Iceland again and the ongoing banking crisis.

The second day when the Online Times refuses to publish a comment of mine on the Iceland affair (see post below). Less surprisingly today perhaps, as my ire was raised by this nasty slur at the start of Mr Hattersley's article upon which I commented, linked here: "Icelanders are, by nature, intrinsically unreasonable." Hattersley states in his first sentence. At least The Economist recognises the significant aspects of the Icelandic situation which The Times chooses to ignore - Read here. MEANTIME - ANTICIPATING REJECTION - I today copied my exact comment to the Hattersley tripe in The Times, which was as follows: Mr Hattersley, as has been his habit down the years, is completely wrong on this matter. The Icelandic refusal, if confirmed in their referendum (wot that?), to repay deposits lost outside normal EU interbank guarantees are showing the way for ordinary people everywhere to eventually escape the results of the banking fiasco and the present government's policy of the printing of vast sums of useless money under QE. Brown and Darling will eventually be found to have acted illegally in the banking bailout as confirmed by the NAO on the last day of the parliamentary sitting in June last year. When they are eventually jailed (if such is possible under Scottish Law), or otherwise brought to account, then I feel sure small property owning English taxpayers will be as reluctant as the Icelanders to pick up the tab for the profligate commitments made without benefit of parliamentary approval by these two incompetents. A blow by blow account of the HBOS Lloyds RBS fiasco is available in these blog archives as well as the illegality of the bailout as stated by the NAO last June. The illegal conspiracy has now been compounded by Parliament's inaction on this matter since its return. The depth to which this law-busting conspiracy has spread across large parts of the British establishment was again illustrated last evening on the Jeff Randall programme when, from Edinburgh please also note, a funds manager refused to explain why he had deliberately thrown millions down the sewer at the behest of Brown and Darling and contrary to the obligations of his office and interests of his policy and share holders.

HBOS merged into doomed Lloyds

The Guardian reports the meeting where the castrated shareholders of HBOS went along with those of Lloyds in agreeing the merger of the two banks which the mazed mainstream media insist on predicting will be a "Superbank" but in fact will result in years of debts for Britain's bankrupt mainly non-voting electorate and the nation's future taxpaying generation. Shareholders contemplating their long term losses and future bleak outlet are unlikely be comforted by this report of further management excesses involving a trip to New York for 100 branch managers and their wives that is in the Scotsman this morning linked here.

Old Halifax Shareholders could block Lloyds takeover

An article in the Mail Online, here, points out an interesting scenario. When the once respectable and honest Building Society The Halifax de-mutualised many members obtained shares which many still retain. Thus there are large numbers of small shareholders, estimated at two million in this article. A simple majority of shareholders are needed for the takeover by Lloyds to proceed - the large institutional shareholders under Government pressure to ram this deal through number only 1000 apparently, therefore ordinary people could put this sorry tale to a speedy end.

Battle for Britain's Banks!

Last week the Marx inspired British Government declared war on Britain's Banks. We must assume that the phony element of last week is about to come to a close as Labours propaganda platforms of the Sunday morning TV political programmes (not an opposition politician in sight) gave prominence to two of the principal plotters Lord Mandelson and Yvette Cooper to announce that the assault would be taken to the boardrooms of the dissenters led by the aforesaid Baron of Hartlepool and Foy with Alistair Darling in tow. The announcement this morning of the Dutch Government bail out of ING brought memories of earlier follies such as that of Barings with further echoes from France with the sackings of executives of Caisse Epargne for getting a 425 million sterling bet wrong on the stock market rising. But in Britain this week we must look to Barclays for clues as to the direction of the campaign for the future control of what was once Great Britain. HSBC is also holding out but as I had reason to discover when I happened to have dinner with its then Chairman in New Zealand at the time of the takeover of what I recall he described as the 'minnow' of a British High Street Bank, The Midland, that giant of international finance is in no way a British Bank, a matter of considerable pride, I recall, for that Scot of self-proclaimed humble origins. So Barclays is the one to watch - an international bank it is true, yet one that seemed to grow by clinging to the coat tails of the British establishment during its period of expansion into Empire, rather than international trading acumen. Its management always seemed lack-lustre to me but whether that will have spared it from many of the excesses of most of its competitors or made it the receptacle for the dross of their own mistakes yet remains to be seen. Lloyds and HBOS issues look set to become a side-show this week, although it is disturbing to see Legal and General recommend the merger, Lloyds shareholders should make their own calculations, large finance companies may easily be swayed by their holdings in HBOS when casting their votes a shareholders of Lloyds! The taxpayers can merely look on in horror and trust that all these deals may yet collapse before a single penny of the billions of taxpayers funds pledged, which can never be realistically raised let alone repaid, are actually legally committed let alone begun to be transferred. (Link on latest borrowing added at 11:30 am, here). David Cameron of the Tories, on Radio 4 this morning, offering 1 penny off Corporation Tax for small companies with less than four employees never fails to exceed ones worst expectations for total irrelevance - even he calculates the total effect for the proposed six month validity would only be worth six hundred pounds - hardly worth losing the opportunity to ram home to the Government that they are completely bankrupt and can now only cut commitments! Ambrose Evans-Pritchard has his own interesting views in the Telegraph again this morning, here.

