Morts Musings

One of my friends said he’d seen an article in the business press about a new banking product called eBAM, which, apparently, may make another banking crisis, like the one we saw in 2008, less likely in future. Actually I’d never heard of it before and, although it sounded interesting (in a geeky kind of way,) it was clear that my mate wasn’t too clear on the specifics himself, so I decided to do some digging.

It turns out that eBAM (electronic Bank Account Management) is indeed a banking product, and one which will certainly make the life’s of banks and big companies’ finance departments easier, although how much difference it will make to us “little people” is debatable; it’s most likely that any benefits which we do experience will be knock-on effects that aren’t exactly likely to revolutionise banking from the perspective of the man in the street.

It appears that eBAM is a new addendum to Corporate Treasury Management Systems (TMS, another acronym I was previously unfamiliar with,) which basically seems to be an impressive sounding name for the software systems which most any decent sized business is likely to be using to look after their finances and banking. However, eBAM apparently gives businesses a greater ability to keep an eye on the current state of their finances and banking facilities. Whereas previously a great deal of important information was transferred around businesses on paper or via emails, both of which can be all too easily misplaced, lost, or forgotten about, eBAM consolidates much of a business’ important banking information into one secure system which allows the information to be retreived electronically, at a moments notice, by anyone with the appropriate access rights.

The big difference with eBAM is that businesses will now have the capability to be far more aware of the exact state of their finances at any given point, which should make it far easier to spot potential financial problems as they emerge, as well as generally allowing a greater awareness of the exact state of their finances.

So, will it make a big difference to the majority of the population? The answer is, that as a product largely aimed at business, not really. However it does sound like this system has the potential to allow financial problems to be spotted easier, & earlier, than was previously the case, and should therefore help companies avoid becoming financially over-exposed to the point where collapse is a real danger, as happened to some very big names during the 2008 economic crash.
Unlike some writers, I wouldn’t go so far as to call any banking product “sexy”, but on the whole eBAM seems like it’s going to reduce the chances of another financial collapse or, if it does happen, at least negate the ignorance excuse on the part of bosses, and if that means there’s less chance of tax payers being forced to bail out the financial sector again that can only be a good thing!

So we’ve got oursleves this fancy new coalition govt, all fresh-faced and, as yet, unsullied by sleeze. It has to be said that we certainly needed a change, Brown’s over-controlling, civil liberty eroding, regime would have become even more insufferably arrogant if they’d won the election. So now we have a Conservative-Lib Dem coalition, and although in many ways I think they’re odd bed fellows, I’m starting to think that it is probably the least bad outcome we could have realistically had from the election; my big hope is that the Lib Dems will be willing to stick to their principles at least to the extent of forcing the Tories to have a conscience. (Which I guess would make Nick Clegg Jiminy Cricket to Cameroon’s Pinocchio.)

Still, as the lesser partner in the coalition it’s only realistic that the Lib Dems will have to accept a large chunk of compromise, and will have to, no doubt, support policies which they wouldn’t naturally be inclined to put in their own manifestos. At least that’s what my inner pragmatist has to keep telling the part of me which is a little upset about my vote ending up shoring up a party who I didn’t want in power. Ho hum, it’s an imperfect system, although the possibility of electoral reform before the next election is a consolation, and I’m very glad that the Lib Dems (mostly) stuck to their guns on that point.

The other Lib Dem policy which I’m pleased to see survive the horse trading was the increase in the income tax allowances. OK, so it’s likely to be trickled out over several years (& I certainly won’t be holding my breath to wait for the allowance to hit 10k) but I really believe that this is one of the best moves, in terms of relieving poverty, which any govt could make; forget the Tax Credit scheme, that was a dishonest PR scam from the get go, its main purpose seemingly to be that it allowed Mr Brown to crow about how he was helping the poorest in society, while actually making a system of such byzantine complexity that many who were eligible for payments never bothered to try and claim!

