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a drop in the ocean

"The £20m is one of the heaviest fines ever imposed by the FSA."

Seems like peanuts to me. Why is there no hearing and sensible fine?

#1 spot on, didn't they make something like 3.4bn dollar profit for that year the fine and fraud charge relates to.

Another compnay not respecting laws. Just a pocket money fine then!

They should be blacklisted after the debacle in Greece was uncovered.

Quick question - where exactly does the £20 million pound fine actually go?

So goldman bought and silenced both the SEC and FSA! Peston why don't you add this to New Capitalism. You can do a crime and get away with it by out of court settlements and by paying money. I just don't get this, if there is a crime people should be behind bars.

Wow - we only to to find another ten thousand fines of this sort for this year and the public finances will start to look healthy - oh I forgot - they'l just pass the costs on to their customers!

£20 million fine? oh well what were Aprils numbers?

"Just days after US regulators began a $1bn (£650m) fraud action against the firm, Goldman revealed a leap in quarterly profits from $1.8bn to $3.5bn and disclosed that it was setting aside $5.49bn to pay its employees. A top lawyer at the bank rebutted the Securities and Exchange Commission's prosecution, insisting Goldman had not misled its clients and describing the case as a "he says, she says" dispute."

Taken for mugs again - middle UK ....oh look at the wonderful FSA, record fine on those bloodsucking leeches £20 million record you know

They are laughing at the FSA and us at the board room table, or were before they went to there lapdancing club

By the way Robert

Why can you always reveal, but never disclose?

Fractional Reserve Banking?

Go on - do a NR and disclose, dare you?

A collateralised debt obligation.
It all revolves around debt.

All those promises to pay, that in reality can’t be paid, save that of entering debt slavery.

As a blogger who goes by the name of averagejoe points out, there is another way.
There is a way that future generations are not chained into debt slavery.

And if like me, you have children, and as a consequence thereof would like to avoid them entering that which can be best described as servitude to eternal debt.

Then follow averagejoe’s links and support the campaign to change that The Bank of England Act group propose.

And if you want the link:

This was a very heavy fine. It is the equivalent of someone on JSA making a false declaration and being fined 38p.

I sent out a load of emails last week asking for 500 dollars in return for 2000 dollars in six months using my magic wand and a pyramid

I had the FSA and trading standards around the house, even the Police attended to keep order ( or legally kill me if I protested).

Anyway, it worked out good for me because some of the pepople that turned up were part of my scheme so in the end it was easy

You see i was guilty as anything, but settled - promised to pay a certain amount back (repaid those nice people at my door) as a fine

settled - its a fine word and gets the guilty off a lot of hooks!

Settled

This 'fine' is equivalent to pouring petrol onto the fire as far as public opinion is concerned.
/blogs/newsnight/fromthewebteam/2010/09/tuesday_7_september_2010.html

Has anyone else noticed how much the posts to Robert's blogs have become more and more politicised/radicalised over past three years?
...because I have.

May this be the first of several succesful investigations and penalties imposed.
The five-month investigation by the UK regulator began just four days after the Securities & Exchange Commission (SEC) charged Goldman with fraud back on April 16th.
As you may recall, Goldman paid a record $550M fine & "settled" those charges.
The fine levied on the bank by the FSA was not based specifically on the Abacus deal; rather, it was the result of the FSA investigation into the bank’s business practices in London.
I wish I knew a little more about those "business practices in London".

wake up folks - smell the coffee



Arhhhg, gee, what cant afford it?

found this

"In 2008, Goldman Sachs, with 29 subsidiaries located in offshore tax havens, reported profits of over $2 billion and paid federal taxes of $14 million, an effective tax rate of just one percent, and less than one third what they paid their CEO Lloyd Blankfein ($42.9 million)."

it lets me sleep in peace that they can afford the fine.

Really its like me getting fined £50 for mugging someone of £3,000 (imo moderators!)

11. At 9:03pm on 08 Sep 2010, Boilerbill wrote:
This was a very heavy fine. It is the equivalent of someone on JSA making a false declaration and being fined 38p.

