The Politics Thread

[Athers]

Phillips Curve.

It's contentious though and many versions have been developed since Phillips first published it in the 50's. Plenty material online if that's how you'd like to spend a Friday night

[Lord Kangana]

Cheers Athers - I've got a shocking cold, so a night in is the order of the day, I might just!

[mummywhycantieatcrayons]

I've been mentoring someone is applying for a place studying Economics at my university, and we discussed the Phillips Curve fairly recently.

There are a few ways in which unemployment and inflation might be linked... lower demand in the economy means lower prices and fewer jobs, if there is a reduction in jobs that itself causes a reduction in demand, people push harder for wage increases in times of full employment which leads to an inflationary spiral etc. etc.

I don't think it makes much sense to see it in terms of a 'trade off' though.

[communistworkethic]

But when you say we must take the blame, ask yourself who benefits the most from 125% mortgages being available. If(and I wish this on no-one) your son defaults on his mortgage payments, he'll have his house repossessed and still be in hock to the bank. I'm not advocating a stalinist system, but the absurd notion of letting the market decide in an unrestrained fashion has proved to have been the most lame excuse for profiteering and cash raking the world has ever seen. We elect a government to govern, when they start to use the excuse that "its out of their hands, the markets dictate" they have failed.

the 125% mortgage was only available through one lender ..... Northern Rock, and in many ways was a better scenario than the idea of 97% plus a whole load of unsecured debt on top of that that could equal more than that 30%. Unsecured debt being more expensive and no less likely to see you lose property if it goes tits up. The GFC (global financial crisis) is more to do with the bundling and trading of debt than it is the ground level lending decisions in the UK, because it opened the risk to a wider audience, a risk that was not full calculated. UK mortgage lending is positive conservative, even at its extremes, compared to the US -'NINJA'* mortgages FFS!

Plus the idea that repossession is some easy route for UK lenders is a falacy, it's expensive and they almost always lose money. It's a last resort to any mainstream lender - it's usually only those that shirk their resposibility for the debt that end up in that position. Even if you pay a reduced amount by arrangemet, as long as you stick to that you'll stay in your home. And the bank with the most repos at the moment by a country mile? The one with 25% of the market (double it's nearest rival)? No. It's Northern Rock (2% market share) , the one the Govt. owns, that same Govt that's telling lenders that reposessions should be a last resort.

and on your point about "City" bonuses. Nobody strips out which of those bonuses are paid to people in the Square Mile and those to all the other employees across the country, like the bank cashier on £14k a year or even those that work in the post room or HR or the like.


*No Income No Job

[Lord Kangana]

Haven't you just contradicted youreslf by pointing out that its hard to reposses, yet the lender that has given out the highest % mortgages is now the one with the highest repossesson rate? If its not meant to reads like that, all apologies.

And being bankrupt, credit blacklisted and homeless I would suggest is a far greater risk on a deal than losing a bob or 2. The consumer stands to lose the most.

[lovethesmellofnapalm]

Oh I dunno, capitalism has worked pretty well for the last 200 years or so. Until someone can come up with a better economic system we're stuck with it. There is no plan 'B'.

There are some who think that the seeds of this crises was sown in the Clinton era, when the federal government coerced the banks to lend to the poorer sections of society.

As an example. When I bought my first house 28 years ago I had to gather a deposit of 15% and was allowed by the building society to borrow 2 1/2 my annual salary. When my eldest lad bought his house earlier this decade he was allowed 125% of the value of his house, with no deposit and IIRC 5 times his annual salary. How someone from the various governments across the west thought that this was sustainable, never mind desirable is baffling.

So yes, the bankers must take the majority of the blame for the mess that we're in but so must we, the consumers. Credit has been way to easy to get, easier than ever before. Everyone joined in this beano and now we have to pay the price.

And Plantation owners in the Southern states of the US claimed slavery had worked pretty well as an economic system for more than 200 years. Didn't make slavery right. And the devotion to neo-liberal economics when the proof is becoming more and more clear that it just doesn't work doesn't make capitalism right either (although the Daily Mail, bless them, is trying to blame Labour as if it's the Winter of Discontent again).