Where will they find the money?

Some say a begging bowl is being held out towards Russia, if true that just shows the desperation. After the weekend spending spree on Scottish Banks with credit cards payable by English taxpayers, Brown and Darling must be feeling like a couple returning from a lost weekend knowing the bills are on their way but with senses too deadened from their excesses to fully grasp the enormity of what they have done! 5.2 per cent inflation, the escalator to be used for various state benefits for next year should further spoil the after-glow from their Marxist wet dreams! The Debt Management Office has announced Gilt Sales to begin to cover these excesses from 20th October, hang on tight, will we see the nationalised banks paying 12 per cent coupons on the Preference Shares of the Government now using their scalped shareholder's remaining funds to provide the investments that will permit the loans on which such shares were purchased? Farce indeed!

Incredibly Lloyds HBOS deal continues!

Of course one cannot really say that a deal is continuing when the price has been re-negotiated downwards by 27 per cent but the join-up of the banks seems to be continuing condemning LLoyds not only to nationalisation but almost certain death! The report from Sky News is linked here with the following comments provided at 1455 London Time:

• It seems I am of exactly the same opinion as many other people at the moment - why is Lloyds taking public money and still making this acquisition? Surely that can't be legal, let alone ethical?

  Posted By :Mike Report This

• as a shareholder of Lloyds this deal looks worse and worse---is this yet another example of atrocious management decisions? Lloyds were regarded as the best capitalised bank with the most prudent board only a few months ago--perhaps the mayhem of the past weeks has affected their collective judgement.

  Posted By :Stephen cole Report This

• If Lloyds TSB also requires government funding, can someone please explain how they can afford to buy HBOS, please? changing the law to allow the purchase in the first place was bad enough but for the tax payer to have to fund it for Lloyds as well?!?!?!

  Posted By :Di Report This

Good question from Mike, can any of this be legal and in accordance with Company Law and the Takeover Code? Things just get stranger and stranger - Where is the Parliamentary Opposition?

Solely a Scottish Shareholder Salvage

Well I have read the press, watched the excruciatingly overlong Downing Street press conference and have concluded that all the 37 billion presently being discussed is entirely to be devoted to rescuing the Labour Party North of the English border. I can remember banks coming and going throughout my lifetime, others too may remember these names: Martins Bank National Provincial Bank Midland Bank They have all gone in one way or another - WHY NOT the Halifax Bank of Scotland and the Royal Bank of Scotland. The only other bank presently involved seems to be Lloyds TSB which was perfectly viable before they became entwined in the machinations of the demented Gordon Brown - now presumably the Lloyds shareholders are to be punished/sacrificed for having doubts on the originally hastily cobbled together deal. British taxpayers can neither afford nor pay for this deal which does not direct a single penny towards the source of the problem - the exploded house price bubble. A MOTION OF NO CONFIDENCE IN THE GOVERNMENT SHOULD TODAY BE TABLED IN PARLIAMENT AND ANY ENGLISH CONSTITUENCY MP NOT VOTING AGAINST THE GOVERNMENT SHOULD BE MADE AWARE OF THE CERTAIN CONSEQUENCE! Has the 37 billion helped the liquidity crisis? Well consider this, the Three Month Interbank Sterling Interest Rate has dropped point one tenth of one per cent from6.28 to 6.27 per cent - DISASTER!

New Labour called to Account -

Labour has been the greatest financial disaster ever to be inflicted upon Great Britain by its own electorate. The cost this morning of Monday 13th October 2008, according to the propaganda of the subjugated and biased media is in the tens of billions of pounds up another 37 billion just today! Read here, here and here. This is not the end. Any who have studied the erratic and dangerous behaviour traits of Gordon Brown down the years, as has this blog, can be in no doubt that ever more dangerous waters lie ahead.

