Friday, February 10, 2012

Why Wall Street Should Stop Whining

Everybody on Wall Street is talking about the new piece by New York magazine’s Gabriel Sherman, entitled "The End of Wall Street as They Knew It."
The article argues that Barack Obama killed everything that was joyful about the banking industry through his suffocating Dodd-Frank reform bill, which forced banks to strip themselves of "the pistons that powered their profits: leverage and proprietary trading."
Having to say goodbye to excess borrowing and casino gambling, the argument goes, has cut into banking profits, leading to extreme decisions like Morgan Stanley’s recent dictum capping cash bonuses at $125,000. In response to that, Sherman quotes an unnamed banker:
"After tax, that’s like, what, $75,000?" an investment banker at a rival firm said as he contemplated Morgan Stanley’s decision. He ran the numbers, modeling the implications. "I’m not married and I take the subway and I watch what I spend very carefully. But my girlfriend likes to eat good food. It all adds up really quick. A taxi here, another taxi there. I just bought an apartment, so now I have a big old mortgage bill."
Quelle horreur! And who’s to blame? According to Sherman's interview subjects, it has nothing to do with the economy having been blown up several times over by these very bonus-deprived bankers, or with the fact that all conceivable public bailout money has essentially already been sucked up and converted into bonuses by that same crowd.
No, it instead apparently has everything to do with the Dodd-Frank bill, and specifically the Volcker rule banning proprietary trading, which incidentally hasn’t gone into effect yet.
He quotes Dick Bove, the noted analyst who last year downgraded Goldman Sachs. Bove’s quote on the bonus sadness:
"The government has strangled the financial system," banking analyst Dick Bove told me recently. "We’ve basically castrated these companies. They can’t borrow as much as they used to borrow."
When I read things like this I’m simultaneously amazed by two things. The first is the unbelievable tone-deafness of people who would complain out loud, during a time when millions of people around the country are literally losing their homes, that their bonuses – not their total compensation, mind you, but just their cash bonuses, paid in addition to their salaries and their stock packages – are barely enough to cover the mortgage payments for their new condos, the taxis they take when walking is too burdensome, and their girlfriends with expensive tastes.
The second thing that amazes me is that Sherman is buying all this. I don’t know this reporter at all, and I’m happy to concede that he probably hangs out with more Wall Street people than I do. But I’m still in touch with plenty of people in the business, and I have yet to have any investment bankers crying on my shoulder about how the Dodd-Frank bill is forcing them into generic breakfast cereals.
Now, I’m sure if you put it to them the right way – "Hey, Mr. Habitually Overpaid Banker, do you think Barack Obama and the Dodd-Frank bill are ruining your bonus season?" – you’ll get a good percentage of people who’ll take that cheese and cough out the desired quote.
But in reality? Please. Wall Street people complain a lot, but in the last six months, the grave impact of Dodd-Frank on bonuses hasn’t even been within ten miles of the things these people are really panicked about. The comments I’ve heard have been more like, "My asshole has been puckered completely shut for four months in a row over this Europe business," or, "If the ECB doesn’t come up with a Greek bailout package, I’m going to have to sell my children for dog food."
Bonuses are indeed down this year, especially when compared with the bonuses of recent years, but let’s be clear about why. It has nothing to do with Dodd-Frank. We can posit three other factors:
1. Banks have unfortunately had to give up the practice of simply printing trillions of dollars out of thin air by selling off worthless mortgages for huge profits and/or making millions of synthetic copies of those same worthless mortgage assets;
2. After twice being saved from the execution chamber by Ben Bernanke’s Quantitative Easing programs, which printed trillions of new dollars and injected them straight into Wall Street’s arm, Wall Street was rocked this summer when Helicopter Ben decided to temporarily forestall QE3;
3. Europe, a slightly more than minor factor in the global financial picture, is imploding, causing mass hoarding of assets all over the world, severely impacting the business of investment banks everywhere.
