Finance crisis meeting
Wednesday 1st October 2008, 3:00PM BST.
THE Chief Minister has called an urgent meeting today with senior politicians and finance industry leaders to discuss the fall-out of the deepening global financial crisis.
Senator Frank Walker called the meeting to hear first-hand the latest information about the present situation and hear the industry’s view on action that might be needed in the future.
‘There are probably some exceptional measures that we can discuss, whether or not they are necessary at this stage,’ he said. ‘We will do whatever it takes to protect Jersey and not lose our workforce in the finance industry.’
He added that it was too early to say what those ‘special measures’ might be. Yesterday the director general of the Jersey Financial Services Commission, John Harris, expressed the views of many involved in the finance industry that Jersey was ‘a strong link in a weak system’.
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One of the things our politicians could do is to try to ensure we don’t help facilitate the next big financial collapse. Chasing business , the offshore finance centres were happy to set up the structures which facilitated the current crisis. Will our new Unregulated Funds laws allow even more unintended consequences in future? As we have now seen, its simply not good enough to say that the parties to such structures are professionals and know what they are doing. They didn’t and the rest of us are now suffering.
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Here, here It is apparent then!!! Thank god I thought I was actually mad for questioning these so called advisors…. wolf and sheeps clothing the banks are the worst they really are thick as!! Yes here we go heres some more commission for you just keep the bcuks rolling in for the fat cats at the top they are worse than people who scrounge benfits for nothing
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The States should have been looking at this much earlier than this. They have not taken the current economic climate seriously over the last 6 months or so and now as the World is on the brink of falling apart they start having crisis meetings! The only reason Frank is now looking at this is because the rich have no back up if the Banks or Finance in Jersey go bust. Well done Frank a bit slow off the ball as usual. May be next time you wont bury your head in the sand.
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The Irish government and others are moving to protect bank deposits.
If the crisis continues then Jersey and other jurisdictions that offer no security for bank deposits may find themselves losing out.
Banks in Jersey have huge sums in deposits, working out a scheme that would be an effective guarantee would be easy.
Time for some forward thinking on the part of the Council of Ministers…
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So what’s wrong with the plan our FSC drew up in 2003 for a Compensarion Scheme and Ombunsman – it’s already writtne – Mike Higgins has been waving it at Hustings & reported in JEP.
The States (ie WE!)paid him & them to write it – now they’re going to pay another load of lawyers to write a new one…and they wonder why both business and workers think they’re Muppets!
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As Chief Minister he is of course obliged to talk positively to maintain confidence and to be seen to be taking the right steps. Unfortunately this is a global phenomenon which has arisen from a massive property bubble in USA / UK / Spain / Ireland etc. The finance and construction industries are being devastated and the high street has it to come once the recession kicks in later this year and through 2009.
So what for Jersey ? Its property market in the last 5 or so years has been even more hyped than the UK which in turn was even more over-inflated than the US market. Now the years of easy credit are over all will now correct to the historic norm by dropping c 30% as lenders will only provide mortgages on normal terms (i.e. 10 % deposit up to a 4 multiple of salary). The BTL brigade who have been responsible for pushing prices beyond the reach of so many are going to get hit hard. As Jersey is so utterly dependant on the finance industry for employment (both directly and indirectly) and for states revenue it will be hit harder than even London or NY as the banks that survive contract their balance sheets, securitisation and structured finance work remains dead and the size of the funds industry reduces significantly. It is going to be a painful few years for most everyone in Jersey I am afraid.
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Al, I hope this is not the case for all of us, but you are correct in saying that Jersey will feel the effect and no matter how rosy the Chief Minister stands there and smiles Jersey will have problems. For the States to rush though an emergency meeting to discuss protecting savings is the first sign of panic. They have not done this for the low income public but to save the rich folk of the world from withdrawing their money and putting into Irish banks with 100% cover. The problem with the States Members is that they keep convincing themselves that Jersey is not attached to the rest of the World, How naive!
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The billions in bank accounts in Jersey are just computer blips – here to today gone tomorrow. Jersey has no money – unless of course Frank knows something we don’t know. The Fort Regent gold reserve perhaps?
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What about the “Rainy Day Fund”?
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At least the US/UK and EU have had a stab at fixing the issues – buying assets and issuing liquidity. All to no avail of course. Jersey’s govt doesnt even have a chance.
A GDP of less than 1bn to protect assets over 200bn. What are you gonna do guys?….Cut the tax to zero?…Oops!
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pcc – Jersey actually has a GDP of nearly £4bn. the uk’s GDP only just covers its deposits and at the same time it has national debt of more than its GDP…. Oops!
Jersey is actually in a fairly good position to ride out the downturn. There is no prospect of having to bail out banks, a lot of restructuring work will be done invloving offshore jurisdictions, a lot of deposits will be taken by offshore banks, different types of funds will be set up more suited to the new conditions… it goes on. Most analysts are prediciting the worst to be over in a year’s time. There will be plenty to keep Jersey busy until then.
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“Whatever”‘s response is typical of what I have seen over here. Not one iota of contrition for the part the offshore jurisdictions played in this financial smoke and mirrors game.
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We have nothing to be remorseful for.
The financial turmoil is credit driven having been caused by Banks taking on securitised repackaged loan books, some of which were backed by US sub-prime mortgages which started to default…
The problem is that due to the way loans were repackaged, the Bank’s can’t tell which books are bad (despite ratings) and they don’t know each other’s exposure. So… they don’t lend to each other. No lending means no money to lend and therefore no business. Whether some securitisations went through offshore structures is irrelevant to the cause.
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