I’ll be interested to see how the overall tax burden shifts under this new Govt, and, for anyone else who’s interested, Coutts bank have a pretty useful resource on their site which provides a clear and concise breakdown of the UK’s main tax rates, although their income tax section is probably the most useful for the average person in the street.

Anyway, we’ll have to wait for Osborne’s emergency budget on the 22_nd June to find out exactly how the financial future of this country is likely to look. There’s been a lot of talk about cost cutting, the tightening of belts, and times of austerity, so we’re obviously being prepared for the worst, and the internal governmental cost cutting measures which have already been widely reported are surely more about fostering the Tory campaign mantra of “all being in this together” than actually making any significant dent in the national debt.
Still, govt certainly got pretty bloated under New Labour, so it’s probably a sensible move, even if I’m not convinced by the over-arching Tory strategy of starting to make cuts while our recovery from the recession is still so potentially fragile.

Of course the news, from the Office of National Statistics, that the Govt spent £7bn less last year than predicted might make Osborne’s first budget a little less stark than it would otherwise be, but if, as chancellor, you have to put tough measures in place the best time has surely got to be just after an election, so the electorate will have time to forget, and calm down, before the next election. Guess we’ll find out in about a months time…

I saw this article the other day, and although it’s a few weeks old, and made me think back to all the news articles, which were about this time last year, claiming that there would be a shortage of hire vehicles during the summer season due to the rental companies not being able to afford new vehicles for their fleets.

So, with the news that one of the UK’s largest van hire firms is set to renew 20,000 vans, a third of its fleet, in the expectation that the economy has/will pick up to an extent where the expense is justified, one has to feel that, assuming the money men at Northgate have done their jobs right, this has to be a good sign for the wider economy. Afterall, 20,000 vans are not going to come cheap and, even if the vehicles which are being replaced are so clapped out that they can’t be rented anymore, the implication has to be that the firm thinks it will need a capacity significantly greater than the 40,000 vans which it would have left.

A lot of Northgate’s business traditionally comes from businesses in construction and manufacturing, as opposed to private customers, so the firm’s commitment to renew their fleet strongly suggests that they have confidence in these sectors to flourish over the next twelve months, and if that’s the case then that would certainly be a good sign for the wider economy; particularly when one considers that the construction industry was one of the areas hit hardest by the recession, and the resulting crash in house prices.

Only time will tell whether or not it’s an astute move which will leave them well placed to profit from any recovery we see this year, but they’re by no means the only company to demonstrate optimism over the economy’s near future, and quite often the economy seems to function as much according to expectations as because of any real monetary factors, so, although my tendancy is to be wary, overall I’m thinking that the signs for recovery are looking hopeful.

Even embittered old news junkies like myself need a break from time to time, and over the holiday period I took a couple of weeks off without watching any news, &, I have to say, I feel so much better, not to mention less jaded by the world, for having done so. Still, with the new decade well and truly underway I figured I should, once again, start taking a cynical and curmudgeonly look at what’s going on in the world around me…

One of the things which I’m very glad hasn’t come to pass, was the descent into another global financial crisis, which, for a brief time, it looked like Dubai World’s financial problems might have sparked.

In the end it took a $10bn bail out from Abu Dhabi to save the troubled company, and in return the company showed it’s gratitude by naming it’s latest project, the Burj Tower, after Abu Dhabi’s ruler Sheikh Khalifa bin Zayed bin Sultan al-Nahyan. The Burj Khalifa, as it’s now known, opened earlier this week, and is now officially the world’s tallest building, beating the previous holder of the title, the Taipei 101, by about 300 metres.

As part of the publicity surrounding the tower’s opening two intrepid base jumpers were granted permission to leap from it’s top in a death defying record attempt. I guess it was only going to be a matter of time before someone made such an attempt, with or without permission, so maybe the owners were just trying to harness the inevitable publicity which such a stunt is bound to generate. However, before would be daredevils start booking their flights to Dubai it’s worth pointing out that the event was strictly a one off, and neither the owners, nor the Dubai authorities are likely to take kindly to further, unauthorised, jumps.

