Possible Bank crash - how does it affect my existing spanish mortgage?

Given this knowledge JD01, is the inference that there is still no regulation in place to ensure existing pension providers are not allowed to further compromise "our" funds? At what point I wonder do those with this knowledge mobilise awareness to pressure our leaders into some form of regulatory action to protect pension funds from this "game" you described below? Or perhaps this is already being addressed behind the scenes? Sorry if this is off thread but as you have indicated all these issues are inter-related.

Re existing Spanish mortgages, what is the liklihood that Spanish Banks will be made to extend options such as "Interest only" as part of their terms of the re-capitalisation process, in an attempt to limit more instances of owners defaulting on their mortgages?  Again, is this happening already? Is the hope that sufficient monies will be made available in this latest bail-out/loan , whatever, to reassure current account/savings investors that there is no need for a run on the Banks?

To your knowledge have any stringent conditions been put in place to ring fence these monies to ensure that they are used to best effect rather than be mis-appropriated yet again?

The thought of Banks having free reign doesn't bear thinking about.....

Dear All,

I really am a bit of sucker

The problem with this information is that it is making my particular set of criminal fraudsters seem somewhat "small beer" and even "normal".

If a criminal cannot be charged can he really be a proper criminal?????

Do we need a revolution of some kind to clear out the "ruling classes" in the financial world, the political world and perhaps even the world as a whole.

It seems that you cannot even keep your head down and not get involved.

Whatever, I am immensley relieved that I refused to attempt completion on my rubbish build.

Regards

Norman

<>

This message was last edited by JD01 on 17/06/2012.

JD01 has spelt it out very clearly so I wont comment further as it just raises my stress levels and does my dodgy ticker no good at all. I would just say to Norman that I have been calling for a revolution for years! Even though most people (including me) don't understand the world of high finance the number of people I know who are just so complacent about the obvious fraud and corruption in politics  is staggering.

This appeared in Punch Magazine in 1957 - bang on the money methinks

Q: What are banks for?
A: To make money.

Q: For the customers?
A: For the banks.

Q: Why doesn’t bank advertising mention this?
A: It would not be in good taste. But it is mentioned by implication in
references to reserves of £249,000,000,000 or thereabouts. That is the
money they have made.

Q: Out of the customers?
A: I suppose so.

Q: They also mention Assets of £500,000,000,000 or thereabouts. Have they
made that too?
A: Not exactly. That is the money they use to make money.

Q: I see. And they keep it in a safe somewhere?
A: Not at all. They lend it to customers.

Q: Then they haven’t got it?
A: No.

Q: Then how is it Assets?
A: They maintain that it would be if they got it back.

Q: But they must have some money in a safe somewhere?
A: Yes, usually £500,000,000,000 or thereabouts. This is called
Liabilities.

Q: But if they’ve got it, how can they be liable for it?
A: Because it isn’t theirs.

Q: Then why do they have it?
A: It has been lent to them by customers.

Q: You mean customers lend banks money?
A: In effect. They put money into their accounts, so it is really lent to the banks.

Q: And what do the banks do with it?
A: Lend it to other customers.

Q: But you said that money they lent to other people was Assets?
A: Yes.

Q: Then Assets and Liabilities must be the same thing?
A: You can’t really say that.

Q: But you’ve just said it! If I put £100 into my account the bank is
liable to have to pay it back, so it’s Liabilities. But they go and lend
it to someone else and he is liable to have to pay it back, so it’s Assets.
It’s the same £100 isn’t it?
A: Yes, but….

Q: Then it cancels out. It means, doesn’t it, that banks haven’t really any
money at all?
A: Theoretically……

Q: Never mind theoretically! And if they haven’t any money, where do they
get their Reserves of £249,000,000,000 or thereabouts??
A: I told you. That is the money they have made.

Q: How?
A: Well, when they lend your £100 to someone they charge him interest.

Q: How much?
A: It depends on the Bank Rate. Say five and a-half percent. That’s
their profit.

Q: Why isn’t it my profit? Isn’t it my money?
A: It’s the theory of banking practice that………

Q: When I lend them my £100 why don’t I charge them interest?
A: You do.

Q: You don’t say. How much?
A: It depends on the Bank Rate. Say a half percent.

