Apropos Mark Carney and politics

Mark Carney seems to have glossed over his remarks prior to the the referendum which attempted to scare the electorate into backing remain - furthermore, he has persistently refused to be held accountable for his comments or to explain them in the subsequent light of the facts

The real disgrace is that at the time he used his 'trusted' position in order to influence those undecided voters to his way of thinking

Friday 13 May 2016 - Bank of England Governor Mark Carney delivering the quarterly Inflation report in London

'.. Brexit, to my mind, would have a material impact on growth and inflation. It would be likely to have a negative impact in the short term ..'

'.. I certainly think that would increase the risk of recession ..'

In short Mark Carney has never to this day provided a satisfactory response to his interference in the referendum or the following charges over his comments on the referendum

He was accused of '.. being "politically involved" and of bargaining with Chancellor George Osborne on warnings over the economic impact of Brexit ..' and furthermore, '.. he refused to publicly release notes of his private conversations with Mr Osborne, stating that MPs could see them if they wished ..'

With all this in mind his latest outburst about political interference is really rather peculiar

There has been a lot in the press lately about Mark Carney and the Bank of England railing against political interference by politicians

‘.. We are not going to take instruction on our policies from the political side ..’ 

Independent - Bank of England Governor Mark Carney Theresa May

However, Mr Carney seems to have forgotten that he was rather a political appointment in the first place by George Osborne the then Chancellor, so perhaps he should reflect on this before ‘shouting the odds’ – furthermore, if he had been half competent at his job the issue would not have arisen in the first place – and today we hear that he intends to bail-out by possibly resigning

‘Good effort’ – if only the rest of us could bailout of his legacy so easily on the same (pension / historical remuneration) terms as he will undoubtedly receive

Mark Carney may not want advice from politicians but looking back at the performance over his tenure to date, he certainly needs advice from someone because his term in office has not proved to be a resounding success and in fact has only made the whole economic climate infinitely worse than when he took office

Central Bankers as a group, apart from one notable exception Elvira Nabiullina  - Nabiullina named Euromoney Central Bank Governor of the Year 2015 - from the Russian Central Bank, have proved to be THE PROBLEM AND NOT THE SOLUTION

They have made incredibly bad decisions and persistently interfered with the global economy in one form or another over the past 8 years (and before). As a result of the actions of these Central Bankers we have been brought to the brink of a potential global systemic collapse

Throughout, Mark Carney has run with the herd of other Central Bankers by constantly cutting interest rates and printing money, instead of thinking for himself and recognising the potential future problems associated with the BoE decisions – as the saying in the past went ‘nobody was ever blamed for buying IBM’;  although, look at how they were overtaken by others as a salutary lesson for Mr Carney

In fact, for all the performance of this indecisive individual (‘unreliable boyfriend’), with rumours of interest rate cuts which never came to fruition, Mr Carney has been an unmitigated disaster – but then again so has his peer group, but blame is never allocated provided one is part of the herd when there is a collective ‘foul up’

All these failures by Central Bankers, and more, have been outlined in the Bank of International Settlements report - Bank of International Settlements (BIS)

 

Bank of International Settlements:

“Rising debt, lower productivity growth and diminishing room for policy manoeuvre have contributed to a build-up of vulnerabilities that give rise to three threats: macroeconomic instability; the adverse effects of persistently low interest rates; and a loss of confidence in policymaking”

 

All in all, not a pretty scenario and all brought about by the abject failure of Central Bankers of which Mark Carney is one.

By now interest rates should have returned to their ‘norm’ and not sunk ever lower, punishing savers, crippling pension funds and building up huge issues for future generations. The fault of the Central Bankers, those ‘wonders of the universe’, who are not really affected themselves because of huge salaries and very impressive pensions courtesy of the populations they are in the process of bankrupting!

Unfortunately Central Bankers / Governments / SEC / etc. never seem to learn from history and whereas they should have long ago broken up the big banks (too big to fail – requiring bail outs) and banned derivatives (baskets of goodness know what rubbish); instead of introducing more transparency they allowed greater leverage, destroyed the Chinese wall between commercial / investment banks (Glass-Steagall) - Glass-Steagall: aftermath of repeal - and continued with a whole raft of other mistakes 

Therefore instead of shutting down the problems before they became out of hand, everyone (SEC / Governments / Central Bankers et al) just relaxed the rules and joined the party with less regulation, banks became hedge funds, more derivatives, greater exposure, crazy bank capital rules introducing greater risk … and so on … with nobody taking any heed of warnings

Furthermore, the ratings agencies have also played their part and it is remarkable that they still retain the credibility that they do - Questionable Credibility Of the Ratings Agencies- In Aftermath of 2008 Crisis

Now we are at a point where there are only two ways out of the global debt – either actual default or default by inflation. This is why today’s solution is encouraging inflation to try and reduce the debt by once again manipulating the system. It is almost getting to the farcical situation where they should try the Governments Epiphany Over Perpetual Bonds approach - because we are now in the realms of fantasy with global debt, which under normal circumstance can never be repaid

