What caught my eye this week.

A big week for news. A Spring Budget that shifted the retirement savings goalposts like a giant tossing cabers, alongside a banking crisis still threatening to drag down US – and possibly European – banks, like giants gasping for air.

On pensions, do read the cracking comments to our article on Wednesday. We’re lucky to have informed readers who mostly take the time to flesh out their thinking when they post. You’ll learn as much from that thread as from any media article. Especially when many financial journalists seem confused as to how the Lifetime Allowance really works.

There’s no doubt this ceaseless pension meddling is a pain though – from how the Lifetime Allowance has been reduced over the years to Hunt going back on a pledge made just last autumn to freeze it until 2026 (making this week’s reversal potentially bitter and costly to anyone who had acted accordingly) to Labour’s response that they’ll – you guessed it – reverse the reversal.

I believe the Lifetime Allowance is bad regulation. But changing the pension rules every few years is even worse. Pensions require people to plan for several decades away. Yet we can’t be confident the rules will even outlast an election.

Those who can should probably take advantage of this latest pivot. But do your research carefully – and don’t dawdle!

Here today, gone tomorrow

As for the banking crisis, that story is changing daily. I just deleted a huge bunch of relevant links I collected over the week. Most of them – while admirable takes – have been overtaken by events.

The most interesting of these discussed how the failure of Silicon Valley bank is a sign of a wider shift in the venture capital ecosystem. But that’s pretty esoteric stuff from a mainstream perspective when a European bank like Credit Suisse is listing.

Now money can be moved in seconds online, bank runs seem to be just a Twitter panic away.

Perhaps my main takeaway therefore is US regulators seem to be deciding they can’t risk any deposit losses – because that risk even existing can drive deposit flight – and so they will in time legislate towards either full insurance of deposits or at least limits in the several millions.

Existing insurance schemes work by protecting enough small deposits to satisfy most of a bank’s customers that their money is safe. This gives the larger deposits a sort of free ride.

The theory is that protecting the little guys means a bank run won’t happen. But Silicon Valley Bank’s failure showed that model has limits.

Banks are still not boring enough

If we do see all cash deposits protected that would surely change the business of banking, both in the US and abroad (if only due to regulatory arbitrage).

Banks would become quasi-national utilities if the Government explicitly stood behind their balance sheets. And they’d be regulated as such.

On the other hand smaller banks (of which the US still has thousands, some of whom fail ever year) might get a leg-up. Larger banks wouldn’t benefit from Too Big To Fail status if, thanks to universal insurance and regulatory scrutiny, no bank could fail.

For what it’s worth I still think the drama is containable – not least because it has to be. The authorities can do what it takes, albeit we might be cleaning up the consequences for years to come.

As the Motley Fool said this week in a tongue-in-cheek letter to lawmakers:

[Imagine] how well your sensitive, musical instrument-playing children would fare in post-capitalist Mad Max wasteland.

Then add a zero to every number in your rescue package.

Have a great weekend!

From Monevator

Our updated guide to finding the best online broker – Monevator

Lifetime Allowance for Pensions abolished and annual allowance raised – Monevator

From the archive-ator: Gagadom and the Grim Reaper: suppose they come early? – Monevator


Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.

Spring Budget: key points at-a-glance – BBC

Spring Budget: changes to pensions, childcare, and energy support – Which

Spring Budget: how will your income change? [Calculator]Guardian

Labour pledges to reverse abolishing of Lifetime Allowance – Pension Age

Jeremy Hunt’s R&D shake-up divides UK small businesses [Search result]FT

UK house prices to fall 10% from peak, says OBR – Yahoo Finance

Barclays could save £200m by pausing payments to staff pension scheme – Guardian

Oil price falls to lowest level since Russia invaded Ukraine – Axios

Scottish Mortgage removes non-executive director after boardroom clash [Search result]FT

Argentinian inflation soars over the 100% mark – BBC

Seems like the Covid ‘She-cession’ was a ‘He-cession’ after all… – Axios

…but there’s still plenty to debate in the latest UK gender pay gap figures – ONS

Why the UK economy has grown so slowly [Search result]FT

Frozen thresholds impact mini-special

The impact of frozen or reduced tax thresholds on personal incomes – OBR

Frozen tax thresholds to cost higher-rate households £1,000 a year, says IFS – This Is Money

Products and services

How the government energy cap U-turn will affect your bills – Which

Open an account with InvestEngine via our link and get £25 when you invest at least £100 – and an additional £100 if you invest at least £10,000 into an ISA before 2 May (T&Cs apply. Capital at risk) – InvestEngine

£4.5bn is lying in lost accounts. Could some of it belong to you? – Which

Eight energy-saving fixes from a hands-on energy-saving expert – This Is Money

Halifax is offering a time-limited £175 bank switching bonus – This Is Money

Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor

Homes for sale in former pubs, in pictures – Guardian

Comment and opinion

Why the higher paid should work longer than the rest [Search result]FT

Gradually, then suddenly – Fortunes & Frictions

Investor behaviour during market shocks – Behavioural Investment

No, it wasn’t pension funds that killed the UK stock market – Real Returns

The rules of the money game [Podcast] – Morgan Housel via Apple Podcasts

Stabilizing – Retirement Investing Today

Staying invested – Spilled Coffee

Market expectations for US interest rate hikes are yo-yoing – The Irrelevant Investor

Don’t waste your emotional capital investing out of spite – Abnormal Returns

Will ChatGPT improve financial literacy? – Morningstar

Market timing mini-special

Don’t chase the past – Bilello

Why you always sell stocks at the bottom – Darius Foroux

Naughty corner: Active antics

A tracker and a slug of cash replicates the average multi-factor hedge fund – Finominal

Statistically speaking, you are the patsy – Neckar Substack

Crisis alpha versus panic alpha – Random Roger

Can the value spread expand forever? – Alpha Architect

Kindle book bargains

Banking On It: How I Disrupted an Industry by Anne Boden – £0.99 on Kindle

Bank of Dave by Dave Fishwick – £0.99 on Kindle

Never Go Broke by Lee Boyce and Jesse McClure – £0.99 on Kindle

Green Living Made Easy: Hacks to Save Time and Money by Nancy Birtwhistle – £0.99 on Kindle

Environmental factors

Germany gives green light to €49 a month public transport ticket – Guardian

How the fossil fuel industry plays dirty in the “fight for its life”Semafor

Baking on the seaweed rush – Hakai

Joe Biden just broke a big climate promise in Alaska – Vox

Off our beat

Michael Heseltine: “The adults are back in charge” [Search result]FT

Is Facebook’s Metaverse turning into a ghost town? – The Honest Broker

Six useful prompts to make better use of ChatGPT – via Twitter

Our reality may be the sum of all possible realities – Nautilus

Meta productivity – Dror Poleg

How Ted Lasso became a multi-million dollar business – Huddle Up

An interview with futurist Kevin Kelly – Noahpinion

And finally…

“No doubt all commodities have politics. But money and credit and the structure of finance piled on them are constituted by political power, social convention, and law in a way that sneakers, smartphones, and barrels of oil are not.”
– Adam Tooze, Crashed: How a Decade of Financial Crises Changed the World

Like these links? Subscribe to get them every Friday. Note this article includes affiliate links, such as from Amazon and Interactive Investor.

The post Weekend reading: Can you bank on it? appeared first on Monevator.

Receive the latest news in your email
Table of content
Related articles