Iceland and Gordon's rant.

Not only the journalists. As recently as 30th September rating agencies were giving Icelandic banks top rating. It raises serious questions as to whether these agencies are fit for purpose.

However, it seems there might have been a deliberate attempt by the Iceland Government to move Icesave's assets to Iceland. Without that, it's perfectly possible that a deal along the lines of ING for Kaupthing Edge might have been possible.

That's why I think GB jumped on Kaupthing Edge and Heritage. He wasn't prepared to allow the same thing to happen again.

Maybe, but I'm not so sure that Icesave's business model was fundamentally flawed - It was borrowing from UK savers in order to lend to people who wanted to invest in the UK. Banks do provide an important service in dealing with hundreds of thousands of people in order to provide funds to those who can make good returns but need sums not usually available to individuals.

Of course, all the banks lost the plot in not understanding that in a rising market everyone can make money. Therefore the fact people are making money is not a good measure of whether you should be lending to them. I don't know what a good measure would be - maybe people who are making a profit when only considering income and ignoring any capital gains - at least that way the bank has two ways to win - either the asset continues to rise, in which case if the business climate changes and income drops below that necessary to service the loan then the bank can repossess the asset, or, if assets fall, a company may be able to continue to make enough money to service the loan. Only when both bite will the bank lose. Whether that might have prevented the credit bubble I don't know.

Regardless of whether anybody ever sees any of the icesave money again I think it's going to be an interesting legal battle to watch over the next ten years or so.

Tim.

Yes, well. The `financial journalists' are mostly droids making stuff up from financial institutions' press releases. Financial advice is worth what you pay for it, as they say. How much does the Daily Mail cost?

They've probably computerised it all so they can piss off to the Caribbean and play golf using their massive bonuses for getting everything right.

Seriously, though: how much of what's happened is down to software that watches markets and makes decisions automatically?

Journalists? Experts? You're either naive or a comedian!

Well, I am talking about *financial* journalists who *are* supposed to know what they are talking about. But I take your point! The big question is, just who *do* you turn to for expert financial advice? I certainly have no faith at all in financial advisors who, more often than not, are apt to recommend investment vehicles that will give them the greatest commission, rather than do well for the investor.

Ret.

Do these agencies have professional liability insurance? Maybe, if other means fail, the UK Local Authorities, NHS, Police forces etc who lost out to the Icelandic banks might consider suing the ratings agencies for their shortfall.

If anybody really knows how to get it right all the time, he or she is probably working the markets to make money. People who sell advice as financial journalists or investment advisors or whatever are not making money from investing or trading in investments; they are working in that lesser market of selling advice.

The frightening fact is that we are each out on our own, swimming among the sharks.

It is always worth remembering that there is a risk/return trade-off.

I came a cropper as a result of advice from the same sort of people when they waxed lyrical about the "Asian tigers" in the early nineties. Best taken with a pinch of salt.

Don't we pay people to interpret those things, and not just treat them as gospel? If we were only interested in the computer analysis (which ultimately depends on the skill of a programmer - most of which are not noted for their accountancy skills), then why bother with the people?

John

Ditto the Irish "Celtic Tiger".

derek

The FSA also allowed them to trade!

There would have been fewer UK investors if the FSA hadn't given them a clean bill of health.

Channel 4 News said last night that they had been to Iceland in July to investigate ICE and had warned viewers. Derek.

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Brokers Comments can go into the same waste paper basket. Derek.

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In message , DerekF wrote

Broadcast during their 60 second showbiz news slot?

Even yesterday, the World Economic Forum released a report which said that Icelandic banks were safer than British ones.

This is now on the beeb's web site

Ms Ussher told him: "I do not have figures for the Icelandic compensation scheme."

Mr Fallon then asked if she was satisfied that British investors in Icelandic banks are fully guaranteed in the event of a bank collapse.

Ms Ussher replied: "I am satisfied that the law exists to guarantee them, yes."

Mr Fallon: "You are satisfied that the law exists to guarantee them?"

Ms Ussher: "Yes, under a combination of European and British law."

Mr Fallon: "So they will get all their money back?"

Ms Ussher: "That is the legal situation."

Hmmm.

In message , Mike Scott wrote

Typical case of being asked one question and answering another.

It's a great pity, (and a scandal!), therefore that the newspaper financial pages didn't pick up on this and warn their readers to get out. The first real whiff I got that Landsbanki were in difficulties was on the Monday night evening news prior to them closing accounts to withdrawals the next morning. I actually got into my account on the Monday evening and transferred the entire balance to my current account. The transfer went through on-line - but was not actioned the next day.

Ret.

Ret.