While I’m not about to go into an in-depth analysis of this week’s pre budget report, there are a few of the Chancellors announcements which I feel the need to comment (& maybe even rant) about.

If you’re interested a summary of the the Report’s main points can be found here.

The much speculated upon moves to curb the bonus culture of banks is probably one of the biggest events of this PBR, but in the end were Darlings moves about encouraging the bankers to live in the real world, which most of us mere mortals inhabit, or was it more of a move to placate the public?
There wasn’t a windfall tax on the banks themselves, but bankers’ bonuses over £25k are to be subject to a one off tax of 50%. Yeah, sock it to them Darling!

Actually for all that it sounds good, not to mention fair, when one considers how much of tax payers’ money has been used to aid the banks over the past year or so, the bankers don’t seem to be taking it with good grace. There’s been the predictable wailing and whinging, and threats of taking their business abroad, from some in the industry. I do understand that, to an extent, we have to be careful not to drive the banks overseas; it’s undeniable that the sector does contribute substantially to the UK economy, but at the same time it’s clearly neither sustainable, nor acceptable, to have a system where the bankers run around making risky investments and creaming the profits ’til it all goes wrong, at which point that make contrite noises and go cap in hand to the tax payer.
That can’t be allowed to happen again, and frankly any bank which hasn’t the good grace, to recognise that being based in the UK is to their overall advantage, and engage in a little give and take, is welcome to run off to some unregulated banana republic; Let’s see how willing such countries are to support the banks when it all goes wrong again! Good riddance to bad rubbish!

Even those who are staying are desperately looking for loopholes to try and avoid the bonus tax; apparently the “Investment banking boutiques” are trying to argue that they’re not technically banks, even though some of their bankers are amongst the best rewarded, in terms of bonuses. Well guess what guys, somantics aside, you are exactly the guys that helped kick off the financial crisis, & who the public are pee’d off with! You can argue technicalities all you want, but you’re distinctly “banker flavoured” and you’re precisiely the people that this tax is designed to hit, live with it!
I hope the treasury takes the same attitude. Although full guidelines on the tax are still being ironed out, it at least appears that the treasury’s intent is to prevent the exploitation of such loopholes; lets hope thats how it pans out!

Other tax measures in the PBR include a 0.5% rise in NI, and the basic rate of VAT returning to 17.5%, although on the positive side there is to be a 2% drop in Bingo duty, so it’s not all take, take, take!
Actually, in fairness, there are also to be changes to the NI system so that those earning less than £20k won’t end up paying more due to the announced hike. I do like this move, a lot, it’s almost as if the Labour party have remembered that they’re meant to be the party that doesn’t screw the poor.

There was also some encouraging green measures in the PBR too. There’s to be a “scrappage” scheme for outdated household boilers, as well as £200m of govt money set aside to assist home owners with improving energy efficiency. There are also incentives for green vehicles too, electric company cars are to get a 5 year exemption from road tax, while electric vans are to receive a 100% first year capital allowance. A piece of news which will no doubt make Sainburys, who have recently announced an increase in the size of their fleet of electric delivery vans, very happy; “Every little helps,” as one of their competitors might say.
Any regular reader will know that I’m a fan of the concept of electric vans and cars, so it’s good to see the govt taking steps to encourage their use, even if, so far, those measures only apply to businesses.

Obviously that’s by no means all that the PBR contained, but it’s tone overall seemed to be one of trying to juggle the need for austerity alongside doing enough “headline” stuff to make people happy. Indeed, opposition have already called it a “pre election report”, rather than a “pre budget report, a label which is undoubtedly politically motivated in itself, but which also, probably, isn’t too far from the truth.