Yes Boilerbill but that person would not be given the chance to settle - just fined

if you have 1000000 pound and are fined 380000 then you have 620000 to "carry on regardless"

if you have 100000 pound and are fined 38000 then you have 62000 to decide your future

if you have 100 pound and are fined 38 then you have 62 to buy a room for the night

if you have a pound and are fined 38p then you have 62p

Its a carry on!

Most banking stories deal with billions.

So a record fine of £0.02billion makes it sound laughably small.

Did someone's bonus get docked as a result? Are we sure it was a mistake and not GS hoping no one would notice?

Saturday last I was happily engaged watching an under sixteen’s football match, in which my youngest played a part.

At a point in the second half, I pondered what those twenty two young individuals would make of a system so designed that many would likely be enslaved into debt.

I desired to run upon the pitch and proclaim that such a system was wholly in their worst interests, needless to say, I did not, for fear of appearing a complete and utter idiot.

The plain truth is: It is wrong that the young should face a future, in which many will likely be enslaved into debt.

Trading of collateralised debt obligations could be likened to a mass debt slave auction.

Crikey Robert!...

...it's nearly the third anniversary of the start of the havoc (aka The Credit Crisis) that you personally wreaked onto the UK's economy ;o)
(only joking!)

Rock or crock?
/blogs/thereporters/robertpeston/2007/09/rock_or_crock.html
Robert Peston 14-Sep-07
‘The good news is that the Chancellor, the Financial Services Authority and the Bank of England don't believe Northern Rock is an unviable business.’


Mervyn - still on Rocks
/blogs/thereporters/robertpeston/2007/09/mervyn_still_on_rocks.html
Robert Peston 19-Sep-07
‘What happened at Northern Rock, the first run on a British bank in living memory, has caused deep shame and embarrassment in the banking industry.’

It's funny looking back, as most of the posters used real names and most worked in the financial industry...there were a few dissenting voices though.

...and still there is no legislation laid down that has removed the systemic risks to the entire banking system.

AMAZING!

#10. Dempster wrote:

There is a way that future generations are not chained into debt slavery.

And if like me, you have children, and as a consequence thereof would like to avoid them entering that which can be best described as servitude to eternal debt.

Dempster, you have made repeated references to "debt slavery" and your fear that your children will suffer "servitude to eternal debt". What exactly do you mean by that? Please explain it simply and clearly.

Are you suggesting that people are somehow forced into debt and have no power to resist? That individuals lack the strength to budget wisely? Do you think all debt is bad? How will your children ever afford a home of their own, or even complete a university education, if they (or you) do not enter into carefully-considered debt?

I once took on a significant amount of debt in order to buy a property - if I remember correctly, it was six times my gross salary at one stage - and, as a result, now have two homes, no mortgage and do not have to pay rent to anyone. In fact, people pay me rent, thereby increasing my wealth without my having to lift a finger. Far from making a slave out of me, debt eventually set me free. (And, no, I do not believe that the accumulation of wealth is a means in itself; it merely allows me to spend more time doing the things I want to do with the people I love and care about, which are the things that really matter).

I have a feeling that "debt slavery" is just another buzz-word that is thrown around these forums by the extremists and actually means nothing.

Good evening Robert. Blimey you do work long hours - well hats off to you. I think you need to have a break though or you'll end up blogging every other minute claiming that you work in a bank and the end is nigh and there will be a revolution (except in Hendon) and refusing to listen to anyone else's point of view.

Unfortunately whatever you write will be dismissed by some as capitalistic propaganda as many posters here believe it's all a conspiracy of the banks who are run by reptilian shape shifting aliens to enslave the entire population (not to mention the ninja monkeys who are also zombies). I imagine this must fill you with ennui somewhat.

Why, oh why, do we never hear of any individuals being brought to book?

The current day equivalent of Mr Goldmam or Mr Sachs.

Why are they allowed to hide behind their corporate identities?

If a £20million fine is appropriate, some individuals must have broken some rules?

Who were they??

Can we please have some transparency!!!!!

what a joke

To No.22. At 9:48pm on 08 Sep 2010, rbs_temp

I do indeed believe that the current debt based money system offers only servitude to debt.

