Shock Horror Probe

Perhaps I expect too much of modern day journalism.

Take the following two articles:

The first concerns recent data on global warming ( HERE)

It is not the skeptical stance of the article that disturbs me, it is more the lack of accessibility to the released [quote] without fanfare [unquote] data -purportedly from the Met office.

I have looked for the referred to Met office document without success. Does it exist?

 All it would have taken would have been a link or reference in the above article. Is that too much to ask?

I could Google and Bing and whatever and maybe (if it exists - which I expect it does) I would find it.

But the article without a valid reference is diminished.

To be fair, it also diminishes the Met Office by them not having ready access to what they must know is likely to be controversial data. Are they hiding it? Or does it not exist? Who knows?

If you know - tell me. It would be nice to know, so I can make my own judgement.

The second is this article concerning Peer to Peer lending (HERE)

Again I admit I am quite a fan of peer to peer lending but I still look to responsible journalism for proper information on this growing sector of the financial system.

The article referred to a small increase in repayment default at Zopa (still less than that accepted at the main banks) and also a failed company that operated on the margins and outside of the voluntary regulation self imposed by most responsible peer to peer companies.

Yet these two unrelated aspects are used to taint the reputation of the three main companies trading in this field, namely Zopa, Funding Circle and Ratesetter.

Perhaps if the article had concentrated on the need for formal FSA regulation (as demanded by Zopa, FC and RateSetter) then it would have had a purpose.

As it was it simply indulged in an orgy of half truths and innuendo.

Journalism fails us when the sources are not transparent. It particularly fails us when journalists fail to let the truth get in the way of a good story.

The Best ISA is NOT an ISA

I bet there are those among you grubby little Englanders who are despairing about where to put the few quid you have stashed away. Where will you get interest that means your paltry little pile at least keeps its value?

There is  after all nothing as depressing as saving for that rainy day, just to watch your money melt away as inflation does its damage.

This government, like the previous government really doesn't give a damn about savers.

As for the banks. To them, my sad little saver, you are just the route to their wealth and extravagance. You will get chucked the scraps.

As the April deadline approaches, we get lots of glitzy adverts and promotions as the banks vie for your ISA pennies.

But look at the rates. They are derisory.

Leave your money with one of these charlatans for more than a year and you even lose the various bonuses. The rate drops from less than 3% down to an interest rate of  1% or less.

The banks all play off that you get the tax back. But really its the banks getting the tax bonus. You get the left-overs.

But if you go for a loan, it is 10% maybe more. So ask yourself. You gets the difference?

The banks are having a laugh. Guess what little Englander. It is you they are laughing at.

So what can you do? Where can you put your money so that it is reasonably safe and gets a decent return. Or alternatively, where can you get a loan at less than loan-shark rates?

Well, I give no advice. But here are two suggestions.

If you want to get a decent return or a loan at a fair rate try Zopa

If you are a small company that needs a loan or you want to lend money into the business sector try Funding Circle.

These are two revolutionary companies, breaking the mould. They do things differently. Have a look.

They beat the banks hands down. It does not matter whether you are a lender or a loaner.

You can try Zopa out with 50 quid. Have a look, read the reviews. Make your own judgement.

Forget about the false gain of the tax free ISA. You will get a far better return from Zopa or Funding Circle.

The greedy banks simply cannot compete with this. With Zopa and Funding Circle everyone is a winner, except the greedy banks.

A Business Banking Rebellion

Once upon a time us grubby little Englanders regarded our banks as respectable, honest institutions. Pillars of society. Bank managers were respected and viewed with awe. Meeting one was usually regarded with a level of trepidation. A bit like  being called to see the headmaster or waiting to see the dentist.

Your money was safe in banks. They paid interest on your savings and charged appropriate rates for loans. They made a respectable profit on the difference.  They were seen as the basis for fair dealing and financial honesty thoughout the country.

Small businesses could go to them assured that their situation would be given fair consideration, even if "the interview" was a bit like an interrogation by Special Branch. But if you had a good  history you could get the money to expand your business. You could trust the banks.

How things change.

At the moment the small businesses requiring short term loans are being crucified. Even if they are offered loans they are often at extortionate rates of interest.

This reluctance to lend becomes a self fulfilling propecy. No loans mean businesses cannot expand or modernise. No expansion or modernisation means they lose market share. They become less viable.  As they are less viable they are even less likely to attract a loan. Eventually they go under or are taken over. Hey Presto. The bankers were right all along.

But there is hope.

Lenders and borrowers are rebelling against the tyranny of the banks.