Q: Grasping of me, rather?
A: But that’s only if you’re not going to draw the money out again.

Q: But of course I’m going to draw the money out again! If I hadn’t wanted
to draw it out again I could have buried it in the garden!
A: They wouldn’t like you to draw it out again.

Q: Why not? If I keep it there you say it’s a Liability. Wouldn’t they be
glad if I reduced their Liabilities by removing it?
A: No. Because if you remove it they can’t lend it to anyone else.

Q: But if I wanted to remove it they’d have to let me?
A: Certainly.

Q: But suppose they’ve already lent it to another customer?
A: Then they’ll let you have some other customers money.

Q: But suppose he wants his too….and they’ve already let me have it?
A: You’re being purposely obtuse.

Q: I think I’m being acute. What if everyone wanted their money all at
once?
A: It’s the theory of banking practice that they never would.

Q: So what banks bank on, is not having to meet their commitments?
A. YOU GOT IT!

Q: What are banks for?
A: To make money.

Q: For the customers?
A: For the banks.

Q: Why doesn’t bank advertising mention this?
A: It would not be in good taste. But it is mentioned by implication in
references to reserves of £249,000,000,000 or thereabouts. That is the
money they have made.

Q: Out of the customers?
A: I suppose so.

Q: They also mention Assets of £500,000,000,000 or thereabouts. Have they
made that too?
A: Not exactly. That is the money they use to make money.

Q: I see. And they keep it in a safe somewhere?
A: Not at all. They lend it to customers.

Q: Then they haven’t got it?
A: No.

Q: Then how is it Assets?
A: They maintain that it would be if they got it back.

Q: But they must have some money in a safe somewhere?
A: Yes, usually £500,000,000,000 or thereabouts. This is called
Liabilities.

Q: But if they’ve got it, how can they be liable for it?
A: Because it isn’t theirs.

Q: Then why do they have it?
A: It has been lent to them by customers.

Q: You mean customers lend banks money?
A: In effect. They put money into their accounts, so it is really lent to the banks.

Q: And what do the banks do with it?
A: Lend it to other customers.

Q: But you said that money they lent to other people was Assets?
A: Yes.

Q: Then Assets and Liabilities must be the same thing?
A: You can’t really say that.

Q: But you’ve just said it! If I put £100 into my account the bank is
liable to have to pay it back, so it’s Liabilities. But they go and lend
it to someone else and he is liable to have to pay it back, so it’s Assets.
It’s the same £100 isn’t it?
A: Yes, but….

Q: Then it cancels out. It means, doesn’t it, that banks haven’t really any
money at all?
A: Theoretically……

Q: Never mind theoretically! And if they haven’t any money, where do they
get their Reserves of £249,000,000,000 or thereabouts??
A: I told you. That is the money they have made.

Q: How?
A: Well, when they lend your £100 to someone they charge him interest.

Q: How much?
A: It depends on the Bank Rate. Say five and a-half percent. That’s
their profit.

Q: Why isn’t it my profit? Isn’t it my money?
A: It’s the theory of banking practice that………

Q: When I lend them my £100 why don’t I charge them interest?
A: You do.

Q: You don’t say. How much?
A: It depends on the Bank Rate. Say a half percent.

Q: Grasping of me, rather?
A: But that’s only if you’re not going to draw the money out again.

Q: But of course I’m going to draw the money out again! If I hadn’t wanted
to draw it out again I could have buried it in the garden!
A: They wouldn’t like you to draw it out again.

Q: Why not? If I keep it there you say it’s a Liability. Wouldn’t they be
glad if I reduced their Liabilities by removing it?
A: No. Because if you remove it they can’t lend it to anyone else.

Q: But if I wanted to remove it they’d have to let me?
A: Certainly.

Q: But suppose they’ve already lent it to another customer?
A: Then they’ll let you have some other customers money.

Q: But suppose he wants his too….and they’ve already let me have it?
A: You’re being purposely obtuse.

Q: I think I’m being acute. What if everyone wanted their money all at
once?
A: It’s the theory of banking practice that they never would.

Q: So what banks bank on, is not having to meet their commitments?
A. YOU GOT IT!

Q: What are banks for?
A: To make money.

Q: For the customers?
A: For the banks.

