WHY would you pay 4,200 % APR on a Loan? Strangely, the answer is because it could be cheaper than getting an unauthorised overdraft from your bank.
Wonga, the short-term loan business, claimed last week that it was more transparent than the banks, after the Independent Commission on Banking (ICB) said customers were confused by the welter of charges associated with their current accounts.
Errol Damelin, the founder of the company, said customers could not compare the cost of borrowing money in the short term when the most common way of doing it was through a bank overdraft.
Wonga is forced to display a representative annual percentage rate (APR) for its loans of 4,214pc. However, Mr Damelin said that, because it offered loans limited to 30 days, the APR was not relevant, and the loan was often cheaper than unauthorised bank charges for the same amount.
At this point our real problem is that we don’t in fact know what is was that he did wrong in order to get into this mess: but something stupid almost certainly. In a little bit of a surprise for those like me who think that the lefties at The Guardian are entirely ignorant not just of finance but of basic numeracy, their reporting today is rather better than that of the Telegraph’s.
Anyway, let me try to put together a guide to some of the jargon for you. All that ETF, Delta-1, futures, options, market making and the like. And let’s stick with something simple, gold, to use as our explanation.
EUROBONDS are “absolutely wrong” for the crisis. So saith Angela Merkel:
German Chancellor Angela Merkel bluntly rejected euro zone bonds as a solution to the currency area’s sovereign debt crisis, saying on Thursday that “collectivizing debts” would not solve the problem.
This doesn’t really leave any palatable options for resolving the crisis. I’m not even sure that it leaves any unpalatable options for resolving it.
Put aside all the bits and pieces you’ve read over the past year or so and just think about these few things.
1) Greece is bust. Portugal, Spain and possibly Italy could follow them. Ireland’s a special case as it might, just, be able to climb out of its hole. Well, we know what we do with bust companies, we declare them bankrupt and wipe out their debts. We can do this with countries, indeed we’ve done it hundreds of times over the centuries.
JON Snow was hyperventilating away last night about how it’s just so appalling that we’ve not thrown any bankers in jail yet.
In one month, hundreds of rioters and looters have been prosecuted and punished by the English courts, often for offences with a value of under fifty pounds. Yet the threat to the wellbeing of UKplc was far greater from the bankers than from any number of more arrestable rioters.
There is a strong impression abroad that the UK doesn’t want to prosecute anyone for the banking crisis, a crisis that has affected every tax payer in the Kingdom.
Soon enough the statute of limitations will kick in to ensure that no-one will ever be prosecuted for their role.
Then we can all breathe easy – no banker will ever go to jail, and we can stop asking the nightly question, ‘why not?’
HERE’S a little handy cutoutn’keep chart for you explaining all the fuss that’s going on about reforming the banking system.
Yes, that’s right children. Most of the banks that did have a casino banking operation didn’t fail. And most of the banks that did fail didn’t have a casino banking operation. So, making sure we don’t have more banking failures by ring-fencing casino from high street banks doesn’t seem to be doing anything very much useful, does it?
No, not abolish immigration, this isn’t the BNP newsletter. Rather, the one big thing, the biggest thing in fact, that we could do to grow the world economy is to abandon all immigration restrictions.
That’s the outcome of a new research paper at least. In economic terms the argument is sound and beguiling. A very large part of how much you earn, how much you can produce, what your labour is worth (all, roughly, synonyms for each other) comes from where you had the good or ill fortune to be born.
IT was the BGC Partner’s 7th Annual Charity Trading Day, at Churchill Place in Canary Wharf, east London.
Eva Herzigova and Kelly Brook provided the sex appeal. The Cheeky Girls reminded the City boys that not all East European girls from a bikini is a uniform are are pole dancers. Prince Harry did the larks and worked hard on his ambition to be seen as one of the lads. His former squeeze (he was pictured groping her boobs) Natalie Pinkham added a little class. And then we caught sight of Princess Beatrice, the Duchess of York and Princess Eugenie. Their picture requires a caption.Your best efforts, please…
NOW, OK, this is a trivial little thing on its own. But it is symptomatic. Indicative if you like, of how you go about completely and entirely fucking an economy over.
The nanny state impulse runs strong in the Golden State, where the State Assembly has passed a bill that would virtually regulate babysitting out of business. After 2 hours of babysitting, a mandatory 15 minute break must be give, meaning that a stand-by babysitter must be present. Then there are the paperwork requirements, and the severe penalties that kick in for any parents who fail to dot the i’s and cross the t’s.
