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Global financial system implosion begins

Previously I was supportive of the bank bail-outs but not I am not so sure. There should have been stringent conditions placed before they were bailed out. The banks should never have been allowed to call in business overdrafts and loans in the way that they have done. The deleveraging of British industry and retailing has dealt it a death blow.

It has quite simply been decimated. The whole thing has led to a near-terminal collapse in consumer confidence. A vicious spiral of job losses - which reduces income, confidence and causes more job losses - seems certain.

Well there is no doubt the credit crunch has made things a lot worse, but I am already alarmed to see attempts to rewrite recent history in the press. Now the credit crunch is being said to have caused the recession and all our other woes, which is simply not true. There was already a recession looming, and the housing bubble had already begun to burst, before the credit crunch began. In fact that stuff is probably what triggered the beginnings of the crunch in the first place. But they have the tail wagging the dog.

If they really thought the bailout was going to totally unfreeze credit, and prevent recession, then yes its been a failure. If they only did it to prevent instant collapse, its worked so far, but as we saw the other week, requires topping up and adjusting at short notice.

Unlike the first bailout, they did describe the 2nd one as being a bailout for the wider economy, not bankers. Its almost certain to be seen as a failure, because it wont eliminate recession. It may make the landing a little softer, but we will never know, so there will be nothing tangible to thank the government for.

This sort of stuff is why Ive set my sights so low, if we dont collapse utterly for decades then they have dodged a bullet in my book. Its the least they can do as they helped get us into this mess. But even their triumph will look like ugly failure, so they are probably doomed, its just a question of when.
 
To be honest I really see no difference between what Nu-Labour have done and what the city fat cats have....
They both went out and spent vast sums of money on things they liked with the bankers/brokers etc. I remember the bars saying "They where running out of Champaigne" and with Nu Labour it was every stupid "project" under the sun which fit some half wit MPs ideological pursuit.
What they both had in common was debt. The banks played in the sun with private debt, and Nu Labour with public debt.
At least nobody forced me to take out a credit card, unlike my tax money which was wasted on utter shite.
 
... Previously I was supportive of the bank bail-outs but now I am not so sure...
Interesting.
A banker mate originally said that Northern Wreck should've been allowed to fail - as a lesson to other dodgy money juggling outfits and to avoid moral hazard. Not that it seems that would've done much good. Even he is surprised to see how many other banks were either playing the same game, or became incestuously vulnerable to the avalanche effect.

As you say, the mechanisms which provided stabilising buffers had been de-regulated out of existence, leaving the whole system dangerously unstable. So much for opening the system up to spivs and money-juggling tossers, rather than having it regulated by systems engineers.
:rolleyes:

Ho hum...
:(
 
Mark Twain once wrote.......

"Give me whereon to stand", said Archimedes, "and I will move the earth." The boast was a pretty safe one, for he knew quite well that the standing place was wanting, and always would be wanting. But suppose he had moved the earth, what then? What benefit would it have been to anybody? The job would never have paid working expenses, let alone dividends, and so what was the use of talking about it? From what astronomers tell us, I should reckon that the earth moved quite fast enough already, and if there happened to be a few cranks who were dissatisfied with its rate of progress, as far as I am concerned, they might push it along for themselves; I would not move a finger or subscribe a penny piece to assist in anything of the kind.

Why such a fellow as Archimedes should be looked upon as a genius I never could understand; I never heard that he made a pile, or did anything else worth talking about. As for that last contract he took in hand, it was the worst bungle I ever knew; he undertook to keep the Romans out of Syracuse; he tried first one dodge and then another, but they got in after all, and when it came to fair fighting he was out of it altogether, a common soldier in a very business-like sort of way settling all his pretensions.

It is evident that he was an over-rated man. He was in the habit of making a lot of fuss about his screws and levers, but his knowledge of mechanics was in reality of a very limited character. I have never set up for a genius myself, but I know of a mechanical force more powerful than anything the vaunting engineer of Syracuse ever dreamed of. It is the force of land monopoly; it is a screw and lever all in one; it will screw the last penny out of a man's pocket, and bend everything on earth to its own despotic will. Give me the private ownership of all the land, and will I move the earth? No; but I will do more. I will undertake to make slaves of all the human beings on the face of it. Not chattel slaves exactly, but slaves nevertheless. What an idiot I would be to make chattel slaves of them. I would have to find them salts and senna when they were sick, and whip them to work when they were lazy.