Q: Why doesn’t bank advertising mention this?
A: It would not be in good taste. But it is mentioned by implication in
references to reserves of £249,000,000,000 or thereabouts. That is the
money they have made.

Q: Out of the customers?
A: I suppose so.

Q: They also mention Assets of £500,000,000,000 or thereabouts. Have they
made that too?
A: Not exactly. That is the money they use to make money.

Q: I see. And they keep it in a safe somewhere?
A: Not at all. They lend it to customers.

Q: Then they haven’t got it?
A: No.

Q: Then how is it Assets?
A: They maintain that it would be if they got it back.

Q: But they must have some money in a safe somewhere?
A: Yes, usually £500,000,000,000 or thereabouts. This is called
Liabilities.

Q: But if they’ve got it, how can they be liable for it?
A: Because it isn’t theirs.

Q: Then why do they have it?
A: It has been lent to them by customers.

Q: You mean customers lend banks money?
A: In effect. They put money into their accounts, so it is really lent to the banks.

Q: And what do the banks do with it?
A: Lend it to other customers.

Q: But you said that money they lent to other people was Assets?
A: Yes.

Q: Then Assets and Liabilities must be the same thing?
A: You can’t really say that.

Q: But you’ve just said it! If I put £100 into my account the bank is
liable to have to pay it back, so it’s Liabilities. But they go and lend
it to someone else and he is liable to have to pay it back, so it’s Assets.
It’s the same £100 isn’t it?
A: Yes, but….

Q: Then it cancels out. It means, doesn’t it, that banks haven’t really any
money at all?
A: Theoretically……

Q: Never mind theoretically! And if they haven’t any money, where do they
get their Reserves of £249,000,000,000 or thereabouts??
A: I told you. That is the money they have made.

Q: How?
A: Well, when they lend your £100 to someone they charge him interest.

Q: How much?
A: It depends on the Bank Rate. Say five and a-half percent. That’s
their profit.

Q: Why isn’t it my profit? Isn’t it my money?
A: It’s the theory of banking practice that………

Q: When I lend them my £100 why don’t I charge them interest?
A: You do.

Q: You don’t say. How much?
A: It depends on the Bank Rate. Say a half percent.

Q: Grasping of me, rather?
A: But that’s only if you’re not going to draw the money out again.

Q: But of course I’m going to draw the money out again! If I hadn’t wanted
to draw it out again I could have buried it in the garden!
A: They wouldn’t like you to draw it out again.

Q: Why not? If I keep it there you say it’s a Liability. Wouldn’t they be
glad if I reduced their Liabilities by removing it?
A: No. Because if you remove it they can’t lend it to anyone else.

Q: But if I wanted to remove it they’d have to let me?
A: Certainly.

Q: But suppose they’ve already lent it to another customer?
A: Then they’ll let you have some other customers money.

Q: But suppose he wants his too….and they’ve already let me have it?
A: You’re being purposely obtuse.

Q: I think I’m being acute. What if everyone wanted their money all at
once?
A: It’s the theory of banking practice that they never would.

Q: So what banks bank on, is not having to meet their commitments?
A. YOU GOT IT!

Q: What are banks for?
A: To make money.

Q: For the customers?
A: For the banks.

Q: Why doesn’t bank advertising mention this?
A: It would not be in good taste. But it is mentioned by implication in
references to reserves of £249,000,000,000 or thereabouts. That is the
money they have made.

Q: Out of the customers?
A: I suppose so.

Q: They also mention Assets of £500,000,000,000 or thereabouts. Have they
made that too?
A: Not exactly. That is the money they use to make money.

Q: I see. And they keep it in a safe somewhere?
A: Not at all. They lend it to customers.

Q: Then they haven’t got it?
A: No.

Q: Then how is it Assets?
A: They maintain that it would be if they got it back.

Q: But they must have some money in a safe somewhere?
A: Yes, usually £500,000,000,000 or thereabouts. This is called
Liabilities.

Q: But if they’ve got it, how can they be liable for it?
A: Because it isn’t theirs.

Q: Then why do they have it?
A: It has been lent to them by customers.

Q: You mean customers lend banks money?
A: In effect. They put money into their accounts, so it is really lent to the banks.

Q: And what do the banks do with it?
A: Lend it to other customers.

Q: But you said that money they lent to other people was Assets?
A: Yes.