Yes, I agree, babysitting is a fairly trivial part of the whole thing. But both here and in the US we’ve been making these sorts of rules for well on a century now. The idea that we don’t send the kiddies down the mines is easy enough to accept: the idea that a 19 year old looking after the kids while you go for dinner and a movie requires a rest break every two hours is insane.
But what’s getting him today is that there’s a reform of the planning system in the air. This, according to him, means that the bastard plutocrats will be able to build all over this green and pleasant land and once again the bastard plutocrats will make pots of money.
Strong planning is one of many factors, but it is symptomatic of a political culture that puts the national interest above the self-interest of the rich and the long view above the quick buck. Pickles and Osborne are seeking to rip up England’s planning system for the same reasons that they want to drop the proposed new banking rules: corporate power, cronyism and plutocracy, the forces that got us into this mess.
Erm, no, not really, In fact entirely the other way around.
I’ve been having an extended shouting match with a bloke called Richard Murphy for years now. He’s set himself up as the arbiter of all things economics and tax and would now like to tell us all how to run the country. It’s not a bad ambition for a retired accountant from Wandsworth.
However, the problem he’s got is that he cannot in fact follow logic. Try this for example:
And I know markets are full of people who are as clueless about what will happen next and who are as willing to fly by the seat of their pants as the person setting out to climb a mountain without a map or guide. They’re not wrong to do that – it’s just what has to happen in a world of uncertainty. But in that same world of uncertainty (which neoliberals do not think exists) there has also to be firm government action under the direction of politicians who know they have been elected to make decisions.
You know how everyone likes to go on about how the banks are all thieving bastards, corrupt to the core, hang them all and close ‘em down?
Even, why haven’t there been more prosecutions?
Well, the answer to that last question is because while they were all very silly there wasn’t in fact much going on that was illegal.
EDWARD Hairston, 39, of Youngstown, Ohio, did not win the lottery. For eight years he contributed to a syndicate run at the KraftMaid logistics centre where he works. Then, while he was on medical leave over June, July and August, the rest of the office syndicate won $99 million. So. Did he get a share? No. He never paid his subs while he was off sick.
He wants $2 million. The Lottery Commission is uncertain. It’s retained his share while the parties argue.
If you thought the rioting and rampaging, the mindless hooliganism, theft, violence and arson that has swept across parts of the UK over the last few days was bad enough, did you know that British taxpayers may actually have to foot the bill for all the damage? It’s true! Thanks to the Riots (Damages) Act of 1886 the police authorities may be forced to foot the bill…and the police authorities are of course funded by the public purse.
This won’t have any bearing on the lawless, feral mobs who tore up Britain – they don’t work or pay tax anyway. But for the rest of Great Britain its reason enough to think about leaving! And if you are thinking about moving abroad, you might like to look and see where you will pay less tax and be less likely to encounter the underclass that the UK has bred over recent generations.
THE banks really are to blame for the economy. Although not in quite the manner many seem to think.
The UK economy is currently 4pc smaller than its peak in March 2008 and 2.8pc smaller than in September 2008, when Lehman Brothers collapsed and Britain’s banking industry began its long decline.
Of the 2.8pc fall, the contraction in banking activity has accounted for one percentage point, analysis of Office for National Statistics (ONS) figures shows.
The impact banks have had on the economy is completely disproportionate to the industry’s size. Banks account for just 5.1pc of national output, but are to blame for around 35pc of the national decline even excluding the knock-on effect of tighter credit on businesses and households.
We’re used enough to people telling us it was all the banks’ fault: and they’re right! It is, at least in part, all hte banks’ fault.
PROSTITUTES in Bonn, Germany , are being invited to buy a €euro daily tax ticket from a vending machine. Prostitutes in German brothels already pay taxes so this is attempt to make things fair. You might own your body, but you do not own the tarmac on which you stand. And you place of work is only open between 8:15 pm to 6:00 am.
Also those who pick up the men and women who sell their bodies for sex are encouraged to do so in a car and drive to designated shagging zone.
QUITE rightly, there’s doom and gloom about the short term prospects for the economy. However, in the long term there’s blue skies, optimism and unicorns pooping rainbows. The reason is this:
The second factor is the nature of the latest great technological leap by mankind, namely the internet. My suspicion has long been that although its initial benefits were over-hyped, its real contribution will only be seen in the spread and development of the next technological advance.