I am a father of three, and as a consequence I have to admit that my hopes and fears are influenced by my circumstance.

However it is my hope that one day the young will not have to enter such a system.

I use the phrase debt slavery, because sadly I believe that’s what it is, and I wish I believed differently, I truly do.

I would rather they kept the money....but were banned from trading in the UK and anyone in the UK stopped from trading with them.

Mistake my a*** they knew exactly what they were doing.

Fining Goldman Sachs for a minor discrepancy is not a substitute for appropriate regulation. It is not even the semblance of regulation!

The real regulatory problem is far far deeper and fundamental. It is about the structure of reporting and relationships. It is about proper, full and complete reporting of risk, assets, liabilities and contingent liabilities, the prohibition of all special investment vehicles, the concealing of business and the nature of the permitted contractual relationships in the financial sector as well as the need for full public and open markets including the prohibition of clandestine over-the-counter trading of any product. (I could attempt to spell my detailed views out, but it would take tens of thousand of words so I will not!)

But hell, lets us make a tiny headline before we are abolished!

Given the nature of the allegations against G-S, why did the US SEC settle. Could it be, that at its heart, the US system is fundamentally corrupt, with "justice" coming down on the side of the party with the deepest pockets.

Does nobody remember the vigour with which the US justice system pursued the three NatWest executives in the ENRON scandal, using the discredited extradition treaty between us to extract its pound of flesh. Those men were imprisoned. Funny how the Yanks don't seem to mind as much when its their own countrymen found with their hand in the cookie jar.

In this particular instance I would like to know if the ABACUS 2007-ACI product was sold to any UK companies? If so, shouldn't we similarly look for recompense from Goldman Sachs, and preferably seek to extradite the perpetrators of this fraud, and imprison them if found guilty.

Oh no, I forgot, the extradition treaty is a one-way affair; anyway, we wouldn't want to upset our dear american cousins now would we, especially as they are so equitable in their dealings with the UK. So that would be "rollover on your back, feet in the air, and wait for a tummy rub"? Good boy - woof!

To RBS Temp

I am not an extremist, I am just a self employed working Joe, husband and father of three.

And for the avoidance of doubt, I wasn’t bright enough to go to university, and whilst I was modestly accomplished in sports, I never made into the school football team. The truth is, I’m an absolute nobody, and the only thing I’ve got going for me, is that I’m happy in my own skin.

But still I believe that the current debt based monetary system enslaves the younger generation into debt.

I believe that such a system is heinous, lacks any propensity for the furtherance of our country and is both insidious and debilitating in respect of the future of our children.

I believe that our children should inherit a monetary system that is both fair and by its nature does not enslave them into debt.

I believe it today, I will believe it tomorrow, and I will believe till the earth is placed upon my casket.

22. At 9:48pm on 08 Sep 2010, rbs_temp wrote:

"Are you suggesting that people are somehow forced into debt and have no power to resist?"

what about the trillions of debt that governments of all levels have racked up for tomorrow to buy votes today? I did not ask them to or vote for them to?

So if you break the rules or the law, then say sorry quickly all is good? Is this a lesson in life for us all?

Well no, only banks or the like can get away with this. On e rule for the masses, no rules for the rest.
What else is going to come out in the next few weeks and months?

#26. Dempster wrote:

I do indeed believe that the current debt based money system offers only servitude to debt.

I use the phrase debt slavery, because sadly I believe that’s what it is, and I wish I believed differently, I truly do...

I believe that the current debt based monetary system enslaves the younger generation into debt...

I believe that our children should inherit a monetary system that is both fair and by its nature does not enslave them into debt.

You've now repeated the phrase half a dozen times in this thread alone, but you still haven't explained what "debt slavery" actually is. What does it mean? Why is it slavery? Getting into unmanageable debt does, of course, ruin lives, but do you believe that all debt is wrong, even if you are borrowing within your means to purchase a home or fund an education? If so, why? I will ask you again - how do you expect your children ever to own their own homes if they do not take on debt? Are you counting on their winning the lottery? What monetary system are you proposing that would eliminate this "debt slavery"?