Q: Then Assets and Liabilities must be the same thing?
A: You can’t really say that.

Q: But you’ve just said it! If I put £100 into my account the bank is
liable to have to pay it back, so it’s Liabilities. But they go and lend
it to someone else and he is liable to have to pay it back, so it’s Assets.
It’s the same £100 isn’t it?
A: Yes, but….

Q: Then it cancels out. It means, doesn’t it, that banks haven’t really any
money at all?
A: Theoretically……

Q: Never mind theoretically! And if they haven’t any money, where do they
get their Reserves of £249,000,000,000 or thereabouts??
A: I told you. That is the money they have made.

Q: How?
A: Well, when they lend your £100 to someone they charge him interest.

Q: How much?
A: It depends on the Bank Rate. Say five and a-half percent. That’s
their profit.

Q: Why isn’t it my profit? Isn’t it my money?
A: It’s the theory of banking practice that………

Q: When I lend them my £100 why don’t I charge them interest?
A: You do.

Q: You don’t say. How much?
A: It depends on the Bank Rate. Say a half percent.

Q: Grasping of me, rather?
A: But that’s only if you’re not going to draw the money out again.

Q: But of course I’m going to draw the money out again! If I hadn’t wanted
to draw it out again I could have buried it in the garden!
A: They wouldn’t like you to draw it out again.

Q: Why not? If I keep it there you say it’s a Liability. Wouldn’t they be
glad if I reduced their Liabilities by removing it?
A: No. Because if you remove it they can’t lend it to anyone else.

Q: But if I wanted to remove it they’d have to let me?
A: Certainly.

Q: But suppose they’ve already lent it to another customer?
A: Then they’ll let you have some other customers money.

Q: But suppose he wants his too….and they’ve already let me have it?
A: You’re being purposely obtuse.

Q: I think I’m being acute. What if everyone wanted their money all at
once?
A: It’s the theory of banking practice that they never would.

Q: So what banks bank on, is not having to meet their commitments?
A. YOU GOT IT!

These two guys have stopped doing these. Which is a great shame because they were very funny. Fortunately, they're still available on YouTube. FWIW, The $54 Trillion mention in the first video might be about twenty times larger now. 

Bird And Fortune - Financial Crisis

Bird And Fortune Subprime Crisis

These two guys have stopped doing these. Which is a great shame because they were very funny. Fortunately, they're still available on YouTube. FWIW, The $54 Trillion mention in the first video might be about twenty times larger now. 

Bird And Fortune - Financial Crisis

Bird And Fortune Subprime Crisis

These two guys have stopped doing these. Which is a great shame because they were very funny. Fortunately, they're still available on YouTube. FWIW, The $54 Trillion mention in the first video might be about twenty times larger now. 

Bird And Fortune - Financial Crisis

http://www.youtube.com/watch?v=9z70BKwfSUA&feature=related

Bird And Fortune - Subprime Crisis

http://www.youtube.com/watch?v=mzJmTCYmo9g&feature=related

@ Poppyseed - I think that most of us have the desire to start a revolution but are perhaps mindful the resultant chaos could be worse. A great deal of the problem arose when Mr Brown in his infinite wisdom decide to pass regulation of the banks to the FSA (a relatively toothless Government agency) and remove control from the Bank of England. The FSA didnt have the resources or the intellectual brainpower to police exotic financial instruments such as credit derivatives. Other than the Government appointed heads most of their inspectors came from the personal financial services industry - therefore used to dealing in pensions, life assurance etc. The banks were employing quantum physicists with Doctorates and 1st Class honours degrees from Oxford and the like to create financial programmes that the regulators simply didnt understand. When it comes to space programmes there is always someone with practical intellect that can keep the rocket scientists feet on the ground..........unfortunately there was nobody within the regulators (or even the Treasury I suspect) who had the gumption to ask the question "where is all the physical cash going to come from to substantiate all the debt"

2008 - Gordon Brown "nobody could have predicted this situation" (sic) ---- why were alarm bells being rung by Warren Buffet and the wall Street Journal in 1999 then?

Hi Patrick,

point taken but........

are alarm bells really enough to get action never mind start a revolution??????

we need leaders with intelligence/best advisers but essentially with real gumption.......would Maggie do?