[lovethesmellofnapalm]

But when you say we must take the blame, ask yourself who benefits the most from 125% mortgages being available. If(and I wish this on no-one) your son defaults on his mortgage payments, he'll have his house repossessed and still be in hock to the bank. I'm not advocating a stalinist system, but the absurd notion of letting the market decide in an unrestrained fashion has proved to have been the most lame excuse for profiteering and cash raking the world has ever seen. We elect a government to govern, when they start to use the excuse that "its out of their hands, the markets dictate" they have failed.

the 125% mortgage was only available through one lender ..... Northern Rock, and in many ways was a better scenario than the idea of 97% plus a whole load of unsecured debt on top of that that could equal more than that 30%. Unsecured debt being more expensive and no less likely to see you lose property if it goes tits up. The GFC (global financial crisis) is more to do with the bundling and trading of debt than it is the ground level lending decisions in the UK, because it opened the risk to a wider audience, a risk that was not full calculated. UK mortgage lending is positive conservative, even at its extremes, compared to the US -'NINJA'* mortgages FFS!

Plus the idea that repossession is some easy route for UK lenders is a falacy, it's expensive and they almost always lose money. It's a last resort to any mainstream lender - it's usually only those that shirk their resposibility for the debt that end up in that position. Even if you pay a reduced amount by arrangemet, as long as you stick to that you'll stay in your home. And the bank with the most repos at the moment by a country mile? The one with 25% of the market (double it's nearest rival)? No. It's Northern Rock (2% market share) , the one the Govt. owns, that same Govt that's telling lenders that reposessions should be a last resort.

and on your point about "City" bonuses. Nobody strips out which of those bonuses are paid to people in the Square Mile and those to all the other employees across the country, like the bank cashier on £14k a year or even those that work in the post room or HR or the like.

*No Income No Job

and therin lies the problem with our bonus/target culture. Give something a target and incentivise the meeting of it leads to the artificial meeting of the target at the detriment of doing a good job. So banks meeting lending targets throw prudence out of the window, police meeting crime targets massage the figures and "ignore" certain types of criminal activity which are not targetted, hospitals prioritise "easy" operations in order to improve their position in a league table while ignoring potential health problems, schools and universities lower the bar in order to make government policies on education seem successful and so on. Why not pay the bank cashier a decent wage and incentivise "success" by promotion?

[communistworkethic]

Haven't you just contradicted youreslf by pointing out that its hard to reposses, yet the lender that has given out the highest % mortgages is now the one with the highest repossesson rate? If its not meant to reads like that, all apologies.

And being bankrupt, credit blacklisted and homeless I would suggest is a far greater risk on a deal than losing a bob or 2. The consumer stands to lose the most.

the consumer who chose that deal you mean? Caveat emptor means feck all these days it seems. People forget i was homebuyers who gambled on ever increasing house prices too not just lenders.

It isn't that easy to reposess, I've been to the court hearings. Northern Rock is reposessing hand over fist because it's desperate for capital to repay the taxy payer, the Govt denies it's driving that policy but it's itsown rules on repayment and their puppet CEO in charge. You don't find HBOS or Abbey with 25 & 12 % of the market respectively with 25 & 12% or the reposessions, and they did Buy To Let loans.

The Govt is demanding other lenders don't repossess, when there's no evidence that they doing it aggressively yet its own newly acquired lender is doing it. 'do as we say not as we do'

[Dave Sutton's barnet]

Nobody strips out which of those bonuses are paid to people in the Square Mile and those to all the other employees across the country, like the bank cashier on £14k a year or even those that work in the post room or HR or the like.

and therin lies the problem with our bonus/target culture. Give something a target and incentivise the meeting of it leads to the artificial meeting of the target at the detriment of doing a good job. So banks meeting lending targets throw prudence out of the window, police meeting crime targets massage the figures and "ignore" certain types of criminal activity which are not targetted, hospitals prioritise "easy" operations in order to improve their position in a league table while ignoring potential health problems, schools and universities lower the bar in order to make government policies on education seem successful and so on. Why not pay the bank cashier a decent wage and incentivise "success" by promotion?