Now, Sherman barely even mentions Europe in his article, which is interesting, because the banks on whose behalf he wails so loudly in this piece have mostly all pointed to Europe as more or less the sole reason for their reduced revenues of late.
Take for instance Lloyd Blankfein and Goldman, Sachs. Lloyd has the most famous reduced bonus on Wall Street – he’s making $7 million this year (it was $12.6 million last year) as his bank, Goldman, had a disastrous fourth quarter. Goldman’s $6.1 billion in revenues was down 30% off last year’s fourth quarter. To what does the big Lloyd attribute this sad development?
"This past year was dominated by global macro-economic concerns which significantly affected our clients' risk tolerance and willingness to transact," Blankfein said, "While our results declined as a consequence, I am pleased that the firm retained its industry-leading positions across our global client franchise while prudently managing risk, capital and expenses. As economies and markets improve – and we see encouraging signs of this – Goldman Sachs is very well positioned to perform for our clients and our shareholders."
Translation: Europe is such a mess right now that all our biggest clients are sitting on their money instead of letting us steal it from them. However, once Europe rebounds, as we expect it to, we will be well positioned to start stealing from them again.
Goldman’s numbers offer a hilarious counterpoint to Sherman’s piece. The bank’s earnings in total for last year were $4.4 billion, down some 65% off of last year’s numbers. Its revenues for the year were down 26%. Despite these bummerific numbers, Goldman reduced bonuses and compensation by only 21%, down to (a mere) $12.2 billion. If the era of outsized bonuses is over, how come the biggest banks aren’t even cutting them to match revenues, much less profits? One could even interpret Goldman’s numbers as a major increase in the size of the bonus pool, relative to earnings.
But what about other banks? Well, Citigroup also saw a drop in revenues for the year (although its net income actually went up, from $10.6 billion to $11.3 billion). But what was most concerning was the bank’s crappy fourth quarter, when it suffered an 11% drop in earnings.
So where did CEO Vikram Pandit lay the blame for the lost revenue? Dodd-Frank? Reduced leverage? Uh, no. He blamed Europe, too:
"Clearly, the macro environment has impacted the capital markets and we will continue to right-size our businesses to match the environment," Pandit said.
How about JP Morgan Chase? The bank’s CEO, Jamie Dimon, was breathlessly quoted in the Sherman piece, and in fact had this to say to Sherman about the culture change:
"Certain products are gone forever," Dimon tells Sherman. "Fancy derivatives are mostly gone. Prop trading is gone. There’s less leverage everywhere."
So it’s prop trading and derivatives that’s the problem? That’s not what Wall Street analysts said, when Chase posted a 23% drop in earnings in the fourth quarter. While Dimon in a Q&A last month did go off on the potential problems the Volcker rule might inspire in the future, he was careful to note that those problems are still very much future problems ("I'm going to put Volcker aside, okay, because that really hasn't been written yet").
Instead, virtually every headline about Chase's fourth-quarter earnings drop pegged Euro troubles. "JPMorgan Chase (JPM) ended a long run of profit gains when it logged a steep drop in fourth-quarter earnings Friday, as weakness in Europe contributed to a decline in investment banking revenue," wrote Investor’s Business Daily.
The Telegraph commented thusly: "JPMorgan Chase chief executive Jamie Dimon struck a positive note on the outlook for the US economy even as Europe's debt crisis dragged down the bank's quarterly profits."
And Dimon himself seemed to go along with his counterparts at Goldman and Citi in blaming macro troubles for the recent drop, talking about issues with the "current environment":
The bank's third-quarter profit fell 4% as its businesses were hit hard by Europe's financial woes and the fragile recovery in the United States...
"All things considered, we believe the firm's returns were reasonable given the current environment," said Jamie Dimon, JP Morgan's chairman and chief executive.
When I look at the revenue and bonus numbers on Wall Street this year, I see a number of companies that, despite being functionally insolvent in reality and dependent upon a combination of corrupt accounting and cheap cash from the Fed to survive, are still paying out enormous amounts of money in compensation.
