UK debt crisis and the onward march of neoliberalism | Letters

Quantitative easing allowed the wealthy to get out of cash and into assets, writes Martin London; the provisionally passed Ceta deal is TTIP by the back door, says John Airs. Plus letters by David Dodd and Paul Nicolson

The debt crisis Larry Elliott predicts (Borrowed time: Threadneedle Street is right to fear a bubble, 19 September), is the result of our failure to resolve the financial crisis of 2008. The credit crunch demonstrated that western economies were living beyond their means and that there was too much money and too much debt in the system. The required solution was for creditors to give up a considerable portion of their wealth, and return living space to debtors. Significant austerity was unavoidable.

Governments chose quantitative easing instead, which allowed the wealthy to get out of cash and into assets, retaining or regaining any loss caused by the crash. The rest of us had to bear the brunt of austerity: cuts in benefits, the erosion of full-time jobs, the rise of the gig economy and increases in rents. Additional debt, funded by the liquidity of quantitative easing, enabled millions temporarily to retain a semblance of normal living: but the unequal distribution of wealth has not gone away.

Continue reading…

Five reasons why global stock markets are surging | Nick Fletcher

Investors are picking up on the positive signals coming from US, China and Europe, and easing tensions over North Korea

Global stock markets are at record highs, with the MSCI All Country World Index reaching a new peak on Monday and both the Dow Jones Industrial Average and the S&P 500 in uncharted territory. European and UK markets are also attracting investors again, although they are below their best levels due to the strength of the euro and the pound making exports pricier. Here are five reasons why investors are buying into shares.

Continue reading…

Don’t dismiss bankers’ predictions of a bitcoin bubble – they should know

The virtual currency’s success reflects the continuing lack of trust in traditional banking following the credit crunch

When the boss of Wall Street’s biggest bank calls a bubble, the world inevitably sits up and listens, albeit with a sense of historically weighted irony: of course an investment bank boss would spot disaster after his industry presided over the last one. Jamie Dimon, the chief executive of JP Morgan, said last week that the ascendancy of the virtual currency bitcoin – which has risen in price from just over $2 in 2011 to more than $4,000 at points this year – reminded him of tulip fever in 17th-century Holland. “It is worse than tulip bulbs,” he said. “It could be at $20,000 before this happens, but it will eventually blow up. I am just shocked that anyone can’t see it for what it is.”

Dimon’s comments are an open invitation for derision from those who, rightly, point out that although JP Morgan may be top of the Wall Street heap, that heap is far from being the moral high ground. Under Dimon’s leadership, it has agreed a $13bn settlement with US regulators over selling dodgy mortgage securities – the instruments behind the credit crunch – and its run-ins with watchdogs include a $264m fine last year for hiring the children of Chinese officials in order to win lucrative business in return.

Continue reading…

Northern Rock investors’ compensation claim just doesn’t stand up | Nils Pratley

Though it might be deserved, the chance of campaigners securing reparation through suasion is extremely low

One sympathises, of course, with the former shareholders in Northern Rock who are still campaigning for compensation a decade after the bank’s nationalisation. They are not faceless City institutions. Many are small shareholders who had invested substantial sums, presumably in the belief the Rock was a solid north-east institution run by a competent board, and lost the lot.

The problem with the compensation idea, however, is that it doesn’t stand up. Yes, it is probably true that the Rock was not insolvent, just suffering an extreme liquidity crisis. After all, the Treasury is set to make a clear profit from the run-off of the mortgage book. But those profits are not evidence of unfair confiscation. Taxpayers assumed a risk the Rock was unable to bear because it had been running a risky and reckless funding model that couldn’t withstand the crisis. For a bank, lack of liquidity can be a life-threatening event.

Related: Darling: Brexit would not have happened without banking crisis

Continue reading…

Darling: Brexit wouldn’t have happened without banking crisis

Ex-chancellor admits government ‘lost control’ for a few days 10 years ago and says people have felt ‘badly treated’ since

The UK would not have voted for Brexit had it not been for the banking crisis which began 10 years ago with the run on Northern Rock, according to the former chancellor Lord Darling.

Darling admitted the Labour government “lost control” for a few days at this time 10 years ago when customers were queuing outside branches of the lender to withdraw their cash, and said the consequences were still being felt today.

Related: UK’s high street banks are accident waiting to happen, says report

Continue reading…

UK’s high street banks are accident waiting to happen, says report

Bank of England’s stress tests are not gruelling enough, says report to mark 10 years since run on Northern Rock

The UK’s high street banks are an accident waiting to happen and could struggle in another financial crisis, according to a report published on Wednesday to mark the 10th anniversary of the run on Northern Rock.

The report criticises the annual health checks – stress tests – that have been conducted by the Bank of England since the crisis and concludes that the methodology used by Threadneedle Street is flawed and the tests not gruelling enough.

Continue reading…

Time to raise eurozone interest rates, says Deutsche Bank chief

John Cryan says bubbles are emerging in parts of market ahead of European Central Bank monetary policy meeting

It is time to start raising interest rates, the chief executive of Deutsche Bank has said, warning that bubbles are emerging in parts of the market.

Speaking in Frankfurt, John Cryan said: “The era of cheap money in Europe should come to an end, despite the strong euro.”

Related: Business Today: sign up for a morning shot of financial news

Related: Deutsche Bank boss says ‘big number’ of staff will lose jobs to automation

Continue reading…

Time to raise eurozone interest rates, says Deutsche Bank chief

John Cryan says bubbles are emerging in parts of market ahead of European Central Bank monetary policy meeting

It is time to start raising interest rates, the chief executive of Deutsche Bank has said, warning that bubbles are emerging in parts of the market.

Speaking in Frankfurt, John Cryan said: “The era of cheap money in Europe should come to an end, despite the strong euro.”

Related: Business Today: sign up for a morning shot of financial news

Related: Deutsche Bank boss says ‘big number’ of staff will lose jobs to automation

Continue reading…