Archive for Finance
Too good not to pass on…………..
This explains the source of the worldwide financial
problem…..
Seanie is the proprietor of a bar in Dublin .
In order to increase sales, he decides to allow his
loyal customers – most of whom are unemployed
alcoholics – to drink now but pay later. He keeps
track of the drinks consumed on a ledger (thereby
granting the customers loans). Read More→
“UK Energy Risks – Uncertain but not Unimaginable” – Global Energy Advisory
Posted by: | Comments On the 23rd of February it was reported that one of the large six utility companies in the UK lost £172.5mn, in just three months, by trading a gas position. This loss could have been against a background of relatively low gas price volatility; presumably this “increase in wholesale cost” will now be passed on to end consumers? Who trades and who pays? Who invests and who pays? The new Energy & Climate Change Committee is today taking oral evidence from the Secretary of State for Energy and Climate Change, Rt Hon Edward Miliband MP, in the House of Commons in London. The independent Global Energy Advisory White Paper entitled: Investment Failure, Fails Customers, was circulated to the Committee earlier this week.
The paper discusses the potential risks to UK energy security which are well known within the Industry. It also asks pertinent questions regarding the costs and consequences of the energy investment/trading decisions being taken at the current time.
This discussion will be continued at the Global Energy/Advisory Super Derivatives Seminar in London on March 5th
Details of the seminar are:
Date: Thursday, March 5th
Time: 11.30am – 1:00pm
Venue: Floor 33, 30 St Marys Axe (The Gherkin), London,
EC3A 8EP.
Bill Powell Said:
I am a member of ‘Action for Land Tax & Economic Reform’ (ALTER) and help run their stall at Lib Dem Conferences. ALTER is one of the groups behind this event.
It is estimated that 70% of the money that circulates is created in the form of loans ’secured’ against ‘property’. They circulate as money until the loan is paid off. If loans stop the money money in circulation dries up. That’s what happened. That’s the origin of the credit crunch.
The bubble came about by banks enticing people to take on higher and higher loans with more and more ‘affordable’ payment terms, e.g. interest only, self-certified income, low teaser (aka ‘fixed’) rates for a couple of years. They competed with each other until the loan to earnings ratio became unbelieveable. Then the bubble burst!
The amount that an individual can borrow is income divided by interest rate. So, as rates fell borrowers became over extended. So did the banks when borrowers stopped paying. The £$ values were more than either borrowers or banks could stand.
Land Value Tax would stop the process in its tracks. LVT would take some of the borrower’s income. There is then less that the banks could capitalise. In that way LVT could stabilise 70% of the currency that circulates.
It would also provide public revenue, raised on the locations most able to bear it, and this would enable other taxes to be reduced.
So that’s the way to prevent another property bubble. It doesn’t tell us how to get out of this mess though. Maybe see Chris Cook for a different form of finance.
Bill Powell
