The credit crisis visualised

This is an interesting animated film on the origins of the crisis, it holds with the view that banks were only ever a part of the problem and not necessarily the sole cause. Central banks have a lot to answer for, as does all of society because when you stop saving and instead spend somebody else’s savings it means that eventually, when it comes time to repay your loans that not only is the money not there, but the productivity has likely suffered as well – income based on lending gives the artificial appearance of wealth but it is a mirage.

part 2

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Current account interest rates are set to drop

Banks have a pool of money called ‘zero rated funds’, this is the money that they hold for which they are paying no interest. Lots of current accounts fall under this category, and banks can figure out with time, the block that is there on a regular basis when you remove the marginal volatility in the funds held at any time.

Imagine you own a money shop and you buy in money and sell it too, in the till you know that no matter what  happens you always seem to have at least €60 in the till, that would be the equivalent of your zero rated funds (hope that makes sense!).

When banks lend they take these zero rated funds and mix them with money bought on the market to come up with ‘blended rates’. So while some money is costing 0% other money might cost 1.269% (that’s today’s 3 month Euribor ), you then get an average of these and depending on what the ‘blend’ or ‘mix’ is your …

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When an Irish CEO can't give shareholders value.

I write today regarding the CEO of Irish Life & Permanent TSB, Dennis Casey. He is an articulate and educated individual and driven as well, he has led the company to profitablity for many years. However one of his latest moves is to reduce broker commissions in the coming year, this decision was met with a lot of hostility by the broker market. The basis for it is apparently because of huge losses in the subprime market in the USA, but are the out of state investment decisions of any bank really the concern of anybody other than the banks themselves? No, of course not, but the fallout is passed on it seems.

People might talk about broker greed but it pales in comparison to bank greed! The proposal means that brokers can potentially lose the money they earn as a commission if the loan is changed any time in the first five years, and the average loan is currently lasting about five years so brokers will never be able to remain liquid because they will never know if a …

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When an Irish CEO can’t give shareholders value.

I write today regarding the CEO of Irish Life & Permanent TSB, Dennis Casey. He is an articulate and educated individual and driven as well, he has led the company to profitablity for many years. However one of his latest moves is to reduce broker commissions in the coming year, this decision was met with a lot of hostility by the broker market. The basis for it is apparently because of huge losses in the subprime market in the USA, but are the out of state investment decisions of any bank really the concern of anybody other than the banks themselves? No, of course not, but the fallout is passed on it seems.

People might talk about broker greed but it pales in comparison to bank greed! The proposal means that brokers can potentially lose the money they earn as a commission if the loan is changed any time in the first five years, and the average loan is currently lasting about five years so brokers will never be able to remain liquid because they will never know if a …

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Financial Highlights / Lowlights of 2007

Last year was a market full of ‘surprises’ and here is my list:

1. Affecting my own livlihood the most was the credit crunch. It spread from the US to the Eurozone Australia and then on to Asia.

2. The sub-prime fiasco, and I don’t use the word ‘fiasco’ sparingly – on that note I would ask banks to stop inventing things like SIV’s because it was the inability to value them correctly and the subsequent failures of same which kick started the whole thing. The sub-prime mess hit everything from wall street to London, here, there, everywhere and it even raised rates for all new mortgages in Ireland because the Euribor sat at 6 year high and refuses to drop as far as the ECB had hoped with the latest cash injection, it went from almost 5% to (todays) 3 month money price of 4.64%…. are we getting value for our billions? Does it even matter any more? The fact of the matter is that the likes of Citibank should have its whole board resign and they should have …

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