No, it is not good enough. Under the system I propose the fools would imagine they were all free. I would get a maximum of results, and have no responsibility whatever. They would cultivate the soil; they would dive into the bowels of the earth for its hidden treasures; they would build cities and construct railways and telegraphs; their ships would navigate the ocean; they would work and work, and invent and contrive; their warehouses would be full, their markets glutted, and

the beauty of the whole concern would be
that everything they made would belong to me.

It would be this way, you see: As I owned all the land, they would of course, have to pay me rent. They could not reasonably expect me to allow them the use of the land for nothing. I am not a hard man, and in fixing the rent I would be very liberal with them. I would allow them, in fact, to fix it themselves. What could be fairer? Here is a piece of land, let us say, it might be a farm, it might be a building site, or it might be something else - if there was only one man who wanted it, of course he would not offer me much, but if the land be really worth anything such a circumstance is not likely to happen. On the contrary, there would be a number who would want it, and they would go on bidding and bidding one against the other, in order to get it. I should accept the highest offer - what could be fairer? Every increase of population, extension of trade, every advance in the arts and sciences would, as we all know, increase the value of land, and the competition that would naturally arise would continue to force rents upward, so much so, that in many cases the tenants would have little or nothing left for themselves.

In this case a number of those who were hard pushed would seek to borrow, and as for those who were not so hard pushed, they would, as a matter of course, get the idea into their heads that if they only had more capital they could extend their operations, and thereby make their business more profitable. Here I am again. The very man they stand in need of; a regular benefactor of my species, and always ready to oblige them. With such an enormous rent-roll I could furnish them with funds up to the full extent of the available security; they would not expect me to do more, and in the matter of interest I would be equally generous.

I would allow them to fix the rate of it themselves in precisely the same manner as they had fixed the rent. I should then have them by the wool, and if they failed in their payments it would be the easiest thing in the world to sell them out. They might bewail their lot, but business is business. They should have worked harder and been more provident. Whatever inconvenience they might suffer, it would be their concern, and not mine. What a glorious time I would have of it! Rent and interest, interest and rent, and no limit to either, excepting the ability of the workers to pay. Rents would go up and up, and they would continue to pledge and mortgage, and as they went bung, bung, one after another, it would be the finest sport ever seen. thus, from the simple leverage of land monopoly, not only the great globe itself, but everything on the face of it would eventually belong to me. I would be king and lord of all, and the rest of mankind would be my most willing slaves.

It hardly needs to be said that it would not be consistent with my dignity to associate with the common rank and file of humanity; it would not be politic to say so, but, as a matter of fact, I not only hate work but I hate those who do work, and I would not have their stinking carcasses near me at any price. High above the contemptible herd I would sit enthroned amid a circle of devoted worshippers. I would choose for myself companions after my own heart. I would deck them with ribbons and gewgaws to tickle their vanity; they would esteem it an honour to kiss my glove, and would pay homage to the very chair that I sat upon; brave men would die for me, parsons would pray for me, and bright-eyed beauty would pander to my pleasures. For the proper management of public affairs I would have a parliament, and for the preservation of law and order there would be soldiers and policemen, all sworn to serve me faithfully; their pay would not be much, but their high sense of duty would be a sufficient guarantee that they would fulfil the terms of the contract.

Outside the charmed circle of my society would be others eagerly pressing forward in the hope of sharing my favours; outside of these would be others again who would be forever seeking to wriggle themselves into the ranks of those in front of them, and so on, outward and downward, until we reach the deep ranks of the workers forever toiling and forever struggling merely to live, and with the hell of poverty forever threatening to engulf them. The hell of poverty, that outer realm of darkness where there is weeping and wading and gnashing of teeth - the social Gehenna, where the worm dieth not, and the fire is not quenched - here is a whip more effective by far than the keenest lash of the chattel slave owner, urging them on by day, haunting their dreams by night, draining without stint the life blood from their veins, and pursuing them with relentless constancy to their graves. In the buoyancy of youth many would start full of hope and with high expectations; but, as they journeyed along, disappointment would follow disappointment, hope would gradually give place to despair, the promised cup of joy would be turned to bitterness, and the holiest affection would become a poisoned arrow quivering in the heart!

