Banker Bashing

Banker bashing is a gratifying sport, and any politician on his ‘downers’ can take part and watch his approval rating rise.

So, President Obama has signalled that he’s going engage in a bit more, by restricting what banks can do and that has been applauded on both sides of the Atlantic. In the UK we’re delighted becuase it means London isn’t the only place bankers are being bashed.

I’m just going to change the subject a bit – I blogged a while back about there being a number of new lenders queueing up to enter the UK mortgage market – it’s just what we need, the lack of competition in mortgages is ensuring that rates don’t fall, in fact, they are rising and that’s no good for any of us!

So, it’s widely agreed that we need more mortgage companies to stimulate competition and get lower interest rates available to everyone and help the recovery along.

This is where I join up those two points.

The new lenders need the backing of banks. If they don’t get that, they’ll have no money to lend, and there will be less competition for mortgages.

If there is less competition for mortgages, our mortgage rates won’t fall and our housing market and economy won’t recover so well.

Banker Bashing is cutting off our noses to spite our faces. 

Banks need proper, tough and intelligent regulation – dealing out revenge for political ratings isn’t the same thing.

Living with an IT geek taught me today…

…that the stuff IT geeks say are often really sensible.

Today, I have seen that whereas I need a new laptop every year or so, Di has had the same laptop for 4 years and the one she gave to her cousin 4 years ago is 10 years old and going strong. That’s because she actually does the things IT geeks tell us to do that we, or certainly I, ignore.

Like:

I know I have been told to plug in the laptop fully, before turning the power on at the wall and then, the laptop.

I know I have been told to install anti virus, but I haven’t for a long time becuase it used to slow my computer down.

I noticed today that Di brought a CD in from the (cold) garage, and wouldn’t put it into her CD drive for 10 minutes becuase condensation might get into her computer.

She carries her laptop properly, apparently hard drives have many layers, something like an onion I suppose – if they didn’t they’d be super thin, but the size of a football pitch. Anyway, those layers need to stay apart and since they are mere 100ths of a mm apart, they need to be respected.

I need to defrag more often.

I need to close down the laptop properly, using the buttons provided, not the off switch.

However, the means to maintaining battery life are still a mystery to me…

The best place to get a new recipe.

Recipe books always have the chef’s favourite recipes, or should I say, they have the chef’s ‘next most favourite’ recipes – presumably the stakes were highest with their first book, so the really good ones will be in that book, and it’s downhill from there.

On the other hand, if you see an ingredient, check out the back of the packet – a great deal of money is spent on product packaging – designers, marketeers, researchers etc – they aren’t going to blow it all by putting a duff recipe on the box.

Consequently, a while back I had found a recipe for a monkfish and grape curry, it was delicious. Actually, as I type that, I think it was for Chicken and grape, but I lived with a veggie at the time and so it needed adapting.

Tonight we had Carmargue Red Rice – Red Rice with asparagus and sugarsnap peas in a dressing of coriander, red wine vinegar, parsley garlic and onion. I topped it with some  Tuna steak that I’d marinated in chilli, coriander and lemon juice and seared for just 40 seconds each side, then I ripped it in half, so the inside matched the rice! It was beautiful.

Apart from the tuna, the whole thing was a recipe on the red rice  packet.

You will often see me wandering around Sainsbury’s reading the back of a box and buying the ingredients…other supermarkets are available, but I get a 5% discount at Sainsbury’s so despite the poor checkout management and stock control I still shop there.

7 sizes that you use but you don’t know…

I was reading a book about endangered species last night and it brings up the subject of sizes.

In the book, they are talking about the Amazon rainforest and the idea that an area the size of Belgium was being deforested every year.

The Belgium is in the metric system and was first used in 1995 by ABC news in the above example. It’s an odd example for an American broadcaster to use as it’s estimated that only 7 people in the USA could find Belgium on a map, but if you are american and need to know, Belgium is about the size of Maryland. Anyway,  it suited the mainland  Europeans and the Belgium was quickly adopted into the metric system  In the UK, we had the imperial system of measurement and so you measured very large areas using the Wales.

