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@MajorRage The job losses are pretty much a given. Quite a few financials (banks and non-banks) with global or EMEA headquarters in London have already established a presence in mainland the EU in anticipation of restrictions on trading. Once it becomes clear how things play out its not realistic to have duplicated functionality or even duplicated presence for some services so some jobs will move, mostly to Frankfurt, Lux or Ireland. If the roles that move reach a critical mass the HQs will move in their entirety. Of course the rationale for each organization will differ, but you can count on the Americans in particular being quite cold-blooded about that.
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@JC Jobs come and go. Jobs have been disappearing form the city for years as IT & Operations roles have been silo'd out elsewhere. There is always a risk that American firms will shut up shop and move to an EU zone, but I just cannot see it. I'm hardly the most well connected bloke here, but the connections I do have are consistent. They aren't going anywhere.
You are of course correct that the final rules are not decided as yet, but the expected framework is there and most places have adapted.
Perhaps I am being overly optimistic, or even worse, naive. Time will tell.
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Apart from job losses you mean?
There's also the potential for big increases as the UK cut deals to get access to markets, say India - where UK insurers have struggled thanks to the EU's attitude to that country. "Single Market Access" was pretty much a myth for whole swathes of the services industry. Virtually impossible to trade insurance across the "single market", for example.
There is still plenty of scope to do real damage and the City should fear that.
We heard that with the ERM, the ECB being based in Frankfurt and the UK not joining the Euro. The City will adapt, change and seize opportunities as it always has.
There's big risks, but also big opportunities.
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@Victor-Meldrew said in Brexit:
@Catogrande said in Brexit:
@pakman There is a view that the support dished out by governments since the GFC has actually hindered recovery, keeping zombie businesses in life support.
Was working in financial Services around GFC time and that's possibly true for banks. Insurance, on the other hand, didn't get as much support and bounced back far quicker.
At least two of the big three UK banks were insolvent. Government had to put them on life support for several years.
Other issue is/was regulation. After the GFC, banking regulation was based on reducing risk of bad loans so collateral of up to 110% on a business loan required (in case property prices crashed). You had politicians and regulators exhorting banks to lend to business while threatening to jail bankers for "reckless lending" if their loans went bad.
Now specialist hedge funds can provide such lending. Great product when no accounting requirement to provide for bad debts which are statistically certain, but yet to be reported, and annual performance fees paid out of 'profits'!
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@Victor-Meldrew said in Brexit:
I wonder how much is down to the EU redundancy laws? In my experience EU companies often limp on with bloated cost structures because the cost of redundancies is prohibitive.
From my limited experience, it's a fear of change, failure and a lack of vision too. May be something to with shareholder needs as well. Some of the most successful companies are family-owned - JCB & BMW being examples.
It's really interesting. I've worked in listed equities for 30+ years, and it's always struck me that firms which rely on entrepeneural flair tend to become repressed once they become large enough to be caught in the web of good corporate governance. By then the founders have often extracted their money and the firms operate conservatively, like a winger keeping ten metres away from line so as to avoid being pushed into touch. One can argue this makes them 'institutional quality' and safe for mainstream investors, at least for so long as they don't experience secular change: c.f. Kodak, etc.
But in a changing business environment I suspect (no expert) that trying new ideas becomes essential, and fear of making some missteps less important.
One can think of lots of examples. That said, many ideas will fail. We remember the winners, but not the losers. Warren Buffett tells anecdote about investing in US automobile car firms in 20s. He says there were 100s. Most failed. So not great investments unless you bought Ford, GM, Dodge or Chrysler, or one of the firms they bought. But at least people had a go.
So there needs to be an inventive environment, entrepeneural management and a capital market which is receptive. At present, maybe because of the zero cost of capital, that is the case in UK, but it seems not to be in EU.
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@MajorRage said in Brexit:
@Victor-Meldrew said in Brexit:
The big issue is growth in EU GDP/capita has been poor compared to other Western countries like Australia & Canada. The EU is good at old technology like cars and such but lags behind on new technologies such as nanotechnology, life sciences and IT. Airbus - touted as a EU success story - has been a perennial loss-maker costing billions in state subsidies.
The EU can't hide uncompetitive industries behind protectionism forever - not when the likes of India & Indonesia start to flex their economic muscles,
Agree, although more personally aware that EU GDP/head low than time series for same.