I use to be a Compliance officer at Goldman. The things I could tell you Robert, but I'm be concerned I'd be implicit for not speaking up at the time.
GS is a banking mafia protected by the high and mighty. Ever ask why the US government let Lehman go under? Sure most of you have. Think who had most to gain....

What, in the name of God almighty, is the point of a fine for companies like this? What we should all now be clear on is that the fine will be paid for, not by the people who actually perpetrated the crime, but by the poor schmucks who either bank with Goldman Sachs or who have dealings with organisations that have dealings with Goldman Sachs. That is, everyone EXCEPT the guilty parties.

In cases like these there should be a blacklist. Those at the tops of businesses who are responsible for financial misdeeds of this seriousness should be blacklisted. They should not be allowed to work in finance companies operating in this country and any finance company that employs them should lose their licence to operate in this country.

Huge personal rewards MUST involve personal responsibility. If we learn nothing else from the financial meltdown, we should learn that

22. At 9:48pm on 08 Sep 2010, rbs_temp wrote:
Are you suggesting that people are somehow forced into debt and have no power to resist?

-------------------------------------------------

Hello. Welcome to the real world - the world where millions of people in this country live. The world where honest, hard-working but low-paid people live on such tight budgets that an unexpected, but unavoidable, financial outlay forces them into debt. Sometimes that debt is with reputable financial organisations, sometimes it's with loan sharks. Either way, once they're in the thrall of debt they don't often get out.

That's the way millions of your fellow citizens live. Didn't you know that?

22. At 9:48pm on 08 Sep 2010, rbs_temp wrote:
"Are you suggesting that people are somehow forced into debt and have no power to resist?"

I wouldn't say forced but definitely they are actively and strenuously encouraged.

Like Dempster I have also 3 children. In my case the eldest two are now in the sixth form and starting to look at university. The current estimate is that each of them will pick up a £25K debt as a result of that - this will just be the start of their problems.

Of course they could just give up on further education and not fulfil their potential but there is something significantly wrong with a society where the potential of the young can be wasted like this.

Tangentially, a side effect is that they become accustomed at a very early age to accept relatively large debt as a fact of life which I really don't think is a good thing.

Do we know how many seconds it took Goldman Sachs to earn £20m last year?

Goldman Sachs, Bernie Madoff, Robert Maxwell, Jeffrey Saunders, Lord Ronson,....who do they remind you off?...You ain't seen nuffink yet !!

34. At 00:04am on 09 Sep 2010, harryjjames

Oh, go one. Do tell!

Paul Moore, the risk manager at HBOS wasn't attacked because he highlighted the inside attitude.

And anyway, don't you know journalists never give away their sources.

5. At 8:50pm on 08 Sep 2010, BytheRiverside wrote:

Quick question - where exactly does the £20 million pound fine actually go?


Hmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm


It will pobably get recycled as bonus pie for the SFO




Who could doubt that the what's in it for me first westearn culture permeAAAtes everything.

Dempster
I'm starting to look at public debt in a different way, more specifically in terms of the money supply. I'm not so sure anymore that it can be classed or analysed in the same way as private debt.

With regard to future generations. Output, GDP whatever in future years will be consumed, used up, eaten by the generation of the time. It can't be sent back in time to for us to enjoy at their expense.
How that output is shared out of course is a different matter.

Perhaps we should be paying more regard now to maintaining the production of real goods and services and employment as well as removing ourselves from slavery to the banks.

Try this example. Remember alot of this stuff is new to me.

If you have a remote island with a small barter ecomony and someone decides to appoint himself central banker intoduce money as a means of exchange to the island, how does he do it?

He doesn't borrow it does he or issue gilts. He creates it using some 'thing' that the islanders accept and whose quantity can be controlled. He may also cement that acceptance by introducing taxation and forcing the islanders to pay the tax using the 'thing'

That taxation helps to control the quantity of the 'thing' but the central banker does not need it to finance his (the govts) activity. He just needs to create more of the 'thing' to facilitate the hopefully growing trade.

Does that make sense ? Public debt is unnecessary.

#43 - what a brillaint idea! I'm finally convinced! The Government just prints the money, brilliant! So, we need gas to heat our homes - we print some money and hand it over to the Ruskies. They will quite happily except it as they currently happily except money which is created by banks.