In fact, when one considers the lost billions and trillions from the end of the mortgage bubble scam and the expiration of the quantitative easing program, it’s pretty incredible (one might even call it an inspirational testament to the industry's dedication to the cause of high compensation) that bonuses are even in the same ballpark as they used to be.
And all of this is just looking at things from a bottom-line, Wall-Street-centric point of view. Looking at the question from the point of view of an ordinary human being, however, Sherman’s thesis is even more nuts. He’s written a sort of investment-banking version of Jimmy Carter’s "malaise" speech, complaining about a lost era of easy money, when in fact there are two damning realities he’s ignored:
1. He’s wrong. See the above argument about Europe, QE, etc.
2. Even if he wasn’t wrong, which he is, his reaction to the "news" that Wall Street’s outsized bonuses are dropping is all wrong. If it were true, it would be good news, not bad news.
Since 2008, the rest of America has suffered a severe economic correction. Ordinary people everywhere long ago had to learn to cope with the equivalent of a lower bonus season. When the crash hit, regular people could not make up the difference through bailouts or zero-interest loans from the Fed or leveraged-up synthetic derivative schemes. They just had to deal with the fact that the economy sucked – and they adjusted.
This ought to have been true also on Wall Street, but in a curious development that is somehow not addressed in Sherman's piece, the denizens of the financial services industry managed to maintain their extravagant lifestyle standards in the middle of a historic global economic crash that, incidentally, they themselves caused.
After suffering one truly bad year – 2008, in which the securities industry collectively lost over $42 billion – Wall Street immediately rebounded to post record revenues in 2009, despite the fact that the economy at large did nothing of the sort. The numbers were so huge on Wall Street compared to the rest of the world that Goldman slashed its 4th-quarter bonuses, just so that the final bonus/comp number ($16.2 billion, down from what would have been $21 billion) didn’t look so garish to the rest of broke America.
What Sherman now argues is that Dodd-Frank has so completely hindered Wall Street’s ability to magically invent profits through borrowing and gambling that, unlike those wonderful days in 2009, its fortunes are now reduced to rising and falling – heaven forbid – along with the rest of the economy. Things are so bad, his interview subjects argue, that one is now more likely to make big money going into an actual business that makes an actual product:
"If you’re a smart Ph.D. from MIT, you’d never go to Wall Street now," says a hedge-fund executive. "You’d go to Silicon Valley. There’s at least a prospect for a huge gain. You’d have the potential to be the next Mark Zuckerberg."
Once upon a time, Sherman argues, banking was boring. "In the quaint old days, Wall Street tended to earn its profits rather boringly by loaning money, advising mergers, and supervising bond issues and IPOs," he writes. But then, in the eighties, the business became "turbocharged" when new ways to create leverage were introduced. A sudden surge in credit turned this staid business into the realm of super-compensated superheroes:
Credit was the engine that powered the explosion in bank profits. From junk bonds in the eighties to the emerging-markets crisis in the nineties to the subprime mania of the aughts, Wall Street developed new ways to produce, package, and sell debt to willing investors. The alphabet soup of complex vehicles that defined the 2008 crash – CLO, CDO, CDS – had all been developed to sell more credit.
But all of this leverage led to problems, Sherman grudgingly concedes, and those problems led to reforms, and now Wall Street is being threatened with a return to those "quaint" days of loaning money and supervising bond issues and such.
Such a return is being demanded by the 99-percenters, much-loathed by Sherman’s interview subjects and portrayed as a bunch of ignoramuses who don’t understand where their bread is buttered. In New York especially, it’s the regular people, he argues, who benefitted from all that crazy leverage. Why, without ginormous leverage-generated bonuses, New York would be … Philadelphia!