Regards

Norman

Smiley and JD01- Surely it's never too late to regulate to prevent further chaos is it? Who are the powers that be taking advice from now? Those same people who as you described Smiley are "lacking the intellectual brainpower"? How hopeful are you now that enough is being done to at least contain the problem in terms of financial regulation and reform of the system, if not in due time to prevent this from reoccurring?

Sometimes to give the impression that nothing can be done as the scale of the problem is too large to solve, only creates panic and disorder and does little to motivate people to remain aware (head in sand scenario), which can be self defeating in terms of encouraging those same people to be more proactive to back those striving to achieve workable solutions. And sometimes breaking the problem down into manageable proportions, one step at a time, or several co-ordinated steps at a time is far better, which some (the likes of Keith re the BG scenario as just one small but effective example) are attempting to achieve. We all have to believe that we can effect change, no matter how small it is in the scale of things.

Those who understand the wider issues and have that intellectual capacity, together with a more ethical approach, surely  have to remain hopeful and become more proactive in educating and motivating Jo public to gain a sense of self belief, in terms of instilling them with the thought that they CAN make a difference.

It's important to educate and remain aware, yes, but isn't it equally important to strive for workable solutions at the same time, and use "vehicles"  to co-ordinate all manner of  means of pressuring those in power to effect reform, rather than give the impression that little can be done?

Hi Norman - unfortunately political leaders with gumption and charisma seem to have been superseded by those that are photogenic and have the right strap lines. I doubt maggie thatcher (love or hate her) would be electable in this day and age - nor I suspect Winston Churchill.

well Patrick,

we have got to come up with something........Ads wont let us give up.........thinking caps on I am afraid.......

Regards

Norman

<>

That assumes that lack of regulations is the problem. It isn't. It's the lack of enforcement.

So, I ask again: Of what use are more regulations when the existing regulations are not being enforced?  

I agree that we should strive for workable solutions but how can we do that if we don't have a grasp of what the problem actually is?

Instead we seem to continually grasp for the easy option of calling for more regulation  - which won't be enforced either - from the very people who are responsible for the lack of enforcement of the existing regulations? Why? What fantasy world is it that we're living in that believes that these puppets will enforce the new laws any more diligently than the existing ones?

As a result, we continually fall for the illusion that something is being done with these endless discussions about more regulation instead of demanding, unconditionally, that existing laws are enforced vigorously when broken - no matter who they are or whatever excuses they conjure up.

Ads; JD01 is exactly right. The regulations are there (albeit maybe not broad or far reaching enough - although as he says, what is the point of more regulation if those in existence arent being enforced).

Every time a new layer of compliance is introduced in financial institutions they employ more people to develop concepts and products that while they do not break any regulations they circumvent those in existence. I worked for 25 years in the City in an interbank dealing room on a currency lending desk. Initially banks were lending physical cash to each other via the interbank market. Their compliance teams had strict benchmarks and "lending lines" which determined whether they could lend to another bank or not. Rarely were these breached although if the borrowing bank had the right profile and credit rating it was possible to get an extension of the limit ...... in those days it would have been hard for a lending bank to decline Barclays, Nat West, JP Morgan, Bank of America, UBS, BNP,  (the list goes on and on). These limits also had a geo-political element to them as well - in the early 80s very rarely would a bank lend to South American banks for instance and usually it would only be short term.

All physical lending was on balance sheet and thus had an impact on any banks facility to do business and dictated strict limitations.

In the mid to late 80s "financial engineers" started to develop off balance sheet instruments such as forward rate agreements which was effectively a lending transaction whereby there was no physical exchange or repayment of principal. To that end traders were effectively speculating on where a specific interest rate would be in three, six, twelve months time etc. Their only balance sheet exposure was a daily "mark to market" whereby the trader had to assess whether their "bet" was making or losing money in relation to the actual market for three months cash deposit. From there developed more exotic instruments (all off balance sheet) such as interest rate swaps, options, futures, spreads and credit derivatives. In fact I use the term exotic loosely as these are probably to be considered pretty plain vanilla these days.

When interest rate swaps started to be traded I recall a colleague telling me he had finalised a transaction that had taken about three weeks of negotiation from start to finish - the bid/offer spread had started about 25 points wide. When I left the market in 1997 (roughly ten years on) dealing rooms were processing thousands of these transactions daily......by then the bid/offer spread was probably 0.25 points wide. 