What a beautiful arrangement - ambition urging in front, want and the fear of want bringing up the rear! In the conflicting interests that would be involved, in the throat-cutting competition that would prevail, in the bitterness that would be engendered between man and man, husband and wife, father and son, I should, of course, have no part. There would be lying and cheating, harsh treatment by masters, dishonesty of servants, strikes and lockouts, assaults and intimidation, family feuds and interminable broils; but they would not concern Me. In the serene atmosphere of my earthly paradise I would be safe from all evil. I would feast on the daintiest of dishes, and sip wines of the choicest vintage; my gardens would have the most magnificent terraces and the finest walks. I would roam mid the umbrageous foliage of the trees, the blooming flowers, the warbling of birds, the jetting of fountains, and the splashing of pellucid waters. My palace would have its walls of alabaster and domes of crystal, there would be furniture of the most exquisite workmanship, carpets and hangings of the richest fabrics and finest textures, carvings and paintings that were miracles of art, vessels of gold and silver, gems of the purest ray glittering in their settings, the voluptuous strains of the sweetest music, the perfume of roses, the softest of couches, a horde of titled lackeys to come and go at my bidding, and a perfect galaxy of beauty to stimulate desire, and administer to my enjoyment. Thus would I pass the happy hours away, while throughout the world it would be a hallmark of respectability to extol my virtues, and anthems would be everywhere sung in praise.

Archimedes never dreamt of anything like that. Yet, with the earth for my fulcrum and its private ownership for my lever, it is all possible. If it should be said that the people would eventually detect the fraud, and with swift vengeance hurl me and all my courtly parasites to perdition, I answer, "Nothing of the kind, the people are as good as gold, and would stand it like bricks, and I appeal to the facts of today to bear me witness."
 
Wow! Mark Twain describes present world problems rather neatly there.

Incidentally, people might be interested to read this article in yesterday's FT. He says all eyes will be on the American's, but in his blog (he is attending Davos) he reports few American's have turned up!

Consensus melts as the crisis heats up
By Gideon Rachman
Financial Times, January 27 2009

...the 2009 meeting of the World Economic Forum is taking place at a
time when the "globalisation consensus" is under strain as never
before. The international financial crisis has directly undermined one
of the central assumptions behind that consensus – the idea that
international economic integration provides a path to steadily rising
prosperity. Instead, at the moment, the globalisation of the economy
appears to have done the opposite – spreading a dangerous economic
virus around the world, and creating the threat of another global
depression...But the group most closely watched will be the Americans. For all the talk about the rise of multi-polarity and the decline of the US, it remains at the centre of global politics and economics. The biggest questions at Davos will be whether the Obama administration can revive the economy and give US foreign policy a fresh start after the Bush era.
http://www.ft.com/cms/s/0/6bde8788-ec75-11dd-a534-0000779fd2ac.html

Will Davos disintegrate?
http://blogs.ft.com/rachmanblog/2009/01/will-davos-disintegrate/#more-463
When Europe starts to melt at the edges
http://blogs.ft.com/rachmanblog/2009/01/when-europe-starts-to-melt-at-the-edges/
 
My Virtual Davos by Paul Mason
http://www.bbc.co.uk/blogs/newsnight/paulmason/2009/01/my_virtual_davos.html

Robert Peston at Davos: Soros and Roubini cheer me up
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/01/soros_and_roubini_cheer_me_up.html

Mountains of Doom
Discussing the stimulus and the disaster that is the world economy, with "Dr. Doom," Nouriel Roubini, RGEMonitor.com chairman
http://www.cnbc.com/id/15840232?video=1015456793

Roubini Sees Negative Growth Remaining Through 2009
http://www.bloomberg.com/avp/avp.ht...//media2.bloomberg.com/cache/vXkZDJASdGtU.asf
 
Comment #60 made me smile:
So, who do you believe? George Soros who has a proven and unenviable track record, or Gordon Brown who doesn't. Mr Brown still has still to explain what happened to our gold reserves and what we have got in return for billions sunk into the NHS. From today's news, it seems that they have got e-mail working and I am supposed to be impressed by this!

