Open letter to Russell Brand from RBS worker

[Schoolaroundthecorner]

So apparently Russell Brand stormed into RBS London headquarters and decided to hassle employees about their pay and bonuses. Now I know Russell is on a crusade at the moment against capitalism and bankers might have seemed an obvious target but he's really getting annoying now (I know plenty of people found him irritating already....). I'm not a banker, not working in a job with big bonuses but I have sympathy with these workers, many of whom are probably not the fat cats he paints them as. In particular I thought this open letter made it clear how self-aggrandising the whole stunt was and effectively punctured Russell's new 'man of the people' persona.

thedailyedge.thejournal.ie/russell-brand-open-letter-1839456-Dec2014/

Just to broaden ‘the banking crisis blame’ with some facts, lets look at why some people say ‘blame the American’s’, after all, it was the American Bank exposure to securitized Sub Prime (low quality) mortgages, that triggered the crisis, by closing the inter-bank markets – as western banks worried about the contagion of American Banks with potentially huge open repackaged Sub Prime financial exposure, cut off their lending/borrowing business with one another, effecting the artery of daily global capital market business, affecting everyone.

The packaging up of Sub Prime mortgage loans to the poor, by U.S. government agencies, had been going on since the 1930’s, but look at this timeline of the U.S. government encouraging those agencies (and others) to massively increase such poor quality lending, especially in the 2001 to 2004 section.
“SubPrime crisis impact timeline.”
en.wikipedia.org/wiki/Subprime_crisis_impact_timeline

The PROBLEM was that too many U.S. lenders (often external mortgage brokers) RELAXED the borrowers credit criterion, loaned to low income citizens with little chance of maintaining the repayments – thereby ensuring the ‘mortgage default rate’ in huge repackaged, then securitized into bond issues (and sold to investors) was to be way above HISTORIC default rates, built into the price.

As investors of these securitized Sub Prime mortgage bond issues had the right to PUT BACK these bonds to the American banks if default rates rose above historic levels – the U.S Banks POTENTIALLY had hundreds of $$$billions of exposure, should the default rates rise, as the U.S. was still deep in a honking great recession.

UK banks balance sheets were by now way too large and therefore needed the now closing inter bank market to function. Northern Rock had gone from being a small mortgage lender to one of the largest USING the securitization of mortgages to get them ‘off balance sheet’, the Halifax was doing the same with about 50% of all mortgage loans – so WHEN THE SECURITIZED MORTAGE MARKET to investors of good quality mortgages closed as well (as the Sub prime), they had already granted mortgages they were no longer able to fund, either by selling them on, or borrowing via the inter bank market.

To UK banks, securitizing mortgages was the best of all worlds;the banks customers were happy, they were gaining market share and making a ‘turn’, AND it was less risky as bond INVESTORS rather than their shareholders, bore much of the risk.

When from 1997 to 2007/8, mortgage lending rose from £21 billion a year to £115 billion a year AND the average price of a home went from £73k to £232k - were the citizens (and UK government needing the BTLet market to take up the housing slack and enjoying the ‘growf’ from the tax receipts) angry with the banks then?

THIS is why just bashing the UK banks is non productive, as there was ‘a series of unfortunate events’ away from their control, that if DID NOT happen, would have meant the possibility of SOMEONE in government SEEING the problem, and slowly deflating the credit/debt financial bubble, before it was too late.

I wonder if Russel ‘kin Brand takes any of that into account when requesting an appointment with the big RBS knobs?

This is interesting though, Iceland seems to have maintained, if not increase welfare, whilst being quite clear in holding those responsible to account:

www.bbc.co.uk/news/business-30121591

Former Landsbanki boss Sigurjon Arnason has been sentenced to 12 months in prison.

An Icelandic court found him guilty of market manipulation in the lead up to the 2008 financial crisis.

"This sentence is a big surprise to me as I did not nothing wrong," Sigurjon Arnason told Reuters.

The former chief executives of Iceland's two other big banks, Glitnir and Kaupthing, have already received jail sentences.

The three banks imploded in 2008 after acquiring assets worth approximately 10 times the size of Iceland's economy.

A Reykjavik court said that nine months of Mr Arnason's sentence would be suspended.

Fraud
Two of his colleagues - Ivar Gudjonsson, a former director of proprietary trading, and Julius Heidarsson, a banker - were also convicted and sentenced to nine months in prison, of which six months would be suspended.

