The Musings Of An Opinionated Sod [Help Me Grow!]

Bank Balance … Or More Accurately, Banks In The Balance …
February 2, 2009, 6:55 am
Filed under: Comment

[Top, L-R: Morgan Stanley / RBS / Deutche / Credit Agricole / Societe Generale]
[2nd, L-R: Barclays / BNP Paripas / Unicredit / UBS]
[3rd, L-R: JP Morgan / HSBC]
[Bottom, L-R: Credit Suisse / Goldman Sachs / Santander / Citigroup]

This chart is from JP Morgan – who are trying to say they’re good simply because they’ve lost less billions than everyone else.

Not the greatest ‘proof of professionalism’ I’ve ever seen but the data makes for interesting – and scary – reading.

And who is bailing out the ego maniacs?

Us. The people.

So in essence, we’re going broke helping the organisations who helped us go broke in the first place. How does that work and why hasn’t there been a revolution about it?

Seriously, are we the most apathetic generation in history – or is it that we are the only ones who know in the big scheme of things, we are an inconsequential irritant to the people in real power?

I know the banks bad behaviour goes deeper than just the responsibility of the banks … cultural materialism, shareholder pressure, Government greed all played a major part … but despite all that has gone on, I still don’t know where the responsibility starts and where the responsibility ends – because it seems to me, all the powers-that-be are doing is putting a plaster on the problem rather than treating the wound.

Letting banks have money to lend means nothing if the people have no security to borrow. Or maybe that’s the future of finance – corporate loan sharking – where they’ll lend to anyone but charge huge interest rates that you have no chance of ever paying back. Oh hang on, they did that already didn’t they!

Without wishing to downplay the importance of the current economic situation, we need to remember there are many, many more terrible things going on in the World – so while we worry about our loans/homes/jobs and lives, let’s not forget there are many people out there who have been worrying about their lack of health, homes, food, future for a hell of a lot longer than the relatively short time this financial crisis has been going on.

Don’t be a stranger to the rest of life …

38 Comments so far
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Are you officially now back Robert? I have to ask because you write so many posts when you claim to be away.

If you are, then I hope they continue in this vein rather than the “Nottingham newsflas” you brought to us last week. It was vrey droll, but these posts are much more interesting and represent you (and us) in a much better light. Plus Mary will like you more.

Poor JP Morgan. I know what they were trying to do but they slipped on a banana skin. For an industry that exists on confidence they accidently put both feet in their greedy mouths. And do my eyes deceive me or is this chart showing Santander is in a better position to JP? I would have thought they would be which is why I would have thought JP would not have featured them in their comparison.

Good post Robert. Long may it continue.

Comment by George


Misleading data me ol’ chum.

The numbers represent the diameters but it’s the area of the circles that the eye looks at.

So…..the ratio between the diameters is x/y while the ratio between the areas is pi(1/2x)^2 / pi(1/2y)^2.

The ratio between these two shows that the graphic exaggerates the market value of 2007 to 2008 by x/y.


Comment by Charles Frith

Don’t shoot the messenger 🙂

To be fair, the data does have some numbers attached to them – they just are too small to see on the pic I think. And can I say I once got 2% in a maths exam so whilst I appreciate your mathamatical genius, it means absolutely sod all to me – which is probably how the banking industry got to pull such a fast one on so many people, ha!

Comment by Rob

Nay worries Rob. I’m anti quant so really I read this first off David’s blog last week and Jeffrey Winter chipped in with the math.

I realise this means I read too much RSS 🙂

Comment by Charles Frith

No, it say’s you’re a bloody clever magpie …

BTW, just realised I’m STILL using the same calculator I had at junior school and I am pretty sure it’s still on the same battery – which says something – but I’m not exactly sure what!

[Texas Instruments TI-30 – which my friends at school used to joke was the size of an Acorn BBC bloody computer … ]

Comment by Rob

I hope you’re not getting the same quality of answer with it.