I was asked this week if I wanted to "incentivise" my three staff writers by rewarding them for increased clickthroughs. I flatly declined, because I don't want them targeting forum members and chasing traffic instead of, y'know, writing.

[Lord Kangana]

Interesting point DSB - a few years ago I was offered a monthly incentive bonus for my staff budget. Being a kitchen crew it was 18 guys, but most of them were miminum wagers washer up/veg chopper types. Not only was the business more than capable of paying them, and that a greater workload would then fall on the higher-paid higher skilled workforce, but the money I was offered to lower their working hours was roughly the same as the cuts being asked for. The accountant was flabbergasted when I pointed this out, and even more when I suggested he just include it in the staff budget.

I felt I had a duty of care to both staff and customers to maintain standards and a healthy happy workforce. I think he hoped to trade on my selfishness.

[Montreal Wanderer]

I'd be interested in Mummy's take on whether the US VP should have firm beliefs in witch hunting (literally).
http://www.youtube.com/watch?v=igFiyyFTF88

This woman is scary.

[Prufrock]

I'd be interested in Mummy's take on whether the US VP should have firm beliefs in witch hunting (literally).
http://www.youtube.com/watch?v=igFiyyFTF88

This woman is scary.

[communistworkethic]

But when you say we must take the blame, ask yourself who benefits the most from 125% mortgages being available. If(and I wish this on no-one) your son defaults on his mortgage payments, he'll have his house repossessed and still be in hock to the bank. I'm not advocating a stalinist system, but the absurd notion of letting the market decide in an unrestrained fashion has proved to have been the most lame excuse for profiteering and cash raking the world has ever seen. We elect a government to govern, when they start to use the excuse that "its out of their hands, the markets dictate" they have failed.

the 125% mortgage was only available through one lender ..... Northern Rock, and in many ways was a better scenario than the idea of 97% plus a whole load of unsecured debt on top of that that could equal more than that 30%. Unsecured debt being more expensive and no less likely to see you lose property if it goes tits up. The GFC (global financial crisis) is more to do with the bundling and trading of debt than it is the ground level lending decisions in the UK, because it opened the risk to a wider audience, a risk that was not full calculated. UK mortgage lending is positive conservative, even at its extremes, compared to the US -'NINJA'* mortgages FFS!

Plus the idea that repossession is some easy route for UK lenders is a falacy, it's expensive and they almost always lose money. It's a last resort to any mainstream lender - it's usually only those that shirk their resposibility for the debt that end up in that position. Even if you pay a reduced amount by arrangemet, as long as you stick to that you'll stay in your home. And the bank with the most repos at the moment by a country mile? The one with 25% of the market (double it's nearest rival)? No. It's Northern Rock (2% market share) , the one the Govt. owns, that same Govt that's telling lenders that reposessions should be a last resort.

and on your point about "City" bonuses. Nobody strips out which of those bonuses are paid to people in the Square Mile and those to all the other employees across the country, like the bank cashier on £14k a year or even those that work in the post room or HR or the like.

*No Income No Job

and therin lies the problem with our bonus/target culture. Give something a target and incentivise the meeting of it leads to the artificial meeting of the target at the detriment of doing a good job. So banks meeting lending targets throw prudence out of the window, police meeting crime targets massage the figures and "ignore" certain types of criminal activity which are not targetted, hospitals prioritise "easy" operations in order to improve their position in a league table while ignoring potential health problems, schools and universities lower the bar in order to make government policies on education seem successful and so on. Why not pay the bank cashier a decent wage and incentivise "success" by promotion?

which in technical terms is "talking bollocks". Do you have any idea how every person's bonus sructure is set? No you don't. The bank cashier's bonus isn't on the same thing as someone else and it will vary from organisation to organisation on the speciifics but it's not commission, they have 'service' in there as a measure.

but no you keep to your sweeping generalisations based on little knowledge.

