tiz. There are a lot of families locked in this trap and they will gain nothing if Wonga fails because some other shark will buy the debt book.

[PanBiker]

No need for anyone else to buy the debts, reported yesterday that the receivers were calling in the loans and also that they maybe a little more insistent than the original lender.

[Stanley]

I heard that as well Ian. Either way the borrowers still have to pay..... I also noted that with penalties some of the interest rates imposed by Wonga were well over 4000%. Charming....... What happened to the sin of usury?

[plaques]

A few years ago a young man approached me in Parker Lane, Burnley, just outside the library. His whole dress and demeanour suggested he was going to ask me for money. He then pulled out an advert for an loan company with 'no questioned asked'. After directing him I thought who in their right mind would lend money to such an obviously vulnerable person. Clearly loan sharks have no moral compulsion.

[Tizer]

The accountants Grant Thornton are being fined £4 million for audit misconduct.

[Stanley]

That's only the tip of the iceberg isn't it Tiz, you know that as well as I. I noted a long time ago that the bean-counters ran the world and what we are seeing is the result of decades of under-regulation. There is often conflict between their audit and consultancy services and time and time again we are told that 'something must be done about it' but no meaningful action has been taken.

[Stanley]

See THIS BBC report on the collapse of Wonga into administration. It has looked inevitable for a few days now and they are not getting much sympathy. However, as Tiz pointed out the other day, in the absence of any other route and with absolute destitution staring a family in the face, we have no right to criticise people for entering into these terrible loans. Two things strike me, other lenders who are equally predatory will take up the slack and under the same pressures as Wonga are in danger of failing. We have not seen the end of this problem.
The second thing that strikes me is that in a modern society no family should be put in this position. There is no safety net. In this respect we were better off when there were workhouses! This is a failure of government and at the root, this is where the ultimate solution lies. Let's not hear any talk of feckless scroungers, they exist but the vast majority are perfectly normal families who have fallen into the poverty trap our present policies have manufactured under the spurious banner of 'work is better'. For many of these victims work has not been better as they can't get a living wage and fall into debt. The situation where these people are exploited by these lenders is a disgrace and an indictment of welfare policies.

[Tizer]

Even if those people could get a bank account and an overdraft they'd face fees of 15 to 20%. A `hidden charge' that will affect many of these people is when they have to choose to pay for things monthly by direct debit instead of upfront in cash. The higher charge for the monthly account is generally equivalent to a 40% interest rate.

[Stanley]

Could the system possibly be rigged against the poor?

[Tizer]

Surely not!

[Stanley]

Any bets as to who will do well if and when Brexit hits us?
I see that Mark Carney is expected to be interrogated by a Commons Committee as to if and when he is going to leave his post. I don't agree with everything he has done but we could have a lot worse incumbent!

[Tizer]

No wonder Paul Pester has `stepped down' at TSB...
`TSB apologises for fresh disruption to online services' TSB
`TSB has apologised after its online and mobile banking services were disrupted on Monday morning, locking thousands of customers out of their accounts in the bank’s second IT failure this year. Customers trying to log in reported that they were denied access for using the “wrong” details, even though they knew they were correct. Others who had managed to log in said they had been unable to move money between TSB accounts. Many were furious that the company had claimed the problems, which followed a routine maintenance upgrade, had been fixed when they had not. Others described the latest disruption as “beyond a joke”....Last week, it emerged that TSB had plummeted from fourth to last place in the latest banking customer service poll by the website Money Saving Expert.'

[Stanley]

And he still gets his bonus.
Well done Justin Welby for going public on the terrible effect austerity is having on the poorest. There was a piece in PE yesterday about the crimes against the disabled being perpetrated under the new Universal Credit rules. Many are losing over £150 a month because they lose some allowances they had before being transferred. (LINK to BBC report)

[Stanley]

As you know, I trust Private Eye..... I'd urge all of you to get hold of this week's edition as it contains a six page report by Richard Brooks titled 'Looting with Putin'. It lays out in detail the activities of the Russian kleptocrats and the role of the City of London in their money-laundering activities. I expressed my doubts about the official line on the Novichok affair and suggested that there were alternative scenarios. If you read this report you'll see why.
One thing that stands out a mile is that while the official line is that the 'brass plate' economy and the misuse of LLPs in laundering money though the city, including the involvement of City Lawyers and the 'Big Four' accountants, is bad, nothing concrete seems to be being done to regulate these activities. This is part of the foundations of our banking system and it seems to me that there is quite a lot to worry about.