If you consider that we are talking about every major global currency (it doesnt simply stop with sterling) you will understand the size of the situation (I am reluctant to call it problem). You may not be aware but most local councils in the UK have a Treasury Operation - where they use the markets for cashflow purposes to lend or borrow according to their budget requirements. No point having a current account surplus earning next to nothing if money can be managed better by placing it on deposit with a secure institution at money market rates. However in the early days of IRS local councils started to place trades in swaps --- I believe that Lambeth Council and Lewisham Council in London were close to bankruptcy over trades done with Parisbas --- whether this still goes on or not I dont know.

The important note is that if its off balance sheet then it has no impact on the banks ability to keep racking up trades - good or bad. Hopefully compliance monitors the bad ones so they do not become too much of an issue but frequently we hear stories where failsafes themselves fail - barings and Leeson, UBS, Soc Gen, BNP Parisbas, JP Morgan --- these are just the stories we hear about because the losses are so immense. Believe me there are many more that dont make the news.

Sorry I have droned on much much more than intended. Have a gander at the DVD Inside Job I mentioned if you can find it in your local store. It reinforces what JD01 says about the regulators ----- the scale of nepotism in the US is beyond the pale with US Treasury directors etc expected to police the very roles they were once circumventing themselves etc. If it cannot be controlled in the States then its unlikely it can be controlled anywhere. The rules are there but the rules have been and will continue to be broken because the people that hold the lid to the cookie jar were once in the jar themselves ----- or those in Government frequently owe too much to the people holding the jar. Kleptocracy is alive and well and living throughout the world ---- in moderate, right wing, left wing, democracy or dictatorship ----- it has always been there and I suspect always will be ---- just that in the modern world we are all able to be so much more aware of the imbalance and injustice.

Therein lies the problem of layers of regulation -- if the individuals that control the regulators have too much to lose themselves then they are less likely to ensure the necessary controls are adhered to.

Believe it or not but some of us JD01and Smiley are doing exactly that behind the scenes as well as pushing for workable reform and better regulation from many within the real estate industry in Spain, making suggestions, highlighting good practice etc, and are constantly bringing this fact re lack of legal enforcement to light to the powers that be and networking as best we can, looking for support along the way from Jo public and intellectuals who better understand the system. Striving for respected vehicles to further the cause.

But until such time as this is backed up by the majority via proactive and determined efforts, nothing will happen. Talk and rhetroic is easy, its action that matters, and bringing to light this undeniable fact that lack of enforcement (that to be honest I've been banging on about for ages now!) is the problem needs to be the priority. So we are at one here JD01 and Smiley (albeit I am quite ignorant of the details of the financial system as you described so eloquently).

But how are you practically going to assist in this endeavour? I can't tell you how much correspondence and networking and researching Keith and others like us are doing (sometimes with higher profile, sometimes behind the scenes) to bring this to the forefront of debate   Are you aware for instance of the World Justice Project? What do you suggest as a practical means of moving forward on this?

Likewise have you aligned yourself with any proactive group to influence and effect change from within with regard to these major problems within the financial sector and the moving of goalposts that JD01 has identified ? Do you not envisage that this knowledge that you have acquired can be used to good effect to strive for workable reform, to influence opinion, to pull together others in your discipline, to motivate them into action as a means of ensuring enforcement is achieved? 

Sorry if this sounds too pushy, as that is not my intention, merely to point out that raising ones head above the parapet requires enormous effort and dedication and belief that as a larger respected group, positive change is possible.

Once again I call upon Keith as a prime example of such commitment and dedication to prove that small steps can make a difference, and can disprove those who suggested from the outset that legal action would never be successful. (OK it’s dependent upon legal enforcement, but at least this high profile case has brought attention to this matter and all eyes will be on the enforcement process now). In fact preliminary enforcement as I understand it is now in progress.

All things start from small endeavours and I really hope that those such as your goodselves, who are kindly taking time out to educate us, will believe that they too can play their part in some form of higher profile practical means of ensuring that lack of enforcement is brought  to light  to as many as possible.