Why bother with printing money though? Why don't we collect sea shells and give them to the Ruskies?

As for debt slavery - Dempster why don't you encourage your children to get an education and work hard rather than giving up on life and blaming society and the banks?

Lyndsay I think you've been sussed.

43. At 06:31am on 09 Sep 2010, Alesha Soba wrote:

"He creates it using some 'thing' that the islanders accept and whose quantity can be controlled."
"He just needs to create more of the 'thing' to facilitate the hopefully growing trade."

That is the contradiction of fiat money in a nut(sea)shell. If the "thing" is controlled by one group of people, but every time they want to pay for something i.e. votes, they just create more, then the populous of the island are completely in their control.

Once the government of the island give the control of the quantity of the "thing" to a private group on the island, who live in the best tree house and get the islanders to cook and fish for them as they bark out orders, things become very unjust. The islanders then have to borrow some of the "thing" to buy their own hut. But as they amount of the "thing" gets bigger and bigger the price of the huts rises out of reach of the children born onto the island.

They can swim with the sharks.

And where will the £20million go?

Does it pay for FSA salaries?

Is there an FSA Bonus culture?

Until there is, the frauds will continue.

46. At 07:41am on 09 Sep 2010, truths33k3r wrote:
Once the government of the island give the control of the quantity of the "thing" to a private group on the island, who live in the best tree house and get the islanders to cook and fish for them as they bark out orders, things become very unjust. The islanders then have to borrow some of the "thing" to buy their own hut. But as they amount of the "thing" gets bigger and bigger the price of the huts rises out of reach of the children born onto the island.

Agreed so don't give it the private group or in our case take it away from them

To RBS Temp

You asked for a definition of ‘debt slavery’, there are many, one could go on the internet and Google it.

In any event I can only give examples of how the young are crippled by debt.

My first example is the student loan. A loan which cannot be written off by bankruptcy. Take one out and its chains you till its expiry.

My second example, is the current uncontrolled fractional reserve banking system created large amounts of credit, primarily secured against houses (homes).

The national average earnings index was 98.3 in September 2000. By September 2007 it had reached 128.7. This shows an increase of 31% over the seven year period. By comparison the Greater Manchester house price index in September 2000 was 103.4 and by September 2007 it had reached 244.7, an increase of 137% over the seven year period.

Also during the same period the amount outstanding on consumer credit and mortgages had more than doubled. Source: National Average Earnings Indices, the Land Registry Property Price Information Service and the Bank of England.

The growth in domestic property prices had therefore far exceeded the growth in earnings, and had been fuelled by a significant increase in the money supply by way of extensive credit.

This extensive creation of credit (debt) increased the price of houses (homes) to a level at which those for whom they were intended, could no longer afford them, save taking on such enormous debt that would cripple them for a generation.

44. At 06:47am on 09 Sep 2010, Lindsay_from_Hendon wrote:
‘As for debt slavery - Dempster why don't you encourage your children to get an education and work hard rather than giving up on life and blaming society and the banks?’

I do not blame society Lindsay, nor have I given up on life, and I do encourage my children in respect of their education.

But I am not prepared to stay silent on an issue which I believe debilitates the younger generation for fear of upsetting those who are in receipt of the benefit from it.

Robert, why do you string out the words of your spoken answers on the radio? 'That's...right...John...it...is...' It's as if you are waiting for the answer to come up on Google. Then you race away for a few sentences, perhaps until the next page loads? Anyway, it's irritating. It makes you sound like William Shatner in Startrek. Where. Every. Word. Is. It's. Own. Sentence.

Robert,
You did not tell us exactly who will pay the £20m fine. The Director responsible for compliance? The Directors as a whole? Or will it be paid by the Company, out of its profits? In that case the shareholders or customers, or both, pick up the bill.

I stand with Dempster on the subject of "debt slavery". I too have three children and ponder their future.

Of course, if you are willing to borrow enough to invest and if you invest successfully in something that means you never have to work again - good luck to you. But that is not the common track.