The new revolutionary concept of Peer to Peer banking is storming ahead. This is where the "banker" acts like a facilitator or intermediary and does not actually hold the purse strings itself. Real, actual people are the lenders and they decide the rates.

Most of the development so far has been with enabling peer to peer lending to individuals. The main player in this market has been the highly successful firm ZOPA. Now the model has been extended into the business sector by a new company called Funding Circle.

Funding Circle is soley concerned with facilitating loans to small and medium sized businesses. They are in their infancy at then moment but the concept looks good. It works by letting individuals directly loan money directly to small businesses. Funding Circle is simply the intermediary

Small businesses needing cash can register to borrow money.

A single lender will make many very small loans (£20) to many businesses. A single credit checked borrower will have their loan constructed from many small lenders.

The interest rate is decided in exactly the same way as done at ZOPA. The lender decides what rate he wants to achieve and then the loan offer is contructed from the lowest offers. So if you offer to loan money at a ridiculously high rate you will have no takers, while the borrower is classified according to a credit rating so he will only be offered a loan from borrowers who will have adjusted their rate to take into account the credit risk. On any one borrower, a lender is only risking a small amount of money.

The end result is that businesses can achieve loans at significantly lower rates than offered by the banks while lenders (i.e. savers) get a return (that takes into account potential bad debt) which is at least twice that offered by the banks. You can, by the way lend as little as £500. This is not a scheme simply for the rich.

Before you ask, I have no financial or work interest with Funding Circle. That is other than that I have bunged in £500.00 to see what happens. So far I am very impressed.

If your small company needs a fair loan, have a look at Funding Circle. If you have some savings and you want to get a good return (and actually use your money to do something useful) then I recommend you look to become a lender. As well as that, in a small way you also get to screw the greedy banks.

Next (or soon)  I will be looking at the third very interesting leg of Peer to Peer banking with KIVA and the charity sector.

The Bankers Achilles Heel

Billothewisp has been watching the unfolding farce surrounding bankers bonuses with probably as
much disbelief and disgust as the rest of you grubby little Englanders.

I suppose it really was too much to expect the arrogant ignorant and greedy to put anyone else before themselves. Even when we are all up to our bottom lips in their debt.

The bankers feel invincible. They can ignore the shrill cries about fair play and  responsibility. They can sneer at the common hard working folk while gloating over their own growing mountain of gold.

This travesty will continue year in, year out. Until, out of nowhere, "something" will happen that turns them from an arrogant elite into a flock of foolish redundant dinosaurs.

And maybe that "something" had already happened.

Maybe an event has already taken place that spells doom for out extremely well fed friends. Perhaps they have been so busy swindling the rest of us that they did not notice the high tide of banking excess has reached a turning point.

Revolutions, even against the most despicable tyrants, never happen unless there is someone, or something of a revolutionary nature that sparks the gunpowder.

Billothewisp reckons (or at least hopes)the today that spark has arrived and has the name of Peer to Peer banking.

Currently the most popular manifestation is a company called ZOPA but there other infant companies like Funding Circle. The concept has even expanded into the charity field with an organisation called KIVA.

Currently all of these companies simply deal with arranging and financing loans. But all revolutions have to start somewhere.

Peer to Peer banking works in a completely different way to normal banking.

With a bank you borrow off the bank. They decide the rate. You get what you are given. The money they take in from savers gathers derisory interest. The bankers pocket almost all the profit.

Companies like ZOPA work in a completely different way. They are an arranger. They do not own the loans, but they take a commission for sorting things out.

A loan for £500 will have 50 lenders, each lending £10. Each lender, lending in total £500 will lend £10 to 50 different borrowers. All borrowers are credit checked as for a normal loan, and the risk of bad debt is reduced by the spread of the lenders money over many borrowers.

The best part is that the interest rate is determined by what the lenders is prepared to lend it for - and what the borrower is prepared to pay. Hence the name ZOPA (Zone Of Possible Agreement). Borrowers pay less and lenders gain more. This would have been impossible before modern computers.

It is revolutionary. The cobwebbed ossified banks have no answer.

I hope it works.

I hope ZOPA, its clones and competitors continue to grow exponentially. I really hope the greedy banking elite come to rue the day the scorned and swindled the British public. Maybe with a real revolutionary alternative to the big banks we will avoid ever getting in this mess again.

I'm having a go with ZOPA (you want to try lending through them, you can start with £50.00), also Funding Circle and soon KIVA. It's worth a punt.

I'll tell you how it goes.