Comment by John

And featuring Santander isn’t so dumb – if you imply you’re the best when you’re not, you’ll get called on selective data. Here, they at least show they’re performing “better” than most of the other big banks. Their audience presumably is their customers and not the people who are paying for the bail-out.

Comment by John

They should still be going to jail though.

Comment by John

ah the very people who created the economic mess are the ones most likely to profit from it. Congratulations to the banks for convincing us:

a) to use our tax dollars to enable them to pay their bloated executives ‘bonuses’ for being incompetent.
b) to use our tax dollars to allow them to lend us our own money and charge interest at 24% for a credit card or 6.5% for a home loan.
c) to use our tax dollars to fund their retirement not our own.
d) to lend them 700 billion dollars to save their arses with no strings attached, never have to pay it back and with virtually no conditions on how they use it.
e) but the cleverest trick by far is convincing us that they are necessary at all. Verbal Kint would have been proud.

Comment by martin

Lets be honest here, whether they feature Santander or not, no one is covering themselve in too much glory in this whole debacle …

Maybe it would be more apt if the graphs weren’t circles and made to resemble the toilet …

Comment by Rob

Maybe we are the most apathetic generation ever – but tell me, what can I do about the world global economic situation? Close all my bank accounts and keep my money under the matress?

I simply don’t know enough about the ins and outs of fincancial markets and I too have managed a 2% mark in a maths exam, so I am all ears. Is there anything I can do to make a difference?

Comment by Ben

Hi Ben – it was a question rather than a statement, but whilst we might not be able to manage the complex nature of global finance – we could all stand up to our Governments and demand that action against the guilty is more severe than having our taxes bail them out and leave them in the lives of luxury that many of them have got used to.

We could fight against the blatant favouritism towards banks over smaller business and society … we could insist our Government looks after the countries best interests not just the influential few … we could encourage investment in things that can better the people and the country rather than just see it as financial aquisition tools …

We could also ask ourselves stop being so materially obsessed and exercise a degree of financial responsibility … it’s a sad day when ‘bankrupcy’ is not seen as the horror it should be.

I haven’t got answers – and I know how I hate people who are quick to shoot without considering possibilities – but I stand in amazement how we are sitting quietly while decisions are made that are going to cost us decades before we get anywhere close to where we were at whilst the guilty can expect ‘normality’ [or a sense of it] in far less time.

I guess we’re all falling for the propoganda started by the bible when they said “the meek shall inheret the Earth”, ha!

Comment by Rob

A free market can benefit everyone. The problem occurs when a company interprets “free” as being an invitation to break legal, moral or ethical codes of conduct.

Naturally there are many who need to shoulder some of the blame for this economic situation, but let’s keep the spotlight on the financial institutions who are doing a sterling job of trying to hide in the shadows of responsibility.

This is a much improved post Robert, but the question is whether you will be able to maintain the standard?

Comment by Lee Hill

I guess Govts across the world don’t have any option but to bail out the banks. It’s the Govt who gave them a license to operate in the first place, framed laws and then let them break it. I think they had to save the banks with the tax payer’s money, otherwise banks wouldn’t be in a position to honour their own papers.

Consider this : you wake up one morning and go to your bank to withdraw your fixed deposits, long term savings or a part of you salary you’re putting aside for retirement , and the banker says “ sorry mate we can’t, haven’t got any cash left!!!”

It’s like robbery. The buggers had to be bailed out otherwise there would have been a public outcry.

I think I forgot what this post was about 🙂

Comment by Bhaskar

But Bhaskar – the scenario you paint has already happened to many people, hundreds – if not millions – of people all around the World.

The issue for me is that the economy won’t be bolstered just by giving the banks money to lend, it’s about giving society the hope and confidence that there is a future for them where investment will pay dividends down the line, not greater fear, pressure, concern and debt.

Just giving the banks money is akin to trying to train cats. If they don’t want it, it doesn’t matter what you do, nothing will change.

Yes, that oculd be the shittest analogy EVER!

Comment by Rob

Oh, I agree with you completely, I’m just saying the govt had no option, or let may say the easiest option was to give banks money. What after that .