[Zulus Thousand of em]

As for Palin.

A nation of 300 million people, with more nuclear warheads than you can hit with a big shitty stick. And this nutter is in the last four for the Presidency. One heartbeat away from the Presidency if John McCain dies of senility, which is looking increasingly possible.

And this post from me, a man whose natural inclinations (In US politics) are Republican.

Sheesh!

[lovethesmellofnapalm]

CWE- no doubt you will now say i'm being selective in my use of this example rather than your other criticism of making sweeping generalisations
http://www.independent.co.uk/opinion/le ... 72834.html

in particular this point seems pertinent
"the Trust's proposal seems to mirror a much wider misconception that is current in government and management circles: that money alone spurs performance, and that more money will automatically improve results. It is probably true that, over a single generation, money has increasingly become a gauge of status. But we do not think that most professional people – whether nurses, teachers, lawyers or doctors – do what they do only, or mainly, for the money.

Most professionals are trained to do the best job they could do and find their work interesting and rewarding. More money is always welcome. But for the comparatively well-paid, such as doctors, money as a performance incentive has its limits. Two years ago many GPs took only a portion of the higher pay on offer, choosing instead shorter, more regular hours.

The bonus culture has spread like a plague through the public sector, where already well-paid people are paid even more simply for doing their job. It does not belong here, and it belongs in the operating theatre least of all."

No-one, least of all me, is arguing that all bonus structures are the same. But you cannot argue that the "greed is good" culture as epitomised by the bonuses paid to City employees is good for society. And i repeat for those on a "bank cashiers" wage would it not be better to raise the basic wage thus negating the need for a "bonus" - or are bonuses more often than not tax deductable for the employer and basically given to all employees ,therefore not measured by service or any other criteria?

[Worthy4England]

But when you say we must take the blame, ask yourself who benefits the most from 125% mortgages being available. If(and I wish this on no-one) your son defaults on his mortgage payments, he'll have his house repossessed and still be in hock to the bank. I'm not advocating a stalinist system, but the absurd notion of letting the market decide in an unrestrained fashion has proved to have been the most lame excuse for profiteering and cash raking the world has ever seen. We elect a government to govern, when they start to use the excuse that "its out of their hands, the markets dictate" they have failed.

the 125% mortgage was only available through one lender ..... Northern Rock, and in many ways was a better scenario than the idea of 97% plus a whole load of unsecured debt on top of that that could equal more than that 30%. Unsecured debt being more expensive and no less likely to see you lose property if it goes tits up. The GFC (global financial crisis) is more to do with the bundling and trading of debt than it is the ground level lending decisions in the UK, because it opened the risk to a wider audience, a risk that was not full calculated. UK mortgage lending is positive conservative, even at its extremes, compared to the US -'NINJA'* mortgages FFS!

Plus the idea that repossession is some easy route for UK lenders is a falacy, it's expensive and they almost always lose money. It's a last resort to any mainstream lender - it's usually only those that shirk their resposibility for the debt that end up in that position. Even if you pay a reduced amount by arrangemet, as long as you stick to that you'll stay in your home. And the bank with the most repos at the moment by a country mile? The one with 25% of the market (double it's nearest rival)? No. It's Northern Rock (2% market share) , the one the Govt. owns, that same Govt that's telling lenders that reposessions should be a last resort.

and on your point about "City" bonuses. Nobody strips out which of those bonuses are paid to people in the Square Mile and those to all the other employees across the country, like the bank cashier on £14k a year or even those that work in the post room or HR or the like.

*No Income No Job

and therin lies the problem with our bonus/target culture. Give something a target and incentivise the meeting of it leads to the artificial meeting of the target at the detriment of doing a good job. So banks meeting lending targets throw prudence out of the window, police meeting crime targets massage the figures and "ignore" certain types of criminal activity which are not targetted, hospitals prioritise "easy" operations in order to improve their position in a league table while ignoring potential health problems, schools and universities lower the bar in order to make government policies on education seem successful and so on. Why not pay the bank cashier a decent wage and incentivise "success" by promotion?