Generalising, people who read for a degree can expect to leave University with, on average, debts of around £25 to £30 thousand pounds. If they then wish to own a house, then to achieve this modest ambition they will need to get a steady, well paying job: pay off their student loans; save a deposit of a similar sum; and then take on a mortgage of roughly £150 thousand (average).

The dearth of steady, well paying jobs for university leavers (too many find themselves being passed from one short term scheme to the next) will do for some of them. The rest will pay off the mortgage while raising their children: only to find that their pensions are not enough to live on.

It is not exactly progress from the days of student grants and affordable housing is it?

I wonder if GS turned themselves into a bank so that they would have a method for accounting for the consequences of their regulatory incursions.

re #20
I would hire you to do the team talks at the DfE. If I have any disappointment about The Coalition thus far, it is that they appear to be hell bent on keeping Uni tuition fees and the Libbies have been neutered on scrapping them. And with Govey meddling at the point of sale, they don't appear to be doing enough to sort out the administrative drain on the State education spending.

Yep. We've got to halt the debt culture along with sorting out a zillion and one other problems, Can't do it all once but some signals that they are on the to do list would be comforting.

So, the 22 kids on the pitch should put a lot of effort into becoming pro footballers. Then they can take a little bit of money from a lot of people (who don't earn much), become very rich, then go and live abroad. Debt problem? What debt problem?

Grumpy old cynic mode this morning, can't think why. Could it be be GS related ...?

The point to avoiding debt slavery is to realise early on in your adult life that it is no bad thing to lead a simple life. I wished I had realised that early on, but I am passing that message on to my children.

Working hard isn't the answer. Not if by that you mean working hard to earn more money. By the time you have to work hard in a job you're already in the problem.

re #42
If I may be permitted to barge in your conversation ... me too.

I asked this question of BobRocket on RP's 'Valueless Banking Boom' Blog but it has now been closed. So I paste the post and invite all and sundry to join in:
- o O o -

'499. At 09:18am on 08 Sep 2010, Snuffy wrote:
re #496
I'm a bit out of date on M numbers. No, not E numbers - they put the fizz in drinking. I'm talking about the ones that put the fizz in politico-economical banking.

You seem to be a good guy to ask, Bob. Does the list of M measures, wich was growing the last time I looked but has largely been forgotten by politicos, economicos and journos since the days of Thatcher, now contain enough to differentiate the credit element of money supply between capital infrastructure, operations, unsecured consumption, housing, etc?

I realise they were always a bit vague. I also thought that just as Maggie and her Chancellors became a bit too obsessed by one or two in particular there was an opposite danger that their warning signals might be completely overlooked. Did AB,GB and AD commit that sort of peculiar sin?'
- o O o -

Can't say how precise the 'M' money measures were/are but breaking debt down into different types, as Alesha suggests, could be helpful when thinking about the overall problem. And attacking it. Soon.

Having listened to Cleggie on the Toady programme this am, the thought also occurs that public spending - in terms of his discussion with the Humph - is also a form of debt for those who benefit, not just for the Government/Taxpayer.

Govt bond sales are part of the central banks money market operations to control interest rates on a daily basis. They are used to attract or provide excess funds to or from banks reserves.

I think we have got confused and decided to categorize them as debt and somehow we correlate them with Govt spending.

To 33. rbs_temp Re: Debt Slavery

To fund an education



Then purchase an average house



all the while saving towards , say £15K per annum in retirement:



I make the total just shy of £500K. To fund an average life in our country and avoid having to keep working until death.

Work that out, (including interest on the mortgage) over a 40 year working life.

If that isn't a definition of debt slavery I don't know what is.

36. At 00:27am on 09 Sep 2010, Andrew Morton wrote

low-paid people live on such tight budgets that an unexpected, but unavoidable, financial outlay forces them into debt.

----------

Agree, like the 42" breaking down and need a new TV.

57. At 09:12am on 09 Sep 2010, Up2snuff wrote:
Having listened to Cleggie on the Toady programme this am, the thought also occurs that public spending - in terms of his discussion with the Humph - is also a form of debt for those who benefit, not just for the Government/Taxpayer.

Govt spending is not debt.
The Govt does not have to borrow to fund its activities.