Which is where we are today – global debt has ballooned from the last financial crisis - and when the next meltdown arrives the Central Bankers will have already expended their armoury after being totally incompetent over the past few years by adopting reckless policies and never learning

The only difference next time around will be size of the problem, which will be far greater than in the past and reflect the magnitude of the oversight of Central Bankers / Governments / etc. in failing to address all these issues long ago when they had the opportunity

And what of the bankers / hedgies / politicians that brought about the problems – they will be long gone – but even if they are still here NOTHING WILL THEIR FAULT and they will once again be underwritten by the rest of us

 

Reference

Bank of International Settlements

 

Tags: | Categories: Bank of England | Economics

Why should currencies move a far greater amount than usual in a short space of time, for no apparent reason and then more or less return to their norm?

This situation is beginning to occur far more frequently than in the past and as with everything in the financial world no-one is ever to blame

Yes, liquidity plays a large part with the imposition of tougher banking requirements but so do algorithms and automated computer high frequency traders (HFTs) which can trigger excessive movement and compound each other

However, why is the concept of market manipulation limited to individual traders / organisations and surely it should be applied to computer models as well or the organisations that run them? There maybe bugs or glitches in the software but no-one has yet managed to explain why this exonerates either the developer or the underlying organisation from ultimate responsibility or even why they should not pay the penalty for what is clearly market manipulation

After all someone has coded the computers to react in a certain way and without ‘fail-safes’ they effectively get into a position where the computer code does indeed manipulate the market for financial gain and furthermore they feed on each others decisions thereby compounding the issue very quickly

For the future this is inevitably the way forward for ‘hackers’ – why bother to go for ‘penny-ante’ ransom hacks when targeting the Forex market by getting systems to place fake/dummy trades can reap huge rewards

Better still if you can get your computer to trigger a knock on effect with the market makers systems the sky is the limit. Simply get your systems to find the trigger points in the ‘algo’ computers and let them do all the work – furthermore, by triggering someone else’s systems to do the dirty work you probably won’t even get found out

Don’t do it too often because that is one way of being found out, but once every 6 months should fund a nice lifestyle

So the message seems to be clear – write systems that ascertain the ‘algo' systems triggers and then use these loop holes to exploit the market using the HFT's own applications to do the work for you

And don’t forget the underlying message that nobody is at fault ‘.. it was a computer that done it – your honour ..’! - and I have no idea how the computer code got written

Tags: | Categories: Currency | Forex

Let us return to the TalkTalk saga of last year when a number of their customers had their details hacked

TalkTalk - Joke Of The Data Protection Act

Now that TalkTalk have crystallised the extent of the breach (despite their CEO Dido Harding not having a clue and yet pocketing a £2.8 million salary) - it would seem that the information commissioner has given TalkTalk a record fine

TalkTalk - fined £400,000 for mass hacking breach

Although one has to question the miserly level of the fine which was £400,000 to cover the theft of the details of 156,959 customers data

Does the information commissioner really believe that a fine of £2.55 per customer breach is in any way appropriate or adequate?

After all assuming that it only takes a customer 1 hour (whereas in reality the time would probably be a great deal more to put right damage caused by this event) at the minimum wage (£7.20) to put right the potential damage or changing bank passwords etc. the fine should have been a minimum of £1.1 million

Furthermore, if a reasonable penalty of £100 per breach was imposed then it would have cost TalkTalk a far more respectable £15.6 million

Bearing in mind the following two comments - one really does have to wonder what planet both the ICO and TalkTalk are on

 

Elizabeth Denham, the information commissioner, said:

“Today’s record fine acts as a warning to others that cybersecurity is not an IT issue, it is a boardroom issue. TalkTalk’s failure to implement the most basic cybersecurity measures allowed hackers to penetrate its systems with ease”

 

 

The above comment by the ICO is complete nonsense!

Bearing in mind that TalkTalk have just stated that fixing the problem cost them about £60m, why would the prospect of a £400K fine actually encourage any organisation to volunteer to spend £60m up front fixing problems when they can simply await a breach and only then be required to pay the cost of correcting their systems

It is simple really - why fork out £60m until you are caught - and even then the fine pales into insignificance beside the cost to rectify the problem

Especially (as in TalkTalk case) where the company makes it incredibly difficult for those who have been affected to break their contract and leave for another provider

 

TalkTalk

“said that the hacking incident cost about £60 million to resolve, was “disappointed” by the decision to impose the fine for breaches of Britain’s Data Protection Act”

 

Oh well! seems that matters are still OK on the CEO/Directors circuit and no-body is held to account - so nothing really changes with the cosy arrangement within big business

Move on and don't create waves - or alternatively, trot out the trite fall-back response about taking it on-board and learning from the incident

Dido Harding should learn from the incident by collecting her P45 on the way out

Reference

TalkTalk CEO Dido Harding Pockets £28m

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