Have you for instance considered starting a petition to the European Commission and/or the World Justice Project as a means of rallying support? Have you considered documenting your knowledge and concerns to the likes of AVAAZ as another vehicle of rallying support? Just a thought……..

But many thanks in the interim for the continuing educative postings!

p.s. I already have the DVD, bought me by my dear nephew, yes one of those millions of youngsters who will be directly affected if nothing is done about this.

Not sure who Keith is ads.

As to regulatory reform within Spanish real estate ..... I rather suspect that Spain thinks it has bigger problems to focus on and until they can get the legal framework sorted out for the simplest cases so that given statutes are adhered to (which would essentially mean re-writing most legal books) so that all the grey areas are removed, while I admire your pushing for those reforms I think you may be beating your head against a brick wall.

One specific springs to mind over the farcical situation regarding application for licence of first occupation - the tacit acceptance was (and set under precedent spanning decades) that if the application was not rejected within a 3 month timeframe and written acknowledgement was received from the town hall that it had been applied for it was deemed as approved. In the autumn of 2006 (I think but maybe 05) the Junta de Andalucía issued a very public statement via all various media with letters written to developers, Notaries, lawyers etc - that LFO issued by silence of administration would no longer be considered as acceptable for transfer of Title Deeds or mortgage. During that time I recall conversations with thirty or forty lawyers who took the line that the Junta could not break with tradition and were themselves breaking the law. The ensuing arguments went back and forth and I think that it was only 2011 that it is now to be assumed that if there is no response within 3 months it should be considered declined. Why not instead simply state as in most logical countries that one applies for the LFO and waits for its approval ......... oh yeah that’s right Spain ain’t the best when it comes to bureaucracy and if your application happened to get to the top of the pile as the individual went for coffee it would likely fall to the bottom of the pile again.....

While Spain needs a massive shake up in real estate law, in criminal law, in fact probably every type of law they also need to attend to their systems and processes. The problem starts with the cultural difference rather than anything else I think ...... and to be honest the culture is one of the many things that are so attractive about the Spanish. Employment law probably needs to be the first step because aptitude, ability and importantly ambition tend to be regarded little differently to an employee who is a clock-watcher, permanent sick note etc. While I am a huge advocate for employee protection there needs to be a balance and employers need to know they can fire someone if they have just cause -- without the wrath of social injustice falling upon their heads. It might actually help to alleviate some of the current unemployment issues as well.

As to changing the banking system. In an ideal world, appropriate regulation should be returned to the Bank of England in the UK - the banks run rings round the FSA. Who should regulate them in Spain is open to debate - it will probably be the Bundesbank soon anyway. I believe steps are afoot to action this in the UK. As to getting the Govt to change its mentality towards them ........ we have already seen clearly how weak either party is when a bank suggests it will move its base of operations to another centre if beneficial tax status is removed. The financial district contributes such a massive amount to the British economy when it comes to balance of payments that Tory or labour, green or red; no Govt is really going to upset them.

Don’t get me wrong - my background is the City - I come from a bonus culture and I am in favour of it (puts tin hat on!!). The difference is that during my time, I earned a bonus if I over-performed my targets (I wasn’t a banker - I was a broker and we are probably perceived in a darker light). By the mid 80s I earned a six figure income which was made up of a generous basic.......but much more came from bonus. What I think is wrong is that bankers seem to be rewarded as equally for failure as they are for success (certainly that doesn’t happen in broking houses even today - they can’t wave a wand to magic up the money). Again to be controversial I believe that greed is good – it makes the world go around and means that we don’t all live in an environment where failure is as acceptable as success – in that event mediocrity prevails and we would not even have invented the wheel if we were made that way.

If I thought that petitioning Westminster for tighter enforcement on banks would do any good then I would willingly do it. I rather suspect that if Brussels was unable to make a difference last year at the summit on the Euro then they would take little or no notice of me (a decision that was correct in my belief) – Eddie George was opposed to the shift of power to the FSA initially and I believe Mervyn King has lobbied for the return of it ever since he took over at The Bank. Hector Sants (ex investment banker) is due to leave his post as CEO of the FSA shortly (originally appointed MD with responsibility for wholesale and institutional markets) – understandably he hasn’t consulted me on where he is going – I believe he has recently warned that The Bank of England seems to be garnishing too much power – one wonders if there is a hidden agenda assuming he is returning to his roots in investment banking.