Its own buying and selling of bonds is part of BOE's tool to control interest rates /inflation and nothing to do with its own spending.

#56, there is nothing wrong with hard work, it is fair reward that is the problem.

#57 The M series are derivatives of the money supply data (like the dials on an aeroplane) although a measure may require attention occasionaly, concentrating on any one of them at the expense of the others when using it to justify a particular course of (in)action is potentially disastrous (or rewarding if you are lucky).

Money itself is a derivative measure so by extension the M series are a derivative of a derivative.
That is ok if the M series is directly proportionate to the underlying asset that the Money is derived from.
(if this were the case then the indicator that is the 'group of M series' would give a direct link to the asset)

Money should equal asset via the attribute :value, a change in the asset should be reflected in the value which ripples up through Money and should be seen in M(master).

It doesn't - so how do you account for that ?

59. At 10:00am on 09 Sep 2010, Jasp27 wrote:
" I make the total just shy of £500K. To fund an average life in our country and avoid having to keep working until death.

Work that out, (including interest on the mortgage) over a 40 year working life.

If that isn't a definition of debt slavery I don't know what is."

…and it gets even worse when you consider that the £500K is in addition to the basic cost of living i.e. buying food, clothes

This has recently been estimated at about £14,000.

So if you get an average job, paying around £30K (if only that was the 'real' average) to meet all your average needs leaving a residual amount of £16, 000 before tax and about £9K after tax then, in terms of years spent working "for nothing", we have (all figures approximate):

Further Education = 3 years (27.5K / 9K)
House = 24.5 years (224K / 9K)
Pension = 27 years (250K for 15K pension / 9K)

Of course, none of the above accounts for any interest payments which can easily double some of the costs (e.g. the £224K would easily double over a 25 years mortgage).

So, if they were average in all cases, my children will spend their entire working lives plus another 10 years after that, for a total of 55 years minimum working life, to cover just the average needs.

Looked at this way, it appears that the "average life" is no longer affordable by the "average person" - that can't be right and is no way it should be acceptable in any sort of society that attempts to call itself civilised.

Of course what really happens is that the average person must make adjustments in order to make ends meet.

The first thing to go is the pension provision - it's too far in the future for most young people to contemplate and is always less important than the immediate problems. We're already seeing the impact of that with the unsustainability of current approach to pension provision.

The next thing, which is now starting to emerge, is the revolt against those people who drive up the cost of living (the extraction of profits ultimately translates into an increase in the cost of living) but don’t apparently add anything productive to the economy. The Investment Bankers are at the pinnacle of that but are no means the only targets.

My children are right to question why they should participate in such a system that enslaves them to a life of arduous work, worry and stress when there are so many better things they could do with their lives.

I don't yet have an acceptable answer to that (because I don’t think there is one) but I'd really like to know what purpose the current socio-economic system actual serves the majority of us.

The usual whinges about Goldman and incomprehensible debt instruments here.
But the important thing is that someone got fined for simply not telling the FSA something the world knew about (eventually anyway). The point is UK authorised businesses are supposed to volunteer information to the FSA not wait until they get caught out; the so called "open relationship" obligation. Goldman's "crime" was forgetting (?) to tell the FSA. The fine was reduced because Goldman "fessed up" thus saving the cost of an enquiry (into what? failure to remember something now remembered after a prompt wow! Not exactly a good use of resources there)
If Goldman had told the FSA about the SEC enquiry in the first place there would have been no fine, so firstly the UK is £20m better off for essentially nothing more than reading the newspaper and secondly lots of other firms will now remember their obligation to "shop" themselves in future, all over a win-win for everyone (except Goldman).
So why all the whinges?

@64. At 11:35am on 09 Sep 2010, Mark wrote:
"So why all the whinges?"
In a correctly regulated and morally responsible financial industry GS would not need to be telling the FSA or SEC anything as they wouldn't have been spending their time trying to shaft other people.
@63. At 11:07am on 09 Sep 2010, AgeTheGod wrote:
"Looked at this way, it appears that the "average life" is no longer affordable by the "average person" - that can't be right and is no way it should be acceptable in any sort of society that attempts to call itself civilised."
So just exploit the reliance on debt as a creator of wealth (sic). They can't do much in the way of prosecution when you're dead.