Hmmm I think there's a couple of things in there that have some differences. Police targets, hospital targets and school targets up to 18 are pretty much entirely within our control as a nation.

Banks work in a global enconomy, so they have a bit of a dilemma. If, for example, US banks follow a policy of agressive growth at significant risk - which could lead to a potential run/threat towards our banks, but for a number of consecutive accounting periods they manage to pull off exponential growth...then what do our banks do? Wait to be taken over or compete in the same market?

When you relate that to an operating theatre, the Prof or whoever, used to be a well respected person and possibly reasonably paid by conventional standards, but at the minute, you can actually earn way more trading shit you didn't own in the first place. So some guy who's at the top of his/her profession in saving lives isn't probably earning comparable than some barrow boy from the East End who happens to be selling shit, short. I could understand someone in the health services believing that comparatively they're losing out - to people that are generating wealth from stuff they didn't own in the first place and people who are pedantically arguing about complete bollocks (legal) which is perpetrating a huge burden on every economy as there's no such thing as an "accident" any more - someone, somewhere has to be culpable so there's a fee to pay to a legal person. In that context, how does a Senior surgeon (or whatever their "title" is) manage to keep up with the Jones' or are they not allowed to? (And no I'm not a Medical Doctor )

[Verbal]

Phillips Curve.

It's contentious though and many versions have been developed since Phillips first published it in the 50's. Plenty material online if that's how you'd like to spend a Friday night

Kin ell, spent the latter half of first year macroeconomics trying to get my head around that, still doesn't make complete sense.

[communistworkethic]

No-one, least of all me, is arguing that all bonus structures are the same. But you cannot argue that the "greed is good" culture as epitomised by the bonuses paid to City employees is good for society. And i repeat for those on a "bank cashiers" wage would it not be better to raise the basic wage thus negating the need for a "bonus" - or are bonuses more often than not tax deductable for the employer and basically given to all employees ,therefore not measured by service or any other criteria?

no. and er no. The fact you want to argue a point around which you have so little actual knowledge is just a bit silly. You've a case built on a few Daily Mail headlines and your own on biases - it's not a very strong one.

Those 'city boys' are rewarded for the money they make for the business that they work for- they don't set risk policy, they don't set the law or legal framework in which they work. They are trying to make this money because it's what all businesses do and they're directed by the strategy of the Board of their company who are answerable to the company's owners, which in the case of banks is shareholders who expect a return on their investment by way of dividends, which is paid out of profit and which only comes when you make money. The GFC is as much, if not more, to do with the structure of financial markets, law and regulation - The FSA has only grown a set of nuts in the last 8 months - after Northern Rock had already collapsed.

This isn't the first time that there has been a collapse of financial systems, runs on banks were commonplace in 1800s, BCCI went down in the 90s, Barings brought down by Nick Leason. The last two were down to the failures of controls and regulatory oversight.

Bonuses are there to reward performance against pre-agreed targets, they are there to avoid mediocrity, they are there to recognise additional effort in a way that a basic salary just cannot do. Reward through promotion alone just means lots of over promoted people, how would you promote a GP? Make him a brain surgeon? Bonuses also allow a felxibility that you just can't write in to a contract - changing the targets annually means they can take in to account changing conditions in the market and the company in which they operate.

[lovethesmellofnapalm]

The last two were down to the failures of controls and regulatory oversight.

.

Well we are agreed on one thing- the complete failure of free markets to regulate themselves and governments devoted to neo-liberal free market economics to regulate in the best interests of the nation at large. The BCCI collapse and Barings should have been salutary warnings of the present crisis- the fact they weren't suggests the banking industry was driven by short term greed. Ultimately it is the system and the "culture" i am criticising not the people involved.

[communistworkethic]

again, take one thing and in your own view and make something completely different.