A Wales is 8000 square miles (8023 to be exact) or 20,000 square kilometres (20779)

A Belgium is 12000 square miles or 30,00 sq kilometres so is somewhat bigger than a Wales.

The Belgium is replacing the Wales and there doesn’t seem to be much protest about this which is strange. Happily, we still retain many of the old imperial measurements.

2. Size: The Football pitch

This is curious – if you’ve watched football on the TV, you’ll have heard commentators talking about a wide football pitch, or you may have noticed some goalkeepers get superhuman powers and are able to kick the ball the full length of the pitch. This is because a pitch can be of different sizes – the width has to be between 45 and 90 metres, and the length has to be between 90 and 120m.  This means a 45 x 90m pitch is possible, or a 90 x 120m pitch, or weirdly a square 90 x 90 pitch. The usual size though is 105m x 68m.

3. Height: The Double Decker bus

A popular way of measuring height, this unit is defined by the UK department of transport as 14′4″  or 4.4m. The UK DoT have changed the definition of the maximum length and width of a standard double decker bus something like 40 times in the past 100 years, but the height has remained fairly constant and is more restricted by bridges than beaurocracy. Other measurements of height from the imperial system include:

• The Nelson’s Column – 185ft or 13 times the height of a double decker bus.
• The Blackpool Tower – 520 ft or 36 times the height of a double decker bus.
• The Big Ben – 316 ft or 22 times the height of a double decker bus.
• The St Paul’s Cathedral – 354 ft, or 25 times the height of a double decker bus.

There is a convention that a building unit of measurement should only be used to measure other buildings.

4. Volume: The Olympic sized swimming pool

This is a 50m pool, usually 8 lanes (16m) wide and  2 meters deep and the measurement is used to describe volume, so like a pint or a litre, but much bigger. An Olympic pool is much bigger than a regular pool which is 25 x 10 and is only 2m deep at the deep end. It is 2.5 million litres, 660,000 gallons or 1/200,000 of a Sydharb. A Sydharb, before you worry, is the volume of water in Sydney harbour.

5.  Weight: The Elephant

This is easy, it’s about 6 tons.

6. Time:  2 Shakes of a Lambs tail

Believe it or not, this both metric and imperial – “2 shakes of a lambs tail” was a shorter period of time than “a moment”. However, the nuclear engineering community has adopted the Shake as  10 nanoseconds.  In IT, the ‘Jiffy’ has also been metricated and is now 0.01 seconds but it used to mean any unspecified, but short, period of time. The Jiffy almost became standardised in the early 20th century as the period of time it takes light to travel 1cm but it didn’t catch on.

7. Energy: The Hiroshima bomb

This is mostly used by geologists to measure volcano’s and asteroid impacts. If this unit of measurement is used it means ‘big’ and quite often ‘bad’. Probably that is all you need to know.

As a final note, I found that a Parsec is used in astronomy to describe long distances and is about 3.26 light years (in miles it would be a 2 with 14 zeros after!) – it’s handy for measure the distance between stars and galaxies. There is also a measurement called an atto – which reduces size, in the same way as “centi” in centimetre means 100th of a meter.  An “attoparsec” is about 3 cm – about the length of the top bit of your thumb.

6 top tips for house insurance

The Sunday Times last weekend highlights cases of people being charged in excess of £100pm for their insurance for fairly standard properties – one was a bungalow and one a 3 bed semi.  In both cases there were alternative, similar policies available for one quarter the cost.

I have saved money people paying premiums for their insurance that turned out to high after I looked around for them, although the examples above were extremes.

However, there is no doubt – just because your insurance policy was good value 3 or 4 years ago, doesn’t mean it still is – do shop around. That’s top tip number 1.

Top tip number 2

You should be able to find policies that have unlimited buildings insurance cover, or £300,000 is another common limit – these are much simpler than having to set your own cover amount, which can easily leave you with a shortfall of cover, especially on older properties and terraced properties.

Top Tip number 3

Have a reality check on your contents insurance – £40,000 standard cover may sound alot, but add up the stuff in your lounge – if it surprises you, ask if you can get a higher level of cover – many companies do.