UK far ahead on new technology. Cars is about to cross over, which was behind last minute haggling on car batteries.
I wonder how much is down to the EU redundancy laws? In my experience EU companies often limp on with bloated cost structures because the cost of redundancies is prohibitive.
Contrast with States, where failing company can fire as required and bounce back sometimes within months. I imagine EU bankruptcy laws also an issue, although no direct experience.
EU redundancy laws inhibit growth. The amount of deadwood where I work is completely insane. I work at a financial firm & their approach to work goes against everything I've ever worked in. It has it's advantages, but serious disadvantages as well. Case in point was very early on last year, I needed to get to see a client in AMS - large client, their request to have me in to brief on what we are building / selling as they had serious interest. It was a no brainer. Travel rejected. It was deemed that I should be able to give the pitch to the local sales guys, and they could deliver it. The local sales guys were proper chocolate teapots and all knew it. Upshot was I didn't go, they tried to pitch it and the client walked away.
Cost of ticket for me to go - 95 EUR + admin expenses DECLINED.
Two weeks later, a training course was on about how to learn more about yourself. Mandatory for all in my division. Two days long, and unequivocally a complete and utter waste of time.. Cost? 480 EUR. Approved.
I said, why don't I stay one more night and go and see the client. Additional cost - 45 EUR (cheaper flight offset by extra accommodation). DECLINED.
Now this is obviously an example where you can't see an of the additional context and if it was an isolated incident, then so be it. But these sort of decisions are minimum monthly. Trying to build a truly competitive financial offering is completely destroyed by beaurecratical red tape and continual spending of EUR salaries to complete and utter pieces of dead wood.
As I said early, the London financial system has NOTHING to be afraid of from Europe. Literally, nothing.
EU MSs have all sorts of regulations which make it hard post Brexit to visit for work. Could get worse before it gets better.
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@Catogrande said in Brexit:
@Victor-Meldrew said in Brexit:
@Catogrande said in Brexit:
@pakman There is a view that the support dished out by governments since the GFC has actually hindered recovery, keeping zombie businesses in life support.
Was working in financial Services around GFC time and that's possibly true for banks. Insurance, on the other hand, didn't get as much support and bounced back far quicker.
Sort of illustrates my point. More support has hindered recovery. You have to let the dead wood rot. Not suggesting allowing banks to fail, more that a blanket approach was not the right way. My point about support though goes wider. Artificially low interest rates, governmental lending targets for banks, QE propping up asset prices have all provided lifelines for businesses that normally would have failed.
That's right. And bought time for upskilling so population more able to cope in modern world. Instead, asset price inflation backed spending has meant the hard decisions have been avoided. Deadweight on system.
Other issue is/was regulation. After the GFC, banking regulation was based on reducing risk of bad loans so collateral of up to 110% on a business loan required (in case property prices crashed). You had politicians and regulators exhorting banks to lend to business while threatening to jail bankers for "reckless lending" if their loans went bad.
Two issues here and I’m not arguing against you on either really. Firstly bank solvency. Before the Basel agreements the “rules” around bank solvency were wildly different according to which country the bank was from, which is not helpful when the banks can operate globally. So some form of regulation was probably overdue.
Basel regs include the concept of 'risk weighted' assets. In practice, the calculations are theoretically flawed, and, perhaps more dangerously, encapsulate a large degree of false precision. Allied to the governmental put, casino banking lives on. I have lobbied for the ring fenced and casino parts of UK banks to have to publish separate balance sheets, with the put only applicable to deposits/mortgage bank. Then casino banks would have to borrow unsusbidised, and guess what, the market would levy a chunky risk premium, rendering many speculative activities unviable.
Secondly those “rules” were pretty lax to say the least. In the UK there were effectively no rules. No formula for solvency that was enforced. No minimum requirements. More “well you chaps know what to do, just don’t be silly eh”?
Friends tell me some of the margin regulations in UK are the most lax in world?
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@Victor-Meldrew said in Brexit:
I could also add that the regulation put in place post '97 moved the management and control of risk away from shareholders and the folks at the workface actually doing the lending face-face, to bureaucrats.
Those bureaucrats seemed to have little knowledge of what was actually going on and thought if you policed checklists and conformance to capital adequacy figures, all would be good. Add to that, political & FSA directives to force banks to lend to riskier demographics and it was a recipe for disaster.