[Tizer]

There's been a lot about it in the mainstream press and some BBC programmes too in recent months.

[Stanley]

Give PE their due, they have been banging on about this and the associated shady practices for years.....
Remember May threatening the EU with aggressive banking as one of her opening 'negotiating ploys'?

[Stanley]

On broadly financial matters, I see that the Noble Lord Ashcroft is in the news again as he brushes with the courts. He must enjoy living on the edge! It wouldn't do for me.......

[Stanley]

I think THIS Telegraph article is worth a look. Not a bad summary of the situation I think.
Add to this growing fears about the volatility of the markets and the life expectancy of the current Bull Run.
I heard some gloomy opinions on consumer spending this morning. I have always contended that the domestic spend was about 80% of GDP but I stand corrected, the expert this morning put a figure on it of 67%, less than me but still enormously significant when you realise that the number of families able to save money each month has dropped to 5%, the next to the lowest figure recorded in 60 years of these statistics.
One problem I can see coming is that whatever the outcome of Brexit in March, retailers are going to tend to raise prices using the excuse of Brexit. We saw it happen with decimalisation and I don't believe March will be any better. What will that do for the cost of living?
The economy is on a knife edge and the government doesn't seem to be aware of it. If they are, they are keeping stum.

[Stanley]

I seem to remember reading that many Equity Release Schemes were getting into trouble because the housing market is showing signs of slowing down and general market uncertainty associated with Brexit. Despite that I note that many sites that have advertising have plenty of content promoting more equity release schemes. Does this mean that they are mitigating the dangers by offering less attractive deals?

[Tizer]

Yes, the equity release schemes are getting nervous about the way the housing market is going and the instability of the economy with Brexit on the horizon. Another concern is that the Government's Help to Buy scheme has allowed housebuilders to make a fortune while trapping first-time buyers in negative equity. The builders have been greedily putting an even bigger premium on their new houses in the knowledge that the buyer is getting a subsidy from the government. When the owners eventually want to sell, they find that the house is valued at £30,000 or more below what they expect by the new buyer's mortgage surveyor. Housebuilding companies in the UK can get away with anything!

[Stanley]

Judging from Persimmon's profits and what they pay their CEO you could be right Tiz.
THIS supports your contention....

[Tizer]

Coming up to 10 years from the Lehman debacle...
`The lost decade' LINK
`A decade ago the global financial crisis saw plunging markets, collapsing banks and big names disappearing from the High Street. The human cost was profound - 10 years of low wages, public sector cuts and hard times.'

[Stanley]

And it isn't over yet......
Two things grabbed me this morning. First THIS BBC report of an interview Gordon Brown has given in which he warns of the inevitability of a readjustment which be believes will be another crisis like 2008 and furthermore, the fact that we haven't the reserves to act like we did then. I've always believed in recognising worst case and preparing for it and this seems to me to be a perfectly plausible interpretation of the situation. By the way, he also says that top bankers should have been indicted, I couldn't agree more!
Second there is THIS this Guardian report of the fallout from Justin Welby's speech in Manchester on Wednesday and the Cabinet response on the efficacy of the roll out of Universal Credit. Margaret Greenwood, Shadow Minister shadow work and pensions secretary said "“Esther McVey selling as a success the fact that tens of thousands of people are still not being paid on time tells you everything you need to know about universal credit.” This followed an admission that only 84% are paid on time, it follows that 16% are not.

[Tizer]

I listened to Gordon Brown giving the warning this morning and thought what a cheek he has to be telling us now to beware when he was one of those who allowed conditions for the 2007/8 crisis to occur...but then it occurred to me that we should listen to someone who has gone through it before and has more experience behind him. Of course, I could say the same for T. Blair...