j4ckos mate

thats what they tell you anyway when the council tax go's up,
turns out they are (or were) loaded?

whats the attraction with iceland as well?

phil_wrx

iTrader: (2)

they put council tax up by way over inflation year on year and yet they have savings? if i dont spend my budget at work i dont get to bloody invest

davegtt

We got a refund this year, something to do with the police force not getting as much as the council expected so reduced our tax for the rest of the year by about £10 a month

PeteBrant

I dont think they were loaded - rather that some poeple and presumably the government pay annually - That money has to be kept somewhere.

stilover

They have to put your maoney somewhere. They decided to stick it in an Icelandic bank to get better interest rates.

Most Councils have money in different banks so if one does go bust they don't lose it all. Just what they had in that bank. Which is whats happened.

Turbo2

Banks and Councils: they deserve each other

Clarebabes

Bloke on GMTV got scuppered this morning by the woman from the taxpayers alliance.

Bloke: Councils have this money as a contingency in case of any emergencies etc.
Woman: Then why was the money put in a bank account which needed over a year notice to get it out?

STi wanna Subaru

iTrader: (1)

What gets me is you think that UK councils would keep UK taxpayers money in UK banks.

Dr Hu

All big councils have to complete a 'Best Value' assessment for pretty much everything they do involving money - either spending it or investing it.

The reason so many people (and councils) have money in Icelandic banks is because a bout 4 years ago - the icelandic banks saw a huge banking market & offered very tempting interest rates for savers to bring in a lot of new business.

So when the councils did their 'best value' review, if an Icelandic bank was offering a higher percentage return, the rules of 'best value' saw to it that it all went there.

Of course the downside of the 'best value' way of doing things is - you dont always get the best result for the lowest price.......

Considering Iceland only has a total population of 300,000 people but now owe's Billions of Pounds to UK savers/investors it does'nt look good!

Note to Icelandic Bank Managers - A perfect example of 'over stretching' yourself.

edit: Yes big councils always have reserves of cash - a big county councils budgets run in to tens of millions per annum, they will aways have a buffer, as any big business would. For example in a county town close to us, during the floods, a road bridge fully collapsed leading into the town centre - the county council have to replace that! Not exactly a budgeted for expense!

plus they make large monetary returns on investments anyway to actually keep council taxes lower & as the old adage is - Money makes money!

PeteBrant

The banks also had to have the highest rating from the three main credit raiting agencies; which they did.

Basically, the councils were under instruction to get the absolute best return for the taxpayer, from the safest means

J4CKO

iTrader: (1)

Big increases next year then I expect, cant really blame the councils, any sizable organisation will need to have cash squirelled away, hopefully it wasnt stupid amounts through mismanagement.

jacrobat

This is an example of a Victorian system that obviously needs an overhaul. Councils, police authorities and transport authorities all having silos of cash and making individual investment decisions and then being preyed upon by sharper minds in the City and elsewhere who know how to play the system. If central government does not need the cash then the authorities should pool it together with a small group of investment managers so that it can act like a sovereign wealth fund with strict criteria and transparent reporting.

Leslie

It has been reported that the councils were advised by the government to invest in Icelandic banks. Yet another piece of outstanding advice by this load of incompetent clowns! I thought they were supposed to support their own country's financial establishments anyway!

Also freezing the Icelandic funds by the use of the Anti Terrorism Act was another master stroke! That will really improve the ensuing discussion!

I must say that the funds invested by councils-some £860 million- makes the constant increases in council tax seem questionable to say the least.

Les

pwhittle

councils also get grants for buildings etc, which have to be put somewhere until they have to pay out.

this government are incredibly good at passing the buck, you see it all the time in the public sector. Council tax increasing? that's their fault, they set the rate. Nothing to do with reducung central funding for increasing services of course. Local PCT gone bust? not our fault, they hold the budget...

superb bit of management really. shame they don't put such efforts into spotting life-changing national disasters before they happen.

pwhittle

just noticed there's no mention of saugage rolls / cheesecakes / Kerry Katona (sp)?