Unlike other Western countries, Iceland has pursued prison sentences for the chief executives and others who were involved in the 2008 financial crisis.

Hreidar Mar Sigurdsson, the former chief executive of Kaupthing - formerly Iceland's largest bank - received a jail sentence of five and a half years - the heaviest sentence for financial fraud in Iceland's history.

The country's former prime minister, Geir Haarde, was also found guilty of negligence leading up to the crisis but was not given a jail term.

They also haven't "lost" the best people to bonus-paying banks, but have a stark warning to country's like us on being too dependent on financial services.

www.bbc.co.uk/news/world-europe-20936685

Iceland's 'tenacity' lifts economy out of crisis

The medicine was tough and the response immediate. Growth collapsed, thousands emigrated and Iceland became an outcast in the international financial community having been downgraded to "junk" status.
But then in the middle of the dark and cold winter of 2010 something happened. Iceland's exporters, which had struggled to recruit skilled graduates because they were being poached by bonus-paying banks for a decade, got the engineers, scientists, IT graduates and brainpower that they needed.

Ossur, which manufactures the prosthetic running blades that athlete Oscar Pistorius has made famous, is one company which has benefitted from the crisis, now finding it easier to recruit skilled staff than during the reign of the banks.

Its CEO Jan Siggursson has a message for Britain with its still dominant banking sector: "Don't depend on a phoney economy. It was not real and we understand that now. This was complete bubble. The financial business is necessary, don't get me wrong, but it is a very dangerous business because it sucks the best and it's not real. And the longevity of the financial business is not there. It's very easy to copy and it is not long term."

Temp05978 ….. you have raised some interesting counters in order to put UK bankers ‘up against the wall’ - for what was in the main ‘commercial decisions’ within the lowest banking risk environment since god knows when – and I’ll try to answer them, point by point.

As far as I can see, you are using Iceland and their banking crash/welfare maintained as a comparison to ours AND suggesting the UK relies too much on banking AND disagreeing with the fact that RBS (and therefore the UK taxpayer looking to sell RBS at a profit) has suffered from populist/government interference in RBS’s employee remuneration options.

Iceland;Economy/Banking Crisis. Iceland with a population under 350,000, it’s annual GDP worth between $10-18 billlion (when the UK spends north of £800 billion a year) apart from fishing and power generation, it STILL relies on ‘Services’ for over 2/3rds of its economy – but as we are overtaking France in terms of GDP around 5th in the world, Iceland is over 100th – so there is no sensible comparison between the two economies.

Icelandic banking, similar to the U.S. and U.K., had their financial deregulation in the early 2000’s, similar to its peers Icelandic banks massively leveraged up their balance sheets to dangerous levels, relying even more on the inter-bank market for shorter term funding, hence their collapse in 2008. The main difference to the U.K. (and U.S.) who’s main problem was they lent too much on demand to UK companies/individuals, the Icelandic Heads/directors were guilty of all sorts, the ‘market manipulation’ cited, lending back to themselves, lending to favoured businessmen to buy overseas assets, embezzlement – all from a country the size of a large UK town, and worth sod all to a jam tart.

Icelandic welfare/benefits, while I’m not convinced that all their benefits/welfare were not only maintained but individually increased, as longer term ’stuff’ like pensions would have to be made more affordable for a State with an ongoing financial crisis, without even knowing the rate of increases over the previous decade, Iceland the State, was in a totally different state (to the UK) going into the crisis.

As not only did Iceland have a low sovereign debt to GDP ratio, Iceland was also running a decent annual budget surplus, and as Iceland with $160,000 of debt per resident told most oversees depositors to go screw themselves, they (the State) had far more options than in the UK.

In the UK although our finances were budgeted to go into a SURPLUS in the early 2000’s (and did so), we went on an unprecedented in Europe annual government tax & spending spree (rather than paying down our National Debt as others did), so while Iceland had a healthy 2008 government SURPLUS to spend, the UK by 2010 had an annual £157 billion overspend/DEFICIT to be sorted out, with no firm plans to do so.
www.dailymail.co.uk/news/article-389284/The-80-tax-rises-Labour.html
www.economicshelp.org/blog/5509/economics/government-spending-under-labour/

Furthermore, within that government increased spending, UK benefits/welfare in a time of record UK employment, was rising faster than Europe, and fell back slower.
www.telegraph.co.uk/news/politics/10574376/Graphic-Britain-outstrips-Europe-on-welfare-spending.html

I would therefore suggest that it would be unfair to both blame the UK banking crash for any cutting back of State welfare/benefits, when reforms were long overdue before the UK State got in such a state – and all the so called ‘cuts’ or ‘austerity’ has achieved, is slowed the rate of INCREASE, not decreased the annual bill.