And my point is that Agius, Varley and Soros are professionals and haven't got where they are today by being stupid. On the other hand (and as far as I can tell) neither Gordon Brown or Alastair Darling have any formal qualifications in anything to do with money (economics, banking or even accountancy). Do you want to believe the amateurs of the professionals? - it's not a trick question.

In my lifeboat, I have Marcus Agius, John Varley and George Soros. Gordon Brown and Alastair Darling are a waste of rations and can take their chances with the sharks.
:D
 
Bloomberg audio interview (approx 30mins): Roubini "risk of near depression"

Notice how amidst all the statistics and telephone number sized sums being bandied about there is little discussion of the social implications and the severe hardships underway...
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vtupzuZch.R4.asf

Global crisis politics - A Davos debate with Nouriel Roubini and Ian Bremmer
http://blogs.reuters.com/great-deba...-debate-with-nouriel-roubini-and-ian-bremmer/
 
Howard Beale said:
I don't have to tell you things are bad. Everybody knows things are bad. It's a depression. Everybody's out of work or scared of losing their job. The dollar buys a nickel's worth; banks are going bust; shopkeepers keep a gun under the counter; punks are running wild in the street, and there's nobody anywhere who seems to know what to do, and there's no end to it.

We know the air is unfit to breathe and our food is unfit to eat. And we sit watching our TVs while some local newscaster tells us that today we had fifteen homicides and sixty-three violent crimes, as if that's the way it's supposed to be! We all know things are bad -- worse than bad -- they're crazy. It's like everything everywhere is going crazy, so we don't go out any more. We sit in the house, and slowly the world we're living in is getting smaller, and all we say is, "Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials, and I won't say anything. Just leave us alone."

Well, I'm not going to leave you alone. I want you to get mad!

I don't want you to protest. I don't want you to riot. I don't want you to write to your Congressman, because I wouldn't know what to tell you to write. I don't know what to do about the depression and the inflation and the Russians and the crime in the street. All I know is that first, you've got to get mad. You've gotta say, "I'm a human being, goddammit! My life has value!"

So, I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window, open it, and stick your head out and yell, "I'm as mad as hell and I'm not going to take this anymore!!"

Scene from the movie Network (1976), strangely resonant today:
http://uk.youtube.com/watch?v=WINDtlPXmmE
 
Would helicoptering free High St gift vouchers to households help invigorate economy?

The scale of job losses and ongoing UK economic contraction makes it clear that the government is going to have to come up with new and imaginative tricks from the hat if the harshest economic recession in decades is to be mitigated and avoided. I read that Obama has a ‘Helicopter Bernanke-style’ plan for a £500 cheque for every US family. This could be adopted in Britain, but instead of a cheque you could make it gift vouchers that people could spend in a range of stores and shops. People are busy paying down debt and reducing expenditure so aren’t spending. Credit is harder to come by and those with the cash or access to credit are scared to spend when they see the extent of job losses in the economy. Free money in the form of High Street gift vouchers, could be just what is needed to stem some of the job losses. Families looking to buy something larger could even pool their vouchers (to buy a car for example), which would help out this struggling industry.
 
All this disaster & suffering & virtually nobody goes to jail for it. Where are the videos of the execs on Wall St & other financial centers being led out of their sky scrapers in handcuffs?

The problem isn't the laws that are broken. It's the laws that are obeyed.

And I get so sick of hearing the free market worshipers (like libertarian Ron Paul) saying "Don't blame the market. Don't intervene in the market. Don't regulate the market."

I showed this article on another thread but it applies here too:
The collapse of Communism as a political system sounded the death knell for Marxism as an ideology. But while laissez-faire capitalism has been a monumental failure in practice, and soundly defeated at the polls, the ideology is still alive and kicking.

...you can find all manner of free market fundamentalists still on the Senate floor or in Governor's mansions or showing up on TV trying to peddle the deregulation snake oil.

Take Sen. John Ensign, chairman of the National Republican Senatorial Committee, who went on Face the Nation and, with a straight face, said of the economic meltdown: "Unfortunately, it was allowed to be portrayed that this was a result of deregulation, when in fact it was a result of overregulation."

It's time to drive the final nail into the coffin of laissez-faire capitalism by treating it like the discredited ideology it inarguably is. If not, the Dr. Frankensteins of the right will surely try to revive the monster and send it marauding through our economy once again.