Comment by Bhaskar

I think your second expression – ease – is closer to the truth.

That and the fact that they were in a race against the speed of [bank account] emptiness, ha!

Comment by Rob

I think its essentially down to one thing, regardless of how banks screw us over and how government screw us over:

The system was SO weighted towards the banks, that even if they collapsed we would have been fucked. A system designed to screw us out of our money is also partly responsible for holding our finances together.

Is it any wonder people are apathetic?

Comment by Rob Mortimer

I remember a quote someone said in the Michael Moore film “SICKO”.

Whilst I can’t remember it specifically, it went something like …

“When the Government are frightened of the people, things with purpose happen … but when the people are frightened of the Government, we sit frightened and demoralized”

Comment by Rob

The Republican motto

Comment by Rob Mortimer

Who is to blame? It’s a big question!

The bankers were operating within the rules governments set for them (unless they broke the law in which case they will be sort-of punished by the criminal justice process, in so far as anyone is ever “punished” for anything).

But why are the bankers anymore to blame than anyone who sold their house for more than three and a half times average salary? It was within the rules, so who can blame them?

And who is telling us to blame the bankers anyway? Since no real “narrative” appears in the media without someone placing it there and manipulating it.

That doesn’t mean the bankers should escape blame, but the politicians need to be in the dock as well, and the estate agents, and the conveyancing lawyers etc. And maybe also the ad industry for telling people they had to have lifestyles they couldn’t really afford (and probably didn’t really want in the first place).

But we are where we are.

The real fall-guys (I think) are going to be the Chinese since the western governments are deliberately letting the value of currencies (particularly the dollar) fall in value. As the Chinese hold billions and billions of dollars the recession is being paid for by China. Do they realise this? And what are they going to do when the penny finally drops that all their hard work and hard saving over the last ten years is evaporating? China is not a liberal democracy. Faced with riots the Chinese government may do something stupid to distract their population (like attack Taiwan).

But perhaps I’m being paranoid.

Comment by andrew

The Bankers and Wall Street should have fallen on their swords. Instead we’re paying their bonuses. The ad industry is the first to shed blood in tough times. No comparison.

Comment by Charles Frith

The bankers dont get punished Andrew. We might get one scapegoat if we are lucky. The rest will get consultancy jobs at 100k a week.

Is it our fault for selling our houses at what they were ‘worth’ at the time. Just as many of us bought them at those prices. We didnt set the price movements, estate agents and banks did that. IF you have to buy or sell you have no choice but to put it at roughly market value.

I agree though that most bankers were acting legally, just not morally. And that is the fault of all of us for letting governments let them do it.

Comment by Rob Mortimer

I always think it’s funny that when you want a bank loan a banker is quite happy to tell you to fuck off or will impose such stringent conditions that you are in hock for the rest of your life.

However, when they need a loan to bail them out of the shit……..

It strikes me as even funnier that we can’t find the money to take care of old people. Or to fund our schools properly. Or to give people a decent standard of health care. Or even to house people in accommodation that’s slightly better than a slum.

But we can find 700 Billion $ for a few bankers in the States. Or whatever the absurd amount of money was given to them in the UK.

In fact, I find it so funny I’m laughing all the way to the bank.


Comment by martin

I have always said the bankers are not the only ones to blame for this situation, however whilst the majority did work within the law, many were living in the ‘grey area’ and the information they divulged – or more accurately, DIDN’T divulge’ – means that in many situations, they were at the very least acting in a manner that was morally and/or ethically criminal.

I don’t believe the house analogy is right. As Mr M said, there is nothing wrong selling a house for the market rate – a house that performs what is expected of it … however many of these financial institutions sold products that had no chance of achieving what was claimed.

Sure the purchasers should of embarked on more due dilligence – and some did but were lied to – but the issue isn’t about the purchaser, it is about the motivations of the seller and the legal framework … and if you look into that, you will find many things that are deserving of public outrage, not bailouts.