Consciously or not, as a city, New York made a bargain: It would tolerate the one percent’s excessive pay as long as the rising tax base funded the schools, subways, and parks for the 99 percent. "Without Wall Street, New York becomes Philadelphia" is how a friend of mine in finance explains it.
Sherman then goes further:
In this view, deleveraging Wall Street means killing the goose.
Look, the financial services industry should be boring. It should be quaint. Let’s take the municipal debt business. For ages, it was a simple, dull, low-margin sort of industry, in which banks arranged municipal bond issues and made small but dependable profits as cities and towns financed improvements and construction projects.
That system worked seamlessly for decades, until people like Sherman’s interview subjects suddenly decided to make the business exciting. You know what happens when you make municipal debt exciting? Jefferson County, Alabama happens. Or, on a macro level, Greece happens.
When making a few points on mere bond issues stops being enough, and you have to cook up crazy swap schemes and indices to bet against those schemes, ingenious scams allowing politicians to borrow billions of dollars that they will never in a million years be able to pay back, you might end up getting a few parks, schools, and subways in New York.
But what you get everywhere else is a giant clusterfuck that costs the rest of us years and even more billions of tax dollars to remedy.
This is what the protests are all about – it’s anger that Wall Street has been profiting from an imaginary economy that leaves bankers overpaid, but creates damage everywhere else. Sherman doesn’t get this. He seems to subscribe to the well-worn straw-man position that protesters are simply upset that bankers and financiers make a lot of money. Take for example his view on John Paulson, the hedge fund titan who was involved in Goldman’s infamous Abacus deal:
In October, a thousand protesters stood outside John Paulson’s Upper East Side townhouse and offered the hedge-fund billionaire a mock $5 billion check, the amount he earned from his 2010 investments. Later that day, Paulson released a statement attacking the protesters and their movement …. The truth was, Paulson was furious that the protesters had singled him out. Last year, he lost billions of dollars on bad bets on gold and the banking sector. One of his funds posted a 52 percent loss. "The ironic thing is John lost a lot of money this year," a person close to Paulson told me. "The fact that John got roped into this debate highlights their misunderstanding."
Hey, asshole: nobody misunderstands anything about John Paulson. They’re not mad that he made billions the year before, and they’re not happy that he lost money this year. They’re mad that the way he made his money in previous years – which involved putting together a born-to-lose portfolio of toxic mortgage bonds and then using Goldman Sachs to dump them on a pair of European banks, who in turn had no idea that Paulson was betting against them.
At least part of this transaction was illegal (so ruled the SEC, anyway), and all of it looks pretty damned underhanded. And if the benefit to society from this sort of work is the tax money New York City received from the proceeds of this fleecing, well, we’re willing to go without those taxes, thank you very much.
Listening to Wall Street whine about how it is misunderstood is nothing new. It’s been going on for years (often in that same mag). But if Sherman’s piece heralds a new era of Wall Street complaining about how it is not only misunderstood but undercompensated, you’ll have to excuse me while I spend the next month or so vomiting into my shoes.
The financial services industry went from having a 19 percent share of America’s corporate profits decades ago to having a 41 percent share in recent years. That doesn’t mean bankers ever represented anywhere near 41 percent of America’s labor value. It just means they’ve managed to make themselves horrifically overpaid relative to their counterparts in the rest of the economy.
A banker's job is to be a prudent and dependable steward of other peoples’ money – being worthy of our trust in that area is the entire justification for their traditionally high compensation.
Yet these people have failed so spectacularly at that job in the last fifteen years that they’re lucky that God himself didn’t come down to earth at bonus time this year, angrily boot their asses out of those new condos, and command those Zagat-reading girlfriends of theirs to start getting acquainted with the McDonalds value meal lineup. They should be glad they’re still getting anything at all, not whining to New York magazine.

