Reith Lecture: It is Society that is broken - not just the economy

pqrdef

John_Pierpoint wrote: »

and an asset that the "funny money" politicians cannot print (in a desperate attempt to devalue debt and keep down interest rates thus avoid repossessing negative equity mortgaged homes.) .

But several countries' governments in recent years have successfully devalued property by allowing the construction of far too much.

KiethBEN

"Niall Ferguson was commenting about the benefits supposedly on offer to the professional and managerial class and how they are fighting to keep them, even when simple arithmetic demonstrates that they are not sustainable" So now these kinda things also being the part of mortgage?

John_Pierpoint

There is not much point in paying off your personal mortgage early, when your MP then rushes out and mortgages next year's GDP on your behalf.

There is nothing new about "doing a Greece". I wonder if Niall Ferguson is going to remember that after "Tulip Mania" but before "The South Sea Bubble", the Scottish nation had to be bailed out in similar circumstances.

There must be some people in Germany who can still remember those 1,000 mark postage stamps over printed with three more zeros.

http://www.scribd.com/doc/185756/The-Darien-Adventure-17th-Century-Scotland-Attempts-to-Found-a-Colony-in-Panama

......and two hundred years later their successors have had a go at wrecking Britain's economy once more:

http://www.24dash.com/news/education/2012-06-21-RBS-management-style-used-economic-violence-to-wield-power-that-led-to-banks-failure-new-study-suggests

yertiz_2

John_Pierpoint wrote: »

http://downloads.bbc.co.uk/podcasts/radio4/reith/reith_20120619-0930a.mp3

Can also catch repeats on Radio 4, Saturdays at 10.15pm and World Service also broadcast Tuesdays 11.05pm and Saturdays 7:05pm. Hope that helps.

zagubov

This thread reminds me how I found this bit of the forum almost a year ago when (I think it was) Percy1983 started a fascinating thread .
It was at least partly about Alvin Hall's BBC shows about mortgages and savings and how things are going wrong about passing money across generations.

John_Pierpoint wrote: »

I wonder if Niall Ferguson is going to remember that after "Tulip Mania" but before "The South Sea Bubble", the Scottish nation had to be bailed out in similar circumstances.

Hmmm. Not quite.. There was a wee bit more going on. If you ever get a moment to read anything on the history of the UK not contaminated by forum trolls, cast your eye over this.;)

John_Pierpoint

Thanks for highlighting the wheels within wheels as the "politicians" of the day all tried to fight for their vested interests.
It sort of supports Niall Ferguson recommendation that what we need is simple laws and then the politicians should step back and let the commercial forces get on with delivering the goods.


However I doubt the Scots would have managed to make a successful enterprise of trans-shipping goods across the isthmus that is central America.

It proved to be an idea at least 150 year ahead of its time:

In 1849, the discovery of gold in California created great interest in a crossing between the Atlantic and Pacific Oceans. Eventually, the Panama Railway was built to cross the isthmus, opening in 1855. This overland link became a vital piece of Western Hemisphere infrastructure, greatly facilitating trade and largely determining the later canal route.

Disease and exhaustion took a heavy toll on the workers, in part because the connection between mosquitoes and malaria would not be discovered for another forty years. The disposal of unidentifiable bodies was a boon to the PCRC mostly paid for by medical facilities. Medical schools and teaching hospitals needed cadavers to train budding physicians, and paid handsomely for anonymous bodies pickled in barrels shipped up from the tropics. The PCRC itself sold the corpses abroad, and the income generated was sufficient to maintain the Company's own hospital.

The French tried and were beaten back by inadequate organisation and failure to realise the health problems of the Tropics.

http://en.wikipedia.org/wiki/Panama_Canal

John_Pierpoint

This weeks lecture is somewhat harder work. I have listened to it twice and I am still not sure I agree.

However the observations:

Banks, which get into difficulty, should be offered plenty of liquidity, at a high interest rate that will force them to be taken over in the longer term!
[Offering dirt cheap taxpayers' money to all banks just prolongs the crisis, as they accept it and speculate in commodities.]

Transgressing bankers should go to jail!

Both turn out to be amazing prescience in the light of the malfeasance revealed a Barclays Bank the next day.

Incidentally Barclays did not take the taxpayers' shillings, but raised a king's ransom from its friends in the gulf - paying as I remember something between 10% & 15% (Wake up Greece & Spain) with a conversion option to ordinary shares.

Barclays existing shareholders did not get a look-in as I remember it.

Barclays confirmed that it rejected the Government’s offer and would instead raise £6.5 billion of new capital (£2 billion by cancellation of dividend and £4.5 billion from private investors).[52]

http://www.bbc.co.uk/programmes/b01jmxqp/features/transcript

http://www.bbc.co.uk/blogs/radio4/

http://en.wikipedia.org/wiki/Barclays

Thrugelmir

John_Pierpoint wrote: »

Incidentally Barclays did not take the taxpayers' shillings, but raised a kings ransom from its friends in the gulf - paying as I remember something between 10% & 15% (Wake up Greece & Spain) with a conversion option to ordinary shares.

Shares were sold with warrants attached. Once share price rose. The shares were dumped. Giving the investors a tidy profit. Along with free warrants allowing them to buy shares at a discounted price in the future.

Barclays shareholders suffered massive dilution in the process.

Given the news of LIBOR manipulation. Is Barclays guilty of something more serious? Such as lying to the FSA regarding its state of financial health.

The deal meaning that a full audited prospectus was not required.

StevieJ

Thrugelmir wrote: »

Shares were sold with warrants attached. Once share price rose. The shares were dumped. Giving the investors a tidy profit. Along with free warrants allowing them to buy shares at a discounted price in the future.
Barclays shareholders suffered massive dilution in the process.

Then again the share price was around 50 pence when financing was raised (I know, I took advantage) and even after recent corrections it is now £1.70, some dilution that

Kennyboy66

StevieJ wrote: »

Then again the share price was around 50 pence when financing was raised (I know, I took advantage) and even after recent corrections it is now £1.70, some dilution that

I think the point is, that Barclays raised money from Gulf investors and ignored existing shareholders (who after all are only the owners) pre-emption rights.

This was inherently more expensive that the offer that would have been available from the UK government.

So we need to ask ourselves, was it in shareholders best interests to raise money this way - or was it in the managements best interests (allowing them to pay unlimited bonuses without government interference).

Increasingly it seems that company boards have hi-jacked companies and are happy to loot them for as such as they can get while shareholders can swivel.

This in extremis is the Xstrata / Glencore merger but goes all the way down to small companies where chief executives are taking 1% per year of a market capitalisation in renumeration of a company for mediocre performance or worse.