For the internet is a knowledge storage, retrieval, dissemination and discovery machine. Its effect should be to speed up technological progress.
A SLIGHTLY surprising letter turned up in a French newspaper today. Coming from a bunch of rich French people they demanded that they be taxed more.
We, chairmen of companies and business leaders, business men and women, finance professionals or wealthy citizens, call for an exceptional levy that would target France’s richest taxpayers.
Well, yes, except there’s a number of teenie problems with this whole idea. One of which is that one of the signatories Liliane Betencourt, the L’Oreal heir, has been getting tax rebates for the past few years. If she really wanted to pay more tax then she could have just not cashed those checks.
RICH people are bastards, aren’t they? And look, here we have it, absolute proof!
Increasing a person’s wage can cause a significant drop in the amount of time they spend helping their parents with household chores, errands and transport.
For every ten per cent rise in their salary women will spend 36 per cent less time providing care and men will reduce their input by 18 per cent.
The more people get paid the less they are willing to take care of those aged parents who sacrificed the best eyars of their lives to have and educate them.
IS there a hidden message on the US dollar bill? Do you see symbols for the Illuminati, the Masons and more? He does. There are messages everywhere. You just need to twist the paper to reveal the truth…
WE get George Monbiot’s plan in his column in The Guardian today. And a very good plan it is too.
So Jackson has begun developing a macroeconomic model which would allow economic output to be stabilised. He experiments with raising the ratio of investment to consumption, changing the nature and conditions of investment and shifting the balance from private to public spending, while staying within tight constraints on the use of resources. He finds that the redistribution of both income and employment (through shorter working hours) is essential to the project. So is re-regulation of the banks, enhanced taxation of resources and pollution and measures to discourage manic consumption, such as tighter restrictions on advertising.His system is not wholly different to today’s: people will still spend and save, companies will still produce goods and services, governments will still raise taxes and spend money. It requires more government intervention than we’re used to;
No, I don’t mean excellent in the sense of desirable, I mean excellent in the sense that it will do just as George wants, kill economic growth stone dead.
SURE, we’d all prefer that Spain doesn’t go bust. That the euro survives in some form or other, that we don’t get the cataclysm of an entire continent seeing its monetary and banking system swirling round the U-bend. But that’s probably not the way it’s going to turn out.
THIS is a strange little headline from the depths of the policy wonks’ part of the internet:
A Great Success: World Bank has a 70% failure rate with ICT4D projects to increase universal access
To unpick it for a moment: ICT4D is when the World Bank tries to get computers into the hands of poor people (why it doesn’t just given them a smart phone is another matter). And the rest of the headline is stating that 70% of all the money it spends is just pissed away on nothing useful and that this is a great success.
ALLISTER Heath is the editor of London’s City A.M. It’s a free news sheet that’s handed out to bankers and baking types. His views on the London Riots are beyond parody:
FEAR. Debilitating, widespread fear. The country held to ransom by feckless youths. Thousands of shocked Londoners cowering in their homes, with many shops, banks and offices shutting early. I cannot remember anything like it; the atrocities of the 7/7 terror attacks, the shock from 9/11 and the IRA’s repeated terrorist attacks had a chilling, devastating effect on the capital but it felt different this time…
The cause of the riots is the looters; opportunistic, greedy, arrogant and amoral young criminals who believe that they have the right to steal, burn and destroy other people’s property… There were no extenuating circumstances, no excuses…
ARE women being unfairly denied jobs? No, I don’t mean the usual feminist whinge that women are discriminated against because none of them have been hired as FTSE chief executives immediately after 15 years of raising sproglets. No, rather, the general difference in unemployment rates that we’re seeing:
The latest figures also confirm an unusual feature of this recovery – fewer jobs for women and more jobs for men. In previous recoveries, the recovery in employment favoured women. In this recovery, job growth has been strongly male dominated. It remains to be seen whether the reversed gender bias in job growth will continue.
DON’T go to University – get a job instead. Yes, everyone says you’ve got to go to uni if you’re going to get ahead. But this isn’t actually true as a number of employers are now pointing out:
A poll of employers has revealed a surprising degree of scepticism about the value of a degree. The finding may encourage students who miss the A-level grades they need for university on Thursday to abandon the idea of re-applying next year.
The majority of the more than 400 UK firms surveyed said they would hire a school-leaver with two years’ work experience over a graduate. Two-thirds of firms said so. This rose to almost three-quarters when just businesses that employ 50 people or fewer were surveyed.