...the GOP was launching "a new, in-house think tank aimed at reviving the party's policy heft." In a private memo explaining the think tank, RNC chairman Mike Duncan wrote: "We must show how our ideology can be applied to solve problems." But, of course, it's that very ideology that's causing the problems.

The blame shifters cannot be allowed to make their case without the truth being pointed out at every turn. It's time to relegate free market fundamentalists to the same standing as Marxist ideologues: intellectual curiosities occasionally trotted out as relics of a failed philosophy.
http://www.huffingtonpost.com/arianna-huffington/laissez-faire-capitalism_b_152900.html
 
And I get so sick of hearing the free market worshipers (like libertarian Ron Paul) saying "Don't blame the market. Don't intervene in the market. Don't regulate the market."

Yes those types are focussing on all the evil government intervention, bailouts etc, that are now being done, are foaming on about big government, the central banks, and generally talking a lot of rubbish. Its also giving them an excuse to have a pop at fiat currency and get an erection over gold.
 
News today:

Barclays bank has had its credit rating downgraded by agency Moody's, which said it expected "significant further losses" on credit-related write-downs.
Shares in Barclays were trading down more than 11% at 94.4 pence in afternoon trading.

http://news.bbc.co.uk/1/hi/business/7865195.stm

The Building Societies Association (BSA) has called on the Bank of England not to cut interest rates this week.
The Bank's monetary policy committee (MPC) meets on Thursday amid widespread expectations of a further reduction in the cost of borrowing.
The BSA said this would have a "severe impact on savers", and might choke off the supply of funds available to societies to lend as mortgages.

http://news.bbc.co.uk/1/hi/business/7864700.stm

US President Barack Obama has warned that more US banks are likely to fail, as the full extent of their losses in the economic crisis becomes clear.
Speaking to NBC News, Mr Obama said "some banks won't make it" but stressed that people's deposits would be safe.
He has also asked Treasury Secretary Timothy Geithner to draw up guidelines for banks receiving taxpayers' money.
"If a bank or a financial institution is getting relief then they've got to abide by certain conditions," he said.

The interview was short on details, with the president declining to comment on whether he planned to create a "bad bank" to buy toxic assets from other financial institutions.
He said that he did not want to pre-empt an announcement planned for "next week".

http://news.bbc.co.uk/1/hi/business/7865165.stm
 
Scale of problems in China hard to get head round:

http://www.guardian.co.uk/business/2009/feb/02/china-unemployment-unrest

Around 20 million migrant workers have returned to the Chinese countryside after failing to find work in the cities because of the economic downturn, a senior official said today.

The figure - greater than the population of Australia - is double a previous official estimate and will heighten the concerns of the Chinese authorities about maintaining stability. It came a day after the government warned that 2009 would be "possibly the toughest year" for economic development in China since the turn of the century.

Chen Xiwen, director at the Office of the Central Leading Group on Rural Work, told a news conference that a government survey showed that 15.3% of an estimated 130 million rural migrants to the cities had returned home jobless. Adding in new entrants to the rural labour market gave a total of around 26 million unemployed and potentially restive people in the countryside. Some economists believe this is an underestimate and say the real figure could ultimately reach 40 million.
 