Part Two.

Firstly may I again clarify the difference between the global investment banking/capital markets, and our domestic banking e.g. High Street banking, as the former is responsible for £trillions each year of government and company refinancing, trading and the recycling of global capital surpluses to global borrowing demand – whilst our High Street banking is not, it does what it sez on the can, the main overlap is a local bank needs plain vanilla investment banking financial Swaps, in order to offer Fixed Rate mortgages and similar basic financially engineered products.

I say this as there is no government directive or policy that will STOP the global capital markets functioning, it would be stupid to try and stop world growth; the question for a government in a 24- hour global trading environment, where traditionally the main centres were New York, London and Tokyo, is generally how can OUR country be one of those three main trading centres, not ‘let some other country have the prestige, employment and £65 billion annual tax receipts’.

If the Investment Banks, the large Fund Managers and smaller UK based financial institutions all moved to Paris or Frankfurt, it would still be the same talent drain on bright UK people, as evidenced by bright young people from all over the globe, currently working here.

Furthermore, if the European investment bank head offices were based in, and trading from Paris or Frankfurt, it wouldn’t make our banks any safer in any similar systemic global liquidity/inter-bank market crash we experienced from late 2007.

Iceland is hardly an investment banking centre, and with a population that might fill several UK football stadiums, has a smaller talent pool. The UK High Street and Commercial banking industry would still need bright people even if Investment Banking moved to mainland Europe.

OUR problem is while this country currently needs 75,000 Engineers, the UK was turning out a small army of ‘well rounded’, happy and indebted specialists in Media Studies (and similar worthless subjects), into a UK economy desperately needing a medium to high skilled labour force to provide international companies based here to compete with the world.

The UK blessed with the employment and tax receipts from Investment Banking had the best decade for a century (1997-2007) to use those proceeds to reform and invest UK social/infrastructure spending, and BALANCE the STRUCTURE of the UK economy not to RELY on the City/Financial Services, but the UK went in the opposite direction.

Yes the money was massively increased and spent (see the link in my previous post from economicshelp), but all it ‘manufactured’ was an unsustainable or “phoney economy” referred to within your last post.

Far from increasing the real economy, manufacturing/industry fell as a percentage of our economy from a static 22-23% from 1979 to 1997, to around 12% in 2010, with many of those jobs lost BEFORE the financial crash began.
www.independent.co.uk/news/business/news/million-factory-jobs-lost-under-labour-6150418.html

The Coalition has talked about the dire need to ‘rebalancing the economy’ since 2010, look at the FORTH chart on this Bloomberg link below – where from 2001, growth in the governments payroll (public sector) significantly outgrew the employment of the rest of the economy (private sector) PAYING for that oversized government and all our important services e.g. the NHS - is there any wonder we had such a large annual overspend/budget deficit by 2010, and dare we wonder if the UK had just stuck to that business plan like Mr Micawber, waiting for ‘something to turn up’, where would we be now?
www.bloombergview.com/articles/2014-12-22/uks-holiday-cheer-in-four-charts

In conclusion; the UK banks were by no means the cause of the western financial crash, as on what appears to be a once in a century financial ‘event’, I repeat my much earlier point, it was a combination of government financial deregulation action, financial regulator inaction, banks lending more than they could afford and companies and consumers borrowing more than they could afford, provided a ‘perfect financial storm’.

What has made it far worse for the UK was the extent of the structural imbalance of the economy, the extent of our fixed overspending/annual deficit (previously financed by the proceeds of City investment bank profits, UK bank balance sheet growth, credit, debt, speculation and overspending £30 billion a year plus in the ‘good times’).

As this neither allowed a responsible UK government by 2010 the option of doing NOTHING to cut our annual £157 bil over spend, or wait for an unbalanced economy ‘to turn up’ - in order to provide more private sector jobs than those already lost, and stop the (accumulating annual deficits) National Debt increasing, never mind START to pay it off.
www.nationaldebtclock.co.uk/

Just read this now.

Oh, for goodness sake, gals... I'm a woman, and I would happily call ANY woman who chooses to have sex with Russell Brand a slut or a bike. That guy shouldn't get any IMHO, but there seems to be plenty of weird women who don't have brains.