Justin Tribble: 'People's support for Ron Paul will grow'

Ron Paul's best election night

Getting Ready for the Self-Reliance Expo in Mesquite, Texas, Educational, Featured Content, Food, Health, Herbal & Home Remedies, Limited Specials, Natural Disasters, Organic Food Storage, Portable Water Purification, Quick-Tips & Shortcuts, Sales & Deals, Seeds, Self-Reliance, Technology, Volcano Collapsible Propane Grill, Water, Water Storage, Wise Food Storage 1 Comment
Hey folks! We’re here in Mesquite, Texas getting ready for the Self-Reliance Expo. For more information about this Expo, and to learn when we’ll be coming to your state, please visit
We are excited for many reasons, one of which is that Texans are good people! They have wonderful hospitality, tell you exactly what they’re thinking, and when they do something, they do it BIG! Since we began offering products online, Texans have been wonderful customers to serve. The state is rich with so much history, it’s a shame this trip keeps us on a tight schedule. Just last night we stopped in and visited some historical landmarks, such as a 150 year-old jail, a Bonnie & Clyde landmark, and an old cabin off of Main Street. There are many buildings which have great architectural appeal and are gigantic in size. The food has also been fantastic here.
What can people expect by attending the show? Besides saving tons of money in buying products at discounts, there are many products that people will find which they never knew about, such Wes Morgan’s Stronghold Haywire Klamper, Humless Silent Generator, and more!
Mike Adams, the Health Ranger, will be the Key Note Speaker on Saturday morning at 11:00, presenting a lecture on “Survival Nutrition: How to choose foods & supplements that will keep you alive & healthy.” Doctor Bones and Nurse Amy will be presenting a series of Collapse Medicine lectures and offering classes on “How to Suture” (SOLD OUT), and many, many other great presentations.
We will be offering free items with purchases at our booth. We are excited to have a few copies of  the Doom and Bloom Survival Medicine Handbook, and the New print copy of Dr. Prepper’s Making the Best of Basics, with a newly added chapter by Doctor Bones & Nurse Amy available at our booth as well. We will post photos from the event on the blog next week.

Romanian government collapses amid public outrage over austerity

The Romanian government collapsed Monday after weeks of protests over biting cuts meant to keep outside funding flowing to the troubled nation.
Prime Minister Emil Boc said he and his Cabinet were resigning “to defuse political and social tension,” the Associated Press reported.
Opposition leaders are calling on President Traian Basescu to step down as well. Crin Antonescu, who heads the opposition Liberal Party, called it “the most corrupt, incompetent and lying government” since the 1989 revolt against communism, the report said.
Austerity has become the watchword in Europe, where governments have been cutting back and trying to rein in debt to help restore faith in the battered euro currency. Spain, for example, crafted a nearly $20-billion package of cuts and tax increases and even cut back on puentes, an extra vacation day slipped in when holidays fall on a Tuesday or Thursday to make a long weekend, Lauren Frayer reported for The Times.
Such austerity cuts are often a tit-for-tat for strapped nations' financial survival: Romania made sweeping cuts to secure a $26-billion loan from the International Monetary Fund, the European Union and the World Bank to keep paying salaries as its economy shrank. Sales taxes were hiked from 19% to 24%. Government workers took a 25% pay cut.
But in Romania and elsewhere, such deep cuts are deeply unpopular. Italy was racked with strikes in December before its lawmakers hiked taxes and put off pension payments. In Greece, workers clad in black are holding marches almost daily, Anthee Carassava has reported for The Times. Greeks argue that the austerity measures just aren’t fixing its tottering economy:
"One minute we're being told to do one thing; then, they tell us something else. Then, they modify that with something different, and in the end, it's scrapped and replaced with something even more brutal," said Nikos Tassos, a carpet salesman in Marathon.
"It's nerve-racking," he said. "Does anyone really know where this is all heading?"
To get a sense of the anger over the cuts in Romania, take a look at this video, shared several weeks ago by the Associated Press, of the protests rocking the country:

Greeks grow weary of austerity measures

Italian Senate votes through austerity package
Spain workers lose bridge holidays in debt crisis austerity move
-- Emily Alpert in Los Angeles
Photo: Romanian Prime Minister Emil Boc, left, is escorted by a bodyguard as he leaves Democrat-Liberal Party headquarters shortly after he resigned in Bucharest, Romania, on Monday. Credit: Robert Ghement / European Pressphoto Agency

Why Is Global Shipping Slowing Down So Dramatically?