perfectly legal corporate tax avoidance

http://www.guardian.co.uk/business/2009/feb/02/tax-gap-avoidance

British taxpayers are being left to plug a multibillion-pound hole in the public finances as hundreds of the country's biggest companies increasingly employ complex and secretive tax arrangements to limit the amount they hand over to the exchequer.
An extensive Guardian investigation has examined the accounts of the UK's biggest companies - many of them household names - and discovered a series of sophisticated tax strategies which, critics say, amount to an almost unstoppable tide of perfectly legal corporate tax avoidance.
The veil of confidentiality that covers these tax avoidance schemes is so difficult to penetrate that nobody knows exactly how much tax goes missing each year. But HM Revenue & Customs estimated that the size of the tax gap could be anything between £3.7bn and £13bn. The Commons public accounts committee put it at a possible £8.5bn and the TUC said £12bn.
UK listed companies are not required to set out exactly how much UK corporation tax they actually hand over to HM Revenue & Customs. When the Guardian asked each FTSE 100 company to provide this information only two offered a response.
Similarly each company was asked what its official policy on so-called tax planning is and how this is implemented. No company was prepared to answer the question directly. However, the investigation, which we publish over coming days, has established that:
• The UK-based drinks giant Diageo plc has transferred ownership of brands worth billions of pounds, including Johnnie Walker, J&B and Gilbey's gin, to a subsidiary in the Netherlands where profits accrued virtually tax-free. Despite average profits of £2bn a year, it paid an average of £43m a year in UK tax - little more than 2% of its overall profits.
• Two major drug firms have shifted ownership of their brands to tax havens in the Caribbean. Their UK operations can then be made to pay royalties for the use of the trademarks, reducing their profits and the amount of tax due in this country.
• An internationally renowned corporation has structured itself so that it is now simultaneously a British public company, tax-resident in Amsterdam, but whose brands are Swiss-owned.
• The makers of an iconic British food product have shifted the rights in it to a tax haven in Switzerland.
• A household name has been deliberately loaded with debt so that it no longer has any profits to pay tax on.
• Top accountancy firms are charging £500,000 a time to invent tax-avoidance schemes.
• Some UK-listed companies which have moved control to Dublin to benefit from Ireland's low-tax regime appear to have little real presence there.
According to the National Audit Office, in 2006 more than 60% of Britain's 700 biggest companies paid less than £10m corporation tax, and 30% paid nothing.
 
perfectly legal corporate tax avoidance
. . .
Part deux . . .

"The multi-millionaire columnist Polly Toynbee is this morning ranting against tax dodging corporations in the Guardian. The paper has even set up a campaigning website with fancy interactive graphics. According to the their own annual report Guardian Media Group made £306.4 million before tax. Using astute tax planning and legal manipulation of the tax laws; such as the use of an equity owning trust and a Caymans Islands offshore corporation to avoid stamp duty, they managed to get a rebate of £800,000 in tax last year. That is less than they paid the Guardian Media Group's chief executive, Carolyn McCall, she got a package of £827,000 so the media fat cats got paid by HM Revenue Commissioners. . . . etc etc etc "

Pot, kettle, black.
 
Australia economic stimulus plan

I see that Australia are copying Obama's plan for a £500 windfall cheque. The targeting is very astute as there is no point throwing money at the rich who have all they need and wont spend it. I wonder if we will see this adopted in 'blighty'?

"Mr Rudd said that...a further $12.7 billion will provide cash support for lower-income families to be paid next month. This means low-income earners such as farmers, students and stay-at-home mothers will receive a one-off payment of $950."
http://business.timesonline.co.uk/t...rticle5648320.ece?token=null&offset=12&page=2
 
Oh dear.

If the current bail-out fails, even bigger problems lie ahead in relation to derivatives, often consisting of clever bets on asset prices, interests and exchange rate movements. At the end of 2007, they were estimated to have a face value of about $1,140tn. The UK Treasury has failed to come up with numbers, but the US statistics show that just five banks have derivatives with a face value of some $170tn (see page 12 here). JP Morgan has $2.251tn of assets and $91.339tn face value of derivatives (see table 2 here); and Citibank has 2.050tn of assets and 38.186tn face value of derivatives. Barclays Bank is party to derivatives with a face value of nearly £29tn. No doubt all these bets are hedged and if all works out well the economic exposure may be small, but bankers have not exactly excelled at risk management.

Even if only a small proportion of derivatives go bad they have a capacity to bankrupt nation states and printing presses will have to go into overdrive to print money. The US gross domestic product (GDP) is about $14tn and the UK GDP is about $2.7tn. Global GDP is about $60tn.

http://www.guardian.co.uk/commentisfree/2009/feb/04/banking-credit-crunch?commentpage=1
 

Quit . . . . Grauniad in "not understanding what it's talking about" shock

Looks like it's numbers are based on the total exposure to the underlying securites/instrument and assumes it's worst case to be that anything and everything goes to zero AND infinity at the same time.

Eg, say you purchase 1 contract of the FTSE100 index futures. This means that you win/lose £10 for each point the index moves away from your purchase price.

Using the Grauniad's methodology, say you buy at 4170, it quotes your "face value" to be (4170 * £10) ie £41,700. This is correct, but a slightly disengenuous proxy for "risk"
 
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