Top tip number 4

Many companies struggle to insure particular items – if you have an item that is a bit more valuable than usual, make sure it is individually insured.

Top tip number 5

I have one item that I was worried about – I called the insurer I chose and asked to speak to an underwriter , then asked about how they expected me to behave with my item. This discussion actually made me swap to a different insurer, the first had answers that entirely defied common sense.

Top Tip number 6

If you pay monthly, you don’t have to wait until your renewal date to change cover. Just do it.

This is what does my head in most…

…well, in my job anyway.

I’ve been to see someone who had asked for my help – a mother and son.

Her husband (his dad) died recently, with £50,000 life cover for his £175,000 mortgage. Her house is worth about £175,000 – he’d been drawing money out of the house to try to build his business.

She’s in her late 50’s  earns about £6,000 pa and is left with £125,000 mortgage.

So, her son who is in his mid 30’s has moved back  in with her to help pay the mortgage.

Here’s the thing. Life insurance isn’t expensive.

Especially not compared with the fact that he has ruined the lives of the 2 people he loved most.

That doesn’t seem right.

If you are reading this, and you are married and/or have children, please do the basics right. If you don’t know what the basics are, ask someone like me.

And no, despite the look of hope and pleading in their eyes, I couldn’t help these people other than getting them to check what benefits they may be entitled to.

EDF increase energy costs

There’s an article in the Sunday Times yesterday about energy prices – mainly about EDF increasing their prices. Increasing is a bit of a surprise when the wholesale price of gas and electricity fell 50% last year.

The Sunday Times recommend shopping around and many people will, which is good. And many people won’t because there is a feeling that whoever is cheapest now will be most expensive in a few months so there is no point.

And then there is the old chestnut that the banks use – obsolete accounts – old tarrifs that don’t get the cheaper costs – so Npower has launched 14 versions of it’s online tarrif since Feb 2006. Those on earlier tarrifs are paying £229pa on average more than later tarrifs.

If you are the shop around every 6 months or so, that is good, but beware, most providers are introducing exit fees.

My own recommendation when shopping around is to grab your latest bill, look at the unit costs. Compare these with the unit costs of what you are offered. Then you know for real if you are getting a better deal.

If this seems too much of a hassle, try a provider that is constantly in the cheap range. I moved to Utility Warehouse about a year before I became a distributor for them.

I find that for Gas and Electricty they tend to be consistantly amongst the cheapest and not at the expensive end of things.

And, if you take 4 services – gas/electic/phone and Broadband – the savings are excellent, especially if you normally have a phone bill above £25pm – I work from home and use to have hideous phone bills, but now they are negligible.

And since I am a distributor for them, and they don’t appear on comparison websites, please contact me – it’ll help to have your latest bills handy. If I can save you money I’ll tell you. If I can’t, I will too.

who’s paying the tax then?

The top 1% of the richest people in the UK pay 25% of all income tax recieved by the government.

The top 5% of the richest people in the UK pay 43% of all income tax recieved by the government.

They don’t like income tax being raised to 50% so quite a few are off to Switzerland, where is it boring, but has very low tax, and the tax rate is reliable, unlike the UK which appears unpredictable and populist. In December alone 9 Hedge Funds emigrated there and The Sunday Times predicts 150 more will have gone by April and there are comments that it won’t be long before we lose a big employer.

The same newspaper give this example of the tax the government will recieve from a bankers bonus of £200,000 – the bonus tax of 50% costs the company an extra £87,500, Employers NI is £25,600 Employee income tax is £80,000 (this year), employee NI is £2000. Total tax paid on a bankers £200k bonus? £195,100!

I learned something new about the weather…

Weather always interested me – I did a Meteorology O’level at school and got a C despite there being no lessons at all.

So, I follow the weather forecasts out of interest – like football fans do the pools, I see if my predictions of the weather are any better than the BBC – although I recognise that, like the pools, random guesses could probably do just as well.

My favourite place for getting weather information is www.theyr.com, a site based in Iceland – over the years it seems to have a better degree of accurancy than the BBC

Well, today I learned why.

There are apparently 6 providers of weather data – the MET office being one of them. Commercial Weather forecasters use the data from all 6, so have a better chance of being accurate.