Somewhat depressing, but excellent posts, JD01.

Ads, it's not just the young people going to be affected by this and paying for it, ask anyone within sight of retirement. Every day our retirement prospects get worse and worse with low interest rates and annuities in their death knell. We have  achieved the goal that was supposed to provide for our retirement but every day the news is worse, that £100000 pension pot that once  bought you a £15,000pa pension (level payments) is now paying less than £6,000pa and apparantly thats about to reduce further due to EU regs. The exception of course is public service pensions, a £15,000 pa inflation proofed public service pension would require someone in the private sector to have a £600,000 pension pot. These scheisters (politicians and bankers) have destroyed the lives of so many people and yet not one has been prosecuted. I truly despair.

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I applaud you for your efforts to effect change but it's the right action that matters.

Action for action's sake is no better than talk and rhetoric. In fact it may be worse if it's playing into their hands of demanding things that they're only too willing to spend inordinate amounts of time and money discussing (i.e. more regulations that won't be enforced). That wasted time keeps up in false hope of real change. 

I liken it to demanding the increase in price of alcohol to address the violence and binge drinking in the UK. The people making that demand think they're asking for the right thing. Their heart is in the right place but their solution is not - and proposing it does more harm than good because it wastes time in the false belief that it will be a cure that would be better spent addressing the root causes. Alcohol abuse and the rise in anti-social behaviour is a symptom of much deeper problem and is the result of that problem - not its cause. 

Similarly, the increase in abuse of power and position is the result of a problem - not the cause. As such, it will not - can not - be eliminated by asking the abusers to introduce (and enforce) legislation against their own abuses. Self-regulation instead of independent scrutiny doesn't work for less important issues. So, it is very unlikely to cure an ill of this magnitude. 

I agree with much of what Smiley wrote but I think we're way beyond Wall Street just pushing the boundaries of existing laws to game the system and get an 'edge'. Campaign financing, lobbying (which is just a euphamism for threats and bribes) and the revolving door between Wall Street and the Whitehouse is now so riddled with corruption that it's the Financial Industry who tells the Fed, the Whitehouse, the Senate and most of Congress which laws will be passed and which will be repealed. 

That's a whole different world from just creating exotic and complex derivatives. Their unrestrained growth is bad enough but now any and every law that seeks to curtail their unlimited misuse is immediately thrown out or overturned soon after.   

As I said before, I applaud your desire to effect change. Just that, makes you unique but I fear you're fighting the last war and it isn't the one we're in now. I don't share the view that a Central Bank is the solution. I tend to agree with (most of) these sentiments on the subject.    

http://www.truthandliberty.com/Quotes_on_Money_and_Fed.html 

Others, in more powerful positions than we have tried your way and failed. It came as quite a shock to me once I discovered just how deliberate the current events are. e.g. Alan Greenspan (He of the honorary knighthood no less) had this to say on the subject of 'fraud'.

[Greenspan] “Well, Brooksley, we’re never going to agree on fraud.” (Brooksley Born was the head of the CFTC - Commodity Futures Trading Commission at the time)

[Brooksley Born] “Well, what do you mean?”

[Greenspan] “`You probably think there should be rules against it.”

[Brooksley Born] “Well, yes, I do.”

[Greenspan] “You know, I think the market will figure it out and take care of the fraudsters.”

Greenspan didn’t believe that prosecuting fraud was something that needed to be enforced, and he assumed Brooksley probably did.

The documentary about her story can be watched here - I urge you to watch it: 

http://www.pbs.org/wgbh/pages/frontline/warning/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

Brooksley Born honestly believed that the people in power were unaware of the situation she uncovered and that their apathy was borne of ignorance, lack of understanding and lack of regulations. She wrongly believed that alerting senior members of the Administration and the Fed was 'taking action'. It never occurred to her that she had nothing to say that they didn't already know and, to her horror, she discovered it was all very deliberate. 

That's the same war you're trying to fight - in the same way - and making the same incorrect assumption that there is a lack of knowledge in the halls of power and that there will be a 'genuine' will to reverse this by asking for more regulation.   

This message was last edited by JD01 on 18/06/2012.

This message was last edited by JD01 on 18/06/2012.

This message was last edited by JD01 on 18/06/2012.