PS: Let me assure you Andrew, the Chinese are very canny and you might think they don’t know they’re paying for the recession/bail out – but they are smart and more self focused than most Westerners give them credit for … and when the time is right, they will reveal their hand and we will see the masterplan. And no, I am not being dramatic. Remember, it’s only been the last 500 years or so that the West has had financial leadership – not only has it/will it return to the East, but they will be in a much stronger position than anyone could imagine.

For nations who sided against the East, there is going to be a lot of humble pie to eat. A lot.

Comment by Rob

Thanks for putting the fear of God, Satan and everyone else into us Robert. Very kind of you. Sunshine my ass! 🙂

Comment by Bazza

You should know Baz … they’ve been basically holding your company ransom for the last few years, ha!

Comment by Rob

The thing that fucks me off is that banks have no problem withdrawing an overdraft or loan and causing a profitable small business to go under instantly. Yet its different for them.

Frankly there are many people who deserve to pay for this shit, but none of them ever will.

Comment by Rob Mortimer

This has been a good, lively debate that’s stayed on topic. What on earth is going on? Oh yeah, Andy is away that’s what …

Comment by Rob

this is the flipside to interconnectedness. everybody is guilty, so nobody is to blame.

reminds me of a story about a horses head and a movie producer..

Comment by niko

I think some are more guilty than others Niko. And some banks have still paid out bonuses to their staff which is rubbing salt into the wounds not to mention demonstrating bankers lack of tact and humanity, which was to be expected I guess.

Comment by Pete

As someone pointed out on here. The amount of debt that caused one of the banking institutions to collapse was less than they paid in bonuses in 2007.

That is a frightening mark of just how overpaid and unmorally acceptable this all was.

Comment by Rob Mortimer

(something like $60bn by the way)

Comment by Rob Mortimer

In early 2007, Royal Bank of Scotland led a consortium that included Fortis Group of Belgium and Santander of Spain. It paid $100 billion to acquire the Dutch bank, ABN Amro.

Had they held on to the $100 billion, those institutions could now buy:

Goldman Sachs
Morgan Stanley
Merrill Lynch
Deutsche Bank

And they would have enough left over to buy General Motors, Ford and Chrysler.

Banks really know how to make money don’t they? 🙂

Comment by Pete

this chart reminds me of ‘blue is the new green’… anyway, i think one problem is that there is not only an interdependence, but that political systems and financial/economic systems are literally fused. i mean, if a politician is a member of parliament earning about 7,000 euros a month(in germany) and getting a hell lot of money from some bank/corporation at the same time… who is he/she likely to feeling more committed to? especially keeping in mind that there is a life after being a member of parliament after four years. i m not saying that every politician is an ego-maniac, but let s face it – it is easy to become one. the framework is just not set right… but those kind of topics are usually not on the agenda of mainstream media, unfortunately. i m not too optimistic about the progress of the whole financial situation. and i am not a specialist, but i think there have been a lot of strange decisions made – saving some top bankers’ asses and lifestyle. i m convinced that did not help the economy or the people, in the long term.
and yes, we still are all quite lucky. if we are able to read and write on this blog. because that probably means we are having enough to eat, drink and are sleeping in a proper house. and that is more than so many people all over the world have…

Comment by peggy

Pete – But they wouldn’t have been able to raise the credit now…

Comment by Rob Mortimer

Is that actually true Peter? If it is, that is shocking but then hindsight is only valuable if you can see into the future.

Comment by Lee Hill

just catching up.. i also find it reprehensible that soooo much taxpayer money is going towards saving the arses of a select few (especially a stupid select few – the whole ABN Amro makes me a little ill). i can’t believe that the UK, especially, got their knickers in a knot about northern rock and not a peep about RBS, Lloyds, Barclays, etc, etc, etc.

i’m also really grateful that, when k-rudd helped ‘bail’ out the banks, with it came a set of stipulations a mile long and the start of even stronger regulations. our main losers were non-bank mortgage lenders, who are being secceeded by the banks at the moment.

i’m glad, for once, that we’re comparitively smallfry and, as a result, are coming out relatively OK from this debacle.

Comment by lauren

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