HBOS Deal Collapses

Sky News is reporting, as repeatedly foretold by this blog from the day of its announcement, the Lloyds TSB takeover of HBOS will not proceed. Links to be provided when available. This Guardian report indicates the reports have substance but do not provide confirmation. Elsewhere Eurozone members are reported to be about to guarantee interbank lending, if only these wasted billions could be directed to the aid of those with negative home equity - almost at a stroke the banks would then be able to resume normal activities! Tomorrow looks like being another hectic start to the week, as I blogged here seven days ago, I will report things as they appear to me on the morrow. G'night!

Treasures from the Threads - Number Twenty-one

This comment is to a typically weak article from the monumentally useless 'so-called' "Leader" of the Opposition David Cameron in today's Daily Telegraph, linked here: "it is ... critical that we stand up for the interests of taxpayers" You've got your work cut out for you, Sir. What will be the effect of the Brown-Darling rescue plan? Let's look at one example. When the Lloyds TSB deal to take over HBOS was put together in mid-September, Lloyds (280p) were offering 0.83 shares per HBOS share (232p). Yesterday, Lloyds closed at 210p. 0.83 of that is 174p. But HBOS closed at 117p. Lloyds cannot sensibly stick to the original price. They would be paying 49% too much for HBOS. So Lloyds will have to re-negotiate the price. Not easy at the best of times. But now there is an added complication, thanks to the government's rescue plan. HBOS have confirmed that they want to take up the government's offer of re-capitalisation. How much coupon would the combined bank have to pay the government? It doesn't matter. However much it is, Lloyds can pay for it by reducing the price it pays for HBOS. How much is the government's promise to waive the competition laws worth to Lloyds? A lot. But how much do they have to pay for it? Not a lot – the government have no alternative. How important is it that Lloyds keep HBOS branches open and staffed? Very. Very important to the staff. And very important to the government. Lloyds can pay for that by reducing the price it pays for HBOS. Can Lloyds afford to walk away from the deal? Yes. Can the government afford for Lloyds to walk away from the deal? No. You say that: "we back, in broad terms, what the Government has done" Is that wise? Let's test it by trying to guess the price Lloyds will actually pay for HBOS. 0.83 Lloyds shares per HBOS share? No. Too high. Why should Lloyds flush its billions away? 0.56? No. Too low. Or is it? Is there any such thing, now, as too low, when we know that there is at least £50bn to be flushed away? Now multiply that by all the other transactions that need to be completed before the problem is solved. It doesn't work. Not for the first time, the government's plan is not a solution to the problem it faces. Posted by David Moss on October 9, 2008 12:58 AM

HBOS deal under renegotiation - Brown's resignation to follow?

The Daily Telegraph has an initial report, linked here.

More warnings for Lloyds Shareholders

The Independent backs my concerns today with this report opening as follows:

Words of caution from Société Générale had little effect on Lloyds TSB, which advanced to 290.25p, up 10.78 per cent, or 28.25p, as the London market awaited a crucial vote on America's $700bn bailout package.

The broker advised investors to "sell" Lloyds, arguing that the proposed acquisition of HBOS, which was up 17.87 per cent, or 30.4p, at 200.5p, will materially stretch the bank's capital ratios.

"We remove the capital benefit of the insurance subsidiaries from our core Tier 1 [capital estimate] and believe that there could be a further £2bn post-tax impairment on HBOS treasury assets. This would result in a core Tier 1 ratio of 4.7 per cent for the combined entity, which implies a £6bn capital shortfall," the broker said. "If we were to assume that this shortfall was addressed through a 45 per cent discounted rights issue, this would equate to an additional 3,910 million shares being issued."

News from India

The following is from the web site "Top News", linked here: "The Executives of the Halifax Bank of Scotland (HBOS) are in Bangalore for a week to meet possible partners for doing their IT work. This step of out-sourcing has been taken by the HBOS to cut-down on its expenditure. However, a leading newspaper reveals that the trip of 11 Executives has cost the company 45,000 pounds. " Wonderful that Britain's spooky Prime Minister waived the competition rules to save these creeps. Separately there are many reports that this same Halifax has today raised its mortgage rates for the second time in a week, read here. Poor old Lloyds Bank shareholders, soon to be brought low to keep a Building Society with such spendthrift executives afloat for a mere few extra weeks or months and salvage Gordon Brown's pride for even less time I would guess.