The slippery, slithery world of investment banking,
or why mom & pop banks are vital to economic recovery.
Goldman Sachs is disbanding their prop trading unit. a group that MAKES BETS with the firm’s own capital. This move is to comply with new US rules aimed at curbing risk.
Britain's FSA slapped a 17.5 million pounds (US$27-million) fine on Goldman Sachs for inadequate disclosure of a US probe. The fine — admittedly one of the biggest ever imposed in Britain — was related to Goldman's troubled Abacus mortgage-security product, which resulted in the investment bank being investigated by the US Securities & Exchange Commission (SEC).
In JULY, Goldman agreed to pay $550-million to settle civil fraud charges over how it marketed the Abacus subprime mortgage product.
Britain's Financial Services Authority Director Margaret Cole said: "Goldman Sachs International did not set out to hide anything, but its defective systems and controls meant that the level and quality of its communications with the FSA fell far below what we expect of an authorized firm." (Margaret is so kind!)
In a seven-word response to the FSA fine, a Goldman Sachs spokeswoman said: "We're pleased the matter is resolved."
The FSA said Goldman Sachs had failed to notify it of the fact that the SEC had issued so-called "Wells Notices" containing allegations of violations of US securities laws. A Wells Notice is an indication from the SEC staff that they intend to submit to SEC for enforcement action.
Earlier this week, JPMorgan specified plans to shut down all of its prop trading units, starting with a commodities trading unit in London. Twenty commodities traders in London were told to apply for jobs elsewhere inside the bank. Investment banks right now are changing the roles of their prop traders, including Citi and Bank of America. The announcement about JPMorgan is different because they apparently plan to shut down ALL prop trading desks.
But WATCH OUT: shutting down prop desks does not necessarily mean shutting down the function; it's more like changing the name, NOT THE PRACTICE. Prop traders are no longer "prop traders". Many have been moved to client-based desks. Look at the new role of Citi's Sutesh Sharma. Citi will move Sutesh Sharma and at least 3 members of his prop trading group, Citi Principal Strategies, to the firm's HEDGE FIND, Citi Capital Advisors.
Why?
To sidestep a potential run-in regarding the Volcker Rule's new regulations. Did anyone really think that Volker's new rule would stop these investment guys from manipulating, playing games, taking risks and speculating?
Sharma is also close to Vikram Pandit. The pair left Morgan Stanley to launch the hedge fund, Old Lane, with $4B, making it the second largest hedge fund launch at the time. (Old Lane was later bought by Citi.)
Thanks to A SINGLE LINE in the Volcker Rule which specifies trading "operations unrelated to customer operations," as long as the "prop trading" is done for client-related purposes, all is hunky-dory. And never believe that this "hole" got into the New Financial Reform by oversite.
This explanation of Citi's plans for Sharma is alarmingly interesting because it demonstrates how Goldman and other banks plan to deal with the Volcker Rule.

re #61
Sorry, Alesha, I should have made it clear that I know it's not debt in financial terms but it just struck me while listening to The Humph and Cleggie that it has become a form of debt.

It hangs over us. We can't live without it. The cost keeps getting racked up. Someone wants it 'paid back' ie cut. Bit like a credit card balance ...

Technically, though you are right bond wise, in a way it is pure 'debt' because GB eventually abandoned his golden rule and also continued helter skelter with PFI 'initiatives'.

The FSA is a bureaucratic monstrosity that has added nothing to the regulation of financial services. It's failure to apply an intelligent approach when evaluating the returns from the likes of Northern Rock and HBOS contributed significantly to the financial crisis. Both should have been told to either rein in asset growth or increase sources of long term funding years earlier.

So what does the FSA levy its greatest fine for? Are yes, failing to have a system in place to fill in the boxes. Had Goldmans told the FSA about the investigation the FSA would have done nothing. No harm has arisen from the failure to inform the bureaucrats. But the system wasn't followed, the boxes weren't ticked. Calamity!

I have no great love for Goldmans, but I despair that we rely on box-tickers whose priorities seem so far removed with the real issues they are supposed to deal with.