If the global economy is not heading for a recession, then why is global shipping slowing down so dramatically?  Many economists believe that measures of global shipping such as the Baltic Dry Index are leading economic indicators.  In other words, they change before the overall economic picture changes.  For example, back in early 2008 the Baltic Dry Index began falling dramatically.  There were those that warned that such a rapid decline in the Baltic Dry Index meant that a significant recession was coming, and it turned out that they were right.  Well, the Baltic Dry Index is falling very rapidly once again.  In fact, on February 3rd the Baltic Dry Index reached a low that had not been seen since August 1986.  Some economists say that there are unique reasons for this (there are too many ships, etc.), but when you add this to all of the other indicators that Europe is heading into a recession, a very frightening picture emerges.  We appear to be staring a global economic slowdown right in the face, and we all need to start getting prepared for that.
If you don't read about economics much, you might not know what the Baltic Dry Index actually is.
Investopedia defines the Baltic Dry Index this way....
A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea.
When the global economy is booming, the demand for shipping tends to go up.  When the global economy is slowing down, the demand for shipping tends to decline.
And right now, global shipping is slowing way, way down.
In fact, recently there have been reports of negative shipping rates.
According to a recent Bloomberg article, one company recently booked a ship at the ridiculous rate of negative $2,000 a day....
Glencore International Plc paid nothing to hire a dry-bulk ship with the vessel’s operator paying $2,000 a day of the trader’s fuel costs after freight rates plunged to all-time lows.
Glencore chartered the vessel, operated by Global Maritime Investments Ltd., a Cyprus-based company with offices in London, Steve Rodley, GMI’s U.K. managing director, said by phone today. The daily payments last the first 60 days of the charter, Rodley said. The vessel will haul a cargo of grains to Europe, putting the carrier in a better position for its next shipment, he said.
So why would anyone agree to ship goods at negative rates?
Well, it beats the alternative.
This was explained in a recent Fox Business article....
“They’re doing this because you can’t just have ships sitting. If they sit too long, then that’s hard on the ships. They have to keep them loaded and moving from port to port,” said Darin Newsom, senior commodities analyst at DTN.
If the owner of a ship can get someone to at least pay for part of the fuel and the journey will get the ship closer to its next destination, then that is better than having the ship just sit there.
But just a few short years ago (before the last recession) negative shipping rates would have been unthinkable.
Asian shipping is really slowing down as well.  The following comes from a recent article in the Telegraph....
Shanghai shipping volumes contracted sharply in January as Europe's debt crisis curbed demand for Asian goods, stoking fresh doubts about the strength of the Chinese economy.
Container traffic through the Port of Shanghai in January fell by more than a million tons from a year earlier.
So this is something we are seeing all over the globe.
Another indicator that is troubling economists right now is petroleum usage.  It turns out that petroleum usage is really starting to slow down as well.
The following is an excerpt from a recent article posted on Mish's Global Economic Trend Analysis....
As I have been telling you recently, there is some unprecedented data coming out in petroleum distillates, and they slap me in the face and tell me we have some very bad economic trends going on, totally out of line with such things as the hopium market - I mean stock market.
This past week I actually had to reformat my graphs as the drop off peak exceeded my bottom number for reporting off peak - a drop of ALMOST 4,000,000 BARRELS PER DAY off the peak usage in our past for this week of the year.
I would encourage you to go check out the charts that were posted in that article.  You can find them right here.  Often a picture is worth a thousand words, and those charts are quite frightening.
Over the past few days, I have been trying to make the point that nothing got fixed after the financial crisis of 2008 and that an even bigger crisis is on the way.
Yes, the stock market is flying high right now.
Yes, even "Dr. Doom" Nouriel Roubini is convinced that the stock market will go even higher.
But this rally will not last that much longer.
Wherever you look, global economic activity is slowing down.  The UK economy and the German economy both actually shrank a bit in the fourth quarter of 2011.  About half of all global trade involves Europe in one form or another.  As Europe slows down, it is going to affect the entire planet.
Many thought that the German economy was so strong that it would not be significantly affected by the problems the rest of Europe is having, but that is turning out not to be the case.
In a new article by CBS News entitled "German economic slowdown worse than expected?", we are told that industrial production in Germany is declining even more than anticipated....
German industrial production fell 2.9 percent in December from the month before, according to official data released Tuesday, suggesting the country's economic slowdown could be worse than expected.
So don't believe all the recent hype about an "economic recovery".  Europe is heading into a recession, Asia is slowing down and the U.S. will not be immune.
Despite what you hear from the mainstream media, the truth is that the U.S. economy is not improving and incredibly tough times are ahead.
Thankfully, those of us that are aware of what is happening can make preparations for the economic storm that is coming.
Others will not be so fortunate.

