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View Full Version : Don’t let banks lose your money – do it yourself



BrilloPad
28th September 2008, 07:24
My favourite part - "There isn’t a single person in the entire world who has the first idea how the [banking] system works."

http://www.timesonline.co.uk/tol/comment/columnists/jeremy_clarkson/article4836545.ece

Afew months ago I was seated at dinner next to a banker and, as you can imagine, my watch immediately started going backwards. Minutes crawled by, and as he droned on about derivatives and sub-prime markets in America I began to wonder if it would be poor form to stab him in the eye with my lobster scissors.

Instead I decided to try to will myself to death. But then I was snapped into hair-straightening consciousness when he casually mentioned that the giant Union Bank of Switzerland was in trouble.

UBS? That’s where I’d plonked all my life savings. What do you mean, trouble? Are you saying that because some Mexicans can’t afford to pay their mortgages I’m in danger of losing the fruits of a lifetime’s graft? The answer, when translated and condensed, was yes.

The next day, in a bit of a flap, I rang the bank, which quite understood my concerns and offered to transfer the bulk of my savings to a company I’d never heard of. It was called AIG.

As you can imagine, the past two weeks have been most enjoyable. No wait. That’s the wrong word. I mean blood-in-my-feet, dead-faint-half-the-time terrifying.

As I sat there on that horrible Monday, watching the whole financial world on the brink of collapse, I thought back to all the midnight oil I’d burnt writing these columns, all the crappy hotels I’d stayed in while making various television shows. And how all of that revenue would be lost for a raft of reasons I simply didn’t understand.

Of course I made strenuous efforts to get my money out of AIG as soon as the scale of its problems became apparent. But it wasn’t possible. It had shut the fund in which I’d invested and it would remain closed for three months while it tried to sell the assets. “We need to do this in an orderly fashion,” said the man on the phone, calmly.

Inwardly I was screaming. I don’t give a shit about an orderly fashion, any more than a man in the trenches wants to look smart while running for his life. It’s my money. I gave it to you. You’ve squandered it on a Mexican’s house in San Diego and a stupid football team and that’s your problem. Not mine.

It turned out, however, that I was wrong. It was my problem, so I decided to try to understand banking. And what I’ve gleaned from a two-week crash course is that it is completely unfathomable. There isn’t a single person in the entire world who has the first idea how the system works.

It’s like the internet. An entity. Something that can be brilliant or terrible, depending on nothing that the human mind can grasp. But either way, it cannot be turned off.

This, for example, is what AIG had to say about the situation. “Approximately $307 billion . . . of the $441 billion in notional exposure of AIGFP’s super senior credit default swap portfolio represented derivatives written for financial institutions, principally in Europe, for the purpose of providing regulatory capital relief rather than risk mitigation. In exchange for a minimum guaranteed fee, the counterparties receive credit protection with respect to diversified loan portfolios they own, thus improving their regulatory capital position.” That’s not English. So far as I know, it’s not even human. It is rhyming slang for bank.

Then, for no reason that anyone can explain, news came through that the American taxpayer had rescued AIG. I was beside myself with happiness. I was also in California. So I turned off the CNN business report – the BBC was doing something on global warming, as usual – ran downstairs and, much to the surprise of the hotel doorman, thanked him and everyone in the lobby for getting me out of such a deep and confusing hole.

Sadly, however, it turns out I’m still in it. You see, I’ve just received a letter from an AIG assistant general manager – it has obviously put its top men on the job – saying that I can either have a fraction of my investment back in December, or I can take out a new fund – using imaginary money that obviously doesn’t exist – and hope to get it all back at some unspecified point in the future.

Now, I’m a gambler. I love the horses and playing cards. But this is a big one. This is keeping me awake at night. Can I really put 20 years of savings on red and hope that Carlos the Mexican sells his pickup truck to pay off his mortgage?

My banker can’t help. He, like everyone, is caught up in a whirlwind of uncertainty. I asked him a million questions and he hasn’t been able to answer one. Advice? There’d been plenty in the good times – but now? I might as well have asked my dog for guidance.

It’s the same story with the newspapers and the government. There is much finger-pointing. Blame is flying everywhere. It’s the bankers. It’s the Mexicans. It’s capitalism. It’s the price of oil. It’s the Chinese. And, on the BBC of course, it’s global warming. This is all very natural. But it doesn’t really help.

And so it’s up to me to come up with what I hope, for once, is a spot of sensible advice for those who are in the same boat.

Because there is no safe haven for your money, you need to give it to someone else. That way, it becomes their problem. So, why not pay your income tax early? And call your kids’ school to see if you can settle all forthcoming fees in advance. Need a new car? Why not buy one now?

