#HSBC

Banker Buster?

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Before the GFC in 2008, bank shares across the globe were flying. Financial engineering promised a new paradigm of wealth creation and abundant profitability. They were unstoppable.

However 12 years later, many banks look mere shadows of their former selves. We are told by our political class to believe that our economies are robust and that a low-interest rate environment will keep things tickety-boo indefinitely. After all the wheels of the economy have always been greased by the financial sector.

If that were true, why does Europe’s largest economy have two of its major banks more than 90% off the peak? Commerz has shrunk so far that it has been thrown out of the DAX. Surely, Japan’s banks should be prospering under Abenomics so why are the shares between 65% and 80% below 2007 levels?

Ahh, but take a look at those Aussie beauties! How is it they have bucked the global trend? How can Commonwealth Bank be worth 6x Deutsche Bank?

Although we shouldn’t look at the Aussie banks with rose-tinted glasses they have mortgage debt up to the eyeballs. Mortgages to total loans exceed 62% in Australia. The next is daylight, followed by Norway at 40%. Japanese banks, before the bubble collapsed, were in the 40% range. CM wrote a comparo here. There is a real risk that these Aussie banks will require bailouts if the housing market craps out. It carries so many similarities to Japan and when anyone ever mentions stress tests – start running for the hills.

If you own Aussie banks in your superannuation portfolio, it is high time you dumped them. Franked dividends might be an ample reason to hold them, but things in finance turn on a dime and this time Australia doesn’t have a China to rescue us like it did in 2008-09. More details contained in the link in the paragraph above.

In closing, Milton Friedman said it best with respect to the ability of central banks to control outcomes,

“… we are in danger of assigning to monetary policy a larger role than it can perform, in danger of asking it to accomplish tasks that it cannot achieve, and as a result, in danger of preventing it from making the contribution that it is capable of making.

 

Toxic males and older folk still prefer Brexit to climate change

Activist group Christian Aid has published a survey of 2,072 people across representative age, gender, region and socioeconomic background to tell us that 71% of people care about the “long term” impacts of climate change than Brexit. 60% of people said that the UK government isn’t doing enough on climate change. Although looking at the questions in the ComRes survey we find when the word long term is removed it falls to 49%. Those damned toxic males make it 44% agreeing and 48% disagreeing with climate change being more pressing than Brexit in the short run. Don’t mention the older people! What do they know!? If Brexit occurs they’ll have stolen our “futures” twice!

Then by region, those pesky Northern Irelanders don’t think climate change is as important as Brexit. The double-barreled snobs in the South West are a given to be in favour of leaving the EU.

As can be seen from the Christian Aid website, it is an alarmist organization pleading its followers to bully banks into ending finance to fossil fuel industries.  HSBC is the main target.

When the next general election comes, CM thinks that Brexit will be given priority to climate. The EU elections proved that. Now that Corbyn has gone back on his word on Brexit and Boris is a “leaver” one imagines that the results of this survey will be disproven at the ballot box.