The BBC have asked some commercial forecasters to bid to become the provider of weather forecasts to the BBC.

But not because they want better data – last week the MET Office failed to predict the bad snow, and last weekend they predicted ’something big and bad’ that never happened.

The BBC are asking for bidders becuase they have to been seen to get best value for money.

My forecast is that they will be “seen” to get bids and stay with the MET office, whether or not they are cheapest and whether or not they are accurate.

Why we should encourage bankers bonuses.

I saw someone today who’s nephew is a banker and is expecting a bonus of £7m. He made a couple of interesting points to me.

The first was that in order to make a £7m bonus he had to make ( and we speculated here)  something like £25m profit for his bank and in doing that made much more money for his customers. Now we don’t know who his customers were, but across the board they’ll have included most of our pension funds and that benefits all of us.

Possibly he’ll work for a nationalised bank and if that’s the case, presumably we prefer someone with the skills to make it £25m profit to work there, because it means the taxpayer debt will be repaid faster. Much better him, than say… me, – I would be happy to work in that world and I wouldn’t demand a bonus, I’d be happy for a paltry basic salary, say of £250,000. I would be very cheap, but I can’t guarantee I’d be very good and maybe the taxpayer debt would never get repaid.

And finally, if he gets the cash he’ll pay £3.5m in tax. He’ll then spend the other £3.5m with lots of people who will be glad to be doing some business.   Then there is the multiplier effect.

Here is a simple example of the multiplier effect.

It is the month of August, a resort town sits next to the shores of a lake. It is raining, and the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit.

Suddenly, a rich tourist, probably our banker friend,  comes to town. He enters the only hotel, lays a 100 dollar bill on the reception counter, and goes to inspect the rooms upstairs in order to select one.

The hotel proprietor takes the 100 dollar bill and runs to pay his debt to the butcher.

The Butcher takes the 100 dollar bill, and runs to pay his debt to the pig raiser.

The pig raiser takes the 100 dollar bill, and runs to pay his debt to the supplier of his feed and fuel.

The supplier of feed and fuel takes the 100 dollar bill and runs to pay his debt to the town’s prostitute that in these hard times, gave her “services” on credit.

The hooker runs to the hotel, and pays off her debt with the 100 dollar bill to the hotel proprietor to pay for the rooms that she rented when she brought her clients there.

The hotel proprietor then lays the 100 dollar bill back on the counter so that the rich tourist will not suspect anything.

At that moment, the rich tourist comes down after inspecting the rooms, and takes his 100 dollar bill, after saying that he did not like any of the rooms, and leaves town.

The example is a little bit too tidy, but it did turn $100 into $500 – in real life, people will save a little and so the $100 would slowly diminish.

But, if our man spends £1m of his £3.5m and buys a house, the seller of the house has £972,000. The estate agent has £21000 and the solicitor has £3000. The estate agent will be pleased and get his new signs made up (say £2000 to the signmaker) and new computers for the office (£5000 to the local IT guy) buy his wife a nice present (£1000 to the local jeweller, £200 to the dress maker) and he pays his secretary her wages (£1500), goes to the pub to celebrate the deal (£200) books a holiday through the travel agent (£2000) etc etc.

All of those places and people have benefitted, but there was also the surveyor and solicitor for the buyer and the staff in all the places he spent money – the secretaries, the cleaners, the HR people, the electricians who stick those labels on the kettles the wages clerks etc the barman at the pub, the seamstress at the dressmaker .  All of these people then have money to spend down at the pub, at the travel agent and the grocers.  So will the seller of the house and all those people help make the multiplier effect carry on.

You’ll have spotted my maths didn’t work out at the beginning there – VAT on the estate agents fees and solicitors would be £4000. Also stamp Duty would have been £40,000. Those both come back to the government as tax, which is good.

And so, bankers bonuses do our economy a great deal of good – they draw profits from the banks and put them into circulation and once they are in circulation they benefit every one of us. And the £3.5m in tax (plus the £44,000) – well, that gets spent on wages for civil servants, nurses, teachers etc, and they spend it too – so that multiplies as well.

To me, that’s interesting…