TomTom tech to set driver insurance premiums

TomTom has signed a deal with an insurance company to use its satnav technology to measure driving ability to set premiums.
The satnav specialist said it has teamed up with Motaquote on Fair Pay Insurance - a product that the companies claim rewards 'good' drivers with lower premiums, using technology to monitor driver behaviour.
"Our entry into the insurance market with our proven fleet management technology puts us at the forefront of a move that could help to revolutionise the motor insurance industry," said Thomas Schmidt, managing director of TomTom Business Solutions.
"We offer a navigation, traffic information and telematics which opens up great opportunities for insurance companies to promote greener, safer driving and create a ground breaking portfolio of new insurance products."
Companies can tell your performance and your performance will have a direct impact on the premium you pay
According to the companies, the service would provide users with cheaper quotes, but prices could be pushed up if driver logs show recklessness or dangerous driving.
"We've dispensed with generalisations and said to our customers, if you believe you're a good driver, we'll believe you and we'll even give you the benefit up front," said Nigel Lombard of Fair Pay Insurance.
“If you think of your insurance as your car's MPG - the better you drive, the longer your fuel will last. Good drivers get more for their money and in that sense they will pay ultimately less."
Drivers on the scheme will be given a TomTom PRO 3100 as part of the package, and the device will include Active Driver Feedback and LIVE Services to warn drivers when they were cornering too sharply or braking too hard.
The TomTom will also have a LINK tracking unit fitted in their vehicles, allowing driver behaviour and habits to be monitored.
Rise of driver data
Telemetry insurance goes back some seven years, but is expected to become more common due to new equality rules affecting the industry.
“This is not so dissimilar to other telemetry services and they will become more common following the European Court of Justice ruling on gender,” said a spokesperson for the AA, which also plans to launch its own telemetry based service shortly.
The ECJ ruling said it was unfair to charge men more for insurance than women – as is often the case, with women paying as much as 40% less – and has forced a rethink on pricing.
From December, insurance companies will be barred from basing premiums on gender and are looking for other ways to group drivers according to risk.
According to the AA, telemetric premiums will grow in popularity because people are less concerned about Big Brother-style monitoring than they used to be.

Read more: TomTom tech to set driver insurance premiums | News | PC Pro

2 Live Stream Greece Protest - TV Greek Riots Video Feed

US banks and states agree $26bn mortgage settlement for homeowners

US housing market depressed, mortgage foreclosures
The agreement covers five banks: Ally Financial, Bank of America, Citigroup, JP Morgan Chase and Wells Fargo. Photograph: Shannon Stapleton/Reuters
US government officials are set to announce a $26bn settlement with the country's largest lenders over alleged abuses in the housing market. The agreement, to be announced by attorney-general Eric Holder and urban development secretary Shaun Donovan at 10am, will be the largest industry fine since a multi-state deal with the tobacco industry in 1998.

Federal and bank officials have been in negotiations over the deal for over a year. There had been speculation that president Barack Obama might announce the deal at his State of the Union speech in January.

But talks stalled as California and New York balked at the terms of the agreement. They have now signed off on the deal, which is now expected to cover at least 49 states.

The agreement covers five banks: Ally Financial, Bank of America, Citigroup, JP Morgan Chase and Wells Fargo. The five account for 55% of all outstanding home loans