Kieran_Burns

iTrader: (1)

A good friend is posting about this and has put up a rather excellent rant. I thought I'd share it with you as it puts an interesting slant on things:



The sums involved are typically a small (single digit) percentage of the Council's annual budget.

No Council will go bankrupt over this.


On the other hand, using anti-terrorism legislation to freeze all Icelandic assets is an absolute OUTRAGE.

The direct consequence of this idiocy is that the one Icelandic Bank expected to survive this mess was forced into administration and had to be nationalised - thereby making the problem much worse for *everybody*.

To be honest, the Councils made *wholesale* deposits. *Retail* deposits made by ordinary citizens are guaranteed and the Icelandic government has stood by that guarantee. So this is just a particularly nasty example of a big country bullying a small country, kicking it when it is down.

What is particularly unfortunate is that the Icelandic banks in question all had very good capital reserve ratios - certainly by US, UK and European standards. It's the sudden drop in their currency's value (30% in a single day) that has stuffed them. Remember the Yen Carry Trade I was moaning about 18 months ago? Borrow Yen at almost 0% interest rate and invest in higher returning assets? That would be Sub-Prime loans in the US and, oh, look, Iceland returns a very high interest rate even after inflation is taken into account. I don't know for certain, but I'm willing to bet good money that a chunk of that Carry Trade went into Icelandic banks.

By the way, talking of interest rates and inflation, how many people have noticed that UK interest rates are now LOWER than the rate of inflation? In other words, we're inflating our way out of our debts. I predicted that as well. Cynical, but if you just start from the premise that this government is out to stiff you, you can usually guess what is going to happen.

There *is* a sensible solution to the whole banking mess. It's just that the government would rather throw Taxpayers money around every time there's a problem.

And what is the problem?

The Banks are under capitalised because a large chunk of their assets are dodgy and need to be written down, which means that they are insufficiently capitalised.

The answer is simple.

FORCE the Banks to write down the dodgy assets to a proper evaluation.
And FORCE the Bond-Holders to exchange their current Bonds for new (lower-priced) Bonds + Shares.

The Shareholders are diluted, and the Bond-Holders replace Bonds (currently worth a lot less than their face value) for bonds + shares worth their current (depressed) value. BUT, the Banks' liabilities to the Bond Holders are reduced, their "sub-prime" assets are now valued correctly and the whole bank is now properly capitalised.

The Bond Holders might take a small nominal loss to start with, but that could be recovered over time as the share price recovered.
The shareholders would take a bath as their equity stake would be diluted.
But that is as it should be - not the Privatised Profits, Nationalised Losses we have now.

This isn't my idea, this is just the best of several competing suggestions put forward.

And no taxpayer involvement required at all.

So why Is Gordon "is a moron" Brown going for possibly *the* most expensive option that just happens to also bail out the share and bond holders whilst completely scalping the ordinary taxpayer...?

tmo

Looks like the socialist republic of Rotherham have blow £3.5m on this.

mart360

Whats the betting, we get the following shortly..

Dear householder, due to circumstances beyond our control, and the resulting credit crunch, and uncertaainty in the markets, our budget for 09/10 has been seruiusly affected. Due to this shrtfall, we will need to increase your council tax payment for 09/10 by 15% to maintain the level of services you expect
naturally this will come as a shock to you, but naturally you would want us to maintain our 100% target related performance (obtained in saving gay lesbian trees from the jungles of ecuador)

yours xxxxxx council finaincial director


Mart

Simon C

They better not Mart, I know how much my council take per day. They do and I'll be asking some very hard questions.

The Zohan

Fantastic!

I hard a chap from Kent County Council of R5 Live Friday moening, they have £50m with the Icelandic bank, he said that it was not tooo much of a probnlem loosing that amount, some18 was part of pension funds.

Then when challenged by someone from the Tax Payers Alliance as to why was 50m not a problem when the council was asked for better/improvements to services and that the council always reverted to the same old response' "That money was not avaliable unless council tax went up" he could not really answer and reverted to changing the subject.

Council, government - you cannot get a straight and honest answer to a straight forward question - i hate 'em!