Certainly I’ve decided not to send out any invoices right now. I simply wouldn’t know where to put the cash. And so with that in mind, if you are the accountant at The Sunday Times and you are reading this, the payment I would like for this week’s column is four lamb chops.

cojak
28th September 2008, 07:59
For reasons of pure FUD (and a healthy dose of idleness) all I've done with my saving is to put them into savings accounts. No account in more than one institution and no more than £35K in one account (easier said than done if your savings are reasonable).

I'm sleeping better than many colleagues at the moment...

ChimpMaster
28th September 2008, 08:28
No account in more than one institution and no more than £35K in one account (easier said than done if your savings are reasonable).


I think that's the problem though. I don't want to open 5 or 6 different accounts.

Mind you, I'm with Nationwide who are (a) not a PLC and hence can't be shorted/sold to death and (b) have a very conservative loans/savings ratio of something like 0.7 (HBOS is 1.7)

scooterscot
28th September 2008, 10:02
I'm with Nationwide who are (a) not a PLC and hence can't be shorted/sold to death and (b) have a very conservative loans/savings ratio of something like 0.7 (HBOS is 1.7)

Me too. The nationwide has all my cash. I sleep easy.

thunderlizard
28th September 2008, 10:49
As a wise man nearly once said:

"If you owe the bank a million dollars you're in trouble. If the bank owes you a million dollars, the bank's not in trouble."

Troll
28th September 2008, 10:53
Cater Allen guarantee

So how strong is Abbey National?


Many of you have been asking us for more details regarding the Cater Allen deposit guarantee. Ever responsive to your requests, we would like to clarify for you the main features which will answer your questions.

The Cater Allen Deposit Guarantee

* All deposits held by Cater Allen Private Banking are 100% guaranteed by Abbey National plc.

* This guarantee covers all deposits with Cater Allen including Personal and Non-Personal Banking and Savings Accounts, as well as Term Deposit Accounts.

* Cater Allen and Abbey are both part of Grupo Santander, one of the largest banks in the World. Both Abbey and Banco Santander have stable credit ratings of AA and above.

The Financial Services Compensation Scheme (FSCS) / Depositor Protection Scheme

* Abbey National plc and Cater Allen are separately authorised and registered with the FSA as having permission to carry out banking activities. Therefore a customer would be able to claim separate compensation, under the FSCS, from both Abbey and Cater Allen in relation to the total amounts deposited in accounts with each bank. Currently, the scheme protects £35,000 per person.

thunderlizard
28th September 2008, 10:59
Santander's about as good as they get at the moment.

BlasterBates
28th September 2008, 11:08
Most of my money is on "red" in various casino´s (stock exchanges). The thing about shares is that as long as all the companies don´t go bankrupt at the same time you´re still in the game. Thankfully I was so busy buying mining and oil stocks over the last couple of years I haven´t had any left to put into financial stocks; I would steer clear of them. My investment philosophy is he who dares wins. :D

Francko
28th September 2008, 11:16
Most of my money is on "red" in various casino´s (stock exchanges).

I know safer casinos like Lugano or Campione. :smokin

Troll
28th September 2008, 11:39
Santander's about as good as they get at the moment....but it isn't Santander that is guaranteeing the deposits

BrilloPad
28th September 2008, 16:08
As a wise man nearly once said:

"If you owe the bank a million dollars you're in trouble. If the bank owes you a million dollars, the bank's not in trouble."

And if you owe the bank a billion dollars they are in trouble?

NotAllThere
28th September 2008, 16:23
I always thought it was

"If you owe the bank £5000 it's your problem. If you owe the bank £5,000,000 it's the banks problem".

I live and work in an economy that isn't driven by credit. My mortgate and most of my savings are with the Cantonal bank. So, though I've some savings with UBS. and no economy is an island, entire of itself, I'm sleeping fairly easily.

Stan.goodvibes
28th September 2008, 19:36
Me too. The nationwide has all my cash. I sleep easy.

I don't have any cash. I sleep easy as well.

bobhope
29th September 2008, 07:50
Gold + silver of course.

rootsnall
29th September 2008, 08:13
...but it isn't Santander that is guaranteeing the deposits

Santander own Abbey, and now B&B, I'm going to have to shuffle some of my money to keep under the £35K limit. Will there be enough banks left for DimPrawn to spread his million around ?

DimPrawn
29th September 2008, 08:29
Santander own Abbey, and now B&B, I'm going to have to shuffle some of my money to keep under the £35K limit. Will there be enough banks left for DimPrawn to spread his million around ?

It's getting tricky I can tell you. Damned curse being rich.