Toshiba: You've Lost A Customer For Life

In March 2011, I bought a Toshiba laptop after reading a glowing review on Which? (for which I'd had to subscribe). 

Nineteen days ago, my 6 month old Toshiba laptop died. 

I was on holiday overseas at the time. It was Friday evening. The Toshiba web site wasn't helpful and I couldn't reach anyone at Toshiba Support. Monday was a holiday in the UK, so it was Tuesday before I could report a critical problem: Day 4. The support person I spoke to said it couldn't possibly be a hard drive failure, as I'd have different error messages, so I should order a recovery disk on the web site - about £20 worth. Delivery was promised within fourteen days.

So, Toshiba think it's okay for a customer to wait at least fourteen days to get access to his laptop. So I went down to the basement and rescuscitated my old Dell laptop.

I began tweeting, using #ToshibaFail.

Toshiba's recovery disk arrived on Day 11. It didn't work. The only option available on the web site and via the telephone was to pay £30 for third party support. I spent over an hour on the phone before the support person said I should call a special number at Toshiba for a hard drive diagnosis. I did, and after trying to suggest my warranty details on the web site weren't valid, they said I should take the machine to a support centre in London, which I did, same day. 

On Day 13, the Toshiba service centre told me the hard drive had failed. They said they'd ordered a new one on the warranty. Estimated delivery time: another 5 business days.

Day 17, the lap top still hadn't surfaced, so I ordered a new Dell - estimated delivery: two days.

Today, Day 19, the new Dell arrived. I also got a call to say the Toshiba was ready, but I don't care. This is being posted via the Dell. I still haven't collected the Toshiba, which I might do tomorrow if I have time.

Toshiba, you've lost a customer for life.

Institutions Don't Need Our Money

Forget the credit crisis, we're in the midst of a deposit crisis. 

In a series of excellent posts citing the NY Feds' work on shadow banking, FT Alphaville explains there are too few of these safe harbours for all the institutional cash that needs them. This is different from the mistaken investments made in toxic "AAA" sub-prime mortgage debt. This is about a shortage of the highest grade bank deposits and government bonds. In fact, the NY Fed reports "that 90 per cent of instutional cash pools are subject to management policies where safety [rather than yield] is the primary objective."

This can turn government bonds and other high grade debt into kind of Giffen Good, which people paradoxically consume more of as the price rises. This can continue to the point that the bond rate becomes negative (as has happened with Swiss debt) and some banks may even charge depositors for depositing cash on which it can no longer make a return.

In turn, this awakens the so-called "Triffin Dilemma", whereby a country that has a reserve currency (like the US) runs a large current account deficit to fuel consumption and provide the rest of the world with liquidity, yet suffers "from the declining value and credibility of any currency which runs a persistent trade deficit - eventually leading to a reluctance of creditors to hold the reserve currency."

All of which suggests that institutions don't need our cash - that perhaps we're better off allocating it directly to those who do need it, like people and SMEs, through 'horizontal credit intermediaries' that don't add unnecessary cost or contribute to the deposit crisis.

Image from CurtisMorley.

Let's Be Unreasonable

"The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man."
George Bernard Shaw.

A Litigation-led Recovery

Those struggling to find a job take note. The recents string of law suits filed against major banks by the Federal Housing Finance Agency confirms that the litigation services market will lead us to economic recovery.

By the time the parties have counter-claimed, cross-claimed and largely disappeared, taxpayers on both sides of the pond may of course syphon some damages out of the giant round-robbin. But it's when you add in the legal and other professional/support time, software and cloud-computing capacity, stationery, coffee, taxis, restaurants and takeaway food that you know we're into some serious redistribution of wealth. Then there are the spin-offs: all the discretionary spending of everyone involved, on holidays, cars, boats, pub lunches and ice creams for the kids - all trickling through into the real economy.

I reckon there's a good five years left in it yet, by which time the same machine will be chewing hungrily into the next mess.

Litigation is the future.

Joking aside, anyone who thinks that being a securities litigator might be a bit dull should watch how much fun Senator Carl Levin had cross-examining Dan "Shitty Deal" Sparks of Goldman Sachs on their Timberwolf CDO deal:

There's No Good Time For Banks To Change

Retail bankers always fiercely resist change. I guess that's because they've always had to follow the manual. Unless the manual changes they are powerless to help. Add to this a general lack of accountability for the manual, and you have the perfect recipe for inertia. This explains retail bankers' resistance to faster payments, fairer overdraft charges, abandoning the sale of payment protection insurance ... the list goes on and on and on. It's cultural, regardless of their woeful economic plight.

So, of course, we find febrile resistance to the notion of 'ring-fencing' or other structural proposals to shuffle the deckchairs somehow prevent the need for massive taxpayer subsidies to keep retail banks afloat. Timing is always the last line of defence, and now we're hearing from the British Bankers Association that they couldn't possible restructure until never they've financed the recovery and repaid bail-out funds to the taxpayer.

I completely understand the concerns about restructuring banks amidst the current economic hurricane. But isn't the purpose of restructuring them to protect us against one of them being swamped? If so, surely now is the time to batten down hatches and secure the cargo as best we can.

Or should we simply be manning the lifeboats?

Image from gCaptain.