The shareholders and taxpayers took the hit - the politicians blamed the bankers. The bureaucrats hid.
Bureaucrats who nowadays don't have to have ever worked in a real market. Like me regulating surfing!
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@MajorRage said in Brexit:
Travel rejected. It was deemed that I should be able to give the pitch to the local sales guys, and they could deliver it. The local sales guys were proper chocolate teapots and all knew it. Upshot was I didn't go, they tried to pitch it and the client walked away.
Cost of ticket for me to go - 95 EUR + admin expenses DECLINED.I have a great example of corporate stupidity which I often related to MBD's who thought counting the pennies and not the millions was essential
Major US bank had its international networks operations run out of London. Early days of TCP/IP and there 2-3 network engineers who were seriously essential to the network. Often worked 6-7 days a week all over the world and were head-hunted regularly.
Claiming of expenses was petty and rankled. Two of them billed for UK newspapers when they were working in Germany over the weekend and the expenses were rejected. They said "Right, fuck off then", resigned and were escorted out of the building.
That week the LoveBug worm struck....
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At least two of the big three UK banks were insolvent. Government had to put them on life support for several years.
They should have let them go down the pan, while protecting depositors. Gordon Brown's arm-twisting to get (very) solvent Lloyds to takeover the basket-case that was HBOS just magnified the problem.
Arguably the worst thing The Great Moron ever did - which is saying something.
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@Victor-Meldrew said in Brexit:
At least two of the big three UK banks were insolvent. Government had to put them on life support for several years.
They should have let them go down the pan, while protecting depositors. Gordon Brown's arm-twisting to get (very) solvent Lloyds to takeover the basket-case that was HBOS just magnified the problem.
Arguably the worst thing The Great Moron ever did - which is saying something.
Worst Chancellor ever.
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@Victor-Meldrew said in Brexit:
At least two of the big three UK banks were insolvent. Government had to put them on life support for several years.
They should have let them go down the pan, while protecting depositors. Gordon Brown's arm-twisting to get (very) solvent Lloyds to takeover the basket-case that was HBOS just magnified the problem.
Arguably the worst thing The Great Moron ever did - which is saying something.
Sir Victor Blank, chairman of Lloyds, said to have been promised a peerage.
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@Victor-Meldrew said in Brexit:
At least two of the big three UK banks were insolvent. Government had to put them on life support for several years.
They should have let them go down the pan, while protecting depositors. Gordon Brown's arm-twisting to get (very) solvent Lloyds to takeover the basket-case that was HBOS just magnified the problem.
Arguably the worst thing The Great Moron ever did - which is saying something.
Worst Chancellor ever.
Surely you mean "most prudent"? After all he told us that often enough. No doubt selling half out=r gold at a low valuations after announcing the sale beforehand was also prudent.
One eyed scotch fluffybunny.
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@Victor-Meldrew said in Brexit:
At least two of the big three UK banks were insolvent. Government had to put them on life support for several years.
They should have let them go down the pan, while protecting depositors. Gordon Brown's arm-twisting to get (very) solvent Lloyds to takeover the basket-case that was HBOS just magnified the problem.
Arguably the worst thing The Great Moron ever did - which is saying something.
Worst Chancellor ever.
In a position with 800 years history (there are audit records from the Exchequer/revenue department dating back to 1129, and those records are clearly continuous with previous records, and the first recorded Chancellor was appointed in 1221), I doubt Brown is the worst ever, although he might be the worst modern Chancellor, which for a position with that history is probably either Neville Chamberlain in 1923 as the first Chancellor who wasn't also the PM, or Sir Robert Peel as the new Chancellor (and also PM) following the first election after the Great Reform Act of 1832 expanded the voting franchise significantly.
This pointless tangent was brought to you by me, some moron in NZ.
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@Catogrande said in Brexit:
One eyed scotch fluffybunny.
Oh, I don't know. He certainly had his finger on the pulse of global affairs....
"Our ability to connect as a nation with other nations around the world is enhanced dramatically by the Internet." Gordon Brown, 2005.
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@Victor-Meldrew He’s a godamn genius
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@Victor-Meldrew better than a series of tubes at least...
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Jesus H Christ
Brexit